Ebook Principles of marketing (7/E): Part 2

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www.downloadslide.net CHAPTER ELEVEN Pricing strategies: additional considerations Chapter preview 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 To start, let’s examine the importance of pricing strategy in sport Our case looks at the pricing approach of Borussia Dortmund, a Bundesliga team with huge local support But Dortmund’s pricing strategy isn’t just about local fans — their pricing strategy recognises that real fans will travel long distances for the elusive goal of high-quality football combined with a fanatic atmosphere! Objective outline ➤ Objective Describe the major strategies for pricing new products New product pricing strategies (pp 314–315) ➤ Objective Explain how companies find a set of prices that maximises the profits from the total product mix Product mix pricing strategies (pp 315–317) ➤ Objective Discuss how companies adjust their prices to take into account different types of customers and situations Price adjustment strategies (pp 318–324) 312 ➤ Objective Discuss the key issues related to initiating and responding to price changes Price changes (pp 325–328) ➤ Objective Overview the social and legal issues that affect pricing decisions Public policy and pricing (pp 328–330) www.downloadslide.net Borussia Dortmund: supporting a fair price by Leif Brandes, Warwick Business School F ootball made in Germany is becoming increasingly popular — and not only among German supporters who might still be in a dream-like trance after Germany ’s victory in the 2014 FIFA World Cup final In addition, German football has also managed to attract some of its fiercest critics from the past: English football fans According to a recent BBC article, more than 1,000 supporters are leaving their country each weekend to attend Bundesliga matches in Germany The destination? Dortmund The motivation? Attending high-quality football matches for a reasonable price Located in the Ruhr area, Ballsportverein Borussia 09 e.V Dortmund (BVB) was founded in 1909, and is now one of the most successful clubs in the German Bundesliga In 2010 and 2011, the club won the national championships twice, and the national cup once In the following two years, the team finished the league second behind Bayern Munich, and reached the UEFA Champions League final in 2013 (where they lost to Bayern Munich in the first ever German final) This outstanding sporting performance also shows up in the team’s stock price: from 2010 to 2014, BVB’s stock market value increased by an impressive 280 per cent! However, Dortmund does not only attract spectators because of their sporting performance, but because of the unique culture of their fans, who create an incredible stadium atmosphere during the games Borussia Dortmund’s slogan ‘echte liebe’ means ‘true love’, and supporters stand by it Need an example? How about this: when Dortmund reached the 2013 Champions League final, the club received 502,567 applications for 24,042 tickets Not bad for a city with a total population of 580,956 The fans’ true love also shows up in attendance figures for Bundesliga home matches: with a stadium capacity of 80,645, Dortmund has an average attendance of 80,291, which makes it currently the highest in the world 25,000 of these spectators stand on the terrace during the games and form the ‘Gelbe Wand’ (‘yellow wall’) The atmosphere that these fans create is indeed legendary and even feared by other teams: when asked whether he was more scared of Dortmund’s players or manager, Bayern Munich and Germany midfielder Bastian Schweinsteiger responded: ‘It is the yellow wall that scares me the most.’ Eager to become part of this atmosphere in every home game, 30,000 people are currently on the club’s waiting list for one of the 55,000 season tickets With such a degree of excess demand, many football clubs around the world would be tempted to raise their prices — especially if current prices are as low as in Dortmund where season ticket holders pay, on average, just €11 to see a match But Dortmund is different Here, the club wants to ensure that fandom is affordable for their customers in the longer run To this end, the club recently refused caterers’ requests to increase the beer price for the first time in three years Similarly, Dortmund said no when their shirt manufacturer, Puma, urged them to increase the price of the kit for the first time in three years The club understands that fans are co-producers in creating an unforgettable match experience for every visitor, and place this experience before revenues For example, Dortmund not sell drinks in their corporate boxes during the game to make sure that fans spend the match time supporting the team by clapping and singing In a similar vein, Dortmund’s stadium announcer demands fans return to their seats in time for the start of the second half The club could allow fans to spend more money buying food and drink, but this would reduce product quality in the eyes of officials ‘We are a football club,’ says marketing director Carsten Cramer ‘If the football doesn't run properly, the rest of the business would not work The business is part of a train, but not the engine.’ Dortmund’s business philosophy is what makes the experience so affordable for every member of society, not just the rich and old Even the British fans are thrilled about the low cost: ‘We make a weekend of it With tickets, accommodation, transport, this trip will cost €82 When you think it cost me €64 to see the Arsenal game last season, you can see the benefits.’ The atmosphere at a Borussia Dortmund home game is considered one of the best in any football league Source: Alexandre Simoes/ Borussia Dortmund/Getty Images 313 www.downloadslide.net The high prices in England have changed the composition of fans who can afford to attend the matches Says a Dortmund fan: ‘When I was young, we all watched English football, the Kop and said “yes, that is what football is all about” Now, when we go to English football, the stadiums are quiet and we say that it is actually quite boring If you price people out, you change the atmosphere If you price people out, it isn't the people's game anymore.’ Another English fan agrees: ‘Prices are too high in England But here, everything is cheap It's a better experience for the fan and the atmosphere is incredible.’ Dortmund’s pricing approach, however, results in substantial forgone revenues that not every club around the world would be willing to bear Take Arsenal, London, for example Despite having 20,000 fewer seats, the amount of money the club generates on match days dwarfs that of the BVB In times when clubs generate a significant part of revenues from success in international competitions like the Champions League, a team’s spending power becomes an important competitive advantage So why does Dortmund continue leaving money on the table every single home match? The answer is simple: because the club is owned by the fans This particular ownership structure reflects on the Bundesliga’s ‘50+1’ rule, which requires clubs to be owned by their members Currently, all but three of the 18 clubs in the Bundesliga are owned or controlled by their members, with Wolfsburg, Leverkusen and Hoffenheim the exceptions It is thus clear that low ticket prices are likely to prevail in Germany as long as the fan is king — and many kings there are: according to a recent Deloitte report, the Bundesliga is now the number one European football league in terms of weekly attendance figures and profitability.1 Author comment Pricing new products can be 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 314 As the Borussia Dortmund story suggests, and as we learned in the previous chapter, pricing 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 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 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 much as €417 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 €278 for an 8GB model and €348 for the 16GB model to attract new buyers Within a year, it dropped prices again to €138 and €208, respectively, and you can now buy an 8GB model for €69 In this way, Apple skimmed the maximum amount of revenue from the various segments of the market www.downloadslide.net Chapter 11  Pricing strategies: additional considerations 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 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 African countries, Samsung recently unveiled an affordable yet full-function Samsung Galaxy Pocket model that sells for only about €95 with no contract The Samsung Pocket is designed and priced to encourage millions of first-time 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 €60 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 €250 in India, limiting Apple’s market share to only about per cent there Several conditions must be met for this lowprice strategy to work First, the market must be highly price sensitive so that a low price produces more market 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 price must maintain its low-price position Otherwise, the price advantage may be only temporary 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 maximises 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 product mix pricing situations summarised in Table 11.1: product line pricing, optional-product pricing, ­captive-product pricing, by-product pricing and product bundle pricing Product line 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 Cheaper but full-function mobile smartphones are ­facilitated through a ­market penetration strategy by Samsung Source: Adrian Pope/Getty Images Author comment Most individual products are 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 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 €133 for its junior skis, such as Fun Girl, to more than €985 for a pair from its Radical racing 315 www.downloadslide.net Part 3  Designing a customer value-driven strategy and mix Table 11.1  Product mix pricing 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 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 collection It also offers lines of Nordic and backcountry skis, snowboards and ski-related 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 different features For example, Sage offers an entire line of financial management software, including Sage One Accounts, Instant Accounts, Instant Accounts Plus, 50 Accounts and 50 Accounts Plus versions priced at around €14, €170, €275, €775 and €1,116, respectively Although it costs Sage no more to produce the CD containing the 50 Accounts Plus version than the CD containing the Sage One version, many buyers happily pay more to obtain additional features Sage’s task is to establish perceived value differences that support the price differences Optional-product pricing Optional-product pricing— The pricing of optional or accessory products along with a main product 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, 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 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 video-game console 316 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 mark-ups 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 When Sony first introduced its PlayStation3 (PS3) videogame console, priced at €347 and €417 for the regular and premium versions, respectively, it lost as much as €213 per unit sold Sony hoped to recoup the losses through the sales of more lucrative PS3 games 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 For example, despite industry-leading PS3 videogame sales, Sony has yet to earn back its losses on the PS3 console Even more, consumers trapped into buying expensive captive products may come to resent the brand that ensnared them Customers of single-cup coffee brewing systems such as Nescafé’s Dolce Gusto or Nestlé’s Nespresso 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 Costa www.downloadslide.net Chapter 11  Pricing strategies: additional considerations Coffee, Starbucks, Tchibo or Segafredo, 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 €40 per pound.4 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 single cup 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 Aqualand in the South of France 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 Producing products and services often generates by-products If the by-products 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, whisky can fuel you in more than one way:5 Viobuttanol is a biofuel made from whisky by-products, it can be used in ordinary cars, and is predicted to be the generation of biofuel which they estimate gives 30 per cent more output power than ethanol Scientists were provided with samples of whisky distilling by-products from Diageo’s Glenkinchie Distillery in East Lothian, which makes The Edinburgh Malt It uses the two main by-products of whisky production — pot ale, the liquid from the copper stills, and draff, the spent grains, as the basis for producing the butanol that can then be used as fuel The scientists at the university’s biofuel research centre have filed for a patent and intend to create a spin-out company to take the new fuel to market With 1.6 million litres of pot ale and 187,000 tonnes of draff produced by the malt whisky industry annually, the scientists believe there is real potential for biofuel to be available at local garage forecourts alongside traditional fuels Unlike ethanol, the nature of the innovative biofuel means that ordinary cars could use the more powerful fuel, instead of traditional petrol, without modification The product can also be used to make other green renewable biochemicals, such as acetone Product bundle pricing By-product pricing—Setting a price for by-products in order to make the main product’s price more competitive Product bundle pricing— Combining several products and offering the bundle at a reduced price By-product pricing: you can make biofuel from whisky byproducts Source: Tim Graham/Alamy Images 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 Body Shop (owned by L’Oréal) with 2,500 stores in 61 countries is offering ‘three-for’ deals on its soaps and lotions (such as buy three lotions and save €5, buy three save €10) And Sky, France Telecom, Virgin, Deutsche Telecom and British Telecom, 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 317 www.downloadslide.net Part 3  Designing a customer value-driven strategy and mix Author comment Setting the base price for 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? 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 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 summarised 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 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 per cent 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 programmes Segmented pricing Segmented pricing—Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs Companies will often adjust their basic prices to allow for differences in customers, products and locations In segmented pricing, the company sells a good or service at two or more prices, even though the difference in prices is not based on differences in costs Segmented pricing takes several forms Under customer-segment pricing, different customers pay different prices for the same product or service Museums and movie theatres, for example, Table 11.2  Price adjustments 318 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 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 differences in their costs For instance, a one-litre bottle (about 34 ounces) of Evian mineral water may cost €1 at your local supermarket But a five-ounce aerosol can of Evian Brumisateur Mineral Water Spray sells for a suggested retail price of €8 at beauty boutiques and spas The water is all from the same source in the French Alps, and the aerosol packaging costs little more than the plastic bottles Yet you pay about €0.03 an ounce for one form and €1.60 an ounce for the other 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 outof-state students, and theatres vary their seat prices because of audience preferences for certain locations Tickets for a Monday night performance of Les Misérables in London’s West End cost €17 for a seat in the upper circle, whereas seats in the stalls go for €88 Finally, using time-based pricing, a firm varies its price by the season, the month, the day, and even the hour For example, cinemas charge matinee pricing during the daytime, and resorts give weekend 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 Psychological pricing 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 Product-form pricing: Evian water in a one-litre bottle might cost you €0.03 an ounce at your local supermarket, whereas the same water might run to €1.60 an ounce when sold in five ounce aerosol cans as Evian Brumisateur Mineral Water Spray moisturiser Source: Photo by Jim Whitmer Psychological pricing— Pricing that considers the psychology of prices and not simply the economics; the price is used to say something about the product 319 www.downloadslide.net Part 3  Designing a customer value-driven strategy and mix Reference prices—Prices that buyers carry in their minds and refer to when they look at a given product the information or skill, price becomes an important quality signal For instance, who’s the better barrister or advocate, 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 Another aspect of psychological pricing is reference prices – prices that buyers carry in their minds and refer to when looking at a given product The reference price might be formed by noting current prices, remembering past prices or assessing the buying 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 still-high-priced models look more affordable by comparison For example, Ralph Lauren was selling a ‘Ricky’ alligator bag for €10,000, making its Tiffin Bag a steal at just €1,800 Williams-Sonoma once offered a fancy bread maker at the steep price of €220 However, it then added a €340 model The expensive model flopped but sales of the cheaper model doubled.6 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 the best deals Instead, they may rely on certain cues that 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 Lidl or Netto, where almost every price ends in In contrast, high-end retailers might favour 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 Even small differences in price can signal product differences For example, in a recent American 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 (around €211) The actual price difference was only $1 (€0.81), 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 it also raised stronger concerns about quality and risk.7 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 creates a soothing effect, whereas seven (7) is angular and creates a jarring effect.8 Promotional pricing Promotional pricing— Temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales 320 With promotional pricing, companies will temporarily price their products below list price – and sometimes even below cost – to create buying excitement and urgency Promotional pricing takes several forms A seller may simply offer discounts from normal prices 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 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 favourite of the auto industry www.downloadslide.net Chapter 11  Pricing strategies: additional considerations Promotional pricing, however, can have adverse effects Used too frequently and copied by competitors, price promotions can create ‘deal-prone’ customers who wait until brands go on sale before buying them Or, constantly reduced prices can erode a brand’s value in the eyes of customers Marketers sometimes become addicted to promotional pricing, especially in difficult 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 But companies must be careful to balance short-term sales incentives against long-term brand building One analyst advises:9 When times are tough, there’s a tendency to panic One of the first and most prevalent tactics that many companies try is an aggressive price cut Price trumps all At least, that’s how it feels these days: 20% off 30% off 50% off Buy one, get one free Whatever it is you’re selling, you’re offering it at a discount just to get customers in the door But aggressive pricing strategies can be risky business Companies should be very wary of risking their brands’ perceived quality by resorting to deep and frequent price cuts Some discounting is unavoidable in a tough economy, and consumers have come to expect it But marketers have to find ways to shore up their brand identity and brand equity during times of discount mayhem Promotional pricing, however, can have adverse effects During most holiday seasons, for 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 Companies must be careful to balance short-term sales incentives against long-term brand building Geographical pricing A company also must decide how to price its products for customers located in different parts of Europe 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 Madrid, Spain, and sells paper products to customers all over Europe 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 (Lisbon, Portugal), Customer B (Florence, Italy), and Customer C (Riga, Latvia) One option is for Peerless to ask each customer to pay the shipping cost from the Madrid 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 the customer, who pays the freight from the factory to the destination Because each customer picks up its own cost, supporters of FOB pricing feel that this is the fairest way to assess freight charges The disadvantage, however, is that Peerless will be a high-cost firm to distant customers Uniform-delivered pricing is the opposite of FOB pricing Here, the company charges the same price plus freight to all customers, regardless of their location The freight charge is set at the average freight cost Suppose this is €150 Uniform-delivered pricing therefore results in a higher charge to the Lisbon customer (who pays €150 freight instead of €100) and a lower charge to the Riga customer (who pays €150 instead of €250) Although the Lisbon customer would prefer to buy paper from another local paper company that uses FOB-origin pricing, Peerless has a better chance of winning over the Latvian customer in Riga 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 Uniform-delivered pricing—A geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their location 321 www.downloadslide.net Glossary channel, forging an effective global value delivery network Wholesaler—A firm engaged primarily in wholesaling activities Wholesaling—All the activities involved in selling goods and services to those buying for resale or business use Word-of-mouth influence—Personal communications about a product between target buyers and neighbours, friends, family members and associates Workload method—An approach to determining sales force size based on the workload required and the time available for selling Zone pricing—A geographical pricing strategy in which the company sets up two or more zones All customers within a zone pay the same total price; the more distant the zone, the higher the price 661 www.downloadslide.net INDEX accountability in advertising 452 and marketing ROI 55, 56 accounting departments internal data 107 ACORN and market segmentation 200 acquisitions 601 action programmes in marketing plans 53, 630–1 actual products 228 adaptability criteria and distribution channel design 354 adapted global marketing 576 Adidas 117 administered VMSs 348–9 adoption of new products 158–60 advertising 409, 437–54 agencies 452 allowances 491 brands 251–2 and buyer decisions 156 consumer-generated marketing 17–18 corporate image campaigns 230 and cultural pollution 600–1 and direct and digital marketing 504 E*TRADE 460–1 evaluating effectiveness of 438, 451–2 expenditure on 420, 451–2 feedback from 420 global expenditure on 437 high advertising costs 595 in history 437 impact of culture on 568 increasing expenditure on 645 and integrated marketing communications 410, 411, 412 international decisions 453–4 and the marketing environment 81, 92–3 and mature consumers 142 media selection 447–51 choosing among major media types 448–50 reach, frequency, impact and engagement 447–8 meercat campaign 434–7 message content 416–17 Nike 37, 81 and not-for-profit organisations 438 online 107, 508 and personal selling 468 662 and the promotion mix 422, 424 and public relations (PR) 454, 455 regulation of 107 setting the budget 438, 440–1 setting objectives 438–40 socially responsible 207–8, 425 specialities (promotional products) 489 strategy 438, 441–51 breaking through the clutter 441–2 consumer-generated content 446–7 creating the advertising message and brand content 441–7 global 453 merging advertising and entertainment 442–4 message execution 445–6 message strategy 444–5 subliminal 152 Tesco 407–8 see also television advertising advertising appeals 444–5 advertorials 92 affordable method setting the promotion budget 420 Africa distribution channels 355 market-penetration pricing 315 marketing environment 75, 78, 79, 84 age and consumer buyer behaviour 141, 142, 147–8 and life-cycle segmentation 196 structure of the world population 75 agencies advertising 452 and business regulation 89 agents (wholesalers) 395 aging populations 74, 75, 79 AIDA model of marketing communications 415 air freight 362 Alcatel 173–4 Aldi 45, 373–4 Alibaba 342–3 allowance pricing 318 allowances and trade promotions 491 ALS Foundation 412 alternative evaluation and buyer decisions 156–7 alternative marketing advertising in 449–50 Amazon 19, 127, 196, 260, 391–2, 502 channel partnering 369–1 and competitive advantage 541 Competitive Intelligence 108 deliveries 362 market challenger strategies 549 permission-based marketing 509 pricing policies 329 analysis managing the marketing function 51–2 see also environmental forces analytic ratios 641–2 Apple 108–9, 150, 200, 249, 263, 274, 314 competitive strategy 542, 545 iPad launch 454 Armstrong, Lance 419 artificial intelligence 88 Asos 220–3 aspiration gap 599 atmospheres 418–19 attack advertising 438–40 attitudes and consumer buyer behaviour 153 Auchen 402–3 audiences, identifying target 414 audiovisual materials and public relations (PR) 455 augmented products 228 Australia 79 awareness and effective marketing communication 414–15 baby boomers 75, 76, 142 bad competitors 541–2 barnacles 21 barter 568 base-point pricing 322 BBC study of social classes 143–4 behavioural segmentation 195, 198–200 behavioural targeting 118 beliefs and brand positioning 245 and consumer buyer behaviour 153 Ben & Jerry’s 26 benchmarking competitors 539 benefit segmentation 199 www.downloadslide.net INDEX bias and marketing research 122 big data warehouses 122–3 birth rates 74, 81 blogs 92, 145, 146, 510–11 blue-ocean strategy 542 BMW 3, 20, 227, 441 BOGOF 489 Boots UK 393 Borussia Dortmund 313–14 Boston Consulting Group (BCG) portfolio planning approach 42–3 brand extensions 249, 250–1 brand integration 443–4 branded entertainment 443–4 branding strategy 233, 243–52 brand equity 243–4 building strong brands 244–51 managing brands 251–2 Reckitt Benckiser 287–9 brands brand personalities 150 brand tribes and market segmentation 198 building strong brands 26, 27 and buying behaviour 154–5 and Generation Z 77 global branding and standardisation 576–7 humour in advertisements 416 life-cycle of 274, 275 low-price ‘fighter brands’ 328 loyalty 199–200 programmes 15 market offerings of brand experiences multi-branding at Volkswagen 191–3 multi-national brands and ethnic ­diversity 80–1 positioning 209–15 value propositions 9–10 Brazil distribution channels 355 marketing environment 74, 80, 82, 83, 566 break-even pricing 298–9 marketing by the numbers 634–7 bribery 611–12 BRIC countries 82–3, 201, 566 broadcast media 418 brokers 395 budgets advertising 438, 440–1 in marketing plans 53 sample marketing plan 631 setting the total promotion budget 420–1 bulk breaking 393 business analysis 269 business buyer behaviour 172–88 business buying process 170, 176–80 e-procurement and online purchasing 179–80 general need description 176, 177 order-routine specification 176, 178 participants 174–5 performance review 176, 177–8 problem recognition 176–7 product specification 176, 177 proposal solicitation 176, 177–8 supplier search 176, 177 supplier selection 176, 178 buying centre 173, 174–5 defining 170 major influences on 175–6 major types of buying situations 173–4 and market segmentation 201 business legislation 88–9 business markets 72, 168–72 advertising budgets 440 Alcatel 173–4 assessing competitors 539 buying decisions and the decision ­process 172 customisation 207 and innovation in channel designs 351 market structure and demand 171 nature of the buying unit 171–2 promotion mix strategies 423–4 sales force 468, 472 segmentation 200–1 supply managers 172 telemarketing 518 UPS 169–70, 173–4 business organisations services 237 business portfolio design 39, 41–4 business promotions 487, 491–2 business services 230 business-to-business selling and digital technology 480–1 butterflies 20, 21 buyer behaviour government markets 181–2 institutional markets 180–1 see also business buyer behaviour; ­consumer buyer behaviour buyer-readiness stages and effective marketing communication 414–15 buyers in the business buying process 174 and direct and digital marketing 504 and market targeting 203 and qualities of salespeople 483–4 reactions to price changes 326 rights of 602 buzz marketing 145, 418 by-product pricing 315, 316, 317 BzzAgent 418 Cadbury’s gorilla advertising 444–5 Cadillac 20 call plans 477 call reports 479 capital items 230 captive-product pricing 315, 316–17 car industry advertising budgets 441 Audi City 383 and the changing world economy 83 Lexus 115–16, 117, 202, 441, 451, 548–9 and sustainable marketing 86, 600 caring capitalism 90 Carrefour 392, 545 cash cows 42 cash rebates 320 cash refunds (rebates, cashback) 488–9 cash-and-carry wholesalers 394 casual research 110 catalogue marketing 517 category killers 378 Cath Kidston 309–11 cause-related marketing 90 celebrity endorsements 419 chain ratio method marketing by the numbers 638 change economic environment 23–5 marketing landscape 21–3 channel conflict 346, 350 channels see distribution channels charities and direct mail 516 chief marketing officers 54, 55 children and family buying decisions 147 and gender-oriented marketing strategies 78 Generation Z 76–7 privacy rights of 522–3 and target marketing 207–8 China advertising in 453 demographic environment 74, 75, 80 distribution channels 354–5, 358 economic environment 82–3 and the global marketplace 569, 570, 575, 576–7, 579, 580, 588–9 income distribution 84 political environment 89 rural-urban migration 82 Cirque du Soleil 542 Cisco Systems 179 cities mega-cities 80 rural-urban migration 82 ‘super-diverse’ 80 citizen-action publics 72 Climax Portable Machine Tools 473 close competitors 540–1 closed-ended questions 119, 120 closing sales 482, 484 club marketing programmes 15 cluster (area) samples 119 CMOs (chief marketing officers) 54, 55 co-branding 248–9 Coach 335–7 Coca-Cola 212, 233, 248 advertising 440, 448, 451, 453 and environmental sustainability 605 and the global marketplace 561–2, 570, 581 public relations and customer ­engagement 461–2 cognitive dissonance 157 663 www.downloadslide.net INDEX cold calling 467, 483 commercialisation 270–1 commission merchants 395 communication 8, 50, 51 adaptation and the global marketplace 579 nine elements of 413–14 technology-driven 91 see also integrated marketing ­communications (IMC) communication channels 417–19 communication effects of advertising campaigns 451 community shopping centres 385 companies business legislation and the protection of 88 consumer-generated marketing 17–18 coordinating marketing and sales 469 customer-driven 11 global firms 563–4 intranets and CRM systems 123–4 loyalty to 199–200 marketing department organisation 54 marketing research departments 109 in the marketing system marketing’s impact on other businesses 601–2 and the microenvironment 69, 70 positioning 209–15 strategic planning 38–44 sustainable 613 websites 179–80, 456 see also sales force comparative advertising 438–40, 453 compensating salespeople 476–7 competition and marketing plans 53 competition-based pricing 299–300 competitions sales promotion 489–90 competitive advantage 534–59 balancing customer and competitor ­orientations 551–2 basic competitive strategies 544–5 and brand equity 244 competitive intelligence systems 542–3 competitive marketing strategies 537, 543–51 competitor analysis 537–43 defining 536 differentiation and positioning strategies 210–12 Sodastream 535–6 competitive intelligence systems 542–3 competitive marketing intelligence 107–9 competitive marketing strategies 537, 543–51 approaches to 543–4 competitive positions 546 market challenger strategies 546, 549–50 market followers 546, 550 market leader strategies 546–9 664 competitive review sample marketing plan 624–6 competitive-parity method setting the promotion budget 421 competitor analysis 537–43 assessing competitors 537, 538–40 defining 537 identifying competitors 537–8 selecting competitors to attack or avoid 537, 540–2 competitor myopia 537–8 competitor-oriented companies 552 competitors and marketing information 106 marketing strategies 207 in the marketing system and the microenvironment 69, 70, 71–2 and new product development 264–5 reactions to price changes 326 responding to price changes by 327–8 complaints and buyer decision processes 157–8 complex buying behaviour 153–4 complex sales force structure 471 concentrated marketing 203, 204–5 concept development 267 concept testing 267–8 conferences 491 consumer buyer behaviour 139–67 buyer responses 139 buyer’s black box 139 characteristics affecting 140–53 cultural factors 140–4 personal factors 140, 144–50 psychological factors 140, 150–3 social factors 140, 144–7 decision process 155–60 for new products 158–60 different types of 153–5 Jack Wills 137–8, 149–50 model of 139 Porsche 165–7 and types of consumer product 229 consumer impressions/expressions in advertising 448 consumer markets 139 and the microenvironment 72 see also consumer buyer behaviour consumer product companies sales force 468 consumer products 228, 229 consumer promotions 486, 487–90 consumer protection and business legislation 88 consumer research consumer spending changes in 83–4, 386–7 consumer-generated advertising content 446–7 consumer-generated marketing 17–18 consumer-oriented marketing 607–8 consumerism 602–3 consumers and integrated marketing ­communications 409 and marketing in the marketing system marketing’s impact on individual 594–9 tracking online 118 content marketing 411 contests sales promotion 489–90 for salespeople or dealers 491 contextual advertising 508 continuous inventory replenishment 363 contract logistics 365 contract manufacturing 574 contractual VMSs 348 contribution margin 635 control, marketing 51, 54–5 controlled test markets 270 controls in marketing plans 53, 631 convenience 50, 51 convenience products 228–9 convenience samples 119 convenience stores 376, 378 conventional distribution channels 347 conviction and effective marketing communication 415 COPPA (Children’s Online Privacy ­Protection Act) 522–3 core cultural values 90 core customer value 227–8 corporate chains 380 corporate identity materials and public relations (PR) 455 corporate image advertising campaigns 230 corporate marketing ethics policies 610–11 corporate VMSs 347–8 cost leadership 544 cost-based pricing 294, 296–9 cost-plus pricing 298 Costco 379 costs and international pricing 324 coupons 488 Craigslist 542 creative concepts in advertising 444–5 creative selling 468 CRM see customer relationship management cross-functional/cross-company teams 364 cross-market segmentation 202 crowdsourcing 265–6 cultural differences and international marketing research 125–6 cultural environment 8, 90–2 and consumer wants and values 600 and the global marketplace 568–71 cultural factors and consumer buyer behaviour 140–4 and international market segmentation 202 cultural influences on business buyer behaviour 175 cultural pollution 600–1 cultural shifts 140 www.downloadslide.net INDEX currencies and the global marketplace 568 customer acquisition 55 customer cost 50, 51 customer engagement 45, 55–6 Coca-Cola 461–2 customer-engagement marketing 16–18, 27 and integrated marketing communications 413 and social media 512 customer equity 19–21, 56 customer insights and marketing information 104–6 customer intimacy 545 customer lifetime value 19, 20, 56 customer loyalty and retention 18, 19 customer management customer management organisations 54 customer relationship management 6, 13–18, 27, 122–4 engaging customers 16–18, 45 levels and tools 15 and partner relationship management 18, 27, 45–7 and personal selling 485–6 relationship management 8, 13–15, 27 customer relationships building 468 and competitive advantage 536–7 and customer equity 20–1 and marketing plans 622 and the marketing process and marketing ROI 55–6 understanding customer retention 56 customer sales force structure 470, 471 customer satisfaction 7, 11 and customer relationship management 14–15, 27 and delight 14–15, 27, 157 and the marketing 71–2 and marketing ROI 56 customer service product support services 231, 235 customer service departments 107 customer solution 50, 51 customer value 7, 11 analysis 540 building 224–58 capturing value from customers 5, 6, 18–21, 26, 27 and customer relationship management 13–14, 15, 26, 27 and the marketing 71–2 and marketing ROI 56 Uber 225–6 see also customer lifetime value customer value-based pricing 293–5 customer-centred logistics 358 customer-centred new product development 271–2 customer-driven marketing strategy 6, 9–12, 11, 26–7, 47–9, 190–223 Asos 220–3 differentiation and positioning 194, 209–15 Nike 37–8 Volkswagen 191–3, 194 see also segmentation; target marketing customer-managed relationships customer-oriented companies 552 customer-perceived value 13–14 customer-segment pricing 318–19 customer-solution focus and the sales force 469 customer-value marketing 608 customers and the four Cs of marketing 50–1 and marketing ROI 55–6 and the microenvironment 70, 72 and new product development 265 and the sales force, linking the company with customers 468–9 Danone 303–4 data collection CRM and mining big data 122–3 primary 111, 112–22 secondary 111–12 databases developing marketing information from internal 107 Daunt Books 300 deceptive practices in marketing 596 deceptive pricing 330 deciders in the business buying process 174 decline stage of the product life-cycle 274, 279 deficient products 609, 610 delight and customer satisfaction 14–15, 27, 157 demand and pricing 302–4 demand chains 341 demand curves 303–4 demand management demands of customers demographic environment 8, 73, 74–82 age structure of the world population 75 changing family structures 77–9 defining demography 74 generational differences 75–7 geographical shifts 79–82 world population growth 74 demographic segmentation 195, 196–7 department stores 376, 377, 381, 503 derived demand 171 descriptive research 110, 114 designing the business portfolio 39, 41–4 desirable products 609, 610 developing economies 82 differentiated (segmented) marketing 203, 204 differentiation decisions 26, 49 creating differentiated value for targeted segments 194, 209–15 retailers 381, 382 service differentiation 240, 241 digital marketing see direct and digital marketing digital and social media marketing 22, 506–16 mobile marketing 23, 514–16 see also social media digital technology 86 and advertising 442, 449 and business markets 179–80 catalogues 517 and the changing marketing landscape 21–2, 27 and competitive marketing intelligence 108 and integrated marketing communications 409–10, 411 and the marketing environment 8, 92–3 cultural values 91 generational differences 75, 76 obsolete products 598 and personal selling 480–2 and promotions 385, 397 and retailing 388–90 retail experiences 383 and transport 362 see also Internet; social media digital video ad convergence 412 direct and digital marketing 409, 502–6 bad competitors 541–2 benefits to buyers and sellers 504–5 direct-response television marketing 518–19 kiosk marketing 519 new direct marketing model 503 Ocado 530–1 and the promotion mix 423 public policy issues in 520–3 rapid growth of 503–4 telemarketing 472–3, 518 traditional direct marketing forms 516–17 direct investment and the global marketplace 575–6 direct-mail marketing 345, 449, 516–17 direct-response television marketing (DRTV) 518–19 disabilities, adults with 81 disadvantaged customers poor service to 598–9 discount stores 376, 378, 381 discounts 318, 320, 491 disintermediation 350–1 Disney 43, 87 display allowances 491 dissonance-reducing buying behaviour 154 distant competitors 540–1 distribution 8, 26, 27 high costs of 595 increasing coverage 645–6 marketing intermediaries and 71 and marketing plans 53, 630 and types of consumer product 229 wholesalers 397 distribution centres 360 665 www.downloadslide.net INDEX distribution channels 338–71 behaviour and organisation 345–51 channel design decisions 351–6 channel differentiation 211 channel levels number of 344–5 pricing across 329–30 pricing within 328–9 channel members adding value 343–4 managing and motivating 356–7 selecting 356 as customer-value delivery networks 351, 352 design decisions 351–6 and the global marketplace 580–1 management decisions 356–7 and marketing information 106 and marketing intermediaries 343–4, 353–4 nature and importance of 341–5 Netflix 339–40 public policy and distribution decisions 357–8 review of sample marketing plan 626–7 and RFID technology 87 supply chains 340–1 see also logistics distributors and new product development 264 diversification 44 diversity in markets ethnicity 80–1 migration 79–80 DMA (Direct Marketing Association) 503–4 dogs 42 Dove Campaign for Real Beauty 443 downsizing business portfolios 44 drop shippers 394 dropping products 279, 280 DRTV (direct-response television marketing) 518–19 dynamic pricing 318, 322–3 Dyson, James 232–3 e-mail marketing 508–9 e-procurement 179–80 eBay 503 Eco-Hub 480 economic communities 565–6 economic criteria and distribution channel design 354 economic environment 8, 23–5, 82–5 and business buyer behaviour 175 changes in consumer spending 83–4 changing world order 82–3 and the global marketplace 566–7 income distribution 84–5 and international market segmentation 201 and pricing 304–5 and world population growth 74 economic recession and advertising budgets 441 and baby boomers 75 666 and consumer spending 83–4 effects on customers 23–4 and frugality 600 and migration 79 and pricing 304–5 and sales promotion 487 economic situation and consumer buyer behaviour 148–9 EDI (electronic data interchange) 362–3 EDLP (everyday low pricing) 295, 384 elderly people Solus Singletons 78 electric vehicles 86 Electrolux 273 electronic data interchange (EDI) 362–3 emerging markets economic environment 82–3, 84, 566 observational research in 113 pricing in 324 emotional appeals and effective marketing communications 416 emotional influences on business buyers 175 employment see workforce encoding in the communication process 413, 414 engine downsizing 86 entrepreneurial marketing 543 environmental forces 8, 66–101 defining 69 oil price collapse 66, 67–9, 73 Primark 99–101 proactive and reactive approaches to 92–3 see also macroenvironment; microenvironment environmental influences on business buyers 175, 176 environmental sustainability portfolio 604–5 environmentalism 85–6, 603–6 green retailing 391–2 equity building customer equity 19–21 ESOMAR 127 ethical responsibility 27, 89–90, 610–13 and competitive marketing intelligence 109 in marketing research 126–7 see also social responsibility ethnic diversity in markets 80–1 ethnicity and family size 77 ethnographic research 112–13 European Patent Office 108 European Union (EU) 72 demographic environment 75, 79 Distance Selling Directive 425 and environmental sustainability 606 and international trade 564, 565–6 pricing regulations 328, 329, 330 and privacy issues in digital marketing 522 regulations 88 and small businesses 125 evaluation of sales promotion programmes 492 evaluation of alternatives and buyer decisions 155, 156–7 event marketing/sponsorship 490 events 419 everyday low pricing (EDLP) 295, 384 Evian 509–10 evidence management 237 excessive mark-ups 595–6 exchange controls 564 exchanges and relationships exclusive dealing 357 exclusive distribution 353–4, 357 exclusive territorial agreements 357 execution styles of advertising messages 445–6 exhibitions 491 expanding market share 548–9 expanding total demand 549–50 expectations of customers expense reports 479 experience curve 297–8 experiences products and services 227 experiential retailing 382–4 experimental research 114 exploratory research 110, 114, 120 exporting 572–3 external idea sources and new product development 264–5 extranets and B-to-B marketing 179 and marketing information 124 Eyetracker technology 120 Facebook 501–2, 503, 511 advertising 450, 501 Creative Labs 502 and customer-engagement marketing 16–17 and personal selling 479, 480 privacy issues 89 and social media marketing 22 factory outlets 376, 379 fads and product life-cycles 276 Fair Trade 92 families changing family structures 77–9 influences on consumer buyer behaviour 146–7 fashion and product life-cycles 276 feedback and marketing communication 414, 419–20 FiftyOne 523 financial analysis of marketing tactics 644–8 financial intermediaries 71 financial publics 72 fixed costs (overheads) 296 www.downloadslide.net INDEX flash sales sites 388 flows in distribution channels 345 fluctuating demand 171 FOB-origin pricing 321, 322 focus groups interviewing 114, 115–16 in Muslim countries 126 online 115–17 follow-up in the personal selling process 482, 484 food natural and organic products 92 Ford Figo ad fiasco 92–3 formulated marketing 543 four Cs of marketing 50–1 four Ps see integrated marketing; marketing mix (the four Ps) France, McDonald’s in 578 franchise organisations 348, 380–1 fraud in direct and digital marketing 520–1 free goods and trade promotions 491 free-trade zones, regional 565–6 freight-absorption pricing 322 frequency marketing programmes 15 Freud, Sigmund on drive/motivation 150–1 frontal attacks on competitors 549 frugality, trend towards 23–4, 84, 600 full-line forcing 357 full-service retailers 377 full-service wholesalers 394 functional organisation of marketing departments 54 gamers 141–2 games (sales promotion) 489 gatekeepers in the business buying process 174 GATT (General Agreement on Tariffs and Trade) 565 gay and lesbian consumers 81 GDP (Gross Domestic Product) and changing economies 82 and logistics costs 355 and remittances of migrant workers 80 and the services sector 237 GE (General Electric) 86, 186–8, 548 and personal selling 467, 470–1, 477–8, 481–2 gender and consumer buyer behaviour 146–7 gender-oriented marketing strategies 78 segmentation 196–7 General Agreement on Tariffs and Trade (GATT) 565 general need description and the business buying process 176, 177 Generation X 75 Generation Y 76 Generation Z 76–7 generational differences in the developed world 75–7 geographic segmentation 195–6 international markets 201 geographical organisation of the global marketplace 581 of marketing departments 54 geographical pricing 318, 321–2 geographical shifts in population and market diversity 79–82 Germany 79, 85 global firms 563–4 global marketing 560–89 Coca-Cola 561–2, 570 and the cultural environment 568–71 decisions to go global 571 and the economic environment 566–7 and environmentalism 606 and ethical responsibility 611–12 exporting 572–3 IKEA 587–9 and international trade 563, 564–7 market entry strategies 572–6 organisation 581–2 programme 576–81 selecting markets to enter 571–2 global organisations 581–2 globalisation 25, 83 goals setting company objectives and goals 39, 40–1 GoldieBlox 197 good competitors 541 good-value pricing 295 Google 246, 249, 261–2, 503, 515 Advanced Technology and Projects group 88 advertising 508 Code of Conduct 612–13 privacy policy 522 government agencies 24 government intervention and the natural environment 85 government markets 72 buying behaviour 181–2 government policy laws to pursue and enforce 89 government publics 72 governments advertising by 438 and consumerism 603 regulation of business 88–9 services 237 Greece demographic environment 79 green retailing 391–2 grocery retailing data mining 123 emerging markets 83 and logistics management 359 and wholesaling 393 see also supermarkets gross margin percentage 641 groups and consumer buyer behaviour 144 group interviewing 114, 115–16 growth stage of the product life-cycle 274, 277 growth-share matrix strategic business units (SBUs) 42–3 habitual buying behaviour 154–5 Halfords 198 harmful products 597–8 harvesting products 279 high-low pricing 384 high-pressure selling 596–7 Hill-Rom 471 Holland & Barrett 132–5 horizontal channel conflict 346 horizontal marketing systems 349 households, changing nature of 77 HSN (home shopping network) 530 humour in advertisements 416 hybrid vehicles 86 hydrogen fuel 86 IBM Gloal Asset Recovery Services 605 idea generation 263–6 idea screening 266–7 ideas market offerings ideas marketing 231 identifying competitors 537–8 identity theft 520–1 IKEA 89, 104, 172, 199, 202, 364 advertising 443, 445 and the global marketplace 587–9 image differentiation 211 IMC see integrated marketing communications (IMC) immersion groups 115–16 implementation 51, 52–3, 622 Intuit 271–2 incomes distribution 84–5 levels 82 segmentation 196 independent off-price retailers 376, 378–9 India advertising in 453 demographic environment 74, 75 distribution channels 354–5, 358 economic environment 82, 83 European Union (EU) 565 income distribution 84 marketing logistics 358 political environment 89 indirect attacks on competitors 549 indirect exporting 573 indirect marketing channels 345 individual consumers marketing’s impact on 594–9 individual differences in innovativeness 158–9 individual influences on business buyers 176 individual marketing 206–7 individual product and service decisions 231–5 667 www.downloadslide.net INDEX Indonesia 83 industrial distributors 394 industrial economies 82 industrial goods companies promotion mix strategies 423 industrial products 229–30 industrialising economies 566 inelastic demand 171 inequality and income distribution 84, 85 influencers in the business buying process 174 information market offerings 6–7, information search and buyer decision process 155, 156 informative advertising 438, 439 innovation management systems and new product development 273–4 innovative marketing 608 innovativeness individual differences in 158–9 inside sales force 472–3 Instagram 501–2 institutional markets buying behaviour 180–1 insurance companies and direct mail 516–17 integrated marketing 6, 13, 23, 26, 27, 47 developing an integrated marketing mix 49–51 and direct mail 516–17 integrated marketing communications (IMC) 409–32 need for 411–12 new marketing communications model 409–11 promotion mix 408–9, 421–4 integrating 424 Red Bull 429–32 and sales promotion programmes 492 socially responsible 424–5 steps in developing effective 414–20 view of the communication process 412–14 see also promotion integrated social media marketing 513 Intel Experience Stores 171 intensive distribution 353 interactive marketing 239, 240 interactive TV 518–19 intermarket segmentation 202 intermediaries see marketing intermediaries internal databases developing marketing information from 107 internal idea sources and new product development 264 internal marketing 239–40 internal publics 72 international advertising decisions 453–4 international distribution channels designing 354–6 international marketing research 125–6 668 international markets 72 segmenting 201–2 international migration 79–80 international pricing 318, 324 international product and services marketing 280–1 international retailing 392 international subsidiaries 581 international trade and global marketing 563, 564–7 Internet advertising 410, 411 and B-to-B marketing 179–80 blogs 92, 145, 146, 510–11 dating sites 551 and digital marketing 506–11 and distribution channels 342–3 e-mail marketing 508–9 fraud 520–1 global population with Internet access 506 and government markets 182 marketing research 115–18 commercial online databases 111 focus groups 115, 116–17 Netnography 113 online behavioural and social tracking 118 search engines 111 niche marketing 205 online advertising 107, 508, 541–2 online social networks 145–6 online training of salespeople 475–6 and personal selling 472–3, 479–82 pricing 322–3 and public relations (PR) 456 sales promotions 486 smart TVs 519 and socially responsible marketing 89, 208 transporting digital products 362 web wholesalers 395 see also digital technology; direct and digital marketing; online shopping; social media; websites interpersonal influences on business buyers 176 interpretive consumer research 151 interviews in marketing research 115–16 intranets and CRM systems 123–4 intrepreneurial marketing 543–4 inventory turnover rate 642 Iran culture and the global marketplace 570 ISMA (International Social Marketing ­Association) 231 Jack Wills 137–8, 149–50, 208 Japan aging population 74 effects of natural disasters 85 Jimmy Choo 513 John Lewis 257–9, 382, 389–90 joint ownership and the global marketplace 575 joint venturing 574 judgment samples 119 junk mail 517, 520 just-in-time logistics systems 361 Karachi 80 kiosk marketing 519 knowledge and effective marketing communication 415 Kowalski, Michael 25–6 labelling 231, 234–5 languages and international marketing research 125–6 large companies marketing department organisation 54 learning curve 297–8 learning theory and consumer buyer behaviour 152–3 legal factors and international market segmentation 202 legislation regulating business 88–9 LEGO 60–3, 78, 265, 272 Leonard, Annie 599 lesbian and gay consumers 81 less-for-much less positioning 214 Lexus 115, 115–16, 117, 202, 441, 451, 548–9 licensing brands 248 and global marketing 574 life expectancy 74 life quality and environmentalism 603 life-cycle and consumer buyer behaviour 144–5 product life-cycle strategies 262, 274–9 segmentation 196 lifestyle and consumer buyer behaviour 149–50 market segmentation by 197 lifestyle centres 386 liking and effective marketing communication 415 limited-service retailers 376–7 limited-service wholesalers 394 limited-time offers 320 line extensions (brands) 249–50 line filling/stretching (products) 235–6 LinkedIn 89, 479, 480 local marketing 206 local publics 72 location retailers and selection of 385–6 location-based pricing 319 logistics 358–65 costs and GDP 355, 358 goals of the logistics system 359–60 integrated management 363–5 www.downloadslide.net INDEX and international distribution channels 355 major functions of 360–3 information management 362–3 transport 361–2, 363 nature and importance of 358–9 physical distribution firms 71 logos 234 London and the ‘Ramadan rush’ 80 L’Oréal 46, 70–1 lovemarks 245 low-interest financing 320 loyalty cards 488 creating customer loyalty and retention 18, 19 and customer equity 20–1 loyalty status segmentation 199–200 programmes/cards 487 Lush 12 luxury market 84, 85, 197 pricing strategies 301–2 McDonald’s 346, 354, 355, 381, 391, 392 advertising 453 digital marketing 509, 510 and the global marketplace 577–8 and sustainable marketing 593, 594 macroenvironment 69, 73–92 cultural 8, 90–2 demographic 8, 73, 74–82 economic 8, 23–5, 82–5 and marketing information 106 and Microsoft 73–4 natural 8, 85–6 political and social 8, 88–90 technological 8, 86–8 Madison & Vine 442–3 magazine advertising 447, 449, 450, 600, 601 mail questionnaires 114, 116 mail-order wholesalers 395 management managing the marketing effort 51–5 orientations 10–12 management contracting and the global marketplace 574–5 management services wholesalers 394 manufacturers agents 395 branches and offices 395 contract manufacturing 574 trade promotions 486–7, 490–1 manufacturing-sponsored retailer franchise system 348 manufacturing-sponsored wholesaler franchise system 348 mark-up pricing 298 market challenger strategies 546, 549–50 market demand and pricing 302–4 market descriptions 53, 623–4 market development 44 market differentiation 49 market follower strategies 546, 550 market growth rate strategic business units (SBUs) 42 market information wholesalers 394 market leader strategies 546–9 expanding total demand 549–50 market management organisations 54 market nichers 546, 550–1 market offerings 6–7, 227 and competition-based pricing 299–300 market penetration 44 market pioneers 277 market positioning 49 market potential 638–9 market rollout 271 market segmentation see segmentation market share and advertising budgets 440 market targeting see target marketing market variability 207 market-oriented companies 552 market-oriented mission statements 40–1 market-penetration pricing 315 market-skimming pricing 314–15 marketing 3.0 organisations 12 marketing defining 4–5 marketing analysis 51–2 marketing by the numbers 632–49 marketing channels see distribution channels marketing communications mix 408–9 see also integrated marketing ­communications (IMC) marketing concept 11, 51, 592–3 and sustainable marketing 59, 593–4 marketing control 51, 54–5 marketing dashboards 55 marketing departments internal data 107 marketing environment see environmental forces marketing expenditure 52 marketing implementation 51, 52–3, 622 marketing information 102–35 analysing and using 122–4 assessing needs 106 and customer insights 104–6 developing 107–9 distributing and using 123–4 Holland & Barrett 133–5 Tiger 103–4 see also marketing research marketing information systems (MIS) 106 marketing intelligence competitive 107–9 marketing intermediaries and distribution channels 343–4, 353–4 and the microenvironment 69, 70, 71 marketing landscape changing 21–3, 27 marketing logistics see logistics marketing management defining and environmental forces 70, 92–3 legal issues facing 607 and marketing information 106, 121–2, 123 orientations 10–12 marketing mix (the four Ps) 13, 26 and consumer behaviour 139 and digital marketing 23 and market offerings 227 and marketing strategy 47–51, 52 modifying 279 and positioning strategy 215 and pricing 293, 301–2 retailers 381–6 wholesalers 396–7 marketing myopia marketing plans 51, 52, 621–31 contents of 53 and customer relationships 622 implementation and control 622 and the microenvironment 70 purpose and content of 621 role of research in 621–2 sample plan (Chill Beverage Company) 622–31 strategic 51 marketing process 5–21, 26 building customer relationships 6, 13–18 designing a customer value-driven marketing strategy 6, 9–12, 26 integrated marketing 6, 13 managing 51–4 understanding the marketplace and consumers 6–9, 27, 65–188 marketing research 109–22 and consumer privacy 126–7 defining 109 defining the problem 110 departments 109 developing the research plan 110–11 implementing the research plan 121 international 125–6 interpreting and reporting findings 121–2 and marketing plans 621–2 mis-use of research findings 127 objectives of research 110 process 109 research instruments 119–21 sample marketing plan 630 sampling plans 118–19, 125 secondary data collection 111–12 in small business and non-profit organisations 124–5 see also primary data collection marketing return on investment see ROI (marketing return on investment) marketing return on sales (ROS) 643 marketing services agencies 71 marketing strategy 47–51, 52 advertising 438, 441–51 branding 243–52 and culture 568–71 customer value-driven 6, 9–12, 26–7, 47–9 669 www.downloadslide.net INDEX marketing strategy (continued) development/statement 268 and integrated marketing communications 409 and marketing plans 52, 53 new product development 263 and pricing 301–2 retailers 381–6 sample marketing plan 629 service firms 238–42 wholesalers 395–7 see also competitive marketing strategies; customer-driven marketing strategy marketing tactics financial analysis of 644–8 marketing-sales liaisons 469 markets 8–9 defining elements in marketing system 8–9 markets-of-one marketing 206–7 Marks & Spencer 600 Maslow, Abraham 150 hierarchy of needs 151–2 mass customisation 206–7 MasterCard Conversation Suite 108 materialism 599–600 materials industrial products 229–30 matrix approaches to strategic planning 42–3 mature consumers 142 maturity stage of the product life-cycle 274, 278–9 measurable performance outcomes 55 Mecca Cola 80 mechanical research instruments 120–1 media advertising breaking through the clutter 441–2 merging advertising and entertainment 442–4 selecting 447–51 engagement 448 non-personal communication channels 418–19 publics 72 traditional media and integrated marketing communications 410 mega-cities 80 mega-retailers 388 membership groups 144 membership warehouses 379 merchant wholesalers 394 messages advertising strategy 444–7 marketing communications 415–17, 419 Mexico 80, 83 microenvironment 69, 70–2 companies 69, 70 competitors 69, 70, 71–2 customers 70, 72 marketing intermediaries 69, 70, 71 publics 69, 70, 72 suppliers 69, 70–1 670 micromarketing 205–6 Microsoft 73–4, 263, 269 advertising campaign 439 migration 79–80 rural-urban 82 Millennials 76 Mini (car) 3–4 MINTS (Mexico, Indonesia, Nigeria, Turkey) 83 MIS (marketing information systems) 106 mission statements 39–40, 40–1 mobile marketing 23, 514–16 modified rebuys 173 Moldova 80 money-off deals 489 monopolistic competition 303 Moonpig.com 205 more-for-less positioning 214 more-for-more positioning 213 more-for-the-same positioning 213–14 motivation and consumer buyer behaviour 150–2 motivating salespeople 477, 478 research 151 Mulcahy, Anne 469 multi-brands 249, 251 multi-channel distribution systems 349–50 multichannel marketing 506 multimodal transport 362 multinational corporations 563 multiple niching 551 multiple segmentation bases 200 multiples (corporate chains) 380 Muslim countries marketing research in 126 Muslim shoppers 80, 81 NAFTA (North American Free Trade ­Agreement) 566 names of brands 246 natural disasters 85 natural environment 8, 85–6 people’s views of nature 91–2 need recognition and buyer decision process 155–6 needs of customers and customer equity 20–1 market offerings and marketing channel design 352 and the societal marketing concept 11–12 neighbourhood shopping centres 385 net profit percentage 642 Netflix 339–40, 503, 572 Netnography research 113 neuromarketing 120–1 new brands 249, 251 new clean technology 604, 605 new product development 262, 263 managing 271–4 process 263–71 new product pricing strategies 314–15 new products buyer decision process for 158–60 failure of 599 new tasks 173 news stories and public relations (PR) 445 newspaper advertising 422, 449, 450 niche marketing 204–5 Nielsen Media Research 120 Nigeria 83 Nike 37–8, 49, 81, 145, 206–7, 249, 304, 511 in China 579 and innovative marketing 608 noise in the communication process 414 non-personal communication channels 418–19 non-price positions 301–2 non-probability samples 119 non-tariff trade barriers 565 not-for-profit organisations 5, 24, 237 and advertising 438 marketing research in 124–5 nutritional labelling 235 obesity and socially responsible marketing 597 objections handling in the personal selling process 484 objective-and-task method setting the promotion budget 421 objectives advertising 438–40 determining competitors’ objectives 538 and price decisions 301–2 sample marketing plan 628–9 setting company objectives and goals 39, 40–1 setting distribution channels objectives 352–3 observational research 112–13 Ocado 530–1 occasion segmentation 198–9 occupation and consumer buyer behaviour 148 off-invoice 491 off-list 491 off-price retailers 376, 378–9 oil price collapse impact of 66, 67–9 older consumers/workers 79 oligopolistic competition 303 OLPC (One Laptop Per Child) 591–2 one-to-one marketing 206–7 online sellers 472–3 online shopping 375, 388–90 and catalogues 517 Generation Z 76 John Lewis 258 open-ended questions 119, 120 operating control 54–5 operating expense percentage 642 operating ratios 641 operational excellence 544–5 opinion leaders and consumer buyer behaviour 144 www.downloadslide.net INDEX optional-product pricing 315, 316 order getters 468 order takers 467–8 order-routine specification and the business buying process 176, 178 organisation marketing 230 organisation of the marketing department 51, 54 organisational climate and sales force motivation 478 organisational influences on business buyers 175, 176 organisations market offerings organisational considerations in pricing 302 people’s views of 91 retail 380–1 outdoor advertising 449 outside sales force 472 outsourced logistics 365 overhead (fixed costs) 296 own-label brands 247 P&G 113, 265–6, 274, 279 advertising 446 assessing competitors 540 channel partnering 370–1 logistics management 363 personal selling 267, 465–6, 468, 474, 485 pricing policies 304–5, 326, 328 protecting market share 548 videos 509 packaging 50, 231, 234 deceptive 596 environmentally sustainable 86 Pakistan Karachi 80 partner relationship management (PRM) 18, 27, 45–7, 356–7 partnerships building logistics partnerships 364, 370–1 Patagonia 609 Pegasus Airlines 33–5 people differentiation 211 Pepsi 233 perceived obsolescence 598 percentage-of-sales method setting the promotion budget 421 perception and consumer buyer behaviour 152 performance evaluating sales force performance 478–9 marketing performance measures 640–2 performance quality 232 performance review and the business buying process 176, 177–8 permission-based marketing 509, 517 person marketing 230 personal communication channels 417–18 personal factors in consumer buyer behaviour 140, 144–50 personal interviewing 114 personal selling 409, 411, 466–86 managing customer relationships 485–6 nature of 467–8 process 482–6 approach 482, 483 closing 482, 484 follow-up 482, 484 handling objections 482, 484 pre-approach 482, 483 presentation and demonstration 482, 483–4 prospecting and qualifying 482–3 Procter & Gamble 465–6 and the promotion mix 422 sales force managing 470–9 role of 468–9 social selling 479–82 socially responsible 425 wholesalers 397 see also sales promotion personality and consumer buyer behaviour 150 and market segmentation 197 persuasive advertising 439 Philippines 80 phishing 520–1 physical distribution see logistics Pinterest 104, 450 pipelines 362 place and integrated marketing 13, 47, 50 market offerings retailing decisions 385–6 place marketing 230–1 planned obsolescence 598 pleasing products 609, 610 point-of-purchase (POP) promotions 489 Polish community in the UK 81 political environment 8, 88–90 and global marketplace 567–8 and international market segmentation 202 political factors and business buyer behaviour 175 pollution 85 pollution prevention 604 POP (point-of-purchase) promotions 489 pop-up stores 387 population world population growth 74 Porsche 164–7 positioning 26, 49, 52 brand positioning 244–6, 251–2 creating positions for targeted segments 194, 209–15 retailers 381, 382 wholesalers 396 positioning maps 209 positioning statements 214–15 post-purchase behaviour 155, 157–8 post-purchase dissonance 154 power centres 385–6 PR see public relations (PR) predatory pricing 328–9 preference and effective marketing communication 415 premiums 489 presentation in the selling process 482, 483–4 price defining 292 excessive mark-ups 595–6 and the global marketplace 579–80 impact of marketing on 594–5 integrated marketing 13, 26, 27, 49 marketing mix decision retailers 384–5 wholesalers 396 and types of consumer product 229 price discrimination 329–30 price elasticity of demand 304 price gougers 325 price packs 489 price skimming 314–15 price-fixing 328 price-off 491 pricing 8, 290–337 Borussia Dortmund 313–14 Cath Kidston 309–11 Coach 335–7 deceptive 596 decreasing price 646–7 and economic conditions 304–5 major pricing strategies 293–300 the market and demand 302–4 marketing by the numbers 632–4 marketing strategy, objectives and mix 301–2 new product pricing strategies 314–15 organisational considerations 302 price adjustment strategies 318–24 price changes 325–8 product mix pricing strategies 315–17 and public policy 328–30 retailers 376, 378–9 Ryanair 291–2 sample marketing plan 629 Primark 99–101 primary data collection 111, 112–22 contact methods 114–18 experimental research 114 observational research 112–13 online marketing research 115–18 survey research 112, 113–14 print media 418 privacy issues in direct and digital marketing 520–2 and marketing research 126–7 online 89 behavioural and social targeting 118 private brands 247 private goods and public goods 600 PRM (partner relationship management) 18, 27, 45–7, 356–7 671 www.downloadslide.net INDEX pro-forma profit-and-loss statement 639–40 probability samples 119 problem recognition and the business buying process 176–7 producers’ cooperatives 394 product adaptation 577–8 product assortment retailers 382–4 product bundle pricing 315, 316, 317 product characteristics influence on rate of adoption 159–60 product classes 274, 275 product concept 10 product development 44 product differentiation 211 product form pricing 319 product forms 274, 275 product invention 577, 578 product leadership 545 product liability 280 product life-cycle 262, 274–9 and advertising budgets 440 stages 274, 276–9 styles, fashions and fads 275–6 product lines decisions 235–6 extending 647–8 pricing 315–16 and types of retailer 377–8 product management organisation of marketing departments 54 product mix (portfolio) decisions 236–7 product mix pricing strategies 315–17 product placements branded entertainment 443–4 product positions 209 product quality 231–2 product reviews 53, 624 product safety 88 product sales force structure 470–1 product specification and the business buying process 176, 177 product stewardship 604, 605 product strategy sample marketing plan 629 product/market expansion grid 43–4 production costs at different levels of 296–7 costs as a function of production experience 297–8 production concept 10 productivity managing service productivity 242 products branding 233 and customer value 224–58 product and service decisions 231–7 Uber 225–6 defining 226 design 27 development features 232 free samples of 487–8 and the global marketplace 577–8 672 integrated marketing 13, 26, 49 international product and services marketing 280–1 labelling 231, 234–5 levels of 227–8 market offerings 6–7 new product development 262, 263–74 packaging 231, 234 planned obsolescence 598 product decisions and social responsibility 279–80 product and service classifications 228–31 services and experiences 227 shoddy, harmful or unsafe 597–8 and societal marketing 609–10 style and design 232–3 support services 231, 235 and wholesalers 396 profit maximisation and logistics management 360 profit-and-loss statements 639–41 profitability metrics 643–4 profitable growth 43 promotion 406–98 deceptive 596 and the global marketplace 578–80 high promotion costs 595 and integrated marketing 13, 26, 27, 47, 50, 406 marketing mix decision retailers 385 wholesalers 396–7 setting the total promotion budget 420–1 Tesco 407–8 and types of consumer product 229 and wholesalers 393 see also integrated marketing communications (IMC); personal selling; sales promotion promotion clutter 486 promotional pricing 318, 320–1 proposal solicitation and the business buying process 176, 177–8 prospecting 482–3 protecting market share 548 psychographic segmentation 195, 197–8 psychological factors in consumer buyer behaviour 140, 150–3 psychological pricing 318, 319–20 public goods and private goods 600 public policy and business regulation 88–9 issues in direct and digital marketing 520–3 and pricing 328–30 public relations (PR) 409, 454–6 Coca-Cola 461–2 events 419, 455 and integrated marketing communications 411, 412 major tools 455–6 and mission statements 40 and the promotion mix 423, 424 in retailing 385 role and impact of 454–5 public service activities and public relations (PR) 455 publics and marketing information 106 and the microenvironment 69, 70, 72 pull strategies (promotion) 423–4 purchase decisions 155, 157 and effective marketing communication 415 purchasing agents 395 purchasing officers 395 pure competition 302–3 pure monopoly 303 pure services 227 pure tangible goods 227 push money 491 push strategies (promotion) 423, 424 Qatar 80 qualitative Internet-based research 116 quality and price changes 325 product quality 231–2 service quality 240, 241–2 quality-price market nichers 551 quantitative Internet-based research 116, 117 question marks 42 questionnaires 114, 116, 119–20 and international marketing research 125–6 quotas quota samples 119 sales quotas 478 R&D (research and development) and competitors’ strategies 539 and global firms 563 high costs of 596 and new product development 264, 269 and the technological environment 87–8 rack jobbers 394 radio advertising 422, 447–8, 449 rail transport 361–2 random samples 119 Rank Group 112–13 Raspberry Pi computer 590, 591–2 rational appeals and effective marketing communications 416 raw materials exporting economies 566 industrial products 229 shortages of 85 real-time marketing 512 recession see economic recession Reckitt Benckiser 287–8, 581–2 recruitment of salespeople 474–5 recycling 606 Red Bull 429–32, 490, 550 reference groups 144 www.downloadslide.net INDEX reference prices 320 regional free-trade zones 565–6 regional shopping centres 385 regional shopping malls 385 relationships and exchanges see also customer relationships relative market share strategic business units (SBUs) 42 reminder advertising 439, 440 remittances of migrant workers 80 Renaissance Hotels 195–6 renewable resources 85 resellers 71, 72 retail convergence 388 retail (resale) price maintenance 330 retailer brands 247 retailer cooperatives 380 retailing 373–92 agents 395 Aldi 373–4 Auchen 402–3 and consumer buyer behaviour 148–9 discount retailing 352 distribution channels 347, 348, 350 and the economic environment 83, 84, 85 international 392 international product and service ­marketing 282 large retailers and large wholesalers 397 marketing decisions 381–6 new retail forms 387–8 non-store 388–90 and resellers 71 retailers’ branches and offices 395 and shopper marketing 375 trends and developments 386–92 types of retailers 375–81 return on investment see ROI (marketing return on investment) return on sales investment 479 reverse auctions 179 reverse innovation 280–1 RFID technology 87, 361, 390 rich media advertising 508 risk bearing wholesalers 394 Ritz-Carlton hotels 14–15, 209, 545 road transport 361 Rockwell Automation 485 ROI (marketing return on investment) 55–6, 452, 475 marketing by the numbers 642, 643–4 pricing 633 roles and status and consumer buyer behaviour 147 ROS (marketing return on sales) 643 Royal Mail 538 rural-urban migration 82 Russia 74, 79, 82, 83, 89 and the global marketplace 566, 567 Ryanair 291–2 Saga 196 sales assistants 472 sales branches/offices 395 sales contests 478 sales force evaluating performance 478–9 growth of jobs in sales 481 internal data 107 managing 470–9 outside and inside 472–3 promotions 486 recruiting and selecting 474–5 role of 468–9 sales promotion objectives 487 size 471–2 structure 470–1 team selling 473–4 see also salespeople sales force automation systems 478 sales meetings 478 sales and profit effects of advertising 451–2 sales promotion 409, 412, 486–92 defining 466 examples of 486 major promotion tools 487–92 objectives 486–7 programme development 492 and the promotion mix 422–3 promotional mix strategies 424 rapid growth of 486 sales quotas 478 sales reports 479 salespeople compensating 476–7 evaluating 478–9 high-pressure selling 596–7 motivating 477, 478 nature of 467–8 recruiting and selecting 474–5 sales contests 491 supervising 477–8 training 475–6 salutary products 609, 610 same-for-less positioning 214 samples of products 487–8 sampling plans 118–19 international marketing research 125 Samsung 236 SBUs (strategic business units) 41–3 scanner fraud 330 search engines 506 search-related advertising 508 seasonal advertising 450–1 secondary cultural values 90–2 secondary data collection in marketing research 111–12 segmentation 9, 26, 27, 48, 194–203 behavioural 195, 198–200 business markets 200–1 demographic 195, 196–7 geographic 195–6 international markets 201–2 multiple bases 200 psychographic 195, 197–8 requirements for effective 202–3 and retail marketing decisions 381, 382 wholesalers 396 segmented pricing 318–19 selective attention 152 selective distribution 354 selective retention 152 self-concept and consumer buyer behaviour 150 self-expression and cultural values 90–1 self-service retailers 376 sellers and direct and digital marketing 504–5 and the global marketplace 568 rights of 602 selling agents 395 selling concept 10–11 sense-of-mission marketing 608–9 sequential product development 272 service heroics 14–15 service nichers 551 service products 50 service profit chains 238–40 service retailers 378 service in retailing different types of retailers 376–7 erosion of differentiation in 381 services decision 382–4 service-firm sponsored retailer franchise system 248 services 237–42 defining 226 industrial products 230 inseparability 238 intangibility 237–8 international product and services marketing 280–1 levels of 227–8 market offerings 6–7 marketing strategies for 238–42 perishability 238 product and service decisions 231–7 product support services 231, 235 service design 27 service differentiation 211 variability 238 share of customer 19 shared value and the societal marketing concept 12 shopper marketing 375 shopping centres 385–6 shopping products 228, 229 showrooming 323, 389 silver economy 79 simple random samples 119 simulated test markets 270 singletons 77–8 small businesses marketing research in 124–5 smartphones 23, 514–15 Snap Surveys 116 Snoozebox 387 social agencies advertising 438 social class and consumer buyer behaviour 143–4 social criticisms of marketing 594–602 social environment 8, 88–90 673 www.downloadslide.net INDEX social factors and consumer buyer behaviour 140, 144–7 social marketing 231 social media advertising 449, 501 consumer-generated content 446–7 behavioural and social targeting 118 and business markets 180 and buyer decisions 156 and cultural values 91 and customer engagement 16–17, 17–18 and Generation X 75 and Generation Z 76 and Jack Wills 137 and the management of service quality 242 marketing 22–3, 511–14 integrated 513 and marketing research 118, 126 and Millennials 76 and Nike 37–8 online social networks 145–6 and personal selling 473, 479, 480, 481, 482 Pinterest 104 and privacy issues 89 and promotion 410 Tesco 407–8 and public relations (PR) 456 and retailing 385, 389 and sales promotion 488 and wholesalers 397 see also Facebook; Twitter social networks 144, 145–6 social responsibility 27, 88, 89–90, 590–620 and four-wheel drive cars 593 marketing communications 424–5 and the marketing concept 592–3 and product decisions 279–80 Raspberry Pi computer 590, 591–2 social criticisms of marketing 594–602 and target marketing 207–8 see also ethical responsibility; sustainable marketing social selling 479–82 social sharing capabilities of social media 512 social targeting 118 societal marketing 11–12, 24, 593, 594, 609–10 society government regulation and the protection of 88 impact of marketing on 599–602 Sodastream 535–6 solution selling 173 Spain demographic environment 79, 80 spam 509, 520 special-event pricing 320 specialty advertising items 491 specialty products 228, 229 specialty stores 376, 377 spirituality 92 674 sponsorship brand sponsorship 247–8 sponsorship event marketing/sponsorship 490 standardised global marketing 576 Starbucks 201, 487, 513–14, 515, 541, 576–7 stars 42 status and consumer buyer behaviour 147 stimulus-response model of buyer behaviour 139 stock management 360–1 stock turn rate 642 store brands 247 straight product extension 577 straight rebuys 173 strangers 21 strategic business units (SBUs) 41–3 strategic control 55 strategic groups 539 strategic planning 38–44, 47 designing the business portfolio 39, 41–4 and marketing 45 mission statements 39–40, 40–1 setting company objectives and goals 39, 40–1 and sustainable marketing 593, 594 see also marketing strategy stratified random samples 119 strip malls 385 strong competitors 539, 540 styles and product life-cycles 275 subcultures and consumer buyer behaviour 140–2 subliminal advertising 152 subsistence economies 82, 566 ‘super-diverse’ cities 80 supermarkets 376, 377 assessing competitors 540 Auchen 402–3 horizontal marketing systems in 349 ‘smart shelves’ 120 Tesco 195, 206, 247, 382, 407–8, 601 see also grocery retailing superstores 376, 378 supervising salespeople 477–8 suppliers and e-procurement 180 and market targeting 203 and the microenvironment 8, 69, 70–1 and new product development 264 supplier development 172 supplier search 176, 177 supplier selection 176, 178 supplies industrial products 230 supply chain management (SCM) 358, 359 integrated 363–5 see also logistics supply chains and the value delivery network 340–1 Survey Monkey 116 survey research 112, 113–14 sustainability vision 604, 605–6 sustainable marketing 12, 25–6, 27, 593–4 business actions towards 607–10 consumer actions to promote 602–7 and the marketing concept 59, 593–4 the sustainable company 613 Unilever 606, 618–20 sweepstakes 489 SWOT analysis 51–2, 53 sample marketing plan 627–8 symbols and image differentiation 211 systematic new product development 273–4 systems selling 173 Tajikastan 80 TalkTalk 127 target costing 301 target marketing 9, 26, 48–9, 194, 203–9 and advertising objectives 438 and effective marketing communication 414 evaluating market segments 203 and marketing information 106 and marketing plans 53 and retail marketing decisions 381, 382 selecting target market segments 203–4 and social media 512 socially responsible 207–8 strategies 52, 207 wholesalers 396 target return pricing 298–9, 633 tariffs 564 team selling 473–4 team-based new product development 272–3 technical support people 472 technology and business buyer behaviour 175 and international market segmentation 202 and logistics functions 360, 361 and marketing information 122–4 retail 390 technological environment 8, 86–8 see also digital technology telecommuting 82 telemarketing 472–3, 518 telephone interviewing 114, 116 telephone sales 472–3 television and cultural exchange 570 shopping channels 520 television advertising 410, 422 breaking through the clutter 441–2 direct-response 518–19 and event marketing 490 selecting 447–8, 448–9, 450 territorial agreements, exclusive 357 territorial sales force structure 470 Tesco 195, 206, 247, 382, 407–8, 601 test marketing 270 third-party (3PL) logistics 364–5 Tiger 103–4 www.downloadslide.net INDEX Time Warner MediaLab 120 time-and-duty analysis 477 time-based pricing 319 timing advertising media 450–1 and new product development 270, 271 total costs 296 total market demand 638 total quality management (TMQ) 232 trade promotions 486–7, 490–1 trade shows 491 trade-in allowances 318 trading exchanges 179 training salespeople 474–6 transaction sites 506 transport logistics 361–2, 363 wholesalers 394 truck wholesalers/jobbers 394 true friends 20, 21 TRUSTe 127, 522, 523 Turkey 83 Twitter advertising 450 and customer-engagement marketing 16, 17–18 and social media marketing 22, 23 two-part pricing 317 undifferentiated marketing 203, 204 unemployment and young people 78 unfair competitive marketing practices 601 uniform-delivered pricing 321 Unilever Sustainable Living Plan 606, 618–20 unit contribution 635 unit pricing 235 United Arab Emirates (UAE) 80 United Kingdom consumer spending 83–4 ethnic diversity in markets 81, 82 income distribution 84, 85 United States alternative media 449–50 American Marketing Association code of ethics 612 Americanisation and globalisation 569–71 demographic environment 75, 79, 80, 81 direct and digital marketing 503–4 disadvantaged customers 598 economic environment 83 kiosk marketing 519 universe, people’s views of the 92 unsought products 228, 229 UPS 169–70, 173 usage rate segmentation 199 users in the business buying process 174 user status segmentation 199 USP (unique selling proposition) 212 value 4, 5, brand value 243–4 capturing from customers 5, 6, 18–21, 27 customer value-driven marketing strategy 6, 9–12, 26–7 shared value, and the societal marketing concept 12 see also customer value value chain 45–7 value delivery networks 46–7 value disciplines 544–5 value marketing 84 value propositions 9, 13, 24, 26, 27, 209, 212–14 value selling 485–6 value-added pricing 295 value-led business 90 value-retail centres 379 values and brand positioning 245 cultural 90–2 variable costs 296 variety-seeking buying behaviour 155 vendor-managed inventory (VMI) 363 Venezuela 568 vertical channel conflict 346 vertical marketing systems (VMSs) 347–9 video games 141–2 videoconferencing and focus group interviewing 115 videos advertising 441, 442–3 online 509–10 see also YouTube VILT (virtual instructor-led training) 475 virtual reality 88 Vivago OY 43–4 VMI (vendor-managed inventory) 363 VMSs (vertical marketing systems) 347–9 Volkswagen 191–3, 194 voluntary chains 380 Waitrose 377, 382, 489 Walmart 602 wants of customers false wants and materialism 599–600 market offerings and the marketing concept 11 and the societal marketing concept 11–12 warehouse clubs 379 warehousing 360, 363, 393 water transportation inland waterways 362 WaterAid 24 weak competitors 539, 540 weak products 279 wearable technology 88 WebEx 82 websites and B-to-B marketing 179–80 and digital marketing 506–7 and public relations (PR) 456 Western economies incomes 82 Whole Foods Market 204, 247, 512 whole-channel view and the global marketplace 580–1 wholesale clubs 379 wholesale merchants 394 wholesaling 374, 393–7 distribution channels 347, 348, 350 functions of 393–4 large retailers and large wholesalers 397 marketing decisions 395–7 and resellers 71 and the retail market 307 trends in 397 types of wholesalers 394–5 women consumer buyer behaviour 146 fashion for Muslim women 81 in the workforce 78 word-of-mouth influence 144, 418 workforce migrant 79, 80 older workers 79 women 78 workload approach to sales force size 472 world markets see international markets world population growth 74 world product groups 581 World Trade Organisation (WTO) 565 written materials and public relations (PR) 455 written proposals in market research plans 110–11 WTO (World Trade Organisation) 565 Yogi Tea Company 91 youth market 78 YouTube 509 advertising 441, 442–3, 445, 448, 450 personal selling 479, 481 Zappos 239 Zara 347–8 zone pricing 322 ZoomSystems 519–20 675 ... costs Can I get it 70 percent off?’ New York Times, 27 April 20 09, www.nytimes.com /20 09/04 /28 /business/ media /28 adco.html?_r=1&scp=1&sq=Never %20 Mind %20 What %20 It %20 Costs&st=cse; and ‘Consumer... com/article /20 14/01 /22 /coach-results-idINL3N0KW3V 920 140 122 ; Ashley Lutz, ‘Coach is slipping fast, and it can all be traced to one major mistake’, Business Insider, 22 October 20 12, www.businessinsider.com/... rebound’, Reuters, 21 January 20 14, http://uk.reuters.com/article /20 14/01 /21 / uk-unilever-results-idUKBREA0K09A20140 121 12 See www.bbc.co.uk/news/magazine-13 725 050, accessed October 20 15 13.  See