MARKETING MANAGEMENT. Greg W. Marshall ROLLINS COLLEGE. Mark W. Johnston ROLLINS COLLEGE. McGraw-Hill Irwin

Transcription

1 MARKETING MANAGEMENT Greg W. Marshall ROLLINS COLLEGE Mark W. Johnston ROLLINS COLLEGE McGraw-Hill Irwin Boston Burr Ridge, IL Dubuque, IA New York San Francisco St. Louis Bangkok Bogota Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto

2 TABLE OF part ONE Introduction to Marketing Management 1 CHAPTER 01 MARKETING IN TODAY'S BUSINESS MILIEU 2 WELCOME TO MARKETING MANAGEMENT 4 MARKETING MISCONCEPTIONS 4 Behind the Misconceptions 4 Beyond the Misconceptions and Toward the Reality of Modern Marketing 7 DEFINING MARKETING 8 Value and Exchange Are Core Marketing Concepts 10 MARKETING'S ROOTS AND EVOLUTION 11 Pre-lndustrial Revolution 11 Focus on Production and Products 12 Focus on Selling 12 Advent of the Marketing Concept 12 Beyond the Marketing Concept 14 CHANGE DRIVERS IMPACTING THE FUTURE OF MARKETING 16 Shift to Product Glut and Customer Shortage 16 Shift in Information Power from Marketer to Customer 18 Shift in Generational Values and Preferences 19 Shift to Distinguishing Marketing (Big M) from marketing (little m) 20 Shift to Justifying the Relevance and Payback of the Marketing Investment 22 YOUR MARKETING MANAGEMENT JOURNEY BEGINS 23 SUMMARY 24 KEY TERMS 24 APPLICATION QUESTIONS 24 MANAGEMENT DECISION CASE: UNILEVER MAKES SUSTAINABILITY "BUSINESS AS USUAL" 25 RECOMMENDED READINGS 26 CHAPTER 02 ELEMENTS OF MARKETING STRATEGY AND PLANNING 28 VALUE IS AT THE CORE OF MARKETING 30 The Value Chain 31 Planning for the Value Offering 33 MARKETING PLANNING IS BOTH STRATEGIC AND TACTICAL 33 ELEMENTS OF MARKETING PLANNING 34 Connecting the Marketing Plan to the Firm's Business Plan 34 Organizational Mission, Vision, Goals, and Objectives 37 Organizational Strategies 40 Situation Analysis 42 Additional Aspects of Marketing Planning 50 TIPS FOR SUCCESSFUL MARKETING PLANNING 50 VISIT THE APPENDIX FOR A MARKETING PLAN EXAMPLE 50 SUMMARY 51 KEY TERMS 51 APPLICATION QUESTIONS 51 MANAGEMENT DECISION CASE: DELL'S MARKET- ING STRATEGY WOES 52 MARKETING PLAN EXERCISES 53 RECOMMENDED READINGS 54 APPENDIX CLOUDCAB SMALL JET TAXI SERVICE: ABBREVIATED EXAMPLE MARKETING PLAN 55 CHAPTER 03 UNDERSTANDING THE GLOBAL MARKETPLACE: MARKETING WITHOUT BORDERS 62 MARKETING IS NOT LIMITED BY BORDERS 64 THE GLOBAL EXPERIENCE LEARNING CURVE 65 Companies with No Foreign Marketing 66 Companies with Foreign Marketing 66 International Marketing 66 Global Marketing 67 Essential Information 68 Emerging Markets 70 Marketing in Emerging Markets 72 Multinational Regional Market Zones 72 Marketing in Regional Market Zones 76 SELECT THE GLOBAL MARKET 76 Identify Selection Criteria 77 Company Review 77 DEVELOP GLOBAL MARKET STRATEGIES 77 Market Entry Strategies 78 Organizational Structure 83 Product 84 Consumers 85 Market Channels 87 xix

3 Marketing Communications 89 Pricing 90 SUMMARY 92 KEY TERMS 92 APPLICATION QUESTIONS 93 MANAGEMENT DECISION CASE: A NEWCOMER COM- PETES IN THE GLOBAL COMPUTER BUSINESS 93 MARKETING PLAN EXERCISE 94 RECOMMENDED READINGS 94 part TWO Information Drives Marketing Decision Making 95 CHAPTER 04 PERSPECTIVES ON CUSTOMER RELATIONSHIP MANAGEMENT 96 WHAT IS CUSTOMER RELATIONSHIP MANAGEMENT? 98 OBJECTIVES AND CAPABILITIES OF CRM 99 THE CRM PROCESS CYCLE 101 Knowledge Discovery 102 Marketing Planning 102 Consumer Interaction 103 Analysis and Refinement 103 More on Customer Touchpoints: The USAA Experience 105 j CUSTOMER MARKETING VERSUS CONSUMER MARKETING 105 Advantages of Customer Marketing 107 CRM CORE CONCEPTS ARE NOT NEW 108 CRM Facilitates a Customer-Centric Culture 108 CRM Enables Transformation into a Relationship-Based Enterprise 110 WHAT HAPPENS WHEN CRM FAILS? 111 SUMMARY 113 KEY TERMS 113 APPLICATION QUESTIONS 113 MANAGEMENT DECISION CASE: AMAZON MARKETS ITS "BACKROOM" CAPABILITIES 114 MARKETING PLAN EXERCISE 115 RECOMMENDED READINGS 115 xx CHAPTER 05 MANAGING MARKETING INFORMATION 116 MAKING GOOD MARKETING DECISIONS-THE NEED TO KNOW 118 MARKET INFORMATION SYSTEM 119 The Nature of a Market Information System 119 Internal Sources-Collecting Information Inside the Company 120 External Sources-Collecting Information Outside the Company 123 MARKETING RESEARCH SYSTEMS 129 The Importance of Market Research to Managers 129 The Marketing Research Process 129 Market Research Technology 139 Market Research Challenges in Global Markets 142 SUMMARY 145 KEY TERMS 145 APPLICATION QUESTIONS 145 MANAGEMENT DECISION CASE: THE COST OF BUILDING AN ECO-FRIENDLY HOME 146 MARKETING PLAN EXERCISE 147 RECOMMENDED READINGS 147 CHAPTER 06 UNDERSTANDING COMPETITORS: ANALYSIS TO ACTION 148 KEY SUCCESS FACTOR-KNOW YOUR COMPETITOR 150 DISCOVERING COMPETITORS-STRATEGIC FORCES 151 Industry Structure 151 Supply Chain 154 Product Capabilities 155 Global Issues 156 DISCOVERING COMPETITORS-THROUGH THE CUSTOMERS' EYES 156 Direct Competitors 157 Indirect Competitors 157 Product Use 158 DISCOVERING FUTURE COMPETITORS-LIKELY CANDIDATES 159 Strategic Expansion 159 Channel Member Integration 160 Merger and Acquisition 160 Defending Market Space 160

4 ANALYZING COMPETITORS 161 Strategies 161 Resources 162 Culture 162 Corporate Objectives and Goals 164 Strengths and Weaknesses 165 Benchmarking 166 COLLECTING COMPETITIVE INTELLIGENCE 166 Company Web Site 166 Government Sources 166 Business Publications 167 Search Engines 167 Salespeople 167 Customers 167 CHALLENGE COMPETITORS: VALUE DELIVERY STRATEGIES IN A COMPETITIVE ENVIRONMENT 168 SUMMARY 169 KEY TERMS 169 APPLICATION QUESTIONS 169 MANAGEMENT DECISION CASE: THE SEARCH FOR MICROSOFT 170 MARKETING PLAN EXERCISE 171 RECOMMENDED READINGS 171 CHAPTER 07 UNDERSTANDING CUSTOMERS: BUSINESS- TO-CONSUMER MARKETS 172 THE POWER OF THE CONSUMER 174 i INTERNAL FORCES AFFECT CONSUMER CHOICES 174 Personal Characteristics 174 Psychological Attributes 180 EXTERNAL FACTORS SHAPE CONSUMER CHOICES 186 Cultural Factors 186 Situational Factors 188 Social Factors 189 THE LEVEL OF INVOLVEMENT INFLUENCES THE PROCESS 194 Decision Making with High Involvement 195 Decision Making with Limited Involvement 195 THE CONSUMER DECISION-MAKING PROCESS 196 Problem Recognition 196 Search for Information 197 Evaluation of Alternatives 200 Product Choice Decision 201 Post-Purchase Assessment 203 SUMMARY 205 KEY TERMS 205 APPLICATION QUESTIONS 205 MANAGEMENT DECISION CASE: ZILLOW CHANGES THE RULES IN REAL ESTATE 206 MARKETING PLAN EXERCISE 207 RECOMMENDED READINGS 207 CHAPTER 08 UNDERSTANDING CUSTOMERS: BUSINESS-TO- BUSINESS MARKETS 208 ORGANIZATIONAL BUYING: MARKETING TO A BUSINESS 210 DIFFERENCES BETWEEN BUSINESS AND CONSUMER MARKETS 211 Relationships with Customers 211 Number and Size of Customers 212 Geographic Concentration 213 Complexity of Buying Process 213 Complexity of the Supply Chain 213 Demand for Products and Services Is Different in a Business Market 214 BUYING SITUATIONS 216 Straight Rebuy 216 Modified Rebuy 217 New Purchase 217 BUYING CENTERS 218 Members of the Buying Center 218 Pursuing the Buying Center 220 THE PLAYERS IN BUSINESS-TO-BUSINESS MARKETS 220 The North American Industrial Classification System (NAICS) 220 Manufacturers 221 Resellers 222 Government 223 Institutions 223 THE BUSINESS MARKET PURCHASE DECISION PROCESS 223 Problem Recognition 224 Define the Need and Product Specifications 225 Search for Suppliers 225 Seek Sales Proposals in Response to RFP 226 Make the Purchase Decision 227 Post-Purchase Evaluation of Product and Supplier 230 THE ROLE OF TECHNOLOGY IN BUSINESS MARKETS 231 E-Procurement 231 xxi

5 SUMMARY 232 KEY TERMS 232 APPLICATION QUESTIONS 233 MANAGEMENT DECISION CASE: CISCO'S BRAVE NEW WORLD 233 MARKETING PLAN EXERCISE 234 RECOMMENDED READINGS 234 part THREE Developing the Value Offering 235 CHAPTER 09 SEGMENTATION, TARGET MARKETING, POSITIONING 236 FULFILLING CONSUMER NEEDS AND WANTS 238 WHAT IS SEGMENTATION? 239 Criteria for Effective Segmentation 239 SEGMENTING CONSUMER MARKETS 240 Geographic Segmentation 240 Demographic Segmentation 242 Psychographic Segmentation 252 Behavioral Segmentation 254 Firms Use Multiple Segmentation Approaches Simultaneously 256 Segmenting Business Markets 256 J TARGET MARKETING 256 Analyze Market Segments 257 Develop Profiles of Each Potential Target Market 258 Select a Target Marketing Approach 259 POSITIONING 260 Perceptual Maps 261 Sources of Differential Competitive Advantage 262 Positioning Errors 263 SUMMARY 264 KEY TERMS 264 APPLICATION QUESTIONS 264 MANAGEMENT DECISION CASE: NEW TARGETS AND NEW POSITIONING AT MCDONALD'S 265 MARKETING PLAN EXERCISE 266 RECOMMENDED READINGS 267 CHAPTER 10 THE PRODUCT EXPERIENCE: PRODUCT STRATEGY 268 PRODUCT: THE HEART OF MARKETING 270 Product Characteristics 270 Product Classifications 273 Product Discrimination: Create a Point of Differentiation 278 Product Plan: Moving from One Product to Many Products 283 Product Decisions Affect Other Marketing Mix Elements 285 THE LIFE OF THE PRODUCT: BUILDING THE PRODUCT EXPERIENCE 288 Product Life Cycle Sales Revenue and Profitability 288 Product Life Cycle Timeline 289 Product Life Cycle Caveats 290 Introduction Phase 290 Growth Phase 293 Maturity Phase 294 Decline Phase 296 SUMMARY 298 KEY TERMS 298 APPLICATION QUESTIONS 298 MANAGEMENT DECISION CASE: IT'S NOT YOUR DAD'S MALIBU 299 MARKETING PLAN EXERCISE 300 RECOMMENDED READINGS 300 CHAPTER 11 THE PRODUCT EXPERIENCE: BUILDING THE BRAND 302 BRAND: THE FUNDAMENTAL CHARACTER OF A PRODUCT 304 Brands Play Many Roles 304 The Boundaries of Branding 308 BRAND EQUITY-OWNING A BRAND 310 Defining Brand Equity 310 Benefits of Brand Equity 312 BRANDING DECISIONS 314 Stand-Alone or Family Branding 314 National or Store Branding 316 Licensing 317 Co-Branding 317 PACKAGING AND LABELING: ESSENTIAL BRAND ELEMENTS 318 Package Objectives 318 xxii

6 Effective Packaging 319 Labeling 322 WARRANTIES AND SERVICE AGREEMENTS: BUILDING CUSTOMER CONFIDENCE 323 Warranties Help Define the Brand 324 SUMMARY 325 KEY TERMS 325 APPLICATION QUESTIONS 326 MANAGEMENT DECISION CASE: APPLE'S IPOD RULES BUT LONG LIVE THE RECORD... TURNTABLE 326 MARKETING PLAN EXERCISE 327 RECOMMENDED READINGS 327 CHAPTER 12 THE PRODUCT EXPERIENCE: NEW-PRODUCT DEVELOPMENT 328 NEW PRODUCTS-CREATING LONG-TERM SUCCESS 330 "New" Defined 330 Reasons for New-Product Success or Failure 332 NEW-PRODUCT DEVELOPMENT PROCESS 334 Identify Product Opportunities 334 Define the Product Opportunity 337 Develop the Product Opportunity 340 CONSUMER ADOPTION AND DIFFUSION PROCESS 345 Consumer Product Adoption Process 346 The Diffusion of Innovations 346 SUMMARY 348 KEY TERMS 348 APPLICATION QUESTIONS 348 MANAGEMENT DECISION CASE: KEEPING THE BUZZ AT BURT'S BEES 349 MARKETING PLAN EXERCISE 349 RECOMMENDED READINGS 350 CHAPTER 13 SERVICE AS THE CORE OFFERING 352 WHY SERVICE IS IMPORTANT 354 Service as a Differentiator 354 A New Dominant Logic for Marketing 354 CHARACTERISTICS OF SERVICES 355 Intangibility 355 Inseparability 357 Variability 357 Perishability 358 THE SERVICE-PROFIT CHAIN 358 Internal Service Quality 358 Satisfied, Productive, and Loyal Employees 360 Greater Service Value for External Customers 360 Customer Satisfaction and Loyalty 361 Revenue and Profit Growth 363 SERVICE ATTRIBUTES 364 Search Attributes 364 Experience Attributes 365 Credence Attributes 365 Importance of Understanding Service Attributes 365 SERVICE QUALITY 367 Gap Analysis 367 SERVQUAL: A Multiple Item Scale to Measure Service Quality 373 The SERVQUAL Instrument 373 SERVICE BLUEPRINTS 377 SUMMARY 378 KEY TERMS 378 APPLICATION QUESTIONS 378 MANAGEMENT DECISION CASE: CUSTOMER SERVICE CHAMP USAA 379 MARKETING PLAN EXERCISE 380 RECOMMENDED READINGS 381 CHAPTER 14 MANAGING PRICING DECISIONS 382 PRICE IS A CORE COMPONENT OF VALUE 384 ESTABLISH PRICING OBJECTIVES AND RELATED STRATEGIES 386 Penetration Pricing 387 Price Skimming 388 Profit Maximization and Target ROI 388 Competitor-Based Pricing 389 Value Pricing 390 SELECT PRICING TACTICS 393 Product Line Pricing 393 Captive Pricing 394 Price Bundling 395 Reference Pricing 395 Prestige Pricing 396 xxiii

7 Odd/Even Pricing 396 One-Price Strategy and Variable Pricing 397 Everyday Low Pricing (EDLP) and High/Low Pricing 397 Auction Pricing 398 SET THE EXACT PRICE 398 Cost-Pius Pricing/Markup on Cost 398 Markup on Sales Price 399 Average-Cost Pricing 399 Target Return Pricing 400 DETERMINE CHANNEL DISCOUNTS AND ALLOWANCES 400 Cash Discounts 401 Trade Discounts 401 Quantity Discounts 401 Seasonal Discounts 401 Promotional Allowances 401 Geographic Aspects of Pricing 402 EXECUTE PRICE CHANGES 402 UNDERSTAND LEGAL CONSIDERATIONS IN PRICING 404 Price Fixing 404 Price Discrimination 404 Deceptive Pricing 404 Predatory Pricing 405 Fair Trade and Minimum Markup Laws 405 SUMMARY 405 KEY TERMS 405 APPLICATION QUESTIONS 406 MANAGEMENT DECISION CASE: PRICING*AP- PROACHES IN THE PRINTER INDUSTRY 407 MARKETING PLAN EXERCISE 408 RECOMMENDED READINGS 408 part FOUR Communicating and Delivering the Value Offering 409 CHAPTER 15 MANAGING MARKETING CHANNELS AND THE SUPPLY CHAIN 410 THE VALUE CHAIN AND VALUE NETWORKS 412 CHANNELS AND INTERMEDIARIES 415 FUNCTIONS OF CHANNEL INTERMEDIARIES 417 Physical Distribution Functions 417 Transaction and Communication Functions 419 Facilitating Functions 419 DISINTERMEDIATION AND E-CHANNELS 420 VERTICAL MARKETING SYSTEMS 421 Corporate Systems 421 Contractual Systems 421 Administered Systems 421 CHANNEL BEHAVIOR: CONFLICT AND POWER 422 SELECTING CHANNEL APPROACHES 424 Distribution Intensity 424 Channel Control and Adaptability 425 Prioritization of Channel Functions-Push versus Pull Strategy 425 LOGISTICS ASPECTS OF SUPPLY CHAIN MANAGEMENT 426 Order Processing 427 Warehousing and Materials Handling 427 Inventory Management 427 Transportation 428 LEGAL ISSUES IN SUPPLY CHAIN MANAGEMENT 429 Exclusive Dealing 429 Exclusive Territories 429 Tying Contracts 429 SUMMARY 429 KEY TERMS 430 APPLICATION QUESTIONS 430 MANAGEMENT DECISION CASE: AVON'S 5,000,000-PERSON STRONG DISTRIBUTION NETWORK 431 MARKETING PLAN EXERCISE 432 RECOMMENDED READINGS 433 CHAPTER 16 POINTS OF CUSTOMER INTERFACE: BRICKS AND CLICKS 434 THE CHANGING RULES OF CUSTOMER INTERFACE 436 Customer Touchpoints 436 Go to the Customer 436 Customer Interface 24/7 436 RETAILING 437 The Role of Retailing 438 Characteristics of Retailers 442 xxiv

8 STORE RETAILERS 443 Food Retailers 443 General Merchandise Retailers 445 NON-STORE RETAILING 446 Catalog Retailers 446 Direct Selling 447 Television Home,Shopping 448 Vending Machines 448 Advantages of Non-Store Retailing 448 ONLINE-ELECTRONIC COMMERCE 449 Business to Consumer-E-Retailing 449 Business-to-Business Electronic Commerce 451 RETAIL STRATEGY 453 Retail Target Market 453. Location 453 Product Mix Assortment 454 Pricing 456 In-Store Experience 456 Marketing Communications 458 SUMMARY 458 KEY TERMS 459 APPLICATION QUESTIONS 459 MANAGEMENT DECISION CASE: TESCO SERVES UP JAPANESE EXPANSION 459 MARKETING PLAN EXERCISE 460 RECOMMENDED READINGS 461 CHAPTER 17 INTEGRATED MARKETING COMMUNICATIONS: PROMOTIONAL STRATEGY, ADVERTISING, SALES PROMOTION, AND PUBLIC RELATIONS 462 INTRODUCTION TO PROMOTION AND INTEGRATED MARKETING COMMUNICATIONS (IMC) 464 The Rise of Integrated Marketing Communications (IMC) 465 IMC and the Promotion Mix 467 Push and Pull Strategies 468 Internal Marketing and IMC 469 Looking Ahead 469 COMMUNICATION PROCESS MODEL 470 Sender 471 Encoding Process 471 Message Transmission 471 Decoding Process 472 Receiver 472 Feedback Loop 472 Noise 472 HIERARCHY OF EFFECTS MODEL 473 Attention 474 Interest 475 Desire 475 Action 476 THE MARKETING MANAGER'S ROLE IN PROMOTIONAL STRATEGY 476 Identify Targets for Promotion 478 Establish Goals for Promotion 478 Select the Promotion Mix 480 Develop the Message 482 Select Media for Use in Promotion 483 Prepare Promotion Budget 483 Establish Measures of Results 485 ADVERTISING 485 Types of Advertising 487 Advertising Execution and Media Types 488 The Role of the Creative Agency 489 SALES PROMOTION 491 Sales Promotion to Consumers 492 Sales Promotion to Channel Members 492 PUBLIC RELATIONS (PR) 494 Gaining Product Publicity and Buzz 495 Securing Event Sponsorships 496 Crisis Management 496 SUM MARY 497 KEY TERMS 497 APPLICATION QUESTIONS 497 MANAGEMENT DECISION CASE: HOW CHIPOTLE KEEPS SALES CLIMBING WITH A MINUSCULE ADVERTISING BUDGET 499 MARKETING PLAN EXERCISE 500 RECOMMENDED READINGS 500 CHAPTER 18 INTEGRATED MARKETING COMMUNICATIONS: PERSONAL SELLING, DIRECT MARKETING, AND INTERACTIVE MARKETING 502 TOWARD A MORE PERSONAL COMMUNICATION WITH THE CUSTOMER 504 PERSONAL SELLING-THE MOST PERSONAL FORM OF COMMUNICATION 504 Activities in Personal Selling 505 Key Success Factors 506 Sales in B2C versus B2B Markets 507 Classifying Sales Positions 507 The Personal Selling Process 508 XXV

9 Organizing the Sales Force 514 Sales Force Size 516 Managing the Sales Force 517 DIRECT MARKETING 523 Creating a Direct Marketing Campaign 523 Direct Marketing Channels 524 INTERACTIVE MARKETING 526 The Online Customer Interface 527 Online Advertising Decisions 530 VIRAL MARKETING 530 Viral Marketing Guidelines 531 SUMMARY 531 KEY TERMS 532 APPLICATION QUESTIONS 532 MANAGEMENT DECISION CASE: DEATH OF THE CAR SALESPERSON 532 MARKETING PLAN EXERCISE 533 RECOMMENDED READINGS 534 CHAPTER 19 THE MARKETING DASHBOARD: METRICS FOR MEASURING MARKETING PERFORMANCE 536 THE MARKETING DASHBOARD 538 Goals and Elements of a Marketing Dashboard 538 Potential Pitfalls in Marketing Dashboards 539 Toward Your Own Marketing Dashboard 541 RETURN ON MARKETING INVESTMENT (ROMI) 541 Cautions about Overreliance on ROMI 542 Proceed with Caution 543 A SAMPLING OF OTHER MARKETING METRICS 543 Market Share 544 Penetration 545 Margin on Sales 545 Cannibalization Rate 545 Customer Lifetime Value (CLV) 546 Sales Force Effectiveness 546 Supply Chain Metrics 546 Promotions and Pass-Through 546 Cost per Thousand Impressions (CPM) Rates 547 Share of Voice 547 Click-Through Rates 547 DEVELOPING EFFECTIVE ACTION PLANS 548 Responsibility for the Action Plan 548 Timing of the Action Plan 549 Budget for the Action Plan 549 Measurement and Control of the Action Plan 549 FORECASTING FOR MARKETING PLANNING 550 Subjective Methods of Forecasting 552 Objective Methods of Forecasting 553 Selecting the Appropriate Forecasting Method(s) 557 THE MARKETING BUDGET 558 CONTROLS AND CONTINGENCY PLANNING 559 THE MARKETING AUDIT 561 SUMMARY 564 KEY TERMS 564 APPLICATION QUESTIONS 564 MANAGEMENT DECISION CASE: SUSTAINING THE "TOYOTA WAY" 565 MARKETING PLAN EXERCISE 566 RECOMMENDED READINGS 566 GLOSSARY G-1 END NOTES EN-1 CREDITS PC-1 INDEX 1-1 xxvi