Marketing. An Introduction. Marketing. Gary Armstrong Philip Kotler
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1 Marketing An Introduction For these Global Editions, the editorial team at Pearson has collaborated with educators across the world to address a wide range of subjects and requirements, equipping students with the best possible learning tools. This Global Edition preserves the cutting-edge approach and pedagogy of the original, but also features alterations, customization and adaptation from the North American version. Global edition Global edition Global edition TWELFTH edition Marketing An Introduction TWELFTH edition Armstrong Kotler Gary Armstrong Philip Kotler This is a special edition of an established title widely used by colleges and universities throughout the world. Pearson published this exclusive edition for the benefit of students outside the United States and Canada. If you purchased this book within the United States or Canada you should be aware that it has been imported without the approval of the Publisher or Author. Pearson Global Edition Armstrong_ _mech.indd 1 07/04/14 9:16 PM
2 Editor in Chief: Stephanie Wall Acquisitions Editor: Mark Gaffney Program Manager Team Lead: Ashley Santora Program Manager: Jennifer M. Collins Editorial Assistant: Daniel Petrino Director of Marketing: Maggie Moylan Executive Marketing Manager: Anne Fahlgren Project Management Lead: Judy Leale Senior Project Manager: Jacqueline A. Martin Senior Acquisitions Editor, Global Edition: Steven Jackson Project Editor, Global Edition: Arundati Dandapani Marketing Manager, Global Edition: Kristin Borgert Cover Designer, Global Edition: Karen Salzbach Senior Manufacturing Controller, Production, Global Edition: Trudy Kimber Procurement Specialist: Nancy Maneri Creative Director: Blair Brown Senior Art Director: Janet Slowik VP, Director of Digital Strategy & Assessment: Paul Gentile Digital Editor: Brian Surette Digital Development Manager: Robin Lazrus Digital Project Manager: Alana Coles MyLab Product Manager: Joan Waxman Digital Production Project Manager: Lisa Rinaldi Full-Service Project Management: Roxanne Klaas, S4Carlisle Publishing Services Cover Printer: Courier Kendallville Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: Pearson Education Limited 2015 The rights of Gary Armstrong and Philip Kotler to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act Authorized adaptation from the United States edition, entitled Marketing: An Introduction, 12th edition, ISBN by Gary Armstrong and Philip Kotler, published by Pearson Education All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a license permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6 10 Kirby Street, London EC1N 8TS. All trademarks used herein are the property of their respective owners.the use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners. Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within the text. Microsoft and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published as part of the services for any purpose. All such documents and related graphics are provided as is without warranty of any kind. Microsoft and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all warranties and conditions of merchantability, whether express, implied or statutory, fitness for a particular purpose, title and non-infringement. In no event shall Microsoft and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from the services. The documents and related graphics contained herein could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Microsoft and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time. Partial screen shots may be viewed in full within the software version specified. Microsoft and Windows are registered trademarks of the Microsoft Corporation in the U.S.A. and other countries. This book is not sponsored or endorsed by or affiliated with the Microsoft Corporation. ISBN 10: ISBN 13: British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Typeset in 10/12 Times LT Standard by S4Carlisle Publishing Services Printed and bound by Courier Kendallville in The United States of America
3 Marketing: An Introduction, Global Edition Table of Contents Cover Title Page Contents Preface Acknowledgments PART 1 DEFINING MARKETING AND THE MARKETING PROCESS 1 Marketing: Creating and Capturing Customer Value What Is Marketing? Marketing Defined The Marketing Process Understanding the Marketplace and Customer Needs Customer Needs, Wants, and Demands Market OfferingsProducts, Services, and Experiences Customer Value and Satisfaction Exchanges and Relationships Markets Designing a Customer-Driven Marketing Strategy Selecting Customers to Serve Choosing a Value Proposition Marketing ManagementOrientations Preparing an Integrated Marketing Plan and Program Building Customer Relationships Customer Relationship Management Marketing at Work 1.1: Toyota Japan: The Customer Always Comes First Engaging Customers Marketing at Work 1.2: British Airways: Customer Orientation at Its Peak Partner Relationship Management Capturing Value from Customers Creating Customer Loyalty and Retention Growing Share of Customer Building CustomerEquity The Changing Marketing Landscape The Digital Age:
4 The Changing EconomicEnvironment The Growth of Not-for-Profit Marketing Rapid Globalization Sustainable MarketingThe Call for More Environmental and Social Responsibility So, What Is Marketing?: Pulling It All Together 2 Company and Marketing Strategy: Partnering to Build CustomerValue and Relationships Company-Wide Strategic Planning: Defining Marketings Role Defining a Market-Oriented Mission Marketing at Work 2.1: IBMs Customer-Oriented Mission: Build a Smarter Planet Setting Company Objectives and Goals Designing the Business Portfolio Analyzing the Current Business Portfolio Developing Strategies for Growth and Downsizing Planning Marketing: Partnering to Build Customer Relationships Partnering with Other Company Departments Partnering with Others in the Marketing System Marketing Strategy and the Marketing Mix Customer-Driven Marketing Strategy Marketing at Work 2.2: Red Bull: This Nicher Gives You Wings Developing an Integrated Marketing Mix Managing the Marketing Effort Marketing Analysis Marketing Planning
5 Marketing Implementation Marketing Department Organization Marketing Control Measuring and Managing Return on Marketing Investment PART 2 UNDERSTANDING THE MARKETPLACE AND CUSTOMER VALUE 3 Analyzing the Marketing Environment The Microenvironment The Company Suppliers Marketing Intermediaries Competitors Publics Customers The Macroenvironment Marketing at Work 3.1: Sony: Battling the Marketing Environments Perfect Storm The Demographic Environment The Economic Environment The Natural Environment The Technological Environment The Political and SocialEnvironment The Cultural Environment Responding to the Marketing Environment Marketing at Work 3.2: In the Social Media Age: When the Dialog Gets Nasty
6 4 Managing Marketing Information to Gain Customer Insights Marketing Information and Customer Insights Assessing Marketing Information Needs Developing Marketing Information Internal Data Competitive Marketing Intelligence Marketing Research Defining the Problem and Research Objectives Developing the Research Plan GatheringSecondary Data Primary Data Collection Marketing at Work 4.1: Dell Goes Social: Listening to and Engaging Customers Online Implementing the Research Plan Interpreting and Reporting the Findings Analyzing and Using Marketing Information Customer Relationship Management Marketing at Work 4.2: Vodafone: Strong Customer Relationship Management Distributing and Using Marketing Information Other Marketing Information Considerations Marketing Research in Small Businesses and Nonprofit Organizations International Marketing Research Public Policy and Ethics in Marketing Research
7 5 Understanding Consumer and Business Buyer Behavior Consumer Markets and Consumer Buyer Behavior Model of Consumer Behavior Characteristics Affecting Consumer Behavior Marketing at Work 5.1: Word-of-Mouth Marketing: Sparking Brand Conversationsand Helping Them Catch Fire The Buyer Decision Process Need Recognition Information Search Evaluation of Alternatives Purchase Decision Postpurchase Behavior The Buyer Decision Process for New Products Stages in the Adoption Process Individual Differences in Innovativeness Influence of Product Characteristics on Rate of Adoption Business Markets and Business Buyer Behavior Business Markets Business Buyer Behavior Marketing at Work 5.2: B-to-B Social Marketing: The Space to Engage Business Customers
8 PART 3 DESIGNING A CUSTOMER VALUEDRIVEN STRATEGYAND MIX 6 Customer-Driven Marketing Strategy: Creating Valuefor Target Customers Market Segmentation Segmenting Consumer Markets Marketing at Work 6.1: Hyundais Turning Point: Tapping the Premium Market Segmenting Business Markets Segmenting International Markets Requirements for Effective Segmentation Market Targeting Evaluating Market Segments Selecting Target Market Segments Marketing at Work 6.2: Location-Based Micromarketing Equals Macro Opportunities Differentiation and Positioning Positioning Maps Choosing a Differentiation and Positioning Strategy Communicating and Delivering the Chosen Position
9 7 Products, Services, and Brands: Building Customer Value What Is a Product? Products, Services, and Experiences Levels of Product and Services Product and ServiceClassifications Product and Service Decisions Individual Product and Service Decisions Product Line Decisions Product Mix Decisions Services Marketing The Nature and Characteristics of a Service Marketing Strategies for Service Firms Marketing at Work 7.1: HSBC: Internal Marketing Drives Overall Excellence Branding Strategy: Building Strong Brands Brand Equity Marketing at Work 7.2: Breakaway Brands: Connecting with Consumers and Building Trust Building Strong Brands Managing Brands 8 New Product Development and Product Life-Cycle Strategies
10 New Product Development Strategy The New Product Development Process Idea Generation Idea Screening Marketing at Work 8.1: Crowdsourcing: P&Gs Connect + Develop Concept Development and Testing Marketing Strategy Development Business Analysis Product Development Test Marketing Commercialization Managing New Product Development Customer-Centered New Product Development Team-Based New ProductDevelopment Systematic New Product Development New Product Development inturbulent Times Product Life-Cycle Strategies Introduction Stage Growth Stage Maturity Stage Decline Stage Marketing at Work 8.2: LEGO: An Old Brand Story with a New Beginning Additional Product and Service Considerations Product Decisions and Social Responsibility International Product and Services Marketing 9 Pricing: Understanding and Capturing Customer Value
11 What Is a Price? Major Pricing Strategies Customer ValueBased Pricing Marketing at Work 9.1: Ryanair: Really Good-Value PricingFly for Free! Cost-Based Pricing Competition-Based Pricing Other Internal and External Considerations Affecting Price Decisions Overall Marketing Strategy, Objectives, and Mix Organizational Considerations The Market and Demand The Economy Other External Factors New Product Pricing Strategies Market-Skimming Pricing Market-Penetration Pricing Product Mix Pricing Strategies Product Line Pricing Optional-Product Pricing Captive-Product Pricing By-Product Pricing Product Bundle Pricing Price-Adjustment Strategies Discount and Allowance Pricing Segmented Pricing Psychological Pricing Promotional Pricing Geographical Pricing Dynamic and Internet Pricing International Pricing Price Changes Initiating Price Changes Marketing at Work 9.2: International Pricing: Targeting the Bottom of the Pyramid Responding to Price Changes Public Policy and Pricing Pricing within Channel Levels Pricing across Channel Levels
12 10 Marketing Channels: Delivering Customer Value Supply Chains and the Value Delivery Network The Nature and Importance of Marketing Channels How Channel Members Add Value Number of Channel Levels Channel Behavior and Organization Channel Behavior Vertical Marketing Systems Horizontal MarketingSystems Multichannel Distribution Systems Changing Channel Organization Channel Design Decisions Analyzing Consumer Needs Setting Channel Objectives Identifying MajorAlternatives Evaluating the Major Alternatives Designing International DistributionChannels Channel Management Decisions Selecting Channel Members Managing and Motivating Channel Members Marketing at Work 10.1: Working with Channel Partners to Create Value for Customers Evaluating Channel Members Public Policy and Distribution Decisions Marketing Logistics and Supply Chain Management
13 Nature and Importance of Marketing Logistics Goals of the Logistics System Major Logistics Functions Marketing at Work 10.2: Greening the Supply Chain: Its the Right Thing to Doand Its Profitable Too Integrated Logistics Management 11 Retailing and Wholesaling Retailing Types of Retailers Retailer Marketing Decisions Marketing at Work 11.1: Tesco: A Fairytale Gone Bad Retailing Trends and Developments Marketing at Work 11.2: Showrooming 2.0: Embracing Technology to Pull Back Customers from Online Shopping Sites Wholesaling Types of Wholesalers Wholesaler Marketing Decisions Trends in Wholesaling
14 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations The Promotion Mix Integrated Marketing Communications The New Marketing Communications Model The Need for Integrated Marketing Communications Marketing at Work 12.1: Brand Content Management: Paid, Owned, Earned, and Shared Shaping the Overall Promotion Mix Advertising Setting Advertising Objectives Setting the Advertising Budget DevelopingAdvertising Strategy Evaluating Advertising Effectiveness and the Return on AdvertisingInvestment Other Advertising Considerations Public Relations The Role and Impact of PR Marketing at Work 12.2: PR and Customer Engagement at Coca-Cola: From Impressions to Expressions to Transactions Major Public Relations Tools
15 13 Personal Selling and Sales Promotion Personal Selling The Nature of Personal Selling The Role of the Sales Force Managing the Sales Force Designing the Sales Force Strategy and Structure Recruiting and Selecting Salespeople Training Salespeople Compensating Salespeople Supervising andmotivating Salespeople Evaluating Salespeople and Sales Force Performance Selling Digitally: Online, Mobile, and Social Media Tools Marketing at Work 13.1: B-to-B Salespeople: In This Digital and Social Media Age, Who Needs Them Anymore? The Personal Selling Process Steps in the Selling Process Personal Selling and Managing Customer Relationships Marketing at Work 13.2: P&G: Its Not Sales, Its Customer Business Development Sales Promotion The Rapid Growth of Sales Promotion Sales Promotion Objectives Major Sales Promotion Tools Developing the Sales Promotion Program
16 14 Direct, Online, Social Media, and Mobile Marketing Direct and Digital Marketing The New Direct Marketing Model Rapid Growth of Direct and Digital Marketing Benefits of Direct and Digital Marketing to Buyers and Sellers Forms of Direct and Digital Marketing Marketing at Work 14.1: Samsung: Engaging Customers Directly via Influencers Programsand Online and Social Media Digital and Social Media Marketing Marketing, the Internet, and the Digital Age Online Marketing Social Media Marketing Mobile Marketing Marketing at Work 14.2: Mobile Marketing: Customers Come Calling Traditional Direct Marketing Forms Direct-Mail Marketing Catalog Marketing Telemarketing Direct-Response Television Marketing Kiosk Marketing Public Policy Issues in Direct and Digital Marketing Irritation, Unfairness, Deception, and Fraud Consumer Privacy A Need for Action
17 PART 4 EXTENDING MARKETING 15 The Global Marketplace Global Marketing Today Looking at the Global Marketing Environment The International Trade System Economic Environment Marketing at Work 15.1: Brazil: An Emerging Market or Already Emerged? Political-Legal Environment Cultural Environment Deciding Whether to Go Global Deciding Which Markets to Enter Deciding How to Enter the Market Exporting Joint Venturing Direct Investment Deciding on the Global Marketing Program Marketing at Work 15.2: Starbucks in India: A Global Brand in a Local Market Product Promotion Price Distribution Channels Deciding on the Global Marketing Organization
18 16 Sustainable Marketing: Social Responsibility and Ethics Sustainable Marketing Social Criticisms of Marketing Marketings Impact on Individual Consumers Marketings Impact on Society as a Whole Marketings Impact on Other Businesses Consumer Actions to Promote Sustainable Marketing Consumerism Environmentalism Marketing at Work 16.1: The Body Shops Sustainable Marketing Strategy: Owning the Earth Public Actions to Regulate Marketing Business Actions toward Sustainable Marketing Sustainable Marketing Principles Marketing at Work 16.2: Eco-Fashion: What You Wear Can Save the Earth The Sustainable Company Appendix 1 Appendix 2 Marketing Plan Appendix 3 Glossary
19 References Index A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
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