0 <1 0 A Marketig Strategy Plaig Approach William D. Perreault, Jr., Ph.D. UNIVERSITY OF NORTH CAROLINA Joseph P. Cao, Ph.D. COLORADO STATE UNIVERSITY E. Jerome McCarthy, Ph.D. MICHIGAN STATE UNIVERSITY McGraw-Hill Irwi
CHAPTER ONE Marketig's Value to Cosumers, Firms, ad Society 2 Marketig What's It All About? 4 Marketig Is Importat to You 5 How Should We Defie Marketig? 6 / Macro-Marketig 8 The Role of Marketig i Ecoomic Systems 12 Marketig's Role Has Chaged a Lot over the Years 15 What Does the Marketig Cocept Mea? 16 The Marketig Cocept ad Customer Value 18 The Marketig Cocept Applies i Noprofit Orgaizatios 21 The Marketig Cocept, Social Resposibility, ad Marketig Ethics 22 Coclusio 26 KeuTerms 27 Questios ad Problems 27 Suggested Cases 28 Computer-Aided Problem 28
CHAPTER TWO Marketig Strategy Plaig 0 The Maagemet Job i Marketig 2 What Is a Marketig Strategy? Selectig a Market-Orieted Strategy Is Target Marketig 4 Developig Marketig Mixes for Target Markets 5 The Marketig Pla Is a Guide to Implemetatio ad Cotrol 40 The Marketig Program Should Build Customer Equity 42 The Importace of Marketig Strategy Plaig 44 What Are Attractive Opportuities? 46 Marketig Strategy Plaig Process Highlights Opportuities 47 Types of Opportuities to Pursue 50 Iteratioal Opportuities Should Be Cosidered 52 Coclusio 5 Key Terms 54 Questios ad Problems 54 Creatig Marketig Plas 54 Suggested Cases 55 Computer-Aided Problem 55 CHAPTERTHREE Evaluatig Opportuities i the Chagig Market Eviromet 56 The Market Eviromet 58 Objectives Should Set Firm's Course 59 Compay Resources May Limit Search for Opportuities 62 Aalyzig Competitors ad the Competitive Eviromet 6 The Ecoomic Eviromet 67 The Techological Eviromet 69 The Political Eviromet 71 The Legal Eviromet 72 The Cultural ad Social Eviromet 75 Usig Screeig Criteria to Narrow Dow to Strategies 77 Plaig Grids Help Evaluate a Portfolio of Opportuities 80 Multiproduct Firms Have a Difficult Strategy-Plaig Job 81 Evaluatig Opportuities i Iteratioal Markets 82 Coclusio 8 Key Terms 84 Questios ad Problems 84 Creatig Marketig Plas 85 Suggested Cases 85 Computer-Aided Problem 85
Populatio Treds i the U.S. Cosumer Market 127 Icome Dimesios of the U.S. Market 1 Spedig ad the Family Life Cycle 17 Ethic Dimesios of the U.S. Market 19 CHAPTER FOUR Focusig Marketig Strategy with Segmetatio ad Positioig 86 Search for Opportuities Ca Begi by Uderstadig Markets 88 Namig Product-Markets ad Geeric Markets 91 Market Segmetatio Defies Possible Target Markets 92 What Dimesios Are Used to Segmet Markets? 98 A Best Practice Approach to Segmetig Product-Markets 10 More Sophisticated Techiques May Help i Segmetig 108 Differetiatio ad Positioig Take the Customer Poit of View 110 Coclusio 11 Key Terms 114 Questios ad Problem 114 ' Creatig Marketig Plas 114 Suggested Cases 114 Computer-Aided Problem 114 CHAPTER FIVE Demographic Dimesios of Global Cosumer Markets 116 Target Marketers Focus o the Customer 118 Global Cosumer Markets 119 Coclusio 142 Key Terms 142 Questios ad Problems 142 Creatig Marketig Plas 14 Suggested Cases 14 Computer-Aided Problem 14 CHAPTER SIX Fial Cosumers ad Their Buyig Behavior 144 Cosumer Behavior: Why Do They Buy What They Buy? 146 Ecoomic Needs Affect Most Buyig Decisios 146 Psychological Iflueces withi a Idividual 149 Social Iflueces Affect Cosumer Behavior 157 Idividuals Are Affected by the Purchase Situatio 160 The Cosumer Decisio Process 162 Cosumer Behavior i Iteratioal Markets 165 Coclusio 166 Key Terms 167 Questios ad Problems 167 Creatig Marketig Plas 168 Suggested Cases 168 Computer-Aided Problem 168 00 OQ -o ( > at c O O fu o c 5
CHAPTER SEVEN Busiess ad Orgaizatioal Customers ad Their Buyig Behavior 170 Busiess ad Orgaizatioal Customers A Big Opportuity 172 Orgaizatioal Customers Are Differet 17 May Differet People May Ifluece a Decisio 175 Orgaizatioal Buyers Are Problem Solvers 180 Buyer-Seller Relatioships i Busiess Markets 184 Maufacturers Are Importat Customers 188 Producers of Services Smaller ad More Spread Out 190 Retailers ad Wholesalers Buy for Their Customers 191 The Govermet Market 19 Coclusio 195 Key Terms 195 Questios ad Problems 196 Creatig Marketig Plas 196 Suggested Cases 196 Computer-Aided Problem 196 CHAPTER EIGHT Improvig Decisios with Marketig Iformatio 198 Effective Marketig Requires Good Iformatio 200 Chages Are Uder Way i Marketig Iformatio Systems 201 The Scietific Method ad Marketig Research 205 Five-Step Approach to Marketig Research 205 Defiig the Problem Step 1 206 Aalyzig the Situatio Step 2 206 Gettig Problem-Specific Data Step 210 Iterpretig the Data Step 4 218 Solvig the Problem Step 5 221 Iteratioal Marketig Research 222 Coclusio 22 Key Terms 22 Questios ad Problems 224 Creatig Marketig Plas 224 Suggested Cases 224 Computer-Aided Problem 225 CHAPTER NINE Elemets of Product Plaig for Goods ad Services 226 The Product Area Ivolves May Strategy Decisios 228 XXXII
What Is a Product? 228 Differeces i Goods ad Services 21 Whole Product Lies Must Be Developed Too 2 Bradig Is a Strategy Decisio 2 Coditios Favorable to Bradig 25 Achievig Brad Familiarity Is Not Easy 25 Protectig Brad Names ad Trademarks 28 What Kid of Brad to Use? 28 Who Should Do the Bradig? 29 The Strategic Importace of Packagig 240 What Is Socially Resposible Packagig? 241 Warraty Policies Are a Part of Strategy Plaig 24 Product Classes Help Pla Marketig Strategies 244 Cosumer Product Classes 245 Busiess Products Are Differet 247 Busiess Product Classes How They Are Defied 248 New-Product Plaig 266 A Orgaized New-Product Developmet Process Is Critical 267 New-Product Developmet: A Total Compay Effort 27 Need for Product Maagers 275 Maagig Product Quality 276 Coclusio 280 Key Terms 280 Questios ad Problems 280 Creatig Marketig Plas 281 Suggested Cases 281 Computer-Aided Problem 281 CD o oo Coclusio 251 Key Terms 251 Questios ad Problems 252 Creatig Marketig Plas 25 Suggested Cases 25 Computer-Aided Problem 25 CHAPTER TEN Product Maagemet ad New-Product Developmet 254 Iovatio ad Market Chages Create Opportuities 256 Maagig Products over Their Life Cycles 257 Product Life Cycles Should Be Related to Specific Markets 259 Product Life Cycles Vary i Legth 260 Plaig for Differet Stages of the Product Life Cycle 262 CHAPTER ELEVEN Place ad Developmet of Chael Systems 282 Marketig Strategy Plaig Decisios for Place 284 Place Decisios Are Guided by "Ideal" Place Objectives 285 Chael System May Be Direct or Idirect 286 Chael Specialists May Reduce Discrepacies ad Separatios 290 Chael Relatioship Must Be Maaged 29 Vertical Marketig Systems Focus o Fial Customers 296 The Best Chael System Should Achieve Ideal Market Exposure 298 Chael Systems Ca Be Complex 01 Eterig Iteratioal Markets 04 Coclusio 06 Key Terms 06 Questios ad Problems 06 Creatig Marketig Plas 07 Suggested Cases.07 Computer-Aided Problem 07 QJ O sr I
f i i CHAPTER TWELVE Distributio Customer Service ad Logistics 08 Physical Distributio Gets It to Customers 10 Physical Distributio Customer Service 11 Physical Distributio Cocept Focuses o the Whole Distributio System 1 Coordiatig Logistics Activities amog Firms 15 The Trasportig Fuctio Adds Value to a Marketig Strategy 18 Which Trasportig Alterative Is Best? 20 The Storig Fuctio ad Marketig Strategy 24 Specialized Storig Facilities May Be Required 25 The Distributio Ceter A Differet Kid of Warehouse 26 Coclusio 28 Key Terms 28 Questios ad Problems 28 Creatig Marketig Plas 29 Suggested Cases 29 Computer-Aided Problem 29 CHAPTER THIRTEEN Retailers, Wholesalers, ad Their Strategy Plaig 0 Retailers ad Wholesalers Pla Their Ow Strategies 2 The Nature of Retailig Plaig a Retailer's Strategy 4 Covetioal Retailers Try to Avoid Price Competitio 6 Expad Assortmet ad Service To Compete at a High Price 7 Evolutio of Mass-Merchadisig Retailers 7 Some Retailers Focus o Added Coveiece 40 Retailig o the Iteret 41 Why Retailers Evolve ad Chage 44 Retailer Size ad Profits 45 Differeces i Retailig i Differet Natios 46 What Is a Wholesaler? 48 Wholesalig Is Chagig with the Times 48 Wholesalers Add Value i Differet Ways 50 Merchat Wholesalers Are the Most Numerous 51 Agets Are Strog o Sellig 5 What Will Happe to Retailers ad Wholesalers i the Future? 55 Coclusio 55 Key Terms 56 Questios ad Problems 56 Creatig Marketig Plas 57 Suggested Cases 57 Computer-Aided Problem 57 XXXIV
CHAPTER FOURTEEN Promotio Itroductio to Itegrated Marketig Commuicatios 58 Promotio Commuicates to Target Markets 60 Several Promotio Methods Are Available 61 Someoe Must Pla, Itegrate, ad Maage the Promotio Bled 6 Which Methods to Use Depeds o Promotio Objectives 65 Promotio Requires Effective Commuicatio 67 Itegrated Direct-Respose Promotio Is Very Targeted 69 The Customer May Iitiate the Commuicatio Process 70 How Typical Promotio Plas Are Bleded ad Itegrated 7 Adoptio Processes Ca Guide Promotio ' Plaig 75 Promotio Bleds Vary over the Life Cycle 79 Settig the Promotio Budget 80 Coclusio 81 Key Terms 82 Questios ad Problems 82 Creatig Marketig Plas 8 Suggested Cases 8 Computer-Aided Problem 8 CHAPTER FIFTEEN Persoal Sellig ad Customer Service 84 The Importace ad Role of Persoal Sellig 86 What Kids of Persoal Sellig Are Needed? 89 Order Getters Develop New Busiess Relatioships 89 Order Takers Nurture Relatioships to Keep the Busiess Comig 90 Supportig Sales Force Iforms ad Promotes i the Chael 91 Customer Service Promotes the Next Purchase 9 The Right Structure Helps Assig Resposibility 94 Iformatio Techology Provides Tools to Do the job 99 Soud Selectio ad Traiig to Build a Sales Force 401 Compesatig ad Motivatig Salespeople 40 Persoal Sellig Techiques Prospectig ad Presetig 405 Coclusio 409 Key Terms 410 Questios ad Problems 410 Creatig Marketig Plas 411 Suggested Cases 411 Computer-Aided Problem 411 o QJ O QJ o - i
CHAPTER SIXTEEN Advertisig, Publicity, ad Sales Promotio 412 Advertisig, Publicity, Sales Promotio, ad Marketig Strategy Plaig 414 Advertisig Is Big Busiess 416 Advertisig Objectives Are a Strategy Decisio 418 Objectives Determie the Kids of Advertisig Needed 419 Coordiatig Advertisig Efforts with Cooperative Relatioships 421 Choosig the "Best" Medium How to Deliver the Message 422 Advertisig o the Iteret 425 Plaig the "Best" Message What to, Commuicate 427 Advertisig Agecies Ofte Do the Work 40 Measurig Advertisig Effectiveess Is Not Easy 41 How to Avoid Ufair Advertisig 42 Customer Commuicatio ad Types of Publicity 4 Sales Promotio Do Somethig Differet to Stimulate Chage 441 Problems i Maagig Sales Promotio 44 Differet Types of Sales Promotio for Differet Targets 444 Coclusio 446 Key Terms 447 Questios ad Problems 447 Creatig Marketig Plas 448 Suggested Cases 448 Computer-Aided Problem 448 CHAPTERSEVENTEEN Pricig Objectives ad Policies 450 Price Has May Strategy Dimesios 452 Objectives Should Guide Strategy Plaig for Price 454 Profit-Orieted Objectives 455 Sales-Orieted Objectives 456 Status Quo Pricig Objectives 457 Most Firms Set Specific Pricig Policies To Reach Objectives 457 Price Flexibility Policies 458 Price-Level Policies Over the Product Life Cycle 460 Discout Policies Reductios from List Prices 464 Allowace Policies Off List Prices 467 Some Customers Get Somethig Extra 468 List Price May Deped o Geographic Pricig Policies 469 Pricig Policies Combie to Impact Customer Value 470 Legality of Pricig Policies 47 Coclusio 477 Key Terms 477 Questios ad Problems 477 Creatig Marketig Plas 478 Suggested Cases 478 Computer-Aided Problem 478 XXXVI
CHAPTER EIGHTEEN Price Settig i the Busiess World 480 Price Settig Is a Key Strategy Decisio 482 Some Firms Just Use Markups 482 Average-Cost Pricig Is Commo ad Ca Be Dagerous 486 Marketig Maagers Must Cosider Various Kids of Costs 488 Break-Eve Aalysis Ca Evaluate Possible Prices 491 Margial Aalysis Cosiders Both Costs ad Demad 49 Demad-Orieted Approaches for Settig Prices 497 Pricig a Full Lie 504 Bid Pricig ad Negotiated Pricig Deped Heavily o Costs 506 Coclusio 508 Key Terms 508 Questios ad Problems 508 Creatig Marketig Plas 509 Suggested Cases 509 Computer-Aided Problem 509 CHAPTER NINETEEN Implemetig ad Cotrollig Marketig Plas: Evolutio ad Revolutio 510 Good Plas Set the Framework for Implemetatio ad Cotrol 512 Speed Up Iformatio for Better Implemetatio ad Cotrol 51 Effective Implemetatio Meas That Plas Work as Iteded 515 Cotrol Provides Feedback to Improve Plas ad Implemetatio 518 Sales Aalysis Shows What's Happeig 519 Performace Aalysis Looks for Differeces 521 Performace Idexes Simplify Huma Aalysis 522 A Series of Performace Aalyses May Fid the Real Problem 52 Marketig Cost Aalysis Cotrollig Costs Too 526 Plaig ad Cotrol Combied 51 The Marketig Audit 51 Coclusio 5 Key Terms 5 Questios ad Problems 5 Creatig Marketig Plas 54 Suggested Cases 54 Computer-Aided Problem 54 cu O 01 o -t a i/i
Macro-Marketig Does Not Cost Too Much 567 Marketig Strategy Plaig Process Requires Logic ad Creativity 570 The Marketig Pla Brigs All the Details Together 572 Challeges Facig Marketers 57 How Far Should the Marketig Cocept Go? 58 CHAPTER TWENTY Maagig Marketig's Lik with Other Fuctioal Areas 56 Marketig i the Broader Cotext 58 The Fiace Fuctio: Moey to Implemet Marketig Plas 59 Productio Must Be Coordiated with the Marketig Pla 545 Accoutig Data Ca Help i Uderstadig Costs ad Profit 550 People Put Plas ito Actio 555 Coclusio 557 Key Terms 558 Questios ad Problems 558 Creatig Marketig Plas 559 Suggested Cases 559 CHAPTER TWENTY-ONE Ethical Marketig i a Cosumer- Orieted World: Appraisal ad Challeges 560 How Should Marketig Be Evaluated? 562 Ca Cosumer Satisfactio Be Measured? 564 Micro-Marketig Ofte Does Cost Too Much 565 Coclusio 58 Questios ad Problems 584 Creatig Marketig Plas 584 Suggested Cases 585 Appedix A Ecoomics Fudametals 586 Appedix B Marketig Arithmetic 599 Appedix C Career Plaig i Marketig 616 VIDEO CASES 60 1. Chick-fil-A: "Eat Mor Chicki" (Except o Suday) 61 2. Bass Pro Shops (Outdoor World) 62. Toyota Prius: The Power of Excellece i Product Iovatio ad Marketig 6 4. Potbelly Sadwich Works Grows through "Quirky" Marketig 65 5. Suburba Regioal Shoppig Malls: Ca the Magic Be Restored? 66 6. Strategic Marketig Plaig i Big Brothers Big - Sisters of America 69 7. Ivacare Says, "Yes, You Ca!" to Customers Worldwide 642 8. Segway Fids Niche Markets for Its Huma Trasporter Techology 644 CASES 647 1. McDoald's "Seiors" Restaurat 648 2. Suyvale Foods, Ic. 648. Rocky Soccer Academy 649 4. Lakeside Techology Services 650 5. ApplPoly Products 651 6. Steelco 652 7. Be Ohau Lodge 65 8. Palio's Ristorate 654 XXXVIII
9. GoodNight I 655 10. Swa's Ice Area 656 11. Fleet of Foot 657 12. DrGle.com Elite Vitamis ad Supplemets 658 1. Office Supplies, Ic. (OSI) 659 14. Showtime Media 660 15. The Herrera Group 661 16. Wright Wood Compay 662 17. Pure ad Sparklig Water, Ic. (PSW) 664 18. Ralsto Valley Voluteer Fire Departmet (RVVFD) 665 19. SpledidWeddig.com 666 20. Spare Time Equipmet 668 21. Worldwide ChemPlastics, Ic. (WCI) 669 22. Bright Light Iovatios: The Starlight Stove 670 2. Furiture Today 671 24. A Better Wire, Ic, 672 25. Harbor Plastics Mfg., Ic. 67 26. Harmoy Valley Caig, Ic. 674 27. Excel Moldig, Ic. 675 28. A Cut Above, Ic. (ACA) 676 29. Custom Castigs, Ic. 677 0. River Ridge Mills, Ltd. 678 1. Domicile Health Providers, Ic. (DHP) 679 2. Lever, Ltd. 681. Alle & Lych (A&L) 68 4. Creative Alumium Products, Ic. (CAP) 684 5. De Agelo's Pizzeria 686 6. Moutai View Builders 688 Computer-Aided Problems 690 Notes 695 Illustratio Credits 74 Name Idex 1-1 Compay Idex 1-12 Subject Idex 1-17 Glossary G-l a OJ O i I