Principles of marketing

Những nguyên lý cơ bản trong Marketing của Philip Kotler và Gary Amstrong

Specialized Features

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

5

1

to Enhance Your Learning

Throughout the fourteenth edition, you will find revised coverage of the rapidly changing nature of customer

relationships and new material on such

topics as customer-managed

relationships, crowdsourcing, social

networking, and consumer-generated

marketing.

2

to end, a fully integrated

customer value framework

captures the essence of today’s

marketing.

3

The enhanced-learning design of the book features annotated, illustrated chapter- opening vignettes to introduce key chapter concepts For each chapter, the Objectives Outline shows what students will need to know and where to find it The end-of- chapter Reviewing Objectives and Key Terms summary tie back to the chapter objectives.

4

Updated annotated figures

and author comments

throughout each chapter provide the authors’ insights on key points 5

• Study Plan The Study Plan helps ensure that you have a

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.

Principles of

Marketing

Principles of

Marketing

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Library of Congress Cataloging-in-Publication Data

To Kathy, Betty, Mandy, Matt, KC, Keri, Delaney, Molly, Macy, and Ben; and Nancy, Amy, Melissa, and Jessica

As a team,Philip Kotler and Gary Armstrong provide a blend of skills uniquely suited towriting 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 undergraduatebusiness students Together they make the complex world of marketing practical, approach-able, and enjoyable

PHILIP KOTLERis S C Johnson & Son Distinguished Professor of InternationalMarketing at the Kellogg School of Management, Northwestern University He receivedhis 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 ofbusiness worldwide He has authored dozens of other successful books and has writtenmore 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 DistinguishedMarketing Educator of the Year Award given by the American Marketing Association andthe Philip Kotler Award for Excellence in Health Care Marketing presented by the Academyfor Health Care Services Marketing His numerous other major honors include the Sales andMarketing Executives International Marketing Educator of the Year Award; The EuropeanAssociation of Marketing Consultants and Trainers Marketing Excellence Award; theCharles 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 ness writer/guru” of the twenty-first century

busi-Dr Kotler has served as chairman of the College on Marketing of the Institute of 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 inthe 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 ARMSTRONGis Crist W Blackwell Distinguished Professor Emeritus

Manage-of Undergraduate Education in the Kenan-Flagler Business School at the University Manage-ofNorth Carolina at Chapel Hill He holds undergraduate and masters degrees in businessfrom 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 businessjournals 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 BlackwellDistinguished Professorship is the only permanent endowed professorship for distin-guished undergraduate teaching at the University of North Carolina at Chapel Hill He hasbeen 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 theUndergraduate 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 repeatrecipient 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 thesixteen-campus University of North Carolina system

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 CommunicationsStrategy 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

Preface xvi

Part 1: Defining Marketing and the Marketing Process 2

Marketing: Creating and Capturing

Customer Value 2

What Is Marketing? 4

Marketing Defined 5 | The Marketing Process 5

Understanding the Marketplace and Customer Needs 6

Customer Needs, Wants, and Demands 6 | Market Offerings—

Products, Services, and Experiences 6 | Customer Value and

Satisfaction 7 | Exchanges and Relationships 7 | Markets 7

Designing a Customer-Driven Marketing Strategy 8

Selecting Customers to Serve 8 | Choosing a Value Proposition 9

| Marketing Management Orientations 9

Preparing an Integrated Marketing Plan and Program 12

Building Customer Relationships 12

Customer Relationship Management 12 | The Changing Nature

of Customer Relationships 16 | Partner Relationship

Management 19

Capturing Value from Customers 20

Creating Customer Loyalty and Retention 20 | Growing Share

of Customer 21 | Building Customer Equity 21

The Changing Marketing Landscape 22

The Uncertain Economic Environment 23 | The Digital Age 26 |

Rapid Globalization 27 | Sustainable Marketing—The Call for

More Social Responsibility 27 | The Growth of Not-for-Profit

Marketing 28

So, What Is Marketing? Pulling It All Together 29

Reviewing Objectives and Key Terms 30 | Key Terms 31 |

Discussing & Applying the Concepts 32 | Focus on

Technology 32 | Focus on Ethics 33 | Marketing & the

Economy 33 | Marketing by the Numbers 33

Video Case: Stew Leonard’s 34

Company Case: JetBlue: Delighting Customers Through

Happy Jetting 34

Company and Marketing Strategy:

Partnering to Build Customer

Relationships 36

Company-Wide Strategic Planning: Defining Marketing’s

Role 38

Defining a Market-Oriented Mission 39 | Setting Company

Objectives and Goals 40 | Designing the Business Portfolio 40

Marketing Strategy and the Marketing Mix 48

Customer-Driven Marketing Strategy 48 | Developing anIntegrated Marketing Mix 51

Managing the Marketing Effort 53

Marketing Analysis 53 | Marketing Planning 54 | MarketingImplementation 54 | Marketing Department Organization 55 |Marketing Control 56

Measuring and Managing Return on Marketing Investment 57

Reviewing Objectives and Key Terms 59 | Key Terms 60 |Discussing & Applying the Concepts 60 | Focus onTechnology 60 | Focus on Ethics 61 | Marketing & theEconomy 61 | Marketing by the Numbers 61

Video Case: Live Nation 62Company Case: Trap-Ease America: The Big Cheese

of Mousetraps 62

Part 2: Understanding the Marketplace and Consumers 64

Analyzing the Marketing Environment 64

The Microenvironment 66

The Company 67 | Suppliers 67 | Marketing Intermediaries 68

| Competitors 68 | Publics 69 | Customers 69

The Macroenvironment 70

The Demographic Environment 70 | The EconomicEnvironment 77 | The Natural Environment 78 | TheTechnological Environment 80 | The Political and SocialEnvironment 81 | The Cultural Environment 86

Responding to the Marketing Environment 89

Reviewing Objectives and Key Terms 91 | Key Terms 92 |Discussing & Applying the Concepts 92 | Focus onTechnology 93 | Focus on Ethics 93 | Marketing & theEconomy 93 | Marketing by the Numbers 93

Video Case: TOMS Shoes 94Company Case: Target: From “Expect More” to “Pay Less” 94

Managing Marketing Information

to Gain Customer Insights 96Marketing Information and Customer Insights 98Assessing Marketing Information Needs 100

Part 3: Designing a Customer-Driven Strategy and Mix (Chapters 7–17) Part 4: Extending Marketing (Chapters 18–20)

1

2

3

4

Developing Marketing Information 100

Internal Data 100 | Competitive Marketing Intelligence 101

Marketing Research 103

Defining the Problem and Research Objectives 103 | Developing

the Research Plan 104 | Gathering Secondary Data 104 |

Primary Data Collection 106 | Implementing the Research

Plan 118 | Interpreting and Reporting the Findings 118

Analyzing and Using Marketing Information 119

Customer Relationship Management 119 | Distributing and

Using Marketing Information 120

Other Marketing Information Considerations 121

Marketing Research in Small Businesses and Nonprofit

Organizations 121 | International Marketing Research 123 |

Public Policy and Ethics in Marketing Research 124

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

Video Case: Radian6 129

Company Case: Harrah’s Entertainment: Hitting the CRM

Jackpot 129

Consumer Markets and Consumer

Buyer Behavior 132

Model of Consumer Behavior 134

Characteristics Affecting Consumer Behavior 135

Cultural Factors 135 | Social Factors 139 | Personal

Factors 144 | Psychological Factors 147

Types of Buying Decision Behavior 150

Complex Buying Behavior 150 | Dissonance-Reducing Buying

Behavior 151 | Habitual Buying Behavior 151 | Variety-Seeking

Buying Behavior 152

The Buyer Decision Process 152

Need Recognition 152 | Information Search 152 | Evaluation

of Alternatives 153 | Purchase Decision 154 | Postpurchase

Behavior 154

The Buyer Decision Process for New Products 156

Stages in the Adoption Process 156 | Individual Differences

in Innovativeness 157 | Influence of Product Characteristics

on Rate of Adoption 157

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

Video Case: Radian6 161

Company Case: Porsche: Guarding the Old While Bringing

in the New 162

Business Markets and Business

Buyer Behavior 164

Business Markets 166

Market Structure and Demand 167 | Nature of the Buying

Unit 168 | Types of Decisions and the Decision Process 168

Business Buyer Behavior 170

Major Type of Buying Situations 171 | Participants in theBusiness Buying Process 172 | Major Influences on BusinessBuyers 173 | The Business Buying Process 176 | E-Procurement:Buying on the Internet 178

Institutional and Government Markets 180

Institutional Markets 180 | Government Markets 181

Reviewing Objectives and Key Terms 183 | Key Terms 183 |Discussing & Applying the Concepts 184 | Focus onTechnology 184 | Focus on Ethics 185 | Marketing & theEconomy 185 | Marketing by the Numbers 185

Video Case: Eaton 185Company Case: Cisco Systems: Solving Business ProblemsThrough Collaboration 186

Part 3: Designing a Customer-Driven Strategy and Mix 188

Customer-Driven Marketing Strategy: Creating Value for Target Customers 188

Market Segmentation 190

Segmenting Consumer Markets 191 | Segmenting BusinessMarkets 198 | Segmenting International Markets 199 |Requirements for Effective Segmentation 200

Market Targeting 200

Evaluating Market Segments 201 | Selecting Target MarketSegments 201

Differentiation and Positioning 207

Positioning Maps 208 | Choosing a Differentiation andPositioning Strategy 208 | Communicating and Delivering theChosen Position 215

Reviewing Objectives and Key Terms 216 | Key Terms 217 |Discussing & Applying the Concepts 217 | Focus onTechnology 218 | Focus on Ethics 218 | Marketing & theEconomy 218 | Marketing by the Numbers 218

Video Case: Meredith 219Company Case: Starbucks: Just Who Is the StarbucksCustomer? 219

Products, Services, and Brands: Building Customer Value 222What Is a Product? 224

Products, Services, and Experiences 224 | Levels of Product andServices 225 | Product and Service Classifications 226

Product and Service Decisions 229

Individual Product and Service Decisions 229 | Product LineDecisions 234 | Product Mix Decisions 235

Branding Strategy: Building Strong Brands 243

Brand Equity 243 | Building Strong Brands 244 | Managing

Brands 251

Reviewing Objectives and Key Terms 252 | Key Terms 253 |

Discussing & Applying the Concepts 253 | Focus on

Technology 254 | Focus on Ethics 254 | Marketing & the

Economy 254 | Marketing by the Numbers 255

Video Case: General Mills—GoGurt 255

Company Case: Las Vegas: What’s Not Happening

in Vegas 255

New Product Development and

Product Life-Cycle Strategies 258

New-Product Development Strategy 260

The New-Product Development Process 261

Idea Generation 261 | Idea Screening 264 | Concept

Development and Testing 264 | Marketing Strategy

Development 265 | Business Analysis 266 | Product

Development 266 | Test Marketing 267 |

Commercialization 268

Managing New-Product Development 269

Customer-Centered New-Product Development 269 |

Team-Based New-Product Development 270 | Systematic New-Product

Development 270 | New-Product Development in Turbulent

Times 272

Product Life-Cycle Strategies 273

Introduction Stage 275 | Growth Stage 275 | Maturity

Stage 277 | Decline Stage 278

Additional Product and Service Considerations 280

Product Decisions and Social Responsibility 280 | International

Product and Services Marketing 280

Reviewing Objectives and Key Terms 282 | Key Terms 283 |

Discussing & Applying the Concepts 283 | Focus on

Technology 284 | Focus on Ethics 284 | Marketing & the

Economy 284 | Marketing by the Numbers 285

Video Case: General Mills—FiberOne 285

Company Case: Samsung: From Gallop to Run 285

Pricing: Understanding and

Capturing Customer Value 288

What Is a Price? 290

Major Pricing Strategies 291

Customer Value-Based Pricing 291 | Cost-Based Pricing 295 |

Competition-Based Pricing 299

Other Internal and External Considerations Affecting Price

Decisions 300

Overall Marketing Strategy, Objectives, and Mix 300 |

Organizational Considerations 301 | The Market and

Demand 301 | The Economy 303 | Other External Factors 304

Reviewing Objectives and Key Terms 306 | Key Terms 307 |

Discussing & Applying the Concepts 308 | Focus on

Technology 308 | Focus on Ethics 308 | Marketing & the

Economy 309 | Marketing by the Numbers 309

Video Case: IKEA 309Company Case: Southwest Airlines: Balancing the Price-ValueEquation 310

Pricing Strategies 312New-Product Pricing Strategies 314

Market-Skimming Pricing 314 | Market-Penetration Pricing 314

Product Mix Pricing Strategies 315

Product Line Pricing 315 | Optional Product Pricing 316 |Captive Product Pricing 316 | By-Product Pricing 316 | ProductBundle Pricing 318

Price Adjustment Strategies 319

Discount and Allowance Pricing 319 | Segmented Pricing 319 |Psychological Pricing 320 | Promotional Pricing 321 |

Geographical Pricing 322 | Dynamic Pricing 323 | InternationalFricing 324

Price Changes 325

Initiating Price Changes 325 | Responding to Price Changes 327

Public Policy and Marketing 328

Pricing within Channel Levels 328 | Pricing Across ChannelLevels 331

Reviewing Objectives and Key Terms 332 | Key Terms 333 |Discussing & Applying the Concepts 333 | Focus onTechnology 334 | Focus on Ethics 334 | Marketing & theEconomy 334 | Marketing by the Numbers 334

Video Case: Smashburger 335Company Case: Payless ShoeSource: Paying Less forFashion 335

Marketing Channels: Delivering Customer Value 338

Supply Chains and the Value Delivery Network 340The Nature and Importance of Marketing Channels 341

How Channel Members Add Value 342 | Number of ChannelLevels 343

Channel Behavior and Organization 344

Channel Behavior 344 | Vertical Marketing Systems 345 |Horizontal Marketing Systems 348 | Multichannel DistributionSystems 349 | Changing Channel Organization 350

Channel Design Decisions 351

Analyzing Consumer Needs 351 | Setting ChannelObjectives 352 | Identifying Major Alternatives 352 | Evaluatingthe Major Alternatives 353 | Designing International DistributionChannels 354

Channel Management Decisions 354

Selecting Channel Members 355 | Managing and MotivatingChannel Members 355 | Evaluating Channel Members 356

Public Policy and Distribution Decisions 356Marketing Logistics and Supply Chain Management 357

Nature and Importance of Marketing Logistics 357 | Goals of theLogistics System 358 | Major Logistics Functions 360 |

Integrated Logistics Management 363

9

10

12 11

Reviewing Objectives and Key Terms 366 | Key Terms 367 |

Discussing & Applying the Concepts 368 | Focus on

Technology 368 | Focus on Ethics 368 | Marketing & the

Economy 369 | Marketing by the Numbers 369

Video Case: Progressive 369

Company Case: Netflix: Disintermediator or

Disintermediated? 369

Retailing and Wholesaling 372

Retailing 374

Types of Retailers 375 | Retailer Marketing Decisions 382 |

Retailing Trends and Developments 389

Wholesaling 394

Types of Wholesalers 396 | Wholesaler Marketing Decisions 396

| Trends in Wholesaling 399

Reviewing Objectives and Key Terms 400 | Key Terms 401 |

Discussing & Applying the Concepts 401 | Focus on

Technology 402 | Focus on Ethics 402 | Marketing & the

Economy 402 | Marketing by the Numbers 403

Video Case: Zappos.com 403

Company Case: Tesco Fresh & Easy: Another British

Invasion 403

Communicating Customer Value:

Integrated Marketing

Communications Strategy 406

The Promotion Mix 408

Integrated Marketing Communications 409

The New Marketing Communications Model 409 | The Need for

Integrated Marketing Communications 410

A View of the Communication Process 414

Steps in Developing Effective Marketing Communication 415

Identifying the Target Audience 415 | Determining the

Communication Objectives 416 | Designing a Message 417 |

Choosing Media 418 | Selecting the Message Source 420 |

Collecting Feedback 420

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

Socially Responsible Marketing Communication 427

Advertising and Sales Promotion 427 | Personal Selling 428

Reviewing Objectives and Key Terms 428 | Key Terms 429 |

Discussing & Applying the Concepts 429 | Focus on

Technology 430 | Focus on Ethics 430 | Marketing & the

Economy 431 | Marketing by the Numbers 431

Setting Advertising Objectives 437 | Setting the Advertising

Budget 438 | Developing Advertising Strategy 439 | Evaluating

Advertising Effectiveness and the Return on AdvertisingInvestment 449 | Other Advertising Considerations 450

Video Case: E*TRADE 460Company Case: OgilvyOne: It’s Not Creative Unless ItSells 460

Personal Selling and Sales Promotion 462

Personal Selling 464

The Nature of Personal Selling 464 | The Role of the SalesForce 465

Managing the Sales Force 468

Designing the Sales Force Strategy and Structure 468 |Recruiting and Selecting Salespeople 472 | TrainingSalespeople 473 | Compensating Salespeople 474 | Supervisingand Motivating Salespeople 474 | Evaluating Salespeople andSales Force Performance 477

The Personal Selling Process 478

Steps in the Selling Process 478 | Personal Selling and ManagingCustomer Relationships 480

Sales Promotion 481

The Rapid Growth of Sales Promotion 482 | Sales PromotionObjectives 482 | Major Sales Promotion Tools 483 | Developingthe Sales Promotion Program 487

Reviewing Objectives and Key Terms 488 | Key Terms 489 |Discussing & Applying the Concepts 489 | Focus onTechnology 490 | Focus on Ethics 490 | Marketing & theEconomy 490 | Marketing by the Numbers 490

Video Case: Nestlé Waters 491Company Case: HP: Overhauling a Vast Corporate SalesForce 491

Direct and Online Marketing:

Building Direct Customer Relationships 494

The New Direct Marketing Model 496Growth and Benefits of Direct Marketing 497

Benefits to Buyers 497 | Benefits to Sellers 498

Customer Databases and Direct Marketing 499Forms of Direct Marketing 500

Direct-Mail Marketing 501 | Catalog Marketing 502 |Telephone Marketing 502 | Direct-Response TelevisionMarketing 503 | Kiosk Marketing 504 | New Digital DirectMarketing Technologies 505

Public Policy Issues in Direct Marketing 518

Irritation, Unfairness, Deception, and Fraud 518 | Invasion of

Privacy 519 | A Need for Action 520

Reviewing Objectives and Key Terms 521 | Key Terms 522 |

Discussing & Applying the Concepts 522 | Focus on

Technology 522 | Focus on Ethics 523 | Marketing & the

Economy 523 | Marketing by the Numbers 523

Video Case: Zappos.com 524

Company Case: EBay: Fixing an Online Marketing Pioneer 524

Part 4: Extending Marketing 526

Creating Competitive

Advantage 526

Competitor Analysis 528

Identifying Competitors 528 | Assessing Competitors 529 |

Selecting Competitors to Attack and Avoid 531 | Designing a

Competitive Intelligence System 533

Competitive Strategies 535

Approaches to Marketing Strategy 535 | Basic Competitive

Strategies 536 | Competitive Positions 538 | Market Leader

Strategies 538 | Market Challenger Strategies 541 | Market

Follower Strategies 542 | Market Nicher Strategies 543

Balancing Customer and Competitor Orientations 544

Reviewing Objectives and Key Terms 545 | Key Terms 546 |

Discussing & Applying the Concepts 546 | Focus on

Technology 546 | Focus on Ethics 546 | Marketing & the

Economy 547 | Marketing by the Numbers 547

Video Case: Umpqua Bank 547

Company Case: Ford: Resurrecting an Iconic Company 548

The Global Marketplace 550

Global Marketing Today 552

Looking at the Global Marketing Environment 554

The International Trade System 554 | Economic

Environment 556 | Political-Legal Environment 557 | Cultural

Environment 557

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

Deciding on the Global Marketing Program 565

Product 566 | Promotion 569 | Price 571 | DistributionChannels 572

Deciding on the Global Marketing Organization 573

Reviewing Objectives and Key Terms 574 | Key Terms 575 |Discussing & Applying the Concepts 575 | Focus onTechnology 576 | Focus on Ethics 576 | Marketing & theEconomy 576 | Marketing by the Numbers 577

Video Case: Monster 577Company Case: Nokia: Envisioning a Connected World 577

Sustainable Marketing: Social Responsibility and Ethics 580Sustainable Marketing 582

Social Criticisms of Marketing 584

Marketing’s Impact on Individual Consumers 584 | Marketing’sImpact on Society as a Whole 589 | Marketing’s Impact on OtherBusinesses 591

Consumer Actions to Promote Sustainable Marketing 592

Consumerism 592 | Environmentalism 593 | Public Actions toRegulate Marketing 599

Business Actions Toward Sustainable Marketing 599

Sustainable Marketing Principles 599 | Marketing Ethics 604 |The Sustainable Company 608

Reviewing Objectives and Key Terms 608 | Key Terms 609 |Discussing & Applying the Concepts 609 | Focus onTechnology 610 | Focus on Ethics 610 | Marketing & theEconomy 610 | Marketing by the Numbers 611

Video Case: Land Rover 611Company Case: International Paper: Combining Industry andSocial Responsibility 611

Appendix 1: Marketing Plan A1Appendix 2: Marketing by the Numbers A11

References R1 Glossary G1 Credits C1 Index I1

18

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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 keting in an innovative and comprehensive yet practical and enjoyable way We’ve pouredover every page, table, figure, fact, and example in an effort to make this the best text fromwhich to learn about and teach marketing Enhanced by mymarketinglab, our online home-work and personalized study tool, the fourteenth edition creates exceptional value for bothstudents and professors

mar-Marketing: Creating Customer Value and Relationships

Top marketers at outstanding companies share a common goal: putting the consumer at theheart of marketing Today’s marketing is all about creating customer value and buildingprofitable 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 day’s marketing It builds on five major value themes:

to-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 ships Outstanding marketing companies understand the marketplace and customer

relation-needs, design value-creating marketing strategies, develop integrated marketing 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, andcustomer loyalty

pro-Preface

Design a customer-driven marketing strategy

Construct an integrated marketing program that delivers superior value

Build profitable relationships and create customer delight

Capture value from customers to create profits and customer equity

A Simple Model of the Marketing Process

Marketing: Creating and Capturing Customer Value

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 withstrong brand equity provide the basis upon which to build customer value and prof-itable customer relationships Today’s marketers must position their brands powerfullyand manage them well They must build close brand relationships and experienceswith customers

3 Measuring and managing return on marketing.Marketing managers must ensure thattheir marketing dollars are being well spent In the past, many marketers spent freely

on big, expensive marketing programs, often without thinking carefully about thefinancial returns on their spending But all that has changed rapidly “Marketingaccountability”—measuring and managing return on marketing investments—hasnow 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 marketingdevelopments are dramatically changing how consumers and marketers relate to oneanother The fourteenth edition thoroughly explores the new technologies impactingmarketing, 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 theworld an increasingly smaller and more fragile place, marketers must be good at mar-keting their brands globally and in sustainable ways New material throughout thefourteenth 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 andcontinuing with new sections, discussions, and examples integrated throughout thetext, the fourteenth edition shows how, now more than ever, marketers must focus oncreating 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 relationshipswith companies and brands Today’s 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 andtheir lives Today’s new relationship-building tools include everything from Web sites,blogs, in-person events, and video sharing to online communities and social networkssuch as Facebook, YouTube, Twitter, or a company’s own social networking sites

mar-• 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 ter 1), a more active role in providing customer insights (Chapter 4), crowdsourcing andshaping new products (Chapter 9), consumer-generated marketing content (Chapters

(Chap-1, 14, and 15), developing or passing along brand messages (Chapters 1 and 15), acting in customer communities (Chapters 5, 15, and 17), and other developments

inter-• This edition provides revised and expanded discussions of new marketing

technologies, from “Web 3.0” in Chapter 1 to “Webnography” research tools in ter 4 to neuromarketing in Chapter 5 and the dazzling new digital marketing and on-line technologies in Chapters 1, 15, and 17

Chap-• 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 sociallyand environmentally responsible actions that meet both the immediate and the futureneeds 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 marketingexercises 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 gies with traditional media to create more targeted, personal, and interactive customerrelationships No other text provides more current or encompassing coverage of theseexciting developments

technolo-• 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

marketingand better applies the branding strategy discussions that follow to bothproducts 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 notated chapter-opening stories, a chapter-opening objective outline, and explanatoryauthor comments on major chapter sections and figures The chapter-opening layouthelps to preview and position the chapter and its key concepts Figures annotated withauthor 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, andfinancial marketing analysis In all, the innovative learning design facilitates studentunderstanding and eases learning

an-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, everychapter opening vignette and Real Marketing highlight has been updated or replaced toprovide fresh and relevant insights into real marketing practices Learn how:

• Web seller Zappos.com’s obsession with creating the very best customer experience hasresulted in avidly loyal customers and astronomical growth

• Nike’s customer-focused mission and deep sense of customer brand community havethe company sprinting ahead while competitors are gasping for breath

• Trader Joe’s unique “cheap gourmet” price-value strategy has earned it an almost like following of devoted customers who love what they get for the prices they pay

cult-• ESPN has built a global brand empire as much recognized and revered as megabrandssuch as Coca-Cola, Nike, or Google

• Dunkin’ Donuts successfully targets the “Dunkin’ Tribe”—not the Starbucks snob butthe average Joe

• When it comes to sustainability, no company in the world is doing more good thesedays than Walmart That’s right—big, bad, Walmart

• 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 makeHäagen-Dazs more than just another premium ice cream brand—it’s now “a brandwith a heart and a soul.”

• Hyundai hit the accelerator on marketing when the slow economy caused rivals tothrottle down, making it the world’s fastest growing major car company

• McDonald’s, the quintessentially all-American company, now sells more burgers andfries outside the United States than within

• Google’s odyssey into mainland China—and back out again—vividly illustrates theprospects and perils of going global

Beyond these features, each chapter is packed with countless real, relevant, and timelyexamples 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 dents to learn, link, and apply major concepts:

stu-• 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 withprevious 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 materialand 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 sectionsand 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 pendix 2, Marketing by the Numbers

Ap-• 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 marketingprinciples 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 thisedition

• Marketing Plan appendix Appendix 1 contains a sample marketing plan that helps

stu-dents to apply important marketing planning concepts

• 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 totallearning package!

A Valuable Total Teaching and Learning Package

A successful marketing course requires more than a well-written book A total package ofresources 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 RelationshipsEaton’s Dependable Customer ServiceGoGurt’s Winning Brand ManagementFiberOne’s Exponential GrowthNestlé 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 usethe 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 ing concepts

market-• 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 anddebate 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 cific keywords or page numbers, highlight specific sections, enter notes right on thee-book page, and print reading assignments with notes for later review or with othermaterials

spe-Find out more at www.mypearsonmarketinglab.com

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 samecontent and save up to 50 percent off the suggested list price of the print text With aCourseSmart eTextbook, students can search the text, make notes online, print out readingassignments that incorporate lecture notes, and bookmark important passages for laterreview For more information, or to purchase access to the CourseSmart eTextbook, visitwww.coursesmart.com

No book is the work only of its authors We greatly appreciate the valuable contributions ofseveral 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 ing this often-hectic project

dur-We thank Andy Norman of Drake University for his skillful development of companyand video cases and help with preparing selected marketing stories; and Lew Brown of theUniversity 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 ofLouisiana at Monroe for her dedicated efforts in preparing end-of-chapter materials andkeeping our Marketing by the Numbers appendix fresh; and to Michelle Rai of Pacific UnionCollege for her able updates to the Marketing Plan appendix Additional thanks also go toAndy 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 andsuggestions for this and previous editions We are indebted to the following colleagues fortheir thoughtful inputs:

Fourteenth Edition Reviewers

Acknowledgments

Alan Dick, University of BuffaloRod Carveth, Naugatuck ValleyCommunity CollegeAnindja Chatterjee, Slippery RockUniversity of PennsylvaniaMary Conran, Temple UniversityEloise Coupey, Virginia TechKaren Gore, Ivy Tech Community College,Evansville Campus

Charles Lee, Chestnut Hill CollegeSamuel McNeely, Murray State UniversityChip Miller, Drake University

David Murphy, Madisonville CommunityCollege

Esther Page-Wood, Western MichiganUniversity

Tim Reisenwitz, Valdosta State UniversityMary Ellen Rosetti, Hudson ValleyCommunity College

William Ryan, University of ConnecticutRoberta Schultz, Western MichiganUniversity

J Alexander Smith, Oklahoma CityUniversity

Deb Utter, Boston UniversityDonna Waldron, Manchester CommunityCollege

Wendel Weaver, Oklahoma WesleyanUniversity

Mark Anderson, Eastern KentuckyUniversity

Lydia E Anderson, Fresno City CollegeAllan L Appell, San Francisco StateUniversity

Bruce Lammers, California StateUniversity at North Ridge

J Ford Laumer, Auburn UniversityDebra Laverie, Texas Tech UniversityKenneth Lawrence, New Jersey Institute ofTechnology

Richard Leventhal, Metropolitan StateCollege, Denver

Charles Lee, Chestnut Hill CollegeMarilyn Liebrenz-Himes, GeorgeWashington UniversityDolly D Loyd, University of SouthernMississippi

Kerri Lum, Kapiolani Community CollegeLarry Maes, Davenport UniversityTamara Mangleburg, Florida AtlanticUniversity

Patricia M Manninen, North ShoreCommunity College

Wendy Martin, Judson College, IllinoisPatrick H McCaskey, MillersvilleUniversity

June McDowell-Davis, CatawbaCollege/High Point UniversitySamuel McNeely, Murray State University

H Lee Meadow, Indiana University East

H Lee Meadow, Northern IllinoisUniversity

John Mellon, College MisericordiaMohan K Menon, University of SouthernAlabama

Martin Meyers, University of Wisconsin,Stevens Point

Chip Miller, Drake UniversityWilliam Mindak, Tulane UniversityTed Mitchell, University of Nevada, RenoDavid Murphy, Madisonville CommunityCollege

David M Nemi, Niagra CountyCommunity College

Carl Obermiller, Seattle UniversityHoward Olsen, University of Nevada atReno

Betty Parker, Western Michigan UniversityVanessa Perry, George WashingtonUniversity

Susan Peterson, Scottsdale CommunityCollege

Abe Qastin, Lakeland CollegePaul Redig, Milwaukee Area TechnicalCollege

Laurie Babin, University of Louisiana at

Monroe

Michael Ballif, University of Utah

Pat Bernson, County College of Morris

Roger Berry, California State University,

Dominguez Hills

Amit Bhatnagar, University of Wisconsin

Donald L Brady, Millersville University

Thomas Brashear, University of

Massachusetts, Amherst

Fred Brunel, Boston University

Jeff Bryden, Bowling Green University

David J Burns, Youngstown State

University

Kirsten Cardenas, University of Miami

Rod Carveth, Naugatuck Valley

Community College

Glenn Chappell, Coker College

Hongsik John Cheon, Frostburg State

Kathleen Conklin, St John Fisher College

Mary Conran, Temple University

Michael Coolsen, Shippensburg University

Alicia Cooper, Morgan State University

Douglas A Cords, California State

University, Fresno

Preyas Desai, Purdue University

Philip Gelman, College of DuPage

James L Giordano, La Guardia

Community College

Karen Gore, Ivy Tech Community College,

Evansville Campus

Hugh Guffey, Auburn University

Kenny Herbst, Saint Joseph’s University

Terry Holmes, Murray State University

David Houghton, Charleston Southern

University

Pat Jacoby, Purdue University

Carol Johanek, Washington University

Eileen Kearney, Montgomery County

Community College

Thomas R Keen, Caldwell College

Tina Kiesler, California State University at

North Ridge

Dmitri Kuksov, Washington University in

St Louis

William Renforth, Angelo State UniversityGregory A Rich, Bowling Green StateUniversity

William Ryan, University of ConnecticutMelinda Schmitz, Pamlico CommunityCollege

Roberta Schultz, Western MichiganUniversity

Alan T Shao, University of NorthCarolina, Charlotte

Lynne Smith, Carroll Community CollegeMartin St John, Westmoreland CountyCommunity College

Randy Stewart, Kennesaw State UniversityKaren Stone, Southern New HampshireUniversity

John Stovall, University of Illinois,Chicago

Jeff Streiter, SUNY Brockport

Ruth Taylor, Texas State UniversityDonna Tillman, California StatePolytechnic UniversityJanice Trafflet, Bucknell UniversityRafael Valiente, University of MiamiSimon Walls, University of TennesseeDonna Waldron, Manchester CommunityCollege

Mark Wasserman, University of TexasAlvin Williams, University of SouthernMississippi

Douglas E Witt, Brigham YoungUniversity

Andrew Yap, Florida InternationalUniversity

Irvin A Zaenglein, Northern MichiganUniversity

Larry Zigler, Highland CommunityCollege

We also owe a great deal to the people at Pearson Prentice Hall who helped develop thisbook Executive Editor Melissa Sabella provided fresh ideas and support throughout to re-vision Project Manager Meeta Pendharkar provided valuable assistance in managing themany facets of this complex revision project Janet Slowik developed the fourteenth edi-tion’s exciting design, and Senior Production Project Manager Karalyn Holland helpedguide the book through the complex production process We’d also like to thank ElisabethScarpa, Anne Fahlgren, and Judy Leale We are proud to be associated with the fine profes-sionals at Pearson Prentice Hall We also owe a mighty debt of gratitude to Project EditorLynn Steines and the fine team at S4Carlisle Publishing Services

Finally, we owe many thanks to our families for all of their support and encouragement

—Kathy, Betty, Mandy, Matt, KC, Keri, Delaney, Molly, Macy, and Ben from the Armstrongclan and Nancy, Amy, Melissa, and Jessica from the Kotler family To them, we dedicate thisbook

Gary Armstrong Philip Kotler

Principles of

Marketing

Chapter Preview This chapter introduces you tothe basic concepts of

market-ing We start with the question, What is marketing? Simply put,

mar-keting is managing profitable customer relationships The aim of

marketing is to create value for customers and capture value from

cus-tomers in return Next we discuss the five steps in the marketing

process—from understanding customer needs, to designing

customer-driven marketing strategies and integrated marketing programs, to

building customer relationships and capturing value for the firm

Fi-nally, we discuss the major trends and forces affecting marketing in this

age of customer relationships Understanding these basic concepts

75 percent of Zappos.com’s sales come from repeat customers

“We actually take a lot of the money that we would have normallyspent on paid advertising and put it back into the customer expe-rience,” says Hsieh “We’ve always stuck with customer service,even when it was not a sexy thing to do.” Adds Aaron Magness,Zappos’ director of business development and brand marketing,

“We decided if we can put all the money possible into our tomer service, word of mouth will work in our favor.”

cus-What little advertising the company does do focuses on—you guessed it—customer service The most recent Zappos TVads feature “Zappets,” puppetlike characters styled after actualZappos employees, highlighting interactions between Zapposcustomer service reps and customers

Free delivery, free returns, and a 365-day return policyhave been the cornerstone of Zappos’ customer-centric ap-proach To wow customers, it even quietly upgrades the ex-perience, from four-to-five-day shipping to second-day ornext-day shipping Its customer service center is staffed 24/7with 500 highly motivated employees—about one-third of thecompany’s payroll—answering 5,000 calls a day “Those thingsare all pretty expensive, but we view that as our marketing dol-lars,” says Hsieh “It’s just a lot cheaper to get existing cus-tomers to buy from you again than it is to try to convincesomeone [new].”

I magine a retailer with service so good its customers wish

it would take over the Internal Revenue Service or start up

an airline It might sound like a marketing fantasy, but this

scenario is reality for 12-year-old Zappos.com At Zappos,

the customer experience really does come first—it’s a daily

ob-session Says Zappos understated CEO, Tony Hsieh

(pro-nounced shay), “Our whole goal at Zappos is for the Zappos

brand to be about the very best customer service and customer

experience.” When it comes to creating customer value and

re-lationships, few companies can match Zappos’ passion

Launched in 1999 as a Web site that offered the absolute best

selection in shoes—in terms of brands, styles, colors, sizes, and

widths—the online retailer now carries many other categories of

goods, such as clothing, handbags, and accessories From the

start, the scrappy Web retailer made customer service a

corner-stone of its marketing As a result, Zappos has grown

astronomi-cally It now serves more than 10 million customers annually, and

gross merchandise sales top $1 billion, up from only $1.6 million

in 2000 Three percent of the U.S population now shops at

Zappos.com And despite the harsh economy, Zappos sales have

continued to soar in recent years

Interestingly, Zappos doesn’t spend a lot of money on media

advertising Instead, it relies on customer service so good that

cus-tomers not only come back but also tell their friends More than

and forming your own ideas about what they really mean to you willgive you a solid foundation for all that follows

Let’s start with a good story about marketing in action atZappos.com, one of the world’s fastest-growing Web retailers The se-cret to Zappos’ success? It’s really no secret at all Zappos is flat-out cus-tomer obsessed It has a passion for creating customer value andrelationships In return, customers reward Zappos with their brand loy-alty and buying dollars You’ll see this theme of creating customervalue in order to capture value in return repeated throughout this firstchapter and the remainder of the text

Part 3: Designing a Customer-Driven Strategy and Mix (Chapters 7–17)

Part 4: Extending Marketing (Chapters 18–20)

Marketing

Creating and Capturing Customer Value

Zappos: A Passion for Creating Customer Value and Relationships

Zappos has been steadfast in its focus on customer service

even as it’s grown In a sluggish economy, retailers especially

should be focusing on customer service But as Hsieh points out, it’s

often the first thing to go “The payoff for great customer service

might be a year or two down the line And the payoff for having a

great company culture might be three or four years down the line.”

At Zappos, customer intimacy starts with a deep-down,

customer-focused culture “We have a saying,” proclaims the

company at its Web site “We are a service company that

hap-pens to sell [shoes (or handbags, or clothing, or eventually,

any-thing and everyany-thing)].” The Zappos culture is built around its

10 Core Values, ranging from “Build open and honest

relation-ships with communication” to “Create fun and a little

weird-ness.” Value number one: “Deliver WOW through service!”

Zappos’ online success and passion for customers made it

an ideal match for another highly successful, customer-obsessed

online retailer, Amazon.com, which purchased Zappos in late

2009 Amazon.com appears to be letting Hsieh and Zappos

con-tinue to pursue independently the strategy that has made them

so successful in the past

To make sure Zappos’ customer obsession permeates the

en-tire organization, each new hire—everyone from the chief

execu-tive officer and chief financial officer to the children’s footwear

buyer—is required to go through four weeks of customer-loyalty

training In fact, in an effort to weed out the half-hearted,

Zappos actually bribes people to quit During the four weeks of

customer service training, it offers employees $2,000 cash, plus

payment for the time worked, if they leave the company The

theory goes that those willing to take the money and run aren’t

right for Zappos’ culture anyway

Hsieh says that originally the incentive was $100, but the

amount keeps rising because not enough people take it On

av-erage, only 1 percent takes the offer, and Hsieh believes that’s

too low Zappos argues that each employee needs to be a great

point of contact with customers “Getting customers excited

about the service they had at Zappos has to come naturally,”

says Magness “You can’t teach it; you have to hire for it.”

When dealing with customers, Zappos employees must

check their egos and competitiveness at the door Customer

service reps are trained to look on at least three rival Web sites

if a shopper asks for specific shoes that Zappos doesn’t have

in stock and refer customers accordingly “My guess is that

other companies don’t do that,” Hsieh says “For us, we’re

willing to lose that sale, that transaction in the short term

We’re focused on building the lifelong loyalty and

relation-ship with the customer.”

Relationships mean everything at Zappos Hsieh and many

other employees stay in direct touch with customers, with each

other, and with just about anyone else interested in the company

They use social-networking tools, such as Facebook, Twitter, and

blogs, to share information—

both good and bad And the

company invites customers

to submit frank online

re-views Such openness might

worry some retailers, but

Zappos embraces it As

Mag-ness points out, “You only

need to worry if you have thing to hide,” and Zappos seems

some-to take even criticism as a free gift

of information

Zappos has set new standards

in the industry, leading the way for

a new type of consumer-focused company “There’s somethingabout these young Internet companies,” says a retailing expert

“I’m not sure exactly why—if it was because they were born in

a different era, the leadership has a different worldview, or ifthey just have amazing access to customer data and see first-hand what customers are thinking,” he says “It seems that Zap-pos is really the poster child for this new age of consumercompanies that truly are customer focused A lot of companieslike to say they are, but none of them is as serious as Zappos.”It’s that intense customer focus that has set the stage for Zap-pos’ growth, as the company branches out into new categories,such as electronics and home goods “Hopefully, 10 years fromnow, people won’t even realize we started out selling shoes online

We’ve actually had tomers ask us if we wouldplease start an airline or runthe IRS,” Hsieh says,adding, “30 years from now

cus-I wouldn’t rule out a pos airline that’s all aboutthe very best service.”1

Zap-At Zappos, taking care

of customers starts with

a deep-down, focused culture Zappos

customer-is “happy to help, 24/7.”

Web seller Zappos is obsessed with creating the very best customer service and customer experience In return, customers reward the company with their brand loyalty and buying dollars The result: Zappos’

sales have grown astronomically.

Understanding the Marketplace and Customer Needs (6–8)

Identify the key elements of a customer-driven marketing strategy and discuss the marketing management orientations that guide marketing strategy.

Designing a Customer-Driven Marketing Strategy (8–12)

Preparing an Integrated Marketing Plan and Program (12)

Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.

Building Customer Relationships (12–19)

Capturing Value from Customers (20–22)

Describe the major trends and forces that are changing the marketing landscape in this age of relationships.

The Changing Marketing Landscape (22–30)

Stop here for a second

and think about how

you’d answer this question before

studying marketing Then see how

your answer changes as you read the

Customer relationships and value are especially important today As the nation’s economyhas recovered following the worst downturn since the Great Depression, more frugal consumersare spending more carefully and reassessing their relationships with brands In turn, it’s moreimportant than ever to build strong customer relationships based on real and enduring value

What Is Marketing? (pp 4–5)

Marketing, more than any other business function, deals with customers Although we willsoon explore more-detailed definitions of marketing, perhaps the simplest definition is this

one: Marketing is managing profitable customer relationships The twofold goal of marketing is to

attract new customers by promising superior value and keep and grow current customers bydelivering satisfaction

For example, Walmart has become the world’s largest retailer—and the world’s largestcompany—by delivering on its promise, “Save money Live better.” Nintendo surged ahead

in the video-games market behind the pledge that “Wii would like to play,” backed by itswildly popular Wii console and a growing list of popular games and accessories for all ages.And McDonald’s fulfills its “i’m lovin’ it” motto by being “our customers’ favorite place andway to eat” the world over, giving it a market share greater than that of its nearest three com-petitors combined.2

Sound marketing is critical to the success of every organization Large for-profit firms, such

as Procter & Gamble, Google, Target, Toyota, and Marriott use marketing But so do not-for-profitorganizations, such as colleges, hospitals, museums, symphony orchestras, and even churches

4

Create value for customersand build customer relationships

Capture value from

customers in return

Capture value from customers to create profits and customer equity

Build profitable relationships and create customer delight

Construct an integrated marketing program that delivers superior value

Design a customer-driven marketing strategy

Understand the

marketplace and

customer needs

and wants

This important figure shows marketing in

a nutshell! By creating value for customers,

marketers capture value from customers in

return This five-step process forms the

marketing framework for the rest of

the chapter and the remainder of the text.

FIGURE|1.1

A Simple Model of the Marketing Process

You already know a lot about marketing—it’s all around you Marketing comes to you

in the good old traditional forms: You see it in the abundance of products at your nearbyshopping mall and the ads that fill your TV screen, spice up your magazines, or stuff yourmailbox But in recent years, marketers have assembled a host of new marketing ap-proaches, everything from imaginative Web sites and online social networks to your cellphone These new approaches do more than just blast out messages to the masses Theyreach you directly and personally Today’s marketers want to become a part of your life and

enrich your experiences with their brands—to help you live their brands.

At home, at school, where you work, and where you play, you see marketing in almosteverything you do Yet, there is much more to marketing than meets the consumer’s casualeye Behind it all is a massive network of people and activities competing for your attentionand purchases This book will give you a complete introduction to the basic concepts andpractices of today’s marketing In this chapter, we begin by defining marketing and the mar-keting process

Marketing Defined

What is marketing? Many people think of marketing as only selling and advertising We are

bombarded every day with TV commercials, catalogs, sales calls, and e-mail pitches ever, selling and advertising are only the tip of the marketing iceberg

How-Today, marketing must be understood not in the old sense of making a sale—“telling

and selling”—but in the new sense of satisfying customer needs If the marketer understands

consumer needs; develops products that provide superior customer value; and prices, tributes, and promotes them effectively, these products will sell easily In fact, according tomanagement guru Peter Drucker, “The aim of marketing is to make selling unnecessary.”3

dis-Selling and advertising are only part of a larger “marketing mix”—a set of marketing toolsthat work together to satisfy customer needs and build customer relationships

Broadly defined, marketing is a social and managerial process by which individualsand organizations obtain what they need and want through creating and exchanging valuewith others In a narrower business context, marketing involves building profitable, value-laden exchange relationships with customers Hence, we define marketingas the process

by which companies create value for customers and build strong customer relationships inorder to capture value from customers in return.4

The Marketing Process

Figure 1.1presents a simple, five-step model of the marketing process In the first foursteps, companies work to understand consumers, create customer value, and build strongcustomer relationships In the final step, companies reap the rewards of creating superior

customer value By creating value for consumers, they in turn capture value from consumers

in the form of sales, profits, and long-term customer equity

In this chapter and the next, we will examine the steps of this simple model of ing In this chapter, we review each step but focus more on the customer relationship steps—understanding customers, building customer relationships, and capturing value fromcustomers In Chapter 2, we look more deeply into the second and third steps—designingmarketing strategies and constructing marketing programs

market-Marketing

The process by which companies create

value for customers and build strong

customer relationships in order to capture

value from customers in return.

Understanding the Marketplace and Customer Needs (pp 6–8)

As a first step, marketers need to understand customer needs and wants and the marketplace

in which they operate We examine five core customer and marketplace concepts: (1) needs, wants, and demands; (2) market offerings (products, services, and experiences); (3) value and satis- faction; (4) exchanges and relationships; and (5) markets.

Customer Needs, Wants, and Demands

The most basic concept underlying marketing is that of human needs Human needsare

states of felt deprivation They include basic physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual needs for knowledge and self-

expression Marketers did not create these needs; they are a basic part of the human makeup

Wantsare the form human needs take as they are shaped by culture and individual

personality An American needs food but wants a Big Mac, french fries, and a soft drink A person in Papua New Guinea needs food but wants taro, rice, yams, and pork Wants are

shaped by one’s society and are described in terms of objects that will satisfy those needs.When backed by buying power, wants become demands Given their wants and resources,people demand products with benefits that add up to the most value and satisfaction.Outstanding marketing companies go to great lengths to learn about and understandtheir customers’ needs, wants, and demands They conduct consumer research and analyzemountains of customer data Their people at all levels—including top management—stayclose to customers For example, retailer Cabela’s vice-chairman, James W Cabela, spendshours each morning reading through customer comments and hand-delivering them toeach department, circling important customer issues At Zappos, CEO Tony Hsieh usesTwitter to build more personal connections with customers and employees Some 1.6 mil-lion people follow Hsieh’s Twitter feed And at P&G, executives from the chief executive of-ficer down spend time with consumers in their homes and on shopping trips P&G brandmanagers routinely spend a week or two living on the budget of low-end consumers to gaininsights into what they can do to improve customers’ lives.5

Market Offerings—Products, Services, and Experiences

Consumers’ needs and wants are fulfilled through market offerings—some combination

of products, services, information, or experiences offered to a market to satisfy a need or a

want Market offerings are not limited to physical products They also include services—

activities or benefits offered for sale that are essentially intangible and do not result in theownership of anything Examples include banking, airline, hotel, tax preparation, and homerepair services

More broadly, market offeringsalso include other entities, such as

persons, places, organizations, information, and ideas For example, the “Pure

Michigan” campaign markets the state

of Michigan as a tourism destinationthat “lets unspoiled nature and authen-tic character revive your spirits.” Andthe U.S Forest Service’s “ReconnectingKids with Nature” campaign marketsthe idea of encouraging urban youngpeople to explore the joys of naturefirsthand Its DiscoverTheForest.orgWeb site helps children and their par-ents figure out where to go outdoorsand what to do there.6

Needs

States of felt deprivation.

Wants

The form human needs take as they are

shaped by culture and individual

Some combination of products, services,

information, or experiences offered to a

market to satisfy a need or want.

Marketing is all about

creating value for

customers So, as the first step in the

marketing process, the company must

fully understand consumers and the

marketplace in which it operates.

Author

Comment

Market offerings are not limited to physical products Here, the U.S Forest Service markets

the idea of reconnecting young people with exploring the joys of nature firsthand.

Many sellers make the mistake of paying more attention to the specific products they fer than to the benefits and experiences produced by these products These sellers suffer from

of-marketing myopia They are so taken with their products that they focus only on existingwants and lose sight of underlying customer needs.7They forget that a product is only a tool

to solve a consumer problem A manufacturer of quarter-inch drill bits may think that the

customer needs a drill bit But what the customer really needs is a quarter-inch hole These

sellers will have trouble if a new product comes along that serves the customer’s need

bet-ter or less expensively The customer will have the same need but will want the new product.

Smart marketers look beyond the attributes of the products and services they sell By

orchestrating several services and products, they create brand experiences for consumers For

example, you don’t just watch a NASCAR race; you immerse yourself in the exhilarating,high-octane NASCAR experience Similarly, HP recognizes that a personal computer ismuch more than just a collection of wires and electrical components It’s an intensely per-sonal user experience As noted in one HP ad, “There is hardly anything that you own that

is more personal Your personal computer is your backup brain It’s your life It’s your

as-tonishing strategy, staggering proposal, dazzling calculation It’s your autobiography, ten in a thousand daily words.”8

writ-Customer Value and Satisfaction

Consumers usually face a broad array of products and services that might satisfy a givenneed How do they choose among these many market offerings? Customers form expecta-tions about the value and satisfaction that various market offerings will deliver and buy ac-cordingly Satisfied customers buy again and tell others about their good experiences.Dissatisfied customers often switch to competitors and disparage the product to others.Marketers must be careful to set the right level of expectations If they set expectationstoo low, they may satisfy those who buy but fail to attract enough buyers If they set expec-tations too high, buyers will be disappointed Customer value and customer satisfaction arekey building blocks for developing and managing customer relationships We will revisitthese core concepts later in the chapter

Exchanges and Relationships

Marketing occurs when people decide to satisfy needs and wants through exchange tionships.Exchangeis the act of obtaining a desired object from someone by offering some-thing in return In the broadest sense, the marketer tries to bring about a response to somemarket offering The response may be more than simply buying or trading products andservices A political candidate, for instance, wants votes, a church wants membership, an or-chestra wants an audience, and a social action group wants idea acceptance

rela-Marketing consists of actions taken to build and maintain desirable exchange

relationships with target audiences involving a product, service, idea, or other object Beyond

simply attracting new customers and creating transactions, companies want to retain tomers and grow their businesses Marketers want to build strong relationships by consis-tently delivering superior customer value We will expand on the important concept ofmanaging customer relationships later in the chapter

cus-Markets

The concepts of exchange and relationships lead to the concept of a market Amarketis theset of actual and potential buyers of a product or service These buyers share a particularneed or want that can be satisfied through exchange relationships

Marketing means managing markets to bring about profitable customer relationships.However, creating these relationships takes work Sellers must search for buyers, identifytheir needs, design good market offerings, set prices for them, promote them, and store anddeliver them Activities such as consumer research, product development, communication,distribution, pricing, and service are core marketing activities

Although we normally think of marketing as being carried out by sellers, buyers alsocarry out marketing Consumers market when they search for products, interact with

Marketing myopia

The mistake of paying more attention to

the specific products a company offers

than to the benefits and experiences

produced by these products.

Exchange

The act of obtaining a desired object from

someone by offering something in return.

Market

The set of all actual and potential buyers

of a product or service.

Now that the company

fully understands its

consumers and the marketplace, it

must decide which customers it will

serve and how it will bring them value.

Author

Comment

companies to obtain information, and make their purchases Infact, today’s digital technologies, from Web sites and online so-cial networks to cell phones, have empowered consumers andmade marketing a truly interactive affair Thus, in addition tocustomer relationship management, today’s marketers must also deal effectively with

customer-managed relationships Marketers are no longer asking only “How can we reach

our customers?” but also “How should our customers reach us?” and even “How can ourcustomers reach each other?”

Figure 1.2shows the main elements in a marketing system Marketing involvesserving a market of final consumers in the face of competitors The company and com-petitors research the market and interact with consumers to understand their needs.Then they create and send their market offerings and messages to consumers, either di-rectly or through marketing intermediaries Each party in the system is affected by ma-jor environmental forces (demographic, economic, natural, technological, political, andsocial/cultural)

Each party in the system adds value for the next level The arrows represent ships that must be developed and managed Thus, a company’s success at building prof-itable relationships depends not only on its own actions but also on how well the entiresystem serves the needs of final consumers Walmart cannot fulfill its promise of low pricesunless its suppliers provide merchandise at low costs And Ford cannot deliver a high qual-ity car-ownership experience unless its dealers provide outstanding sales and service

relation-Designing a Customer-Driven Marketing Strategy (pp 8–12)

Once it fully understands consumers and the marketplace, marketing management can sign a customer-driven marketing strategy We define marketing managementas the artand science of choosing target markets and building profitable relationships with them Themarketing manager’s aim is to find, attract, keep, and grow target customers by creating,delivering, and communicating superior customer value

de-To design a winning marketing strategy, the marketing manager must answer two

im-portant questions: What customers will we serve (what’s our target market)? and How can we serve these customers best (what’s our value proposition)? We will discuss these marketing strat-

egy concepts briefly here and then look at them in more detail in Chapters 2 and 7

Selecting Customers to Serve

The company must first decide whom it will serve It does this by dividing the market into segments of customers (market segmentation) and selecting which segments it will go after (target marketing) Some people think of marketing management as finding as many cus-

tomers as possible and increasing demand But marketing managers know that they cannotserve all customers in every way By trying to serve all customers, they may not serve anycustomers well Instead, the company wants to select only customers that it can serve well

Marketing management

The art and science of choosing target

markets and building profitable

relationships with them.

Major environmental forces

Consumers

Marketing intermediaries Competitors

Each party in the system adds

value Walmart cannot fulfill

its promise of low prices unless

its suppliers provide low costs.

Ford cannot deliver a high quality

car-ownership experience unless

its dealers provide outstanding

service.

FIGURE|1.2

A Modern Marketing System

and profitably For example, Nordstrom profitably targets fluent professionals; Dollar General profitably targets familieswith more modest means.

af-Ultimately, marketing managers must decide which tomers they want to target and on level, timing, and nature of

cus-their demand Simply put, marketing management is customer management and demand management.

Choosing a Value Proposition

The company must also decide how it will serve targeted

customers—how it will differentiate and position itself in the ketplace A brand’s value proposition is the set of benefits or values

mar-it promises to deliver to consumers to satisfy their needs AtAT&T, it’s “Your World Delivered.” whereas with T-Mobile,family and friends can “Stick together.” The diminutive Smartcar suggests that you “Open your mind to the car that challengesthe status quo,” whereas Infiniti “Makes luxury affordable,” andBMW promises “the ultimate driving machine.”

Such value propositions differentiate one brand from other They answer the customer’s question, “Why should Ibuy your brand rather than a competitor’s?” Companies mustdesign strong value propositions that give them the greatestadvantage in their target markets For example, the Smart car

an-is positioned as compact, yet comfortable; agile, yet cal; and safe, yet ecological It’s “sheer automotive genius in atotally fun, efficient package Smart thinking, indeed.”

economi-Marketing Management Orientations

Marketing management wants to design strategies that willbuild profitable relationships with target consumers But what

philosophy should guide these marketing strategies? What weight should be given to the

in-terests of customers, the organization, and society? Very often, these inin-terests conflict.There are five alternative concepts under which organizations design and carry out their

marketing strategies: the production, product, selling, marketing, and societal marketing concepts.

The Production Concept

Theproduction conceptholds that consumers will favor products that are available andhighly affordable Therefore, management should focus on improving production and dis-tribution efficiency This concept is one of the oldest orientations that guides sellers.The production concept is still a useful philosophy in some situations For example,computer maker Lenovo dominates the highly competitive, price-sensitive Chinese PC mar-ket through low labor costs, high production efficiency, and mass distribution However, al-though useful in some situations, the production concept can lead to marketing myopia.Companies adopting this orientation run a major risk of focusing too narrowly on theirown operations and losing sight of the real objective—satisfying customer needs andbuilding customer relationships

The Product Concept

Theproduct conceptholds that consumers will favor products that offer the most in ity, performance, and innovative features Under this concept, marketing strategy focuses

qual-on making cqual-ontinuous product improvements

Product quality and improvement are important parts of most marketing strategies

However, focusing only on the company’s products can also lead to marketing myopia For

example, some manufacturers believe that if they can “build a better mousetrap, the world

Value propositions: Smart car suggests that you “open your

mind”—“Sorry, big guy Efficiency is in these days.”

Production concept

The idea that consumers will favor

products that are available and highly

affordable and that the organization

should therefore focus on improving

production and distribution efficiency.

Product concept

The idea that consumers will favor

products that offer the most quality,

performance, and features and that the

organization should therefore devote its

energy to making continuous product

improvements.

Means Starting

point

Ends Focus

The selling

concept

Profits through customer satisfaction

marketing

Customer needs

The marketing

concept

Selling and promoting

sales volume

Existing products

The selling concept takes an

inside-out view that focuses on

existing products and heavy

selling The aim is to sell what

the company makes rather than

making what the customer wants.

The marketing concept takes an outside-in view that focuses on satisfying customer needs as a path to profits As Southwest Airlines’ colorful founder puts it,

“We don’t have a marketing department, we have a

The Selling Concept

Many companies follow the selling concept, which holds that consumers will not buyenough of the firm’s products unless it undertakes a large-scale selling and promotion ef-fort The selling conceptis typically practiced with unsought goods—those that buyers donot normally think of buying, such as insurance or blood donations These industries must

be good at tracking down prospects and selling them on a product’s benefits

Such aggressive selling, however, carries high risks It focuses on creating sales actions rather than on building long-term, profitable customer relationships The aim often

trans-is to sell what the company makes rather than making what the market wants It assumesthat customers who are coaxed into buying the product will like it Or, if they don’t like it,they will possibly forget their disappointment and buy it again later These are usually poorassumptions

The Marketing Concept

Themarketing conceptholds that achieving organizational goals depends on knowingthe needs and wants of target markets and delivering the desired satisfactions better than

competitors do Under the marketing concept, customer focus and value are the paths to

sales and profits Instead of a product-centered “make and sell” philosophy, the marketingconcept is a customer-centered “sense and respond” philosophy The job is not to find theright customers for your product but to find the right products for your customers

Figure 1.3contrasts the selling concept and the marketing concept The selling

con-cept takes an inside-out perspective It starts with the factory, focuses on the company’s

ex-isting products, and calls for heavy selling and promotion to obtain profitable sales Itfocuses primarily on customer conquest—getting short-term sales with little concern aboutwho buys or why

In contrast, the marketing concept takes an outside-in perspective As Herb Kelleher, the

colorful founder of Southwest Airlines puts it, “We don’t have a marketing department; wehave a customer department.” The marketing concept starts with a well-defined market, fo-cuses on customer needs, and integrates all the marketing activities that affect customers Inturn, it yields profits by creating lasting relationships with the right customers based on cus-tomer value and satisfaction

Implementing the marketing concept often means more than simply responding to

tomers’ stated desires and obvious needs Customer-driven companies research current

cus-tomers deeply to learn about their desires, gather new product and service ideas, and testproposed product improvements Such customer-driven marketing usually works wellwhen a clear need exists and when customers know what they want

Selling concept

The idea that consumers will not buy

enough of the firm’s products unless it

undertakes a large-scale selling and

promotion effort.

Marketing concept

A philosophy that holds that achieving

organizational goals depends on knowing

the needs and wants of target markets

and delivering the desired satisfactions

better than competitors do.

In many cases, however, customers don’t know what they

want or even what is possible For example, even 20 yearsago, how many consumers would have thought to ask fornow-commonplace products such as notebook computers,cell phones, digital cameras, 24-hour online buying, andsatellite navigation systems in their cars? Such situations call

for customer-driving marketing—understanding customer

needs even better than customers themselves do and creatingproducts and services that meet existing and latent needs,now and in the future As an executive at 3M puts it, “Our

goal is to lead customers where they want to go before they

know where they want to go.”

The Societal Marketing Concept

The societal marketing concept questions whether thepure marketing concept overlooks possible conflicts between

consumer short-run wants and consumer long-run welfare Is a

firm that satisfies the immediate needs and wants of targetmarkets always doing what’s best for its consumers in thelong run? The societal marketing concept holds that market-ing strategy should deliver value to customers in a way that maintains or improves both the

consumer’s and society’s well-being It calls for sustainable marketing, socially and

environ-mentally responsible marketing that meets the present needs of consumers and businesseswhile also preserving or enhancing the ability of future generations to meet their needs.Consider today’s bottled water industry You may view bottled water companies as of-fering a convenient, tasty, and healthy product Its packaging suggests “green” images ofpristine lakes and snow-capped mountains Yet making, filling, and shipping billions of plas-tic bottles generates huge amounts of carbon dioxide emissions that contribute substantially

to global warming Further, the plastic bottles pose a substantial recycling and solid wastedisposal problem Thus, in satisfying short-term consumer wants, the bottled water indus-try may be causing environmental problems that run against society’s long-run interests

As Figure 1.4shows, companies should balance three considerations in setting their

marketing strategies: company profits, consumer wants, and society’s interests UPS does

this well Its concern for societal interests has earned it the number one or number two spot

in Fortune magazine’s Most Admired Companies for Social Responsibility rankings in four

of the past five years

UPS seeks more than just short-run sales and profits Its three-pronged corporate

sus-tainability mission stresses economic prosperity (profitable growth through a customer focus), social responsibility (community engagement and individual well-being), and environmental stewardship (operating efficiently and protecting the environment).

Whether it involves greening up its operations or urging employees to volunteer time

in their communities, UPS proactively seeks opportunities to act responsibly UPS

Customer-driving marketing: Even 20 years ago, how many

consumers would have thought to ask for now-commonplace

products such as cell phones, notebook computers, iPods, and digital

cameras? Marketers must often understand customer needs even

better than the customers themselves do.

Societal marketing concept

The idea that a company’s marketing

decisions should consider consumers’

wants, the company’s requirements,

consumers’ long-run interests, and

society’s long-run interests.

Societal marketing concept

FIGURE|1.4

Three Considerations Underlying

the Societal Marketing Concept