New coverage in every chapter of the fourteenth edition shows how companies and consumers are dealing with marketing and the uncertain economy in the aftermath
Learn to think like a marketer using: • Study Plan. The Study Plan helps ensure that you have a
basic understanding of course material before coming to class by guiding you directly to the pages you need to review.
• Mini-Simulations. Move beyond the basics with interactive
simulations that place you in a realistic marketing situation and require you to make decisions based on marketing concepts.
• Applied Theories. Get involved with detailed videos, interactive cases, and critical-thinking exercises.
• Critical Thinking. Experience real marketing situations that might not always have a right answer but will have a best answer. This allows for great discussion and debate with your classmates.
And More: • Self-Assessments • Videos • Pearson eText • Flash Cards
Go to www.mypearsonmarketinglab.com
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Principles of
Marketing
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Principles of
Marketing
14 | E
PHILIP Kotler Northwestern University
GARY Armstrong University of North Carolina
Pearson Prentice Hall
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Library of Congress Cataloging-in-Publication Data
Kotler, Philip. Principles of marketing / Philip Kotler, Gary Armstrong. -- 14th ed. p. cm. Includes bibliographical references and index. ISBN-13: 978-0-13-216712-3 ISBN-10: 0-13-216712-3
1. Marketing. I. Armstrong, Gary (Gary M.) II. Title. HF5415.K636 2011 658.8--dc22
10 9 8 7 6 5 4 3 2 1 ISBN 10: 0-13-216712-3 ISBN 13: 978-0-13-216712-3
DEDICATION
To Kathy, Betty, Mandy, Matt, KC, Keri, Delaney, Molly, Macy, and Ben; and Nancy, Amy, Melissa, and Jessica
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ABOUT The Authors
As a team, Philip Kotler and Gary Armstrong provide a blend of skills uniquely suited to writing an introductory marketing text. Professor Kotler is one of the world’s leading au- thorities on marketing. Professor Armstrong is an award-winning teacher of undergraduate business students. Together they make the complex world of marketing practical, approach- able, and enjoyable.
PHILIP KOTLER is S. C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management, Northwestern University. He received
his master’s degree at the University of Chicago and his Ph.D. at M.I.T., both in econom- ics. Dr. Kotler is author of Marketing Management (Pearson Prentice Hall), now in its four- teenth edition and the world’s most widely used marketing textbook in graduate schools of business worldwide. He has authored dozens of other successful books and has written more than 100 articles in leading journals. He is the only three-time winner of the coveted Alpha Kappa Psi award for the best annual article in the Journal of Marketing.
Professor Kotler was named the first recipient of two major awards: the Distinguished Marketing Educator of the Year Award given by the American Marketing Association and the Philip Kotler Award for Excellence in Health Care Marketing presented by the Academy for Health Care Services Marketing. His numerous other major honors include the Sales and Marketing Executives International Marketing Educator of the Year Award; The European Association of Marketing Consultants and Trainers Marketing Excellence Award; the Charles Coolidge Parlin Marketing Research Award; and the Paul D. Converse Award, given by the American Marketing Association to honor “outstanding contributions to sci- ence in marketing.” A recent Forbes survey ranks Professor Kotler in the top 10 of the world’s most influential business thinkers. And in a recent Financial Times poll of 1,000 senior exec- utives across the world, Professor Kotler was ranked as the fourth “most influential busi- ness writer/guru” of the twenty-first century.
Dr. Kotler has served as chairman of the College on Marketing of the Institute of Manage- ment Sciences, a director of the American Marketing Association, and a trustee of the Market- ing Science Institute. He has consulted with many major U.S. and international companies in the areas of marketing strategy and planning, marketing organization, and international mar- keting. He has traveled and lectured extensively throughout Europe, Asia, and South America, advising companies and governments about global marketing practices and opportunities.
GARY ARMSTRONG is Crist W. Blackwell Distinguished Professor Emeritus of Undergraduate Education in the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. He holds undergraduate and masters degrees in business
from Wayne State University in Detroit, and he received his Ph.D. in marketing from North- western University. Dr. Armstrong has contributed numerous articles to leading business journals. As a consultant and researcher, he has worked with many companies on market- ing research, sales management, and marketing strategy.
But Professor Armstrong’s first love has always been teaching. His long-held Blackwell Distinguished Professorship is the only permanent endowed professorship for distin- guished undergraduate teaching at the University of North Carolina at Chapel Hill. He has been very active in the teaching and administration of Kenan-Flagler’s undergraduate pro- gram. His administrative posts have included Chair of Marketing, Associate Director of the Undergraduate Business Program, Director of the Business Honors Program, and many oth- ers. Through the years, he has worked closely with business student groups and has re- ceived several campuswide and Business School teaching awards. He is the only repeat recipient of school’s highly regarded Award for Excellence in Undergraduate Teaching, which he received three times. Most recently, Professor Armstrong received the UNC Board of Governors Award for Excellence in Teaching, the highest teaching honor bestowed by the sixteen-campus University of North Carolina system.
vii
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BRIEF Contents
Preface xvi
Part 1: Defining Marketing and the Marketing Process 2
1 Marketing: Creating and Capturing Customer Value 2
2 Company and Marketing Strategy: Partnering to Build Customer Relationships 36
Part 2: Understanding the Marketplace and Consumers 64
3 Analyzing the Marketing Environment 64
4 Managing Marketing Information to Gain Customer Insights 96
5 Consumer Markets and Consumer Buyer Behavior 132
6 Business Markets and Business Buyer Behavior 164
Part 3: Designing a Customer-Driven Strategy and Mix 188
7 Customer-Driven Marketing Strategy: Creating Value for Target Customers 188
8 Products, Services, and Brands: Building Customer Value 222
9 New Product Development and Product Life-Cycle Strategies 258
10 Pricing: Understanding and Capturing Customer Value 288
11 Pricing Strategies 312
12 Marketing Channels: Delivering Customer Value 338
13 Retailing and Wholesaling 372
14 Communicating Customer Value: Integrated Marketing Communications Strategy 406
15 Advertising and Public Relations 434
16 Personal Selling and Sales Promotion 462
17 Direct and Online Marketing: Building Direct Customer Relationships 494
Part 4: Extending Marketing 526
18 Creating Competitive Advantage 526
19 The Global Marketplace 550
20 Sustainable Marketing: Social Responsibility and Ethics 580 Appendix 1 Marketing Plan A1
Appendix 2 Marketing by the Numbers A11 References R1
Glossary G1 Credits C1 Index I1
ix
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Part 1: Defining Marketing and the Marketing Process (Chapters 1–2) Part 2: Understanding the Marketplace and Consumers (Chapters 3–6) Part 3: Designing a Customer-Driven Strategy and Mix (Chapters 7–17) Part 4: Extending Marketing (Chapters 18–20)
Contents
Preface xvi Planning Marketing: Partnering to Build Customer Relationships 45
Partnering with Other Company Departments 46 | Partnering
Part 1: Defining Marketing and the Marketing Process 2
with Others in the Marketing System 47 Marketing Strategy and the Marketing Mix 48
1 What Is Marketing? 4 Marketing Analysis 53 | Marketing Planning 54 | Marketing
Marketing: Creating and Capturing Customer-Driven Marketing Strategy 48 | Developing an Customer Value 2 Integrated Marketing Mix 51
Managing the Marketing Effort 53
Implementation 54 | Marketing Department Organization 55 | Marketing Defined 5 | The Marketing Process 5
Marketing Control 56
Understanding the Marketplace and Customer Needs 6 Measuring and Managing Return on Marketing Investment 57 Customer Needs, Wants, and Demands 6 | Market Offerings—
Reviewing Objectives and Key Terms 59 | Key Terms 60 | Products, Services, and Experiences 6 | Customer Value and
Discussing & Applying the Concepts 60 | Focus on Satisfaction 7 | Exchanges and Relationships 7 | Markets 7
Technology 60 | Focus on Ethics 61 | Marketing & the Designing a Customer-Driven Marketing Strategy 8
Economy 61 | Marketing by the Numbers 61 Selecting Customers to Serve 8 | Choosing a Value Proposition 9
Video Case: Live Nation 62
| Marketing Management Orientations 9 Company Case: Trap-Ease America: The Big Cheese Preparing an Integrated Marketing Plan and Program 12
of Mousetraps 62
Building Customer Relationships 12 Customer Relationship Management 12 | The Changing Nature of Customer Relationships 16 | Partner Relationship
Part 2: Understanding the Marketplace and Consumers 64
Management 19 Capturing Value from Customers 20 Creating Customer Loyalty and Retention 20 | Growing Share
Analyzing the Marketing
of Customer 21 | Building Customer Equity 21
Environment 64
The Changing Marketing Landscape 22
The Uncertain Economic Environment 23 | The Digital Age 26 |
The Microenvironment 66
Rapid Globalization 27 | Sustainable Marketing—The Call for The Company 67 | Suppliers 67 | Marketing Intermediaries 68 More Social Responsibility 27 | The Growth of Not-for-Profit
| Competitors 68 | Publics 69 | Customers 69 Marketing 28
The Macroenvironment 70
So, What Is Marketing? Pulling It All Together 29 The Demographic Environment 70 | The Economic Reviewing Objectives and Key Terms 30 | Key Terms 31 |
Environment 77 | The Natural Environment 78 | The Discussing & Applying the Concepts 32 | Focus on
Technological Environment 80 | The Political and Social Technology 32 | Focus on Ethics 33 | Marketing & the
Environment 81 | The Cultural Environment 86 Economy 33 | Marketing by the Numbers 33
Responding to the Marketing Environment 89 Video Case: Stew Leonard’s 34
Reviewing Objectives and Key Terms 91 | Key Terms 92 | Company Case: JetBlue: Delighting Customers Through
Discussing & Applying the Concepts 92 | Focus on Happy Jetting 34
Technology 93 | Focus on Ethics 93 | Marketing & the Economy 93 | Marketing by the Numbers 93
Company and Marketing Strategy: Video Case: TOMS Shoes 94
Company Case: Target: From “Expect More” to “Pay Less” 94
Partnering to Build Customer Relationships 36
Managing Marketing Information
Company-Wide Strategic Planning: Defining Marketing’s
to Gain Customer Insights 96
Role 38
Defining a Market-Oriented Mission 39 | Setting Company Marketing Information and Customer Insights 98 Objectives and Goals 40 | Designing the Business Portfolio 40
Assessing Marketing Information Needs 100
xi xi
Business Buyer Behavior 170
Internal Data 100 | Competitive Marketing Intelligence 101 Major Type of Buying Situations 171 | Participants in the Marketing Research 103
Business Buying Process 172 | Major Influences on Business Defining the Problem and Research Objectives 103 | Developing
Buyers 173 | The Business Buying Process 176 | E-Procurement: the Research Plan 104 | Gathering Secondary Data 104 |
Buying on the Internet 178
Primary Data Collection 106 | Implementing the Research Institutional and Government Markets 180 Plan 118 | Interpreting and Reporting the Findings 118
Institutional Markets 180 | Government Markets 181 Analyzing and Using Marketing Information 119
Reviewing Objectives and Key Terms 183 | Key Terms 183 | Customer Relationship Management 119 | Distributing and
Discussing & Applying the Concepts 184 | Focus on Using Marketing Information 120
Technology 184 | Focus on Ethics 185 | Marketing & the Other Marketing Information Considerations 121
Economy 185 | Marketing by the Numbers 185 Marketing Research in Small Businesses and Nonprofit
Video Case: Eaton 185
Organizations 121 | International Marketing Research 123 | Company Case: Cisco Systems: Solving Business Problems Public Policy and Ethics in Marketing Research 124
Through Collaboration 186
Reviewing Objectives and Key Terms 126 | Key Terms 127 | Discussing & Applying the Concepts 127 | Focus on Technology 128 | Focus on Ethics 128 | Marketing & the Economy 128 | Marketing by the Numbers 129
Part 3: Designing a Customer-Driven Strategy and Mix 188
Video Case: Radian6 129 Company Case: Harrah’s Entertainment: Hitting the CRM Jackpot 129
Customer-Driven Marketing Strategy: Creating Value for Target Customers 188
5 Model of Consumer Behavior 134
Consumer Markets and Consumer
Buyer Behavior 132
Market Segmentation 190
Segmenting Consumer Markets 191 | Segmenting Business
Markets 198 | Segmenting International Markets 199 | Characteristics Affecting Consumer Behavior 135
Requirements for Effective Segmentation 200 Cultural Factors 135 | Social Factors 139 | Personal
Market Targeting 200
Factors 144 | Psychological Factors 147 Evaluating Market Segments 201 | Selecting Target Market Types of Buying Decision Behavior 150
Segments 201
Complex Buying Behavior 150 | Dissonance-Reducing Buying
Differentiation and Positioning 207
Behavior 151 | Habitual Buying Behavior 151 | Variety-Seeking Positioning Maps 208 | Choosing a Differentiation and Buying Behavior 152
Positioning Strategy 208 | Communicating and Delivering the The Buyer Decision Process 152
Chosen Position 215
Need Recognition 152 | Information Search 152 | Evaluation Reviewing Objectives and Key Terms 216 | Key Terms 217 | of Alternatives 153 | Purchase Decision 154 | Postpurchase
Discussing & Applying the Concepts 217 | Focus on Behavior 154
Technology 218 | Focus on Ethics 218 | Marketing & the The Buyer Decision Process for New Products 156
Economy 218 | Marketing by the Numbers 218 Stages in the Adoption Process 156 | Individual Differences
Video Case: Meredith 219
in Innovativeness 157 | Influence of Product Characteristics Company Case: Starbucks: Just Who Is the Starbucks on Rate of Adoption 157
Customer? 219
Reviewing Objectives and Key Terms 158 | Key Terms 159 | Discussing & Applying the Concepts 159 | Focus on Technology 160 | Focus on Ethics 160 | Marketing & the Economy 161 | Marketing by the Numbers 161
8 What Is a Product? 224
Products, Services, and Brands: Building Customer Value 222
Video Case: Radian6 161 Company Case: Porsche: Guarding the Old While Bringing
in the New 162 Products, Services, and Experiences 224 | Levels of Product and
6 Business Markets 166
Services 225 | Product and Service Classifications 226
Business Markets and Business
Product and Service Decisions 229
Buyer Behavior 164
Individual Product and Service Decisions 229 | Product Line Decisions 234 | Product Mix Decisions 235
Services Marketing 236
Market Structure and Demand 167 | Nature of the Buying The Nature and Characteristics of a Service 236 | Marketing Unit 168 | Types of Decisions and the Decision Process 168
Strategies for Service Firms 238
Contents
xiii
Branding Strategy: Building Strong Brands 243
Video Case: IKEA 309
Brand Equity 243 | Building Strong Brands 244 | Managing Company Case: Southwest Airlines: Balancing the Price-Value Brands 251
Equation 310
New-Product Pricing Strategies 314 11
Reviewing Objectives and Key Terms 252 | Key Terms 253 | Discussing & Applying the Concepts 253 | Focus on Technology 254 | Focus on Ethics 254 | Marketing & the
Pricing Strategies 312
Economy 254 | Marketing by the Numbers 255 Video Case: General Mills—GoGurt 255
Company Case: Las Vegas: What’s Not Happening Market-Skimming Pricing 314 | Market-Penetration Pricing 314 in Vegas 255
Product Mix Pricing Strategies 315
9 New-Product Development Strategy 260 Discount and Allowance Pricing 319 | Segmented Pricing 319 | The New-Product Development Process 261 Psychological Pricing 320 | Promotional Pricing 321 |
Product Line Pricing 315 | Optional Product Pricing 316 |
New Product Development and Captive Product Pricing 316 | By-Product Pricing 316 | Product Product Life-Cycle Strategies 258 Bundle Pricing 318
Price Adjustment Strategies 319
Geographical Pricing 322 | Dynamic Pricing 323 | International Idea Generation 261 | Idea Screening 264 | Concept
Fricing 324
Development and Testing 264 | Marketing Strategy Development 265 | Business Analysis 266 | Product
Price Changes 325
Development 266 | Test Marketing 267 | Initiating Price Changes 325 | Responding to Price Changes 327 Commercialization 268
Public Policy and Marketing 328
Managing New-Product Development 269 Pricing within Channel Levels 328 | Pricing Across Channel Customer-Centered New-Product Development 269 | Team-
Levels 331
Based New-Product Development 270 | Systematic New-Product Reviewing Objectives and Key Terms 332 | Key Terms 333 | Development 270 | New-Product Development in Turbulent
Discussing & Applying the Concepts 333 | Focus on Times 272
Technology 334 | Focus on Ethics 334 | Marketing & the Product Life-Cycle Strategies 273
Economy 334 | Marketing by the Numbers 334 Introduction Stage 275 | Growth Stage 275 | Maturity
Video Case: Smashburger 335
Stage 277 | Decline Stage 278 Company Case: Payless ShoeSource: Paying Less for Additional Product and Service Considerations 280
Fashion 335
Product Decisions and Social Responsibility 280 | International Product and Services Marketing 280
Marketing Channels: Delivering
Reviewing Objectives and Key Terms 282 | Key Terms 283 |
Customer Value 338
Discussing & Applying the Concepts 283 | Focus on
Technology 284 | Focus on Ethics 284 | Marketing & the
Economy 284 | Marketing by the Numbers 285 Supply Chains and the Value Delivery Network 340 Video Case: General Mills—FiberOne 285
The Nature and Importance of Marketing Channels 341 Company Case: Samsung: From Gallop to Run 285
How Channel Members Add Value 342 | Number of Channel Levels 343
10 What Is a Price? 290
Channel Behavior and Organization 344
Pricing: Understanding and
Channel Behavior 344 | Vertical Marketing Systems 345 |
Capturing Customer Value 288
Horizontal Marketing Systems 348 | Multichannel Distribution Systems 349 | Changing Channel Organization 350
Channel Design Decisions 351
Major Pricing Strategies 291 Analyzing Consumer Needs 351 | Setting Channel Customer Value-Based Pricing 291 | Cost-Based Pricing 295 |
Objectives 352 | Identifying Major Alternatives 352 | Evaluating Competition-Based Pricing 299
the Major Alternatives 353 | Designing International Distribution Other Internal and External Considerations Affecting Price
Channels 354
Decisions 300
Channel Management Decisions 354
Overall Marketing Strategy, Objectives, and Mix 300 | Selecting Channel Members 355 | Managing and Motivating Organizational Considerations 301 | The Market and
Channel Members 355 | Evaluating Channel Members 356 Demand 301 | The Economy 303 | Other External Factors 304
Public Policy and Distribution Decisions 356 Reviewing Objectives and Key Terms 306 | Key Terms 307 |
Marketing Logistics and Supply Chain Management 357 Discussing & Applying the Concepts 308 | Focus on
Nature and Importance of Marketing Logistics 357 | Goals of the Technology 308 | Focus on Ethics 308 | Marketing & the
Logistics System 358 | Major Logistics Functions 360 | Economy 309 | Marketing by the Numbers 309
Integrated Logistics Management 363 Integrated Logistics Management 363
Reviewing Objectives and Key Terms 366 | Key Terms 367 | Advertising Effectiveness and the Return on Advertising Discussing & Applying the Concepts 368 | Focus on
Investment 449 | Other Advertising Considerations 450 Technology 368 | Focus on Ethics 368 | Marketing & the
Public Relations 454
Economy 369 | Marketing by the Numbers 369 The Role and Impact of PR 455 | Major Public Relations Video Case: Progressive 369
Tools 456
Company Case: Netflix: Disintermediator or Disintermediated? 369 Reviewing Objectives and Key Terms 457 | Key Terms 458 |
Discussing & Applying the Concepts 458 | Focus on Technology 459 | Focus on Ethics 459 | Marketing & the
Retailing and Wholesaling 372 Economy 459 | Marketing by the Numbers 460
Video Case: E*TRADE 460
Company Case: OgilvyOne: It’s Not Creative Unless It Retailing 374
Sells 460
Types of Retailers 375 | Retailer Marketing Decisions 382 | Retailing Trends and Developments 389
Wholesaling 394
Personal Selling and Sales
Promotion 462
Types of Wholesalers 396 | Wholesaler Marketing Decisions 396
| Trends in Wholesaling 399
Personal Selling 464
Reviewing Objectives and Key Terms 400 | Key Terms 401 |
Discussing & Applying the Concepts 401 | Focus on The Nature of Personal Selling 464 | The Role of the Sales Technology 402 | Focus on Ethics 402 | Marketing & the
Force 465
Economy 402 | Marketing by the Numbers 403
Managing the Sales Force 468
Video Case: Zappos.com 403 Designing the Sales Force Strategy and Structure 468 | Company Case: Tesco Fresh & Easy: Another British
Recruiting and Selecting Salespeople 472 | Training Invasion 403
Salespeople 473 | Compensating Salespeople 474 | Supervising and Motivating Salespeople 474 | Evaluating Salespeople and
14 Communications Strategy 406 Customer Relationships 480
Communicating Customer Value: Sales Force Performance 477
The Personal Selling Process 478
Integrated Marketing
Steps in the Selling Process 478 | Personal Selling and Managing
Sales Promotion 481
The Promotion Mix 408 Integrated Marketing Communications 409 The Rapid Growth of Sales Promotion 482 | Sales Promotion
Objectives 482 | Major Sales Promotion Tools 483 | Developing The New Marketing Communications Model 409 | The Need for
the Sales Promotion Program 487
Integrated Marketing Communications 410
A View of the Communication Process 414 Reviewing Objectives and Key Terms 488 | Key Terms 489 | Steps in Developing Effective Marketing Communication 415 Discussing & Applying the Concepts 489 | Focus on Technology 490 | Focus on Ethics 490 | Marketing & the
Identifying the Target Audience 415 | Determining the Economy 490 | Marketing by the Numbers 490 Communication Objectives 416 | Designing a Message 417 |
Video Case: Nestlé Waters 491
Choosing Media 418 | Selecting the Message Source 420 | Company Case: HP: Overhauling a Vast Corporate Sales Collecting Feedback 420
Force 491
Setting the Total Promotion Budget and Mix 422 Setting the Total Promotion Budget 422 | Shaping the Overall Promotion Mix 424 | Integrating the Promotion Mix 426
17 Relationships 494
Direct and Online Marketing:
Socially Responsible Marketing Communication 427
Building Direct Customer
Advertising and Sales Promotion 427 | Personal Selling 428
Reviewing Objectives and Key Terms 428 | Key Terms 429 | Discussing & Applying the Concepts 429 | Focus on
The New Direct Marketing Model 496 Technology 430 | Focus on Ethics 430 | Marketing & the
Growth and Benefits of Direct Marketing 497 Economy 431 | Marketing by the Numbers 431
Benefits to Buyers 497 | Benefits to Sellers 498 Video Case: CP⫹B 431
Customer Databases and Direct Marketing 499 Company Case: Pepsi: Can a Soda Really Make the World
Forms of Direct Marketing 500
15 Advertising 436
a Better Place? 432 Direct-Mail Marketing 501 | Catalog Marketing 502 | Telephone Marketing 502 | Direct-Response Television Marketing 503 | Kiosk Marketing 504 | New Digital Direct
Advertising and Public Relations 434
Marketing Technologies 505 Online Marketing 508
Marketing and the Internet 508 | Online Marketing Setting Advertising Objectives 437 | Setting the Advertising
Domains 509 | Setting Up an Online Marketing Presence 513 Budget 438 | Developing Advertising Strategy 439 | Evaluating
Contents
xv
Public Policy Issues in Direct Marketing 518 Deciding on the Global Marketing Program 565 Irritation, Unfairness, Deception, and Fraud 518 | Invasion of
Product 566 | Promotion 569 | Price 571 | Distribution Privacy 519 | A Need for Action 520
Channels 572
Reviewing Objectives and Key Terms 521 | Key Terms 522 | Deciding on the Global Marketing Organization 573 Discussing & Applying the Concepts 522 | Focus on
Reviewing Objectives and Key Terms 574 | Key Terms 575 | Technology 522 | Focus on Ethics 523 | Marketing & the
Discussing & Applying the Concepts 575 | Focus on Economy 523 | Marketing by the Numbers 523
Technology 576 | Focus on Ethics 576 | Marketing & the Video Case: Zappos.com 524
Economy 576 | Marketing by the Numbers 577 Company Case: EBay: Fixing an Online Marketing Pioneer 524
Video Case: Monster 577 Company Case: Nokia: Envisioning a Connected World 577
Part 4: Extending Marketing 526
Sustainable Marketing: Social Responsibility and Ethics 580
18 Competitor Analysis 528
Creating Competitive
Advantage 526
Sustainable Marketing 582 Social Criticisms of Marketing 584
Marketing’s Impact on Individual Consumers 584 | Marketing’s Identifying Competitors 528 | Assessing Competitors 529 |
Impact on Society as a Whole 589 | Marketing’s Impact on Other Selecting Competitors to Attack and Avoid 531 | Designing a
Businesses 591
Competitive Intelligence System 533 Consumer Actions to Promote Sustainable Marketing 592 Competitive Strategies 535
Consumerism 592 | Environmentalism 593 | Public Actions to Approaches to Marketing Strategy 535 | Basic Competitive
Regulate Marketing 599
Strategies 536 | Competitive Positions 538 | Market Leader Business Actions Toward Sustainable Marketing 599 Strategies 538 | Market Challenger Strategies 541 | Market
Sustainable Marketing Principles 599 | Marketing Ethics 604 | Follower Strategies 542 | Market Nicher Strategies 543
The Sustainable Company 608
Balancing Customer and Competitor Orientations 544 Reviewing Objectives and Key Terms 608 | Key Terms 609 | Reviewing Objectives and Key Terms 545 | Key Terms 546 |
Discussing & Applying the Concepts 609 | Focus on Discussing & Applying the Concepts 546 | Focus on
Technology 610 | Focus on Ethics 610 | Marketing & the Technology 546 | Focus on Ethics 546 | Marketing & the
Economy 610 | Marketing by the Numbers 611 Economy 547 | Marketing by the Numbers 547
Video Case: Land Rover 611
Video Case: Umpqua Bank 547 Company Case: International Paper: Combining Industry and Company Case: Ford: Resurrecting an Iconic Company 548
Global Marketing Today 552 19
Social Responsibility 611
The Global Marketplace 550
Appendix 1: Marketing Plan A1 Appendix 2: Marketing by the Numbers A11
Looking at the Global Marketing Environment 554
References R1
The International Trade System 554 | Economic
Glossary G1
Environment 556 | Political-Legal Environment 557 | Cultural
Credits C1
Environment 557
Index I1
Deciding Whether to Go Global 560 Deciding Which Markets to Enter 561 Deciding How to Enter the Market 562
Exporting 563 | Joint Venturing 563 | Direct Investment 565
Preface
The Fourteenth Edition of Principles of Marketing! Still Creating More Value for You!
The goal of every marketer is to create more value for customers. So it makes sense that our goal for the fourteenth edition is to continue creating more value for you—our customer. Our goal is to introduce new marketing students to the fascinating world of modern mar- keting in an innovative and comprehensive yet practical and enjoyable way. We’ve poured over every page, table, figure, fact, and example in an effort to make this the best text from which to learn about and teach marketing. Enhanced by mymarketinglab, our online home- work and personalized study tool, the fourteenth edition creates exceptional value for both students and professors.
Marketing: Creating Customer Value and Relationships
Top marketers at outstanding companies share a common goal: putting the consumer at the heart of marketing. Today’s marketing is all about creating customer value and building profitable customer relationships. It starts with understanding consumer needs and wants, determining which target markets the organization can serve best, and developing a com- pelling value proposition by which the organization can attract and grow valued con- sumers. If the organization does these things well, it will reap the rewards in terms of mar- ket share, profits, and customer equity.
Five Major Value Themes
From beginning to end, the fourteenth edition of Principles of Marketing develops an innova- tive customer-value and customer-relationships framework that captures the essence of to- day’s marketing. It builds on five major value themes:
1. Creating value for customers in order to capture value from customers in return. To- day’s marketers must be good at creating customer value and managing customer relation- ships . Outstanding marketing companies understand the marketplace and customer needs, design value-creating marketing strategies, develop integrated marketing pro- grams that deliver customer value and delight, and build strong customer relation- ships. In return, they capture value from customers in the form of sales, profits, and customer loyalty.
Marketing: Creating and Capturing Customer Value
Create value for customers and
Capture value from
build customer relationships
customers in return
Understand the
Design a
Construct an
Build profitable
Capture value
marketplace and
customer-driven
integrated
relationships and
from customers to
customer needs
marketing
marketing program
that delivers superior value
create customer
create profits and
and wants
strategy
delight
customer equity
FIGURE | 1.1
A Simple Model of the Marketing Process
xvi
Preface
xvii
This innovative customer-value framework is introduced at the start of Chapter 1 in
a five-step marketing process model, which details how marketing creates customer value and captures value in return. The framework is carefully developed in the first two chapters and then fully integrated throughout the remainder of the text.
2. Building and managing strong, value-creating brands. Well-positioned brands with strong brand equity provide the basis upon which to build customer value and prof- itable customer relationships. Today’s marketers must position their brands powerfully and manage them well. They must build close brand relationships and experiences with customers.
3. Measuring and managing return on marketing. Marketing managers must ensure that their marketing dollars are being well spent. In the past, many marketers spent freely on big, expensive marketing programs, often without thinking carefully about the financial returns on their spending. But all that has changed rapidly. “Marketing accountability”—measuring and managing return on marketing investments—has now become an important part of strategic marketing decision making. This emphasis on marketing accountability is addressed throughout the fourteenth edition.
4. Harnessing new marketing technologies. New digital and other high-tech marketing developments are dramatically changing how consumers and marketers relate to one another. The fourteenth edition thoroughly explores the new technologies impacting marketing, from “Web 3.0” in Chapter 1 to new digital marketing and online technolo- gies in Chapters 15 and 17 to the exploding use of online social networks and customer- generated marketing in Chapters 1, 5, 14, 15, 17, and elsewhere.
5. Sustainable marketing around the globe. As technological developments make the world an increasingly smaller and more fragile place, marketers must be good at mar- keting their brands globally and in sustainable ways. New material throughout the fourteenth edition emphasizes the concept of sustainable marketing—meeting the pres- ent needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs.
New in the Fourteenth Edition
We’ve thoroughly revised the fourteenth edition of Principles of Marketing to reflect the ma- jor trends and forces impacting marketing in this era of customer value and relationships. Here are just some of the major and continuing changes you’ll find in this edition.
• New coverage in every chapter of the fourteenth edition shows how companies and consumers are dealing with marketing and the uncertain economy in the aftermath of the recent Great Recession. Starting with a major new section in Chapter 1 and continuing with new sections, discussions, and examples integrated throughout the text, the fourteenth edition shows how, now more than ever, marketers must focus on creating customer value and sharpening their value propositions to serve the needs of today’s more frugal consumers. At the end of each chapter, a new feature—Marketing and the Economy —provides real examples for discussion and learning.
• Throughout the fourteenth edition, you will find revised coverage of the rapidly changing nature of customer relationships with companies and brands. Today’s mar- keters aim to create deep consumer involvement and a sense of community surround- ing a brand—to make the brand a meaningful part of consumers’ conversations and their lives. Today’s new relationship-building tools include everything from Web sites, blogs, in-person events, and video sharing to online communities and social networks such as Facebook, YouTube, Twitter, or a company’s own social networking sites.
• The fourteenth edition contains new material on the continuing trend toward two-way interactions between customers and brands, including such topics as customer- managed relationships , crowdsourcing, and consumer-generated marketing. Today’s customers are giving as much as they get in the form of two-way relationships (Chap- ter 1), a more active role in providing customer insights (Chapter 4), crowdsourcing and shaping new products (Chapter 9), consumer-generated marketing content (Chapters
1, 14, and 15), developing or passing along brand messages (Chapters 1 and 15), inter- acting in customer communities (Chapters 5, 15, and 17), and other developments.
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• This edition provides revised and expanded discussions of new marketing technologies , from “Web 3.0” in Chapter 1 to “Webnography” research tools in Chap- ter 4 to neuromarketing in Chapter 5 and the dazzling new digital marketing and on- line technologies in Chapters 1, 15, and 17.
• New material throughout the fourteenth edition highlights the increasing importance of sustainable marketing. The discussion begins in Chapter 1 and ends in Chapter 20, which pulls marketing together under a sustainable marketing framework. In between, frequent discussions and examples show how sustainable marketing calls for socially and environmentally responsible actions that meet both the immediate and the future needs of customers, companies, and society as a whole.
• The fourteenth edition continues its emphasis on measuring and managing return on marketing , including many new end-of-chapter financial and quantitative marketing exercises that let students apply analytical thinking to relevant concepts in each chap- ter and link chapter concepts to the text’s innovative and comprehensive Appendix 2: Marketing by the Numbers.
• The fourteenth edition provides revised and expanded coverage of the developments in the fast-changing areas of integrated marketing communications and direct and on- line marketing . It tells how marketers are blending the new digital and direct technolo- gies with traditional media to create more targeted, personal, and interactive customer relationships. No other text provides more current or encompassing coverage of these exciting developments.
• Restructured pricing chapters (Chapters 10 and 11) provide improved coverage of pric- ing strategies and tactics in an uncertain economy. And a reorganized products, ser- vices, and brands chapter (Chapter 8) helps to promote the text’s coverage of services marketing and better applies the branding strategy discussions that follow to both products and services.
• The fourteenth edition continues to improve on its innovative learning design. The text’s active and integrative presentation includes learning enhancements such as an- notated chapter-opening stories, a chapter-opening objective outline, and explanatory author comments on major chapter sections and figures. The chapter-opening layout helps to preview and position the chapter and its key concepts. Figures annotated with author comments help students to simplify and organize chapter material. End-of- chapter features help to summarize important chapter concepts and highlight impor- tant themes, such as marketing and the economy, marketing technology, ethics, and financial marketing analysis. In all, the innovative learning design facilitates student understanding and eases learning.
An Emphasis on Real Marketing
Principles of Marketing features in-depth, real-world examples and stories that show con- cepts in action and reveal the drama of modern marketing. In the fourteenth edition, every chapter opening vignette and Real Marketing highlight has been updated or replaced to provide fresh and relevant insights into real marketing practices. Learn how:
• Web seller Zappos.com’s obsession with creating the very best customer experience has
resulted in avidly loyal customers and astronomical growth. • Nike’s customer-focused mission and deep sense of customer brand community have
the company sprinting ahead while competitors are gasping for breath. • Trader Joe’s unique “cheap gourmet” price-value strategy has earned it an almost cult-
like following of devoted customers who love what they get for the prices they pay. • ESPN has built a global brand empire as much recognized and revered as megabrands
such as Coca-Cola, Nike, or Google. • Dunkin’ Donuts successfully targets the “Dunkin’ Tribe”—not the Starbucks snob but
the average Joe. • When it comes to sustainability, no company in the world is doing more good these
days than Walmart. That’s right—big, bad, Walmart.
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• Four Seasons hotels has perfected the art of high-touch, carefully crafted service, prompting one customer to reflect: “If there’s a heaven, I hope it’s run by Four Seasons.”
• The “Häagen-Dazs loves honey bees” integrated marketing campaign has helped make Häagen-Dazs more than just another premium ice cream brand—it’s now “a brand with a heart and a soul.”
• Hyundai hit the accelerator on marketing when the slow economy caused rivals to throttle down, making it the world’s fastest growing major car company.
• McDonald’s, the quintessentially all-American company, now sells more burgers and fries outside the United States than within.
• Google’s odyssey into mainland China—and back out again—vividly illustrates the prospects and perils of going global.
Beyond these features, each chapter is packed with countless real, relevant, and timely examples that reinforce key concepts. No other text brings marketing to life like the four- teenth edition of Principles of Marketing.
Valuable Learning Aids
A wealth of chapter-opening, within-chapter, and end-of-chapter learning devices help stu- dents to learn, link, and apply major concepts:
• Chapter Preview. As part of the active and integrative chapter-opening design, a brief section at the beginning of each chapter previews chapter concepts, links them with previous chapter concepts, and introduces the chapter-opening story.
• Chapter-opening marketing stories. Each chapter begins with an engaging, deeply devel- oped, illustrated, and annotated marketing story that introduces the chapter material and sparks student interest.
• Objective outline. This chapter-opening feature provides a helpful preview outline of chapter contents and learning objectives, complete with page numbers.
• Author comments and figure annotations. Throughout the chapter, author comments ease and enhance student learning by introducing and explaining major chapter sections and organizing figures.
• Real Marketing highlights. Each chapter contains two highlight features that provide an in-depth look at real marketing practices of large and small companies.
• Reviewing the Objectives and Key Terms. A summary at the end of each chapter reviews major chapter concepts, chapter objectives, and key terms.
• Discussing and Applying the Concepts. Each chapter contains a set of discussion questions and application exercises covering major chapter concepts.
• Marketing and the Economy. End-of-chapter situation descriptions provide for discussion of the impact of recent economic trends on consumer and marketer decisions.
• Focus on Technology. Application exercises at the end of each chapter provide discussion of important and emerging marketing technologies in this digital age.
• Focus on Ethics. Situation descriptions and questions at the end of each chapter highlight important issues in marketing ethics.
• Marketing by the Numbers. An exercise at the end of each chapter lets students apply an- alytical and financial thinking to relevant chapter concepts and links the chapter to Ap- pendix 2, Marketing by the Numbers.
• Company Cases. All new or revised company cases for class or written discussion are provided at the end of each chapter. These cases challenge students to apply marketing principles to real companies in real situations.
• Video Shorts. Short vignettes and discussion questions appear at the end of every chap- ter, to be used with the set of mostly new 4- to 7-minute videos that accompany this edition.
• Marketing Plan appendix. Appendix 1 contains a sample marketing plan that helps stu- dents to apply important marketing planning concepts.
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• Marketing by the Numbers appendix. And innovative Appendix 2 provides students with
a comprehensive introduction to the marketing financial analysis that helps to guide, assess, and support marketing decisions.
More than ever before, the fourteenth edition of Principles of Marketing creates value for you—it gives you all you need to know about marketing in an effective and enjoyable total learning package!
A Valuable Total Teaching and Learning Package
A successful marketing course requires more than a well-written book. A total package of resources extends this edition’s emphasis on creating value for you. The following aids sup- port Principles of Marketing, 14e:
Videos
The video library features 20 exciting segments for this edition. All segments are on the DVD (ISBN: 0-13-216723-9) and in mymarketinglab. Here are just a few of the videos that are of- fered:
Stew Leonard’s Customer Relationships Eaton’s Dependable Customer Service GoGurt’s Winning Brand Management FiberOne’s Exponential Growth Nestlé Waters’ Personal Selling
mymarketinglab (www.mypearsonmarketinglab.com) gives you the opportunity to test yourself on key concepts and skills, track your own progress through the course, and use the personalized study plan activities—all to help you achieve success in the classroom.
The MyLab that accompanies Principles of Marketing includes: • Study Plan: The Study Plan helps ensure that you have a basic understanding of course
material before coming to class by guiding you directly to the pages you need to review. • Mini-Simulations: Move beyond the basics with interactive simulations that place you
in a realistic marketing situation and require you to make decisions based on market- ing concepts.
• Applied Theories: Get involved with detailed videos, interactive cases, and critical-
thinking exercises. • Critical Thinking: Get involved with real marketing situations that might not always
have a right answer but will have a best answer. This allows for great discussion and debate with your classmates.
Plus:
• Interactive Elements: A wealth of hands-on activities and exercises let you experience and learn firsthand. Whether it is with the online e-book where you can search for spe- cific keywords or page numbers, highlight specific sections, enter notes right on the e-book page, and print reading assignments with notes for later review or with other materials.
Find out more at www.mypearsonmarketinglab.com
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More Valuable Resources
CourseSmart is an exciting new choice for students looking to save money. As an alternative to purchasing the print textbook, students can purchase an electronic version of the same content and save up to 50 percent off the suggested list price of the print text. With a CourseSmart eTextbook, students can search the text, make notes online, print out reading assignments that incorporate lecture notes, and bookmark important passages for later review. For more information, or to purchase access to the CourseSmart eTextbook, visit www.coursesmart.com.
Acknowledgments
No book is the work only of its authors. We greatly appreciate the valuable contributions of several people who helped make this new edition possible. As always, we owe very special thanks to Keri Jean Miksza for her dedicated and valuable help in all phases of the project, and to her husband Pete and little daughter Lucy for all the support they provide Keri dur- ing this often-hectic project.
We thank Andy Norman of Drake University for his skillful development of company and video cases and help with preparing selected marketing stories; and Lew Brown of the University of North Carolina at Greensboro for his able assistance in helping prepare se- lected marketing stories and highlights. We also thank Laurie Babin of the University of Louisiana at Monroe for her dedicated efforts in preparing end-of-chapter materials and keeping our Marketing by the Numbers appendix fresh; and to Michelle Rai of Pacific Union College for her able updates to the Marketing Plan appendix. Additional thanks also go to Andy Lingwall at Clarion University of Pennsylvania, for his work on the Instructor’s Man- ual; Peter Bloch at University of Missouri and ANS Source for developing the Power Points; and Bonnie Flaherty for creating the Test Item File & Study Plan.
Many reviewers at other colleges and universities provided valuable comments and suggestions for this and previous editions. We are indebted to the following colleagues for their thoughtful inputs:
Fourteenth Edition Reviewers
Alan Dick, University of Buffalo
Esther Page-Wood, Western Michigan
Rod Carveth, Naugatuck Valley
University
Community College
Tim Reisenwitz, Valdosta State University
Anindja Chatterjee, Slippery Rock
Mary Ellen Rosetti, Hudson Valley
University of Pennsylvania
Community College
Mary Conran, Temple University
William Ryan, University of Connecticut
Eloise Coupey, Virginia Tech
Roberta Schultz, Western Michigan
Karen Gore, Ivy Tech Community College,
University
Evansville Campus
J. Alexander Smith, Oklahoma City
Charles Lee, Chestnut Hill College
University
Samuel McNeely, Murray State University
Deb Utter, Boston University
Chip Miller, Drake University