Solution Manual For
Applied Marketing, 2nd Canadian Edition Rochelle Grayson, Daniel Padgett, Andrew
Loos
Chapter 1-15 With Appendix
Chapter 1
What Is Marketing?
What Marketing Is Not
Misconception #1: Marketing Is Common Sense
Misconception #2: Marketing Is Equivalent to Sales or Advertising
Misconception #3: Marketing Makes People Buy Things They Don‘t Need
Misconception: 4: Marketing Is an Art, and You Either Have the Gift of You
Don‘t
Misconception #5: Marketing Does Not Involve Numbers
LO 1.1 Describe some common misconceptions about marketing.
Marketing Defined
Marketing Is Managing Exchanges with Customer
What Does Managing Exchanges with Customers Include?
LO 1.2 Provide an accurate definition of marketing.
Philosophy of Marketing
Perceived Value
The Role of Marketing Research
LO 1.3 Discuss, with examples, the philosophy of marketing.
How Marketing Has Changed over Time
LO 1.4 Outline the evolution of marketing thought and practice.
Chapter Introduction
This chapter introduces students to marketing. The chapter first examines some common
misconceptions about marketing in LO 1.1 and then presents a proper definition in LO
1.2. The philosophy and thinking that drives marketing and marketers is discussed in LO
1.3. Finally, an examination of the evolution of marketing thought and practice to the
present time closes the chapter and completes the preparation of students for further
detailed study of marketing topics.
Industry Expert Video Bill Imada, Chairman, IW Group
Please note: Video Questions do not appear in the ebook and are designed to give
instructors a few options for quick quizzing and starting points for discussing the videos
with their students. Correct answers to multiple choice questions are bolded.
Multiple-choice Questions
,1. Bill Imada defines marketing as:
a. selling brands
b. people connecting with people, products, and services
c. understanding needs
d. wanting to improve products and services
2. IW Groups is trying to:
a. make the connection between companies and their customers more
personal and emotional
b. create brand loyalty whenever possible
c. better understand people through focus groups and surveys
d. increase communications with potential customers.
3. Bill Imada advises marketing students to:
a. avoid internships
b. focus on getting the highest grades with or without an internship
c. exploit the internship environment to the hilt to avoid friendships with co-
workers at internship environments.
4. According to Bill Imada, IW Group:
a. does better when competitors are weak
b. only hires young people who don‘t have preconceived ideas about marketing
solutions
c. is very secretive about how they do things.
d. should help everyone, even competitors.
Discussion Questions
1. How does Bill Imada describe marketing differently than the traditional textbook
models?
2. Do you think IW Group‘s multicultural focus influences the way the firm approaches
strategic thinking and creative problem-solving?
3. What does Bill Imada mean when he says, ―if someone can invent a better wheel, they
should.‖
What Marketing Is Not
LO 1.1 Describe some common misconceptions about marketing.
Some students might begin their studies with preconceived bias or incomplete
understanding of the nature of marketing and marketers. For example, some might
believe that marketing means "sales" or "advertising" and nothing more. It is important to
set the stage for how students will approach the study of marketing and provide the
proper foundation and background.
Several misconceptions are presented.
Misconception #1: Marketing Is Common Sense
Common sense statement #1: A lower price is always better.
Reality: In some cases, a higher price is actually better.
,Common sense statement #2: Better service leads to higher profits.
Reality: Better service is only more valuable if customers are willing to pay more for it.
Common sense statement #3: More is better.
Reality: Too many options can lower sales.
What is referred to as "common sense thinking" is really "common beliefs" held by many
people about marketing. Review each common sense statement with the class. Ask for a
show of hands of how many students believe there is some truth to each statement. Ask
why they think this statement is a popular belief.
Misconception #2: Marketing Is Equivalent to Sales or Advertising
Ask students to name one function or activity that best describes marketing. Sales and
advertising will likely be the most common response. If you then ask students why the
results point to sales and advertising more than other functions, their responses will likely
centre on familiarity with these function which opens the discussion to the introduction to
some of the other functions like distribution and product development.
Misconception #3: Marketing Makes People Buy Things They Don‘t Need
Ask students, with a show of hands, if they have ever bought something they didn't need.
Ask some students to explain the circumstances and work to develop the concepts of
"needs" and "wants." Ask students why they needed or just wanted specific things that
they bought and how they came to the decision to actually make the purchase. Did the
salesperson influence their thinking? Was the item on sale? Then, ask students if they
ever wanted something, but didn‘t have the ability to purchase it. While marketers
influence desires, customers have control to buy products that they have demand for.
Discuss with the students the ―Ethical Dilemma‖ in the chapter: Business managers have
to make tough decisions that impact others. In fact, marketing managers have the specific
job to influence customers so they are willing to exchange with the firm. Making these
decisions requires a consideration of both morals and ethics. Morals refer to the personal
beliefs the manager might have, while ethics refers to the social expectations others might
have. In other words, morals refer to what a person thinks is right or wrong. Ethics is
what the culture/society thinks is appropriate or not. Consider a manager for a furniture
company. A chair costs $100 to manufacture. However, from research, the manager
knows some customers are willing to pay $400 for the chair, while other customers are
willing to pay $700 for the same chair. Ask: What price do you think the marketing
manager will suggest? What does this suggest about the morals of the manager? What
price is ethical? What does this tell you about perceptions of marketers in general?
Misconception #4: Marketing Is an Art, and You Either Have the Gift or You Don‘t
, Ask students where creative skills are most useful in marketing? Advertising? Product
conceptualization and design? Discuss whether idea generation is a gift or can be
learned—especially in an environment where creative thinking is the norm in a marketing
department or firm.
Misconception #5: Marketing Does Not Involve Numbers
This misconception provides an opportunity to discuss the mathematics that students are
likely to deal with in the course and in their marketing career. Sales reports and the
various ratios marketers are likely to deal with can be introduced. Ask students why
reports of profit margins and sales per square foot would be useful to marketers.
Review the Applied Metrics scenario in chapter 1: ―Measuring performance: Sales vs
Profit:‖ Marketing managers often measure performance in terms of sales and profits.
Though the two are related, they are not equal and provide different information about
success. Consider the case where a marketing manager has two products in the division.
One assistant manager is in charge of each product. The marketing manager is reviewing
their performance for the previous month and has the following information:
Product A vs Product B -Sales and Profits
In the above scenario, we have two different products (Product A and Product B) with
different unit prices, units sold, and costs of goods sold.
Total Sales: This is the total revenue generated from sales of each product. It is
calculated by multiplying the unit price by the number of units sold.
Cost of Goods Sold: This is the cost incurred to produce or purchase the goods
sold. It includes the cost of raw materials, labor, and other expenses associated
with producing or purchasing the product.
Gross Profit: This is the difference between total sales and the cost of goods sold.
It represents the amount of money earned from sales before deducting operating
expenses.
Operating Expenses: These are expenses incurred in running the business, such as
salaries, rent, utilities, and marketing expenses.
Net Profit: This is the amount of money earned after deducting both the cost of
goods sold and operating expenses from total sales.
As we can see from the table, Product A has a lower unit price and a higher number of
units sold than Product B, but with a lower Cost of Goods Sold, it results in a higher total
gross profit. And even though they have the same operating expenses, Product A has a
higher net profit overall.
