A01 KOTL5681 01 SE FM.indd ii 8/31/11 8:59 PMpearsonmiddleeastawe.com/pdfs/principles-of-marketing_SAMPLE.pdf · He is also Director of El-Khazindar Business Research and Case Center

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v

is the Crist W. Blackwell Distinguished Professor of Undergraduate Education in the Kenan-Flagler Business School at the University of North Carolina

at Chapel Hill. He holds undergraduate and master’s degrees in business from Wayne State University in Detroit, and he received his PhD in marketing from Northwestern University. Professor Armstrong has contributed numerous articles to leading business journals. As a consul-tant and researcher, he has worked with many companies on marketing research, sales manage-ment, and marketing strategy.

But Professor Armstrong’s first love has always been teaching. His Blackwell Distinguished Professorship is the only permanent endowed professorship for distinguished undergraduate teaching at the University of North Carolina at Chapel Hill. He has been very active in the teach-ing and administration of Kenan-Flagler’s undergraduate program. His administrative posts have included Chair of Marketing, Associate Director of the Undergraduate Business Program, Director of the Business Honors Program, and many others. He has worked closely with business student groups and has received several campuswide and Business School teaching awards. He is the only repeat recipient of the school’s highly regarded Award for Excellence in Undergraduate Teaching, which he has received three times. Most recently, Professor Armstrong received the UNC Board of Governors Award for Excellence in Teaching, the highest teaching honor bestowed by the 16-campus University of North Carolina system.

About the Authors

is the S. C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management, Northwestern University. He received his master’s degree at the University of Chicago and his PhD at MIT, both in economics. Professor Kotler is

the author of Marketing Management (Pearson Prentice Hall), now in its thirteenth edition and the most widely used marketing text book in graduate business schools worldwide. He has authored dozens of other successful books and has written more than 100 articles in leading journals. He is the only three-time winner of the coveted Alpha Kappa Psi award for the best annual article in the Journal of Marketing .

Professor Kotler was named the first recipient of two major awards: the Distinguished Marketing Educator of the Year Award , given by the American Marketing Association and the Philip Kotler Award for Excellence in Health Care Marketing , presented by the Academy for Health Care Services Marketing. His numerous other major honors include the Sales and Marketing Executives International Marketing Educator of the Year Award; the European Association of Marketing Consultants and Trainers Marketing Excellence Award ; the Charles Coolidge Parlin Marketing Research Award ; and the Paul D. Converse Award , given by the American Marketing Association to honor “outstanding contributions to science in marketing.” In a recent Financial Times poll of 1,000 senior executives across the world, Professor Kotler was ranked as the fourth “most influential business writer/guru” of the twenty-first century.

Professor Kotler has served as chairman of the College on Marketing of the Institute of Management Sciences, a director of the American Marketing Association, and a trustee of the Marketing Science Institute. He has consulted with many major U.S. and international compa-nies in the areas of marketing strategy and planning, marketing organization, and international marketing. He has traveled extensively throughout Europe, Asia, and South America, advising companies and governments about global marketing practices and opportunities.

Gary

Armstrong

As a team, Philip Kotler and Gary Armstrong provide a blend of skills uniquely suited to writing an introductory marketing text. Professor Kotler is one of the world’s leading authorities on mar-keting. Professor Armstrong is an award-winning teacher of undergraduate business students. Together they make the complex world of marketing practical, approachable, and enjoyable.

Philip

Kotler

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vi About the Authors

is Assistant Professor of Marketing in the School of Business at the American University in Cairo. He is also Director of El-Khazindar Business Research and Case

Center (KCC), which is the first center in the MENA region to focus on developing world-class refereed case studies. He was awarded his PhD from the George Washington University in 2006, and his MBA & BSc from the American University in Cairo in 1997 and 2001 respectively. His professional experience includes four years at Procter & Gamble Egypt; he also worked as a mar-keting consultant for several local firms.

His research focuses on brand equity, nation branding, branding strategies, and social market-ing. His work has been published and presented in leading academic journals, such as the Journal of Product and Brand Management , the Journal of Technology Marketing, the International Journal of Marketing Studies, and the Journal of International Business and Cultural Studies, and presented at conferences for the American Marketing Association (AMA), the Academy of Marketing Science (AMS), the Society for Marketing Advances, the Academy of Management (SMA), the Thought Leaders International Conference on Brand Management, Frontiers in Services Conference, and the Association for Global Business, among others.

is a faculty member at the Dubai Women’s College, Higher Colleges of Technology in United Arab Emirates. He holds an MBA from the University of Dhaka, Bangladesh,

and is currently completing his DBA at the Business School Laussane, Switzerland. He has been teaching marketing since 2006.

Anwar Habib has 20 years of practical marketing experience working for Unilever, Ciba-Geigy and Johnson & Johnson, in South Asia, Australia and the Middle East. He started out as a brand manager at Unilever, and gradually progressed through senior roles in marketing and sales. His last role before teaching was General Manager of Johnson & Johnson Vision Care for the Middle East and North Africa region.

Ahmed

Tolba

Anwar

Habib

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Brief Contents Features matrix xiv

Foreword xvii

Preface xviii

Acknowledgments xxiii

Part 1 Defining Marketing and the Marketing Process 1

1 Marketing: Creating and Capturing Customer Value 2

2 Company and Marketing Strategy: Partnering to Build Customer Relationships 36

Part 2 Understanding the Marketplace and Consumers 65

3 Analyzing the Marketing Environment 66

4 Marketing Research 94

5 Consumer Behavior 124

6 Business Markets and Business Buyer Behavior 152

Part 3 Designing a Customer-Driven Strategy and Mix 175

7 Customer-Driven Marketing Strategy: Segmentation, Targeting & Positioning 176

8 Products, Services, and Brands: Building Customer Value 202

9 New-Product Development and Product Life-Cycle Strategies 238

10 Pricing 266

11 Communicating Customer Value: Integrated Marketing Communications Strategy 300

12 Promotion Mix Strategies: Advertising and Public Relations 326

13 Direct and Online Marketing: Building Direct Customer Relationships 368

14 Managing Marketing Channels 400

Part 4 Extending Marketing 439

15 Creating Competitive Advantage 440

16 The Global Marketplace 466

17 Sustainable Marketing: Social Responsibility and Ethics 494

Appendix 1 Marketing Plan A1

Appendix 2 Marketing by the Numbers A11

Appendix 3 Careers in Marketing A29

References R1

English-Arabic Glossary G1

Index I1

Credits C1

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Contents Part 1 Defining Marketing and the Marketing

Process 1

Chapter 1 Marketing: Creating and Capturing

Customer Value 2

Chapter Preview 2 Objective Outline 4 What Is Marketing? 4

Marketing Defined 5 | The Marketing Process 5

Understanding the Marketplace and Customer Needs 6

Customer Needs, Wants, and Demands 6 | Market Offerings—

Products, Services, and Experiences 7 |

Customer Value and Satisfaction 7 | Exchanges and

Relationships 8 | Markets 8

Designing a Customer-Driven Marketing Strategy 9 Selecting Customers to Serve 9 | Choosing a Value

Proposition 10 | Marketing Management Orientations 10

Preparing an Integrated Marketing Plan and Program 13 Building Customer Relationships 13

Customer Relationship Management 14

Real Marketing 1.1 Etisalat: Delighting Customers 15

The Changing Nature of Customer Relationships 16

Real Marketing 1.2 Media and Direct Communication

Trends in the Arab World 19

Partner Relationship Management 20

Capturing Value from Customers 21 Creating Customer Loyalty and Retention 21 | Growing

Share of Customer 22 | Building Customer Equity 22

The Changing Marketing Landscape 24 The Digital Age 24 | Rapid Globalization 26 | The Call

for More Ethics and Social Responsibility 27 | The Growth

of Not-for-Profit Marketing 27

So, What is Marketing? Pulling It All Together 28 Reviewing Objectives and Key Terms 30 | Key Terms 31 |

Discussing & Applying the Concepts 32 | Focus on

Technology 32 | Focus on Ethics 32 | Marketing

by the Numbers 33

Video Case: Harley-Davidson 33

Company Case Diwan: A Tale of Heart Over Matter 33

Chapter 2 Company and Marketing Strategy:

Partnering to Build Customer

Relationships 36

Chapter Preview 36 Objective Outline 38

Companywide Strategic Planning: Defining Marketing’s Role 37

Defining a Market-Oriented Mission 39 | Setting Company

Objectives and Goals 39

Designing the Business Portfolio 41 Analyzing the Current Business Portfolio 41 | Developing

Strategies for Growth and Downsizing 43

Real Marketing 2.1 Mo’men Sandwich: A Recipe for Success 44

Planning Marketing: Partnering to Build Customer Relationships 46

Partnering with Other Company Departments 46 |

Partnering with Others in the Marketing System 47

Marketing Strategy and the Marketing Mix 48 Customer-Driven Marketing Strategy 49

Real Marketing 2.2 Niching Voluntourism, A New Way to See

the World 51

Developing an Integrated Marketing Mix 52

Managing the Marketing Effort 53 Marketing Analysis 54 | Marketing Planning 54 | Marketing

Implementation 56 | Marketing Department Organization 56 |

Marketing Control 57

Measuring and Managing Return on Marketing Investment 58

Reviewing Objectives and Key Terms 60 | Key Terms 61 |

Discussing and Applying the Concepts 61 | Focus on

Technology 61 | Focus on Ethics 62 | Marketing by the

Numbers 62

Video Case: Live Nation 62

Company Case Bahrain Bay: Building Customer

Relations for the Future 63

Part 2 Understanding the Marketplace and Consumers 65

Chapter 3 Analyzing the Marketing

Environment 66

Chapter Preview 66 Objective Outline 68 The Company’s Microenvironment 68

The Company 69 | Suppliers 69 | Marketing Inter-

mediaries 69 | Competitors 70 | Publics 70 | Customers 71

The Company’s Macroenvironment 71 Demographic Environment 72

Changing Age Structure of the Population 73 | The Changing

Arab Family 75

Real Marketing 3.1 Niching: ‘On the Run’ in Egypt 76

Geographic Shifts in Population 77 | Education and

Employment 77 | Increasing Diversity 78

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Real Marketing 5.1 How McDonald’s Markets to the Arab

Consumers 129

Social Factors 131 | Personal Factors 134 | Psychological

Factors 136

Types of Buying Decision Behavior 139 Complex Buying Behavior 139 | Dissonance-Reducing

Buying Behavior 140 | Habitual Buying Behavior 140 |

Variety-Seeking Buying Behavior 140

The Buyer Decision Process 141 Need Recognition 141 | Information Search 141 | Evaluation

of Alternatives 142 | Purchase Decision 142 | Postpurchase

Behavior 143

The Buyer Decision Process for New Products 143 Real Marketing 5.2 Lexus: Delighting Customers After the Sale

to Keep Them Coming Back 144

Stages in the Adoption Process 145 | Individual Differences

in Innovativeness 145

Influence of Product Characteristics on Rate of Adoption 146 Reviewing Objectives and Key Terms 147 | Key Terms 148 |


Technology 148 | Focus on Ethics 149 | Marketing by

the Numbers 149

Video Case: Wild Planet 149

Company Case Arabic BlackBerry: Adapting to the

Language of the Market 150

Chapter 6 Business Markets and Business

Buyer Behavior 152

Chapter Preview 152 Objective Outline 154 Business Markets 154

Market Structure and Demand 154 | Nature of the

Buying Unit 155 | Types of Decisions and the Decision

Process 156

Real Marketing 6.1 Aramex Partners with Business

Customers 157

Business Buyer Behavior 162 Major Types of Buying Situations 158 | Participants in the

Business Buying Process 159 | Major Influences on Business

Buyers 161

The Business Buying Process 162 Problem Recognition 162 | General Need

Description 163 | Product Specification 163 | Supplier

Search 163 | Proposal Solicitation 163 | Supplier

Selection 163

Real Marketing 6.2 International Marketing Manners:

When in Rome, Do as the Romans Do 164

Order-Routine Specification 164 | Performance Review 165

E-Procurement: Buying on the Internet 166 Institutional and Government Markets 167

Institutional Markets 167 | Government Markets 168

Reviewing Objectives and Key Terms 170 | Key Terms

171 | Discussing & Applying the Concepts 171 | Focus on


Numbers 172

Video Case: Eaton 172

Company Case Boeing: Selling a Dream(liner) 173

Economic Environment 79 Changes in Income 79 | Changing Consumer Spending

Patterns 80

Natural Environment 80 Technological Environment 82 Political and Social Environment 83

Legislation Regulating Business 83 | Increased Emphasis

on Ethics and Socially Responsible Actions 84

Cultural Environment 85 Persistence of Cultural Values 85 | Shifts in Secondary Cultural

Values 86

Responding to the Marketing Environment 88 Real Marketing 3.2 First National Bank: Now You Can

Be a Movie Star 89

Reviewing Objectives and Key Terms 90 | Key

Terms 90 | Discussing and Applying the Concepts 91 | Focus

on Technology 91 | Focus on Ethics 91 | Marketing by the

Numbers 92

Video Case: TOMS Shoes 92

Company Case Al Jazirah: The Genius Inventor 92

Chapter 4 Marketing Research 94

Chapter Preview 94 Objective Outline 96 Marketing Information and Customer Insights 95 Assessing Marketing Information Needs 97 Developing Marketing Information 98

Internal Data 98 | Marketing Intelligence 99

Marketing Research 100 Defining the Problem and Research Objectives 100 |

Developing the Research Plan 101 | Gathering Secondary

Data 101 | Primary Data Collection 103

Real Marketing 4.1 Collecting Brand Information

in the Arab World 109

Implementing the Research Plan 111 | Interpreting and

Reporting the Findings 111

Analyzing and Using Marketing Information 112 Customer Relationship Management (CRM) 112 | Distributing

and Using Marketing Information 113

Other Marketing Information Considerations 114 Marketing Research in Small Businesses and Nonprofit

Organizations 114 | International Marketing Research 115 |

Public Policy and Ethics in Marketing Research 116

Real Marketing 4.2 Luxury Brands in the UAE 117


Terms 120 | Discussing & Applying the Concepts 120 |

Focus on Technology 120 | Focus on Ethics 121

Marketing by the Numbers 121

Company Case Ariel in Egypt: The Value

of Consumer Insight 121

Chapter 5 Consumer Behavior 124

Chapter Preview 124 Objective Outline 126 Model of Consumer Behavior 126 Characteristics Affecting Consumer Behavior 127

Cultural Factors 127

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Video Case: Swiss Army Brands 235

Company Case Alshaya: The House of Brands 235

Chapter 9 New-Product Development and

Product Life-Cycle Strategies 238

Chapter Preview 238 Objective Outline 240 New-Product Development Strategy 240 The New-Product Development Process 241

Idea Generation 242 | Idea Screening 243 | Concept

Development and Testing 244 | Concept Testing 244 |

Marketing Strategy Development 245 | Business

Analysis 246 | Product Development 246 | Test Marketing

247 | Commercialization 249

Managing New-Product Development 250 Customer-Centered New-Product Development 250 |

Team-Based New-Product Development 251 |

Systematic New-Product Development 251

Real Marketing 9.1 Nasamat Al Riyadh: TMG’s New Product in

the Kingdom of Saudi Arabia 252

Product Life-cycle Strategies 253 Introduction Stage 255 | Growth Stage 255 | Maturity Stage 256

Real Marketing 9.2 Etisalat Challenges Different Stages of the

Product Life Cycle 257

Decline Stage 258

Additional Product and Service Considerations 258

Product Decisions and Social Responsibility 258 | International

Product and Services Marketing 259




Numbers 263

Video Case: Electrolux 264

Company Case Activia in Egypt 264

Chapter 10 Pricing 266

Chapter Preview 266 Objective Outline 268 What is a Price? 267

Factors to Consider When Setting Prices 269

Customer Perceptions of Value 269 Value-Based Pricing 269

Company and Product Costs 271 Types of Costs 271

Real Marketing 10.1 Cheap Chinese Products Flood into

Arab Markets 272

Costs at Different Levels of Production 272 | Costs as

a Function of Production Experience 273 | Cost-Plus

Pricing 274 | Break-Even Analysis and Target Profit Pricing 274

Other Internal and External Considerations Affecting Price Decisions 276

Overall Marketing Strategy, Objectives, and

Mix 276 | Organizational Considerations 277 | The Market

and Demand 277

Real Marketing 10.2 The World Wonder, Dubai 278

Other External Factors 282

Part 3 Designing a Customer-Driven Strategy and Mix 175

Chapter 7 Customer-Driven Marketing

Strategy: Segmentation, Targeting,

and Positioning 176

Chapter Preview 176 Objective Outline 178 Market Segmentation 178

Segmenting Consumer Markets 178

Real Marketing 7.1 Ramadan Spirit in the Arab World 183

Segmenting Business Markets 184 | Segmenting International

Markets 184 | Requirements for Effective Segmentation 185

Market Targeting 186 Evaluating Market Segments 186 | Selecting Target Market

Segments 187

Real Marketing 7.2 Islamic Banking 189

Socially Responsible Target Marketing 191

Differentiation and Positioning 192 Positioning Maps 193 | Choosing a Differentiation and

Positioning Strategy 193 | Communicating and Delivering the

Chosen Position 197




Numbers 200

Video Case: Meredith 200

Company Case The Arab Online World—Microsoft Maren 200

Chapter 8 Products, Services, and Brands:

Building Customer Value 202

Chapter Preview 202 Objective Outline 204 What is a Product? 204

Products, Services, and Experiences 204 | Levels of Product

and Services 205 | Product and Service Classifications 206

Product and Service Decisions 209 Individual Product and Service Decisions 209 | Product Line

Decisions 213 | Product Mix Decisions 214

Branding Strategy: Building Strong Brands 215 Brand Equity 215

Real Marketing 8.1 Breakaway Brands: Connecting with

Customers 217

Building Strong Brands 218 | Managing

Brands 223 | International and Regional Branding

Decisions 224

Services Marketing 224 Real Marketing 8.2 Fayrouz: An International Brand Built in

the Region 225

Nature and Characteristics of a Service 225 | Marketing

Strategies for Service Firms 227

Real Marketing 8.3 Service Marketing 230



Focus on Technology 233 | Focus on Ethics 234 |

Marketing by the Numbers 234

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Chapter 12 Promotion Mix Strategies:

Advertising and Public

Relations 326

Chapter Preview 326 Objective Outline 328 Advertising 328

Setting Advertising Objectives 329 | Setting the Advertising

Budget 330 | Developing Advertising Strategy 331

Evaluating Advertising Effectiveness and Return on Advertising

Investment 338 | Other Advertising Considerations 338

Real Marketing 12.1 Dove: Championing Real Beauty in the

Arab World 340

Public Relations 341 The Role and Impact of Public Relations 342 | Major Public

Relations Tools 343

Personal Selling 345 The Role of the Sales Force 346

Managing the Sales Force 347 Designing Sales Force Strategy and Structure 348 | Recruiting

and Selecting Salespeople 350 | Training

Salespeople 351 | Compensating Salespeople 352 | Supervising

and Motivating Salespeople 352 | Evaluating Salespeople and

Sales-Force Performance 355

The Personal Selling Process 355 Steps in the Selling Process 355 | Personal Selling and

Managing Customer Relationships 357

Sales Promotion 358 Rapid Growth of Sales Promotion 358

Real Marketing 12.2 Qatar Automobiles Company 359

Sales Promotion Objectives 359 | Major Sales Promotion

Tools 360 | Developing the Sales Promotion Program 362


Terms 365 | Discussing & Applying the Concepts 365 | Focus


Numbers 366

Video Case: The Principal Financial Group 366

Company Case Coca-Cola: Advertising Hits 366

Chapter 13 Direct and Online Marketing:

Building Direct Customer

Relationships 368

Chapter Preview 368 Objective Outline 370 The New Direct Marketing Model 370 Growth and Benefits of Direct Marketing 371

Benefits to Buyers 371 | Benefits to Sellers 372

Customer Databases and Direct Marketing 373 Forms of Direct Marketing 373

Direct-Mail Marketing 374 | Telephone Marketing 375 | Direct-

Response Television Marketing 375 | Kiosk

Marketing 376 | New Digital Direct Marketing Technologies 377

Online Marketing 379 Marketing and the Internet 379 | Online Marketing Domains 380

Real Marketing 13.1 Online Business in the Arab World 381

Setting Up An Online Marketing Presence 384 Creating a Website 384 | Placing Ads and Promotions

Online 386 | Creating or Participating in Online Social

Networks 387

New-Product Pricing Strategies 283 Market-Skimming Pricing 283 | Market-Penetration

Pricing 283

Product Mix Pricing Strategies 284 Product Line Pricing 284 | Optional-Product

Pricing 285 | Captive-Product Pricing 285 | By-Product

Pricing 285 | Product Bundle Pricing 286

Price-Adjustment Strategies 286 Discount and Allowance Pricing 286 | Segmented

Pricing 287 | Psychological Pricing 287 | Promotional

Pricing 288 | Geographical Pricing 289 | Dynamic

Pricing 290 | International Pricing 291

Price Changes 292 Initiating Price Changes 292 | Responding to Price

Changes 293



Focus on Technology 297 | Focus on Ethics 297 | Marketing

by the Numbers 297

Video Case: Ikea 298

Company Case Flydubai Pricing Strategy: Flydubai Enters the Airline Market 298

Chapter 11 Communicating Customer

Value: Integrated Marketing

Communications Strategy 300

Chapter Preview 300 Objective Outline 302 The Promotion Mix 301 Integrated Marketing Communications 303

The New Marketing Communications Landscape 303 |

The Shifting Marketing Communications Model 303

The Need for Integrated Marketing Communications 304

Real Marketing 11.1 Economic Slowdown and the

Digital Advertising Boom in the Arab World 305

A View of the Communications Process 307 Steps in Developing Effective Marketing Communications 308

Identifying the Target Audienc 308 | Determining

the Communication Objectives 308 | Designing a

Message 309 | Choosing Media 311 | Selecting the

Message Source 313 | Collecting Feedback 313

Setting the Total Promotion Budget and Mix 314

Setting the Total Promotion Budget 314

Real Marketing 11.2 Qatar Airways 315

Shaping the Overall Promotion Mix 316

Integrating the Promotion Mix 319

Socially Responsible Marketing Communication 319

Advertising and Sales Promotion 319 | Personal

Selling 320



Focus on Technology 322 | Focus on Ethics 322 | Marketing

by the Numbers 322

Video Case: Crispin Porter + Bogusky 323

Company Case Burger King: Promoting a Food Fight 323

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Real Marketing 13.2 Social Networks in the Arab World 388

Using Email 389

The Promise and Challenges of Online Marketing 390 Public Policy Issues in Direct Marketing 390

Irritation, Unfairness, Deception, and Fraud 390 | Invasion of

Privacy 391




Numbers 395

Video Case: Google 395

Company Case Elsou2.com: The First Online Supermarket

in the Arab World 395

Chapter 14 Managing Marketing

Channels 400

Chapter Preview 400 Objective Outline 402 Supply Chains and the Value Delivery Network 401 The Nature and Importance of Marketing Channels 403

How Channel Members Add Value 403 | Number of Channel

Levels 404

Channel Behavior and Organization 405 Channel Behavior 406 | Vertical Marketing

Systems 407 | Horizontal Marketing Systems 409 | Multichannel

Distribution Systems 409 | Changing Channel Organization 410

Channel Design Decisions 411 Analyzing Consumer Needs 411 | Setting

Channel Objectives 412 | Identifying Major

Alternatives 412 | Evaluating the Major

Alternatives 414 | Designing International Distribution

Channels 414

Channel Management Decisions 415 Selecting Channel Members 415 | Managing and Motivating

Channel Members 415

Real Marketing 14.1 Toys “R” Us 416

Public Policy and Distribution Decisions 417

Marketing Logistics and Supply Chain Management 417

Nature and Importance of Marketing Logistics 417 | Goals

of the Logistics System 419 | Major Logistics

Functions 419 | Integrated Logistics Management 421

Retailing 423 Types of Retailers 424

Retailer Marketing Decisions 427 Segmentation, Targeting, Differentiation, and Positioning

Decisions 427 | Product Assortment and Services Division 428

Real Marketing 14.2 Orchestrating the Retail Experience 429

Price Decision 430 | Promotion Decision 430 | Place

Decision 430

Wholesaling 431 Agents and Distributors 431




Numbers 436

Video Case: Progressive 436

Company Case Zara: The Technology Giant of the Fashion

World 436

Part 4 Extending Marketing 439

Chapter 15 Creating Competitive

Advantage 440

Chapter Preview 440 Objective Outline 442 Competitor Analysis 442

Identifying Competitors 442 | Assessing Competitors 443 |

Selecting Competitors to Attack and Avoid 445

Real Marketing 15.1 Middle Eastern Airlines Filling

the Market Gaps 448

Designing a Competitive Intelligence System 448

Competitive Strategies 449 Approaches to Marketing Strategy 449 | Basic Competitive

Strategies 451 | Competitive Positions 452

Real Marketing 15.2 Ritz-Carlton: Creating Customer

Intimacy 453

Market Leader Strategies 454 | Market Challenger

Strategies 456 | Market Follower Strategies 458 | Market

Nicher Strategies 458

Balancing Customer and Competitor Orientations 459




by the Numbers 462

Video Case: Umpqua Bank 462

Company Case Bose: Competing by Being Truly Different 463

Chapter 16 The Global Marketplace 466

Chapter Preview 466 Objective Outline 468 Global Marketing Today 468 Looking at the Global Marketing Environment 470

The International Trade System 470 | Economic

Environment 472 | Political-Legal

Environment 473 | Cultural Environment 474

Deciding Whether to Go Global 477 Deciding Which Markets to Enter 478 Deciding How to Enter the Market 479

Exporting 480 | Joint Venturing 480 | Direct Investment 481

Deciding on the Global Marketing Program 482 Real Marketing 16.1 Oreos and Milk, Chinese Style 483

Product 484

Real Marketing 16.2 Desserts in Ramadan 485

Promotion 485 | Price 486 | Distribution Channels 487

Deciding on the Global Marketing Organization 488




by the Numbers 491

Video Case: Nivea 491

Company Case B-Tech: A Successful Regional Brand 492

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Chapter 17 Sustainable Marketing: Social

Responsibility and Ethics 494

Chapter Preview 494 Objective Outline 496 Sustainable Marketing 496 Social Criticisms of Marketing 498

Marketing’s Impact on Individual

Consumers 498 | Marketing’s Impact on Society as a

Whole 503 | Marketing’s Impact on Other Businesses 505

Consumer Actions to Promote Sustainable Marketing 506

Consumerism 506

Real Marketing 17.1 Improving Society Via Cultural and

Islamic Virtues 507

Environmentalism 508 | Public Actions to Regulate

Marketing 512

Business Actions Toward Sustainable Marketing 513

Sustainable Marketing Principles 513

Real Marketing 17.2 Takaful: A True Customer-Driven

Product 514

Marketing Ethics 517 The Sustainable Company 519




Numbers 523

Video Case: Land Rover 524

Company Case ExxonMobil: Social Responsibility in a

Commodity Market 524

Appendix 1 Marketing Plan A1 Appendix 2 Marketing by the Numbers A11 Appendix 3 Careers in Marketing A29 References R1 English-Arabic Glossary G1 Index I1 Credits C1

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xiv

Feature matrix

Chapter 1 Chapter opening case BBK, formerly known as The Bank of Bahrain and Kuwait B.S.C.

Regional

Real Marketing 1.1 Etisalat: Delighting Customers Regional

Real Marketing 1.2 Media and Direct Communication Trends in the Arab World

Regional

Company Case Diwan: A Tale of Heart Over Matter Egypt

Chapter 2 Chapter opening case The London Olympics United Kingdom

Real Marketing 2.1 Mo’men Sandwich: A Recipe for Success Egypt

Real Marketing 2.2 Niching: Voluntourism, A New Way to See the World Regional

Company Case Bahrain Bay: Building Customer Relations for the Future

Bahrain

Chapter 3 Chapter opening case The Dubai property market UAE

Real Marketing 3.1 Niching: ‘On the Run’ in Egypt Egypt

Real Marketing 3.2 First National Bank: Now You Can Be a Movie Star Lebanon

Company Case Al Jazirah: The Genius Inventor Saudi Arabia

Chapter 4 Chapter opening case Maktoob Research’s ‘Arab Eye’ website Regional

Real Marketing 4.1 Collecting Brand Information in the Arab World Regional

Real Marketing 4.2 Luxury Brands in the UAE UAE

Company Case Ariel in Egypt: The Value of Consumer Insight Egypt

Chapter 5 Chapter opening case Al-Ahli and Zamalek football teams Egypt

Real Marketing 5.1 How McDonald’s Markets to the Arab Consumers Regional

Real Marketing 5.2 Lexus: Delighting Customers After the Sale to Keep Them Coming Back

UAE

Company Case Arabic BlackBerry: Adapting to the Language of the Market

Regional

Chapter 6 Chapter opening case Advanced Electronics Company Saudi Arabia

Real Marketing 6.1 Aramex Partners with Business Customers Regional

Real Marketing 6.2 International Marketing Manners: When in Rome, Do as the Romans Do

Global

Company Case Boeing: Selling a Dream(Liner) United States

Chapter 7 Chapter opening Case Damas Group Regional

Real Marketing 7.1 Ramadan Spirit in the Arab World Regional

Real Marketing 7.2 Islamic Banking Regional

Company Case The Arab Online World—Microsoft Maren Regional

Chapter 8 Chapter opening case Bahrain Islamic Bank Bahrain

Real Marketing 8.1 Breakaway Brands: Connecting with Customers Global

Real Marketing 8.2 Fayrouz: An International Brand Built in the Region Egypt

Real Marketing 8.3 Service Marketing Global

Company Case Alshaya: The House of Brands Regional

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Chapter 9 Chapter opening Case Apple Global

Real Marketing 9.1 Nasamat Al Riyadh: TMG’s New Product in the Kingdom of Saudi Arabia

Saudi Arabia

Real Marketing 9.2 Etisalat Challenges Different Stages of the Product Life Cycle

Regional

Company Case Activia in Egypt Egypt

Chapter 10 Chapter opening case Carrefour Regional

Real Marketing 10.1 Cheap Chinese Products Flood into Arab Markets Regional

Real Marketing 10.2 The World Wonder, Dubai UAE

Company Case Flydubai Pricing Strategy UAE

Chapter 11 Chapter opening case Unilever Arabia Regional

Real Marketing 11.1 Economic Slowdown and the Digital Advertising Boom in the Arab World

Regional

Real Marketing 11.2 Qatar Airways Qatar

Company Case Burger King: Promoting a Food Fight Global

Chapter 12 Chapter opening case TBWA\RAAD UAE

Real Marketing 12.1 Dove: Championing Real Beauty in the Arab World Regional

Real Marketing 12.2 Qatar Automobiles Company Qatar

Company Case Coca-Cola: Advertising Hits Regional

Chapter 13 Chapter opening case Amazon.com Global

Real Marketing 13.1 Online Business in the Arab World Regional

Real Marketing 13.2 Social Networks in the Arab World Regional

Company Case Elsou2.com: The First Online Supermarket in the Arab World

Egypt

Chapter 14 Chapter opening case Al Zaytoun Palestine

Real Marketing 14.1 Toys “R” Us Regional

Real Marketing 14.2 Orchestrating the Retail Experience Global

Company Case Zara: The Technology Giant of the Fashion World Global

Chapter 15 Chapter opening case Bahrain Polytechnic Bahrain

Real Marketing 15.1 Middle Eastern Airlines Filling the Market Gaps Regional

Real Marketing 15.2 Ritz-Carlton: Creating Customer Intimacy Global

Company Case Bose: Competing by Being Truly Different Global

Chapter 16 Chapter opening case McDonald’s Global

Real Marketing 16.1 Oreos and Milk, Chinese Style China

Real Marketing 16.2 Ramadan Desserts Regional

Company Case B-Tech: A Successful Regional Brand Egypt

Chapter 17 Chapter opening case

CSR Middle East Regional

Real Marketing 17.1 Improving Society Via Cultural and Islamic Virtues Regional

Real Marketing 17.2 Takaful: A True Customer-Driven Product Regional

Company Case ExxonMobil: Social Responsibility in a Commodity Market

United States

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Foreword We are very pleased to see the Arab World Edition of Principles of Marketing. The text was first published for the North America region and has been successfully adopted by hundreds of uni-versities in the Middle East and in other parts of the world. This great edition for the Arab world demonstrates that this textbook, in its scope and depth, effectively meets the demands of educa-tors for a book that offers a comprehensive focus on marketing as a tool for creating valuable customer experiences in various and changing cultural settings.

The Arab World Edition brings to the readers the local marketing scenario, perspectives, and practices through case studies and examples.

The book provides local insights into the exciting world of marketing in a region that has become a competing arena for increasing numbers of national and multinational corporations.

While maintaining the essence of the original U.S. edition, this Arab world version provides students with concepts, approaches, and examples relevant to the Arab culture and its business environment.

We are thrilled to see it available for educators and students in the Arab world and hope that they find it useful.

Philip Kotler

Gary Armstrong

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Preface

The New Arab World Edition! Creating More Value for You! The goal of every marketer is to create more value for customers. So it makes sense that our goal for the new Arab World Edition of Kotler & Armstrong’s Principles of Marketing is to continue creating more value for you— our customer. Our goal is to introduce you to the fascinating world of modern marketing in an innovative yet practical and enjoyable way, incorporating relevant examples from across the Arab region and across the globe. In this way, the Arab World Edition has the advantage of offering the best of both the regional, as well as the global, worlds of marketing.

This Arab World Edition aims to help students in the region to understand and apply the concepts and practices of modern marketing, by relating marketing strategies and theory to students’ experiences in daily life. We have tried to bring to life global marketing concepts by showcasing and analyzing regional marketing initiatives and practices from all over the Arab world. Of course, we have also retained global examples which demonstrate marketing theory and practice in an international context. In this way, the Arab World Edition has the advantage of offering the best of both the regional, as well as the global, worlds of marketing.

Marketing: Creating Customer Value and Relationships A recent survey of top marketers showed that they all share a common goal: putting the consumer at the heart of marketing. Today’s marketing is all about creating customer value and building profitable customer relationships. It starts with understanding consumer needs and wants, decid-ing which target markets the organization can serve best, and developing a compelling value proposition by which the organization can attract, keep, and grow targeted consumers. If the organization does these things well, it will reap the rewards in terms of market share, profits, and customer equity.

Five Major Value Themes From beginning to end, the Arab World Edition of Principles of Marketing develops an innovative customer-value and customer-relationships framework that captures the essence of today’s mar-keting. It builds on five major value themes:

1. Creating value for customers in order to capture value from customers in return . Today’s mar-keters must be good at creating customer value and managing customer relationships. Outstanding marketing companies understand the marketplace and customer needs, design value-creating marketing strategies, develop integrated marketing programs that deliver customer value and delight, and build strong customer relationships. In return, they capture value from customers in the form of sales, profits, and customer loyalty.

This innovative customer-value framework is introduced at the start of Chapter 1 in a five-step marketing process model, which details how marketing creates customer value and cap-tures value in return. The framework is carefully explained in the first two chapters and then fully integrated throughout the remainder of the text.

2. Building and managing strong, value-creating brands. Well-positioned brands with strong brand equity provide the basis upon which to build customer value and profitable customer relationships. Today’s marketers must position their brands powerfully and manage them well. They must build close brand relationships and experiences with customers.

3. Measuring and managing return on marketing. Marketing managers must ensure that their marketing budgets are being spent wisely. In the past, many marketers spent freely on big, expensive marketing programs, often without thinking carefully about the finan-cial returns on their spending. But that has all been changing in recent years. ‘Marketing

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Preface xix

accountability’—measuring and managing return on marketing investments—has now become an important part of strategic marketing decision making. This emphasis on mar-keting accountability is addressed throughout this book.

4. Harnessing new marketing technologies. New digital and other high-tech marketing develop-ments are dramatically changing how consumers and marketers relate to one another. The Arab World Edition thoroughly explores the new technologies impacting marketing, from ‘Web 2.0’ in Chapter 1 to new-age digital marketing and online technologies in Chapters 12 and 13 to the exploding use of online social networks and customer-generated marketing in Chapters 1 , 5 , 11 , 13 , and elsewhere.

5. Sustainable marketing around the globe. As technological developments make the world an increasingly smaller and more fragile place, marketers must be good at marketing their brands globally and in responsible and ethical ways. Material and examples throughout the Arab World Edition emphasize the concept of sustainable marketing—meeting the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs.

Adapted for Students in the Arab World We’ve thoroughly adapted Principles of Marketing to meet the needs of students in the Arab region, by including examples which reflect the marketing environment and experience of businesses operating in the Arab region, while still retaining a global perspective overall. We have also included cultural and social insights which will be more familiar and relevant to our audience. We retain Kotler & Armstrong’s successful formula: a sharp focus on how to create, communicate and deliver value to customers, and we discuss the major trends and forces impacting marketing in this era of customer value and relationships. Here are just some of the ways in which we’ve adapted the book to be ideal for students in the Arab world.

• Throughout each chapter, Arab businesses and familiar cultural examples are integrated into the text, making the whole book more relevant for our readers.

• In-depth case studies in each chapter show marketing principles and concepts in practice, at the Chapter Openers, the in-chapter “Real Marketing” boxes, and end-of-chapter Company Cases. These now feature a well-balanced spread of global examples alongside compa-nies and examples from across the Arab region including Saudi Arabia, the United Arab Emirates, Egypt, Jordan, Palestine, Lebanon, Qatar, Bahrain, Kuwait, Northern Africa, and elsewhere.

• An English-Arabic Glossary has been added at the end of the book, providing a translation of the key terms found in each chapter.

• Each chapter has been carefully edited to adapt the English vocabulary to be sympathetic to students whose first language is not English. We have ensured that over-complicated words, sayings or idioms are replaced with straightforward language so that students can focus their energy on understanding the concepts.

• The book has been reduced in length to 17 focused chapters, to meet the demand for a resource which is easier to handle and cover in the time available.

Real Value Through Real Marketing Principles of Marketing features in-depth, real-world examples and stories that show concepts in action and reveal the drama of modern marketing. In the Arab World Edition, every Chapter Opening case study, “Real Marketing” box and end-of-chapter Company Case has been reviewed for its relevance to you, our Arab world audience. We have replaced many of these case studies throughout the book with examples from the Arab region which will provide familiar, fresh and relevant insights into real marketing practices. We have deliberately retained many other exam-ples from across the world to emphasize the global nature of modern day marketing. A selection of these examples include the following:

• BBK Bank (formerly The Bank of Bahrain and Kuwait) has grown to become a leading commercial bank in its markets, by focusing on client-driven customer service, employee development and brand building. ( Chapter 1 )

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xx Preface

• The ‘voluntourism’ movement has sprung up to meet the needs of a particular niche – we explore voluntourism programmes operating in Jordan, Syria, Lebanon and elsewhere. ( Chapter 2 )

• Saudi Arabian company Al Jazirah has capitalized on environmental factors in successfully developing and marketing its evaporative coolers. ( Chapter 3 )

• Proctor & Gamble launched its Ariel product into Egypt, based on rigorous market research and a solid understanding of the current habits and needs of potential customers. ( Chapter 4 )

• The devoted and divided fan bases of the Egyptian football teams Al-Ahly and Zamalek show the importance of social and cultural interests such as football in shaping consumer behavior. ( Chapter 5 )

• Advanced Electronics Company (AEC), the Saudi-based company, has developed an interna-tional client base including Boeing, Lockheed Martin, Rockwell International, Saudi Ministry of Water & Electricity, Aramco, Siemens, Nokia. It has built an approach to business-to-business marketing based on deep relationships with clients, to become a strategic, problem-solving partner. ( Chapter 6 )

• Damas Group, the jewelry and watch retailer operating across the Arab world and beyond, uses segmentation wisely to target different customer groups. ( Chapter 7 )

• Microsoft developed its Maren product, which represented a leap forward in addressing the problem of using Arabic language online and with a QWERTY keyboard, by working to understand customer needs and responses in depth. ( Chapter 7 )

• Alshaya understands the importance of brands, and uses this knowledge to operate franchises of many international brands in the Arab world. ( Chapter 8 )

• Apple founder Steve Jobs used dazzling customer-driven innovation to first start the company and then to remake it again 20 years later. ( Chapter 9 )

• Flydubai used pricing strategy to meet the demand for low cost flights and launch as a new airline in the UAE. ( Chapter 10 )

• Coca-Cola combines music and advertising to appeal to its customers, with recent campaigns in the Middle East including Nancy Ajram to raise profile. ( Chapter 12 )

• Amazon.com has developed industry-leading expertise in using the internet as a tool for delivering customer value. ( Chapter 13 )

• Bahrain Polytechnic has created a clear competitive advantage for its target students by dis-tinctly differentiating itself from its competitors. ( Chapter 15 )

• McDonald’s, the quintessential all-American company, now sells more burgers and fries out-side the United States than within. We explore its journey into the Russian market. ( Chapter 16 )

• CSR Middle East promotes corporate social responsibility across the region by working closely with a range of businesses, organizations and NGOs. ( Chapter 17 )

Each chapter is packed with countless real, relevant, and timely examples that reinforce key concepts and bring marketing to life.

Valuable Learning Aids The Arab World Edition continues the hallmark approach to text design crafted in Principles of Marketing , to inspire students and present everything as clearly as possible. A wealth of chapter-opening, in-chapter, and end-of-chapter learning devices help students to learn, link, and apply major concepts:

• Chapter Preview. As part of an active and integrative chapter-opening design, a brief section at the beginning of each chapter previews chapter concepts, links them with previous chapter concepts, and introduces the chapter-opening story.

• Chapter-opening marketing stories. Each chapter begins with an engaging, deeply developed, illustrated, and annotated marketing story that introduces the chapter material and sparks student interest. Many relevant and inspiring examples from the Arab world have been added.

• Objective outline. This chapter-opening feature provides a helpful preview outline of chapter contents and learning objectives.

• Author comments and figure annotations. Throughout the chapter, author comments ease and enhance student learning by introducing and explaining major chapter sections. There are also comment bubbles on the figures to help explain concepts to students.

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Preface xxi

• Real Marketing boxes. Each chapter contains two boxed case study features that provide an in-depth look at real marketing practices of large and small companies, including a wide range of new examples from the Arab world.

• Reviewing the Objectives and Key Terms. A summary at the end of each chapter reviews major chapter concepts, chapter objectives, and key terms.

• Discussing and Applying the Concepts. Each chapter contains a set of discussion questions and application exercises covering major chapter concepts.

• Focus on Technology. Application exercises at the end of each chapter provide discussion of important and emerging marketing technologies in this digital age.

• Focus on Ethics. Situation descriptions and questions highlight important issues in marketing ethics at the end of each chapter.

• Marketing by the Numbers. An exercise at the end of each chapter lets students apply analyti-cal and financial thinking to relevant chapter concepts and links the chapter to Appendix 2 : Marketing by the Numbers.

• Company Cases. Company cases for class or written discussion are provided at the end of each chapter—many of these are now developed specifically for the Arab World Edition. These cases challenge students to apply marketing principles to real companies in real situations.

• Video Cases. Short cases and discussion questions appear at the end of every chapter, to be used with the set of 4- to 6-minute videos that accompany this edition.

• Marketing Plan appendix. Appendix 1 contains a sample marketing plan that helps students to apply important marketing planning concepts.

• Marketing by the Numbers appendix. An innovative Appendix 2 provides students with a com-prehensive introduction to the marketing financial analysis that helps to guide, assess, and support marketing decisions.

More than ever before, the Arab World Edition of Principles of Marketing creates value for you—it gives you all you need to know about marketing in an effective and enjoyable total learn-ing package!

A Valuable Learning Package A successful marketing course requires more than a well-written book. A total package of resources extends this edition’s emphasis on creating value for you. The following aids support Principles of Marketing.

Videos The video library features exciting segments for this edition. All segments are available in mymar-ketinglab. Here are just a few of the videos offered:

Live Nation’s Customer Relationships

TOMS Shoes’ Marketing Environment

E*TRADE’s Advertising and PR Strategies

Principle Financial Group’s Personal Selling

Umpqua Bank’s Competitive Advantage

mymarketinglab ( www.pearsoned.co.uk/kotler ) gives you the opportunity to test yourself on key concepts and skills, track your own progress through the course, and use the personalized study plan activities—all to help you achieve success in the classroom. Features include:

• Personalized study plans —Pre- and post-tests with remediation activities directed to help you understand and apply the concepts where you need the most help.

• Self-assessments —Prebuilt self-assessments allow you to test yourself.

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xxii Preface

• Interactive elements —A wealth of hands-on activities and exercises let you experience and learn firsthand. Whether it is with the online e-book where you can search for specific keywords or page numbers, highlight specific sections, enter notes right on the e-book page, and print reading assignments with notes for later review or with other materials including “Real People Real Choices Video Cases,” online end-of-chapter activities, “Active Flashcards,” and much more.

• iQuizzes —Study anytime, anywhere—iQuizzes work on any color-screen iPod and are comprised of a sequence of quiz questions, specifically created for the iPod screen.

Find out more at www.pearsoned.co.uk/kotler .

No book is the work only of its authors. We greatly appreciate the valuable contribu-tions of several people who helped make this new edition possible.

Anwar Habib: I would like to acknowledge the continuous inspiration and support of my wife Fahmida in writing this text. I would also like to thank Nada Yaghi, my ex-student, for her valuable research and support in selecting appropriate regional examples for the text. Finally I would like to thank all the regional organizations, like MAF group, Unilever, Masafi, and Al Islami Foods, who have supported me with case study materials and other information. I’d also like to extend a special thanks to Sarah Wightman for her excellent editorial support.

Ahmed Tolba: I would like to dedicate this edition to my wife Nayla and my kids Ismail and Amina. I would also like thank Ahmed El Banhawy for his significant contribution to the completion of this textbook, and my teaching assistants Laila Yassin and Ali El Gendy for their remarkable efforts in finding appropriate regional case studies. Finally, I would like to thank everyone at Pearson for their significant efforts and professional support.

Anwar Habib

Ahmed Tolba

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Acknowledgments We would like to thank the following reviewers for their thoughtful comments and suggestions for this new Arab World Edition:

Dr Saleh AlShebil, King Fahd University of Petroleum & Minerals, Saudi Arabia

Dr Ibrahim Hegazy, American University of Cairo, Egypt

Professor Peter Mason, American University of Sharjah, UAE

Dr Ahmad Zamil, King Saud University, Saudi Arabia

Dr Abdullah Sultan, Kuwait University, Kuwait

Professor Hassan Naja, Lebanese American University, Lebanon

Dr Imad Baalbaki, American University of Beirut, Lebanon

Dr Jean Boisvert, American University of Sharjah, UAE

Dr Samaa Attia, British University in Egypt, Egypt

Professor Mariam Abou-Youssef, German University in Cairo, Egypt

Professor Abbas Abu Altimen, University of Sharjah, UAE

Dr Ahmed Ghoneim, Cairo University, Egypt

Dr Hani Al-Dmour, University of Jordan, Jordan

Dr Rania Hussein, Cairo University, Egypt

Dr Khaled Hanafy, Arab Academy for Science, Technology & Maritime Transport, Egypt

Dr Mohamed A. Radwan, American University in Cairo, Egypt

We would also like to thank contributors Dr. Mohamed A. Radwan, Adjunct Faculty at American University in Cairo and Managing Director of Platinum Partners, Mike Lewicki, Marketing Instructor at the University College of Bahrain, and Owen Davies, who provided additional material for this text. Their excellent work has added real value to this edition.

Many reviewers and contributors have provided valuable comments and suggestions for previous editions of Principles of Marketing. We’d like to thank them all for their insights, which have informed our work on this adaptation.

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PART 3

Designing a Customer-Driven Strategy and Mix

CHAPTER 7 Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning

CHAPTER 8 Products, Services, and Brands: Building Customer Value

CHAPTER 9 New-Product Development and Product Life-Cycle Strategies

CHAPTER 10 Pricing

CHAPTER 11 Communicating Customer Value: Integrated Marketing Communications Strategy

CHAPTER 12 Promotion Mix Strategies: Advertising and Public Relations

CHAPTER 13 Direct and Online Marketing: Building Direct Customer Relationships

CHAPTER 14 Managing Marketing Channels

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176

jewelry and watch markets brought from all over the world. The list

ranges from standard brands to modish celebrated worldwide brand

names, such as Carrera y Carrera and Mikimoto; world-renowned

Italian jewelry brands such as Roberto Coin, Marco Bicego, Fope,

Luca Carati, and Leo Pizzo; famous Spanish brand Magerit; in addi-

tion to a wide collection of watches crafted by legendary watch

brands, including Chronoswiss, Parmigiani, Perrelet, Roger Dubuis,

and Sarcar.

Tamjid Abdullah, deputy managing

director, Damas, says: “In keeping with

the growing international profile of Dubai,

Damas has always sought to bring customers

a versatile array of brands acknowledged for

their style definition and creative exuberance.

And I am happy to say that it is their enthu-

siastic appreciation and

support of our efforts

that has provided us the

incentive to forge ahead

as true pioneers. During

the Damas Luxury Week,

shoppers will be treated

to a thrilling selection of

the most exclusive dia-

mond, gold and pearl

jewelry collections, by

the world’s leading jew-

elry and watch brands.

Such events also provide

brilliant testimony to the

tremendous trust Damas

enjoys with its interna-

tional partners.” 2

Segmentation, Targeting, and Positioning

So far, you’ve learned what marketing is and about the importance of understanding con-sumers and the marketplace environment. With

that as background, you’re now ready to delve deeper into mar-keting strategy and tactics. This chapter looks further into key customer-driven marketing strategy decisions—how to divide up

markets into meaningful customer groups ( segmentation ), choose which customer groups to serve ( targeting ), create market offer-ings that best serve targeted customers ( differentiation ), and posi-tion the offerings in the minds of consumers ( positioning ). Then, the chapters that follow explore the tactical marketing tools—the Four Ps—by which marketers bring these strategies to life. A good example of segmentation in the Arab world is Damas, as discussed in the example here.

Chapter 7

Damas Group is a jewelry and watch retailer that has

expanded into 18 countries around the world with about

450 stores. The group is the most widespread jewelry and

watch retailer in the Arab world, in terms of number of stores. The

group has subsidiaries mainly in the Arab world, India, and Italy. It

also has jointly controlled entities and associates in the Arab world,

Europe, North Africa, and other locations. Damas sells its own brands,

and it also sells other top international and Arab world brands.

It might be perceived that Damas focuses merely on the high-end

consumer, yet this is not absolutely correct. Essentially, Damas targets

three types of consumers through selling its brands in three types of

stores: Les Exclusives stores, Semi-Exclusive stores, and Damas 22K

stores. The Les Exclusives stores mainly serve “high net worth con-

sumers,” and offer highly extravagant worldwide brands in addition

to Damas’ own products. Semi-Exclusive stores target “upper-middle

income consumers” with products that are relatively less unique,

but appeal to a broader spectrum of consumers, such as tourists and

expatriates, professionals, and office workers. These stores sell inter-

national brands, along with Damas’ products. Thirdly, Damas 22K

stores target “middle income and working class immigrant popula-

tions,” and sell Damas’ products along with some regional brands.

While the above are the main stores, Damas targets other segments by

selling in other stores, such as Damas Kids for youngsters and fami-

lies, and Mono-stores specializing in certain global brands, including

Tiffany & Co, Paspaley, Graff, Parmigiani, Stefan Hafner, Links of

London, Roberto Coin, Roberta Porrati and Folli Follie. 1

Let’s take a closer look at Damas’ A-segment in its Les

Exclusives Boutiques. In Dubai, Damas holds the Luxury Week

event, which displays the extravagant and up-to-date jewelry and

watch collections at the city’s renowned shopping site. Shoppers at

that event are treated with gifts with every purchase they make. The

occasion, which is attended by journalists and VIPs, gives A-class

buyers the chance to purchase the latest fashionable brands in the

Chapter

PRE VIEW

Customer-Driven Marketing

Strategy

Damas has its own designs, targeting

different segments from different age ranges and differ-ent income levels.

Part 1 Defining Marketing and the Marketing Process (Chapters 1, 2)Part 2 Understanding the Marketplace and Consumers (Chapters 3, 4, 5, 6)Part 3 Designing a Customer-Driven Strategy and Mix (Chapters 7, 8, 9, 10, 11, 12, 13, 14)Part 4 Extending Marketing (Chapters 15, 16, 17)


Chapter 7 | Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning 177

Recently, Les Exclusives Boutiques in the UAE have added a new

collection of the leading Italian design house, Roberto Coin. Roberto

Coin is featured by its best-selling Cento Collection, which is based

on the artistic designs of the luxurious 100-facet Cento diamonds. In

Les Exclusives shops, Roberto Coin offers the latest of its collections.

Tawhid Abdullah, managing director of Damas, added: “The exten-

sive Roberto Coin collection has been launched to create [a] distinct

modern look for contemporary woman and set a different trend this

festive season. Thus on one side it captures the hearts of discerning

followers of fashion and on the other complement[s] the personality

of the wearer. Roberto Coin’s vibrant creations blend color and an eye

for detail that has helped the brand carve a niche in the highly com-

petitive Middle East market and Mr Coin’s recent visit to Dubai is

proof of his close affinity to jewelry lovers in this part of the globe.” 3

Roberto Coin, CEO of the brand, commented: “You must

understand that Roberto Coin is a niche jewelry brand which

unwaveringly upholds and perfects its standards to stay at the top

by constant innovation and creativity. We use some of the world’s

finest jewels and our treatment of the most precious metals and

stones have given new meaning to the words ’top-class.’ Thus I cre-

ate jewelry for a woman who has her own personal style, is intelli-

gent, witty and has grace. So it is natural that my inspiration comes

from the elegance of femininity.” 4

Around the world, Roberto Coin’s name appeals to the

A-segment; this includes famous Hollywood stars and VIPs in all

fields in Europe. Roberto Coin now is positioned among the most

famous jewelry brands in

the United States, and is

the leading Italian jewelry

brand. Roberto Coin finds

his target niche in the Arab

world as well. Coin said,

“The Middle East is a very

important market for us and the growth

potential for Italian jewelry is enormous. I

am extremely happy to know that Roberto

Coin has found a loyal following driven by

a huge demand from the style conscious of

the region.” 5

The Arab world has become a

promising region for the most luxurious

brands, local and global. In fact, the region

displays a wide array of demographic

segmentation from highly

rich to low-income buyers.

This makes it easy for mar-

keters to find their target;

however, it is a tougher job

to convey sound product

positioning.

Damas Les Exclusives in Dubai holds the Luxury Week event, which displays the extravagant and up-to-date jewelry and watch collections at the city’s renowned shopping site.

When Damas decided to target and position itself in the market, it created a variety of store brands targeting the different segments not only by income but also according to age and ethnicity.

Companies today recognize that they cannot appeal to all buyers in the marketplace, or at

least not to all buyers in the same way. Buyers are too numerous, too widely scattered, and too

varied in their needs and buying practices. Moreover, the companies themselves vary widely

in their abilities to serve different segments of the market. Instead, a company must identify

the parts of the market that it can serve best and most profitably. It must design customer-

driven marketing strategies that build the right relationships with the right customers.

Thus, most companies have moved away from mass marketing and toward target marketing —identifying market segments, selecting one or more of them, and developing prod-

ucts and marketing programs tailored to each. Instead of scattering their marketing efforts,

firms are focusing on the buyers who have greater interest in the values they create best.

Figure 7.1 shows the four major steps in designing a customer-driven marketing

strategy. In the first two steps, the company selects the customers that it will serve. Market segmentation involves dividing a market into smaller groups of buyers with distinct

needs, characteristics, or behaviors that might require separate marketing strategies or

mixes. The company identifies different ways to segment the market and develops profiles

of the resulting market segments. Market targeting (or targeting ) consists of evaluating

each market segment’s attractiveness and selecting one or more market segments to enter.

In the final two steps, the company decides on a value proposition—on how it will cre-

ate value for target customers. Differentiation involves actually differentiating the firm’s

market offering to create superior customer value. Positioning consists of arranging for

a market offering to occupy a clear, distinctive, and desirable place relative to competing

products in the minds of target consumers. We discuss each of these steps in turn.

Market segmentation Dividing a market into smaller groups with distinct needs, characteristics, or behavior that might require separate mar-keting strategies or mixes.

Market targeting (targeting) The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.

Differentiation Actually differentiating the market offer-ing to create superior customer value.

Positioning Arranging for a market offering to occupy a clear, distinctive, and desirable place rel-ative to competing products in the minds of target consumers.


178

Market segmentation addresses the first simple-

sounding marketing question: What customers will we serve? The answer will be different for each company. For example, The Four Seasons targets the top 5 percent of corporate and leisure travelers. Holiday Inn targets middle-class people traveling on a budget.

Author Comment

Objective Outline OBJECTIVE 1 Define the major steps in designing a customer-driven marketing

strategy: market segmentation, targeting, differentiation, and positioning.

Customer-Driven Marketing Strategy 177

OBJECTIVE 2 List and discuss the major bases for segmenting consumer and business markets.

Market Segmentation 178–186

OBJECTIVE 3 Explain how companies identify attractive market segments and choose a market-targeting strategy.

Market Targeting 186–192

OBJECTIVE 4 Discuss how companies differentiate and position their products for maximum competitive advantage in the marketplace.

Differentiation and Positioning 192–198

Market Segmentation (pp 178–186) Buyers in any market differ in their wants, resources, locations, buying attitudes, and buying

practices. Through market segmentation, companies divide large, heterogeneous markets

into smaller segments that can be reached more efficiently and effectively with products and

services that match their unique needs. In this section, we discuss four important segmenta-

tion topics: segmenting consumer markets, segmenting business markets, segmenting inter-

national markets, and requirements for effective segmentation.

Segmenting Consumer Markets There is no single way to segment a market. A marketer has to try different segmentation

variables, alone and in combination, to find the best way to view the market structure.

Table 7.1 outlines the major variables that might be used in segmenting consumer

markets. Here we look at the major geographic , demographic , psychographic , and behavioral variables.

Geographic Segmentation Geographic segmentation calls for dividing the market into different geographical units

such as nations, regions, provinces, parishes, cities, or even neighborhoods. A company

Geographic segmentation Dividing a market into different geo-graphical units such as nations, provinces, regions, cities, or neighborhoods.

Decide on a value propositionSelect customers to serve

Create valuefor targetedcustomers

SegmentationDivide the total market into

smaller segments

TargetingSelect the segment or

segments to enter

DifferentiationDifferentiate the market offering

to create superior customer value

PositioningPosition the market offering inthe minds of target customers

In concept, marketing boils down totwo questions: (1) Which customerswill we serve? and (2) How will weserve them? Of course, the toughpart is coming up with good answersto these simple-sounding but difficultquestions. The goal is to create morevalue for the customers we servethan competitors do.

FIGURE | 7.1 Designing a Customer-Driven Marketing Strategy



may decide to operate in one or a few geographical areas, or to operate in all areas but pay

attention to geographical differences in needs and wants.

Many companies today are localizing their products, advertising, promotion, and

sales efforts to fit the needs of individual regions, cities, and even neighborhoods. For

example, one consumer-products company ships additional cases of its ‘power bar’

(protein bars) to stores in neighborhoods near Gold’s Gym centers. Citibank offers differ-

ent mixes of branch banking services depending on neighborhood demographics. And the

ice-cream maker Baskin Robbins practices what it calls ‘three-mile marketing,’ emphasiz-

ing local events and promotions close to its local store locations. On a global scale, video

TABLE | 7.1 Major Segmentation Variables for Consumer Markets

Geographic Examples

World region or country Western Europe, Arab world, Pacific Rim, China, India, Canada, Mexico, North America

Country region North Africa, The Gulf, Near East

City or metro size Under 5,000; 5,000–20,000; 20,000–50,000; 50,000–100,000; 100,000–250,000; 250,000–500,000; 500,000–1,000,000; 1,000,000–4,000,000; over 4,000,000

Density Urban, suburban, ex-urban, rural

Climate Northern, southern

Demographic Examples

Age Under 6, 6–11, 12–19, 20–34, 35–49, 50–64, 65+

Gender Male, female

Family size 1–2, 3–4, 5+

Family life cycle Young, single; married, no children; married with children; widowed; older, married, no children under 18; older, single; other

Income Under US$20,000; $20,000–$30,000; $30,000–$50,000; $50,000–$100,000; $100,000–$250,000; $250,000 and over

Occupation Professional and technical; managers, officials, and proprietors; clerical; sales; craftspeople; supervisors; farmers; retired; students; homemakers; unemployed

Education Primary school or less; some secondary school; secondary school graduate; some college; college graduate

Religion Muslim, Christian, Jewish, other

Nationality Egyptian, Saudi, Syrian, Lebanese, American, British, French, Indian

Psychographic Examples

Social class Lower lowers, upper lowers, working class, middle class, upper middles, lower uppers, upper uppers

Lifestyle Achievers, strivers, survivors

Personality Compulsive, gregarious, authoritarian, ambitious

Behavioral Examples

Occasions Regular occasion; special occasion; holiday; seasonal

Benefits Quality, service, economy, convenience, speed

User status Nonuser, ex-user, potential user, first-time user, regular user

User rates Light user, medium user, heavy user

Loyalty status None, medium, strong, absolute

Readiness stage Unaware, aware, informed, interested, desirous, intending to buy

Attitude toward product Enthusiastic, positive, indifferent, negative, hostile


180 Part Three | Designing a Customer-Driven Strategy and Mix

game companies create different versions of their games depending on the world region

in which the game is sold.

For example, Protrac Online is an Egyptian company that specializes in providing the lat-

est technologies in geo-marketing research and services by employing researchers, data

analysts, and geo-professionals, and a large scale of data maps and tools. Protrac refers

to geo-marketing as a sophisticated marketing science that uses geographical informa-

tion for analyzing distribution channels of products. Protrac provides insight into the

competition and target segments surrounding a specific distribution point. Hence, this

allows companies to understand the specific changes needed in terms of distributing

products so as to better serve the targeted consumers. This is based on the assump-

tion that people buy products or use services based on the product’s or the service’s

proximity. Geo-marketing allows Protrac’s clients to see the map of their outlets and

their competitors’ outlets as well. This also allows clients to understand where to go to

pursue their target. Accordingly, geo-marketing

can be of highly effective benefit to all kinds of

marketing applications.

Protrac offers three types of products:

Geographical Digital Maps, Socio-Demographic

Data, and Trade Channels Census and Survey

Data. Hossam Ragheb, CEO of Protrac, said that

using digital maps for marketing purposes is

crucial, especially for Fast-Moving Consumer

Goods companies (FMCGs), such as Coca-Cola,

Proctor & Gamble, and Unilever. Ragheb added

that “[for suppliers] to know where to sell the

products ... and where this outlet is, not only

in terms of address, but the [demographics]

of the area—[for example] how many people

above 15 years [of age] are living in this area—

gives them a sort of direction to know which

products should go where.” 6

Some companies are seeking to cultivate

as-yet-untapped geographic territory. For example, some large companies are fleeing the

fiercely competitive major cities and suburbs to set up shops in small towns. Meanwhile

others are developing new store concepts that will give them access to higher-density urban

areas. Metro Group has done a mix of both. It opened a chain of wholesale retail shops,

Makro, which run using a subscription-only access. Not only is Makro different from any

other wholesale retail model but also the shops are located outside of the main cities but in

low-income areas close to them.

Demographic Segmentation Demographic segmentation divides the market into groups based on variables such as

age, gender, family size, family life cycle, income, occupation, education, religion, race, gen-

eration, and nationality. Demographic factors are the most popular bases for segmenting cus-

tomer groups. One reason is that consumer needs, wants, and usage rates often vary closely

with demographic variables. Another is that demographic variables are easier to measure

than most other types of variables. Even when marketers first define segments using other

bases, such as benefits sought or behavior, they must know segment demographic character-

istics in order to assess the size of the target market and to reach it efficiently.

Age and Life-Cycle Stage. Consumer needs and wants change with age. Some com-

panies use age and life-cycle segmentation , offering different products or using dif-

ferent marketing approaches for different age and life-cycle groups. For example, whereas

Demographic segmentation Dividing the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality.

Age and life-cycle segmentation Dividing a market into different age and life-cycle groups.

Geographic information systems are used for marketing purposes, in defining the location of the target market, distribution channels, and socio-demographic data.



HP targets adult buyers with its “The Computer Is Personal Again” campaign, along with

ads featuring price and value, it developed a special “Society for Parental Mind Control”

campaign targeting teenagers. Research shows that although parents are the predominant

buyers of computers, teens are key recommenders. “It’s such an old story, but kids are the

arbiters of cool,” says one analyst. 7

Marketers must be careful to guard against stereotypes when using age and life-cycle

segmentation. Although some 80-year-olds fit the weary stereotypes, others play tennis.

Similarly, whereas some 40-year-old couples are sending their children off to college, others

are just beginning new families. Thus, age is often a poor predictor of a person’s life cycle,

health, work or family status, needs, and buying power. Companies marketing to mature

consumers usually employ positive images and appeals.

Gender. Gender segmentation has long been used in clothing, cosmetics, toiletries,

and magazines. For example, Heineken decided to target men for its non-alcoholic beer

Birell, and developed a campaign called “Be a Man”. On the other hand, Galaxy targeted

women with its chocolate and emphasized that in its advertising campaigns.

Income. The marketers of products and services such as automobiles, clothing, cosmet-

ics, financial services, and travel have long used income segmentation . Many companies

target affluent consumers with luxury goods and convenience services.

However, not all companies that use income segmentation target

the affluent. For example, many retailers—such as pound and dol-

lar stores—successfully target low- and middle-income groups. The

core market for such stores is families with incomes under US$30,000.

When real-estate experts scout locations for new pound and dollar

stores, they look for lower-middle-class neighborhoods where people

wear less-expensive shoes and drive old cars that drip a lot of oil.

With their low-income strategies, stores such as these have

become fast-growing retailers. They have been so successful that

giant discounters are taking notice. An example of income segmenta-

tion in the Arab world is mobile phone service providers targeting

low-income populations. Companies such as Zain, Qtel, STC, and

Etisalat earn most of their revenues from countries where the popula-

tions are large with low income, as in Sub-Saharan Africa and South

Asia. The main challenge for those companies is the low generated

revenues per mobile phone user, which comes as a result of competi-

tive and price-cutting measures taken by companies in the field. 8

Psychographic Segmentation Psychographic segmentation divides buyers into different groups based on social class,

lifestyle, or personality characteristics. People in the same demographic group can have

very different psychographic characteristics.

In Chapter 5 , we discussed how the products people buy reflect their lifestyles. As a

result, marketers often segment their markets by consumer lifestyles and base their mar-

keting strategies on lifestyle appeals. Marketers also use personality variables to segment

markets. For example, Sprite launched a new campaign called “This is who I am…,” target-

ing teenagers who are rebellious and independent. This is considered a very unique and

emerging segment in the Arab world.

Behavioral Segmentation Behavioral segmentation divides buyers into groups based on their knowledge, atti-

tudes, uses, or responses to a product. Many marketers believe that behavior variables are

the best starting point for building market segments.

Occasions. Buyers can be grouped according to occasions when they get the idea to buy,

actually make their purchase, or use the purchased item. Occasion segmentation can

Gender segmentation Dividing a market into different groups based on gender.

Income segmentation Dividing a market into different income groups.

Psychographic segmentation Dividing a market into different groups based on social class, lifestyle, or person-ality characteristics.

Behavioral segmentation Dividing a market into groups based on consumer knowledge, attitudes, uses, or responses to a product.

Occasion segmentation Dividing the market into groups according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item.

Luxury yachts can easily cost over US$1 million, and are targeted at the most affluent section of society.



help firms build up product usage. For example, many marketers prepare special offers

and ads for holiday occasions. Ramadan and the two Islamic Feasts are the most critical

times in the Arab world, where offers and advertisements intensify as a result of increased

viewership driven from family and group gatherings. Real Marketing 7.1 discusses how

consumers behave during the holy month of Ramadan.

Benefits Sought. A powerful form of segmentation is to group buyers according to the

different benefits that they seek from the product. Benefit segmentation requires finding

the major benefits people look for in the product class, the kinds of people who look for

each benefit, and the major brands that deliver each benefit.

Champion athletic wear segments its markets according to benefits that different

consumers seek from its activewear. For example, ‘Fit and Polish’ consumers seek a bal-

ance between function and style—they exercise for results but want to look good doing

it. ‘Serious Sports Competitors’ exercise heavily and live in and love their activewear—

they seek performance and function. By contrast, ‘Value-Seeking Parents’ have low sports

interest and low activewear involvement—they buy for the family and seek durability and

value. Thus, each segment seeks a different mix of benefits. Champion must target the

benefit segment or segments that it can serve best and most profitably, using appeals that

match each segment’s benefit preferences.

User Status. Markets can be segmented into nonusers, ex-users,

potential users, first-time users, and regular users of a product.

Marketers want to reinforce and retain regular users, attract targeted

nonusers, and revive relationships with ex-users.

Included in the potential users group are consumers facing life-

stage changes—such as newlyweds and new parents—who can be

turned into heavy users.

Usage Rate. Markets can also be segmented into light, medium,

and heavy product users. Heavy users are often a small percentage

of the market but account for a high percentage of total consump-

tion. For example, Burger King targets what it calls ‘Super Fans,’

young (age 18 to 34), burger-eating males who make up 18 percent

of the chain’s customers but account for almost half of all customer

visits. They eat at Burger King an average of 16 times a month. 9

Burger King targets these Super Fans openly with ads that exalt

huge burgers containing meat, cheese, and more meat and cheese.

Loyalty Status. A market can also be segmented by con-

sumer loyalty. Consumers can be loyal to brands (Apple), stores

(Carrefour), and companies (Toyota). Buyers can be divided into

groups according to their degree of loyalty. Some consumers are

completely loyal—they buy one brand all the time. For example,

Apple Computer has an almost cultlike following of loyal users: 10

There are Mac folks who happen to own a Mac and use it for

emailing, blogging, browsing, buying, and social networking.

Then there are the Apple diehards—the Mac fanatics who buy

Apple products and accessories that maximize their Mac lives.

Some of these fans buy two iPhones—one for themselves and

the other just to take apart, to see what it looks like on the inside,

and maybe, just to marvel at Apple’s ingenious ability to cram

so much into a tight little elegant package. These Mac fanatics

(also called MacHeads or Macolytes) see Apple founder and

CEO Steve Jobs as a wizard of technology. Say the word ‘Apple’

Benefit segmentation Dividing the market into groups according to the different benefits that consumers seek from the product.

Consumer loyalty: ‘Mac fanatics’—fanatically loyal Apple Computer users—helped keep Apple afloat during the lean years, and they are now at the forefront of Apple’s burgeoning empire.



Real Marketing 7.1

Ramadan Spirit in the Arab World An example of occasional targeting in the Arab world is the holy month of Ramadan. According to a study conducted by Maktoob Research regarding Ramadan in the region, 71 percent of respondents believe that the month enables them to experience a feeling of “solidarity and brotherhood with fellow Muslims.” The study has found out that 67 percent perceive Ramadan to be a commer-cial occasion for many companies. The study gathered the opinions of 6,128 Muslims from around the Arab world, just ahead of the holy month in 2008.

Discussing the results, Tamara Deprez, director of Maktoob Research, added: “The survey’s findings show that despite the pace of modern life and the changes in people’s lifestyle, the Arab world retains its spiritual essence and remains largely tradition-bound where matters of faith are concerned—more so during the Holy Month of Ramadan.” It was discovered that most of the respon-dents enjoyed having Iftar (breaking their fast) with their families at home compared with the significant portion, but not a major-ity, who said that they liked to have Iftar in restaurants.

Ramadan is also characterized by the sense of charity. During Ramadan, in many countries in the Arab world, just before the dusk prayer (the time for fast breaking), people hurry to one another in streets to give little snacks, saying, “Ramadan Kareem, Iftar Shahy” (“Hearty Iftar”). People are there always to provide each other with dates and drinks, ensuring that people have their Iftar on time. Also, rich Muslim people rush to make Mawa’ed Rahaman (free public eat-eries), where poor people are offered free food at Iftar time. Accordingly, it is a good chance for businesses to show their support in corporate social responsibility (CSR) and to promote the Ramadan spirit. For instance, in 2008, Saudi Telecom (STC) set up a food tent to cater for more than 7,000 people daily in Ramadan in more than 80 different locations all around Jeddah. McDonald’s provided Iftar, incorporating entertainment activities for orphans in one of the malls. There is also the Food Bank, sponsored by Olympic Group and Elsewedy Cables, which delivered food to low-income people during

the month. Further, some food and beverage companies offer free products on streets at Iftar time, primarily aiming to promote those products. In addition, Ramadan is consid-ered an optimal time to reach the consumer through televi-sion advertisements. In Egypt, both the finance and trans-port ministries broadcast their advertisements throughout the month.

In countries such as the UAE, companies market their products in line with the Ramadan theme of family gathering. For example, du, the mobile services provider, made special Ramadan offers in 2009 to enable families to keep in touch with each other even if they are in dis-tant locations. The Ramadan promotional offer entailed 1 fils credit (0.3 US cents) for each second of night-time worldwide calls, and users can double their call time using the Pay as You Go services. “du’s desire to help its valued customers strengthen their social bonds and communicate more easily with loved ones during the Holy Month is the foundation of all our Ramadan offers,” said Farid Faraidooni, executive vice presi-dent, Commercial, du. “As a telecom pro-vider with strong local roots, we know the high value all residents place on staying in touch. Our unique offers give customers the peace of mind that comes with afford-ability, plus the flexibility and convenience of exceptional calling benefits during a very special time of year.” du’s main offer during the night time aims to serve customers who have been fasting during the day, through exclusive price cuts during the month of Ramadan. Customers get 1 fils free credit for every international call made during the night time. No matter how far away family members are, du provides the same price deductions on calls.

Another interesting consumer behavior during the holy month of Ramadan is the special types of foods that are demanded during that time. For example, stores selling Eastern desserts, such as Konafa , Basbousa ,

and the like experience a substantial increase in demand during Ramadan, and they face the challenge of satisfying the large number of customers queuing in lines, particularly right before Iftar time. Of course, the price of television ads skyrockets during the month as a result of family gatherings in front of the television after Iftar, to watch programs and soap operas. As a result, companies inten-sify their advertising campaigns during the month, in anticipation of increased demand and viewership.

Sources: “Ramadan Continues to Inspire the Faithful Throughout the Arab World,” Maktoob Research, 2008, www.maktoob-research.com/PR-Maktoob%20Research-Ramadan-English-FINAL.pdf ; “Special Ramadan Offers from du,” BI-ME , August 18, 2009, www.bi-me.com/main.php?id=39691&t=1 ; Safaa Abdoun, “The Spirit of Giving During Ramadan,” The Daily News Egypt, September 19, 2008, www.thedailynewsegypt.com ; Amira Howeidy, “Made to Measure,” Al Ahram Weekly, September 10–16, 2009, Issue No. 964, http://weekly.ahram.org.eg/2009/964/eg5.htm .

Often charity work and social activities increase during the holy month of Ramadan, which affects the demand and supply of nutrition products.



in front of Mac fans and they’ll go into ecstasy about the superiority of the brand. Put

two MacHeads together and you’ll never shut them up. “The Mac [comes] not just as a

machine in a box, it [comes] with a whole community,” notes one observer. Such fanati-

cally loyal users helped keep Apple afloat during the lean years, and they are now at the

forefront of Apple’s rapidly growing empire. 11

Other consumers are somewhat loyal—they are loyal to two or three brands of a given

product or favor one brand while sometimes buying others. Still other buyers show no

loyalty to any brand. They either want something different each time they buy or they buy

whatever’s on sale.

A company can learn a lot by analyzing loyalty patterns in its market. It should start by

studying its own loyal customers. For example, by studying Mac fanatics, Apple can better

pinpoint its target market and develop marketing appeals. By studying its less-loyal buyers, the

company can detect which brands are most competitive with its own. By looking at customers

who are shifting away from its brand, the company can learn about its marketing weaknesses.

Using Multiple Segmentation Bases Marketers rarely limit their segmentation analysis to only one or a few variables. Rather,

they often use multiple segmentation bases in an effort to identify smaller, better-defined

target groups. Thus, a bank may not only identify a group of wealthy retired adults but

also, within that group, distinguish several segments based on their current income, assets,

savings and risk preferences, housing, and lifestyles.

Such segmentation provides a powerful tool for marketers of all kinds. It can help

companies to identify and better understand key customer segments, target them more

efficiently, and tailor market offerings and messages to their specific needs.

Segmenting Business Markets Consumer and business marketers use many of the same variables to segment their mar-

kets. Business buyers can be segmented geographically, demographically (industry, com-

pany size), or by benefits sought, user status, usage rate, and loyalty status. Yet, business

marketers also use some additional variables, such as customer operating characteristics , pur-chasing approaches , situational factors , and personal characteristics . By going after segments

instead of the whole market, companies can deliver just the right value proposition to each

segment served and capture more value in return.

Almost every company serves at least some business markets. For example, Visa tar-

gets businesses in one of the four merchant levels based on Visa transaction volumes over

a 12-month period. Level one are merchants processing over six million Visa transactions

annually, level two are merchants channel-processing one to six million Visa transactions per

year, level three are merchants processing 20,000 to one million Visa e-commerce transactions

per year, and so on, for every level of merchant. The overall business offering is variable: the

higher the level, the more privileges are offered, and the lower rates the merchant pays. 12

Many companies set up separate systems for dealing with larger or multiple-location

customers. For example, IBM first segments customers into main industries, including bank-

ing, and aviation. Next, company salespeople work with independent partners to handle

smaller, local, or regional customers in each segment. But many national, multiple-location

customers have special needs that may reach beyond the scope of individual partners. So

IBM uses national account managers to help its dealer networks handle its national accounts.

Within a given target industry and customer size, the company can segment by pur-

chase approaches and criteria. As in consumer segmentation, many marketers believe that

buying behavior and benefits provide the best basis for segmenting business markets. 13

Segmenting International Markets Few companies have either the resources or the will to operate in all, or even most, of the

countries that dot the globe. Although some large companies, such as Coca-Cola or Sony,

sell products in more than 200 countries, most international firms focus on a smaller set.



Operating in many countries presents new challenges. Different countries, even those that

are close together, can vary greatly in their economic, cultural, and political makeup. Thus,

just as they do within their domestic markets, international firms need to group their world

markets into segments with distinct buying needs and behaviors.

Companies can segment international markets using one or a combination of several vari-

ables. They can segment by geographic location , grouping countries by regions such as Western

Europe, the Pacific Rim, the Arab world, or Africa. Geographic segmentation assumes that

nations close to one another will have many common traits and behaviors. Although this is

often the case, there are many exceptions. For example, companies in the Arab world face the

challenge of classifying customers across the region, and they need to effectively segment the

market in a way that allows them to satisfy varied customers’ needs. It does not make sense

to group countries such as Qatar (with small population and high income) with a country

such as Sudan (with large population and low income). Also, it would be strange to group

countries in North Africa (Tunisia, Algeria, and Morocco) with Gulf countries given the dif-

ferences in language and culture.

World markets can also be segmented on the basis of economic factors . For example,

countries might be grouped by population income levels or by their overall level of eco-

nomic development. A country’s economic structure shapes its population’s product and

service needs and, therefore, the marketing opportunities it offers. Countries can be seg-

mented by political and legal factors such as the type and stability of government, receptiv-

ity to foreign firms, monetary regulations, and amount of bureaucracy. Cultural factors can

also be used, grouping markets according to common languages, religions, values and atti-

tudes, customs, and behavioral patterns.

An important aspect in the Arab world is the availability of media channels that are

being watched by consumers through satellite broadcasting. Companies targeting consum-

ers of different countries in the region benefit from that; yet they face the challenge of send-

ing consistent messages to all countries. As a result, they attempt to find attractive regional

intermarket segments.

Segmenting international markets based on geographic, economic, political, cultural,

and other factors assumes that segments should consist of clusters of countries. However, as

new communications technologies, such as satellite television and the Internet, connect con-

sumers around the world, marketers can define and reach segments of like-minded consum-

ers no matter where in the world they are. Using intermarket segmentation (also called

cross-market segmentation ), they form segments of consumers who have similar needs and

buying behaviors even though they are located in different countries. For example, Coca-

Cola creates special programs to target teens, core consumers of its soft drinks the world over.

Coca-Cola wants to relate to the world’s teens. To accomplish that, the global soft

drinks marketer needed to figure out what the majority of teens finds appealing.

The answer: music. So, throughout the world, Coca-Cola links itself with the local

pop music scene. For example, in the United States, Coke is the official sponsor of

American Idol , the country’s number-one television show and a teen magnet. In the

Arab world, Coca-Cola commercials feature Arab pop stars, such as Nancy Ajram—

Coca-Cola even sponsors her world tour. In Europe, Coke has created the Coca-Cola

Music Network, which features signed and unsigned musicians online at CokeMusic.

com, on stage, and in podcasts. And in Uganda, Coca-Cola sponsored the search for

a new MTV VJ. The winner, Carol Mugasha, became host of the weekly music chart

show MTV Coca-Cola Chart Express . 14

Requirements for Effective Segmentation Clearly, there are many ways to segment a market, but not all segmentations are effective.

For example, buyers of table salt could be divided into blond and brunette customers. But

hair color obviously does not affect the purchase of salt. Furthermore, if all salt buyers

bought the same amount of salt each month, believed that all salt is the same, and wanted

to pay the same price, the company would not benefit from segmenting this market.

Intermarket segmentation Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries.



To be useful, market segments must be:

• Measurable: The size, purchasing power, and profiles of the

segments can be measured. Certain segmentation variables

are difficult to measure. For example, there are many left-

handed people in the world. Yet few products are targeted

toward this left-handed segment. The major problem may be

that the segment is hard to identify and measure. There is little

data on the demographics of ‘lefties.’ Private data companies

keep reams of statistics on other demographic segments but

not on left-handers.

• Accessible: The market segments can be effectively reached

and served. Suppose a fragrance company finds that heavy

users of its brand are single men and women who stay out late

and socialize a lot. Unless this group lives or shops at certain

places and is exposed to certain media, its members will be

difficult to reach.

• Substantial: The market segments are large or profitable enough to serve. A segment

should be the largest possible homogeneous group worth pursuing with a tailored

marketing program. It would not pay, for example, for an automobile manufacturer

to develop cars especially for people whose height is greater than two meters.

• Differentiable: The segments are conceptually distinguishable and respond differently

to different marketing mix elements and programs. If married and unmarried women

respond similarly to a sale on perfume, they do not constitute separate segments.

• Actionable: Effective programs can be designed for attracting and serving the segments.

For example, although one small airline identified seven market segments, its staff was

too small to develop separate marketing programs for each segment.

Market Targeting (pp 186–192) Market segmentation reveals the firm’s market segment opportunities. The firm now has to

evaluate the various segments and decide how many and which segments it can serve best.

We now look at how companies evaluate and select target segments.

Evaluating Market Segments In evaluating different market segments, a firm must look at three factors: segment size

and growth, segment structural attractiveness, and company objectives and resources. The

company must first collect and analyze data on current segment sales, growth rates, and

expected profitability for various segments. It will be interested in segments that have the

right size and growth characteristics.

But ‘right size and growth’ is a relative matter. The largest, fastest-growing segments

are not always the most attractive ones for every company. Smaller companies may lack the

skills and resources needed to serve the larger segments. Or they may find these segments

too competitive. Such companies may target segments that are smaller and less attractive,

in an absolute sense, but that are potentially more profitable for them.

The company also needs to examine major structural factors that affect long-run seg-

ment attractiveness. 15 For example, a segment is less attractive if it already contains many

strong and aggressive competitors . The existence of many actual or potential substitute prod-ucts may limit prices and the profits that can be earned in a segment. The relative power of buyers also affects segment attractiveness. Buyers with strong bargaining power relative to

sellers will try to force prices down, demand more services, and set competitors against one

another—all at the expense of seller profitability. Finally, a segment may be less attractive

The ‘Leftie’ segment can be hard to identify and measure. As a result, few companies tailor their offers to left-handers. However, some nichers such as Anything Left-Handedin the United Kingdom target this segment.

Now that we’ve divided the market into segments,

it’s time to answer that first seemingly simple marketing strategy question we raised in Figure 7.1 : Which customers will the company serve?

Author Comment



if it contains powerful suppliers who can control prices or reduce the quality or quantity of

ordered goods and services.

Even if a segment has the right size and growth and is structurally attractive, the com-

pany must consider its own objectives and resources. Some attractive segments can be dis-

missed quickly because they do not mesh with the company’s long-run objectives. Or the

company may lack the skills and resources needed to succeed in an attractive segment. For

example, given current economic conditions, the economy segment of the automobile market

is large and growing. But given its objectives and resources, it would make little sense for

luxury-performance carmaker BMW to enter this segment. A company should enter only seg-

ments in which it can create superior customer value and gain advantages over competitors.

Selecting Target Market Segments After evaluating different segments, the company must decide which and how many seg-

ments it will target. A target market consists of a set of buyers who share common needs

or characteristics that the company decides to serve. Market targeting can be carried out

at several different levels. Figure 7.2 shows that companies can target very broadly

(undifferentiated marketing), very narrowly (micromarketing), or somewhere in between

(differentiated or concentrated marketing).

Undifferentiated Marketing Using an undifferentiated marketing (or mass-marketing ) strategy, a firm might

decide to ignore market segment differences and target the whole market with one offer.

This mass-marketing strategy focuses on what is common in the needs of consumers rather

than on what is different . The company designs a product and a marketing program that

will appeal to the largest number of buyers.

As noted earlier in the chapter, most modern marketers have strong doubts about this

strategy. Difficulties arise in developing a product or brand that will satisfy all consumers.

Moreover, mass marketers often have trouble com-

peting with more focused firms that do a better job of

satisfying the needs of specific segments and niches.

Differentiated Marketing Using a differentiated marketing (or segmented marketing ) strategy, a firm decides to target sev-

eral market segments and designs separate offers

for each. General Motors tries to produce a car for

every “purse, purpose, and personality.” Procter

& Gamble markets six different laundry detergent

brands, which compete with each other on super-

market shelves.

By offering product and marketing variations

to segments, companies hope for higher sales and

a stronger position within each market segment.

Developing a stronger position within several seg-

ments creates more total sales than undifferentiated

marketing across all segments.

But differentiated marketing also increases the

costs of doing business. A firm usually finds it more

Target market A set of buyers sharing common needs or characteristics that the company decides to serve.

Undifferentiated (mass) marketing A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.

Differentiated (segmented) marketing A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.

Undifferentiated(mass) marketing

Differentiated(segmented)

marketing

Concentrated(niche)

marketing

Micromarketing(local or individual

marketing)

Targetingbroadly

Targetingnarrowly

This figure covers a pretty broad range oftargeting strategies, from mass marketing(virtually no targeting) to individualmarketing (customizing products andprograms to individual customers). Anexample of individual marketing: AtmyMMs.com you can order a batch ofM&Ms with your face and personalmessage printed on each little candy.

FIGURE | 7.2 Marketing Targeting Strategies

Differentiated marketing: Procter & Gamble markets six different laundry detergents, including Tide—each with multiple forms and formulations—that compete with each other on store shelves.



expensive to develop and produce, say, 10 units of 10 different products than 100 units of

one product. Developing separate marketing plans for the separate segments requires extra

marketing research, forecasting, sales analysis, promotion planning, and channel manage-

ment. And trying to reach different market segments with different advertising campaigns

increases promotion costs. Thus, the company must weigh increased sales against increased

costs when deciding on a differentiated marketing strategy.

Concentrated Marketing Using a concentrated marketing (or niche marketing ) strategy, instead of going after a

small share of a large market, the firm goes after a large share of one or a few smaller seg-

ments or niches. For example, Bindawood, a local supermarket chain in the Kingdom of

Saudi Arabia, has many stores in different areas in Mecca and Madinah that target mainly

the visitors of the holy sites.

Through concentrated marketing, the firm achieves a strong market position because

of its greater knowledge of consumer needs in the niches it serves and the special reputation

it acquires. It can market more effectively by fine-tuning its products, prices, and programs

to the needs of carefully defined segments. It can also market more efficiently , targeting its

products or services, channels, and communications programs toward only consumers that

it can serve best and most profitably.

Whereas segments are fairly large and normally attract several competitors, niches

are smaller and may attract only one or a few competitors. Niching lets smaller companies

focus their limited resources on serving niches that may be unimportant to or overlooked

by larger competitors. Many companies start as nichers to get a foothold against larger,

more resourceful competitors and then grow into broader competitors. Aramex offers new

services such as “Shop and Ship” for the customers in the Arab world willing to buy prod-

ucts from online shops in the United States and Europe, in order to differentiate itself from

large competitors such as DHL, UPS, and FedEx.

In contrast, as markets change, some megamarketers develop niche markets to create

sales growth. For example, in recent years, Pepsi has introduced several niche products, such

as Seven-Up with Lemon, Pepsi Twist, and Miranda Tangerine. Today, the low cost of setting

up shop on the Internet makes it even more profitable to serve seemingly miniscule niches.

Small businesses, in particular, are realizing riches from serving small niches on the web.

Concentrated marketing can be highly profitable. At the same time, it involves higher-than-

normal risks. Companies that rely on one or a few segments for all of their business will suffer

greatly if the segment turns sour. Or larger competitors may decide to enter the same segment

with greater resources. For these reasons, many companies prefer to diversify in several market

segments. In the Arab world, there is a clear need for Islamic banking services. As a result, a variety

of banks, led by HSBC, introduced Islamic banking initiatives in the region. Real Marketing 7.2

highlights the concept of Islamic banking and its application in the Arab world.

Micromarketing Differentiated and concentrated marketers tailor their offers and marketing programs to

meet the needs of various market segments and niches. At the same time, however, they do

not customize their offers to each individual customer. Micromarketing is the practice of

tailoring products and marketing programs to suit the tastes of specific individuals and loca-

tions. Rather than seeing a customer in every individual, micromarketers see the individual

in every customer. Micromarketing includes local marketing and individual marketing .

Local Marketing. Local marketing involves tailoring brands and promotions to the

needs and wants of local customer groups—cities, neighborhoods, and even specific stores.

For example, McDonald’s introduced a new sandwich, McArabia, which suited the local

culture in the Arab world.

Advances in communications technology have given rise to a new high-tech version

of location-based marketing. By coupling mobile phone services with GPS devices, many

marketers are now targeting customers wherever they are with what they want. 16

Concentrated (niche) marketing A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches.

Micromarketing The practice of tailoring products and marketing programs to the needs and wants of specific individuals and local cus-tomer groups—includes local marketing and individual marketing.

Local marketing Tailoring brands and promotions to the needs and wants of local customer groups—cities, neighborhoods, and even specific stores.



Real Marketing 7.2

Islamic Banking A significant type of behavioral targeting tak-ing place in the Arab world is Islamic banking. A recent report by Morgan Stanley analyzing Dubai Islamic Bank and Kuwait Finance House has concluded that Islamic assets will have increased to 18 percent of total assets in the GCC’S banking system by 2012. Currently, there are 22 Islamic banks that possess more than US$300 billion of sharia-compliant assets. An analyst at Morgan Stanley says: “There are a number of reasons why the sector is growing, and will continue to grow, strongly. A buoyant macro-economic backdrop and increased infrastructure spending, and contin-ued diversification from oil economies are driv-ing the banking sector generally . . . In terms of factors behind the growth in Islamic finance, a greater focus on Islamic identity, government backing for the development and promotion of Islamic banking, low penetration, and com-petition among conventional banks makes Islamic banking more attractive, and more favorable industry dynamics are all likely to fuel the growth.”

Despite the expected growth in that behavioral segment, which fosters the Islamic identity, there are some obstacles to the con-cept. The main difficulty remains that the product is not a regular one that can easily be identified. As such, Islamic banks are subject to more than one regulatory body, such as the local Central Banks as well as the Shari’a Supervisory Board (SSB), which must be established by the banks to advise them and ensure that all their activities are compliant with Shari’a Islamic rules principles, in order to formulate Islamic services. Another issue is the fact that people tend to be less familiar with how the system works compared with the regular banking systems. There are also some aspects in Islamic banking that are not welcomed by other financial institutions and customers, such as not allowing hedging (fixing currency value for long periods in the currency exchange market). A 2008 Morgan Stanley report, however, suggests an exponen-tial growth for the sector.

Islamic banking mainly targets ‘devout Muslims’ in Muslim communities and Muslim minorities in non-Muslim coun-tries. In addition, it attracts non-Muslim individuals and societies that demand ethical financial solutions. Islamic financial institutions were established in the 1960s and 1970s. Since that time Islamic bank-

Islamic banking has gained a strong reputation in the past few years, especially after the financial crisis in 2008 which revealed many of the defects in international banking systems.

to HSBC’s mission, “Amanah is committed to improving the lives of our customers world-wide by providing them with the highest qual-ity Islamic banking solutions.” Accordingly, there is commitment to Shari’a to the great-est extent. HSBC Islamic banking services are present in several GCC countries, includ-ing Bahrain, UAE, Saudi Arabia, Qatar, and other non-Arab Muslim countries, including Bangladesh, Brunei, Indonesia, Malaysia, and other countries as well.

HSBC Amanah is supervised by the Global Shari’a Advisory Board (GSAB) and Regional Shari’a Committees (RSC). Moreover, HBSC has a team of professionals who are there to guarantee that Shari’a are applied in ‘letter’ and ‘spirit.’ GSAB pursues continu-ous updating of the Islamic financial services. The board consists of delegate scholars from all RSC of HSBC Amanah and other Shari’a scholars from all around the world. HSBC depends on known scholars from different origins to ensure the convention of all schol-ars on its Islamic financial matters.

Amanah has different Islamic services all using the same principles, yet they are based on the needs of the various types of custom-ers. There are three common Islamic financial instruments, which are:

• Mudaraba: An investment part-nership, whereby an agreement takes place between an investor (or financer) and an entrepreneur or investment manager, called the Mudarib. They both divide risks

ing has sprawled in several Islamic coun-tries primarily in the Arab world, South and Southeast Asia, and in the West where Muslim minorities live. Now Bahrain is the most flourishing country in the Islamic finance field; other non-Arab cities enjoyed growth in the field, including Kuala Lumpur and London. Islamic banks are available in different formats, including “commercial banks, investment banks, investment and finance companies, insurance (Takaful) companies, and financial service com-panies.” However, they pursue distinct banking models: private organizations in a traditional economy (in the GCC and the West), national banking institutions (such as those in Sudan, Iran, and Pakistan), and dual banking systems (such as in Malaysia and the UAE). Moreover, they are present in different models: fully Islamic institu-tions, Islamic subsidiaries of traditional banking groups, and Islamic banking ‘win-dows’ inside traditional banks.

Islamic banking services range from com-mercial banking to syndicated transactions and equities, and have recently moved into debt issuance and structured products. The growth in the segment is attributed to the growing economy of oil-producing countries. Thus, this made the Islamic financial services highly demanded by a large number of people.

Let’s take a look at an example of an international bank that has adapted to the needs of the Islamic segment. HSBC Amanah—Islamic Financial Solutions was “established to serve the particular financial needs of Muslim communities.” According Continued on next page



Real Marketing 7.2 Continued

and profits. When there are profits, they earn their agreed-upon shares. When there are losses, the investor incurs a loss of capital, whereas the Mudarib loses time and effort.

• Ijara, which means an Islamic lease. The financial institution buys an asset and leases it to a customer in return for a set monthly fee. The

from a third party and sells it to a client at a set profit on a deferred payment system. Murabaha ensures that the client buys something without taking interest on a loan.

lessee has the choice to purchase the asset at the end of the lease.

• Murabaha, which is a sale at an agreed-upon profit. In this trans-action, the bank buys something

Sources: Justin Smith, “Morgan Stanley Initiates Coverage on Islamic Banking Stocks,” BI-ME , February 19, 2008, www.bi-me.com/main.php?id=17576&t=1&c=34&cg= ; “Our Vision,” “The Industry,” “Shariah Supervision,” and “Financial Instruments,” HSBC Amanah, www.hsbcamanah.com/amanah/about-amanah/islamic-banking .

Location. Location. Location. This is the mantra of the real-estate business.

But it may not be long before marketers quote it, too. “Location-based tech-

nology allows [marketers] to reach people when they’re mobile, near their

stores, looking to make a decision,” says one marketing expert. “When

customers get information—even advertising information—linked to their

location, research shows that’s often perceived as value-added informa-

tion, not as an advertisement.” For example, Starbucks recently launched

a store locator service for mobile devices, which allows people to use their

phones and in-car GPS systems to search for the nearest Starbucks shop. A

consumer sends a text message to “MYSBUX” (697289) including his or her

postal code. Within 10 seconds, Starbucks replies with up to three nearby

store locations. Starbucks plans to expand the service to include a wider

range of text-messaging conversations with local customers that will “show-

case Starbucks as a brand that truly listens.” Such location-based marketing

will grow astronomically as the sales of GPS devices skyrocket.

Local marketing has some drawbacks. It can drive up manufacturing and

marketing costs by reducing economies of scale. It can also create logistics prob-

lems as companies try to meet the varied requirements of different regional and

local markets. Further, a brand’s overall image might be diluted if the product

and message vary too much in different localities.

Still, as companies face increasingly fragmented markets, and as new support-

ing technologies develop, the advantages of local marketing often outweigh the

drawbacks. Local marketing helps a company to market more effectively in the

face of pronounced regional and local differences in demographics and lifestyles.

It also meets the needs of the company’s first-line customers—retailers—who prefer more

finely tuned product assortments for their neighborhoods.

Individual Marketing. In the extreme, micromarketing becomes individual marketing —

tailoring products and marketing programs to the needs and preferences of individual cus-

tomers. Individual marketing has also been labeled one-to-one marketing , mass customization, and markets-of-one marketing .

The widespread use of mass marketing has obscured the fact that for centuries consumers

were served as individuals: The tailor custom-made the suit, the cobbler designed shoes for

the individual, the cabinetmaker made furniture to order. Today, however, new technologies

are permitting many companies to return to customized marketing. More powerful comput-

ers, detailed databases, robotic production and flexible manufacturing, and interactive com-

munication media such as cellphones and the Internet—all have combined to foster ‘mass

customization.’ Mass customization is the process through which firms interact one-to-one with

masses of customers to design products and services tailor-made to individual needs.

Dell creates custom-configured computers. Visitors to Nike’s NikeID website can per-

sonalize their sneakers by choosing from hundreds of colors.

Marketers are also finding new ways to personalize promotional messages. Service

providers such as Vodafone have been sending customers personalized office stationery,

Individual marketing Tailoring products and marketing pro-grams to the needs and preferences of individual customers—also labeled ‘one-to-one marketing,’ ‘customized market-ing,’ and ‘markets-of-one marketing.’

Local marketing: By coupling mobile phone services with GPS devices, marketers such as Starbucks are now targeting customers wherever they are with what they want.



calendars, and giveaways showing their names and titles. Newsletters

from different providers have mapped customer interests to make

their material more relevant and personal.

Business-to-business marketers are also finding new ways to cus-

tomize their offerings. For example, John Deere manufactures seeding

equipment that can be configured in more than two million versions

to individual customer specifications. The seeders are produced one

at a time, in any sequence, on a single production line. Mass custom-

ization provides a way to stand out against competitors.

Unlike mass production, which eliminates the need for human

interaction, one-to-one marketing has made relationships with

customers more important than ever. Just as mass production was

the marketing principle of the past century, interactive marketing

is becoming a marketing principle for the twenty-first century. The

world appears to be coming full circle—from the good old days

when customers were treated as individuals, to mass marketing

when nobody knew your name, and back again.

The move toward individual marketing mirrors the trend in con-

sumer self-marketing . Increasingly, individual customers are taking more

responsibility for shaping both the products they buy and the buying experience. Consider two

business buyers with two different purchasing styles. The first sees several salespeople, each

trying to persuade him to buy his or her product. The second sees no salespeople but rather

logs on to the web. She searches for information on available products; interacts online with

various suppliers, users, and product analysts; and then decides which offer is best. The second

purchasing agent has taken more responsibility for the buying process, and the marketer has

had less influence over the buying decision.

As the trend toward more interactive dialogue and less marketing monologue contin-

ues, marketers will need to influence the buying process in new ways. They will need to

involve customers more in all phases of the product development and buying processes,

increasing opportunities for buyers to practice self-marketing.

Choosing a Targeting Strategy Companies need to consider many factors when choosing a market-targeting strategy. Which

strategy is best depends on company resources . When the firm’s resources are limited, concen-

trated marketing makes the most sense. The best strategy also depends on the degree of product variability . Undifferentiated marketing is more suited for uniform products such as grapefruit

or steel. Products that can vary in design, such as cameras and automobiles, are more suited to

differentiation or concentration. The product’s life-cycle stage also must be considered. When a

firm introduces a new product, it may be practical to launch only one version, and undifferen-

tiated marketing or concentrated marketing may make the most sense. In the mature stage of

the product life cycle, however, differentiated marketing begins to make more sense.

Another factor is market variability . If most buyers have the same tastes, buy the same

amounts, and react the same way to marketing efforts, undifferentiated marketing is appro-

priate. Finally, competitors’ marketing strategies are important. When competitors use differenti-

ated or concentrated marketing, undifferentiated marketing can be suicidal. Conversely, when

competitors use undifferentiated marketing, a firm can gain an advantage by using differenti-

ated or concentrated marketing, focusing on the needs of buyers in specific segments.

Socially Responsible Target Marketing Smart targeting helps companies to be more efficient and effective by focusing on the segments

that they can satisfy best and most profitably. Targeting also benefits consumers—companies

serve specific groups of consumers with offers carefully tailored to their needs. However, target

marketing sometimes generates controversy and concern. The biggest issues usually involve

the targeting of vulnerable or disadvantaged consumers with controversial or potentially

harmful products.

John Deere manufactures a wide range of seeding equipment and other planting equipment that matches the various needs of customers’ specifications.



For example, over the years, marketers in a wide

range of industries—from cereal and toys to fast food and

fashion—have been heavily criticized for their marketing

efforts directed toward children. Critics worry that premium

offers and high-powered advertising appeals presented

through the mouths of lovable animated characters will

overwhelm children’s defenses. Other problems arise when

the marketing of adult products spills over into the child

segment—intentionally or unintentionally. Some critics have

even called for a complete ban on advertising to children.

The growth of the Internet and other carefully targeted

direct media has raised fresh concerns about potential targeting

abuses. The Internet allows increasing refinement of audiences

and, in turn, more precise targeting. This might help makers of

questionable products or deceptive advertisers to more readily

victimize the most vulnerable audiences. Unprincipled market-

ers can now send tailor-made deceptive messages directly to

the computers of millions of unsuspecting consumers. 17

Not all attempts to target children, minorities, or other

special segments draw such criticism. In fact, most provide benefits to targeted consum-

ers. For example, Pantene markets Relaxed and Natural hair products to women of color.

Samsung markets the Jitterbug phone directly to seniors who need a simpler cellphone

that is bigger and has a louder speaker. And Colgate makes a large selection of toothbrush

shapes and toothpaste flavors for children. Such products help make tooth brushing more

fun and get children to brush longer and more often.

Thus, in target marketing, the issue is not really who is targeted but rather how and

for what . Controversies arise when marketers attempt to profit at the expense of targeted

segments—when they unfairly target vulnerable segments or target them with question-

able products or tactics. Socially responsible marketing calls for segmentation and targeting

that serve not just the interests of the company but also the interests of those targeted.

Differentiation and Positioning (pp 192–198) Beyond deciding which segments of the market it will target, the company must decide

on a value proposition —on how it will create differentiated value for targeted segments and

what positions it wants to occupy in those segments. A product’s position is the way the

product is defined by consumers on important attributes—the place the product occupies in

consumers’ minds relative to competing products. “Products are created in the factory, but

brands are created in the mind,” says a positioning expert. 18

Tide is positioned as a powerful, all-purpose family detergent. At Subway restaurants,

you “Eat Fresh.” In the automobile market, Mercedes and Cadillac are positioned on lux-

ury, and Porsche and BMW on performance. Volvo positions powerfully on safety. And

Toyota positions its fuel-efficient, hybrid Prius as a high-tech solution to the energy short-

age. “How far will you go to save the planet?” it asks.

Consumers are overloaded with information about products and services. They

cannot reevaluate products every time they make a buying decision. To simplify the

buying process, consumers organize products, services, and companies into categories

and ‘position’ them in their minds. A product’s position is the complex set of percep-

tions, impressions, and feelings that consumers have for the product compared with

competing products.

Consumers position products with or without the help of marketers. But marketers

do not want to leave their products’ positions to chance. They must plan positions that will

give their products the greatest advantage in selected target markets, and they must design

marketing mixes to create these planned positions.

Not only does Colgate offer a wide selection of products targeting chil-dren, but also it holds many campaigns for children in the Arab world to increase awareness about the importance of brushing their teeth.

At the same time that it’s answering the first sim-

ple-sounding question (Which custom-ers will we serve?), the company must be asking the second question (How will we serve them?). For example, Ritz-Carlton serves the top 5 percent of corporate and leisure travelers. Its value proposition is ‘The Ritz-Carlton Experience’—one that “enlivens the senses, instills a sense of well-being, and fulfills even the unexpressed wishes and needs of our guests.”

Author Comment

Product position The way the product is defined by con-sumers on important attributes—the place the product occupies in consumers’ minds relative to competing products.



Positioning Maps In planning their differentiation and positioning strategies, marketers often prepare percep-tual positioning maps, which show consumer perceptions of their brands versus competing

products on important buying dimensions. Figure 7.3 shows a positioning map for the

U.S. large luxury sport utility vehicle market. 19

Choosing a Differentiation and Positioning Strategy Some firms find it easy to choose a differentiation and positioning strategy. For example, a

firm well known for quality in certain segments will go for this position in a new segment if

there are enough buyers seeking quality. But in many cases, two or more firms will go after

the same position. Then, each will have to find other ways to set itself apart. Each firm must

differentiate its offer by building a unique bundle of benefits that appeals to a substantial

group within the segment.

Above all else, a brand’s positioning must serve the needs and preferences of well-

defined target markets. For example, Mobinil is positioning itself in the Egyptian market

as the competent local service provider, and builds its communication campaigns on the

concept of patriotism. On the other hand, Vodafone is positioning itself as an international

and professional brand.

The differentiation and positioning task consists of three steps: identifying a set of dif-

ferentiating competitive advantages upon which to build a position, choosing the right

competitive advantages, and selecting an overall positioning strategy. The company must

then effectively communicate and deliver the chosen position to the market.

Identifying Possible Value Differences and Competitive Advantages To build profitable relationships with target customers, marketers must understand cus-

tomer needs better than competitors do and deliver more customer value. To the extent

that a company can differentiate and position itself as providing superior customer value,

it gains competitive advantage .

But solid positions cannot be built on empty promises. If a company positions its prod-

uct as offering the best quality and service, it must actually differentiate the product so

Competitive advantage An advantage over competitors gained by offering greater customer value, either through lower prices or by providing more benefits that justify higher prices.

160

120

80

40

Luxury Performance

Escalade

Escalade ESV

Hummer H1

Hummer H2

Infiniti QX56

Range Rover

Lexus LX470

Navigator

Land Cruiser

Pri

ce

(th

ou

san

ds

of

$)

The location of each circle shows where consumers positiona brand on two dimensions: price and luxury-performanceorientation. The size of each circle indicates the brand’srelative market share in the segment. Thus, Toyota's LandCruiser is a niche brand that is perceived to be relativelyaffordable and more performance oriented.Orientation

FIGURE | 7.3 Positioning Map: Large Luxury Sport Utility Vehicles



that it delivers the promised quality and service. Companies must do much

more than simply shout out their positions in ad slogans and taglines. They

must first live the slogan.

To find points of differentiation, marketers must think through the customer’s

entire experience with the company’s product or service. An alert company can find

ways to differentiate itself at every customer-contact point. In what specific ways

can a company differentiate itself or its market offer? It can differentiate along the

lines of product , services , channels, people , or image . Through product differentiation brands can be differentiated on features, per-

formance, or style and design. Thus, Panasonic positions its Toughbook PCs,

designed to stand up to rugged use on the road or in the field. The Toughbook

website offers “Tough Stories,” complete with pictures of battered and abused

Toughbooks still functioning well.

Beyond differentiating its physical product, a firm can also differenti-

ate the services that accompany the product. Some companies gain services differentiation through speedy, convenient, or careful delivery. For example,

Al-Baraka Bank has positioned itself as “the commercial Islamic Bank”—it

offers retail, corporate and investment banking, and treasury services which

should abide by the principles of Islamic Shari’a. 20 Others differentiate their

service based on high-quality customer care. Lexus makes fine cars but is

perhaps even better known for the quality service that creates outstanding

ownership experiences for Lexus owners.

Firms that practice channel differentiation gain competitive advantage through

the way they design their channel’s coverage, expertise, and performance. Amazon.

com and GEICO set themselves apart with their smooth-functioning direct chan-

nels. Companies can also gain a strong competitive advantage through people differentiation —hiring and training better people than their competitors do. And Singapore

Airlines enjoys an excellent reputation, largely because of the grace of its flight attendants.

People differentiation requires that a company select its customer-contact people carefully and

train them well. For example, the entertainment company Disney trains its theme park people

thoroughly to ensure that they are competent, polite, and friendly—from the hotel check-in

agents, to the monorail drivers, to the ride attendants, to the people who sweep its parks. Each

employee is carefully trained to understand customers and to “make people happy.”

Even when competing offers look the same, buyers may perceive a difference based on

company or brand image differentiation . A company or brand image should convey the prod-

uct’s distinctive benefits and positioning. Developing a strong and distinctive image calls

for creativity and hard work. A company cannot develop an image in the public’s mind

overnight using only a few advertisements. If Ritz-Carlton means quality, this image must

be supported by everything the company says and does.

Symbols—such as the McDonald’s golden arches, the Nike swoosh, or Google’s color-

ful logo—can provide strong company or brand recognition and image differentiation. The

company might build a brand around a famous person, as Nike did with its Air Jordan bas-

ketball shoes and Tiger Woods golfing products. Some companies even become associated

with colors, such as IBM (blue), UPS (brown), or Coca-Cola (red). The chosen symbols, char-

acters, and other image elements must be communicated through advertising that conveys

the company’s or brand’s personality.

Choosing the Right Competitive Advantages Suppose a company is fortunate enough to discover several potential differentiations that

provide competitive advantages. It now must choose the ones on which it will build its

positioning strategy. It must decide how many differences to promote and which ones .

How Many Differences to Promote. Many marketers think that companies should aggres-

sively promote only one benefit to the target market. Ad man Rosser Reeves, for example, said

a company should develop a unique selling proposition (USP) for each brand and stick to it. Each

Toughbook is positioned as the durable, reliable, wireless notebook that can protect the customer’s work even in the toughest environments.



brand should pick an attribute and tout itself as ‘number one’ on that attribute. Buyers tend to

remember number one better, especially in this overcommunicated society. Thus, Wal-Mart pro-

motes its always low prices and Burger King promotes personal choice—“have it your way.”

Other marketers think that companies should position themselves on more than one

differentiator. This may be necessary if two or more firms are claiming to be best on the same

attribute. Today, in a time when the mass market is fragmenting into many small segments,

companies are trying to broaden their positioning strategies to appeal to more segments.

For example, S.C. Johnson recently introduced a new Pledge multi-surface cleaner. Known

mainly as a brand for cleaning and dusting wood furniture, the new Pledge is positioned as a

cleaner that works on wood, electronics, glass, marble, stainless steel, and other surfaces. Says

its website, “No need to keep switching products—this multi-surface cleaner is perfect for a

quick and easy cleanup of the whole room!” Clearly, many buyers want these multiple ben-

efits. The challenge was to convince them that one brand can do it all. However, as companies

increase the number of claims for their brands, they risk disbelief and a loss of clear positioning.

Which Differences to Promote. Not all brand differences are meaningful or worth-

while; not every difference makes a good differentiator. Each difference has the potential to

create company costs as well as customer benefits. A difference is worth establishing to the

extent that it satisfies the following criteria:

• Important: The difference delivers a highly valued benefit to target buyers.

• Distinctive: Competitors do not offer the difference, or the company can offer it in a

more distinctive way.

• Superior: The difference is superior to other ways that customers might obtain the

same benefit.

• Communicable: The difference is communicable and visible to buyers.

• Preemptive: Competitors cannot easily copy the difference.

• Affordable: Buyers can afford to pay for the difference.

• Profitable: The company can introduce the difference profitably.

Many companies have introduced differentiations that failed one or more of these

tests. When the Westin Stamford Hotel in Singapore once advertised that it is the world’s

tallest hotel, it was a distinction that was not important to most tourists—in fact, it turned

many off. Thus, choosing competitive advantages upon which to position a product or ser-

vice can be difficult, yet such choices may be crucial to success.

Selecting an Overall Positioning Strategy The full positioning of a brand is called the brand’s value proposition —the full mix of

benefits upon which the brand is differentiated and positioned. It is the answer to the

customer’s question “Why should I buy your brand?” Volvo’s value proposition hinges on

safety but also includes reliability, roominess, and styling, all for a price that is higher than

average but seems fair for this mix of benefits.

Figure 7.4 shows possible value propositions upon which a company might posi-

tion its products. In the figure, the five green cells represent winning value propositions—

differentiation and positioning that gives the company competitive advantage. The red

cells, however, represent losing value propositions. The center yellow cell represents at

best a marginal proposition. In the following sections, we discuss the five winning value

propositions upon which companies can position their products: more for more, more for

the same, the same for less, less for much less, and more for less.

More for More. ‘More-for-more’ positioning involves providing the most upscale prod-

uct or service and charging a higher price to cover the higher costs. Ritz-Carlton Hotels,

Mont Blanc writing instruments, Mercedes automobiles—each claims superior quality,

craftsmanship, durability, performance, or style and charges a price to match. Not only is the

market offering high in quality, it also gives prestige to the buyer. It symbolizes status and a

loftier lifestyle. Often, the price difference exceeds the actual increment in quality.

Value proposition The full positioning of a brand—the full mix of benefits upon which it is positioned.



Sellers offering ‘only the best’ can be found in every product and service category,

from hotels, restaurants, food, and fashion to cars and household appliances. Consumers

are sometimes surprised, even delighted, when a new competitor enters a category with

an unusually high-priced brand. Starbucks coffee entered as a very expensive brand in a

largely commodity category. When Apple premiered its iPhone, it offered higher-quality

features than a traditional cellphone, with a hefty price tag to match.

In general, companies should be on the lookout for opportunities to introduce a ‘more-

for-more’ brand in any underdeveloped product or service category. Yet ‘more-for-more’

brands can be vulnerable. They often invite imitators who claim the same quality but at a

lower price. Luxury goods that sell well during good times may be at risk during economic

downturns when buyers become more cautious in their spending.

More for the Same. Companies can attack a competitor’s more-for-more positioning by

introducing a brand offering comparable quality but at a lower price. For example, Toyota

introduced its Lexus line with a ‘more-for-the-same’ value proposition versus Mercedes and

BMW. Its first ad headline read: “Perhaps the first time in history that trading a $72,000 car

for a $36,000 car could be considered trading up.” It communicated the high quality of its

new Lexus through rave reviews in car magazines and through a widely distributed video-

tape showing side-by-side comparisons of Lexus and Mercedes automobiles. It published

surveys showing that Lexus dealers were providing customers with better sales and service

experiences than were Mercedes dealerships. Many Mercedes owners switched to Lexus,

and the Lexus repurchase rate has been 60 percent, twice the industry average.

The Same for Less. Offering ‘the same for less’ can be a powerful value proposition—

everyone likes a good deal. Hypermarkets, such as Carrefour, also use this positioning.

They don’t claim to offer different or better products. Instead, they offer many of the same

brands as department stores and specialty stores but at deep discounts based on supe-

rior purchasing power and lower-cost operations. Other companies develop imitative but

lower-priced brands in an effort to lure customers away from the market leader. For exam-

ple, AMD makes less-expensive versions of Intel’s market-leading microprocessor chips.

Less for Much Less. A market almost always exists for products that offer less and there-

fore cost less. Few people need, want, or can afford ‘the very best’ in everything they buy. In

many cases, consumers will gladly settle for less than optimal performance or give up some

of the extra features in exchange for a lower price. For example, Nokia has a series of mobile

phones with limited features for lower prices targeting consumers who are not willing to pay

for features they will not use.

‘Less-for-much-less’ positioning involves meeting consumers’ lower performance or

quality requirements at a much lower price. For example, Chinese products have invaded

the Arab world markets with relatively low quality products, but at very low prices, which

have attracted a large number of consumers.

More

The same

Less

More The same Less

Morefor

more

Morefor thesame

Morefor

less

The samefor

less

Less formuchless

Be

ne

fits

Price

These are winningvalue propositions.

These are losers.

FIGURE | 7.4 Possible Value Propositions



More for Less. Of course, the winning value proposition would be to offer

‘more for less.’ Many companies claim to do this. And, in the short run, some

companies can actually achieve it. Several mobile operators have built con-

sumption segments where the more minutes a user consumes talking on the

phone, the cheaper each minute becomes. For example, Zain, a mobile opera-

tor in Kuwait, offers unlimited communication at a fixed price based on the

duration of users’ subscription. For a one-day unlimited usage, the user pays

US$5.4 per day; if the user subscribes for a week, they pay US$3.6 per day,

and if the user subscribes for 30 days, they pay US$2.8 per day. 21

Yet in the long run, companies will find it very difficult to sustain

such best-of-both positioning. Offering more usually costs more, making it

difficult to deliver on the ‘for-less’ promise. Companies that try to deliver

both may lose out to more focused competitors.

All said, each brand must adopt a positioning strategy designed to

serve the needs and wants of its target markets. ‘More for more’ will draw

one target market, ‘less for much less’ will draw another, and so on. Thus,

in any market, there is usually room for many different companies, each

successfully occupying different positions. The important thing is that

each company must develop its own winning positioning strategy, one

that makes it special to its target consumers.

Developing a Positioning Statement Company and brand positioning should be summed up in a positioning statement . The statement should follow the form: To (target segment and need) our (brand) is (concept) that (point-of-difference). 22 For example: “To

busy, mobile professionals who need to always be in the loop, BlackBerry

is a wireless connectivity solution that gives you an easier, more reliable

way to stay connected to data, people, and resources while on the go.” 23

Note that the positioning first states the product’s membership in a

category (wireless connectivity solution) and then shows its point-of-dif-

ference from other members of the category (easier, more reliable connec-

tions to data, people, and resources). Placing a brand in a specific category

suggests similarities that it might share with other products in the category. But the case for

the brand’s superiority is made on its points of difference.

Sometimes marketers put a brand in a surprisingly different category before indicating

the points of difference. Nestlé’s Nescafé brand has several products in the instant coffee

market, including Nescafé Gold, positioned as better instant coffee, and Nescafé Espresso,

positioned as the Italian instant coffee (instant coffee that looks better and tastes like

espresso). The positioning of Nescafé Espresso as gourmet coffee puts it in a completely

different category versus the other instant coffee products in the market.

Communicating and Delivering the Chosen Position Once it has chosen a position, the company must take strong steps to deliver and commu-

nicate the desired position to target consumers. All the company’s marketing mix efforts

must support the positioning strategy.

Positioning the company calls for concrete action, not just talk. If the company decides to

build a position on better quality and service, it must first deliver that position. Designing the mar-

keting mix—product, price, place, and promotion—involves working out the tactical details of

the positioning strategy. Thus, a firm that seizes on a more-for-more position knows that it must

produce high-quality products, charge a high price, distribute through high-quality dealers, and

advertise in high-quality media. It must hire and train more service people, find retailers who

have a good reputation for service, and develop sales and advertising messages that broadcast its

superior service. This is the only way to build a consistent and believable more-for-more position.

Positioning statement A statement that summarizes company or brand positioning—it takes this form: To (target segment and need) our (brand) is (concept) that (point-of-difference).

Home Centre in Egypt was one of the first movers in the direction of ‘more for less’ offers after the revolution in January 2011.



Companies often find it easier to come up with a good positioning strategy than to

implement it. Establishing a position or changing one usually takes a long time. In contrast,

positions that have taken years to build can quickly be lost. Once a company has built the

desired position, it must take care to maintain the position through consistent performance

and communication. It must closely monitor and adapt the position over time to match

changes in consumer needs and competitors’ strategies. However, the company should

avoid abrupt changes that might confuse consumers. Instead, a product’s position should

evolve gradually as it adapts to the ever-changing marketing environment.

REVIEWING Objectives AND KEY Terms

In this chapter, you’ve learned about the major elements of a customer-driven marketing strategy: segmentation, targeting, differentiation, and positioning. Marketers know that they can-not appeal to all buyers in their markets, or at least not to all buyers in the same way. Buyers are too numerous, too widely scattered, and too varied in their needs and buying practices. Therefore, most companies today practice target marketing —identifying market segments, selecting one or more of them, and developing products and marketing mixes tailored to each.

OBJECTIVE 1 Define the major steps in designing a customer-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. (p 177)

Customer-driven marketing strategy begins with selecting which customers to serve and deciding on a value proposition that best serves them. It consists of four steps. Market segmenta-tion is the act of dividing a market into distinct groups of buy-ers with different needs, characteristics, or behaviors who might require separate products or marketing mixes. Once the groups have been identified, market targeting evaluates each market segment’s attractiveness and selects one or more segments to serve. Market targeting consists of designing strategies to build the right relationships with the right customers. Differentiation involves actually differentiating the market offering to create superior customer value. Positioning consists of positioning the market offering in the minds of target customers.

OBJECTIVE 2 List and discuss the major bases for seg-menting consumer and business markets. (pp 178–186)

There is no single way to segment a market. Therefore, the marketer tries different variables to see which give the best segmentation opportunities. For consumer marketing, the major segmentation variables are geographic, demographic, psychographic, and behav-ioral. In geographic segmentation, the market is divided into differ-ent geographical units such as nations, regions, provinces, parishes, cities, or neighborhoods. In demographic segmentation, the market is divided into groups based on demographic variables, including age, gender, family size, family life cycle, income, occupation, edu-cation, religion, race, generation, and nationality. In psychographic segmentation, the market is divided into different groups based on social class, lifestyle, or personality characteristics. In behavioral seg-mentation, the market is divided into groups based on consumers’ knowledge, attitudes, uses, or responses to a product.

Business marketers use many of the same variables to seg-ment their markets. But business markets also can be segmented

by business consumer demographics (industry, company size), operating characteristics, purchasing approaches, situational fac-tors, and personal characteristics . The effectiveness of segmenta-tion analysis depends on finding segments that are measurable , accessible , substantial , differentiable, and actionable .

OBJECTIVE 3 Explain how companies identify attractive market segments and choose a market-targeting strategy. (pp 186–192)

To target the best market segments, the company first evaluates each segment’s size and growth characteristics, structural attrac-tiveness, and compatibility with company objectives and resources. It then chooses one of four market-targeting strategies—ranging from very broad to very narrow targeting. The seller can ignore seg-ment differences and target broadly using undifferentiated (or mass) marketing. This involves mass producing, mass distributing, and mass promoting about the same product in about the same way to all consumers. Or the seller can adopt differentiated marketing —developing different market offers for several segments. Concentrated marketing (or niche marketing) involves focusing on only one or a few market segments. Finally, micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Micromarketing includes local marketing and individual marketing . Which targeting strategy is best depends on company resources, product variability, product life-cycle stage, market variability, and competitive marketing strategies.

OBJECTIVE 4 Discuss how companies differentiate and position their products for maximum competitive advan-tage in the marketplace. (pp 192–198)

Once a company has decided which segments to enter, it must decide on its differentiation and positioning strategy. The differ-entiation and positioning task consists of three steps: identifying a set of possible differentiations that create competitive advantage, choosing advantages upon which to build a position, and select-ing an overall positioning strategy. The brand’s full positioning is called its value proposition —the full mix of benefits upon which the brand is positioned. In general, companies can choose from one of five winning value propositions upon which to position their products: more for more, more for the same, the same for less, less for much less, or more for less. Company and brand posi-tioning are summarized in positioning statements that state the target segment and need, positioning concept, and specific points of difference. The company must then effectively communicate and deliver the chosen position to the market.



KEY Terms

OBJECTIVE 1

Market segmentation (p 177 ) Market targeting (targeting) (p 177 ) Differentiation (p 177 ) Positioning (p 177 )

OBJECTIVE 2

Geographic segmentation (p 178 ) Demographic segmentation (p 180 ) Age and life-cycle segmentation (p 180 ) Gender segmentation (p 181 ) Income segmentation (p 181 )

Concentrated (niche) marketing (p 188 ) Micromarketing (p 188 ) Local marketing (p 188 ) Individual marketing (p 190 )

OBJECTIVE 4

Product position (p 192 ) Competitive advantage (p 193 ) Value proposition (p 195 ) Positioning statement (p 197 )

Psychographic segmentation (p 181 ) Behavioral segmentation (p 181 ) Occasion segmentation (p 181 ) Benefit segmentation (p 182 ) Intermarket segmentation (p 185 )

OBJECTIVE 3

Target market (p 187 ) Undifferentiated (mass) marketing (p 187 ) Differentiated (segmented) marketing (p 187 )

DISCUSSING & APPLYING THE Concepts

Discussing the Concepts

1. Briefly describe the four major steps in designing a customer-driven marketing strategy.

2. Name and describe the four major sets of variables that might be used in segmenting consumer markets. Which segmenting variable(s) do you think Starbucks is using?

3. Explain how marketers can segment international markets.

4. Compare and contrast undifferentiated, differentiated, con-centrated, and micromarketing targeting strategies. Which strategy is best?

5. What is a product’s ‘position’ and how do marketers know what it is?

6. Name and define the five winning value propositions described in the chapter. Which value proposition describes Wal-Mart? Explain your answer.

Applying the Concepts

1. The chapter described psychographics as one major variable used by marketers when segmenting consumer markets. SRI Consulting has developed a typology of consumers based

on their values and lifestyles; specifically it places U.S. adult consumers into one of eight segments. Go to the website ( www.sric-bi.com ), and click on the VALS survey in the right side of the page. Take the test. How accurately do the VALS types describe you? What amendments to the survey would you need to make in order for it to be more appropriate to your country’s adult consumers. How would the survey results be affected if your changes were made?

2. Assume you work at a regional university in your country. The traditional market for the university is post-secondary school students in your region who have attained sufficiently high qualifications. However, the university’s target market is shrinking. In addition, it will decrease by around 5 percent over the course of the next 10 years. Recommend other potential market segments the university could pursue, and discuss the criteria it should consider to ensure that the segments you identified are effectively targeted.

3. Form a small group and create an idea for a new reality television show. Using the format provided in the chapter, develop a positioning statement for this television show. What competitive advantage does the show have over existing shows? How many and which differences would you promote?

FOCUS ON Technology Have you noticed that ads on websites seem to reflect your inter-ests? Do you ever wonder if someone is watching your Internet behavior? Well, someone (that is, a computer) probably is watching and tracking you. Marketers use such tracking information to send targeted ads to consumers —it’s called behavioral targeting. You’ve no doubt heard of ‘cookies,’ the files deposited on your computer when you visit a website. If you’ve ever given personally identify-ing information at a site, it remembers you when you return—it’s all stored in the cookie file. But even if you don’t give personally identifying information on a website, Internet protocol addresses (IP addresses) can be tracked to follow where you go and where you’ve been on the Internet. This tracking lets marketers tailor web pages, information, offers, and prices to individuals based on their

behavioral characteristics. Behavioral targeting is coveted because it allows marketers to implement micromarketing strategies.

1. TACODA is a behavioral targeting ad network. Visit www.tacoda.com to learn more about this company. Explore this website to learn how it lets marketers send Internet ads to targeted consumers. Then, write a brief report explaining behavioral targeting and how marketers are using it.

2. Many individuals are concerned that Internet behavioral tracking violates their privacy. Most websites have access to users’ IP addresses. Do IP addresses alone qualify as ‘user identifiable’ information? Learn more about this issue and write a brief report about it.



FOCUS ON Ethics The increasing number of infomercials and advertisements in the Arab world for weight control pills has started to trigger reactions in society. People have been bombarded with advertisements featur-ing beautiful bodies in revealing clothing, sitting lazily and ingest-ing multiple food supplements, and ending up looking like movie stars. The vast majority of these supplements are not approved by any formal authority or regulated by any government. There is no authority that places standards on what should or could be shown to the masses and what message it should communicate.

Many of these products turn out to be a scam, with no actual value. The organizations offering these products are able to adver-tise them on television to the majority of the Arab world because of the lack of regulatory authority. Critics argue that the ads are misleading the customers about what could be a health-damaging product, and also that the resulting aspiration for achieving the

perfect body through instant, non-effective, and non-healthy means requires some supervision and management.

The channels showing these ads have also been criticized for their role in promoting them. Some channels have taken the initia-tive of managing the material being advertised. That has resulted in new satellite channels which use a business model of plugging in the infomercials into entertainment programs to overcome the limitations of the television channels and also to save the cost of their advertisement.

1. Do you think the channels that show the infomercials have any form of liability?

2. Give an example of an organization or a governmental authority that has taken the responsibility of managing the honesty of a television advertisement.

MARKETING BY THE Numbers China’s fast-paced economic growth and the Chinese’s increas-ing levels of disposable income have had a major impact on the pet industry. The latest research suggests that pet ownership is on the rise in China. The demand for pet food products in the country is also growing. Although the pet food market in China is still small by Western standards, it offers high growth potential.

1. Refer to Appendix 2 : Marketing by the Numbers. Carry out research to estimate what the potential market for dog food in China might be.

2. What big, overseas pet food companies are already doing business in China?

3. How does the Mexican market for pet food compare with China’s pet food market?

VIDEO Case

Meredith The Meredith Corporation has developed an expertise in build-ing customer relationships through segmentation, targeting, and positioning. Amazingly, however, it has done this by focus-ing on only half of the population—the female half. Meredith has developed the largest database of any U.S. media company and uses that database to meet the specific needs and desires of women.

Meredith is known for leading titles such as Better Homes and Gardens , Family Circle , and Ladies’ Home Journal . But that list has grown to a portfolio of 14 magazines and more than 200 special interest publications. Through these magazines alone, Meredith regularly reaches about 30 million readers. By focusing on core categories of home, family, and personal development, Meredith

has developed a product mix designed to meet various needs of women. This creates multiple touch points as individual women engage with more than one magazine, as well as with specialty books and websites.

After viewing the video featuring Meredith, answer the fol-lowing questions about segmenting, targeting, and positioning:

1. On what main variables has Meredith focused in segmenting its markets?

2. Which target marketing strategy best describes Meredith’s efforts? Support your choice.

3. How does Meredith use its variety of products to build rela-tionships with the right customers?

COMPANY Case

The Arab Online World—Microsoft Maren The Arab world has become more and more lucrative for the international market over the years. It is one of the largest

growing regions in the world and provides many organiza-tions with huge growth potential. The Arab world alone has 63,240,946 Internet users as of 2010, out of a total popula-tion of 212,336,924. That means that more than 29 percent of the population are Internet users. The North Africa region has 40,356,400 Internet users as of 2010, out of a total population



of 205,716,142, equivalent to 19 percent of the population. Over the last 10 years, Internet usage in the Arab world has shown growth of around 1,825 percent compared with 432 percent for the rest of the world.

The Arabic language is the seventh most spoken language worldwide. It is estimated that 18 percent of Arabic speakers are Internet users. Between 2000 and 2010 the amount of online content in the Arabic language grew by 2,501 percent, far out-stripping the rest of the world and making the potential for mar-keting in the region huge.

The Internet has become the life blood of many organiza-tions. Companies such as Microsoft, Google, Yahoo!, Amazon, and Facebook make their living when more people are online, and it is not a modest living by any means. As a result of the nature and the culture of the region, the product offering to the Arab world has to be customized to meet their lifestyle and expectations.

BARRIERS One of the barriers to increasing Internet usage in the Arab world is language. The rich culture of the Arab world is not yet matched by the content and usage online. Many companies have started building Arabic versions of their products, which are strictly tar-geted at the lucrative, growing region.

With all these companies being in the interactive business, they faced problems communicating with the users in their lan-guage. Even where the products were in Arabic, the user had several challenges in using them.

Microsoft launched its Arabic language support in the early 1990s, allowing users to type in their native language within the Microsoft products and online. The language plug-in was highly appreciated, but left the customer with much to desire. Keyboards did not have Arabic support, and the users were unac-customed to the letter layout.

The users were so familiar with the QWERTY keyboard that learning a new keyboard layout was very challenging for many of them. The first attempt to break that barrier was with typing teachers. Many were published, downloaded, and used. But typing teachers were insufficient and required a great deal of effort on the part of the user. Another approach was the virtual keyboard, in the Arabic alphabet, but this required continuous switching between applications to produce the Arabic text the user desired.

THE MOVEMENT OF THE PEOPLE Independently, the users resorted to transliteration: this involves using Roman characters to spell out Arabic words phonetically. This approach creates what is known as Arabish (also known as ‘Aralish,’ ‘Franco-Arabic, or Arabizi’). This character encoding of Arabic to the Roman alphabet and the Hindu-Arabic numerals is also known as Arabic Chat Alphabet because it is most commonly used to communicate on online chat services. Some users have also developed special nota-tions to use in place of letters that don’t exist in the Roman alphabet. For example:

The user types: ana raye7 el gam3a el sa3a 3 el 3asr.

Meaning: “ انا رايح الجامعه الساعه 3 العصر ”

English translation: “I’m going to college at 3pm.”

The user types: kif sa7tak, chou 3am ta3mil?.

Saying: “ كيف صحتك، شو عمتعمل؟ ”

English translation: “How is your health, what are you doing?”

As soon as organizations became aware of the massive trend of Arabish, wanting to tap into this market, they started adver-tising and communicating in this language form. Ads using the Arabish language began to appear online, on television, on prod-ucts and even in movie posters.

ARABISH IS NOT ENOUGH After capitalizing on the Arabish language, and as Internet usage grew tremendously, controversy started. There was a backlash against Arabish, with some believing it was changing the heritage of the Arab world. Reacting to this controversy, by knowing their customers well, companies such as Microsoft began to offer actual Arabic text in order to assure the maxi-mum reach, acceptance, and adoption of their products by all sectors of society.

A team at Microsoft’s Innovation Lab, led by Mostafa Ashour, started to build a product that translated Arabish into Arabic. Microsoft Maren, though not the first of its kind, was the most impressive. Microsoft Maren seamlessly integrated into Windows and allowed users to capitalize on their familiarity with the QWERTY keyboard, and still produce Arabic text. For example, if a user typed “saba7 el kheir” meaning “good morning”, صباح الخير would appear on the screen.

The advantage Maren had over rival products was that it was built into the users’ system, and logging in to websites, typing, copying, and pasting were no longer required.

The product was welcomed by online users. Now the users’ chat, blogs, posts, and comments were perfectly accessible to all their target audience. There were more than 250,000 down-loads of Maren from Microsoft pages alone, in addition to those downloaded from other sources. Mostafa Ashour, program manager at Microsoft, says, “This is a real life scenario where communicating in your own language makes all the difference. Expressing your intense feelings of joy or sorrow is better served using your native tongue. Maren helps you communicate effi-ciently in Arabic if you lack access to an Arabic keyboard or you are not familiar with one.”

The evolution of products for the Arab world is very interest-ing to observe, by knowing the market, not least because compa-nies can trap into the huge potential for sales in the region.

Questions for Discussion

1. Using www.internetworldstats.com select one country in the Arab world and analyze the market demographics, then select a lucrative market segment and explain your choice.

2. For that segment propose a product offering based on Internet usage that delivers value to the customer.

3. Define the positioning that you will offer to your customers based on what you know about the behavior of the selected segment.

4. How does the launch of Maren affect the business of Microsoft in the Arab world?

Sources: “Internet World Stats: Usage and Population Statistics,” 2011, www.internetworldstats.com ; “Your Maren Story,” Miscrosoft Maren (MSDN Blogs), July 22, 2009, http://blogs.msdn.com/b/maren/archive/2009/07/22/your-maren-story.aspx; “Arabic chat albhabet,” wikipedia, http://en.wikipedia.org/wiki/Arabic_chat_alphabet.

This case was provided by Mohamed Radwan, adjunct faculty member at the American University in Cairo and managing director for Platinum Partners.


G1

Glossary Benchmarking | المقارنة المرجعية The process of comparing the company’s products and processes

to those of competitors or leading firms in other industries to

identify “best practices” and find ways to improve quality and

performance.

Benefit segmentation | تقسيم السوق وفقا للفائدة التى يسعى إليها المستهلك Dividing the market into groups according to the different benefits

that consumers seek from the product.

Brand equity |

تقسيم السوق وفقا للفائدة التى يسعى إليها المستهلك The differential effect that knowing the brand name has on customer

response to the product or its marketing.

Brand extension | توسيع استخدام العالمة التجارية Extending an existing brand name to new product categories.

Brand personality | سمات العالمة التجارية The specific mix of human traits that may be attributed to a particular

brand.

Brand | العالمة التجارية A name, term, sign, symbol, design, or a combination of these that

identifies the products or services of one seller or group of sellers and

differentiates them from those of competitors.

Break-even pricing (target profit pricing) |

التسعير على أساس نقطة التعادل (التسعير على أساس الربح المستهدف) Analysis to determine the unit volume and dollar sales needed to be

profitable given a particular price and cost structure.

Business analysis | تحليل األنشطة التجارية A review of the sales, costs, and profit projections for a new

product to find out whether these factors satisfy the company’s

objectives.

Business buyer behaviour |

سلوك مشتري منتجات أو خدمات األنشطة التجارية The buying behavior of the organizations that buy goods and services

for use in the production of other products and services or to resell or

rent them to others at a profit.

Business buying process | عملية شراء الخدمات والسلع التجارية The decision process by which business buyers determine which

products and services their organizations need to purchase, and

then find, evaluate, and choose among alternative suppliers and

brands.

Business portfolio |

مجموع االعمال التجارية و المنتجات التي تتكون منها و تقدمها الشركة The collection of businesses and products that make up the company.

Business promotions | العروض الترويجية للنشاط التجاري Sales promotion tools used to generate business leads, stimulate

purchases, reward customers, and motivate salespeople.

Business-to business (BB) online marketing |

التسويق اإللكتروني فيما بين المؤسسات التجارية Businesses using B2B Web sites, e-mail, online catalogs, online

trading networks, and other online resources to reach new business

customers, serve current customers more effectively, and obtain

buying efficiencies and better prices.

Business-to-consumer (BC) online marketing |

التسويق اإللكتروني بين الشركات والعمالء Businesses selling goods and services online to final consumers.

Adapted global marketing | التسويق العالمي المعدل حسب كل سوق An international marketing strategy for adjusting the marketing

strategy and mix elements to each international target market, bearing

more costs but hoping for a larger market share and return.

Administered VMS | نظام التسويق الرأسي المحكم A vertical marketing system that coordinates successive stages of

production and distribution, not through common ownership or

contractual ties, but through the size and power of one of the parties.

Adoption process | عملية تبني فكرة جديدة The mental process through which an individual passes from first

hearing about an innovation to final adoption.

Advertising | الدعاية Any paid form of nonpersonal presentation and promotion of ideas,

goods, or services by an identified sponsor.

Advertising agency | وكالة إعالنات A marketing services firm that assists companies in planning,

preparing, implementing, and evaluating all or portions of their

advertising programs.

Advertising budget | ميزانية الدعاية The dollars and other resources allocated to a product or company

advertising program.

Advertising media | وسائل اإلعالن The vehicles through which advertising messages are delivered to

their intended audiences.

Advertising objective | الهدف اإلعالني A specific communication task to be accomplished with a specific target audience during a specific period of time .

Advertising strategy | استراتيجية الدعاية The strategy by which the company accomplishes its advertising

objectives. It consists of two major elements: creating advertising

messages and selecting advertising media.

Affordable method | ميزانية دعاية يمكن تحملها Setting the promotion budget at the level management thinks the

company can afford.

Age and life-cycle segmentation |

التقسيم وفقا للفئة العمرية والدورة الحياتية Dividing a market into different age and life-cycle groups.

Alternative evaluation | التقييم البديل The stage of the buyer decision process in which the consumer uses

information to evaluate alternative brands in the choice set.

Approach | (في عملية البيع) المقابلة األولى The step in the selling process in which the salesperson meets the

customer for the first time.

Attitude | موقف A person’s consistently favorable or unfavorable evaluations, feelings,

and tendencies toward an object or idea.

Baby boomers | 1964 مواليد ما بعد الحرب العالمية الثانية وحتى عام The 78 million people born during the baby boom following World

War II and lasting until 1964.

Behavioural segmentation | التقسيم على أساس السلوك Dividing a market into groups based on consumer knowledge,

attitudes, uses, or responses to a product.

Belief | االعتقاد A descriptive thought that a person holds about something.

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G2 Glossary

Competitive marketing strategies | استراتيجيات التسويق التنافسية Strategies that strongly position the company against competitors

and that give the company the strongest possible strategic

advantage.

Competitive-parity method | طريقة التماثل التنافسية Setting the promotion budget to match competitors’ outlays.

Competitor analysis | تحليل الجهة المنافسة The process of identifying key competitors; assessing their objectives,

strategies, strengths and weaknesses, and reaction patterns; and

selecting which competitors to attack or avoid.

Competitor-centered company | شركة تركز على المنافس A company whose moves are mainly based on competitors’ actions

and reactions.

Complex buying behaviour | سلوك الشراء المعقد Consumer buying behavior in situations characterized by high

consumer involvement in a purchase and significant perceived

differences among brands.

Concentrated (niche) marketing | (متخصص) التسويق المركز A market coverage strategy in which a firm goes after a large share of

one or a few segments or niches.

Concept testing | اختبار المفاهيم Testing new-product concepts with a group of target consumers to

find out if the concepts have strong consumer appeal.

Consumer buyer behaviour | سلوك المستهلك الشرائي The buying behavior of final consumers—individuals and households

that buy goods and services for personal consumption.

Consumer market | سوق المستهلك All the individuals and households who buy or acquire goods and

services for personal consumption.

Consumer product | منتج االستهالكي A product bought by final consumer for personal consumption.

Consumer promotions | العروض الترويجية للعميل Sales promotion tools used to boost short-term customer buying and

involvement or to enhance longterm customer relationships.

Consumer-generated marketing | تسويق يقوم به المستهلك للسلعة Marketing messages, ads, and other brand exchanges created by

consumers themselves—both invited and uninvited.

Consumerism | حماية المستهلك An organized movement of citizens and government agencies to

improve the rights and power of buyers in relation to sellers.

Consumer-oriented marketing | التسويق الموجه للمستهلك The philosophy of sustainable marketing that holds that the company

should view and organize its marketing activities from the consumer’s

point of view.

Consumer-to-business (CB) online marketing |

التسويق اإللكتروني فيما بين المستهلكين والمؤسسات التجارية Online exchanges in which consumers search out sellers, learn about their

offers, and initiate purchases, sometimes even driving transaction terms.

Consumer-to-consumer (CC) online marketing |

التسويق اإللكتروني فيما بين المستهلكين Online exchanges of goods and information between final consumers.

Contract manufacturing | التسويق اإللكتروني فيما بين المستهلكين A joint venture in which a company contracts with manufacturers in a

foreign market to produce the product or provide its service.

Contractual VMS | نظام التسويق الرأسي التعاقدي A vertical marketing system in which independent firms at different

levels of production and distribution join together through contracts to

obtain more economies or sales impact than they could achieve alone.

Convenience product | (ميسر) منتج سهل المنال A consumer product that customers usually buy frequently,

immediately, and with a minimum of comparison and buying effort.

Buyer-readiness stages |

المراحل التي يمر خاللها المستهلك قبل عملية إتخاذ قرار الشراء The stages consumers normally pass through on their way to

purchase, including awareness, knowledge, liking, preference,

conviction, and purchase.

Buyers | المشترين The people in the organization’s buying center who make an actual

purchase.

Buying center | مركز الشراء All the individuals and units that play a role in the purchase decision

making process.

Buzz marketing | التسويق بلفت االنتباه Cultivating opinion leaders and getting them to spread information

about a product or service to others in their communities.

By-product pricing | تسعير المنتجات الفرعية Setting a price for by-products in order to make the main product’s

price more competitive.

Captive-product pricing | تسعير المنتجات المساندة Setting a price for products that must be used along with a main

product, such as blades for a razor and film for a camera.

Causal research |

البحث التسويقي االعتيادي الذى يختبر الفرضيات حول العالقة بين السبب والتأثير Marketing research to test hypotheses about cause-and-effect

relationships.

Chain stores | (سلسلة متاجر) متاجر متعددة الفروع Two or more outlets that are commonly owned and controlled.

Channel conflict | الصراع بين القنوات التسويقية Disagreement among marketing channel members on goals and

roles—who should do what and for what rewards.

Channel level | مستوى التوزيع A layer of intermediaries that performs some work in bringing the

product and its ownership closer to the final buyer

Click-and-mortar companies |

شركات تقوم بتسويق منتجاتها بالطرق التقليدية باإلضافة إلى اإلنترنت Traditional brick-and-mortar companies that have added online

marketing to their operations.

Click-only companies | شركات تقوم بتسويق منتجاتها عبر اإلنترنت فقط The so-called dotcoms, which operate only online without any brick-

and-mortar market presence.

Closing | اتمام عملية البيع The step in the selling process in which the salesperson asks the

customer for an order.

Co-branding | عالمة تجارية مشتركة The practice of using the established brand names of two different

companies on the same product.

Cognitive dissonance | الشعور بعدم الرضا بعد شراء المنتج Buyer discomfort caused by postpurchase conflict.

Commercial online databases | قواعد البيانات التجارية على اإلنترنت Computerized collections of information available from online

commercial sources or via the Internet.

Commercialization | تقديم منتج جديد للسوق Introducing a new product into the market.

Communication adaptation |

موائمة اإلعالنات التجارية لالسواق المحلية المختلفة A global communication strategy of fully adapting advertising

messages to local markets.

Competitive advantage | الميزة التنافسية An advantage over competitors gained by offering greater customer

value, either through lower prices or by providing more benefits that

justify higher prices.


Glossary G3

Customer-centered company | شركة تركز على العميل A company that pays balanced attention to both customers and

competitors in designing its marketing strategies.

Customer-centered new-product development |

تطوير المنتجات الجديدة المستهفة للعمالء New-product development that focuses on finding new ways to solve

customer problems and create more customer satisfying experiences.

Customer-perceived value | القيمة المدركة للمستهلك The customer’s evaluation of the difference between all the benefits and

all the costs of a marketing offer relative to those of competing offers.

Customer relationship management (CRM) |

ادارة عالقات المستهلكين Managing detailed information about individual customers and

carefully managing customer ‘touch points’ in order to maximize

customer loyalty.

Customer-value marketing | قيمة المستهلك التسويقية A principle of sustainable marketing that holds that a company should

put most of its resources into customer value-building marketing

investments.

Deciders | أصحاب القرار People in the organization’s buying center who have formal or

informal power to select or approve the final suppliers.

Decline stage | مرحلة التدهور The product life-cycle stage in which a product’s sales decline.

Deficient products | المنتجات المعيبة Products that have neither immediate appeal nor long-run benefits

Demand curve | منحنى الطلب A curve that shows the number of units the market will buy in a given

time period, at different prices that might be charged.

Demands | المتطلبات Human wants that are backed by buying power.

Demographic segmentation | التقسيم الديموغرافي Dividing the market into groups based on variables such as age,

gender, family size, family life cycle, income, occupation, education,

religion, race, generation, and nationality.

Demography | (علم دراسة السكان) الديمغرافيا The study of human populations in terms of size, density, location,

age, gender, race, occupation, and other statistics.

Department store | متاجر كبرى A retail organization that carries a wide variety of product lines—

each line is operated as a separate department managed by specialist

buyers or merchandisers.

Derived demand | الطلب االشتقاقي Business demand that ultimately comes from (derives from) the

demand for consumer goods.

Descriptive research | البحث الوصفي Marketing research to better describe marketing problems, situations,

or markets, such as the market potential for a product or the

demographics and attitudes of consumers.

Desirable products | المنتجات المرغوبة Products that give both high immediate satisfaction and high longrun

benefits.

Differentiated (segmented) marketing | (المجزأ) التسويق المتنوع A market-coverage strategy in which a firm decides to target several

market segments and designs separate offers for each.

Differentiation | المفاضلة Actually differentiating the market offering to create superior

customer value.

Differentiation | المفاضلة Actually differentiating the market offering to create superior

customer value.

Convenience store | متاجر صغيرة A small store, located near a residential area, that is open long

hours seven days a week and carries a limited line of high-turnover

convenience goods.

Conventional distribution channel | قنوات التوزيع التقليدية A channel consisting of one or more independent producers,

wholesalers, and retailers, each a separate business seeking to maximize

its own profits even at the expense of profits for the system as a whole.

Corporate (or brand) website |

الموقع اإللكتروني للشركة (أو العالمة التجارية) A website designed to build customer goodwill, collect customer

feedback, and supplement other sales channels, rather than to sell the

company’s products directly.

Corporate VMS | نظام التسويق الرأسي للشركات A vertical marketing system that combines successive stages of

production and distribution under single ownership—channel

leadership is established through common ownership.

Cost-based pricing | التسعير القائم على التكلفة Setting prices based on the costs for producing, distributing, and

selling the product plus a fair rate of return for effort and risk.

Cost-plus pricing | التسعير على أساس اجمالي التكلفة والربح Adding a standard markup to the cost of the product.

Countertrade | (المقايضة) التجارة عن طريق تبادل السلع بدال من المال International trade involving the direct or indirect exchange of goods

for other goods instead of cash.

Creative concept | مفهوم اإلبداع The compelling “big idea” that will bring the advertising message

strategy to life in a distinctive and memorable way.

Cultural environment | البيئة الثقافية Institutions and other forces that affect society’s basic values,

perceptions, preferences, and behaviors.

Culture | الثقافة The set of basic values, perceptions, wants, and behaviors learned by a

member of society from family and other important institutions.

Customer database | قواعد بيانات العمالء An organized collection of comprehensive data about individual

customers or prospects, including geographic, demographic,

psychographic, and behavioral data.

Customer equity | قيمة العميل The total combined customer lifetime values of all of the company’s

customers.

Customer insights | رؤى العمالء Fresh understandings of customers and the marketplace derived from

marketing information that become the basis for creating customer

value and relationships.

Customer lifetime value | القيمة الدائمة للعميل The value of the entire stream of purchases that the Customer would

make over a lifetime of patronage.

Customer relationship management | إدارة عالقات العمالء Managing detailed information about individual customers and

carefully managing customer “touch points” in order to maximize

customer loyalty.

Customer sales force structure | هيكل قوى البيع للعمالء A sales force organization under which salespeople specialize in

selling only to certain customers or industries.

Customer satisfaction | رضا المستهلك The extent to which a product’s perceived performance matches a

buyer’s expectations.

Customer value analysis | تحليل الفوائد التى يعتبرها العميل قيمة Analysis conducted to determine what benefits target customers value

and how they rate the relative value of various competitors’ offers.


G4 Glossary

Environmentalism | حماية البيئة An organized movement of concerned citizens and government

agencies to protect and improve people’s current and future living

environment.

E-procurement | الشراء اإللكتروني Purchasing through electronic connections between buyers and

sellers—usually online.

Ethnographic research | البحث اإلثنوغرافي A form of observational research that involves Sending trained

observers to watch and interact with consumers in their “natural

habitat.”

Event marketing | تسويق الحدث Creating a brand marketing event or serving as a sole or participating

sponsor of events created by others.

Exchange | تبادل The act of obtaining a desired object from someone by offering

something in return.

Exclusive distribution | التوزيع الحصري Giving a limited number of dealers the exclusive right to distribute the

company’s products in their territories.

Exclusive distributor | الموزع الحصريA representative who buys, stocks, and sells the products ofaforeign

company to a retailer and wholesaler in his or her territory.

Execution style | أسلوب التنفيذ The approach, style, tone, words, and format used for executing an

advertising message.

Experience curve (learning curve) | (منحنى التعلم) منحنى الخبرة The drop in the average per-unit production cost that comes with

accumulated production experience.

Experimental research | البحث التجريبي Gathering primary data by selecting matched groups of subjects,

giving them different treatments, controlling related factors, and

checking for differences in group responses.

Exploratory research | البحث االستكشافي Marketing research to gather preliminary information that will help

define problems and suggest hypotheses.

Exporting | التصدير Entering a foreign market by selling goods produced in the company’s

home country, often with little modification.

Factory outlet | منافذ بيع المصنع An off-price retailing operation that is owned and operated by a

manufacturer and that normally carries the manufacturer’s surplus,

discontinued, or irregular goods.

Fad | زيادة مؤقتة فى المبيعات نتيجة لشهرة منتج أو عالمة تجارية ما A temporary period of unusually high sales driven by consumer

enthusiasm and immediate product or brand popularity.

Fashion | موضة A currently accepted or popular style in a given field.

Fixed costs (overhead) | (المباشرة) التكاليف الثابتة Costs that do not vary with production or sales level.

FOB-origin pricing | التسعير على أساس مكان التسليم A geographical pricing strategy in which goods are placed free on

board a carrier; the customer pays the freight from the factory to the

destination.

Focus group interviewing |

مقابلة تضم مجموعة من األفراد تركز على موضوع ما بشكل معمق Personal interviewing that involves inviting six to ten people to

gather for a few hours with a trained interviewer to talk about a

product, service, or organization. The interviewer “focuses” the group

discussion on important issues.

Direct investment | استثمار مباشر Entering a foreign market by developing foreign-based assembly or

manufacturing facilities.

Direct marketing | التسويق المباشر Direct connections with carefully targeted individual consumers to

both obtain an immediate response and cultivate lasting customer

relationships—the use of direct mail, the telephone, direct response

television, e-mail, the Internet, and other tools to communicate

directly with specific consumers.

Direct marketing channel | قنوات التسويق المباشر A marketing channel that has no intermediary levels.

Direct-mail marketing | التسويق المباشر عبر البريد Direct marketing by sending an offer, announcement, reminder, or

other item to a person at a particular physical or virtual address.

Direct-response television marketing |

التسويق باالستجابة المباشرة عبر التليفزيون Direct marketing via television, including direct-response television advertising (or infomercials ) and home shopping channels .

Discount | الخصم A straight reduction in price on purchases during a stated period of time.

Discount store | معرض للسلع المخفضة A retail operation that sells standard merchandise at lower prices by

accepting lower margins and selling at higher volume.

Disintermediation | حذف الوسطاء The cutting out of marketing channel intermediaries by product or

service producers, or the displacement of traditional resellers by

radical new types of intermediaries.

Dissonance-reducing buying behavior |

سلوك المشتري عند شراء منتج باهظ الثمن مع وجود بضعة اختالفات بين الماركات

Consumer buying behaviour in situations characterized by high

involvement but few perceived differences among brands.

Distribution center | مركز توزيع A large, highly automated warehouse designed to receive goods from

various plants and suppliers, take orders, fill them efficiently, and

deliver goods to customers as quickly as possible.

Diversification | التنويع A strategy for company growth through starting up or acquiring

businesses outside the company’s current products and markets.

Downsizing | التقليص Reducing the business portfolio by eliminating products of business units

that are not profitable or that no longer fit the company’s overall strategy.

Dynamic pricing | التسعير الديناميكي Adjusting prices continually to meet the characteristics and needs of

individual customers and situations.

Economic community | المجتمع االقتصادي A group of nations organized to work toward common goals in the

regulation of international trade.

Economic environment | المناخ االقتصادي Factors that affect consumer buying power and spending patterns.

Engel’s laws | قوانين انجل Differences noted over a century ago by Ernst Engel in how

people shift their spending across food, housing, transportation,

health care, and other goods and services categories as family

income rises.

Environmental sustainability | االستدامة البيئية A management approach that involves developing strategies that both

sustain the environment and produce profits for the company.

Environmental sustainability | االستدامة البيئية A management approach that involves developing strategies that both

sustain the environment and produce profits for the company.


Glossary G5

Hypermarket | محل تجارى ضخم Very large stores traditionally aimed at meeting consumers’ total

needs for routinely purchased food and nonfood items. Includes

combined supermarket and discount stores, and category killers ,

which carry a deep assortment in a particular category and have a

knowledgeable staff.

Idea generation | توليد األفكار The systematic search for new-product ideas.

Idea screening | تصفية األفكار Screening new-product ideas in order to spot good ideas and drop

poor ones as soon as possible.

Income segmentation | تقسيم الدخل Dividing a market into different income groups.

Independent off-price retailer | بائع تجزئة مستقل للسلع المخفضة An off-price retailer that is either independently owned and run or is a

division of a larger retail corporation.

Indirect marketing channel | قنوات التسويق غير المباشرة Channel containing one or more intermediary levels.

Individual marketing | التسويق الفردي Tailoring products and marketing programs to the needs and

preferences of individual customers—also labeled “one-to-one

marketing,” “customized marketing,” and “markets-of-one marketing.”

Industrial product | منتج صناعي A product bought by individuals and organizations for further

processing or for use in conducting a business.

Influencers | أصحاب التأثير People in an organization’s buying center who affect the buying

decision; they often help define specifications and also provide

information for evaluating alternatives.

Information search | البحث عن المعلومات The stage of the buyer decision process in which the consumer is

aroused to search for more information; the consumer may simply have

heightened attention or may go into an active information search.

Innovative marketing | التسويق المبتكر A principle of sustainable marketing that requires that a company seek

real product and marketing improvements.

Inside sales force | قوى البيع الداخلية Inside salespeople who conduct business from their offices via

telephone, the Internet, or visits from prospective buyers.

Institutional market | السوق المؤسسي Schools, hospitals, nursing homes, prisons, and other institutions that

provide goods and services to people in their care.

Integrated logistics management | اإلدارة المتكاملة لإلمدادات The logistics concept that emphasizes teamwork, both inside the

company and among all the marketing channel organizations, to

maximize the performance of the entire distribution system.

Integrated marketing communications (IMC) |

االتصاالت التسويقية المتكاملة Carefully integrating and coordinating the company’s many

communications channels to deliver a clear, consistent, and

compelling message about the organization and its products.

Intensive distribution | التوزيع المكتف Stocking the product in as many outlets as possible.

Interactive marketing | التسويق التفاعلي Training service employees in the fine art of interacting with

customers to satisfy their needs.

Intermarket segmentation |

تقسيم المستهلكين طبقا لتشابه متطلباتهم الشرائية رغم اختالف بالدهم Forming segments of consumers who have similar needs and buying

behavior even though they are located in different countries.

Follow-up | المتابعة The last step in the selling process in which the salesperson follows up

after the sale to ensure customer satisfaction and repeat business.

Franchise | االمتياز A contractual association between a manufacturer, wholesaler, or

service organization (a franchiser) and independent businesspeople

(franchisees) who buy the right to own and operate one or more units

in the franchise system.

Franchise organization | منظمة االمتياز A contractual vertical marketing system in which a channel member, called

a franchiser, links several stages in the production-distribution process.

Freight-absorption pricing | التسعير على أساس تحمل قيمة الشحن A geographical pricing strategy in which the seller absorbs all or part

of the freight charges in order to get the desired business.

Gatekeepers | منسقي تداول المعلومات People in the organization’s buying center who control the flow of

information to others.

Gender segmentation | التجزئة على أساس الجنس Dividing a market into different groups based on gender.

General need description | الوصف العام للحاجات The stage in the business buying process in which the company

describes the general characteristics and quantity of a needed item.

Generation X | جيل إكس The 45 million people born between 1965 and 1976 in the “birth

dearth” following the baby boom.

Geographic pricing | التسعير الجغرافي Setting prices for customers located in different parts of the country or

world.

Geographic segmentation | التجزئة الجغرافية Dividing a market into different geographical units such as nations,

states, regions, counties, cities, or neighborhoods.

Global firm | شركة دولية A firm that, by operating in more than one country, gains R&D,

production, marketing, and financial advantages in its costs and

reputation that are not available to purely domestic competitors.

Good-value pricing | التسعير المبني على قيمة المنتج Offering just the right combination of quality and good service at a

fair price.

Government market | السوق الحكومي Governmental units— federal, state, and local—that purchase or rent

goods and services for carrying out the main functions of government.

Group | فئة Two or more people who interact to accomplish individual or mutual

goals.

Growth stage | مرحلة النمو The product life-cycle stage in which a product’s sales start climbing

quickly.

Growth-share matrix | مصفوفة حصة النمو A portfolio-planning method that evaluates a company’s strategic

business units in terms of its market growth rate and relative market

share. SBUs are classified as stars, cash cows, question marks, or dogs.

Habitual buying behavior | السلوك المعتاد في الشراء Consumer buying behavior in situations characterized by low-consumer

involvement and few significantly perceived brand differences.

Handling objections | معالجة االعتراض على الشراء The step in the selling process in which the salesperson seeks out,

clarifies, and overcomes customer objections to buying.

Horizontal marketing system | نظام التسويق األفقي A channel arrangement in which two or more companies at one level

join together to follow a new marketing opportunity.


G6 Glossary

Market leader | شركة رائدة في السوق The firm in an industry with the largest market share.

Market nicher | شركة متخصصة تعمل في سوق ال يتنافس فيه الكثير A firm that serves small segments that the other firms in an industry

overlook or ignore.

Market offering | الطرح في األسواق Some combination of products, services, information, or experiences

offered to a market to satisfy a need or want.

Market penetration | النفاذ إلى األسواق A strategy for company growth by increasing sales of current products

to current market segments without changing the product.

Market segment | الشريحة السوقية A group of consumers who respond in a similar way to a given set of

marketing efforts.

Market segmentation | تجزئة السوق Dividing a market into distinct groups of buyers who have different

needs, characteristics, or behaviors, and who might require separate

products or marketing programs.

Market targeting (targeting) | (أو االستهداف) استهداف السوق The process of evaluating each market segment’s attractiveness and

selecting one or more segments to enter.

Market-centered company |

الشركة التي تعين اهتماما متساويا لعمالئها ومنافسيها A company that pays balanced attention to both customers and

competitors in designing its marketing strategies.

Marketing | التسويق The process by which companies create value for customers and

build strong customer relationships in order to capture value from

customers in return.

Marketing channel (distribution channel) |

قناة التسويق (قتاة التوزيع) A set of interdependent organizations that help make a product or service

available for use or consumption by the consumer or business user.

Marketing channel design | تصميم قناة تسويقية Designing effective marketing channels by analyzing consumer needs,

setting channel objectives, identifying major channel alternatives, and

evaluating them.

Marketing channel management | إدارة قنوات التسويق Selecting, managing, and motivating individual channel members and

evaluating their performance over time.

Marketing concept | مفهوم التسويق The marketing management philosophy that holds that achieving

organizational goals depends on knowing the needs and wants of

target markets and delivering the desired satisfactions better than

competitors do.

Marketing control | الرقابة التسويقية The process of measuring and evaluating the results of marketing

strategies and plans and taking corrective action to ensure that

objectives are achieved.

Marketing environment | المناخ التسويقي The actors and forces outside marketing that affect marketing

management’s ability to build and maintain successful relationships

with target customers.

Marketing implementation | التنفيذ التسويقي The process that turns marketing strategies and plans into

marketing actions in order to accomplish strategic marketing

objectives.

Marketing information system (MIS) | نظام المعلومات التسويقية People and procedures for assessing information needs, developing the

needed information, and helping decision makers to use the information

to generate and validate actionable customer and market insights.

Intermodal transportation | النقل متعدد الوسائط Combining two or more modes of transportation.

Internal databases | قواعد البيانات الداخلية Electronic collections of consumer and market information obtained

from data sources within the company network.

Internal marketing | التسويق الداخلي Orienting and motivating customer-contact employees and

supporting service people to work as a team to provide customer

satisfaction.

Introduction stage | مرحلة تقديم المنتج إلى السوق The product life-cycle stage in which the new product is first

distributed and made available for purchase.

Joint ownership | ملكية مشتركة A joint venture in which a company joins investors in a foreign market

to create a local business in which the company shares joint ownership

and control.

Joint venturing | المشروع المشترك Entering foreign markets by joining with foreign companies to

produce or market a product or service.

Learning | التعلم Changes in an individual’s behavior arising from experience.

Licensing | الترخيص A method of entering a foreign market in which the company enters

into an agreement with a licensee in the foreign market, offering the

right to use a manufacturing process, trademark, patent, trade secret,

or other item of value for a fee or royalty.

Lifestyle | نمط المعيشة A person’s pattern of living as expressed in his or her activities,

interests, and opinions.

Line extension | توسيع خط اإلنتاج Extending an existing brand name to new forms, colors, sizes,

ingredients, or flavors of an existing product category.

Local agents | وكالء محليين Act as brokers between the local buyer and the foreign company

Local marketing | التسويق المحلي Tailoring brands and promotions to the needs and wants of local

customer groups—cities, neighborhoods, and even specific stores.

Macroenvironment | البيئة الكلية The larger societal forces that affect the microenvironment—

demographic, economic, natural, technological, political, and cultural

forces.

Madison & Vine | ماديسون وفين A term that has come to represent the merging of advertising and

entertainment in an effort to break through the clutter and create new

avenues for reaching consumers with more engaging messages.

Management contracting | التعاقد اإلداري A joint venture in which the domestic firm supplies the management

knowhow to a foreign company that supplies the capital; the domestic

firm exports management services rather than products.

Market | السوق The set of all actual and potential buyers of a product or service.

Market challenger | منافس قوي فى السوق A runner-up firm that is fighting hard to increase its market share in

an industry.

Market development | تنمية األسواق A strategy for company growth by identifying and developing new

market segments for current company products.

Market follower | شركة تابعة في السوق A runner-up firm that wants to hold its share in an industry without

rocking the boat.


Glossary G7

Mission statement | مهمة الشركة A statement of the organization’s purpose—what it wants to

accomplish in the larger environment.

Modified rebuy | إعادة الشراء بعد تعديل المنتج A business buying situation in which the buyer wants to modify

product specifications, prices, terms, or suppliers.

Motive (drive) | (دافع) حافز A need that is sufficiently pressing to direct the person to seek

satisfaction of the need.

Multichannel distribution system | نظام التوزيع متعدد القنوات A distribution system in which a single firm sets up two or more

marketing channels to reach one or more customer segments.

Natural environment | العوامل الطبيعية Natural resources that are needed as inputs by marketers or that are

affected by marketing activities.

Need recognition | الشعور بالحاجة The first stage of the buyer decision process, in which the consumer

recognizes a problem or need.

Needs | االحتياجات States of felt deprivation

New product | منتج جديد A good, service, or idea that is perceived by some potential customers

as new.

New task | مهمة جديدة A business buying situation in which the buyer purchases a product or

service for the first time.

New-product development | تطوير المنتج الجديد The development of original products, product improvements,

product modifications, and new brands through the firm’s own

product development efforts.

Nonpersonal communication channels | قنوات االتصال غير الشخصية Media that carry messages without personal contact or feedback,

including major media, atmospheres, and events.

Objective-and-task method | طريقة الهدف والمهمة Developing the promotion budget by (1) defining specific

objectives; (2) determining the tasks that must be performed to

achieve these objectives; and (3) estimating the costs of performing

these tasks. The sum of these costs is the proposed promotion

budget.

Observational research | البحث القائم على المالحظة Gathering primary data by observing relevant people, actions, and

situations.

Occasion segmentation | التجزئة على أساس المناسبات Dividing the market into groups according to occasions when buyers

get the idea to buy, actually make their purchase, or use the

Online advertising | اإلعالن على اإلنترنت Advertising that appears while consumers are surfing the Web,

including display ads, search-related ads, online classifieds, and other

forms.

Online focus groups | إعداد مجموعات نقاش مركزة على اإلنترنت Gathering a small group of people online with a trained moderator

to chat about a product, service, or organization and gain qualitative

insights about consumer attitudes and behavior.

Online marketing | التسويق اإللكتروني Company efforts to market products and services and build customer

relationships over the Internet.

Online marketing research | بحث التسويق عبر اإلنترنت Collecting primary data online through Internet surveys, online

focus groups, Web-based experiments, or tracking consumers’ online

behavior.

Marketing intelligence | االستخبارات التسويقية The systematic collection and analysis of publicly available

information about consumers, competitors, and developments in the

marketing environment.

Marketing intermediaries | الوسطاء التسويقيين Firms that help the company to promote, sell, and distribute its goods

to final buyers.

Marketing logistics (physical distribution) |

اإلمدادات التسويقية-التوزيع المادي Planning, implementing, and controlling the physical flow of

materials, final goods, and related information from points of origin to

points of consumption to meet customer requirements at a profit.

Marketing management | إدارة التسويق The art and science of choosing target markets and building profitable

relationships with them.

Marketing mix | المزيج التسويقي The set of controllable tactical marketing tools—product, price, place,

and promotion—that the firm blends to produce the response it wants

in the target market.

Marketing myopia | قصر النظر التسويقي The mistake of paying more attention to the specific products a

company offers than to the benefits and experiences produced by

these products.

Marketing research | البحث التسويقي The systematic design, collection, analysis, and reporting of data

relevant to a specific marketing situation facing an organization.

Marketing strategy | استراتيجيه التسويق The marketing logic by which the business unit hopes to create

customer value and achieve profitable customer relationships.

Marketing strategy development | تطوير استراتيجيات التسويق Designing an initial marketing strategy for a new product based on

the product concept.

Marketing Web site | موقع الكتروني للتسويق A website that engages consumers in interactions that will move them

closer to a direct purchase or other marketing outcome.

Market-penetration pricing |

وضع سعر منخفض لمنتج جديد بغية جذب عدد كبير من المشتركين و الحصول على حصة كبيرة من السوق Setting a low price for a new product in order to attract a large

number of buyers and a large market share.

Market-skimming pricing |

وضع سعر أعلى لزبائن معيينين يرغبون بدفع قيمة أعلى مقابل الحصول على امتياز الحصول على المنتج أوال Setting a high price for a new product to skim maximum revenues

layer by layer from the segments willing to pay the high price; the

company makes fewer but more profitable sales.

Maturity stage | مرحلة النضوج The product life-cycle stage in which sales growth slows or

levels off.

Microenvironment | البيئة التسويقية الجزئية The actors close to the company that affect its ability to serve its

customers—the company, suppliers, marketing intermediaries,

customer markets, competitors, and publics.

Micromarketing | التسويق الجزئي - تسويق ضيق النطاق The practice of tailoring products and marketing programs to the

needs and wants of specific individuals and local customer groups—

includes local marketing and individual marketing .

Millennials (Generation Y) | (جيل واي) جيل األلفية The 83 million children of the baby boomers, born between 1977 and

2000.


G8 Glossary

Positioning statement | بيان التمركز A statement that summarizes company or brand positioning— it takes

this form: To (target segment and need) our (brand) is (concept) that (point-of-difference) .

Postpurchase behaviour | سلوك ما بعد الشراء The stage of the buyer decision process in which the consumers

take further action after purchase, based on their satisfaction or

dissatisfaction.

Pre approach | التحضير المسبق The step in the selling process in which the salesperson or company

identifies qualified potential customers.

Presentation | عرض المنتج The step in the selling process in which the salesperson tells the “value

story” to the buyer, showing how the company’s offer solves the

customer’s problems.

Price | السعر The amount of money charged for a product or service, or the sum of

the values that customers exchange for the benefits of having or using

the product or service.

Price elasticity | المرونة السعرية A measure of the sensitivity of demand to changes in price.

Primary data | بيانات أولية Information collected for the specific purpose at hand.

Problem recognition | إدراك المشكلة The first stage of the business buying process in which someone in the

company recognizes a problem or need that can be met by acquiring a

good or a service.

Product | المنتج Anything that can be offered to a market for attention, acquisition,

use, or consumption that might satisfy a want or need.

Product adaptation | موائمة المنتج Adapting a product to meet local conditions or wants in foreign

markets.

Product bundle pricing | التسعير على أساس حزم المنتجات Combining several products and offering the bundle at a reduced

price.

Product concept | مفهوم المنتج A detailed version of the new-product idea stated in meaningful

consumer terms.

Product development | تطوير المنتج من فكرة إلى منتج فعلي Developing the product concept into a physical product in order to

ensure that the product idea can be turned into a workable market

offering.

Product development (p 44) | تطوير منتجات الشركة لتساهم فى نموهاA strategy for company growth by offering modified or new products

to current market segments.

Product invention | اختراع المنتج Creating new products or services for foreign markets.

Product life cycle | دورة حياة المنتج The course of a product’s sales and profits over its lifetime. It involves

five distinct stages: product development, introduction, growth,

maturity, and decline.

Product line pricing | تسعير خط اإلنتاج Setting the price steps between various products in a product line

based on cost differences between the products, customer evaluations

of different features, and competitors’ prices.

Product line | خط اإلنتاج A group of products that are closely related because they function

in a similar manner, are sold to the same customer groups, are

Online social networks | الربط اإلجتماعي عبر اإلنترنت Online social communities—blogs, social networking Web sites, or

even virtual worlds—where people socialize or exchange information

and opinions.

Opinion leader | قادة الرأي Person within a reference group who, because of special skills, knowledge,

personality, or other characteristics, exerts social influence on others.

Optional-product pricing | تسعير المنتجات غير الضرورية The pricing of optional or accessory products along with a main

product.

Order-routine specification | المواصفات الروتينية للطلبيات The stage of the business buying process in which the buyer writes

the final order with the chosen supplier(s), listing the technical

specifications, quantity needed, expected time of delivery, return

policies, and warranties.

Outside sales force ( field sales force ) |

قوى البيع الخارجية ( موظفو البيع الميدانيين) Outside salespeople who travel to call on customers in the field.

Packaging | التعبئة والتغليف The activities of designing and producing the container or wrapper for

a product.

Partner relationship management | إدارة العالقات مع الشركاء Working closely with partners in other company departments and

outside the company to jointly bring greater value to customers.

Percent-of-sales method |

تحديد ميزانية الدعاية على أساس نسبة معينة من المبيعات Setting the promotion budget at a certain percentage of current or

forecasted sales or as a percentage of the unit sales price.

Perception | اإلدارك The process by which people select, organize, and interpret

information to form a meaningful picture of the world.

Performance review | مراجعة األداء The stage of the business buying process in which the buyer assesses

the performance of the supplier and decides to continue, modify, or

drop the arrangement.

Personal communication channels | قنوات االتصال الشخصي Channels through which two or more people communicate directly

with each other, including face to face, on the phone, through mail or

e-mail, or even through an Internet “chat.”

Personal selling | البيع الشخصي Personal interactions between a customers and the firm’s sales

force for the purpose of making sales and building customer

relationships.

Personality | الشخصية The unique psychological characteristics that lead to relatively

consistent and lasting responses to one’s own environment.

Pleasing products | المنتجات الممتعة Products that give high immediate satisfaction but may hurt

consumers in the long run.

Political environment | البيئة السياسية Laws, government agencies, and pressure groups that influence and

limit various organizations and individuals in a given society.

Portfolio analysis | (العمل المؤسسي) تحليل الحقيبة االستثمارية The process by which management evaluates the products and

businesses that make up the company.

Positioning | التمركز Arranging for a product to occupy a clear, distinctive, and desirable

place relative to competing products in the minds of target

consumers.


Glossary G9

creating a demand vacuum that “pulls” the product through the

channel.

Purchase decision | قرار الشراء The buyer’s decision about which brand to purchase.

Push strategy | استراتيجيه الدفع A promotion strategy that calls for using the sales force and trade

promotion to push the product through channels. The producer

promotes the product to channel members who in turn promote it to

final consumers.

Reference prices | األسعار المرجعية Prices that buyers carry in their minds and refer to when they look at

a given product.

Retailer | بائع التجزئة A business whose sales come primarily from retailing.

Retailing | البيع بالتجزئة All activities involved in selling goods or services directly to final

consumers for their personal, non-business use.

Return on advertising investment | العائد من االستثمار اإلعالني The net return on advertising investment divided by the costs of the

advertising investment.

Return on marketing investment | عائد استثمار التسويق The net return from a marketing investment divided by the costs of

the marketing investment.

Sales force management | إدارة قوى البيع The analysis, planning, implementation, and control of sales force

activities. It includes designing sales force strategy and structure

and recruiting, selecting, training, supervising, compensating, and

evaluating the firm’s salespeople.

Sales promotion | الترويج للمبيعات Short-term incentives to encourage the purchase or sale of a product

or service.

Sales quota | حصة المبيعات A standard that states the amount a salesperson should sell and how

sales should be divided among the company’s products.

Salesperson | مندوب مبيعات An individual representing a company to customers by

performing one or more of the following activities: prospecting,

communicating, selling, servicing, information gathering, and

relationship building.

Salutary products |

المنتجات المفيدة (منتجات ضئيله الجاذبية بالنسبة للعمالء , ولكنها مفيدة لهم على المدى البعيد) Products that have low appeal but may benefit consumers in the long

run.

Sample | عينة A segment of the population selected for marketing research to

represent the population as a whole.

Secondary data | بيانات ثانوية Information that already exists somewhere, having been collected for

another purpose.

Segmented pricing | التسعير المجزئ Selling a product or service at two or more prices, where the difference

in prices is not based on differences in costs.

Selective distribution | التوزيع االنتقائي The use of more than one, but fewer than all, of the intermediaries

who are willing to carry the company’s products.

Selling concept | مفهوم البيع The idea that that consumers will not buy enough of the firm’s

products unless it undertakes a large-scale selling and promotion

effort.

marketed through the same types of outlets, or fall within given

price ranges.

Product mix (product portfolio) |

المنتجات المتنوعة المعروضة للبيع (قائمة المنتجات) The set of all product lines and items that a particular seller offers for sale.

Product position | مركز المنتج The way the product is defined by consumers on important

attributes—the place the product occupies in consumers’ minds

relative to competing products.

Product quality | جودة المنتج The characteristics of a product or service that bear on its ability to

satisfy stated or implied customer needs.

Product sales force structure |

هيكل قوى بيع جزء من منتجات الشركة للعمالء A sales force organization under which salespeople specialize in

selling only a portion of the company’s products or lines

Product specification | مواصفات المنتج The stage of the business buying process in which the buying

organization decides on and specifies the best technical product

characteristics for a needed item.

Product/market expansion grid | شبكة توسيع حجم المنتج/السوق A portfolio-planning tool for identifying company growth

opportunities through market penetration, market development,

product development, or diversification.

Production concept | مفهوم اإلنتاج The idea that consumers will favor products that are available and

highly affordable and that the organization should therefore focus on

improving production and distribution efficiency.

Promotion mix (marketing communications mix) |

مزيج ترويجي (مزيج االتصاالت التسويقية) The specific blend of advertising, sales promotion, public relations,

personal selling, and direct-marketing tools that the company uses

to persuasively communicate customer value and build customer

relationships.

Promotional pricing | التسعير الترويجي Temporarily pricing products below the list price, and sometimes even

below cost, to increase short-run sales.

Proposal solicitation | طلب العروض The stage of the business buying process in which the buyer invites

qualified suppliers to submit proposals.

Prospecting | البحث عن العمالء The step in the selling process in which the salesperson or company

identifies qualified potential customers.

Psychographic segmentation | التجزئة السيكوغرافية Dividing a market into different groups based on social class, lifestyle,

or personality characteristics.

Psychological pricing | التسعير السيكولوجي A pricing approach that considers the psychology of prices and not

simply the economics; the price is used to say something about the

product.

Public | الجمهور Any group that has an actual or potential interest in or impact on an

organization’s ability to achieve its objectives.

Public relations | العالقات العامة Building good relations with the company’s various publics by

obtaining favorable publicity, building up a good corporate image,

and handling or heading off unfavorable rumors, stories, and events.

Pull strategy | استراتيجيه السحب A promotion strategy that calls for spending a lot on advertising and

consumer promotion to induce final consumers to buy the product,


G10 Glossary

Specialty store | متجر الصناعات المتخصصة A retail store that carries a narrow product line with a deep assortment

within that line.

Standardized global marketing | التسويق العالمي الموحد An international marketing strategy for using basically the same

marketing strategy and mix in all the company’s international

markets.

Store brand (private brand) |

عالمة تجارية مملوكة لتاجر(عالمة تجارية خاصة)

A brand created and owned by a reseller of a product or service

Straight product extension |

توسيع نطاق تسويق المنتج دون إحداث اي تغيير فيه Marketing a product in a foreign market without any change.

Straight rebuy | إعادة الشراء المباشر A business buying situation in which the buyer routinely reorders

something without any modifications.

Strategic group | المجموعة اإلستراتيجية A group of firms in an industry following the same or a similar strategy.

Strategic planning | التخطيط االستراتيجي The process of developing and maintaining a strategic fit between

the organization’s goals and capabilities and its changing marketing

opportunities.

Style | نمط A basic and distinctive mode of expression.

Subculture | الجماعة الفرعية A group of people with shared value systems based on common life

experiences and situations.

Supermarket | السوبر ماركت A large, low-cost, low-margin, high-volume, self-service store that

carries a wide variety of grocery and household products.

Supplier development | تطوير أداء الموردين Systematic development of networks of supplier partners to ensure an

appropriate and dependable supply of products and materials for use

in making products or reselling them to others.

Supplier search | د البحث عن مور The stage of the business buying process in which the buyer tries to

find the best vendors.

Supplier selection | اختيار المورد The stage of the business buying process in which the buyer reviews

proposals and selects a supplier or suppliers.

Supply chain management | إدارة سلسلة اإلمداد Managing upstream and downstream value-added flows of materials,

final goods, and related information among suppliers, the company,

resellers, and final consumers.

Survey research | البحث المسحي Gathering primary data by asking people questions about their

knowledge, attitudes, preferences, and buying behavior.

Sustainable marketing | التسويق المستدام A principle of sustainable marketing that holds that a company should

make marketing decisions by considering consumers’ wants, the

company’s requirements, consumers’ longrun interests, and society’s

long-run interests.

SWOT analysis | (نقاط القوة والضعف والفرص والتهديدات) تحليل سوت An overall evaluation of the company’s strengths (S), weaknesses (W),

opportunities (O), and threats (T).

Systems selling (solutions selling) | (بيع الحلول) بيع األنظمة Buying a packaged solution to a problem from a single seller, thus

avoiding all the separate decisions involved in a complex buying situation.

Target costing | التكاليف المستهدفة Pricing that starts with an ideal selling price, then targets costs that

will ensure that the price is met.

Selling process | عملية البيع The steps that the salesperson follows when selling, which include

prospecting and qualifying, preapproach, approach, presentation and

demonstration, handling objections, closing, and follow-up.

Sense-of-mission marketing | التسويق على أساس اإلحساس بالمسئولية A principle of sustainable marketing that holds that a company should

define its mission in broad social terms rather than narrow product

terms.

Service | الخدمات Any activity or benefit that one party can offer to another that is

essentially intangible and does not result in the ownership of anything.

Service inseparability | تالزم الخدمات A major characteristic of services—they are produced and consumed

at the same time and cannot be separated from their providers.

Service intangibility | الخدمات غير الملموسة A major characteristic of services—they cannot be seen, tasted, felt,

heard, or smelled before they are bought.

Service perishability | عدم قابلية تخزين الخدمة A major characteristic of services—they cannot be stored for later sale

or use.

Service retailer | (خدمات) بائع تجزئة A retailer whose product line is actually a service, including hotels,

airlines, banks, colleges, and many others.

Service variability | تنوع الخدمات A major characteristic of services—their quality may vary greatly,

depending on who provides them and when, where, and how.

Service-profit chain | سلسلة ربحية الخدمة The chain that links service firm profits with employee and customer

satisfaction.

Share of customer | حصة العميل The portion of the customer’s purchasing that a company gets in its

product categories.

Shopping center | مركز تسوق A group of retail businesses planned, developed, owned, and

managed as a unit.

Shopping product | منتج شرائي A consumer product that the customer, in the process of selection and

purchase, usually compares on such bases as suitability, quality, price,

and style.

Social class | طبقة إجتماعية Relatively permanent and ordered divisions in a society whose

members share similar values, interests, and behaviors.

Social marketing | التسويق االجتماعي The use of commercial marketing concepts and tools in programs

designed to influence individuals’ behavior to improve their well-

being and that of society.

Societal marketing | التسويق المجتمعي A principle of sustainable marketing that holds that a company should

make marketing decisions by considering consumers’ wants, the

company’s requirements, consumers’ longrun interests, and society’s

long-run interests.

Societal marketing concept | مفهوم التسويق المجتمعي The idea that a company’s marketing decisions should consider

consumers’ wants, the company’s requirements, consumers’ long-run

interests, and society’s long-run interests.

Spam | البريد غير المرغوب Unsolicited, unwanted commercial e-mail messages

Specialty product | منتج خاص A consumer product with unique characteristics or brand

identification for which a significant group of buyers is willing to

make a special purchase effort.


Glossary G11

Value chain | سلسلة اإلمدادات؛ سلسلة األنشطة المضيفة للقيمة The series of departments that carry out value-creating activities to

design, produce, market, deliver, and support a firm’s products.

Value delivery network | شبكة توفير القيمة The network made up of the company, suppliers, distributors,

and ultimately customers who “partner” with each other to

improve the performance of the entire system in delivering

customer value.

Value proposition | قيمة المنتج The full positioning of a brand—the full mix of benefits upon which it

is positioned.

Value-added pricing | التسعير القائم على القيمة المضافة Attaching value added features and services to differentiate a

company’s offers and charging higher prices.

Value-based pricing | التسعير المبني على القيمة Setting price based on buyers’ perceptions of value rather than on the

seller’s cost.

Variable costs | التكاليف المتغيرة Costs that vary directly with the level of production.

Variety-seeking buying behaviour | سلوك الشراء المتسم بالتنوع Consumer buying behavior in situations characterized by low

consumer involvement but significant perceived brand differences.

Vertical marketing system (VMS) | نظام التسويق الرأسي A distribution channel structure in which producers, wholesalers, and

retailers act as a unified system. One channel member owns the others,

has contracts with them, or has so much power that they all cooperate

Viral marketing | التسويق عبر التنتاقل اإللكتروني The Internet version of word-of-mouth marketing—Web sites, videos,

e-mail messages, or other marketing events that are so infectious that

customers will want to pass them along to friends.

Wants | الرغبات The form human needs take as shaped by culture and individual

personality.

Whole-channel view | المنظور الكامل لقنوات التسويق Designing international channels that take into account the entire

global supply chain and marketing channel, forging and effective

global value delivery network.

Wholesaler | تاجر الجملة A firm engaged primarily in wholesaling activities.

Wholesaling | البيع بالجملة All activities involved in selling goods and services to those buying

for resale or business use.

Word-of-mouth influence | تأثير الكلمة المنطوقة Personal communication about a product between target buyers and

neighbors, friends, family members, and associates.

Zone pricing | التسعير حسب المناطق A geographical pricing strategy in which the company sets up two or

more zones. All customers within a zone pay the same total price; the

more distant the zone, the higher the price.

Target market | السوق المستهدفة A set of buyers sharing common needs or characteristics that the

company decides to serve.

Team selling | البيع بواسطة الفرق Using teams of people from sales, marketing, engineering, finance,

technical support, and even upper management to service large,

complex accounts.

Team-based new-product development |

تطوير منتج جديد باالعتماد على فريق العمل An approach to developing new products in which various company

departments work closely together, overlapping the steps in the

product development process to save time and increase effectiveness.

Technological environment | البيئة التكنولوجية Forces that create new technologies, creating new product and market

opportunities.

Telephone marketing | التسويق عن طريق التليفون Using the telephone to sell directly to customers.

Territorial sales force structure |

الهيكل التنظيمي لمندوبي المبيعات في مناطق جغرافية مختلفة A sales force organization that assigns each salesperson to an exclusive

geographic territory in which that salesperson sells the company’s full

line.

Test marketing | اإلختبار التسويقي The stage of new-product development in which the product and

marketing program are tested in realistic market settings.

Third-party logistics (PL) provider | مقدم الخدمات اللوجستية المستقل An independent logistics provider that performs any or all of the

functions required to get its client’s product to market.

Total costs | التكاليف اإلجمالية The sum of the fixed and variable costs for any given level of

production.

Trade promotions | العروض الترويجية التجارية Sales promotion tools used to persuade resellers to carry a brand,

give it shelf space, promote it in advertising, and push it to

consumers.

Undifferentiated (mass) marketing | (الموسع) التسويق المفتوح A market-coverage strategy in which a firm decides to ignore

market segment differences and go after the whole market with

one offer.

Uniform-delivered pricing | التسعيرة الموحدة للتوصيل A geographical pricing strategy in which the company charges

the same price plus freight to all customers, regardless of their

location.

Unsought product | منتج غير مطلوب A consumer product that the consumer either does not know about or

knows about but does not normally think of buying.

Users | المستخدمون Members of the buying organization who will actually use the

purchased product or service.


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Inside all new copies of this textbook is a pre-paid access code that students can use to access MyMarketingLab at www.pearsoned.co.uk/awe/kotler.

The essential marketing textbook for the Arab region and beyond.

Discover what makes a marketing campaign successful in this rapidly developing region through the Arab edition of this widely acclaimed textbook. Kotler and Armstrong’s hugely successful approach has been adapted specifically for the Arab world, using Arab-world business examples, case studies and statistics as well as cultural and demographic insights. Emphasis is placed on making marketing ideas and concepts come alive by encouraging readers to apply established marketing principles to real companies in real situations.

Philip Kotle

Gary A

rmstrong

Ahm

ed Tolba A

nwar H

abib

Arab W

orld Edition

Princ

iples of

Ma

rketing

PRINCIPLES OF MARKETING

Philip Kotler

Gary Armstrong

Ahmed Tolba

Anwar Habib

Documents

A01 KOTL5681 01 SE FM.indd ii 8/31/11 8:59 PMpearsonmiddleeastawe.com/pdfs/principles-of-marketing_SAMPLE.pdf · He is also Director of El-Khazindar Business Research and Case Center