SOLUTIONS MANUAL
PRINCIPLES OF MARKETING
19TH EDITION
CHAPTER NO. 01: MARKETING: CREATING CUSTOMER VALUE AND
ENGAGEMENT
END OF CHAPTER MATERIAL
Discussion and Critical Thinking
Discussion Questions
1-1. What is marketing, and what is the goal of the marketing process? (AACSB: Written and
Oral Communication)
Answer:
Marketing is the set of strategies and activities that companies use to acquire and engage
customers, build strong customer relationships, and create superior customer value so they
can capture value from customers in return.
The goal of the five-step marketing process is creating and capturing customer value. In the
first four steps, companies work to create customer value by: (1) understanding the
marketplace and customer needs and wants, (2) designing a customer value-driven
marketing strategy, (3) constructing an integrated marketing mix that delivers superior
value, and (4) engaging customers, building profitable relationships, and creating customer
delight. In the last step, companies reap the rewards of creating superior customer value by
(5) capturing value from customers to create profits and customer equity.
1-2. What are the five marketing orientations, and what do marketing managers prioritize when
operating under each? (AACSB: Written and Oral Communication)
Answer:
1. The production concept: Consumers will favor products that are available and highly
affordable; focus on improving production and distribution efficiency
2. The product concept: Consumers will favor products that are available and highly
affordable; focus on improving production and distribution efficiency
3. The selling concept: Consumers will not buy enough of the firm’s products unless the
firm undertakes a large-scale selling and promotion effort; focus on prospecting and
aggressive selling
4. The marketing concept: Achieving organizational goals depends on knowing the needs
and wants of target markets and delivering the desired satisfaction better than
competitors do; focus on customers and creating value for them
, 5. The societal marketing concept: Marketing strategy should deliver value to customers
in a way that maintains or improves both the consumer’s and society’s well-being;
focus on consumers’ wants, the company’s requirements, consumers’ long-run
interests, and society’s long-run interests
1-3. Marketers calculate and track customer-centered metrics to assess their performance, such
as customer lifetime value customer equity. How are these two measures related?
(AACSB: Written and Oral Communication; Reflective Thinking)
Answer:
Customer lifetime value is the value of the entire stream of purchases a customer makes
over a lifetime of patronage. Customer equity is a forward-looking measure of the total
combined customer lifetime values of all of the company’s current and potential customers.
It is, essentially, a measure of the future value of the company’s current customer base. The
more loyal the firm’s profitable customers, the higher its customer equity.
1-4. What are the two important questions a marketing manager must answer to design a
customer value–driven marketing strategy? Briefly describe why the answer to each
question is important. (AACSB: Written and Oral Communication; Reflective Thinking)
Answer:
The two questions a marketing manager must answer to design a winning marketing
strategy are (1) What customers will we serve? (What is our target market?) and (2) How
can we serve these customers best? (What is our value proposition?)
The first question relates to the decision about who the company will serve, which typically
involves segmenting the market (market segmentation) and selecting the segments to
pursue (target marketing). The company wants to select customers it can serve well and
profitably. The second question relates to the decision about how the company will serve
targeted customers. The company will differentiate (differentiation) its offerings and
position itself in the marketplace (positioning). Its value proposition is the set of beliefs or
values it promises to deliver to satisfy customer needs.
1-5. What is consumer-generated marketing? What are the challenges associated with
consumer-generated marketing? (AACSB: Written and Oral Communication; Reflective
Thinking)
Answer:
A growing part of the new customer dialogue is consumer-generated marketing, by which
consumers themselves are playing a bigger role in shaping their own brand experiences and
those of others. This might happen through uninvited or invited consumer-to-consumer
exchanges in blogs, video-sharing sites, and other digital forums. It can be costly and time-
consuming. Examples in the text include the #MyOreoCreation contest, the My Starbucks
Idea site, and #MakingArtWithHeinz. Encourage students to find their own recent
examples.
,1-6. What is customer brand advocacy? Why is it important to brand managers? (AACSB:
Written and Oral Communication; Reflective Thinking)
Answer:
Customer brand advocacy occurs when satisfied customers initiate favorable interactions
with others about a brand. Brands with strong relationships with customers benefit by
retaining the existing customer, which is usually less expensive than attracting a new
customer. Brands also benefit when the customers help inform others about the brand’s
positive attributes and why they have favorable attitudes toward the brand. Customers often
believe information that comes from other customers.
Critical Thinking Exercises
1-7. Visit www.lego.com and discuss how well LEGO balances the three considerations
underlying the societal marketing concept. To what extent has LEGO embodied the
societal marketing concept? (AACSB Written and Oral Communication; Analytical
Thinking)
Answer:
Although student answers will vary, there are many examples of LEGO embodying the
societal marketing concept. By visiting various tabs at www.lego.com, students can explore
the world of LEGO and appreciate its adherence to the societal marketing concept. LEGO
provides value to consumers through its dedication to the fascination, interest, and diversity
of its customers. LEGO’s profitability is fueled by product innovation. LEGO’s concern for
human welfare is demonstrated through its myriad sustainability programs focused on
children (for example, Build the Change and Re: Code), environment (Replay and
developing sustainable materials), and people (promoting a family-friendly workplace, and
a diverse and inclusive LEGO group).
1-8. Consider the four customer relationship groups in Figure 1.5. Realizing that no group will
be 100 percent satisfied, one can assume that some groups are likely to be more satisfied
than others. As a marketing manager for Chase banking services (see www.chase.com),
which groups would you aim to satisfy and profit from in the short run and, separately, in
the long run, and why? What would your relationship management strategy be for each
group in Figure 1.5? (AACSB: Written and Oral Communication; Reflective Thinking)
Answer:
Figure 1.5 in the chapter separates customer relationship groups into strangers (low
potential profitability and little projected loyalty), butterflies (potentially profitably but not
loyal), true friends (profitable and loyal), and barnacles (not profitable but very loyal). It
suggests different relationship management strategies for each group.
Customer satisfaction depends on Chase’s perceived performance relative to a buyer’s
expectations. When Chase fails to meet customers’ expectations, they are dissatisfied.
When Chase performs as expected, customers are satisfied. When Chase exceeds
expectations, customers are highly satisfied or delighted. Chase should aim to delight
customers by promising only what it can deliver and then delivering more than it promises.
, Because there is a low fit between what strangers need and want and what Chase offers,
Chase should not invest in them and should aim to make money on every transaction from
them. This explains why Chase may charge noncustomers for basic transactions, such as
cashing checks or having large bills broken down. When there is a good fit between what
Chase offers and what butterflies need and want, at least in the short term, Chase should
create satisfying and profitable transactions in the short time they are interested and then
move on and cease investing in these butterflies until they demonstrate interest again. This
is likely the case if there is a Chase bank near campus. The students are expected to be
customers for the duration of college but may leave afterward. Barnacles are highly loyal
but not very profitable because there is a limited fit between their needs and the company’s
offerings. Chase marketing managers should creatively develop marketing mixes that are
profitable if possible. These customers may have modest accounts and be uninterested in
credit and investing offerings Chase provides, but they are still loyal. The most desirable
group is true friends because there is a strong fit between their needs and what Chase
offers. Chase wants to make continuous relationship investments to delight these customers
and engage, nurture, retain, and grow them. These customers likely have large and active
accounts and use multiple products from Chase, such as checking and savings accounts,
credit lines, and investments.
In the short run, Chase should expect to be able to satisfy everyone except strangers.
However, they may only be able to profit from butterflies and true friends in the short run.
In the long run, they should be able to satisfy true friends and barnacles. However, only
true friends are expected to be profitable in the long run, as barnacles may never be
profitable and strangers will never be satisfied with the offering.
1-9. Visit www.starbucks.com. Scroll to the bottom of the page and notice how Starbucks is
currently connecting with customers via social media platforms (such as Pinterest and
Instagram) and through its proprietary app. Click on one or more of the platform icons to
view ways in which Starbucks is building and maintaining customer linkages while
illustrating customer value and providing information about the brand. Evaluate
Starbucks’s effectiveness in creating customer engagement through its consumer
touchpoints. Is the Starbucks brand message consistent across platforms? (AACSB:
Communication; Reflective Thinking)
Answer:
Student responses will depend on the social media channels they review. For example, a
recent visit to Starbucks’s Instagram page showed it had more than 17.4 million followers.
It responds to individual comments from consumers, which increases consumer
engagement. It features curated products from the stores (for example, drinks and music)
and grocery retailers (for example, homebrew) as well as playlists that are consonant with
the retail atmosphere, which further enhances customer engagement. Starbucks also utilizes
its app to help customers engage with the brand through easy ordering, payments options,
and gamified rewards. Although each platform has its own function, the message appears
to be consistent across the website, social media, and app.
Applications and Cases
PRINCIPLES OF MARKETING
19TH EDITION
CHAPTER NO. 01: MARKETING: CREATING CUSTOMER VALUE AND
ENGAGEMENT
END OF CHAPTER MATERIAL
Discussion and Critical Thinking
Discussion Questions
1-1. What is marketing, and what is the goal of the marketing process? (AACSB: Written and
Oral Communication)
Answer:
Marketing is the set of strategies and activities that companies use to acquire and engage
customers, build strong customer relationships, and create superior customer value so they
can capture value from customers in return.
The goal of the five-step marketing process is creating and capturing customer value. In the
first four steps, companies work to create customer value by: (1) understanding the
marketplace and customer needs and wants, (2) designing a customer value-driven
marketing strategy, (3) constructing an integrated marketing mix that delivers superior
value, and (4) engaging customers, building profitable relationships, and creating customer
delight. In the last step, companies reap the rewards of creating superior customer value by
(5) capturing value from customers to create profits and customer equity.
1-2. What are the five marketing orientations, and what do marketing managers prioritize when
operating under each? (AACSB: Written and Oral Communication)
Answer:
1. The production concept: Consumers will favor products that are available and highly
affordable; focus on improving production and distribution efficiency
2. The product concept: Consumers will favor products that are available and highly
affordable; focus on improving production and distribution efficiency
3. The selling concept: Consumers will not buy enough of the firm’s products unless the
firm undertakes a large-scale selling and promotion effort; focus on prospecting and
aggressive selling
4. The marketing concept: Achieving organizational goals depends on knowing the needs
and wants of target markets and delivering the desired satisfaction better than
competitors do; focus on customers and creating value for them
, 5. The societal marketing concept: Marketing strategy should deliver value to customers
in a way that maintains or improves both the consumer’s and society’s well-being;
focus on consumers’ wants, the company’s requirements, consumers’ long-run
interests, and society’s long-run interests
1-3. Marketers calculate and track customer-centered metrics to assess their performance, such
as customer lifetime value customer equity. How are these two measures related?
(AACSB: Written and Oral Communication; Reflective Thinking)
Answer:
Customer lifetime value is the value of the entire stream of purchases a customer makes
over a lifetime of patronage. Customer equity is a forward-looking measure of the total
combined customer lifetime values of all of the company’s current and potential customers.
It is, essentially, a measure of the future value of the company’s current customer base. The
more loyal the firm’s profitable customers, the higher its customer equity.
1-4. What are the two important questions a marketing manager must answer to design a
customer value–driven marketing strategy? Briefly describe why the answer to each
question is important. (AACSB: Written and Oral Communication; Reflective Thinking)
Answer:
The two questions a marketing manager must answer to design a winning marketing
strategy are (1) What customers will we serve? (What is our target market?) and (2) How
can we serve these customers best? (What is our value proposition?)
The first question relates to the decision about who the company will serve, which typically
involves segmenting the market (market segmentation) and selecting the segments to
pursue (target marketing). The company wants to select customers it can serve well and
profitably. The second question relates to the decision about how the company will serve
targeted customers. The company will differentiate (differentiation) its offerings and
position itself in the marketplace (positioning). Its value proposition is the set of beliefs or
values it promises to deliver to satisfy customer needs.
1-5. What is consumer-generated marketing? What are the challenges associated with
consumer-generated marketing? (AACSB: Written and Oral Communication; Reflective
Thinking)
Answer:
A growing part of the new customer dialogue is consumer-generated marketing, by which
consumers themselves are playing a bigger role in shaping their own brand experiences and
those of others. This might happen through uninvited or invited consumer-to-consumer
exchanges in blogs, video-sharing sites, and other digital forums. It can be costly and time-
consuming. Examples in the text include the #MyOreoCreation contest, the My Starbucks
Idea site, and #MakingArtWithHeinz. Encourage students to find their own recent
examples.
,1-6. What is customer brand advocacy? Why is it important to brand managers? (AACSB:
Written and Oral Communication; Reflective Thinking)
Answer:
Customer brand advocacy occurs when satisfied customers initiate favorable interactions
with others about a brand. Brands with strong relationships with customers benefit by
retaining the existing customer, which is usually less expensive than attracting a new
customer. Brands also benefit when the customers help inform others about the brand’s
positive attributes and why they have favorable attitudes toward the brand. Customers often
believe information that comes from other customers.
Critical Thinking Exercises
1-7. Visit www.lego.com and discuss how well LEGO balances the three considerations
underlying the societal marketing concept. To what extent has LEGO embodied the
societal marketing concept? (AACSB Written and Oral Communication; Analytical
Thinking)
Answer:
Although student answers will vary, there are many examples of LEGO embodying the
societal marketing concept. By visiting various tabs at www.lego.com, students can explore
the world of LEGO and appreciate its adherence to the societal marketing concept. LEGO
provides value to consumers through its dedication to the fascination, interest, and diversity
of its customers. LEGO’s profitability is fueled by product innovation. LEGO’s concern for
human welfare is demonstrated through its myriad sustainability programs focused on
children (for example, Build the Change and Re: Code), environment (Replay and
developing sustainable materials), and people (promoting a family-friendly workplace, and
a diverse and inclusive LEGO group).
1-8. Consider the four customer relationship groups in Figure 1.5. Realizing that no group will
be 100 percent satisfied, one can assume that some groups are likely to be more satisfied
than others. As a marketing manager for Chase banking services (see www.chase.com),
which groups would you aim to satisfy and profit from in the short run and, separately, in
the long run, and why? What would your relationship management strategy be for each
group in Figure 1.5? (AACSB: Written and Oral Communication; Reflective Thinking)
Answer:
Figure 1.5 in the chapter separates customer relationship groups into strangers (low
potential profitability and little projected loyalty), butterflies (potentially profitably but not
loyal), true friends (profitable and loyal), and barnacles (not profitable but very loyal). It
suggests different relationship management strategies for each group.
Customer satisfaction depends on Chase’s perceived performance relative to a buyer’s
expectations. When Chase fails to meet customers’ expectations, they are dissatisfied.
When Chase performs as expected, customers are satisfied. When Chase exceeds
expectations, customers are highly satisfied or delighted. Chase should aim to delight
customers by promising only what it can deliver and then delivering more than it promises.
, Because there is a low fit between what strangers need and want and what Chase offers,
Chase should not invest in them and should aim to make money on every transaction from
them. This explains why Chase may charge noncustomers for basic transactions, such as
cashing checks or having large bills broken down. When there is a good fit between what
Chase offers and what butterflies need and want, at least in the short term, Chase should
create satisfying and profitable transactions in the short time they are interested and then
move on and cease investing in these butterflies until they demonstrate interest again. This
is likely the case if there is a Chase bank near campus. The students are expected to be
customers for the duration of college but may leave afterward. Barnacles are highly loyal
but not very profitable because there is a limited fit between their needs and the company’s
offerings. Chase marketing managers should creatively develop marketing mixes that are
profitable if possible. These customers may have modest accounts and be uninterested in
credit and investing offerings Chase provides, but they are still loyal. The most desirable
group is true friends because there is a strong fit between their needs and what Chase
offers. Chase wants to make continuous relationship investments to delight these customers
and engage, nurture, retain, and grow them. These customers likely have large and active
accounts and use multiple products from Chase, such as checking and savings accounts,
credit lines, and investments.
In the short run, Chase should expect to be able to satisfy everyone except strangers.
However, they may only be able to profit from butterflies and true friends in the short run.
In the long run, they should be able to satisfy true friends and barnacles. However, only
true friends are expected to be profitable in the long run, as barnacles may never be
profitable and strangers will never be satisfied with the offering.
1-9. Visit www.starbucks.com. Scroll to the bottom of the page and notice how Starbucks is
currently connecting with customers via social media platforms (such as Pinterest and
Instagram) and through its proprietary app. Click on one or more of the platform icons to
view ways in which Starbucks is building and maintaining customer linkages while
illustrating customer value and providing information about the brand. Evaluate
Starbucks’s effectiveness in creating customer engagement through its consumer
touchpoints. Is the Starbucks brand message consistent across platforms? (AACSB:
Communication; Reflective Thinking)
Answer:
Student responses will depend on the social media channels they review. For example, a
recent visit to Starbucks’s Instagram page showed it had more than 17.4 million followers.
It responds to individual comments from consumers, which increases consumer
engagement. It features curated products from the stores (for example, drinks and music)
and grocery retailers (for example, homebrew) as well as playlists that are consonant with
the retail atmosphere, which further enhances customer engagement. Starbucks also utilizes
its app to help customers engage with the brand through easy ordering, payments options,
and gamified rewards. Although each platform has its own function, the message appears
to be consistent across the website, social media, and app.
Applications and Cases
