Marketing Management. PhiLip. Kevin Lane. Mairead. MalcoLm. forben. Prentice Hall PEARSON

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1 PhiLip Kevin Lane Mairead MalcoLm forben Marketing Management PEARSON Prentice Hall Harlow, England London New York Boston San Francisco Toronto Sydney Singapore Hong Kon Tokyo Seoul Taipei New Delhi Cape Town - Madrid Mexico City - Amsterdam Munich Paris Mila

2 Guided tour Preface Acknowledgements Publisher's acknowledgements XXIV xxviii xxxiii xxxiv PART 1 Chapter 1 UNDERSTANDING MARKETING MANAGEMENT Video documentary for Part 1 Introduction to marketing The importance of marketing The scope of marketing Understanding markets How is marketing practised? The European marketing environment: company and consumer challenges Understanding the philosophy of marketing Overview of marketing management Chapter 2 Understanding marketing management What is management? Four core features of management Understanding marketing management Contemporary marketing management challenges Contemporary marketing management skills Managing within a global marketing environment: the global marketing manager Deciding whether to go abroad Deciding which markets to enter Evaluating potential markets Deciding on the marketing mix programme Managing in developing markets Conclusion Chapter 3 Developing marketing strategies and plans Marketing and customer value Business environment paradigm change The value delivery process The value chain Core competencies A holistic marketing orientation and customer value The central role of strategic planning

3 Jtiv CONTENTS Corporate and divisional strategic planning 88 Defining the corporate mission 88 Defining the business 90 Assigning resources to each SBU 91 Assessing growth opportunities 92 Relationship between missions and visions 96 Organisation and organisational culture 97 Marketing innovation 97 Business unit strategic planning 101 The business mission 101 SWOT analysis 101 Critique of conventional SWOT analysis 104 Goal formulation 105 Strategic formulation 105 Programme formulation and implementation 107 Feedback and control 108 The nature and content of a marketing plan 109 Contents of the marketing p,lan 109 Sample marketing plan: Euromart 110 Introduction Chapter 4 Managing digital technology in marketing 116 Digital technology in marketing 118 The range of ICTs in marketing' 118 The Internet 120 Gaining competitive advantage from using the Internet 121 ' The influence of the Internet on industry structure and competition 122 Digital marketing communication 124 Consumer digital interactivity and ewom 125 Social networking 125 marketing 129 Permission marketing 129 Viral marketing 130 Other digital communication channels 131 Consumer digital shopping behaviour 135 Perspectives on consumer digital shopping behaviour 136 Cultural influence on digital shopping behaviour 139 Company-customer interactivity 140 ICI and internal decision making 142 Future developments in digital technologies 144 Biometrics 144 The cashless future 145 PART 2 CAPTURING MARKETING INSIGHTS 151 Video documentary for Part 2 Chapter 5 The changing marketing environment and information management 152 The company environment 154 The marketing environment 154 Analysing the macroenvironment 154

4 CONTENTS XV The socio-cultural and demographic environment 157 The economic environment 163 The social-cultural environment 164 The ecological and physical environment 165 The technological environment 169 The political-legal environment 171 Managing the marketing information system 172 Components of a modern marketing information system 172 Internal records 174 The marketing intelligence system 174 Databases, data warehousing and data mining 177 Chapter 6 Managing market research and forecasting 188 The marketing research system 190 The marketing research process 191 Step 1: define the problem, the decision alternatives and the research objectives 191 Step 2: develop the research plan 192 Step 3: collect the information 205 Step 4: analyse the information 206 Step 5: present the findings 207 Step 6: make the decision 208 Overcoming barriers to the use of marketing research 209 Measuring marketing productivity 211 Marketing,-mix modelling 211 Forecasting and demand measurement 212 The measures of market demand 212 A vocabulary for demand measurement 213 Estimating current demand 215 Estimating future demand 218 Chapter 7 Analysing consumer markets \ 222 The study of consumer behaviour 224 Culture 224 Social groups 227 The individual consumer 230 The interaction between dimensions 236 Key psychological processes 237 Motivation: Freud, Maslow, Herzberg 237 Perception 239 Learning 240 Memory 241 Perspectives on consumer behaviour 243 The buying decision process: the five-stage model 246 Problem recognition 247 Information search 247 Evaluation of alternatives 249 Purchase decision 251 Post-purchase behaviour 253

5 XVi CONTENTS Other theories of consumer decision making 255 Level of consumer involvement 255 Decision heuristics and biases 257 Mental accounting 259 Profiling the customer buying decision process 260 Chapter 8 Analysing business markets 266 What is organisational buying? 268 The business market versus the consumer market 268 Buying situations. 271 Systems buying and selling 274 Participants in the business buying process 274 The buying centre 274 Buying centre influences 275 Buying centre targeting 277 The purchasing/procurement process 278 Purchasing department perceptions 278 Purchasing organisation and administration 279 Stages in the buying process 279 Problem recognition 280 General need description and product specification 280 Supplier search 280 Proposal solicitation 282 Supplier selection 283 Order-routine specification 286 Performance review 287 Managing business-to-business relationships 287 The need for managing business-to-business relationships 287 The role of uncertainty in business relationships 287 Transaction cost economics 289 Network theory 290 Vertical coordination 291 Institutional and government markets 295 Chapter 9 Dealing with competition 302 Competitive forces 304 Identifying competitors 305 Analysing competitors 308 Strategies 308 Objectives 309 Strengths and weaknesses 310 Selecting competitors 311 Selecting customers 312 Competitive strategies for market leaders 312 Other competitive strategies 321 Market-challenger strategies 322 Market-follower strategies 324 Market-nicher strategies 325 Balancing customer and competitor orientations 327 Competitor-centred companies 327 Customer-centred companies 328

6 CONTENTS XVii PART 3 CONNECTING WITH CUSTOMERS Video documentary for Part Chapter 10 Indentifying, analysing and creating target market differentiating and positioning strategies 332 Levels of market segmentation 334 Segment marketing 334 Niche marketing 334 Local marketing 335 Individual marketing 338 Bases for segmenting consumer markets 341 Geographic segmentation 341 Demographic segmentation 342 Psychographic segmentation 349 Behavioural segmentation 351 Bases for segmenting business markets 355 Market targeting 356 Effective segmentation criteria 357 Evaluating and selecting the market segments 357 Additional considerations 359 Creating differentiation and positioning strategies 360 Positioning 361 Establishing category membership 365 Choosing POPs and PODs 366 Creating POPs and PODs 367 Perceptual or positioning mapping 369 What can positioning analysis do for a company's business? 369 Positioning maps 369 Developing a positioning strategy 370 Repositioning 370 Developing and communicating a differentiation strategy 371 Cost leadership 371 Distinctive superior quality 372 Cost leadership and differentiation v 372 Differentiation strategies 372 The purpose of positioning 374 Chapter 11 Creating customer value, satisfaction and loyalty Building customer value Customer-perceived value Building customer satisfaction Customers want loyalty, not perfection Total customer satisfaction Monitoring satisfaction Customer satisfaction Product and service quality Maximising customer lifetime value Customer profitability Customer lifetime value - conceptual dream or real-time activity?

7 XViii CONTENTS Cultivating customer relationships 396 Customer relationship management 397 Attracting and retaining customers 399 Building customer loyalty 401 Improving loyalty 401 Attracting and retaining customers 403 Recapturing customers 408 The experience economy 408 The value experience 408 The empowered customer 412 Interactive marketing 413 Complexity of markets 413 Emotional turn 414 PART k BUILDING STRONG BRANDS 421 Video documentary for Part 4 Chapter 12 Creating and managing brands and brand equity 422 Understanding branding 425 What is a brand? 425 The role of brands 428 Strategic brand management 429 Creating and managing brand identities: names, logos, slogans and images 431 Co-branding and ingredient branding 431 Criteria for choosing brand names 434 Branding decisions: individual or house brands 436 Brand reinforcement and revitalisation 443 Managing and measuring brand equity 446 Brand valuation 446 Branding issues: branding of services, co-creation and brand touchpoints 451 Services branding * 451 Co-creation and customisation 452 Managing the brand touch points 454 Chapter 13 Devising a contemporary branding strategy 458 What is a global brand and how is it managed? 460 Global services branding 462 Iconic brands 464 Factors leading to increased global branding for European products and services 464 Understanding global communities and tribes 470 Understanding branding in an ICT-based environment 474 The challenges of branding in developing economies 476 Celebrity branding 478 The advantages of celebrity endorsements 479 Issues arising from celebrity branding 481 Countries and places as brands 481

8 CONTENTS XIX PART 5 SHAPING THE MARKET OFFERING 487 Video documentary for Part 5 Chapter 14 Designing, developing and managing market offerings 488 Product life-cycle marketing strategies 490 Product life cycles 490 Style, fashion and fad life cycles 491 Marketing strategies: the introduction stage and the pioneer advantage 491 Marketing strategies: the growth stage 495 Marketing strategies: the maturity stage 497 Marketing strategies: the decline stage 501 Evidence on the product life cycle concept 502 Critique of the product life cycle concept 503 Market evolution 504 Emergence 504 Growth 504 Maturity 504 Decline 505 Product characteristics and classifications 505 Product levels: the customer-perceived value hierarchy 506 Product classifications 507 Differentiation 510 Product (market offering) differentiation 510 Design 514 Service differentiation 514 Product and brand relationships 515 The product hierarchy 516 Product systems and mixes 516 Product-line analysis 517 Product-line length 518 Product-mix pricing 523 Co-branding and ingredient branding 524 Packaging, labelling, warranties and guarantees 526 Packaging 526 Labelling 530 Warranties and guarantees 531 Chapter 15 Introducing new market offerings 536 New product options 538 Make or buy? 538 Types of new products 538 Challenges in new product development 539 The innovation imperative 539 New product success 540 New product failure 541 Organisational arrangements 542 Budgeting for new product development 545 Organising new product development 545

9 XX CONTENTS Managing the development process I: ideas 547 Process stages 547 Idea generation 547 Idea screening 552 Managing the development process II: concept to strategy 555 Concept development and testing 555 Marketing strategy development 558 Business analysis 558 Managing the development process III: development to commercialisation 560 Product and market development 560 Market testing 561 Commercialisation and new product launch 564 The consumer adoption process 567 Stages in the adoption process 567 Factors influencing the adoption process 567 Chapter 16 Developing and managing pricing strategies 572 Understanding pricing 574 A changing pricing environment ' 574 How companies price 575 Consumer psychology and pricing 578 Setting the price 582 Step 1: selecting the pricing objective 582 Step 2: determining demand 585 Step 3: estimating costs 587 Step 4: analysing competitors' costs, prices and offers 590 Step 5: selecting a pricing method 590 Step 6: selecting the final price 596 Adapting the price 598 Geographical pricing (cash, countertrade, barter) 598 Price discounts and allowances 599 Promotional pricing 600 Differentiated pricing 601 Initiating and responding to price changes 602 Initiating price cuts ' 602 Initiating price increases 603 Responding to competitors' price changes 604 PART 6 DELIVERING VALUE 611 Video documentary for Part 6 Chapter 17 Designing and managing supply networks 612 What is a supply chain or network? 614 Designing agile, adaptable, aligned supply networks 620 Managing a demand-driven chain or network 623 Supply network management 625 Modelling the service supply chain 627 Channel management and channel design decisions 627

10 CONTENTS XXi Selecting channel members 632 Analysing customers' needs 635 Establishing channel objectives and constraints 635 Deciding on the number of intermediaries 636 Terms and responsibilities of channel members 636 Selecting channel members: evaluating the major alternatives 637 Managing distribution channels 638 Training and motivating channel members 638 Gaining cooperation and channel power 638 Evaluating channel members 639 Modifying channel design and arrangements 641 Understanding the impact of technology 641 The Internet as a channel of distribution 641 Mobile phones as a channel of distribution 644 Self-service technologies Chapter 18 Managing the service process and the consumer interface 654 Service process design and management 656 Managing people (staff and consumers) during the service process 663 Training customer service personnel 666 Managing technology and particularly self-service technologies within the service process 672 The future of self-service technology 677 Creating and managing the physical evidence or experience environment 678 Service atmosphere 679 Store activities and experiences 679 Managing the five senses to create the service environment COMMUNICATING VALUE 687 Video documentary for Part 7 Chapter 19 Designing and managing marketing communications 688 The role of marketing communications 690 The changing marketing communication environment 690 Marketing communications, brand equity and sales 691 The communications process models 694 Developing effective communications 696 Identify the target audience 696 Determine the communications objectives 696 Design the communications 697 Select the communications channels 702 Word of Mouth 703 Establishing the total marketing communications budget 706 Deciding on the marketing communications mix 708 Characteristics of the marketing communications mix 708 Factors in setting the marketing communications mix 711 Measuring communication results 713

11 XXii CONTENTS Managing the integrated marketing communications process 714 Coordinating media 714 Implementing IMC 715 Quovadisl 716 Chapter 20 Managing mass and personal communications 720 Developing and managing an advertising programme Setting objectives Deciding on the advertising budget and developing the advertising campaign Managing media matters Evaluating advertising effectiveness Sales promotion Setting objectives Advertising versus sales promotion Major decisions Events, experiences, public and press relations Setting objectives Major sponsorship experiences Creating experiences Major decisions in marketing and public relations Marketing public relations Major decisions in marketing press relations Direct marketing Setting objectives The benefits of direct marketing Overview of the direct marketing mix Catalogue marketing Telemarketing Other media for direct response marketing Public and ethical issues in direct marketing Interactive marketing Placing advertisements and promotions online Developing and managing the sales force Setting objectives and strategy Sales force management issues Key principles of personal selling The six steps of selling Relationship marketing (RM) PART 8 MANAGING MARKETING IMPLEMENTATION AND CONTROL 767 Video documentary for Part 8 Chapter 21 Implementing marketing management 768 Trends in marketing practices 770 Internal marketing 770 Critique of internal marketing 771 Organising the marketing department 773 Relations with other departments 779

12 CONTENTS XXiii Building a creative marketing organisation 779 Taking the creative approach 779 Building a creative culture 781 Creativity - a mystical gift for some or something for all? 781 Maintaining momentum 782 Marketing implementation 783 Leadership 783 Methodology and madness - the importance of leaving room for creativity 784 Creative marketing 784 Socially responsible marketing 785 Corporate social responsibility 785 Socially responsible business models 789 Cause-related marketing 792 Social marketing 794 Ethnic marketing 796 Green marketing 796 Evaluation and control 800 Annual-plan control 800 Profitability control.805 Efficiency control 808 Strategic control 809 The future of marketing 812 The marketing manager's key tasks 812 A holistic approach to marketing management 813 The nature of marketing 813 Relationship activity 815 Market research 817 New product'development 817 Marketing communications activity 817 Getting started 817 Chapter 22 Managing marketing metrics 824 The need for marketing metrics 826 What marketing metrics should do The chain of marketing productivity 828' Measuring marketing performance and productivity 830 Counting-based metrics 830 Accounting-based metrics 830 NPV 831 Outcome metrics 831 The balanced scorecard approach 838 Marketing dashboards 841 Appendix: Digitel marketing plan and exercises 846 Glossary 861 Name index 871 Organisation and brand index 873 Subject index 877

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