These are actual answers that were submitted excepting for some editorial changes.
1. A friend has just inherited a bottling plant . . .
In the final analysis, the question that must be answered is: Can a carbonated iced tea drink be sold at an acceptable financial profit? The answer to this seemingly simple question requires the understanding of many elements that culminate in that final act of exchange between a buyer and a seller.
A buyer is motivated to engage in the transaction by the level of perception that the good or service offered by the seller satisfies a need or needs. The other side of the transaction is the profit generated by the exchange that contributes to the continued existence of the seller. A successful exchange is one in which the needs of both parties are met.
The market transactions operate within an environment. The environment includes such things as technology, competition, government regulation, cultural norms and values, and economics. For the introduction of a "new" product such as a carbonated ice tea drink to be successful, one must account for the impact of these environmental factors.
The factor that comes to mind foremost would be competition. Who are the competitors for this potential product? The direct competitors would be the iced tea products currently on the market: Nestea, Lipton, Snapple, and Arizona Tea, for example. In addition, all non-alcoholic beverages would be competition.
The beverage market is a mature one characterized by intense competition. (A mature market, by definition of the concept of product life cycle, has limited market growth with high price pressure due to competition.) This competition would significantly impact price and distribution (access to shelf space and vending machine cites). How is the product to be positioned? Is this to be a niche product? Can a cost advantage be used? What ever the decision, competitors would most certainly introduce a similar product if there was any market success of a carbonated iced tea beverage. This would shorten the life cycle of the new product, putting further strain on profitability.
The technology factor might not readily come to mind, but it is an important consideration. Although the beverages are not inherently high tech, the packages are. The package type adds utility and value to the product, and different consumers have different preferences. What package or packages are to be used? Aseptic (box), aluminum 2-piece, PET, 7.5 oz., 12 oz., 16 oz., and such, are all options. The question to be answered here, is, can the plant produce the product in a package that the consumer wants? If not, what capital costs are involved and how will it impact price?
Government regulation impacts everything. Since this a food product, regulations pertaining to health codes, package labeling regulations, deposit laws, and other environmental codes must all be considered.
Economic factors would include the general economic environment. If the economy is slow, the effect would be to make the introduction of a new product more price sensitive. The economy would also influence the cost of materials. What is the price of tea, sugar, lemons, etc.? Are the prices of these materials stable, or do they vary widely? Can changes in the cost of materials be passed onto the buyer (price elasticity)?
Although iced tea is not a controversial item, cultural attitudes do change. Tea contains caffeine; what are the cultural attitudes associated with this issue? Package choice enters here again as environmental concerns have had a significant impact upon the acceptability of various package types.
The collection of consumer acceptance data for the proposed new product should take place in steps. This is because of the need to acquire both categorical and attitudinal data. There are many variables that can determine the final outcome if the decision to introduce the new beverage goes forward. This should begin with concept testing. Focus groups would be introduced to the idea of carbonating an iced tea beverage. The attitudes pertaining to such concepts as carbonation, caffeine, sugar, packaging, etc. would be identified using such tools as conjoint and projective analysis. It must be remembered that attitudes are not directly measurable and the date must be interpreted carefully.
The next stage would be product development. Taste testing to determine the characteristics of the product would be carried out. This would need to be very extensive given the number of ingredients that can be used; decisions would be associated with the several major tea varieties (cut black, orange pekoe, etc.), level of carbonation, level of sweetness, sweetener choice (modified corn syrup, fructose, cane sugar, and Aspartame), water quality (hardness and other characteristics), etc. All of these variables would need to be tested to determine the correct formulation or formulations.
Lastly, multiple item (e.g., Likert) surveys would be used to determine package preferences, pricing strategies, distribution, etc. The survey must be constructed such that it is accurate by not having apparent answer patterns, leading questions, and asking questions in more than one manner to verify reliability. Included with the survey would be questions to determine demographic and psychographic profiles to assist in determining target markets for the new product.
2. One student made the statement, "Marlboro has . . .
The statement, "Marlboro has never gone out of style" can be seen as counter to the product life cycle notion and at the same time can fit the idea of a product life cycle. It can fit the PLC idea since, at one point, Marlboro was targeted toward female smokers, but later targeted toward men. By changing the image of the brand, Marlboro, in essence, created a 'new' product, thereby creating a new life cycle for the brand to follow. By creating a new image, Marlboro might have saved itself from declining sales. Although the brand could be considered to be in the mature stage of the PLC, decline now appears to be quite a distance away.
It is also important to remember that the PLC idea does not apply to all products. Consider hammers: people have been using basic hammers for hundreds of years, and the only thing that has competed with this product is the nail gun. Since a nail gun is impractical and out of the price range for most people, the hammer seems to have a bright future. Applying the product life cycle idea to such things as hammers is nearly impossible since there is no decline forthcoming.
Products that would seem to fit the PLC idea best are those that are vulnerable to technological advances, such as automobiles. A company might come out with a new automobile, and then over the years watch its sales increase and then decline to the point where the product no longer produces a profit. This is probably due to the fact that every year, someone comes out with a better car, with more or better features and options from which to choose.
3. How is the marketing of a government agency . . .
The marketing concept is important for both profit an not-for-profit organizations. Both should use marketing functions to accomplish the organization's goals by anticipating customer or client needs and providing goods and services that satisfy those needs.
The major differences between the marketing of a government agency and a microcomputer producer have to do with objectives, who is responsible for marketing, marketing strategies that are used, and pricing. The objectives for a government agency differ from a microcomputer manufacturer in that these organizations have totally different messages that they need to communicate with the consumers of their products. The government agency might be trying to convince people to change their attitudes on a certain issue, or trying to change a certain behavior, or providing some sort of service free or of little direct charge. Fox & Kotler indicate that "many of these organizations have recently discovered marketing as a potentially useful tool to help them to achieve their objectives, which often deal with social change." Sheth & Frazier state that marketing for social change "requires making decisions as to which strategies to use, in what combinations, and for what target groups." A government agency is likely to be providing an intangible service, so it would most likely focus marketing efforts on the individuals who are providing the service. The government agency will be focusing on developing rapport with clients in an attempt to build long-term relationships. The microcomputer manufacturer also wants repeat business, but is unlikely to be able to establish personal relationships with final consumers; any long-term relationships would be established with customers in the distribution channel.
The microcomputer manufacturer is selling a tangible product, and can therefore focus on advertising such product features as durability, warranty, and capabilities. Prospective consumers can more easily see the benefits of such a good than they can with a services product. The government agency, on the other hand, is promoting to educate the public, to change behavior, and such, as in , say, showing how cigarette smoking can cause heart disease.
Another major difference between the marketing of a government agency and a microcomputer line is that sometimes no one person or department is directly responsible for marketing in a government agency, whereas there might be a person or whole department that is responsible marketing in the manufacturing organization. Promoting a tangible product or a service can be very costly, and a government agency is likely to be limited in the ability to budget for promotion. This could sometimes be true for a goods-oriented firm, but it is more likely that a promotional budget exists since success or failure can depend on promotion.
As with a microcomputer manufacturer, a non-profit government agency must take in as much in revenues as it spends or it won't survive. However, a non-profit government organization will not measure success in the same way as the microcomputer manufacturer. For example, the non-profit government organization might measure success based on how many people are provided with a particular service. The microcomputer manufacturer, on the other hand, is more likely to measure success based on profit and market share in addition to sales volume. With a non-profit organization, it is sometimes more difficult to evaluate the benefits of different activities that the organization provides relative to the costs that are incurred.
Public image for both non-profit and for goods-oriented firms is important, but is especially so for a non-profit organization. As Hartley suggests, "Not-for-profits are particularly vulnerable to public image problems because they depend solely on voluntary support."
Both organizations can benefit from using the marketing concept and success is unlikely if everyone doesn't pull together to strive for a common objective that can be achieved with the available resources. Adopting the marketing concept helps to bring this kind of focus. After all, each organization is seeking the same outcome - long term customer support through satisfaction; both are attempting to increase efficiency and make the best use of resources.
4. Marketing makes the calls . . .
As recent as twenty years ago, such a comment as marketing making the calls with regard to product modification, reformulation, and output would have left many executives laughing. In the past, particularly in American companies, it was more indicative that marketing served a function after the fact, such as General Motors' producing full-size V-8 sedans during the 1974 oil crisis, and then turning to the market department, saying: "Well, figure out how we're going to sell these things!" As a consequence of some very costly mistakes, many of these same companies have incorporated marketing as a proactive component of the production process. Although marketing might not have full say with regard to production as D.S. had suggested, they certainly have a lion's share.
D.S. had stated that 'marketing makes all the calls' with regard to production. It is more likely, however, that marketing input and decisions serve as merely one component, albeit an important one, of a cross-functional team or as part of a management matrix. Decisions regarding product reformulation were probably derived by marketing as a result of preference testing and surveys; the decision to use coupons probably also strongly influence by marketing. However, these decisions most likely received a final O.K. from the Controller's office only after some serious number crunching. It also seems reasonable to assume that the Chief Operations Officer had a say in the decision to do the re-tooling and reformulation of production lines when packaging was changed.
Although decisions can appear to be made by a single department, this is rarely the case. It is true that certain decisions, by their very nature, be they financial, R&D, marketing, or even operational, require more specific input from corresponding departments, many production decisions must be made on a multi-departmental level. Although marketing doesn't directly 'make all the calls', one can see the indirect truth in D.S.'s comment in that marketing serves as the conduit for one group that does make the calls: the customers.