Brief Contents Feature matrix xiv Foreword xvii Preface xviii Acknowledgments xxiii

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Brief Contents Feature 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

1 Brief Contents Feature 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 Business Markets and Business Buyer Behavior 152 Part 3 Designing a Customer-Driven Strategy and Mix Customer-Driven Marketing Strategy: Segmentation, Targeting & Positioning Products, Services, and Brands: Building Customer Value New-Product Development and Product Life-Cycle Strategies Pricing Communicating Customer Value: Integrated Marketing Communications Strategy Promotion Mix Strategies: Advertising and Public Relations Direct and Online Marketing: Building Direct Customer Relationships Managing Marketing Channels 400 Part 4 Extending Marketing Creating Competitive Advantage The Global Marketplace 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 vii A01_KOTL5681_01_SE_FM.indd vii

2 Part 1 Chapter 1 Defining Marketing and the Marketing Process 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 Chapter Preview 36 Objective Outline 38 Company and Marketing Strategy: Partnering to Build Customer Relationships 36 Companywide Strategic Planning: Defining Marketing s Role 37 Defining a Market-Oriented Mission 39 Setting Company Objectives and Goals 3 9 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 Chapter 3 Understanding the Marketplace and Consumers 65 Analyzing the Marketing Environment 66 Chapter Preview 66 Objective Outline 68 The Company s Microenvironment 68 The Company 69 Suppliers 69 Marketing Intermediaries 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 viii A01_KOTL5681_01_SE_FM.indd viii

3 ix 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 Reviewing Objectives and Key Terms 119 Key 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 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 Discussing & Applying the Concepts 148 Focus on 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 Technology 171 Focus on Ethics 172 Marketing by the Numbers 172 Video Case: Eaton 172 Company Case Boeing: Selling a Dream(liner) 173 A01_KOTL5681_01_SE_FM.indd ix

4 x Contents Part 3 Designing a Customer-Driven Strategy and Mix 175 Video Case: Swiss Army Brands 235 Company Case Alshaya: The House of Brands 235 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 Reviewing Objectives and Key Terms 198 Key Terms 199 Discussing & Applying the Concepts 199 Focus on Technology 199 Focus on Ethics 200 Marketing by the 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 Reviewing Objectives and Key Terms 232 Key Terms 233 Discussing & Applying the Concepts 233 Focus on Technology 233 Focus on Ethics 234 Marketing by the Numbers 234 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 Reviewing Objectives and Key Terms 261 Key Terms 262 Discussing & Applying the Concepts 262 Focus on Technology 263 Focus on Ethics 263 Marketing by the 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 A01_KOTL5681_01_SE_FM.indd x

5 xi 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 Reviewing Objectives and Key Terms 295 Key Terms 296 Discussing & Applying the Concepts 296 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 Reviewing Objectives and Key Terms 320 Key Terms 321 Discussing & Applying the Concepts 321 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 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 Reviewing Objectives and Key Terms 363 Key Terms 365 Discussing & Applying the Concepts 365 Focus on Technology 365 Focus on Ethics 365 Marketing by the 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 A01_KOTL5681_01_SE_FM.indd xi

6 xii Contents Real Marketing 13.2 Social Networks in the Arab World 388 Using 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 Reviewing Objectives and Key Terms 392 Key Terms 393 Discussing & Applying the Concepts 394 Focus on Technology 394 Focus on Ethics 394 Marketing by the 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 Reviewing Objectives and Key Terms 433 Key Terms 434 Discussing & Applying the Concepts 435 Focus on Technology 435 Focus on Ethics 435 Marketing by the 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 Reviewing Objectives and Key Terms 460 Key Terms 461 Discussing & Applying the Concepts 461 Focus on Technology 461 Focus on Ethics 462 Marketing 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 Reviewing Objectives and Key Terms 489 Key Terms 490 Discussing & Applying the Concepts 490 Focus on Technology 490 Focus on Ethics 491 Marketing by the Numbers 491 Video Case: Nivea 491 Company Case B-Tech: A Successful Regional Brand 492 A01_KOTL5681_01_SE_FM.indd xii

7 xiii 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 Reviewing Objectives and Key Terms 521 Key Terms 522 Discussing & Applying the Concepts 522 Focus on Technology 523 Focus on Ethics 523 Marketing by the 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 A01_KOTL5681_01_SE_FM.indd xiii

A P. ion,9e. Gary Armstrong. Philip Kotler. University of North Carolina. Northwestern University. Pearson Education International

A P. ion,9e. Gary Armstrong. Philip Kotler. University of North Carolina. Northwestern University. Pearson Education International A P ion,9e Gary Armstrong University of North Carolina Philip Kotler Northwestern University Pearson Education International Preface 21 Acknowledgments 28 PART 1 DEFINING MARKETING AND THE MARKETING PROCESS