Q1 Why have ethics and social responsibility become so important .docx

Q1: Why have ethics and social responsibility become so
important in recent years? Why is it important that marketing
ethics be incorporated into the firm’s strategic plan?
Marketing ethics and social responsibility are considered to be
very important and critical in the implementation of strategic
planning in any organization. Frequently issues related to ethics
and social responsibility arise in organizations and depending
on the weight of such issues some firms have developed a
negative public reputation that eventually affected their
profitability with some being destroyed completely. Hence
firms are laying more emphasis on ethical conduct as an
important pillar within their strategic market planning with an
intention of enhancing the customer relationships through
enhanced trust. A firm’s ethics and social responsibility closely
relate to changes in government laws and stakeholder demands.
Overall established ethics and social responsibility is a plus for
any firm because it improves profits and the company’s
marketing performance. Notably marketing ethics are not
attained by employing ethical people but rely on a well-defined
and compliance program that must be initiated and implemented
by the firm’s managers.
Hence customer demands and growing regulations in business
have necessitated that firms have marketing ethics and social
responsibility framework from where they can operate. This is
most suitably integrated into the strategic market planning
process. History reveals organizations that were adversely
affected because they engaged in ethical misconduct.
Comparatively recovering from poor performance is far easier
for any firm than recovering from ethical misconduct. Ethical
misconduct has far reaching consequences that touch on the
reputation of the organization. This directly affects the
activities of a firm and has adverse effect on its profitability.
Apart from losing out on the direct customers, a firm may also
lose out on indirect partners who get a negative perception of

the organization through the media and public opinion. There
have been known cases where such issues resulted in aggressive
campaigns and product boycotts leading to low sales and
earnings.
Q2: Draw, label, and explain the pyramid of social
responsibility. What are the requirements for a firm if it truly
wants to be ethical and socially responsible?
The social responsibility pyramid consists of four dimensions
that include the legal, ethical, economic and philanthropic. The
economic dimension suggests that organizations have a
responsibility to their shareholders. These shareholders are
particular about the organization’s relationship with its
stakeholders and this affects the firm’s reputation. This is
associated with the organization’s earnings that are related to
the shareholders investment. Economic responsibility will also
enhance the organization’s environment in terms of increased
income and employment whenever the organization operates
profitably.
Whereas laws and regulations within an organization’s
environment are important and sometimes change so often,
marketers are obligated to abide by these regulations and laws.
Generally economic and legal responsibilities are the two basic
and most important obligations for any organization. Since they
lay the foundation on which the organization can have a
sustainable social responsibility, they must be carefully
established so that the organization can grow and also serve the
ethical and philanthropic dimensions.
Marketing ethics are the principles that a firm puts in place to
define acceptable marketing practices as stipulated by other
regulators such as government, competitors, and the public and
private interest groups. Marketing ethics are nothing but a set of
laws and regulations controlling the way the organization is
expected to carry on its activities according to society’s
expectations. Therefore marketing ethics aim at the
organization making ethical decisions that go beyond the legal
responsibilities. Such decisions are intended to enhance trust

that is important in the establishment of strategic marketing
relationships.
According to the philanthropic dimension, the organization
focuses on ways of increasing its positive effect to the
community, society and environment. This is intended to enable
the firm attain goodwill from the society that also increases the
firm’s profitability. Generally organizations align their brand
and marketing image with their philanthropic dimension. Hence
it is expected that in times of natural disasters or during
economic difficulties such organizations can effectively display
their philanthropic dimension. Because of the power associated
with positive social responsibility behavior, a firm’s
philanthropic dimension becomes a very powerful marketing
tool. Since this is always visible to the public, it paints the
organization in positive light and hence has the capacity to
endear the customers, community and employees to the
organization’s products or services.
Q2: Discuss the different views or interpretations of marketing
as a function of business, including the AMA’s 2007 change in
the definition of marketing. Why do you think the AMA
changed the definition?
To many people marketing is nothing more than a function of
business. As such marketing is viewed as a function whose
main objective is to connect the business and its clients.
Marketers however have a different perception of marketing and
look at it as a management of the flow of products from one
point to the other. These points being invariably the point of
origin to that where the product is consumed. Furthermore
marketing has also been viewed as a means to satisfy social and
human needs. Based on this understanding marketing can be
closely linked to the standard of living because it affects the
social well-being through enhanced consumption. According to
AMA marketing must reflect the competition at the marketplace
by focusing on the customer relationships and value. With an
emphasis being placed on the long term relationships this latter
view is a departure from the former view that only focused on

the transactions.
Q3: Briefly explain and discuss the five types of utility. Which
type(s) of utility is(are) the most important and why?
The five types of utility include:
a) Place: In this type the products are available where the
customers want them. Hence the products are available at the
right moment and the customer is also available right there at
the place at that moment.
b) Time: In this type the products are available when the
customers want them.
c) Form: In this type the products possess features that give
them a competitive advantage making them stand out against
competition.
d) Psychological: In this type the products are attractive to the
customers and are appealing to their realistic expectations. If a
product doesn’t have any negative realistic expectations such is
considered to offer exceptional psychological utility
e) Possession: This type of utility highlights the transfer of
ownership between the seller and customer. Since the seller
makes it easier for the customer to own the product, it follows
that products with high possession utility are most satisfying.
Generally these five utility types are important in ensuring that
a product is well marketed and these in a way supplement each
other in ensuring that the product satisfies a desired market
need.
Q4: Describe the role that a code of conduct plays in ensuring
ethical compliance within a firm. How should a code of conduct
be developed, what should it contain, and what are the keys to
ensuring that the code is successfully implemented?
Many organizations start by developing codes of conduct as an
introduction to the process of launching an organizational ethics

program. This code of ethics is a formal documentation that
defines what the organization expects its employees to do in
certain situations. Most firms have been found to have a formal
code of conduct that may include ethical policy statements,
business process guidelines, and code of ethics. These codes
cover several areas like financial disclosure practices, sales
presentations and in-house operations of the organization.
Typically the code of ethics will highlight five to seven main
areas. These are also called core values that are considered to
be important and desirable for enhancing ethical conduct within
any organization. These values will include fairness,
responsibility, respect, trustworthiness, caring and citizenship.
Management support in terms of training and distribution are
necessary in ensuring that these values are entrenched within
the organization’s culture. By using specific example the
management can effectively implement these values within their
organizations.
Although an organization may have a perfect code of ethics in
place, this is not to say that such an organization will not face
any ethical issues arising. However, the managers in such a
situation have a general point of reference in the organization’s
code of ethics that can be used to suggest and in certain cases
dissuade certain action. The biggest undoing for most
organizations is that their codes of conduct are not effectively
communicated to the employees. As such most of the issues
arise out of ill-informed cases. Even where the code of conduct
has been made available and accessible by all employees there
is a greater need to enforce it so that the employees have a
standardized outlook all matters related to their ethical conduct
within the organization. A desirable code of ethics must be one
that enables the employee to shun unethical behavior and
improve his or her ethical decision making process. Such a
document can provide guidelines that will assist the employee
to attain the ethical objectives of the organization.
Q5: Discuss the challenges and opportunities associated with
planning and developing marketing strategy in today’s

economy. Why is marketing strategy both exciting and
challenging?
Change is the most notable challenge as well as opportunity in
marketing. The effect of change is such that it affects
customers, competitors and even organizations. Although
change is a great challenge it also provides the greatest
opportunity for marketing. Change makes marketing most
rewarding and fulfilling whenever the marketer adopts the right
marketing strategy. Marketing strategy more so focuses on
people (people-driven) where the process looks at ways of
delivering unique value by fulfilling the unique needs of people.
In this case the people here may include shareholders,
customers, and the society. The strategy must also be capable of
addressing the needs of the organization itself.
Definitely with continual change and the fact that marketing is
people driven, there is bound to be a challenge in developing
and implementing a market strategy. Since these factors are
often highly unpredictable there is always likelihood that even
where the marketing strategy is perfect the process can still fail.
Since there are virtually no rules of marketing in specific
situations predictability remains a great challenge. Hence
hypothetical scenarios cannot be effectively used to infer any
predictable results. There is no practically way to ascertain the
product, price, distribution and promotion given certain factors
because the success of such a marketing approach cannot be
guaranteed. Therefore as the development of a marketing
strategy focuses on a whole lot of unpredictable issues as
mentioned here, it is an intriguing subject of study.
Q5: What is the relationship among marketing ethics, strategic
planning, and organizational performance? How is being market
oriented different than having a stakeholder orientation?
The foreseen benefits of including social responsibility and
ethics in strategic planning process points to the fact that these
aspects are responsible for enhanced business environment and

market performance that involves the stakeholders. As such the
demands for a more fulfilling relationship with customers is
more felt where the employees are guided by an ethical code of
conduct. Hence positive ethical climate within organizations
has been associated with employee’s commitment to quality and
trust. Further social responsibility has been directly associated
with customer loyalty, employee commitment and profitability.
Therefore it is no wonder that an ethical climate is responsible
for the establishment of a favorable and competitive edge within
a firm.
Market orientation entails developing an organizational culture
that promotes value for customers thereby enhancing the
organization’s profitability. Marketing ethics also positively
affects market orientation. By placing the customer’s
requirements first an ethical climate also ensures that the
stakeholders’ interests are also effectively addressed. A
positive market orientation approach is therefore one where the
firm sustains a desirable cooperation and shares information
that enables it to have a better view of its customer’s needs.
Stakeholder orientation is the degree to which an organization
addresses stakeholders’ demands. Hence the stakeholders’
orientation will include a comprehensive collection of
stakeholder data with the aim of analyzing how the organization
affects the stakeholders’ activities, distributing information
throughout the organization and organizing responsiveness in
relation to the information gathered.
Stakeholder orientation as a process is accomplished in varying
levels for different firms. Whereas the basis is an assessment of
the extent to which the organization responds to after it
generates and disperses information related to stakeholders, the
degree of such responsiveness may vary between stakeholders
based on the amount of intelligence that has been gathered for
every stakeholder. As such a firm can respond more to one
stakeholder as compared to another because of the amount of
information it gathers for each stakeholder respectively.
Q1: “Analysis alone is not a solution” is an important piece of

advice to keep in mind during a situation analysis. What does
this phrase mean? If analysis alone is not a solution, what other
considerations are relevant during a situation analysis?
Although an analysis on its own is not sufficient,
comprehensive situational analysis is important for better
planning and decision making. Effective strategic planning will
however require more than situational analysis and rely on
intuition and appropriate judgment. Therefore situation
analysis must supplement the manager’s decision making
process and not act as a replacement of the decision maker.
Within this context the situation analysis enables a manager to
break down a complex situation into simple manageable parts.
Within the marketing context the breaking down of situations
into simple manageable parts will help the marketer to
understand why products, organizations and people perform as
they do.
Q2: Identify and explain each element of the 5W model for
customer analysis. What role does this analysis play in an
overall situation analysis?
The important aspects of a customer environment analysis
process include the following:
a) Current and prospective customers
b) Needs of both current and potential customers
c) Competitor features and the products that customers perceive
as meeting their needs
d) Expected changes relating to customer needs
Who are our current and prospective customers?
In order to answer the ‘who’ question there must be an analysis
of the target market. Demographic, psychographic and
geographic characteristics must be determined.
What do customers do with our products?
Helps to evaluate how the firm’s customers consume and what
they do with the company’s products.
Where do customers purchase our products?
Helps the marketer to understand distribution and customer
convenience aspects of the product.

When do customers purchase our products?
The seasonality of the firm’s goods or services can be assessed
using this question. Hence any influence that affects the
customer’s purchasing of the goods will be identified with this
question.
Why (and how) do customers select our products?
Enables the marketer to detect the main need-satisfying benefits
associated with the organization’s products.
Q3: Identify and discuss at least five reasons why potential
customers do not purchase a firm’s goods or services. For each
reason, discuss ways that the firm can overcome the resistance
of noncustomers
There are various reasons why a customer may not purchase an
organization’s product.
They may include the following:
1) Product cannot fulfill the customer’s basic need
2) Ineffective distribution of the product
3) The product is not matching the noncustomer’s budget
4) The product is not matching the noncustomer’s lifestyle
5) Noncustomers’ misconception about the product
6) Noncustomers are unaware that the product exists
Q5: Identify and discuss the challenges involved in collecting
environmental data and information. How can a marketing
manager or analyst overcome these problems?
Various challenges are associated with the data collection
process. Among the main challenges include the following:
a) Inaccurate or inadequate assessment of the situation under
study. The area of study must be accurately defined before data
collection can commence. Sometimes the researcher or manager
may encounter a situation of excessive information where the
area of study has not been clearly defined.
b) Sometimes the expenses of collecting data can be prohibitive.
However the internet has substantially reduced this challenge
with the exception for cases that require primary data sourcing
c) With regard to primary data collection the time factor may
also be a greater challenge. However where the study relies on

secondary data sources this can be overcome by use of readily
available and authenticated sources from the internet
d) Where the manager encounters information overload it may
be difficult to effectively categorize such information in order
to satisfy the need for the research. A lack of knowledge on
suitable tools like SWOT that the manager can use to
effectively classify the data can also pose some challenge
during the research process.
ESSAY
1. The text discusses seven challenges and opportunities
associated with marketing in today’s economy. Identify these
issues and discuss how they are related. What is the common
thread that ties all seven issues together?
ANS:
The seven issues are:
1. Power Shift to Customers
2. Massive Increase in Product Selection
3. Audience and Media Fragmentation
4. Changing Value Propositions
5. Shifting Demand Patterns
6. Privacy, Security, and Ethical Concerns
7. Unclear Legal Jurisdiction
The common thread that ties these issues together is the
increase in information and choices made available by the
Internet.
2. Discuss the different views or interpretations of

marketing as a function of business, including the AMA’s 2007
change in the definition of marketing. Why do you think the
AMA changed the definition?
ANS:
Many people, especially those not employed in marketing, see
marketing as a function of business. As a business function, the
goal of marketing is to connect the organization to its
customers. Other individuals, particularly those working in
marketing jobs, tend to see marketing as a process of managing
the flow of products from the point of conception to the point of
consumption. A final way to think about marketing relates to
meeting human and social needs. This broad view links
marketing with our standard of living, not only in terms of
enhanced consumption and prosperity but also in terms of
society’s well-being.
The AMA changed the definition of marketing to better reflect
the realities of competing in today’s marketplace. The new
definition stresses two critical success factors in marketing
today: value and customer relationships. Whereas the former
definition of marketing had a decidedly transactional focus, the
new definition emphasizes long-term relationships that provide
value for both customers and the firm.
3. Briefly explain and discuss the five types of utility.
Which type(s) of utility is(are) the most important and why?
ANS:
The five types of utility are:
1. FormUtility—Products high in form utility have attributes
or features that set them apart from the competition.
2. TimeUtility—Products high in time utility are available

when customers want them.
3. PlaceUtility—Products high in place utility are available
where customers want them, which is typically wherever the
customer happens to be at that moment or where the product
needs to be at that moment.
4. PossessionUtility—Possession utility deals with the transfer
of ownership or title from marketer to customer. Products
higher in possession utility are more satisfying because
marketers make them easier to acquire.
5. PsychologicalUtility—Products high in psychological utility
deliver positive experiential or psychological attributes that
customers find satisfying. Conversely, a product might offer
exceptional psychological utility because it lacks negative
experiential or psychological attributes.
One type of utility is not necessarily more important than the
others. In reality, all five types are complementary and overlap
to a great degree. One could argue that form utility is the most
important, however, because customers tend to choose products
that offer certain features. For routinely purchased products
(gasoline, bread), time and place utility are likely to be more
important. For unique types of products (vacations, luxury
goods), psychological utility might be relatively more
important.
4- Discuss the challenges and opportunities associated with
challenging?
ANS:
One of the greatest frustrations and opportunities in marketing
is change—customers change, competitors change, and even the
marketing organization changes. Strategies that are highly
successful today will not work tomorrow. Customers will buy

products today that they will have no interest in tomorrow.
These are truisms in marketing. Although frustrating, challenges
like these also make marketing extremely interesting and
rewarding. Another fact about marketing strategy is that it is
inherently people driven. Marketing strategy is about people
(inside an organization) trying to find ways to deliver
exceptional value by fulfilling the needs and wants of other
people (customers, shareholders, business partners, society at
large), as well as the needs of the organization itself.
The combination of continual change and the people-driven
nature of marketing makes developing and implementing
marketing strategy a challenging task. A perfect strategy that is
executed perfectly can still fail. This happens because there are
very few rules for how to do marketing in specific situations. In
other words, it is impossible to say that given “this customer
need” and these “competitors” and this “level of government
regulation” that Product A, Price B, Promotion C, and
Distribution D should be used. Marketing simply doesn’t work
that way. The lack of rules and the ever-changing economic,
sociocultural, competitive, technological, and political/legal
landscapes make marketing strategy a terribly fascinating
subject.
5-. Why have ethics and social responsibility become so
ANS:
The importance of marketing ethics and social responsibility
has grown in recent years, and their role in the strategic
planning process has become even more important as many
firms have seen their images, reputations, and marketing efforts
destroyed by problems in these areas. The failure to see ethical

conduct as part of strategic market planning can destroy the
trust and customer relationships that are necessary for success.
Ethics and social responsibility are also necessary in light of
stakeholder demands and changes in federal law. Furthermore,
ethical and socially responsible behavior improves marketing
performance and profits. Marketing ethics does not just happen
by hiring ethical people; it requires implementation of an
effective ethics and compliance program.
In response to customer demands, along with the threat of
increased regulation, more and more firms have incorporated
ethics and social responsibility into the strategic marketing
planning process. Any organization’s reputation can be damaged
by poor performance or ethical misconduct. However, it is much
easier to recover from poor marketing performance than from
ethical misconduct. Obviously, stakeholders who are most
directly affected by negative events will have a corresponding
shift in their perceptions of a firm’s reputation. On the other
hand, even those indirectly connected to negative events can
shift their reputation attributions. In many cases, those
indirectly connected to the negative events may be more
influenced by the news media or general public opinion than
those who are directly connected to an organization. Some
scandals may lead to boycotts and aggressive campaigns to
dampen sales and earnings.
6- Draw, label, and explain the pyramid of social
ANS:
The pyramid of social responsibility consists of four dimensions
or responsibilities: economic, legal, ethical, and philanthropic.
From an economic perspective, all firms must be responsible to

their shareholders, who have a keen interest in stakeholder
relationships that influence reputation of the firm and, of
course, earning a return on their investment. The economic
responsibility of making a profit also serves employees and the
community at large due to its impact on employment and
income levels in the area that the firm calls home.
Marketers also have expectations, at a minimum, to obey laws
and regulations. This is a challenge because the legal and
regulatory environment is hard to navigate and interpretations
of the law change frequently. Economic and legal concerns are
the most basic levels of social responsibility for good reason:
Without them, the firm may not survive long enough to engage
in ethical or philanthropic activities.
At the next level of the pyramid, marketing ethics refers to
principles and standards that define acceptable marketing
conduct as determined by the public, government regulators,
private-interest groups, competitors, and the firm itself. The
most basic of these principles have been codified as laws and
regulations to induce marketers to conform to society’s
expectations of conduct. However, it is important to understand
that marketing ethics goes beyond legal issues: Ethical
marketing decisions foster trust, which helps build long-term
marketing relationships.
In terms of philanthropy, firms that choose to take these extra
steps concern themselves with increasing their overall positive
impact on society, their local communities, and the
environment, with the bottom line of increased goodwill toward
the firm, as well as increased profits. Many firms try hard to
align their philanthropy with marketing and brand image.
During major crises, like Hurricane Katrina or the more recent
financial meltdown, firms are given an opportunity to make
their philanthropic programs more responsive and visible to the
public. Socially responsible behavior is not only good for

customers, employees, and the community, but it also makes
good business sense. For this reason, philanthropic activities
make very good marketing tools. Thinking of corporate
philanthropy as a marketing tool may seem cynical, but it points
out the reality that philanthropy can be very good for a firm.
7- Describe the role that a code of conduct plays in ensuring
ANS:
Most firms begin the process of establishing organizational
ethics programs by developing codes of conduct (also called
codes of ethics), which are formal statements that describe what
an organization expects of its employees. According to a KPMG
Integrity Survey, 82 percent of employees reported that their
firm has a formal code of conduct such as codes of ethics,
policy statements on ethics, or guidelines on proper business
conduct. These codes may address a variety of situations from
internal operations to sales presentations and financial
disclosure practices.
A code of ethical conduct has to reflect the board of directors’
and senior management’s desire for organizational compliance
with the values, rules, and policies that support an ethical
climate. Development of a code of conduct should involve the
board of directors, president, and senior managers who will be
implementing the code. Legal staff should be called upon to
ensure that the code has correctly assessed key areas of risk and
that standards contained in the code buffer potential legal
problems. A code of conduct that does not address specific
high-risk activities within the scope of daily operations is
inadequate for maintaining standards that can prevent

misconduct.
Research has found that corporate codes of ethics often have
five to seven core values or principles in addition to more-
detailed descriptions and examples of appropriate conduct. Six
core values are considered to be highly desirable in any code of
ethical conduct: (1) trustworthiness, (2) respect, (3)
responsibility, (4) fairness, (5) caring, and (6) citizenship.
These values will not be effective without distribution, training,
and the support of top management in making them a part of the
corporate culture and the ethical climate. Employees need
specific examples of how these values can be implemented.
Codes of conduct will not resolve every ethical issue
encountered in daily operations, but they help employees and
managers deal with ethical dilemmas by prescribing or limiting
specific activities. Many firms have a code of ethics, but
sometimes they do not communicate their code effectively. A
code placed on a website or in a training manual is useless if the
company doesn’t reinforce it on a daily basis. By
communicating both the expectations of proper behavior to
employees, as well as punishments they face if they violate the
rules, codes of conduct curtail opportunities for unethical
behavior and thereby improve ethical decision making. Codes of
conduct do not have to be so detailed that they take into account
every situation, but they should provide guidelines and
principles capable of helping employees achieve organizational
ethical objectives and address risks in an accepted manner.
8- What is the relationship among marketing ethics,
strategic planning, and organizational performance? How is
being market oriented different than having a stakeholder
orientation?

ANS:
One of the most powerful arguments for including ethics and
social responsibility in the strategic planning process is the
evidence of a link between social responsibility, stakeholders,
and marketing performance. An ethical climate calls for
organizational members to incorporate the interests of all
stakeholders, including customers, in their decisions and
actions. Hence, employees working in an ethical climate will
make an extra effort to better understand the demands and
concerns of customers. One study found that ethical climate is
associated with employee commitment to quality and intrafirm
trust. Employee commitment to the firm, customer loyalty, and
profitability have also been linked to increased social
responsibility. These findings emphasize the role of an ethical
climate in building a strong competitive position.
An ethical climate is also conducive to a strong market
orientation. Market orientation refers to the development of an
organizational culture that effectively and efficiently promotes
the necessary behaviors for the creation of superior value for
buyers and, thus, continuous superior performance of the firm.
Market orientation places the customer’s interests first, but it
does not exclude the interests of other stakeholders. Being
market oriented means fostering a sense of cooperation and
open information exchange that gives the firm a clearer view of
the customer’s needs and desires.
The degree to which a firm understands and addresses
stakeholder demands can be referred to as a stakeholder
orientation. This orientation contains three sets of activities: (1)
the organization-wide generation of data about stakeholder
groups and assessment of the firm’s effects on these groups, (2)
the distribution of this information throughout the firm, and (3)
the organization’s responsiveness as a whole to this
intelligence.

A stakeholder orientation can be viewed as a continuum in that
firms are likely to adopt the concept to varying degrees. To
gauge a given firm’s stakeholder orientation, it is necessary to
evaluate the extent to which the firm adopts behaviors that
typify both the generation and dissemination of stakeholder
intelligence and responsiveness to it. A given organization may
generate and disseminate more intelligence about certain
stakeholder communities than about others and, as a result, may
respond to that intelligence differently.
9- “Analysis alone is not a solution” is an important piece of
ANS:
Although it is true that a comprehensive situation analysis can
lead to better planning and decision making, analysis itself is
not enough. Put another way, situation analysis is a necessary
but insufficient prerequisite for effective strategic planning.
The analysis must be combined with intuition and judgment to
make the results of the analysis useful for planning purposes.
Situation analysis should not replace the manager in the
decision-making process. Its purpose is to empower the manager
with information for more effective decision making.
A thorough situation analysis empowers the marketing manager
because it encourages both analysis and synthesis of
information. From this perspective, situation analysis involves
taking things apart: whether it’s a customer segment (in order to
study the heavy users), a product (in order to understand the
relationship between its features and customers’ needs), or
competitors (in order to weigh their strengths and weaknesses
against your own). The purpose of taking things apart is to
understand why people, products, or organizations perform the
way they do. After this dissection is complete, the manager can

then synthesize the information to gain a big-picture view of the
complex decisions to be made.
10- Identify and explain each element of the 5W model
for customer analysis. What role does this analysis play in an
ANS:
During the analysis of the customer environment, information
should be collected that identifies (1) the firm’s current and
potential customers, (2) the prevailing needs of current and
potential customers, (3) the basic features of the firm’s and
competitors’ products perceived by customers as meeting their
needs, and (4) anticipated changes in customers’ needs.
Who Are Our Current and Potential Customers? – Answering
the “who” question requires an examination of the relevant
characteristics that define target markets. This includes
demographic characteristics (gender, age, income, etc.),
geographic characteristics (where customers live, density of the
target market, etc.), and psychographic characteristics
(attitudes, opinions, interests, etc.).
What Do Customers Do with Our Products? – The “what”
question entails an assessment of how customers consume and
dispose of the firm’s products. Here the marketing manager
might be interested in identifying the rate of product
consumption (sometimes called the usage rate), differences
between heavy and light users of products, whether customers
use complementary products during consumption, and what
customers do with the firm’s products after consumption.
Where Do Customers Purchase Our Products? – The “where”
question is associated mainly with distribution and customer
convenience. Until recently, most firms looked solely at
traditional channels of distribution such as brokers,

wholesalers, and retailers. Thus, the marketing manager would
have concerns about the intensity of the distribution effort and
the types of retailers that the firm’s customers patronized.
Today, however, many other forms of distribution are available.
The fastest growing form of distribution today is nonstore
retailing—which includes vending machines; direct marketing
through catalogs, home sales, or infomercials; and electronic
merchandising through the Internet, interactive television, and
video kiosks.
When Do Customers Purchase Our Products? – The “when”
question refers to any situational influences that may cause
customer purchasing activity to vary over time. This includes
broad issues such as the seasonality of the firm’s products and
the variability in purchasing activity caused by promotional
events or budgetary constraints.
Why (and How) Do Customers Select Our Products? – The
“why” question involves identifying the basic need-satisfying
benefits provided by the firm’s products. The potential benefits
provided by the features of competing products should also be
analyzed. The “how” part of this question refers to the means of
payment that customers use when making a purchase.
Why Do Potential Customers Not Purchase Our Products? – An
important part of customer analysis is the realization that many
potential customers choose not to purchase the firm’s products.
There are many potential reasons why customers might not
purchase a firm’s products.
This analysis is vital because the information can be used to
identify and select specific target markets for the revised
marketing strategy. The firm should target those customer
segments where it can create and maintain a sustainable
advantage over its competition.

11- Identify and discuss at least five reasons why
potential customers do not purchase a firm’s goods or services.
For each reason, discuss ways that the firm can overcome the
resistance of noncustomers.
ANS:
There are many potential reasons why customers might not
purchase a firm’s products. The reasons given in the text are:
Noncustomers have a basic need that the firm’s product
does not fulfill.
Noncustomers perceive that they have better or lower-
priced alternatives such as
competing substitute products.
Competing products actually have better features or
benefits than the firm’s
product.
The firm’s product does not match noncustomers’ budgets
or lifestyles.
Noncustomers have high switching costs.
Noncustomers do not know that the firm’s product exists.
Noncustomers have misconceptions about the firm’s
product (weak or poor
image).
Poor distribution makes the firm’s product difficult to
find.
Student responses will vary greatly as to the reasons for
nonpurchase, as well as how the firm might overcome the
resistance of noncustomers.
12-Identify and discuss the challenges involved in collecting

ANS:
Despite the best intentions, problems usually arise in collecting
data and information. One of the most common problems is an
incomplete or inaccurate assessment of the situation that the
gathering of data should address. After expending a great
degree of effort in collecting data, the manager may be unsure
of the usefulness or relevance of what has been collected. In
some cases, the manager might even suffer from severe
information overload. To prevent these problems from
occurring, the marketing problem must be accurately and
specifically defined before the collection of any data. Top
managers who do not adequately explain their needs and
expectations to marketing researchers often cause the problem.
Another common difficulty is the expense of collecting
environmental data. Although there are always costs associated
with data collection (even if the data are free), the process need
not be prohibitively expensive. The key is to find alternative
data collection methods or sources. For example, an excellent
way for some businesses to collect data is to engage the
cooperation of a local college or university. Many professors
seek out marketing projects for their students as a part of course
requirements. Likewise, to help overcome data collection costs,
many researchers have turned to the Internet as a means of
collecting both quantitative and qualitative data on customer
opinions and behaviors.
A third issue is the time it takes to collect data and information.
Although this is certainly true with respect to primary data
collection, the collection of secondary data can be quite easy
and fast. Online data sources are quite accessible. Even if the
manager has no idea where to begin the search, the powerful
search engines and indexes available on the Internet make it

easy to find data. Online data sources have become so good at
data retrieval that the real problem involves the time needed to
sort through all of the available information to find something
that is truly relevant.
Finally, it can be challenging to find a way to organize the vast
amount of data and information collected during the situation
analysis. Clearly defining the marketing problem and blending
different data sources are among the first steps toward finding
all of the pieces to the puzzle. A critical next step is to convert
the data and information into a form that will facilitate strategy
development. Although there are a variety of tools that can be
used to analyze and organize environmental data and
information, one of the most effective of these tools is SWOT
analysis. As we will see in the next chapter, SWOT analysis –
which involves classifying data and information into strengths,
weaknesses, opportunities and threats—can be used to organize
data and information and used as a catalyst for strategy
formulation.
MKTG 4050: Applied Marketing Management Exam 1
Guidelines & Preparation Spring 2017
Exam 1 will cover chapters 1, 3 and 4 and other notes. It will be
held on February 22 in class. The information on this exam will
be drawn from the text, charts, graphs, and figures. The Exam
will contain 20 multiple choice and 4 essay questions.
* * * * * * * * * * * * *
Sample essay questions:
(1.1) The text discusses seven challenges and opportunities
associated with marketing in today’s economy. Identify these
issues and discuss how they are related. What is the common

thread that ties all seven issues together?
(1.2) Discuss the different views or interpretations of marketing
as a function of business, including the AMA’s recent change in
the definition of marketing. Why do you think the AMA
changed the definition after 20 years?
(1.3) Briefly explain and discuss the five types of utility
discussed in Chapter 1. Which type(s) of utility is the most
important and why?
(1.4) Discuss the challenges and opportunities associated with
challenging?
(3.1) Why have ethics and social responsibility become so
(3.2) Draw, label, and explain the pyramid of social
(3.3) Describe the role that a code of conduct plays in ensuring
(3.4) What is the relationship among marketing ethics, strategic
planning, and organizational performance? How is being market
oriented different than having a stakeholder orientation?
(4.1) “Analysis alone is not a solution” is an important piece of

(4.2) Identify and explain each element of the 5W model for
customer analysis. What role does this analysis play in an
(4.3) Identify and discuss at least five reasons why potential
customers do not purchase a firm’s goods or services. For each
reason, discuss ways that the firm can overcome the resistance
of noncustomers.
(4.4) Identify and discuss the challenges involved in collecting

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