Gary Armstrong Philip Kotler

TINGAn Introduction

/Brill;

Gary ArmstrongUniversity of North Carolina It

Philip KotlerNorthwestern University

Prentice Hall, Upper Saddle River, New Jersey 07458

Contents

Understanding Marketing and the MarketingManagement Process

1. Marketing in a Changing World: Creating Customer Value and Satisfaction 12. Strategic Planning and the Marketing Process 34

Analyzing Marketing Opportunities

3. The Global Marketing Environment 674. Marketing Research and Information Systems5. Consumer and Business Buyer Behavior 138

101

Developing Marketing Strategy and the Marketing Mix

6. Market Segmentation, Targeting, and Positioning for Competitive Advantage 1777. Product and Services Strategy 2178. New-Product Development and Product Life-Cycle Strategies 2599. Pricing Products: Pricing Considerations and Strategies 287 ,

10. Distribution Channels and Logistics Management 32611. Retailing and Wholesaling 36512. Integrated Marketing Communications: Advertising and Public Relations 40013. Integrated Marketing Communications: Personal Selling and Sales Promotion 43814. Direct and On-Line Marketing 473

Extending Marketing

15. The Global Marketplace 51116. Marketing and Society: Social Responsibility and Marketing Ethics 543

Appendices

Appendix 1 Marketing ArithmeticAppendix 2 Careers in Marketing

Glossary G1Endnotes N1Video Cases C1Credits CR1Indices 11

A1A8

VII

Ti

s ,

« : •; . . . \

Preface xix ~; "

Understanding Marketing and the Marketing / ; ; • ' ••Management Process

1. Marketing in a Changing World: Creating Customer Value and Satisfaction 1W h a t Is Marke t ing? 4 : ; "'"'•• • - : ; ' " : ' ' ' ' •> ' " l'v' ' ' • '

Marketing Defined 4, Needs, Wants, and Demands 5, Products and Services 6, Value, Satisfaction,and Quality 7, Exchange, Transactions, and Relationships 9, Markets 13, Marketing 14

Marketing Management 15

Demand Management 15, Building Profitable C u s t o m e r Relationships 15 - • | . l > > >

Marketing Management Philosophies 17 •••••* , , i . . , , . , . ,

The Production Concept 18, The Product Concept 18, The Selling Concept 18, The MarketingConcept 19, The Societal Marketing Concept 20

Marketing Challenges in the New Millennium 22Growth of Nonprofit Marketing 23, The Information Technology Boom 24, Rapid Globalization 25,The Changing World Economy 28, The Call for More Ethics and Social Responsibility 28, The NewMarketing Landscape 29

Reviewing the Concepts 30, Navigating the Key Terms 31, Travel Log 31, Traveling theNet 32, MAP—Marketing Applications 33

2. Strategic Planning and the Marketing Process 34,. • Strategic Planning 37 ; ; , ; v , ? : , - , ,4

Defining the Company Mission 38, Setting Company Objectives and Goals 40

Designing the Business Portfolio 41Analyzing the Current Business Portfolio 41, Developing Growth Strategies 43, Planning Functional

,-:, Strategies 47

Strategic Planning and Small Businesses 49 '• r'no-

, The Marketing Process 50

Targeting Consumers 50, Developing the Marketing Mix 55

Managing the Marketing Effort 56

Marketing Analysis 56, Marketing Planning 57, Marketing Implementation 57, MarketingDepartment Organization 59, Marketing Control 62, The Marketing Environment 62


ix

CONTENTS

Analyzing Marketing Opportunities

3. The Global Marketing Environment 67The Company's Microenvironment 70

The Company 70, Suppliers 71, Marketing Intermediaries 71, Customers 72, Competitors 73,Publics 73

The Company's Macroenvironment 74Demographic Environment 75, Economic Environment 82, Natural Environment 84, TechnologicalEnvironment 86, Political Environment 87, Cultural Environment 90

Responding to the Marketing Environment 96


4. Marketing Research and Information Systems 101The Marketing Information System 104

Assessing Information Needs 104, Developing Information 105, Distributing Information 109

The Marketing Research Process 110Defining the Problem and Research Objectives 111, Developing the Research Plan 111, Implementingthe Research Plan 127, Interpreting and Reporting the Findings 128

Other Marketing Research Considerations 128Marketing Research in Small Businesses and Nonprofit Organizations 128, International MarketingResearch 130, Public Policy and Ethics in Marketing Research 132


5. Consumer and Business Buyer Behavior 138Consumer Markets and Consumer Buyer Behavior 140

Model of Consumer Behavior 141, Characteristics Affecting Consumer Behavior 141, The BuyerDecision Process 154, The Buyer Decision Process for New Products 157, Consumer Behavior AcrossInternational Borders 160

Business Markets and Business Buyer Behavior 161> Business Markets 162, Business Buyer Behavior 163


Developing Marketing Strategy and the Marketing Mix

6. Market Segmentation, Targeting, and Positioning for Competitive Advantage 177Market Segmentation 180

Levels of Market Segmentation 180, Bases for Segmenting Consumer Markets 186, Segmenting BusinessMarkets 195, Segmenting International Markets 196, Requirements for Effective Segmentation 199

CONTENTS

: Market Targeting 200Evaluating Market Segments 200, Selecting Market Segments 200

Positioning for Competitive Advantage 206

Positioning Strategies 206, Choosing and Implementing a Positioning Strategy 206


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7. Product and Services Strategy 217What Is a Product? 219 "' " ' "" " '*"""' ' " ' "" '

The Product-Service Continuum 220, Levels of Product 220

Product Classifications 221Consumer Products 221, Industrial Products 223, Organizations, Persons, Places, andIdeas 224

I n d i v i d u a l P r o d u c t D e c i s i o n s 2 2 6 • ' • •• • • •••••••.•'-•". -«-r-

Product Attributes 226, Branding 227, Packaging 237, Labeling 240, Product SupportServices 240, Product Decisions and Social Responsibility 241 , oivrawn

Product Line Decisions 242

Product Mix Decisions 243 . . •

Services Marketing 244

Nature and Characteristics of a Service 245, Marketing Strategies for Service Firms 246

International Product and Services Marketing 252

Reviewing the Concepts 254, Navigating the Key Terms 256, Travel Log 256, Traveling theNet 257, MAP—Marketing Applications 258 " ;-

8. New-Product Development and Product Life-Cycle Strategies 259New-Product Development Strategy 261

Idea Generation 262, Idea Screening 265, Concept Development and Testing 265, MarketingStrategy Development 268, Business Analysis 269, Product Development 269, Test Marketing 271,Commercialization 271, Speeding Up New-Product Development 274

Product Life-Cycle Strategies 276Introduction Stage 278, Growth Stage 278, Maturity Stage 279, Decline Stage 282

Reviewing the Concepts 283, Navigating the Key Terms 284, Travel Log 284, Traveling the. Net 285, MAP—Marketing Applications 286

9. Pricing Products: Pricing Considerations and Strategies 287Factors to Consider When Setting Prices 290

Internal Factors Affecting Pricing Decision 290, External Factors Affecting Pricing Decisions 293

General Pricing Approaches 299

Cost-Based Pricing 299, Value-Based Pricing 301, Competition-Based Pricing 304

New-Product Pricing Strategies 304Market-Skimming Pricing 306, Market-Penetration Pricing 306

CONTENTS

Product-Mix Pricing Strategies 307Product-Line Pricing 307, Optional-Product Pricing 308, Captive-Product Pricing 308, ByproductPricing 308, Product-Bundle Pricing 310

Price-Adjustment Strategies 310Discount and Allowance Pricing 310, Segmented Pricing 311, Psychological Pricing 311,Promotional Pricing 312, Geographical Pricing 314, International Pricing 315

Price Changes 316

Initiating Price Changes 316, Responding to Price Changes 318

Public Policy and Pricing 320


10. Distribution Channels and Logistics Management 326The Nature of Distribution Channels 330

Why Are Marketing Intermediaries Used? 330, Distribution Channel Functions 331, Number ofChannel Levels 331

Channel Behavior and Organization 333

Channel Behavior 334, Vertical Marketing Systems 335, Horizontal Marketing Systems 339, HybridMarketing Systems 340

Channel Design Decisions 342Analyzing Consumer Service Needs 342, Setting Channel Objectives and Constraints 342, IdentifyingMajor Alternatives 343, Evaluating the Major Alternatives 345, Designing International Distribution

•'f!i Channels 345

Channel Management Decisions 347Selecting Channel Members 347, Motivating Channel Members 347, Evaluating ChannelMembers 348

Public Policy and Distribution Decisions 350

Physical Distribution and Logistics Management 350

Nature and Importance of Physical Distribution and Marketing Logistics 351, Goals of the LogisticsSystem 352, Major Logistics Functions 353, Integrated Logistics Management 355


11. Retailing and Wholesaling 365Retailing 368

Store Retailing 368, Nonstore Retailing 375, Retailer Marketing Decisions 379, The Future ofRetailing 384

Wholesaling 390

Types of Wholesalers 390, Wholesaler Marketing Decisions 391, Trends in Wholesaling 394


CONTENTS

12. Integrated Marketing Communications: Advertising and PublicRelations 400The Marketing Communications Mix 403

Integrated Marketing Communications 404 , • ., j

The Changing Communications Environment 404, The Need for Integrated Marketing ,Communications 405, A View of the Communication Process 407 . . ,

Setting the Overall Communication Mix 408The Nature of Each Promotion Tool 408, Promotion-Mix Strategies 410, Socially ResponsibleMarketing Communication 411 " "

Advertising 413 ' . _Setting Advertising Objectives 414, Setting the Advertising Budget 415, Developing AdvertisingStrategy 416, Evaluating Advertising 426, Other Advertising Considerations 427

Public Relations 429

Major Public Relations Tools 432

Reviewing the Concepts 434, Navigat ing the Key Terms 435 , Travel Log 435 , Traveling the

Net 436, M A P — M a r k e t i n g Applicat ions 437 •; : - , ( •:-• .•;.? -,»:.• ;,,

13. Integrated Marketing Communications: Personal Selling and SalesPromotion 438Personal Selling 440 '' L ; ! ( l i i ; n r i i f l h ^ ; ' i n

The Nature of Personal Selling 440, The Role of the Sales Force 442 drr.i/.

Managing the Sales Force 443 " ; •-'>•;? ••'• '.>n: n

Designing Sales Force Strategy and Structure 443, Recruiting and Selecting Salespeople 447, TrainingSalespeople 450, Compensating Salespeople 450, Supervising Salespeople 452, EvaluatingSalespeople 456

Principles of Personal Selling 456The Personal Selling Process 456, Steps in the Selling Process 457, Relationship Marketing 459

Sales Promotion 460

Rapid Growth of Sales Promotion 461, Sales Promotion Objectives 462, Major Sales PromotionTools 463, Developing the Sales Promotion Program 468


14. Direct and On-Line Marketing 473What Is Direct Marketing? 476

Growth and Benefits of Direct Marketing 476

The Benefits of Direct Marketing 477, The Growth of Direct Marketing 478

Customer Databases and Direct Marketing 478

Forms of Direct Marketing Communication 483Face-to-Face Selling 483, Direct-Mail Marketing 483, Catalog Marketing 485, Telemarketing 486,Direct-Response Television Marketing 486, Kiosk Marketing 487

CONTENTS

On-line Marketing and Electronic Commerce 488Rapid Growth of On-line Marketing 489, The On-line Consumer 490, The Benefits of On-lineMarketing 492, On-line Marketing Channels 493, The Promise and Challenges of On-lineMarketing 500 , ' • - ' - n < - '••<•• •••• •• • • . • > • • • > ; J A U . W I : ; n i

Integrated Direct Marketing 501 "

Public Policy and Ethical Issues in Direct Marketing 504Irritation, Unfairness, Deception, and Fraud 504, Invasion of Privacy 504


Extending Marketing

15. The Global Marketplace 511 ^ . - • . • . . . A

Global Marketing into the Twenty-First Century 514 - ! : v-'J

Looking at the Global Marketing Environment 518The International Trade System 518, Economic Environment 521, Political-Legal Environment 522,Cultural Environment 523 •-.-;• ••: •..-;;,.

Deciding Whether to Go International 525 ;: ; ..- ;. • •••>

Deciding Which Markets to Enter 525 ..v .' •

Deciding How to Enter the Market 529 • ' , - ...,\\iMExporting 529, Joint Venturing 530, Direct Investment 531 > : v";

Deciding on the Global Marketing Program 532 ' ' ,Product 532, Promotion 534, Price 536, Distribution Channels 536

Deciding on the Global Marketing Organization 538


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16. Marketing and Society: Social Responsibility and Marketing Ethics 543Social Criticisms of Marketing 546

Marketing's Impact on Individual Consumers 546, Marketing's Impact on Society as a Whole 553,Marketing's Impact on Other Businesses 555

Citizen and Public Actions to Regulate Marketing 556 '•"•" •"

Consumerism 556, Environmentalism 557, Public Actions to Regulate Marketing 563

Business Actions Toward Socially Responsible Marketing 563Enlightened Marketing 563, Marketing Ethics 566


CONTENTS

Appendix 1 Marketing Arithmetic A1

Appendix 2 Careers in Marketing A8

Glossary G1

Endnotes N1

Video Cases C1

Credits CR1

Indices

Company/Brand Name 11

Author 110

Subject 113

Documents

Gary Armstrong Philip Kotler