CONTENTS PART 1 The World of Marketing ... 1 1 AN OVERVIEW OF MARKETING ... 4 What Is Marketing? ... 6 The Concept of Exchange ... 6 Marketing Management Philosophies ... 6 Production Orientation ... 7 Sales Orientation ... 7 Market Orientation ... 7 Societal Orientation ... 9 Differences Between Sales and Market Orientations ... 9 The Organization's Focus ... 9 The Firm's Business ... 15 Those to Whom the Product Is Directed ... 15 The Firm's Primary Goal ... 16 Tools the Organization Uses to Achieve Its Goals ... 16 A Word of Caution ... 16 The Marketing Process ... 17 Why Study Marketing ... 17 Marketing Plays an Important Role in Society ... 17 Marketing Is Important to Businesses ... 18 Marketing Offers Outstanding Career Opportunities ... 18 Marketing Affects Your Life Every Day ... 18 Looking Ahead ... 19 Looking Back ... 20 Summary ... 20 Key Terms ... 20 Discussion and Writing Questions ... 21 Application for Small Business ... 21 Review Quiz ... 22 Video Case : Lord of the Boards ... 23 Answer Key ... 25 2 STRATEGIC PLANNING : DEVELOPING AND IMPLEMENTING A MARKETING PLAN ... 26 The Nature of Strategic Planning ... 28 What Is a Marketing Plan? ... 29 Why Write a Marketing Plan? ... 30 Marketing Plan Elements ... 31 Writing the Marketing Plan ... 31 Define the Business Mission ... 33 Set Marketing Plan Objectives ... 34 Conduct a Situation Analysis ... 35 Strategic Windows ... 37 Strategic Alternatives ... 37 Selecting a Strategic Alternative ... 38 Differential Advantage ... 42 Describe the Marketing Strategy ... 43 Target Market Strategy ... 43 The Marketing Mix ... 44 Following Up the Marketing Plan ... 45 Implementation ... 45 Evaluation and Control ... 46 Effective Strategic Planning ... 46 Looking Back ... 47 Summary ... 47 Discussion and Writing Questions ... 52 Key Terms ... 52 Application for Small Business ... 52 Review Quiz ... 53 Video Case : Comedian Mark Lundhoim Marketing Recovery ... 55 Answer Key ... 56 3 THE MARKETING ENVIRONMENT AND MARKETING ETHICS ... 58 The External Marketing Environment ... 60 Understanding the External Environment ... 60 Environmental Management ... 60 Social Factors ... 61 Marketing-Oriented Values of Today ... 61 The Growth of Component Lifestyles ... 62 The Changing Role of Families and Working Women ... 64 Demographic Factors ... 64 Generation Y : Born to Shop ... 65 Generation X : Savvy and Cynical ... 66 Baby Boomers : America's Mass Market ... 66 Older Consumers : Not Just Grand-parents ... 68 Americans on the Move ... 69 Growing Ethnic Markets ... 69 Ethnic and Cultural Diversity ... 70 Economic Factors ... 71 Rising Incomes ... 71 Inflation ... 72 Recession ... 73 Technological and Resource Factors ... 73 Political and Legal Factors ... 75 Federal Legislation ... 76 State Laws ... 77 Regulatory Agencies ... 77 Competitive Factors ... 78 Competition for Market Share ... 78 Global Competition ... 80 Ethical Behavior in Business ... 81 Morality and Business Ethics ... 81 Ethical Decision Making ... 82 Ethical Guidelines ... 83 Corporate Social Responsibility ... 84 Looking Back ... 86 Summary ... 86 Key Terms ... 88 Discussion and Writing Questions ... 88 Application for Small Business ... 89 Review Quiz ... 90 Video Case : Ben & Jerry's : "We Do Good by Doing Good." ... 92 Answer Key ... 92 4 DEVELOPING A GLOBAL VISION ... 94 Rewards of Global Marketing ... 96 Importance of Global Marketing to the United States ... 97 Multinational Firms ... 98 Multinational Advantage ... 99 Global Marketing Standardization ... 100 External Environment Facing Global Marketers ... 101 Culture ... 101 Economic and Technological Development ... 103 Political Structure ... 106 Demographic Makeup ... 112 Natural Resources ... 113 Global Marketing by the Individual Firm ... 114 Export ... 115 Licensing ... 115 Contract Manufacturing ... 118 Joint Venture ... 118 Direct Investment ... 119 The Global Marketing Mix ... 120 Product and Promotion ... 120 Distribution ... 125 Looking Back ... 126 Summary ... 126 Discussion and Writing Questions ... 127 Key Terms ... 127 Application for Small Business ... 128 Review Quiz ... 128 Video Case : Autocite : The Ticket to Going Global ... 129 Answer Key ... 131 PART 2 Analyzing Marketing Opportunities ... 137 5 CONSUMER DECISION MAKING ... 140 The Importance of Understanding Consumer Behavior ... 142 The Consumer Decision-Making Process ... 143 Need Recognition ... 143 Information Search ... 144 Evaluation of Alternatives and Purchase ... 146 Post-purchase Behavior ... 147 Types of Consumer Buying Decisions and Consumer Involvement ... 148 Factors Determining the Level of Consumer Involvement ... 149 Marketing Implications of Involvement ... 150 Factors Influencing Consumer Buying Decisions ... 152 Cultural Influences on Consumer Buying Decisions ... 153 Culture and Values ... 153 Understanding Culture Differences ... 156 Subculture ... 156 Social Class ... 158 Social Influences on Consumer Buying Decisions ... 160 Reference Groups ... 161 Opinion Leaders ... 162 Family ... 164 Individual Intluences on Consumer Buying Decisions ... 165 Gender ... 166 Age and Family Life Cycle Stage ... 166 Personality, Self-Concept, and Lifestyle ... 167 Psychological Influences on Consumer Buying Decisions ... 168 Perception ... 169 Motivation ... 171 Learning ... 173 Beliefs and Attitudes ... 174 Looking Back ... 177 Summary ... 177 Discussion and Writing Questions ... 178 Key Terms ... 179 Application for Small Business ... 179 Review Quiz ... 179 Video Case : Vermont Teddy Bear Co. : Workin' Hard for the Honey ... 181 Answer Key ... 182 6 BUSINESS MARKETING ... 184 What Is Business Marketing? ... 186 Business Marketing on the Internet ... 186 Relationship Marketing and Strategic Alliances ... 187 Major Categories of Business Customers ... 190 Producers ... 190 Resellers ... 190 Governments ... 191 Institutions ... 191 The North American Industry Classification System(NAICS) ... 192 Business Versus Consumer Markets ... 192 Demand ... 192 Purchase Volume ... 195 Number of Customers ... 196 Location of Buyers ... 196 Distribution Structure ... 196 Nature of Buying ... 196 Nature of Buying Influence ... 196 Types of Negotiations ... 196 Use of Reciprocity ... 196 Use of Leasing ... 197 Primary Promotional Method ... 197 Types of Business Products ... 197 Major Equipment ... 197 Accessory Equipment ... 197 Raw Materials ... 198 Component Parts ... 198 Processed Materials ... 199 Supplies ... 199 Business Services ... 199 Business Buying Behavior ... 199 Buying Centers ... 199 Evaluative Criteria ... 200 Buying Situations ... 202 Purchasing Ethics ... 203 Customer Service ... 203 Looking Back ... 204 Summary ... 204 Discussion and Writing Questions ... 205 Key Terms ... 205 Application for Small Business ... 206 Review Quiz ... 206 Video Case : Burke, Inc. : Business-to-Buisness Alliances ... 207 Answer Key ... 209 7 SEGMENTING AND TARGETING MARKETS ... 210 Market Segmentation ... 212 The Importance of Market Segmentation ... 212 Criteria for Successful Segmentation ... 213 Bases for Segmenting Consumer Markets ... 214 Geographic Segmentation ... 215 Demographic Segmentation ... 215 Psychographic Segmentation ... 220 Benefit Segmentation ... 223 Usage-Rate Segmentation ... 224 Bases for Segmenting Business Markets ... 225 Macrosegmentation ... 225 Microsegmentation ... 225 Steps in Segmenting a Market ... 226 Strategies for Selecting Target Markets ... 227 Undifferentiated Targeting ... 227 Concentrated Targeting ... 229 Multisegment Targeting ... 230 Positioning ... 231 Perceptual Mapping ... 232 Positioning Bases ... 233 Repositioning ... 234 Global Issues in Market Segmentation and Targeting ... 235 Looking Back ... 235 Summary ... 235 Discussion and Writing Questions ... 236 Key Terms ... 237 Application for Small Business ... 237 Review Quiz ... 237 Video Case : Labelle Management : Something for Everyone ... 239 Answer Key ... 240 8 DECISION SUPPORT SYSTEMS AND MARKETING RESEARCH ... 242 Marketing Decision Support Systems ... 244 The Role of Marketing Research ... 245 Differences Between Marketing Research and DSS ... 245 Management Uses of Marketing Research ... 245 Steps in a Marketing Research Project ... 248 The New Age of Secondary Information - The Internet and World Wide Web ... 250 Finding Secondary Data on the Internet ... 251 Discussion Groups and Special Interest Groups on the Internet as Sources of Secondary Data ... 253 Databases on CD-ROM ... 256 Planning the Research Design and Gathering Primary Data ... 256 Specifying the Sampling Procedures ... 267 Collecting the Data ... 268 Analyzing the Data ... 270 Preparing and Presenting the Report ... 271 Following Up ... 272 Scanner-Based Research ... 271 When Should Marketing Research Be Conducted? ... 273 Looking Back ... 273 Summary ... 274 Discussion and Writing Questions ... 274 Key Terms ... 275 Application for Small Business ... 276 Review Quiz ... 277 Video Case : Burke Marketing Research : The Right Way to Make the Right Decision ... 279 Answer Key ... 280 9 CREATING A COMPETITIVE ADVANTAGE USING COMPETITIVE INTELLIGENCE ... 282 Competitive Advantage ... 284 Cost Competitive Advantage ... 284 Sources of Cost Differential Advantages ... 284 Cost Competitive Advantages Are Rarely Sustainable ... 286 Differentiation Competitive Advantages ... 286 Niche Competitive Advantage ... 287 Building Tomorrow's Competitive Advantage ... 287 Competitive Intelligence ... 288 Advantages of Competitive Intelligence ... 288 Sources of Internal Competitive Intelligence ... 289 Non-Computer-Based External Sources of Competitive Intelligence ... 290 Experts ... 290 CI Consultants ... 291 Government Agencies ... 291 Uniform Commercial Code Filings ... 293 Suppliers ... 294 Photographs ... 294 Newspapers and Other Publications ... 294 Yellow Pages ... 294 Trade Shows ... 295 Speeches by Competitors ... 295 Neighbors to Competitors ... 295 Advisory Boards ... 296 Using the Internet and Databases for Competitive Intelligence ... 296 Industrial Espionage ... 298 Looking Back ... 301 Summary ... 301 Discussion and Writing Questions ... 302 Key Terms ... 302 Application for Small Business ... 302 Review Quiz ... 303 Case : Cassatt String Quartet : Using Competitive Intelligence ... 304 Answer Key ... 305 PART 3 Product Decisions ... 313 10 PRODUCT CONCEPTS ... 316 What Is a Product? ... 318 Types of Consumer Products ... 318 Convenience Products ... 318 Shopping Prodocts ... 319 Specialty Products ... 319 Unsought Products ... 320 Product Items, Lines, and Mixes ... 320 Adjustments to Product Items, Lines, and Mixes ... 321 Product Modifications ... 321 Repositioning ... 322 Product Line Extensions ... 323 Product Line Contraction ... 323 Branding ... 323 Benefits of Branding ... 323 Branding Strategies ... 326 Generic Products Versus Branded Products ... 327 Manufacturers' Brands Versus Private Brands ... 327 Individual Brands Versus Family Brands ... 328 Cobranding ... 329 Trademarks ... 330 Packaging ... 332 Packaging Functions ... 332 Labeling ... 333 Universal Product Codes ... 334 Global Issues in Branding and Packaging ... 334 Branding ... 334 Packaging ... 335 Product Warranties ... 335 Looking Back ... 336 Summary ... 336 Discussion and Writing Questions ... 337 Key Terms ... 337 Application for Small Business ... 338 Review Quiz ... 338 Video Case : Ben & Jerry's : Taste and Innovation ... 339 Answer Key ... 340 11 DEVELOPING AND MANAGING PRODUCTS ... 342 The Importance of New Products ... 344 Categories of New Products ... 344 The New-Product Development Process ... 345 New-Product Strategy ... 346 Idea Generation ... 346 Idea Screening ... 348 Business Analysis ... 349 Development ... 349 Test Marketing ... 351 The High Costs of Test Marketing ... 351 Alternatives to Test Marketing ... 353 Commercialization ... 353 Global Issues in New-Product Development ... 354 Organization for New-Product Development ... 355 New-Product Committees and Departments ... 355 Venture Teams and In Intrapreneurs ... 355 Simultaneous Product Development ... 356 The Spread of New Products ... 356 Diffusion of Innovation ... 356 Product Characteristics and the Rate of Adoption ... 357 Marketing Implications of the Adoption Process ... 358 Product Life Cycles ... 359 Introductory Stage ... 360 Growth Stage ... 361 Maturity Stage ... 361 Decline Stage ... 361 Implications for Marketing Management ... 362 Looking Back ... 363 Summary ... 363 Key Terms ... 364 Discussion and Writing Questions ... 365 Application for Small Business ... 365 Review Quiz ... 366 Video Case : AutoCite : Traffic Ticket and Parking Citation System ... 367 Answer Key ... 368 12 SERVICES AND NONPROFIT ORGANIZATION MARKETING ... 370 The Importance of Services ... 372 How Services Differ from Goods ... 373 Intangibility ... 373 Inseparability ... 374 Heterogeneity ... 374 Perishability ... 374 Service Quality ... 375 The Gap Model of Service Quality ... 375 Services Marketing in Manufacturing ... 377 Marketing Mixes for Services ... 377 Product(Service) Strategy ... 378 Core and Supplementary Services ... 378 Mass Customization ... 379 The Service Mix ... 380 Distribution Stratege ... 380 Promotion Strategy ... 381 Price Strategy ... 381 Relationship Marketing in Services ... 382 Internal Maketing in Service Firms ... 383 Global Issues in Service Marketing ... 384 Nonprofit Organization Marketing ... 384 What Is Nonprofit Organization Marketing? ... 385 Unique Aspects of Nonprofit Organization Marketing Strategies ... 386 Objectives ... 386 Target Markets ... 386 Product Decisions ... 387 Distribution Decisions ... 387 Promotion Decisions ... 388 Pricing Decisions ... 388 Looking Back ... 390 Summary ... 390 Discussion and Writing Questions ... 391 Key Terms ... 392 Application for Small Business ... 392 Review Quiz ... 392 Video Case : Boyne USA : At Your Service... ... 394 Auswer Key ... 395 PART 4 Distribution Decisions ... 401 13 MARKETING CHANNELS AND LOGISTICS DECISIONS ... 404 Marketing Channels ... 406 Providing Specialization and Division of Labor ... 407 Overcoming Discrepancies ... 407 Providing Contact Efficiency ... 408 Channel Intermediaries and Their Functions ... 409 Types of Channel Intermediaries ... 409 Channel Functions Performed by Intermediaries ... 410 Channel Structures ... 412 Channels for Consumer Products ... 412 Channels for Business-to-Business and Industrial Products ... 413 Alternative Channel Arrangements ... 413 Channel Strategy Decisions ... 416 Factors Affecting Channel Choice ... 416 Levels of Distribution Intensity ... 418 Channel Relationships ... 420 Channel Power, Control, and Leadership ... 420 Channel Conflict ... 420 Channel Partnering ... 422 Logistics Decisions and Supply Chain Management ... 423 The Evolution of Integrated Logistics and Supply Chain Management ... 426 Benefits of Supply Chain Management ... 427 Balancing Logistics Service and Cost ... 428 Integrated Functions of the Supply Chain ... 430 Sourcing and Procurement ... 431 Production Scheduling ... 431 Order Processing ... 432 Inventory Control ... 433 Warehousing and Materials Handling ... 435 Transportation ... 436 Trends in Logistics ... 437 Automation ... 437 Outsourcing Logistics Functions ... 438 Electronic Distribution ... 439 Channels and Distribution Decisions for Services ... 439 Channels and Distribution Decisions for Global Markets ... 440 Developing Global Marketing Channels ... 440 Global Logistics and Supply Chain Management ... 441 Looking Back ... 443 Summary ... 443 Key Terms ... 446 Discussion and Writing Questions ... 446 Application for Small Business ... 447 Review Quiz ... 447 Video Case : Burton Snowboards : Going Global ... 448 Answer Key ... 450 14 RETAILING ... 452 The Role of Retailing ... 454 Classification of Retail Operations ... 455 Ownership ... 456 Level of Service ... 457 Product Assortment ... 457 Price ... 457 Major Types of Retail Operations ... 457 Department Stores ... 457 Specialty Stores ... 458 Supermarkets ... 459 Drugstores ... 460 Convenience Stores ... 460 Discount Stores ... 461 Restaurants ... 464 Nonstore Retailing ... 465 Automatic Vending ... 465 Direct Retailing ... 466 Direct Marketing ... 468 Electronic Retailing ... 469 Franchising ... 470 Retail Marketing Strategy ... 472 Defining a TargetMarket ... 473 Choosing the Retailing Mix ... 473 The Product Offering ... 473 Promotion Strategy ... 476 The Proper Location ... 476 Retail Prices ... 479 Presentation of the Retail Stare ... 479 Personnel and Customer Service ... 483 Global Retailing ... 483 Trends in Retailing ... 487 Entertainment ... 487 Convenience and Efficiency ... 487 Customer Management ... 488 Looking Back ... 489 Summary ... 489 Discussion and Writing Questions ... 491 Key Terms ... 491 Application for Small Business ... 492 Review Quiz ... 492 Video Case : Hudson's Shopping Euphoria at the Somerset Collection ... 493 Answer Key ... 495 PART 5 Integrated Marketing Communications ... 503 15 MARKETING COMMUNICATION AND PERSONAL SELLING ... 506 The Role of Promotion in the Marketing Mix ... 509 The Promotional Mix ... 510 Personal Selling ... 510 Advertising ... 511 Sales Promotion ... 511 Public Relations ... 512 Marketing Communication ... 513 The Communication Process ... 514 The Sender and Encoding ... 515 The Communication Process and the Promotional Mix ... 516 Integrated Marketing Communications ... 516 The Goals and Tasks of Promotion ... 518 Informing ... 518 Persuading ... 519 Reminding ... 519 Promotional Goals and the AIDA Concept ... 519 AIDA and the Promotional Mix ... 521 Factors Affecting the Promotional Mix ... 522 Nature of the Product ... 522 Stage in the Product Life Cycle ... 522 Target Market Characteristics ... 523 Type of Buying Decision ... 524 Available Funds ... 524 Push and Pull Strategies ... 525 Personal Selling ... 526 Relationship Selling ... 527 Steps in the Selling Process ... 529 Generating Leads ... 531 Qualifying Leads ... 532 Approaching the Customer and Probing Needs ... 533 Develaping and Proposing Solutions ... 535 Handling Objections ... 535 Closing the Sale ... 536 Following Up ... 536 Sales Management ... 538 Defining Sales Goals and the Sales Process ... 538 Determining the Sales Force Structure ... 539 Recruiting and Training the Sales Force ... 539 Compensating and Motivating the Sales Force ... 540 Evaluating the Sales Force ... 542 Looking Back ... 542 Summary ... 542 Key Terms ... 544 Discussion and Writing Questions ... 544 Application for Small Business ... 545 Review Quiz ... 545 Video Case : Boyne USA Resorts' Lifestyles Magazine : Promoting the Ultimate Playground ... 547 Answer Key ... 548 16 ADVERTISING, SALES PROMO-TION, AND PUBLIC RELATIONS ... 550 Effects of Advertising ... 552 Advertising and Market Share ... 553 Advertising and the Consumer ... 554 Advertising and Brand Loyalty ... 554 Advertising and Product Attributes ... 554 Major Types of Advertising ... 555 Institutional Advertising ... 555 Product Advertising ... 555 Steps in Creating an Advertising Campaign ... 557 Determine Campaign Objectives ... 557 Make Creative Decisions ... 558 Make Media Decisions ... 561 Media Types ... 563 Media Selection Considerations ... 567 Media Scheduling ... 569 Evaluate the Ad Campaign ... 570 Sales Promotion ... 570 The Objectives of Sales Promotion ... 571 Tools for Consumer Sales Promotion ... 571 Tools for Trade Sales Promotion ... 575 Public Relations ... 576 Major Public Relations Tools ... 577 Managing Unfavorable Publicity ... 580 Looking Back ... 581 Summary ... 581 Discussion and Writing Questions ... 583 K