Chapter 2

As an assistant to Jane Melody, Sonic’s chief marketing officer, you’ve been assigned to draft a
mission statement for top management’s review. This should cover the competitive spheres
within which the firm will operate and your recommendation of an appropriate generic
competitive strategy. Using your knowledge of marketing, the information you have about Sonic,
and library or Internet resources, answer the following questions.

 What should Sonic’s mission be?

 In what competitive spheres (industry, products and applications, competence, market-
segment, vertical, and geographic) should Sonic operate?
 Which of Porter’s generic competitive strategies would you recommend Sonic follow in
formulating its overall strategy?
As your instructor directs, enter your answers and supporting information in a written marketing
plan to document your ideas.

Answer

Students may offer differing definitions of Sonic’s mission. One possibility: “Sonic is dedicated
to producing and marketing high-quality products that provide a range of valued communication,
entertainment, information storage, and organization functions for the convenience of consumers
and business users on the go.”

Among the major competitive scopes in which Sonic might operate are:

 Product: Multifunction, multimedia personal digital assistant products. According to the

marketing plan, Sonic’s products include features (such as hands-free cell/Wi-Fi
telecommunications capabilities) that are unique to this category plus other features
found only in higher-priced models.
 Industry: The Smartphone market covers both consumers (including professionals who
buy for their own use and students) and businesses.
 Competence: Producing quality electronics with innovative, value-added features.
 Market segments: Among consumers, middle- to upper-income professionals who need
one portable device to coordinate their busy schedules and communicate with family and
colleagues. Also students who want a multimedia, dual-mode device. Among businesses,
mid- to large-size corporations that want to help their workforce stay in touch and input
or access critical data on the go. Also entrepreneurs, small-business owners, and medical
users.
 Vertical scope: Manufactures its own products for distribution through a network of
select retailers in top U.S. markets plus particular online retailers.
 Geographic scope: Nationwide across the United States.

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Sonic Appendix Solutions

Students may suggest that Sonic pursue differentiation as a generic competitive strategy, because
the firm is playing to strengths in important benefits valued by key customer segments. Sonic is
not pursuing cost leadership. Some students may argue that Sonic is pursuing focus because it is
targeting specific segments; however, since those segments are broad rather than narrow, Sonic’s
competitive strategy is more accurately described as differentiation.

Chapter 3

Jane Melody asks you to scan Sonic’s external environment for early warning signals of new
opportunities and emerging threats that could affect the success of the Sonic 1000 Smartphone.
Using Internet or library sources (or both), locate information to answer three questions about
key areas of the macroenvironment.

 What demographic changes are likely to affect Sonic’s targeted segments?

 What economic trends might influence buyer behavior in Sonic’s targeted segments?
 How might the rapid pace of technological change alter Sonic’s competitive situation?
Enter your answers about Sonic’s environment in the appropriate sections of a written marketing
plan to record your comments.

Answer

Students may consider a variety of demographic changes, such as growth in the student
population and geographical shifts that could cause Sonic to rethink its distribution strategy. Ask
students to discuss Sonic’s possible responses to these shifts. Among the economic trends that
could influence buyer behavior are: lower credit availability and recessionary conditions that
affect job and business stability. What should Sonic do if these trends actually occur?

Technological changes will clearly affect Sonic’s competitive situation if competitors start to
market Smartphones with features and functions that equal or surpass the 1000 model before
Sonic launches its first product. Also, the Sonic 1000 may become obsolete quickly if
technological advances allow competitors to develop newer/faster/cheaper/more convenient
products. Again, ask students what Sonic can do to anticipate such changes and be ready for
them?

Chapter 4

Your next task is to consider how marketing research can help Sonic support its marketing
strategy. Jane Melody also asks you how Sonic can measure results after the marketing plan is
implemented. She wants you to answer the following three questions.

 What surveys, focus groups, observation, behavioral data, or experiments will Sonic need
to support its marketing strategy? Be specific about the questions or issues that Sonic
needs to resolve using marketing research.
 Where can you find suitable secondary data about total demand for Smartphones over the

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 next two years? Identify at least two sources (online or off-line), describe what you plan
to draw from each source, and indicate how the data would be useful for Sonic’s
marketing planning.
 Recommend three specific marketing metrics for Sonic to apply in determining
marketing effectiveness and efficiency.
Enter this information in the marketing plan you’ve been writing to document your responses.

Answer

Students will offer a variety of ideas about surveys, focus groups, observation, behavioral data,
or experiments that Sonic can use to support its marketing decisions. Evaluate their responses on
the basis of how well the research they suggest will help Sonic answer specific questions and
resolve specific issues important to the company’s planning and implementation. As one
example, the research should help Sonic better describe attractive, profitable market segments to
be targeted or better understand how certain customer segments make buying decisions about
Smartphone products.

Students will offer various ideas for sources of secondary data about Smartphone demand in the
coming years. For instance, they might recommend searching business publications for quotes
from analysts (such as Gartner Group) that cover Smartphone technology and companies
competing in this market.

A few of the many marketing metrics that Sonic can apply in determining marketing
effectiveness and efficiency are: sales by market, channel, and segment; market share; brand
awareness; product profitability; and customer satisfaction. Students should be able to add to this
list.

Chapter 5

Sonic has decided to focus on total customer satisfaction as a way of encouraging brand loyalty
in a highly competitive marketplace. With this in mind, you’ve been assigned to analyze three
specific issues as you continue working on Sonic’s marketing plan.

 How (and how often) should Sonic monitor customer satisfaction?

 Would you recommend that Sonic use the Net Promoter method? Explain your reasoning.
 Which customer touch points should Sonic pay particularly close attention to, and why?
Consider your answers in the context of Sonic’s current situation and the objectives it has set.
Then enter your latest decisions in the written marketing plan.

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Sonic Appendix Solutions

Answer

Students will recognize that Sonic needs to monitor customer satisfaction more often in the early
months following the first product’s launch so it can identify and fix any quality problems that
occur. Otherwise, the company’s reputation could suffer if product quality is perceived to be
low. Sonic might collect satisfaction data by asking buyers to register for updates and warranty
information, then sending them brief surveys after a few months of ownership. Sonic could also
use other methods, such as asking what retailers have heard from customers (complaints or
compliments or ideas for product improvements).

If students recommend that Sonic use the Net Promoter concept, they may say that this will help
the firm judge how well it is satisfying current customers (based on whether they are willing to
recommend the brand). If students recommend against using this concept, they may say that
Sonic can get more specific, timely information through research designed to gauge satisfaction
with the Sonic 1000. Students should be able to identify a number of customer touch points, such
as in-store sales contacts, that warrant close attention for customer satisfaction.

Chapter 6

You’re responsible for researching and analyzing the consumer market Sonic’s Smartphone
product. Look again at the data you’ve already entered about the company’s current situation and
macroenvironment, especially the market being targeted. Now answer these questions about the
market and buyer behavior.
 What cultural, social, and personal factors are likely to most influence consumer
purchasing of Smartphones? What research tools would help you better understand the
effect on buyer attitudes and behavior?
 Which aspects of consumer behavior should Sonic’s marketing plan emphasize and why?
 What marketing activities should Sonic plan to coincide with each stage of the consumer
buying process?

After you’ve analyzed these aspects of consumer behavior, consider the implications for Sonic’s
marketing efforts to support the launch of its Smartphone. Finally, document your findings and
conclusions in a written marketing plan.

Answer

Students may say that the values of material comfort, individuality, and efficiency and
practicality—part of the shared U.S. culture—could affect Smartphone buyers. They may also
indicate that reference groups, roles, and statuses play a part by, for instance, influencing who
buys a Sonic Smartphone as a status symbol. Personal factors influencing this purchase include
occupation and economic circumstances and lifestyle. Students may suggest conducting primary
research to better understand buyer attitudes and behavior and to determine whether a
Smartphone is considered a high- or low-involvement product; they may also suggest examining
secondary research to learn more about the attitudes and behavior of current Smartphone owners.

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Sonic, students may suggest, should use its marketing to get Sonic into the total, awareness,
consideration, and choice sets during the consumer’s information search. Also Sonic needs to use
its marketing to influence consumers’ attitudes and beliefs. The idea is for customers to form a
positive impression of this new brand and include it in their consideration and choice sets.

Two sample ways of using marketing to coincide with the buying process: (1) the plan should
stress informative marketing communications targeting consumers who will use Smartphones to
build the brand image and provoke problem recognition to set complex buying behavior in
motion; and (2) the plan should stress Smartphone use among aspirational groups to bring in
social factors that affect attitudes and behavior during the evaluation of alternatives part of the
consumer buying process.

Chapter 7

You’ve been learning more about the business market for Sonic’s Smartphone. Jane Melody has
defined this market as mid- to large-sized corporations that want their employees to stay in touch
and be able to input or access data from any location. Respond to the following three questions
based on your knowledge of Sonic’s current situation and business-to-business marketing.
 What types of businesses appear to fit Melody’s market definition? How can you
research the number of employees and find other data about these types of businesses?
 What type of purchase would a Sonic Smartphone represent for these businesses? Who
would participate in and influence this type of purchase?
 Would demand for Smartphones among corporate buyers tend to be inelastic? What are
the implications for Sonic’s marketing plan?

Your answers to these questions will affect how Sonic plans marketing activities for the business
segments to be targeted. Take a few minutes to note your ideas in a written marketing plan.

Answer

The information that students gather about business-to-business prospects and influences will
affect what they include in their marketing plans. They may use the NAICS classifications site
(www.census.gov/epcd/www/naics.html) to identify specific NAICS sectors, such as information
(code 51), finance and insurance (code 52), and professional, scientific, and technical services
(code 54). Following links on the U.S. Census Bureau site, students can find out exactly how
many companies are in each industry grouping, determine how many are in specific geographic
markets, and identify the number of employees. Many state sites also offer state-specific data.

For business customers that don’t have Smartphones, a Sonic Smartphone would represent a
new-task buy. Any and all of the buying-center members may be involved in a new-task buy. A
gatekeeper, for example, may allow Sonic’s marketing communications to reach buyers but
prevent another firm’s communications from getting through. For those seeking to replace older
devices, a Sonic Smartphone would represent a modified rebuy, because the buyer is taking a
new look at changing product specs, prices, delivery requirements, and other aspects of the
purchase. Although any buying-center participant may be involved, those most directly involved

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Sonic Appendix Solutions

in formulating new specifications and evaluating suppliers are likely to be influencers (especially
internal information technology experts), deciders, approvers, and buyers.

Initial demand for Smartphones among corporate buyers would probably not be inelastic,
because the functions supplied by Smartphones can be handled by other devices. Therefore,
Sonic must consider price sensitivity when preparing a marketing plan. However, once a
corporation has given managers and employees Smartphones for everyday tasks, demand would
likely be somewhat inelastic because organizational members have come to rely on these
devices. This would be a factor for marketing the next Sonic model.

Chapter 8

As Jane Melody’s assistant, you’re researching how to market the Sonic 1000 Smartphone
product outside the United States within a year. You’ve been asked to answer the following
questions about Sonic’s use of global marketing.

 As a start-up company, should Sonic use indirect or direct exporting, licensing, joint
ventures, or direct investment to enter the Canadian market next year? To enter other
markets? Explain your answers.
 If Sonic starts marketing its Smartphone in other countries, which of the international
product strategies is most appropriate? Why?
 Although some components are made in Asia, Sonic’s Smartphones will be assembled in
Mexico through a contractual arrangement with a local factory. How are country-of-
origin perceptions likely to affect your marketing recommendations?

Think about how these global marketing issues fit into Sonic’s overall marketing strategy. Now
document your ideas in the marketing plan you’ve been writing.

Answer

Sonic may want to begin using indirect exporting to get its products to Canada, minimizing the
risk, investment, and commitment. This also allows the company to evaluate response and, if
warranted, change its approach and use direct exporting or other methods. As students offer
observations about entering the Canadian market and expanding beyond, ask them how a start-up
like Sonic can balance the risk and the investment with the potential for profits.

Students will recognize that Sonic will have to adapt its products as it expands beyond North
America, because of worldwide variations in electrical standards and broadband systems. Also,
consumers in other countries may have different needs and preferences, and the competition in
Smartphones is likely to vary in each market, which will affect Sonic’s marketing
communication efforts.

Students who say country-of-origin issues will not change their marketing recommendations may
note that many Smartphones and other high-tech gadgets are made in Asia (or other areas) and
this doesn’t seem to have hurt their sales. Students who think country-of-origin issues may affect
Sonic’s marketing might say that the company should emphasize its careful design, quality

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control, testing, and other aspects of ensuring that the product meets or exceeds all relevant
standards and expectations.

Chapter 9

Identifying suitable market segments and selecting targets are critical to the success of any
marketing plan. As Jane Melody’s assistant, you’re responsible for market segmentation and
targeting. Look back at the market information, buyer behavior data, and competitive details you
previously gathered as you answer the following questions.

 Which variables should Sonic use to segment its consumer and business markets?
 How can Sonic evaluate the attractiveness of each identified segment? Should Sonic
market to one consumer segment and one business segment or target more than one in
each market? Why?
 Should Sonic pursue full market coverage, market specialization, product specialization,
selective specialization, or single-segment concentration? Why?
Next, consider how your decisions about segmentation and targeting will affect Sonic’s
marketing efforts. Depending on your instructor’s directions, summarize your conclusions in a
written marketing plan.

Answer

In general, Sonic would benefit by targeting specific consumer segments based on their busy
work and home lifestyles; their needs for a versatile, multipurpose product that delivers the
benefit of helping organize their lives and stay in touch while away from home and office; and
positive attitudes toward Smartphone technology, including wireless Web and e-mail access.
Students may suggest additional variables for Sonic to use, as well. For example, in addition to
income and geography, Sonic may want to focus on consumers who have specific lifestyles,
needs, or attitudes.

For business markets, Sonic can use demographics (such as industry and company size) and
situational factors (need for specific applications such as on-the-go access to e-mail or ability to
input data in the field). Again, students may offer other ideas for suitable variables to segment
the business market.

Sonic can evaluate the attractiveness of each identified segment by determining whether it is
measurable, substantial, accessible, differentiable, and actionable. The company will probably
need to conduct research to support this evaluation. The decision to market to one or more
segments in each market depends on how well each segment fits with Sonic’s goals and
objectives and its resources, such as the marketing budget. Ask students to suggest what criteria
should carry the most weight in this evaluation process.

Students can make a compelling case for Sonic pursuing either product or selective
specialization. With product specialization, the company will sell its Smartphone products to

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Sonic Appendix Solutions

both consumer and business segments that need the primary communication and information
exchange benefits. With selective specialization, the company will identify specific segments
that would respond to the Smartphone offer, thereby diversifying the risk. However, Sonic
should not pursue full market coverage at this time, in part because different segments may have
different needs and in part because the cost is too much for a start-up. In addition, single-segment
concentration may prove too narrow to be profitable for Sonic.

Chapter 10

As before, you’re working with Jane Melody on Sonic’s marketing plan for launching a new
Smartphone. Now you’re focusing on Sonic’s brand positioning by answering three specific
questions.
 In a sentence or two, what is an appropriate positioning statement for the Sonic 1000
Smartphone?
 Create a perceptual map to diagram points-of-parity and points-of-difference between
Sonic and its competitors. Are there any opportunities based on your findings?
 How can Sonic create differentiation from competitors using emotional branding?

Document your ideas in a written marketing plan. Note any additional research you may need to
determine how to proceed after the Sonic 1000 has been launched.

Answer

Students’ answers may vary, depending on their answers and decisions related to marketing plan
exercises in earlier chapters. In general, some of the key differentiation variables they may
consider as they develop a positioning statement are value-added features (such as multimedia,
dual-mode capabilities) and high-tech image, linked to the benefits of one versatile device for
easy/speedy communication, entertainment, and information exchange on the go. A complete
positioning statement should identify the target audience as well.

Emotional differences are likely to be strongest or most effective when they are related to a
functional difference that affects the product performance in some way. Sonic can differentiate
its offering using storytelling. It should ensure it is authentic in its communications, as
authenticity is important in emotional branding.

Chapter 11

Sonic is a new brand with no prior brand associations, which presents a number of marketing
opportunities and challenges. Jane Melody has given you responsibility for making
recommendations about three brand equity issues that are important to Sonic’s marketing plan.

 What brand elements would be most useful for differentiating the Sonic brand from
competing brands?

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 How can Sonic sum up its brand promise for the new Smartphone?
 Should Sonic add a brand for its second product or retain the Sonic name?
Be sure your brand ideas are appropriate in light of what you’ve learned about your targeted
segments and the competition. Then add this information to your written marketing plan.

Answer

The Sonic brand name lends itself to associations with sophisticated electronics technology, a
desirable attribute for a brand that wants to deliver the benefit of allowing users to easily and
conveniently communicate and exchange information while on the road. Sonic can reinforce
these associations by using brand elements such as a “thunderbolt” graphic (used much the same
way that Nike uses its “swoosh” in advertising and packaging) and an appropriate slogan (what
would students suggest?).

Students may sum up the Sonic brand promise in various ways. Ask them to show how their
suggested brand promise incorporates the benefits valued by customers (such as versatility,
convenience, reliability, ease of use, and speedy on-the-go organization and communication).

Sonic will be investing in its brand with the launch of the 1000 model. After this kind of
investment, the company should not change brands for the 2000 model, because it would then
lose much of the brand equity built up during the 1000’s introduction and growth period.

Chapter 12

Knowing that the smart-phone market is likely to remain highly competitive, Jane Melody wants
you to look ahead at how Sonic can develop new products outside the smart-phone market.
Review the competitive situation and the market situation before you continue working on the
Sonic Marketing plan.

 List three new-product ideas that build on Sonic’s strengths and the needs of its various
target segments. What criteria should Sonic use to screen these ideas?
 Develop the most promising idea into a product concept, and explain how Sonic can test
this concept. What particular dimensions must be tested?
 Assume that the most promising idea tests well. Now develop a marketing strategy for
introducing it, including a description of the target market; the product positioning; the
estimated sales, profit, and market share goals for the first year; your channel strategy;
and the marketing budget you will recommend for this new-product introduction. If
possible, estimate Sonic’s costs and conduct a break-even analysis.

Document all the details of your new-product development ideas in the written marketing plan.

Answer

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Sonic Appendix Solutions

Students will certainly have a wide variety of imaginative new-product ideas for Sonic to
consider, such as a model that wirelessly connects to movie Web sites to buy and download full-
length films in a matter of seconds (this builds on Sonic’s technological strength and its brand
promise of versatility and convenience). New product ideas can be screened through an idea
committee and by rating against preset criteria such as estimated cost of development, market
size, and revenue/profit potential. In addition, these ideas may be tested by asking members of
the targeted segments to consider the concept or handle a prototype, among other testing
methods. Testing will help Sonic determine the portability and usability of a possible new
product and examine the reaction to specific features described in the concept, such as the speed
of paying for and downloading movies.

Students will develop a product concept based on one of their new product ideas. Ask them how
the marketing strategy they suggest fits with the overall goals and ideas proposed in their
marketing plans, including an examination of the costs and an appropriate break-even point. Also
ask whether cannibalization will be an issue for Sonic to consider or whether the new product
will help Sonic improve its competitive position. Students may recommend an acid test or other
focus groups.

For the last part of the question, the students’ answers will depend on their choices regarding the
product and the target audience. If students select a penetration strategy and a low price, their
assumptions regarding margins and the break even units should reflect a need to sell more units.
On the other hand, a highly technological product that is sold to innovators using skim pricing
may need fewer units to breakeven.

Chapter 13

Introducing a new product entails a variety of decisions about product strategy, including
differentiation, ingredient branding, packaging, labeling, warranty, and guarantee. Your next task
is to answer the following questions about Sonic’s product strategy.
 Which aspect of product differentiation would be most valuable in setting Sonic apart
from its competitors, and why?
 Should Sonic use ingredient branding to tout the Linux-based operating system that it
says makes its Smartphone more secure than Smartphones based on some other operating
systems?
 How can Sonic use packaging and labeling to support its brand image and help its
channel partners sell the Smartphone product more effectively?
Once you’ve answered these questions, incorporate your ideas into the marketing plan you’ve
been writing.

Answer

Students’ answers may vary, depending on their answers and decisions related to marketing plan
exercises in earlier chapters. In general, some of the key differentiation variables they may
suggest for Sonic are: features (especially the dual mode and multimedia features); quality (to
reassure buyers that Sonic products will perform as expected and will be reliable); and design

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(for status-conscious buyers who care about aesthetics and functionality). Also Sonic may
differentiate itself on the basis of superior customer service.

Students who recommend that Sonic use ingredient branding to tout the Linux-based operating
system may say this helps differentiate the 1000 from competing Smartphones and supports the
benefit of a more secure system. Students who don’t recommend using ingredient branding may
argue that this aspect of the offering is less important than other aspects and therefore Sonic
should focus on aspects that customers value more highly.

Sonic can support brand image by prominently displaying its brand and logo or some other
appropriate graphic on the packaging. Other ways to use the packaging to reinforce the brand
image include: listing important product specifications to show how the Smartphone’s advanced
technology delivers on the brand promise (this also helps retail salespeople compare the product
to competing models); and including an enlarged photo or illustration of the Smartphone
highlighting key competitively-superior features and the benefits they deliver (again, this helps
retail salespeople discuss the product’s competitive strengths). Encourage students to think
creatively about packaging and labeling as part of the marketing package that will help the
product’s introduction.

Chapter 14

You’re planning customer support services for Sonic’s new Smartphone product. Review what
you know about your target market and its needs; also think about what Sonic’s competitors are
offering. Then respond to these three questions about designing and managing services.

 What support services are buyers of Smartphone products likely to want and need?
 How can Sonic manage gaps between perceived service and expected service to satisfy
customers?
 What post-sale service arrangements must Sonic make and how would you expect these
to affect customer satisfaction?
Consider how your service strategy will support Sonic’s overall marketing efforts. Summarize
your recommendations in a written marketing plan to document your ideas.

Answer

In general, Smartphone buyers would want convenient access to technical support for setup and
trouble-shooting; repair services if needed; a good warranty offer; and information about
upgrades and updates. Students may offer ideas about additional support services, as well.

Sonic can manage the gaps between expected and perceived service by (1) managing
expectations through communications that explain what the company offers so customers do not
have expectations that exceed actual service delivery and (2) researching customer satisfaction
and perceptions of service to uncover problems that can be addressed. To be competitive, Sonic
will have to offer at least the same guarantee as its major rivals. If Sonic’s products are better
quality than those of rivals, it can take a small risk and offer a better guarantee.

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Sonic Appendix Solutions

Sonic’s post-sale service must include repair and return of defective products, which means
training company employees, distributors, and repair or service centers. Students may suggest
additional service arrangements to keep customers satisfied.

Chapter 15

Sonic is a new entrant in an established industry characterized by competitors with relatively

high brand identity and strong market positions. Use research and your knowledge of how to deal
with competitors to consider three issues that will affect the company’s ability to successfully
introduce its first product:

 What factors will you use to determine Sonic’s strategic group?

 Should Sonic select a class of competitor to attack on the basis of strength versus
weakness, closeness versus distance, or good versus bad? Why is this appropriate in the
Smartphone market?
 As a start-up company, what competitive strategy would be most effective as Sonic
introduces its first product?

Take time to analyze how Sonic’s competitive strategy will affect its marketing strategy and
tactics. Now summarize your ideas in a written marketing plan or use Marketing Plan Pro
software.

Answer

Sonic’s strategic group would include the firms following the same or a very similar strategy in
the same target market. The Smartphone market is changing rapidly, however, which means
students should be able to explain their choice of factors and competitors using the most up-to-
date data.

Students should be able to defend their answers about selecting a class of competitor based on
strength vs. weakness, closeness vs. distance, or good vs. bad. For example, some students may
say that Sonic should challenge close competitors because the Sonic 1000 has many features that
resemble products marketed by distant competitors.

Some students may make a case for Sonic using a market-challenger competitive strategy (a
flank or bypass attack, for instance). Others may suggest that Sonic consider a niche strategy (by
targeting the medical market, for instance). Ask students to explain why their suggested strategy
is appropriate and what it will mean for the marketing plan’s tactics and implementation.

Chapter 16

You’re in charge of pricing Sonic’s product for its launch early next year. Review the SWOT
analysis you previously prepared as well as Sonic’s competitive environment, targeting strategy,

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and product positioning. Now continue working on your marketing plan by responding to the
following questions.

 What should Sonic’s primary pricing objective be? Explain your reasoning.
 Are Smartphone customers likely to be price sensitive? What are the implications for
your pricing decisions?
 What price adaptations (such as discounts, allowances, and promotional pricing) should
Sonic include in its marketing plan?

Make notes about your answers to these questions and then document the information in a
written marketing plan.

Answer

Sonic’s primary pricing objective should be market penetration, because it is operating in a

difficult and highly competitive market. If the firm fails to achieve a decent market share, it will
be unable to effectively compete and will not be able to lower unit costs through higher volume.
Students may argue that survival is an appropriate pricing objective, but this is probably not the
case because Sonic is not yet in trouble. Nor can Sonic set prices to maximize current profits at
this time, because it needs to establish its brand.

Smartphone customers are likely to be fairly price sensitive, because there are many well-known
Smartphones already on the market (substitute-awareness effect) and because current users of
other brands may perceive switching costs (sunk-investment effect). Demand is relatively elastic,
with more buyers willing to buy when prices are substantially lower. Thus, Sonic must price at
the low end of its acceptable range to implement a market penetration strategy. Sonic’s
introductory product pricing must be supported by the other parts of the marketing mix. For
example, Sonic’s advertising might mention the price or tout the value, and its choice of
distributors should be consistent with its pricing. Students may suggest other ideas, as well.

Price adaptations to be included in Sonic’s marketing plan include: cash discounts for resellers
buying Smartphones (because these encourage early or on-time payment of invoices) and
promotional allowances for encouraging distributors to stock the new Smartphones. Sonic might
also use promotional pricing on a limited basis to jump-start consumer purchases of its new
Smartphone. Ask students to consider how other tactics mentioned in the chapter might apply to
Sonic’s product introduction.

Chapter 17

At Sonic, you have been asked to develop a marketing channel system for the new Sonic 1000
Smartphone. Based on what you know about designing and managing integrated marketing
channels, answer the three questions that follow.

 Do you agree with Jane Melody’s decision to use a push strategy for the new product?
Explain your reasoning.

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Sonic Appendix Solutions

 How many channel levels are appropriate for Sonic’s targeted consumer and business
segments?
 In determining the number of channel members, should you use exclusive, selective, or
intensive distribution? Why?

Be sure your marketing channel ideas support the product positioning and are consistent with the
goals that have been set. Record your recommendations in a written marketing plan.

Answer

Students who agree with the push strategy may argue that Sonic needs to get its new product into
stores and dealers where consumers and business customers will see it alongside competing
products. These students may also argue that without good distribution, any consumer-directed
marketing communications will be wasted if buyers go to local stores or shop online and can’t
find the Sonic 1000. Students who disagree with the push strategy may argue that potential
buyers need to know about the new product and be prompted to ask for it at local stores. This
would be a good approach because Sonic is a new brand and stores could be reluctant to stock it
unless buyers are asking for it. Be sure students consider the implications for their marketing
communications activities.

Sonic must plan forward channels to allow consumers and business customers to buy its
Smartphones from suitable dealers and retailers. It must also plan backward channels to allow for
the return flow of defective or broken Smartphones and unsold merchandise being returned by
dealers. Sonic may have to use two levels (wholesalers and retailers) to reach the consumer and
business markets; in addition, it may have to sell directly to corporate customers that buy in
volume.

Sonic should probably plan for selective distribution, because—as a new company entering an
established product category—it may not be able to sign up all the distributors it would like.
Also, Sonic will want to use only channel members who are knowledgeable about Smartphones,
can offer the right levels of service, and who reach the targeted customer segments. Ask students
about the benefits and pitfalls of using exclusive or intensive distribution for a new company like
Sonic.

Chapter 18

At this point, you need to make more specific decisions about managing the marketing
intermediaries for Sonic’s first product. Formulate your ideas by answering the following
questions.

 What types of retailers would be most appropriate for distributing Sonic’s Smartphone?
What are the advantages and disadvantages of selling through these types of retailers?
 What role should wholesalers play in Sonic’s distribution strategy? Why?
 What market-logistics issues must Sonic consider for the launch of its first Smartphone?

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Summarize your decisions about retailing, wholesaling, and logistics in the marketing plan
you’ve been writing.

Answer

Sonic should approach specialty retailers that serve the segments being targeted for the new
Smartphone and that carry complementary products, have an appropriate price level in line with
Sonic’s pricing, and have the services to demonstrate and sell the Smartphone. For example,
office-supply superstores such as Staples would be appropriate, as would consumer electronics
stores. One benefit of this is a connection with well-regarded retailers, which could enhance
Sonic’s reputation. One disadvantage is that Sonic may have to fight for prominent shelf space
and sales attention.

Because Sonic is entering an already crowded Smartphone market, it may need to work with
wholesalers to get into the best retail chains and to reach smaller and local specialty stores.
Market-logistics issues to be considered include: getting sufficient merchandise to the stores in
time for the scheduled launch; transporting Smartphones at an acceptable cost but with minimal
damage; promptly and accurately processing orders from wholesalers and retailers; warehousing
Smartphones at appropriate cost and in appropriate locations; and maintaining sufficient
inventory without being overstocked. Ask students to discuss the effect of all these
wholesale/retail decisions on other marketing-mix decisions, especially pricing.

Chapter 19

Jane Melody has assigned you to plan integrated marketing communications for Sonic’s new
product introduction. Review the data, decisions, and strategies you previously documented in
your marketing plan before you answer the next three questions.

 What communications objectives are appropriate for Sonic’s initial campaign?

 How can Sonic use personal communications channels to influence its target audience?
 Which communication tools would you recommend using after Sonic’s initial product
has been in the market for six months? Why?

Confirm that your marketing communications plans make sense in light of Sonic’s overall
marketing efforts. Now, as your instructor directs, summarize your thoughts in a written
marketing plan.

Answer

For the initial campaign, Sonic should set objectives for awareness among the targeted segments.
It may also want to set objectives for knowledge, liking, preference, conviction, and purchase as
time goes on. Initially, however, it must make the market aware of the brand and product.
Students should use their imaginations in discussing personal communications channels such as
direct marketing, interactive marketing, personal selling, and word-of-mouth marketing to reach
prospects and build brand credibility.

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Sonic Appendix Solutions

Ask students to be creative in suggesting promotional tools for Sonic’s promotional mix after the
first six months of the product introduction. This may be a good time to increase consumer
communications and decrease trade communications, for instance, because distribution has been
established and now Sonic needs to drive traffic to its resellers. Also ask students to discuss how
their choices fit with other decisions they set earlier in the marketing planning process. For
example, students may want to change the mix of sales promotion, public relations, personal
selling, and online or direct marketing.

Chapter 20

Mass communications will play a key role in Sonic’s product introduction. After reviewing your
earlier decisions and thinking about the current situation (especially your competitive
circumstances), respond to the following questions to continue planning Sonic’s marketing
communications strategy.
 Once Sonic begins to use consumer advertising, what goals would be appropriate?
 Should Sonic continue consumer and trade sales promotion after the new product has
been in the market for six months? Explain your reasoning.
 Jane Melody wants you to recommend an event sponsorship possibility that would be
appropriate for the new product campaign. What type of event would you suggest and
what objectives would you set for the sponsorship?

Record your ideas about mass communications in the marketing plan you’ve been writing.

Answer

Students may suggest advertising objectives related to (1) informing consumers about the new
product’s features and benefits, (2) making them aware of the brand and building positive
attitudes and preferences, and (3) stimulating trial. To measure results, Sonic would compare
actual consumer sales during and after the ad campaign with the sales projections that were set
prior to the campaign. Sonic will also want to commission research to measure awareness,
attitudes, and preferences among the target audience.
After the initial six months, Sonic will still want to offer a product warranty and probably will
want to continue changing point-of-purchase displays. It will also need some trade sales
promotion, such as sales contests, to keep resellers interested. However, coupons, prizes,
sampling, and free goods are probably not appropriate tactics for the Sonic 1000, even after the
introductory period.
When students think about an event sponsorship possibility, ask them to consider how the event
would enhance Sonic’s brand or reinforce images of quality and technological superiority. Also
ask how Sonic would use this sponsorship. For instance, Sonic would want to be able to have its
Smartphones available for attendees to see and try (one of the objectives); it would also need the
opportunity for signage (to build brand awareness and positive associations) and even
participation with event headliners (positive associations). Would students suggest that Sonic
sponsor a 10-city tour by a well-known television personality who makes personal appearances,

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for instance? Would they recommend that Sonic sponsor an up-and-coming musical group that
appeals to its target audiences?

Chapter 21
Digital communications strategies will be essential to Sonic’s marketing plan as brand
awareness can be generated quickly through online channels, social media, and work of
mouth. Jane Melody is especially interested in your answers to the following questions.

 How should Sonic use word of mouth to generate brand awareness and encourage
potential buyers to visit retailers to see the new smart phone in person?
 Which social media platforms and networks should Sonic pursue based on their
target audiences? Explain your reasoning.
 Is mobile marketing a viable strategy for Sonic’s smart phone? Why or why not?

Consider your overall marketing objectives as you compile your answers. Document your
ideas in you marketing plan.

Answer
Word of mouth may be a low cost way to gain highly credible communication about the brand,
which should help generate brand awareness. An incentivized referral program may encourage
customers to tell friends or family members to visit retailers to see the new smart phone. Social
badging, which would appear in social media, is another way to get customers to help the firm
spread the word. The social media platforms selected will depend on the target audiences, but
one way to get people talking about the product might be to create a viral video showing the
1000 model being used in unusual ways or places (or by some of the celebrities featured in the
advertising or special events). Once this is posted on the Sonic site and YouTube, among other
sites, visitors who see the video and like it would spread the word. Facebook might be selected
based on its popularity. LinkedIn may be specified if the target audience is business people. Be
sure students consider the possibility that such a video could be misused, altered, or parodied in a
way that reflects negatively on Sonic. The appropriateness of mobile marketing also depends on
the target audience. If Sonic is targeting laggards, for example, mobile marketing may not be
appropriate (since the target does not have a phone that would receive most ads). Students may
mention the limitations associated with mobile advertising, including the size limitations and
concerns about legibility. Good answers will tie social media decisions to the overall marketing
objectives.

Chapter 22

Sonic needs a strategy for managing personal communications during its new product launch.
This is the time to look at interactive marketing, word-of-mouth, and personal selling. Answer
these three questions as you consider Sonic’s personal communications strategy.

 Which forms of direct marketing are appropriate for Sonic, given its objectives, mass
communications arrangements, and channel decisions?

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Sonic Appendix Solutions

 Should Sonic use database marketing to identify and cultivate prospects? What are the
opportunities and potential downsides of this approach?
 Does Sonic need a direct sales force or can it sell through agents and other outside
representatives?

Look back at earlier decisions and ideas before you document your comments about personal
communications in your written marketing plan.

Answer

Given the technological nature of the Smartphone market, Sonic should have a substantial
interactive marketing presence. For example, it needs a Web site with detailed product
specifications, various product demonstrations, additional brand information, and possibly
exclusive, downloadable extras. It would also benefit from staying in touch with prospects and
customers through an e-mail newsletter; to do this, it would invite people who visit the Web site
to sign up to receive issues (and be able to unsubscribe whenever they wish). Students may
suggest other interactive marketing activities, as well, including online ads, interactive games,
and so on. Ask them to explain how each would help Sonic reach its objectives.
Sonic can use database marketing to identify prospects, differentiate between high and low value
customers, interact with consumers using communications that are personalized based on
individual preference, and customize the product itself. This is where students can apply their
creativity. Downsides include privacy concern, clutter in direct communications, and costs
associated wit keeping the database up to date. Students who say Sonic needs a direct sales force
may argue that this helps the company hire, train, and motivate the right kind of reps to sell only
the Sonic Smartphone to major business accounts and to intermediaries. Those who argue against
a direct sales force may say that as a start-up, Sonic should not invest in a direct sales force but
should rely on agents and other outside representatives until the first product has been
established.

Chapter 23

With the rest of the marketing plan in place, you’re ready to make recommendations about how
to manage Sonic’s marketing activities. Here are some specific questions Jane Melody wants you
to consider.
 How can Sonic drive customer-focused marketing and strategic innovation throughout
the organization?
 What role should social responsibility play in Sonic’s marketing?
 How can Sonic evaluate its marketing? Suggest several specific steps the company
should take.
To complete your marketing plan, enter your answers to these questions in the written marketing
plan. Finally, draft the executive summary of the plan’s highlights.

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Answer
Student answers will vary. Ask them to think about informing, educating, motivating, and
controlling non-marketing employees to ensure a tight customer focus. Also ask them how Sonic
can encourage and reward innovation in marketing and in all functional areas. In general, Sonic
can create a more customer-focused organization through top-management emphasis on
customer needs and satisfaction; rewarding employees for building relations with channel
partners and customers; investing more heavily in marketing talent, programs, and planning
systems; and shifting to a process/outcome focus.
Regarding social responsibility, Sonic must have an ethical code of conduct and comply with
applicable legal and regulatory guidelines. It can certainly incorporate basic environmentally-
sound practices into its marketing, including recycling materials whenever possible and using
eco-friendly paper and inks for printed materials. Students may recommend a more active
approach, such as aligning with a particular cause that has a natural connection with Sonic’s
products. Because Sonic is a start-up with limited resources, it needs to evaluate opportunities
carefully before investing in social responsibility activities. For this reason, Sonic may want to
research stakeholders’ attitudes and values before making social responsibility decisions.
For evaluation purposes, Sonic should build the following into its marketing plan: annual-plan
controls such as sales analysis and market-share analysis; profitability controls measured by
product, segment, trade channel, and so on; efficiency controls to improve productivity of the
sales force, advertising, and other marketing elements; and strategic control through market
audits and other methods that reveal whether it is fully exploiting the best marketing
opportunities and applying its marketing resources properly. Earlier in the planning process,
students recommended marketing metrics for tracking performance. Ask them to review their
earlier ideas and then explain exactly how Sonic might take measurements, when to check
metrics, and under what circumstances to make marketing changes.

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