(BQ) Part 1 book Principles of marketing has contents: Company and marketing strategy - partnering to build customer relationships; analyzing the marketing environment; managing marketing information to gain customer insights; consumer markets and consumer buyer behavior; business markets and business buyer behavior
Find more at www.downloadslide.com Find more at www.downloadslide.com ™ MyMarketingLab MyMarketingLab is an online assessment and preparation solution that helps you actively study and prepare material for class Chapter-by-chapter activities, including study plans, focus on what you need to learn and to review in order to succeed Visit www.mymktlab.com to learn more Find more at www.downloadslide.com Principles of Marketing Find more at www.downloadslide.com This page intentionally left blank Find more at www.downloadslide.com Principles of Marketing Global Edition Philip Kotler Northwestern University Gary Armstrong University of North Carolina Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo 15e Find more at www.downloadslide.com Editor in Chief: Stephanie Wall Senior Acquisitions Editor, Global Edition: Steven Jackson Editorial Project Manager: Meeta Pendharkar Editorial Assistant: Jacob Garber Executive Marketing Manager: Anne Fahlgren Marketing Manager, International: Dean Erasmus Senior Managing Editor: Judy Leale Senior Production Project Manager: Karalyn Holland Senior Manufacturing Controller, Production, Global Edition: Trudy Kimber Creative Director: Blair Brown Senior Art Director: Janet Slowik Interior Designer: Karen Quigley Cover Designer: Jodi Notowitz Cover Art: © pio3 Senior Media Project Manager: Denise Vaughn Media Project Manager: Lisa Rinaldi Full-Service Project Management: Sudha Balasundaram Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within the text Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearson.com/uk © Pearson Education Limited 2014, 2012 The rights of Philip Kotler and Gary Armstrong to be identified as authors of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988 Authorised adaptation from the United States edition, entitled Principles of Marketing, 15th Edition, ISBN 978-0-13-325541-6 by Philip Kotler and Gary Armstrong, published by Pearson Education © 2014 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS All trademarks used herein are the property of their respective owners The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners Microsoft and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published as part of the services for any purpose All such documents and related graphics are provided “as is” without warranty of any kind Microsoft and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all warranties and conditions of merchantability, whether express, implied or statutory, fitness for a particular purpose, title and non-infringement In no event shall Microsoft and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from the services The documents and related graphics contained herein could include technical inaccuracies or typographical errors Changes are periodically added to the information herein Microsoft and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time Partial screen shots may be viewed in full within the software version specified Microsoft® and Windows® are registered trademarks of the Microsoft Corporation in the U.S.A and other countries This book is not sponsored or endorsed by or affiliated with the Microsoft Corporation ISBN-13: 978-0-273-78699-3 ISBN-10: 0-273-78699-7 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library 10 15 14 13 12 11 Typeset in 9/12.5 Palatino Lt Standard by S4Carlisle Publishing Services Printed and bound by Courier/Kendallville in United States of America The publisher’s policy is to use paper manufactured from sustainable forests Find more at www.downloadslide.com Dedication To Kathy, Betty, Mandy, Matt, KC, Keri, Delaney, Molly, Macy, and Ben; Nancy, Amy, Melissa, and Jessica Find more at www.downloadslide.com This page intentionally left blank Find more at www.downloadslide.com As a team, Philip Kotler and Gary Armstrong About The Authors provide a blend of skills uniquely suited to writing an introductory marketing text Professor Kotler is one of the world’s leading authorities on marketing Professor Armstrong is an award-winning teacher of undergraduate business students Together they make the complex world of marketing practical, approachable, and enjoyable Philip Kotler is S C Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management, Northwestern University He received his master’s degree from the University of Chicago and his PhD from M.I.T., both in economics Dr Kotler is author of Marketing Management (Pearson Prentice Hall), now in its fourteenth edition and the most widely used marketing textbook in graduate schools of business worldwide He has authored dozens of other successful books and has written more than 100 articles in leading journals He is the only three-time winner of the coveted Alpha Kappa Psi award for the best annual article in the Journal of Marketing Professor Kotler was named the first recipient of two major awards: the Distinguished Marketing Educator of the Year Award given by the American Marketing Association and the Philip Kotler Award for Excellence in Health Care Marketing presented by the Academy for Health Care Services Marketing His numerous other major honors include the Sales and Marketing Executives International Marketing Educator of the Year Award; the European Association of Marketing Consultants and Trainers Marketing Excellence Award; the Charles Coolidge Parlin Marketing Research Award; and the Paul D Converse Award, given by the American Marketing Association to honor “outstanding contributions to science in marketing.” A recent Forbes survey ranks Professor Kotler in the top 10 of the world’s most influential business thinkers In a recent Financial Times poll of 1,000 senior executives across the world, Professor Kotler was ranked as the fourth “most influential business writer/guru” of the twenty-first century And he recently topped BusinessEducators com’s “Management A-List of Academics,” based on outstanding achievements as well as Google global Web search interest Dr Kotler has served as chairman of the College on Marketing of the Institute of Management Sciences, a director of the American Marketing Association, and a trustee of the Marketing Science Institute He has consulted with many major U.S and international companies in the areas of marketing strategy and planning, marketing organization, and international marketing He has traveled and lectured extensively throughout Europe, Asia, and South America, advising companies and governments about global marketing practices and opportunities Gary Armstrong is Crist W Blackwell Distinguished Professor Emeritus of Undergraduate Education in the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill He holds undergraduate and master’s degrees in business from Wayne State University in Detroit, and he received his PhD in marketing from Northwestern University Dr. Armstrong has contributed numerous articles to leading business journals As a consultant and researcher, he has worked with many companies on marketing research, sales management, and marketing strategy But Professor Armstrong’s first love has always been teaching His long-held Blackwell Distinguished Professorship is the only permanently endowed professorship for distinguished undergraduate teaching at the University of North Carolina (UNC) at Chapel Hill He has been very active in the teaching and administration of Kenan-Flagler’s undergraduate program His 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ind more at www.downloadslide.com Chapter | New-Product Development and Product Life-Cycle Strategies 293 Commercialization Commercialization Introducing a new product into the market Test marketing gives management the information needed to make a final decision about whether to launch the new product If the company goes ahead with commercialization— introducing the new product into the market—it will face high costs For example, the company may need to build or rent a manufacturing facility And, in the case of a major new consumer product, it may spend hundreds of millions of dollars for advertising, sales promotion, and other marketing efforts in the first year For instance, to introduce its McCafé coffee in the United States, McDonald’s spent $100 million on an advertising blitz that spanned TV, print, radio, outdoor, the Internet, events, public relations, and sampling Similarly, Nokia spent $100 million on a campaign to launch its Ace smartphone in the highly competitive U.S mobile market.14 A company launching a new product must first decide on introduction timing If the new product will eat into the sales of other company products, the introduction may be delayed If the product can be improved further, or if the economy is down, the company may wait until the following year to launch it However, if competitors are ready to introduce their own competing products, the company may push to introduce its new product sooner Next, the company must decide where to launch the new product—in a single location, a region, the national market, or the international market Some companies may quickly introduce new models into the full national market Companies with international distribution systems may introduce new products through swift global rollouts General Motors did this with its global car, the new Malibu, which will be sold in 100 countries on six continents The global Malibu launch was backed by live, high-definition video run on Facebook and various mobile media, timed to coincide with major auto shows in both Shanghai and New York The car’s designers and marketers were available in a live Web session to field consumer questions posted on Twitter or Chevrolet’s Facebook page.15 Managing New-Product Development The new-product development process shown in Figure 9.1 highlights the important activities needed to find, develop, and introduce new products However, new-product development involves more than just going through a set of steps Companies must take a holistic approach to managing this process Successful new-product development requires a customer-centered, team-based, and systematic effort Customer-Centered New-Product Development Customer-centered new-product development New-product development that focuses on finding new ways to solve customer problems and create more customersatisfying experiences Above all else, new-product development must be customer centered When looking for and developing new products, companies often rely too heavily on technical research in their R&D laboratories But like everything else in marketing, successful new-product development begins with a thorough understanding of what consumers need and value Customer-centered new-product development focuses on finding new ways to solve customer problems and create more customer-satisfying experiences One study found that the most successful new products are ones that are differentiated, solve major customer problems, and offer a compelling customer value proposition Another study showed that companies that directly engage their customers in the newproduct innovation process had twice the return on assets and triple the growth in operating income of firms that did not Thus, customer involvement has a positive effect on the new-product development process and product success.16 For example, whereas the consumer package goods industry’s new-product success rate is only about 15 to 20 percent, P&G’s success rate is over 50 percent According to former P&G CEO A G Lafley, the most important factor in this success is understanding what consumers want In the past, says Lafley, P&G tried to push new products down to consumers rather than first understanding their needs But now, P&G employs an immersion process it calls “Living It,” in which researchers go so far as to live with shoppers for several days at a time to envision product ideas based directly on consumer needs P&Gers also hang out in stores for similar insights, a process they call “Working It.” No other company in the world has invested more in consumer research than P&G Each year, the company interacts with more than million customers in 100 countries It conducts more than Find more at www.downloadslide.com 294 Part | Designing a Customer-Driven Strategy and Mix 20,000 research studies every year and invests more than $400 million annually in what it calls “consumer understanding.” “We figured out how to keep the consumer at the center of all our decisions,” concludes Lafley “As a result, we don’t go far wrong.”17 Thus, today’s innovative companies get out of the research lab and connect with customers in search of fresh ways to meet customer needs Customer-centered new-product development begins and ends with understanding customers and involving them in the process Team-Based New-Product Development Team-based new-product development New-product development in which various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness Good new-product development also requires a total-company, cross-functional effort Some companies organize their new-product development process into the orderly sequence of steps shown in Figure 9.1, starting with idea generation and ending with commercialization Under this sequential product development approach, one company department works individually to complete its stage of the process before passing the new product along to the next department and stage This orderly, step-by-step process can help bring control to complex and risky projects But it can also be dangerously slow In fastchanging, highly competitive markets, such slow-but-sure product development can result in product failures, lost sales and profits, and crumbling market positions To get their new products to market more quickly, many companies use a teambased new-product development approach Under this approach, company departments work closely together in cross-functional teams, overlapping the steps in the product development process to save time and increase effectiveness Instead of passing the new product from department to department, the company assembles a team of people from various departments that stays with the new product from start to finish Such teams usually include people from the marketing, finance, design, manufacturing, and legal departments and even supplier and customer companies In the sequential process, a bottleneck at one phase can seriously slow an entire project In the team-based approach, however, if one area hits snags, it works to resolve them while the team moves on The team-based approach does have some limitations, however For example, it sometimes creates more organizational tension and confusion than the more orderly sequential approach However, in rapidly changing industries facing increasingly shorter product life cycles, the rewards of fast and flexible product development far exceed the risks Companies that combine a customer-centered approach with team-based new-product development gain a big competitive edge by getting the right new products to market faster Systematic New-Product Development Finally, the new-product development process should be holistic and systematic rather than compartmentalized and haphazard Otherwise, few new ideas will surface, and many good ideas will sputter and die To avoid these problems, a company can install an innovation management system to collect, review, evaluate, and manage new-product ideas The company can appoint a respected senior person to be its innovation manager It can set up Web-based idea management software and encourage all company stakeholders— employees, suppliers, distributors, dealers—to become involved in finding and developing new products It can assign a cross-functional innovation management committee to evaluate proposed new-product ideas and help bring good ideas to market It can also create recognition programs to reward those who contribute the best ideas The innovation management system approach yields two favorable outcomes First, it helps create an innovation-oriented company culture It shows that top management supports, encourages, and rewards innovation Second, it will yield a larger number of newproduct ideas, among which will be found some especially good ones The good new ideas will be more systematically developed, producing more new-product successes No longer will good ideas wither for the lack of a sounding board or a senior product advocate Thus, new-product success requires more than simply thinking up a few good ideas, turning them into products, and finding customers for them It requires a holistic approach for finding new ways to create valued customer experiences, from generating and screening new-product ideas to creating and rolling out want-satisfying products to customers More than this, successful new-product development requires a whole-company commitment At companies known for their new-product prowess, such as Google, Apple, ... Part Part 10 11 12 13 14 15 16 17 Part 18 19 20 Appendix Appendix Appendix Defining Marketing and the Marketing Process 24 Marketing: Creating and Capturing Customer Value 24 Company and Marketing. .. Exercises 18 2 | Marketing Ethics 95 | Marketing by the Numbers 96 | Applications and Cases 16 1 | Marketing Technology 16 1 | Video Case: Ecoist 96 | Company Case: Xerox 11 8 Marketing Ethics 16 1 | Marketing. .. Direct Marketing Model 516 Growth and Benefits of Direct Marketing 517 Benefits to Buyers 517 | Benefits to Sellers 518 Customer Databases and Direct Marketing 518 Forms of Direct Marketing 5 21 Deciding