5. Explain the following English words and word combinations in your own words.

Development costs, fixed costs, opportunity costs, innovation strategy, television commercial, brand, merger, one-stop shop, profit margin.

6. Decide which of the following statements are right and which are wrong. Give the correct variants.

1. Mr Zyman argues that the 1970s hilltop advertisement turned out to be successful and helped to sell more Coke.

2. A lot of companies have to expand their activities into new areas or to launch new brands of goods because of the dwindling audiences.

3. Executives in large companies believe they will be better off if they innovate or be better rewarded for flights of fancy.

4. Mr Zyman is sure that innovation is rather problematic because of its expensiveness.

5. The interviewee thinks that it is bad for an advertising agency to be run by an anonymous figure.

6. According to Mr Zyman, consolidation in advertising is not a good thing.

7. The interviewer supposes Mr Zyman is bored by advertising mergers.

8. Mr Zyman thinks advertising agencies are going to face problems in the future, because much of their work they used to do in the past is being by large corporations.

9. He believes corporations will have to find new ways of collaboration with large retailers, such as Wal-Mart of the USA.

10. Mr Zyman says the audiences for particular retail chains are increasing shrinking.

11. The interviewee is sure that the goal for a lot of retailers is to find ways to keep shoppers longer in the shop thus making them buy more goods.

7. Make up your own sentences using the words and word combinations given below.

To forge ahead, hilltop advertisement, high anxiety, a cry for help, flights of fancy, to be suspicious of smth, to generate growth, to put pressure on smb, to run low-cost operations, to squeeze suppliers, to ignore as smb’s peril.

8. In groups discuss the following.

About 25 years ago, the number one drink in America was coffee. The trend is not good, however. From 1962 to 1985, the sales of coffee declined and the sales of soft drinks went up. By the end of 1985, soft drinks became the number one drink. The history of coffee is revealing.

The original colonists were mostly tea drinkers, bringing the habit with them from England. There were some coffee drinkers in the Dutch colony called New Amsterdam. In 1773, the colonists dumped hundreds of chests of tea into Boston harbour because of taxes, and America became a coffee-drinking nation.

By 1962, coffee sales were up to $1billion a year and three fourths of the population drank an average of over three cups a day. The market looked so good at that time that Procter & Gamble bought Folger in 1963. From 1963 on, however, coffee sales have declined.

What happened in the 1960s to change the market? A major factor was the battle between Pepsi and Coke for the teenage drinker. Pepsi developed the theme of the “Pepsi Generation”. Coke responded with themes directed toward young people as well. Coffee ads, meanwhile, were directed toward the over-35 crowd. The spokespeople for coffee were middle-aged women such as Mrs. Olsen, who promoted Folgers Coffee. Meanwhile, the Pepsi generation grew up and took their preference for soft drinks with them.

One problem with the coffee industry is that it was successful in making caffeine a “dirty” word in the 1980s by heavily advertising decaffeinated coffee. Suddenly, however, soft drinks such as Jolt became popular promoting heavy caffeine and sugar. Coffee producers were shocked – that was their market!

More recently, coffee producers have been trying to woo back younger drinkers. Nescafe Silca, for example, is a “smooth, lighter coffee” aimed at 18- to 35-year-olds. Another campaign is aimed at the new generation of college students. The Coffee Development Group has opened 50 “coffee houses” on college campuses, providing a coffee grinder, a brewer, and a cappuccino machine, among other supplies. The idea is to get students back to drinking coffee. Recent studies have found that students are drinking soft drinks for breakfast. Coffee makers want to change that trend back to coffee for breakfast.

Coffee makers noticed the success of Jolt and countered with their own coffee with twice the caffeine of regular brews. It is called Buzz and is made by the Barrie House Coffee Company in Mount Vernon, New York. It is said to have twice the flavour, too. That should wake you up in the morning! A “Buzz-mobile” is cruising Manhattan streets to let people try Buzz. Coffee makers have also introduced iced coffee in a can.

Decision Questions

1. What would you recommend to coffee producers to win the college market to coffee? Will the new iced coffee help?

2. Would you develop different strategies for regular versus decaffeinated coffee? Why or why not? Which would you emphasize for college students today or would you try to sell them both?

3. What kind of marketing research might you conduct before starting any campaign?

4. You have talked with many college students and heard what they say about coffee versus soft drinks. What has your marketing intelligence system told you? What recommendation would you make to coffee producers based on that information? Would a focus group help to confirm those impressions?