Introduction to marketing theory and practice Second edition Adrian Palmer OXFORD UNIVERSITY PRESS
Preface Acknowledgments Guided tour of the textbook features v vii viii Marketing: the fundamentals 1 What is marketing? 3 Chapter objectives 3 Introduction 3 Marketing as a philosophy and as a set of techniques 5 Foundations for success in business 8 Production orientation 11 Selling orientation 12 What organizations undertake marketing? 14 Key marketing concepts 15 Customers 15 Needs 16 Value 17 Exchange 19 Markets 20 The marketing mix 21 Products 22 Pricing 23 Place 23 Promotion 23 People 24 Process 24 Physical evidence 24 Interdependency of the marketing mix 24 Marketing management 25 The marketing management process 25 Marketing management structures 26 Outcomes of the marketing management process 27 Marketing and its relationship to other business functions 27 Marketing and social responsibility 28 Is marketing a science or an art? 29 Marketing as an academic discipline 31
What makes a good marketer? 32 Chapter summary and linkages to other chapters 33 Key principles of marketing 33 Case study: The Body Shop good luck or good marketing? 33 Chapter review questions 36 Activities 37 References 37 Suggested further reading 37 Useful web links 38 Key terms 38 2 The marketing environment 40 Chapter objectives 40 Introduction 40 The micro-environment 42 Customers ' 42 Competitors 43 Intermediaries 43 Suppliers 44 Government 45 The financial community 45 Local communities 46 Pressure groups 46 Value chains 47 Relationships between members of an organization's micro-environment 48 Communication within the micro-environment 50 The macro-environment 51 The macro-economic environment 51 The political environment 55 The social and cultural environment 56 The demographic environment 59 The technological environment 61 The ecological environment 61 The internal environment 63 The flexible organization 65 Monitoring and responding to environmental change 66 SWOT analysis 67 Chapter summary and linkages to other chapters 69 Key principles of marketing 70 Case study: Ready meal manufacturers ready to respond to a changing marketing environment 70 Chapter review questions 72
Activities 72 References 73 Suggested further reading 73 Useful web links 74 Key terms 74 3 Socially responsible marketing 76 Chapter objectives 76 Introduction 76 Philosophical principles underlying responsible marketing 78 Ecologically sustainable marketing 82 Ethical responsibility 85 Marketing's responsibility for customers' privacy and security 89 Marketing's responsibilities to vulnerable people 92 Marketing's responsibility to employees, 93 Marketing's responsibility for preserving the competitiveness of markets 95 Responsible communication 97 Chapter summary and links to other chapters 102 Key principles of marketing 102 Case study: Problems in the air for low-cost flights? 103 Chapter review questions 105 Activities 105 References 106 Suggested further reading 106 Useful web links / 107 Key terms 107 Understanding customers 4 Buyer behaviour and relationship development 111 Chapter objectives 111 Introduction 111 Buying situations 112 The buying process 113 Needs as buying process initiators 114 Information search 120 Evaluation 122 Decision 124 Post-purchase evaluation 125
The decision-making unit (DMU) 127 Influences 127 Gatekeepers 128 Buyers : 128 Users 129 Decision-maker 130 Models of buyer decision-making 130 Personal and organizational buyer behaviour compared 133 Developing ongoing relationships with buyers 134 Reasons for the development of ongoing customer relationships 135 Methods used to develop ongoing relationships with customers 138 Problems of creating ongoing relationships with buyers 141 Chapter summary and linkages to other chapters 142 Key principles of marketing 142 Case study: How do you really understand young people's buying behaviour? 143 Chapter review questions 145 Activities 145 References 145 Suggested further reading 146 Useful web links 146 Key terms 146 l 5 Marketing research 148 Chapter objectives 148 Introduction 148 Market research v. marketing research 149 Major uses of marketing research 150 The marketing research process 152 Primary v. secondary research 154 Secondary research information sources 156 Primary research methods 157 Sampling procedures 157 Data collection methods 158 Quantitative v. qualitative research 162 Quantitative research 162 Qualitative research 166 Who carries out marketing research? 168 Marketing intelligence 169 Knowledge management 169 Demand forecasting 172 Chapter summary and key linkages to other chapters 174
Key principles of marketing Case study: Drowning in data, searching for insight? Chapter review questions Activities References Suggested further reading Useful web links Key terms 175 175 177 177 178 178 179 179 6 Segmentation, positioning, and targeting 180 Chapter objectives 180 Why segment markets? 180 Criteria for effective segmentation 183 Is the basis of market segmentation useful to the company? 183 Are the segments of an economic size? 184 Can the market segments be measured? ' 185 Are the segments accessible to the company? 186 Bases for market segmentation 187 Demographic bases for segmentation 187 Socio-economic bases for segmentation 194 Psychographic bases for segmentation 196 Geodemographic bases for segmentation 198 Situational bases for segmentation 199 Comprehensive approaches to segmentation 202 Bases for segmenting business markets 203 Size of firm 203 Formality of buying processes 203 Industry sector 203 Evaluating market segments 204 Size of segment 204 Growth prospects 204 Profitability 204 Competition for the segment 205 Fit with company objectives 205 Selection of target markets 207 Undifferentiated mass marketing 208 Single-segment specialization ('niche' marketing) 209 Multiple-segment specialization 211 Segment development plans 211 Developing a position within the target market 212 Chapter summary and linkages to other chapters 214 Key principles of marketing 214 Case study: A bar for all tastes 215
Chapter review questions 217 Activities 218 References 218 Suggested further reading 218 Useful web links 218 Key terms 219 Developing the marketing mix 7 Competitor analysis and brand development 223 Chapter objectives 223 Introduction 223 Who are a company's competitors? 224 Branding 228 The history of branding * 229 Key characteristics of a brand 231 Consistency 231 Risk reduction 233 Functional and emotional attributes 233 Creating a distinctive brand 235 Choice of name 235 Distinctive product features 237 Creation of a distinctive brand personality 238 Distinctive visual identity 238 Branding strategy 239 Development of a single strong brand 240 Differentiated brands 242 Brand families 242 Brand extension 242 Co-branding 243 Protecting a brand 243 The organization as a brand 244 The development of global brands 245 The changing role of branding 246 Positioning the brand 249 Repositioning 252 The marketing mix 253 Chapter summary and key linkages to other chapters 254 Key principles of marketing 254 Case study: Fairy's brand bubble never seems to burst 254 Chapter review questions 256 Activities 257
References 257 Suggested further reading 258 Useful web links 258 Key terms 259 8 Developing the product 260 Chapter objectives 260 What do we mean by a product? 260 Material goods 262 Intangible services 264 Ideas 265 Locations and people 266 Analysis of the product offer 266 The product mix 267 Quality 268 Technical quality and functional quality > 269 Distinctive design 270 Packaging 271 'Greening'the product range 272 The product life cycle 272 The product life cycle and consumer adoption processes 273 Limitations of product life-cycle theory 276 Innovation and new product development 276 What is innovation? 277 What are new products? 277 The new product development process 281 Idea generation 281 Idea screening 282 Concept development and testing 283 Business analysis 284 Product development and testing 285 Market testing 285 Product launch 286 Integrating the new product development process 288 Strategic issues in expanding the product range 288 Planning for growth 290 Deleting products 292 Chapter summary and linkages to other chapters 295 Key principles of marketing 296 Case study: Small new phones, big investment risk? 296 Chapter review questions 299 Activities 299
References 299 Suggested further reading 300 Useful web links 301 Key terms 301 9 Pricing 302 Chapter objectives 302 Introduction 302 Effects of market structure on pricing 303 The theory of supply and demand 305 Demand 306 Supply 309 Price determination 311 Imperfections to competition 312 Elasticity of demand 314 Oligopoly, 317 Monopolistic markets 318 Regulatory influences on pricing 319 Direct government controls to regulate monopoly power 319 Government controls on price representations 320 Pricing objectives of companies 321 Profit maximization 321 Sales growth 322 Survival 322 Social considerations 323 Pricing strategy 324 Pricing and the product life cycle 324 Price-skimming strategy 325 Penetration pricing strategy 327 Customer lifetime pricing 329 Pricing methods 329 Cost-based pricing 329 Marginal cost pricing 331 Competitors and pricing 332 Demand-based pricing 333 Pricing a product range 339 Price bundling 340 Pricing models 341 The pricing of public services 341 Chapter summary and linkages to other chapters 343 Key principles of marketing 343 Case study: A fair price for 'free' hospital treatment? 344 Chapter review questions 346
Activities 346 References 346 Suggested further reading 347 Useful web links 347 Key terms 347 10 Channel intermediaries 349 Chapter objectives 349 Introduction 349 What is a marketing channel? 350 The role of intermediaries in a value chain 351 Functions of intermediaries 352 Types of intermediary 354 Classification of retailers 354 Designing a channel of distribution, 356 Influences on channel selection 357 Channel alternatives 359 Multiple channels 360 Selecting specific intermediaries 360 Power and conflict within distribution channels 361 Integrated distribution channels 363 Franchising systems 364 Global channels of distribution 366 The Internet and channel design 366 Physical distribution management 369 Physical distribution objectives 370 Customer service objectives in logistics 371 Identification of segments by service requirements 372 Cost/service trade-offs 373 Inventory management 375 Just-in-time systems 376 Information processing 378 Order processing 379 Materials and production planning 379 Delivery planning 379 Production and warehouse location 380 Transport 382 Trends in logistics management 382 Rising expectations of end consumers 382 From functions to processes 384
Competition between supply networks 384 Closer working relationships 384 Fewer channel members 385 Virtual organizations 385 Increasingly complex consumer needs 385 The Internet 386 Increasing public concern over the environment 386 Chapter summary and key linkages to other chapters 387 Key principles of marketing 387 Case study: Tesco tries to cut food miles from its supply chain 388 Chapter review questions 390 Activities 391 References 391 Suggested further reading 392 Useful web links 392 Key terms 393 11 Marketing communications 394 Chapter objectives 394 Introduction 394 Marketing and promotional objectives 395 The communication process ' 397 The message source 399 The message 400 Encoding, decoding, and noise 401 Perception and retention of the message 403 The target audience 405 Buyer readiness state 407 Push v. pull messages 408 Other important audiences for communication 410 The channel 410 Response: marketing communications models 411 'Hierarchy of effects' models 412 Integrated models 413 Stages of the promotion planning process 414 The promotion campaign 415 The role of promotion agencies 416 Setting budgets for promotional activity 417 Monitoring and evaluating the promotional effort 419 Introducing the promotion mix 420 Advertising 424 The role of advertising in the promotion mix 424 How does advertising work? 424
Advertising media 425 Media selection and evaluation 430 Constraints on advertising 430 Personal selling 432 Types of selling 432 Tasks of a salesperson 433 Sales promotion 434 Sales promotion tools 435 Evaluation of sales promotion 437 Public relations 437 Public relations and corporate reputation 438 The characteristics of public relations 439 The tools of public relations 440 Evaluating public relations activity 442 Sponsorship 442 Direct marketing 443 The development of customer databases 444 Profiling and targeting 446 Direct marketing media 448 Online marketing 449 Choice of online channels 451 Integrating online with other media 452 Chapter summary and links to other chapters 454 Key principles of marketing 454 Case study: Online advertising goes mobile 455 Chapter review questions 458 Activities 458 References 458 Suggested further reading 459 Useful web links 460 Key terms 460 Bringing it together 12 Managing the marketing effort 465 Chapter objectives 465 Introduction 465 The marketing management process 466 Strategic, tactical, and contingency planning 470 The dynamic marketing environment 471 Marketing planning and corporate planning 471 Planning as an inter-functional integrator 472
The mission statement 473 Organizing the marketing management function 474 Management by functional responsibility 476 Management by geographical responsibility 476 Management by product type 476 Management by market segment 477 Integrating marketing management with other management functions 479 Marketing management and smaller businesses 482 Internal marketplaces 485 Leadership 485 Managing information 487 Using information for control 490 Improving organizational effectiveness for marketing 492 Chapter summary and key linkages to other chapters 494 Case study: Viva Espana! Marketing Spain as a tourism destination ' 494 Chapter review questions 497 Activities 497 References 497 Suggested further reading 498 Useful web links 498 Key terms 498 13 Global marketing 499 Chapter objectives 499 Introduction 499 Why export? 501 National reasons for trade occurring 501 Firms' reasons for developing foreign trade 502 A note on'exporting'of services 503 Analysing foreign marketing opportunities 503 Political factors 504 Economic factors 506 Social factors 507 Technological factors 508 A more detailed analysis of potential markets 510 Adapting the product offer to foreign markets 512 Pricing in foreign markets 516 Distributing goods and services in foreign markets 517 People decisions 518
Market entry strategies Timescale for foreign market development Who should be involved in foreign market development? Global e-commerce Future trends in global marketing Chapter summary and key linkages to other chapters Key principles of marketing Case study: Can Interbrew sell more beer to the heavy drinking Czechs? Chapter review questions Activities References Suggested further reading Useful web links Key terms 519 519 521 524 526 527 528 529 532 533 533 533 534 534 Glossary of marketing terms Subject index Index of authors Index of comoanies and brands 535 543 548 550