MARKETING. Elnora W.!b II Ufluu 1 UNIVERSITY OF SOUTH CAROLINA UPSTATE. Michael R. SAINT JOSEPH'S UNIVERSITY. Greg W.
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1 MARKETING Michael R. SAINT JOSEPH'S UNIVERSITY Greg W. ROLLINS GOLLEGE THE Elnora W.!b II Ufluu 1 UNIVERSITY OF SOUTH CAROLINA UPSTATE Prentice Hall Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
2 Contents Preface xvii CHAPTER 1: Welcome to the World of Marketing: Create and Deliver Value 4 problem... 5 WELCOME TO BRAND YOU 6 THE WHO AND WHERE OF MARKETING 7 Marketing's Role in the Firm: Cross-Functional Relationships 8 Where Do You Fit In? Careers in Marketing 8 MARKETING CREATES VALUE 8 Marketing Meets Needs 8 Marketing Creates Utility 11 Marketing and Exchange 12 WHEN DID MARKETING BEGIN? THE EVOLUTION OF A CONCEPT 13 The Production Era 13 The Sales Era 13 : The Relationship Era 15 ' The Triple Bottom Line Orientation 15 WHAT CAN WE MARKET? 18 Lasers to Lady Gaga 18 Consumer Goods and Services 19 Business-to-Business Goods and Services 19 Not-for-Profit Marketing 20 Idea, Place, and People Marketing 20 Decisions in the Real World 20 THE VALUE OF MARKETING AND THE MARKETING OF VALUE 21 Value from the Customer's Perspective 22 Value from the Seller's Perspective 22 Provide Value Through Competitive Advantage 23 Add Value Through the Value Chain 24 How Do We Know What's Valuable? 25 Consumer-Generated Value: From Audience to Community 25 Value from Society's Perspective 27 Is Marketing Evil? 28 The Dark Side of Marketing 28 MARKETING AS A PROCESS 30 Marketing Planning 30 Marketing's Tools: The Marketing Mix 31 choice Study Map 33 Objective Summary 33 Key Terms 33 Chapter Questions and Activities 36 at Colgate-Palmolive 37 C H A P T E R 2: Strategic Market Planning: Take the Big Picture 38 problem..._ 39 BUSINESS PLANNING: COMPOSE THE BIG PICTURE 40 Ethics Is Up Front in Marketing Planning 41 Decisions in the Real World 42 STRATEGIC PLANNING: FRAME THE PICTURE 46 Step 1: Define the Mission 46 Step 2: Evaluate the Internal and External Environment 47 Step 3: Set Organizational or SBU Objectives 48 Step 4: Establish the Business Portfolio 49 Step 5: Develop Growth Strategies 51 MARKETING PLANNING: SELECT THE CAMERA SETTING 53 Step 1: Perform a Situation Analysis 53 Step 2: Set Marketing Objectives 54 Step 3: Develop Marketing Strategies 54 Step 4: Implement and Control the Marketing Plan 55 Action Plans 58- Make Your Life Easier! Use the Marketing Planning Template 60 Operational Planning: Day-to-Day Execution of Marketing Plans 60 choice Study Map 62 Objective Summary 62 Key Terms 62 Chapter Questions and Activities 63 for the Apple iphone 64 CHAPTER 3: Thrive in the Marketing Environment: The World Is Flat 66 problem DECISIONS, DECISIONS 68 IX
3 CONTENTS TAKE A BOW: MARKETING ON THE GLOBAL STAGE 68 World Trade 69 Should We Go Global? 70 UNDERSTAND INTERNATIONAL, REGIONAL, AND COUNTRY REGULATIONS 71 Initiatives in International Cooperation and Regulation 72 Economic Communities 72 ANALYZE THE MARKETING ENVIRONMENT 73 The Economic Environment 74 The Competitive Environment 77 The Technological Environment 79 The Political and Legal Environment 79 The Sociocultural Environment 83 IS THE WORLD FLAT OR NOT? HOW "GLOBAL" SHOULD A GLOBAL MARKETING STRATEGY BE? 87 Company-Level Decisions: The Market Entry Strategy 87 Decisions in the Real World 87 Product-Level Decisions: The Marketing Mix Strategy 90 choice Study Map 93 Objective Summary 93 Key Terms 93 Chapter Questions and Activities 96 at Mattel 97 C H A P T E R 4: Marketing Research: Gather, Analyze, and Use Information 100 problem KNOWLEDGE IS POWER 102 The Marketing Information System 102 Decisions in the Real World 103 The Marketing Decision Support System 106 SEARCHING FOR GOLD: DATA MINING 107 STEPS IN THE MARKETING RESEARCH PROCESS 108 Step 1: Define the Research Problem 108 Step 2: Determine the Research Design 109 Step 3: Choose the Method to Collect Primary Data 113 Step 4: Design the Sample 119 Step 5: Collect the Data 120 Step 6: Analyze and Interpret the Data 121 Step 7: Prepare the Research Report 122 choice Study Map 124 Objective Summary 124 Key Terms 124 Chapter Questions and Activities 126 at IMMI 127 C H A P T E R 5: Consumer Behavior: How and Why We Buy 128 problem DECISIONS, DECISIONS 130 THE CONSUMER DECISION-MAKING PROCESS 130 Not All Decisions Are the Same 131 Step 1: Problem Recognition 133 Step 2: Information Search 134 Step 3: Evaluation of Alternatives 135 Step 4: Product Choice 136 Decisions in the Real World 136 Step 5: Postpurchase Evaluation 137 INTERNAL INFLUENCES ON CONSUMERS' DECISIONS 138 Perception 138 Motivation 140 Learning 140 Attitudes 142 Personality and the Self: Are You What You Buy? 143 Age 143 Lifestyle 144 SITUATIONAL AND SOCIAL INFLUENCES ON CONSUMERS' DECISIONS 145 Situational Influences 145 Social Influences on Consumers' Decisions 146 choice Study Map 151 Objective Summary 151 Key Terms 151 Chapter Questions and Activities 153 at Lexus 155 CHAPTER 6: Business-to-Business Markets: How and Why Organizations Buy problem BUSINESS MARKETS: BUYING AND SELLING WHEN THE CUSTOMER IS ANOTHER FIRM 158 Factors That Make a Difference in Business Markets 159 Size of Purchases 161 B2B Demand 161 Types of Business-to-Business Customers 163
4 CONTENTS XJ BUSINESS-TO-BUSINESS E-COMMERCE AND SOCIAL MEDIA 165 Intranets, Extranets, and Private Exchanges 165 The Dark Side of B2B E-Commerce 166 B2B and Social Media 166 BUSINESS BUYING SITUATIONS AND THE BUSINESS BUYING DECISION PROCESS 168 The Buyclass Framework 168 Professional Buyers and Buying Centers 170 The Business Buying Decision Process 171 Decisions in the Real World 174 choice Study Map 178 Objective Summary 178 Key Terms 178 Chapter Questions and Activities 179 at The Filter 180 C H A P T E R 7: Sharpen the Focus: Target Marketing Strategies and Customer Relationship Management 182 problem TARGET MARKETING STRATEGY: SELECT AND ENTER A MARKET 184 STEP 1: SEGMENTATION 185 Segment Consumer Markets 185 Segment by Psychographics 194 Segment by Behavior 196 Segment Business-to-Business Markets 197 STEP 2: TARGETING 198 Targeting in Three Steps 198 STEP 3: POSITIONING 201 Decisions in the Real World 201 Steps in Positioning 202 Bring a Product to Life: The Brand Personality 203 CUSTOMER RELATIONSHIP MANAGEMENT (CRM): TOWARD A SEGMENT OF ONE 204 CRM: A New Perspective on an Old Problem 205 Characteristics of CRM 206 Real People, Real Choices:. Here's my choice Study Map 210 Objective Summary 210 Key Terms 210 Chapter Questions and Activities 212 Choices: What Do You Think? 212 at Subaru 213 CHAPTER 8: Create the Product 216 problem BUILD A BETTER MOUSETRAP AND ADD VALUE 218 Layers of the Product Concept 219 HOW MARKETERS CLASSIFY PRODUCTS 221 How Long Do Products Last? 221 How Do Consumers Buy Products? 222 How Do Businesses Buy Products? 224 "NEW AND IMPROVED!" THE PROCESS OF INNOVATION 225 Types of Innovations 225 Continuous Innovations 226 Dynamically Continuous Innovations 226 Discontinuous Innovations 227 How Do We Measure Innovation? 227 NEW PRODUCT DEVELOPMENT 228 Phase 1: Idea Generation 228 Phase 2: Product Concept Development and Screening 228 Phase 3: Marketing Strategy Development 229 Phase 4: Business Analysis 229 Phase 5: Technical Development 230 Phase 6: Test Marketing 231 Phase 7: Commercialization 232 ADOPTION AND DIFFUSION OF NEW PRODUCTS 233 Decisions in the Real World 233 Stages in Consumers' Adoption of a New Product 234 Innovator Categories 236 Product Factors That Affect the Rate of Adoption 238 choice Study Map 240 Objective Summary 240 Key Terms 240 Chapter Questions and Activities 242 at KFC 243 C H A P T E R 9 l Manage the Product 244 problem PRODUCT PLANNING: USE PRODUCT OBJECTIVES TO DECIDE ON A PRODUCT STRATEGY 246 Objectives and Strategies for Individual Products 247 Objectives and Strategies for Multiple Products 248 Product Mix Strategies 249
5 Xii CONTENTS Quality as a Product Objective: The Science of TQM 250 Quality Guidelines 250 MARKETING THROUGHOUT THE PRODUCT LIFE CYCLE 252 The Introduction Stage 252 The Growth Stage 254 The Maturity Stage 254 The Decline Stage 254 CREATE PRODUCT IDENTITY: BRANDING DECISIONS 255 What's in a Name (or a Symbol)? 255 Why Brands Matter 257 Branding Strategies 259 Individual Brands versus Family Brands 260 National and Store Brands 260 Generic Brands 261 Licensing 261 Cobranding 261 Brand Metrics 262 CREATE PRODUCT IDENTITY: THE PACKAGE AND LABEL 262 What Packages Do 263 Design Effective Packaging 264 Labeling Regulations 265 Decisions in the Real World 265 ORGANIZE FOR EFFECTIVE PRODUCT MANAGEMENT 266 Manage Existing Products 266 Brand Managers 266 Product Category Managers 266 Market Managers 267 Organize for New-Product Development 267 choice Study Map 268 Objective Summary 268 Key Terms 268 Chapter Questions and Activities 270 at Starbucks 271 C H A P T E R 1 0; Services and Other Intangibles: Marketing the Product That Isn't There 272 problem MARKETING WHAT ISN'T THERE 274 What Is a Service? 274 Characteristics of Services 274 The Service Encounter 277 How We Classify Services? 278 Core and Augmented Services 279 Physical Elements of the Service Encounter: Servicescapes and Other Tangibles 280 Decisions in the Real World 280 HOW WE PROVIDE QUALITY SERVICE 281 Service Quality Attributes 282 How We Measure Service Quality 283 Strategic Issues When We Deliver Service Quality 285 MARKETING PEOPLE, PLACES, AND IDEAS 286 Marketing People 286 Marketing Places 288 Marketing Ideas 289 The Future of Services 289 choice Study Map 292 Objective Summary 292 Key Terms 292 Chapter Questions and Activities 294 at Clear & SIMPLE 295 C H A P T E R 1 1: Price the Product Real People, Real Choices: Here's My problem "YES, BUT WHAT DOES IT COST?" 298 What Is Price? 298 Step 1: Develop Pricing Objectives 300 COSTS, DEMAND, REVENUE, AND THE PRICING ENVIRONMENT 302 Step 2: Estimate Demand 302 Step 3: Determine Costs 307 Step 4: Evaluate the Pricing Environment 312 PRICING THE PRODUCT: ESTABLISHING STRATEGIES AND TACTICS 316 Step 5: Choose a Pricing Strategy 316 Step 6: Develop Pricing Tactics 320 PRICING AND ELECTRONIC COMMERCE 323 Dynamic Pricing Strategies 323 Online Auctions 323 Freenomics: What If We Just Give It Away? 323 Pricing Advantages for Online Shoppers 324 PSYCHOLOGICAL, LEGAL, AND ETHICAL ASPECTS OF PRICING 325 Psychological Issues in Setting Prices 325 Psychological Pricing Strategies 326 Legal and Ethical Considerations in B2C Pricing 327 Legal Issues in B2B Pricing 328 Decisions in the Real World
6 CONTENTS XIII choice Study Map 331 Objective Summary 331 Key Terms 331 Chapter Questions and Activities 334 at Amazon 335 Marketing Math 336 INCOME STATEMENT AND BALANCE SHEET 336 IMPORTANT FINANCIAL PERFORMANCE RATIOS 339 Operating Ratios 340 INVENTORY TURNOVER RATE 340 RETURN ON INVESTMENT 341 PRICE ELASTICITY 342 COST-PLUS PRICING 343 Markup on Cost 343 Markup on. Selling Price 343 CHAPTER 12: One-to-One to Many-to- Many: Traditional and New Media 348 Real People, Real Choices: Here's My problem THE TRADITIONAL COMMUNICATION MODEL: ONE-TO-MANY 350 The Communication Model 352 The Traditional Promotion Mix 355 THE UPDATED COMMUNICATION MODEL: MANY-TO-MANY 358 Buzz Building 359 Decisions in the Real World 360 New Social Media 362 PROMOTIONAL PLANNING IN A WEB 2.0 WORLD 366 Step 1. Identify the Target Audience(s) 366 Step 2. Establish the Communication Objectives 367 Step 3: Determine and Allocate the Marketing Communication Budget 368 Step 4: Design the Promotion Mix 371 Step 5: Evaluate the Effectiveness of the Communication Program 372 Multichannel Promotional Strategies 372 choice Study Map 374 Objective Summary 374 Key Terms 374 Chapter Questions and Activities 376 American Express 377 CHAPTER 13: One-to-Many: Advertising, Public Relations, and Consumer Sales Promotion 378 Real People, Real Choices: Here is My problem ADVERTISING: THE IMAGE OF MARKETING 380 Types of Advertising 381 Who Creates Advertising? 382 User-Generated Advertising Content: Do-it-Yourself Advertising, and Crowdsourcing 383 Ethical Issues in Advertising 384 Decisions in the Real World 385 DEVELOP THE ADVERTISING CAMPAIGN 386 Step 1: Understand the Target Audience 386 Step 2: Establish Message and Budget Objectives 387 Step 3: Create the Ads 387 Step 4: Pretest What the Ads Will Say 391 Step 5: Choose the Media Type(s) and Media Schedule 392 Step 6: Evaluate the Advertising 401 PUBLIC RELATIONS 402 Plan a Public Relations Campaign 403 Public Relations Objectives 404 Public Relations Tactics 406 SALES PROMOTION 408 Sales Promotion Directed toward Consumers 408 choice Study Map 412 Objective Summary 412 Key Terms 412 Chapter Questions and Activities 415 at JetBlue 417 CHAPTER 14: One-to-One: Trade Promotion, Direct Marketing, and Personal Selling Real People, Real Choices: Here's My problem TRADE SALES PROMOTION: TARGETING THE B2B CUSTOMER 420 Discount Promotions 421 Sales Promotion Designed to Increase Industry Visibility 422 DIRECT MARKETING 423 Mailorder 423 Direct Mail 424 Telemarketing 425 Direct-Response Advertising 425 M-Commerce 426
7 XIV CONTENTS Decisions in the Real World 426 PERSONAL SELLING: ADDING THE PERSONAL TOUCH TO THE PROMOTION MIX 427 The Role of Personal Selling in the Marketing Mix 427 Technology and Personal Selling 429 THE LANDSCAPE OF MODERN PERSONAL SELLING 431 Types of Sales Jobs 431 Two Approaches to Personal Selling 432 THE CREATIVE SELLING PROCESS 433 Step 1: Prospect and Qualify 433 Step 2: Preapproach 434 Step 3: Approach 435 Step 4: Sales Presentation 435 Step 5: Handle Objections 435 Step 6: Close the Sale 435 Step 7: Follow-up 436 SALES MANAGEMENT 436 Set Sales Force Objectives 436 Create a Sales Force Strategy 437 Recruit, Train, and Reward the Sales Force 437 Evaluate the Sales Force 438 choice Study Map 440 Objective Summary 440 Key Terms 440 Chapter Questions and Activities 442 at Frito-Lay 443 CHAPTER 15: Deliver Value through Supply Chain Management, Channels of Distribution, and Logistics 446 problem PLACE: THE FINAL FRONTIER 448 Supply Chain Management 449 DISTRIBUTION CHANNELS: GET IT THERE 450 Functions of Distribution Channels 451 The Internet in the Distribution Channel 452 WHOLESALING INTERMEDIARIES 453 Independent Intermediaries 454 Merchandise Agents or Brokers 456 Manufacturer-Owned Intermediaries 456 TYPES OF DISTRIBUTION CHANNELS 457 Consumer Channels 457 B2B Channels 460 Dual and Hybrid Distribution Systems 460 Distribution Channels and the Marketing Mix 460 Ethics in the Distribution Channel 461 PLAN A CHANNEL STRATEGY 461 Step 1: Develop Distribution Objectives 462 Step 2: Evaluate Internal and External Environmental Influences 462 Step 3: Choose a Distribution Strategy 462 Intensive, Exclusive, or Selective Distribution? 464 Step 4: Develop Distribution Tactics 465 Decisions in the Real World 466 LOGISTICS: IMPLEMENT THE SUPPLY CHAIN 467 The Lowdown on Logistics 468 Inventory Control: JIT, RFID, and Fast Fashion 471 Supply Chain Metrics 472 choice Study Map 474 Objective Summary.474 Key Terms 474 Chapter Questions and Activities 476 at Walmart 477 CHAPTER 16: Retailing: Bricks and Clicks 478 problem RETAILING: SPECIAL DELIVERY 480 Retailing: A Mixed (Shopping) Bag 480 The Evolution of Retailing 481 The Evolution Continues: What's "In Store" for the Future? 484 Ethical Problems in Retailing 486 FROM MOM-AND-POP TO SUPER WALMART: HOW MARKETERS CLASSIFY RETAIL STORES 487 Classify Retailers by What They Sell 487 Decisions in the Real World 487 Classify Retailers by Level of Service 488 Classify Retailers by Merchandise Selection 488 Major Types of Retailers 489 NONSTORE RETAILING 493 Direct Selling 493 Automatic Vending 494 B2C E-Commerce 495 DEVELOP A STORE POSITIONING STRATEGY: RETAILING AS THEATER 498 Store Image 499 Build the Theater: Store Location 502 choice Study Map 505 Objective Summary 505 Key Terms 505
8 CONTENTS XV Chapter Questions and Activities 507 at IKEA 509 Appendix Marketing Plan: The S&S Smoothie Company 510 NOTES 523 GLOSSARY 540 INDEX 556
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