7 marketing - why business?thssbusiness.com/business-10/chapter-7.pdf · channel of distribution...

7

K E Y T E R M Smarketingdirect competitionindirect competitiontarget marketmarket researchmarketing mixbrand nametrademarkpackaginglabellingchannel of distributionwholesalerretailerpromotionpersonal sellingtelemarketingAIDAsales promotionpublic relationspublicityadvertisingdirect mail

Marketing

S p e c i f i c E x p e c t a t i o n s

After studying this chapter, you will be able to

• Describe the role and effectiveness of the following in marketinga product:- advertising display- distribution- research- packaging- selling methods

In this chapter, we will examine the importance of marketing and the reasons why a

business must be knowledgeable about the marketing environment. Marketing

involves understanding what your customer needs and wants, and demonstrating how

you can satisfy your customer’s expectations.

Marketing is not straightforward because there are many factors involved.

Market research will reveal the demographics of your target audience, the social and

cultural changes that are occurring, and whether there will be competition for your

product. Understanding how your product should be packaged and advertised is also

critical. These and other issues are explored in this chapter.

C H A P T E R 7 Marketing • MHR 185

Cyndi Chooses aWeb Developer

“You should go on the Web,” Cyndi’s brother told her.“Your party business would really grow if you were on theWeb and if you had the right site. You could do all sortsof things to get people in and keep them coming–CoolParty Tip of the Week, Parties that Go Belly Up . . .youknow. Grab them with humour. The point is to create abuzz around your business.”

“I have been thinking about going on the Web,”Cyndi said. “In fact, last week, I researched compa-nies that will create a Web site for you. I stuck to theCanadian firms, but you should see how many thereare and all the things they’re doing! It’s so confusing!”

“What’s confusing? You want a Web page.”“Well, that’s just it. According to the folks who mar-

ket this service, it’s complicated. There’s everythingfrom having a simple Web page to having e-commerceor even offering 3-D virtual tours.”

“3-D Virtual Tours? You’re kidding me.“Well, that’s just it. I don’t need the 3-D stuff, thank

you very much, but I would be interested in e-commerceone day. I really have to give this serious thought.”

A few days later, Cyndi thought about the Web sites she had seen, and allthe things the Web developers promised to do for her. She knew she wasn’t avery big business. She decided to make a list of all the things she wanted herWeb site to be, and do. Then she carefully reviewed the Web developers’ sitesone more time, this time paying attention to their “feel” as well as the content.

After making her list, Cyndi looked one last time at the sites of twoWeb developers. She had narrowed it down to these two. Read the cap-tions beside the sample Web pages to find out which company Cyndichose to develop her Web site.

My biography

A complete description of my services and prices

An on-line portfolio that shows some of the great work I've done

Party management tip of the week (will make my site look friendly I'm going to take my brother's suggestion!)

Testimonials from satisfied clients

Complete contact information, including telephone, address, and e-mail

F igure 7-1 Cyndi’s Website wish list

B U S I N E S SP R O F I L E

186 MHR • U N I T 2 Conducting Business

F igure 7-3 Cyndi eventually choseBlue Cat Design to create her Web site.She kept returning to the site because itsimage matched her image–colourful,whimsical, and a little funky. In addition,she was very impressed by all the helpfulhints Blue Cat put on their site. Shewanted her site to look as friendly. Shealso loved the individual biographies andphotos of the team members, and thefact that Blue Cat’s services were clearlylaid out. In addition, Blue Cat also knewhow to set up e-commerce if she everwanted to do that. She had definitelyfound her developer. And now she wouldbe marketing her business more effec-tively, with a brand new Web site!

F igure 7-2 Cyndi continued to bein awe of this site. It just seemed to haveeverything, and the company did have agreat online portfolio, just like the one shewanted. One other developer she hadchecked out offered a button for “worksamples” and then told you to mail in yourrequest for samples. Forget that! And thevirtual tour offerings at Weblife 2000 wereamazing. Cyndi started to wonder how oneof her table arrangements would look inthe “360° immersive imaging” offered byWeblife 2000. But she was fairly certainthat the cost for such Web design serviceswould be too high.


The Importance of MarketingMarketing is a process that includes many activities. The goal of thisprocess is to create an exchange that will satisfy human needs andwants. Marketing involves planning, pricing, promoting, and distribut-ing a good, service, or idea. Every time you buy something at the storeor watch a television commercial, you are involved in a marketing activ-ity. Marketing affects you all the time.

As you read magazines, view Web sites, or listen to the radio, you arebeing exposed to some very persuasive marketing techniques. Learningabout marketing will help you become a more informed consumer. Youwill have a much better understanding of how a company promotes itsgoods and services. Understanding marketing strategies will also help youin any career you choose because every type of job involves persuasion.A teacher, for example, has to keep his class engaged—he has to figureout the most convincing way to present a concept. A nurse, on the otherhand, might have to persuade a patient to do something that he or shereally does not want to do.

Marketing activities are crucial to all businesses, no matter whattheir size. Even if a company has no marketing department, it has topromote the goods or services that will eventually earn revenues for thebusiness. Producing a quality product or coming up with a good ideawill not necessarily result in a company’s success. Consumers must beconvinced that the product fills their needs or wants—just like Cyndiwas assured that a certain Web developer would fulfill her businessneeds and wants. Goods and services are brought to the attention ofconsumers through marketing activities.

The Market ing Env i ronment

We are living in a world of rapid change. We are constantly beingexposed to new technology and new products. These exciting timesmake marketing activities much more difficult and provide businesseswith new challenges. Some changes are beyond the control of the busi-ness community. Yet in order to compete successfully, businesses mustreact to everything that’s going on around them—marketing segmenta-tion, changing demographics and economic conditions, new competition,social and cultural change, and new technology.

Find a need

Conduct research

Design a product tomeet the need

based on research

Set a price and doproduct testing

Determine a brandname, design a

package and logo

Select a distributionsystem

Design a promotionalprogram

Build a relationshipwith customers

F igure 7-4 The marketing process

People in the 18-48 agebracket spend moremoney than any otherdemographic group.Marketers are alwaysinterested in how thisgroup is spending itsmoney.

Market Segmentat ion It’s important for marketers to understand market segmentation,which is the division of a total market into specific groups relating tocustomer needs and characteristics. Not every consumer has the sameneeds and wants. Different people fall into different consumer groups.

Take the automobile market, for example. In Chapter 1, you read afeature on how women drive the automobile market. Women have spe-cific needs and wants when it comes to purchasing an automobile.Manufacturers and retailers need to develop products and marketingplans to suit the individual characteristics of each customer group. Thelarger market can be divided into segments according to age, gender,income, family status, lifestyle, interest, language, and culture.

Demograph icsIn Chapter 4, you were introduced to the concept of demographics.Demographics are the characteristics of a population, categorized bycriteria such as age group, sex, income level, and level of education.Demographic statistics help businesses target a particular group or mar-ket, for example, women between 18 and 54 or people over 65.

Canadian demographics change constantly. In the year 2000, forexample, the number of people over the age of 65 was greater than thenumber of teenagers in the population. This kind of information helpsbusinesses decide on the goods and services they will offer, the mediathey will use to advertise products, and even the price of certain prod-ucts. As the population ages, it is likely that the price of retirement prop-erties will increase, along with the supply of products aimed at peopleover 65. For this reason, you might expect advertisers to start using well-known older people to represent their products as a marketing strategy.

Business owners and marketers use demographics to help them under-stand their markets and try to predict the opportunities that might exist. Ifinterpreted correctly, demographics can reduce the risk of business failure.

The Economic Env i ronment

As you learned in Chapter 5, the business cycle refers to the changes inthe economy as it moves from prosperity to inflation, sometimes intodepression, and then to economic recovery. The economy never staysthe same; it is always contracting and expanding.



When a business is engaged in marketing, it has to pay careful atten-tion to the current stage of the business cycle. During a period of highunemployment in a recession, a business might reduce its advertisingand emphasize essential goods and services for the consumer. Price isa very important factor during periods of high unemployment. Peoplewho don’t have a job or who are worried about losing a job tend tobecome very price-conscious. During a time of prosperity, a companymight emphasize the more luxurious aspects of its goods or services,especially if interest rates are low and people can borrow money eas-ily to buy luxury items.

Compet i t ionCompetition can take many forms. Direct competition is the rivalry thatexists when two or more businesses produce similar goods or services. Forexample, McDonald’s and Burger King compete for customers who likehamburgers. Each chain has to persuade customers to buy its hamburgers,and not another chain’s burgers. In addition, both chains compete withother chains selling different kinds of fast food, such as pizza and tacos.This is known as substitute or indirect competition. When developinga marketing strategy to compete for consumers, a company needs to con-sider the type of competition it will be facing.

Competition is good for you, the consumer.When two or more companies compete for the samemarket and try to anticipate your needs and desires,the end result is usually more excellence, more offer-ings for you to choose from, and a better price.

Socia l and Cu l tura l ChangeAs consumers’ lifestyles, values, and beliefs change,so do their needs and wants. As a result, they spendtheir money on different goods and services. A busi-ness needs to be aware of these changes and to beflexible in order to survive.

For example, when banks and other financialinstitutions introduced the first “bank machine” inthe late 1970s, they were worried that customerswould find these machines too impersonal. Up tothis point, people had always gone to a bank teller—a real person—to make bank transactions, including

F igure 7-5 Many consumers embraced the convenience of automatic tellers.

simple deposits and withdrawals. But the banks soon discovered thatpeople appreciated the flexibility of bank machines, and that theywanted more and more electronic services, such as telephone banking,Internet banking, and electronic debiting. There were more women inthe Canadian workforce than ever before, and people were also work-ing much longer hours. Most people welcomed the electronic bankingrevolution enthusiastically, even though they had to pay charges formany of the services. Banks stopped worrying about providing lesspersonal service.

Another example of a social change occurred when gasoline pricesincreased dramatically in the 1970s. As a result of the price increase,consumers became more aware of the need to conserve energy. Manycar drivers switched to smaller, more fuel-efficient cars. An added bonuswas that these cars were more affordable than larger cars. Soon, auto-mobile manufacturers stopped stressing the luxury of large cars andbegan to emphasize the affordability and fuel efficiency of smaller cars.As a result, these cars soared in popularity.

Techno logyTechnology has had a major impact on our lives and on the businessesthat supply goods and services for our needs and wants. ManyCanadian homes have a microwave oven, a videocassette recorder, anda computer. Twenty-five years ago, these appliances were not widelyused or even available. Very few business people today are without cellphones, and the Internet is playing an extremely important role in mar-keting and advertising.

Technological breakthroughs have a significant effect on marketing:• Technological innovations create new industries, which means new

marketing opportunities. Of course, inventing a new product is notenough—the customer has to like it.

• Technological changes may alter or even destroy existing busi-nesses. Compact discs have driven most vinyl records from themarketplace. Soon, digital may replace CD technology.

• New technologies can sometimes stimulate businesses in unrelatedfields. For example, there is a direct relationship between the salesof VCRs and DVD players and the growth of the snack-food indus-try. Have you ever noticed how many video rental outlets sell pop-corn, chips, candy, and pop?

• Technology opens the door to brand new ways of marketing, asyou learned by reading about Cyndi in the Business Profile.



K n o w l e d g e / U n d e r s t a n d i n g

1 Explain, in your own words, why demographic statistics are important tomarketers.

2 List two of your own examples of direct and indirect competition, andexplain the marketing strategy that the competing companies use.

T h i n k i n g / I n q u i r y

3 As a consumer, why is it important for you to understand marketing?4 Work with a partner to create a survey that would help a business under-

stand the lifestyles, values, and buying habits of yourself and your class-mates. Then, independently, write a one-page report describing howmarketers could use the results of such a survey to promote their prod-ucts or services to teenagers.

C o m m u n i c a t i o n

5 Look through magazines and newspapers and select two automobileadvertisements. Review the visual components and the words in each.Then write a paragraph comparing the market segments that are beingtargeted by the two advertisements.

A p p l i c a t i o n

6 Select a product and research the strategies that are used to market thatproduct. You could consider packaging and labelling, advertising and pro-motional literature, Internet Web sites, or newspaper and magazine arti-cles about the product. Then use what you have learned to prepare anillustrated report to predict the following:• the demographic profile that fits the product • ways that the economic environment might effect marketing for the

product• the potential or real direct competition for the product • social and cultural changes that should be considered in marketing the

product• the effect of technological changes that might influence the marketing

of this product

Check Your Understanding

S k i l l sA p p e n d i x

writing reports


analysing media

Media Copywrit ing


When students arrive for the first day of HumberCollege’s media copywriting program, “everyone of them dreams of writing that great televi-sion commercial,” observes Wilf McOstrich, oneof the program instructors.

During the year at the Toronto school, stu-dents learn that writing ads is hard work—muchharder than most students think. At Humber,they learn how to develop creative strategies;write ads for print, television, radio, and theInternet; present ideas to clients; and perhapsmost important, put together a portfolio or“book” to show prospective employers.

The one-year course, which accepts only stu-dents with a post-secondary degree, includes atwo-month summer placement at an agency thatmay or may not pay the student a small salary.

Writing ads involves both skill and ingenuity.For example, during a recent class on direct mail,McOstrich reminded the students that, “The enve-lope has three seconds to live.” That’s howquickly someone decides whether to open a let-ter or toss it, so it had better grab the person’sattention in a hurry,” he says.

He holds up an “exceptionally clever” directmail piece created by a student. In large bold typeon the envelope are the words “Your latest issueof incredibly boring Vistas and Views has arrived!Featuring tremendously boring stuff from aroundthe world!”

How could anyone resist? Inside, as promised,is a booklet with mundane photographs of a high-way, a toll booth, and auto parts store. The pitch?“There are 1.1 million Canadians with visual dis-abilities who will never witness such incrediblyboring sites. Help us promote a greater under-standing of blindness.”

Stephen Fogel, 25, created the fundraising let-ter and typifies the sort of irreverent personalitydrawn to the Humber copywriting program.Humber expects big things from Fogel. “Stevecould get up and do an agency presentationtomorrow and he’d probably win the account,”says McOstrich. “He’s going to be president of anad agency one day.”

True or not, Humber students have gone onto senior positions in the industry since the pro-gram started in 1993. One of them is James Lee,associate director at Palmer Jarvis DDB inVancouver. He won a Golden Lion at the presti-gious Cannes International Advertising Festival in1999 for a humorous shampoo commercial.

Other graduates credit Humber with gettingthem in the door at ad agencies. In the words ofRich Cooper, who now works as a writer forRoche Macaulay & Partners in Toronto: “Morethan any other writing program in the country,saying that you’re a Humber copywriter does pulla lot of weight.”

A C T I V I T I E S

1 How does the Humber College program preparestudents for a career in marketing? What skillsdoes the program focus on developing?

2 Create a poster that could be used for the visualdisabilities fundraising campaign described in thisfeature. Keep in mind the purpose you want toachieve and the audience you want to persuade.Present your poster to a small group and explainhow it would achieve the fundraising goal.


The Functions Of MarketingMarketing has two main functions. First, it helps a business determineits target markets. A target market is a group of consumers the busi-ness wants to reach. The members of the targeted group will be similarin some way, such as in age.Every business needs to answerthe questions in Figure 7-6 in orderto sell a good, service, or idea.

To answer these types of questions, businesses frequentlyundertake market research.Market research is the gatheringand analyzing of data to providea business with information onconsumers’ needs and wants.

For example, if a business ismaking a new laundry detergent,it might interview supermarketshoppers and ask what brandthey buy now and why. A bever-age company might conduct a taste test to determine consumers’ opin-ions of a new product. Or an advertising agency might phone peoplerandomly to measure the effectiveness of a new television commercial.Market research has to be carefully planned and administered to givevalid results. Validity means that the company can rely on the resultsand make generalizations about the rest of the population.

The second function of marketing is to give consumers what they want: • A product they want (product) • A product they want, when they want it (promotion) • A product they want, when they want it, where they want it (place) • A product they want, when they want it, where they want it, at a

price they are willing to pay (price) This what is known as the marketing mix—product, promotion,place, and price.

Marketing Functions

Questions Strategies

• Who will buy this product Consider consumers by sex, age, income level,or service? rural or urban distribution, or any other

defining characteristic.

• When do they want to buy? Consider season, time of day, time of month, or if the purchase is tied to another purchase.

• Where do they buy? Consider whether they will buy in retail stores, discount stores, or over the Internet. Consider where they live in Canada.

• Why do they buy? Consider whether the purchase is a necessity,a luxury, a planned purchase, or an impulse buy.

F igure 7-6 What doesa business need to knowabout your buying habits?

The Marketing MixThe components of the marketing mix vary for each product. One ofthe functions of marketing is to help a company design a program toreach the product’s target market. The market will determine the make-up of the mix and the way each component is weighted in the finalmarketing plan.

Product

In marketing, the “product” is not just the good or service. The term,product, also includes an item’s name, its packaging and labelling, andany guarantees that come with the product. Through research anddevelopment, many businesses invest a great deal of money developingproducts that they believe consumers want and will pay for.

Brand NamesA brand name is the name that identifies the goods or services of onebusiness. It can be a word or words, number or numbers, letter or let-ters, or some combination of these elements. The visual elements of abrand—a logo, symbol, or other such design—are called brand marks.When these brand marks are registered so that no one else can usethem, they are called trademarks.

Microsoft Windows’ trademark is the stylized four-colour windowthat customers see when they open up the software. The brand name is“Microsoft Windows.” It takes many years for a company to establish abrand loyalty. However, once a brand name has consumer loyalty, it canbe used for a variety of products. For example, the Ivory name is usedfor hand soap, laundry soap, and dishwasher soap. Kleenex is so rec-ognizable that it is used by many people to mean any disposable tissue.

PackagingPackaging refers to the container or wrapper for a product, the design ofthe container, and the information printed on the container. The packag-ing must protect the product while it is on the way to the consumer andoften during use by the consumer. A milk carton must not leak, evenafter you take it home.


Companies must do asearch of pre-existingtrademarks before theycreate one for a newproduct.


The container also must attract the attention of consumers. Thedesign of the container and the advertising printed on it can help sell theproduct. Packaging will often carry slogans, list special features, or pro-vide useful information about the product, such as “fortified with vita-mins A and D” or “contains no artificial preservatives.” In fact, suchphrases are examples of package advertising. Displaying the manufac-turer’s name prominently on the packaging is also a form of advertising.

Packaging is changing as a response to consumers’ demands forless packaging material. More manufacturers are trying to package theirproducts in smaller or reusable containers in response to criticism thatpackaging contributes to the waste problem. The ideals of “reduce,reuse, recycle” will probably continue to affect packaging in the future.In some instances, however, customers may come to expect more andmore visual appeal, and more packaging features. For example, theevolution in CD packaging shows how a relatively simple format canbecome a design extravaganza because that’s what consumers decidethey want. Perfume and cosmetics are good examples of other productsthat attract customers because of their packaging.

Label l ingLabelling is the part of packaging that provides the consumer withinformation, such as product ingredients. Many foods you eat carrylabels indicating how much fat they contain, and the percentage dailyrequirement of nutrients a serving provides. Labels may vary from coun-try to country, and will appear in different languages, depending ongovernment regulations and the needs of consumers. In Canada, forexample, labels on all products must appear in English and French.

its its mymybusines

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Cash in, Cash out

Account for itGrowin' my BizI'll ManageInvest in MeIt's MY BusinessEthics?Smile and NodLet's Do LunchB4 the Aquisition

lyricsCash in

, Cash out

Lenny Loonie - vocals, guitar

Robin Banks - bassYes Man - drums, backing vocalsProduced by C. E. YoRecorded by Targ Ette and Mark

Ette at Oddeo Solutions,Los Angeles, California,October 2000 - December 2000Concept & art direction Global

Presence Artwork

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F igure 7-8 This mock-up for an imaginary CD illustrates how elaborate the packaging can be. Whatother elements are some-times included?

The Canadian retail indus-try is worth approximately$277 billion and employs1.74 million people.

A label can be as simple as the brand name “Chiquita” stamped on abanana or as detailed as a description of the recyclable products thatwere used to create a new product. Labels can also include informationto help the consumer use the product more effectively (cooking instruc-tions, assembly instructions, a picture of the product). Like packaging,labelling helps to sell the product.

Pr ic ing

The price of a product will, in many cases, be determined by the demandfor it. Price will play an important role in how successful the product is.Some businesses price their products low to sell more of them, and oth-ers price their products high, knowing that fewer will be sold but that agreater percentage of the selling price will be profit.

A business must always take into account the price that competitorsare asking for similar products and how much consumers are willing topay. Few consumers will pay five dollars for a doughnut, for instance.

Place

Even if consumers are pleased with a new product and its price, its suc-cess is uncertain unless it is where consumers can get it when they wantit. The manufacturer’s choice of channels of distribution is extremelyimportant. A channel of distribution is the path a product takes fromthe manufacturer to the final consumer. The four most common chan-nels of distribution are shown in Figure 7-9.

Manufacturers make products. They sometimes sell their products towholesalers and sometimes directly to retailers, depending on the type of product and on the size of the retailer. For example, a cereal makersells directly to large supermarkets (the retailers), as well as to wholesalerswho, in turn, sell the cereal to smaller retailers such as convenience stores.

Wholesalers buy goods or services and sell them to other busi-nesses for resale. Wholesalers usually buy products in large quantitiesfrom the manufacturers and sell them in smaller quantities to the retail-ers. By buying in larger quantities, wholesalers pay less per unit for aproduct than an individual retailer, who buys a smaller quantity of theproduct directly from the manufacturer. In turn, some of the whole-saler’s savings are passed on to the retailer.



Retailers sell goods or services directly to consumers. Retailerscome in all shapes and sizes. They can be as large as Home Depot oras small as a mobile hotdog business. The consumer is the end user ofthe product or service. When you walk into your favourite store tomake a purchase, you are the consumer, the end of a longchain. Manufacturers fight for “good” shelf space in theretail chains. Everyone wants to get your attention first.

The increasing popularity of the Internet meansthat there is one other way for manufacturers toreach consumers directly. Web sites connect manu-facturers with their customers 24 hours a day, andcustomers can browse any time they please.Through the Internet, customers can select from arange of products, order products with a credit card,and have them delivered to their home.

Promot ion

Promotions inform consumers about a product or service and encour-age them to buy it. Promotion involves personal selling, sales promo-tion, publicity, public relations, and advertising.

Manufacturer

Channels for consumer goods

Consumers

Independentsalesperson distributor

Wholesaler Retailer

Retailer

Manufacturer

Manufacturer

Manufacturer

Consumers

Consumers

Consumers

This channel is used by craftspeople and small farmers. Many manufacturers are also selling on the Internet.

This channel is used for door-to-door distribution by companies like Avon (cosmetics) and Electolux (vacuum cleaners).

This channel is used for cars, furniture, and clothing.

This channel is the most common channel for consumer goods such as groceries, drugs, and cosmetics.

F igure 7-9

Channels of distribu-tion for differentkinds of businesses.

WebnectConnC

Visit the Retail Council of Canada’s Web site toread what retailers are saying about current con-

sumer trends, developing technologies, andchanges in the shopping environment.

http://www.mcgrawhill.ca/links/exploringbiz

Persona l Se l l ingPersonal selling is any one-to-one communica-tion of information that tries to persuade a cus-tomer to buy a good, service, or idea. Theowner of a corner store is using personal sellingwhen he or she asks you if you need any helpand then proceeds to sell you something. Thesales representative, who tries to sell books toyour teacher, is using personal selling. The rep-resentative of a charity, who asks you to make adonation, is using personal selling.

Personal selling often starts with “selling an idea.” It may later lead tothe purchase of a product. For example, a salesperson in a bicycle storemay try to sell you on the idea of road safety first. Once he has sold youon the importance of safety, you are more likely to buy a helmet.

Personal selling has several advantages. First, it is a flexible methodof promotion. Sales presentations can be tailored to suit the needs ofindividual clients. Second, sales efforts are focused on prospective buy-ers, eliminating unproductive efforts. Third, sales can be finalizedimmediately while the customer is interested in the product. Finally, thepersonal contact found in this type of selling can help a salespersondevelop a long-term relationship with a customer.

However, personal selling also has several disadvantages. First, it’sexpensive to maintain a qualified sales staff. Studies have shown thatthe cost of one sales call can be as high as $200. This cost includes suchitems as salary and traveling expenses. Second, many companies havetrouble finding and keeping qualified, competent sales staff. Selling is ahigh-stress job because there is the constant pressure to perform. Manypeople get burned out by personal selling and have to quit after a cou-ple of years. These disadvantages have forced some businesses intoconsidering alternatives to personal selling. Some stores and serviceshave moved to self-serve operations such as those found at many gasstations. In return for not receiving personal attention, consumers oftenpay less for the good or service.

Al ternat ives to Persona l Se l l ingTelemarketing is a popular alternative to personal selling. It uses tele-phone technology, including fax machines, to maintain regular contactwith customers. Household services, such as carpet cleaning, ductcleaning, or window installation, are often promoted by telemarketing.


F igure 7-10 Face-to-face selling involves pay-ing close attention to thecustomer. Some expertshave described it as “get-ting inside the customer’shead.”


Another alternative to personal selling is the use of mail order. Somebusinesses, either by the nature of the business or the type of productbeing sold, use this form of selling. These businesses do not have retailstores. Potential customers are sent the catalogue, order their goods bymail or phone, and receive the goods by mail.

The A IDA Se l l ing FormulaMany sales training programs teach those who do per-sonal selling participants to use the AIDA formula. Theword is made up of each of the first letters in the foursteps of the basic selling approach:• attract attention• hold interest• arouse desire• take action to close the sale

The salesperson’s first objective is to attract yourattention. The salesperson must be sensitive to yourneeds and find some way of arousing your interest, per-haps by generating curiosity about the product. Onceyou’re paying attention, the salesperson must hold yourinterest to explain the benefits of the product and createa desire in you to have the product or service. When thesalesperson feels you have an interest in the product, heor she should start to close the sale. Before a sale can beclosed, however, the salesperson has to overcome anyobjections you might have about the product or service.

Sales Promot ionSales promotion covers all the activities designed tostimulate you to buy. Free samples, discount coupons,rebates, in-store displays, in-store demonstrations, andcontests are examples of sales promotions. Some promo-tions, such as free samples left in your mailbox, aredesigned to get you to try the product. Free samples areusually products that are necessary household items, suchas laundry detergent or shampoo. Other promotions aredesigned to get you to switch from a competitor’s prod-uct to another company’s product. One popular tactic isto challenge you to find a better price for the product and

F igure 7-11 Since its earliest days, theMcDonald’s Corporation has been highly skilledat using sales promotions like the one shown inthis photograph, to stimulate the public to buythe company’s products.


for the promoter to match the lowest price. Still other promotions, suchas in-store displays, remind you of all your unfulfilled desires and mayintroduce a new product, sometimes at a special price.

Publ ic Re la t ions and Pub l ic i tyPublic relations includes all the activities by which a business tries tomaintain its good reputation and promote good will with the public.Public relations does not involve actually selling products. Instead, forexample, a business becomes involved in charitable activities or spon-sors local (or even national) sports teams. Large companies usually havea public relations department. Smaller companies contract out theirpublic relations activities to a firm specializing in this area.

Publicity is the act of bringing company activities to the attentionof the public. Publicity is not controlled or bought by the business andcan be either good or bad. A business that is in the news for con-tributing money to a residence for senior citizens receives positive pub-licity. A business that is in the news for polluting a town’s only sourceof drinking water receives negative publicity.


1 Briefly describe, in your own words, the four components of the marketingmix.

2 How does packaging and labelling influence consumer purchasing decisions?3 In chart format select three products that you use everyday and identify

the following: the product name, the manufacturing company’s name, andthe brand name.


4 Research the marketing mix for a product that you are interested in pur-chasing. Explain how the four components of the marketing mix wouldcontribute to influencing your purchasing decisions.


5 Using current media reports, identify a real-life situation where an individ-ual, organization, or company has experienced some bad publicity. In



small groups, develop a public relations plan to deal with the situation andto get some positive publicity for the person or group. Present yourgroup’s ideas to the class.


6 Develop a poster, radio, or television advertisement for a new productidea. Be sure that the advertisement clearly illustrates the following: theappropriate elements of the marketing mix, the target market, the AIDAformula, the brand name, and the trademark.

AdvertisingAdvertising is any paid use by an identified sponsor to inform a targetmarket about a product, service, idea, or organization. The presentationof the message—the advertisement—can be oral, visual, or a combina-tion of the two.

Advertising has three objectives:• Inform The main purpose of informative advertising is to tell

you about the product, its features, its unique attributes, how itworks, and how to use it effectively. Informativeadvertising is often used to promote a newproduct or to suggest new uses for an existingproduct.

• Persuade Persuasive advertisements try to con-vince you to buy one particular company’s prod-uct or service instead of the competitor’sproduct. Persuasive advertising can appeal toyour emotions, such as love, pride, or fear. Anexample of an emotional appeal would be achewing gum ad that appeals to your concernabout having bad breath. Some persuasive adver-tisments use testimonials in which a well-knowncelebrity or a member of an association endorsesa product. For example, Silken Laumann, theCanadian Olympic bronze medallist in rowing,endorses Brooks Sports athletic wear. Peoplewho buy endorsed products hope that some ofthe celebrity’s success will “rub off” on them.


analysing media

F igure 7-14 Milk mar-keting boards in Canada andthe U.S. have raised theirprofile among consumers byproducing eye-catching,humourous advertisementsdesigned to gently persuadepeople to buy their products.

Connecting Businesss wwith


Graphic design is a growingfield that includes illustration,type design and typesetting, for-matting, and photography. Since1975, when IBM produced thefirst laser printer, computer tech-nology has revolutionized theway graphic designers work.However, technology is no sub-stitute for talent.

Marketers and advertisers rely on the skill ofgraphic designers every day. Through the use ofmemorable graphics and eye-catching typogra-phy, these designers make sure that you remem-ber what you see. With so many products forsale, the challenge is to create advertising that ismemorable. How do graphic artists rise to thechallenge?

Here’s how one Canadian design firmapproached an assignment. The task was to cre-ate an animated character that would act as aguide during a three-minute video for a shop-ping mall that was getting a facelift. The char-acter had to walk, talk, and look happy.

Simon Tuckett, the designer, began by think-ing of a concept. He had an “idea of a 3D smi-ley face,” which he sketched out on paper witha pencil because “I can’t design directly on thecomputer. I always feel so constrained there.”

Then he used a computer program to modelthe character in 3-D, creating a head, eyes andeyelids, and skin texture. Tuckett also used thecomputer program to ensure that the eyes hadjust the right sparkle and the mouth moved. Hecreated the lips in a separate file, but when hemoved them to the face, he realized they wouldneed adjustment: “I was looking at one of those

horrible images of an astronaut in training,straining against G forces,” he said.

After completing the face, Simon createdarms and legs. Because the legs would have tomove, he created a skeleton using another com-puter program. The skeleton showed how thelimbs would move, bone by bone. Next, hetested how the character moved to ensure itwas realistic. He added flesh to the bones, andrefined the appearance and colour so that thefinal character would be appealing. During thisphase, Tuckett shared his progress with hisclient and asked for feedback.

A C T I V I T I E S

1 Why would the animated smiley face be effectiveas a video host? What sort of marketing appealwould this character have?

2 What did Simon Tuckett do to ensure that thecharacter he created would be an unforgettablemarketing tool?

Graphic Design

F igure 7-12 The lips that didn’t work

F igure 7-13 The final product

Art

C H A P T E R 7 Marketing • MHR 203C H A P T E R 7 Marketing • MHR 203

• Remind Many advertisements are designed to keep the product ororganization visible to the public. This method of advertising is oftencalled institutional advertising; its main purpose is to promote goodwillfor the company. Advertisements for charitable organizations, such asWorld Vision, are one example of reminder advertising.Once marketers know what they want from their adver-

tising campaign, they choose a type of medium to carry theirmessage. Should the company use radio, television, theInternet, newspapers, magazines, billboards, direct mail, orother media? Each medium has its advantages and disadvantages.

Types o f Media

NewspapersNewspapers provide advertisers with a timely and flexible medium.Advertisers can select which among many regional and local newspa-pers appeal to their target market. A business that operates only inLondon, Ontario, might advertise in the London Free Press, whereas anational business would run advertisements in the daily newspapers ofall large cities.

Newspapers offer advertisers the advantage of responding quicklyto local economic and social conditions and being able to change theiradvertisements on very short notice. For example, as interest rateschange, banks and mortgage loan companies can advertise the newrates to potential customers. The cost of producing a newspaper adver-tisement is relatively low, but its life is quite short since papers are nor-mally discarded a day or two after they have been read.

Magaz inesMagazines offer advertisers a high-quality medium for their advertising.Compare an advertisment in the newspaper with one in a magazine printedon glossy paper. What do you notice about the visual effect of the twoadvertisements? How clear are they? How vivid are the colours?

Because many special-interest magazines exist, advertisers can beselective and can focus advertisements on target markets. For example,a garden equipment manufacturer would likely advertise in CanadianGardening rather than in a news magazine such as Maclean’s.

Magazines are usually read in a leisurely fashion, so an advertisercan send a lengthy or complicated message to the reader. People usu-

F igure 7-15 YogenFrüz’s brilliantly colouredmagazine advertisementsare very carefully designedto take the best advantageof high-quality paper andcolour production values.

Advertising can benational, regional, orlocal.

Automobile manufac-turers might use nationaladvertising to cover allregions, areas, and mar-kets in the country.

A major departmentstore in a city might useregional advertising tocover the district whereits customers come from.

A smaller retail estab-lishment–a dry cleanersor hair salon–might adver-tise in a local newspaperor on a local televisionchannel.

ally keep their magazines longer than they keep newspapers.Magazines are also often read by a number of people. Because maga-zines are published less frequently than newspapers, more time is avail-able for the preparation of the advertisement, but the flexibilityassociated with newspapers is lost.

RadioRadio is a popular advertising medium. It is relatively inexpensive andallows advertisers to reach a target market because individual stationscater to specific groups of people. An advertiser can place a messageon a station aimed at teenagers, a country-and-western station, or a sta-tion that plays classical music. A rock concert might be advertised on aradio station that plays rock music, but a 10 kilometre run to benefit ayouth orchestra might be advertised on a classical music station.

Radio is a medium that reaches people anywhere, which is anattractive feature for advertisers. People can listen to the radio while sit-ting on the beach, while jogging, or while driving in their cars.Advertisers pay a lot of money for airtime in the morning and eveningrush hours.

Although most radio advertising is not expensive, advertisers mustrepeat their message frequently. Many listeners tend to use the radio asbackground and do not really concentrate on what is being said. Peoplealso tend to remember what they see better than what they hear.

Te lev is ionTelevision is the only medium that offers the advertiser a combinationof sight, sound, motion, and colour. The people who create advertise-ments for television can use a wide range of effects to attract theviewer’s attention.

Because people tend to remember what they see, advertis-ers ensure that their product appears in the commercial.

Its method of use or application can be demon-strated, sustaining the viewer’s interest. Televisionalso allows the advertiser to select demographicmarkets. A negative aspect of television for theadvertiser is the high cost of producing commercials

and advertising, so this medium tends to be used pri-marily by large corporations.


WebnectConnC

Take a look at the Canadian Code of Advertisingto see some of the challenging issues faced by

consumers and businesses in today’s multi-media advertising environment.



In ternetAdvertising takes a twist on the Internet, where new gimmicks can attractthe attention of even the most seasoned media watcher. What would youdo if you were on the World Wide Web and a box suddenly appeared thatlooked like your personal e-mail? What if it said you had one new mes-sage? You would probably open it—only to find that it’s a marketing pitch.Messages that claim you’ve just won something are also marketing pitchesfrom companies that want you to order more of their products. In bothinstances, the advertisers anticipate your behaviour on line.

Banner ads are advertisements that appear at the top or bottom ofa Web site. They may “scroll” or flash with a series of different boards.The latest high-tech banner advertisements function as mini-Web sitesand let customers order products without having to go to another Website. As a result, marketers on the Internet are increasingly able to tar-get people when they have the impulse to buy. This is the one hugeadvantage of advertising on the Internet.

An inviting home page is also an effective form of Internet adver-tising. Companies can sell their products on line, and buyers can accessreviews and testimonials about products, for example, the editorialand customer book reviews offered by Indigo.com, whichdistributes toys, books, videos, and music.

Advertising is generated on the Internet every timesomeone reaches a Web site, so it’s always in a com-pany’s interest to be listed in the search engines.Since the top 3 percent of the search engines gen-erate 90 percent of traffic on the Web, companiesare advised to focus their attention on the bigsearch engines, such as Yahoo, Google, Lycos, andother top performers.

Direct Mai lAdvertising pamphlets, brochures, leaflets, and flyers that are deliveredin the mail make up a medium called direct mail. Because direct mailcan be selective, the advertiser can tailor the advertisement to its targetmarket. A business that buys the subscription list of a fashion magazine

WebnectConnC

Review some of the current forms of advertisingbeing used on the Internet. Watch for changes intechniques and features of these advertisements.

Why is it that some of the most interesting and advanced media techniques are

developed for advertising?

F igure 7-16

McGraw-Hill Ryerson’sbanner ad at its Website contains the com-pany’s logo and name.The ad appears at thetop of each page atthe company’s site.



to market mail-order clothing knows that the magazine subscribers aremore likely to be interested in fashion than people who do not sub-scribe to fashion magazines. As well, direct mail gives the advertiser away to distribute samples of their products to potential customers.However, direct mail can be expensive and is sometimes considered as“junk mail.” It is often thrown out without being read. Also, mailing listscan quickly go out of date.

Outdoor Adver t i s ingBillboards, bus-shelter ads, and advertisements on public transit and onthe sides of trucks are forms of outdoor advertising. These advertisementstend to be seen by people on the move who are not focusing on theadvertisements around them. It is a medium most appropriate for shortmessages. An advantage is that outdoor advertisements are seen by a largenumber of consumers, but a drawback is that it is impossible for advertis-ers to target their market.

Ther are almost 40 000outdoor ad spaces inCanada, up from about29 000 spaces in 1995.

F igure 7-17 Mobile Vision is a Canadian company that specializes in creating advertisingfor trucks and tractor trailers. The company developed its own vinyl product that allows bill-boards and vehicles to be “wrapped” in a fraction of the usual time, and at a low cost.



1 Identify and describe the three objectives of advertising.2 Using an organizer, identify the advantages and disadvantages of using

each media type for advertising and marketing.


3 Compare one form of Internet advertising with advertising in a differentmedium. Chart the advantages and disadvantages of each medium andexplain the type of products and services best suited to each medium.


4 Create an advertisement that would convince an employer to hire you. Asyou plan your advertisement, keep your purpose—to market yourself—and your audience in mind.

5 Work with a small group of students to plan and design an advertisingcampaign for a local retailer, charity, or club. Be sure that your campaigncovers the objectives of advertising. Decide which media type would helpyou reach your objectives.


6 Develop an advertisement for a product that you enjoy using for a hobbyor a sport. Identify the medium you would use for your advertisement.Create your advertisement as a storyboard, a layout for a print or Webpage, or a script for a radio commercial.



analysing media


building an argument


Marketing to Children

Marketing to children poses some uniqueopportunities and some serious ethical chal-lenges. As marketing has grown, so have con-cerns about society’s responsibility for itschildren’s health and safety.

In the United States, parents and educatorsare becoming more and more critical ofChannel One, a marketing company that “deliv-ers two minutes of advertising and ten minutesof news” to about 8 million students in 12 000schools every day, according to CommercialAlert, a watchdog group.

Canadian schools have so far managed tokeep out Youth News Network, a 12–minuteeducational program that comes with two min-utes of commercials. The Canadian firm that cre-ated Youth News Network offered schools freecomputers, televisions, and VCRs if they pickedup YNN, but teachers, parents, and students“just said no.”

Exclusive contracts between soft drink com-panies and school cafeterias are also becomingpopular. The school gets a percentage of themoney from the soft drink sales, if it promises tosell only that brand name in the school. In theUnited States, the number of exclusive soft drinkcontracts in schools has increased 300 percentin the last two years. In Canada, many schoolshave opted for soft drink vending machines andare benefiting from exclusive contracts with softdrink companies.

Promotion of the brand name is also animportant marketing strategy. In both the UnitedStates and Canada, it is illegal to aim cigaretteadvertising directly at young people. The resulthas been that cigarette companies often promotemessages other than smoking, but rely on theassociation of their brand name with smoking.

In the Unites States, Phillip Morris recentlydistributed 13 million schoolbook covers as partof an anti-smoking educational campaign.Advertising Age noted that the design of thecover looked “alarmingly like a colorful pack ofcigarettes.” The textbook covers also promotethe Philip Morris brand name—synonymouswith tobacco and smoking—to children.

According to Commercial Alert, brandedbook jackets are an effective way to increasebrand recognition among schoolchildren.“When Philip Morris promotes its name amongchildren, it increases its brand recognition, andbuilds a relationship with them that can help selltobacco products,” says Commercial Alert. “Thisis especially troubling given that Marlboro, aPhilip Morris brand, is the Number One brandof cigarettes among children.”

While some parents are concerned about spe-cific products being marketed to youngsters, oth-ers are more concerned about children’s privacy

Eth ics/Soc ia l Respons ib i l i ty

F igure 7-19 A student drinks coke sold at a vendingmachine in a Vancouver school


in an age of electronic marketing techniques.Most of this concern focuses on the Internet.

Recently, the Canadian Marketing Associationamended its Code of Ethics to “better guide itsmembers and protect the interests of children.”The CMA noted that some marketers collect fartoo much personal information from children onthe Internet by asking them questions directly.The CMA now requires its members to • obtain consent (given explicitly, either

orally or in writing) from a child’s parent orguardian before collecting, retaining ortransferring a child’s personal information,e.g., a name, address or telephone number.

• use clear and simple language that takes intoaccount a child’s inexperience and credulity. In additional guidelines for parents,

“Protecting Children’s Privacy in the InformationAge,” the CMA pointed out that “most childrenare more cyber-savvy than their parents. Theytend to have a trusting and curious nature thatcan lead them to give up their personal infor-mation without realizing it.”

Another danger involved in on-line market-ing is the ability of marketers to track children’sbehaviour on-line. “Cookies” are files that areautomatically placed on a computer whensomeone is browsing. These files allow compa-nies to create profiles of people who visit theirsites. As a result of this profiling, marketers

learn what children are interested in and canaggressively pitch products to them. You caneliminate “cookies” by changing the options intheir browser so that a Web site must get per-mission to place a “cookie” on their computer.

A C T I V I T I E S

1 What are some of the ways that companies market their products to children?2 What policies has the Canadian Marketing Association put in place to protect children

while they are on the Internet?3 Working with a partner, research the issue of privacy on the Internet. Create a con-

cept web or other diagram to demonstrate the complexity of this issue. Post yourvisual on a bulletin board or school Web site along with a caption that offers a possi-ble solution for this problem.

F igure 7-20 Children may be more cyber-savvy thantheir parents, but they may also give up more personalinformation willingly.

C h a p t e r R e v i e w

P o i n t s t o R e m e m b e r• Marketing is the process of discovering what customers want and need and

then providing them with products that meet or exceed their expectations.

• A marketing environment results from the influence of several factors.

• The four components of the marketing mix are product, price, place, andpromotion.

• A channel of distribution is the path a product takes from the maker ordeveloper to the final consumer.

• The promotional mix is made up of a variety of approaches.

• Advertising informs the target market of goods and services and tries topersuade it to buy them.

• Advertising media includes print and electronic media as well as outdooradvertising.

A c t i v i t i e s

Knowledge/Unders tand ing

1 Create a comparison chart to demonstrate the advantages and disadvan-tages of the following types of advertising media: newspapers, maga-zines, radio, television, direct mail, and outdoor advertising.

2 List and give examples of the four Ps of the marketing mix.3 List the three main objectives of advertising and explain their purpose

in your own words.

Th ink ing/ Inqu i ry

1 Select two packages from similar types of products. One packageshould illustrate your idea of packaging that is not harmful to the envi-ronment. The other package should illustrate what you consider to bepackaging that is harmful to the environment. Discuss the reasons foryour selections and suggest ways to improve the harmful packaging.



analysing media


2 Collect examples of sales promotion material that you receive at homeover a one-week period. Bring the examples to class. With a partner,evaluate their effectiveness. Would you or your family buy any of theadvertised products? Why?

Communicat ion

1 Collect examples of sales promotion material that you receive at homeover a one-week period. Bring the examples to class. With a partner,evaluate their effectiveness. Would you or your family buy any of theadvertised products? Why?

Appl icat ion

1 Work with a small group of students to brainstorm a list of questionsthat could be included in a survey to determine which brand of shoesyoung consumers use most. Include questions that might help you findout why they prefer one brand over another. Prepare a one-page summary of the outcome of the survey, showingthe brands available, consumers’ choices, and the reasons for theirchoices. Which is the most popular brand for each product? And why?

In ternet Extens ion

1 Work with a partner to write a slogan and draft of a marketing plan fora new brand of product with which you are familiar. Research differentkinds of slogans on the Internet and decide which one you think wouldbe most effective for the kind of marketing your product will need.


critical thinking

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