Contents
vii
Preface xvi
PART 1 Understanding Marketing
Management 2
CHAPTER 1 Defining Marketing for the 21st
Century 2
The Importance of Marketing 3
The Scope of Marketing 5
What Is Marketing? 5
What Is Marketed? 5
Who Markets? 7
Core Marketing Concepts 9
Needs, Wants, and Demands 9
Target Markets, Positioning, and
Segmentation 10
Offerings and Brands 10
Value and Satisfaction 10
Marketing Channels 11
Supply Chain 11
Competition 11
Marketing Environment 11
The New Marketing Realities 12
Major Societal Forces 12
New Company Capabilities 14
Marketing in Practice 15
MARKETING INSIGHT Marketing in an Age
of Turbulence 16
Company Orientation toward the
Marketplace 17
The Production Concept 18
The Product Concept 18
The Selling Concept 18
The Marketing Concept 18
The Holistic Marketing Concept 18
MARKETING MEMO Marketing Right
and Wrong 19
Relationship Marketing 20
Integrated Marketing 20
Internal Marketing 21
Performance Marketing 22
The New Four Ps 25
Marketing Management Tasks 26
Developing Marketing Strategies and
Plans 26
Capturing Marketing Insights 26
MARKETING MEMO Marketers’ Frequently
Asked Questions 26
Connecting with Customers 27
Building Strong Brands 27
Shaping the Market Offerings 27
Delivering Value 27
Communicating Value 27
Creating Successful Long-Term Growth 27
Summary 28
Applications 28
CHAPTER 2 Developing Marketing Strategies
and Plans 32
Marketing and Customer Value 33
The Value Delivery Process 33
The Value Chain 34
Core Competencies 35
A Holistic Marketing Orientation and
Customer Value 36
The Central Role of Strategic Planning 36
Corporate and Division Strategic
Planning 37
Defining the Corporate Mission 38
Establishing Strategic Business Units 39
Assigning Resources to Each SBU 42
Assessing Growth Opportunities 42
Organization and Organizational Culture 45
Marketing Innovation 45
MARKETING INSIGHT Creating Innovative
Marketing 46
Business Unit Strategic Planning 47
The Business Mission 48
SWOT Analysis 48
Goal Formulation 50
Strategic Formulation 50
MARKETING MEMO Checklist for Performing
Strengths/Weaknesses Analysis 52
Program Formulation and
Implementation 53
Feedback and Control 53
Product Planning: The Nature and Contents
of a Marketing Plan 54
MARKETING MEMO Marketing Plan
Criteria 55
The Role of Research 55
The Role of Relationships 55
From Marketing Plan to Marketing
Action 55
Summary 56
Applications 56
Sample Marketing Plan: Pegasus Sports
International 60
PART 2 Capturing Marketing
Insights 66
CHAPTER 3 Collecting Information and
Forecasting Demand 66
Components of a Modern Marketing
Information System 67
Internal Records 70
The Order-to-Payment Cycle 70
Sales Information Systems 70
Databases, Data Warehousing, and Data
Mining 71
Marketing Intelligence 71
The Marketing Intelligence
System 71
Collecting Marketing Intelligence on the
Internet 72
Communicating and Acting on Marketing
Intelligence 73
Analyzing the Macroenvironment 74
Needs and Trends 74
Identifying the Major Forces 74
The Demographic Environment 75
MARKETING INSIGHT Finding Gold at the
Bottom of the Pyramid 76
The Economic Environment 77
The Sociocultural Environment 78
The Natural Environment 80
The Technological Environment 81
MARKETING INSIGHT The Green Marketing
Revolution 82
The Political-Legal Environment 84
Forecasting and Demand
Measurement 85
The Measures of Market Demand 85
A Vocabulary for Demand
Measurement 86
Estimating Current Demand 88
Estimating Future Demand 90
Summary 92
Applications 92
CHAPTER 4 Conducting Marketing
Research 96
The Marketing Research System 97
The Marketing Research Process 99
Step 1: Define the Problem, the Decision
Alternatives, and the Research
Objectives 99
Step 2: Develop the Research Plan 100
MARKETING MEMO Conducting Informative
Focus Groups 102
MARKETING MEMO Questionnaire Dos and
Don’ts 104
MARKETING INSIGHT Getting into the
Heads of Consumers 106
MARKETING INSIGHT Understanding Brain
Science 108
Step 3: Collect the Information 110
Step 4: Analyze the Information 111
Step 5: Present the Findings 111
Step 6: Make the Decision 111
MARKETING INSIGHT Bringing Marketing
Research to Life with Personas 112
Overcoming Barriers to the Use of Marketing
Research 112
Measuring Marketing Productivity 114
Marketing Metrics 114
Marketing-Mix Modeling 116
Marketing Dashboards 116
MARKETING INSIGHT Marketing
Dashboards to Improve Effectiveness and
Efficiency 117
Summary 118
Applications 119
PART 3 Connecting with
Customers 122
CHAPTER 5 Creating Long-term Loyalty
Relationships 122
Building Customer Value, Satisfaction, and
Loyalty 123
Customer Perceived Value 124
Total Customer Satisfaction 128
Monitoring Satisfaction 128
MARKETING INSIGHT Net Promoter and
Customer Satisfaction 129
Product and Service Quality 131
viii
Maximizing Customer Lifetime Value 132
MARKETING MEMO Marketing and Total
Quality 132
Customer Profitability 133
Measuring Customer Lifetime Value 134
Cultivating Customer Relationships 134
MARKETING MEMO Calculating Customer
Lifetime Value 134
Customer Relationship
Management 135
Attracting and Retaining
Customers 139
Building Loyalty 141
Win-Backs 143
Customer Databases and Database
Marketing 143
Customer Databases 143
Data Warehouses and Data Mining 143
The Downside of Database Marketing and
CRM 145
MARKETING INSIGHT The Behavioral
Targeting Controversy 146
Summary 147
Applications 147
CHAPTER 6 Analyzing Consumer
Markets 150
What Influences Consumer Behavior? 151
Cultural Factors 151
Social Factors 153
MARKETING MEMO The Average U.S.
Consumer Quiz 155
Personal Factors 155
Key Psychological Processes 160
Motivation: Freud, Maslow, Herzberg 160
Perception 161
Learning 163
Emotions 163
Memory 163
MARKETING INSIGHT Made
to Stick 165
The Buying Decision Process:
The Five-Stage Model 166
Problem Recognition 167
Evaluation of Alternatives 168
ix
Purchase Decision 170
Postpurchase Behavior 172
Moderating Effects on Consumer Decision
Making 173
Behavioral Decision Theory and Behavioral
Economics 174
Decision Heuristics 174
MARKETING INSIGHT Predictably
Irrational 176
Framing 177
Summary 177
Applications 178
CHAPTER 7 Analyzing Business Markets 182
What Is Organizational Buying? 183
The Business Market versus the Consumer
Market 183
Buying Situations 185
Systems Buying and Selling 187
Participants in the Business Buying
Process 188
The Buying Center 188
Buying Center Influences 189
Targeting Firms and Buying Centers 190
MARKETING INSIGHT Big Sales to Small
Businesses 191
The Purchasing/Procurement
Process 193
Stages in the Buying Process 195
Problem Recognition 196
General Need Description and Product
Specification 196
Supplier Search 196
Proposal Solicitation 198
Supplier Selection 198
MARKETING MEMO Developing Compelling
Customer Value Propositions 199
Order-Routine Specification 201
Performance Review 201
Managing Business-to-Business Customer
Relationships 201
The Benefits of Vertical Coordination 202
MARKETING INSIGHT Establishing
Corporate Trust, Credibility, and
Reputation 203
Business Relationships: Risks and
Opportunism 203
New Technology and Business
Customers 204
Institutional and Government Markets 205
Summary 207
Applications 208
CHAPTER 8 Identifying Market Segments and
Targets 212
Bases for Segmenting Consumer
Markets 214
Geographic Segmentation 214
Demographic Segmentation 216
MARKETING INSIGHT Trading Up, Down,
and Over 218
Psychographic Segmentation 225
Behavioral Segmentation 227
Bases for Segmenting Business Markets 230
Market Targeting 231
Effective Segmentation Criteria 231
Evaluating and Selecting the Market
Segments 232
MARKETING INSIGHT Chasing the Long
Tail 235
Summary 236
Applications 237
PART 4 Building Strong
Brands 240
CHAPTER 9 Creating Brand Equity 240
What Is Brand Equity? 241
The Role of Brands 242
The Scope of Branding 243
Defining Brand Equity 243
Brand Equity Models 245
MARKETING INSIGHT Brand Bubble
Trouble 248
Building Brand Equity 249
Choosing Brand Elements 250
Designing Holistic Marketing Activities 251
Leveraging Secondary Associations 252
Internal Branding 253
Brand Communities 253
Measuring Brand Equity 255
MARKETING INSIGHT The Brand Value
Chain 255
MARKETING INSIGHT What Is a Brand
Worth? 257
Managing Brand Equity 258
Brand Reinforcement 258
Brand Revitalization 259
Devising a Branding Strategy 260
Branding Decisions 261
Brand Portfolios 262
Brand Extensions 263
Customer Equity 267
MARKETING MEMO Twenty-First-Century
Branding 267
Summary 268
Applications 269
CHAPTER 10 Crafting the Brand Positioning 274
Developing and Establishing a Brand
Positioning 275
Determining a Competitive Frame of
Reference 276
MARKETING INSIGHT High Growth Through
Value Innovation 278
Identifying Optimal Points-of-Difference and
Points-of-Parity 280
Choosing POPs and PODs 283
Brand Mantras 284
Establishing Brand Positioning 286
MARKETING MEMO Constructing a Brand
Positioning Bull’s-eye 287
Differentiation Strategies 289
Alternative Approaches to Positioning 291
Positioning and Branding a Small
Business 293
Summary 294
Applications 294
CHAPTER 11 Competitive Dynamics 298
Competitive Strategies for Market
Leaders 299
MARKETING INSIGHT When Your
Competitor Delivers More for Less 300
x
Expanding Total Market Demand 301
Protecting Market Share 302
Increasing Market Share 304
Other Competitive Strategies 305
Market-Challenger Strategies 305
Market-Follower Strategies 307
Market-Nicher Strategies 308
MARKETING MEMO Niche Specialist
Roles 309
Product Life-Cycle Marketing
Strategies 310
Product Life Cycles 310
Style, Fashion, and Fad Life Cycles 311
Marketing Strategies: Introduction Stage and
the Pioneer Advantage 312
Marketing Strategies: Growth Stage 313
Marketing Strategies: Maturity Stage 313
Marketing Strategies: Decline Stage 315
MARKETING INSIGHT Managing a Brand
Crisis 316
Evidence for the Product Life-Cycle
Concept 316
Critique of the Product Life-Cycle
Concept 317
Market Evolution 317
Marketing in an Economic
Downturn 318
Explore the Upside of Increasing
Investment 318
Get Closer to Customers 318
Review Budget Allocations 319
Put Forth the Most Compelling Value
Proposition 319
Fine-tune Brand and Product
Offerings 320
Summary 320
Applications 321
PART 5 Shaping the Market
Offerings 324
CHAPTER 12 Setting Product Strategy 324
Product Characteristics and
Classifications 325
Product Levels: The Customer-Value
Hierarchy 326
Product Classifications 327
xi
Product and Services Differentiation 328
Product Differentiation 329
Services Differentiation 330
Design 332
Product and Brand Relationships 333
MARKETING INSIGHT Marketing Luxury
Brands 334
The Product Hierarchy 336
Product Systems and Mixes 336
Product Line Analysis 337
Product Line Length 337
MARKETING INSIGHT When Less Is
More 339
Product Mix Pricing 342
Co-Branding and Ingredient
Branding 344
MARKETING MEMO Product-Bundle Pricing
Considerations 344
Packaging, Labeling, Warranties, and
Guarantees 346
Packaging 346
Labeling 348
Warranties and Guarantees 349
Summary 349
Applications 350
CHAPTER 13 Designing and Managing
Services 354
The Nature of Services 355
Service Industries Are Everywhere 356
Categories of Service Mix 356
Distinctive Characteristics of Services 358
The New Services Realities 361
A Shifting Customer Relationship 362
Achieving Excellence in Services
Marketing 365
Marketing Excellence 365
Best Practices of Top Service
Companies 366
Differentiating Services 368
MARKETING INSIGHT Improving Company
Call Centers 369
Managing Service Quality 370
MARKETING MEMO Recommendations for
Improving Service Quality 372
Managing Customer Expectations 373
Incorporating Self-Service Technologies
(SSTs) 375
Managing Product-Support Services 375
Identifying and Satisfying Customer
Needs 376
MARKETING MEMO Assessing E-Service
Quality 376
Postsale Service Strategy 377
Summary 378
Applications 378
CHAPTER 14 Developing Pricing Strategies and
Programs 382
Understanding Pricing 383
A Changing Pricing Environment 384
MARKETING INSIGHT Giving It All
Away 384
How Companies Price 386
Consumer Psychology and
Pricing 386
Setting the Price 389
Step 1: Selecting the Pricing
Objective 389
Step 2: Determining Demand 390
Step 3: Estimating Costs 392
Step 4: Analyzing Competitors’ Costs, Prices,
and Offers 395
Step 5: Selecting a Pricing
Method 395
Step 6: Selecting the Final Price 402
MARKETING INSIGHT Stealth Price
Increases 403
Adapting the Price 403
Geographical Pricing (Cash, Countertrade,
Barter) 404
Price Discounts and Allowances 404
Promotional Pricing 405
Differentiated Pricing 406
Initiating and Responding to Price
Changes 407
Initiating Price Cuts 407
Initiating Price Increases 408
Responding to Competitors’ Price
Changes 409
Summary 410
Applications 410
PART 6 Delivering Value 414
CHAPTER 15 Designing and Managing Integrated
Marketing Channels 414
Marketing Channels and Value Networks 415
The Importance of Channels 416
Hybrid Channels and Multichannel
Marketing 416
Value Networks 417
The Role of Marketing Channels 418
Channel Functions and Flows 418
Channel Levels 420
Service Sector Channels 421
Channel-Design Decisions 422
Analyzing Customer Needs and Wants 422
Establishing Objectives and
Constraints 423
Identifying Major Channel Alternatives 424
Evaluating Major Channel Alternatives 426
Channel-Management Decisions 427
Selecting Channel Members 427
Training and Motivating Channel
Members 428
Evaluating Channel Members 429
Modifying Channel Design and
Arrangements 429
Channel Modification Decisions 429
Global Channel Considerations 430
Channel Integration and Systems 431
Vertical Marketing Systems 431
MARKETING INSIGHT Channel Stewards
Take Charge 432
Horizontal Marketing Systems 433
Integrating Multichannel Marketing
Systems 433
Conflict, Cooperation, and Competition 435
Types of Conflict and Competition 435
Causes of Channel Conflict 436
Managing Channel Conflict 436
Dilution and Cannibalization 438
Legal and Ethical Issues in Channel
Relations 438
E-Commerce Marketing Practices 438
Pure-Click Companies 439
Brick-and-Click Companies 440
M-Commerce Marketing Practices 441
Summary 442
Applications 442
xii
CHAPTER 16 Managing Retailing, Wholesaling,
and Logistics 446
Retailing 447
Types of Retailers 448
The New Retail Environment 451
Marketing Decisions 453
Channels 454
MARKETING MEMO Helping Stores to
Sell 458
Private Labels 459
Role of Private Labels 460
Private-Label Success Factors 460
MARKETING INSIGHT Manufacturer’s
Response to the Private Label Threat 461
Wholesaling 461
Trends in Wholesaling 463
Market Logistics 464
Integrated Logistics Systems 464
Market-Logistics Objectives 465
Market-Logistics Decisions 466
Organizational Lessons 469
Summary 469
Applications 470
PART 7 Communicating Value 474
CHAPTER 17 Designing and Managing Integrated
Marketing Communications 474
The Role of Marketing Communications 476
The Changing Marketing Communications
Environment 476
MARKETING INSIGHT Don’t Touch That
Remote 476
Marketing Communications, Brand Equity,
and Sales 478
The Communications Process Models 480
Developing Effective Communications 482
Identify the Target Audience 482
Determine the Communications
Objectives 482
Design the Communications 484
MARKETING INSIGHT Celebrity
Endorsements as a Strategy 486
Select the Communications Channels 486
xiii
Establish the Total Marketing
Communications Budget 488
Deciding on the Marketing
Communications Mix 490
Characteristics of the Marketing
Communications Mix 490
Factors in Setting the Marketing
Communications Mix 492
Measuring Communication Results 494
Managing the Integrated Marketing
Communications Process 494
Coordinating Media 495
Implementing IMC 496
MARKETING MEMO How Integrated Is Your
IMC Program? 496
Summary 497
Applications 497
CHAPTER 18 Managing Mass Communications:
Advertising, Sales Promotions,
Events and Experiences, and Public
Relations 502
Developing and Managing an Advertising
Program 504
Setting the Objectives 504
Deciding on the Advertising Budget 505
Developing the Advertising Campaign 506
MARKETING MEMO Print Ad Evaluation
Criteria 509
Deciding on Media and Measuring
Effectiveness 510
Deciding on Reach, Frequency, and
Impact 511
Choosing among Major Media Types 512
Alternate Advertising Options 512
MARKETING INSIGHT Playing Games with
Brands 516
Selecting Specific Media Vehicles 516
Deciding on Media Timing and
Allocation 517
Evaluating Advertising Effectiveness 518
Sales Promotion 519
Objectives 519
Advertising versus Promotion 519
Major Decisions 520
Events and Experiences 524
Events Objectives 524
Major Sponsorship Decisions 525
Creating Experiences 526
MARKETING MEMO Measuring High
Performance Sponsorship Programs 526
Public Relations 527
Marketing Public Relations 527
Major Decisions in Marketing PR 528
Summary 530
Applications 530
CHAPTER 19 Managing Personal
Communications: Direct and
Interactive Marketing, Word
of Mouth, and Personal
Selling 534
Direct Marketing 535
The Benefits of Direct Marketing 536
Direct Mail 538
Catalog Marketing 539
Telemarketing 539
Other Media for Direct-Response
Marketing 539
Public and Ethical Issues in Direct
Marketing 540
Interactive Marketing 540
Advantages and Disadvantages of Interactive
Marketing 540
Interactive Marketing Communication
Options 541
MARKETING MEMO How to Maximize the
Marketing Value of E-mails 543
MARKETING MEMO Segmenting Tech
Users 545
Word of Mouth 546
Social Media 546
Buzz and Viral Marketing 549
Opinion Leaders 551
MARKETING MEMO How to Start a Buzz
Fire 552
Measuring the Effects of Word of
Mouth 552
Designing the Sales Force 553
Sales Force Objectives and Strategy 554
Sales Force Structure 555
MARKETING INSIGHT Major Account
Management 555
Sales Force Size 556
Sales Force Compensation 556
Managing the Sales Force 556
Recruiting and Selecting
Representatives 556
Training and Supervising Sales
Representatives 557
Sales Rep Productivity 557
Motivating Sales Representatives 558
Evaluating Sales Representatives 559
Principles of Personal Selling 560
The Six Steps 561
Relationship Marketing 562
Summary 562
Applications 563
PART 8 Creating Successful Long-
term Growth 566
CHAPTER 20 Introducing New Market
Offerings 566
New-Product Options 567
Make or Buy 567
Types of New Products 568
Challenges in New-Product
Development 568
The Innovation Imperative 568
New-Product Success 569
New-Product Failure 570
Organizational Arrangements 570
Budgeting for New-Product
Development 571
Organizing New-Product
Development 572
Managing the Development Process:
Ideas 573
Generating Ideas 573
MARKETING MEMO Ten Ways to Find Great
New-Product Ideas 574
MARKETING INSIGHT P&G’s New Connect
Develop Approach to Innovation 574
MARKETING MEMO Seven Ways to Draw
New Ideas from Your Customers 576
MARKETING MEMO How to Run a
Successful Brainstorming Session 577
Using Idea Screening 578
xiv
Managing the Development Process: Concept
to Strategy 579
Concept Development and Testing 579
Marketing Strategy Development 582
Business Analysis 583
Managing the Development Process:
Development to Commercialization 585
Product Development 585
Market Testing 585
Commercialization 588
The Consumer-Adoption Process 589
Stages in the Adoption Process 589
Factors Influencing the Adoption
Process 589
Summary 590
Applications 591
CHAPTER 21 Tapping into Global Markets 594
Competing on a Global Basis 595
Deciding Whether to Go Abroad 597
Deciding Which Markets to Enter 597
How Many Markets to Enter 598
Developed versus Developing Markets 598
MARKETING INSIGHT Spotlight on Key
Developing Markets 600
Evaluating Potential Markets 602
Deciding How to Enter the Market 603
Indirect and Direct Export 603
Licensing 604
Joint Ventures 605
Direct Investment 605
Deciding on the Marketing Program 606
Global Similarities and Differences 606
Marketing Adaptation 607
MARKETING MEMO The Ten
Commandments of Global Branding 608
Global Product Strategies 608
Global Communication Strategies 610
Global Pricing Strategies 611
Global Distribution Strategies 613
Country-of-Origin Effects 614
Building Country Images 614
Consumer Perceptions of Country of
Origin 614
Deciding on the Marketing Organization 616
Export Department 616
International Division 616
Global Organization 616
Summary 617
Applications 617 xv
CHAPTER 22 Managing a Holistic Marketing
Organization for the Long
Run 620
Trends in Marketing Practices 621
Internal Marketing 623
Organizing the Marketing Department 623
MARKETING MEMO Characteristics of
Company Departments That Are Truly
Customer Driven 624
Relationships with Other Departments 627
Building a Creative Marketing
Organization 628
MARKETING INSIGHT The Marketing
CEO 628
Socially Responsible Marketing 629
Corporate Social Responsibility 630
MARKETING INSIGHT The Rise of
Organic 633
Socially Responsible Business Models 634
Cause-Related Marketing 634
MARKETING MEMO Making a Difference:
Top 10 Tips for Cause Branding 637
Social Marketing 638
Marketing Implementation and Control 640
Marketing Implementation 640
Marketing Control 641
Annual-Plan Control 641
Profitability Control 642
Efficiency Control 642
Strategic Control 643
The Future of Marketing 643
MARKETING MEMO Major Marketing
Weaknesses 647
Summary 648
Applications 648
Appendix Tools for Marketing
Control 650
Appendix Sonic Marketing Plan A1
Endnotes E1
Glossary G1
Image Credits C1
Name Index I1
Company, Brand, and Organization Index I4
Subject Index I14
vii
Preface xvi
PART 1 Understanding Marketing
Management 2
CHAPTER 1 Defining Marketing for the 21st
Century 2
The Importance of Marketing 3
The Scope of Marketing 5
What Is Marketing? 5
What Is Marketed? 5
Who Markets? 7
Core Marketing Concepts 9
Needs, Wants, and Demands 9
Target Markets, Positioning, and
Segmentation 10
Offerings and Brands 10
Value and Satisfaction 10
Marketing Channels 11
Supply Chain 11
Competition 11
Marketing Environment 11
The New Marketing Realities 12
Major Societal Forces 12
New Company Capabilities 14
Marketing in Practice 15
MARKETING INSIGHT Marketing in an Age
of Turbulence 16
Company Orientation toward the
Marketplace 17
The Production Concept 18
The Product Concept 18
The Selling Concept 18
The Marketing Concept 18
The Holistic Marketing Concept 18
MARKETING MEMO Marketing Right
and Wrong 19
Relationship Marketing 20
Integrated Marketing 20
Internal Marketing 21
Performance Marketing 22
The New Four Ps 25
Marketing Management Tasks 26
Developing Marketing Strategies and
Plans 26
Capturing Marketing Insights 26
MARKETING MEMO Marketers’ Frequently
Asked Questions 26
Connecting with Customers 27
Building Strong Brands 27
Shaping the Market Offerings 27
Delivering Value 27
Communicating Value 27
Creating Successful Long-Term Growth 27
Summary 28
Applications 28
CHAPTER 2 Developing Marketing Strategies
and Plans 32
Marketing and Customer Value 33
The Value Delivery Process 33
The Value Chain 34
Core Competencies 35
A Holistic Marketing Orientation and
Customer Value 36
The Central Role of Strategic Planning 36
Corporate and Division Strategic
Planning 37
Defining the Corporate Mission 38
Establishing Strategic Business Units 39
Assigning Resources to Each SBU 42
Assessing Growth Opportunities 42
Organization and Organizational Culture 45
Marketing Innovation 45
MARKETING INSIGHT Creating Innovative
Marketing 46
Business Unit Strategic Planning 47
The Business Mission 48
SWOT Analysis 48
Goal Formulation 50
Strategic Formulation 50
MARKETING MEMO Checklist for Performing
Strengths/Weaknesses Analysis 52
Program Formulation and
Implementation 53
Feedback and Control 53
Product Planning: The Nature and Contents
of a Marketing Plan 54
MARKETING MEMO Marketing Plan
Criteria 55
The Role of Research 55
The Role of Relationships 55
From Marketing Plan to Marketing
Action 55
Summary 56
Applications 56
Sample Marketing Plan: Pegasus Sports
International 60
PART 2 Capturing Marketing
Insights 66
CHAPTER 3 Collecting Information and
Forecasting Demand 66
Components of a Modern Marketing
Information System 67
Internal Records 70
The Order-to-Payment Cycle 70
Sales Information Systems 70
Databases, Data Warehousing, and Data
Mining 71
Marketing Intelligence 71
The Marketing Intelligence
System 71
Collecting Marketing Intelligence on the
Internet 72
Communicating and Acting on Marketing
Intelligence 73
Analyzing the Macroenvironment 74
Needs and Trends 74
Identifying the Major Forces 74
The Demographic Environment 75
MARKETING INSIGHT Finding Gold at the
Bottom of the Pyramid 76
The Economic Environment 77
The Sociocultural Environment 78
The Natural Environment 80
The Technological Environment 81
MARKETING INSIGHT The Green Marketing
Revolution 82
The Political-Legal Environment 84
Forecasting and Demand
Measurement 85
The Measures of Market Demand 85
A Vocabulary for Demand
Measurement 86
Estimating Current Demand 88
Estimating Future Demand 90
Summary 92
Applications 92
CHAPTER 4 Conducting Marketing
Research 96
The Marketing Research System 97
The Marketing Research Process 99
Step 1: Define the Problem, the Decision
Alternatives, and the Research
Objectives 99
Step 2: Develop the Research Plan 100
MARKETING MEMO Conducting Informative
Focus Groups 102
MARKETING MEMO Questionnaire Dos and
Don’ts 104
MARKETING INSIGHT Getting into the
Heads of Consumers 106
MARKETING INSIGHT Understanding Brain
Science 108
Step 3: Collect the Information 110
Step 4: Analyze the Information 111
Step 5: Present the Findings 111
Step 6: Make the Decision 111
MARKETING INSIGHT Bringing Marketing
Research to Life with Personas 112
Overcoming Barriers to the Use of Marketing
Research 112
Measuring Marketing Productivity 114
Marketing Metrics 114
Marketing-Mix Modeling 116
Marketing Dashboards 116
MARKETING INSIGHT Marketing
Dashboards to Improve Effectiveness and
Efficiency 117
Summary 118
Applications 119
PART 3 Connecting with
Customers 122
CHAPTER 5 Creating Long-term Loyalty
Relationships 122
Building Customer Value, Satisfaction, and
Loyalty 123
Customer Perceived Value 124
Total Customer Satisfaction 128
Monitoring Satisfaction 128
MARKETING INSIGHT Net Promoter and
Customer Satisfaction 129
Product and Service Quality 131
viii
Maximizing Customer Lifetime Value 132
MARKETING MEMO Marketing and Total
Quality 132
Customer Profitability 133
Measuring Customer Lifetime Value 134
Cultivating Customer Relationships 134
MARKETING MEMO Calculating Customer
Lifetime Value 134
Customer Relationship
Management 135
Attracting and Retaining
Customers 139
Building Loyalty 141
Win-Backs 143
Customer Databases and Database
Marketing 143
Customer Databases 143
Data Warehouses and Data Mining 143
The Downside of Database Marketing and
CRM 145
MARKETING INSIGHT The Behavioral
Targeting Controversy 146
Summary 147
Applications 147
CHAPTER 6 Analyzing Consumer
Markets 150
What Influences Consumer Behavior? 151
Cultural Factors 151
Social Factors 153
MARKETING MEMO The Average U.S.
Consumer Quiz 155
Personal Factors 155
Key Psychological Processes 160
Motivation: Freud, Maslow, Herzberg 160
Perception 161
Learning 163
Emotions 163
Memory 163
MARKETING INSIGHT Made
to Stick 165
The Buying Decision Process:
The Five-Stage Model 166
Problem Recognition 167
Evaluation of Alternatives 168
ix
Purchase Decision 170
Postpurchase Behavior 172
Moderating Effects on Consumer Decision
Making 173
Behavioral Decision Theory and Behavioral
Economics 174
Decision Heuristics 174
MARKETING INSIGHT Predictably
Irrational 176
Framing 177
Summary 177
Applications 178
CHAPTER 7 Analyzing Business Markets 182
What Is Organizational Buying? 183
The Business Market versus the Consumer
Market 183
Buying Situations 185
Systems Buying and Selling 187
Participants in the Business Buying
Process 188
The Buying Center 188
Buying Center Influences 189
Targeting Firms and Buying Centers 190
MARKETING INSIGHT Big Sales to Small
Businesses 191
The Purchasing/Procurement
Process 193
Stages in the Buying Process 195
Problem Recognition 196
General Need Description and Product
Specification 196
Supplier Search 196
Proposal Solicitation 198
Supplier Selection 198
MARKETING MEMO Developing Compelling
Customer Value Propositions 199
Order-Routine Specification 201
Performance Review 201
Managing Business-to-Business Customer
Relationships 201
The Benefits of Vertical Coordination 202
MARKETING INSIGHT Establishing
Corporate Trust, Credibility, and
Reputation 203
Business Relationships: Risks and
Opportunism 203
New Technology and Business
Customers 204
Institutional and Government Markets 205
Summary 207
Applications 208
CHAPTER 8 Identifying Market Segments and
Targets 212
Bases for Segmenting Consumer
Markets 214
Geographic Segmentation 214
Demographic Segmentation 216
MARKETING INSIGHT Trading Up, Down,
and Over 218
Psychographic Segmentation 225
Behavioral Segmentation 227
Bases for Segmenting Business Markets 230
Market Targeting 231
Effective Segmentation Criteria 231
Evaluating and Selecting the Market
Segments 232
MARKETING INSIGHT Chasing the Long
Tail 235
Summary 236
Applications 237
PART 4 Building Strong
Brands 240
CHAPTER 9 Creating Brand Equity 240
What Is Brand Equity? 241
The Role of Brands 242
The Scope of Branding 243
Defining Brand Equity 243
Brand Equity Models 245
MARKETING INSIGHT Brand Bubble
Trouble 248
Building Brand Equity 249
Choosing Brand Elements 250
Designing Holistic Marketing Activities 251
Leveraging Secondary Associations 252
Internal Branding 253
Brand Communities 253
Measuring Brand Equity 255
MARKETING INSIGHT The Brand Value
Chain 255
MARKETING INSIGHT What Is a Brand
Worth? 257
Managing Brand Equity 258
Brand Reinforcement 258
Brand Revitalization 259
Devising a Branding Strategy 260
Branding Decisions 261
Brand Portfolios 262
Brand Extensions 263
Customer Equity 267
MARKETING MEMO Twenty-First-Century
Branding 267
Summary 268
Applications 269
CHAPTER 10 Crafting the Brand Positioning 274
Developing and Establishing a Brand
Positioning 275
Determining a Competitive Frame of
Reference 276
MARKETING INSIGHT High Growth Through
Value Innovation 278
Identifying Optimal Points-of-Difference and
Points-of-Parity 280
Choosing POPs and PODs 283
Brand Mantras 284
Establishing Brand Positioning 286
MARKETING MEMO Constructing a Brand
Positioning Bull’s-eye 287
Differentiation Strategies 289
Alternative Approaches to Positioning 291
Positioning and Branding a Small
Business 293
Summary 294
Applications 294
CHAPTER 11 Competitive Dynamics 298
Competitive Strategies for Market
Leaders 299
MARKETING INSIGHT When Your
Competitor Delivers More for Less 300
x
Expanding Total Market Demand 301
Protecting Market Share 302
Increasing Market Share 304
Other Competitive Strategies 305
Market-Challenger Strategies 305
Market-Follower Strategies 307
Market-Nicher Strategies 308
MARKETING MEMO Niche Specialist
Roles 309
Product Life-Cycle Marketing
Strategies 310
Product Life Cycles 310
Style, Fashion, and Fad Life Cycles 311
Marketing Strategies: Introduction Stage and
the Pioneer Advantage 312
Marketing Strategies: Growth Stage 313
Marketing Strategies: Maturity Stage 313
Marketing Strategies: Decline Stage 315
MARKETING INSIGHT Managing a Brand
Crisis 316
Evidence for the Product Life-Cycle
Concept 316
Critique of the Product Life-Cycle
Concept 317
Market Evolution 317
Marketing in an Economic
Downturn 318
Explore the Upside of Increasing
Investment 318
Get Closer to Customers 318
Review Budget Allocations 319
Put Forth the Most Compelling Value
Proposition 319
Fine-tune Brand and Product
Offerings 320
Summary 320
Applications 321
PART 5 Shaping the Market
Offerings 324
CHAPTER 12 Setting Product Strategy 324
Product Characteristics and
Classifications 325
Product Levels: The Customer-Value
Hierarchy 326
Product Classifications 327
xi
Product and Services Differentiation 328
Product Differentiation 329
Services Differentiation 330
Design 332
Product and Brand Relationships 333
MARKETING INSIGHT Marketing Luxury
Brands 334
The Product Hierarchy 336
Product Systems and Mixes 336
Product Line Analysis 337
Product Line Length 337
MARKETING INSIGHT When Less Is
More 339
Product Mix Pricing 342
Co-Branding and Ingredient
Branding 344
MARKETING MEMO Product-Bundle Pricing
Considerations 344
Packaging, Labeling, Warranties, and
Guarantees 346
Packaging 346
Labeling 348
Warranties and Guarantees 349
Summary 349
Applications 350
CHAPTER 13 Designing and Managing
Services 354
The Nature of Services 355
Service Industries Are Everywhere 356
Categories of Service Mix 356
Distinctive Characteristics of Services 358
The New Services Realities 361
A Shifting Customer Relationship 362
Achieving Excellence in Services
Marketing 365
Marketing Excellence 365
Best Practices of Top Service
Companies 366
Differentiating Services 368
MARKETING INSIGHT Improving Company
Call Centers 369
Managing Service Quality 370
MARKETING MEMO Recommendations for
Improving Service Quality 372
Managing Customer Expectations 373
Incorporating Self-Service Technologies
(SSTs) 375
Managing Product-Support Services 375
Identifying and Satisfying Customer
Needs 376
MARKETING MEMO Assessing E-Service
Quality 376
Postsale Service Strategy 377
Summary 378
Applications 378
CHAPTER 14 Developing Pricing Strategies and
Programs 382
Understanding Pricing 383
A Changing Pricing Environment 384
MARKETING INSIGHT Giving It All
Away 384
How Companies Price 386
Consumer Psychology and
Pricing 386
Setting the Price 389
Step 1: Selecting the Pricing
Objective 389
Step 2: Determining Demand 390
Step 3: Estimating Costs 392
Step 4: Analyzing Competitors’ Costs, Prices,
and Offers 395
Step 5: Selecting a Pricing
Method 395
Step 6: Selecting the Final Price 402
MARKETING INSIGHT Stealth Price
Increases 403
Adapting the Price 403
Geographical Pricing (Cash, Countertrade,
Barter) 404
Price Discounts and Allowances 404
Promotional Pricing 405
Differentiated Pricing 406
Initiating and Responding to Price
Changes 407
Initiating Price Cuts 407
Initiating Price Increases 408
Responding to Competitors’ Price
Changes 409
Summary 410
Applications 410
PART 6 Delivering Value 414
CHAPTER 15 Designing and Managing Integrated
Marketing Channels 414
Marketing Channels and Value Networks 415
The Importance of Channels 416
Hybrid Channels and Multichannel
Marketing 416
Value Networks 417
The Role of Marketing Channels 418
Channel Functions and Flows 418
Channel Levels 420
Service Sector Channels 421
Channel-Design Decisions 422
Analyzing Customer Needs and Wants 422
Establishing Objectives and
Constraints 423
Identifying Major Channel Alternatives 424
Evaluating Major Channel Alternatives 426
Channel-Management Decisions 427
Selecting Channel Members 427
Training and Motivating Channel
Members 428
Evaluating Channel Members 429
Modifying Channel Design and
Arrangements 429
Channel Modification Decisions 429
Global Channel Considerations 430
Channel Integration and Systems 431
Vertical Marketing Systems 431
MARKETING INSIGHT Channel Stewards
Take Charge 432
Horizontal Marketing Systems 433
Integrating Multichannel Marketing
Systems 433
Conflict, Cooperation, and Competition 435
Types of Conflict and Competition 435
Causes of Channel Conflict 436
Managing Channel Conflict 436
Dilution and Cannibalization 438
Legal and Ethical Issues in Channel
Relations 438
E-Commerce Marketing Practices 438
Pure-Click Companies 439
Brick-and-Click Companies 440
M-Commerce Marketing Practices 441
Summary 442
Applications 442
xii
CHAPTER 16 Managing Retailing, Wholesaling,
and Logistics 446
Retailing 447
Types of Retailers 448
The New Retail Environment 451
Marketing Decisions 453
Channels 454
MARKETING MEMO Helping Stores to
Sell 458
Private Labels 459
Role of Private Labels 460
Private-Label Success Factors 460
MARKETING INSIGHT Manufacturer’s
Response to the Private Label Threat 461
Wholesaling 461
Trends in Wholesaling 463
Market Logistics 464
Integrated Logistics Systems 464
Market-Logistics Objectives 465
Market-Logistics Decisions 466
Organizational Lessons 469
Summary 469
Applications 470
PART 7 Communicating Value 474
CHAPTER 17 Designing and Managing Integrated
Marketing Communications 474
The Role of Marketing Communications 476
The Changing Marketing Communications
Environment 476
MARKETING INSIGHT Don’t Touch That
Remote 476
Marketing Communications, Brand Equity,
and Sales 478
The Communications Process Models 480
Developing Effective Communications 482
Identify the Target Audience 482
Determine the Communications
Objectives 482
Design the Communications 484
MARKETING INSIGHT Celebrity
Endorsements as a Strategy 486
Select the Communications Channels 486
xiii
Establish the Total Marketing
Communications Budget 488
Deciding on the Marketing
Communications Mix 490
Characteristics of the Marketing
Communications Mix 490
Factors in Setting the Marketing
Communications Mix 492
Measuring Communication Results 494
Managing the Integrated Marketing
Communications Process 494
Coordinating Media 495
Implementing IMC 496
MARKETING MEMO How Integrated Is Your
IMC Program? 496
Summary 497
Applications 497
CHAPTER 18 Managing Mass Communications:
Advertising, Sales Promotions,
Events and Experiences, and Public
Relations 502
Developing and Managing an Advertising
Program 504
Setting the Objectives 504
Deciding on the Advertising Budget 505
Developing the Advertising Campaign 506
MARKETING MEMO Print Ad Evaluation
Criteria 509
Deciding on Media and Measuring
Effectiveness 510
Deciding on Reach, Frequency, and
Impact 511
Choosing among Major Media Types 512
Alternate Advertising Options 512
MARKETING INSIGHT Playing Games with
Brands 516
Selecting Specific Media Vehicles 516
Deciding on Media Timing and
Allocation 517
Evaluating Advertising Effectiveness 518
Sales Promotion 519
Objectives 519
Advertising versus Promotion 519
Major Decisions 520
Events and Experiences 524
Events Objectives 524
Major Sponsorship Decisions 525
Creating Experiences 526
MARKETING MEMO Measuring High
Performance Sponsorship Programs 526
Public Relations 527
Marketing Public Relations 527
Major Decisions in Marketing PR 528
Summary 530
Applications 530
CHAPTER 19 Managing Personal
Communications: Direct and
Interactive Marketing, Word
of Mouth, and Personal
Selling 534
Direct Marketing 535
The Benefits of Direct Marketing 536
Direct Mail 538
Catalog Marketing 539
Telemarketing 539
Other Media for Direct-Response
Marketing 539
Public and Ethical Issues in Direct
Marketing 540
Interactive Marketing 540
Advantages and Disadvantages of Interactive
Marketing 540
Interactive Marketing Communication
Options 541
MARKETING MEMO How to Maximize the
Marketing Value of E-mails 543
MARKETING MEMO Segmenting Tech
Users 545
Word of Mouth 546
Social Media 546
Buzz and Viral Marketing 549
Opinion Leaders 551
MARKETING MEMO How to Start a Buzz
Fire 552
Measuring the Effects of Word of
Mouth 552
Designing the Sales Force 553
Sales Force Objectives and Strategy 554
Sales Force Structure 555
MARKETING INSIGHT Major Account
Management 555
Sales Force Size 556
Sales Force Compensation 556
Managing the Sales Force 556
Recruiting and Selecting
Representatives 556
Training and Supervising Sales
Representatives 557
Sales Rep Productivity 557
Motivating Sales Representatives 558
Evaluating Sales Representatives 559
Principles of Personal Selling 560
The Six Steps 561
Relationship Marketing 562
Summary 562
Applications 563
PART 8 Creating Successful Long-
term Growth 566
CHAPTER 20 Introducing New Market
Offerings 566
New-Product Options 567
Make or Buy 567
Types of New Products 568
Challenges in New-Product
Development 568
The Innovation Imperative 568
New-Product Success 569
New-Product Failure 570
Organizational Arrangements 570
Budgeting for New-Product
Development 571
Organizing New-Product
Development 572
Managing the Development Process:
Ideas 573
Generating Ideas 573
MARKETING MEMO Ten Ways to Find Great
New-Product Ideas 574
MARKETING INSIGHT P&G’s New Connect
Develop Approach to Innovation 574
MARKETING MEMO Seven Ways to Draw
New Ideas from Your Customers 576
MARKETING MEMO How to Run a
Successful Brainstorming Session 577
Using Idea Screening 578
xiv
Managing the Development Process: Concept
to Strategy 579
Concept Development and Testing 579
Marketing Strategy Development 582
Business Analysis 583
Managing the Development Process:
Development to Commercialization 585
Product Development 585
Market Testing 585
Commercialization 588
The Consumer-Adoption Process 589
Stages in the Adoption Process 589
Factors Influencing the Adoption
Process 589
Summary 590
Applications 591
CHAPTER 21 Tapping into Global Markets 594
Competing on a Global Basis 595
Deciding Whether to Go Abroad 597
Deciding Which Markets to Enter 597
How Many Markets to Enter 598
Developed versus Developing Markets 598
MARKETING INSIGHT Spotlight on Key
Developing Markets 600
Evaluating Potential Markets 602
Deciding How to Enter the Market 603
Indirect and Direct Export 603
Licensing 604
Joint Ventures 605
Direct Investment 605
Deciding on the Marketing Program 606
Global Similarities and Differences 606
Marketing Adaptation 607
MARKETING MEMO The Ten
Commandments of Global Branding 608
Global Product Strategies 608
Global Communication Strategies 610
Global Pricing Strategies 611
Global Distribution Strategies 613
Country-of-Origin Effects 614
Building Country Images 614
Consumer Perceptions of Country of
Origin 614
Deciding on the Marketing Organization 616
Export Department 616
International Division 616
Global Organization 616
Summary 617
Applications 617 xv
CHAPTER 22 Managing a Holistic Marketing
Organization for the Long
Run 620
Trends in Marketing Practices 621
Internal Marketing 623
Organizing the Marketing Department 623
MARKETING MEMO Characteristics of
Company Departments That Are Truly
Customer Driven 624
Relationships with Other Departments 627
Building a Creative Marketing
Organization 628
MARKETING INSIGHT The Marketing
CEO 628
Socially Responsible Marketing 629
Corporate Social Responsibility 630
MARKETING INSIGHT The Rise of
Organic 633
Socially Responsible Business Models 634
Cause-Related Marketing 634
MARKETING MEMO Making a Difference:
Top 10 Tips for Cause Branding 637
Social Marketing 638
Marketing Implementation and Control 640
Marketing Implementation 640
Marketing Control 641
Annual-Plan Control 641
Profitability Control 642
Efficiency Control 642
Strategic Control 643
The Future of Marketing 643
MARKETING MEMO Major Marketing
Weaknesses 647
Summary 648
Applications 648
Appendix Tools for Marketing
Control 650
Appendix Sonic Marketing Plan A1
Endnotes E1
Glossary G1
Image Credits C1
Name Index I1
Company, Brand, and Organization Index I4
Subject Index I14
