(BQ) Part 2 book “Principles of marketing” has contents: Retailing and wholesaling, engaging customers and communicating customer value, personal selling and sales promotion, direct, online, social media, and mobile marketing, creating competitive advantage,… and other contents.
www.downloadslide.net PART 1: Defining Marketing and the Marketing Process (Chapters 1–2) PART 2: Understanding the Marketplace and Customer Value (Chapters 3–6) PART 3: Designing a Customer Value-Driven Strategy and Mix (Chapters 7–17) PART 4: Extending Marketing (Chapters 18–20) 11 Chapter Preview Pricing Strategies Additional Considerations In the previous chapter, you learned that price is an important marketing mix tool for both creating and capturing customer value You explored the three main pricing strategies—customer value-based, cost-based, and competition-based pricing—and the many internal and external factors that affect a firm’s pricing decisions In this chapter, we’ll look at some additional pricing considerations: new product pricing, product mix pricing, price adjustments, and initiating and reacting to price changes We close the chapter with a discussion of public policy and pricing For openers, let’s examine the importance of pricing in online retailing In case you haven’t noticed, there’s a war going on—between Walmart, by far the world’s largest retailer, and Amazon, the planet’s largest online merchant Each combatant brings an arsenal of potent weapons to the battle For now, the focus is on price But in the long run, it’ll take much more than low prices to win this war The spoils will go to the company that delivers the best overall online customer experience and value for the price AMAZON VS WALMART: A Price War for Online Supremacy “W almart to Amazon: Let’s Rumble” read the by Walmart’s standards, online sales are growing at three times headline Ali had Frazier Coke has Pepsi The the rate of physical-world sales Within the next decade, online Yankees have the White Sox And now, the two and mobile buying will capture as much as a third of all retail retail heavyweights are waging a war all their sales Because Amazon owns online, its revenues have soared an own The objective? Online supremacy The weapon of choice? average of almost 30 percent annually over the past three years Prices, at least for now—not surprising, given the two combatMeanwhile, Walmart’s earthbound sales have grown at less than ants’ long-held low-cost positions percent a year during that period At that rate, Amazon’s revEach side is formidable in its own right Walmart dominates enues will reach $100 billion within the next year, reaching that offline retailing It’s price-driven “Save money Live Better.” mark faster than any other company in history positioning has made it far and away the world’s biggest reAmazon has shown a relentless ambition to offer more of tailer, and the world’s largest company to boot In turn, Amazon almost everything online It started by selling only books, but is the “Walmart of the Web”—our online general store Alnow sells everything from books, movies, and music to conthough Walmart’s yearly sales total an incredible $469 billion, sumer electronics, home and garden products, clothing, jewelry, more than 6.3 times Amazon’s $75 billion annually, Amazon’s toys, tools, and even groceries Thus, Amazon’s online prowonline sales are 7.5 times greater than Walmart’s online sales ess now looms as a significant threat to Walmart If Amazon’s By one estimate, Amazon captures a full one-third of all online expansion continues and online sales spurt as predicted, the buying worldwide digital merchant will eat further and further into Walmart’s Why does Walmart worry about Amazon? bread-and-butter store sales After all, online sales currently account for only about percent of total U.S retail sales Walmart Walmart, the world’s largest retailer, and Amazon, the world’s largest captures most of its business through its more online merchant, are fighting a war for online supremacy The weapon of than 11,000 brick-and-mortar stores—online buying accounts for only a trifling percent of choice? Prices, at least for now But in the long run, winning the war will its total sales But this battle isn’t about now, it’s take much more than just low prices about the future Although still a small market www.downloadslide.net CHAPTER 11 | Pricing Strategies: Additional Considerations 347 But Walmart isn’t about to let that happen without a fight Instead, it’s taking the battle to Amazon’s home territory—the Internet and mobile buying It started with the tactics it knows best—low costs and prices Through aggressive pricing, Walmart is now fighting for every dollar consumers spend online If you compare prices at Walmart.com and Amazon.com, you’ll find a price war raging across a broad range of products In a price war, Walmart would seem to have the edge Low costs and prices are in the company’s DNA Through the years, Walmart has used its efficient operations and immense buying power to slash prices and thrash one competitor after another But Amazon is not like most other competitors Its network is optimized for online shopping, and the Internet seller isn’t saddled with the costs of running physical stores As a result, Amazon has been able to match or even beat Walmart at its own pricing game online The two giants now seem pretty much stalemated on low prices, giving neither much of an advantage there In fact, in the long run, reckless price cutting will likely more damage than good to both Walmart and Amazon So, although low prices will be crucial, they won’t be enough to win over online buyers Today’s online shoppers want it all, low prices and selection, speed, convenience, and a satisfying overall shopping experience For now, Amazon seems to have the upper hand Walmart versus Amazon online: Achieving online supremacy will take more on most of the important nonprice buying factors Its than just waging and winning an online price war The spoils will go to the made-for-online distribution network speeds orders company that delivers the best overall online customer experience and to buyers’ homes quickly and efficiently—including value for the price same-day delivery in some markets Amazon’s on(top) Bloomberg via Getty Images; (bottom) © digitallife / Alamy line assortment outstrips even Walmart’s, and the Web wizard is now moving into groceries, an area To catch up, Walmart is investing heavily to create a nextthat currently accounts for 55 percent of Walmart’s sales As generation fulfillment network Importantly, it’s taking advanfor Amazon’s lack of physical stores—no problem Amazon’s tage of a major asset that Amazon can’t match—an opportunity heavily used mobile app lets customers shop Amazon.com to integrate online buying with its massive network of brickeven as they are browsing Walmart’s stores Finally, Amaand-mortar stores For example, Walmart is experimenting zon’s unmatched, big data-driven customer interface creates with fulfilling online orders more quickly and cheaply by havpersonalized, highly satisfying online buying experiences ing workers in stores pluck and pack items and mail or deliver Amazon regularly rates among the leaders in customer satisthem to customers’ homes Two-thirds of the U.S population faction across all industries lives within five miles of a Walmart store, offering the potential By contrast, Walmart came late to online selling It’s still for 30-minute delivery trying to figure out how to efficiently deliver goods into the And by combining its online and offline operations, Walmart hands of online shoppers As its online sales have grown, the can provide some unique services, such as free and convenient store-based giant has patched together a makeshift online dispickup and returns of online orders in stores (Walmart’s site tribution network out of unused corners of its store distribution gives you three buying options: “online,” “in-store,” and “sitecenters And the still-mostly-store retailer has yet to come close to-store”) Using Walmart’s Web site and mobile app can also to matching Amazon’s online customer buying experience So smooth in-store shopping They let customers prepare shopping even with its impressive low-price legacy, Walmart finds itself lists in advance, locate products by aisle to reduce wasted shopplaying catch-up online “We’re starting to gain traction,” says ping time, and use their smartphones at checkout with preloaded Walmart’s CEO, but “we still have a long ways to go.” 348 www.downloadslide.net PART | Designing a Customer Value-Driven Strategy and Mix Objective Outline OBJECTIVE Describe the major strategies for pricing new products New Product Pricing Strategies OBJECTIVE Explain how companies find a set of prices that maximizes the profits from the total product mix Product Mix Pricing Strategies OBJECTIVE (pp 352–360) Discuss the key issues related to initiating and responding to price changes Price Changes OBJECTIVE (pp 350–352) Discuss how companies adjust their prices to take into account different types of customers and situations Price Adjustment Strategies OBJECTIVE (pp 349–350) (pp 360–365) Overview the social and legal issues that affect pricing decisions Public Policy and Pricing (pp 365–367) digital coupons applied automatically Customers who pick up online orders in the store can pay with cash, opening up online shopping to the 20 percent of Walmart customers who don’t have bank accounts or credit cards For customers who pay online, Walmart is testing in-store lockers where customers can simply go to an assigned locker for pickup Who will win the battle for the hearts and dollars of online buyers? Certainly, low prices will continue to be important But achieving online supremacy will involve much more than just waging and winning an online price war It will require delivering low prices plus selection, convenience, and a world-class online buying experience—something that Amazon perfected long ago For Walmart, catching and conquering Amazon online will require time, resources, and skills far beyond its trademark everyday low prices As Walmart’s president of global e-commerce puts it, the important task of winning online “will take the rest of our careers and as much as we’ve got [to invest] This isn’t a project It’s about the future of the company.”1 MyMarketingLab™ Improve Your Grade! Over 10 million students improved their results using the Pearson MyLabs Visit mymktlab.com for simulations, tutorials, and end-of-chapter problems As the Walmart–Amazon story suggests, and as we learned in the previous chapter, pric- ing decisions are subject to a complex array of company, environmental, and competitive forces To make things even more complex, a company does not set a single price but rather a pricing structure that covers different items in its line This pricing structure changes over time as products move through their life cycles The company adjusts its prices to reflect changes in costs and demand and to account for variations in buyers and situations As the competitive environment changes, the company considers when to initiate price changes and when to respond to them www.downloadslide.net CHAPTER 11 | Pricing Strategies: Additional Considerations 349 This chapter examines additional pricing approaches used in special pricing situations or to adjust prices to meet changing situations We look in turn at new product pricing for products in the introductory stage of the product life cycle, product mix pricing for related products in the product mix, price adjustment tactics that account for customer differences and changing situations, and strategies for initiating and responding to price changes Author Pricing new products can be Comment especially challenging Just think about all the things you’d need to consider in pricing a new smartphone, say the first Apple iPhone Even more, you need to start thinking about the price—along with many other marketing considerations—at the very beginning of the design process Market-skimming pricing (price skimming) Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales New Product Pricing Strategies Pricing strategies usually change as the product passes through its life cycle The introductory stage is especially challenging Companies bringing out a new product face the challenge of setting prices for the first time They can choose between two broad strategies: market-skimming pricing and market-penetration pricing Market-Skimming Pricing Many companies that invent new products set high initial prices to skim revenues layer by layer from the market Apple frequently uses this strategy, called market-skimming pricing (or price skimming) When Apple first introduced the iPhone, its initial price was as high as $599 per phone The phones were purchased only by customers who really wanted the sleek new gadget and could afford to pay a high price for it Six months later, Apple dropped the price to $399 for an 8-GB model and $499 for the 16-GB model to attract new buyers Within a year, it dropped prices again to $199 and $299, respectively, and you can now get a basic 8-GB model for free with a wireless phone contract In this way, Apple has skimmed the maximum amount of revenue from the various segments of the market Market skimming makes sense only under certain conditions First, the product’s quality and image must support its higher price, and enough buyers must want the product at that price Second, the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more Finally, competitors should not be able to enter the market easily and undercut the high price Market-Penetration Pricing Market-penetration pricing Setting a low price for a new product in order to attract a large number of buyers and a large market share Rather than setting a high initial price to skim off small but profitable market segments, some companies use market-penetration pricing Companies set a low initial price to penetrate the market quickly and deeply—to attract a large number of buyers quickly and win a large market share The high sales volume results in falling costs, allowing companies to cut their prices even further For example, Samsung has used penetration pricing to quickly build demand for its mobile devices in fast-growing emerging markets.2 In Kenya, Nigeria, and other Africa countries, Samsung recently unveiled an affordable yet full-function Samsung Galaxy Pocket model that sells for only about $120 with no contract The Samsung Pocket is designed and priced to encourage millions of firsttime African buyers to trade up to smartphones from their more basic handsets Samsung also offers a line of Pocket models in India, selling for as little as $77 Through penetration pricing, the world’s largest smartphone maker hopes to make quick and deep inroads into India’s exploding mobile device market, which consists of mostly first-time users and accounts for nearly one-quarter of all smartphones sold globally each year Samsung’s penetration pricing has set off a price war in India with Apple, which has responded in emerging markets with heavy discounts and more affordable models of its own Apple iPhones have typically sold for more than $300 in India, limiting Apple’s market share to only about percent there Penetration pricing: Samsung has used low initial prices to make quick and deep inroads into emerging mobile device markets such as Africa and India Bloomberg via Getty Images Several conditions must be met for this low-price strategy to work First, the market must be highly price sensitive so that a low price produces more market 350 www.downloadslide.net PART | Designing a Customer Value-Driven Strategy and Mix Table 11.1 | Product Mix Pricing Pricing Situation Description Product line pricing Setting prices across an entire product line Optional-product pricing Pricing optional or accessory products sold with the main product Captive-product pricing Pricing products that must be used with the main product By-product pricing Pricing low-value by-products to get rid of or make money on them Product bundle pricing Pricing bundles of products sold together growth Second, production and distribution costs must decrease as sales volume increases Finally, the low price must help keep out the competition, and the penetration pricer must maintain its low-price position Otherwise, the price advantage may be only temporary Author Most individual products are Comment part of a broader product mix and must be priced accordingly For example, Gillette prices its Fusion razors low But once you buy the razor, you’re a captive customer for its higher-margin replacement cartridges Product Mix Pricing Strategies The strategy for setting a product’s price often has to be changed when the product is part of a product mix In this case, the firm looks for a set of prices that maximizes its profits on the total product mix Pricing is difficult because the various products have related demand and costs and face different degrees of competition We now take a closer look at the five Table 11.1: product line pricing, optionalproduct mix pricing situations summarized in product pricing, captive-product pricing, by-product pricing, and product bundle pricing Product Line Pricing Companies usually develop product lines rather than single products For example, Rossignol offers seven different collections of alpine skis of all designs and sizes, at prices that range from $150 for its junior skis, such as Fun Girl, to more than $1,100 for a pair from its Radical racing collection It also offers lines of Nordic and backcountry skis, snowboards, and skirelated apparel In product line pricing, management must determine the price steps to set between the various products in a line The price steps should take into account cost differences between products in the line More important, they should account for differences in customer perceptions of the value of For example, at a Mr Clean car wash, you different features can choose from any of six wash packages, ranging from a basic exterior-clean-only “Bronze” wash for $5; to an exterior clean, shine, and protect “Gold” package for $12; to an interior-exterior “Signature Shine” package for $27 that includes the works, from a thorough cleaning inside and out to a tire shine, underbody rust inhibitor, surface protectant, and even air freshener The car wash’s task is to establish perceived value differences that support the price differences Optional-Product Pricing Product line pricing: Mr Clean car washes offer a complete line of wash packages priced from $5 for the basic Bronze wash to $27 for the feature-loaded Mr Clean Signature Shine package The Procter & Gamble Company Many companies use optional-product pricing—offering to sell optional or accessory products along with the main product For example, a car buyer may choose to order a navigation system and premium entertainment system Refrigerators come with optional ice makers And when you order a new computer, www.downloadslide.net CHAPTER 11 Product line pricing Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors’ prices Optional-product pricing The pricing of optional or accessory products along with a main product Captive-product pricing Setting a price for products that must be used along with a main product, such as blades for a razor and games for a videogame console | Pricing Strategies: Additional Considerations 351 you can select from a bewildering array of processors, hard drives, docking systems, software options, and service plans Pricing these options is a sticky problem Companies must decide which items to include in the base price and which to offer as options Captive-Product Pricing Companies that make products that must be used along with a main product are using captive-product pricing Examples of captive products are razor blade cartridges, video games, printer cartridges, single-serve coffee pods, and e-books Producers of the main products (razors, video-game consoles, printers, single-cup coffee brewing systems, and tablet computers) often price them low and set high markups on the supplies For example, Amazon makes little or no profit on its Kindle readers and tablets It hopes to more than make up for thin margins through sales of digital books, music, movies, subscription services, and other content for the devices “We want to make money when people use our devices, not when they buy our devices,” declares Amazon CEO Jeff Bezos.3 Captive products can account for a substantial portion of a brand’s sales and profits For example, only about 27 percent of Keurig’s revenues come from the sale of its single-cup brewing systems The bulk of the brand’s revenues—nearly 73 percent—comes from captive sales of its K-Cup portion packs.4 However, companies that use captive-product pricing must be careful Finding the right balance between the main-product and captive-product prices can be tricky Even more, consumers trapped into buying expensive captive products may come to resent the brand that ensnared them For example, customers of single-cup coffee brewing systems may cringe at what they must pay for those handy little coffee portion packs. Although they might seem like a bargain when compared on a cost-per-cup basis versus Starbucks, the pods’ prices can seem like highway robbery when broken down by the pound One investigator calculated the cost of pod coffee at a shocking $51 per pound.5 At those prices, you’d be better off cost-wise brewing a big pot of premium coffee and pouring out the unused portion For many buyers, the convenience and selection offered by singlecup brewing systems outweigh the extra costs However, such captive product costs might make others avoid buying the device in the first place or cause discomfort during use after purchase In the case of services, captive-product pricing is called two-part pricing The price of the service is broken into a fixed fee plus a variable usage rate Thus, at Six Flags and other amusement parks, you pay a daily ticket or season pass charge plus additional fees for food and other in-park features By-Product Pricing Captive product pricing: Nearly 73 percent of Keurig’s sales come from its K-Cup portion packs The brand must find the right balance between mainproduct and captive-product prices ASSOCIATED PRESS By-product pricing Setting a price for by-products in order to make the main product’s price more competitive Producing products and services often generates by-products If the byproducts have no value and if getting rid of them is costly, this will affect the pricing of the main product Using by-product pricing, the company seeks a market for these by-products to help offset the costs of disposing of them and help make the price of the main product more competitive The by-products themselves can even turn out to be profitable—turning trash into cash For example, Coca-Cola converts waste from its beverage-making operations into profitable by-products Nothing goes to waste, not even orange peels:6 To make its Simply Orange, Minute Maid, and other orange juice brands, Coca-Cola and its fruit-procuring partner, Cutrale, squeeze a lot of oranges Together each year, the two companies buy and process some 50 million boxes of oranges from Florida growers alone That’s a lot of orange juice, but it also leaves behind a lot of orange peels Rather than paying to have the peels hauled way, however, Coca-Cola and Cutrale turn them into valuable by-products Every part of the orange is put to good use Essential oils are extracted, bottled, and sold for everything from food flavorings to household cleaners What’s left is pressed into pellets sold for livestock feed Even the Simply Orange bottles you buy at your supermarket might soon be made in part from left-over orange peels Coca-Cola’s newly developed bio-PET Plant Bottles contain orange peels and other agricultural by-products from the company’s food processing operations 352 www.downloadslide.net PART | Designing a Customer Value-Driven Strategy and Mix Product Bundle Pricing Product bundle pricing Combining several products and offering the bundle at a reduced price Author Setting the base price for Comment a product is only the start The company must then adjust the price to account for customer and situational differences When was the last time you paid the full suggested retail price for something? Using product bundle pricing, sellers often combine several products and offer the bundle at a reduced price For example, fast-food restaurants bundle a burger, fries, and a soft drink at a “combo” price Bath & Body Works offers “three-fer” deals on its soaps and lotions (such as three antibacterial soaps for $10) And Comcast, Time Warner, Verizon, and other telecommunications companies bundle TV service, phone service, and high-speed Internet connections at a low combined price Price bundling can promote the sales of products consumers might not otherwise buy, but the combined price must be low enough to get them to buy the bundle Price Adjustment Strategies Companies usually adjust their basic prices to account for various customer differences and changing situations Here we examine the seven price adjustment strategies summarized in Table 11.2: discount and allowance pricing, segmented pricing, psychological pricing, promotional pricing, geographical pricing, dynamic pricing, and international pricing Discount and Allowance Pricing Discount A straight reduction in price on purchases during a stated period of time or of larger quantities Allowance Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way Most companies adjust their basic price to reward customers for certain responses, such as paying bills early, volume purchases, and off-season buying These price adjustments— called discounts and allowances—can take many forms One form of discount is a cash discount, a price reduction to buyers who pay their bills promptly A typical example is “2/10, net 30,” which means that although payment is due within 30 days, the buyer can deduct percent if the bill is paid within 10 days A quantity discount is a price reduction to buyers who buy large volumes A seller offers a functional discount (also called a trade discount) to trade-channel members who perform certain functions, such as selling, storing, and record keeping A seasonal discount is a price reduction to buyers who buy merchandise or services out of season Allowances are another type of reduction from the list price For example, trade-in allowances are price reductions given for turning in an old item when buying a new one Trade-in allowances are most common in the automobile industry, but they are also given for other durable goods Promotional allowances are payments or price reductions that reward dealers for participating in advertising and sales-support programs Table 11.2 | Price Adjustments Strategy Description Discount and allowance pricing Reducing prices to reward customer responses such as volume purchases, paying early, or promoting the product Segmented pricing Adjusting prices to allow for differences in customers, products, or locations Psychological pricing Adjusting prices for psychological effect Promotional pricing Temporarily reducing prices to spur short-run sales Geographical pricing Adjusting prices to account for the geographic location of customers Dynamic pricing Adjusting prices continually to meet the characteristics and needs of individual customers and situations International pricing Adjusting prices for international markets www.downloadslide.net CHAPTER 11 | Pricing Strategies: Additional Considerations 353 Segmented Pricing Companies will often adjust their basic prices to allow for differences in customers, products, and locations In segmented pricing, the company sells a product or service Selling a product or service at two or at two or more prices, even though the difference in prices is not based on differences more prices, where the difference in in costs prices is not based on differences in Segmented pricing takes several forms Under customer-segment pricing, different cuscosts tomers pay different prices for the same product or service Museums and movie theaters, for example, may charge a lower admission for students and senior citizens Under product form pricing, different versions of the product are priced differently but not according to For instance, a differences in their costs round-trip economy seat on a flight from New York to London might cost $1,000, whereas a business-class seat on the same flight might cost $4,700 or more Although business-class customers receive roomier, more comfortable seats and higher-quality food and service, the differences in costs to the airlines are much less than the additional prices to passengers However, to passengers who can afford it, the additional comfort and services are worth the extra charge Using location-based pricing, a company charges different prices for different locations, even though the cost of offering each location is the same For instance, state universities charge higher tuition for out-of-state students, and theaters vary their seat prices because of audience preferences for certain locations Finally, using time-based pricing, a firm varies its price by the season, the month, Product-form pricing: A roomier business class seat on a flight from New York to the day, and even the hour For example, London is many times the price of an economy seat on the same flight To customers movie theaters charge matinee pricing durwho can afford it, the extra comfort and service are worth the extra charge ing the daytime, and resorts give weekend © Index Stock Imagery and seasonal discounts For segmented pricing to be an effective strategy, certain conditions must exist The market must be segmentable, and segments must show different degrees of demand The costs of segmenting and reaching the market cannot exceed the extra revenue obtained from the price difference Of course, the segmented pricing must also be legal Most important, segmented prices should reflect real differences in customers’ perceived value Consumers in higher price tiers must feel that they’re getting their extra money’s worth for the higher prices paid By the same token, companies must be careful not to treat customers in lower price tiers as second-class citizens Otherwise, in the long run, the practice will lead to customer resentment and ill will For example, in recent years, the airlines have incurred the wrath of frustrated customers at both ends of the airplane Passengers paying full fare for business- or first-class seats often feel that they are being gouged At the same time, passengers in lower-priced coach seats feel that they’re being ignored or treated poorly Segmented pricing Psychological Pricing Psychological pricing Pricing that considers the psychology of prices and not simply the economics; the price is used to say something about the product Price says something about the product For example, many consumers use price to judge quality A $100 bottle of perfume may contain only $3 worth of scent, but some people are willing to pay the $100 because this price indicates something special In using psychological pricing, sellers consider the psychology of prices, not simply the economics For example, consumers usually perceive higher-priced products as having higher quality When they can judge the quality of a product by examining it or by calling on past experience with it, they use price less to judge quality But when they cannot judge quality because they lack the information or skill, price becomes an 354 www.downloadslide.net PART | Designing a Customer Value-Driven Strategy and Mix important quality signal For instance, who’s the better lawyer, one who charges $50 per hour or one who charges $500 per hour? You’d have to a lot of digging into the respective lawyers’ credentials to answer this question objectively; even then, you might not be able to judge accurately Most of us would simply assume that the higher-priced lawyer is better Reference prices Another aspect of psychological pricing is reference prices—prices that buyers Prices that buyers carry in their minds carry in their minds and refer to when looking at a given product The reference price and refer to when they look at a given might be formed by noting current prices, remembering past prices, or assessing the buyproduct ing situation Sellers can influence or use these consumers’ reference prices when setting price For example, a grocery retailer might place its store brand of bran flakes and raisins cereal priced at $2.49 next to Kellogg’s Raisin Bran priced at $3.79 Or a company might offer more expensive models that don’t sell very well to make its less expensive but stillhigh-priced models look more affordable by comparison For example, Williams-Sonoma once offered a fancy bread maker at the steep price of $279 However, it then added a $429 model The expensive model flopped but sales of the cheaper model doubled.7 For most purchases, consumers don’t have all the skill or information they need to figure out whether they are paying a good price They don’t have the time, ability, or inclination to research different brands or stores, compare prices, and get Instead, they may rely on certain cues that the best deals signal whether a price is high or low Interestingly, such pricing cues are often provided by sellers, in the form of sales signs, price-matching guarantees, loss-leader pricing, and other helpful hints Even small differences in price can signal product differences A or 0.99 at the end of a price often signals a bargain You see such prices everywhere For example, browse the online sites of top discounters such as Target, Best Buy, or Overstock.com, where almost every price ends in In contrast, high-end retailers might favor prices ending in a whole number (for example, $6, $25, or $200) Others use 00-cent endings on regularly priced items and 99-cent endings on discount merchandise Although actual price differences might be small, the impact of such psychological tactics can be big For example, in one study, people were asked how likely they were to choose among LASIK eye surgery providers based only on the prices they charged: $299 or $300 The actual price difference was only $1, but the study found that the psychological difference was much greater Preference ratings for the providers charging $300 were much higher Subjects perceived the $299 price as significantly less, but the lower price also raised stronger concerns about quality and risk Some psychologists even argue that each digit has symbolic and visual qualities that should be considered in pricing Thus, eight (8) is round and even and crePsychological pricing: What the prices marked on this tag suggest about the product and buying situation? ates a soothing effect, whereas seven (7) is angular and creates a jarring effect.8 © Tetra Images/Alamy Promotional Pricing Promotional pricing Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales With promotional pricing, companies will temporarily price their products below list price—and sometimes even below cost—to create buying excitement and urgency PromoA seller may simply offer discounts from normal prices tional pricing takes several forms to increase sales and reduce inventories Sellers also use special-event pricing in certain seasons to draw more customers Thus, TVs and other consumer electronics are promotionally priced in November and December to attract holiday shoppers into the stores Limited-time offers, such as online flash sales, can create buying urgency and make buyers feel lucky to have gotten in on the deal www.downloadslide.net CHAPTER 11 | Pricing Strategies: Additional Considerations 355 Manufacturers sometimes offer cash rebates to consumers who buy the product from dealers within a specified time; the manufacturer sends the rebate directly to the customer Rebates have been popular with automakers and producers of mobile phones and small appliances, but they are also used with consumer packaged goods Some manufacturers offer low-interest financing, longer warranties, or free maintenance to reduce the consumer’s “price.” This practice has become another favorite of the auto industry Promotional pricing can help move customers over humps in the buying decision process For example, to encourage its voice-plan customers to “break free” from WiFi-only tablets and add its 4G LTE mobile Internet services, T-Mobile recently offered discounts of up to $100 on T-Mobile 4G tablets, plus 1GB of free 4G LTE data monthly for up to eight months (and 200MB of free data monthly for as long as they own the tablet) Such aggressive price promotions can provide powerful buying and switching incentives.9 Promotional pricing: Companies offer promotional prices to create buying Promotional pricing, however, can have adexcitement and urgency verse effects During most holiday seasons, for Bloomberg via Getty Images example, it’s an all-out bargain war Marketers carpet-bomb consumers with deals, causing buyer wear-out and pricing confusion Used too frequently, price promotions can create “deal-prone” customers who wait until brands go on sale before buying them In addition, constantly reduced prices can erode a brand’s value in the eyes of customers Marketers sometimes become addicted to promotional pricing, especially in tight economic times They use price promotions as a quick fix instead of sweating through the difficult process of developing effective longer-term strategies for building their brands For example, as recounted in the Chapter 10 opening story, JCPenney has long relied on a steady diet of coupons, markdowns, and nonstop sales to pull customers through the doors Although these promotional practices have been destructive to JCPenney’s image and profitability, they’ve become so ingrained that the retailer is finding it difficult to stop offering them To avoid such problems, companies must be careful to balance short-term sales incentives against long-term brand building Geographical Pricing Geographical pricing Setting prices for customers located in different parts of the country or world FOB-origin pricing A geographical pricing strategy in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination A company also must decide how to price its products for customers located in different parts of the United States or the world Should the company risk losing the business of more-distant customers by charging them higher prices to cover the higher shipping costs? Or should the company charge all customers the same prices regardless of location? We will look at five geographical pricing strategies for the following hypothetical situation: The Peerless Paper Company is located in Atlanta, Georgia, and sells paper products to customers all over the United States The cost of freight is high and affects the companies from which customers buy their paper Peerless wants to establish a geographical pricing policy It is trying to determine how to price a $10,000 order to three specific customers: Customer A (Atlanta), Customer B (Bloomington, Indiana), and Customer C (Compton, California) One option is for Peerless to ask each customer to pay the shipping cost from the Atlanta factory to the customer’s location All three customers would pay the same factory price of $10,000, with Customer A paying, say, $100 for shipping; Customer B, $150; and Customer C, $250 Called FOB-origin pricing, this practice means that the goods are placed free on board (hence, FOB) a carrier At that point, the title and responsibility pass to www.downloadslide.net Cooperatives, producers, 432 Core beliefs, 114 Corporate chain retailers, 415–417, 416 Corporate identity materials, public relations, 493 Corporate image marketing, 260 Corporate vertical marketing system (VMS), 382 Corruption, 647 Cost-based pricing, 329–332, 330, 331 Cost leadership, 577 Cost-plus pricing, 330–331 Coupons, 519, 520–521 Cradle-to-cradle practices, 639 Creative concept, 480 Cross-company teams, logistics, 400 Cross-cultural marketing, 169 Cross-functional teams, logistics, 400 Cross-market segmentation, 231–232 Crowdsourcing, 296–299, 298 Cultural pollution, 634 Culture business buying decisions, 203–204 consumer buyer behavior and, 167–171, 168, 169, 170 cultural environment, marketing, 114–117, 115, 116 global market segmentation, 231–232 international marketing, 205–206, 600–602, 601, 611–613 international marketing research, 153–154 marketing environment, 104–105 Currency, 597–600 Customer Business Development teams, 500–501, 507–508 Customer-centered company, 585–586 Customer-centered logistics, 393 Customer-centered new product development, 304 Customer-driven marketing business market segmentation, 230–231 differentiation and positioning, 238, 240–247, 241, 242, 243, 244, 245, 246 hypertargeting, 239–240 IBM, 66–67 market segmentation, 223–232, 224, 225, 226, 228, 229, 230, 231 market targeting, 232–238, 233, 234, 236, 237 Minicases and Applications, 249–251 Real Marketing, Dunkin' Donuts, 227–228 strategy overview, 35, 222–223 Customer engagement See also Integrated marketing communications; Social media advertising media decisions, 482–486, 483, 484 advertising strategy, 477–486, 478, 479, 481, 482, 483, 484 branded Web communities, 540–541 brand positioning, 276–277 communication process, 452–454, 453 competitive marketing intelligence, 133–135, 134 Dell, social media listening center, 145–146 IBM, 66–67 individual marketing, 236–237 marketing, definition of, 29 marketing process, 30–33, 31, 53–54 market nicher strategy, 584–585 new product ideas from, 296 new product testing, 302 Nike, 63 overview of, 41–45, 42, 43 personal communication channels, 457–458 personal selling and, 517–518 promotional mix decisions, 462–464 relationship building, 72–74, 73 test marketing, new products, 302–303 Customer equity, 47–48 Customer expectations, marketing process, 30–33, 31 Customer insights, 130–132, 131 Customer intimacy, 577, 578–580 Customer lifetime value, 46 Customer management, 33 Customer management organization, 82 Index 717 Customer needs, marketing channel and, 386 Customer relationships See also Integrated marketing communications; Social media advertising media decisions, 482–486, 483, 484 advertising strategy, 477–486, 478, 479, 481, 482, 483, 484 Amazon.com, 26–27 building of, 72–74, 73 communication process, 452–454, 453 competitive marketing intelligence, 133–135, 134 customer insights, use of, 130– 132, 131, 386 customer-managed relationships, 42 customer relationship management (CRM) programs, 148–149 Dell, social media listening center, 145–146 direct and digital marketing, 554–557, 555, 556 IBM, 66–67 individual marketing, 236–237 international marketing research, 153–154 JetBlue and, 40–41 management of, 37–41, 38, 39 marketing, definition of, 29 marketing concept and, 35 marketing department organization and, 82 marketing process, 30–33, 31, 53–54 market nicher strategy, 584–585 Nike, 62–63 personal communication channels, 457–458 personal selling and, 517–518 sales force and, 504 Customers, marketing environment and, 98 Customer sales force structure, 505–508, 507 Customer satisfaction, postpurchase behavior, 185–186 Customer-segment pricing, 353 Customer services, 266–267 Customer-solution approach, 516 718 www.downloadslide.net Index Customer value See also Integrated marketing communications; Marketing channels; Personal selling; Price; Product development; Retailers; Sales promotion; Wholesalers Amazon.com, 26–27 branding strategy, 274–284, 275, 276, 277, 278, 279, 280, 281 brands, overview of, 263–264 capturing value from customers, 46–48, 47 customer intimacy, 577, 578–580 customer needs, analyzing, 386 customer-perceived value, 37–39 customer relationship management, 37–41, 38, 39 ESPN brand and, 254–255 focus group research and, 141–142 Google, new products, 292–293 JetBlue and, 40–41 labeling decisions, 265–266 marketing, definition of, 29 marketing channel, role of, 378–379 marketing information gathering, 130–132, 131 marketing process, 30–33, 31, 53–54 marketing strategy and, 74–79, 77, 78 Minicases and Applications, 286–288 packaging decisions, 264–265 product line decisions, 267 product mix decisions, 267–268 products and services, attributes of, 261–263, 262 products and services, types and classification, 256–261, 258, 259, 260 product support services, 266–267 services, marketing of, 268–274, 270, 271, 273 value delivery networks, 376–377 value selling, 518 Customer value analysis, 573–575, 574 Customer value-based pricing, 325–329, 326, 327, 328 Customer value marketing, defined, 641 D Dashboards, 83 Databases, market research, 137–138, 154–156 See also Marketing information systems (MIS) Data collection See Marketing information systems (MIS) Data mining, 148–149 Deception, direct and digital marketing, 554–555 Deceptive pricing, 366 Deciders, buying decisions, 202–203 Decline stage, product life cycle, 310–312, 311, 313 Decoding, communication process, 453–454 Deficient products, 644–645 Demand, business markets, 199–200 Demand, pricing decisions and, 336–338, 337 Demand chain, 377 Demand curve, 337–338 Demand management, 33 Demands, customer, 30, 31 Demographics buying behavior, personal factors, 175–177, 176 marketing environment, 99–102, 99, 100, 101, 102 Demographic segmentation, 223, 224–226, 225 Demonstration, sales process, 515, 516–517 Department stores, 412 Derived demand, 199–200 Descriptive research, 136 Design, product, 262–263 Designer shops, 412 Design for environment (DFE), 639 Desirable products, 644–645 Desire, message design, 455–456 Developing economies, 106 Differentiated marketing, 233–234, 238, 240–247, 241, 242, 243, 244, 245, 246 Differentiation brand equity and value, 275–276 competitive strategies, 577 defined, 75, 77, 222–223 of services, 272–273 wholesaler decisions, 433–435, 434 Digital marketing See also Minicases and Applications advertising media decisions, 482–486, 483, 484 advertising strategy, 477–486, 478, 479, 481, 482, 483, 484 behavioral tracking, 143, 145–146 big data, information management, 131–132 blogs and online forums, 543–544 business buying behavior, 209–210 consumers as marketers, 32 coupons, 520–521 customer engagement, 41–45, 42, 43 Facebook, 532–533 generational groups and, 99–102 hypertargeting, 239–240 integrated marketing communications, 447–452, 448, 450, 451 local marketing, 235–236 marketing mix, 78–79 Microsoft and, 92–94, 93 mobile marketing, overview, 547–550, 548, 549 negative publicity and, 117, 118–119 netnography, 139 Nike, 62–63 online advertising, 541 online marketing research, 142–146, 143 online retailing, 424–429, 425, 427 online social networks, buyer behavior and, 172 overview, 534–536, 535, 538–540 PepsiCo's use of, 129 personal communication channels, 457–458 promotion mix, 447, 463 public policy and ethics, 112, 154–156, 554–557, 555, 556 real-time marketing, 536, 537–538 retailer promotions, 422 sales force strategies, 506–507 sales promotions, 519 shopper marketing, 410–411 social media, overview, 544–547, 545, 546 social selling, 512–515, 513, 514 www.downloadslide.net steps for effective communication, 454–460, 455, 456, 457, 458, 460 trends in, 29, 48–50, 49 Web sites and branded Web communities, 540–541 wholesaler decisions, 434 Digital video ad convergence, 452 Direct investment, international markets, 606–607 Direct marketing channel catalog marketing, 551–552 direct-mail, 550–551 direct-response television marketing (DRTV), 553–554 kiosk marketing, 554 Minicases and Applications, 559–562 overview, 379–380, 534–536, 535 promotional mix, 447, 463 public policy and, 554–557, 555, 556 real-time marketing, 536, 537–538 telemarketing, 552–553 Direct-response television marketing (DRTV), 553–554 Disabilities, persons with, 105 Discount pricing, 352, 354–355, 522 See also Sales promotion Discount stores, 412, 414 Disintermediation, 384–385 Dissonance-reducing buying behavior, 182, 185–186 Distribution See also Marketing channels Amazon's Vendor Flex program, 391–392 consumer product marketing, 259 international marketing, 614–615 logistics, management of, 393– 401, 394, 397, 398, 399 new products, marketing strategy, 301 value delivery networks, 376–377 wholesaler decisions, 434–435 Distribution centers, 396–397 Distributors, 96, 296, 378–379 Diversification, 72 Diversity marketing environment, 104–105 subcultures, buyer behavior, 168–170, 169 Doha Round, 597 Do Not Call Registry, 112, 506 Downsizing, strategies for, 69–72, 71 Drive, buyer behavior and, 177–180, 179 Drop shippers, 432 Duties, trade, 596–598, 597 DVR systems, 478 Dynamic pricing, 352, 356–359, 357 E Early adopters, 186–188, 187 Early mainstream adopters, 186–188, 187 Earned media, 450 Economic communities, 597–598 Economic environment business buying decisions, 203–204 defined, 106–107 global market segments, 231–232 international marketing, 598–599 pricing decisions, 338–339 Economic forces, 50–51 Education, population trends, 104 Electronic data exchange (EDI), 399 Electronics, turnover in, 631–632 E-mail marketing, 541–542 Emerging economies, 598 Emotional appeal, message design, 455–456 Emotions, buying decisions and, 203–204 Encoding, communication process, 453–454 Endorsement messages, 458–459, 481 Engagement, advertising decisions, 483 Entrepreneurial marketing, 576 Environment, buying decisions, 203–204 Environment, concerns about See also Social responsibility Chipotle, 109–110 environmentalism, 636–640, 637, 638 green retailing, 429–430 packaging, 264–265 Patagonia, 624–626, 625 societal marketing concept, 35–37, 36, 52–53, 627–628, 644–645 supply chain, 394, 395–396 Environment, marketing See Marketing environment Index 719 Environmental Protection Agency (EPA), 107–108 E-procurement, 208, 210 Equipment purchases, 260 E-tailers, 539 Ethics See also Minicases and Applications behavioral targeting, 145–146 business and sustainable marketing, 641–645, 642 competitive marketing intelligence, 135 consumerism, 635–636 cultural pollution, 634 deceptive practices, 629–630 direct and digital marketing, 554–557, 555, 556 environmentalism, 636–640, 637, 638 high-pressure selling, 630 hypertargeting, 239–240 marketing and society, 632–634, 633 marketing communications, 464–465 marketing decisions and the law, 641 marketing information management, 154–156, 155 other business, marketing impact on, 634–635 overview of, 645–648, 646, 647 planned obsolescence, 631–632 poor service to disadvantaged consumers, 632 prices, marketing costs and, 628–629 shoddy or unsafe products, 630–631 socially responsible behavior, 112–113, 237–238 supplier selection, 206 sustainable marketing, 627–628 Ethnicity marketing environment, 104–105 subcultures, buyer behavior, 168–170, 169 target markets, 238 Ethnographic research, 138–139 European Union (EU), 596, 597–598 Evaluation of results, 82–84, 486– 488, 487 Event marketing, 522 720 www.downloadslide.net Index Events, 458 Everyday low pricing (EDLP), 327, 422 Exchange, defined, 32 Exchange controls, 596 Exclusive distribution, 387, 392–393 Exclusive territorial agreements, 392–393 Execution styles, advertising, 480–481 Executive summary, 81 Expense reports, 512 Experience curve, 330 Experiences, 257 Experiential retailing, 419 Experimental research methods, 138, 140 Exploratory research, 136 Exports See also International marketing marketing organization, 615–616 trade system, 596–598, 604–605 Extranet, 151, 208 F Factory outlet stores, 414–415 Fad, product life cycle, 307 Fair Packaging and Labeling Act (1966), 112, 266 Family, changes in, 102–103, 172, 173–174 Family, influence of, 172, 173–174 Fantasy messages, 481 Fashion, product life cycle, 307 Features, product, 262 Federal Cigarette Labeling and Advertising Act (1967), 112 Federal Food, Drug, and Cosmetic Act (1906), 112, 312–313 Federal Trade Commission Act (1914), 112, 266 Feedback, communication process, 453–454, 460 Field sales force, 506 Financial intermediaries, 96 Financial publics, 97–98 Financial Reform Law (2010), 112 Fishyback, 398 Fixed costs, 329–332, 330, 331 Fixed-price policies, 356 Flash sales, 354–355 FOB-origin pricing, 355–356 Focus, competitive strategies, 577 Focus group interviewing, 141–146 Follow-up, sales process, 515, 517 Food and Drug Act (1906), 112 Food and Drug Administration (FDA), 111 Food deserts, 632 Format, messages, 481 Formulated marketing, 576 Four P's of marketing, 37, 53–54, 78–79 Franchise organizations, 382–383, 415–417, 416 Fraud, 554–555 Free goods, trade promotions, 522 Freight-absorption pricing, 356 Frequency, advertising decisions, 483 Frequency marketing programs, 39, 520 Freud, Sigmund, 177–180 Full-line forcing, 393 Full-service retailers, 411, 412 Full-service wholesalers, 431–433, 432 Functional discount, 352 Functional organization, 82 G Gatekeepers, buying decisions, 202–203 Gay community, 105 GDP (gross domestic product), 393 Gender segmentation, 225 General Agreement on Tariffs and Trade (GATT), 597 General need description, business buying, 204, 205 General public, 98 Generational groups consumer buying behavior, 175–177, 176 traits of, 99–102, 99, 100, 101, 102 Generation X, 100–101 Generation Z, 99–102 Generic brands, 278–280 Geographical organizations, 615–616 Geographical pricing, 352, 355–356 Geographic location, market segments, 231–232 Geographic nichers, 585 Geographic organization, 82 Geographic population shifts, 103–104 Geographic segmentation, 223–224 Global firm, 595 See also International marketing Globalization See International marketing Global marketing See International marketing Global organizations, defined, 615–616 Global value delivery network, 614–615 Goals, company, 68 Good-value pricing, 326–327 Government, role of distribution decisions and public policy, 392–393 environmental regulations, 107–108 international marketing, 599–600 safety, role in, 111 services of, 268 social goods, 633–634 Government markets, 52, 98, 211–213 Government publics, defined, 97–98 Great Recession (2008–2009) advertising budgets and, 477 baby boomers and, 99 consumer confidence, 115 consumer spending, 50–51, 106, 424 good-value pricing, 326–327 pricing decisions and, 338–339 Green manufacturing, 636–640 Green retailing, 429–430 Green supply chain, 394, 395–396 Group interviews, marketing research, 141–142 Groups, buyer behavior and, 171–175, 172, 174 Growth-share matrix, 69–70 Growth stage, product life cycle, 308–309, 313 Growth strategies, 69–72, 71 H Habitual buying behavior, 182–183 Hackathons (hackdays), 295–296 Handling objections, sales process, 515, 517 HDTV adoption rate, 187–188 Hierarchy of Needs, 179–180 Higg Index, 395 www.downloadslide.net High-low pricing, 327 High-pressure selling, 630 Hispanic American consumers, 168–169 Homosexuals, 105 Horizontal conflict, 380 Horizontal marketing systems, 383–384 Households, changes in, 102–103 House of Cards, 151 Hypertargeting, 239–240 I Idea generation, new product development, 295–299, 296, 297, 298 Ideas, as market offerings, 30–31, 261 Idea screening, new product development, 299 Image differentiation, 242, 260–261 Image messages, 481 Immersion groups, 141–142 Imports See also International marketing marketing organization, 615–616 trade system, 596–598 Inbound telemarketing, 552–553 Incentives, sales force, 510, 511, 524–525 Income baby boomers, 99 distribution of, 106–107, 598–599 segmentation by, 225–226 Independent off-price retailers, 414–415 India, 388, 598 Indirect marketing channel, 379–380 Individual marketing, 236–237 Industrial distributors, 432 Industrial economies, 106, 598 Industrializing economies, 598 Industrial products, 260 Industrial structure, 598 Influencers, buying decisions, 202–203 Influentials, 171–172 Infomercials, 553–554 Information, as market offerings, 30–31 Information management, logistics, 399 Information search, buyer behaviors, 184 Information technology, retailing, 428–429 See also Marketing information systems (MIS) Informative advertising, 475–476 Innovation See also Product development crowdsourcing and, 297–299, 298 disintermediation, 384–385 Netflix, 374–375 value innovation, 575 Innovation management systems, 305–306 Innovative marketing, 642 Inside sales force, 506 Institutional markets, 210–211 Insurance companies, 96 Integrated logistics management, 399–401 Integrated marketing communications Chick-fil-A, 444–446, 445 communication process, 452–454, 453 message source, 458–459 Minicases and Applications, 467–471 overall promotional mix decisions, 462–464 overview of, 447–452, 448, 450, 451 personal communication channels, 457–458 socially responsible communication, 464–465 steps for effective communication, 454–460, 455, 456, 457, 458, 460 total promotion budget, 460–462, 461 Integrated marketing plan and program, 37 Intensive distribution, 387 Interactive marketing, 272 Interactive TV, 553–554 Interest, message design, 455–457, 456 Intermarket segmentation, 231–232 Intermediaries, marketing, 96, 378–379, 387–388 See also Marketing channels Internal data, marketing information, 133 Internal marketing, 272 Index 721 Internal publics, 98 International marketing advertising decisions, 489–490 business regulations, 111–114, 112 Coca-Cola in Africa, 592–593 corruption, 647 cultural environment, 600–602, 601 culture differences, 205–206 decisions overview, 596, 602–604, 603 distribution channels, 388–389, 614–615 economic environment, 106–107, 598–599 exporting, 604–605 horizontal marketing systems, 383–384 international trade system, 596–598, 597 joint venturing, 605–606 marketing organization, 615–616 marketing program decisions, 52, 98, 607–609 market-penetration pricing, 349–350 market research, 153–154 market segmentation, 231–232 Minicases and Applications, 618–621 new products and services, 314–315 PepsiCo's brand management, 129 political-legal environment, 599–600 pricing decisions, 613–614 product strategies, 609–611, 610 promotions, 611–613 trends in, 594–596, 595 International markets, 52, 98 International pricing, 352, 359–362, 360, 361 International subsidiaries, 615–616 Internet fraud, 554–555 Internet pricing, 356–359, 357 Internet search engines, 137 Interpersonal factors, buying decisions, 203–204 Interpretive consumer research, 179 Interviews, market research, 140– 146, 141, 142, 143, 144, 145 Intranet, 151 Intrapreneurial programs, 295–296 Intrepreneurial marketing, 576 722 www.downloadslide.net Index Introduction stage, product life cycle, 308, 313 Inventory management, 397 Investor relations, 490–493, 492 J Japan, distribution channels, 388 Joint ownership, 606 Joint venturing, 605–606 Judgment sample, 146 Just-in-time logistics, 397 K Kiosk marketing, 554 Knowledge, buyer readiness, 454–455 L Labels, deceptive practices, 629–630 Labels, decisions about, 265–266 Lagging adopters, 186–188, 187 Language, international marketing, 611–613 Lanham Trademark Act (1946), 112 Late mainstream adopters, 186–188, 187 Leading adopters, 171–172 Learning, buyer behavior and, 181 Learning curve, 330 Legal issues advertising, 476 business regulations, 111–114, 112 direct and digital marketing, 554–557, 555, 556 distribution decisions, 392–393 international marketing, 599–600 marketing communications, 464–465 marketing decisions, 641 new product development and, 312–313 pricing decisions, 365–367 Lesbian community, 105 Less-for-much less positioning, 245 LGBT community, 105 Licensing, 280, 605 Life-cycle segmentation, 224–226, 225 Lifestyle, buying behavior and, 176–177, 226 Lifestyle centers, 423 Lifestyle messages, 481 Lifestyles of health and sustainability, 116 Liking, buyer readiness, 454–455 Limited-service retailers, 411, 412 Limited-service wholesalers, 432 Limited-time offers, 354–355 Line extensions, brands and, 280–283, 281 Line filling, products, 267 Line stretching, products, 267 Lobbying, public relations, 490–493, 492 Local marketing, 235–236 Local publics, 97–98 Location-based pricing, 353 Logistics functions of, 396–399, 397, 398 goals of, 394 marketing logistic, management of, 393–401, 394, 397, 398, 399 Logos, 242–243, 265–266 Lower class, defined, 169–170 Low-interest financing, 355 Loyalty programs, 109, 520 Loyalty status, market segments, 229–230 M Macroenvironment, marketing, 95, 98–105, 99, 100, 101, 102, 103, 104 Madison & Vine, 479 Magnuson-Moss Warranty Act (1975), 112 Mail-order wholesalers, 432 Mail questionnaires, 140–141 Management contracting, 606 Manufacturers, logistics management, 393–401, 394, 397, 398, 399 Manufacturers' agents, 432 Manufacturers' branches, wholesalers, 431–433, 432 Manufacturer-sponsored retailer franchise system, 383 Manufacturer-sponsored wholesaler franchise system, 383 Market, defined, 32 Market, pricing decisions and, 336–338, 337 Market-centered company, 585–586 Market challengers, 580, 581, 583–584 Market description, 81 Market development, 71–72 Market differentiation, 75, 77, 417–418, 433–435, 434 Market expansion grid, 71–72 Market followers, 580, 581, 584 Market growth rate, 69–70 Marketing defined, 26, 29 four P's of, 37 integrated plan and program, 37 process for, 30–33, 31, 53–54 sales force and, 504 steps for effective communication, 454–460, 455, 456, 457, 458, 460 Marketing 3.0, 36 Marketing analysis, 79–80 Marketing channels See also Integrated marketing communications advertising strategy, 477–486, 478, 479, 481, 482, 483, 484 channel behavior and organization, 380–385, 381, 382, 383, 384 channel design decisions, 385– 389, 386, 387 channel management decisions, 389–392, 390, 391 content marketing, 450–451 digital and social media, overview, 538–540 importance of, 377–379, 378 levels of, 379–380 marketing logistics and, 393–401, 394, 397, 398, 399 Minicases and Applications, 403–406 Netflix, 374–375 personal communication channels, 457–458 promotion mix decisions, 462–464 public policy and, 392–393 steps for effective communication, 454–460, 455, 456, 457, 458, 460 supply chains and value delivery networks, 376–377 Marketing concept, 35 Marketing control, 82–83 Marketing dashboards, 83 Marketing department, 82 Marketing environment www.downloadslide.net cause-related marketing, 112–113 cultural environment, 114–117, 115, 116 economic environment, 106–107 macroenvironment, 98–105, 99, 100, 101, 102, 103, 104 microenvironment, 95–98, 96, 97 Microsoft, 92–94, 93 Minicases and Applications, 121–124 natural environment, 107–108 political and social environment, 111–114, 112, 113 responding to, 117 social responsibility and ethics, 112 technological environment, 108, 110–111 Marketing implementation, 80–81 Marketing information systems (MIS) analysis and use of information, 148–152, 149, 151 competitive marketing intelligence, 133–135, 134 customer insights, 130–132, 131 defined, 132 internal data, 133 international marketing research, 153–154 marketing research process overview, 135–137, 136 Minicases and Applications, 158–161 needs assessment, 132 PepsiCo., 128–129 plan implementation, 148 primary data collection, 138–147, 139, 140, 141, 142, 143, 145, 146 public policy and ethics in, 112, 154–156, 155, 555–556 research instruments, 146–147 sampling plan, 146 secondary data, 137–138 small business and nonprofit organizations, 151–153 Marketing intermediaries, 96 Marketing logistics, 393–401, 394, 397, 398, 399 Marketing management, 33–37, 35, 36 Marketing mix See also Integrated marketing communications advertising media decisions, 483, 483–486, 484 pricing decisions and, 333–336 strategy decisions, 37, 74–79, 77, 78 wholesaler decisions, 434–435 Marketing myopia, 31, 34 Marketing organization, international markets, 615–616 Marketing plan See also Marketing strategy contents of, 80, 81 customer relationships, building of, 72–74, 73 international marketing decisions, 607–609 management of, 79–83, 80, 81, 82 Marketing research See also Marketing information systems (MIS) analysis and use of information, 148–152, 149, 151 international marketing research, 153–154 Minicases and Applications, 158–161 plan implementation, 148 primary data collection, 138–147, 139, 140, 141, 142, 143, 145, 146 process overview, 135–137, 136 public policy and ethics in, 154–156, 155 research instruments, 146–147 sampling plan, 146 secondary data, 137–138 small business and nonprofit organizations, 151–153 Marketing return on investment (ROI), 83–84 Marketing services agencies, 96 Marketing strategy advertising strategy, 477–486, 478, 479, 481, 482, 483, 484 business portfolio, 68–72, 69, 70, 71 company goals and objectives, 68 customer relationships, building of, 72–74, 73 differentiation and positioning, 238, 240–247, 241, 242, 243, 244, 245, 246 evaluation of, 82–84 going global, decisions overview, 602–604, 603 integrated marketing communications, 447–452, 448, 450, 451 Index 723 international markets, culture and, 600–602, 601 managing marketing plan, 79–83, 80, 81, 82 marketing mix, 74–79, 77, 78 market-oriented mission, 64–68, 65, 67 market targeting, 237 Minicases and Applications, 86–89 new products, 300–301 Nike, 62–63 pricing decisions and, 333–336 promotional mix decisions, 462–464 retailer marketing decisions, 417–423, 418, 419, 422 strategic planning, overview, 64, 65 test marketing, new products, 302–303 total promotional budget decisions, 460–462 wholesalers, 433–435, 434 Marketing Web sites, 540–541 Market leader, 580–583, 581, 582 Market management organization, 82 Market nichers, 234–235, 545, 580, 581, 584–585 Market offerings, 30–31 Market penetration, 71–72 Market-penetration pricing, 349–350 Market pioneers, 308 Marketplace Fairness Act (2013), 438 Market positioning, 75, 77, 417–418, 433–435, 434 Market research See Marketing information systems (MIS) Market sales force structure, 505– 508, 507 Market segmentation defined, 75 demographic segments, 224–226, 225 geographic segments, 223–224 overview of, 33, 222–223 retailer decisions, 417–418 wholesalers, 433–435, 434 Market share, expansion of, 582–583 Market-skimming penetration, 349 Market structure, business market, 199–200 724 Index Market targeting defined, 75, 222–223 retailer decisions, 417–418 strategies for, 232–238, 233, 234, 236, 237 Markup pricing, 330–331 Maslow, Abraham, 177–180, 179 Mass marketing, 233, 447–452, 448, 450, 451 Materialism, 632–634, 633 Materials, industrial products, 260 Matrix methods, market growth, 69–70 Maturity stage, product life cycle, 309–310, 313 Mechanical instruments, marketing research, 147 Media advertising media decisions, 482–486, 483, 484 advertising strategy, 477–486, 478, 479, 481, 482, 483, 484 communication process, 453–454 integrated marketing communications, 447–452, 448, 450, 451 steps for effective communication, 454–460, 455, 456, 457, 458, 460 Media impact, defined, 483 Media multitaskers, 485 Media publics, 97–98 Megaretailers, 425 Membership groups, buyer behavior and, 171 Membership warehouses, 415 Merchant wholesalers, 431–433, 432 Message advertising strategy, 477–486, 478, 479, 481, 482, 483, 484 communication process, 453–454 design of, 455–457, 456 execution of, 480–481 Microenvironment, marketing, 95–98, 96, 97 Micromarketing, 235–237, 236 Middle class, defined, 169–170 Middle-of-the-roaders, 577 Millennials, 101 Minicases and Applications advertising and public relations, 495–498 baby monitoring, 57 www.downloadslide.net brands, customer value and, 286–288 business buyer behavior, 215–218 competitive advantage, 588–590 consumer buyer behavior, 190–193 customer-driven marketing, 249–251 direct and digital marketing, 559–562 ethics and social responsibility, 650–653 integrated marketing communications, 467–471 international marketing, 618–621 marketing by numbers, 58 marketing channels, 403–406 marketing environment, 121–124 marketing information systems, 158–161 marketing strategy, 86–89 new product development, 317–319 personal selling, 527–530 pricing decisions, 342–345 pricing strategies, 369–372 retailers and wholesalers, 438–441 Zappos, 58 Mission statements market-oriented mission, 64–68, 65, 67 sense-of-mission marketing, 643–644 Timberland, 108 Mobile marketing See also Minicases and Applications advertising media decisions, 482–486, 483, 484 advertising strategy, 477–486, 478, 479, 481, 482, 483, 484 behavioral tracking, 143, 145–146 business buying behavior, 209–210 consumers as marketers, 32 coupons, 520–521 customer engagement, 41–45, 42, 43 direct and digital marketing, overview, 534–536, 535 ethics and, 112 Facebook, 532–533 generational groups, 99–102 hypertargeting, 239–240 integrated marketing communications, 447–452, 448, 450, 451 interactive TV, 553–554 local marketing, 235–236 negative publicity and, 117, 118–119 online marketing research, 142–146, 143 online retailing, 424–429, 425, 427 online social networks, buyer behavior and, 172 overview, 538–540, 547–550, 548, 549 personal communication channels, 457–458 promotion mix, 447, 463 public policy and ethics, 154–156 real-time marketing, 536, 537–538 retailer promotions, 422 sales force strategies, 506–507 sales promotions, 519 shopper marketing, 410–411 social selling, 512–515, 513, 514 steps for effective communication, 454–460, 455, 456, 457, 458, 460 trends in, 29, 48–50, 49 wholesaler decisions, 434 Modified rebuy, 201–202 Modifying the market, 309–310 Modifying the market mix, 310 Monopolistic competition, 337 Mood messages, 481 Moral appeal, message design, 456 More-for-less positioning, 245–246 More-for-more positioning, 244–245 More-for-same positioning, 245 Motivation, buyer behavior and, 177–180, 179 Motivation, sales force, 510–511 Multibrands, 281–283 Multichannel distribution systems, 384 Multichannel marketing, defined, 539 Multimodal transportation, 398 Musical messages, 481 N Name selection, 277 National brands, 278–280 National Do Not Call Registry, 552 www.downloadslide.net National Environmental Policy Act (1969), 112 National Traffic and Safety Act (1958), 112 Natural environment, 107–108 Natural resources industrial products, 260 supply and use of, 107–108 Need recognition, buyer behaviors, 184 Needs, customer, 30, 31 Needs, hierarchy of, 179–180 Negative publicity, 117, 118–119 Neighborhood shopping center, 423 Netnography, 139 Neuromarketing, 147 New products See also Product development business analysis, 301 buyer decisions about, 186–188, 187 commercialization, 303 concept development and training, 299–300, 301 crowdsourcing, 296–299, 298 development, management of, 304–306, 305 development process, 295, 301–302 development strategy, 294–295 Google, 292–293 idea generation, 295–299, 296, 297, 298 idea screening, 299 international marketing, 314–315, 610–611 market evaluation, 232 marketing strategy development, 300–301 Minicases and Applications, 317–319 pricing strategy, 349–350 product development, defined, 71–72 product life cycle strategies, 306–312, 307, 309, 311, 313 social responsibility and, 312–314 test marketing, 302–303 New task buying, 201–202 Niche marketing competitive strategies, 584–585 market nichers, defined, 580, 581 market targeting, 75, 76–77 overview, 234–235 social media and, 545 Noise, communication process, 453–454 Nonpersonal communication channels, 458 Nonprobability samples, 146 Nontariff trade barriers, 596–598 North American Free Trade Agreement (NAFTA), 598 Not-for-profit organizations marketing research in, 151–153 services, marketing of, 268–274, 270, 271, 273 trends in, 51–52 Nutrition Labeling and Education Act (1990), 112, 266 O Objective-and-task method, budgeting, 462 Objectives, company, 68 Objectives, marketing channel, 386–387 Observational research, 138–139, 141–142 Obsolescence, planned, 631–632 Occasion segmentation, 228 Occupation, consumer behavior and, 175–176 Off-invoice, 522 Off-list, 522 Off-price retailers, 412, 414–415 Oligopolistic competition, 337 Omnichannel buyer, 411 Online advertising, 541 Online focus groups, 143 Online forums, 543–544 Online marketing See also Minicases and Applications advertising media decisions, 482–486, 483, 484 advertising strategy, 477–486, 478, 479, 481, 482, 483, 484 big data, information management, 131–132 blogs and online forums, 543–544 business buying behavior, 209–210 consumers as marketers, 32 coupons, 520–521 customer engagement, 41–45, 42, 43 Index 725 direct and digital marketing, overview, 534–536, 535 e-mail marketing, 541–542 Facebook, 532–533 generational groups, 99–102 hypertargeting, 239–240 integrated marketing communications, 447–452, 448, 450, 451 local marketing, 235–236 marketing mix, 78–79 negative publicity and, 117, 118–119 netnography, 139 Nike, 62–63 online advertising, 541 online social networks, buyer behavior and, 172 online videos, 542–543 overview, 538–540 personal communication channels, 457–458 promotion mix, 447, 463 public policy and ethics, 154–156, 554–557, 555, 556 real-time marketing, 536, 537–538 retailer promotions, 422 sales force strategies, 506–507 sales promotions, 519 shopper marketing, 410–411 social selling, 512–515, 513, 514 steps for effective communication, 454–460, 455, 456, 457, 458, 460 trends in, 29, 48–50, 49 Web sites and branded Web communities, 540–541 wholesaler decisions, 434 Online marketing research, 140, 142–146, 143 Online purchasing, business buyers, 208, 210 Online retailing, 424–429, 425, 427 Online security, 555–556 Online sellers, 506 Online social networks See Social media Online training, sales force, 509 Online videos, 542–543 Operating control, 83 Operational excellence, 577 Opinion leaders, 171–172, 457–458 Optional-product pricing, 350–351 726 Index Order-routine specification, business buying, 204, 206 Organizational climate, sales force and, 511 Organizations buying decisions, 203–204 as market offerings, 30–31, 260 people's view of, 115 Outbound logistics, 393 Outbound telemarketing, 552–553 Outside sales force, 506 Overhead costs, 329–332, 330, 331 Owned media, 450 P Packaging deceptive practices, 629–630 decisions about, 79, 264–265 green retailing, 429–430 sustainable marketing, 627–628 Paid media, 450 Paradox of Choice, The, 561 Partner relationship management, 45, 72–74, 73, 390–392, 391 Patents, 634 Patriotism, 116 People differentiation, 242 Perceived value, 37–39 Percentage-of-sales method, budgeting, 461 Perception, 180 Perceptual positioning maps, 240–241 Performance assessment business buying, 204, 206 return on investment, 82–84 sales force, 512 Performance quality, defined, 262 Permission-based e-mail marketing, 542 Personal communication channels, 457–458 Personal factors, buyer behavior, 167, 175–177, 176 Personal interviews, market research, 140, 141 Personality, buying behavior and, 177 Personality symbol messages, 481 Personal selling customer relationships and, 517–518 defined, 500, 502 legal and ethical issues, 465 www.downloadslide.net Minicases and Applications, 527–530 overview of, 463, 502–504, 503 process for, 515–518 promotion mix, 447 sales force management, 504–512, 505, 507, 508, 509, 511 sales promotion program, 524–525 sales promotions and, 519–520 sales promotion tools, 520–524, 521, 522, 523 social selling, 512–515, 513, 514 Persons, as market offerings, 30–31, 260–261 Persuasive advertising, 475–476 Phishing, 555 Physical distribution firms, 96 Physical distribution management, 393–401, 394, 397, 398, 399 Physician Payment Sunshine Act, 527 Piggyback, 398 Place marketing mix, 37, 78–79 as market offerings, 30–31, 261 retailer decisions, 423 Planned obsolescence, 631–632 Pleasing products, 644–645 POES (paid, owned, earned, shared) media channels, 450–451 Point-of-purchase (POP) promotions, 521 Political environment business buying decisions, 203–204 global market segments, 231–232 international marketing, 599–600 regulations and ethics, 111–114, 112, 113 Pollution See also Sustainable marketing concerns about, 107–108 cultural pollution, 634 environmentalism, 636–640, 637, 638 green retailing, 429–430 packaging, 264–265 Population shifts, geographic, 103–104 Pop-up stores, 425 Portfolio, business, 68–72, 69, 70, 71 Portfolio analysis, 69–70 Positioning defined, 75, 77, 223 strategy for, 238, 240–247, 241, 242, 243, 244, 245, 246 wholesaler decisions, 433–435, 434 Positioning maps, 240–241 Positioning statement, 246 Postpurchase behavior, 185–186 Power centers, 423 Preapproach, sales process, 515, 516 Predatory pricing, 363–365, 364 Premiums, 521 Presentation, sales process, 515, 516–517 Press relations, 490–493, 492 Price ALDI, pricing strategy, 328–329 Amazon vs Walmart, 346–348, 347 competition-based pricing, 332–333 consumer product marketing, 259 cost-based pricing, 329–332, 330, 331 cost leadership, 577 customer value-based pricing, 325–329, 326, 327, 328 deceptive practices, 629–630 defined, 324–325 discount and allowance pricing, 352 dynamic pricing, 352, 356–359, 357 economic factors and, 338–339 geographical pricing, 352, 355–356 international pricing, 352, 359– 362, 360, 361, 613–614 Internet pricing, 356–359, 357 JCPenney pricing strategy, 322–323 market and demand concerns, 336–338, 337 marketing channels and, 377 marketing costs and, 628–629 marketing mix, 37, 78–79, 333–336 marketing strategy and, 333–336 Minicases and Applications, 342–345, 369–372 new product pricing strategy, 301, 349–350 organizational considerations, 336 price discrimination, 366 price elasticity, 338 price escalation, 359 price-fixing, 363–365, 364 price gouger, 362 www.downloadslide.net price-off, 522 price packs, 521 price skimming, 349 pricing strategies, overview, 325 product mix pricing strategies, 350–352, 351 promotional pricing, 352, 354–355 psychological pricing, 352, 353–354 public policy and, 365–367, 366 reference prices, 354 response to price changes, 363–365, 364 retailer decisions, 421–422 segmented pricing, 352, 353 Trader Joe's pricing strategy, 333–335, 334 unfair practices, 634–635 unit pricing, 266 wholesaler decisions, 434 Primary data, 137, 138–147, 139, 140, 141, 142, 143, 145, 146 Print media, 447–452, 448, 450, 451 Privacy behavioral targeting, 145–146 ethics and, 112, 555–556 hypertargeting, 239–240 marketing information management, 131–132, 154–156, 155 Private brands, 278–280 Private goods, 633–634 Probability samples, 146 Problem recognition, business buying, 204, 206 Producers See Marketing channels Producers' cooperatives, 432 Product assortment, retailer decisions, 418–421, 419 Product bundle pricing, 350, 352 Product development business analysis, 301 buyer decisions about, 186–188, 187 commercialization, 303 concept development and training, 299–300, 301 crowdsourcing, 296–299, 298 defined, 71–72 Google, 292–293 idea generation, 295–299, 296, 297, 298 international marketing, 314–315 managing new product development, 304–306, 305 marketing strategy development, 300–301 Minicases and Applications, 317–319 new products, process for, 295, 301–302 new product strategy, 294–295 pricing strategy, 349–350 product invention, 610–611 product life cycle strategies, 306–312, 307, 309, 311, 313 social responsibility and, 312–314 test marketing, 302–303 Production concept, 34 Production costs, 329–330 Productivity, services and, 274 Product management organization, 82 Product-oriented business definition, 65 Products See also Product development attributes of, 261–263, 262 branding of, 263–264, 274–284, 275, 276, 277, 278, 279, 280, 281 defining, 256–257 desirable products, 644–645 international marketing decisions, 609–611, 610 labeling decisions, 265–266 levels and classification of, 257–261, 258, 259, 260 line extensions, 280–283, 281 marketing mix and, 78–79 market offerings, 30–31 packaging decisions, 264–265 product adaptation, 610 product concept, 34, 37, 299–300 product differentiation, 242 product expansion grid, 71–72 product form pricing, 353 product image, 299 product leadership, 577, 579 product life cycle (PLC), 306–312, 307, 309, 311, 313, 477 product line decisions, 267 product line pricing, 350 product mix (portfolio) decisions, 267–268 product mix pricing strategies, 350–352, 351 Index 727 product position, 238, 240–247, 241, 242, 243, 244, 245, 246 product publicity, public relations and, 490–493, 492 product review, 81 product specification, business buying, 204, 205 product stewardship, 639 quality and safety of, 261–263, 262, 630–631 support services, 266–267 wholesaler decisions, 434 Product sales force structure, 505–508, 507 Profits advertising return on investment, 486–488, 487 customer equity and, 47–48 new products, marketing strategy, 300–301 service profit chain, 270 Promotion See also Integrated marketing communications; Sales promotion advertising strategy, 477–486, 478, 479, 481, 482, 483, 484 consumer product marketing, 259 deceptive practices, 629–630 feedback on, 460 international marketing, 611–613 marketing mix, 37, 78–79 prices, marketing costs and, 628–629 promotional mix decisions, 447, 462–464 retailer decisions, 422 social responsibility and, 464–465 total promotion budget, 460–462, 461 Web sites, generating traffic, 541 wholesaler decisions, 434 Promotional allowance, 352 Promotional pricing, 352, 354–355 Promotional products, 521 Promotion clutter, 519 Proposal solicitation, business buying, 204, 206 Prospecting, 515–516 Psychographic segmentations, 223, 226 Psychological factors, buyer behavior, 167, 177–181, 179, 180 728 Index Psychological pricing, 352, 353–354 Public goods, 633–634 Public policy direct and digital marketing, 554–557, 555, 556 distribution decisions and, 392–393 regulation and ethics, 111–114, 112 Public publicity, 490–493, 492 Public relations (PR), 422 Minicases and Applications, 495–498 overview of, 422, 490–493, 492 promotion mix, 447, 463 Publics, marketing environment and, 97–98 Public service activities, 493 Pull strategy, 463–464 Pulsing, advertising, 485–486 Purchase, buyer-readiness stages, 454–455 Purchase decision, defined, 185 See also Consumer buyer behavior Purchasing agents, 433 Purchasing offices, 433 Pure competition, 337 Purpose-driven marketing, 36 Push strategy, 463–464 Q Quality, product, 261–263, 262 Quality-price nichers, 585 Quantity discount, 352 Questionnaires, 146–147 Quotas, trade, 596 Quota sample, 146 R Race marketing environment, 104–105 subcultures, buyer behavior, 168–170, 169 target markets, 238 Rack jobbers, 432 Radio-frequency identification (RFID), 108 Railroad transport, 398 Rational appeal, message design, 455–456 Raw material exporting economies, 598 Raw materials industrial products, 260 www.downloadslide.net supply and use of, 107–108 Reach, advertising decisions, 482–483 Real Marketing ALDI, pricing strategy, 328–329 Amazon and P&G channel partnering, 391–392 brand extensions, 282–283 B-to-B salespeople, 513–514 B-to-B social marketing, 209–210 celebrity endorsers, 459–460 Chinese brands, localizing, 612–613 Chipotle, 109–110 content marketing, 450–451 Club Med customer intimacy, 578–579 crowdsourcing, 297–298 digitizing in-store experiences, 420–421 Dunkin' Donuts, average Joe, 227–228 dynamic pricing, 357–358 greening the supply chain, 395–396 HSBC, services, 271–272 IBM customer-oriented mission, 66–67 international marketing manners, 205–206 international pricing, 361–362 JetBlue, 40–41 Kodak, competitive analysis, 570–571 LEGO, product life-cycle, 311–312 Life is good, 44–45 mobile marketing, 549–550 P&G “Everyday Effect,” 499–500 public relations and Coca-Cola, 492–493 real-time marketing, 537–538 showrooming, 427–428 social media management, 118–119 Super Bowl ads, value of, 487–488 sustainability, Unilever, 638–639 Taco Bell, lifestyle and, 178–179 TOMS, sense-of-mission marketing, 643–644 Trader Joe's pricing strategy, 333–335, 334 word-of-mouth marketing, 173–174 Real-time marketing, 536, 537–538, 545–546 Rebates, 521 Receiver, communication process, 452–454, 453 Recruiting salespeople, 508–509 Redlining, 632 Reference groups, 171 Reference prices, 354 Regional differences, 103–104 Regional free trade zones, 597–598 Regional shopping center, 423 Relative market share, 69–70 Religion, views of, 116–117 Reminder advertising, 475–476 Resale price maintenance, 366 Research and development, 295– 296, 301–302 Resellers, 96, 98 Resources, natural industrial products, 260 supply and use of, 107–108 Response, communication process, 453–454 Retailer cooperatives, 415–417, 416 Retailers See also Marketing channels defined, 410 digitizing in-store experiences, 419, 420–421 green retailing, 429–430 logistics, management of, 393– 401, 394, 397, 398, 399 marketing decisions, 417–423, 418, 419, 422 Minicases and Applications, 438–441 place decisions, 423 price decisions, 421–422 product assortment and services, 418–421, 419 promotion decisions, 422 trends in, 424–430, 425, 426, 427, 429 types of, 411–417, 412, 413, 414, 415, 416 Retailers' branches, wholesalers, 431–433, 432 Retail price maintenance, 366 Return on investment (ROI), 83–84, 486–488, 487 Return-on-quality, 262 Reverse auctions, 208 Reverse logistics, 393 RFID tags, 394, 397, 428–429 Rich media ads, 541 Robinson-Patman Act (1936), 112, 366, 465 www.downloadslide.net Russia, 598 R-W-W (real, win, worth doing), 299 S Safety concerns government legislations, 111–114, 112 shoddy or unsafe products, 630–631 Sales assistants, 506 Sales branches, 433 Sales force See also Sales promotion compensation, 510 management of, 504–505, 510–511 performance evaluation, 512 promotions in, 519 recruitment of, 508–509 strategy and structure, 505–508, 507 supervision and motivation, 510–511 training of, 509–510 Sales offices, 433 Salesperson, defined, 502 Sales promotion See also Sales force advertising return on investment, 486–488, 487 consumer promotions, 520–522, 521 defined, 500 high-pressure selling, 630 Minicases and Applications, 527–530 overview of, 518–520, 519 personal selling, overview, 502–504, 503 personal selling, process for, 515–518 Procter & Gamble CBD teams, 500–501 program development, 524–525 promotion mix, 447, 463 sales contests, 524 social responsibility and, 465 social selling, 512–515, 513, 514 Sales quotas, 511 Sales reports, 512 Salutary products, 644–645 Same-for-less positioning, 245 Samples, 520 Sampling plans, research, 138, 146 Satisfaction, customer, 32, 37–41, 38, 39 Scanner fraud, 366 Scientific evidence messages, 481 Search engines, 539 Search-related ads, 541 Seasonal advertising, 485–486 Seasonal discount, 352 Secondary beliefs, 114 Secondary data, 137–138 Segmented marketing, 233–234, 433–435, 434 Segmented pricing, 352, 353 Selective attention, 180 Selective distortion, 180 Selective distribution, 388 Selective retention, 180 Self-concept, buying behavior and, 177 Self-service retailers, 411, 412 Selling marketing and, 29 process for, 515–518 selling agents, 433 selling concept, 34 Sender, communication process, 452–454, 453 Sense-of-mission marketing, 642, 643–644 Sequential product development, 304–305 Served market, 583 Service-firm-sponsored retailer franchise system, 383 Service inseparability, 269 Service intangibility, 269 Service nichers, 585 Service perishability, 269–270 Service products, 79 Service profit chain, 270 Service retailers, 413–414 Services attributes of, 261–263, 262 brands, overview of, 263–264 defining, 256–257 industrial products, 260 levels and classification of, 257–261, 258, 259, 260 marketing of, 268–274, 270, 271, 273 market offerings, 30–31 retailer decisions, 418–421, 419 wholesaler decisions, 434 Services differentiation, 242 Service variability, 269 Sexual orientation, 105 Shared media, 450 Shared projects, logistics, 400 Index 729 Shared value, 36 Share of customer, 46–47 Sherman Antitrust Act (1890), 112 Shopper marketing, 410 Shopping centers, 423 Shopping products, defined, 259 Short-run average cost curve, 329–330 Showrooming, 357, 359, 426–429, 427 Shwopping, 633 Simple random sample, 146 Slice of life messages, 480 Small businesses, marketing research in, 151–153 Social class, 169–170, 176 Social environment, marketing, 111–114, 112, 113 Social factors, buyer behavior, 167, 171–175, 172, 174 Social goods, 633–634 Socially responsible behavior, 112–113, 239–240 Socially responsible target marketing, 237–238 Social marketing, defined, 261 Social media See also Minicases and Applications advertising media decisions, 482–486, 483, 484 advertising strategy, 477–486, 478, 479, 481, 482, 483, 484 behavioral tracking, 143, 145–146 business buying behavior, 208–210 buyer behavior and, 172 buyers information searches, 184 competitive marketing intelligence, 134–135 consumers as marketers, 32 coupons, 520–521 customer engagement, 41–45, 42, 43 customer insights, 130–132 customer service, comments about, 273–274 Dell, social media listening center, 145–146 direct and digital marketing, overview, 534–536, 535 Facebook, 532–533 film series “Inside,” 450–451 hypertargeting, 239–240 integrated marketing communications, 447–452, 448, 450, 451 730 Index Social media (cont.) Intel “Inside” series, 199 JetBlue, 40–41 local marketing, 235–236 management of, 118–119 marketing mix, 78–79 netnography, 139 Nike, 62–63 online marketing research, 142–146, 143 online retailing, 424–429, 425, 427 overview, 538–540, 544–547, 545, 546 PepsiCo's use of, 129 personal communication channels, 457–458 promotion mix, 447, 463 public policy and ethics, 112, 154–156, 554–557, 555, 556 real-time marketing, 536, 537–538 retailer promotions, 422 sales force strategies, 506–507 sales promotions, 519 shopper marketing, 410–411 social selling, 512–515, 513, 514 steps for effective communication, 454–460, 455, 456, 457, 458, 460 trends in, 29, 48–50, 49 usage by generational group, 99–102 Web series, 169 wholesaler marketing, 434 Social responsibility consumerism, 635–636 cultural pollution, 634 deceptive practices, 629–630 environmentalism, 636–640, 637, 638 green retailing, 429–430 high-pressure selling, 630 marketing and society, 632–634, 633 marketing communications, 464–465 marketing decisions and the law, 641 marketing ethics, 645–648, 646, 647 Minicases and Applications, 650–653 other business, marketing impact on, 634–635 packaging decisions, 264–265 Patagonia, 624–626, 625 www.downloadslide.net planned obsolescence, 631–632 poor service to disadvantaged consumers, 632 product development and, 312–314 shoddy or unsafe products, 630–631 societal marketing concept, 35–37, 36, 627–628, 644–645 sustainable marketing, 627–628 trends in, 52–53 Social selling, 512–515, 513, 514 Social targeting, 145–146 Societal marketing concept, 35–37, 36, 627–628, 644–645 Society, views on, 116 Socioeconomic status, 106–107, 169–170, 176, 632 Soft drinks, concerns about, 631 SoLoMo (Social Local Mobile) marketing, 235–236 Solutions selling, 202 Source of message, 458–459 Spam, 542 Special event pricing, 354–355 Specialty advertising, 522 Specialty products, 259 Specialty stores, 411–412 Spokespeople, selection of, 458–459 Standardized global marketing, 607–609 Stimulus object, 181 Stock turn over, 438 Store brands, 278–280 Story of Stuff, The, 633 Straight product extension, 609–611, 610 Straight rebuy, 201–202 Strangers, customer relationships, 48 Strategic business units, 69–70 Strategic control, 83 Strategic group, 571–573, 572 Strategic planning, 64–72, 65, 67, 68, 69, 70, 71 See also Marketing strategy Stratified random sample, 146 Strip malls, 423 Style, product, 262, 307 Subcultures, 168–170, 169 Subliminal advertising, 180 Subsistence economies, 106, 598 Substitute products, 232 Suggested retail price, 366 Supermarkets, 412–413 Superstores, 412, 413–414 Suppliers, new product ideas from, 296 Supplies, industrial products, 260 Supply chain integrated logistics management, 399–401 management of, 393–401, 394, 397, 398, 399 marketing microenvironment, 95–96 partner relationship management, 45 supplier development, 199–200 supplier search, business buying, 204, 205–206 supplier selection, business buying, 204, 206 value delivery networks, 376–377 Survey research, 138, 139–147, 140, 141, 142, 143, 146 Sustainability vision, 640 Sustainable company, 648 Sustainable marketing business actions toward, 641–645, 642 Chipotle, 109–110 consumerism, 635–636 environmental sustainability, 108 greening the supply chain, 394, 395–396 green retailing, 429–430 individual consumers, impact on, 628–632, 629, 630, 631 overview of, 35–37, 36, 627–628 trends in, 52–53 SWOT analysis, 79–80 Symbols, use of, 242–243 Systematic new product development, 305–306 Systems selling, 202 T Tangible goods, 257 Target costing, 335–336 Target return pricing, 331–332 Tariffs, 596–598, 597 Taxes, Marketplace Fairness Act (2013), 438 Team-based new product development, 304–305 Team selling, 507–508 www.downloadslide.net Technical expertise messages, 481 Technical sales-support people, 506 Technology See also Product development business buying decisions, 203–204 customer relationship management (CRM), 148–149 customized marketing, 236–237 digitizing in-store experiences, 419, 420–421 e-procurement, 208, 210 information management, logistics, 399 integrated marketing communications, 447–452, 448, 450, 451 logistics, management of, 394, 396–399, 397, 398 marketing information systems (MIS), 132 netnography, 139 neuromarketing, 147 new product adoption, 186–188 online marketing research, 142–146, 143 online social networks, buyer behavior and, 172 personal connections and, 115 public policy and ethics, 154–156 retailing, trends in, 424–429, 425, 427 RFID tags, 397, 428–429 sales force automation systems, 511 technological environment, marketing and, 108, 110–111 Telecommuting, 104 Telemarketers, 506 Telemarketing, 552–553 Telephone Consumer Protection Act (1991), 112 Telephone interviews, 140–141 Territorial sales force structure, 505–508, 507 Testimonial evidence messages, 481 Test marketing, new products, 302–303 Third-party logistics (3PL) providers, 400–401 Three-day cooling-off rule, 465 Time-and-duty analysis, sales force, 510–511 Time-based pricing, 353 Tone, messages, 481 Total costs, 329–332, 330, 331 Total quality management (TQM), 262 Tracking online behavior, 143, 145–146 Trade associations, public relations, 490–493, 492 Trade discount, 352 Trade-in allowance, 352 Trade promotions, 519, 522 Trade shows, 524 Trade system, international, 596–598 Trading exchanges, 208 Training, sales force, 509–510 Trainship transport, 398 Transaction sites, Internet, 539 Transportation, types of, 397–398 Transportation costs, 355–356, 393–401, 394, 397, 398, 399 Truck transport, 398 Truck wholesalers, 432 True friends, customer relationships, 48 Two-part pricing, 351 U Undifferentiated marketing, 233 Uniform-delivered pricing, 356 Union of South American Nations (UNASUR), 598 Unique selling position (USP), 243 United States, logistics costs, 393 Unit pricing, 266 Universe, views of, 116–117 Unsought products, 259 Upper class, defined, 169–170 Uruguay Round, 597 Usage rate, market segments, 229 Users, buying decisions, 202–203 User status, market segments, 229 V Value-added pricing, 327 Value chain, partner relationship management, 72–74, 73 Value delivery network, 74, 376–377 Value disciplines, 577 Value innovation, 575 Value marketing, 106 Value proposition, 33–34, 244–246, 245, 300–301 See also Customer value Index 731 Value-retail centers, 415 Value selling, 518 Variable costs, 329–332, 330, 331 Variety-seeking buying behavior, 183 Vendor-managed inventory, 206, 399 Vertical conflict, 380–381 Vertical marketing systems, 381–383, 382 Vertical marketing systems (VMS), 382–383 Video, online advertising, 542–543 Viral marketing, 542–543 Viral video, 42 Virtual instructor-led training (VILT), 509 Virtual worlds, 172 Vision, company, 68 Voluntary chain retailers, 415–417, 416 W Wants, customer, 30, 31 Warehouse clubs, 414–415, 415 Warehouses See also Wholesalers Amazon's Vendor Flex program, 391–392 logistics, management of, 393– 401, 394, 397, 398, 399 Warranties, 355 Water transport, 398 Web wholesalers, 432 Wheeler-Lea Act (1938), 112 Whole-channel view, 614–615 Wholesale merchants, 432 Wholesalers See also Marketing channels marketing decisions, 433–435, 434 Minicases and Applications, 438–441 trends in wholesaling, 435 types of, 430–433, 431, 432 Women, roles of, 102–103 Word-of-mouth influence, 171–172, 457–458 Word-of-mouth marketing, 173–174 Working class, defined, 169–170 Workload approach, sales force, 506 World product groups, 615–616 World Trade Organization (WTO), 597 Z Zone pricing, 356 ... article /20 14/01 /21 /uk-unilever-results-idUKBREA0K09A20140 121 13 See Serena Ng, “Toilet-Tissue ‘Desheeting’ Shrinks Rolls, Plumps Margins,” Wall Street Journal, July 24 , 20 13, http://online.wsj.com/ news/articles/SB10001 424 127 887 323 97 120 4578 626 223 49448... America Plummet as Market Share Erodes,” Reuters, January 22 , 20 14, http://in.reuters.com/article /20 14/01 /22 /coach-results -idINL3N0KW3V 920 140 122 ; Ashley Lutz, “Coach Is Slipping Fast, and It Can All... the Bottom of the Pyramid,” Harvard Business Review, June 20 12, pp 120 – 125 ; Marketing Innovative Devices for the Base of the Pyramid,” Hystra Consulting, March 20 13, http://hystra.com /marketing- devices;