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CONTENTS
Preface xxix
PART 1 U n d e r s t a n d i n g M a r k e t i n g M a n a g e m e n t 2
Chapter 1 Defining Marketing for the 21st Century 3
The Impor tance of Marke t ing 4
The Scope of Marke t ing 5
What Is Marketing? 5
MARKETING MEMO Marketers' Frequently Asked Questions 6
Exchange and Transactions 6
What Is Marketed? 8
Who Markets? 10
MARKETING INSIGHT New Consumer Capabil i t ies 11
How Business and Marketing Are Changing 13
MARKETING M E M O The Ten Rules of Radical Market ing 13
Company Or ien ta t ions Toward the Marketp lace 15
The Production Concept 15
The Product Concept 15
The Selling Concept 15
The Marketing Concept 16
The Holistic Marketing Concept 16
MARKETING INSIGHT The Internet Advantage 17
Fundamental Marke t ing Concepts, Trends, and Tasks 24
Core Concepts 24
Shifts in Marketing Management 27
Marketing Management Tasks 29
Summary 31
Applications 31
Notes 32
Chapter 2 Developing Marketing Strategies and Plans 35
Market ing and Customer Value 36
The Value Delivery Process 36
The Value Chain 38
Core Competencies 39
A Holistic Marketing Orientat ion and Customer Value 40
The Central Role of Strategic Planning 41
MARKETING INSIGHT Views on Market ing f rom Chief
Executive Officers 42
MARKETING INSIGHT Keys to Long-Term Market
Leadership 43
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Corpora te and Division Strategic Planning 44
Defining the Corporate Mission 44
Defining the Business 45
Assessing Growth Opportuni t ies 47
Organization and Organizational Culture 50
Business Unit Strategic Planning 51
The Business Mission 51
SWOT Analysis 52
Goal Formulation 54
MARKETING M E M O Checklist for Performing
Strengths/Weaknesses Analysis 55
Strategic Formulation 56
Program Formulation and Implementation 58
MARKETING INSIGHT Marketing's Contr ibut ion to
Shareholder Value 58
Feedback and Control 59
Product Planning: The Nature and Contents of a Marke t ing
Plan 60
Contents of the Marketing Plan 60
TING M E M O Market ing Plan Criteria 61
Summary 67
Applications 67
Notes 68
PART 2 C a p t u r i n g M a r k e t i n g Ins ights 70
Chapter 3 Gathering Information and Scanning the Environment 71
Components of a Modern Marke t ing In format ion System 72
Internal Records and Marke t ing Intel l igence 73
The Order-to-Payment Cycle 73
Sales Information Systems 73
Databases, Data Warehousing, and Data Mining 74
The Marketing Intelligence System 74
MARKETING INSIGHT Putt ing Data t o Work wi th Business
Integrat ion Software 75
Analyz ing the Macroenv i ronment 77
MARKETING M E M O Clicking on the Compet i t ion 77
Needs and Trends 77
MARKETING INSIGHT Ten Megatrends Shaping the Consumer Landscape 78
Identifying the Major Forces 78
The Demograph ic Envi ronment 79
Worldwide Population Growth 79
Population Age Mix 80
Ethnic and Other Markets 81
Educational Groups 83
Household Patterns 83
Geographical Shifts in Population 84
Other Major Macroenv i ronments 85
Economic Environment 85
Social-Cultural Environment 87
Natural Environment 89
MARKETING INSIGHT Green Market ing 91
Technological Environment 92
Political-Legal Environment 93
Summary 95
Applications 96
Notes 97
Chapter 4 Conducting Marketing Research and Forecasting Demand 101
The Marke t ing Research System 102
The Marke t ing Research Process 103
Step 1: Define the Problem, the Decision Alternatives, and the
Research Objectives 104
Step 2: Develop the Research Plan 104
MARKETING INSIGHT Conduct ing Informative Focus
Groups 106
MARKETING M E M O Questionnaire Dos and Don'ts 107
MARKETING INSIGHT Get t ing into Consumers' Heads with Quali tat ive Research 109
Step 3: Collect the Information 112
MARKETING M E M O Pros and Cons of Onl ine Research 113
MARKETING INSIGHT Global Online Market Research
Challenges 114
Step 4: Analyze the Information 114
Step 5: Present the Findings 114
Step 6: Make the Decision 115
Overcoming Barriers to the Use of Marketing Research 116
Measur ing Marke t ing Product iv i ty 116
Marketing Metrics 117
MARKETING INSIGHT Seeing the Big Picture and Getting
to the Bottom Line in Marketing 117
Measuring Marketing Plan Performance 119
Profitability Analysis 122
Marketinq-Mix Model ing 125 3 3 XIII
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Forecast ing and Demand Measurement 125
The Measures of Market Demand 126
A Vocabulary for Demand Measurement 127
Estimating Current Demand 130
Estimating Future Demand 132
Summary 134
Applications 135
Notes 136
PART 3 C o n n e c t i n g w i t h C u s t o m e r s 138
Chapter 5 Creating Customer Value, Satisfaction, and Loyalty 139
Bui ld ing Customer Value, Sat isfact ion, and Loyalty 140
Customer Perceived Value 141
Total Customer Satisfaction 144
Measuring Satisfaction 145
Product and Service Quality 146
Total Quality Management 147
Maximiz ing Customer Li fet ime Value 148
Customer Profitability 149
Measuring Customer Lifetime Value 150
Customer Equity 151
Cu l t i va t ing Customer Relationships 152
Customer Relationship Management (CRM) 152
MARKETING INSIGHT Progress and Priorities in Customer
Equity Management 153
At t ract ing, Retaining, and Growing Customers 154
MARKETING M E M O How to Handle Customer Complaints 156
Building Loyalty 157 Reducing Customer Defection 158
Forming Strong Customer Bonds 159
M E M O Asking Questions when Customers
Leave 159
MARKETING M E M O Forming Strong Customer Bonds 160
Customer Databases and Database Marke t ing 162
Customer Databases 162
Data Warehouses and Datamining 163
The Downside of Database Marketing and CRM 165
MARKETING INSIGHT Succeeding at CRM 167
Summary 167
Applications 168
Notes 169
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Chapter 6 Analyz ing Consumer Marke ts 173
What Influences Consumer Behavior? 174
Cultural Factors 174
MARKETING INSIGHT Consumer Trends for the Future 176
Social Factors 176
MARKETING INSIGHT Market ing to Cultural Market
Segments 178
Personal Factors 180
MARKETING M E M O The Average American Consumer Quiz 181
Key Psychological Processes 184
Motivat ion: Freud, Maslow, Herzberg 184
Perception 185
Learning 187
Memory 187
The Buying Decision Process: The Five-Stage Mode l 191
Problem Recognition 191
Information Search 191
Evaluation of Alternatives 193
MARKETING M E M O App ly ing Customer Value Analysis 196
Purchase Decisions 196
Postpurchase Behavior 198
Other Theories of Consumer Decision Making 199
Level of Consumer Involvement 200
Decision Heuristics and Biases 201
MARKETING M E M O Decision Traps 202
Mental Accounting 202
Profiling the Customer Buying Decision Process 203
Summary 203
Appl ica t ions 203
Notes 205
Chapter 7 Analyz ing Business Marke ts 209
What Is Organizat ional Buying? 210
The Business Market Versus the Consumer Market 210
MARKETING INSIGHT Big Sales to Small Business 210
Buying Situations 212
MARKETING M E M O Guidelines for Selling to Small Business 212
Systems Buying and Selling 213
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Part ic ipants in the Business Buying Process 214
The Buying Center 214
Buying Center Influences 215
Buying Center Targeting 215
The Purchasing/Procurement Process 217
Purchasing Orientations 218
Types of Purchasing Processes 218
Purchasing Organization and Administrat ion 219
Stages in the Buying Process 219
Problem Recognition 220
General Need Description and Product Specification 221
Supplier Search 222
E-Procurement 222
MARKETING INSIGHT The Business-to-Business (B2B)
Cyberbuying Bazaar 223
Proposal Solicitation 225
Supplier Selection 225
MARKETING M E M O Methods of Assessing Customer Value 226
Order-Routine Specification 227
Performance Review 227
MARKETING INSIGHT Establishing Corporate Trust
and Credibi l i ty 228
Manag ing Business-to-Business Customer Relationships 228
The Benefits of Vertical Coordination 228
Business Relationships: Risks and Opportunism 230
Inst i tu t iona l and Government Markets 230
MARKETING M E M O Selling Tech to the Government 233
Summary 234
Applications 234
Notes 235
Chapter 8 Identifying Marke t Segments and Targets 239
Levels of Marke t Segmentat ion 240
Segment Marketing 240
Niche Marketing 242
Local Marketing 244
MARKETING INSIGHT Experiential Market ing 245
Customerization 246
Segment ing Consumer Markets 247
Geographic Segmentation 247
Demographic Segmentation 249
Psychographic Segmentation 252
MARKETING INSIGHT Market ing t o Generat ion Y 253
MARKETING M E M O Cheat Sheet for 21-Year-Olds 253
Behavioral Segmentation 254
Bases fo r Segment ing Business Markets 258
Marketing to Small Businesses 258
Sequential Segmentation 260
Market Target ing 261
Effective Segmentation Criteria 262
Evaluating and Selecting the Market Segments 262
Addi t ional Considerations 264
Summary 268
Applications 268
Notes 269
PART 4 Bu i l d ing S t r o n g Brands 272
Chapter 9 Creating Brand Equity 273
What Is Brand Equity? 274
The Role of Brands 274
MARKETING M E M O The Brand Report Card 275
The Scope of Branding 275
Defining Brand Equity 276
Brand Equity as a Bridge 278
Brand Equity Models 278
Bui ld ing Brand Equity 281
Choosing Brand Elements 281
Designing Holistic Marketing Activit ies 284
MARKETING INSIGHT App ly ing Permission
Market ing 285
Leveraging Secondary Associations 287
Measuring Brand Equity 288
MARKETING INSIGHT The Brand Value Chain 288
Brand Audits 289
Brand Tracking 290
Brand Valuation 290
Managing Brand Equity 291
Brand Reinforcement 291
MARKETING INSIGHT What Is a Brand Worth? 292
MARKETING M E M O Twenty-First-Century
Branding 294
Brand Revitalization 294
Brand Crisis 295 xvii
Devising a Branding St rategy 296
Branding Decision: To Brand or Not to Brand? 297
Brand Extensions 297
Brand Portfolios 301
MARKETING M E M O Research Insights on Brand
Extensions 301
Summary 303
Applications 303
Notes 304
Chapter 10 Crafting the Brand Positioning 309
Deve lop ing and Communicat ing a Posit ioning Strategy 310
Compet i t ive Frame of Reference 311
MARKETING INSIGHT Value Disciplines Positioning 311
Points-of-Parity and Points-of-Difference 312
Establishing Category Membership 314
Choosing POPs and PODs 315
Creating POPs and PODs 316
i M E M O Wri t ing a Positioning Statement 316
Di f ferent ia t ion Strategies 318
MARI ETING M E M O How to Derive Fresh Consumer Insights to
Differentiate Products and Services 318
Product Differentiation 319
Personnel Differentiation 319
Channel Differentiation 320
Image Differentiation 320
Product Life-Cycle Marke t ing Strategies 321
MARKETING M E M O Exceeding Customer Expectations 322
Product Life Cycles 322
Style, Fashion, and Fad Life Cycles 323
Marketing Strategies: Introduction Stage and the Pioneer
Advantage 324
Marketing Strategies: Growth Stage 325
Marketing Strategies: Maturity Stage 326
Marketing Strategies: Decline Stage 329
The Product Life-Cycle Concept: Crit ique 331
Marke t Evolut ion 331
MARKETING INSIGHT Dynamics of Attribute Competition 334
Summary 335
Applications 335
Notes 337 xviii
Chapter 11 Dealing with Competition 341
Compet i t i ve Forces 342
Ident i fy ing Compet i to rs 343
Industry Concept of Compet i t ion 344
Market Concept of Compet i t ion 346
Analyzing Compet i to rs 347
Strategies 347
Objectives 347
Strengths and Weaknesses 347
Selecting Competi tors 348
Compet i t i ve Strategies fo r Marke t Leaders 349
MARKETING M E M O Benchmarking to Improve Compet i t ive
Performance 349
Expanding the Total Market 350
MARKETING INSIGHT When Your Compet i to r Delivers More for Less 351
Defending Market Share 352
Expanding Market Share 355
Other Compet i t i ve Strategies 355
Market-Challenger Strategies 355
Market-Follower Strategies 359
MARKETING M E M O Making Smaller Better 360
Market-Nicher Strategies 362
MARKETING M E M O Niche Specialist Roles 364
MARKETING M E M O Strategies for Entering Markets Held
by Incumbent Firms 364
Balancing Customer and Compet i t o r Or ien ta t ions 365
Competi tor-Centered Companies 365
Customer-Centered Companies 365
Summary 366
Applications 366
Notes 367
PART 5 Shap ing t h e M a r k e t O f f e r i n g s 370
Chapter 12 Setting Product Strategy 371
Product Characterist ics and Classif ications 372
Product Levels: The Customer Value Hierarchy 372
Product Classifications 373
Di f ferent ia t ion 376
Product Differentiation 376
Design: The Integrative Force 377
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Services Differentiation 378
MARKETING INSIGHT Design as a Powerful Market ing
Tool 379
Product and Brand Relationships 380
The Product Hierarchy 380
Product Systems and Mixes 381
Product-Line Analysis 382
Product-Line Length 384
MARKETING INSIGHT Rationalizing Brand Portfol ios
for Growth 387
Product-Mix Pricing 387
Co-Branding and Ingredient Branding 390
Packaging, Label ing, Warrant ies, and Guarantees 392
MARKETING M E M O Making Ingredient Branding Work 392
Packaging 393
Labeling 394
Warranties and Guarantees 395
Summary 396
Applications 397
Notes 398
Chapter 13 Designing and Managing Services 401
The Nature of Services 402
Service Industries Are Everywhere 402
Categories of Service Mix 403
Distinctive Characteristics of Services 405
Marke t ing Strategies for Service Firms 408
A Shifting Customer Relationship 408
MARKETING M E M O A Service Market ing Checklist 409
Holistic Marketing for Services 410
MARKETING INSIGHT Voice Mail Hell 410
Managing Service Qual i ty 412
Customer Expectations 412
Best Practices of Service-Quality Management 414
MARKETING INSIGHT The Role of Expectations in Service-
Quali ty Perceptions 415
M A R K E T I N G M E M O Assessing E-Service Quali ty 416
MARKETING M E M O Recommendations for Improving
Service Quality 417
MARKETING M E M O Get t ing Self-Service Kiosks Off the
Ground 418