, { FIFTH EUROPEAN EDITION TIOCID PHILIP KOTLER GARY ARMSTRONG VERONICA WONG JOHN SAUNDERS rketioo FT; Prentice Hall FINANCIAL TIMES An imprint of Pearson Education Harlow, England London New York Boston San Francisco Toronto Sydney Singapore Hong Kong Tokyo Seoul Taipei New Delhi Cape Town Madrid Mexico City Amsterdam Munich Paris Milan
CONTENTS Guided tour A message from the authors Preface Custom publishing Acknowledgements About the authors Publisher's acknowledgements XVI XX xxi xxvi xxviii xxix xxxi Part one Marketing now 1 Chapter one Marketing 3 4 Prelude case Bye-bye Ryanair 5 6 What is marketing? 6 Marketing defined 6 o The marketing process 7 Understanding the marketplace and customer needs 8 Needs, wants and demands 8 The market offering - products, services and experiences 9 o Value, satisfaction and quality 11 o Exchanges, transactions and relationships 11 Markets and the marketing system 12 Designing a customer-driven marketing strategy 13 o Selecting customers to serve 14 Choosing a value proposition 15 o Marketing management orientations 15 Building profitable customer relationships 21 Real Marketing 1.1 'Whatever people say I am, that's what I'm not' 22 Preparing an integrated marketing plan and programme 24 Building customer relationships 24 Customer relationship management 24 Capturing value from customers 28 o Creating customer loyalty and retention 28 o Growing share of customer 28 Building customer equity 28 The new marketing landscape 3 Sustainability 31 o Not-for-profit marketing 32 o The electronic marketplace 33 o The global marketplace 35 Marketing in the noughties 36 Real Marketing 1.2 A new dawn? 37 o Marketing now (Part 1) 4 o Markets (Part 2) 42 o Core strategy (Part 3) 46 o The marketing mix (Parts 4 to 7) 49 So, what is marketing? Pulling it all together 51 53 55 55 56 Company case 1 Build-A-feear Workshop 59 Chapter two Sustainable nnarketing: marketing ethics and social responsibility 63 64 Prelude case NSPCC: Full Stop to child cruelty 65 66
Social criticisms of marketing 67 o Marketing's impact on individual consumers 67 Real Marketing 2.1 The Dove Campaign for Real Beauty 73 Marketing's impact on society as a whole 79 Marketing's impact on other businesses 84 Citizen and public actions to regulate marketing 85 Consumer movements 85 o Environmentalism 87 Public actions to regulate marketing 95 Business actions towards socially responsible marketing - 96 o Enlightened marketing 96 Marketing ethics 12 Real Marketing 2.2 From Plato's Republic to supermarket slavery 14 Sustainable marketing 18 114 115 116 116 Company case 2 Nestle: singled out again and again 121 Chapter three Strategic marketing 125 Prelude case Poor little rich brands Strategic planning Overview of planning The planning process The strategic plan The mission From mission to strategic objectives Strategic audit CL SWOT analysis Real Marketing 3.1 Albumart.com: But will we make money? r The business portfolio Real Marketing 3.2 KISS (Keep It Simple Stupid) o Developing growth strategies Marketing relationships Partnering with customers 126 127 128 128 128 129 13 13 134 134 135 136 139 144 146 149 149 o Partnering with other company departments 15 o Partnering with others in the marketing system 151 The marketing plan 152 o Executive summary 153 Marketing audit 153 o SWOT analysis 153 o Objectives and issues 155 Marketing strategy 156 o Marketing mix 157 Marketing implementation 158 o Marketing budgets 159 Marketing controls 161 Marketing organisation 162 163 165 165 166 Company case 3 Starbucks 169 Part two Markets 173 Chapter four The marketing environment 175 176 Prelude case Big food has a lot on its plate 177 179 The company's microenvironment 179 The company 18 o Suppliers 18 o Marketing intermediaries 181 o Customers 182 o Competitors 183 o Publics 183 The company's macroenvironment 184 o Demographic environment 185 o Economic environment 197 o Natural environment 4 21 Real Marketing 4.1 Marketing to those who have it all 22 Technological environment 28 o Political environment 211 o Cultural environment 216 Real Marketing 4.2 Cashing in on environmental awareness 217 VIII
Responding to the marketing environment 223 225 226 227 227 Company case 4 Toyota Prius: green or geek machine? 231 28 281 Company case 5 Shoot the dog: bye-bye Aibo 284 Chapter six Business-to-business marketing 287 Chapter five Consumer markets Prelude case Harley-Davidson Motorfietsen - Tijd om te rijden Models of consumer behaviour Characteristics affecting consumer behaviour Cultural factors o Social factors o Personal factors Psychological factors Consumer decision process Types of buying decision behaviour e Complex buying behaviour Dissonance-reducing buying behaviour o Habitual buying behaviour» Variety-seeking buying behaviour The buyer decision process Need recognition Information search Real Marketing 5.1 Pong: marketing's final frontier Evaluation of alternatives Purchase decision Postpurchase behaviour The buyer decision process for new products Stages in the adoption process Individual differences in innovativeness Influence of product characteristics on rate of adoption Consumer behaviour across international borders Real Marketing 5.2 Sustainable consumption: Green Sham's Law Discussina the concepts 235 236 237 238 238 239 24 244 25 255 261 261 262 263 263 264 265 265 266 267 269 271 271 272 272 273 274 274 275 278 28 288 Prelude case Concorde is dead - the booming Busjet market 289 291 Business markets 291 Market structure and demand 292 Nature of the buying unit 294 o Types of decisions and the decision process 294 Business buyer behaviour 295 Real Marketing 6.1 IKEA: working with suppliers to customers clamouring for more 296 Major types of buying situations 299 o Participants in the business buying process 3 o Major influences on business buyers 32 o The business buying process 33 o E-procurement: buying on the Internet 37 Institutional and government markets 38 Institutional markets 39 Government markets 39 Real Marketing 6.2 Political graft: wheeze or sleaze? 31 314 315 315 316 Company case 6 Biofoam: just peanuts? 318 Chapter seven Marketing research 321 322 Prelude case Market researching HIV/AIDS in Africa: a little achieves the unimaginable 323 325 Assessing marketing information needs 326 IX
Developing marketing information 327 o Internal data 327 Marketing intelligence 328 o Why is Europe different? 332 Marketing research 333 Defining the problem and research objectives 333 Developing the research plan 334 o Gathering secondary data 334 o Primary data collection 335 Real Marketing 7.1 'Touchy-feely' research into consumer motivations. 34 o Implementing the research plan.. 345 o Interpreting and reporting the findings 346 Analysing marketing information 347 Distributing and using marketing information 347 Other marketing information considerations 348 o Marketing research in small businesses and non-profit organisations 349 o International marketing research 349 o Public policy and ethics in marketing research 351 Real Marketing 7.2 Video mining 352 357 359 359 36 Company case 7 Enterprise Rent-A-Car: measuring service quality 362 Part three Core strategy 365 Chapter eight Relationship marketing Prelude case 'The most important part of a car is the distributor' r\ i / -Satisfying customer needs.defining customer value and satisfaction o Customer value o Customer satisfaction Real Marketing 8.1 Cold turkey has got me on the run Delivering customer value and satisfaction o Value chain 367 368 369 371 372 372 373 374 378 38 38 Total quality management Customer value o Customer retention Relationship marketing Real Marketing 8.2 M2M marketing and morphing products o Selective relationship management o Customer relationship management o When to use relationship marketing Partner relationship management Company case 8 Abel & Cole - the 382 385 385 387 388 391 393 395 396 398 4 4 41 Greener Grocer 43 Chapter nine Segmentation and positioning 47 48 Prelude case Classic Car Club 49 41 Market segmentation 41 o Segmenting consumer markets 411 Segmenting business markets 418 o Segmenting international markets 421 Requirements for effective segmentation 422 Market targeting 423 Evaluating market segments 423 o Selecting target market segments 424 o Socially responsible target marketing 43 Differentiation and positioning 432 Real Marketing 9.1 The place is the thing 433 o Positioning maps 434 Choosing a differentiation and positioning strategy 435 Real Marketing 9.2 Staples: on the button 437 Communicating and delivering the chosen position 444 445 447 447 447 Company case 9 Coffee-Mate 45
Chapter ten Competitive strategy Prelude case PS3 blues and X-box 36 turn as wee Wii wins Competitor analysis Identifying competitors Assessing competitors o Selecting competitors to attack and avoid /, o Designing a competitive intelligence system Competitive strategies o Approaches to marketing strategy o Basic competitive strategies Real Marketing 1.1 Marketing where the money is: customer coddling Competitive positions o Market leader strategies o Market challenger strategies Market follower strategies Market nicher strategies Real Marketing 1.2 Tesco: playing in the big guys' back yard Balancing customer and competitor orientations Company case 1 Bose: competing by being truly different 457 458 459 461 461 461 463 465 467 467 467 469 471 473 474 479 481 481 482 487 488 489 489 489 491 Part four Product 495 Chapter eleven Product and branding strategy 497 498 Prelude case L'Oreal: are you worth it? 499 5 What is a product? 5 Products, services and experiences 5 Product decisions 57 Individual product decisions 57 Real Marketing 11.1 Naming brands: part science, part art, and more than a little instinct 513 o Product line decisions 517 Product-mix decisions 52 Branding strategy: building strong brands 521 o Brand equity 521 Building strong brands 523 Additional product considerations 534 o Product decisions and social responsibility 534 Real Marketing 11.2 Mattel, 'Made in China' and 1, doll tears 535 International product decisions 536 538 54 54 541 Company case 11 Is it a phone? No! Is it an MP3 player? No! Is it an Internet company? Yes, it's Ovi! 544 Chapter twelve New-product development and product life-cycle strategies 547 Prelude case Hoki, by any other name, tastes just as oily New-product development strategy o Risks and returns in new-product development o Why do new products fail? o What influences new-product success? The new-product development process o New-product strategy Idea generation Idea screening ^ o Concept development and testing o Marketing strategy development Business analysis o Product development o Test marketing Commercialisation Managing new-product development o Customer-centred new-product development 548 549 551 551 551 552 553 554 554 555 557 557 559 56 56 561 564 566 566 XI
o Team-based new-product development o Systematic new-product development Real Marketing 12.1 Electrolux: cleaning up with customer-centred, team-based new-product development Product life-cycle strategies o stage o Growth stage o Maturity stage o Decline stage Real Marketing 12.2 Smile! Leica captures the good old days Company case 12 CEM: innovating out of decline Chapter thirteen Marketing services Prelude case Stena Line: sailing out of troubled waters Nature and characteristics of a service 567 567 568 571 573 574 574 578 58 583 584 584 585 588 593 594 595 597 597 o Defining services and categories of service mix 597 o Service characteristics and marketing implications 599 Marketing strategies for service firms 64 o Three additional Ps 64 The service-profit chain 64 o Managing differentiation 67 o Managing service quality 69 Real Marketing 13.1 Moral marketing pays: doing well by doing good 61 o Managing productivity 615 Marketing in non-profit organisations 616 The non-profit environment 617 Real Marketing 13.2 Oxfam: sustainable fashion 618 o Characteristics of non-profit marketing 621 o Marketing strategies for non-profit organisations 623 625 627 627 628 Company case 13 The Ritz 63 Part five Price 633 Chapter fourteen Pricing 635 636 Prelude case The Oresund Bridge: over or under, down and out, again and again 637 What is price? 639 Factors to consider when setting prices 639 o Customer perceptions of value 639 o Other internal and external considerations affecting pricing decisions 647 Real Marketing 14.1 Economic Value Added 656 New-product pricing strategies 659 o Market-skimming pricing 659 o Market-penetration pricing 659 Product-mix pricing strategies 66 o Product line pricing 661 o Optional-product pricing 661 o Captive-product pricing 661 By-product pricing 662 o Product-bundle pricing 662 Price-adjustment strategies 662 o Discount and allowance pricing 663 o Segmented pricing 664 o Psychological pricing 665 o Promotional pricing 666 o Geographical pricing 666 o Dynamic pricing 668 o International pricing 669 Real Marketing 14.2 Pricing around the world 67 Price changes 672 o Initiating price changes 672 o Responding to price changes 674 675 678 679 679 Company case 14 BMI Baby, Buzz, ValuJet, easyjet: easy come, easy go 681 XII
Part six Promotion 685 Chapter fifteen Communicating customer value: integrated marketing communications strategy 687 688 Prelude case Rolls-Royce 689 691 The promotion mix 691 Integrated marketing communications 692 o The new marketing communications landscape " 692 o The shifting marketing communications model 693 Real Marketing 15.1 For fun, fame and fortune, try do-it-yourself (DIY) advertising 694 o The need for integrated marketing communications 696 A view of the communication process 698 Steps in developing effective communication 71 o Identifying the target audience 71 Determining the communication objectives 71 Designing a message 73 Choosing media 77 Collecting feedback 71 Setting the total promotion budget and mix 711 Setting the total promotion budget 711 Setting the overall promotion mix 713 Integrating the promotion mix 718 Socially responsible marketing communication 718 Real Marketing 15.2 We're decent, legal, honest and truthful: Who needs laws? 719 Advertising and sales promotion 721 Personal selling 722 724 725 726 726 Company case 15 Absolut Vodka: Samantha and the Hunk on the Level 728 Chapter sixteen Advertising and public relations 733. 734 Prelude case Bored? Let's play Monopoly 735 Advertising Important decisions in advertising o Setting advertising objectives o Setting the advertising budget Developing advertising strategy Real Marketing 16.1 Mobile advertising: signing up for real-time discounts Evaluating advertising effectiveness and return on advertising investment Other advertising considerations Organising for advertising o International advertising decisions Public relations The role and impact of public relations Real Marketing 16.2 Bed and breakfast IKEA style Major public relations tools Major public relations decisions Company case 16 Ninety per cent of spend wasted! 737 737 737 738 739 74 75 753 755 755 756 76 761 762 764 766 768 769 769 77 772 Chapter seventeen Personal selling and sales promotion 775 776 Prelude case Aria Foods - rethinking its sales force strategy and structure 777 Personal selling 779 o The nature of personal selling 779 The role of the sales force 78 Managing the sales force 781 Designing sales force strategy and structure 782 Recruiting and selecting^ salespeople 785 o Training salespeople 787 o Compensating salespeople 788 o Supervising salespeople 789 Evaluating salespeople 793 The personal selling process 794 Steps in the selling process 794 XIII
Real Marketing 17.1 Cross-cultural selling: in search of universal values Personal selling and customer relationship management Sales promotion o Rapid growth of sales promotion o Setting sales promotion objectives Major sales promotion tools Real Marketing 17.2 Sales promotions under siege: What should companies do? o Developing the sales promotion programme Company case 17 Britcraft Jetprop: Whose sale is it anyhow? Chapter eighteen Direct and online marketing: building direct customer relationships Prelude case Cool Diamonds: are they forever? Direct marketing o The new direct-marketing model Growth and benefits of direct marketing Benefit to buyers o Benefit to sellers Customer databases and direct marketing Forms of direct marketing o Direct-mail marketing o Catalogue marketing o Telephone marketing ' Real Marketing 18.1 'Flick to click' shoppers turn to new page o Direct-response television marketing -.Kiosk marketing o- New digital direct marketing technologies Online marketing Marketing and the Internet o Online marketing domains o Types of online marketers o Setting up an online marketing presence Real Marketing 18.2 Corporate website performance: are you being served? 797 798 799 799 8 81 one UU ij 88 81 811 812 812 814 819 82 821 823 823 824 825 825 826 828 829 83 831 832 833 834 834 839 839 839 846 849 852 The promise and challenges of online marketing Integrated direct marketing Public policy and ethical issues in direct marketing A need for action Company case 18 Viagogo goes west Part seven Place 858 859 859 862 865 866 867 868 871 875 Chapter nineteen Managing marketing channels 877 878 Prelude case Good Hair Day (GHD) 879 Supply chains and the value delivery network 88 The nature and importance of marketing channels 881 How channel members add value 881 Number of channel levels 884 Channel behaviour and organisation 885 Channel behaviour 885 o Channel organisation 886 Real Marketing 19.1 Disintermediation: the music industry dances to a new itune 893 Channel design decisions 896 Analysing customer needs 896 o Setting channel objectives 896 Identifying the major channel alternatives 897 Evaluating the main channel alternatives 97 Designing international distribution channels 98 Channel management decisions 91 Selecting channel members 91 o Managing and motivating channel members 91 Evaluating channel members 91 Marketing logistics and supply chain management 911 The nature and importance of marketing logistics 911 o Goals of the logistics system 912 XIV
o Major logistics functions 912 o Integrated logistics management 916 Real Marketing 19.2 High-tech logistics pave way for greener trucking 917 Channel trends 923 o Retailing and wholesaling "trends 923 928 93 93 931 Company case 19 Zara - the fast and furious giant of fashion '"' 933 Chapter twenty The global marketplace 937 938 Prelude case Jagermeister Rock'n'Race 939 Global marketing today 94 Looking at the global marketing environment 942 o The international trade system 943 Economic environment 945 Political-legal environment 947 Cultural environment 948 Deciding whether to go international 951 Deciding which markets to enter 952 Deciding how to enter the market 953 Exporting 953 Real Marketing 2.1 Emerging markets: elusive targets o Joint venturing o Direct investment Deciding on the global marketing programme o Standardisation or adaptation for international markets? o Product Real Marketing 2.2 LG Electronics: think locally; succeed globally o Promotion o Price o Distribution channels Deciding on the global marketing organisation o Export department o International division o Global organisation Company case 2 The global wine SCAM: soil, climate, aspect and mystique Glossary Subject index ComDanv index 954 957 958 96 96 963 964 968 971 972 973 974 974 974 975 976 976 977 98 985 999 115 XV