News You Can Use
Last Updated: May 21, 1997
Keep up to date with happennings that affect the marketing world by selecting an article below:
Go back to 1-9 | Go to 25-32
Article 10: Is America Really Different?
Source: Inc Mag. State of Small Business Issue 1996 p. 108-09
Hot Link: http://www.inc.com/incmagazine/archives/27961081.html
Related Topic: Organizational Markets
Summary: Data showing the roles small businesses play in European economies compared with the role they play in the US economy. In Europe, businesses with less than 100 employees account for 57% of the jobs, vs. 39% in USA. In Europe, businesses with over 500 employees account for 28% of the jobs, vs. 46% in USA.
Class Application: Europe has many more small businesses than USA, relatively. If you were an American
exporter, how might this affect your decision to choose one of the 4 market-entry strategies?
Article 11: Errand Boy
Source: Inc. Magazine Nov. 1996 P.60
Hot Link: http://www.inc.com/incmagazine/archives/11960601.html
Related Topic: Distribution channels
Summary: Streamline Inc., does home delivery of consumer goods and services to a service box (consisting of a freezer, refrigerator, and a few open shelves) in each customer's basement or garage. The company provided service box is nominally free to the customer, but Streamline recoups the cost of the box in part through a $30. Monthly delivery fee. "Its our warehouse, our drivers, our trucks. We own everything. And we want to own the channel of sale directly into your home."
Class Application: Will consumers give drivers access to their garage or basement? What do food buyers
really want? What is different in the consumer purchase decision process that makes one consumer shop at a grocery
store, and another consumer to shop through Streamline?
Article 12: The Price is Right
Source: Forbes Dec 16, 1996 p. 52
Hot Link: http://www.forbes.com/forbes121696/5814052a.htm
Summary: Crown books surveyed close to 2000 customers. What do they look for in a bookstore? He found that low price was the first thing on their list. Coffee shops, as Barnes and Noble and Borders are offering? No. CDs? No. Just books, lots of them, and price. Some people want cappuccino with their book browsing. Others want their books straight and at low pric3s. Crown is betting that there are enough of the latter to make this strategy a success.
Class Application: Is Barnes and Noble in the coffee business to make a profit, or is it a psychological
influence on consumer behavior? If Crown is correct about just low prices, can they compete against the on-line
booksellers such as Amazon.com? What Decision process is different in a bookstore compared to an on-line seller?
Article 13: Digital Commerce
Source: Fortune December 9, 1996 P. 164
Hot Link: http://pathfinder.com/@@uqphvAVAJHsSrlqb/fortune/1996/961209/dig.html
Related Topics: Distribution channels
Summary: The killer app for Web commerce will be facilitating corporate buying and selling. Business to Business selling on the Web already is taking off under the auspices of online marts like Nets Inc. (www.industry.net) Headed by Jim Manzi, former CEO of Lotus, Nets recently announced an alliance with PNC Bank Corp in Pittsburgh to build a soup to nuts Web system for corporate purchases of everything from bolts to computers.
Classroom Application: Identify product categories that would and others that would not be suitable for bid
and sale on the Web, business to business. What is the advantage to the seller? To the buyer?
Article 14: Oil on Guccis
Source: Forbes Dec 2, 1996
Hot Link: http://www.forbes.com/forbes/120296/5813096a.htm
Related Topics: IPO
Summary: Bonded Motors' business is remanufacturing car and light truck engines. Workers take the metal cores of broken engines, retool worn surfaces and then refit them with new pistons and other parts. Much of the company's growth is fueled by the rapid consolidation in the retail auto parts market. Big stores such as Auto Zone and Pep boys are chasing small fries out of business. These big chains want bigger suppliers like Bonded. With 45 million cars over a decade old now cruising the country's highways, the market for remanufactured engines is humming. That's good news for Bonded.
Classroom Application: What other products/services can have their demand derived from the above fact
(45 million old cars). Order them in terms of which are the most closely derived.
Article 15: Storytelling: A New Way to Get Close to your Customer
Source: Fortune February 3, 1997 P. 102
Hot Link:http://pathfinder.com/@@uqphvAUAJHsSrlqb/fortune/1997/970203/cus.html
Related Topics: New Product Development
Summary: Surveys and focus groups can take you only so far. If you hope to understand what drives consumer behavior, search out the true-life anecdotes that reveal what your customers really want. It seems that traditional market research no longer works with an increasingly diverse and fickle customer base. Kimberly-Clark, DuPont and Intuit advocate far more probing research and are on to something called storytelling: eliciting real life stories from customers about how they behave and what they truly feel.
Class Application: Discuss the relative merits and deficiencies of anecdotal evidence compared to
quantitative measures of performance. For example, compare Pizza Hut to Domino's Pizza, asking for both quantitative
and storytelling feedback.
Article 16: Coaxing Meaning Out of Raw Data
Source: Business Week February 3, 1997 p. 134
Hot Link: http://www.businessweek.com/1997/05/b3512127.htm
Related Topics: Target Markets
Summary: Computers are everywhere, accumulating gigabytes galore. Yet it only seems harder to extract significance from the blizzard of numbers, facts, and stats. Data mining software has the smarts to see meaningful patterns and relationships that might otherwise take tens of man years to find. The payoffs can be huge as MCI is learning. MCI wants to keep its best customers. One way is to identify early those who might be considering jumping to a rival. If it can do that, the carrier can try to keep the customer with offers of special rates and services for example. US West wants to sell second and third lines in homes, but the carrier doesn't want to sink money into new switches and lines unless they can be certain that orders will really materialize. US West want to pinpoint customers who will not only respond to introductory offers but also will keep their second lines long enough for the carrier to make a profit.
Classroom Application: How does data mining fulfill the marketing function according to the definition in
arter 1? A large database is necessary to discover meaningful patterns. This is another example of economies of
scale.
Article 17: Making Lincolns Boomer Bait
Source: Business Week Dec. 30, 1996 P. 41
Hot Link: No link
Related Topics: market share
Summary: The young affluent buyers who once flocked to the Lincoln showrooms stopped coming years ago. The big luxury liners of the Eisenhower generation look stodgy to the baby boomers. Now, Lincoln is getting its own sport ute, which dealers hope will "at least get baby boomers to come into a Lincoln showroom." As Lincoln's traditional customer base heads for the end of the road, Ford is repositioning its luxury brand. Lincoln will offer the Navigator beginning in July for about $43,000. Based on the same chassis as the successful Expedition, Lincoln hopes Navigator buyers will average 48 years old some 19 years younger than the average buyer of its Lincoln Town Car.
Classroom Application: Lexus has already introduced a luxury ute, and Mercedes is planning to unveil one
soon. In the article, Chrysler President says that they have determined that the market for American luxury cars
is disappearing, and they have no plans to introduce a luxury ute. What demographic evidence is there that this
target market is large enough to support at least 3 competitors? At the same time, what demographic evidence is
there to support Chrysler's position?
Article 18: Showdown in Toontown
Source: Fortune October 28, 1996 P. 100
Hot Link: http://pathfinder.com/@@uqphvAUAJHsSrlqb/fortune/1996/961028/kid.html
Related Topics: Consumer Behavior
Summary: Children's television, once a sleepy business, is becoming as hotly competitive as the grownup variety. But how's a TV mogul to know what kids really want? Advertising revenue has increased an amazing 70% since 1991, to almost $700million last season. The market is further segmented. Nickelodeon with the largest market share has its own set of rules: no violence, no edge, no superheroes. This of course has left the door wide open for competitors. Fox Network reached respectable viewer levels by appealing to violence with the "Mighty Morphin Power Rangers". Disney is attempting to gain market share by offering programs that appeal to the "family", both children and adults at the same time.
Classroom Application: Given what the students learned about the changing marketing environment in arter 3,
make some creative, bold predictions about how children's programming might be segmented in the year 2020.
Article 19: The Rent a Car Jocks Who MadeEnterprise #1
Source: Fortune Oct 28, 1996 p. 125
Hot Link:http://pathfinder.com/@@uqphvAUAJHsSrlqb/fortune/1996/961028/ent.html
Related Topics: Buyer Behavior
Summary: While Avis and Hertz and lots of other companies were cutting each other's throats for the business and vacation travelers at airports, Enterprise invaded the hinterlands with a completely different strategy: It aims to provide a spare family car in the event yours has been hit, or has broken down or is in for routine maintenance. Enterprise sets up inexpensive rental offices just about everywhere. Once a new office opens, employees fan out to develop chummy relationships with the service managers of every good size auto dealership and body shop in the area. When your car is being towed, you are in no mood to figure out which rental company to use. Enterprise knows that the recommendations of the garage service managers will carry enormous weight, so it has turned courting them into an art form.
Classroom Application: What techniques can Avis and Hertz use to develop relationships with their own
customers? Continue to segment the rental car market. Which ones might be profitable?
Article 20: Another Fad Worth Killing
Source: Fortune Feb 3, 1997 p. 119
Hot Link: http://pathfinder.com/@@uqphvAUAJHsSrlqb/fortune/1997/970203/lea.html
Related Topics: Transfer pricing
Summary: The idea of "internal customers" might have made sense once, but it has become a dangerous delusion. Get rid of it before it distracts you from real customers. Business exists to create value, and value is defined only by real customers. A way is needed to carry the customer's voice, the voice of the business, deep into the organization. Quantum Corp. asks all major customers to fill out quarterly report cards. These provide detailed scores of how Quantum has performed on measures like product quality, responsiveness, meeting delivery dates, and so on. CEO Brown and the management team study them each quarter. A key benefit he says is that the report cards bring facts from the marketplace to help set in- house priorities.
Classroom Application: Using the UPS case at the end of arter 10, have the students create a report card
that can be used both as a tool for measuring performance, and also as a tool for uncovering customer needs.
Article 21: Development time is Money
Source: Business Week Jan 27, 1997 P. 6
Hot Link: No link
Related Topic: None
Summary: Not really an article. This is a stand alone chart showing the change in average development times from 1991 to 1996 for four different product categories: breakthrough products; new product lines; major product revisions; minor product revisions. Average Development times for each category has decreased over the time period.
Classroom Application: Some companies such as Hewlett-Packard and Xerox are benchmarked for their ability
to be on the cutting edge of technology and bring that technology to market in record times. Other companies, such
as IBM and Microsoft, are followers rather than leaders. They have a reputation of bringing new products to market
only after they have been proven by less powerful competitors. Discuss the advantages and disadvantages of each of
these as a marketing strategy.
Article 22: A Drink With an Attitude
Source: Forbes Feb 10, 1997 P. 112
Hot Link: http://www.forbes.com/forbes/97/0210/5903112a.htm
Related topics: Personal Selling
Summary: In 1989 two Brown University graduates began bottling Nantucket Nectars, a fruit drink made from peaches, sugar and water. Using a bottle-cap handpress, recycled wine bottles and canned and fresh fruit, they sold three flavors out of their 19 foot motorboat at Nantucket Harbor. Just a few years later sales are $30million. The flavor, taste and price is very similar to Snapple. The difference? The owners went straight to college campuses and sold an image of natural ingredients and bohemian youth. They pitched a tent at Ivy League Football games, giving away samples, promoting their product as the youthful healthy alternative to drinks sold by the big impersonal conglomerates.
Classroom Application: So far this company is successful. Snapple was initially too, but then faltered when
their success attracted competition. On pages 298-299 of the text are reasons for new product failures. If you were
one of the owners of Nantucket Nectars which of these reasons for failure would you be most concerned about right now?
Article 23: "Oh Yeah, They Also Serve Food"
Source: Business Week 24 February 1997 p. 60
Hot Link: No link
Related Topics: Target markets
Summary: The Co-Founder of Hard Rock Cafes is opening a new chain of cafes called House of Blues. He wants to replicate the legendary brand of Hard Rock. HOB is the first theme restaurant with a concert hall used a s production studio, and HOB linked programming can be found in every media outlet. "We are creating media properties as tools for the brand". It has ventures in records, publishing, concert tours, and radio. A syndicated TV show ran for a season, and a Web site broadcasts live concerts.
Class Application: What are the properties that made Hard
Rock such a successful brand? Can these same properties be applied to HOB? Is the target market
the same or different? Does this matter?
Article 24: "Brands with Feeling"
Source: Forbes 16 December, 1996 p. 292
Hot Link:http://www.forbes.com/forbes/121696/5814292a.htm
Related Topics: Product Positioning
Summary: In current advertising there is an obsession with images and feelings and an almost total lack of any concrete claims about the product itself. Nike, and the current series of Nissan car ads are examples. "they're not interested in hearing from us that we make better cars, they wouldn't believe us anyway." In a day when most cars are pretty much alike, the only real difference is in how the consumer sees the brand image. The product is no longer just what is between the bumpers, anybody can copy that. The brand is the only thing that is truly unique anymore.
Class Application: If these concept ads work, do they create a brand image, or
do they perpetuate an already existing brand? In what stage of the product life cycle would these
concept ads work best?
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