TING
An Introduction
/Brill;
Gary Armstrong University of North Carolina
Philip Kotler It
Northwestern University
Prentice Hall, Upper Saddle River, New Jersey 07458
Contents Understanding Marketing and the Marketing Management Process 1. Marketing in a Changing World: Creating Customer Value and Satisfaction 2. Strategic Planning and the Marketing Process 34
1
Analyzing Marketing Opportunities 3. The Global Marketing Environment 67 4. Marketing Research and Information Systems 5. Consumer and Business Buyer Behavior 138
101
Developing Marketing Strategy and the Marketing Mix 6. 7. 8. 9. 10. 11. 12. 13. 14.
Market Segmentation, Targeting, and Positioning for Competitive Advantage 177 Product and Services Strategy 217 New-Product Development and Product Life-Cycle Strategies 259 Pricing Products: Pricing Considerations and Strategies 287 , Distribution Channels and Logistics Management 326 Retailing and Wholesaling 365 Integrated Marketing Communications: Advertising and Public Relations 400 Integrated Marketing Communications: Personal Selling and Sales Promotion 438 Direct and On-Line Marketing 473
Extending Marketing 15. The Global Marketplace 511 16. Marketing and Society: Social Responsibility and Marketing Ethics
543
Appendices Appendix 1 Appendix 2
Marketing Arithmetic A1 Careers in Marketing A8
Glossary G1 Endnotes N1 Video Cases C1 Credits CR1 Indices 11
VII
Ts
i
, «
•;
:
~;
Preface xix
...
'
/ ; ; • ' ••
Understanding Marketing and the Marketing Management Process
1. Marketing in a Changing World: Creating Customer Value and Satisfaction 1 : ; W h a t Is M a r k e t i n g ? 4 ''•• • -:;' ' : ' ' ' ' • > ' ' l ' v ' '•' Marketing Defined 4, Needs, Wants, and Demands 5, Products and Services 6, Value, Satisfaction, and Quality 7, Exchange, Transactions, and Relationships 9, Markets 13, Marketing 14
Marketing Management 15 Demand Management 15, Building
Profitable
Marketing Management Philosophies
C u s t o m e r Relationships
17
15
-
•|.l> > >
•••••*
,i..,.,.,
The Production Concept 18, The Product Concept 18, The Selling Concept 18, The Marketing Concept 19, The Societal Marketing Concept 20 Marketing Challenges in the New Millennium 22 Growth of Nonprofit Marketing 23, The Information Technology Boom 24, Rapid Globalization 25, The Changing World Economy 28, The Call for More Ethics and Social Responsibility 28, The New Marketing Landscape 29 Reviewing the Concepts 30, Navigating the Key Terms 31, Travel Log 31, Traveling the Net 32, MAP—Marketing Applications 33
2. Strategic Planning and the Marketing Process
34
,. • Strategic Planning 37 ; ; , ; v , ? : ,-,4 Defining the Company Mission 38, Setting Company Objectives and Goals 40 Designing the Business Portfolio 41 Analyzing the Current Business Portfolio 41, Developing Growth Strategies 43, Planning Functional ,-:, Strategies 47 Strategic Planning and Small Businesses
49
'• r'no-
, The Marketing Process 50 Targeting Consumers 50, Developing the Marketing Mix 55 Managing the Marketing Effort 56 Marketing Analysis 56, Marketing Planning 57, Marketing Implementation 57, Marketing Department Organization 59, Marketing Control 62, The Marketing Environment 62 Reviewing the Concepts 63, Navigating the Key Terms 64, Net 65, MAP—Marketing Applications 66
Travel Log 64,
Traveling the
ix
CONTENTS
Analyzing Marketing Opportunities 3. The Global Marketing Environment 67 The Company's Microenvironment 70 The Company 70, Suppliers 71, Marketing Intermediaries 71, Customers 72, Competitors 73, Publics 73 The Company's Macroenvironment 74 Demographic Environment 75, Economic Environment 82, Natural Environment 84, Technological Environment 86, Political Environment 87, Cultural Environment 90 Responding to the Marketing Environment
96
Reviewing the Concepts 97, Navigating the Key Terms 98, Net 99, MAP—Marketing Applications 100
Travel Log 98,
Traveling the
4. Marketing Research and Information Systems 101 The Marketing Information System
104
Assessing Information Needs 104, Developing Information 105, Distributing Information 109 The Marketing Research Process 110 Defining the Problem and Research Objectives 111, Developing the Research Plan 111, Implementing the Research Plan 127, Interpreting and Reporting the Findings 128 Other Marketing Research Considerations 128 Marketing Research in Small Businesses and Nonprofit Organizations 128, International Marketing Research 130, Public Policy and Ethics in Marketing Research 132 Reviewing the Concepts 133, Navigating the Key Terms 134, Net 136, MAP—Marketing Applications 136
5. Consumer and Business Buyer Behavior
Travel Log 135,
Traveling the
138
Consumer Markets and Consumer Buyer Behavior 140 Model of Consumer Behavior 141, Characteristics Affecting Consumer Behavior 141, The Buyer Decision Process 154, The Buyer Decision Process for New Products 157, Consumer Behavior Across International Borders 160 Business Markets and Business Buyer Behavior 161 > Business Markets 162, Business Buyer Behavior 163 Reviewing the Concepts 173, Navigating the Key Terms 174, Net 175, MAP—Marketing Applications 176
Travel Log 174,
Traveling the
Developing Marketing Strategy and the Marketing Mix 6. Market Segmentation, Targeting, and Positioning for Competitive Advantage 177 Market Segmentation 180 Levels of Market Segmentation 180, Bases for Segmenting Consumer Markets 186, Segmenting Business Markets 195, Segmenting International Markets 196, Requirements for Effective Segmentation 199
CONTENTS
:
Market Targeting 200 Evaluating Market Segments 200, Selecting Market Segments 200 Positioning for Competitive Advantage 206 Positioning Strategies 206, Choosing and Implementing a Positioning Strategy 206 Reviewing the Concepts 212, Navigating the Key Terms 214, Net 215, MAP—Marketing Applications 216
Travel Log 214, :J!
Traveling the
;'iS!n;::1 * ' w i n .
7. Product and Services Strategy 217 What Is a Product? 219 The Product-Service Continuum 220, Levels of Product 220
' ' ' ' '
' '*'' ' ' ' ' ' '
Product Classifications 221 Consumer Products 221, Industrial Products 223, Organizations, Persons, Places, and Ideas 224 Individual Product Decisions 2 2 6 • ' • • • • •••••••.•'-•'. -«-rProduct Attributes 226, Branding 227, Packaging 237, Labeling 240, Product Support Services 240, Product Decisions and Social Responsibility 241 , oivrawn Product Line Decisions
242
Product Mix Decisions
243
.
.
•
Services Marketing 244 Nature and Characteristics of a Service 245, Marketing Strategies for Service Firms 246 International Product and Services Marketing
252
Reviewing the Concepts 254, Navigating the Key Terms 256, Net 257, MAP—Marketing Applications 258 ' ;-
Travel Log 256,
Traveling the
8. New-Product Development and Product Life-Cycle Strategies 259 New-Product Development Strategy 261 Idea Generation 262, Idea Screening 265, Concept Development and Testing 265, Marketing Strategy Development 268, Business Analysis 269, Product Development 269, Test Marketing 271, Commercialization 271, Speeding Up New-Product Development 274 Product Life-Cycle Strategies 276 Introduction Stage 278, Growth Stage 278, Maturity Stage 279, Decline Stage 282 .
Reviewing the Concepts 283, Navigating the Key Terms 284, Net 285, MAP—Marketing Applications 286
Travel Log 284,
Traveling the
9. Pricing Products: Pricing Considerations and Strategies 287 Factors to Consider When Setting Prices 290 Internal Factors Affecting Pricing Decision 290, External Factors Affecting Pricing Decisions 293 General Pricing Approaches
299
Cost-Based Pricing 299, Value-Based Pricing 301, Competition-Based Pricing 304 New-Product Pricing Strategies 304 Market-Skimming Pricing 306, Market-Penetration Pricing 306
CONTENTS
Product-Mix Pricing Strategies 307 Product-Line Pricing 307, Optional-Product Pricing 308, Captive-Product Pricing 308, Byproduct Pricing 308, Product-Bundle Pricing 310 Price-Adjustment Strategies 310 Discount and Allowance Pricing 310, Segmented Pricing 311, Psychological Pricing 311, Promotional Pricing 312, Geographical Pricing 314, International Pricing 315 Price Changes 316 Initiating Price Changes 316, Responding to Price Changes 318 Public Policy and Pricing 320 Reviewing the Concepts 321, Navigating the Key Terms 323, Net 324, MAP—Marketing Applications 325
Travel Log 323,
Traveling the
10. Distribution Channels and Logistics Management 326 The Nature of Distribution Channels 330 Why Are Marketing Intermediaries Used? 330, Distribution Channel Functions 331, Number of Channel Levels 331 Channel Behavior and Organization 333 Channel Behavior 334, Vertical Marketing Systems 335, Horizontal Marketing Systems 339, Hybrid Marketing Systems 340 Channel Design Decisions 342 Analyzing Consumer Service Needs 342, Setting Channel Objectives and Constraints 342, Identifying Major Alternatives 343, Evaluating the Major Alternatives 345, Designing International Distribution •'f!i Channels 345 Channel Management Decisions 347 Selecting Channel Members 347, Motivating Channel Members 347, Evaluating Channel Members 348 Public Policy and Distribution Decisions
350
Physical Distribution and Logistics Management 350 Nature and Importance of Physical Distribution and Marketing Logistics 351, Goals of the Logistics System 352, Major Logistics Functions 353, Integrated Logistics Management 355 Reviewing the Concepts 360, Navigating the Key Terms 362, Net 363, MAP—Marketing Applications 364
Travel Log 362,
Traveling the
11. Retailing and Wholesaling 365 Retailing 368 Store Retailing 368, Nonstore Retailing 375, Retailer Marketing Decisions 379, The Future of Retailing 384 Wholesaling 390 Types of Wholesalers 390, Wholesaler Marketing Decisions 391, Trends in Wholesaling 394 Reviewing the Concepts 396, Navigating the Key Terms 397, Net 398, MAP—Marketing Applications 399
Travel Log 397,
Traveling the
CONTENTS
12. Integrated Marketing Communications: Advertising and Public Relations 400 The Marketing Communications Mix
403
Integrated Marketing Communications 404 ,• ., The Changing Communications Environment 404, The Need for Integrated Marketing Communications 405, A View of the Communication Process 407 .
j , . ,
Setting the Overall Communication Mix 408 The Nature of Each Promotion Tool 408, Promotion-Mix Strategies 410, Socially Responsible Marketing Communication 411 '
'
Advertising 413 ' . Setting Advertising Objectives 414, Setting the Advertising Budget 415, Developing Advertising Strategy 416, Evaluating Advertising 426, Other Advertising Considerations 427
_
Public Relations 429 Major Public Relations Tools 432 Reviewing the Concepts 4 3 4 , Navigating the Key Terms 4 3 5 , Travel L o g 4 3 5 , N e t 4 3 6 , M A P — M a r k e t i n g Applications 4 3 7 •; : - , ( •:-• .•;.? -,»:.• ;,
Traveling the
13. Integrated Marketing Communications: Personal Selling and Sales Promotion 438 L;!(lii;nriiflh ; in Personal Selling 440 ' ^ ' The Nature of Personal Selling 440, The Role of the Sales Force 442 drr.i/.
M a n a g i n g the Sales Force
443
'
; •-'>•;? ••'• '.>n: n
Designing Sales Force Strategy and Structure 443, Recruiting and Selecting Salespeople 447, Training Salespeople 450, Compensating Salespeople 450, Supervising Salespeople 452, Evaluating Salespeople 456 Principles of Personal Selling 456 The Personal Selling Process 456, Steps in the Selling Process 457, Relationship Marketing 459 Sales Promotion 460 Rapid Growth of Sales Promotion 461, Sales Promotion Objectives 462, Major Sales Promotion Tools 463, Developing the Sales Promotion Program 468 Reviewing the Concepts 469, Navigating the Key Terms 470, Net 471, MAP—Marketing Applications 472
Travel Log 470,
Traveling the
14. Direct and On-Line Marketing 473 What Is Direct Marketing?
476
Growth and Benefits of Direct Marketing
476
The Benefits of Direct Marketing 477, The Growth of Direct Marketing 478 Customer Databases and Direct Marketing
478
Forms of Direct Marketing Communication 483 Face-to-Face Selling 483, Direct-Mail Marketing 483, Catalog Marketing 485, Telemarketing 486, Direct-Response Television Marketing 486, Kiosk Marketing 487
CONTENTS
On-line Marketing and Electronic Commerce 488 Rapid Growth of On-line Marketing 489, The On-line Consumer 490, The Benefits of On-line Marketing 492, On-line Marketing Channels 493, The Promise and Challenges of On-line Marketing 500
Integrated Direct Marketing
,
' •-'
- n < - '•• • • • > ; J A U . W I
:;n i
501
'
Public Policy and Ethical Issues in Direct Marketing 504 Irritation, Unfairness, Deception, and Fraud 504, Invasion of Privacy 504 Reviewing the Concepts 505, Navigating the Key Terms 507, Net 508, MAP—Marketing Applications 509
Travel Log 507,
Traveling the
Extending Marketing 15. The Global Marketplace
511
^.-•.•...A
Global Marketing into the Twenty-First Century
514
!
-
: v-'J
Looking at the Global Marketing Environment 518 The International Trade System 518, Economic Environment 521, Political-Legal Environment 522, Cultural Environment 523 •-.-;• ••: •..-;;,. Deciding Whether to Go International Deciding Which Markets to Enter
525
;: ;
..- ;.
525
..v .'
Deciding How to Enter the Market 529 Exporting 529, Joint Venturing 530, Direct Investment 531
• >
•
' , - ...,iM : v';
Deciding on the Global Marketing Program 532 ' Product 532, Promotion 534, Price 536, Distribution Channels 536 Deciding on the Global Marketing Organization
• •••>
' ,
538
Reviewing the Concepts 539, Navigating the Key Terms 539, Net 541, MAP—Marketing Applications 541 •T- '
'i
Travel Log 540,
Traveling the
.• J /-Vi. 11 .f'
16. Marketing and Society: Social Responsibility and Marketing Ethics 543 Social Criticisms of Marketing 546 Marketing's Impact on Individual Consumers 546, Marketing's Impact on Society as a Whole 553, Marketing's Impact on Other Businesses 555 Citizen and Public Actions to Regulate Marketing 556 '•'•' •' Consumerism 556, Environmentalism 557, Public Actions to Regulate Marketing 563 Business Actions Toward Socially Responsible Marketing Enlightened Marketing 563, Marketing Ethics 566
563
Reviewing the Concepts 571, Navigating the Key Terms 572, Net 573, MAP—Marketing Applications 574
Travel Log 572,
Traveling the
CONTENTS
Appendix 1
Marketing Arithmetic
A1
Appendix 2
Careers in Marketing
A8
Glossary
G1
Endnotes
N1
Video Cases Credits
C1
CR1
Indices Company/Brand Name 11 Author
110
Subject
113
An Introduction
/Brill;
Gary Armstrong University of North Carolina
Philip Kotler It
Northwestern University
Prentice Hall, Upper Saddle River, New Jersey 07458
Contents Understanding Marketing and the Marketing Management Process 1. Marketing in a Changing World: Creating Customer Value and Satisfaction 2. Strategic Planning and the Marketing Process 34
1
Analyzing Marketing Opportunities 3. The Global Marketing Environment 67 4. Marketing Research and Information Systems 5. Consumer and Business Buyer Behavior 138
101
Developing Marketing Strategy and the Marketing Mix 6. 7. 8. 9. 10. 11. 12. 13. 14.
Market Segmentation, Targeting, and Positioning for Competitive Advantage 177 Product and Services Strategy 217 New-Product Development and Product Life-Cycle Strategies 259 Pricing Products: Pricing Considerations and Strategies 287 , Distribution Channels and Logistics Management 326 Retailing and Wholesaling 365 Integrated Marketing Communications: Advertising and Public Relations 400 Integrated Marketing Communications: Personal Selling and Sales Promotion 438 Direct and On-Line Marketing 473
Extending Marketing 15. The Global Marketplace 511 16. Marketing and Society: Social Responsibility and Marketing Ethics
543
Appendices Appendix 1 Appendix 2
Marketing Arithmetic A1 Careers in Marketing A8
Glossary G1 Endnotes N1 Video Cases C1 Credits CR1 Indices 11
VII
Ts
i
, «
•;
:
~;
Preface xix
...
'
/ ; ; • ' ••
Understanding Marketing and the Marketing Management Process
1. Marketing in a Changing World: Creating Customer Value and Satisfaction 1 : ; W h a t Is M a r k e t i n g ? 4 ''•• • -:;' ' : ' ' ' ' • > ' ' l ' v ' '•' Marketing Defined 4, Needs, Wants, and Demands 5, Products and Services 6, Value, Satisfaction, and Quality 7, Exchange, Transactions, and Relationships 9, Markets 13, Marketing 14
Marketing Management 15 Demand Management 15, Building
Profitable
Marketing Management Philosophies
C u s t o m e r Relationships
17
15
-
•|.l> > >
•••••*
,i..,.,.,
The Production Concept 18, The Product Concept 18, The Selling Concept 18, The Marketing Concept 19, The Societal Marketing Concept 20 Marketing Challenges in the New Millennium 22 Growth of Nonprofit Marketing 23, The Information Technology Boom 24, Rapid Globalization 25, The Changing World Economy 28, The Call for More Ethics and Social Responsibility 28, The New Marketing Landscape 29 Reviewing the Concepts 30, Navigating the Key Terms 31, Travel Log 31, Traveling the Net 32, MAP—Marketing Applications 33
2. Strategic Planning and the Marketing Process
34
,. • Strategic Planning 37 ; ; , ; v , ? : ,-,4 Defining the Company Mission 38, Setting Company Objectives and Goals 40 Designing the Business Portfolio 41 Analyzing the Current Business Portfolio 41, Developing Growth Strategies 43, Planning Functional ,-:, Strategies 47 Strategic Planning and Small Businesses
49
'• r'no-
, The Marketing Process 50 Targeting Consumers 50, Developing the Marketing Mix 55 Managing the Marketing Effort 56 Marketing Analysis 56, Marketing Planning 57, Marketing Implementation 57, Marketing Department Organization 59, Marketing Control 62, The Marketing Environment 62 Reviewing the Concepts 63, Navigating the Key Terms 64, Net 65, MAP—Marketing Applications 66
Travel Log 64,
Traveling the
ix
CONTENTS
Analyzing Marketing Opportunities 3. The Global Marketing Environment 67 The Company's Microenvironment 70 The Company 70, Suppliers 71, Marketing Intermediaries 71, Customers 72, Competitors 73, Publics 73 The Company's Macroenvironment 74 Demographic Environment 75, Economic Environment 82, Natural Environment 84, Technological Environment 86, Political Environment 87, Cultural Environment 90 Responding to the Marketing Environment
96
Reviewing the Concepts 97, Navigating the Key Terms 98, Net 99, MAP—Marketing Applications 100
Travel Log 98,
Traveling the
4. Marketing Research and Information Systems 101 The Marketing Information System
104
Assessing Information Needs 104, Developing Information 105, Distributing Information 109 The Marketing Research Process 110 Defining the Problem and Research Objectives 111, Developing the Research Plan 111, Implementing the Research Plan 127, Interpreting and Reporting the Findings 128 Other Marketing Research Considerations 128 Marketing Research in Small Businesses and Nonprofit Organizations 128, International Marketing Research 130, Public Policy and Ethics in Marketing Research 132 Reviewing the Concepts 133, Navigating the Key Terms 134, Net 136, MAP—Marketing Applications 136
5. Consumer and Business Buyer Behavior
Travel Log 135,
Traveling the
138
Consumer Markets and Consumer Buyer Behavior 140 Model of Consumer Behavior 141, Characteristics Affecting Consumer Behavior 141, The Buyer Decision Process 154, The Buyer Decision Process for New Products 157, Consumer Behavior Across International Borders 160 Business Markets and Business Buyer Behavior 161 > Business Markets 162, Business Buyer Behavior 163 Reviewing the Concepts 173, Navigating the Key Terms 174, Net 175, MAP—Marketing Applications 176
Travel Log 174,
Traveling the
Developing Marketing Strategy and the Marketing Mix 6. Market Segmentation, Targeting, and Positioning for Competitive Advantage 177 Market Segmentation 180 Levels of Market Segmentation 180, Bases for Segmenting Consumer Markets 186, Segmenting Business Markets 195, Segmenting International Markets 196, Requirements for Effective Segmentation 199
CONTENTS
:
Market Targeting 200 Evaluating Market Segments 200, Selecting Market Segments 200 Positioning for Competitive Advantage 206 Positioning Strategies 206, Choosing and Implementing a Positioning Strategy 206 Reviewing the Concepts 212, Navigating the Key Terms 214, Net 215, MAP—Marketing Applications 216
Travel Log 214, :J!
Traveling the
;'iS!n;::1 * ' w i n .
7. Product and Services Strategy 217 What Is a Product? 219 The Product-Service Continuum 220, Levels of Product 220
' ' ' ' '
' '*'' ' ' ' ' ' '
Product Classifications 221 Consumer Products 221, Industrial Products 223, Organizations, Persons, Places, and Ideas 224 Individual Product Decisions 2 2 6 • ' • • • • •••••••.•'-•'. -«-rProduct Attributes 226, Branding 227, Packaging 237, Labeling 240, Product Support Services 240, Product Decisions and Social Responsibility 241 , oivrawn Product Line Decisions
242
Product Mix Decisions
243
.
.
•
Services Marketing 244 Nature and Characteristics of a Service 245, Marketing Strategies for Service Firms 246 International Product and Services Marketing
252
Reviewing the Concepts 254, Navigating the Key Terms 256, Net 257, MAP—Marketing Applications 258 ' ;-
Travel Log 256,
Traveling the
8. New-Product Development and Product Life-Cycle Strategies 259 New-Product Development Strategy 261 Idea Generation 262, Idea Screening 265, Concept Development and Testing 265, Marketing Strategy Development 268, Business Analysis 269, Product Development 269, Test Marketing 271, Commercialization 271, Speeding Up New-Product Development 274 Product Life-Cycle Strategies 276 Introduction Stage 278, Growth Stage 278, Maturity Stage 279, Decline Stage 282 .
Reviewing the Concepts 283, Navigating the Key Terms 284, Net 285, MAP—Marketing Applications 286
Travel Log 284,
Traveling the
9. Pricing Products: Pricing Considerations and Strategies 287 Factors to Consider When Setting Prices 290 Internal Factors Affecting Pricing Decision 290, External Factors Affecting Pricing Decisions 293 General Pricing Approaches
299
Cost-Based Pricing 299, Value-Based Pricing 301, Competition-Based Pricing 304 New-Product Pricing Strategies 304 Market-Skimming Pricing 306, Market-Penetration Pricing 306
CONTENTS
Product-Mix Pricing Strategies 307 Product-Line Pricing 307, Optional-Product Pricing 308, Captive-Product Pricing 308, Byproduct Pricing 308, Product-Bundle Pricing 310 Price-Adjustment Strategies 310 Discount and Allowance Pricing 310, Segmented Pricing 311, Psychological Pricing 311, Promotional Pricing 312, Geographical Pricing 314, International Pricing 315 Price Changes 316 Initiating Price Changes 316, Responding to Price Changes 318 Public Policy and Pricing 320 Reviewing the Concepts 321, Navigating the Key Terms 323, Net 324, MAP—Marketing Applications 325
Travel Log 323,
Traveling the
10. Distribution Channels and Logistics Management 326 The Nature of Distribution Channels 330 Why Are Marketing Intermediaries Used? 330, Distribution Channel Functions 331, Number of Channel Levels 331 Channel Behavior and Organization 333 Channel Behavior 334, Vertical Marketing Systems 335, Horizontal Marketing Systems 339, Hybrid Marketing Systems 340 Channel Design Decisions 342 Analyzing Consumer Service Needs 342, Setting Channel Objectives and Constraints 342, Identifying Major Alternatives 343, Evaluating the Major Alternatives 345, Designing International Distribution •'f!i Channels 345 Channel Management Decisions 347 Selecting Channel Members 347, Motivating Channel Members 347, Evaluating Channel Members 348 Public Policy and Distribution Decisions
350
Physical Distribution and Logistics Management 350 Nature and Importance of Physical Distribution and Marketing Logistics 351, Goals of the Logistics System 352, Major Logistics Functions 353, Integrated Logistics Management 355 Reviewing the Concepts 360, Navigating the Key Terms 362, Net 363, MAP—Marketing Applications 364
Travel Log 362,
Traveling the
11. Retailing and Wholesaling 365 Retailing 368 Store Retailing 368, Nonstore Retailing 375, Retailer Marketing Decisions 379, The Future of Retailing 384 Wholesaling 390 Types of Wholesalers 390, Wholesaler Marketing Decisions 391, Trends in Wholesaling 394 Reviewing the Concepts 396, Navigating the Key Terms 397, Net 398, MAP—Marketing Applications 399
Travel Log 397,
Traveling the
CONTENTS
12. Integrated Marketing Communications: Advertising and Public Relations 400 The Marketing Communications Mix
403
Integrated Marketing Communications 404 ,• ., The Changing Communications Environment 404, The Need for Integrated Marketing Communications 405, A View of the Communication Process 407 .
j , . ,
Setting the Overall Communication Mix 408 The Nature of Each Promotion Tool 408, Promotion-Mix Strategies 410, Socially Responsible Marketing Communication 411 '
'
Advertising 413 ' . Setting Advertising Objectives 414, Setting the Advertising Budget 415, Developing Advertising Strategy 416, Evaluating Advertising 426, Other Advertising Considerations 427
_
Public Relations 429 Major Public Relations Tools 432 Reviewing the Concepts 4 3 4 , Navigating the Key Terms 4 3 5 , Travel L o g 4 3 5 , N e t 4 3 6 , M A P — M a r k e t i n g Applications 4 3 7 •; : - , ( •:-• .•;.? -,»:.• ;,
Traveling the
13. Integrated Marketing Communications: Personal Selling and Sales Promotion 438 L;!(lii;nriiflh ; in Personal Selling 440 ' ^ ' The Nature of Personal Selling 440, The Role of the Sales Force 442 drr.i/.
M a n a g i n g the Sales Force
443
'
; •-'>•;? ••'• '.>n: n
Designing Sales Force Strategy and Structure 443, Recruiting and Selecting Salespeople 447, Training Salespeople 450, Compensating Salespeople 450, Supervising Salespeople 452, Evaluating Salespeople 456 Principles of Personal Selling 456 The Personal Selling Process 456, Steps in the Selling Process 457, Relationship Marketing 459 Sales Promotion 460 Rapid Growth of Sales Promotion 461, Sales Promotion Objectives 462, Major Sales Promotion Tools 463, Developing the Sales Promotion Program 468 Reviewing the Concepts 469, Navigating the Key Terms 470, Net 471, MAP—Marketing Applications 472
Travel Log 470,
Traveling the
14. Direct and On-Line Marketing 473 What Is Direct Marketing?
476
Growth and Benefits of Direct Marketing
476
The Benefits of Direct Marketing 477, The Growth of Direct Marketing 478 Customer Databases and Direct Marketing
478
Forms of Direct Marketing Communication 483 Face-to-Face Selling 483, Direct-Mail Marketing 483, Catalog Marketing 485, Telemarketing 486, Direct-Response Television Marketing 486, Kiosk Marketing 487
CONTENTS
On-line Marketing and Electronic Commerce 488 Rapid Growth of On-line Marketing 489, The On-line Consumer 490, The Benefits of On-line Marketing 492, On-line Marketing Channels 493, The Promise and Challenges of On-line Marketing 500
Integrated Direct Marketing
,
' •-'
- n < - '•• • • • > ; J A U . W I
:;n i
501
'
Public Policy and Ethical Issues in Direct Marketing 504 Irritation, Unfairness, Deception, and Fraud 504, Invasion of Privacy 504 Reviewing the Concepts 505, Navigating the Key Terms 507, Net 508, MAP—Marketing Applications 509
Travel Log 507,
Traveling the
Extending Marketing 15. The Global Marketplace
511
^.-•.•...A
Global Marketing into the Twenty-First Century
514
!
-
: v-'J
Looking at the Global Marketing Environment 518 The International Trade System 518, Economic Environment 521, Political-Legal Environment 522, Cultural Environment 523 •-.-;• ••: •..-;;,. Deciding Whether to Go International Deciding Which Markets to Enter
525
;: ;
..- ;.
525
..v .'
Deciding How to Enter the Market 529 Exporting 529, Joint Venturing 530, Direct Investment 531
• >
•
' , - ...,iM : v';
Deciding on the Global Marketing Program 532 ' Product 532, Promotion 534, Price 536, Distribution Channels 536 Deciding on the Global Marketing Organization
• •••>
' ,
538
Reviewing the Concepts 539, Navigating the Key Terms 539, Net 541, MAP—Marketing Applications 541 •T- '
'i
Travel Log 540,
Traveling the
.• J /-Vi. 11 .f'
16. Marketing and Society: Social Responsibility and Marketing Ethics 543 Social Criticisms of Marketing 546 Marketing's Impact on Individual Consumers 546, Marketing's Impact on Society as a Whole 553, Marketing's Impact on Other Businesses 555 Citizen and Public Actions to Regulate Marketing 556 '•'•' •' Consumerism 556, Environmentalism 557, Public Actions to Regulate Marketing 563 Business Actions Toward Socially Responsible Marketing Enlightened Marketing 563, Marketing Ethics 566
563
Reviewing the Concepts 571, Navigating the Key Terms 572, Net 573, MAP—Marketing Applications 574
Travel Log 572,
Traveling the
CONTENTS
Appendix 1
Marketing Arithmetic
A1
Appendix 2
Careers in Marketing
A8
Glossary
G1
Endnotes
N1
Video Cases Credits
C1
CR1
Indices Company/Brand Name 11 Author
110
Subject
113
A P ion,9e
Gary Armstrong University of North Carolina
Philip Kotler Northwestern University
Pearson Education International
Preface
21
Acknowledgments
PART 1
28
DEFINING MARKETING AND THE MARKETING PROCESS 1
34
Marketing: Creating and Capturing Customer Value 35 What Is Marketing? 37 Marketing Defined 37 • The Marketing Process 38 Understanding the Marketplace and Customer Needs 38 Customer Needs, Wants, and Demands 38 • Market Offerings—Products, Services, and Experiences 39 • Customer Value and Satisfaction 40 • Exchanges and Relationships 40 • Markets 40 Designing a Customer-Driven Marketing Strategy 41 Selecting Customers to Serve 41 • Choosing a Value Proposition 41 • Marketing Management Orientations 42
>
Preparing an Integrated Marketing Plan and Program 45 Building Customer Relationships 45 Customer Relationship Management 45 1 . 1 Marketing at Work Bike Friday: Creating Customer Evangelists 47 The Changing Nature of Customer Relationships 49 1.2 Marketing at Work Consumer-Generated Marketing: Ad Agency of the Year? YOU! 52 Partner Relationship Management 52
Capturing Value from Customers 54 Creating Customer Loyalty and Retention 54 • Growing Share of Customer 55 • Building Customer Equity 55 The Changing Marketing Landscape 57 The Digital Age 58 • Rapid Globalization 59 • The Call for More Ethics and Social Responsibility 60 • The Growth of Not-for-Profit Marketing 60 So, What Is Marketing? Pulling It All Together 61 REST STOP: Reviewing the Concepts 63, Navigating the Key Terms 64, Travel Log 64, Under the Hood: Focus on Technology 64, Focus on Ethics 65, Video Case 65
2
Company and Marketing Strategy: Partnering to Build Customer Relationships 67 Companywide Strategic Planning: Defining Marketing's Role 69 Defining a Market-Oriented Mission 69 • Setting Company Objectives and Goals 71 • Designing the Business Portfolio 71 2 . 1 Marketing at Work Starbucks Coffee: Where Growth Is Really Perking 74
Planning Marketing: Partnering to Build Customer Relationships 76 Partnering with Other Company Departments 77 • Partnering with Others in the Marketing System 78
11
12
Contents
Marketing Strategy and the Marketing Mix 79 Customer-Driven Marketing Strategy 80 2.2 Marketing at Work Niching: Health Insurance for Our Furry—or Feathery—Friends 82
Developing an Integrated Marketing Mix 83 Managing the Marketing Effort 84 Marketing Analysis 84 • Marketing Planning 85 • Marketing Implementation 86 • Marketing Department Organization 87 • Marketing Control 88 Measuring and Managing Return on Marketing Investment 89 REST STOP: Reviewing the Concepts 90, Navigating the Key Terms 92, Travel Log 92, Under the Hood: Focus on Technology 92, Focus on Ethics 93, Video Case 93
PART 2
UNDERSTANDING THE MARKETPLACE AND CONSUMERS 94 3
Analyzing the Marketing Environment 95 The Company's Microenvironment 97 The Company 97 • Suppliers 98 • Marketing Intermediaries 98 • Customers 99 • Competitors 99 • Publics 99 The Company's Macroenvironment 100 Demographic Environment 100 3 . 1 M a r k e t i n g a t Work Ameriprise Financial: Still a Boomer Market 103 Economic Environment 110* Natural Environment 111* Technological Environment 113* Political Environment 114° Cultural Environment 117
Responding to the Marketing Environment 121 3.2 Marketing at Work YourCompanySucks.com 122 REST STOP: Reviewing the Concepts 123, Reviewing the Key Terms 124, Travel Log 124, Under the Hood: Focus on Technology, 125 Focus on Ethics 125, Video Case 125
4
Managing Marketing Information to Gain Customer Insights 127 Marketing Information and Customer Insights 128 Assessing Marketing Information Needs 130 Developing Marketing Information 131 Internal Data 131 'Marketing Intelligence 132 Marketing Research 133 Defining the Problem and Research Objectives 134 • Developing the Research Plan 134* Gathering Secondary Data 135° Primary Data Collection 137 • Implementing the Research Plan 145* Interpreting and Reporting the Findings 145 Analyzing and Using Marketing Information 146 Customer Relationship Management (CRM) 146 • Distributing and Using Marketing Information 147 4 . 1 Marketing at Work Harrah's Hits the CRM Jackpot 148
Other Marketing Information Considerations 150 Marketing Research in Small Businesses and Nonprofit Organizations 150 International Marketing Research 152 • Public Policy and Ethics in Marketing Research 153 4.2 Marketing at Work Tracking Consumers on the Web: Smart Targeting or a Little Creepy? 154
Contents
13
REST STOP: Reviewing the Concepts 157, Navigating the Key Terms 158, Travel Log 158, Underthe Hood: Focus on Technology 159, Focus on Ethics 159, Video Case 159
5
Understanding Consumer and Business Buyer Behavior
i6i
Consumer Markets and Consumer Buyer Behavior 162 Model of Consumer Behavior 163 • Characteristics Affecting Consumer Behavior 163 5 . 1 Marketing at Work Tremor and Vocalpoint: What's the Latest Buzz? 168 The Buyer Decision Process 177 • The Buyer Decision Process for New Products 180 Business Markets and Business Buyer Behavior 182 Business Markets 182 5.2 Marketing at Work Ikea: Working with Suppliers to Keep Customers Clamoring for More 184 Business Buyer Behavior 185 REST STOP: Reviewing the Concepts 193, Navigating the Key Terms 194, Travel Log 194, Underthe Hood: Focus on Technology 195, Focus on Ethics i95,VideoCase 195
PART 3
DESIGNING A CUSTOMER-DRIVEN MARKETING STRATEGY AND MARKETING MIX 196 6
Customer-Driven Marketing Strategy: Creating Value for Target Customers 197 Market Segmentation 199 Segmenting Consumer Markets 200 • Segmenting Business Markets 206 • Segmenting International Markets 206 • Requirements for Effective Segmentation 207 Market Targeting 208 Evaluating Market Segments 208 • Selecting Target Market Segments 209 6 . 1 Marketing at Work P&G: Competing with Itself—and Winning 211 Socially Responsible Target Marketing 215 Differentiation and Positioning 217 Positioning Maps 217 • Choosing a Differentiation and Positioning Strategy 218 6.2 Marketing at Work Staples: Positioning Made Easy 219 Communicating and Delivering the Chosen Position 224 REST STOP:-Reviewing the Concepts 225, Navigating the Key Terms 226, Travel Log 226, Underthe Hood: Focus on Technology 227, Focus on Ethics 227, Video Case 227
7
Products, Services, and Brands: Building Customer Value 229 What Is a Product? 230 Products, Services, and Experiences 231'Levels of Product and Services 232* Product and Service Classifications 232 Product and Service Decisions 236 Individual Product and Service Decisions 236 • Product Line Decisions 240 • Product Mix Decisions 241 Branding Strategy: Building Strong Brands 242 Brand Equity 242 7 . 1 Marketing at Work Breakaway Brands: Connecting with Customers 244
Building Strong Brands 244 • Managing Brands 251
14
Contents
Services Marketing 251 Nature and Characteristics of a Service 251 • Marketing Strategies for Service Firms 253 7.2 Marketing at Work Service Recovery: Doing Things Right When Service Goes Wrong 256 REST STOP: Reviewing the Concepts 258, Navigating the Key Terms 259, Travel Log 259, Under the Hood: Focus on Technology 260, Focus on Ethics 260, Video Case 261
8
New-Product Development and Product Life-Cycle Strategies 263 New-Product Development Strategy 265 The New-Product Development Process 266 Idea Generation 266 • Idea Screening 268 • Concept Development and Testing 269 • Marketing Strategy Development 270'Business Analysis 271 • Product Development 271 • Test Marketing 272 • Commercialization 273 Managing New-Product Development 274 Customer-Centered New-Product Development 274 • Team-Based New-Product Development 275 • Systematic New-Product Development 275 8.1 Marketing at Work Electrolux: Cleaning Up with Customer-Centered,Team-Based New-Product Development 276 Product Life-Cycle Strategies 278 Introduction Stage 280 • Growth Stage 280 • Maturity Stage 280 • Decline Stage 282 Additional Product and Service Considerations 283 Product Decisions and Social Responsibility 283 • International Product and Service Marketing 284 REST STOP: Reviewing the Concepts 285, Navigating the Key Terms 286, Travel Log 286, Underthe Hood: Focus on Technology 287, Focus on Ethics 287, Video Case 287
9
Pricing: Understanding and Capturing Customer Value 289 What Is a Price? 291 Factors to Consider When Setting Prices 291 Value-Based Pricing 292 • Company and Product Costs 294 • Other Internal and External Considerations Affecting Price Decisions 296 9.1 Marketing at Work Pricing High and Proud of It 298 New-Product Pricing Strategies 302 Market-Skimming Pricing 302 • Market-Penetration Pricing 303 Product Mix Pricing Strategies 303 Product Line Pricing 303 • Optional-Product Pricing 304 • Captive-Product Pricing 304 • By-Product Pricing 305 • Product Bundle Pricing 306 Price-Adjustment Strategies 306 Discount and Allowance Pricing 306 • Segmented Pricing 307 • Psychological Pricing 308 • Promotional Pricing 309 • Geographical Pricing 310 • Dynamic Pricing 311 • International Pricing 312 Price Changes 313 Initiating Price Changes 313 • Responding to Price Changes 314 Public Policy and Pricing 315 9.2 Marketing at Work GlaxoSmithKline: Pricing for More than Sales and Profits 316 Pricing Within Channel Levels 316 • Pricing Across Channel Levels 318
Contents
15
REST STOP: Reviewing the Concepts 319, Navigating the Key Terms 320, Travel Log 320, Underthe Hood: Focus on Technology 321, Focus on Ethics 32i,VideoCase 321
10 Marketing Channels: Delivering Customer Value 323 Supply Chains and the Value Delivery Network 325 The Nature and Importance of Marketing Channels 326 How Channel Members Add Value 326 • Number of Channel Levels 327
r
Channel Behavior and Organization 328 Channel Behavior 328 • Vertical Marketing Systems 329 10.1 Marketing at Work Goodyear Rolls, but No Longer over Its Dealers 330 Horizontal Marketing Systems 333 • Multichannel Distribution Systems 333 • Changing ChanneLOrganization 334 10.2 Marketing at Work Netflix: Disintermediator or Disintermediated? 336 Channel Design Decisions 336 Analyzing Consumer Needs 337 • Setting Channel Objectives 338 • Identifying Major Alternatives 338 • Evaluating the Major Alternatives 339 • Designing International Distribution Channels 340 Channel Management Decisions 340 Selecting Channel Members 340 • Managing and Motivating Channel Members 341 • Evaluating Channel Members 342 Public Policy and Distribution Decisions 342 Marketing Logistics and Supply Chain Management 343 Nature and Importance of Marketing Logistics 343 • Goals of the Logistics System 344 • Major Logistics Functions 344 • Integrated Logistics Management 347 REST STOP: Reviewing the Concepts 349, Navigating the Key Terms 350, Travel Log 350, Underthe Hood: Focus on Technology 351, Focus on Ethics 351, Video Case 351
11 Retailing and Wholesaling 353 Retailing 355 Types of Retailers 355 11.1 Marketing at Work Wal-Mart: Almost Unimaginably Big 359 Retailer Marketing Decisions 362 11.2 Marketing at Work Orchestrating the Retail Experience 366 The Future of Retailing 368 Wholesaling 372 Types of Wholesalers 373 • Wholesaler Marketing Decisions 373 • Trends in Wholesaling 375 REST STOP: Reviewing the Concepts 377, Navigating the Key Terms 377, Travel Log 378, Underthe Hood: Focus on Technology 378, Focus on Ethics 378, Video Case 379
12 Communicating Customer Value: Advertising and Public Relations 38i The Promotion Mix 383 Integrated Marketing Communications 383 The New Marketing Communications Landscape 384 • The Shifting Marketing Communications Model 384 • The Need for Integrated Marketing Communications 385 Shaping the Overall Promotion Mix 387 The Nature of Each Promotion Tool 387 • Promotion Mix Strategies 388
16
Contents
Advertising 389 Setting Advertising Objectives 390 • Setting the Advertising Budget 391 • Developing Advertising Strategy 393 12.1 Marketing at Work Madison &Vine: The New Intersection of Advertising and Entertainment 396 Evaluating Advertising Effectiveness and Return on Advertising Investment 403 • Other Advertising Considerations 403 12.2 Marketing at Work The Super Bowl: The Mother of All Advertising Events. But Is It Worth It? 404 r
Public Relations 407 The Role and Impact of Public Relations 408 • Major Public Relations Tools 409 REST STOP: Reviewing the Concepts 410, Navigating the Key Terms 411, Travel Log 412, Underthe Hood: Focus on Technology 412, Focus on Ethics 412, Video Case 413
13 Communicating Customer Value: Personal Selling and Sales Promotion 415 Personal Selling 417 The Nature of Personal Selling 417 • The Role of the Sales Force 418
Managing the Sales Force 419
*•
Designing Sales Force Strategy and Structure 419 1 3 . 1 Marketing at Work Hewlett-Packard Overhauls Its Vast Corporate Sales Force 422 Recruiting and Selecting Salespeople 424 • Training Salespeople 425 • Compensating Salespeople 426 • Supervising and Motivating Salespeople 427 13.2 Marketing at Work Point, Click, and Sell: Welcome to the Web-Based Sales Force 429 Evaluating Salespeople and Sales Force Performance 430
The Personal Selling Process 431 Steps in the Selling Process 431 • Personal Selling and Managing Customer Relationships 434
Sales Promotion 434 Rapid Growth of Sales Promotion 434 • Sales Promotion Objectives 435 • Major Sales Promotion Tools 436 • Developing the Sales Promotion Program 439 REST STOP: Reviewing the Concepts 440, Navigating the Key Terms 441, Travel Log 441, Underthe Hood: Focus on Technology 441, Focus on Ethics 442, Video Case 443
14 Direct and Online Marketing: Building Direct Customer Relationships
445
The New Direct Marketing Model 447 Growth and Benefits of Direct Marketing 448 Benefits to Buyers 448 • Benefits to Sellers 449
Customer Databases and Direct Marketing 450 Forms of Direct Marketing 451 Direct-Mail Marketing 451 • Catalog Marketing 452 ° Telephone Marketing 453 14.1 Marketing at Work Catalogs, Catalogs—Everywhere! 454 Direct-Response Television Marketing 455 • Kiosk Marketing 457 • New Digital Direct Marketing Technologies 457
Online Marketing 460 Marketing and the Internet 460 • Online Marketing Domains 461 • Setting Up an Online Marketing Presence 464 14.2 Marketing at Work P&G: Learning About the Hot New World of Online Social Networks 471 The Promise and Challenges of Online Marketing 472
Contents
17
Public Policy Issues in Direct Marketing 472 Irritation, Unfairness, Deception, and Fraud 473 • Invasion of Privacy 474 • A Need for Action 474 REST STOP: Reviewing The Concepts 475, Navigating the Key Terms 477, Travel Log 477r0rTderthe Hood: Focus on Technology 477, Focus on Ethics 478, Video Case 478
PART 4
EXTENDING MARKETING 480 15 The Global Marketplace r
48i
Global Marketing Today 483 Looking at the Global Marketing Environment 484 The International Trade System 484 • Economic Environment 487 • Political-Legal Environment 488 • Cultural Environment 489 Deciding Whether to Go Global 492 Deciding Which Markets to Enter 492 Deciding How to Enter the Market 493 Exporting 494 • Joint Venturing 494 • Direct Investment 496 Deciding on the Global Marketing Program 496 ( Product 497 1 5 . 1 Marketing at Work LG Electronics: Thinking Locally, Succeeding Globally 498 Promotion 498 • Price 500 15.2 Marketing at Work Watch Your Language! 501 Distribution Channels 502 Deciding on the Global Marketing Organization 503 REST STOP: Reviewing the Concepts 503, Navigating the Key Terms 504, Travel Log 504, Underthe Hood: Focus on Technology 505, Focus on Ethics 505, Video Case 505
16 Marketing Ethics and Social Responsibility 507 Social Criticisms of Marketing 509 Marketing's Impact on Individual Consumers 509 1 6 . 1 Marketing at Work The National Obesity Debate: Who's to Blame? 513 Marketing's Impact on Society as a Whole 516 • Marketing's Impact on Other Businesses 518 Citizen and Public Actions to Regulate Marketing 519 Consumerism 519Environmentalism 520 • Public Actions to Regulate Marketing 523 Business Actions Toward Socially Responsible Marketing 524 Enlightened Marketing 524 16.2 Real Marketing Dove on a Mission: 'Normal Is the New Beautiful' 526 Marketing Ethics 529 REST STOP: Reviewing the Concepts 532, Navigating the Key Terms 533, Travel Log 533, Under the Hood: Focus on Technology 533, Focus on Ethics 534, Video Case 534 Appendix 1 Company Cases 535 Appendix 2 Marketing Plan 575 Appendix 3 Marketing by the Numbers 585 Appendix 4 Careers in Marketing 603 Glossary 611 References 619 Credits 643 Index 645
Gary Armstrong University of North Carolina
Philip Kotler Northwestern University
Pearson Education International
Preface
21
Acknowledgments
PART 1
28
DEFINING MARKETING AND THE MARKETING PROCESS 1
34
Marketing: Creating and Capturing Customer Value 35 What Is Marketing? 37 Marketing Defined 37 • The Marketing Process 38 Understanding the Marketplace and Customer Needs 38 Customer Needs, Wants, and Demands 38 • Market Offerings—Products, Services, and Experiences 39 • Customer Value and Satisfaction 40 • Exchanges and Relationships 40 • Markets 40 Designing a Customer-Driven Marketing Strategy 41 Selecting Customers to Serve 41 • Choosing a Value Proposition 41 • Marketing Management Orientations 42
>
Preparing an Integrated Marketing Plan and Program 45 Building Customer Relationships 45 Customer Relationship Management 45 1 . 1 Marketing at Work Bike Friday: Creating Customer Evangelists 47 The Changing Nature of Customer Relationships 49 1.2 Marketing at Work Consumer-Generated Marketing: Ad Agency of the Year? YOU! 52 Partner Relationship Management 52
Capturing Value from Customers 54 Creating Customer Loyalty and Retention 54 • Growing Share of Customer 55 • Building Customer Equity 55 The Changing Marketing Landscape 57 The Digital Age 58 • Rapid Globalization 59 • The Call for More Ethics and Social Responsibility 60 • The Growth of Not-for-Profit Marketing 60 So, What Is Marketing? Pulling It All Together 61 REST STOP: Reviewing the Concepts 63, Navigating the Key Terms 64, Travel Log 64, Under the Hood: Focus on Technology 64, Focus on Ethics 65, Video Case 65
2
Company and Marketing Strategy: Partnering to Build Customer Relationships 67 Companywide Strategic Planning: Defining Marketing's Role 69 Defining a Market-Oriented Mission 69 • Setting Company Objectives and Goals 71 • Designing the Business Portfolio 71 2 . 1 Marketing at Work Starbucks Coffee: Where Growth Is Really Perking 74
Planning Marketing: Partnering to Build Customer Relationships 76 Partnering with Other Company Departments 77 • Partnering with Others in the Marketing System 78
11
12
Contents
Marketing Strategy and the Marketing Mix 79 Customer-Driven Marketing Strategy 80 2.2 Marketing at Work Niching: Health Insurance for Our Furry—or Feathery—Friends 82
Developing an Integrated Marketing Mix 83 Managing the Marketing Effort 84 Marketing Analysis 84 • Marketing Planning 85 • Marketing Implementation 86 • Marketing Department Organization 87 • Marketing Control 88 Measuring and Managing Return on Marketing Investment 89 REST STOP: Reviewing the Concepts 90, Navigating the Key Terms 92, Travel Log 92, Under the Hood: Focus on Technology 92, Focus on Ethics 93, Video Case 93
PART 2
UNDERSTANDING THE MARKETPLACE AND CONSUMERS 94 3
Analyzing the Marketing Environment 95 The Company's Microenvironment 97 The Company 97 • Suppliers 98 • Marketing Intermediaries 98 • Customers 99 • Competitors 99 • Publics 99 The Company's Macroenvironment 100 Demographic Environment 100 3 . 1 M a r k e t i n g a t Work Ameriprise Financial: Still a Boomer Market 103 Economic Environment 110* Natural Environment 111* Technological Environment 113* Political Environment 114° Cultural Environment 117
Responding to the Marketing Environment 121 3.2 Marketing at Work YourCompanySucks.com 122 REST STOP: Reviewing the Concepts 123, Reviewing the Key Terms 124, Travel Log 124, Under the Hood: Focus on Technology, 125 Focus on Ethics 125, Video Case 125
4
Managing Marketing Information to Gain Customer Insights 127 Marketing Information and Customer Insights 128 Assessing Marketing Information Needs 130 Developing Marketing Information 131 Internal Data 131 'Marketing Intelligence 132 Marketing Research 133 Defining the Problem and Research Objectives 134 • Developing the Research Plan 134* Gathering Secondary Data 135° Primary Data Collection 137 • Implementing the Research Plan 145* Interpreting and Reporting the Findings 145 Analyzing and Using Marketing Information 146 Customer Relationship Management (CRM) 146 • Distributing and Using Marketing Information 147 4 . 1 Marketing at Work Harrah's Hits the CRM Jackpot 148
Other Marketing Information Considerations 150 Marketing Research in Small Businesses and Nonprofit Organizations 150 International Marketing Research 152 • Public Policy and Ethics in Marketing Research 153 4.2 Marketing at Work Tracking Consumers on the Web: Smart Targeting or a Little Creepy? 154
Contents
13
REST STOP: Reviewing the Concepts 157, Navigating the Key Terms 158, Travel Log 158, Underthe Hood: Focus on Technology 159, Focus on Ethics 159, Video Case 159
5
Understanding Consumer and Business Buyer Behavior
i6i
Consumer Markets and Consumer Buyer Behavior 162 Model of Consumer Behavior 163 • Characteristics Affecting Consumer Behavior 163 5 . 1 Marketing at Work Tremor and Vocalpoint: What's the Latest Buzz? 168 The Buyer Decision Process 177 • The Buyer Decision Process for New Products 180 Business Markets and Business Buyer Behavior 182 Business Markets 182 5.2 Marketing at Work Ikea: Working with Suppliers to Keep Customers Clamoring for More 184 Business Buyer Behavior 185 REST STOP: Reviewing the Concepts 193, Navigating the Key Terms 194, Travel Log 194, Underthe Hood: Focus on Technology 195, Focus on Ethics i95,VideoCase 195
PART 3
DESIGNING A CUSTOMER-DRIVEN MARKETING STRATEGY AND MARKETING MIX 196 6
Customer-Driven Marketing Strategy: Creating Value for Target Customers 197 Market Segmentation 199 Segmenting Consumer Markets 200 • Segmenting Business Markets 206 • Segmenting International Markets 206 • Requirements for Effective Segmentation 207 Market Targeting 208 Evaluating Market Segments 208 • Selecting Target Market Segments 209 6 . 1 Marketing at Work P&G: Competing with Itself—and Winning 211 Socially Responsible Target Marketing 215 Differentiation and Positioning 217 Positioning Maps 217 • Choosing a Differentiation and Positioning Strategy 218 6.2 Marketing at Work Staples: Positioning Made Easy 219 Communicating and Delivering the Chosen Position 224 REST STOP:-Reviewing the Concepts 225, Navigating the Key Terms 226, Travel Log 226, Underthe Hood: Focus on Technology 227, Focus on Ethics 227, Video Case 227
7
Products, Services, and Brands: Building Customer Value 229 What Is a Product? 230 Products, Services, and Experiences 231'Levels of Product and Services 232* Product and Service Classifications 232 Product and Service Decisions 236 Individual Product and Service Decisions 236 • Product Line Decisions 240 • Product Mix Decisions 241 Branding Strategy: Building Strong Brands 242 Brand Equity 242 7 . 1 Marketing at Work Breakaway Brands: Connecting with Customers 244
Building Strong Brands 244 • Managing Brands 251
14
Contents
Services Marketing 251 Nature and Characteristics of a Service 251 • Marketing Strategies for Service Firms 253 7.2 Marketing at Work Service Recovery: Doing Things Right When Service Goes Wrong 256 REST STOP: Reviewing the Concepts 258, Navigating the Key Terms 259, Travel Log 259, Under the Hood: Focus on Technology 260, Focus on Ethics 260, Video Case 261
8
New-Product Development and Product Life-Cycle Strategies 263 New-Product Development Strategy 265 The New-Product Development Process 266 Idea Generation 266 • Idea Screening 268 • Concept Development and Testing 269 • Marketing Strategy Development 270'Business Analysis 271 • Product Development 271 • Test Marketing 272 • Commercialization 273 Managing New-Product Development 274 Customer-Centered New-Product Development 274 • Team-Based New-Product Development 275 • Systematic New-Product Development 275 8.1 Marketing at Work Electrolux: Cleaning Up with Customer-Centered,Team-Based New-Product Development 276 Product Life-Cycle Strategies 278 Introduction Stage 280 • Growth Stage 280 • Maturity Stage 280 • Decline Stage 282 Additional Product and Service Considerations 283 Product Decisions and Social Responsibility 283 • International Product and Service Marketing 284 REST STOP: Reviewing the Concepts 285, Navigating the Key Terms 286, Travel Log 286, Underthe Hood: Focus on Technology 287, Focus on Ethics 287, Video Case 287
9
Pricing: Understanding and Capturing Customer Value 289 What Is a Price? 291 Factors to Consider When Setting Prices 291 Value-Based Pricing 292 • Company and Product Costs 294 • Other Internal and External Considerations Affecting Price Decisions 296 9.1 Marketing at Work Pricing High and Proud of It 298 New-Product Pricing Strategies 302 Market-Skimming Pricing 302 • Market-Penetration Pricing 303 Product Mix Pricing Strategies 303 Product Line Pricing 303 • Optional-Product Pricing 304 • Captive-Product Pricing 304 • By-Product Pricing 305 • Product Bundle Pricing 306 Price-Adjustment Strategies 306 Discount and Allowance Pricing 306 • Segmented Pricing 307 • Psychological Pricing 308 • Promotional Pricing 309 • Geographical Pricing 310 • Dynamic Pricing 311 • International Pricing 312 Price Changes 313 Initiating Price Changes 313 • Responding to Price Changes 314 Public Policy and Pricing 315 9.2 Marketing at Work GlaxoSmithKline: Pricing for More than Sales and Profits 316 Pricing Within Channel Levels 316 • Pricing Across Channel Levels 318
Contents
15
REST STOP: Reviewing the Concepts 319, Navigating the Key Terms 320, Travel Log 320, Underthe Hood: Focus on Technology 321, Focus on Ethics 32i,VideoCase 321
10 Marketing Channels: Delivering Customer Value 323 Supply Chains and the Value Delivery Network 325 The Nature and Importance of Marketing Channels 326 How Channel Members Add Value 326 • Number of Channel Levels 327
r
Channel Behavior and Organization 328 Channel Behavior 328 • Vertical Marketing Systems 329 10.1 Marketing at Work Goodyear Rolls, but No Longer over Its Dealers 330 Horizontal Marketing Systems 333 • Multichannel Distribution Systems 333 • Changing ChanneLOrganization 334 10.2 Marketing at Work Netflix: Disintermediator or Disintermediated? 336 Channel Design Decisions 336 Analyzing Consumer Needs 337 • Setting Channel Objectives 338 • Identifying Major Alternatives 338 • Evaluating the Major Alternatives 339 • Designing International Distribution Channels 340 Channel Management Decisions 340 Selecting Channel Members 340 • Managing and Motivating Channel Members 341 • Evaluating Channel Members 342 Public Policy and Distribution Decisions 342 Marketing Logistics and Supply Chain Management 343 Nature and Importance of Marketing Logistics 343 • Goals of the Logistics System 344 • Major Logistics Functions 344 • Integrated Logistics Management 347 REST STOP: Reviewing the Concepts 349, Navigating the Key Terms 350, Travel Log 350, Underthe Hood: Focus on Technology 351, Focus on Ethics 351, Video Case 351
11 Retailing and Wholesaling 353 Retailing 355 Types of Retailers 355 11.1 Marketing at Work Wal-Mart: Almost Unimaginably Big 359 Retailer Marketing Decisions 362 11.2 Marketing at Work Orchestrating the Retail Experience 366 The Future of Retailing 368 Wholesaling 372 Types of Wholesalers 373 • Wholesaler Marketing Decisions 373 • Trends in Wholesaling 375 REST STOP: Reviewing the Concepts 377, Navigating the Key Terms 377, Travel Log 378, Underthe Hood: Focus on Technology 378, Focus on Ethics 378, Video Case 379
12 Communicating Customer Value: Advertising and Public Relations 38i The Promotion Mix 383 Integrated Marketing Communications 383 The New Marketing Communications Landscape 384 • The Shifting Marketing Communications Model 384 • The Need for Integrated Marketing Communications 385 Shaping the Overall Promotion Mix 387 The Nature of Each Promotion Tool 387 • Promotion Mix Strategies 388
16
Contents
Advertising 389 Setting Advertising Objectives 390 • Setting the Advertising Budget 391 • Developing Advertising Strategy 393 12.1 Marketing at Work Madison &Vine: The New Intersection of Advertising and Entertainment 396 Evaluating Advertising Effectiveness and Return on Advertising Investment 403 • Other Advertising Considerations 403 12.2 Marketing at Work The Super Bowl: The Mother of All Advertising Events. But Is It Worth It? 404 r
Public Relations 407 The Role and Impact of Public Relations 408 • Major Public Relations Tools 409 REST STOP: Reviewing the Concepts 410, Navigating the Key Terms 411, Travel Log 412, Underthe Hood: Focus on Technology 412, Focus on Ethics 412, Video Case 413
13 Communicating Customer Value: Personal Selling and Sales Promotion 415 Personal Selling 417 The Nature of Personal Selling 417 • The Role of the Sales Force 418
Managing the Sales Force 419
*•
Designing Sales Force Strategy and Structure 419 1 3 . 1 Marketing at Work Hewlett-Packard Overhauls Its Vast Corporate Sales Force 422 Recruiting and Selecting Salespeople 424 • Training Salespeople 425 • Compensating Salespeople 426 • Supervising and Motivating Salespeople 427 13.2 Marketing at Work Point, Click, and Sell: Welcome to the Web-Based Sales Force 429 Evaluating Salespeople and Sales Force Performance 430
The Personal Selling Process 431 Steps in the Selling Process 431 • Personal Selling and Managing Customer Relationships 434
Sales Promotion 434 Rapid Growth of Sales Promotion 434 • Sales Promotion Objectives 435 • Major Sales Promotion Tools 436 • Developing the Sales Promotion Program 439 REST STOP: Reviewing the Concepts 440, Navigating the Key Terms 441, Travel Log 441, Underthe Hood: Focus on Technology 441, Focus on Ethics 442, Video Case 443
14 Direct and Online Marketing: Building Direct Customer Relationships
445
The New Direct Marketing Model 447 Growth and Benefits of Direct Marketing 448 Benefits to Buyers 448 • Benefits to Sellers 449
Customer Databases and Direct Marketing 450 Forms of Direct Marketing 451 Direct-Mail Marketing 451 • Catalog Marketing 452 ° Telephone Marketing 453 14.1 Marketing at Work Catalogs, Catalogs—Everywhere! 454 Direct-Response Television Marketing 455 • Kiosk Marketing 457 • New Digital Direct Marketing Technologies 457
Online Marketing 460 Marketing and the Internet 460 • Online Marketing Domains 461 • Setting Up an Online Marketing Presence 464 14.2 Marketing at Work P&G: Learning About the Hot New World of Online Social Networks 471 The Promise and Challenges of Online Marketing 472
Contents
17
Public Policy Issues in Direct Marketing 472 Irritation, Unfairness, Deception, and Fraud 473 • Invasion of Privacy 474 • A Need for Action 474 REST STOP: Reviewing The Concepts 475, Navigating the Key Terms 477, Travel Log 477r0rTderthe Hood: Focus on Technology 477, Focus on Ethics 478, Video Case 478
PART 4
EXTENDING MARKETING 480 15 The Global Marketplace r
48i
Global Marketing Today 483 Looking at the Global Marketing Environment 484 The International Trade System 484 • Economic Environment 487 • Political-Legal Environment 488 • Cultural Environment 489 Deciding Whether to Go Global 492 Deciding Which Markets to Enter 492 Deciding How to Enter the Market 493 Exporting 494 • Joint Venturing 494 • Direct Investment 496 Deciding on the Global Marketing Program 496 ( Product 497 1 5 . 1 Marketing at Work LG Electronics: Thinking Locally, Succeeding Globally 498 Promotion 498 • Price 500 15.2 Marketing at Work Watch Your Language! 501 Distribution Channels 502 Deciding on the Global Marketing Organization 503 REST STOP: Reviewing the Concepts 503, Navigating the Key Terms 504, Travel Log 504, Underthe Hood: Focus on Technology 505, Focus on Ethics 505, Video Case 505
16 Marketing Ethics and Social Responsibility 507 Social Criticisms of Marketing 509 Marketing's Impact on Individual Consumers 509 1 6 . 1 Marketing at Work The National Obesity Debate: Who's to Blame? 513 Marketing's Impact on Society as a Whole 516 • Marketing's Impact on Other Businesses 518 Citizen and Public Actions to Regulate Marketing 519 Consumerism 519Environmentalism 520 • Public Actions to Regulate Marketing 523 Business Actions Toward Socially Responsible Marketing 524 Enlightened Marketing 524 16.2 Real Marketing Dove on a Mission: 'Normal Is the New Beautiful' 526 Marketing Ethics 529 REST STOP: Reviewing the Concepts 532, Navigating the Key Terms 533, Travel Log 533, Under the Hood: Focus on Technology 533, Focus on Ethics 534, Video Case 534 Appendix 1 Company Cases 535 Appendix 2 Marketing Plan 575 Appendix 3 Marketing by the Numbers 585 Appendix 4 Careers in Marketing 603 Glossary 611 References 619 Credits 643 Index 645
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