Third Edition Dhruv Grewal, Ph.D. · Chapter Case Study: Coca-Cola 255 9 Marketing Research 259 The...
Transcript of Third Edition Dhruv Grewal, Ph.D. · Chapter Case Study: Coca-Cola 255 9 Marketing Research 259 The...
Marketing
MeGrawHill
^ConnectLearn
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Third Edition
Dhruv Grewal, Ph.D.Babson College
Michael Levy, Ph.D.Babson College
SECTION i Assessing the Marketplace 3
i Overview of Marketing 5
What Is Marketing? 6
Marketing Is about Satisfying Customer Needs and Wants 6
Marketing Entails an Exchange 7
Marketing Requires Product, Price, Place, and Promotion Decisions 8
Superior Service 1.1: Ritz Cariton Hotel Makes Customer Service an Art 10
Marketing Can Be Performed by Both Individuals and Organizations 12
Marketing Impacts Various Stakeholders 12
Power of the Internet 1.1: Facebook Networks the Web 13
Marketing Helps Create Value 14
Adding Value 1.1: Jeans—From Bronco to Boardroom 16
What Is Value-Based Marketing? 17
How Firms Compete on the Basis of Value 18
How Do Firms Become Value Driven? 18
Why Is Marketing Important? 21
Marketing Expands Firms'Global Presence 21
Marketing Is Pervasive across the Supply Chain 22
Marketing Enriches Society 23
Ethical and Societal Dilemma 1.1: Firms Swing the Ethical Pendulum Both Ways 25
Marketing Can Be Entrepreneurial 26
Summing Up 27
Key Terms 28
Marketing Applications 28
Quiz Yourself 2g
Net Savvy 2g
Chapter Case Study: iPad Launch 29
2 Developing Marketing Strategies and a Marketing Plan 33
What Is a Marketing Strategy? 35
Building a Sustainable Competitive Advantage 35
Customer Excellence 36
Superior Service 2.1: Singapore Airline Leads in Customer Satisfaction 37
Operational Excellence 38
Product Excellence 39
Locational Excellence 39
Multiple Sources of Advantage 40
The Marketing Plan 40
Step i: Define the Business Mission 41
Step 2: Conduct a Situation Analysis 41
Step 3: Identifying and Evaluating Opportunities Using STP (Segmentation,Targeting,
and Positioning) 44
Power of the Internet 2.1: Spreading Positive Self-Esteem Online 46
Step 4: Implement Marketing Mix and Allocate Resources 47
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Adding Value 2.1: Innovation at 3M 47
Step 5: Evaluate Performance Using Marketing Metrics 49
Ethical and Societal Dilemma 2.1: Starbucks Working to Make the Earth a Better
Place 51
Strategic Planning Is Not Sequential 54
Growth Strategies 54
Market Penetration 55
Market Development 55
Product Development 56
Diversification 56
Summing Up 57
Key Terms 58
Marketing Applications 59
Quiz Yourself S9
Toolkit 59
Net Savvy 59
Chapter Case Study: Netflix versus Blockbuster and the Video Rental Industry 60 •
Appendix 2A Wiiting a Marketing Plan 62'
3 Marketing Ethics 83
The Scope of Marketing Ethics 84
Ethical Issues Associated with Marketing Decisions 85
Creating an Ethical Climate in the Workplace 85
The Influence of Personal Ethics 88
Ethics and Corporate Social Responsibility 90
Adding Value 3.1: The Barefoot Entrepreneur 92
A Framework for Ethical Decision Making 92
Ethical and Societal Dilemma 3.1: A Questionable Promotion 95
Integrating Ethics into Marketing Strategy 97
Planning Phase 97
Implementation Phase 98
Adding Value 3.2: Newman's Own Making a Difference 99
Power of the Internet 3.1: For Heavyweight Championship of the World: Google
versus China 100
Control Phase 100
Adding Value 3.3: It Isn't Easy to Sell to Walmart 101
Understanding Ethics Using Scenarios 101
Scenario 1: RJ. Reynolds: Promotions to the Youth Market 102
Scenario 2: Car Manufacturer Gives Bribes for Contracts 103
Scenario 3: Retailers Lack Ethical Guidelines 103
Scenario 4: Who Is on the Line? 103
Scenario 5: West Virginia T-Shirts 104
Scenario 6: Giving Credit Where Credit Isn't Due 104
Scenario 7: The Jeweler's Tarnished Image 104
Scenario 8: No Wonder It's So Good 105
Scenario 9: Bright Baby's Bright Idea 105
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Scenario io: Money from Mailing Lists 106
Scenario 11: The Blogging CEO 106
Corporate Social Responsibility 107
Inputs 108
Developing a CSR Program 108
Outputs 109
Summing Up 109
Key Terms no
Marketing Applications no
Quiz Yourself m
Net Savvy m
Chapter Case Study: Whose Side Are You On? 112
4 Analyzing the Marketing Environment 115
A Marketing Environment Analysis Framework 116
The Immediate Environment 117
Company Capabilities 117
Competitors 117
Corporate Partners 118 , ' '
Macroenvirohmental Factors 119
Culture 119 , }
Demographics 120
Ethical and Societal Dilemma 4.1: Predatory Lenders Target VulnerableConsumers 122
Social Trends 126
Adding Value 4.1: Puma Sacks the Box 128
Superior Service 4.1: Grocery Retailers Help Time-Poor Consumers 129
Technological Advances 130
Economic Situation 130
Power of the Internet 4.1: Brands, Calling at Your Service, Sir 131
Political/Regulatory Environment 132
Summing Up 134
Key Terms 134
Marketing Applications 135
Quiz Yourself 735
Net Savvy 735
Chapter Case Study: Nike: Delivering Innovation and Inspiration 136
SECTION 2 Understanding the Marketplace 139
5 Consumer Behavior 141
The Consumer Decision Process 142
Need Recognition 143
Adding Value 5.1: Enhancing the Customer Experience 144
Search for Information 145
Evaluation of Alternatives 147
Purchase and Consumption 149
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Power of the Internet 5.1: Friends Make Shopping Easier 150
Postpurchase 151
Factors Influencing the Consumer Decision Process 153
Psychological Factors 153
Social Factors 158
Situational Factors 159
Superior Service 5.1: Educating Salespeople to Educate Consumers 160
Ethical and Societal Dilemma 5.1: Is a "Free Gift" Really Free? 161
Involvement and Consumer Buying Decisions 162
Extended Problem Solving 163
Limited Problem Solving 164
Summing Up 765
Key Terms 765
Marketing Applications 166
. Quiz Yourself 166
Toolkit 167
Net Savvy 167
Chapter Case Study: Weight Watchers vs. Jenny Craig 167
, _ . . _ » » i i . • ' Introducing a coiporate stimulus6 BusmeSS-tO-BuSineSS Marketing 171 package that eliminates the package
B2B Markets 173
Manufacturers or Producers 174
Resellers 174
Institutions 174
Adding Value 6.1: Buying for Value 175
Government 176
The Business-to-Business Buying Process 176
Stage 1: Need Recognition 176
Stage 2: Product Specification 177
Stage 3: RFP Process 177
Stage 4: Proposal Analysis, Vendor Negotiation, and Selection 177
Stage 5: Order Specification 178
Stage 6: Vendor Performance Assessment Using Metrics 178
The Buying Center 179
Ethical and Societal Dilemma 6.1: But How Does the Doctor Come to Know
Best? 180
Organization Culture 181
Building B2B Relationships 182
Power of the Internet 6.1: Staples Businesses Stick to It! 183
The Buying Situation 183
Summing Up: 186
Key Terms 187
Marketing Applications 187
Quiz Yourself 188
Toolkit 188
Net Savvy 188
Chapter Case Study: UPS: From Shipping to Supply Chain 189
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7 Global Marketing 193Growth of the Global Economy: Globalization of Marketing and Production 195
Ethical and Societal Dilemma 7.1: Pity the Poor Behemoth 197
Assessing Global Markets 198
Economic Analysis Using Metrics 199
Ethical and Societal Dilemma 7.2: Retail Concerns for India 203
Analyzing Infrastructure and Technological Capabilities 204
Analyzing Government Actions 205
Analyzing Sociocultural Factors 208
Choosing a Global Entry Strategy 210
Exporting 210
Franchising 211
Strategic Alliance 212
Joint Venture 212
Direct Investment 213
Choosing a Global Marketing Strategy 213
Target Market: Segmentation, Targeting, and Positioning 214
The Global Marketing Mix 214
Adding Value 7.11 Is One World Car Enough for All of Us? 217
Superior Service 7.1: Hey Neighbor, Can You Spare a Battery Pack? 219
Adding Value 7.2: Cover Art as Cover Ads 220
Summing Up 220
Key Terms 221
Marketing Applications 221
Quiz Yourself 222
Net Savvy 222
Chapter Case Study: P&G Takes on the World, One Smile, One Diaper Change at a
Time 223
SECTION 3 Targeting the Marketplace 227
8 Segmentation, Targeting, and Positioning 229
The Segmentation,Targeting, and Positioning Process 230
Step i: Establish Overall Strategy or Objectives 230
Step 2: Segmentation Methods 231
Adding Value 8.1: Competing for Chinese Drivers 232
Power of the Internet 8.1: How to Attract Women 237
Adding Value 8.2: China Mobile Grows through Segmentation 239
Step 3: Evaluate Segment Attractiveness 241
Step 4: Select Target Market 243
Step 5: Develop Positioning Strategy 246
Superior Service 8.1: Let's See, for This Trip, I'll Take Soft Jazz, a Firm Pillow, and
Jasmine in My Hotel Room, Please 247
Ethical and Societal Dilemma 8.1: Design Labels Target Teens 248
Summing Up 252
Key Terms 253
Marketing Applications 253
Quiz Yourself 254
Toolkit 254
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Net Savvy 254
Chapter Case Study: Coca-Cola 255
9 Marketing Research 259
The Marketing Research Process 260
Marketing Research Process Step i: Defining the Objectives and Research Needs 261 NEW SAUCE.NEW CRUST NEW CHEESE.
Marketing Research Process Step 2: Designing the Research 262 i STILL ROUND.
Marketing Research Process Step 3: Data Collection Process 263
Secondary Data 263
Adding Value 9.1: SymphonylRI and the Value of Information 266
Data Mining 267
Data Collection Techniques 269
Ethical and Societal Dilemma 9.1: Watching Consumers 270
Adding Value 9.2: Marketing Research on a Shoestring Budget 278
Marketing Research Process Step 4: Analyzing Data and Developing Insights 278
Superior Service 9.1: Harrah's Analyzes Its Customers 280
Marketing Research Process Step 5: Action Plan and Implementation 280
The Ethics of Using Customer Information 282
Summing Up 28$
Key Terms 283
Marketing Applications 284 r.
Quiz Yourself 285
Net Savvy 285
Chapter Case Study: Hollywood: Researching a Blockbuster 285
Appendix 9A: Using Secondary Data to Assess Customer Lifetime Value (CLV) 289
SECTION 4 Value Creation 293
10 Product, Branding, and Packaging Decisions 295
Complexity of Products and Types of Products 297
Complexity of Products 297
Types of Products 298
Product Mix and Product Line Decisions 299
Change Product Mix Breadth 301
Change a Product Line's Depth 301
Product Line Decisions for Services 302
Branding 303
Value of Branding for the Customer and the Marketer 304
Power of the Internet 10.1: How Much Is an Amazon.com CustomerWorth? 305
Brand Equity 306
Adding Value 10.1: The Brand Singles Choose to Find Them a Friend 309
Branding Strategies 310
Brand Ownership 310
Naming Brands"and Product Lines 312
Brand and Line Extensions 313
Co-branding 315
Brand Licensing 315
Brand Repositioning 317
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Packaging 318
Product Labeling 319
Ethical and Societal Dilemma 10.1: Calories: o, Vitamins: o. How Much
Information Can Water Labels Provide? 320
Summing Up 320
Key Terms 321
Marketing Applications 322
Quiz Yourself 322
Net Savvy 323
Chapter Case Study: Coca-Cola: A History and a Future 323
11 Developing New Products 327
Why Do Firms Create New Products? 329
Changing Customer Needs 329
Adding Value 11.1: Want Beef? 330
Market Saturation 330
Managing Risk through Diversity 331
Fashion Cycles 331
Improving Business Relationships 332 , f'
Diffusion of Innovation 332
' Innovators 334
Early Adopters 335
Early Majority 335
Late Majority 335
Laggards 335
Using the Diffusion of Innovation Theory 335
How Firms Develop New Products 337
Idea Generation 337
Concept Testing 340
Product Development 341
Superior Service 11.1: Airlines Can Improve Luggage Efficiency through RFID 341
Ethical and Societal Dilemma 11.1: Should Firms Test on Animals? 342
Market Testing 343
Product Launch 344
Adding Value 11.2: Marilyn Monroe Would Love It: Diamonds for Hair Care 346
Evaluation of Results 347
The Product Life Cycle 348
Introduction Stage 348
Growth Stage 349
Maturity Stage 349
Decline Stage 350
The Shape of the Product Life Cycle Curve 351
Strategies Based on Product Life Cycle: Some Caveats 352
Summing Up 352 1
Key Terms 353
Marketing Applications 353
Quiz Yourself 354
Net Savvy 354
Chapter Case Study: The Smart(est) Phone 354
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12 Services: The Intangible Product 359
Services Marketing Differs from Product Marketing 361
Intangible 361
Inseparable Production and Consumption 362
Variable 362
Ethical and Societal Dilemma 12.1: Who Are You Going to Call? 363
Perishable 364
Providing Great Service:The Gaps Model 364
The Knowledge Gap: Understanding Customer Expectations 366
Adding Value 12.1: The Broadmoor Manages Service Quality for Five-StarRating 368
The Standards Gap: Setting Service Standards 370
The Delivery Gap: Delivering Service Quality 371
Superior Service 12.1: Zappos Pays $2000 to Quit 372
The Communications Gap: Communicating the Service Promise 375
Service Recovery 376
Power of the Internet 12.1: David versus Goliath: Service Providers Beware 376
Listening to the Customer 377
Finding a Fair Solution 377
Resolving Problems Quickly 378
Summing Up 379 '"
Key Terms 379
Marketing Applications 380
Quiz Yourself 380
Toolkit 381
Net Savvy 381
Chapter Case Study: Puttin'on the Ritz 381
SECTIONS Value Capture 385
13 Pricing Concepts foi Establishing Value 387
The Five Cs of Pricing 390
Company Objectives 390
Customers 392
Adding Value 13.1: How Much Do You Really Value It? Pay What You WantPricing 393
Costs 398
Superior Service 13.1: Great Service Lowers Price Elasticity 398
Break-Even Analysis and Decision Making 400
Competition 402
Ethical and Societal Dilemma 13.1: The Battle of the Books 403
Channel Members 405
Macro Influences on Pricing 405
The Internet 40,6
Economic Factors 406
Power of the Internet 13.1: Pricing on eBay 407
Summing Up 408
Key Terms 409
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Marketing Applications 409
Quiz Yourself 410
Toolkit 410
Net Savvy 410
Chapter Case Study: Paying for All Those Pinstripes 4 "
14 Strategic Pricing Methods 413
Considerations for Setting Price Strategies 414
Cost-Based Methods 414
Competitor-Based Methods 415
Value-Based Methods 415
Pricing Strategies 417
Everyday Low Pricing (EDLP) 417
Ethical and Societal Dilemma 14.1: Do We Have to Pay Twice as Much to See
The Boss? 418
Power of the Internet 14.1: Price Check on Aisle... Anywhere 419
High/Low Pricing 419
EDLP and High/Low Strategies Are Influenced by
Price-Quality Relationships 420 j '
Ethical and Societal Dilemma 14.2: Is It Really 45 Percent Off? 421
New Product Pricing Strategies 422 ,..
Market Penetration Pricing 422
Price Skimming 422
Adding Value 14.1: Cellular All Around: The Market Penetration of Phones 424
Pricing Tactics 424
Pricing Tactics Aimed at Consumers 425
Superior Service 14.1: Oh, This Old Porsche? I'm Just Leasing It This Month 427
Business Pricing Tactics and Discounts 428
Legal and Ethical Aspects of Pricing 429
Deceptive or Illegal Price Advertising 430
Predatory Pricing 431
Price Discrimination 431
Price Fixing 432
Summing Up 432
Key Terms 433
Marketing Applications 434
Quiz Yourself 43s
Net Savvy 435
Chapter Case Study: Price Wars in the Wireless Market 435
SECTION 6 Value Delivery: Designing the Channeland Supply Chain 439
15 Supply Chain and Channel Management 441
Supply Chain, Marketing Channels, and Logistics Are Related 443
Supply Chains Add Value 444
Supply Chain Management Streamlines Distribution 445
Supply Chain Management Affects Marketing 446
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Making Information Flow 446
Power of the Internet 15.1: Neiman Marcus Expedites Shipments through
Customs 448
Data Warehouse 449
Electronic Data Interchange 450
Vendor-Managed Inventory 451
Collaborative Planning, Forecasting, and Replenishment 452
Pull and Push Supply Chains 452
Making Merchandise Flow 452
Distribution Centers versus Direct Store Delivery 453
The Distribution Center 454
Superior Service 15.1: Home Depot Transitions to Distribution Centers 455
Adding Value 15.1: American Apparel: Now with RFID Chips 456
Inventory Management through Just-in-Time Systems 458
Managing the Marketing Channel and Supply Chain 460
Managing the Marketing Channel and Supply Chain throughVertical Marketing Systems 461
Managing Marketing Channels and Supply Chains throughStrategic Relationships 464
Ethical and Societal Dilemma 15.1: Gap Inc. Recognized as One of World's Most
Ethical Companies 465
Summing Up 467
Key Terms 467
Marketing Applications 468
Quiz Yourself 469
Net Savvy 469
Chapter Case Study: Walmart: Pioneer in Supply Chain Management 469
16 Retailing and Multichannel Marketing 473
Choosing Retailing Partners 475
Channel Structure 476
Customer Expectations 476
Channel Member Characteristics 477
Distribution Intensity 477
Identify Types of Retailers 478
Food Retailers 479
Adding Value 16.1: Trader Joe's Offers the Unexpeced 480
General Merchandise Retailers 482
Services Retailers 486
Developing a Retail Strategy Using the Four Ps 487
Product 488
Price 489
Promotion 489
Place 491
Benefits of Stores for Consumers 491
Benefits of the Internet and Multichannel Retailing 492
Deeper and Broader Selection 492
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Personalization 492
Power of the Internet 16.1: Renting Luxury 493
Superior Service 16.1: Amazon Sells Merchandise, but Excels Because of its
Service 494
Gain Insights into Consumer Shopping Behavior 495
Increase Customer Satisfaction and Loyalty 495
Expand Market Presence 495
Ethical and Societal Dilemma 16.1: Protecting Customer Privacy 496
Effective Multichannel Retailing 496
Integrated CRM 497
Brand Image 497
Pricing 497
Supply Chain 498
Summing Up 498
Key Terms 499
Marketing Applications 499
Quiz Yourself 500
Net Savvy 500
Chapter Case Study: Staples, Inc. 500
SECTION 7 Value Communication 5°5
17 Integrated Marketing Communications 507
Communicating with Consumers 509
The Communication Process 509
How Consumers Perceive Communication 510
The AlDA Model 511
Elements of an Integrated Marketing Communication Strategy 513
Advertising 514
Public Relations (PR) 516
Ethical and Societal Dilemma 17.1: Who Decides What Is Healthy? 515
Sales Promotions 516
Personal Selling 516
Direct Marketing 516
Ethical and Societal Dilemma 17.2: Identifying Web Users 517
Online Marketing 519
Power of the Internet 17.1: YouTube and HSN 523
Planning for and Measuring IMC Success 524
Goals 524
Setting and Allocating the IMC Budget 524
Measuring Success Using Marketing Metrics 525
Planning, Implementing, and Evaluating IMC Programs—
An Illustration of Google Advertising 526
Summing Up 528
Key Terms 529
Marketing Applications 529
Quiz Yourself 530
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Chapter Case Study: Red Bull Gives You Wings 531
18 Advertising, Public Relations, and Sales Promotions 535
Stepi. Identify Target Audience 537
Step 2. Set Advertising Objectives 537 | ©Harmony*
Adding Value 18.1: Going Nuts over Men 538
Informative Advertising 539
Persuasive Advertising 539
Reminder Advertising 539
Focus of Advertisements 540
Step 3. Determine the Advertising Budget 541
Step 4. Convey the Message 541
Ethical and Societal Dilemma 18.1: Getting to the Truth 542
The Message 542
The Appeal 543
Step 5. Evaluate and Select Media 544
Mass and Niche Media 545 , "*
Choosing the Right Medium 546
Determining the Advertising Schedule 546
Step 6. Create Advertisements 547
Step 7. Assess Impact Using Marketing Metrics 548
Regulatory and Ethical Issues in Advertising 549
Public Relations 551
Sales Promotion 553
Types of Sales Promotion 553
Using Sales Promotion Tools 556
Evaluating Sales Promotions Using Marketing Metrics 557
Summing Up 558
Key Terms 559
Marketing Applications 559
Quiz Yourself 560
Toolkit 560
Net Savvy 560
Chapter Case Study: What Is Popularity Anyway? 560
19 Personal Selling and Sales Management 565
The Scope and Nature of Personal Selling 567
Personal Selling as a Career 567
The Value Added by Personal Selling 568
Power of the Internet 19.1: Personal Selling Goes Virtual 569
The Personal Selling Process 570
Stepi:Generate and Qualify Leads 571
Step 2: Preapproach and the Use of CRM Systems 572
Adding Value 19.1: Retail Salespeople Cannot Judge a Book by Its Cover 573
Step 3: Sales Presentation and Overcoming Reservations 574
Step 4: Closing the Sale 575
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Step 5: Follow-Up 576
Superior Service 19.1: Soft-Selling Works 577
Managing the Sales Force 578
Sales Force Structure 578
Recruiting and Selecting Salespeople 579
Sales Training 580
Motivating and Compensating Salespeople 580
Ethical and Legal Issues in Personal Selling 582
The Sales Manager and the Sales Force 583
The Sales Force and Corporate Policy 583
The Salesperson and the Customer 583
Ethical and Societal Dilemma 19.1: Pharmaceutical Sales Ethics 584
Summing Up 584
Key Terms 585
Marketing Applications 585
Quiz Yourself 586
Net Savvy 586
Chapter Case Study: Alta Delta Solutions: Making the Sale 587
Glossary 591
Quiz Yourself Answer Key 607 ri.
Endnotes 609
Credits 647
Name Index 651
Company Index 659
Subject Index 665