INSTRUCTOR'S SOLUTION MANUAL
MARKETING: AN INTRODUCTION
8TH CANADIAN EDITION
CHAPTER NO. 01: MARKETING: CREATING CONSUMER VALUE AND
ENGAGEMENT
END OF CHAPTER MATERIAL
DISCUSSION AND CRITICAL THINKING
DISCUSSION QUESTIONS
1.1 How does the marketing process create value for consumers and the company?
Answer:
Figure 1.1 presents a simple, five-step model of the marketing process for creating and
capturing customer value. In the first four steps, companies work to understand consumers,
create customer value, and build strong customer relationships. In the final step, companies
reap the rewards of creating superior customer value.
1.2 Discuss the concept of consumer satisfaction. How do customer relationship management
and consumer-perceived value impact consumer satisfaction?
Answer:
Customer relationship management is the process of building and maintaining profitable
customer relationships by delivering superior customer value and satisfaction. Consumer-
perceived value is the customer’s evaluation of the difference between all the benefits and
all the costs of a marketing offering relative to those of competing offers. Consumer
satisfaction depends on the product’s perceived performance relative to a buyer’s
expectations. If the product’s performance falls short of expectations, the customer is
dissatisfied. If performance matches expectations, the customer is satisfied. If performance
exceeds expectations, the customer is highly satisfied or delighted. Companies aim to
delight customers by promising only what they can deliver and then delivering more than
they promise.
1.3 What are the outcomes of creating superior consumer value? Why should companies pay
attention to these outcomes?
Answer:
By creating superior consumer value, the firm creates satisfied customers who stay loyal,
buy more, and advocate the brand to others. This, in turn, means greater long-run returns for
the firm. Keeping customers loyal makes good economic sense. Loyal customers spend
more and stay around longer. Companies want to not only create profitable customers but
also “own” them for life, earn a greater share of their purchases, and capture their consumer
lifetime value.
,Critical Thinking Exercises
1.4 Examine how your college or university creates value for the consumers it serves. How
does your institution differentiate and position itself? Outline its integrated marketing
program from your own perspective. Is it successful? Why or why not?
Answer:
Students’ responses will vary depending on their experiences. Students should discuss target
market, positioning, and customer relationship building, as well as addressing the marketing
mix elements of product, price, distribution, and promotion.
1.5 Visit https://tide.ca/en-ca. Scroll to the bottom of the page and notice how Tide is currently
connecting with customers on social media platforms including Facebook, Twitter,
Pinterest, and YouTube. Click on one or more of the platforms to view ways in which Tide
is building and maintaining customer linkages while illustrating value and providing
information about the brand. Evaluate Tide’s effectiveness in creating consumer
engagement.
Answer:
Student answers will vary based on their personal responses.
Students who visit YouTube will have access to Tide’s recent promotional videos. A visit to
Facebook will allow students to find tips on stain removal and folding clothes, information
about Earth Week, and offers from the company.
Mini Cases and Applications
Digital Marketing
The ALS Ice Bucket Challenge
In the summer of 2014, people with connections to ALS (Lou Gehrig’s disease) raised awareness of
the condition by urging people to post videos of themselves dumping buckets of ice water over their
heads and to challenge others to do the same. The efforts raised millions of dollars in online
donations to the ALS Association for enhanced research and patient services. This real-time
marketing campaign generated 17 million videos uploaded to social media platforms from 159
countries. Celebrities posting videos available on YouTube included Will Smith, Bill Gates, Oprah
Winfrey, and Mark Zuckerberg. The Ice Bucket Challenge generated 70 billion video views and
raised $220 million. The best part? Zero dollars were spent to promote the Ice Bucket Challenge yet
440 million people saw it. The ALS Association has now expanded the wildly successful challenge
into several opportunities to support the fight against ALS. For more information, visit www.
alsa.org/fight-als/challenge.
,1.6 Real-time marketing lets marketers digitally link brands to important moments in
consumers’ lives. Explain how real-time marketing was used in the Ice Bucket Challenge.
Why was this campaign successful?
Answer:
The Ice Bucket Challenge became an extremely successful viral campaign. It fed on itself as
more and more people, especially celebrities, posted videos and challenged others to take
the challenge. It became a “social event” to which many people could relate, even if they
were unfamiliar with ALS. It worked because it was fun, genuine, engaging, and provided a
feel-good benefit at little cost to participants.
1.7 Create a real-time marketing campaign for a product or service of your choice to create
consumer engagement using online, mobile, and social media. How would you measure the
success of your campaign?
Answer:
Students’ responses will vary. Focus should include timeliness, genuineness, and relevance to
the customers. Will success be measured by increased sales, increased awareness and
knowledge of the product or service, or some other measure?
Marketing Ethics
Is Big Brother Watching?
Retailers commonly track their customer’s shopping patterns and target them with special offers.
For example, Shoppers Drug Mart has the PC Optimum card that, when swiped at checkout, earns
the consumer points that can be redeemed for future purchases. Behind the scenes, Shoppers is
gathering data on consumers’ purchases and using aggregated data to target individuals with special
offers. Consumers who haven’t recently shopped may receive a discount in their email or an online
offer to incentivize them to return.
1.8 Is it right for marketers to track consumer purchases? Should consumers be concerned with
what information is being used?
Answer: Student answers may vary about the ethical aspect of tracking consumer purchases.
Students should consider how they provide that information to companies through their actions
online and in stores. Privacy aspects, particularly regarding financial or medical information,
should be considered.
1.9 Discuss other examples of marketers using data collection to sell products. Is this ethical?
Answer:
Student answers will vary. Most companies use data collection to market products. Data
collection is done by many retailers, service providers, and other organizations. For
example, insurance agents gather information about current and prospective clients in an
attempt to sell additional policies and financial products. Customers who search a company
website online for a particular product will most likely receive solicitations via email and
Internet banners from both the company and its competitors. It is ethical for companies to
, use the data they collect from a customer’s purchases? The question companies ask is
should they sell the data as a source of revenue or guard it to use as a competitive
advantage.
Marketing by the Numbers
Gillette Trying to Shave Off Competition
The Global Grooming division of Procter & Gamble, which includes Gillette, is experiencing
challenges from consumer trends and upstart digital competitors. Gillette and close competitor
Schick (an Edgewell brand) have focused on product innovation and higher prices. In 2021, Gillette
was the number one razor even though it had experienced years of market share erosion. Gillette
continued to innovate and sought to expand its reach by putting more emphasis on grooming tools,
purchasing the Bevel brand, which targets Black men, and attempting to acquire a razor startup that
sells blades and body-care products to young women. Still, Gillette faces threats posed by the
continuing consumer trend of “beardedness,” such as the “scruff” or “stubble” look associated with
the more casual workplace. It also faces threats from high-growth direct-to-consumer competitors
like Harry’s and Shavelogic. As a result, Gillette’s market share dropped from 70 percent in 2010 to
only about 50 percent in 2021. To protect its market leader position, Gillette periodically cuts prices
on its razors.
1.10 Assuming a contribution margin of 65 percent and current sales of $1.6 billion, what sales
would be necessary to break even (that is, maintain the current total contribution) on a 15
percent across-the-board price reduction? Refer to “Financial Analysis of Marketing
Tactics: Price Decrease” in Appendix 4: Marketing by the Numbers to learn how to perform
this analysis.
Answer:
Since price decreases by 15 percent, that means the contribution margin will decrease
because costs do not change with a price reduction. Therefore, to determine sales necessary
to maintain the current total contribution in terms of absolute dollars, we must first
determine the current total contribution:
Current total contribution = contribution margin × sales
= 0.65 × $1.6 billion = $1.04 billion
Though we do not know individual prices, we can base our analyses on 100 percent or price
equals $1.00. Because we know the contribution margin is 65 percent, the unit contribution
margin will equal $0.65 per unit and unit variable costs will equal $0.35 per unit if price
equals $1.00 per unit. Thus, we can see the effect on unit contribution margin and
contribution margin percentage when price is decreased 15 percent to $0.85 per unit ($1.00
x (1 – 0.15) = $0.85):
MARKETING: AN INTRODUCTION
8TH CANADIAN EDITION
CHAPTER NO. 01: MARKETING: CREATING CONSUMER VALUE AND
ENGAGEMENT
END OF CHAPTER MATERIAL
DISCUSSION AND CRITICAL THINKING
DISCUSSION QUESTIONS
1.1 How does the marketing process create value for consumers and the company?
Answer:
Figure 1.1 presents a simple, five-step model of the marketing process for creating and
capturing customer value. In the first four steps, companies work to understand consumers,
create customer value, and build strong customer relationships. In the final step, companies
reap the rewards of creating superior customer value.
1.2 Discuss the concept of consumer satisfaction. How do customer relationship management
and consumer-perceived value impact consumer satisfaction?
Answer:
Customer relationship management is the process of building and maintaining profitable
customer relationships by delivering superior customer value and satisfaction. Consumer-
perceived value is the customer’s evaluation of the difference between all the benefits and
all the costs of a marketing offering relative to those of competing offers. Consumer
satisfaction depends on the product’s perceived performance relative to a buyer’s
expectations. If the product’s performance falls short of expectations, the customer is
dissatisfied. If performance matches expectations, the customer is satisfied. If performance
exceeds expectations, the customer is highly satisfied or delighted. Companies aim to
delight customers by promising only what they can deliver and then delivering more than
they promise.
1.3 What are the outcomes of creating superior consumer value? Why should companies pay
attention to these outcomes?
Answer:
By creating superior consumer value, the firm creates satisfied customers who stay loyal,
buy more, and advocate the brand to others. This, in turn, means greater long-run returns for
the firm. Keeping customers loyal makes good economic sense. Loyal customers spend
more and stay around longer. Companies want to not only create profitable customers but
also “own” them for life, earn a greater share of their purchases, and capture their consumer
lifetime value.
,Critical Thinking Exercises
1.4 Examine how your college or university creates value for the consumers it serves. How
does your institution differentiate and position itself? Outline its integrated marketing
program from your own perspective. Is it successful? Why or why not?
Answer:
Students’ responses will vary depending on their experiences. Students should discuss target
market, positioning, and customer relationship building, as well as addressing the marketing
mix elements of product, price, distribution, and promotion.
1.5 Visit https://tide.ca/en-ca. Scroll to the bottom of the page and notice how Tide is currently
connecting with customers on social media platforms including Facebook, Twitter,
Pinterest, and YouTube. Click on one or more of the platforms to view ways in which Tide
is building and maintaining customer linkages while illustrating value and providing
information about the brand. Evaluate Tide’s effectiveness in creating consumer
engagement.
Answer:
Student answers will vary based on their personal responses.
Students who visit YouTube will have access to Tide’s recent promotional videos. A visit to
Facebook will allow students to find tips on stain removal and folding clothes, information
about Earth Week, and offers from the company.
Mini Cases and Applications
Digital Marketing
The ALS Ice Bucket Challenge
In the summer of 2014, people with connections to ALS (Lou Gehrig’s disease) raised awareness of
the condition by urging people to post videos of themselves dumping buckets of ice water over their
heads and to challenge others to do the same. The efforts raised millions of dollars in online
donations to the ALS Association for enhanced research and patient services. This real-time
marketing campaign generated 17 million videos uploaded to social media platforms from 159
countries. Celebrities posting videos available on YouTube included Will Smith, Bill Gates, Oprah
Winfrey, and Mark Zuckerberg. The Ice Bucket Challenge generated 70 billion video views and
raised $220 million. The best part? Zero dollars were spent to promote the Ice Bucket Challenge yet
440 million people saw it. The ALS Association has now expanded the wildly successful challenge
into several opportunities to support the fight against ALS. For more information, visit www.
alsa.org/fight-als/challenge.
,1.6 Real-time marketing lets marketers digitally link brands to important moments in
consumers’ lives. Explain how real-time marketing was used in the Ice Bucket Challenge.
Why was this campaign successful?
Answer:
The Ice Bucket Challenge became an extremely successful viral campaign. It fed on itself as
more and more people, especially celebrities, posted videos and challenged others to take
the challenge. It became a “social event” to which many people could relate, even if they
were unfamiliar with ALS. It worked because it was fun, genuine, engaging, and provided a
feel-good benefit at little cost to participants.
1.7 Create a real-time marketing campaign for a product or service of your choice to create
consumer engagement using online, mobile, and social media. How would you measure the
success of your campaign?
Answer:
Students’ responses will vary. Focus should include timeliness, genuineness, and relevance to
the customers. Will success be measured by increased sales, increased awareness and
knowledge of the product or service, or some other measure?
Marketing Ethics
Is Big Brother Watching?
Retailers commonly track their customer’s shopping patterns and target them with special offers.
For example, Shoppers Drug Mart has the PC Optimum card that, when swiped at checkout, earns
the consumer points that can be redeemed for future purchases. Behind the scenes, Shoppers is
gathering data on consumers’ purchases and using aggregated data to target individuals with special
offers. Consumers who haven’t recently shopped may receive a discount in their email or an online
offer to incentivize them to return.
1.8 Is it right for marketers to track consumer purchases? Should consumers be concerned with
what information is being used?
Answer: Student answers may vary about the ethical aspect of tracking consumer purchases.
Students should consider how they provide that information to companies through their actions
online and in stores. Privacy aspects, particularly regarding financial or medical information,
should be considered.
1.9 Discuss other examples of marketers using data collection to sell products. Is this ethical?
Answer:
Student answers will vary. Most companies use data collection to market products. Data
collection is done by many retailers, service providers, and other organizations. For
example, insurance agents gather information about current and prospective clients in an
attempt to sell additional policies and financial products. Customers who search a company
website online for a particular product will most likely receive solicitations via email and
Internet banners from both the company and its competitors. It is ethical for companies to
, use the data they collect from a customer’s purchases? The question companies ask is
should they sell the data as a source of revenue or guard it to use as a competitive
advantage.
Marketing by the Numbers
Gillette Trying to Shave Off Competition
The Global Grooming division of Procter & Gamble, which includes Gillette, is experiencing
challenges from consumer trends and upstart digital competitors. Gillette and close competitor
Schick (an Edgewell brand) have focused on product innovation and higher prices. In 2021, Gillette
was the number one razor even though it had experienced years of market share erosion. Gillette
continued to innovate and sought to expand its reach by putting more emphasis on grooming tools,
purchasing the Bevel brand, which targets Black men, and attempting to acquire a razor startup that
sells blades and body-care products to young women. Still, Gillette faces threats posed by the
continuing consumer trend of “beardedness,” such as the “scruff” or “stubble” look associated with
the more casual workplace. It also faces threats from high-growth direct-to-consumer competitors
like Harry’s and Shavelogic. As a result, Gillette’s market share dropped from 70 percent in 2010 to
only about 50 percent in 2021. To protect its market leader position, Gillette periodically cuts prices
on its razors.
1.10 Assuming a contribution margin of 65 percent and current sales of $1.6 billion, what sales
would be necessary to break even (that is, maintain the current total contribution) on a 15
percent across-the-board price reduction? Refer to “Financial Analysis of Marketing
Tactics: Price Decrease” in Appendix 4: Marketing by the Numbers to learn how to perform
this analysis.
Answer:
Since price decreases by 15 percent, that means the contribution margin will decrease
because costs do not change with a price reduction. Therefore, to determine sales necessary
to maintain the current total contribution in terms of absolute dollars, we must first
determine the current total contribution:
Current total contribution = contribution margin × sales
= 0.65 × $1.6 billion = $1.04 billion
Though we do not know individual prices, we can base our analyses on 100 percent or price
equals $1.00. Because we know the contribution margin is 65 percent, the unit contribution
margin will equal $0.65 per unit and unit variable costs will equal $0.35 per unit if price
equals $1.00 per unit. Thus, we can see the effect on unit contribution margin and
contribution margin percentage when price is decreased 15 percent to $0.85 per unit ($1.00
x (1 – 0.15) = $0.85):
