Basic Marketing A Marketing Strategy Planning Approach UNIVERSITY OF NORTH CAROLINA
COLORADO STATE UNIVERSITY
MICHIGAN STATE UNIVERSITY
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McGraw-Hill Irwin
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Basic Marketing A Marketing Strategy Planning Approach li li ,;•• Customer Equity 42 |The Importance of Marketing Strategy I Planning 43 $ What Are Attractive Opportunities? 45 . ; Marketing Strategy Planning Process Highlights Opportunities 47 Types of Opportunities to Pursue 49 • International Opportunities Should Be ; Considered 51 Conclusion 53 Key Terms 53 Questions and Problems 54 Creating Marketing Plans 54 Suggested Cases 54 Computer-Aided Problem 55
The Market Environment 58 Objectives Should Set Firm's Course 59 Company Resources May Limit Search for Opportunities 61 Analyzing Competitors and the Competitive Environment 62 30
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Evaluating Opportunities in International Markets 82 Conclusion 83 Key Terms 84 Questions and Problems 84 Creating Marketing Plans 85 Suggested Cases 85 Computer-Aided Problem 85
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CHAPTER FOUR
CHAPTER FIVE
Focusing Marketing Strategy with Segmentation and Positioning 86
Final Consumers and Their Buying Behavior 117
Search for Opportunities Can Begin by Understanding Markets 88
Consumer Behavior: Why Do They Buy What They Buy? 7 78
Naming Product-Markets and Generic Markets 91 Market Segmentation Defines Possible Target Markets 92
Economic Needs Affect Most Buying Decisions 7 78 Psychological Influences within an Individual 727
What Dimensions Are Used to Segment
Social Influences Affect Consumer Behavior 729
Markets? 98 A Best Practice Approach to Segmenting Product-Markets 702 More Sophisticated Techniques May Help in Segmenting 708 Differentiation and Positioning Take the Customer Point of View 709 Conclusion 113 Key Terms 113 Questions and Problems 113 Creating Marketing Plans 114 Suggested Cases 714 Computer-Aided Problem 114
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Individuals Are Affected by the Purchase Situation 134 The Consumer Decision Process 735 Consumer Behavior in International Markets 138 Conclusion
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Key Terms 140 Questions and Problems 140 Creating Marketing Plans 141 Suggested Cases 141 Computer-Aided Problem 141
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CHAPTER SIX Business and Organizational Customers and Their Buying Behavior 142 Business and Organizational Customers—A Big Opportunity 144 Organizational Customers Are Different 745 Many Different People May Influence a Decision 747 Organizational Buyers Are Problem Solvers 752 Buyer-Seller Relationships in Business Markets 754 Manufacturers Are Important Customers 759 Producers of Services—Smaller and More Spread Out 767 Retailers and Wholesalers Buy for Their Customers 762
CHAPTER SEVEN Improving Decisions with Marketing Information 168
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Effective Marketing Requires Good Information 770
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Changes Are Under Way in Marketing Information Systems 777 The Scientific Method and Marketing Research 776 Five-Step Approach to Marketing Research 776 Defining the Problem—Step 1 777 Analyzing the Situation—Step 2 777 Getting Problem-Specific Data—Step 3 787 Interpreting the Data—Step 4 789 Solving the Problem—Step 5 797 International Marketing Research 792
The Government Market 163 Conclusion 165 Key Terms 165 Questions and Problems 165 Creating Marketing Plans 166 Suggested Cases 166
Conclusion 193 Key Terms 193 Questions and Problems 193 Creating Marketing Plans 194 Suggested Cases 194 Computer-Aided Problem 194
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Computer-Aided Problem 166
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CHAPTER EIGHT
CHAPTER NINE
Elements of Product Planning for Goods and Services 196
Product Management and New-Product Development 234
The Product Area Involves Many Strategy Decisions 798 What Is a Product? 798 Differences between Goods and Services 202 Whole Product Lines Must Be Developed Too 203 Branding Is a Strategy Decision 204 Achieving Brand Familiarity Is Not Easy 206 Protecting Brand Names and Trademarks 208 What Kind of Brand to Use? 209 Who Should Do the Branding? 270 / Packaging Promotes, Protects, and Enhances 27 7 Warranty Policies Are a Part of Strategy Planning 213
Innovation and Market Changes Create Opportunities 226 Managing Products over Their Life Cycles 227 Product Life Cycles Vary in Length 230 Planning for Different Stages of the Product Life
Product Classes Help Plan Marketing Strategies 274 Consumer Product Classes 275 Business Products Are Different 277 Business Product Classes—How They Are Defined 278 Conclusion 221 Key Terms 221 Questions and Problems 222 Creating Marketing Plans 223 Suggested Cases 223 Computer-Aided Problem 223
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Cycle 232 New-Product Planning 236 An Organized New-Product Development Process Is Critical 238 New-Product Development: A Total Company Effort 244 Need for Product Managers 245 Managing Product Quality 246 Conclusion 249 Key Terms 249 Questions and Problems 250 Creating Marketing Plans 250 Suggested Cases 250 ' Computer-Aided Problem 250
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CHAPTER TEN Place and Development of Channel Systems 253 Marketing Strategy Planning Decisions for Place 254 Place Decisions Are Guided by "Ideal" Place Objectives 255 Channel System May Be Direct or Indirect 256 Channel Specialists May Reduce Discrepancies and Separations 260 Channel Relationship Must Be Managed 262 Vertical Marketing Systems Focus on Final Customers 266 The Best Channel System Should Achieve Ideal Market Exposure 268 Multichannel Distribution and Reverse Channels 270 Entering International Markets 273 Conclusion 275 Key Terms 275 Questions and Problems 275 Creating Marketing Plans 276 Suggested Cases 276 Computer-Aided Problem 277
CHAPTER ELEVEN Distribution Customer Service and Logistics 278 Physical Distribution Gets It to Customers 280 Physical Distribution Customer Service 287 Physical Distribution Concept Focuses on the Whole Distribution System 283 Coordinating Logistics Activities among Firms 285 The Transporting Function Adds Value to a Marketing Strategy 288 Which Transporting Alternative Is Best? 290c The Storing Function and Marketing Strategy 293 Specialized Storing Facilities May Be Required 295 The Distribution Center—A Different Kind of Warehouse 296
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Conclusion 298 Key Terms 298 Questions and Problems 298 Creating Marketing Plans 299 Suggested Cases 299 Computer-Aided Problem 299
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CHAPTER TWELVE
CHAPTER THIRTEEN
Retailers, Wholesalers, and Their Strategy Planning 300
Promotion—Introduction to Integrated Marketing Communications 328
Retailers and Wholesalers Plan Their Own Strategies 302 The Nature of Retailing 303 Planning a Retailer's Strategy 304 Conventional Retailers—Try to Avoid Price Competition 306 Expand Assortment and Service—To Compete at a High Price 307 Evolution of Mass-Merchandising Retailers 307 Some Retailers Focus on Added Convenience 370 Retailing on the Internet 37 7 Why Retailers Evolve and Change 314 Retailer Size and Profits 376 Differences in Retailing in Different Nations 377 What Is a Wholesaler? 379 Wholesaling Is Changing with the Times 379 Wholesalers Add Value in Different Ways 320 Merchant Wholesalers Are the Most Numerous 322 Agents Are Strong on Selling 324 Conclusion 325 Key Terms 326 Questions and Problems 326 Creating Marketing Plans 327 Suggested Cases 327 Computer-Aided Problem 327
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Promotion Communicates to Target Markets 330 Several Promotion Methods Are Available 337 Someone Must Plan, Integrate, and Manage the Promotion Blend 333 Which Methods to Use Depends on Promotion Objectives 335 Promotion Requires Effective Communication 337 When Customers Initiate the Communication Process 340 How Typical Promotion Plans Are Blended and Integrated 343 Adoption Processes Can Guide Promotion Planning 347 Promotion Blends Vary over the Life Cycle 350 Setting the Promotion Budget 357 Conclusion 353 Key Terms 353 Questions and Problems 354 Creating Marketing Plans 354 Suggested Cases 355 Computer-Aided Problem 355
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CHAPTER FOURTEEN Personal Selling and Customer Service 356 The Importance and Role of Personal Selling 358 What Kinds of Personal Selling Are Needed? 367 Order Getters Develop New Business Relationships 367 Order Takers Nurture Relationships to Keep the Business Coming 362 Supporting Sales Force Informs and Promotes in the Channel 363 Customer Service Promotes the Next Purchase 365 The Right Structure Helps Assign Responsibility 366 Information Technology Provides Tools to Do the Job 377 Sound Selection and Training to Build a Sales Force 373 Compensating and Motivating Salespeople 374 Personal Selling Techniques—Prospecting and Presenting 376 Conclusion 381 Key Terms 381 Questions and Problems 381 Creating Marketing Plans 382 Suggested Cases 382 Computer-Aided Problem 382
CHAPTER FIFTEEN Advertising, Publicity, and Sales Promotion 384 Advertising, Publicity, Sales Promotion, and Marketing Strategy Planning 386 Advertising Is Big Business 388 Advertising Objectives Are a Strategy Decision 389 Objectives Determine the Kinds of Advertising Needed 397 Choosing the "Best" Medium—How to Deliver the Message 393 Digital Advertising 396 Planning the "Best" Message—What to Communicate 399 Advertising Agencies Often Do the Work 400 Measuring Advertising Effectiveness Is Not Easy 402 How to Avoid Unfair Advertising 403 Customer Communication and Types of Publicity 404
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Sales Promotion—Do Something Different to Stimulate Change 47 7 Challenges in Managing Sales Promotion 472 Different Types of Sales Promotion for Different Targets 473 Conclusion 415 Key Terms 416 Questions and Problems 416 Creating Marketing Plans 417 Suggested Cases 417 Computer-Aided Problem 417
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CHAPTER SIXTEEN Pricing Objectives and Policies 418 Price Has Many Strategy Dimensions 420 Objectives Should Guide Strategy Planning for Price 422 Profit-Oriented Objectives 423 Sales-Oriented Objectives 424 Status Quo Pricing Objectives 425 Most Firms Set Specific Pricing Policies—To Reach Objectives 425 Price Flexibility Policies 426 Price-Level Policies—Over the Product Life Cycle 428 Discount Policies—Reductions from List Prices 432 Allowance Policies—Off List Prices 434 Some Customers Get Something Extra 435 List Price May Depend on Geographic Pricing Policies 436 Pricing Policies Combine to Impact Customer Value 438 Legality of Pricing Policies 440 Conclusion 443 Key Terms 444 Questions and Problems 444 Creating Marketing Plans 445 Suggested Cases 445 Computer-Aided Problem 445
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CHAPTER SEVENTEEN Price Setting in the Business World 446 Price Setting Is a Key Strategy Decision 448 Some Firms Just Use Markups 449 Average-Cost Pricing Is Common and Can Be Dangerous 452 Marketing Managers Must Consider Various Kinds of Costs 453 Break-Even Analysis Can Evaluate Possible Prices 456 Marginal Analysis Considers Both Costs and Demand 458 Additional Demand-Oriented Approaches for Setting Prices 467 Pricing a Full Line 468 Bid Pricing and Negotiated Pricing Depend Heavily on Costs 470 Conclusion 471 Key Terms 471 Questions and Problems 472 Creating Marketing Plans 472 Suggested Cases 472 Computer-Aided Problem 473
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CHAPTER EIGHTEEN
CHAPTER NINETEEN
Implementing and Controlling Marketing Plans: Evolution and Revolution 474
Managing Marketing's Link with Other Functional Areas 500 Marketing in the Broader Context 502
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Good Plans Set the Framework for Implementation and Control 476 Speed Up Information for Better Implementation and Control 477 Effective Implementation Means That Plans Work as Intended 479
The Finance Function: Money to Implement Marketing Plans 503
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Control Provides Feedback to Improve Plans and Implementation 482 Sales Analysis Shows What's Happening 484 Performance Analysis Looks for Differences 485 Performance Indexes Simplify Human Analysis 486 A Series of Performance Analyses May Find the Real Problem 488
Enabling Marketing Strategy with
Production Must Be Coordinated with the
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Marketing Plan 509 Accounting Data Can Help in Understanding Costs and Profit 574
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Information Technology 579 People Put Plans into Action 520
Marketing Cost Analysis—Controlling Costs Too 497 Planning and Control Combined 495 The Marketing Audit 496 Conclusion 497 Key Terms 497 Questions and Problems 497 Creating Marketing Plans 498 Suggested Cases 498 Computer-Aided Problem 498
CHAPTER TWENTY
Ethical Marketing in a ConsumerOriented World: Appraisal and Challenges 524 How Should Marketing Be Evaluated? 526 Can Consumer Satisfaction Be Measured? 528
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Micro-Marketing Often Does Cost Too Much 529 Macro-Marketing Does Not Cost Too Much 537 Marketing Strategy Planning Process Requires Logic and Creativity 533 The Marketing Plan Brings All the Details Together 535 Challenges Facing Marketers 538 How Far Should the Marketing Concept Go? 545 Conclusion 546 Questions and Problems 547 Creating Marketing Plans 547 Suggested Cases 547
VIDEO CASES 590 1. Chick-fil-A: "Eat Mor Chickin" (Except on Sunday) 597
29. Quality Iron Castings, Inc. 635 30. Walker-Winkle Mills, Ltd. 636
31. Amato Home Health (AHH) 637 2. Bass Pro Shops (Outdoor World) 592 32. Lever, Ltd. 639 3. Toyota Prius: The Power of Excellence in Product 33. Kennedy & Gaffney (K&G) 647 ~Innovation and Marketing 593 34. Chess Aluminum Worldwide (CAW) 642 4. Potbelly Sandwich Works Grows through 35. Rizzuto's Pizzeria 643 "Quirky" Marketing 595 36. Skyline Homebuilders 646 5. Suburban Regional Shopping Malls: Can the Magic Be Restored? 596 Computer-Aided Problems 647 6. Strategic Marketing Planning in Big Brothers Notes 652 Big Sisters of America 598 Illustration Credits 693 Name Index 697 7. Invacare Says, "Yes, You Can!" to Customers Company Index 708 Worldwide 607 Subject Index 713 8. Segway Finds Niche Markets for Its Human Glossary G-1 Transporter Technology 603 xl
