Chapter Two
Interactive Exercise – Marketing Mix
Instructor Notes
Instructions for the Professor:
Overview:
The purpose of this exercise is to help students extend their conceptual knowledge of the marketing mix and its relationship to customer needs.
Students are shown a hypothetical description of a target market and a summary of that market’s needs. Students then make marketing mix decisions by selecting the product, price, place, and promotion strategy mostly likely to be successful given the nature of the target market, the product, and the industry in which it competes.
Concept Review:
The needs of the target market represent the starting point of marketing mix decision-making. Based on these needs, the nature of the product / service is typically determined first, as pricing, distribution, and promotion decisions are often contingent upon the nature of the product. Each element of the marketing mix requires consistency and compatibility with not only the needs of the target market, but with each of the other elements of the marketing mix as well.
Using the Exercise:
Initial Screen
1.A replication of exhibit 2-8 is provided as an introduction to the marketing mix elements.
The professor should introduce the exercise by reminding students that any marketing mix must be developed with the needs of the customer in mind.
The screen transitions briefly; the letter “C” will glow to indicate that is should be selected.
The professor clicks on the interior circle designated by the letter “C” to access the target market description.
Next Screen/Target Market Description
2.The screen pertaining to the target market description and needs appears.
The professor reads the description to the class.
The professor explains to students that they will be asked to develop a marketing mix for this target market and thus should keep these characteristics in mind as they make decisions.
The professor then clicks the screen to return to the Initial Screen showing Exhibit 2-8 and the Four P’s of the marketing mix.
Initial Screen #2
3.Exhibit 2-8 is again displayed.
The professor asks students to select a marketing mix element.
If the Promotion, Distribution, or Pricing mix element is selected, a buzzer will sound, and the instructor should explain that product / service decisions are typically made before pricing, promotion, and distribution.
The professor should then click on the Product element and the screen will transition to the Product Screen.
If the PRODUCT element of the marketing mix is selected initially, the Professor should praise the student and reiterate to the rest of the class that the Product strategy needs to be the first marketing mix decision. The screen transitions to the Product Screen.
Next Screen
4.The screen listing the selected marketing mix strategy choices appears.
The professor reads the choices to the class.
The professor then asks students to select the best product configuration choice in light of the target market characteristics and needs, and clicks on the letter the letter that corresponds to the student’s response.
If the wrong response is given, a buzzer will sound, and the letter designating the incorrect answer will be displayed in red. For details related to right and wrong answers, refer to the ANSWERS AND EXPLANATION section below.
The selection process is repeated until the correct answer is chosen, and a cash register “Ch-ching!” sound is heard. The slide automatically transitions back to the expanded initial screen as described below in step 5.
Expanded Initial Screen
5.Exhibit 2-8 is again displayed, with modifications
The marketing mix element that was previously chosen now includes a short phrase that illustrates the correct application of that mix element.
The remaining marketing mix elements transition briefly.
The professor explains that the remaining elements of the marketing mix typically are developed concurrently; however, for purposes of discussion, PLACE will be discussed next.
The PLACE portion of Exhibit 2-8 will fade in/out until selected.
The professor clicks within the PLACE section of the exhibit and the screen transitions.
Next Several Screens
- The procedures described in steps 4 and 5 are repeated until all marketing mix elements have been investigated. Following PLACE, the professor should select PRICE then finish the marketing mix by selecting PROMOTION. The appropriate selection will fade-in and out until selected.
Final Screen
- The final screen will show the completed Exhibit 2-8, displaying each marketing mix element along with an abbreviated description of the strategy illustrating that element.
- The professor clicks the “X” in the upper-right hand corner to end the exercise.
NOTE: Clicking the “X” at any time will end the exercise.
Answers and Explanations
PRODUCT
Answer A: INCORRECT
The powdered mix does not satisfy the consumer’s need for convenience as the time and effort required to prepare the beverage are substantial. It is also less desirable than other configurations as it requires additional ingredients (yogurt, milk, ice) and special equipment (blender) to be prepared.
Answer B: INCORRECT!
While this product configuration requires no additional ingredients for preparation, usage necessitates that a portion of the product be poured into some type of glass or squeeze bottle – less convenient than alternatives that come prepackaged in “drinkable” single serving size containers. Also, the gallon size may create difficulties in terms A) storage – limited room exists in most refrigerators to hold milk, juice, and 2-liter beverage containers; freezers are typically not sized to accommodate gallon containers; B) spoilage – once thawed, the product will have a limited life before spoilage occurs.
Answer C: INCORRECT
While more convenient to prepare than option A, this configuration still requires the addition of milk, and mixing effort. Easier to store in concentrate form than option B, less chance of spoilage due to smaller quantity prepared.
Answer D: CORRECT
Convenience is optimized for the busy person as the drink A) requires no mixing; B) can be easily stored as a six-pack or as individual 8 ounce containers in freezers, small office refrigerators, and coolers; C) is easy to use as it fits into auto drink holders and can be drunk from without the use of a separate glass. Furthermore, the ability to defrost/use individual containers as needed limits product spoilage.
PLACE STRATEGY
Answer A: INCORRECT
It is unlikely that this option would satisfy the target market’s desire for multiple flavors, as limited beverage storage capacity would prevent McDonald’s from stocking all but a very few flavors. Furthermore, it is even more probable that choosing to distribute in this fashion would not place the product at locations where the target market shops. Professional women seeking the benefits of low-fat products are highly unlikely to patronize McDonald’s on a regular basis.
Answer B: INCORRECT
Consumers are not accustomed to purchasing beverages over the Internet, nor are they likely to be content to wait several days for their order to arrive. Transportation logistics represent an additional hurdle as the milk and yogurt base of the product make it highly susceptible to temperature variations and thus spoilage. There will also be a substantial cost associated with opening this new channel of distribution.
Answer C: CORRECT
Minute Maid already has established channels of distribution through grocery, convenience store, and superstore retail outlets. Distributing in this fashion allows Minute Maid to capitalize on existing competencies while minimizing the costs of distributing a new product line. Furthermore, the wide variety of outlets through which the beverages are available (essentially any store with freezer cases) maximizes the convenience to the consumer by multiplying the number of possible locations from which it might be purchased. As many superstores and convenience stores are open 24 hours, it also maximizes convenience by providing time utility to the consumer as well.
Answer D: INCORRECT
Pursuing this distribution option would put Minute Maid into direct competition with existing Smoothie franchises while creating massive overhead and additional expense. Essentially, Minute Maid would sacrifice the opportunity to be first into the frozen food/grocery industry in favor of being last in to what is already a highly competitive drink drive-through market. The sheer resources required to launch this effort would necessarily limit both the number of locations built, and the hours of operation, ultimately resulting in less convenience for the consumer.
PRICE STRATEGY
Answer A: INCORRECT
Answer A provides an example of penetration pricing (pricing very low to build a high market share). This is not the best pricing strategy as direct competition does not currently exist within the grocery industry; thus higher prices can be charged to earn more profit per each unit sold. Furthermore, Minute Maid’s product contains very different ingredients than either Diet Coke or SlimFast, resulting in a higher cost per unit.
Answers B and C: INCORRECT
Does Minute Maid’s product compete directly with SlimFast? No, it does not. SlimFast targets primarily individuals interested in weight-loss, men as well as women, many of whom are overweight and older than the market targeted by Minute Maid. It can be argued that aside from this fact, Minute Maid warrants a higher price from a cost perspective (additional ingredients-yogurt), and because the target market (working professionals) have both the means and inclination to pay more for the benefits (convenience, multiple flavors, low-fat) that they desire. Furthermore, purchasing Smoothies from conventional Smoothie stores has conditioned these consumers to expect to pay more.
Answer D: CORRECT
Given the cost of the product, its lack of direct competition in the grocery industry, and the relative price insensitivity of this market, it would seem that a higher priced strategy is warranted.
PROMOTION
Answer A: CORRECT
Sampling is the premier sales promotion technique for introducing new products; the ads and product placement described will demonstrate to the target market how the product is convenient to acquire and use, and how the product is compatible with / can fit into their busy lifestyles.
Answer B: INCORRECT
Personal selling is extremely expensive and the cost of reaching consumers by this means far exceeds the sales that might possibly be generated. Personal selling is typically reserved for business-to-business transactions where there are fewer potential customers generating vastly larger orders (i.e., Minute Maid’s sales force selling direct to retailers such as Wal-Mart, Kroger, and 7-11.)
Answer C: INCORRECT
While excellent for reaching the male audience, sports sponsorships and advertising of the nature described will be less effective / efficient in reaching the female working professional. In fact, much of the exposure generated will be “wasted” on the male audience, resulting in a much higher cost per contact for the intended audience. It is possible that Internet banner advertising will assist in creating awareness and in the company’s branding efforts; however, this option taken as a whole is less likely to succeed than is Answer A.
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