Marketing

.oger A. KerinSouthern Methodist University

University of Denver

University of Minnesota

McGraw-HillIrwin

DETAILED CONTENT:

Parti Initiating the Marketing Process

1 CREATING CUSTOMER RELATIONSHIPS AND VALUETHROUGH MARKETING 2

Researching How College Students Study to Launch a NewProduct at 3M 3What Is Marketing? 4

Marketing and Your Career 4

Marketing Matters: Payoff for the Joys (!) andSleepless Nights (?) of Starting Your Own SmallBusiness: YouTube!!!! 5

Marketing: Delivering Benefits to the Organization, ItsStakeholders, and Society 5The Diverse Factors Influencing Marketing Activities 6

How Marketing Discovers and Satisfies Consumer Needs 7Discovering Consumer Needs 7The Challenge: Meeting Consumer Needs with NewProducts 7Satisfying Consumer Needs 9

The Marketing Program: How Customer RelationshipsAre Built 10

Customer Value and Customer Relationships 10Relationship Marketing and the Marketing Program 113M's Strategy and Marketing Program to Help StudentsStudy 12

How Marketing Became So Important 14Evolution of the Market Orientation 14Ethics and Social Responsibility: Balancing Interests ofGroups 14The Breadth and Depth of Marketing 15

Learning Objectives Review 16Focusing on Key Terms 17Applying Marketing Knowledge 17Building Your Marketing Plan 18

Video Case 1: 3M's Post-it® Flag Highlighter: Extending theConcept! 18

2 DEVELOPING SUCCESSFUL MARKETING ANDORGANIZATIONAL STRATEGIES 20

Be an Entrepreneur: Get an "A" in a Correspondence Coursein Ice Cream Making! 21Today's Organizations 22

Kinds of Organizations 22

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DETAILED CONTENTS XXXV

What Is Strategy? 22Structure of Today's Organizations 22

Making Responsible Decisions: The Global Dilemma:How to Achieve Sustainable Development 23

Strategy in Visionary Organizations 24Organizational Foundation: Why Does It Exist? 24Organizational Direction: What Will It Do? 26Organizational Strategies: How Will It Do It? 27Tracking Strategic Performance with MarketingDashboards 27

Using Marketing Dashboards: How Well Is Ben & Jerry'sDoing? 29

Setting Strategic Directions 29A Look Around: Where Are We Now? 29Growth Strategies: Where Do We Want to Go? 31

The Strategic Marketing Process 34The Planning Phase of the Strategic Marketing Process 34The Implementation Phase of the Strategic MarketingProcess 37The Evaluation Phase of the Strategic Marketing Process 38

Learning Objectives Review 40Focusing on Key Terms 41Applying Marketing Knowledge 41Building Your Marketing Plan 41

Video Case 2: General Mills Warm Delights™: Indulgent,Delicious, and Gooey! 42

Appendix A Building an Effective Marketing Plan 44

3 SCANNING THE MARKETING ENVIRONMENT 58

Where in the World Are You? In the Middle of the GPSRevolution! 59Environmental Scanning 60

An Environmental Scan of Today's Marketplace 60Social Forces 60

Demographics 60

Making Responsible Decisions: Millennial Are Making aDifference—through Environmental Sustainability! 63

Culture 64Economic Forces 65

Macroeconomic Conditions 65Consumer Income 66

Technological Forces 67Technology of Tomorrow 67Technology's Impact on Customer Value 68

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Electronic Business Technologies 69Competitive Forces 69

Alternative Forms of Competition 69Small Businesses as Competitors 70

Regulatory Forces 70Protecting Competition 70Product-Related Legislation 70Pricing-Related Legislation 72Distribution-Related Legislation 72

Marketing Matters: The Web Allows New Uses andMisuses of Trademarks 73

Advertising- and Promotion-Related Legislation 73Control through Self-Regulation 73

Learning Objectives Review 74Focusing on Key Terms 75Applying Marketing Knowledge 75Building Your Marketing Plan 75

Video Case 3: Geek Squad: A New Business for a NewEnvironment 75

ETHICAL AND SOCIAL RESPONSIBILITY INMARKETING 78

Responsibility Matters at Anheuser-Busch 79Nature and Significance of Marketing Ethics 80

Ethical/Legal Framework in Marketing 80Current Perceptions of Ethical Behavior 80

Understanding Ethical Marketing BehaviorSocietal Culture and Norms 81

81

Business Culture and Industry Practices 82Corporate Culture and Expectations 83

Making Responsible Decisions: Corporate Conscience inthe Cola War 84

Your Personal Moral Philosophy and Ethical Behavior 85Understanding Social Responsibility in Marketing 86

Three Concepts of Social Responsibility 86

Marketing Matters: Will Consumers Switch Brands fora Cause? Yes, If... 88

The Social Audit and Sustainable Development: Doing Well byDoing Good 88Turning the Table: Consumer Ethics and SocialResponsibility 89

Learning Objectives Review 90Focusing on Key Terms 91Applying Marketing Knowledge 91Building Your Marketing Plan 91

DETAILED CONTENTS XXXVII

Video Case 4: Starbucks Corporation: Serving More ThanCoffee 91

Part 2 Understanding Buyers and Markets

5 UNDERSTANDING CONSUMER BEHAVIOR 94

Enlightened Carmakers Know What Custom(h)ers Value 95Consumer Purchase Decision Process and Experience 96

Problem Recognition: Perceiving a Need 96Information Search: Seeking Value 96Alternative Evaluation: Assessing Value 97Purchase Decision: Buying Value 98Postpurchase Behavior: Value in Consumption or Use 98

Marketing Matters: The Value of a Satisfied Customer tothe Company 99

Consumer Involvement and Problem-Solving Variations 99Situational Influences 101

Psychological Influences on Consumer Behavior 102Motivation and Personality 702Perception 103

Making Responsible Decisions: The Ethics of SubliminalMessages 104

Learning 104Values, Beliefs, and Attitudes 106Consumer Lifestyle 107

Sociocultural Influences on Consumer Behavior 108Personal Influence 108

Marketing Matters: BzzAgent—The BuzzExperience 109

Reference Groups 770Family Influence 770Culture and Subculture 772

Learning Objectives Review 115Focusing on Key Terms 115Applying Marketing Knowledge 115Building Your Marketing Plan 116

Video Case 5: Best Buy: Using Customer Centricity to Connectwith Consumers 116

6 UNDERSTANDING ORGANIZATIONS ASCUSTOMERS 7 78

Buying Is Marketing, Too! Purchasing Publication Paper atJCPenney 7 79The Nature and Size of Organizational Markets 720

Industrial Markets 720

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Reseller Markets 727Government Markets 727

Measuring Domestic and Global Industrial, Reseller, andGovernment Markets 727Characteristics of Organizational Buying 722

Demand Characteristics 722Size of the Order or Purchase 722Number of Potential Buyers 725Organizational Buying Objectives 725Organizational Buying Criteria 124Buyer-Seller Relationships and Supply Partnerships 724

Marketing Matters: Harley-Davidson's SupplierCollaboration Creates Customer Value . . . and a GreatRide 125

Making Responsible Decisions: Sustainable Procurementfor Sustainable Growth 126

The Organizational Buying Process and theBuying Center 726

Stages in the Organizational Buying Process 726The Buying Center: A Cross-Functional Group 726

Online Buying in Organizational Markets 729Prominence of Online Buying in Organizational Markets 729E-Marketplaces: Virtual Organizational Markets 729

Marketing Matters: eBay Means Business forEntrepreneurs 130

Online Auctions in Organizational Markets * 757

Learning Objectives Review 132Focusing on Key Terms 132Applying Marketing Knowledge 133Building Your Marketing Plan 133

Video Case 6: Lands' End: Where Buyers Rule 133

7 UNDERSTANDING AND REACHING GLOBALCONSUMERS AND MARKETS 736

Dell's Quest for Growth in Emerging Economies 737Dynamics of World Trade 738

Decline of Economic Protectionism 758Rise of Economic Integration 138A New Reality: Global Competition among Global Companiesfor Global Consumers 740

Marketing Matters: The Global Teenager—A Marketof 2 Billion Voracious Consumers with $200 Billion toSpend 142

Emergence of a Networked Global Marketspace 745

DETAILED CONTENTS XXXIX

A Global Environmental Scan 744Cultural Diversity 744Economic Considerations 747Political-Regulatory Climate 148

Comparing Global Market-Entry Strategies 749

Marketing Matters: Creative Cosmetics and CreativeExport Marketing in Japan 150

Exporting 750Licensing 757Joint Venture 75/Direct Investment 752

Crafting a Worldwide Marketing Program 752Product and Promotion Strategies 755Distribution Strategy 754Pricing Strategy 755

Learning Objectives Review 156Focusing on Key Terms 156Applying Marketing Knowledge 156Building Your Marketing Plan 157

Video Case 7: CNS Breathe Right Strips:Going Global 157

Part 3 Targeting Marketing Opportunities

MARKETING RESEARCH: FROM CUSTOMERINSIGHTS TO ACTIONS 160

Test Screenings: How Listening to Consumers ReducesMovie Risks 161

The Role of Marketing Research 762What Is Marketing Research? 762The Challenges in Doing Good Marketing Research 762Five-Step Marketing Research Approach 765

Step 1: Define the Problem 763Set the Research Objectives 765Identify Possible Marketing Actions 765

Step 2: Develop the Research Plan 764Specify Constraints 764Identify Data Needed for Marketing Actions 764Determine How to Collect Data 765

Step 3: Collect Relevant Information 766Secondary Data: Internal 766Secondary Data: External 166Advantages and Disadvantages of Secondary Data 767

Marketing Matters: Online Databases and InternetResources Useful to Marketers 168

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Primary Data: Watching People 168Primary Data: Asking People 770

Marketing Matters: Buyology: How "Neuromarketing" IsTrying to Understand Consumers 171

Primary Data: Other Sources 775Advantages and Disadvantages of Primary Data 7 77

Step 4: Develop Findings 778Analyze the Data 778Present the Findings 7 78

Step 5: Take Marketing Actions 780Make Action Recommendations 180Implement the Action Recommendations 180Evaluate the Results 180

Sales Forecasting Techniques 787Judgments of the Decision Maker 787Surveys of Knowledgeable Groups 787Statistical Methods 787

Learning Objectives Review 182Focusing on Key Terms 183Applying Marketing Knowledge 183Building Your Marketing Plan 184

Video Case 8: Ford Consulting Group, Inc.: From Data toActions 184

MARKET SEGMENTATION, TARGETING, ANDPOSITIONING 786

Zappos.com: Delivering "WOW" through Market Segmentationand Service 787Why Segment Markets? 788

What Market Segmentation Means 788When and How to Segment Markets 789

Steps in Segmenting and Targeting Markets 797Step 1: Group Potential Buyers into Segments 792

Marketing Matters: What "Flock" Do You Belongto? 193

Step 2: Group Products to Be Sold into Categories 796Step 3: Develop a Market-Product Grid and Estimate the Size ofMarkets 797Step 4: Select Target Markets 798Step 5: Take Marketing Actions to Reach Target Markets 799

Marketing Matters: Apple's Segmentation Strategy—Camp Runamok No Longer 201

Market-Product Synergies: A Balancing Act 207

DETAILED CONTENTS xli

Positioning the Product 202Two Approaches to Product Positioning 202Writing a Positioning Statement 203Product Positioning Using Perceptual Maps 203A Perceptual Map to Reposition Chocolate Milk forAdults 203

Learning Objectives Review 204Focusing on Key Terms 205Applying Marketing Knowledge 205Building Your Marketing Plan 205

Video Case 9: Prince Sports, Inc.: Tennis Racquets for EverySegment 205

Part 4 Satisfying Marketing Opportunities

10 DEVELOPING NEW PRODUCTS AND SERVICES 208

Apple's New-Product Innovation Machine 209What Are Products and Services? 270

A Look at Goods, Services, and Ideas 270Classifying Products 270Product Items, Product Lines, and Product Mixes 272Classifying Services 272The Uniqueness of Services 275The Goods-Services Continuum 274

Marketing Matters: Feature Bloat: Geek Squad to theRescue! 215

New Products and Why They Succeed or Fail 275What Is a New Product? 275

Why Products and Services Succeed or Fail 277

How Marketing Dashboards Can ReduceNew-Product Failures 279

Using Marketing Dashboards: Which States AreUnderperforming? 220

The New-Product Process 220Stage 1: New-Product Strategy Development 220Stage 2: Idea Generation 227

Marketing Matters: IDEO—the Innovation Lab Superstarin Designing New Products 223

Stage 3: Screening and Evaluation 224Stage 4: Business Analysis 224Stage 5: Development 225Stage 6: Market Testing 225

Marketing Matters: Marissa Mayer: The Talent behindGoogle's Familiar White Home Page 226

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Stage 7: Commercialization 227

Learning Objectives Review 228Focusing on Key Terms 229Applying Marketing Knowledge 229Building Your Marketing Plan 229

Video Case 10: Activeion Cleaning Solutions: Marketing aHigh-Tech Cleaning Gadget 230

11 MANAGING SUCCESSFUL PRODUCTS, SERVICES,AND BRANDS 232

Gatorade: Quenching the Active Thirst within You 233Charting the Product Life Cycle 234

Introduction Stage 234Growth Stage 236Maturity Stage 237

Marketing Matters: Will E-mail Spell Extinction for FaxMachines? 238

Decline Stage 238Three Aspects of the Product Life Cycle 239

Managing the Product Life Cycle 247Role of a Product Manager 247Modifying the Product 247

Using Marketing Dashboards: Knowing Your CD! andBDI 242

Modifying the Market 243Repositioning the Product 243

Branding and Brand Management 244

Making Responsible Decisions: Consumer Economics ofDownsizing—Get Less, Pay More 245

Brand Personality and Brand Equity 245Picking a Good Brand Name 248Different Branding Strategies 248

Packaging and Labeling Products 250

Marketing Matters: Creating Customer Value throughPackaging—Pez Heads Dispense More Than Candy 251

Creating Customer Value and Competitive Advantage throughPackaging and Labeling 257Packaging and Labeling Challenges and Responses 253

Managing the Marketing of Services 253Product (Service) 254Productivity 254Price 254Place (Distribution) 254

DETAILED CONTENTS xliii

Promotion 255People 255Physical Environment 255Process 256

Learning Objectives Review 256Focusing on Key Terms 257Applying Marketing Knowledge 257Building Your Marketing Plan 257

Video Case 11: Philadelphia Phillies, Inc.: SportsMarketing 101 257

12 PRICING PRODUCTS AND SERVICES 260

Vizio, Inc.—Where Vision Meets Value™ in HDTV 267Nature and Importance of Price 262

What Is a Price? 262Price as an Indicator of Value 263Price in the Marketing Mix 263

General Pricing Approaches 264Demand-Oriented Pricing Approaches 264

Marketing Matters: Energizer's Lesson in PricePerception—Value Lies in the Eye of the Beholder 265

Cost-Oriented Pricing Approaches 266Profit-Oriented Pricing Approaches 267Competition-Oriented Pricing Approaches 268

Using Marketing Dashboards: Are Cracker Jack PricesAbove, At, or Below the Market? 269

Estimating Demand and Revenue 270Fundamentals of Estimating Demand 270Fundamentals of Estimating Revenue 272

Determining Cost, Volume, and Profit Relationships 272The Importance of Controlling Costs 273Break-Even Analysis 273

Pricing Objectives and Constraints 275Identifying Pricing Objectives 275Identifying Pricing Constraints 276

Setting a Final Price 278Step 1: Select an Approximate Price Level 278Step 2: Set the List or Quoted Price 278

Making Responsible Decisions: Flexible Pricing—Is ThereRace and Gender Discrimination in Bargaining for a NewCar? 279

Step 3: Make Special Adjustments to the List or QuotedPrice 279

Learning Objectives Review 281

Focusing on Key Terms 282

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Applying Marketing Knowledge 282Building Your Marketing Plan 283

Video Case 12: Washburn Guitars: Using Break-Even Points toMake Pricing Decisions 283

13 MANAGING MARKETING CHANNELS AND SUPPLYCHAINS 286

Callaway Golf: Designing and Delivering the Goods for GreatGolf 287Nature and Importance of Marketing Channels 288 .

What Is a Marketing Channel of Distribution? 288Value Is Created by Intermediaries 288

Channel Structure and Organization 290Marketing Channels for Consumer Products and Services 290Marketing Channels for Business Products and Services 297Electronic Marketing Channels 292Direct and Multichannel Marketing 293Dual Distribution and Strategic Channel Alliances 293Vertical Marketing Systems 293

Marketing Matters: Nestle and General Mills—CerealPartners Worldwide 294

Marketing Channel Choice and Management 296Factors Affecting Channel Choice and Management 296Managing Channel Relationships: Conflict and Cooperation 298

Using Marketing Dashboards: Channel Sales and Profit atCharlesburg Furniture 299

Logistics and Supply Chain Management 307Supply Chains versus Marketing Channels 507Sourcing, Assembling, and Delivering a New Car: TheAutomotive Supply Chain 507Supply Chain Management and Marketing Strategy 302

Marketing Matters: IBM's Integrated Supply Chain—Delivering a Total Solution for Its Customers 303

Two Concepts of Logistics Management in a SupplyChain 304

Total Logistics Cost Concept 305Customer Service Concept 305

Learning Objectives Review 306Focusing on Key Terms 307Applying Marketing Knowledge 307Building Your Marketing Plan 307

Video Case 13: ACT II Microwave Popcorn: The SurprisingChannel 307

DETAILED CONTENTS xlv

14 RETAILING AND WHOLESALING 370

84 Million Consumers Were Shopping Online on CyberMonday. Were You One of Them? 37 7The Value of Retailing 372

Consumer Utilities Offered by Retailing 572The Global Economic Impact of Retailing 575

Classifying Retail Outlets 373

Making Responsible Decisions: Environmentally FriendlyRetailing Takes Off! 314

Form of Ownership 574Level of Service 575Type of Merchandise Line 576

Nonstore Retailing 377Automatic Vending 577Direct Mail and Catalogs 578Television Home Shopping 578Online Retailing 579Telemarketing 320

320321321322

323

Direct SellingRetailing Strategy

Retail PricingStore LocationRetail CommunicationMerchandise 323

Using Marketing Dashboards: Why Apple Stores May Bethe Best in the United States! 324

The Changing Nature of Retailing 325The Wheel of Retailing 325The Retail Life Cycle 326

Wholesaling 326Merchant Wholesalers 327Agents and Brokers 328Manufacturer's Branches and Offices 328

Learning Objectives Review 329Focusing on Key Terms 329Applying Marketing Knowledge 329Building Your Marketing Plan 330

Video Case 14: Mall of America: Shopping and a Whole LotMore 330

15 INTEGRATED MARKETING COMMUNICATIONS ANDDIRECT MARKETING 332

Integrated Marketing Communications Ushers in the 'Age ofEngage' 333The Communication Process 334

Encoding and Decoding 335Feedback 336

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Noise 336The Promotional Elements 336

Advertising 336Personal Selling 337Public Relations 338Sales Promotion 339Direct Marketing 339

Integrated Marketing Communications—Developing thePromotional Mix 340

The Target Audience 340The Product Life Cycle 340

Marketing Matters: Mobile Marketing ReachesGeneration Y, 32/7! 341

Channel Strategies 342Developing an IMC Program 343

Identifying the Target Audience 343Specifying Promotion Objectives 344Setting the Promotion Budget 344

Using Marketing Dashboards: How Much Should YouSpend on IMC? 345

Selecting the Right Promotional Tools 345Designing the Promotion 346Scheduling the Promotion 346

Executing and Assessing the Promotion Program 346Direct Marketing 348

The Growth of Direct Marketing 348The Value of Direct Marketing 348Technological, Global, and Ethical Issues in DirectMarketing 349

Making Responsible Decisions: Can Direct Marketing "GoGreen"? 350

Learning Objectives Review 350Focusing on Key Terms 351Applying Marketing Knowledge 351Building Your Marketing Plan 352

Video Case 15: Under Armour: Using IMC to Create a Brandfor This Generation's Athletes 352

16 ADVERTISING, SALES PROMOTION, AND PUBLICRELATIONS 356

Advertising Moves to a New Dimension: The ThirdDimension 357Types of Advertisements 358

Product Advertisements 358Institutional Advertisements 359

DETAILED CONTENTS xlvii

Developing the Advertising Program 359Identifying the Target Audience 359Specifying Advertising Objectives 360Setting the Advertising Budget 360Designing the Advertisement 360Selecting the Right Media 362

Using Marketing Dashboards: What Is the Best Way toReach 1,000 Customers? 363

Different Media Alternatives 363

Making Responsible Decisions: Who Is Responsible forClick Fraud? 367

Scheduling the Advertising 367Executing the Advertising Program 368

Pretesting the Advertising 368Carrying Out the Advertising Program 369

Assessing the Advertising Program 369Posttesting the Advertising 369

Sales Promotion 370Consumer-Oriented Sales Promotions 370Trade-Oriented Sales Promotions 373

Public Relations 375

Learning Objectives Review 375Focusing on Key Terms 376Applying Marketing Knowledge 376Building Your Marketing Plan 377

Video Case 16: Google, Inc.: The Right Ads at the RightTime 377

17 PERSONAL SELLING AND SALESMANAGEMENT 380

Xerox Succeeds by Doing What's Right for the Customer 387Scope and Significance of Personal Selling and SalesManagement 382

Nature of Personal Selling and Sales Management 582Selling Happens Almost Everywhere 382Personal Selling in Marketing 382Creating Customer Solutions and Value through Salespeople:Relationship Selling 382

The Many Forms of Personal Selling 384Order-Taking Salespeople 384Order-Getting Salespeople 385

The Personal Selling Process: Building Relationships 386Prospecting: Identifying and Qualifying ProspectiveCustomers 386Preapproach: Preparing for the Sales Call 387Approach: Making the First Impression 388Presentation: Tailoring a Solution for a Customer's Needs 388

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Marketing Matters: Imagine This . . . Putting theCustomer into Customer Solutions! 390

Close: Asking for the Customer's Order or Business 390Follow-Up: Solidifying the Relationship 597

The Sales Management Process 397Sales Plan Formulation: Setting Direction 597

Marketing Matters: Creating and Sustaining CustomerValue through Cross-Functional Team Selling 393

Sales Plan Implementation: Putting the Plan into Action 394Salesforce Evaluation: Measuring Results 396Salesforce Automation and Customer RelationshipManagement 596

Using Marketing Dashboards: Tracking SalespersonPerformance at Moore Chemical & Sanitation Supply,Inc. 397

Learning Objectives Review 398Focusing on Key Terms 399Applying Marketing Knowledge 399Building Your Marketing Plan 399

Video Case 17: Xerox: Building Customer Relationshipsthrough Personal Selling 399

18 IMPLEMENTING INTERACTIVE AND MULTICHANNELMARKETING 402

Seven Cycles. One Bike. Yours. 403Creating Customer Value, Relationships, and Experiences in

Marketspace 404Customer Value Creation in Marketspace 404Interactivity, Individuality, and Customer Relationships inMarketspace 405Creating an Online Customer Experience 407

Online Consumer Behavior and Marketing Practice inMarketspace 409

Who Is the Online Consumer? 409

Using Marketing Dashboards: Sizing Up Site Stickiness atSewell Automotive Companies 410

What Online Consumers Buy 470

Marketing Matters: Meet Today's Internet Mom—All 38Million! 411

Why Consumers Shop and Buy Online 477When and Where Online Consumers Shop and Buy 475

Cross-Channel Shoppers and Multichannel Marketing 475Who Is the Cross-Channel Shopper? 475

Making Responsible Decisions: Let the E-BuyerBeware 416

DETAILED CONTENTS xlix

Implementing Multichannel Marketing 476

Learning Objectives Review 419Focusing on Key Terms 419Applying Marketing Knowledge 419Building Your Marketing Plan 420

Video Case 18: Pizza Hut and imc2: Becoming a MultichannelMarketer 420

Appendix B Planning a Career in Marketing 424

Glossary 434Learning Review Answers 440Chapter Notes 447

Credits 469Name Index 471Company/Product Index 477Subject Index 483