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Courts increasingly frown on companies' efforts to keep markets separate. To avoid conflicts and problems that can arise along the channel or in the laws under which a business operates, and understanding of the various possible combinations of markets, channels, and products is essential. Sellers sending their products through both captive and independent outlets may face the problem of discrimination during periods of supply shortages or a possible "price squeeze". A company that uses separate channels to sell the same product to different markets must often deal with price differentials and contracts. Suppliers using different types of channels when selling in different geographic regions are subject to government intervention through price controls and tax differences.

New products should be priced and repriced over their life cycle to fit the changing competitive environment. In the pioneer stage manufacturers must estimate demand, decide on market targets, design promotional strategies, and choose distribution channels. Manufacturers must decide between a high initial price which takes advantage of inelastic demand and helps bear the burden of financing and a low initial price which can penetrate mass markets early and raise entry barriers to competitors. Manufacturers must recognize when a product is entering its mature stage so that prices can be reduced promptly to forestall the entry of private-label competitors.

A case history illustrates how a supplier cut into the sales of his competitors' identical products by devising a new promotional strategy. Advertising expenditures should be directed toward helping the customer to sell his end products. Successful implementation requires: selection of the right product, product manager, and customer; careful marketing research; and an adequate budget based on new account and volume goals. By spending time and money to help customers sell finished products, managers effectively market even the most prosaic industrial commodities.

Federal Express is a small-package airline operating throughout the United States. After initial heavy losses it is now profitable. Management is examining the services offered by the firm and believes that there is great potential for "Courier Pak", an overnight delivery service with presently limited sales. Is it appropriate to devote special emphasis to Courier Pak? If so, what is the appropriate role of advertising and personal selling?

A new media strategy for lemon advertising involving the concentration of the entire budget in a single-print vehicle, is under consideration.

Management of one of the leading Japanese camera manufacturers is faced with the problem of unauthorized shipments from the low-price markets of Hong Kong and Japan to high-price markets of Europe and North America. Control of distribution, change of prices, model designations, and warranty policies are considered as solutions to the problem.

Test marketing should be conducted to provide a dress rehearsal for launching of a new product by a company. Test marketing gives information to improve marketing productivity and avoid disasters. It should be used in conjunction with other marketing information. Recent technological developments allow laboratory simulation of test marketing which can reduce test marketing costs significantly. Researchers may use mathematical market simulation models.

Although the product life cycle (PLC) concept has been the mainstay of marketing strategy for many years, its accuracy and empirical basis are both questionable. In many cases, products do not develop along the traditional stages. The possible variations are so unpredictable that the most effective system employs unique information systems for each product. Product class, product form, and brand are the three stages of PLC, however, the model has little validity for brand life cycles. An effective model predicts sales drops and rises, and it serves as an indicator of the short-term success of strategy. Market-communication models greatly improve product life code models because they quantitatively measure the influences on sales, evaluate different opinions, and provide advance warning signals.

Despite the benefit of high profits, as well as the enjoyment of a position of leadership, a company that has a high market share is a tempting target for actual and potential competitors, consumer organizations and government agencies. Market-share management involves the determination of optimal market share in a given product/market. To achieve or maintain this optimum share, recommended marketing strategies include: sharebuilding, share maintenance, share reduction, and risk reduction.

Introductory note on communications policy for use in first year marketing. Focuses on: Target selection; message delineation; communications intensity; alternative communications; means and media; economics of communications decisions; and need for consistency in communications programs. Assumes that students have previously read Consumer Analysis, Market Analysis, and Note on Marketing Arithmetic and Related Marketing Terms.

After 18 months of deficit operations, Southwest Airlines stands on the brink of profitability. Selective application of discount fares has contributed to a rapid growth in market share. Then, in February 1973, its major competitor halves all fares on Southwest's principal route. Management must decide how to respond. Exhibits detail Southwest's cost structure plus passenger and flight statistics for Southwest and competitors.

Describes the nature and purposes of market analysis. Among topics briefly discussed are primary and selective demand, determinants of demand, market segmentation, the product life cycle, and temporal or cyclical demand variations. Intended as background reading in an introductory marketing course using case materials.

The success of Crown Cork and Seal in the beer can and aerosol container markets is attributable to their concentration on specialized design and manufacturing for those two specific high growth markets. While competitors diversified and lost container market shares to former customers engaged in self manufacture, Crown Cork's careful market strategy paid off. Market choice demands a long range commitment in terms of customer base, competition and required resources. Horizontal and vertical product-market choices allow a company to concentrate marketing where it has an advantage over competitors. Choice of product/market position at the beginning or the end of the market depends on company commitment to manufacturing, quality control and service.

A research technique, called conjoint measurement, evaluates consumers' judgments to determine the nature of a product and the available market. This technique is especially useful when choosing between multiattribute products. Studies of various complex product choices illustrate how conjoint measurement indicates customer preference and the number of prospective orders. Conjoint measurement also shows consumers' evaluations of new product formulations; effective packaging, brand name, and promotional copy combinations; pricing and brand alternatives; verbalized descriptions of new products and services; and alternative service designs.

Test marketing has proper uses and serious limitations. It provides a measure of sales performance and the opportunity to identify and correct any weaknesses in the product or in the marketing plan. It is, however, costly and laborious. Four factors to weigh in determining the efficacy of test marketing are: the cost and risk of product failure against the profit and probability of success; the difference in scale of investment between a test and a national launch; the likelihood of being copied and preempted by the competition; and the costs in money and reputation of a product failure.

Southwest Airlines, a small intrastate carrier, has just completed its first year of operations in June 1972 and management is debating what advertising and promotional strategy to adopt for the future. Southwest has successfully broken into a market dominated by two larger airlines and gained a significant market share through improved quality service, lower prices and other innovations, supported by heavy advertising and other promotions. However, it is still not making money. Illustrates development and introduction of a new consumer service and advertising and promotional strategy. Exhibits emphasize advertising copy, including a centerfold. Another version of this case, Southwest Airlines (A), takes the action up through February 1973, includes more details on pricing, and is designed for teaching marketing programs.

Describes designing an advertising or promotion program to sustain the momentum on L'eggs successful market entry.

Systems analysis may increase the productivity of a sales department by revealing the right combination of products, the right promotional methods, and the right locations. Sales managers implement the system by setting improvement objectives and then applying output and input variables to determine which control variables need changing. Five methods of measuring efficiency are: contribution to profit; return on assets; sales cost ratio; market share; and achievement of company marketing goals.

Evidence from an ongoing study of 57 companies to determine the profit impact of market strategies (PIMS) shows that one of the main indicators of business profitability is market share. By presenting evidence on the nature, importance, and implications of the connection between market share and profit performance, a group of business experts attempt to answer such questions as why market share is profitable; what the observed differences between low- and high-share businesses are; and what implications the profitability/market share links have for strategic planning.

Spreadsheet supplement for case 575-072.