LEAD STORY-DATELINE: Technology Marketing Online, July 1, 2002.

Dell Computers decided to launch "one of the biggest national consumer promotions" in their history. It's called the "$50K A-Day Giveaway", and Dell was literally giving away $50K per day. The sweepstakes ran during the month of July. Customers are entered directly into the sweepstakes when ordering a computer direct from Dell. Corporate buying programs, however, were not eligible. This was a promotion geared toward the home computing market.

Why this kind of strategy? Dell wanted to capture some attention amidst all the price slashing and deal-making in the personal computer arena. There will be other promotional programs throughout the summer, in addition to Dell's popular "Dude, you're getting a Dell" campaign. This has become, by far, the most recognizable campaign for PCs.

In other news, Dell wants to release its own Pocket PC to compete with HP's iPAQ. However, it was reported that Dell would have to contract this product out, and it would be difficult to realize a profit margin. If launching this kind of product really is in the cards, then the advertising and promotions budget may have to be adjusted to reflect the launch of the Pocket PC as a new product line.

1. What is the difference between a sweepstake and a contest?
   
   
2. Explain how Dell's sweepstakes not only create awareness for Dell, but also position Dell as the preference in the computer category.
   
   
3. Name another widely used promotion that also tends to attract computer buyers.
   
   
4. Do you think a new product like a Dell Pocket PC could benefit from a sweepstakes type of promotion strategy to introduce the product?

While we see the prices of personal home computers dropping we also see the rise of the Pocket PC and portable computing. Portable computing may become the preference, or it could take a long time for enough people to embrace the idea. It will be interesting to see if traditional forms of advertising will be enough to help companies like Dell launch new products. They may have to incorporate other approaches like the sweepstakes to get more consumers to switch to new technologies. Technology advances are attractive for those who are always on the edge of technology, but the main concern for companies still the comfort level is the average consumer has for the new technology.

Compare Dell's selling and promotional strategy to other computer lines: Gateway, HP, and Apple. Visit each Web site and find the focus of each company.

SOURCES:

Angel, Jonathan. "Dell Launches $1.5 Million Giveaway," Technology Marketing Online, July 1, 2002.

- Paula E. Bobrowski

LEAD STORY-DATELINE: BRW, June 20-26, 2002.

Since World War II, marketing theorists have put forward the view that adopting the marketing concept means giving customers what they want. The marketing concept is portrayed as a guiding philosophy that, if adopted, results in less hard selling, since customers have been consulted at various times up to the point of sale. More recently, academicians point to a growing body of academics, CEOs and gurus who espouse the view that consumers do not know their own minds, cannot or will not express them when they do, do not want to be best friends with the companies they buy from or through, and that pandering to them is not the secret to commercial success (Brown, 2002). In his irreverent way, Brown questions whether marketing needs a concept at all, pointing out that it is "a belief system. No more, no less. One has to believe in marketing otherwise it does not work and it really does work only if you believe in it" (p.320). So what's wrong with beliefs you might rightly ask?

If we believe Brown (2002), marketing as a discipline and as a business function is at the cross-roads between irrelevance and starting afresh with the adoption of an "imagino-centric" (p.322) approach. The latter born again perspective seems to eschew the creative selling practices of the hucksters of a bygone medicine-show era. Brown advocates a post-modernist approach that is intent on adding spice (fun) to the approach companies take in interacting with their customers.

It is, however, true that the kernel of marketing is not as firm as it might appear to be at first glance. For example, researchers have been hard pressed to find positive relationships between such core elements as expenditure on marketing research (itself a derivative of the mass-marketing paradigm) and financial and marketing outcomes. However, the marketing kernel is a little firmer when it comes to recognising the importance of customer satisfaction. Most marketers are happy to point to the work of Jones and Sasser (1995) as proof positive that the customer is king, and that if customers are totally, "completely satisfied …[they] are—to a surprising degree—much more loyal than satisfied customers" (p.89) and moreover, they are more likely to be a source of profitability for the company which completely satisfies them. So it seems that many marketers do believe, and are acting on their belief, that "A completely satisfied customer typically believes that the company [that] excels in understanding and addressing … personal preferences, values, needs, or problems" (p.98) must listen to their customers, and act on what they say.

Ross (2002) lauds the approach taken by a number of businesses in making progress in increasing customer service levels. She provides us with a number of examples of how Australian businesses are adopting the approach of appearing to give customers what they want—increasing customer service levels on the Internet, and introducing loyalty programs such as "one point for one dollar" (p.53)—while really taking away what customers thought they wanted—dealing with counter-staff at High Street banks, and lower service costs. Westpac, ANZ, NAB, and other financial services providers are cited as having adopted a variety of approaches to customer retention through loyalty enhancing programs. We should note, however, that banks are simultaneously making increased profits through increased charges and reductions in higher cost High Street outlets in favour of call centres (these are not yet termed interaction centres in Australia) and the Internet. (However, apart from the ANZ capitalising on an error by the NAB, we are not provided with firm marketing and financial outcomes from the banks' approach to increasing customer satisfaction.)

It is our view that Brown (2002) would be pleased to see the banks take this approach. He might be pleased to see that they are also adept at the sleight of hand enabled by providing "a great complaint experience" (Ross, p.54), and using the very technology that saves the banks so much money to create this experience for the customer. Is this then the new marketing? Is this the "imagino-centric" approach Brown (2002 p.322) espouses as a replacement for the post World War II marketing concept that itself seems to have replaced the very nasty word 'selling'? We delve further into this matter and your views in the questions that follow.

TALKING IT OVER AND THINKING IT THROUGH!

In this section, we consider questions concerning the seemingly elusive meaning and relevance of marketing science and practice:

1. What is the marketing concept as set out in your textbook?
   
   
2. Is there more to the marketing concept than the social and managerial definitions typically provided?
   
   
3. What are customer needs, wants and demands?
   
   
4. How should the marketing concept relate to business objectives overall?

THINKING ABOUT THE FUTURE!

Is Professor Brown serious, or simply taking a tongue-in-cheek approach to his papers and books? Professor Brown is doing the marketing profession a great service by forcing both academics and practitioners to examine more deeply what the marketing discipline and its practice offer business. His publications receive attention because he takes an extreme position, and is well able to argue the case for needed change in the approach taken by many academics in the research they undertake. Academia may be compared with the sheep producing industry. If more meat is required (teaching), then more wool also results (research). Often the wool is too thick (22+ microns) and results in low prices being achieved i.e., the research that may result when more and more teaching is undertaken can be of questionable quality. Professor Brown provides a timely warning.

SOURCES:

Brown, Stephen. "Vote, vote, vote for Philip Kotler," European Journal of Marketing, Vol 36, No 3, 2002, pp.313-324.

Jones, Thomas, O. and W. Earl Sasser, Jr. "Why Satisfied Customers Defect," Harvard Business Review, Nov-Dec 1995, pp.88-99.

Ross, Emily. "The New Rules of Service," BRW, June 20-26, 2002, pp.52-58.

- Stewart Adam

LEAD STORY-DATELINE: Time Magazine, May 20, 2002.

Spider-Man, the movie, has spun a web to entrap the title as the "blockbuster movie of the summer." In its opening weekend in May, Spider-Man took in $115 million, making it the film that has by far brought in the most money ever made in a weekend. According to this article, what makes this movie extra special is its ability to fine tune the way moviemaking is done, perfecting the art of film production, marketing and distribution. The film industry strives to make blockbuster hits, coveting the big money, which is in getting everyone to see your movie in its first week, then cashing in on the merchandising and the sequels. The movie market has significantly changed. It used to be that movies used to "build an audience slowly." However, entertainment is now labeled as "disposable, designed to gather a heterogeneous society together for one week and then fade away." We have become a "first-week culture." Cable television has splintered what was once mass viewing of "Ed Sullivan-like" programs, to where we have a limited number of universally appealing programs that bond us together as a culture. Most of these are only annual events, such as the Super Bowl and the Oscars. Blockbuster movies such as Spider-Man are a means of replacing that bond by generating a "national conversation."

The foundation for Sony's Spider-Man $50 marketing campaign was simple—billboards featuring the well-known blue and red character and the movie release date. Some theaters even have a blow-up Spider-Man clinging to the outside walls of the theater. Word-of-mouth was the element of the marketing mix that truly made Spider-Man an instant success. People liked it and told their friends right away.

According to the article, Sony is "teaching the movie industry some important rules about creating a modern blockbuster." There is a need to involve all four demographic quadrants: male, female, under 25 and over 25. As a result, the movie must involve half action and half romance. Next, the timing of distribution is critical, it helps to release the movie earlier in the summer—hence Spider-Man debuted the first weekend in May. Third, movies like Spider-Man are becoming more like the network TV business where the key components are demographics, scheduling and series. Also, there is more of a focus on special effects and costuming than on the key actors and script. Finally, the opening weekend is key in generating interest—if the response is big, "people won't want to miss that party" in order to be part of a cultural conversation.

Blockbusters such as Spider-Man are even "stealing shelf space" by squeezing out other top-notch firms from the theaters. But this is bound to happen when you have great effects and surround sound on the wide screen, and people can save the more contemplative, low-key movies for the privacy of their own home DVD's.

TALKING IT OVER AND THINKING IT THROUGH!

1. Why do you think it was an important part of Sony's marketing strategy to release Spider-Man early in the summer?
   
   
2. What role does demographics play in the making of films like Spider-Man?
   
   
3. Based on what you read in this summary, what would you say is the most important part of the promotional mix of Spider-Man? Why?
   
   
4. Marketing is all about filling an unmet need. How are blockbuster movies like Spider-Man filling that "unmet need?"

THINKING ABOUT THE FUTURE!

It seems harder and harder for movies to reach the status and title of "blockbuster" these days. As each movie has more sensational effects, costumes and sound than the next, there is increasing pressure on the producers to outdo the latest production. The film budgets get more immense by the year—partly out of necessity to recruit the "cream of the cast" and to ensure a position on the theater marquee and not be displaced by the upcoming "blockbuster next door." Where will revenue come from to fund these films? The consumer will foot the bill—in increasingly higher ticket prices and purchases of all the merchandising products that spring forth from these blockbuster films. Hollywood has said that in many cases, the merchandising campaign is just as important financially to the bottom line as the film itself.

SOURCES:

"Spider-Man, Biggest Summer," Time Magazine, May 20, 2002.

- Susan Sesolak

LEAD STORY-DATELINE: Fortune, March 4, 2002.

Despite the overall losing year the telecom industry had in 2001 (in which all the telecom companies but Cisco lost money on operations), the cellular giant Nokia reported $4.8 billion in operating profits. When industry sales of cellular handsets dropped six percent, Nokia's sales rose nine percent as Nokia grabbed market share from its rivals, winning 37 percent of the global market last year. This market share is more than twice that of Motorola, once a market leader.

However, the article reports that all is not coming up roses at Nokia. A top brokerage in London has downgraded the Nokia stock, and its share price has dropped accordingly. Why? Analysts are skeptical about the growth for this year, particularly in the Chinese market, which accounts for 11 percent of Nokia's sales. They are also skeptical that the new phones due out this year that were expected to be the driver of Nokia's growth will "impress consumers enough to make them buy." Growth in the cellular phone business is definitely slowing, as most people in developed countries already have one. This confronts Nokia with the challenge of how to keep growing when the industry has matured. Nokia sees its growth opportunity in pushing phones into newer markets such as Russia, China and India, where fewer people can afford them. Additional growth may be found by persuading existing subscribers that they need a second phone or one that's more "state of the art."

Nokia hopes to have revenue growth of 25 percent to 35 percent by the fourth quarter of 2002. In order to accomplish this, the company must capitalize on a quantum leap in the technology of the world's wireless networks: the use of packet-switched networks to route signals in the same efficient manner as those sent via Internet. This use of 3G (third generation) technology will enable Nokia customers to surf the Internet from their phones as easily as they can from their PCs. In addition, the phones will be able to send and receive images much more cheaply and quickly than current models.

The article characterizes the Nokia Corporation as "a little bit Wintel, a little bit Apple, a little bit Dell, and a whole lot Coca-Cola." Nokia has hurdled over rivals to provide "the best products, the best manufacturing logistics, and the best brand name in telecom." It has brand recognition similar to Coca-Cola, as it is ranked the world's fifth most valuable brand, which is amazing seeing that it only came on the New York Stock Exchange in 1994. Nokia is banking on its brand recognition to win over new customers when they replace their existing phones. Research suggests that 80 percent to 90 percent of the world's 930 million cell phone subscribers will buy a Nokia when they replace their existing phones.

The article compares Nokia's mastery of logistics to that of the Dell Corporation, based on its ability to deliver the right product at the right time. It is a master at being virtual partners with its suppliers.

Nokia exhibits an "Apple-like flair" for designing the most consumer friendly devices that meld form and function.

In order to succeed in the maturing cellular industry, Nokia must alter its strategy. Demand for its "plain-vanilla phones" is nearing saturation in many countries. In addition, Nokia has reached the upper limits of its market share potential. Therefore, analysts point out the need to drive up the prices of its phones by introducing new, unique products that will drive people to want to purchase a new phone and be willing to pay more for it. This presents a challenge, given that when products enter "commoditization" as cell phones have, prices tend to decline. Nokia must do a good job of communicating to customers the benefits of its services and how they can be used to improve one's lifestyle. Nokia's response to this challenge is to "blitz the market with 20 promising new products in the first half of 2002." It will introduce new phones that offer multimedia messaging, enabling consumers to send not just voice, but also graphics, audio clips, and photographic images over cell phones. It will offer the digital-camera-in-a-phone (7650). It also hopes to incorporate entertainment services into its phones, whereby a user could use his or her phone to play games, do electronic shopping, and even have access to office applications.

TALKING IT OVER AND THINKING IT THROUGH!

1. What two areas of market development are being pursued by Nokia to stimulate growth?
   
   
2. Why is Nokia characterized as "a little bit Apple, a little bit Dell, and a whole lot Coca-Cola"?
   
   
3. What challenges does Nokia face in stimulating growth of its cellular phones?
   
   
4. What type of services does Nokia plan on introducing in order to stimulate its growth?

THINKING ABOUT THE FUTURE!

There is no doubt that Nokia has vision for uncovering growth opportunities beyond just supplying phones. It also offers entertainment and overall communication services. However, in order for this dream to become a reality, there are some difficult hurdles for Nokia to overcome. To some degree, it is at the mercy of other telecom companies' willingness to invest in the infrastructure of wireless networks. In order to get consumers excited about using multimedia messaging to send and receive graphics and photographic images, there must be ubiquity, where the person on the other end is connected to a network that enables them to receive these messages. There must be collaboration among the industry, even between competitors, to ensure interoperability, and connectivity with PCs. This is a gigantic task, yet achievable with the strong leadership of Nokia.

SOURCES:

"Nokia Rocks its Rivals," Fortune, March 4, 2002.

- Susan Sesolak

LEAD STORY-DATELINE: Advertising Age, December 3, 2001.

Digital garage, virtual showroom, and 3-D images: these are the components of Volvo's new digital initiative. Volvo of North America recently signed a 15-month agreement with MSN to create these enhanced online marketing tools. MSN has the same type of agreement with Toyota and Nissan.

What is the main purpose of these online tools? They are designed to qualify and acquire customers online. Also, Volvo wants to test its customer service and retention programs. Volvo wants to attract a younger customer base through these online initiatives. Back in the fall of 2000, Volvo launched a new model through Internet efforts only. However, dealerships complained that showroom traffic was not being generated, so Volvo added a traditional advertising campaign. Volvo continues to plunge ahead with its devotion to Web-based marketing.

One of the digital products, called a Digital Garage, will be a place where new and existing Volvo enthusiasts can go to get more information on models, sales promotions, and more. The 3-D image feature will allow that online consumer to view the vehicle at all angles (360-degree view). In addition to these products, there is a co-branding effort where Volvo buyers can receive three free months of MSN Internet access. Will this marriage last? We'll have to wait and see.

TALKING IT OVER AND THINKING IT THROUGH!

1. What is one of the main reasons that this online approach may help to retain more customers?
   
   
2. What are the three main benefits to the consumer of online promotion?
   
   
3. Are the efforts of Volvo aimed to produce a corporate Web site or a marketing Web site? Explain.
   
   
4. Explain why the co-branding effort between Volvo and MSN is beneficial to both parties?

THINKING ABOUT THE FUTURE!

With the availability of certain knowledge on the Internet, consumers have had the upper hand in the price arena when negotiating a car purchase with a dealership. As more and more consumers use the Internet to research car makes and models, car companies will have to spruce up their Web sites, and that is exactly what Volvo is doing now. Whether it brings them more sales is still unknown, but at least they are staying ahead of the curve.

DIGGING DEEPER

The Volvo Digital Garage will launch at MSN's CarPoint. Check it out for yourself and rate its effectiveness as a sales and marketing tool. Suggest other marketing tools a company might use to compliment this one to make it even more effective.

SOURCES:

Elkin, Tobi and Jean Halliday. "Volvo to Launch Broad New Digital Initiative," Advertising Age, December 3, 2001.

- Paula E. Bobrowski

LEAD STORY-DATELINE: Computerworld, January 8, 2001.

The Starbucks Corporation is serving up Internet connectivity along with its coffee to its customers in all 3,000 of its North American outlets. This connectivity comes in the form of high-speed wireless LAN access. Prior to the implementation of this strategy, Starbucks conducted 80% of its business in the morning hours. By introducing access to this technology, Starbucks intends to drive more customer traffic into the Starbucks coffee shops during off-peak breakfast hours, and enhance their brand image. This service will be aggressively rolled out over the next two to three years, with the first installations to be completed this spring in the Pacific Northwest.

The implementation of this strategy was driven by customers, who have pushed the company to offer Internet access. Starbucks followed through on the demands of their customers, and conducted studies to determine the most effective technology services to offer their customers. Starbucks chose to offer the high-speed wireless LAN access. Starbucks executives felt that this choice of technology would give the firm a sustainable competitive advantage, with higher-speed connectivity than the typical current offering, or likely to be provided in the near future by cellular phone carriers.

This service is expected to be particularly attractive to "on the road" business people, who are looking for quicker Internet access than that provided from the 28.8K connection typically offered in their hotel rooms.

The high-speed access service will sell for fees ranging from $2.50 for 15 minutes of connectivity, to $59.95 per month for unlimited access.

TALKING IT OVER AND THINKING IT THROUGH!

1. Who is the primary target market for Starbucks' new high-speed LAN access, and what is the overall goal for implementing this strategy?
2. Which of the four types of market opportunities (growth strategies) represents Starbucks' new strategy discussed in this article? Why?
3. How does Starbucks' demonstrate a "marketing concept" orientation, as opposed to one that is strictly internally focused, through its decision to implement this strategy?
4. How might the introduction of the high-speed wireless LAN provide a competitive advantage for Starbucks?
5. In your opinion, is this competitive advantage likely to be sustainable in the long term?

THINKING ABOUT THE FUTURE!

Starbucks may be looked upon as somewhat of a "pioneer" in implementing this wireless LAN connectivity in its North American cafes, and receive just accolades for finally "stepping up to the 21st century." However, this concept is by no means new. Starbucks is actually quite a bit behind the times, when compared to the services offered in cyber-cafes throughout Europe for a few years now. It is the continental business travelers, accustomed to the European ease of public Internet access, who are likely the ones who "pressured" Starbucks to offer some kind of Internet connectivity in its shops, to meet a standard of service they have grown to expect.

Starbucks must be careful not to "rest on the laurels" of their newly found competitive advantage. Other cafes and coffee shops, as well as copy centers and office supply stores can just as easily implement this wireless Internet connectivity. Many already offer similar Internet access capabilities for their clients. In addition, the product life cycle for high-tech services is extremely short. New technology platforms and standards for high-speed Internet connectivity may likely be introduced before Starbucks has even finished the two to three year rollout out of its service offering.

SOURCES:

"Starbucks takes Wireless Leap ", Computerworld, January 8, 2001.

- Susan Sesolak

LEAD STORY-DATELINE: Business Week, January 12, 2001.

We all heard about the Firestone tire recall back in August 2000 - Firestone tires on Ford Explorers were found to have blowouts or tread separation. Dealers had to replace more than 6 million tires because of this incident. These tire dealers were to deal directly with the angry and frustrated consumers who had every right to be angry and frustrated! The tire switch has cost Firestone $450 million to date - but the monetary damage was in the background, as consumers doubted the reliability of a product that is a part of their daily lives.

This is why Firestone attempted to deal swiftly when replacing the recalled tires. However, the dealers felt the brunt of this recall, when customers on waiting lists became impatient while holding out for their replacement tires. More than 200 lawsuits have been filed as a result of the faulty product. So, it seems that most of the damage has been done to Firestone's brand image. This may be why many dealers have removed the Firestone sign from the front of their stores.

What is Firestone to do? The company has recently announced internal changes in the communication it has with its dealers, and its customers. The warranty program has been expanded, and potential defects are addressed promptly. But what about the long-term effects? The author of this article writes, "Can Firestone endure the mounting costs of recall, sales decline, and lawsuits? How much customer loyalty has been lost for good?" We will have to wait and see what happens from here.

TALKING IT OVER AND THINKING IT THROUGH!

1. What was the likely impact of the Firestone tire recall on customer satisfaction?
2. Previous to the recall, Firestone had a reputation of quality and dependability. Do you think that this may help them to rebound faster from their mistakes, or doesn't it matter that they were a popular brand before the recall?
3. Explain how Firestone tried to maintain its relationship marketing throughout the recall.
4. What do you foresee happening to the Firestone customers whose tires were not recalled?

THINKING ABOUT THE FUTURE!

Product recalls happen periodically, but consumers react differently to each situation. This particular case had consumers concerned for personal safety. The safety of other consumers had also been compromised in publicized deaths and accidents. Companies need to constantly monitor the safety of their products, and maintain a back-up plan for making the situation right before an issue becomes a nationwide crisis.

SHARING THE NEWS

Get into small groups and role-play that one of you owns a vehicle with the recalled tires. What customer value would you expect Firestone to provide to customers? If Firestone replaces your recalled tires at no cost how satisfied would you be. Discuss what Firestone would have to do to get you to buy another set of Firestone tires.

Forsman, Theresa. "Firestone Dealers Still Feel the Heat," Business Week, January 12, 2001.

-Paula E. Bobrowski