Newsletter for Instructors

M ar ch
Newsletter for Instructors
2011
De a r P rof e sso r ,
We are proud to provide you with the Grewal/Levy monthly newsletter to empower you to
provide current cutting edge examples in the classroom. New for this year, the newsletter is
accompanied by a Powerpoint file, seamlessly integrating these examples and discussion
questions. Some illustrative examples are incorporated directly into the newsletter. The
newsletter includes abstracts of current articles applicable to the text chapters. Each article
abstract is followed by discussion questions and short sample answers. The abstracts will
also be available on the Online Learning Center archived by chapter for easy reference. Each
newsletter also provides links to exciting and current videos and commercials. This newsletter
summarizes article abstracts for case discussions for the following topics:
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Bundling e-Books (Chapter 1, 2, 7, 10, 13, 14, 18)
Extending Private Labels to Beer (Chapter 2, 10, 11, 18)
The International Symbol of Love and Dessert: Fast Food? (Chapter 2, 3, 6, 7, 10, 18)
Putting Last Call First: Neiman Marcus’s Strategic Changes (Chapter 2, 8, 10, 16, 18)
Personalization: My My – My Macy’s (Chapter 8, 10, 16, 17, 18, 19)
Ethnic Preferences (Chapter 3, 4, 9, 10)
Sam’s Club: Smarter Discounts (Chapter 8, 9, 11, 17)
Entertaining Retailing (Chapter 5, 7, 16)
Big Boxes in Small Formats (Chapter 4, 8, 16)
Fast Growth in Fast Fashion (Chapter 3, 5, 10, 15)
Article/Chapter Index
Preview of the Connect Marketing available with Marketing 3e
NEW! Marketing 3e now available
Look for
below to link to the original article
If you are interested in the textbook please visit: www.mhhe.com/grewal3e.
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• COMMENTS?
CONTACT US
• TO COMMERCIALS
• TO VIDEOS
• TO ABSTRACTS
Commercials
Camaro– This is a Super bowl commercial.
Use with Chapter 10, ―Product, Branding, and Packaging Decisions,‖
Chapter 18, ―Advertising, Public Relations and Sales Promotions.‖
http://online.wsj.com/video/digits-tumblr-the-ticket-to-fashionweek/598FA7D3-39E4-4607-B03A-2D154F1E5543.html
Sketchers– This is a Super bowl commercial.
Use with Chapter 10, ―Product, Branding, and Packaging Decisions,‖ and
Chapter 18, ―Advertising, Public Relations and Sales Promotions.‖
http://online.wsj.com/video/super-bowl-ad-sketcher-trainer/AF3B04B7DD54-4583-A5BC-0619CF4F0CC9.html
eTrade– This is a Super bowl commercial.
Use with Chapter 10, ―Product, Branding, and Packaging Decisions,‖ and
Chapter 18, ―Advertising, Public Relations and Sales Promotions.‖
http://online.wsj.com/video/super-bowl-xlv-ad-e-trade-neezingcat/5C714AA2-D94C-431F-AD3D-03F77DE04A3B.html
Mercedes – This is a Super bowl commercial.
Use with Chapter 11, ―Developing New Products,‖ Chapter 18,
―Advertising, Public Relations, and Sales Promotion.‖
http://online.wsj.com/video/mercedes-ad-for-super-super-bowlxlv/F7E9AA7F-970F-485B-AE02-49C5961C5BA6.html
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Videos
The Following videos are from video.wsj.com and video.forbes.com
iPad etextbooks – McGraw-Hill is developing etextbooks for the iPad.
Use with Chapter 4, ―Analyzing the Marketing Environment,‖ Chapter 11, ―Developing
New Products,‖ and Chapter 17, ―Integrated Marketing Communications.‖
3:16 minutes
http://online.wsj.com/video/digits-an-apple-ipad-for-teachers/6CDBB0E9-B48C-4D05BB0B-F954BB14E90A.html
iPad 2 – This video describes the iPad 2 pricing compared to competing tablets.
Use with Chapter 10, ―Product, Branding, and Packaging Decisions,‖ and Chapter 11,
―Developing New Products.‖
1:37 minutes
http://online.wsj.com/video/steve-jobs-the-year-of-ipad-2/D065C8F4-12E3-4ECF8402-821FA0902606.html
PREVIEW the Power Point slides with embedded videos that complement the Monthly
Newsletter
Google changes Algorithm
Google changes its search algorithm to produce better search results for consumers.
Use with Chapter 4, ―Analyzing the Marketing Environment,‖ Chapter 5, ―Consumer
Behavior,‖ and Chapter 17, ―Integrated Marketing Communications.‖
5:00 minutes
http://online.wsj.com/video/digits-google-changes-search-algorithm/703E27DB-F9D5499B-9793-96A681307B6E.html
Bloggers have Access
The new blogging platform, Tumblr, gives fashion bloggers access to Fashion Week events.
Use with Chapter 17, ―Integrated Marketing Communications,‖ Chapter 18, ―Advertising,
Public Relations, and Sales Promotion,‖ and Chapter 19, ―Personal Selling and Sales
Management
3:25 minutes
http://online.wsj.com/video/digits-tumblr-the-ticket-to-fashion-week/598FA7D3-39E44607-B03A-2D154F1E5543.html
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Bundling e-Books
Use with Chapter 2, ―Developing Marketing Strategies,‖ Chapter 7, ―Global Marketing,‖ Chapter
10, ―Product, Branding, and Packaging Decisions,‖ Chapter 13, ―Pricing Concepts for
Establishing Value,‖ Chapter 14, ―Strategic Pricing Methods,‖ and Chapter 18, ―Advertising,
Sales Promotions, and Public Relations.‖
Jeffrey Trachtenberg, ―Publishers Bundle E-Books to Boost Sales, Promote
Authors,‖ The Wall Street Journal, February 11, 2011.
Larger book retailers such as Barnes & Noble often contain a special table offering ―buy
3, get 1 book free‖ or similar bundle promotions. Book publishers are following their lead
in the electronic book market by bundling titles in their own buy one, get one free offers.
Such offers encourage e-book customers to read more titles on their handheld devices,
which should help continue the spread of these innovations. Currently sales of digital
titles account for approximately 50 percent of the revenue earned by best sellers; book
publishers hope to increase these levels for their whole portfolio.
Rosetta Books therefore offers the well-known thriller I Am Legend (which was made
into a movie with Will Smith) with another, lesser known title by the same author,
Shrinking Man. Individually the books sell for $8.99 each, but together, they are just
$9.99. Other publishers group books from the same genre. One publisher explicitly looks
for older though still relatively recent releases to bundle; if customers buy a brand new
release, they can receive a book, published in 2004, that they probably will like for just a
few dollars more.
These incentives to purchase e-books are relatively easy for publishers to offer because it
is far less expensive to distribute e-books. However, some publishers continue to resist
the idea of discounting e-books, arguing
that just as is the case with regular
books, discounting fails to encourage
people to buy more while also taking
away from the integrity of the book.
Discussion Questions:
1. Would you be swayed by a
bundled e-book offer?
Assuming that a book publisher has good
analytics that enable it to recommend
books I would like, getting two books for
just a little more than the price of one
seems very appealing. However, if I bought
a serious biography, for example, and the
publisher offered to bundle it with the latest
teen romance, I would not be at all
interested.
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Extending Private Labels to Beer
Use with Chapter 2, ―Developing Marketing Strategies,‖ Chapter 10, ―Product, Branding, and
Packaging Decisions,‖ Chapter 11, ―Developing New Products,‖ and Chapter 18, ―Advertising,
Sales Promotion, and Public Relations.‖
David Kesmodel, ―Private-Label Beers Take a Shot at Earning Joe Sixpack’s
Respect,‖ The Wall Street Journal, February 8, 2011.
Private-label products sold by food, drug, and mass merchandise retailers have enjoyed a
2 percent increase in sales recently, even as branded products have suffered a 1 percent
decline. Thus retailers across the board are looking for other categories in which private
labels offer promise, and alcohol seemed like a perfect fit.
However, private-label beers have not fared as well as expected. Private-label alcoholic
beverages actually make up less than 1 percent of retail alcohol sales.
The reason cannot be the price: Supervalu sells 12-pack cans of Buck Range Light for
$5.99, less than an equivalent amount of Busch Light or Keystone Light. Walgreens‘
private-label beer is Big Flats 1901, and it sells for $2.99, right next to the Bud Light for
$6.99. These significant price differences for six packs reflect continuing increases in the
big beer companies‘ price levels. The scenario thus seems ideal for allowing low-cost,
private-label competitors to enter the market.
Yet MillersCoors retains a 29 percent share of the U.S. beer market, and
Anheuser-Busch takes up 48 percent. MillersCoors argues that retailers
should avoid stocking private-label beers, because doing so would
commoditize the beer category and harm everyone in the supply chain. Of
course, it also just might not want to competition of additional beer
brands.
Perhaps the best explanation for the failure of private-label beer though is
the consumption setting. Most people drink in social settings, which
means the brand is important as a symbol and signal to friends. The best
option may be the ―craft beers‖ category. There is no dominant national
brand, and customers often enjoy niche brands that offer special or unique
flavors. Costco thus has done comparatively well with its Kirkland
Signature beer, which it markets as a craft beer.
Discussion Questions:
1. List some possible reasons for the generally disappointing performance of
private-label beer.
Beer brands have quite strong brand recognition, so customers may prefer to buy a brand name
they recognize and know. Some consumers also likely consider alcohol a relatively high-risk
purchase category, so they prefer to have the reassurance of a national brand. Finally, some
customers likely buy their beer in particular locations (e.g., liquor store, convenience store), such
that they never think of checking Costco for beer purchase options.
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The International Symbol of Love and Dessert: Fast Food?
Use with Chapter 2, ―Developing Marketing Strategies,‖ Chapter 3, ―Marketing Ethics,‖ Chapter
6, ―Business-to-Business Marketing,‖ Chapter 7, ―Global Marketing,‖ Chapter 10, ―Product,
Branding, and Packaging Decisions,‖ Chapter 17, ―Integrated Marketing Communications,‖ and
Chapter 18, ―Advertising, Sales Promotions, and Public Relations.‖
Julie Jargon and Laurie Burkitt, ―KFC’s Recipe for Love in China: The Egg Tart,‖
The Wall Street Journal, February 14, 2011.
In the West, holidays such as Valentine‘s Day and Christmas represent huge sales
opportunities for a variety of sellers. Refusing to be limited by geography though, KFC
has found a way to increase its sales dramatically by introducing Western holidays to
other cultures.
In China for example, it sells an egg-based custard inside a pastry shell, called Egg Tarts.
Last year, it sold 300 million, accounting for $200 million in sales, and the vast majority
of them sold on and around Valentine‘s Day. KFC encourages other familiar Western
declarations of love, such as its love song promotion. Customers to can go online to
choose a song, date, time, and location, and KFC will make sure the song is playing when
the loving couple arrives.
KFC seems to have cornered the market on romance,
but its partner chain Pizza Hut (both are owned by
Yum Brands) dresses employees like Santa around
Christmas time and offers special holiday-themed
meals. Around Easter, employees sport bunny ears,
and children can paint eggs. Not to be left out,
Halloween and Father‘s Day prompt similarly
themed offerings.
The success of these promotions seems somewhat
surprising. First, cultural gaps can complicate the
celebration of an unfamiliar holiday. Second,
activists in other countries often protest the spread
and commercialization of Western holidays, which
seem to supplant their native celebrations. And yet
consumers apparently cannot get enough Egg Tarts.
Discussion Questions:
1. Does the success of these holiday-themed
promotions surprise you? Why or why not?
To a certain extent, the success does seem surprising. For
example, China generally discourages the practice of
Christianity, so celebrating that religion’s main holidays,
even if just with Santa and the Easter Bunny, seems unlikely. However, people everywhere enjoy
fun, silly celebrations, and the spread of Western culture has likely made them familiar with the
traditions of holidays such as Valentine’s Day. Go to top of document
Putting Last Call First: Neiman Marcus’s Strategic Changes
Use with Chapter 2, ―Developing Marketing Strategies,‖ Chapter 7, ―Global Marketing,‖ Chapter
8, ―Segmentation, Targeting, and Positioning,‖ Chapter 10, ―Product, Branding, and Packaging
Decisions,‖ Chapter 16, ―Retailing and Multichannel Marketing,‖ and Chapter 18, ―Advertising,
Sales Promotions, and Public Relations.‖
Rachel Dodes, ―Neiman Marcus Opens Customer Door Wider,‖ The Wall Street
Journal, February 15, 2011.
For most of its history, Neiman Marcus has focused on the 100,000 customers who spend
the most (i.e., today, more than $12,000 per year) in its stores, because these buyers
account for half of its sales. But the other half is growing, and so the retailer is
increasingly turning its attention to younger, less affluent customers.
This shift in attention is evident in several trends. For example, salesperson training now
includes the suggestion to show customers less expensive options, not just upsell them.
The chain also plans to open more Last Call clearance centers than regular department
stores in 2011. Overall, it is pursuing a lower average price point by adding less
expensive brands to its racks. In so doing, it can rely on designers, many of which already
have introduced less expensive lines, such as Z Zegna for Ermenegildo Zegna or Z Spoke
for Zac Posen.
These changes may seem remarkable for a firm so firmly connected to luxury
images. During the years between 2003 and 2007, Neiman‘s revenues were
astounding, reaching $650 in sales per square foot. The growth came mainly
from price increases, especially in the shoe and handbag categories, and the
company announced that it hoped to encourage at least five customers to spend
$1 billion per year at Neiman Marcus stores.
This goal seems like a pipe dream today, in an era in which even shoppers who still
purchase luxury brands simply are not buying as much. Accordingly, the retailer must
increase the number of new and different customer in its stores. At the same time, the
service-oriented Neiman Marcus cut its staff by 20 percent, as sales declined more than
30 percent during the recent economic crisis. It still has not regained its pre-recession
revenue levels.
Discussion Questions:
1. Conduct a SWOT analysis of Neiman Marcus‘s current positioning. Neiman Marcus still
enjoys excellent name recognition and a strong reputation for service and high-end items.
However, its high price ranges and luxury standard constitute weaknesses in a struggling
fiscal setting. It thus is pursuing opportunities among different segments of consumers,
including younger and less affluent groups. The threat of such tactics is that its existing
customers will stop regarding Neiman Marcus as an appealing luxury brand, such that its
margins and revenues could decline. Go to top of document
Personalization: My My—My Macy’s
Use with Chapter 2, ―Developing Marketing Strategies,‖ Chapter 8, ―Segmentation, Targeting,
and Positioning,‖ Chapter 10, ―Product, Branding, and Packaging Decisions,‖ Chapter 17,
―Integrated Marketing Communications,‖ and Chapter 18, ―Advertising, Sales Promotions, and
Public Relations,‖ and Chapter 19, ―Personal Selling and Sales Management.‖
Natalie Zmuda, ―Retailers on Quest to ReKindle the Personal Touch of a Bygone
Era,‖ Advertising Age, February 14, 2011.
In the movie classic Miracle on 34th Street, perhaps the biggest surprise was when
Kris Kringle put Macy‘s customers‘ needs first and sent a mother to a competitor
to find the fire engine her son demanded for the holiday. But with bigger stores
and more options, the intimate retail experience in which salespeople know the
preferences of their customers seemingly has disappeared. Macy‘s is trying to
bring back the miracle by emphasizing personalization in its My Macy‘s
program—a company-wide initiative to provide better service to local customers.
In particular, though Macy‘s remains centrally run, each store‘s assortment varies
somewhat, depending on the local market. The goal is to make Macy‘s relevant to
customers who shop their local stores to take advantage of local marketing
programs and purchase items appropriate to the location. A Chicago-area store
thus hosts the Macy‘s Beach Party program, targeting approximately 65,000
college students from 10 nearby campuses with fun spring break–oriented clothes
that will appeal to them now, as well as remind them to return when they need to
buy suits for their first job interviews.
This personalization effort also relies on knowledge about specific customers that may
not relate to their location. In line with its database analysis, Macy‘s therefore mailed
30,000 versions of its catalog to customers, depending on customer-specific information.
Each catalog version varied from 32 to 76 pages in length, encompassing more or fewer
pages of footwear or children‘s clothing, as necessary.
Targeting customers with promotions on products they like or are interested in is critical
to building a relationship with those customers. PetSmart might even have something to
teach Macy‘s: A customer buying crickets received a $2 coupon for live worms.
Confusing? The PetSmart coupon explained: ―Crickets are an important part of a reptile‘s
diet—but did you know that worms are an even better source of energy?‖ Thus the reptile
lover became intrigued and added worms to the menu for his beloved reptile.
Discussion Questions:
1. Are there any risks to such personalization strategies?
Although data can reveal general trends and relatively good predictions, there will always be
exceptions. A Macy’s store in Minnesota might not stock bathing suits in December, which means
that a vacationer readying for a tropical cruise will find few options. Or perhaps the cricket
customer actually was buying the insects for a science fair project, in which case the worm
coupon would likely be unappealing. Go to top of document
Ethnic Preferences
Use with Chapter 4, ―Analyzing the Marketing Environment,‖ Chapter 9, ―Marketing
Research,‖ Chapter 10, ―Product, Branding, and Packaging Decisions.‖
Julie Jargon, ―Pizza Chain Seeks Slice of Bicultural Pie,‖ WSJ.com, December 30,
2010.
Food marketers like Kraft Foods and Anheuser-Busch are making their products and advertising
more user-friendly for Hispanic consumers by adding Spanish translations to packaging and
selling lime-infused beer. The Dallas-based pizza chain, Pizza Patrón, is going the opposite
direction and adding English to their Spanish-language marketing materials. The shift comes in
response to focus groups and surveys that indicated the chain was attracting younger and more
multicultural customers.
When the first Pizza Patrón opened in 1986, it lured first-generation immigrants who tended to
order in Spanish. Recognizing the opportunity to differentiate Pizza Patrón from other pizza
chains, the company‘s founder focused on opening new stores in neighborhoods that were
predominantly Hispanic, offered menu choices likely to appeal to Hispanics, used Spanish on
menus and menu boards, and focused advertising on Spanish-speaking radio and television
stations. The strategy resulted in a chain that has grown to 100 stores in 25 years, and that
projects revenues of more than $40 million this year.
Now the Pizza Patrón restaurants are serving the children of these early customers. These young
diners, who frequently have purchasing power in the household because of their English language
skills, are more fully integrated into American culture. According to a recent U.S. Census Bureau
report, these young Hispanics are the fastest growing segment of the youth population in the
United States, making them a valuable resource for Pizza Patrón. As a result, Pizza Patrón is
shifting its marketing mix so that a significantly higher number of ads will run on Englishlanguage media outlets. New stores will open in neighborhoods that are less heavily Hispanic, as
well as in areas where Hispanics have moved.
Despite the appeal of this new audience, the chain doesn‘t want to run the risk of alienating its
existing customer base. As a result, the restaurants will continue to offer food which appeals to its
target clientele, including toppings like chorizo sausage and jalapeno peppers, churros, and limeand-pepper flavored chicken wings. While English will now be the primary language on menu
boards and printed materials, these marketing tools will still contain Spanish. The store also plans
new marketing efforts designed to appeal to their traditional clientele, including in-store displays
relating to holidays traditionally celebrated by Hispanics and Spanish-language phrases that mean
more to Hispanic customers than to those who simply translate the individual words.
Discussion Questions:
1. Why is Pizza Patrón developing a marketing strategy that is more English-language
based when its customer profile is primarily Hispanic? Although its customers are
primarily Hispanic, Pizza Patrón has discovered that it is now serving the children of
their original clientele, and that these youth are more integrated into the U.S. culture
than their parents. As a result, the new customers are comfortable with English as
well as with Spanish. These young Hispanics are the fastest growing segment of the
youth population in the U.S., which makes them an important source of revenue for
Pizza Patrón. Go to top of document
Sam’s Club: Smarter Discounts
Use with Chapter 8, ―Segmentation, Targeting, and Positioning,‖ Chapter 9, ―Marketing
Research,‖ Chapter 16, ―Retailing and Multichannel Marketing,‖ Chapter 17, ―Integrated
Marketing Communications,‖ and Chapter 18, ―Advertising, Sales Promotions, and Public
Relations.‖
Susan Reda, ―The Personal Touch,‖ Stores, January 2011.
When they purchase a membership in Sam‘s Club‘s eValues program, customers receive
customized, targeted offers from the retailer. These ―smart‖ discounts are more appealing
than generic promotional campaigns, because they pertain specifically to items the
customer already has expressed interest in through past
purchases.
How are retailers designing such personalized appeals?
In the case of Sam‘s Club, it relies on sophisticated data
mining techniques to collect information from every
transaction. This information not only enables it to
target customers better but also supports complex
evaluations of the best products to carry and which to
eliminate.
In turn, Sam‘s Club develops predictive analytics that
estimate what any particular customer will buy in the future. As a simple example, a
customer who buys newborn baby diapers might receive a coupon for wipes, to
encourage immediate purchase, and then later receive a coupon for the next diaper size,
to encourage future purchase. Each customer‘s offers get loaded onto his or her member
card, so there is no need to remember to bring discount coupons on the shopping trip.
Sam‘s Club designates its offers into three categories and ensures that customers receive
promotions in each: rewards, incentives for products the customer normally purchases,
and cross-category offers for items the customer has never bought. The response rates for
the targeted items are impressive. Whereas mass marketing usually offers yield a 1–2
percent response rate and segmented offers increase that rate to 5–6 percent, Sam‘s Club
has achieved a 20–30 percent response rate with its predictive analytics.
With the power of analytics, Sam‘s Club thus is inciting tremendous loyalty among
customers.
Discussion Questions:
1. List some of the benefits of data mining and analytics for retailers, beyond coupon targeting
By analyzing customer data closely, Sam’s Club can ensure that it stocks the most
popular items, eliminate weak sellers, improve its replenishment and forecasting
abilities, and achieve a better understanding of the voice of the customer.
Go to top of document
Entertaining Retailing
Use with Chapter 5, ―Consumer Behavior,‖ Chapter 7, ―Global Retailing,‖ Chapter 9, ―Marketing
Research,‖ and Chapter 16, ―Retailing and Multichannel Marketing.‖
Elizabeth Tyler, ―How IKEA Seduces Its Customers: By Trapping Them,‖ Time Magazine,
January 28, 2011
For many people, navigating the New York City subway system blindfolded might be
easier than getting out of IKEA once they‘ve ventured past the first display. Turns out
that maze-like interior may be intentional.
Customers unable to find the exit, the theory goes, are likely to stay longer and purchase
more. Shoppers hunting for a sofa may see the perfect side tables or remember they need
a lamp. Even more dangerous for the impulse shopper is the IKEA marketplace.
Shoppers have no choice other than to wend their way through marketplace aisles in their
search for the door, and many people drop smaller items like tableware or picture frames
into their cart. After all, the price is right, the opportunity is there, and threading back to
the item later may prove impossible.
In response to these claims, made by a London professor and posted on YouTube, IKEA
says that their store layout is intended to inspire ideas for every area of the home. There
are shortcuts, IKEA claims, and these shortcuts must exist for safety reasons.
Furthermore, while some customers complain about the store layout, others find it
helpful. It is not substantially different from other furniture stores, which display rooms
filled with furniture to help customers envision decorating possibilities. The largest
difference may be in directing traffic through the marketplace, where impulse purchases
abound. But arguably, this technique has its advantages as well: Consumers may pick up
items they need but wouldn‘t have thought to add to their list for furniture shopping. For
IKEA, the advantage is clear in increased sales.
Discussion Questions:
1. Describe IKEA‘s layout. IKEA’s displays are organized by room, so that shoppers
view living rooms in one area, bedrooms in another, kitchens in a third, and so on.
Each area includes different looks to help shoppers decide what will work best in
their home.
2. What are its advantages and disadvantages from the consumers‘ and IKEA‘s point of
view? The layout gives consumers a variety of home decorating options, grouped by
area of interest. Shoppers only interested in a dining room set, therefore, can bypass
displays relating to kitchens or bedrooms. Passing through the marketplace could be
helpful because the area contains small items for the home that shoppers may not
have added to their list because they were thinking more in terms of furniture than
light bulbs or cookware. However, many shoppers find the layout confusing,
frustrating, and even tortuous. IKEA believes that the store layout helps inspire
decorating ideas in their customers, and store managers would certainly not
complain that more time spent in the store results in more purchases. Go to top of
document
Big Boxes in Small Formats
Use with Chapter 4, ―Analyzing the Marketing Environment,‖ Chapter 8, ―Segmentation,
Targeting, and Positioning,‖ Chapter 16, ―Retailing and Multichannel Marketing.‖
Debra Hazel, ―Small Formats, Big Opportunities,‖ Chain Store Age, February 2011.
Whereas once retailers seemed dedicated to the notion that ―bigger is better,‖ today they
are embracing instead the maxim that ―good things come in small(er) packages.‖ These
moves appear to reflect dual influences of improved targeting and inventory efficiency.
Walmart may provide the most remarkable example. Its supercenters, which have
averaged 195,000 square feet, will lose significant real estate by opening with 180,000
square feet. The epitome of giant retail also is opening 30–40 smaller format stores in
urban markets, each of which ranges 30,000–60,000 square feet—or less than one-third
the size of regular Walmart stores.
Expanding into urban markets appears to be a key driver of shrinking stores. Retailers
need to maximize sales in the minimal retail space available in these areas, so they
undertake inventory analysis and eliminate categories that sell poorly in particular
markets. Few customers in a city store need lawn mowers for example. Along similar
lines, Bloomingdale‘s has eliminated its children‘s departments in stores patronized
mainly by an adult clientele.
Urban locations are appealing to retailers, because they imply a dense population in a
small trade area. Previously large retailers have been handicapped in their ability to move
into these promising locations, because they have mandated large store sizes. If they can
better control their inventory and shrink their stores though, they can take advantage of
new opportunities and appeal to new segments of customers.
Of course, many customers worry little about where the stores are located, because they
buy whatever they need online. In this case, the brick-and-mortar stores serve mainly to
provide a compelling customer experience, and they do not need to stock the high level of
inventory traditionally required to support their retail business. Thus instead of more
NikeTowns, Nike plans to open a 20,000 square foot store in Santa Monica Place that
focuses specifically on the experience factor, not merchandise sales. In another notable
shift, the new store will even have a flexible format that enables it to be moved to other
locations, as Nike deems necessary.
Discussion Questions:
1. Why have big box stores traditionally been so big? The business model for big box stores has
insisted that they must provide anything a customer could possibly want, all in one place. By
providing one-stop shopping capabilities, the big box retailers appeal to customers who are
pressed for time or don’t want to bother visiting various stores.
2. Why are they changing now? Customers more and more can find what they need, easily and
conveniently, online. Therefore many customers visit stores just to gain an enjoyable
experience, not to fulfill their practical needs. Go to top of document
Fast Growth for Fashion Fashion
Use with Chapter 3, ―Marketing Ethics,‖ Chapter 5, ―Consumer Behavior,‖ Chapter 10, ―Product,
Branding, and Packaging Decisions,‖ Chapter 15, ―Supply Chain Management,‖ Chapter 16,
―Retailing and Multichannel Marketing.‖
Susan Berfield, ―Forever 21’s Fast (and Loose) Fashion Empire,‖ Bloomberg Business
Week, January 20, 2011
The defining word for Forever 21 is fast: The company is fast to open new stores, fast to snap up
real estate vacated by less fortunate retailers, fast to produce low-cost imitations for trendy
fashions, and fast to turn over merchandise in their stores. This strategy has served the private,
family-owned company well, allowing Forever 21 to grow its square footage tenfold over a seven
year period, to increase its own brand offerings from one to six, and to post profits of $135
million in 2008. In the year ahead, Forever 21 plans to open at least 75 new stores in five
countries. However, the future may not be quite as bright as company executives hope.
Originating as a single 900-square foot store in Los Angeles, Forever 21 now sells its low-cost
trendy designs in prestigious locations such as Fifth Avenue. The company‘s retail strategy is to
offer every trend at far lower cost than designer items, and to keep the merchandise fresh (and the
demand high) by ordering limited quantities of a style, rotating stock daily, and by turning over
merchandise about twice as often as most other apparel retailers.
Expansion of this magnitude in a limited time frame is difficult to control, as retailers aiming for
this kind of meteoric growth in the past have discovered. Company leaders may burn out or get
sick, vendor relationships may fail, cutting costs or delivery times in manufacturing can lead to
quality problems and sweatshop conditions for workers, and consumer preferences may change.
Any one of these scenarios could cripple Forever 21. Most newcomers adopt more moderate
growth strategies for a reason: They have proved successful for the vast majority of retailers.
While Forever 21 may have found a new formula for success, it‘s far more likely the company
will encounter difficulties.
Already there have been signs of trouble in paradise. Forever 21 was sued in 2001 by workers
claiming unfair business practices and wage violations. Forever 21‘s response to these difficulties
was to claim they didn‘t know about and weren‘t responsible for factory working conditions.
Forever 21 faced new charges of copyright infringement from about 50 labels claiming the fastfashion retailer was copying their clothes. While the judge chided Forever 21 for the number of
lawsuits brought against it, one copyright law expert says that the company sees litigation as part
of their business model: The company‘s lawyer simply writes a check in response to claims rather
than implementing a change in company practices.
Discussion Questions:
1. What is Forever 21‘s retail strategy? Forever 21’s retail strategy is all about speed and price
for teenagers shopping for clothes. The company is growing rapidly, uncovers and imitates
new trends quickly, and gets these fashionable garments into stores in record time at prices
that are substantially lower than those of designer labels. Stores rotate and turn merchandise
far more frequently than other apparel retailers, inspiring customers to buy the moment they
see something they want and to return to the store frequently. New fashions are kept at the
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Preview the Power Point slides to complement the
Monthly Newsletter
Major points in each of the newsletter articles are summarized with a ―What Do
You Think‖ slide to follow.
Over 30 slides covering the cutting edge topics each month.
The slides can also be selectively used by dropping them into your existing class
Power Point.
Companies or products hyperlink to their corresponding Web site.
Teaching Note: The Monthly Newsletter is utilized the best if the Professor hands
out the newsletter abstracts to the students to read prior to the class. This way,
students are familiar with the material and prepared to discuss it.
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Article / Chapter INDEX
Articles
Bundling e-Books
Extending Private
Labels to Beer
The International
Symbol of Love and
Dessert: Fast Food?
Putting Last Call
First: Neiman
Marcus’s Strategic
Changes
Personalization: My
My – My Macy’s
Ethnic Preferences
Sam’s Club:
Smarter Discounts
Entertaining
Retailing
Big Boxes in Small
Formats
Fast Growth for
Fast Fashion
1
2
3
4
5
6
X
7
8
9
X
11
12
X
X
X
10
13
14
X
X
15
16 17 18
19
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Commercials
Camaro
Sketchers
eTrade
Mercedes
X
X
X
X
X
X
X
X
Videos
iPad textbooks
iPad 2
Google changes
Algorithm
Bloggers have
Access
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X
X
X
X
X
X
X
X
X
X
X
CONNECT MARKETING
www.mhhe.com/grewal3e
INTERACTIVE CONTENT
Following is a brief description and correlating example of each type of Interactive included in
Connect Marketing. All Interactives are automatically scored and stored in an instructor
gradebook, and they provide immediate feedback to students. Every assignment gives immediate
feedback at intermediate steps throughout each exercise, as well as comprehensive feedback at
the end of the assignment.
#1 VIDEO CASE
Video Cases have been designed to engage the student through interactive content that goes
beyond basic recall and multiple choice questions. Contrary to the standard videos on the market
which provide a passive learning experience, these videos force students to think critically on the
fly and apply and practice chapter concepts.
Each Video Case contains a 4-5 minute video profile of a real company/situation. As the video
plays, the student is asked a series of multiple choice questions requiring him/her to relate chapter
concepts to the video. Immediately following the video/question sequence, the student is asked a
series of 6 multiple choice questions to further assess his/her knowledge of the topic. This
exercise is designed to engage the student through engaging interactive content that goes beyond
basic recall and multiple choice.
Example – Chapter 1: Creating Value with Marketing.
The Video Case in this chapter covers M&M‘s. The student watches the video and answers
questions requiring him/her to relate chapter content to the video. For example, as Public
Relations Manager describes Mars M&M brand, students are asked to identify the functional need
of launching MyM&M.com, but at no point in the video does it explicitly give this answer.
Students must know and understand the concept of functional needs and be able to apply their
knowledge to this real-world business situation.
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#2 VIDEO Simulation
Each Video Sim contains a short video of a simulated scenario. As the scenario unfolds, the
student is asked a series of multiple choice questions requiring him/her to relate chapter content
to the scenario. Immediately following the video/question sequence, the student is asked a series
of 6 multiple choice questions to further assess his/her knowledge of the topic. This exercise is
designed to engage the student through engaging interactive content that goes beyond basic recall.
Example – Chapter 4: Analyzing the Environment
This Video Sim Interactive is set in a courtroom. In this case, the Defendant owns a restaurant
with a ―Healthy Bites‖ menu, advertising that the food is heart healthy. The Plaintiff‘s father
ordered off the ―Healthy Bites‖ menu daily, and he subsequently died of a heart attack. The
Plaintiff is claiming that this is false advertising, and the student is asked to evaluate the scenario
and answer questions relating chapter concepts to this simulated real-world situation. The great
thing about the Video Sims is that they really put the student in a situation that he/she may face
upon graduation, which requires the student to think through a scenario and apply chapter
concepts.
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#3 COMPREHENSION CASE
Comprehension Cases are designed to reinforce comprehension and application of key chapter
concepts within the context of a case. Each Comprehension Case is based on a specific
case/example from the text that illustrates key concepts from the chapter. Students are asked to
type free-form responses to three discussion questions, and they are then provided with 6
multiple-choice questions that bridge the content from the case to the mastery of chapter
concepts.
Example – Chapter 1: Overview of Marketing
In this example, students read a mini-case on eBay. After they read the case, they are asked a
series of three discussion questions.
1. Which of the four marketing orientations – Production, Sales, Marketing, or Value-Based
Marketing – best describes eBay?
2. Does eBay create greater value for buyers and sellers of collectibles, beyond that of
traditional channels?
3. How well does eBay facilitate the exchanges of goods? Does it have the same potential
for exchanges that involve services?
Note - Student answers to the discussion questions are captured, but they are not scored. This is
the only part of any Interactive that is not automatically scored.
Following the discussion questions, students are required to answer six multiple choice questions.
The multiple choice answers are scored automatically and stored in the gradebook.
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#4 DRAG AND DROP – Sequencing Activity
These fun and interactive drag and drop exercises motivate students to apply concepts within the
context of a scenario or case allowing them to think like a manager.
Timeline exercises are designed to reinforce either chronological or multi-step processes. Each
activity begins with a written overview of a topic from the text. The student is then provided with
a list of items that represent each of the steps of the overall process that he/she must place in
order on the provided timeline. If applicable, a 2nd task will be to assign the appropriate actions to
each task. After the timeline is completed and scored, the student is provided with 6 multiplechoice questions that assess his/her understanding of key chapter concepts.
Example – Chapter 2: Developing Marketing Strategies
In this Interactive Timeline, the student first reads a mini-case on Disney regarding how they
addressed declining attendance. The student is first required to put the steps of the strategic
marketing planning process in the correct order on the timeline. Next, the student is required to
place the actions Disney took to address this real situation on the timeline in the appropriate
place. Each of Disney‘s actions corresponds to a step in the strategic marketing planning process.
This exercise requires students to think through the steps in the strategic marketing planning
process, demonstrate knowledge of the process, and identify Disney‘s actions in the context of the
process.
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#5 DRAG AND DROP - Chart Population
Chart Population exercises require students to categorize information by assigning items to
specific fields within a chart. Students will then be asked to analyze the chart created with 6
multiple-choice questions.
Example – Chapter 4: Analyzing the Environment
In this example, students are required to identify attributes and trends associated with different
generational cohorts – Seniors, Baby Boomers, Gen X, Gen Y, and Tweens. For example, an
attribute that marketers must recognize about Baby Boomers is that they value their leisure time.
A current trend for baby boomers is that males in this group have a desire to maintain their youth,
so a new male spa industry has developed. After the students populate the chart with these
attributes and trends, they are given immediate feedback and asked six multiple choice questions,
requiring them to demonstrate deeper knowledge on this topic.
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#6 DECISION GENERATOR
This is a great activity as it requires the student to think in ways similar to managers making real
decisions on the job and developing strategies.
Decision Generators present students with 2-3 concepts from the text and a written case study that
illustrates the concepts presented. The student will then answer a series of questions to either
predict what the company will do or reach a decision on a certain issue (the ‗evidence‘ presented
will be very concrete to ensure a clearly correct response). Finally, the student is asked a series of
6 multiple choice questions to further assess his/her understanding of the topic.
Example – Chapter 2: Developing Marketing Strategies
In this example, the student is presented with a mini-case on a real-world company – FedEx
Kinko‘s. Students read the mini-case and are faced with a decision. FedEx Kinko‘s would like to
capture market share from more small business owners. The student is asked a series of 5
questions, from which his/her answers are used to develop a strategy. The answers are scored
right/wrong, as is the strategy the student chose. This is a great activity as it requires the student
to think in ways similar to marketers making real decisions on the job.
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#7 TOOLKIT – Break Even Analysis
The Toolkits are interactive assignments designed to provide further practice on everything from
the more difficult topics such as marketing math (break even analysis) to the fun topics such as
creating an ad.
The Toolkits are interactive assignments designed to provide further practice on key topics. The
toolkits vary in format and type. The topics covered in the toolkits include Creating an Ad,
Break-Even Analysis, SWOT, Consumer Decision Making, Vendor Analysis, Positioning Map,
Zone of Tolerance, Customer Lifetime Value, and Marketing ROI.
Example – Chapter 13: Pricing Concepts
This is an example of the Break-Even Analysis Toolkit. In this example, the student is presented
with information regarding his role at a shoe manufacturer that recently opened a new
manufacturing plant in Asia. The student is challenged with determining the break-even point for
the first year of operations in this new market. Note – the student is not required to actually
perform any calculations. Rather, he/she has to pick the data (e.g, fixed costs, variable costs,
price, etc.) out of the material presented in the text on screen, and then the student selects the
appropriate numbers from drop-down boxes in the formula area. As the student selects the
answer, the graph is automatically completed, thereby making the exercise very visual and nonthreatening. The student works through three scenarios in each Toolkit, and then his/her work is
scored and feedback is given immediately on the screen. Finally, the student is asked a series of
six multiple choice questions requiring reflection on the exercise.
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REPORTS
Track students’ progress and easily view reports. Questions mapped to AACSB skill areas,
Bloom‘s Taxonomy levels, difficulty level, and chapter learning objectives enable you to run
reports that assess specific learning outcomes. You get complete at-a-glance reports for individual
students or the whole class.
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eBook
McGraw-Hill reinvents the textbook learning experience for the modern student with
Connect Plus. A seamless integration of an eBook and Connect, Connect Plus provides all of
the Connect features plus the following:
• An integrated, printable eBook, allowing for anytime, anywhere access to the textbook.
• Dynamic links between the problems and questions you assign and the location in the
eBook where that problem or question is covered—and Connect for Management also
includes dynamic links between Interactives and LearnSmart.
• A powerful search function to pinpoint and connect key concepts in a snap.
• Pagination that exactly matches the printed text, allowing students to rely on Connect Plus
as the complete resource for your course.
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Connect Plus is now available with a new textbook at no
additional charge!
For more information about Connect, go to www.mcgrawhillconnect.com, or contact your
localMcGraw-Hill sales representative. McGraw-Hill is committed to your success in
preparing your students for success beyond your course. If you have any questions or
require immediate assistance, please contact our Digital CARE Team online at
www.mcgrawhillconnect.com/support or call 1-800-331-5094.
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