Ebook Marketing an introduction (13th edition): Part 1

(BQ) Part 1 book Marketing an introduction has contents: Company and marketing strategy - partnering to build customer engagement, value, and relationships; analyzing the marketing environment; analyzing the marketing environment; understanding consumer and business buyer behavior,...and other contents.

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to Kathy, Betty, mandy, matt, Kc, Keri, Delaney, molly, macy, and Ben; nancy, Amy, melissa, and Jessica

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As a team, Gary Armstrong and Philip Kotler provide a blend of skills uniquely suited to writing an introductory marketing text Professor Armstrong is an award-winning teacher of undergraduate business students Professor Kotler is one of the world’s leading authorities

on marketing Together they make the complex world of marketing practical, approachable, and enjoyable

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 master’s 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 well Distinguished Professorship is the only permanent endowed professorship for distinguished 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 program His administrative posts have included Chair of Marketing, Associate Director of the Undergraduate Business Program, Director of the Business Honors Program, and many others Through the years, he has worked closely with business student groups and has received several UNC campuswide and Business School teaching awards He is the only repeat recipient of the 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 16-campus University of North Carolina system

Black-PhIlIP Kotler is S C Johnson & Son Distinguished Professor of International keting 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 economics

Mar-Dr Kotler is author of Marketing Management (Pearson), now in its 15th edition and the

most widely used marketing textbook in graduate schools of business worldwide He has authored dozens of other successful books and has written more than 50 books and 150 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 four major awards: the Distinguished Marketing Educator of the Year Award and the William L Wilkie “Marketing for a Bet- ter World” Award, both given by the American Marketing Association; the Philip Kotler Award for Excellence in Health Care Marketing presented by the Academy for Health Care Services Marketing; and the Sheth Foundation Medal for Exceptional Contribution to Mar- keting Scholarship and Practice He is a charter member of the Marketing Hall of Fame,

was voted the first Leader in Marketing Thought by the American Marketing tion, and was named the Founder of Modern Marketing Management in the Handbook of Management Thinking His numerous other major honors include the Sales and Marketing

Associa-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 Ameri-

can Marketing Association to honor “outstanding contributions to science 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 executives across

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the world, Professor Kotler was ranked as the fourth “most influential business writer/guru” of the twenty-first century.

Dr Kotler has served as chairman of the College of Marketing of the Institute of agement Sciences, a director of the American Marketing Association, and a trustee of the Marketing 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 marketing He has traveled and lectured extensively throughout Europe, Asia, and South America, advising companies and governments about global marketing practices and opportunities

Man-mArc o oPresnIK is Professor of Marketing and Management and Member of the Board of Directors at SGMI St Gallen Management Institute He is also Professor of Business Administration at Luebeck University of Applied Sciences, as well as a visiting professor to international universities such as the European Business School in London and East China University of Science and Technology in Shanghai He has 10 years of experience working in senior management and marketing positions for Shell International Petroleum Co Ltd Along with Kevin Keller and Phil Kotler, Dr Opresnik is co-author of

the German edition of Marketing Management He is also co-editor and member of the editorial board of several international journals, such as Transnational Marketing, Journal

of World Marketing Summit Group, and International Journal of New Technologies in ence and Engineering.

Sci-In March 2014, Dr Opresnik was appointed Chief Research Officer at Kotler Impact Inc., Phil Kotler’s internationally operating company In addition, he was appointed Chief Executive Officer of the Kotler Business Program, an initiative to enhance marketing edu-cation worldwide via online and offline learning with Pearson as global educational part-ner As President of his firm Opresnik Management Consulting, he works for numerous institutions, governments, and international corporations, including Google, Coca-Cola, McDonald’s, SAP, Shell International Petroleum Co Ltd., Procter & Gamble, Unilever, L’Oréal, Bayer, BASF, and Adidas More than 100,000 people have benefited from his work as a coach in seminars on marketing, sales, and negotiation and as a speaker at confer-ences all over the world, at locations such as St Gallen, Berlin, Houston, Moscow, Kuala Lumpur, London, Paris, Dubai, and Tokyo

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Brief Contents

1 Marketing: Creating Customer Value and Engagement 30

2 Company and Marketing Strategy: Partnering to Build Customer Engagement, Value, and Relationships 66

3 Analyzing the Marketing Environment 94

4 Managing Marketing Information to Gain Customer Insights 126

5 Understanding Consumer and Business Buyer Behavior 160

PArt 3 DesIGnInG A cUstomer VAlUe-DrIVen strAteGy AnD mIx 196

6 Customer Value-Driven Marketing Strategy: Creating Value for Target Customers 196

7 Products, Services, and Brands: Building Customer Value 228

8 Developing New Products and Managing the Product Life Cycle 264

9 Pricing: Understanding and Capturing Customer Value 290

10 Marketing Channels: Delivering Customer Value 326

11 Retailing and Wholesaling 360

12 Engaging Customers and Communicating Customer Value: Advertising and Public Relations 392

13 Personal Selling and Sales Promotion 426

14 Direct, Online, Social Media, and Mobile Marketing 456

15 The Global Marketplace 486

16 Sustainable Marketing: Social Responsibility and Ethics 516

Glossary 619 References 629 Index 651

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Contents

Preface 21 Acknowledgments 27

PArt 1 DefInInG mArKetInG AnD the mArKetInG Process 30

1 marketing: Creating Customer Value and Engagement 30

chAPter roAD mAP 30

Objective Outline 30 • Previewing the Concepts 30 • First Stop: Emirate’s Customer-Value Driven Marketing 31

What Is marketing? 32

Marketing Defined 33 • The Marketing Process 33

Understanding the marketplace and customer needs 34

Customer Needs, Wants, and Demands 34 • Market Offerings—Products, Services, and Experiences 34 • Customer Value and Satisfaction 35 • Exchanges and Relationships 35 • Markets 36

Designing a customer Value-Driven marketing strategy 37

Selecting Customers to Serve 37 • Choosing a Value Proposition 37 • Marketing Management Orientations 37

Preparing an Integrated marketing Plan and Program 40 engaging customers and managing customer relationships 41

Customer Relationship Management 41

marketing at Work 1.1: Amazon: Delighting Customers and Delivering Satisfying Online Customer Experiences 43

Engaging Customers 46 • Customer Engagement and Today’s Digital and Social Media 46 • Consumer-Generated Marketing 47 • Partner Relationship Management 48

capturing Value from customers 48

Creating Customer Loyalty and Retention 49 • Growing Share of Customer 49 • Building Customer Equity 50

the changing marketing landscape 52

The Digital Age: Online, Mobile, and Social Media Marketing 52

marketing at Work 1.2: Facebook: Real-Time Marketing All the Time 54The Changing Economic Environment 56 • The Growth of Not-for-Profit Marketing 56 • Rapid Globalization 57 • Sustainable Marketing—The Call for More Environmental and Social Responsibility 58

so, What Is marketing? Pulling It All together 59

reVIeWInG AnD extenDInG the concePts 61

CHAPTER REVIEW AND CRITICAL THINKING • Objectives Review 61 • Key Terms 62 • Discussion Questions 62 • Critical Thinking Exercises 63 • MINICASES AND APPLICATIONS • Online, Mobile, and Social Media Marketing 63 • Marketing Ethics 63 • Marketing by the Numbers 64 • Video Case 64 • Company Cases 65

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2 company and marketing strategy: Partnering to Build Customer

Engagement, Value, and Relationships 66chAPter roAD mAP 66

Objective Outline 66 • Previewing the Concepts 66 • First Stop: Rolex 67

company-Wide strategic Planning: Defining marketing’s role 68

Defining a Market-Oriented Mission 69 • Setting Company Objectives and Goals 70 • Designing the Business Portfolio 71

marketing at Work 2.1: Red Bull: The Global Market Leader in Energy Drinks Skillfully Manages Its Business Portfolio 72

Planning marketing: Partnering to Build customer relationships 76

Partnering with Other Company Departments 77 • Partnering with Others in the Marketing System 78

marketing strategy and the marketing mix 78

Customer Value-Driven Marketing Strategy 79 • Developing an Integrated Marketing Mix 81

marketing at Work 2.2: DuckDuckGo: Google’s Tiniest, Fiercest Competitor 82

managing the marketing effort 84

Marketing Analysis 84 • Marketing Planning 85 • Marketing Implementation 85 • Marketing Department Organization 87 • Marketing Control 88

measuring and managing marketing return on Investment 88

CHAPTER REVIEW AND CRITICAL THINKING • Objectives Review 90 • Key Terms 91 • Discussion Questions 91 • Critical Thinking Exercises 91 • MINICASES AND APPLICATIONS • Online, Mobile, and Social Media Marketing 92 • Marketing Ethics 92 • Marketing by the

Numbers 92 • Video Case 93 • Company Cases 93

PArt 2 UnDerstAnDInG the mArKetPlAce AnD cUstomer VAlUe 94

3 Analyzing the marketing environment 94

Objective Outline 94 • Previewing the Concepts 94 • First Stop: Philips 95

responding to the marketing environment 119

marketing at Work 3.2: In the Social Media Age: When the Dialogue Gets Nasty 120

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4 managing marketing Information to Gain Customer Insights 126

Objective Outline 126 • Previewing the Concepts 126 • First Stop: Ferrero 127

marketing Information and customer Insights 128

Marketing Information and Today’s “Big Data” 129 • Managing Marketing Information 129

Assessing marketing Information needs 130 Developing marketing Information 130

Internal Data 130 • Competitive Marketing Intelligence 131

marketing at Work 4.1: Social Media Command Centers: Listening to and Engaging Customers in Social Space 132

marketing research 134

Defining the Problem and Research Objectives 135 • Developing the Research Plan 135 • Gathering Secondary Data 136 • Primary Data Collection 137 • Implementing the Research Plan 145 • Interpreting and Reporting the Findings 145

Analyzing and Using marketing Information 146

Customer Relationship Management (CRM) 146 • Big Data and Marketing Analytics 147

marketing at Work 4.2: Netflix Streams Success with Big Data and Marketing Analytics 148Distributing and Using Marketing Information 150

other marketing Information considerations 151

Marketing Research in Small Businesses and Nonprofit Organizations 151 • International Marketing Research 152 • Public Policy and Ethics in Marketing Research 153

5 Understanding consumer and Business Buyer Behavior 160

Objective Outline 160 • Previewing the Concepts 160 • First Stop: Lenovo 161

consumer markets and consumer Buyer Behavior 162

Model of Consumer Behavior 162 • Characteristics Affecting Consumer Behavior 163

marketing at Work 5.1: Word-of-Mouth Marketing: Sparking Brand Conversations and Helping Them Catch Fire 168

marketing at Work 5.2: Taco Bell: More than Just Tacos, a “Live Más” Lifestyle 172

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the Buyer Decision Process 177

Need Recognition 177 • Information Search 177 • Evaluation of Alternatives 178 • Purchase Decision 178 • Postpurchase Behavior 179

the Buyer Decision Process for new Products 179

Stages in the Adoption Process 180 • Individual Differences in Innovativeness 180 • Influence of Product Characteristics on Rate of Adoption 181

Business markets and Business Buyer Behavior 182

Business Markets 182 • Business Buyer Behavior 184 • Engaging Business Buyers with Digital and Social Marketing 189

PArt 3 DesIGnInG A cUstomer VAlUe-DrIVen strAteGy AnD mIx 196

6 customer Value-Driven marketing strategy: Creating Value

for Target Customers 196chAPter roAD mAP 196

Objective Outline 196 • Previewing the Concepts 196 • First Stop: Henkel’s Persil 197

market segmentation 198

Segmenting Consumer Markets 199 • Segmenting Business Markets 204 • Segmenting International Markets 205 • Requirements for Effective Segmentation 206

market targeting 207

Evaluating Market Segments 207 • Selecting Target Market Segments 207

marketing at Work 6.1: Hypertargeting: Walking a Fine Line between Serving Customers and Stalking Them 214

Differentiation and Positioning 215

Positioning Maps 216 • Choosing a Differentiation and Positioning Strategy 217

marketing at Work 6.2: LEGO: Successfully Reviving the Positioning Strategy and Value Proposition 222Communicating and Delivering the Chosen Position 223

7 Products, services, and Brands: Building Customer Value 228

Objective Outline 228 • Previewing the Concepts 228 • First Stop: IKEA 229

What Is a Product? 230

Products, Services, and Experiences 230 • Levels of Product and Services 231 • Product and Service Classifications 232

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Product and service Decisions 235

Individual Product and Service Decisions 235 • Product Line Decisions 241 • Product Mix Decisions 242

services marketing 243

The Nature and Characteristics of a Service 243 • Marketing Strategies for Service Firms 244 • The Service Profit Chain 245

marketing at Work 7.1: HSBC: Taking Care of Those Who Take Care of the Customer 246

Branding strategy: Building strong Brands 249

Brand Equity and Brand Value 250 • Building Strong Brands 251 • Managing Brands 257

marketing at Work 7.2: Adidas: Successful Brand Extensions 258

8 Developing new Products and Managing

the Product Life Cycle 264chAPter roAD mAP 264

Objective Outline 264 • Previewing the Concepts 264 • First Stop: Nestlé 265

new Product Development strategy 266 the new Product Development Process 267

managing new Product Development 275

Customer-Centered New Product Development 275 • Team-Based New Product Development 276 • Systematic New Product Development 276

Product life-cycle strategies 277

Introduction Stage 279

marketing at Work 8.2: Managing L’Oréal’s Product Life Cycle: More Than Just Makeup 280Growth Stage 281 • Maturity Stage 282 • Decline Stage 283

Additional Product and service considerations 284

Product Decisions and Social Responsibility 284 • International Product and Services Marketing 285

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9 Pricing: Understanding and Capturing Customer Value 290

Objective Outline 290 • Previewing the Concepts 290 • First Stop: Amazon versus Walmart 291

What Is a Price? 292 major Pricing strategies 293

Customer Value-Based Pricing 293

marketing at Work 9.1: ALDI: Impressively High Quality at Impossibly Low Prices, Every Day 296Cost-Based Pricing 297 • 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 302 • The Economy 303 • Other External Factors 304

new Product Pricing strategies 305

Market-Skimming Pricing 305 • Market-Penetration Pricing 305

Product mix Pricing strategies 306

Product Line Pricing 306 • Optional-Product Pricing 307 • Captive-Product Pricing 307 • By-Product Pricing 307 • Product Bundle Pricing 308

Price Adjustment strategies 308

Discount and Allowance Pricing 308 • Segmented Pricing 309 • Psychological Pricing 310 • Promotional Pricing 310 • Geographical Pricing 311 • Dynamic and Online Pricing 312

marketing at Work 9.2: Dynamic Pricing at EasyJet and Ryanair: Climbing the Skies with Low Prices 313International Pricing 315

Price changes 316

Initiating Price Changes 316 • Responding to Price Changes 318

Public Policy and Pricing 319

Pricing within Channel Levels 320 • Pricing across Channel Levels 321

10 marketing channels: Delivering Customer Value 326

Objective Outline 326 • Previewing the Concepts 326 • First Stop: Uber 327

supply chains and the Value Delivery network 328 the nature and Importance of marketing channels 329

How Channel Members Add Value 329 • Number of Channel Levels 331

channel Behavior and organization 332

Channel Behavior 332 • Vertical Marketing Systems 333 • Horizontal Marketing Systems 335 • Multichannel Distribution Systems 336 • Changing Channel Organization 336

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marketing at Work 10.1: Zara: Though Disintermediation to the Top of World Fashion 338

channel Design Decisions 339

Analyzing Consumer Needs 339 • Setting Channel Objectives 340 • Identifying Major Alternatives 341 • Evaluating the Major Alternatives 342 • Designing International Distribution Channels 342

channel management Decisions 343

Selecting Channel Members 343 • Managing and Motivating Channel Members 344

marketing at Work 10.2: Amazon and P&G: Taking Channel Partnering to a New Level 345Evaluating Channel Members 346

Public Policy and Distribution Decisions 347 marketing logistics and supply chain management 347

Nature and Importance of Marketing Logistics 347 • Sustainable Supply Chains 349 • Goals of the Logistics System 349 • Major Logistics Functions 350 • Integrated Logistics Management 353

11 retailing and Wholesaling 360

Objective Outline 360 • Previewing the Concepts 360 • First Stop: UNIQLO 361

Types of Wholesalers 384 • Wholesaler Marketing Decisions 385 • Trends in Wholesaling 387

Numbers 390 • Video Case 391 • Company Cases 391

12 engaging consumers and communicating customer Value:

Advertising and Public Relations 392chAPter roAD mAP 392

Objective Outline 392 • Previewing the Concepts 392 • First Stop: Dove 393

the Promotion mix 394

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Integrated marketing communications 395

The New Marketing Communications Model 395

marketing at Work 12.1: Just Don’t Call It Advertising: It’s Content Marketing 397

The Need for Integrated Marketing Communications 398 • Shaping the Overall Promotion Mix 400

The Role and Impact of PR 421 • Major Public Relations Tools 421

13 Personal selling and sales Promotion 426

Objective Outline 426 • Previewing the Concepts 426 • First Stop: Salesforce 427

Personal selling 428

The Nature of Personal Selling 428 • The Role of the Sales Force 429

managing the sales force 430

Designing the Sales Force Strategy and Structure 430 • Recruiting and Selecting Salespeople 434 • Training Salespeople 435 • Compensating Salespeople 436 • Supervising and Motivating

Salespeople 437 • Evaluating Salespeople and Sales Force Performance 438

social selling: online, mobile, and social media tools 438

marketing at Work 13.1: B-to-B Salespeople: In This Digital and Social Media Age, Who Needs Them Anymore? 439

the Personal selling Process 442

Steps in the Selling Process 442 • Personal Selling and Managing Customer Relationships 444

Developing the Sales Promotion Program 451

CHAPTER REVIEW AND CRITICAL THINKING • Objectives Review 452 • Key Terms 453 • Discussion Questions 453 • Critical Thinking Exercises 454 • MINICASES AND APPLICATIONS • Online, Social Media, and Mobile Marketing 454 • Marketing Ethics 454 • Marketing by the

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14 Direct, online, social media, and mobile marketing 456

Objective Outline 456 • Previewing the Concepts 456 • First Stop: Samsung Electronics 457

Direct and Digital marketing 458

The New Direct Marketing Model 458 • Rapid Growth of Direct and Digital Marketing 459 • Benefits

of Direct and Digital Marketing to Buyers and Sellers 459

forms of Direct and Digital marketing 460 Digital and social media marketing 461

Marketing, the Internet, and the Digital Age 461 • Online Marketing 462 • Social Media Marketing 467

marketing at Work 14.1: Social Media Monetization: Making Money without Driving Fans Away 468Mobile Marketing 471

marketing at Work 14.2: Mobile Marketing: Smartphones Are Changing How People Live—and How They Buy 473

traditional Direct marketing forms 475

Direct-Mail Marketing 475 • Catalog Marketing 476 • Telemarketing 477 • Direct-Response Television Marketing 477 • Kiosk Marketing 478

Public Policy Issues in Direct and Digital marketing 479

Irritation, Unfairness, Deception, and Fraud 479 • Consumer Privacy 480 • A Need for Action 480

CHAPTER REVIEW AND CRITICAL THINKING • Objectives Review 482 • Key Terms 483 • Discussion Questions 483 • Critical Thinking Exercises 484 • MINICASES AND APPLICATIONS • Online, Social Media, and Mobile Marketing 484 • Marketing Ethics 484 • Marketing by the

PArt 4 extenDInG mArKetInG 486

15 the Global marketplace 486

Objective Outline 486 • Previewing the Concepts 486 • First Stop: L’Oréal 487

Global marketing today 488 looking at the Global marketing environment 490

The International Trade System 490 • Economic Environment 492 • Political-Legal Environment 493

marketing at Work 15.1: International Marketing: Targeting the Bottom of the Economic Pyramid 494Cultural Environment 495

Deciding Whether to go Global 498 Deciding Which markets to enter 499 Deciding how to enter the market 500

Exporting 500 • Joint Venturing 501 • Direct Investment 502

Deciding on the Global marketing Program 503

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Product 504 • Promotion 505

marketing at Work 15.2: Localizing Chinese Brand Names: Very Important but Notoriously Tricky 507Price 508 • Distribution Channels 509

Deciding on the Global marketing organization 511

16 sustainable marketing: Social Responsibility and Ethics 516

Objective Outline 516 • Previewing the Concepts 516 • First Stop: Unilever’s Knorr 517

sustainable marketing 518 social criticisms of marketing 520

Marketing’s Impact on Individual Consumers 520 • Marketing’s Impact on Society as a Whole 524 • Marketing’s Impact on Other Businesses 526

consumer Actions to Promote sustainable marketing 527

Consumerism 528 • Environmentalism 529

marketing at Work 16.1: Sustainability at Unilever: Creating a Better Future Every Day 530Public Actions to Regulate Marketing 533

Business Actions toward sustainable marketing 534

Sustainable Marketing Principles 534

marketing at Work 16.2: TOMS: “Be the Change You Want to See in the World” 536

Societal Marketing 537 • Marketing Ethics 538 • The Sustainable Company 541

APPenDIx 1 Company Cases 547

APPenDIx 2 Marketing Plan 579

APPenDIx 3 Marketing by the Numbers 589 APPenDIx 4 Careers in Marketing 607

Glossary 619 References 629 Index 651

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The Thirteenth Edition of

Marketing: An Introduction!

fresh Proven Practical engaging.

These are exciting times in marketing Recent surges in digital technologies have created

a new, more engaging, more connected marketing world Beyond traditional tried-and-true marketing concepts and practices, today’s marketers have added a host of new-age tools for engaging consumers, building brands, and creating customer value and relationships In these digital times, sweeping advances in “the Internet of Things”—from social and mobile media, connected digital devices, and the new consumer empowerment to “big data” and new mar-keting analytics—have profoundly affected both marketers and the consumers they serve

More than ever, the 13th edition of Marketing: An Introduction introduces the exciting

and fast-changing world of marketing in a fresh yet proven, practical, and engaging way

marketing: creating customer Value and engagement in the Digital and social Age

Top marketers share a common goal: putting the consumer at the heart of marketing Today’s marketing is all about creating customer value and engagement in a fast-changing, increasingly digital and social marketplace

Marketing starts with understanding consumer needs and wants, determining which target markets the organization can serve best, and developing a compelling value prop-osition by which the organization can attract and grow valued customers Then, more

than just making a sale, today’s marketers want to engage customers and build deep

customer relationships that make their brands a meaningful part of consumers’ sations and lives

conver-In this digital age, to go along with proven traditional marketing methods, marketers have a dazzling set of new online, mobile, and social media tools for engaging customers anytime, anyplace to jointly shape brand conversations, experiences, and community If marketers do these things well, they will reap the rewards in terms of market share, profits,

and customer equity In the 13th edition of Marketing: An Introduction, you’ll learn how customer value and customer engagement drive every good marketing strategy.

Marketing: An Introduction makes learning and teaching marketing more productive

and enjoyable than ever The 13th edition’s streamlined approach strikes an effective ance between depth of coverage and ease of learning The 13th edition builds on proven content developed over 12 previous editions, yet it has been thoroughly revised to provide the freshest insights into current marketing concepts and practices

bal-The 13th edition remains highly approachable, with an organization, writing style, and design well suited to beginning marketing students Its learning design—with integrative features at the start and end of each chapter plus insightful author comments throughout—helps students to learn, link, and apply important concepts The text presents the practical side of marketing, with engaging examples and illustrations throughout that help to bring marketing to life And when combined with MyMarketingLab, our online homework and

Preface

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personalized study tool, Marketing: An Introduction ensures that students will come to

class well prepared and leave class with a richer understanding of basic marketing concepts, strategies, and practices

What’s new in the 13th edition?

Once again, we’ve thoroughly revised Marketing: An Introduction to provide the freshest

coverage of the latest trends and forces that affect marketing We’ve poured over every page, table, figure, fact, and example in order to keep this the best text from which to learn about and teach marketing The new edition provides substantial new content, expanded coverage, and fresh examples throughout each chapter

●

● The 13th edition adds fresh coverage in both traditional marketing areas and on changing and trending topics such as customer engagement marketing, mobile and social media, big data and the new marketing analytics, omni-channel marketing and retailing, customer co-creation and empowerment, real-time customer listening and marketing, building brand community, marketing content creation and native advertising, B-to-B social media and social selling, tiered and dynamic pricing, consumer privacy, sustain-ability, global marketing, and much more

fast-●

● This new edition continues to build on its customer engagement framework—creating

direct and continuous customer involvement in shaping brands, brand conversations, brand experiences, and brand community New coverage and fresh examples throughout the text address the latest customer engagement tools, practices, and developments See

especially Chapter 1 (refreshed sections on Customer Engagement and Today’s Digital and Social Media and Consumer-Generated Marketing); Chapter 4 (big data and real-

time research to gain deeper customer insights); Chapter 5 (creating social influence and customer community through digital and social media marketing); Chapter 8 (customer co-creation and customer-driven new-product development); Chapter 11 (omni- channel retailing); Chapter 12 (marketing content curation and native advertising); Chapter 13 (salesforce social selling); and Chapter 14 (direct digital, online, social media, and mobile marketing)

●

● No area of marketing is changing faster than online, mobile, social media, and other digital marketing technologies Keeping up with digital concepts, technologies, and

practices has become a top priority and major challenge for today’s marketers The 13th

edition of Marketing: An Introduction provides thoroughly refreshed, up-to-date

cover-age of these explosive developments in every chapter—from online, mobile, and social media engagement technologies discussed in Chapters 1, 5, 12, and 14 to “real-time lis-tening” and “big data” research tools in Chapter 4, real-time dynamic pricing in Chapter

9, digitizing the in-store retail shopping experience in Chapter 11, and social selling in

Chapter 13 A Chapter 1 section on The Digital Age: Online, Mobile, and Social Media Marketing introduces the exciting new developments in digital and social media marketing Then a Chapter 14 section on Direct, Online, Social Media, and Mobile Mar- keting digs more deeply into digital marketing tools such as online sites, social media,

mobile ads and apps, online video, email, blogs, and other digital platforms that engage consumers anywhere, anytime via their computers, smartphones, tablets, Internet-ready TVs, and other digital devices

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work 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 New and substantially revised end-of-chapter features help to summa-

rize important chapter concepts and highlight important themes, such as marketing ics, financial marketing analysis, and online, mobile, and social media marketing This

eth-innovative learning design facilitates student understanding and eases learning

●

● The 13th edition provides 16 new end-of-chapter company cases by which students can apply what they learn to actual company situations It also features 16 brand-new video cases, with brief end-of-chapter summaries and discussion questions Finally, all of the chapter-opening stories, Marketing at Work highlights, and end-of-chapter features in the 13th edition are either new or substantially revised

five major customer Value and engagement themes

The 13th edition of Marketing: An Introduction builds on five major customer value and

engagement themes:

1 Creating value for customers in order to capture value from customers in return

Today’s marketers must be good at creating customer value, engaging customers, and managing customer relationships Outstanding marketing companies understand the

marketplace and customer needs, design value-creating marketing strategies, develop integrated marketing programs that engage customers and deliver value and satisfac-tion, and build strong customer relationships and brand community In return, they cap-ture value from customers in the form of sales, profits, and customer equity

This innovative customer value and engagement framework is introduced at the

start of Chapter 1 in a five-step marketing process model, which details how

market-ing 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 Customer engagement and today’s digital and social media New digital and social

media have taken today’s marketing by storm, dramatically changing how companies and brands engage consumers and how consumers connect and influence each other’s brand behaviors The 13th edition thoroughly explores the contemporary concept of

customer engagement marketing and the exciting new digital and social media

technol-ogies that help brands to engage customers more deeply and interactively It starts with

two major Chapter 1 sections: Customer Engagement and Today’s Digital and Social Media and The Digital Age: Online, Mobile, and Social Media Marketing A refreshed Chapter 14 on Direct, Online, Social Media, and Mobile Marketing summarizes the lat-

est developments in digital engagement and relationship-building tools Everywhere in between, you’ll find revised and expanded coverage of the exploding use of digital and social tools to create customer engagement and build brand community

3 Building and managing strong, value-creating brands Well-positioned brands with

strong brand equity provide the basis upon which to build customer value and able customer relationships Today’s marketers must position their brands powerfully and manage them well to create valued brand experiences The 13th edition provides a

profit-deep focus on brands, anchored by a Chapter 7 section on Branding Strategy: Building Strong Brands.

4 Measuring and managing return on marketing Especially in uneven economic times,

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 market-ing return on investment—has now become an important part of strategic marketing decision making This emphasis on marketing accountability is addressed in Chapter 2,

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Appendix 3: Marketing by the Numbers, and end-of-chapter Marketing by the Numbers

features and throughout the 13th edition

5 Sustainable marketing around the globe As technological developments make the

world an increasingly smaller and more fragile place, marketers must be good at marketing their brands globally and in sustainable ways New material throughout the 13th edition emphasizes the concepts of global marketing and sustainable marketing—meeting the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs The 13th edition inte-grates global marketing and sustainability topics throughout the text It then provides focused coverage on each topic in Chapters 15 and 16, respectively

An emphasis on real marketing and Bringing marketing to life

Marketing: An Introduction, 13th edition, takes a practical marketing management

approach, providing countless in-depth, real-life examples and stories that engage students with marketing concepts and bring modern marketing to life In the 13th edition, every

chapter has an engaging First Stop opening story plus Marketing at Work highlights that

provide fresh insights into real marketing practices Learn how:

●

● Netflix uses “big data” to personalize each customer’s viewing experience While

Netflix subscribers are busy watching videos, Netflix is busy watching them—very,

very closely

●

● Nestlé has set up a customer-driven new product development process for finding and growing new market offerings while living up to its vision to make its products tastier and healthier

●

● Emirates became a lifestyle brand by changing the way it reached out to customers

It framed itself as connecting peoples and cultures, creating meaningful experiences

understand-●

● Lenovo’s global success is rooted in its deep and sound understanding of customers and its ability to build profitable relationships Its business model is thus built on customer satisfaction, innovation, and operational efficiency

Beyond such features, each chapter is packed with countless real, engaging, and timely examples that reinforce key concepts No other text brings marketing to life like the

13th edition of Marketing: An Introduction.

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learning Aids that create Value and engagement

A wealth of chapter-opening, within-chapter, and end-of-chapter learning devices help dents to learn, link, and apply major concepts:

stu-●

spread in each chapter features an Objective Outline that outlines chapter contents and learning objectives, a brief Previewing the Concepts section that introduces chapter concepts, and a First Stop opening vignette—an engaging, deeply developed, illustrated, and

annotated marketing story that introduces the chapter material and sparks student interest

●

high-light features that provide an in-depth look at real marketing practices of large and small companies

●

ease and enhance student learning by introducing and explaining major chapter sections and figures

●

summa-rize key chapter concepts and provide questions, exercises, and cases by which students

can review and apply what they’ve learned The Chapter Review and Critical Thinking

section reviews major chapter concepts and links them to chapter objectives It provides

a helpful listing of chapter key terms by order of appearance with page numbers that cilitate easy reference Finally, it provides discussion questions and critical thinking ex-ercises that help students to keep track of and apply what they’ve learned in the chapter

fa-The Minicases and Applications section at the end of each chapter provides brief Marketing Ethics; Online, Mobile, and Social Media Marketing; and Marketing by the Numbers applications cases that facilitate discussion of current issues and company

situations in areas such as mobile and social marketing, ethics, and financial marketing

analysis It also includes a Video Case section that contains short vignettes with

discus-sion questions to be used with a set of short videos that accompany the 13th edition An

end-of-chapter Company Cases section identifies which of the company cases found in

Appendix 1 are best for use with each chapter

●

apply major marketing concepts to real company and brand situations

●

students to apply important marketing planning concepts

●

with a comprehensive introduction to the marketing financial analysis that helps to guide, assess, and support marketing decisions An exercise at the end of each chapter lets students apply analytical and financial thinking to relevant chapter concepts and links the chapter to the Marketing by the Numbers appendix

●

open to them and lays out a process for landing a marketing job that best matches their special skills and interests

More than ever before, the 13th edition of Marketing: An Introduction creates value

and engagement for you—it gives you all you need to know about marketing in an effective and enjoyable total learning package!

A total teaching and learning Package

A successful marketing course requires more than a well-written book Today’s classroom requires a dedicated teacher, well-prepared students, and a fully integrated teaching system

A total package of teaching and learning supplements extends this edition’s emphasis on creating value and engagement for both the student and instructor The following aids sup-

port Marketing: An Introduction, 13th edition.

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Instructor resources

At the Instructor Resource Center, www.pearsonglobaleditions.com/Armstrong, tors can easily register to gain access to a variety of instructor resources available with this text in downloadable format If assistance is needed, our dedicated technical support team is ready to help with the media supplements that accompany this text Visit http://247.pearsoned com for answers to frequently asked questions and toll-free user support phone numbers

instruc-The following supplements are available with this text:

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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 extra-special

thanks to Keri Jean Miksza for her dedicated and valuable contributions to all phases of

the project and to her husband Pete and daughters Lucy and Mary for all the support they provide Keri during this very absorbing project

We owe substantial thanks to Andy Norman of Drake University for his skillful help in developing chapter vignettes and highlights, company and video cases, and the Marketing Plan appendix This and many previous editions have benefited greatly from Andy’s assistance We also thank Laurie Babin of the University of Louisiana at Monroe for her dedicated continued efforts in preparing end-of-chapter materials and for keeping our Marketing by the Numbers ap-pendix fresh Additional thanks also go to Jennifer Barr, Tony Henthorne, and Douglas Martin.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:

We also owe a great deal to the people at Pearson Education who helped develop this book Senior Acquisitions Editor Mark Gaffney provided resources and support during the revision Senior Project Manager Jacqueline Martin and Program Manager Jennifer Collins provided valuable assistance and advice in guiding this complex revision project through development, design, and production We’d also like to thank Stephanie Wall, Lenny Ann Kucenski, Judy Leale, Jeff Holcomb, and Eric Santucci for their able assistance along the way We are proud to be associated with the fine professionals at Pearson We also owe a mighty debt of gratitude to Charles Fisher and the team at Integra

reVIeWers

George Bercovitz, York College

Pari S Bhagat, Ph.D., Indiana University of

Pennsylvania

Sylvia Clark, St John’s University

Linda Jane Coleman, Salem State University

Mary Conran, Temple University

Datha Damron-Martinez, Truman State University

Lawrence K Duke, Drexel University

Barbara S Faries, MBA, Mission College

Ivan Filby, Greenville College

John Gaskins, Longwood University

Karen Halpern, South Puget Sound Community College

Jan Hardesty, University of Arizona

Hella-Ilona Johnson, Olympic College

David Koehler, University of Illinois at Chicago

Michelle Kunz, Morehead State University

Susan Mann, University of Northwestern Ohio

Thomas E Marshall, M.B.E., Owens Community College

Nora Martin, University of South Carolina Erika Matulich, University of Tampa Marc Newman, Hocking College John T Nolan, SUNY, Buffalo State Nikolai Ostapenko, University of the District of Columbia Vic Piscatello, University of Arizona

Bill Rice, California State University David Robinson, University of California, Berkeley William M Ryan, University of Connecticut Elliot Schreiber, Drexel University

Lisa Simon, Cal Poly, San Luis Obispo Robert Simon, University of Nebraska, Lincoln Keith Starcher, Indiana Wesleyan University John Talbott, Indiana University

Rhonda Tenenbaum, Queens College Deborah Utter, Boston University Tom Voigt, Judson University Terry Wilson, East Stroudsburg University

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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 Armstrong clan and Nancy, Amy, Melissa, and Jessica from the Kotler family To them, we dedicate this book.

Gary Armstrong Philip Kotler

Pearson would like to thank the following people for their work on the Global Edition:

contrIBUtors

Diane Sutherland

Jon Sutherland

reVIeWers

Allan Chia, SIM University

Ayantunji Gbadamosi, University of East London

Michael Korchia, BEM Management School

Christina Neylan, Lucerne University of Applied Sciences

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Global Edition

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Part 2: UnDerstanDing the MarketPlace anD cUstoMer ValUe (chaPters 3–5)

Part 3: Designing a cUstoMer ValUe-DriVen strategy anD Mix (chaPters 6–14)

Part 4: extenDing Marketing (chaPters 15–16)

1

the marketing process What Is Marketing? (32–33)

the marketplace and customers and identify the five core

marketplace concepts Understanding the Marketplace and

Customer Needs (34–36)

customer-value driven marketing strategy and discuss the marketing

management orientations that guide marketing strategy

Designing a Customer-Driven Marketing Strategy (37–40)

Preparing an Integrated Marketing Plan and Program (40–41)

Marketing

creating customer Value and engagement

management and identify strategies for creating value for customers and capturing value from customers in return

Engaging Customers and Managing Customer Relationships (41–48); Capturing Value from Customers (48–51)

forces that are changing the marketing landscape in this age of relationships The Changing Marketing

Landscape (52–59)

Previewing the concepts

this chapter introduces you to the basic concepts of marketing We start with the question: What is marketing? simply put, marketing is engaging customers and managing profitable customer relationships the aim of marketing is to create value for customers in order to capture value from customers in return next we discuss the five steps in the marketing process—from understanding customer needs, to designing customer value-driven marketing strategies and integrated marketing programs, to building customer relationships and capturing value for the firm finally, we discuss the major trends and forces affecting marketing in this new age of digital, mobile, and social media Understanding these basic concepts and forming your own ideas about what they really mean to you will provide a solid foundation for all that follows.

let’s start with a good story about marketing in action at emirates, the largest tional airline in the world and one of the best-known brands on the planet emirate’s success results from much more than just offering a way to connect people from point a to point b it’s based on a customer-focused marketing strategy by which emirates creates customer value through deep brand–customer engagement and close brand community with and among its customers.

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first stop

emirate’s customer-Value Driven Marketing:

Engaging Customers and Building a

Brand Community

The Emirates Group operates across six continents and 144

cities with an 84,000 strong team comprised of over 160

nation-alities The Emirates airline, headquartered in Dubai, UAE, was

founded in 1985 The financial year ending March 31, 2015 saw

the Group achieve its 27th consecutive year of profit in a

finan-cial year The company successfully capitalized on its location—

a small city-state strategically located to reach three-fourths of

the world population in a flight of less than eight hours—to build

a fast-growing and profitable hub-based business model,

mak-ing it the largest international airline in the world

Emirates set out to be an innovative, modern, and

customer-oriented provider of high-quality air travel services Through

the years, Emirates has successfully and continuously created

a customer-focused value proposition by offering a combination of

products, services, information, and experiences customized for its

market demographics for each of its destinations This approach had

led to an array of product offerings such as its onboard Information,

Communication, and Entertainment (ICE) system; an all-in-one

com-munications device accommodating customer needs of surfing the

Internet, emailing, or simply calling a land line while in the airplane;

and exclusive lounges for its clientele These offerings have allowed

Emirates to deliver its value proposition to its customers and support

its mission statement of committing to high standards

The Skywards Program, the airlines’ frequent traveler loyalty

pro-gram, also plays a key role in helping Emirates build strong customer

relationships In an industry-leading innovation, members now earn

miles by zone instead of actual miles flown A “miles accelerator

fea-ture” offers bonus miles on specific flights and is designed to boost

turnover on flights with less full flights

Facing increased and fierce competition, Emirates has launched

a range of customer service initiatives that support differentiation,

in-cluding Dubai Connect, an incentive for premium-class passengers

of-fering free luxury hotel accommodation, including meals, ground

trans-portation, and visa costs in Dubai Another differentiating element of

its customer service is Chauffeur-drive, a service offered to customers

flying first-class or business-class Emirates chauffeurs collect

custom-ers from their doorstep or will be present to take them to their final

destination when they land This could be straight to the customer’s

hotel, their next meeting, their favorite restaurant or even to the course

for a round of golf This service is available in over 70 cities worldwide

As competitors continued to discount air fares close to loss

lev-els, Emirates maintained fares while managing healthy yields

sup-ported by excellent load factors The company was capable of doing

this because of its customer-value driven marketing approach and

its service proposition, for which customers continue to be willing

to pay a premium Whereas competitors emphasized low prices or

well-maintained aircraft, Emirates built customer engagement and

re-lationships Beyond the functional benefit of air travel, Emirates

mar-keted its services as “The Emirates Experience,” a genuine passion

for comfort and attention to detail Customers didn’t just fly Emirates;

they experienced it

emirates’ success is due in part to its diverse product offerings, such as its onboard information, communication, and entertainment (ice) system.

emirates is not just offering a way to connect people from point a to point b but is the catalyst to connect people’s dreams, hopes, and aspirations.

Connecting with customers once required simply outspending competitors on big media ads and celebrity endorsers that talk at cus-tomers In these digital times, however, Emirates is forging a new kind

of customer relationship, a deeper, more personal, more engaging one Emirates still invests in traditional advertising, but the brand now spends an increasing amount of its marketing budget on cutting-edge digital and social media marketing that interacts with customers to build brand engagement and community

Emirates uses online, mobile, and social media marketing to connect with their customers Emirates also creates brand “tribes”—large groups

of highly engaged users—with the help of social media platforms such

as Facebook, Twitter, Instagram, YouTube, and Pinterest For example, the main Emirates Facebook page has more than 7 million likes The Emirates Twitter page adds another 500,000; the

Emirates Instagram page has 590,000 subscribers, making it the largest in the industry; and the company’s LinkedIn page has 422,000 followers, also no 1 in the airline business Emirates’

social media presence gages customers at a high level, gets them talking with each other about the brand, and weaves the brand into their daily lives through cross-media campaigns that integrate digital media with traditional tools

en-to connect with cusen-tomers A pelling example is the company’s “Hello Tomorrow” campaign, which was launched in 2012 and positioned the global airline as the enabler of global connectivity and meaningful experi-ences Emirates wanted to be perceived as a lifestyle choice and to en-sure that more people than ever will fly Emirates The target audience was

com-“globalistas”—people who live to experience new cultures Emirates was looking for a big idea that would build virtual bridges between globalistas and different cultures worldwide; inspire conversations on food, fashion, art, and music; and break the mold for a travel brand to engage with its audience and inspire discussions like never before

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Sir Maurice Flanagan, the founding CEO of Emirates and the former

executive vice-chairman of The Emirates Group, emphasized that

Emir-ates is not just offering a way to connect people from point A to point B

but is the catalyst to connect people’s dreams, hopes, and aspirations

He also stated that the company is connecting people and cultures,

cre-ating relevant and meaningful experiences that are shaping the world

The campaign launch featured print, TV, and digital advertising,

in-cluding some iconic billboards in New York’s Times Square and Milan’s

central train station Launched in over 80 markets across the world, the

new brand platform presented Emirates’ new mindset through

com-munication and engagement that celebrates global travel, conveying

Emirates’ commitment to connect with people and help them realize

their potential through travel Reflecting an effort to target a younger

audience, the “Hello Tomorrow” campaign debuted with vignettes of

the TV spots on Emirates’ Facebook channel Moreover, Emirates

col-laborated with the BBC to develop a new series called “Collaboration

Culture,” which followed 14 leading personalities who collaborated

across their respective fields in music, food, fashion, and art With

CNN, Emirates created “Fusion Journeys,” a concept that took artists

to join fellow artists across the world to learn, teach, and even perform with them in their own country Finally, Emirates’ created the “Inspired Culture” channel on Yahoo! Globally, where globalistas can access rec-ommendations, videos, and content, engaging with other people and being inspired by their creations

The new global culture reached 43 million viewers across 85 tries through the BBC, CNN, and Yahoo! Emirates’ consideration jumped from 38 percent to 69 percent among viewers and an impressive 84 per-cent of viewers exposed to the content reportedly believe Emirates was

coun-a brcoun-and thcoun-at sought to connect the world coun-and crecoun-ate coun-a “brighter future.” Emirates has become the world’s most valuable airline brand, with an estimated value of $6.6 billion, according to the 2015 Brand Finance Global 500 report It improved by 38 positions compared to the last ranking As a result of its customer-centric approach and in-tegrated marketing campaigns (such as the Hello Tomorrow initiative), Emirates has demonstrated commitment, authenticity, relevance, and differentiation outside the travel industry Emirates has successfully changed the way it reaches out to its customers by moving away from the product and creating a discourse of global customer engagement.1

oday’s successful companies have one thing in common: Like Emirates, they are strongly customer focused and heavily committed to marketing These companies share a passion for understanding and satisfying customer needs in well-defined target markets They motivate everyone in the organization to help build lasting customer relationships based on creating value

Customer relationships and value are especially important today Facing dramatic technological advances and deep economic, social, and environmental challenges, today’s customers are relating digitally with companies and each other, spending more carefully, and reassessing how they engage with brands New digital, mobile, and social media developments have revolutionized how consumers shop and interact, in turn calling for new marketing strategies and tactics In these fast-changing times, it’s now more important than ever to build strong customer relationships based on real and enduring customer value.We’ll discuss the exciting new challenges facing both customers and marketers later

in the chapter But first, let’s introduce the basics of marketing

What is Marketing?

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

one: Marketing is engaging customers and managing profitable customer relationships

The twofold goal of marketing is to attract new customers by promising superior value and

to keep and grow current customers by delivering satisfaction

For example, Walmart has become the world’s largest retailer—and the world’s largest

company—by delivering on its promise “Save Money Live Better.” Coca-Cola has earn a 49

percent global share of the carbonated beverage market—more than twice Pepsi’s share—by fulfilling its “open happiness” motto with products that “spread smiles and open happiness every day all across the world.” Facebook has attracted more than 1.4 billion active Web and mobile users worldwide by helping them to “connect and share with the people in their lives.”2

Sound marketing is critical to the success of every organization Large for-profit firms, such as Google, Target, Procter & Gamble, Coca-Cola, and Microsoft, use mar-keting But so do not-for-profit organizations, such as colleges, hospitals, museums, symphony orchestras, and even churches

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 nearby

author comment

Pause here and think about how you’d answer

this question before studying marketing Then

see how your answer changes as you read

the chapter

t

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shopping mall and the ads that fill your TV screen, spice up your magazines, or stuff your mailbox But in recent years, marketers have assembled a host of new marketing approaches, everything from imaginative Web sites and smartphone apps to blogs, online videos, and so-cial media These new approaches do more than just blast out messages to the masses They reach you directly, personally, and interactively 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 almost everything you do Yet there is much more to marketing than meets the consumer’s casual eye Behind it all is a massive network of people, technologies, and activities competing for your attention and purchases This book will give you a complete introduction to the basic concepts and practices of today’s marketing In this chapter, we begin by defining marketing and the marketing 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, spiels from salespeople, and online pitches However, selling and advertising are only the tip of the marketing iceberg.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 engages consumers

effectively, understands their needs, develops products that provide superior customer value, and prices, distributes, and promotes them well, these products will sell easily In fact, according

to management guru Peter Drucker, “The aim of marketing is to make selling unnecessary.”3

Selling and advertising are only part of a larger marketing mix—a set of marketing tools that

work together to engage customers, satisfy customer needs, and build customer relationships.Broadly defined, marketing is a social and managerial process by which individuals and organizations obtain what they need and want through creating and exchanging value with others In a narrower business context, marketing involves building profitable,

value-laden exchange relationships with customers Hence, we define marketing as the

process by which companies engage customers, build strong customer relationships, and create customer value in order to capture value from customers in return.4

the Marketing Process

figure 1.1 presents a simple, five-step model of the marketing process for creating and

cap-turing customer value In the first four steps, companies work to understand consumers, create customer value, and build strong customer 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 keting In this chapter, we review each step but focus more on the customer relationship steps—understanding customers, engaging and building relationships with customers, and capturing value from customers In Chapter 2, we look more deeply into the second and third steps—designing value-creating marketing strategies and constructing marketing programs

mar-Marketing

The process by which companies

engage customers, build strong

customer relationships, and create

customer value in order to capture

value from customers in return.

Create value for customers and build customer relationships Capture value from

customers in return

Capture value from customers to create profits and customer equity

Engage customers, build profitable relationships, and create customer delight

Construct an integrated marketing program that delivers superior value

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 the Marketing Process: creating and capturing customer Value

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Understanding the Marketplace and customer needs

As a first step, marketers need to understand customer needs and wants and the place in which they operate We examine five core customer and marketplace concepts:

market-(1) needs, wants, and demands; (2) market offerings (products, services, and experiences); (3) value and satisfaction; (4) exchanges and relationships; and (5) markets.

customer needs, Wants, and Demands

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

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

Wants are 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 and services with benefits that add up to the most value and satisfaction

Outstanding marketing companies go to great lengths to learn about and understand their customers’ needs, wants, and demands They conduct consumer research, analyze moun-tains of customer data, and observe customers as they shop and interact, offline and online People at all levels of the com-pany—including top management—stay close to customers:5

Target’s energetic new CEO, Brian Cornell, makes regular announced visits to Target stores, accompanied by local moms and loyal Target shoppers Cornell likes nosing around stores and getting a real feel for what’s going on It gives him “great, genuine feedback.” Similarly, Boston Market CEO George Mi- chel makes frequent visits to company restaurants, working in the dining room and engaging customers to learn about “the good, the bad, and the ugly.” He also stays connected by reading customer messages on the Boston Market Web site and has even cold-called customers for insights “Being close to the customer

un-is critically important,” says Michel “I get to learn what they value, what they appreciate.”

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 the ownership of anything Examples include banking, airline, hotel, retailing, and home repair services

More broadly, market offerings also include other entities, such as persons, places, organizations, information, and ideas For example, San Diego recently

launched a $9 million “Happiness Is Calling” advertising campaign that invites tors to come and enjoy the city’s great weather and good times—everything from its bays and beaches to its downtown nightlife and urban scenes And the Ad Council and

visi-author comment

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

needs

States of felt deprivation.

Wants

The form human needs take as they

are shaped by culture and individual

Some combination of products,

servic-es, information, or experiences offered

to a market to satisfy a need or want.

staying close to customers: energetic new target ceo brian collins

makes regular unannounced visits to target stores, accompanied by local

moms and loyal target shoppers.

Ackerman + Gruber

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the National Highway Traffic Safety Administration created a “Stop the Texts Stop the Wrecks.” campaign that markets the idea of eliminating texting while driving The campaign points out that a texting driver is 23 times more likely to get into a crash than

a non-texting driver.6

Many sellers make the mistake of paying more attention to the specific products they offer than to the benefits and experiences produced by these products These sell-

ers suffer from marketing myopia They are so taken with their products that they

focus only on existing wants and lose sight of underlying customer needs.7 They 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 better 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 visit Walt Disney World Resort; you immerse yourself and your family in a world of wonder, a world where dreams come true and things still work the way they should “Let the magic begin!” says Disney Similarly, Mattel’s American Girl does much more than just make and sell high-end dolls It creates special experiences between the dolls and the girls who adore them.8

To put more smiles on the faces of the girls who love their American Girl dolls, the pany operates huge American Girl experiential stores in 20 major cities around the country Each store carries an amazing selection of dolls plus every imaginable outfit and accessory But more than just shopping spots, American Girl stores are exciting destinations unto themselves, offering wonderfully engaging experiences for girls, mothers, grandmoth- ers, and even dads or grandpas There’s an in-store restaurant where girls, their dolls, and grown-ups can sit down together for brunch, lunch, afternoon tea, or dinner There’s even

com-a doll hcom-air scom-alon where com-a stylist ccom-an give com-a doll com-a new hcom-airdo Americcom-an Girl com-also offers

“perfect parties” to celebrate a birthday or any day, as well as a full slate of special events, from crafts and activities to excursions Much more than a store that sells dolls, says the company, “it’s the place where imaginations can soar.” A visit to American Girl creates

“Fun today Memories forever.”

customer Value and satisfaction

Consumers usually face a broad array of products and services that might satisfy a given need How do they choose among these many market offerings? Customers form expectations about the value and satisfaction that various market offerings will deliver and buy accordingly 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 tions too low, they may satisfy those who buy but fail to attract enough buyers If they set expectations too high, buyers will be disappointed Customer value and customer satisfac-tion are key building blocks for developing and managing customer relationships We will revisit these core concepts later in the chapter

expecta-exchanges and relationships

Marketing occurs when people decide to satisfy their needs and wants through

ex-change relationships Exex-change is the act of obtaining a desired object from someone

by offering something in return In the broadest sense, the marketer tries to bring about

a response to some market offering The response may be more than simply buying or trading products and services A political candidate, for instance, wants votes; a church wants membership; an orchestra wants an audience; and a social action group wants idea acceptance

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.

Marketing experiences: american girl does

more than just make and sell high-end dolls

it creates special experiences between the

dolls and the girls who adore them.

Trang 39

Marketing consists of actions taken to create, maintain, and grow desirable exchange

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

Companies want to build strong relationships by consistently delivering superior customer value We will expand on the important concept of managing customer relationships later

in the chapter

Markets

The concepts of exchange and relationships lead to the concept of a market A market is

the set of actual and potential buyers of a product or service These buyers share a lar need or want that can be satisfied through exchange relationships

particu-Marketing means managing markets to bring about profitable customer ships However, creating these relationships takes work Sellers must search for and engage buyers, identify their needs, design good market offerings, set prices for them, promote them, and store and deliver them Activities such as consumer research, prod-uct development, communication, distribution, pricing, and service are core marketing activities

relation-Although we normally think of marketing as being carried out by sellers, buyers also carry out marketing Consumers market when they search for products, interact with companies to obtain information, and make their purchases In fact, today’s digital tech-nologies, from online sites and smartphone apps to the explosion of social media, have empowered consumers and made marketing a truly two-way affair Thus, in addition to customer relationship management, today’s marketers must also deal effectively with

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

influ-ence our customers?” but also “How can our customers influinflu-ence us?” and even “How can our customers influence each other?”

figure 1.2 shows the main elements in a marketing system Marketing involves

serving a market of final consumers in the face of competitors The company and tors research the market and interact with consumers to understand their needs Then they create and exchange market offerings, messages, and other marketing content with con-sumers, either directly or through marketing intermediaries Each party in the system is affected by major environmental forces (demographic, economic, natural, technological, political, and social/cultural)

competi-Each party in the system adds value for the next level The arrows represent tionships that must be developed and managed Thus, a company’s success at engaging customers and building profitable relationships depends not only on its own actions but also on how well the entire system serves the needs of final consumers Walmart can-not fulfill its promise of low prices unless its suppliers

provide merchandise at low costs And Ford cannot deliver

a high-quality car-ownership experience unless its dealers provide outstanding sales and service

Market

The set of all actual and potential

buyers of a product or service.

figure 1.2 a Modern Marketing system

Major environmental forces

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.

Marketing intermediaries Competitors

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Designing a customer Value-Driven Marketing strategy

Once it fully understands consumers and the marketplace, marketing management can

design a customer value-driven marketing strategy We define marketing management

as the art and science of choosing target markets and building profitable relationships with them The marketing manager’s aim is to engage, keep, and grow target customers by creating, delivering, and communicating superior customer value

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

impor-tant 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

strategy concepts briefly here and then look at them in more detail in Chapters 2 and 6

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

customers as possible and increasing demand But marketing managers know that they cannot serve all customers in every way By trying to serve all customers, they may not serve any customers well Instead, the company wants to select only customers that it can serve well and profitably For example, Nordstrom profitably targets affluent profession-als; Dollar General profitably targets families with more modest means

Ultimately, marketing managers must decide which customers they want to target and

on the level, timing, and nature of 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 ferentiate and position itself in the marketplace A brand’s value proposition is the set

dif-of benefits or values it promises to deliver to consumers to satisfy their needs JetBlue promises to put “You Above All” by bringing “humanity back to travel.” By contrast, Spirit Airlines gives you “Bare Fare” pricing: “Less Money More Go.” Facebook helps you “connect and share with the people in your life,” whereas Twitter’s Vine app gives you “the best way to see and share life in motion” through “short, beautiful,

looping videos in a simple and fun way for your friends and family to see.”9

Such value propositions differentiate one brand from another They answer the customer’s question: “Why should I buy your brand rather than a competitor’s?” Companies must design strong value propositions that give them the greatest advantage in their target markets

Marketing Management orientations

Marketing management wants to design strategies that will engage target customers and build profitable relationships

with them But what philosophy should guide these marketing

strategies? What weight should be given to the interests of customers, the organization, and society? Very often, these interests conflict

There are five alternative concepts under which organizations design and carry out their marketing strategies:

the production, product, selling, marketing, and societal keting concepts.

mar-author comment

Once a company fully understands its

consumers and the marketplace, it must

decide which customers it will serve and

how it will bring them value

Marketing management

The art and science of choosing target

markets and building profitable

rela-tionships with them.

Value propositions: Vine gives you “the best way to see and share life

in motion” through “short, beautiful, looping videos in a simple and fun

way for your friends and family to see.”

Twitter, Inc.

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