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CH 11] Business 101 The Basics 11-1

Chapter 11

Principals of MarketingLearning Goals

1. Explain how marketing's role in the exchangeprocess creates utility.

2. Identify the major functions of marketing.

3. Define the marketing concept.

4. Discuss how a marketing strategy is developed.

5. Explain the five environmental forces that influencemarketing decision making.

6. Discuss the concept of a market.

7. Outline why the study of consumer behavior isimportant to marketing.

8. Explain the marketing research function.

9. Outline and explain the bases used to segmentmarkets.

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11-2 Marketing Strategy [CH 11

Chapter OverviewMarketing covers every aspect of a business; it is business as a function and

includes everything from conception to consumption. Marketing links the firm withthe consumer and includes all three levels of productivityprimary, secondary andtertiary. For any business to succeed it must serve the needs of the consumer, this istrue for profit and nonprofit organizations alike. For any business to be successful it

only needs to find a need and fill it. Following the process of finding the needassures success, but it does not guarantee profitability. Market planning helps withprofitability. For any business to remain in the marketplace, it must be profitable. Ifthere is no profit, entrepreneurs will turn to other profitable activities. And thebusiness needs to deal with repeat customers to assure their success.

John Cash Penney would tell his store managers: "Either you or yourreplacement will greet the customer within the first 60 seconds." Sam Walton,founder of Wal-Mart stores, got trained with J .C. Penney and instituted customergreeting as an on-going service in Wal-Mart stores. Daton-Hudson, the parentcompany of Target stores, seeing the effectiveness of store greetings, instituted thegreeting policy to be competitive with Wal-Mart.

When people hear the term marketing many immediately think of advertising onbillboards, the radio and television, and periodicals. Some think of the selling

processes as marketing, describing it as the process of selling you something thatyou really did not want or refer to the advocacy that takes place to promote ideas aswith public service advertising (see Figure 11.1). Of course these are importantparts, but not the whole of marketing. The American Marketing Association definesmarketing as the process of planning and executing the conception, pricing,promotion, and distribution of ideas, goods, and services to create exchanges thatsatisfy individual and organizational objectives.

This chapter present an overview of basic marketing concepts: that marketingadds value in the exchange process, utility in marketing, the marketing function, andhow firms utilize the environmental factors that influence market planning andstrategies such as consumer behavior and market research.

Marketing adds value the Exchange Process

Marketing begins when the exchange becomes important to society. Exchangebecomes important when people recognize that they cannot produce or supplyeverything that they need, and in that realization they also recognize that they canproduce some goods or services more efficiently and profitably than other goodsthat they may need. In efficient production, they can over produce and then begin totrade (exchange). Exchange is the process by which two or more parties give

something of value to oneanother to satisfy a determinedneed.1 For example, a consumerwrites a check to Sears for$541.24 to purchase anIndustrial Shop Vaccum;obviously the exchange is the

money for the vacuum. Sowhere does marketing fit in?To simplify the explanation,

consider a society with onlytwo family units and eachcapable of producing their ownfood, clothing, and shelter. Arethere any unique qualities orskills that these family

marketingPlanning and executing theconception, pricing,promotion, and distribution ofideas goods, and services tocreate exchanges that satisfyindividual and organizationalobjectives.

exchangeProcess by which two ormore parties give somethingof value to one another tosatisfy felt needs.

Bus iness offers tosell products or

services

Consumers have needsand will give something

in exchange

Good service andcustomer satisfaction

Gives money, credit, labor,time, trade

EXCHANGE PROCESS

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production units posses? That is are there any expertise thatgives one unit an advantage over the other, or are they betterat producing products than the other. In our example assumethat one of the families is an expert at weaving clothing andthat the others are skilled farmers. Without exchange, eachfamily must satisfy all of its own food, clothing, and shelter

needs, even though the members excel in only one of theseareas.The exchange process allows the families to concentrate

production on their strengths and then to trade clothing forfood and vice versa. This specialization and concentration oflabor leads to increased total production and a higherstandard of living for both families. Unless each familymarkets its over-production the exchange process would notoccur. By concentrating in specialized abilities and engagingin exchange, the standard of living for all is raised.

Marketing Adds Value, it Creates UtilityThrough the activities that enable exchange to take

place, marketing adds value to products. This added value istermed utility, the want-satisfying power of a good orservice. For example, through the use of raw materials, laborand other inputs, confectioners produce ice cream, whichpossesses utility. By making ice cream available in aconsumable form and when the consumer wants an icecream, the function of marketing creates utility. Theconsumer will make buying decisions based on how well theice cream meets their demands.

In this process form utility is produced by convertingthe raw materials and other inputs into finished goods andservices. The marketing function also creates three otherutilities: time, place, andownership.

Time utility is created by having a good or service available when the consumerwants to purchase it. The modern society easily achieves time utility. To have milkand butter available, one need not have a milk cow and milk her twice a day.Instead one need only make a quick trip to the local grocery store pick up a gallonof milk and a pound of butter, and that need is met. Go to any drive-throughrestaurant and order hamburger, such as at McDonalds, place your order, pay yourmoney, proceed to the next window and your order is delivered to you in a paperbag. Fully prepared and ready to eat. Need film processed, take 35mm film toMotoPhoto Inc., they create time utility by providing one-hour film processing,digital film processing to DVD and a video studio in which customers can prepare avideo message in just 30 minutes.

Place utility is created by having goods or service available in a convenientlocation, easily accessible, when the consumer wants to purchase it. A symphonyperformance in a park illustrates this utility. Burger King, Wendy's, Taco Bell, and

other fast-food restaurants create place utility by opening franchises in locationsconvenient to their customers. Coca-Cola has in its marketing plan that no consumerwill be more than 100 feet away from a Coca-Cola, place utility is a part of theirmarketing plan.

Whenever one deals with the ownership of goods and services one is dealingwith ownership utility. It includes the pride of ownership as with real estate, andfirms are organized to arranging for an orderly transfer of ownership, selling andcreating ownership utility. Retailers create ownership utility by accepting currencyor credit-card payments in the transfer of goods. Marketing adds to the want-satisfying power of goods and services by performing eight basic functions.

Figure 11.1 Using Marketing to Advocate a Viewpoint

Source: Courtesy of American Lung Association

form utilityConverting rawmaterials and otherinputs into finishedgoods and services.

time utilityUtility created by makinggoods and servicesavailable when theconsumer wants topurchase them.

place utility

Utility created by makinggoods and servicesavailable where theconsumer wants topurchase them.

ownership utilityUtility created byarranging for transfer ofownership at the time ofpurchase.

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Eight Functions of MarketingMarketing entails a lot more than just advertising and selling, it is the whole

spectrum of business from conception to consumption. The neophyte thinks ofmarketing as beginning with the product they want to produce and sell. However,thinking from that locus of thought generally leads to failure, for marketing actuallyneeds to being with the consumer and becomes a complex activity that reaches intomany aspects of an organization. Marketing actually involves eight functions:buying, selling, transporting, storing, standardization and grading, financing, risktaking, and market information. These eight marketing functions add to the utilitycreated by marketing with some performed by manufacturers, some by wholesalers,and others by retailers. These functions are grouped asexchange functions, physicaldistribution functions, and facilitating functions.

Exchange functions of marketing is buying and selling. Buying is important asmarketers study purchasing habits of consumers for goods and services. Knowingconsumer purchasing behavior is critical to a firms success because they firm is able

to best decide how to meet the needs of their customers. Retail outlets will buy forthe fall season in March and the Christmas season in July. This amount of lead timerequires that they have an understanding of their buyers to make their own purchasedecisions. The Industrial market purchases replacement machinery, raw materialsand equipment upgrades to complete production deadlines and meet their customersneeds. Obviously, to succeed, these firms must sell their goods and services tosomeone. Their selling is accomplished through their promotional strategy;advertising, promotions, sales representatives to the client are the standard salesmethods.

Physical distribution functions include transportion and storing. Physicallymoving the product from manufacturer to outlet is transportation. This can occur atall levels of productivity; from primary producer (farmer) to secondary producer(food processor Green Giant canary); from secondary producer to tertiaryproducer (retail outlet A&P grocery store). In industrial production the retailercannot store all of the production, so warehousing of goods until the retailconsumer/ultimate consumer will take the goods becomes a factor. Storing isaccomplished at all three levels of productivity.

Facilitating functions is a term that is used to describe those acts that facilitatethe market place. Facilitating functions include financing, risk taking, securingmarket information, standardization and grading. These functions assist the marketplace perform the exchange function and the physical distribution function.

Extending credit to consumers, wholesalers, and retailers is the financingfunction. Sales always increases the ability to produce more goods and services.

Figure 11.2 The Functions of Marketing

Facilitating Functions:Standardization and GradingFinancingRisk TakingMarketing Information

Physical DistributionFunctions:

TransportingStoring

ExhangeFunctions:

BuyingSelling

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When the manufacturer receives funds from the wholesaler then the manufacturercan produce additional goods. When retailers extend credit to their customers, theymay increase total sales through credit arrangements.

Risk taking is dealing with the uncertainties of future market forces andconsumer behavior. Farmers grow soybeans without the guarantee that their will bea market for their crop and with the hope that their crop will be able to be harvestedwithout damage or loss. Wholesalers and retailers acquire inventory for resale onthe basis of their research of what retail consumers will buy. This action removes

the manufacturer's risk and gives it to marketing intermediaries. There is noguarantee for the automotive industry that their new car model will sell in quantityor as rapidly as they manufacture. Manufacturers accept risk when they scheduleproduction of a product speculatively before consumers have entered orders.

Standardization and grading deals with standardizing the products in terms ofuse, size, and form. Many industries standardize their products with modificationsto differentiate their product from the competition. There are many different tiremanufacturers from which one may select the same size, shape and functionality oftire for an automobile. Grading standards deals with the quality of the product. Eggsare sold in grocery stores by standardized size (weight) and grade. These standards,grades, and weight classes have been developed and are promulgated pursuant tothe authorities contained in the Agricultural Marketing Act of 1946, as amended, (7U.S.C. 1621et seq.) and are now maintained by the Agricultural Marketing Service,

U.S. Department of Agriculture. To illustrate: the standard size of eggs are X-Large,Large, Medium, Small and Pee-Wee, though one generally does not purchase thesmall and Pee-Wee in grocery stores. Egg grades that may be sold in retail outletsinclude AA, A, and B. The size of an egg is established by its weight and the gradeof the egg is established by its shell characteristics, clarity in candling, and freedomfrom defects and diseases.

Marketers collect and analyze market information to determine what will selland who will buy it. Marketers are concerned with the buyer behavior and consumerpatterns. Organizations that focus on discovering consumer needs and then

GRADE: AA

GRADE: A

GRADE: B

How a cracked out egg spreads on the plate via grade.

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developing goods and services to fill those needs have adopted a managerialapproach referred to as the marketing concept.

The Marketing ConceptWhen people engage in marketing activities, they have consumer needs and

desires clearly in mind. Beginning with the Industrial Revolution of the 19th centuryand the evolved ability to mass produce products, business emphasizedproduction.New manufactured goods were such a novelty, demand was present, and managersconcerned themselves with increased production and production efficiency ratherthan consumer preferences. During this period marketing concerned itself withtaking orders and shipping goods.

Into the 20th century, manufacturers discovered that their supply was catchingup with consumer demand and in some cases an overabundance of goods.Overabundance was especially prevalent after World War I, when Europeanproducers could go back to production, and this affected production in the UnitedStates. Needing to sell their products where consumers had increasing choices andtheir demand was declining, business had to change their emphasis from production(as it was mastered) to a sales emphasis. Companies began using sophisticated

advertising and sales techniques to increase demand for existing products.The shift from a seller's market to a buyer's market occured in the immediatepost-World War II era. Industry shifted from wartime production to consumer goodsto meet pent up demand because supplies were directed to war efforts andconsumers increased savings. This required a change in the way firms conductedtheir business. Firms began to develop a consumer orientation and the marketingconcept had started to evolve.

In the 1950s, General Electric was one of the first companies to state a policy ofcustomer satisfaction. In its 1952 annual report of that year gave one of the cleareststatements of the new approach to focus on customer satisfaction being integratedinto each phase of business:

(The concept) introduces the marketing man at the beginning ratherthan at the end of the production cycle, and integrates marketing into eachphase of the business. Thus, marketing, through its studies and research,

will establish for the engineer, the design and manufacturing man, what theconsumer wants in a given product, what price he is willing to pay, andwhere and when it will be wanted. Marketing will have authority in productplanning, production, scheduling, and inventory control, as well as in sales,distribution, and servicing of the product.2

The policy of customer satisfaction has become known as the marketingconcept. Themarketing concept can be defined as an organizationwide consumerorientation with the objective of achieving long-run success. Both profit-oriented

marketing conceptOrganizationwide consumerorientation with the objectiveof achieving long-runsuccess.

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and nonprofit organizations have adopted the marketing concept as a guide tooperating their enterprises. The basic goal is to target all of the organization's effortsby satisfying consumer needs.

How did the marketing concept evolve? Originally, most organizations areproduction oriented; their primary concern is just being able to supply their productor service. This situation is known as a seller's market: one characterized by

shortages. Later, as production meets and exceeds buyers needs, abuyer's marketevolves; this situation is characterized by adequate or even excess supplies.Marketing is then required to implement the exchange process.

Tennant Company, is a 130-year-old floor care equipment manufacturer thatstarted out as a lumber company. They made wood floors, formulated the waxes tobe put on the floors and developed mechanized methods to take the old waxes off.As Janet Dolan, CEO, and the 25th woman to head a New York Stock Exchangecompany says that their machine, almost like the razor blade and the razor, wasreally only a vehicle to sell more wax. The firm's consumer orientation extends toits customer service and promotional strategies. Consumers are encouraged to use atoll-free telephone number to ask questions and suggest product improvements. Inthis business are there fears of a slowing economy or recession? Of course, nobodylikes to do business in a slowing economy. Theres is less cyclical than at any timein the past because of the new segments they ventured into. They engage in morebusiness outside North America, with more business coming from direct service,and after-market. They have become a very responsive company. 3

Marketing in Nonprofit OrganizationsAdopting the marketing concept has become as important to nonprofit

organizations as it has to profit-seeking businesses. Increased competition andcutbacks in government funding prompt many nonprofit groups to conductmarketing research and study consumer behavior. Fund-raising groups such asUnited Way of America have studied the giving habits of baby boomers, peopleborn between 1946 and 1964, because this group represents a source of significantgrowth in charitable giving in the next two decades. Research indicates baby

seller's marketMarket situationcharacterized by

shortages.

buyer's marketMarket situationcharacterized by adequateor even excess supplies.

Figure 11.4 Organization Marketing

Source: Courtesy of the United Performing Arts Fund of Milwaukee, and Kloppenburg, Sitzer & Teich, Inc.

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boomers prefer to support causes related to individual needs, such as homelessnessand battered women, and want to know specific information about how theircontributions are spent. To gain the support of this group, United Way is fundingmore agencies that deal with homelessness, day care, and women's centers. UnitedWay also prepares newspaper stories that give detailed information about how fundsare allocated and benefit specific agencies.4

The nonprofit sector consists of some 900,000 organizations. They includemuseums, colleges and universities, symphony orchestras, churches and synagogs,government agencies, political parties, labor unions and service clubs. Nonprofitgroups may be classified as either public or private. San Francisco State Universityis a public, nonprofit organization, while the University of San Francisco, a Jesuitinstitution, is a private, nonprofit organization that is open to the public.

Like profit-seeking firms, nonprofit organizations may market a tangible good oran intangible service. The U.S. Postal Service, for example, offers stamps (atangible good) and mail delivery (an intangible service). Four types of nonprofitmarketing are person marketing, place marketing, idea marketing, and organizationmarketing.

Person marketing refers to efforts designed to cultivate the attention, interest,and preference of a target market toward a person.5 The marketing of a politicalcandidate is an example. Campaign managers conduct marketing research to

identify voters and financial supporters and then design promotions such asadvertising, fund-raising dinners, and political rallies to reach the voters and donors.

Place marketing refers to attempts to attract people to a particular area such asa city, state, or country. Several states, for example, have developed marketingcampaigns to attract foreign tourists. Illinois launched a television advertisingcampaign in Great Britain with the theme "America's best kept secret: Chicago" anddeveloped a fly-and-drive package to attract British tourists to the state. Floridaspent $1 million on television advertising campaigns in Argentina, Mexico, andVenezuela to attract Spanish-speaking tourists.6

Idea marketing refers to the marketing of a cause or social issue. Ideamarketing covers a wide range of issues, including birth defects, child abuse,physical fitness, an armed citizenry is a safe citizenry, overeating, and drunkendriving. Kiwanis International is a nonprofit community service group that promotes

civic participation in ones community though various charitable activites. Kiwanisgroups around the country sponsor Boys and Girls Scout troups, local educationalscholarships, the American Red Cross, Salvation Army and numerous othercommunity activities.

Organization marketing attempts to influence others to accept the goals of,receive the services of, or contribute in some way to an organization. For example,through advertisements such as the one in Figure 11.4, the United Performing ArtsFund of Milwaukee tries to persuade people to contribute funds to severalperforming-arts groups.

Developing a Marketing StrategyAll organizations, whether profit-oriented or nonprofit, need to develop a

marketing strategy to effectively reach consumers. This two-step process involves:

1. Studying, analyzing, and eventually selecting a firm's target market.2. Developing a marketing mix to satisfy the chosen target market.

Selecting a Target MarketConsumer needs and wants vary considerably, and no single organization has

the resources to satisfy the desires of all consumers. Therefore, the first decisionmarketers make when developing a marketing strategy is to select a target market. Atarget market is a group of consumers toward which a firm decides to direct itsmarketing efforts. Consider the following examples:

person marketingMarketing efforts designed tocultivate the attention,

interest, and preference of atarget market toward aperson.

place marketingMarketing efforts designed toattract people to a particulargeographical area.

idea marketingMarketing efforts designed topromote a cause or socialissue.

organization marketingMarketing efforts designed toinfluence others to accept thegoals of, receive the servicesof, or contribute in some wayto an organization.

target marketGroup of consumers towardwhich a firm decides to directits marketing efforts.

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Approaches to Selecting a Target Market

Market segmentation approach Total make approach

Chicken Automobiles

Tyson Foods Ford Motor Co.

Rolls-Royce

Compact Cars Luxury Cars

IntermediateCars

Sports Cars

Nestle targets its Oh Henry! candy bar at teens and young adults 12 to 24years old, but its Alpine White brand is targeted at upscale men and women18 to 34 years old.

Pier 1 Imports, a retailer of wicker furniture and home furnishings, targets 25-to 44-year-old women who are well traveled, have some college education,and have an annual income of $35,000.

The Saab target market consists of well-educated, 30- to 40-year-oldprofessionals and managers with household incomes of $50,000 to $100,000.

Sometimes an organization chooses several target markets for a given good orservice. A college or university might select several target markets for its $10million fund-raising campaign: alumni, wealthy individuals, foundations, andlocal businesses. Target marketing requires considerable research and analysis.

Developing a Marketing MixThe second step in the development of a marketing strategy is creating a

marketing mix to satisfy the needs of the organization's target market. Themarketing mix is a combination of the firm's product, pricing, distribution, and

promotion strategies. Marketers focus all of these strategies on the selectedconsumer segments.

Product strategy includes decisions about package, design, brand name,trademark, warranty, guarantee, product life cycle, and new-productdevelopments. Pricing strategy is one of the most difficult parts of marketingdecision making. It deals with the methods of setting profitable and justifiableprices. Both government regulations and public opinion must be considered inpricing decisions. Distribution strategy involves the physical distribution ofgoods and the selection of distribution channels, the organization of wholesaling

marketing mixCombination of a firm'sproduct, pricing,distribution, andpromotional strategies

focused on selectedconsumer segments.

product strategyElement of marketingdecision making that dealswith developing goodsand services, packagedesign, trademarks,warranties, and productlife cycles.

pricing strategyElement of marketingdecision making that dealswith methods of settingprofitable and justifiableprices.

distribution strategyElement of marketingdecision making involvingthe physical distribution ofgoods and the selection ofdistribution channels.

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Figure 11.5 The Marketing Environment

CompetitiveEnvironment

Political/Legal

Enviroment

Social/Cultural

Environment

EconomicEnvironment Technological

Product

Distribution Promotion

TargetMarket

Price

intermediaries and/or retailers who handle the product's distribution. Promotionalstrategy involves personal selling, advertising, and sales promotion tools. Theseelements must be skillfully blended to produce effective communication betweenthe firm and the marketplace.

The marketing mix is the mechanism that allows organizations to matchconsumer needs with product offerings. To illustrate how marketing mix elements

are combined to satisfy the needs of the target market, consider the marketingstrategy developed by Chuck Bennett, president and founder of Zymol Car CareProducts. Several years ago, Bennett introduced the world's most expensive carwax, a product targeted at "lovers of cars and fanatics." The wax is a natural,

Figure 11.6 Advertisement Appealing to a Current Social Trend

promotional strategyElement of marketingdecision making involvingthe blending of personalselling, advertising, andsales promotion tools toproduce effective

communication between thefirm and the marketplace.

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nonabrasive compound containing expensive oils and a coconut scent. It is producedin small batches and packaged in a high-tech container imported from Sweden. Theprice$22.95 for a 9-ounce containerreflects the product's prestige image andexpensive ingredients. Zymol is sold at automobile supply stores and through direct-response advertisements placed in publications read by target customers, such asBMW's Roundel, Mercedes'Star, and Porsche'sPanorama, as well as Autoweek andImport Parts & Accessories. Advertisements are designed to appeal to owners ofexpensive cars. In one ad, headlined "Not for the masses," the Zymol container restsin a brandy warmer next to a mound of caviar on a crystal plate. The advertising copycommunicates a simple message"Collected and enjoyed by the owners of the bestloved automobiles in the world.''7

The Marketing EnvironmentIn selecting a target market and developing a marketing mix, marketers must

consider certain environmental forces. The five dimensions of the marketingenvironment are competitive, political/legal, economic, technological, and social/cultural. As Figure 11.5 illustrates, these external forces provide the frameworkwithin which marketers plan product, pricing, distribution, and promotion strategiesaimed at the target market.

The Competitive Environment. Marketers must continually monitor themarketing activities of competing organizations. Analyzing the competition enablesan organization to devise a strategy that will give it a competitive edge. WhenRoadway Package Service decided to enter the small-package delivery field in themid-1980s, the firm's marketers studied the system used by United Parcel Service,the leader in national small-package delivery. As a result, RPS invested $43 millionin high-technology equipment that would provide customers with services notoffered by UPS, such as itemized computer billing, bar code scanners for packagetracing, and a toll-free telephone number for package tracking and claims processing.RPS set prices similar to those of UPS, but offered a volume discount of up to 8percent to attract new business, something the competition had never done. Bram

Johnson, the marketing vice-president of RPS, said, "We thought that if we could put

together a better product, we had a chance to compete."8The Political/Legal Environment. Governments at the federal, state, and local

levels have enacted laws that regulate many marketing activities, ranging frompackage labeling to product safety. Most laws are designed to maintain a competitiveenvironment and protect consumers. Marketers must not only be aware of the manylaws, but they must also comply with them. Noncompliance could result in fines,negative publicity, and expensive civil damage suits. Two telemarketing firms wereassessed fines and also barred from doing business in the state of New York becausethey violated a federal law that prohibits deceptive trade practices and misleadingadvertising. Consumers complained that the firms misled them by promisingexpensive prizes, such as a Mercedes-Benz car or a fur coat, in return for vitaminpurchases, but that the telemarketers never delivered the promised prizes.9

The Economic Environment.Economic factors such as inflation, unemployment,

and business cycles influence how much consumers are willing and able to spend andwhat they buy. Marketers' understanding of how economic factors influenceconsumer buying behavior allows them to adjust their marketing mix strategies. Forexample, during a recession, consumers are more apt to buy basic products with lowprices. Marketers might respond by lowering prices and increasing promotionalspending to stimulate demand. During times of properity, consumers are morewilling to purchase higher-priced goods and services, therefore, different marketingstrategies are constructed. Marketers might then consider raising prices, expandingdistribution, and expanding product lines.

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The Technological Environment. Changes in technology have a significantimpact on how marketers design, produce, price, distribute, and promote theirgoods and services. New technology can make a product obsolete; for example,calculators wiped out the market for slide rules. Adapting new technology can givean organization a competitive advantage and create new marketing opportunities.

The new technology of interactive television, which allows viewers to alterprograms, gives marketers the chance to advertise to very specific marketsegments.10

The Social/Cultural Environment. Because consumer values change, marketersmust keep abreast of these changes to ensure that their marketing strategies areeffective. The line of exercise clothing shown in the advertisement in Figure 11.6reflects a current social trendAmericans' concern with health and fitness. LikePuma, many other organizations have developed goods and services for our health-and fitness-conscious society. Supermarket shelves are lined with low-salt, low-cholesterol, and vitamin-fortified products. Weight-loss centers and aerobics classeshave sprouted up across the country, and many offer special programs for all ages,ranging from tots to seniors. Some firms target busy professionals by marketingexercise equipment for the home.

All organizations are affected by the external forces in the marketing

environment to some extent. And in many cases marketing managers have little orno control over them. But marketers must still monitor the forces and assess theimpact they have on their goods and services and marketing practices. In thefollowing sections, we will discuss how marketers assess consumer needs andsegment consumer and industrial markets.

What Is a Market?A market consist of people, buyers and sellers, with purchasing power and the

authority to buy. A market also consists of sellers ready to deliver goods andservices. A market consists of people; whether they are consumers, procurementofficers for local, state, or federal governments, or the purchasing department of anearby plant. But people do not make a market. Many college students may desire anew Porsche 944 Turbo, but few have the funds needed to complete this transaction.

A market consists of people with purchasing power and the authority to buy.One of the first rules the successful salesman learns is to determine which person ina firm has the authority to make purchase decisions. Salespeople have wasted hoursconvincing the director of purchasing about the merits of a particular product orgroup of products, only to discover that the ultimate buying decision actually restswith the design engineer.

Consumer and Industrial MarketsMarkets can be classified by the types of products they handle. The two major

categories of products are consumer and industrial goods. Consumer goods arethose goods and services purchased by the ultimate consumer for their own use.Most of the products you buytoilet paper, toothpaste, shoes, and hamburgersare consumer goods.

Industrial goodsare products purchased to be used, either directly or indirectly,in the production of other goods for resale. Cattle Feed, fertilizer, and steel areindustrial products. Hercules Inc. is a firm that markets a variety of industrial goodsthat other firms purchase to make their own products. The advertisement in Figure11.7 points out how firms that make adhesives can benefit by using a Herculesresin. Services can be classified as either consumer or industrial.

Sometimes the same product has different uses, creating a classificationdilemma. The bottle of ketchup purchased by the home shopper at the supermarketclearly is classified as a consumer good; yet ketchup purchased by McDonald's is

marketPeople with the authority,financial ability, andwillingness to purchase goodsand services.

consumer goodsGoods and services purchasedby the ultimate consumer fortheir own use.

industrial goodsGoods purchased to be useddirectly or indirectly in theproduction of other goods forresale.

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considered an industrial good. Properclassification of products should be based onthe purchaser and the reasons for buying theitem. A calculator purchased as a back-to-school gift is a consumer good, but a calculatorused by the manager of the nearby DairyQueen store is an industrial good.

Marketers must be familiar with a market'sbuying patterns and the purchasing behavior ofthose involved. This knowledge is criticalwhen marketers deal with consumer andindustrial goods and services.

Consumer BehaviorConsumer behavior can be defined as

"those acts of individuals directly involved inobtaining, using, and disposing of economicgoods and services, including the decisionprocesses that precede and determine theseacts.''11 Both consumers and industrialpurchasers are included in this definition.

The study of consumer behavior allowsmarketers to identify the critical segments in their marketplace and to developappropriate marketing strategies for reaching these people. Canada Dry Corporationstudied the behavior of people age 30 and older, the target market for its ginger ale,because this segment is crucial to the soft drink's sales growth. The studies revealedthat adults stay home more, are less interested in appearances, do not follow fads,value family life, and search for things that are simple and uncomplicated. Theanalysis helped Canada Dry marketers develop advertising that appeals to thesevalues. One television commercial features a woman who admits she soughtexcitement as a youth but now enjoys quiet evenings at home. Another showed acouple in their thirties turning down a night on the town for a relaxing at-home

dinner of Chinese take-out food and ginger ale. The campaign reversed a decliningsales trend and increased the ginger ale's market share. The study of consumerbehavior also prompted Canada Dry to reformulate its diet ginger ale, making it lesssweet and more gingery, because older drinkers prefer a drier, less sweet flavor.12

Influences on Consumer Buying BehaviorBoth personal and interpersonal factors influence consumer behavior. The

personal influences on consumer behavior are needs and motives, perceptions,attitudes, learned experiences, and self-concept. Marketers frequently usepsychological techniques to understand what motivates people to buy and to studyconsumers' emotional reactions to goods and services. McCann-Erickson, theadvertising agency for the American Express Gold Card account, wanted to find outhow consumers' perceptions of gold-card users and green-card users differed.

Consumers were asked to draw stick figures of each type of cardholder. One set ofsketches showed the gold-card user as a person with broad shoulders in an activestance and the green-card user as a "couch potato" watching television. Based onthese drawings and other research, the agency decided to market the premium goldcard as "a symbol of responsibility for people who have control over their lives andfinances.''13

The interpersonal determinants of consumer behavior include culturalinfluences, social influences, and family influences. The marketing approach usedby Polaroid Corporation in promoting its Cool Cam instant camera for children age

consumer behaviorThe acts of individuals inobtaining and usingeconomic goods andservices, including thedecision processes thatprecede and determine theseacts.

Figure 11.7 Marketing an Industrial Good

THE WRONG ADHESIVE CAN RUIN

A COMPANYS IMAGE OVERNIGHT.

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9 and older recognizes how both social andfamily influences affect buying decisions. Theadvertisement in Figure 11.8 explains thatchildren would want the Cool Cam for socialreasons, because it "will make them the envy ofall their friends" and "help them look cool."Parents, however, would buy the camera becausethey see it as "a learning tool that can helpchildren view their surroundings in ways theynever thought of." Cultural characteristics alsoaffect buying decisions. Many marketers areaware of the important role the family plays inthe cultures of Hispanics and Asian-Americansand use family-oriented themes in targeting thesegroups. For example; American Telephone &

Telegraph commercials using the theme "Thiscloseonly with AT&T" show Hispanicslonging for their relatives in their homeland andthen picking up the phone and calling them.14

Industrial purchasers also face a variety oforganizational influences. Many people play arole in an industrial purchase. A design engineermay be instrumental in setting the specificationsthat potential vendors must satisfy. A purchasingmanager invites selected companies to bid on thepurchase. A production supervisor is responsiblefor evaluating the operational aspects of theproposals that are received. And the vice-president of manufacturing makes the finalpurchase decision.

Consumer Decision MakingConsumer decision making follows a sequential process, shown in Figure 11.9.

The sequence begins with the recognition that a consumer behavior problem oropportunity exists. An example could be a consumer who needs a new pair of shoes.

The second step is search, during which the consumer seeks out informationabout the contemplated purchase. The alternatives (such as different brands) aredelineated and evaluated. The consumer attempts to get the best response to theirperceived problem or opportunity.

Finally a decision is reached and the transaction is completed. Later, consumersevaluate their experience with the purchase. This postmortem then becomes thefeedback that is considered in repeat purchase decisions. Both interpersonal andpersonal determinants of consumer behavior affect the various steps in thesequence.

Marketing ResearchHow should a firm collect information about potential target markets that could

be used in designing effective marketing mixes? For most organizations, the answeris marketing researchthe information function that links the marketer to themarketplace. Marketers conduct research to:

1. identify marketing opportunities and problems2. analyze competitors' strategies3. assess consumer behavior

marketing researchThe information functionthat links the marketer to themarketplace.

Figure 11.8 Social and Family Influences onBuying Behavior

Source: Courtesy of Polaroid Corporation.

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Figure 11.9 Steps in the Consumer Decision-Making Process

Source: James F. Engle, Roger D. Blackwell, and Paul W. Miniard, Consumer Behavior, 6th. ed.(Hinsdale, Il.; The Dryden Press, 1990).

Interpersonal determinants

Family influencesSocial influencesCultural influences

Personal DeterminantsNeeds and motivesPerceptionAttitudesLearningSelf-Concept

The Consumer Decision Process

Problem or Opportunity

Recognition

Purchase

Search

Evaluate Alternatives

Purchase Decision

Postpurchase EvaluationBuyers Remorse

Feedback

4. gauge the performance of existing products and package designs and assessthe potential of new ones

5. develop price, promotion, and distribution plans

Marketing research involves more than just collecting information. Researchersmust decide how to collect the information, interpret the results of research findings,and communicate the results to managers for their use in decision making.

Obtaining Marketing Research DataMarketing researchers are concerned with both internal and external data.

Internal data is generated within the organization. A tremendous amount of usefulinformation is available from financial records. Data can be obtained on changes inaccounts receivable, inventory levels, customers, product lines, profitability ofparticular divisions, or comparisons of sales by territories, sales staff, customers, orproduct lines.

External data is generated outside the firm and can be obtained from previouslypublished data. Trade associations, for example, publish reports on activities inparticular industries. Advertising agencies collect information on the audiences

internal dataData generated within theorganization.

external dataData generated outside theorganization.

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J anet Patterson, the research director of WBZ-TV in Boston, conducts a focus group interview onthe set ofRap-Around, a talk show for teenagers. Such interviews help the station develop news,entertainment, and public service programming that responds to viewers' interests and needs.

Photo source: Courtesy of Westinghouse Electric Corporation.

reached by various media. National marketing research firms offer information toorganizations on a subscription basis. For example, Information Resources Inc.offers a national scanning service that tracks consumer purchases of everysupermarket product sold with a Universal Product Code. The service integratesstore sales and household purchase data, giving marketers information on theirbrand's buyers, store loyalty, and general shopping behavior.

Federal, state, and local government publications are the marketingresearcher's most important data source. The most frequently used governmentstatistics are census data. Data is available on population characteristics such asage, gender, race, education levels, household size and composition, occupation,employment status, and income. Such data enables marketers to assess certainsegments of the population, anticipate changes in their markets, and identifymarkets with growth potential.

In addition to using published data, marketing researchers also gatherinformation by conducting observational studies and surveys. In observationalstudies, researchers actually view the actions of the respondents, either directly orthrough mechanical devices. Traffic counts are used to determine the best locationfor a new fast-food restaurant. Researchers use people meters to observetelevision audience viewership. People meters are electronic, remote controldevices that record the viewing habits of each household member. The viewerinformation is used to measure a program's success and to set advertising rates.

Some information cannot be obtained through observation. When informationis needed about attitudes, opinions, and motives, the researchers must askquestions by conducting a survey. Survey methods include telephone interviews,mail surveys, personal interviews, and focus group interviews. In a focus groupinterview, 8 to 12 individuals are brought together in one location to discuss asubject of interest. Focus groups are an important research tool because theyprovide marketers with insights into why consumers buy or do not buy their goods

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and services. Ideas generated during focus group interviews are especially helpful tomarketers in developing new products, improving existing products, and creatingeffective advertising campaigns.

Applying Marketing Research Data

The information collected by researchers is valuable only when it can be used tomake decisions that conform to an overall corporate plan. All marketing researchshould be done within the framework of the organization's strategic plan. Themarketing research activities of General Motors, for example, are directed towardimplementing a new corporate strategy of designing cars for specific marketsegments rather than for the mass market. To determine which features andaccessories each targeted segment desires, GM conducts focus group interviewswith consumers and dealers and mail and telephone surveys with GM car ownersand owners of competing models. GM uses the information it collects by creating amarket-research model that enables its engineers to apply the research findings tothe design of new cars. GM's research efforts resulted in about 75 improvements inits GM10 line of midsize cars. One improvement came from a focus group sessionthat showed consumers wanted a device more convenient than a small lever toadjust the front seats of a car. GM engineers responded to this desire by designing along metal bar that permits simple access for seat movement.15

Market SegmentationIt is important to be able to clearly define who one's customers are or are

intended to be. Market segmentation allows marketers to determine how and whypeople buy products and services.

Market segmentation is the process of dividing the total market into severalrelatively homogeneous groups. Both profit-oriented and nonprofit organizationsuse market segmentation to help define their target markets.

Figure 11.10 shows that markets can be segmented on a variety of bases.Consumer marketers can use demographic, geographic, psychographic, and benefitsegmentation. By contrast, industrial marketers use geographic segmentation,

product segmentation, and segmentation by end-use application.

Segmenting Consumer MarketsFactors like age, income, place of residence, life-style, and relative product use

have all been used to segment consumer markets. The most common basis forsegmenting consumer markets is the demographic approach. Geographicsegmentation has been used for centuries, but more recently marketers have turnedto psychographic and benefit segmentation.

Demographic Segmentation. Demographic segmentation divides markets on thebasis of demographic, or socioeconomic, characteristics. Gender, income, age,occupation, household size, education, and family life-cycle stage have all beenused in demographic segmentation. A great amount of data is available for assistingmarketers in segmenting potential markets on a demographic basis.

Recent studies indicate children are expanding their roles as consumers. About32 million consumers are children with an estimated purchasing power of $4.2billion for 5- to 12-year-olds and $30.5 billion for 13- to 18-year-olds. Children'sinfluence on their parents' buying decisions has also increased. The rise in thenumber of working couples and single-parent households gives children moreresponsibility in purchasing groceries. Firms in many industries are creatingproducts and developing promotions targeted at this demographic group. Kmartlaunched Walden Kids, a chain of bookstores for children in preschool to age 12.Oral-B Laboratories targets its Muppets and Sesame Street line of toothpastes at 2-

market segmentationProcess of dividing thetotal market into severalrelatively homogeneousgroups.

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Figure 11.10 Bases for Market Segmentation

Consumer Markets Industrial Markets

Demographic Geographic

Psychographic Benefit

Geographic Product

End-Use

to 8-year-olds and creates television commercials aimed at this age group.Marketing aimed at children not only emphasizes their current roles as consumers,but is also intended to build loyalty. First Women's Bank in New York opened abank for children in the F.A.O. Schwartz toy store. The president of First Women'ssays, "What better way to build loyalty to a bank than to get them while they areyoung." A similar strategy inspired the U.S. Army, Marines, and Air Force to placeads in children's magazines such as Boys' Life and Scholastic.16

Geographic Segmentation. Marketers often study population data in their

efforts to segment markets. In fact, geographic segmentation is one of the oldestsegmentation bases available. It can be extremely useful when consumerpreferences and purchase patterns for a product or service differ along regionallines. But one of the problems marketers face is that marketplaces keep shifting. Forinstance, there has been a decided movement in the U.S. population to the Sunbeltand coastal areas and westward.

Campbell Soup Company is an example of a consumer products firm thatsegments markets by geographic location. Campbell divides the country into 22geographic regions and develops products and promotions targeted at each definedarea. Region-specific products include creole soup, which is sold only in the South,and red-bean soup, which is marketed in areas with large populations of Hispanics.Because beer drinkers' tastes vary considerably in different parts of the country, G.Heileman Brewing Company markets a number of regional brands and develops

advertising for each region. In Pittsburgh, Heileman promotes its Iron City beerwith the campaign theme "You Can't Keep an Iron Man Down." Heileman takes adifferent approach in the southern half of Texas, an area hard-hit by recession, byusing the theme "The Lone Star Is on the Rise Again" to promote its Lone Starbrand.17

Psychographic Segmentation. Psychographic segmentation uses behavioral andlife-style profiles to segment markets. Psychographic analysis seeks to furtherdefine the various groups of individuals in American society. This enables firms totailor their marketing approach to a carefully chosen market segment. SRIInternational, a marketing research firm, conducted a study to identify lifestyle

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categories that would be useful in market segmentation. The resulting Values andLifestyles Program (VALS) categorizes individuals into nine life-styles: survivors,sustainers, belongers, emulators, achievers, I-am-me, experiential, societally conscious,and integrated.18

St. Rose Hospital of Hayward, California, decided to use the VALS concept ofsegmentation when consumer research indicated advertisements for its new

emergency-room services were ineffective. The hospital learned that the ads, whichfocused on the speed and cost of service, meant little to potential customers. St. Rose'smarket is dominated by "belongers," people who have traditional values and areintensely patriotic and sentimental. They respond to ads that soothe their anxiety andemphasize the predictability of health-care service. Armed with this knowledge, St.Rose developed a direct-mail advertising campaign that emphasized how many yearsthe hospital had been in business and used the reassuring theme of the hospital's abilityto keep "small worries from growing into big ones." The new campaign appealed to thetarget audience and quickly improved the hospital's business and enhanced its image.19

Benefit Segmentation. Market segments may also be identified by the benefitsbuyers may expect to derive from a good or service. In recent years, socks havebecome a fashion item, and many sock makers now market their goods as a fashionaccessory. But Foot-Joy's brand of Joy Walker Socks offers a benefit that targets amarket segment more concerned about foot comfort than fashion. In the advertisementin Figure 11.11, the company admits its socks are ugly but explains how they aredesigned to improve circulation, thus promising consumers the benefit of foot comfort.

When differences among competing goods or services are slight, firms may tailortheir promotions to highlight benefits that appeal to a certain market segment.Advertising by U.S. airlines takes this approach. In targeting business travelers,American Airlines created advertisements promoting its dependable, on-timeperformance. In the ads, American refers to itself as the "on-time machine" and reportsit has the fewest delayed flights of all major airlines. By contrast, United Air Linestargets business travelers with a campaign theme focusing on customer service"Rededicated to giving you the service you deserve." Thebenefit that US Air offers to business travelers is frequentscheduling of flights to key destinations.20

Segmenting Industrial MarketsIt is also possible to use market segmentation in

industrial markets. The procedure is similar to thatemployed in consumer markets, where the bulk of theresearch has been conducted.

The three approaches to industrial market segmentationare geographic segmentation, product segmentation, andsegmentation by end-use application. Geographicsegmentation would be useful in geographicallyconcentrated industries like aircraft manufacturing. Productsegmentation refers to developing products to meet specificbuyer requirements, such as the purchase of police cars.

Segmentation by end-use application considers how thebuyer will use the product or service. For instance,Northrop's F-20 was designed for export to nations thatwanted a low-cost, general-purpose fighter aircraft.Unfortunately for the manufacturer, the F-20 did not findany overseas customers. Segmentation is a market tool ofgrowing importance in industrial markets.

Figure 11.11 Segmenting Markets byProduct Benefits

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Summary of Learning Goals

1. Explain how marketing's role in the exchange process creates utility.Exchangeis the process by which two or more parties give something of value to one anotherto satisfy felt needs. Marketing is closely linked with the exchange process. It createsutilitythe want-satisfying power of a good or serviceby having the product

available when and where the consumer wants to buy it and by arranging for anorderly transfer of ownership. While production creates form utility, marketingcreates time, place, and ownership utility.

2. Identify the major functions of marketing. Marketing is more than just selling. Infact, there are eight basic functions of marketing: buying, selling, transporting,storing, standardization and grading, financing, risk taking, and acquiring marketinformation.

3. Define the marketing concept. The marketing concept is a managerial philosophythat requires an organizationwide consumer orientation with the objective ofachieving long-run success. Both profit-oriented and nonprofit organizations use themarketing concept.

4. Discuss how a marketing strategy is developed. The development of a marketingstrategy is a two-step process: (1) studying, analyzing, and eventually selecting theorganization's target marketthe group of customers toward which a firm decides todirect its marketing efforts, and (2) developing a marketing mix that will reach theorganization's target market. The marketing mix is a combination of the firm'sproduct, pricing, distribution, and promotional strategies.

5. Explain the five environmental forces that influence marketing decisionmaking.The five environmental forces influencing marketing decision making arecompetitive, political/legal, economic, technological, and social/ cultural. Marketersmust monitor these forces and assess the impact they may have on their goods andservices and marketing practices.

6. Discuss the concept of a market. A market consists of people with purchasing

power and the authority to buy. Markets can be classified on the basis of the types ofproducts they handle. Consumers goods are those goods and services purchased bythe ultimate consumer for their own use. Industrial goods are products purchased tobe used, directly or indirectly, in the production of other goods for resale.

7. Outline why the study of consumer behavior is important to marketing.Consumer behavior deals with why and how people buy things. This information iscrucial to marketers if they are to successfully market a product or service.Marketers must understand the personal and interpersonal influences on consumerbehavior as well as the organizational influences that affect industrial purchasers. Itis also important that marketers understand the steps involved in consumer decisionmaking: problem or opportunity recognition, search, evaluation, buying decision,transaction, and feedback.

8. Explain the marketing research function. Marketing research is the informationfunction that links the marketers to the marketplace. It involves collectinginformation, interpreting the results of research findings, and communicating theresults to managers for their use in decision making. Information can be obtainedfrom internal data, such as financial records, and external data published by thegovernment, trade associations, and research firms. Researchers also gatherinformation by conducting observational studies, telephone interviews, mail surveys,personal interviews, and focus group interviews. Marketing research enablesorganizations to identify marketing problems and opportunities, to assess

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competitors' strategies, to understand consumer buying behavior, and todevelop effective marketing mixes.

9. Outline and explain the bases used to segment markets. Consumer marketsmay be divided on four bases: demographic, geographic, psychographic, orbenefit segmentation. Demographic segmentation divides the market intogroups based on characteristics such as gender, age, income, occupation, andhousehold composition. Geographic segmentation divides the overall marketinto groups on the basis of population location. Psychographic segmentationuses behavioral and life-style profiles to segment markets. Benefit segmentationdivides a market on the basis of benefits consumers expect to derive from agood or service. Bases for segmenting industrial markets include geographicsegmentation, product segmentation, and segmentation by end-use application.

Questions for Discussion and Review

1. What type of utility is created by the following?a. Emery Air Freight's shipment of a fast-selling fad itemb. A Giant supermarketc. The finishing department of a furniture factoryd. An escrow company that handles the details of a property transfer

2. List various examples of marketers who are performing each of the eight basicfunctions of marketing. What, if anything, does this list suggest?

3. Swanson's Le Menu frozen food line is targeted at 25- to 54-year-olds with asalary of $30,000 or more in one- or two-person households. What type ofsegmentation strategy is being employed for this product? Discuss.

4. How successfully do you think the following organizations have adopted themarketing concept?a. Procter & Gambleb. The college you are attendingc. Texacod. Florida Power & Light

5. Identify the likely target markets of each of the following:a. Washington Redskinsb. Midas Mufflerc. H&R Block tax serviced. Cadillac DeVillee. Supercuts hair salons

6. Develop a marketing strategy for a Western Bar-B-Que restaurant in yourcommunity. Defend your marketing strategy decisions.

7. Explain how the competitive, political/legal, economic, technological, andsocial/cultural environments influence marketing strategy.

8. What is meant by a market? Distinguish between consumer and industrialmarkets.

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9. Outline the steps in the consumer decision-making process.

10. Describe the various methods of gathering survey data.

11. Match the four bases of consumer market segmentation(1) geographicsegmentation, (2) demographic segmentation, (3) psychographic segmentation,and (4) benefit segmentationwith the following segmentation variables:

____ a. Life-style____ b. Gender____ c. Urban/suburban/rural____ d. The social contacts provided by a private country club

END NOTES

1. Richard B. Bagozzi, "Marketing as an Organizational System of Exchange," Journal of Marketing, October 1974, p.77. Further work by Bagozzi on this subject appears in "Marketing as Exchange," Journal of Marketing, October

1975, pp. 32 - 39, and "Marketing as Exchange: A Theory of Transactions in the Marketplace," American BehavioralScientist, March-April 1978, pp. 535-536.

2. General Electric 1952 Annual Report, p. 21.3. CMM Staff, Giving customers what they want, CM Exclusive Q&A with Janet Dolan; Cleaning &

Maintenance Management magazine; http://www.cmmonline.com/article.asp?IndexID=6631540,March 2001

4. Mary-Paige Royer, "Please Give Generously, Okay?" American Demographics, June 1988, pp. 35 - 37, 58, 60.5. "Selling of Self," Marketing News, August 15, 1987, pp. 4, 11.6. Jamet Meyers, "States Lure Foreign Tourists," Advertising Age, March 14, 1988, p. 38.7. Amy Zipkin, "Car Lovers Take a Shine to Beauty Treatment," Advertising Age, May 16, 1988, pp. S-12S-13.8. Len Strazewski, "Path Clear for Roadway Expansion," Advertising Age, June 20, 1988 pp. S-9S-10.9. "Telemarketing Firms Barred from New York," Marketing News, October 24, 1988, p. 5.10. Otis Port, Katherine M. Hafner, and Robert Block, "TV That Lets the Viewer Call the Shots," Business Week, May

2, 1988, pp. 100-104.11. James F. Engel, Roger D. Blackwell, and Paul W. Miniard, Consumer Behavior, 5th ed. (Hinsdale, Ill.: The Dryden

Press, 1986), p. 5.12. Patricia Winters, "Using Pop Psychology?" Advertising Age, June 6, 1988, p. 70.13. Ronald Alsop, "Advertisers Put Consumers on the Couch," The Wall Street Journal, May 13, 1988, p. 19.14. Pete Engardio, Walecia Konrad, Ronald Grover, Jo Ellen Davis, and Lois Therrien, "Fast Times on Avenida

Madison," Business Week, June 6, 1988, pp. 62-67.15. David Kiley, "At Long Last, Detroit Gives Consumers the Right of Way," Adweek's Marketing Week, June 6, 1988,

pp. 26 - 28.16. Horst H. Stipp, "Children as Consumers, " American Demographics, February 1988, pp. 27 - 32; Joe Agnew,

"Children Come of Age as Consumers," Marketing News, December 4,1987, pp.8-9; and Laurie Freeman, "ColgateMakes Play for Kids' Market," Advertising Age, September 12, 1988, p.24. Quote is from Ellen Graham, "As KidsGain Power of Purse, Marketing Takes Aim at Them," The Wall Street Journal, J anuary 19, 1988, pp. 1, 23.

17. Ira Teinowitz, "Heileman Focuses on Regional Brands," Advertising Age, May 2, 1988, p. 81; and ChristineDonahue, "Campbell Soup May Restructure in Favor of Regional Marketing," Adweek's Marketing Week, May 4,1987, pp. 1, 8.

18. Aimee Stern, "Tired of Playing Mind Games," Adweek's Marketing Week July 13, 1987, pp. 1, 6.19. Michael Hiestand, "Value Judgment Cures Hospital's Image," Adweek's Marketing Week, February 29, 1988, p. 50.20. David Martindale, "Segmenting the Market," Adweek, September 12, 1988, p. F.P. 76.

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