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Table of contents :
Title
Contents
1 Creating Customer Relationships and Value through Marketing
2 Developing Successful Marketing and Organizational Strategies
Appendix A BUILDING AN EFFECTIV EMARKETING PLAN
3 Scanning the Marketing Environment
4 Ethical and Social Responsibility in Marketing
5 Understanding Consumer Behavior
6 Understanding Organizations as Customers
7 Understanding and Reaching Global Consumers and Markets
8 Marketing Research: From Customer Insights to Actions
9 Market Segmentation, Targeting, and Positioning
10 Developing New Products and Services
11 Managing Successful Products, Services, and Brands
12 Pricing Products and Services
13 Managing Marketing Channels and Supply Chains
14 Retailing and Wholesaling
15 Integrated Marketing Communications and Direct Marketing
16 Advertising, Sales Promotion, and Public Relations
17 Personal Selling and Sales Management
18 Implementing Interactive and Multichannel Marketing
Appenxix B PLANNING A CAREER IN MARKETING
GLOSSARY
LEARNING REVIEW ANSWERS
CHAPTER NOTES
NAME INDEX
COMPANY/PRODUCT INDEX
SUBJECT INDEX

Citation preview

Marketing The Core

4/e

Roger A. Kerin Southern Methodist University Steven W. Hartley University of Denver William Rudelius University of Minnesota

MARKETING: THE CORE Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., Avenue of the Americas, New York, NY, Copyright © , , , by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 3 2 1 0 ISBN MHID



Vice president and editor-in-chief: Brent Gordon Editorial director: Paul Ducham Publisher: Doug Hughes Director of development: Ann Torbert Developmental editor: Gina Huck Siegert Editorial coordinator: Sean M. Pankuch Vice president and director of marketing: Robin J. Zwettler Marketing director: Amee Mosley Marketing manager: Katie Mergen Vice president of editing, design, and production: Sesha Bolisetty Lead project manager: Christine A. Vaughan Senior buyer: Carol A. Bielski Lead designer: Matthew Baldwin Senior photo research coordinator: Jeremy Cheshareck Photo researcher: Mike Hruby Media project manager: Joyce J. Chappetto Cover image: © Getty Images Typeface: /12 Times Roman Compositor: Lachina Publishing Services Printer: R. R. Donnelley Library of Congress Cataloging-in-Publication Data Kerin, Roger A. Marketing : the core / Roger A. Kerin, Steven W. Hartley, William Rudelius. -- 4th ed. p. cm. Includes index. ISBN (alk. paper) ISBN (alk. paper) 1. Marketing. I. Hartley, Steven William. II. Rudelius, William. III. Title. HFK dc22

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l years have brought ible changes the past severa red inc the d ate icip ant e hav the economy, to Who could of our business lives—from ect asp ry Eve ? ting rke ma ed recently. While many to business and es and lifestyles—has chang itud att ’ ers sum con to , role and opportunity for our government’s y create a unique challenge the , tive rup dis en be e hav of the changes s we use to discipline. anging, so too are the vehicle r-ch eve are ting rke ma and Kerin/Hartley/ Just as business of Connect Marketing to the ion uct od intr the th Wi m. m, Erin Steffes. educate about the the newest member of our tea of n itio add the es com e, exciting, new Rudelius text packag leading the development of and g ein rse ove or, uth coa Erin will serve as digital y are today. y to meet students where the log hno tec d ase n-b tio lica app braces the changes and er discipline, is a field that em Marketing, more than any oth ideas to respond to the new new products, services, and of nt me op on issues vel de the tes facilita tainly noticed the new focus cer ’ve You . ace tpl rke ma our . The future environment and improve spending, and employment er sum con n, tio ula reg , wth exciting such as global economic gro and to be an extraordinarily ion ent att our to es issu nal itio as one of our most promises to bring many add to what will surely be viewed me lco We . nts de stu ting rke the educational journey you time for ma We are excited to be part of y. tor his ess sin bu of ds rio dramatic pe provide you with a rich are undertaking! t experiences as a consumer pas r you t tha er cov dis n perspective. As a You’ll soo come part of your business be l wil t tha n atio rm info ant ce in the world change source of import dynamic changes taking pla the how rn lea l wil you ting eriences and student of marke manager, you will use your exp ting rke ma a as , ure fut the In to help you begin business practices. sional. This text is our effort fes pro ess sin bu e tru a e l and educational knowledge to becom to share our own manageria nity rtu po op the iate rec the transition. We app rts here. perspective, your career sta l reasons. First, expertise with you. From our s a milestone for us for severa ent res rep re Co The : ting indication of This edition of Marke but more importantly, it is an , ent em iev ach ant ort imp it is the result it is the 4th edition—an ess and marketing. Second, sin bu in es ng cha the h wit resents the need for keeping up ! Finally, this edition rep in ting wri gan be e —w ting of more than 25 years of wri committed to (1) building educational resource. We are an as g erin off ed anc adv st role in bringing new topics our mo (2) continuing our leadership s, hor aut as s nce erie exp t ical innovation that truly on our pas and (3) focusing on pedagog m, oo ssr cla the to s ive ect rts have created the most and persp g styles. We believe our effo rnin lea and ng chi tea new to textbook available today. We responds ng, and technically advanced agi eng te, -da -to up , sive comprehen s an active-learning hope you’ll agree. Core you will find that it use The : ting rke Ma g din rea r offers a balance of As you begin concepts to life. Each chapte and es ori the ting rke ma ng style using familiar approach to bri presented in an easy-to-read s ive ect rsp pe y rar po tem s approach has traditional and con and business strategies. Thi es, vic ser and cts du pro , ies response from examples of compan visual, connected learners. The al, ctic pra ay’s tod for ” tch translations into been a “perfect ma Marketing: The Core, and its y. nar rdi rao ext en be has rs edition strives to students and instructo ting text in the world! Our 4th rke ma 1 . No the now is s, many other language cess. We hope we continue this tradition of suc sion for marketing with you. pas our re sha to nity rtu po ndation Thank you for the op that they will become the fou and ting res inte and fun s die succeed in making your stu ctive career! of an enlightened and produ Roger A. Kerin Steven W. Hartley William Rudelius v

Preface Marketing: The Core utilizes a unique, innovative, and effective pedagogical approach developed by the authors through the integration of their combined classroom, college, and university experiences. The elements of this approach have been the foundation for each edition of Marketing: The Core and serve as the core of the text and its supplements as they evolve and adapt to changes in student learning styles, the growth of the marketing discipline, and the development of new instructional technologies. The distinctive features of the approach are illustrated below:

Rigorous Framework A pedagogy based on the use of Learning Objectives, Learning Reviews, Learning Objectives Reviews, and supportive student supplements.

High Engagement Style Easy-to-read, highinvolvement, interactive writing style that engages students through active learning techniques.

Marketing: The Core, 4/e

Personalized Marketing A vivid and accurate description of businesses, marketing professionals, and entrepreneurs—through cases, exercises, and testimonials—that allows students to personalize marketing and identify possible career interests.

Pedagogical Approach Traditional and Contemporary Coverage Comprehensive and integrated coverage of traditional and contemporary concepts.

Marketing Decision Making The use of extended examples, cases, and videos involving people making marketing decisions. Integrated Technology The use of powerful technical resources and learning solutions.

The goal of the 4th edition of Marketing: The Core is to create an exceptional experience for today’s students and instructors of marketing. The development of Marketing: The Core was based on a rigorous process of assessment, and the outcome of the process is a text and package of learning tools that are based on experience, leadership, and innovation in marketing education.

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EXPERIENCE The authors bring extraordinary experience to the development of their text. For example, they have benefited from the feedback of many users of previous editions of Marketing: The Core, and its hardcover version— a group that now exceeds more than 1 million students! In addition, the authors are experienced instructors who, in their combined careers, have taught more than 50, students, using many teaching styles, tools, and technologies. Finally, as researchers and consultants, the authors have worked with many of the world’s leading marketing companies. How has their experience shaped the 4th edition? • With the development of Connect Marketing: Connect Marketing is a comprehensive online resource that enables students to learn faster, study more efficiently, and increase knowledge retention. It contains powerful features that allow assignment management and includes a library and a study center.

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• By integrating assessment tools that allow instructors to meet AACSB assurance-of-learning requirements: Each chapter begins with learning objectives, includes in-chapter learning reviews, and ends with learning objective summaries. In addition, the Marketing: The Core, 4/e, Test Bank includes learning objective, AACSB learning standards, and Bloom’s Taxonomy designations for each question. The combination of the objectives, standards, and taxonomy designation with the specific questions provides an important tool for meeting AACSB assurance-of-learning requirements.

3 LEARNING OBJECTIVES After reading this chapter you should be able to: LO1

LO2

LO3

LO4

LO5

LO6

Explain how environmental scanning provides information about social, economic, technological, competitive, and regulatory forces. Describe how social forces such as demographics and culture can have an impact on marketing strategy. Discuss how economic forces such as macroeconomic conditions and consumer income affect marketing.

self-regulation, however: noncompliance by members and enforcement. In addition, if attempts at self-regulation are too strong, they may violate the Robinson-Patman Act. The best-known self-regulatory group is the Better Business Bureau (BBB). This agency is a voluntary alliance of companies whose goal is to help maintain fair practices. Although the BBB has no legal power, it does try to use “moral suasion” to get members to comply with its standards. The BBB recently developed a reliability assurance program, called BBB Online, to provide objective consumer protection for Internet shoppers. Before they display the BBB Online logo on their Web site, participating companies must be members of their local Better Business Bureau, have been in business for at least one year, agree to participate in BBB’s advertising self-regulation program, abide by the BBB Code of Business Practices, and work with the BBB to resolve consumer disputes that arise over goods or services promoted or advertised on their site

Scanning the Marketing Environment

7. The ____________ Act was punitive toward monopolies, whereas the ___________ Act was preventive.

learning review

You may have heard the old saying that the thr things for many businesses ar the GPS revolution is making the entir location-

LEARNING OBJECTIVES REVIEW LO1 Explain how environmental scanning provides information about social, economic, technological, competitive, and regulatory forces. Many businesses operate in environments where important forces change. Environmental scanning is the process of acquiring information about these changes to allow marketers to identify and interpret trends. There are five environmental forces businesses must monitor: social, economic, technological, competitive, and regulatory. By identifying trends related to each of these forces, businesses can develop and maintain successful marketing programs. Several trends that most businesses are monitoring include the increasing diversity of the U.S. population, the growing economic impact of China and India, and the dramatic growth of customer-generated content.

part of the revolution! direction, and time of any GPS r cle’s location on a detailed map. Other r their workouts. In Sydney The future will have many mor services and applications, many of which ar

LO2 Describe how social forces such as demographics and culture can have an impact on marketing strategy. Demographic information describes the world population; the U.S. population; the generational cohorts such as baby boomers, Generation X, and Generation Y; the structure of the American household; the geographic shifts of the population; and the racial and ethnic diversity of the population that has led to multicultural marketing programs. Cultural factors include the trend toward fewer differences in male and female consumer behavior and the impact of values such as “health and fitness” on consumer preferences.

JOY allow you to find nearby r and retailers will also benefit fr GPS devices to track car How did the GPS r cellular signal towers wer Second, the regulatory envir

Describe how technological changes can affect marketing.

use. Third, competitive for Apple, Google, and Nokia quickly cr services. Finally consumers changed. They ar

Discuss the forms of competition that exist in a market.

and to enhance their use of W and blogs. The GPS r exactly where they are!1 Many businesses operate in envir change. Anticipating and r differ describes how the marketing envir and how it is likely to change in the future.

Explain the major legislation that ensures competition and regulates the elements of the marketing mix.

8. Describe some of the recent changes in trademark law. 9. How does the Better Business Bureau encourage companies to follow its standards for commerce?

OF THE GPS REVOLUTION!

LO3 Discuss how economic forces such as macroeconomic conditions and consumer income affect marketing. Economic forces include the strong relationship between consumers’ expectations about the economy and their spend-

ing. Gross income has remained stable for more than 30 years although the rate of saving has been declining. LO4

Describe how technological changes can affect marketing. Technological innovations can replace existing products and services. Changes in technology can also have an impact on customer value by reducing the cost of products, improving the quality of products, and providing new products that were not previously feasible. Electronic commerce is transforming how companies do business. LO5 Discuss the forms of competition that exist in a market and key components of competition. There are four forms of competition: pure competition, monopolistic competition, oligopoly, and monopoly. While large companies are often used as examples of marketplace competitors, there are 29 million small businesses in the United States. These small businesses have a significant impact on the economy. LO6 Explain the major legislation that ensures competition and regulates the elements of the marketing mix. Regulation exists to protect companies and consumers. Legislation that ensures a competitive marketplace includes the Sherman Antitrust Act. Product-related legislation includes copyright and trademark laws that protect companies and packaging and labeling laws that protect consumers. Pricing- and distributionrelated laws are designed to create a competitive marketplace with fair prices and availability. Regulation related to promotion and advertising reduces deceptive practices and provides enforcement through the Federal Trade Commission. Self-regulation through organizations such as the Better Business Bureau provides an alternative to federal and state regulation.

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• With the most comprehensive package of teaching and learning resources: The resources that accompany Marketing: The Core, 4/e, are a comprehensive and integrated package of tools designed to ensure the highest level of learning for all students and assist in making an instructor’s life easier in the process. The resources range from a package of exciting videos, to online quizzes, to comprehensive PowerPoint slides, to the one-of-a-kind Instructor’s Survival Kit, to an Instructor’s Manual, to a world-class visually enhanced test bank.

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LEADERSHIP • The first text to integrate new content areas such as ethics, technology, interactive marketing, and marketing dashboards and metrics. • The first custom-made videos to accompany a marketing text. • The first teaching package to utilize active learning approaches in the text and the instructor resources. These are just a few examples that illustrate how the Kerin author team has played a leadership role in the development and delivery of marketing pedagogy. This book is recognized as the market leader in the United States and Canada, and it continues to introduce new, leadingedge principles and practices to students and instructors around the world. How does Marketing: The Core, 4/e, continue this tradition of leadership? • By focusing on marketplace diversity: A diverse mix of buyers and sellers populates today’s dynamic marketplace. Students will find that successful marketers are not limited to any particular culture, nationality, race, ethnic group, or gender. Rather, like the consumers they serve, marketers mirror society, both domestically and globally. This diversity in today's marketplace is reflected in examples throughout the text.

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• By emphasizing the feature Using Marketing Dashboards: The use of marketing dashboards among marketing professionals is popular today. Marketing dashboards graphically portray the metrics that marketers use to track and analyze marketing phenomena and performance. Students will find commonly used measures applied by successful marketers throughout the text and be exposed to their calculation, interpretation, and application.

Using Marketing Dashboards Which States Are Underperforming? In , you started your own company to sell a nutritious, high-energy snack you developed. It is now January As a marketer, you ask yourself, “How well is my business growing?” Your Challenge The snack is sold in all 50 states. Your goal is 10 percent annual growth. To begin , you want to quickly solve any sales problems that occurred during You know that states whose sales are stagnant or in decline are offset by those with greater than 10 percent growth. Studying a table of the sales and percent change versus a year ago in each of the 50 states would work, but it would be very time consuming. A good graphic is better. You choose the following marketing metric, where “sales” is measured in units:

Your Findings You see that sales growth in the northeastern states is weaker than the 10 percent target, and sales are actually declining in many of the states. Your Action Marketing is often about grappling with sales shortfalls. You’ll need to start by trying to identify and correct the problems in the largest volume states that are underperforming—in this case, in the northeastern United States. You’ll want to do marketing research to see if the problem starts with (1) an external factor, like changing consumer tastes, or (2) an internal factor, like a breakdown in your distribution system. Annual Percentage Change in Unit Volume, by State WA MT

Annual % sales change

ND

MN

NE

IA

R ID

WI WY

NV

( Sales Sales) ___ Sales

UT CA AZ

You want to act quickly to improve sales. In your map growth that is greater than 10 percent is GREEN, 0 to 10 percent growth is ORANGE, and decline is RED. Notice that you (1) picked a metric and (2) made your own rules that GREEN is good, ORANGE is bad, and RED is very bad.

CO N

KS OK

PA IL IN

MO TN

DE VA NC

AR LA

MS AL GA

TX FL

THE NEW-PRODUCT PROCESS LO6

new-product process The seven stages an organization goes through to identify business opportunities and convert them into salable products or services.



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Finding ways to stimulate American innovation and provide jobs is a vital concern to federal and state governments, business firms, and citizens alike Organizations conduct global searches to find the scientists and engineers that can achieve the creative breakthroughs needed for new high-tech products. For example, Chinese, Indian, Russian, and other immigrant engineers represent half the total number of engineers in California’s Silicon Valley To develop new products efficiently, companies such as General Electric and 3M use a specific sequence of steps to make their products ready for market. Figure 10–5 shows the new-product process, the seven stages an organization goes through to identify business opportunities and convert them into salable products or services.

Stage 1: New-Product Strategy Development For companies, new-product strategy development is the stage of the new-product process that defines the role for a new product in terms of the firm’s overall objectives. During this stage, the firm uses both a SWOT analysis (Chapter 2) and environmental scanning (Chapter 3) to assess its strengths and weaknesses relative to the trends it identifies as opportunities or threats. The outcome not only defines the vital “protocol” for each new-product idea but also identifies the strategic role it might serve in the firm’s business portfolio. New-product development in services, such as buying a stock or airline ticket or watching a Major League Baseball game, is often difficult. Why? Because services

INNOVATION What if your research showed that many students in your introductory marketing course don’t attempt to read and understand the tables and charts in the textbook? What could you do to increase their interest and involvement? Read on for the answer. To secure the position of Marketing: The Core 4/e in the marketplace, the Kerin author team consistently creates innovative pedagogical tools that encourage interaction and match students’ learning styles. How did they accomplish this in the 4th edition? • With the creation of Lecture Capture and eBook. Instructors can now help students focus on in-class discussions rather than note-taking by using Connect Marketing’s Lecture Capture to record and distribute lectures and PowerPoint presentations. In addition, the use of eBook provides students with access to the text anytime and anywhere!

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• With the increased emphasis on visually enhanced test questions. The Marketing: The Core, 4/e, Test Bank has been updated to include the latest concepts and ideas from the textbook. When research by the Kerin author team revealed many students were skipping the tables and charts in the chapter, they decided to do something about it. The visually enhanced test bank includes key tables, charts, ads, and photos from the textbook to emphasize their importance and to reward students who study these key elements.

• Through the Instructor’s Survival Kit: This supplement is exactly what it says it is: an instructor’s guide to surviving in today’s classroom. Instructors create interaction by breaking the classroom into teams that analyze marketing problems presented through in-class activities. Students who are kinesthetic (tactile) learners especially appreciate the hands-on product samples, brochures, and props that are tied to specific In-Class Activities (ICAs) that are intended to build on the idea of “cooperative learning.”

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New and Revised Content New Coverage of Customer Relationships, Customer Value, and Social Entrepreneurship. The efforts of 3M inventor David Windorski to create customer value with the new 3M Post-it® Flag Highlighter are described in the opening example of Chapter 1 and in the end-of-chapter video case. New examples such as Hot Pockets Sideshots and AT&T’s CruiseCast have been added, and a description of new social entrepreneurship activities is included in the section on social responsibility. New Coverage and Examples of Organizational Strategies. Netflix’s changing business models are discussed in Chapter 2. In addition, updated examples of the application of the Boston Consulting Group growth-share matrix to four strategic business units at Kodak are included in the section on business portfolio analysis. Chapter 2 also has an updated introduction to the Using Marketing Dashboards box. Introduction of the GPS Revolution and New Trends in Marketing. The many new location-aware services and applications that are part of the GPS revolution are described in the opening example of Chapter 3. Recent trends related to authenticity, sustainability, shift to a service economy, mobile marketing, customer-generated content, and regulation related to privacy and customer engagement have been added. Discussions of multicultural advertising, cloud computing, wireless power transmission, software pricing, and the Internet Tax Freedom Act are also included. Integration of “Triple Bottom Line,” “Greenwashing,” and New Examples of Ethics and Social Responsibility in Marketing. The three concepts of social responsibility presented in Chapter 4 now include a discussion of the balance between people, planet, and profits—the triple bottom line. In addition, the discussion of consumer ethics includes “greenwashing,” or the confusion caused by some environmental claims. New examples such as the global ethics program at UPS are also included.

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New Examples of Consumer Behavior Concepts. The Chapter 5 discussion of alternative evaluation is now based on information about smart phones such as Apple, BlackBerry, and Motorola. Other new examples include Hershey’s Extra Dark Chocolate advertising, which links the product to improved blood pressure; Unilever’s advertising, which features an endorsement from cardiologists to reduce perceived risk; and Oscar Mayer’s efforts to change attitudes toward its beef bologna product. Updated Coverage of Sustainable Procurement. The description of JCPenney’s paper procurement process has been expanded to include the growing importance of environmental programs in addition to price, quality, capacity, and other traditional factors. Chapter 6 also includes new coverage of Starbucks’s sustainable procurement program, which rewards its coffee bean suppliers for ecologically sound growing practices and invests in the farming communities where the coffee is produced. New Emphasis on Growth in Emerging Economies. Chapter 7 includes a new chapter opening example featuring Dell’s global initiative to begin sales and distribution of low-cost personal computers in Asia, Africa, and Latin America. The section on customs now includes a description of how Siemens AG paid an $ million fine for alleged bribes of government officials. New Coverage of Neuromarketing, Buy•ology, and Measuring Social Networks. A new section on neuromarketing, which uses brain scans to record responses to marketing actions, has been added to Chapter 8. A new Marketing Matters box discusses Martin Lindstrom’s book, Buy•ology, and its conclusions about logos, product placement, advertising with sex appeals, and warning labels on cigarettes. Chapter 8 also now includes a new section on data mining on social networks such as Facebook, LinkedIn, and Twitter. Updated Coverage of Zappos and Wendy’s Segmentation Examples, and Expanded Discussion of Perceptual Maps. The Chapter 9 opening example about diseinuak4web.net has been updated to include the addition of clothes, accessories, and electronics to its original segmentation strategy. The chapter also includes coverage of Wendy’s new segmentation strategy to include to year-old customers. Finally, the discussion of perceptual maps and the repositioning of chocolate milk has been expanded.

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Introduction of Open Innovation, Crowdsourcing, and Industrial Design. The idea generation section of the chapter now covers two methods of using outside sources of new-product ideas—called open innovation and crowdsourcing. In addition, new coverage of industrial design at IDEO, Apple, and Google has been added. Updated Product Management and Branding Examples. Gatorade’s new labels, such as “Bring It” on Gatorade Fierce and “Be Tough” on Gatorade X-Factor, are discussed in the updated opening example for Chapter Ralph Lauren’s sunglasses licensing agreement with Luxottica is now included in the Brand Equity section. The section titled “Managing the Marketing of Services” has been updated to utilize the “Eight Ps of Services Marketing” framework. The framework includes product (service), price, place, promotion, people, physical environment, process, and productivity. New Pricing Examples. Chapter 12 now opens with a description of Vizio’s use of pricing to help it become the fastest growing HDTV company in the United States. In addition, the factors that increase or decrease the final price of an offering are illustrated in Chapter 12 with a new example—the Tesla Roadster Sport. The example includes incentives, allowances, and extra fees in the price equation.

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Channel Management and Supply Chain Update. The opening example for Chapter 13 describes how Callaway Golf added an online channel and still maintains its traditional retail partnerships with Golf Galaxy, Dick’s Sporting Goods, and PGA Tour Superstores. Chapter 13 also describes the trend toward selective distribution for products such as Dell computers. Introduction of Cyber Monday and Other Retailing Trends. The growing importance of online retailing and the recognition of the Monday after Thanksgiving as “Cyber Monday” are now presented in Chapter New discussions of environmentally friendly retailing, the use of self-service kiosks as a method of making customers co-creators of value, electronic payment options, and “green” mailing and digital catalogs have also been added. Introduction of the “Age of Engage” in Integrated Marketing Communications. Chapter 15 discusses how consumers increasingly use interactive technologies to stay connected and be engaged with a shopping experience. New forms of integrated marketing communications, including online social viewing rooms for television programs, “fan pages” on Facebook and MySpace, and product integration with video games, have been added to the chapter discussion. New company examples include Gap’s iPhone applications, and Columbia Pictures’s integrated campaign for the movie Angels and Demons. A new Making Responsible Decisions box discusses efforts by direct marketers to “go green” by using recycled paper, removing unresponsive people from mailing lists, and installing “green” printers.

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New Advertising and Sales Promotion Examples and Content. Discussion of the trend toward three-dimensional advertising has been added to Chapter Examples of the first 3-D advertisements on the Super Bowl and future applications on digital billboards, video games, and outdoor laser productions are also discussed. Other examples of new forms of advertising include Porsche’s “Can You Afford a Porsche?” mobile campaign, Geico’s viral video campaign featuring the Geico gecko, Microsoft’s “I’m a PC” campaign, and Barack Obama’s use of infomercials. Media changes such as the growth of satellite radio, magazines based on user-generated content, the decline of newspaper circulation, the migration of yellow pages users to the Web, the incredible growth of search advertising, and the conversion of outdoor advertising to digital billboards have been added. New examples of sales promotions include Cream of Wheat’s online advertising to identify consumers for a coupon offer, Doritos “Crash the Super Bowl” contest asking people to create their own second ad, and American Idol’s sweepstakes to win a trip to the season finale. Updated Description of Salesperson Qualifications. An updated description of salesperson qualifications has been added to Chapter In addition, the methods of evaluating prospective salespeople are discussed. New and Updated Examples of Interactive Marketing. Chapter 18 includes an updated description of Seven Cycles’s use of its interactive, multilanguage Web site to become the world’s largest custom bicycle frame builder. Trends in online shopping, total online retail sales, and sales by product category through are also presented. New examples such as customized M&Ms and online shoe sales at diseinuak4web.net have been added to the chapter.

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New and Updated Career Information. Appendix B, “Planning a Career in Marketing,” has been updated to include new salary information, job descriptions, résumé preparation, job search techniques, and interview skills.

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Organization The 4th edition of Marketing: The Core is divided into four parts. Part 1, “Initiating the Marketing Process,” looks first at what marketing is and how it creates customer value and customer relationships (Chapter 1). Then Chapter 2 provides an overview of the strategic marketing process that occurs in an organization—which provides a framework for the text. Appendix A provides a sample marketing plan as a reference for students. Chapter 3 analyzes the five major environmental forces in our changing marketing environment, while Chapter 4 provides a framework for including ethical and social responsibility considerations in marketing decisions. Part 2, “Understanding Buyers and Markets,” first describes, in Chapter 5, how individual consumers reach buying decisions. Next, Chapter 6 looks at organizational buyers and markets and how they make purchase decisions. And finally, in Chapter 7, the dynamics of world trade and the influence of cultural diversity on global marketing practices are explored. In Part 3, “Targeting Marketing Opportunities,” Chapter 8 discusses the marketing research function and how information about prospective consumers is linked to marketing strategy and decisions, and sales forecasting. The process of segmenting, targeting markets, and positioning products appears in Chapter 9. Part 4, “Satisfying Marketing Opportunities,” covers the marketing mix elements. The product element is divided into the natural chronological sequence of first developing new products and services (Chapter 10) and then managing the existing products, services, and brands (Chapter 11). In Chapter 12, pricing is covered in terms of the way organizations set prices. Two chapters address the place (distribution) aspects of marketing: “Managing Marketing Channels and Supply Chains” (Chapter 13), and “Retailing and Wholesaling” (Chapter 14). Chapter 15 discusses integrated marketing communications and direct marketing, topics that have grown in importance in the marketing discipline recently. The primary forms of mass market communication—advertising, sales promotion, and public relations—are covered in Chapter Personal selling and sales management are covered in Chapter Chapter 18 describes how interactive and multichannel marketing influences customer value and the customer experience through context, content, community, customization, connectivity, and commerce. The book closes with Appendix B, “Planning a Career in Marketing,” which discusses marketing jobs and how to get them. Other useful supplemental sections include a detailed Glossary, Learning Review Answers, and three indexes (name, company/product, and subject).

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Engaging Features

10

Chapter-opening vignettes introduce students to chapter concepts by using an exciting company as an example. Students are immediately engaged while learning about real-world companies. Chapter 10 discusses Bloomberg BusinessWeek’s most innovative company in , Apple.

Developing New Products and Services APPLE’S NEW-PRODUCT INNOVATION MACHINE

LEARNING OBJECTIVES

The stage in front of an auditorium is empty except for a chair, a table, and a huge screen with a large white logo. Then in walks a legend ready for his magic show in his black turtleneck, jeans, and gray New Balance sneakers.

After reading this chapter you should be able to: LO1

LO2

LO3

LO4

LO5

LO6

Recognize the various terms that pertain to products and services.

Apple’s Innovation Machine The legend, of course, is Steve Jobs (opposite page), co-founder and CEO of Apple, Inc. Fortune rated Apple as the world’s most admired company in and Steve Jobs as CEO of the decade, and Bloomberg Businessweek has perennially rated Apple as the world’s most innovative company.1 The magic shows Jobs has put on over the years have introduced many of Apple’s market-changing innovations, such as the:

Identify the ways in which consumer and business products and services can be classified. Describe four unique elements of services. Explain the significance of “newness” in new products and services as it relates to the degree of consumer learning involved. Describe the factors contributing to the success or failure of a new product or service.

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Apple II—the first commercial personal computer.

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Macintosh—the first personal computer with a mouse and a graphical user interface.

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MacBook Air—the world’s thinnest notebook that uses a solid state drive instead of a hard disk.

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iPod—the first commercially successful MP3 digital player. The iPod family (iPod shuffle, iPod nano, iPod classic, and iPod touch) has sold more than million units since the iPod’s launch.

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iPhone 4—the revolutionary multitouch mobile phone and media player. New for FaceTime, which “makes video calling a reality.”

●

iPad (opposite page)—the thin, tablet-shaped device with a color inch screen that enables users to read books, newspapers, and magazines as well as access an array of “apps,” such as video games and other software. The iPad’s big virtual keyboard pops up when needed.

Where Is the Revolutionary iPad Headed? In introducing the iPad in his January 27, , magic show, Steve Jobs said, “Its so much more intimate than a laptop, and so much more capable than a smartphone.”2 The Economist magazine predicts that the iPad, “a giant iPhone on steroids,” will change the landscape of the computing world. This means transforming not just one industry but three—computing,

Explain the purposes of each step of the new-product process.

Marketing Matters > > > > > > customer value Feature Bloat: Geek Squad to the Rescue! Adding more features to a product to satisfy more consumers seems like a no-brainer strategy.

Feature Bloat In fact, most marketing research with potential buyers of a product done before they buy shows they say they do want more features in the product. It’s when the new product gets home that the “feature bloat” problems occur—often overwhelming the consumer with mind-boggling complexity. Computers pose a special problem for homeowners because there’s no in-house technical assistance like that existing in large organizations. Also, to drive down prices of home computers, usually little customer support service is available. Ever call the manufacturer’s toll-free “help” line? One survey showed that 29 percent of the helpline callers wound up swearing at the customer service representative and 21 percent just screamed.

More than a decade ago he turned his geekiness into the Geek Squad—a group of technically savvy people who can fix almost any computer problem. “There’s usually some frantic customer at the door pointing to some device in the corner that will not obey,” Stephens explains. “The biggest complaint about tech support people is rude, egotistical behavior,” says Stephens. So he launched the Geek Squad to show some friendly humility by having team members work their wizardry while: 1. Showing genuine concern to customers. 2. Dressing in geeky white shirts, black clip-on ties, and white socks, a “uniform” borrowed from NASA engineers. 3. Driving to customer homes or offices in black-and-white VW “geekmobiles.” Do customers appr

rson

ee

Marketing Matters boxes highlight real-world examples of customer value creation and delivery and entrepreneurship, giving students further insight into the practical world of marketing.

ua ,

explaining, “People will say

The Geek Squad to the Rescue Computer feature bloat has given rise to what TV’s 60 Minutes says is “the multibillion-dollar service industry popu-

Making Responsible Decisions > > > > > > > ethics Flexible Pricing—Is There Race and Gender Discrimination in Bargaining for a New Car?

Making Responsible Decisions boxes focus on social responsibility, sustainability, and ethics. These boxes provide exciting, current examples of how companies approach these subjects in their marketing strategy.

building your marketing plan To do a consumer analysis for the product—the good, service, or idea—in your marketing plan: 1 Identify the consumers who are most likely to buy your product—the primary target market—in terms of (a) their demographic characteristics and (b) any other kind of characteristics you believe are important. 2 Describe (a) the main points of difference of your product for this group and (b) what problem these characteristics help solve for the consumer, in terms of the

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first stage in the consumer purchase decision process in Figure 5–1. Identify the one or two key influences for each of the four outside boxes in Figure 5–4: (a) marketing mix, (b) psychological, (c) sociocultural, and (d) situational influences. This consumer analysis will provide the foundation for the marketing mix actions you develop later in your plan.

3

What do 60 percent of prospective buyers dread when looking for a new car? That’s right! They dread negotiating the price. Price bargaining demonstrates a shortcoming of flexible pricing when purchasing a new car: the potential for minority price discrimination. A National Bureau of Economic Research study of , car purchases indicated that African Americans, Hispanics, and women, on average, paid roughly $, $, and $ more, respectively, for a new car in the $21, range than the typical purchaser. Smaller price premiums remained after adjusting for income, education, and other factors that may affect price negotiations.

Buying a New Car: Some Folks Pay More 00

verage Pr miums Paid By:

0

W

African Hispanics Americans

Building Your Marketing Plan is an end-of-chapter feature that requires students to go through the practical application of creating their own marketing plan.

INSTRUCTOR RESOURCES Online Learning Center diseinuak4web.net

Element*

Instructor’s Resource CD (IRCD)

Using Marketing Dashboards Video

X

X

Instructor’s Manual (IM)

X

X

Visually Enhanced Test Bank

X

X

X (basic)

X (enhanced)

PowerPoint Presentations Video Cases

Other

Video DVD

Instructor's Survival Kit (ISK)

Stand-alone kit

Instructor Newsletter

e-mail

Connect Marketing

online

*All instructor resources are compatible with any online platform—including Blackboard Learn and eCollege.

• Using Marketing Dashboards Video: Marketing dashboards are being used among marketing professionals to graphically portray the measures used to track and analyze marketing performance. The key feature in Marketing: The Core, 4/e, Using Marketing Dashboards, is a way to bring this concept home to your students. Watch this video and even share it with your class for more information on how dashboards are being used today.

• Instructor’s Manual: The Instructor’s Manual (IM) to accompany Marketing: The Core, 4/e, is an all-inclusive resource designed to make an instructor’s preparation for teaching much easier. The Instructor’s Manual includes detailed lecture notes from which an instructor can construct a custom lecture.

• Visually Enhanced Test Bank: We offer more than 5, test questions categorized by topic and level of learning (knowledge, comprehension, or application) and correlated to both the Learning Objectives and Bloom’s Level of Learning to assist instructors in developing their exams. There are also a number of visually enhanced questions in the test bank that include images and figures from the book itself to ensure student learning and preparation.

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• Test Bank Online: A comprehensive bank of test questions is provided within a computerized test bank powered by McGraw-Hill’s flexible digital Webbased testing software program EZ Test Online (diseinuak4web.netonline. com). EZ Test Online allows you to create paper and online tests or quizzes in this easy-to-use program. Imagine being able to create and access your test or quiz anywhere, at any time, without installing the testing software. Now, with EZ Test Online, instructors can select questions from multiple McGraw-Hill test banks or author their own, and then either print the test for paper distribution or deliver it online.

• Test Creation - Author/edit questions online using different question type templates. - Create printed tests or deliver online to get instant scoring and feedback. - Create question pools to offer multiple versions online—great for practice. - Export your tests for use in WebCT, Blackboard Learn, and PageOut. - Compatible with EZ Test Desktop tests you’ve already created. - Sharing tests with colleagues, adjuncts, and TAs is easy.

• Online Test Management -

Set availability dates and time limits for your quiz or test. Control how your test will be presented. Assign points by question or question type with drop-down menu. Provide immediate feedback to students or delay until all finish the test. - Create practice tests online to enable student mastery. - Upload your roster to enable student self-registration.

• Online Scoring and Reporting -

Automated scoring for most of EZ Test’s numerous question types. Allows manual scoring for essay and other open response questions. Manual re-scoring and feedback is also available. EZ Test’s grade book is designed to easily export to your grade book. View basic statistical reports.

• Support and Help -

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User’s Guide and built-in page specific help. Flash tutorials for getting started on the support site. Support Web site: diseinuak4web.net Product specialist available at Online Training: diseinuak4web.net

• PowerPoint Presentations: The PowerPoint Presentations feature slides that can be used and personalized by instructors to help present concepts to students efficiently. The Online Learning Center contains a basic version of the media-enhanced PowerPoint Presentations that are found on the IRCD. The media-enhanced version has video and commercials embedded in the presentations and makes for an engaging and interesting classroom lecture. A third—narrated —version is also available.

• New and Revised Video Cases: A unique series of 18 contemporary marketing video cases is available on DVD. Each video case corresponds with chapter-specific topics and the end-of-chapter case in the text. The video cases feature a variety of organizations and provide balanced coverage of services, consumer products, small businesses, Fortune firms, and business-tobusiness examples. The 4th edition package includes new videos about Google, Under Armour, Pizza Hut, Activeion, and Prince tennis rackets.

• Instructor’s Survival Kit (ISK): The Instructor’s Survival Kit contains product samples for use in the classroom to illustrate marketing concepts and encourage student involvement and learning, often with teams working on a task for 5 to 30 minutes in class. Today’s students are more likely to learn and be motivated by active participative experiences than by classic classroom lecture and discussion. Marketing: The Core utilizes product samples from both large and small firms that will interest today’s students. When appropriate, sample print and TV ads are included among our PowerPoint Presentations.

• Instructor Newsletter: SPRING ISSUE 3

INSTRUCTOR NEWSLETTER Welcome to the Spring , Issue #3, a special double issue of the Instructor Newsletter for adopters of Marketing and Marketing: The Core! This newsletter provides you with innovative resources to help improve student learning, offer timely marketing examples, and make class preparation easier. Sections of the Instructor Newsletter include: • Links to other resources that provide video clips and selected TV ads (see pages 2–5). • Synopses of marketing-related articles with In-Class Discussion questions (see pages 6–15). • Supplemental Lecture Notes (SLNs), a new feature of the Instructor Newsletter (see pages 16–17). This issue generally corresponds to Chapters 11–17 of Marketing and Chapters 10–14 of Marketing: The Core to facilitate your class preparation and discussion based on the time in the term this publication is sent to you. Each of the previous newsletter is archived on our Web site at diseinuak4web.net Finally, we hope that you are having a great spring term! MARKETING ARTICLE SYNOPSES CONTINUED

CONTENTS

Fortune: Yes, You Can Raise Prices (MKT: CH14; Core: CH12)

MARKETING VIDEO CLIPS & TV ADS Apple iPad TV ad; BusinessWeek: The iPad—More Than the Sum of Its Parts. $ More, Actually and iPad Component Costs Leave Room for Price Cuts (MKT: CH13; Core: CH12)

The Wall Street Journal: Caterpillar joins ‘Onshoring’ Trend (MKT: CH16; Core: CH13) Logistics Management: Warehouse and DCs—RFID Revisited (MKT: CH16; Core: CH13)

ABC News: Breaking the Bank at the Box Office (MKT: CH13; Core: CH12)

The Wall Street Journal: Sizing Up Property, Mall Stores Try to Shrink (MKT: CH17; Core: CH14)

ABC News: Costco’s Success Secrets Revealed (MKT: CH17; Core: CH14)

The Wall Street Journal: Saks to Add More Exclusive Lines (MKT: CH17; Core: CH14)

CNBC: Scouting Expedition for Walmart (MKT: CH17; Core: CH14)

The Wall Street Journal: Target Shifts to Warehouse Approach on Various Items (MKT: CH17; Core: CH14)

MARKETING ARTICLE SYNOPSES

Convenience Store Decisions: What Do Your Restrooms Say About You? (MKT: CH17; Core: CH14)

Marketing News: Core Concepts—The Good Fight and Marketers Use Fighter Brands to Go 10 Rounds (CH11)

SUPPLEMENTAL LECTURE NOTES (SLNS)

Star Tribune: Government Says U.S. Airlines Had Best OnTime Year Since ; Fewer Mishandled Bags, Too (MKT: CH12; Core: CH10)

How to Manage Your Customer’s Experience (MKT: CH12; Core: CH10)

The Instructor Newsletter has been developed for adopters of Marketing: The Core. This newsletter is devoted to providing innovative resources to help improve student learning, offer timely marketing examples, and make class preparation easier. The newsletter includes links to video clips from Fox Business and other sources, synopses of articles with in-class discussion questions, teaching tips, and discussion of pedagogical features of Marketing: The Core. The newsletter will be offered eight times during the academic year and is available through e-mail and on our Web site, diseinuak4web.net

Vendor-Managed Inventory on a Global Scale—Men’s Shirts at JCPenney’s (MKT: CH16; Core: CH13)

The New York Times: Math of Publishing Meets the eBook (MKT: CH13; Core: CH12)

CONTACT US

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Less Managing. More Teaching. Greater Learning. McGraw-Hill Connect Marketing is an online assignment and assessment solution that connects students with the tools and resources they’ll need to achieve success. McGraw-Hill Connect Marketing helps prepare students for their future by enabling faster learning, more efficient studying, and higher retention of knowledge.

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McGraw-Hill Connect Marketing Features Connect Marketing offers a number of powerful tools and features to make managing assignments easier, so faculty can spend more time teaching. With Connect Marketing, students can engage with their coursework anytime and anywhere, making the learning process more accessible and efficient. Connect Marketing offers you the features described below.

Simple Assignment Management With Connect Marketing, creating assignments is easier than ever, so you can spend more time teaching and less time managing. The assignment management function enables you to: • Create and deliver assignments easily with selectable end-of-chapter questions and test bank items. • Streamline lesson planning, student progress reporting, and assignment grading to make classroom management more efficient than ever. • Go paperless with the eBook and online submission and grading of student assignments.

Smart Grading When it comes to studying, time is precious. Connect Marketing helps students learn more efficiently by providing feedback and practice material when they need it, where they need it. When it comes to teaching, your time also is precious. The grading function enables you to: • Have assignments scored automatically, giving students immediate feedback on their work and side-by-side comparisons with correct answers. • Access and review each response; manually change grades or leave comments for students to review. • Reinforce classroom concepts with practice tests and instant quizzes.

Instructor Library The Connect Marketing Instructor Library is your repository for additional resources to improve student engagement in and out of class. You can select and use any asset that enhances your lecture. The Connect Marketing Instructor Library includes: • eBook • PowerPoint Presentations • Video Cases • Instructor’s Manual • Instructor’s Survival Kit and In-Class Activities Guide CD

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Student Study Center The Connect Marketing Student Study Center is the place for students to access additional resources. The Student Study Center: • Offers students quick access to lectures, practice materials, eBooks, and more. • Provides instant practice material and study questions, easily accessible on the go. • Gives students access to the Personalized Learning Plan.

Student Progress Tracking Connect Marketing keeps instructors informed about how each student, section, and class is performing, allowing for more productive use of lecture and office hours. The progress-tracking function enables you to: • View scored work immediately and track individual or group performance with assignment and grade reports. • Access an instant view of student or class performance relative to learning objectives. • Collect data and generate reports required by many accreditation organizations, such as AACSB.

McGraw-Hill Connect Plus Marketing McGraw-Hill reinvents the textbook learning experience for the modern student with Connect Plus Marketing. A seamless integration of an eBook and Connect Marketing, Connect Plus Marketing provides all of the Connect Marketing features plus the following: • An integrated eBook, allowing for anytime, anywhere access to the textbook.

Lecture Capture Increase the attention paid to lecture discussion by decreasing the attention paid to note taking. For an additional charge, Lecture Capture offers new ways for students to focus on the in-class discussion, knowing they can revisit important topics later. Lecture Capture enables you to: • Record and distribute your lecture with the click of a button. • Record and index PowerPoint Presentations and anything shown on your computer so it is easily searchable, frame by frame. • Offer access to lectures anytime and anywhere by computer, iPod, or mobile device. • Increase intent listening and class participation by easing students’ concerns about note-taking. Lecture Capture will make it more likely you will see students’ faces, not the tops of their heads.

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• Dynamic links between the problems or questions you assign to your students and the location in the eBook where that problem or question is covered. • A powerful search function to pinpoint and connect key concepts in a snap.

In short, Connect Marketing offers you and your students powerful tools and features that optimize your time and energies, enabling you to focus on course content, teaching, and student learning. Connect Marketing also offers a wealth of content resources for both instructors and students. This state-of-the-art, thoroughly tested system supports you in preparing students for the world that awaits. For more information about Connect, go to diseinuak4web.net, or contact your local McGraw-Hill sales representative.

Tegrity Campus: Lectures 24/7 Tegrity Campus is a service that makes class time available 24/7 by automatically capturing every lecture in a searchable format for students to review when they study and complete assignments. With a simple one-click start-and-stop process, you capture all computer screens and corresponding audio. Students can replay any part of any class with easy-to-use browser-based viewing on a PC or Mac. Educators know that the more students can see, hear, and experience class resources, the better they learn. In fact, studies prove it. With Tegrity Campus, students quickly recall key moments by using Tegrity Campus’s unique search feature. This search helps students efficiently find what they need, when they need it, across an entire semester of class recordings. Help turn all your students’ study time into learning moments immediately supported by your lecture. To learn more about Tegrity watch a two-minute Flash demo at diseinuak4web.net

Assurance of Learning Ready Many educational institutions today are focused on the notion of Assurance of Learning, an important element of some accreditation standards. Marketing: The Core is designed specifically to support your assurance of learning initiatives with a simple, yet powerful solution. Each test bank question for Marketing: The Core, 4/e maps to a specific chapter learning outcome/objective listed in the text. You can use our test bank software, EZ Test and EZ Test Online, or Connect Marketing to easily query for learning outcomes/objectives that directly relate to the learning objectives for your course. You can then use the reporting features of EZ Test to aggregate student results in a similar fashion, making the collection and presentation of assurance-oflearning data simple and easy.

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AACSB Statement The McGraw-Hill Companies is a proud corporate member of AACSB International. Understanding the importance and value of AACSB accreditation, Marketing: The Core, 4/e, recognizes the curricula guidelines detailed in the AACSB standards for business accreditation by connecting selected questions in the test bank to the six general knowledge and skill guidelines in the AACSB standards. The statements contained in Marketing: The Core, 4/e, are provided only as a guide for the users of this textbook. The AACSB leaves content coverage and assessment within the purview of individual schools, the mission of the school, and the faculty. While Marketing: The Core, 4/e, and the teaching package make no claim of any specific AACSB qualification or evaluation, we have labeled selected questions according to the six general knowledge and skills areas.

McGraw-Hill Customer Care Contact Information At McGraw-Hill, we understand that getting the most from new technology can be challenging. That’s why our services don’t stop after you purchase our products. You can e-mail our product specialists 24 hours a day to get product-training online. Or you can search our knowledge bank of Frequently Asked Questions on our support Web site. For Customer Support, call , e-mail [email&#;protected] diseinuak4web.net, or visit diseinuak4web.net One of our technical support analysts will be able to assist you in a timely fashion.

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Acknowledgments To ensure continuous improvement of our textbook and supplements we have utilized an extensive review and development process for each of our past editions. Building on that history, the Marketing: The Core, 4th edition, development process included several phases of evaluation and a variety of stakeholder audiences (students, instructors, etc.). Reviewers who were vital in the changes that were made to this edition include: Wendi Achey Northampton Community College Praveen Aggarwal University of Minnesota—Duluth Harry Christopher Anicich California State University—Fullerton April Atwood University of Washington Timothy W. Aurand Northern Illinois University Leta Beard University of Washington Christopher P. Blocker Baylor University Elten Briggs University of Texas—Arlington Glen H. Brodowsky California State University—San Marcos Kendrick W. Brunson Liberty University Mary Conran Temple University Jane Cromartie University of New Orleans Richard M. Dailey University of Texas—Arlington Clay Daughtrey Metropolitan State College

Shanmugasundaram Doraiswamy Northeastern Illinois University Darrin C. Duber-Smith Metropolitan State College Phyllis Fein SUNY Westchester Community College Tracy Fulce Oakton Community College Roland Gau Tulane University Kimberly D. Grantham University of Georgia Donna M. Hope Nassau Community College Jianfeng Jiang Northeastern Illinois University Ann T. Kuzma Minnesota State University—Mankato Jane Lang East Carolina University Yong Liu University of Arizona Ritu Lohtia Georgia State University Harold W. Lucius Rowan University Sanjay S. Mehta Sam Houston State University

James A. Muncy Valdosta State University Linda Pettijohn Missouri State University Robert Pitts College of Charleston Timothy H. Reisenwitz Valdosta State University William Rice California State University—Fullerton Bruce Robertson San Francisco State University Robert Rouwenhorst University of Iowa Philip Shum William Paterson University Rob Simon University of Nebraska—Lincoln Julie Sneath University of South Alabama Sushila Umashankar University of Arizona Bronis J. Verhage Georgia State University Joann Wayman Columbia College Letty Workman Utah Valley University James E. Zemanek, Jr. East Carolina University

The preceding section demonstrates the amount of feedback and developmental input that went into this project, and we are deeply grateful to the numerous people who have shared their ideas with us. Reviewing a book or supplement takes an incredible amount of energy and attention. We are glad so many of our colleagues took the time to do it. Their comments have inspired us to do our best. Reviewers who contributed to the first three editions of this book include: Nadia J. Abgrab Kerri Acheson

Corinne Asher Gerard Athaide

James H. Barnes Karen Becker-Olsen

Parimal Bhagat Carol Bienstock

Roy Adler Christie Amato Linda Anglin

Andy Aylesworth Patricia Baconride Ainsworth Bailey

Frederick J. Beier Thom J. Belich Joseph Belonax

Kevin W. Bittle Brian Bittner Chris Black

Ismet Anitsal William D. Ash

Siva Balasubramanian A. Diane Barlar

Jill Bernaciak Thomas M. Bertsch

Jeff Blodgett Nancy Bloom

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Charles Bodkin Larry Borgen Koren Borges Nancy Boykin Thomas Brashear Martin Bressler Bruce Brown William Brown William G. Browne Judy Bulin

Jobie Devinney-Walsh Alan Dick Irene Dickey Paul Dion William B. Dodds James H. Donnelly Michael Dore Michael Drafke Lawrence Duke Bob Dwyer

Santhi Harvey Ron Hasty James A. Henley, Jr. Ken Herbst Jonathan Hibbard Richard M. Hill Nathan Himelstein Donald Hoffer Al Holden Fred Honerkamp

Marilyn Lavin Gary Law Robert Lawson Wilton Lelund Karen LeMasters Richard C. Leventhal Leonard Lindenmuth Natasha Lindsey Ann Little Eldon L. Little

David J. Burns Alan Bush John Buzza

Eddie V. Easley Eric Ecklund Roger W. Egerton

Kristine Hovsepian Jarrett Hudnal Mike Hyman

Yunchuan Liu James Lollar Paul Londrigan

Stephen Calcich Nate Calloway

Steven Engel Barbara Evans

Rajesh Iyer Donald R. Jackson

Lynn Loudenback Ann Lucht

William J. Carner Larry Carter Gerald O. Cavallo Carmina Cavazos S. Tamer Cavusgil Bruce Chadbourne S. Choi Chan Joel Chilsen Sang Choe Kay Chomic Melissa Clark Alfred Cole Deb Coleman Mark Collins Howard Combs Clare Comm Clark Compton Cristanna Cook Sherry Cook John Coppelt John Cox Scott Cragin Donna Crane Ken Crocker Joe Cronin Linda Crosby James Cross Lowell E. Crow

Ken Fairweather Bagher Fardanesh Larry Feick Lori Feldman Kevin Feldt Karen Flaherty Theresa Flaherty Elizabeth R. Flynn Leisa Flynn Charles Ford Renee Foster Judy Foxman Donald Fuller Stan Garfunkel Stephen Garrott Glen Gelderloos Susan Geringer David Gerth James Ginther Susan Godar Dan Goebel Marc Goldberg Leslie A. Goldgehn Kenneth Goodenday Robert Gorman Darrell Goudge James Gould Kimberly Grantham

Kenneth Jameson David Jamison Deb Jansky James C. Johnson Wesley Johnston Keith Jones Robert Jones Mary Joyce Jacqueline Karen Janice Karlen Sudhir Karunakaran Rajiv Kashyap Herbert Katzenstein Philip Kearney George Kelley Katie Kemp Ram Kesaran Roy Klages John Kohn Douglas Kornemann Kathleen Krentler Terry Kroeten Anand Kuman Nanda Kumar Michelle Kunz Ann Kuzma John Kuzma Priscilla LaBarbera

Harold Lucius Mike Luckett Robert Luke Michael R. Luthy Richard J. Lutz Marton L. Macchiete Rhonda Mack Patricia Manninen Kenneth Maricle Tom Marshall Elena Martinez James Maskulka Carolyn Massiah Tamara Masters Charla Mathwick Michael Mayo James McAlexander Peter J. McClure Phyllis McGinnis Jim McHugh Gary F. McKinnon Ed McLaughlin Jo Ann McManamy Kristy McManus Bob McMillen Samuel E. McNeely Lee Meadow James Meszaros

Brent Cunningham John H. Cunningham Bill Curtis

Nancy Grassilli Barnett Greenberg James L. Grimm

Duncan G. LaBay Christine Lai Jay Lambe

George Miaoulis Ronald Michaels Herbert A. Miller

Bob Dahlstrom Dan Darrow Neel Das

Pamela Grimm Pola B. Gupta Amy Handlin

Tim Landry Jane Lang Irene Lange

Stephen W. Miller Soon Hong Min Theodore Mitchell

Hugh Daubek Martin Decatur

Richard Hansen Donald V. Harper

Richard Lapidus Donald Larson

Steven Moff Kim Montney

Francis DeFea Joseph Defilippe Linda M. Delene

Dotty Harpool Lynn Harris Robert C. Harris

Ron Larson Ed Laube J. Ford Laumer

Rex Moody Melissa Moore Linda Morable

Tino DeMarco

Ernan Haruvy

Debra Laverie

Fred Morgan

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Gordon Mosley William Motz Rene Mueller Donald F. Mulvihill James Munch James A. Muncy Jeanne Munger Linda Munilla Bill Murphy Brian Murray

Teri Root Tom Rossi Vicki Rostedt Heidi Rottier Larry Rottmeyer Robert W. Ruekert Maria Sanella Charles Schewe Starr F. Schlobohm Roberta Schultz

Don Weinrauch Robert S. Welsh Ron Weston Michelle Wetherbee Sheila Wexler Max White Alan Whitebread James Wilkins Erin Wilkinson Janice Williams

Janet Murray Keith Murray Joseph Myslivec

Lisa M. Sciulli Stan Scott Eberhard Seheuling

Kaylene Williams Robert Williams Jerrry W. Wilson

Sunder Narayanan Nancy Nentl

Harold S. Sekiguchi Doris M. Shaw

Joseph Wisenblit Robert Witherspoon

Bob Newberry Eric Newman Donald G. Norris Carl Obermiller Dave Olson Lois Olson James Olver Ben Oumlil Notis Pagiavlas Allan Palmer Dennis Pappas June E. Parr Philip Parron David Terry Paul Richard Penn John Penrose William Pertula Michael Peters Susan Peterson Renee Pfeifer-Luckett Bruce Pilling William S. Piper Stephen Pirog Gary Poorman Vonda Powell Carmen Powers Joe Puzi

Eric Shaw Ken Shaw Dan Sherrel Philip Shum Susan Sieloff Bob E. Smiley Allen Smith David Smith Kimberly D. Smith Ruth Ann Smith Sandra Smith Norman Smothers James V. Spiers Craig Stacey Miriam B. Stamps Cheryl Stansfield Joe Stasio Tom Stevenson Kathleen Stuenkel Scott Swan Rick Sweeney Michael Swenson Robert Swerdlow Vincent P Taiani Clint Tankersley Ruth Taylor Andrew Thacker

Kim Wong Van R. Wood Wendy Wood Lauren Wright William R. Wynd Donna Yancey Poh-Lin Yeoh Mark Young Sandra Young Gail M. Zank Jim Zemanek Leon Zurawicki

Edna Ragins Priyali Rajagopal Daniel Rajaratnam James P. Rakowski

Tom Thompson Scott Thorne Dan Toy Fred Trawick

Rosemary Ramsey Barbar Ribbens Cathie Rich-Duval

Thomas L. Trittipo Gary Tucker Ottilia Voegtli

Joe Ricks Heikki Rinne

Jeff von Freymann Gerald Waddle

Linda Rochford William Rodgers Christopher Roe

Randall E. Wade Blaise Waguespack, Jr. Harlan Wallingford

Jean Romeo

Mark Weber

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Thanks are also due to many faculty members who contributed to the text chapters and cases. They include Linda Rochford of the University of Minnesota— Duluth; Kevin Upton of the University of Minnesota—Twin Cities; Nancy Nentl of Metropolitan State University; David Brennan of the University of St. Thomas; and Leigh McAlister of the University of Texas at Austin. Michael Vessey provided cases, research assistance, many special images, and led our efforts on the Instructor’s Manual, In-Class Activities, and Instructor’s Survival Kit. Rick Armstrong of Armstrong Photography, Nick Kaufman and Michelle Morgan of NKP Media, Bruce McLean of World Class Communication Technologies, Paul Fagan of Fagan Productions, Dan Hundley and George Heck of Token Media, Martin Walter of White Room Digital, Scott Bolin of Bolin Marketing, and Dan Stephenson of the Philadelphia Phillies produced the videos. Margaret Edmunds of Electronic Office was responsible for the revision of the test bank. Many businesspeople also provided substantial assistance by making available information that appears in the text, videos, and supplements—much of it for the first time in college materials. Thanks are due to David Ford and Don Rylander of Ford Consulting Group; Mark Rehborg of Tony’s Pizza; Vivian Callaway, Sandy Proctor, and Anna Stoesz of General Mills; David Windorski of 3M; Nicholas Skally, Linda Glassel, and Tyler Herring of Prince Sports; David Montgomery, David Buck, and Bonnie Clark of the Philadelphia Phillies; Todd Schaeffer, Amber Arnseth, and Chris Deets of Activeion Cleaning Solutions; Ian Wolfman of imc2; Brian Niccol of Pizza Hut; Stan Jacot of ConAgra Snack Foods; Sandra Smith of Smith Communications; Erin Patton of the MasterMind Group, LLC; Kim Nagele of JCPenney, Inc.; Charles Besio of the Sewell Automotive Group, Inc.; Kate Hodebeck of Cadbury Schweppes America’s Beverages, Inc.; Beverly Roberts of U.S. Census Bureau; Jennifer Gebert of Ghirardelli Chocolate Company; Michael Kuhl of 3M Sports and Leisure; Barbara Davis of Ken Davis Products, Inc.; Kerry Barnett of Valassis Communications; and Leslie Herman and Jeff Gerst of Bolin Marketing working with Carma Laboratories (Carmex). We also acknowledge the special help of a team that worked with us on the Fallon Worldwide In-Class Activity: Fred Senn, Bruce Blister, Kevin Flat, Ginny Grossman, Kim Knutson, Julie Smith, Erin Taut, and Rob White. Staff support from the Southern Methodist University, the University of Denver, and the University of Minnesota was essential. We gratefully acknowledge the help of Wanda Hanson, Jeanne Milazzo, and Gloria Valdez for their many contributions. Checking countless details related to layout, graphics, clear writing, and lastminute changes to ensure timely examples is essential for a sound and accurate textbook. This also involves coordinating activities of authors, designers, editors, compositors, and production specialists. Christine Vaughan of McGraw-Hill/Irwin’s production staff and editorial consultant Gina Huck Siegert of Imaginative Solutions, Inc., provided the necessary oversight and hand-holding for us, while retaining a refreshing sense of humor, often under tight deadlines. Thank you again. Finally, we acknowledge the professional efforts of the McGraw-Hill/Irwin staff. Completion of our book and its many supplements required the attention and commitment of many editorial, production, marketing, and research personnel. Our Burr Ridge–based team included Paul Ducham, Doug Hughes, Sankha Basu, Sean Pankuch, Melissa Hernandez, Carol Bielski, Matthew Baldwin, Jeremy Cheshareck, Sue Lombardi, Katie Mergen, and many others. In addition we relied on Michael Hruby for constant attention regarding photo elements of the text. Handling the countless details of our text, supplement, and support technologies has become an incredibly complex challenge. We thank all these people for their efforts! Roger A. Kerin Steven W. Hartley William Rudelius

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BRIEF CONTENTS Part 1

Initiating the Marketing Process 1 Creating Customer Relationships and Value through Marketing 2 2 Developing Successful Marketing and Organizational Strategies 20 APPENDIX A Building an Effective Marketing Plan 44 3 Scanning the Marketing Environment 58 4 Ethical and Social Responsibility in Marketing 78

Part 2

Understanding Buyers and Markets 5 Understanding Consumer Behavior 94 6 Understanding Organizations as Customers 7 Understanding and Reaching Global Consumers and Markets

Part 3

Targeting Marketing Opportunities 8 Marketing Research: From Customer Insights to Actions 9 Market Segmentation, Targeting, and Positioning

Part 4

Satisfying Marketing Opportunities 10 11 12 13 14 15 16 17 18

Developing New Products and Services Managing Successful Products, Services, and Brands Pricing Products and Services Managing Marketing Channels and Supply Chains Retailing and Wholesaling Integrated Marketing Communications and Direct Marketing Advertising, Sales Promotion, and Public Relations Personal Selling and Sales Management Implementing Interactive and Multichannel Marketing APPENDIX B Planning a Career in Marketing



Glossary Learning Review Answers



Chapter Notes Credits



Name Index



Company/Product Index



Subject Index

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DETAILED CONTENTS Part 1

Initiating the Marketing Process 1

CREATING CUSTOMER RELATIONSHIPS AND VALUE THROUGH MARKETING 2 Researching How College Students Study to Launch a New Product at 3M 3 What Is Marketing? 4 Marketing and Your Career 4 Marketing Matters: Payoff for the Joys (!) and Sleepless Nights (?) of Starting Your Own Small Business: YouTube!!!! 5

Marketing: Delivering Benefits to the Organization, Its Stakeholders, and Society 5 The Diverse Factors Influencing Marketing Activities 6 How Marketing Discovers and Satisfies Consumer Needs 7 Discovering Consumer Needs 7 The Challenge: Meeting Consumer Needs with New Products 7 Satisfying Consumer Needs 9 The Marketing Program: How Customer Relationships Are Built 10 Customer Value and Customer Relationships 10 Relationship Marketing and the Marketing Program 11 3M’s Strategy and Marketing Program to Help Students Study 12 How Marketing Became So Important 14 Evolution of the Market Orientation 14 Ethics and Social Responsibility: Balancing Interests of Groups 14 The Breadth and Depth of Marketing 15

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Learning Objectives Review 16 Focusing on Key Terms 17 Applying Marketing Knowledge 17 Building Your Marketing Plan 18

Video Case 1: 3M’s Post-it® Flag Highlighter: Extending the Concept! 18

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DEVELOPING SUCCESSFUL MARKETING AND ORGANIZATIONAL STRATEGIES 20 Be an Entrepreneur: Get an “A” in a Correspondence Course in Ice Cream Making! 21 Today’s Organizations 22 Kinds of Organizations 22

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DETAILED CONTENTS What Is Strategy? 22 Structure of Today’s Organizations 22 Making Responsible Decisions: The Global Dilemma: How to Achieve Sustainable Development 23

Strategy in Visionary Organizations 24 Organizational Foundation: Why Does It Exist? 24 Organizational Direction: What Will It Do? 26 Organizational Strategies: How Will It Do It? 27 Tracking Strategic Performance with Marketing Dashboards 27 Using Marketing Dashboards: How Well Is Ben & Jerry’s Doing? 29

Setting Strategic Directions 29 A Look Around: Where Are We Now? 29 Growth Strategies: Where Do We Want to Go? 31 The Strategic Marketing Process 34 The Planning Phase of the Strategic Marketing Process 34 The Implementation Phase of the Strategic Marketing Process 37 The Evaluation Phase of the Strategic Marketing Process 38 Learning Objectives Review 40 Focusing on Key Terms 41 Applying Marketing Knowledge 41 Building Your Marketing Plan 41

Video Case 2: General Mills Warm Delights™: Indulgent, Delicious, and Gooey! 42 Appendix A Building an Effective Marketing Plan 44

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SCANNING THE MARKETING ENVIRONMENT

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Where in the World Are You? In the Middle of the GPS Revolution! 59 Environmental Scanning 60 An Environmental Scan of Today’s Marketplace 60 Social Forces 60 Demographics 60 Making Responsible Decisions: Millennials Are Making a Difference—through Environmental Sustainability! 63

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Culture 64 Economic Forces 65 Macroeconomic Conditions 65 Consumer Income 66 Technological Forces 67 Technology of Tomorrow 67 Technology’s Impact on Customer Value 68

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DETAILED CONTENTS Electronic Business Technologies 69 Competitive Forces 69 Alternative Forms of Competition 69 Small Businesses as Competitors 70 Regulatory Forces 70 Protecting Competition 70 Product-Related Legislation 70 Pricing-Related Legislation 72 Distribution-Related Legislation 72 Marketing Matters: The Web Allows New Uses and Misuses of Trademarks 73

Advertising- and Promotion-Related Legislation Control through Self-Regulation 73

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Learning Objectives Review 74 Focusing on Key Terms 75 Applying Marketing Knowledge 75 Building Your Marketing Plan 75

Video Case 3: Geek Squad: A New Business for a New Environment 75

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ETHICAL AND SOCIAL RESPONSIBILITY IN MARKETING 78 Responsibility Matters at Anheuser-Busch 79 Nature and Significance of Marketing Ethics 80 Ethical/Legal Framework in Marketing 80 Current Perceptions of Ethical Behavior 80 Understanding Ethical Marketing Behavior 81 Societal Culture and Norms 81 Business Culture and Industry Practices 82 Corporate Culture and Expectations 83 Making Responsible Decisions: Corporate Conscience in the Cola War 84

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Your Personal Moral Philosophy and Ethical Behavior 85 Understanding Social Responsibility in Marketing 86 Three Concepts of Social Responsibility 86 Marketing Matters: Will Consumers Switch Brands for a Cause? Yes, If . . . 88

The Social Audit and Sustainable Development: Doing Well by Doing Good 88 Turning the Table: Consumer Ethics and Social Responsibility 89 Learning Objectives Review 90 Focusing on Key Terms 91 Applying Marketing Knowledge 91 Building Your Marketing Plan 91

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DETAILED CONTENTS

Video Case 4: Starbucks Corporation: Serving More Than Coffee 91

Part 2

Understanding Buyers and Markets 5

UNDERSTANDING CONSUMER BEHAVIOR 94 Enlightened Carmakers Know What Custom(h)ers Value 95 Consumer Purchase Decision Process and Experience 96 Problem Recognition: Perceiving a Need 96 Information Search: Seeking Value 96 Alternative Evaluation: Assessing Value 97 Purchase Decision: Buying Value 98 Postpurchase Behavior: Value in Consumption or Use 98 Marketing Matters: The Value of a Satisfied Customer to the Company 99

Consumer Involvement and Problem-Solving Variations Situational Influences Psychological Influences on Consumer Behavior Motivation and Personality Perception

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Making Responsible Decisions: The Ethics of Subliminal Messages

Learning Values, Beliefs, and Attitudes Consumer Lifestyle Sociocultural Influences on Consumer Behavior Personal Influence



Marketing Matters: BzzAgent—The Buzz Experience

Reference Groups Family Influence Culture and Subculture Learning Objectives Review Focusing on Key Terms Applying Marketing Knowledge Building Your Marketing Plan

Video Case 5: Best Buy: Using Customer Centricity to Connect with Consumers

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UNDERSTANDING ORGANIZATIONS AS CUSTOMERS Buying Is Marketing, Too! Purchasing Publication Paper at JCPenney The Nature and Size of Organizational Markets Industrial Markets

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