Kevin,Lane

ft Mairead

I

2nd edition

PEARSON

Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney

Auckland -S ingapore • Hong Kong • Tokyo • Seoul • Taipei • New Delhi

Cape Town • Sao Paulo •• Mexico City • Madrid • Amsterdam • Munich • Paris •' Milan

Contents

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Guided tourPrefaceAcknowledgementsPublisher's acknowledgements

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PARTI UNDERSTANDING MARKETING MANAGEMENTVideo documentary for Part 1

Chapter 1 Introduction to marketing

The importance of marketingMarketing during challenging economic times

The scope of marketingWhat is marketing?Understanding marketsMarketing's role in creating demand

Core marketing concepts ,<?Segmentation, target markets and positioningOfferings and brandsValue and satisfactionMarketing channelsSupply networksCompetitionMarkets

Types of marketConsumer marketsBusiness marketsGlobal marketsNon-profit, voluntary and government marketsMarketplaces, marketspaces and metamarkets

The new European marketing realitiesMajor societal forcesNew consumer capabilities

Understanding the marketing philosophyThe production philosophyThe selling philosophyThe marketing philosophyThe holistic marketing philosophy

Overview of marketing management

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Chapter 2 Understanding marketing management withina global context

What is management?The process of managementWhy is management difficult?

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Xiv CONTENTS

What is marketing management? 50The practice of management 51The core marketing management skills 54

Managing across the organisation 54Managing networks, relationships and interactions 59Information handling and management 64Managing innovation and change 65Analytical and creative skills ' 66

Understanding global marketing management 68Deciding whether to go abroad 68Deciding how to enter the market 69Deciding which markets to enter 71Deciding on the marketing mix programme 73

Managing in developing markets 74

Chapter 3 Developing marketing strategies and plans 84

Marketing and customer-perceived value 86Business environment paradigm change 86The value delivery process 87The value chain 88Core competencies 90A holistic marketing orientation and customer value 93The central role of strategic planning 95

Corporate and divisional strategic planning 96Defining the corporate mission 97Defining the business 99Assigning resources to each SBU 100Assessing growth opportunities 100Relationship between missions and visions 106Organisation and organisational culture 106Marketing innovation 107

Business unit strategic planning 111The business mission 111SWOT analysis 111Critique of conventional SWOT analysis 115Goal formulation 115Strategic formulation 116Programme formulation and implementation 117Feedback and control 119

The nature and content of a marketing plan 119Contents of the marketing plan 120

Sample marketing plan: Euromart 121Introduction 121

Chapter 4 Managing digital technology in marketing 128

Digital technologies in marketing 130Understanding digital technology and digital marketing 131Digital technology: an information and interactions

perspective : 132The range of technologies in marketing 134

Managing digital technologies and digital marketing 137Selection of digital technologies 137

CONTENTS XV

Supporting the adoption of digital technologiesExploitation of digital technologiesUniting marketing and IT staff

Managing individual technologies in marketingThe internet: understanding competitive advantageUnderstanding social networkingEmail marketingManaging search engine optimisationVirtual worldsMobile phonesSelf-service technologies

Understanding consumer digital behaviourThe theory of planned behaviourThe technology acceptance modelThe theory of adoption of innovationsChannel trade-offs and transaction costsThe perceived risk perspectiveSynthesising the perspectivesCompany-customer interactivity

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PART 2 CAPTURING MARKETING INSIGHTS 171Video documentary for Part 2 171

Chapter 5 The changing marketing environmentand information management 172

The company environment 174The marketing environment 174

Analysing the macroenvironment 175The sociocultural and demographic environment 177The economic environment 184The social-cultural environment 185The ecological and physical environment 186The technological environment 190The political-legal environment ' 192

f Managing the marketing information system 193Components of a modern marketing information system 193Internal records - 195The marketing intelligence system 196

Databases, data warehousing and data mining 198

Chapter 6 Managing market research and forecasting 208

The marketing research system 210The marketing research process 211

Step 1: define the problem, the decision alternativesand the research objectives 211

Step 2: develop the research plan 213Step 3: collect the information 225Step 4: analyse the information • 227Step 5: present the findings 227Step 6: make the decision 229Overcoming barriers to the use of marketing research 230

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Measuring marketing productivity 231Marketing-mix modelling 231

Forecasting and demand measurement 232The measures of market demand 232A vocabulary for demand measurement 233Estimating current demand 236Estimating future demand 238

Chapter 7 Analysing consumer markets 244

The study of consumer behaviour 246Culture 246Social groups 249The individual consumer 253The interaction between dimensions 257

Key psychological processes 259Motivation: Freud, Maslow, Herzberg , 259Perception 261Learning 262Memory - 263

Perspectives on consumer behaviour 265The behaviourist perspective 265The information-processing perspective 265The emotional perspective 266The cultural perspective 268A multiperspective approach 269

The buying decision process: the five-stage model 270Problem recognition 270Information search 271Evaluation of alternatives 273Purchase decision 275Post-purchase behaviour 277

Other theories of consumer decision making 279Level of consumer involvement 279

Behavioural decision theory and behavioural economics 282Decision Heuristics 284Framing 284Mental accounting 284Profilingtonsumer product buying and usage behaviour 285

Chapter 8 Analysing business markets 292

What is organisational buying? 294The business market versus the consumer market 294Buying situations 297Systems buying and selling 300

Participants in the business buying process 301The buying centre 301Buying centre influences 302Targeting firms and buying centres 302

The purchasing/procurement process 303Stages in the buying process 305

Problem recognition 305General need description and product specification 305

Supplier searchProposal solicitationSupplier selectionOrder-routine specificationPerformance review

Managing business-to-business relationshipsThe need for managing business-to-business relationshipsThe role of uncertainty in business relationshipsTransaction cost economicsNetwork theoryVertical coordination

Institutional and government markets

Dealing with competition

Competitive forcesIdentifying competitorsAnalysing competitors

StrategiesObjectivesStrengths and weaknessesSelecting competitorsSelecting customers

Competitive strategies for market leadersExpanding the total market 'f

Protecting market shareExpanding market share

Other competitive strategiesMarket-challenger strategiesMarket-follower strategiesMarket-nicher strategies

Balancing customer and competitor orientationsCompetitor-centred companiesCustomer-centred companies

Competing in an economic downturnExplore the upside of increasing investmentGet closer to customersReview budget allocationsPut forth the most compelling value propositionFine-tune brand and product offerings

CONNECTING WITH CUSTOMERSVideo documentarv for Part 3

CONTENTS XVii

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PART 3

Chapter 10 Seeking and developing target marketingdifferentiation strategies 366

Levels of market segmentation 368Segment marketing 368Niche marketing 369Local marketing : 369Individual marketing 372

Bases for segmenting consumer markets 375Geographic segmentation . 375

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Demographic segmentation 376Psychographic segmentation 383Behavioural segmentation 385

Bases for segmenting business markets 389Market targeting 390

Effective segmentation criteria 391Evaluating and selecting the market segments 391Additional considerations 393

Creating differentiation and positioning strategies 395Positioning , 396Establishing category membership 400Choosing POPs and PODs 401Creating POPs and PODs 403

Perceptual or positioning mapping 404What can positioning analysis do for a company's business? 405Positioning maps 405Developing a positioning strategy 406

Repositioning 406Developing and communicating a differentiation strategy 407

Cost leadership ' 407Distinctive superior qualify 408Cost leadership and differentiation 408

Differentiation strategies 408The purpose of positioning 410

Chapter 11 Creating customer value, satisfaction and loyalty 416

Building customer value 418Customer-perceived value 421

Building customer satisfaction 426Customers want loyalty, not perfection 426Total customer satisfaction 428Monitoring satisfaction 429Customer satisfaction 429Market offering (product and service) quality - 432

Maximising customer lifetime value 433Customer profitability 434Customer lifetime value - conceptual dream

or real-time activity? 435Cultivating customer relationships __4-36

Customer relationship management 437Attracting and retaining customers 439

Building customer loyalty 442Improving loyalty 442

Seeking and retaining customers , 444Developing loyalty programmes 444Recapturing customers 449

The experience economy 449The value experience 449The empowered customer 452Interactive marketing 453Complexity of markets 454Emotional turn 455

rCONTENTS Xix

PART 4 BUILDING STRONG BRANDS 463Video documentary for Part 4 463

Chapter 12 Creating and managing brands and brand equity 464

Understanding branding 467What is a brand? 467The roles of brands 468Managing brands: consumers and channels 472

Strategic brand management 473Creating and managing brand identities: names, logos,

slogans and images 476Managing individual or house brands 482Managing brand extensions 483Managing brand portfolios 488Brand reinforcing and revitalisation 489Growing, sustaining and managing brand equity 492

Managing service brands 500Choosing brand elements for services 501Aspects of service brand management 502

Chapter 13 Digital and global brand management strategies 510

What is a digital brand? 512Digital branding as a core management requirement 512Understanding the new consumer decision journey 516Mining the information from digital technology 518Understanding the digital brand experience 518Customer-managed brands 520

Branding and social networking .521Linking social networking and the consumer

decision journey 523Digital brand communities 525Online brand communities member characteristics 526Digital branding, virtual worlds and gaming 528

Managing global brands . 529Factors leading to increased global branding 531Managing iconic global brands 533Operating a global brandstrategy 534

Branding in developing economies • 541Celebrity branding 544

. How to use celebrities successfully 545Countries and places as brands 547

PART 5 SHAPING THE MARKET OFFERING 555Video documentary for Part 5 555

Chapter 14 Designing, developing and managing market offerings 556

Product life-cycle marketing strategies 558Product life cycles 558Style, fashion and fad life cycles 559Marketing strategies: the introduction stage

and the pioneer advantage 560

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Marketing strategies: the growth stage 564Marketing strategies: the maturity stage 566Marketing strategies: the decline stage 569

Evidence on the product life cycle concept 570Critique of the product life cycle concept . 571Market evolution 572

Emergence 573Growth 573Maturity 573Decline 574

Product characteristics and classifications 574Product levels: the customer-perceived value hierarchy 575Product classifications 577

Differentiation 579Product (market offering) differentiation 579Design 583Service differentiation 583

Product and brand relationships 585The product hierarchy 585Product systems and mixes - 585Product-line analysis 586Product-line length 588Product-mix pricing . 593Co-branding and ingredient branding 594

Packaging, labelling, warranties and guarantees 596

( Packaging 596Labelling 601Warranties and guarantees 602

Chapter 15 Introducing new market offerings 608

New market offering optionsMake or buy?Types of new product

Challenges in new product developmentThe innovation imperativeNew product successNew product failure

Organisational arrangementsBudgeting for new product developmentOrganising new product development

Managing the development process I: ideasProcess stagesIdea generationIdea screening

Managing the development process II: concept to strategyConcept development and testingMarketing strategy developmentBusiness analysis

Managing the development process III: developmentto commercialisationProduct and market development

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Chapter 16

PART 6

Chapter 17

Market testingCommercialisation and new product launch

The consumer adoption processStages in the adoption processFactors influencing the adoption process

Developing and managing pricing strategies

Understanding pricingA changing pricing environmentHow companies priceConsumer psychology and pricing

Setting the priceStep 1-. selecting the pricing objectiveStep 2: determining demandStep 3: estimating costsStep 4: analysing competitors' costs, prices

and offersStep 5: selecting a pricing methodStep 6: selecting the final price

Adapting the priceGeographical pricing (cash, countertrade, barter)Price discounts and allowancesPromotional pricingDifferentiated pricing f

Initiating and responding to price changesInitiating price cutsInitiating price increasesResponding.to competitors' price changes

DELIVERING VALUEVideo documentary for Part 6

Designing and managing integrated marketing

CONTENTS XXi

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channels and global value networks

Marketing channels and value networksThe importance of channelsMultichannel distribution systemsValue networks

The role of marketing channelsChannel functions and flowsChannel levelsService sector channels

Channel-design decisionsAnalysing customer needs and wants

Establishing objectives and constraintsIdentifying major channel alternativesEvaluating' major channel alternatives

Channel-management decisionsSelecting channel membersTraining and motivating channel membersEvaluating channel members

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Modifying channel design and arrangements 712Channel modification decisions 714Global channel considerations 714

Channel integration and systems 716Vertical marketing systems 716Integrating multichannel marketing systems 718Multichannel and channel multiplicity 719

Conflict, cooperation and competition 721Types of conflict and competition 722Causes of channel conflict 723Managing channel conflict 723Dilution and cannibalisation 724Legal and ethical issues in channel relations 724

Online channel marketing practices 725Pure-click companies 725Brick-and-click companies 727

M-commerce marketing practices 728

Chapter 18 Managing process, people and physical evidenceat the consumer interface 736

Process design and management 738A service process blueprint 741Creating an atmosphere 742Managing flexibility within the service design 744Managing variability 745

! The service process and customer satisfaction 746Managing efficiency within the service process 748

Managing people at the customer interface 751Training service personnel 752Hiring service personnel 754Service personnel failure and recovery 755Customer participation 755Co-creation of value 755Level of engagement 756Training customers 757

„ Managing customer-to-customer interactions 759/ Managing the physical evidence and experience environment 759

Senses management 761Managing digital technology at the customer interface 764

Managing the internet at the customer interface 765Managing vending machines 766RFID at the customer interface 767

PART 7 COMMUNICATING VALUE 773Video documentary for Part 7 773

Chapter 19 . Designing and managing marketing communications 774

The role of marketing communications 776The changing marketing communication environment 777Marketing communications, brand equity and sales 777The communications process models 780

CONTENTS xxii i

Developing effective communications 782Identify the target audience 782Determine the communications objectives 783Design the communications 783Select the communications channels 789Word of mouth 790

Establishing the total marketing communications budget 793Deciding on the marketing communications mix 795

Characteristics of the marketing communications mix 795Factors in setting the marketing communications mix 798Measuring marketing communication results 800

Managing the integrated marketing communicationsprocess 801Coordinating media 801Implementing IMC 802

Quovadis? 803

Chapter 20 Managing mass and personalcommunications 808

Developing and managing an advertising programme 810Setting objectives 810Deciding on the advertising budget and developing

the advertising campaign 811Managing media matters '' 816Evaluating advertising effectiveness 823

Sales promotion 824Setting objectives 825Advertising versus sales promotion 825Major decision 827

Events, experiences, public and press relations 829Setting objectives 829Major sponsorship experiences 831Creating experiences 832Major decisions in marketing and public relations 834Marketing public relations ' 835Major decisions in marketing press relations 836

. Direct marketing 839Setting objectives " 839The benefits of direct marketing 839Overview of the direct marketing mix 840Catalogue marketing 841Telemarketing 842Other media for direct response marketing 842Public and ethical issues in direct marketing 842

Interactive marketing 843Placing advertisements and promotions online . 844

Developing and managing the sales force 846Setting objectives and strategy 846Sales force management issues 848Key principles of personal selling 851The six steps of selling 851Relationship marketing (RM) 852

XXiv CONTENTS

PART 8 MANAGING MARKETING IMPLEMENTATIONAND CONTROL 859Video documentary for Part 8 859

Chapter 21 Implementing marketing management 860

Trends in marketing practices 862Internal marketing 862

Critique of internal marketing 863Organising the marketing department 865Relations with other departments 870

Building a creative marketing organisation 871Taking the creative approach 871Building a creative culture 874Creativity - a mystical gift for some or something

for all? 874Maintaining momentum 875Marketing implementation 875Leadership 876Methodology and madness - the importance of-leaving

room for creativity 877Creative marketing 877

Socially responsible marketing 878Corporate social responsibility 878Socially responsible business models 882Cause-related marketing 885Social marketing 887Ethnic marketing 889Green marketing 889

Evaluation and control 893Annual-plan control . 894Profitability control 897Efficiency control 901Strategic control 902

The future of marketing 906The marketing manager's key tasks 906A holistic approach to marketing management 907The nature of marketing 907Relationship activity 908Market research ' • 911New product development 911Marketing communications activity 911

Marketing morphs to greater focus on customerexperience and engagement 911

Getting started 912

Chapter 22 Managing marketing metrics 918

• The need for marketing metrics 920What marketing metrics should do 921

The chain of marketing productivity 923Measuring the past, the present or the future 925

CONTENTS XXV

Measuring marketing performance and productivity 925Counting-based metrics 926Accounting-based metrics 926Outcome metrics 927

Corporate social responsibility 941Marketing dashboards 942

Appendix: Digitel marketing plan and exercises 948Glossary 964Name index 983Organisation and brand index ' '•• 9 8 5Subject index '• , 993