Table Of Content

Core Concepts of Marketing This book is licensed under a Creative Commons Attribution 3.0 License Core Concepts of Marketing John Burnett Copyright © 2008 by John Burnett For any questions about this text, please email: [email protected] The Global Text Project is funded by the Jacobs Foundation, Zurich, Switzerland. This book is licensed under a C reative Commons Attribution 3.0 License This edition was scanned and converted to text using Optical Character Recognition. We are in the process of converting this edition into the Global Text Project standard format. When this is complete, a new edition will be posted on the Global Text Project website and will be available in a variety of formats upon request. Core concepts of marketing 2 A Global Text PREFACE Throughgoodeconomictimesandbad,marketingremainsthepivotalfunctioninanybusi ness. Determining and satisfying the needs ofcustomers through products thathave value and accessibility and whose features are clearly communicated is the general purpose of any business. Itisalsoafundamental definitionofmarketing.Thistextintroduces students to the marketing strategies and tools that practitioners use to market their products. BALANCED COVERAGE To emphasize how various marketii1g areas work together to create acohesive strategy, I define and explainthe various marketing areas and their comparative strengths and weak nesses, as well as stress how to best "mix" marketing tools in astrategic, integrated plan. Thebook beginswithadiscussion ofthe marketingplanningprocess,continueswithadis cussionofthepreliminarytasksofdevelopingtheplan,andconcludeswitbthetacticsavail ableto the marketingplanner.Thiscompletecoverageensuresthatstudentswilllearnhow toplan,execute, and evaluate amarketing program thatiseffectiveand efficientfrom start to finish. INTERNATIONAL ANDTECHNOLOGY COVERAGE Introducing Marketing recognizes theimpactoftheglobal community on marketingprac tices. Internationalimplications are discussed in Chapter6and are also integrated into the textthrough relevantexamples. Technology is altering many marketing practices. TheWorld Wide Web. databases, tracking devices, and marketsimulations are only afew examples ofthe ways technology has affected marketing strategies. Technology coverageis woven throughout the text, fea tures, and end-of-chaptermaterials ofthis book. (Note thatbecause technology is chang ing sorapidly, itisvirtuallyimpossibleforatextsuchasthistoremainabsolutelycurrent.) CURRENT EXAMPLES FROM ALL TYPES AND SIZES OF BUSINESS Thisbookdemonstrateshow companiesusemarketing. Specific examples appearnotonly intextdiscussions, butalso inthechapteropeners, theIntegratedMarketing and Newsline boxes,andtheendofchaptercases.Examplesandstoriesbringtheorytolife,demonstrating therelevanceofthereaaing.Theexamplesubjectsarevivid,current,andvaried.They range from Fortune500companiestosmaller, privatelyheldbusinesses.Thetextalsofocuses on internationalcompanies of all sizes. v vi PREFACE Learningis notalways aboutsuccessstories. Diagnosingproblems andfailures is an importantaspectofcriticalthinking, andexamplesofsuchareintroducedtochallengestu dents to learnfrom others' mistakes and bettermanage real-world problems. A CLEAR, EFFECTIVE ORGANIZATION Time is a precious commodity to instructors and students. Market feedback revealed that instructorswantanintroductorymarketingtextthat(1)coversthebasicswelland(2)omits unnecessary detail. Careful seleCtionoftopics, appropriatedepth ofcoverage, and concise writinghelpcdusmeetthosetwo objectives.Insteadofthetypical20-25chapters,thistext offers 10chapters ofmanageable length. HELPFUL PEDAGOGY We introduce several features to reinforce learning and help students build business skills thatthey can use ontnejob. Ourcomprenensive learning system enables students to mas termaterialsquicklyandthoroughly. Somefeatures ofthatsystemincludeopeningvignettes, performance-basec learning objectives, concept reviews, Integrated Marketing boxes, Newsline boxes, end-of-chapter projec~s, and end-ofchaptercases. SUPPLEMENTS OFTHE BOOK TheInstructor'sManualwithTestQuestionsprovideshelpfulteachingideas,advice oncoursedevelopment,sampleassignmentsandchapter-by-chaptertexthighlights, learning objectives, lecture outlines, class exercises and more. This manual also includesmultiplechoice,true/false,andshortanswertextquestionsforeachchapter. • PowerPoint Presentations are available for download via the text web site (www.wiley.com/college/burnett).Theseslidescontainlectureoutlinesforeachchap ter ofthe text. • Acomputerized versionoftheTestBank is availableto instructors for customiza tion oftheir exams. • Additional onlineresources are available toinstructorsvia thetextweb site.These resources include: In Practice exercise~ for each chapter, which relate directly to theWallStreet,Journalarticleson-line;aninteractiveStudyGuide;interactiveweb based cases; on-line chapter summaries; a ReadingRoom containing on-line arti clesfrom the WallStreetJournal, whichcorrelatewithkeyconceptsandtopicswithin eacJl chapterofthe text;and more. ACKNOWLEDGMENTS introducing Marketing, FirstEdition benefits from insights providedfrom marketing edu cators aroundthe country that carefully read and critiqued draft chapters. I am pleased to express my appreciation to the following colleagues for their contributions: PREFACE vii Joe K. Ballenger Stephen F.Austin StateTJniversity Dong Jin Lee State University ofNewYork (SUNY), Bingha;nton AmitBhatnagar University ofWisconsin, Milwaukee Thomas L. Ainscough College ofWilliam and Mary Jeffrey B. Schmidt University ofIllinois at'Jrbana-Champaign James V. Spiers Arizona State University I would also like to thank the Wiley team including my editor, JeffMarshall, marketing manager, Charity Robey, production editor, Norine Pigliucci, Cindy Rhoads, Dawn Stan ley,MikeBrennan, andElyseRiederfortheirhardworkandsupportofthisproject.Agreat deal ofthanks also goes to my friend and colleague, Pallab Paul, for his outstanding con tri~utionsto the web site. CONTENTS CHAPTERONE INTRODUCINGMARKETING 1 CHAPTERTHREE MARKETINGRESEARCH:ANAIDTO DECISIONMAKING 53 Introduction 2 Marketing: DefinitionandJustification 3 Introduction 53 DefiningMarketing 3 TheNatureand ImportanceofMarketingResearch 54 JustificationforStudy 6 WhatNeeds Researching in Marketing? 55 CharacteristicsofaMarketingOrganization 7 ProceduresandTechniquesin MarketingResearch 57 TheRoleofMarketingin the Firm: MakingaPreliminaryInvestigation 57 ABasisforClassification 12 CreatingtheResearch Design 59 StrategicComponentsofMarketing 17 ConductingtheResearch 67 Keys toMarketingSuccess 22 ProcessingtheData 67 Summary 24 TheValueofMarketingResearch 67 Marketer'sVocabulary 24 Summary 70 DiscussionQuestions 24 Marketer'sVocabulary 70 Project 25 DiscussionQuestions 71 CaseApplication: TheHogIsAliveandWell 25 Project 71 References 26 CaseApplication: ResearchSaves theDayatCase 72 References 72 CHAPTERTWO UNDERSTANDINGANDAPPROACHING THEMARKET 27 CHAPTER FOUR UNDERSTANDING BUYER BEHAVIOR 73 Introduction 28 DefiningtheMarket 28 Introduction 74 TheMarketIs People 28 BuyerBehaviorand Exchange 74 TheMarketIsaPlace 29 BuyerBehavioras ProblemSolving 75 TheMarketIs anEconomicEntity 29 TheDecisionProcess 76 Types ofMarkets 30 InfluencingFactorsofConsumerBehavior 82 ConsumerMarkets 30 OrganizationalBuyerBehavior 91 IndustrialMarkets 30 CharacteristicsofOrganizational Buying 91 Institutional Markets 30 StagesinOrganizationalBuying 93 ResellerMarkets 30 Summary 98 Approaching theMarket 31 Marketer'sVocabulary 98 The UndifferentiatedMarket(MarketAggregation) 32 Discussion Questions 99 ProductDifferentiation 33 Project 99 TheSegmentedMarket 34 CaseApplication: CustomerSatisfactionStillMatters 99 TheStrategyofMarketSegmentation 45 References 100 Summary 49 Marketer'sVocabulary 49 CHAPTER FIVE EXTERNALCONSIDERATIONSIN DiscussionQuestions 50 MARKETING 101 Project 51 Introduction 102 CaseApplication: RollingRock FindsIts Niche 51 ExternalFactors thatAffectPlanning 103 References 52 External Surprises 104 Competitors 104 ix X CONTENTS LegallEthicaJ Factors 106 ProductPlanningandStrategyFormulation 159 EconomiclPoliticalIssues 110 TheDetermination ofProductObjectives 159 Technology 113 The ProductPlan 160 SocialTrends 115 ProductStrategies 161 ForecastsoftheFuture 120 StrategiesforDevelopingNew Products 168 Summary 123 Step I: Generating NewProductIdeas 173 Marketer'sVocabulary 123 Step2: ScreeningProductDevelopmentIdeas 175 Discussion Questions 123 Step 3: BusinessAnalysis 176 Project 124 Step4: Technical andMarketingDevelopment 178 CaseApplication 124 Step 5: ManufacturingPlanning 178 References 125 Step 6: Marketing Planning 178 Step7: TestMarketing 178 CHAPTERSIX MARKETINGIN Step 8: Commercialization 180 GLOBALMARKETS 126 Summary 182 Introduction ~27 Marketer'sVocabulary 182 DefiningInternationalMarketing 127 DiscussionQuestions 183 Standardizationand Customization 128 Project 183 Reasonsfor Entering InternationalMarkets 129 CaseApplication: HersheyChocolate Milk 183 Reasons toAvoidInternationalMarkets 130 References 184 TheStagesofGoing International 130 Exporting 131 CHAPTEREIGHT COMMUNICATINGTO Licensing 131 MASSMARKETS 185 JointVentures 132 Introduction 186 DirectInvestment 132 TheRoleofIMC 187 U.S.Commercial Centers 132 PrimaryTasks 187 Trade Intermediaries 133 IntegratedMarketingCommunication 189 Alliances 133 TheMeaningofMarketingCommunication 189 TheInternationalMarketingPlan 133 The ObjectivesofMarketingCommunication 190 TheCorporateLevel 134 HowWeCommunicate 191 TheBusinessLevel 134 BasicElementsofCommunication 191 TheFunctionalLevel 136 TypesofCommunicationSystems 193 TheInternationalMarketingEnvironment 139 MarketingCommunications 194 TheSociaVCulturalEnvironment 139 DesigninganIMC Strategy 194 ThePoliticallLegalEnvironment 142 ThePromotionMix 197 TheTechnologicalEnvironment 144 TheCampaign 198 TheEconomicEnvironment 145 UnderstandingAdvertising 199 TheCompetitiveEnvironment 145 TheOrganizationofAdvertising 199 Summary 148 TheAdvertisingAgency 200 Marketer'sVocabulary 148 Developingthe CreativeStrategy 200 Discussion Questions 149 DevelopingtheMediaPlan 201 Project 149 BannerAdvertisements 202 CaseApplication: Unilever's Global Brand 149 SalesPromotionand PublicRelations 204 References 150 SalesPromotion: ALittleBitofEverything 204 CHAPTER SEVEN INTRODUCINGANDMANAGING THE Public Relations:TheArtofMaintainingGoodwill 207 PersonalSellingand theMarketing PRODUCT 151 CommunicationMix 211 Introduction 152 Strengthsand WeaknessesofPersonalSelling 218 Defining theProduct 152 TheSales ForceoftheFuture 219 ClassificationofProducts 154 Summary 222 ConsumerGoodsand Industrial Goods 155 Marketer'sVocabulary 222 GoodsVersusServices 157 DiscussionQuestions 223 CONTENTS xi Project 224 Organizingthe Channel 267 CaseApplication: TheMicrorecorder 224 ConventionalChannels 267 References 225 Vertical MarketingSystems 268 HorizontalChannel Systems 268 CHAPTERNINE PRICINGTHEPRODUCT 226 The ChannelManagementProcess 269 Introduction 227 AnalyzetheConsumer 269 PriceDefined: ThreeDifferentPerspectives 227 Establishthe Channel Objectives 270 TheCustomer'sViewofPrice 227 Specify DistributionTasks 270 Pricefrom aSocietalPerspective 228 EvaluateandSelect from ChannelAlternatives :!7~ Rational ManPricing:An Economic Perspective 229 EvaluatingChannelMemberPerfOlmance 272 Irrational ManPricing: FreedomRules 230 TheHumanAspectofDistribution 273 TheMarketer'sViewofPrice 230 Role 273 PricingObjectives 230 Communication 273 Developing aPricingStrategy 231 Conflict 274 NonpriceCompetition 232 Power 274 CompetitivePricing 234 Summary 276 New ProductPricing 235 Marketer's Vocabulary 276 PriceLines 237 Discussion Questions 277 PriceFlexibility 237 Project 277 DiscountsandAllowances 237 CaseApplication: ConnectingChannelMembers 277 PriceBundling 240 References 278 PsychologicalAspectsofPricing 240 PHOTO CREDITS 279 AlternativeApproaches toDeterminingPrice 242 Cost-OrientedPricing: Cost-Plusand Mark-Ups 242 INDEX 281 Break-EvenAnalysis 243 TargetRates ofReturn 244 Demand-OrientedPricing 244 Value-BasedPricing 244 TheFutureofPricing 246 Summary 248 Marketer'sVocabulary 248 Discussion Questions 248 Project 249 CaseApplication: UnitedTechtronics 249 References 250 CHAPTERTEN CHANNELCONCEPTS: DISTRIBUTING THEPRODUCT 252 Introduction 253 TheDualFunctionsofChannels 253 TheEvolutionoftheMarketingChannel 254 FlowsinMarketingChannels 255 Functionsofthe Channel 256 ChannelInstitutions: Capabilitiesand Limitations 257 Producerand Manufacturer 257 Retailing 258 Wholesaling 263 PhysicalDistribution 264