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CONTENTS PREFACE xviii SECTION ONE THE ROLE OF MARKETING IN DEVELOPING SUCCESSFUL BUSINESS STRATEGIES 1 1 The Marketing Management Process 2 RedEnvelope?Marketing Upscale Gifts Online 2 A New Mission and Strategy 2 The New Marketing Plan 2 The Results 4 Marketing Challenges Addressed in Chapter 1 4 Why Are Marketing Decisions Important? 4 The Importance of the Top Line 5 Marketing Creates Value by Facilitating Exchange Relationships 5 What Factors Are Necessary for a Successful Exchange Relationship? 6 1. Who Markets and Who Buys? The Parties in an Exchange? 6 2. Customer Needs and Wants 7 3. What Gets Exchanged? Products and Services 10 4. How Exchanges Create Value 10 5. Defining a Market 12 What Does Effective Marketing Practice Look Like? 13 Marketing Management?A Definition 13 Integrating Marketing Plans with the Company?s Strategies and Resources 15 Market Opportunity Analysis 16 Formulating Strategic Marketing Programs 17 Formulating Strategic Marketing Programs for Specific Situations 18 Implementation and Control of the Marketing Program 19 The Marketing Plan?a Blueprint for Action 20 Who Does What? 21 Marketing Institutions 21 Who Pays the Cost of Marketing Activities?and Are They Worth It? 22 Room for Improvement in Marketing Efficiency 23 The Role of the Marketing Decision Maker 24 Some Recent Developments Affecting Marketing Management 24 Globalization 25 Increased Importance of Service 25 Information Technology 25 Relationships across Functions and Firms 27 Take-aways 27 Endnotes 28 2 The Marketing Implications of Corporate and Business Strategies 30 IBM Switches Strategies 30 Technology Changes and Competitor Actions Require a Shift in Strategy 30 A New Corporate Strategy 32 New Business and Marketing Strategies 32 The Bottom Line 33 Marketing Challenges Addressed in Chapter 2 33 What Is Marketing?s Role in Formulating and Implementing Strategies? 34 Market-Oriented Management 35 Does Being Market-Oriented Pay? 36 Factors That Mediate Marketing?s Strategic Role 37 Three Levels of Strategy: Similar Components, but Different Issues 39 mul63706_fm.qxd 1/2/04 2:03 PM Page ix x CONTENTS Strategy: A Definition 39 The Components of Strategy 40 The Hierarchy of Strategies 40 Corporate Strategy 40 Business-Level Strategy 42 Marketing Strategy 42 The Marketing Implications of Corporate Strategy Decisions 42 Corporate Scope?Defining the Firm?s Mission 43 Corporate Objectives 46 Corporate Growth Strategies 48 Allocating Corporate Resources 51 The Marketing Implications of Business-Unit Strategy Decisions 56 How Should Strategic Business Units Be Designed? 58 The Business Unit?s Objectives 58 The Business Unit?s Competitive Strategy 58 Take-aways 60 Endnotes 61 Appendix 2.1 The American Marketing Association?s Code of Ethics 63 SECTION TWO MARKET OPPORTUNITY ANALYSIS 65 3 Environmental Analysis: Tools to Identify Attractive Markets 66 The Changing American Menswear Market 66 The Impact of Macroenvironmental Trends 66 What?s Next? Will Suits Come Back? 67 Marketing Challenges Addressed in Chapter 3 67 Swimming Upstream or Downstream: An Important Strategic Choice 68 Macro Trend Analysis: A Framework for Assessing Market Attractiveness 68 The Demographic Environment 69 The Sociocultural Environment 70 The Economic Environment 72 The Political/Legal Environment 73 The Technological Environment 75 The Physical Environment 77 Environmental Analysis Guides Marketing Decision Making 78 Prioritizing Trend Categories 78 Information Sources and Outputs of Macro Trend Analysis 79 Anticipating and Responding to Environmental Change 80 Take-aways 81 Endnotes 81 4 Industry Analysis and Competitive Advantage 84 The Cellular Telephone Business: Increasing Competition in a Growing Market 84 Cell Phone Manufacturing 84 Cell Phone Service Providers 84 Marketing Challenges Addressed in Chapter 4 85 Markets and Industries: What?s the Difference? 85 Defining Markets and Industries: Levels of Analysis 86 Challenges in Market and Industry Definition 86 Your Market Is Attractive: What About Your Industry? 88 Driving Forces 88 Porter?s Five Competitive Forces 91 A Five Forces Analysis of the Cellular Phone Service Industry 91 Changing Competition and Industry Evolution 91 Critical Success Factors: Who Wins within an Industry? 92 Industry Analysis Locally: How Intense Is the Immediate Competition? 93 Rate of Diffusion of Innovations: Another Factor in Assessing Opportunity Attractiveness 94 The Adoption Process 94 The Rate of Adoption 94 Adopter Categories 95 Implications of Diffusion of Innovation Theory for Forecasting Sales of New Products and New Firms 96 Sustaining Competitive Advantage over the Product Life Cycle 97 mul63706_fm.qxd 1/2/04 12:36 PM Page x CONTENTS xi Life-Cycle Curves 97 Market and Competitive Implications of Product Life-Cycle Stages 99 Strategic Implications and Limitations of the Product Life Cycle 102 Take-aways 103 Endnotes 103 5 Understanding Consumer Buying Behavior 106 Cruise Ships?Not Just for Grandma and Grandpa Anymore 106 Savvy Marketing Helped Fuel Industry Growth 106 Future Challenges 107 Marketing Challenges Addressed in Chapter 5 108 The Psychological Importance of the Purchase Affects the Decision-Making Process 109 How Do Consumers Make High-Involvement Purchase Decisions? 109 Low-Involvement Purchase Decisions 116 Understanding the Target Consumer?s Level of Involvement Enables Better Marketing Decisions 117 Why People Buy Different Things?the Marketing Implications of Psychological and Personal Influences 119 Perception and Memory 119 Needs and Attitudes 121 Demographics and Lifestyle 123 Why People Buy Different Things: Part 2?the Marketing Implications of Social Influences 125 Culture 125 Social Class 126 Reference Groups 126 The Family 127 Take-aways 127 Endnotes 128 6 Understanding Organizational Markets and Buying Behavior 130 Exel: Building Long-Term Relationships with Organizational Buyers 130 Delivering Printing Systems in the Netherlands 130 Marketing Challenges Addressed in Chapter 6 131 Who Is the Customer? 132 A Comparison of Organizational versus Consumer Markets 132 What Do the Unique Characteristics of Organizational Markets Imply for Marketing Programs? 134 The Organizational Customer Is Usually a Group of Individuals 134 How Organizational Members Make Purchase Decisions 137 Types of Buying Situations 137 The Purchase Decision-Making Process 138 The Marketing Implications of Different Organizational Purchasing Situations 144 Purchasing Processes in Government Markets 145 Selling Different Kinds of Goods and Services to Organizations Requires Different Marketing Programs 146 Raw Materials 146 Component Materials and Parts 148 Installations 148 Accessory Equipment 149 Operating Supplies 149 Business Services 149 Take-aways 150 Endnotes 150 7 Measuring Market Opportunities: Forecasting and Market Research 152 African Communications Group: Bringing Modern Telecommunications to Tanzania 152 Market Analysis 152 Industry Analysis 153 Consumer Needs and Behavior 153 The Business Idea 153 Determining Market Potential and Preparing a Sales Forecast 153 Marketing Challenges Addressed in Chapter 7 154 Every Forecast Is Wrong! 154 mul63706_fm.qxd 1/2/04 12:36 PM Page xi xii CONTENTS A Forecaster?s Toolkit: ATool for Every Forecasting Setting 155 Statistical and Other Quantitative Methods 156 Observation 157 Surveys 157 Analogy 158 Judgment 159 Market Tests 159 Mathematics Entailed in Forecasting 160 Cautions and Caveats in Forecasting 161 Keys to Good Forecasting 161 Biases in Forecasting 162 Why Data? Why Marketing Research? 162 Market Knowledge Systems: Charting a Path toward Competitive Advantage 163 Internal Records Systems 163 Marketing Databases 164 Competitive Intelligence Systems 166 Client Contact and Salesforce Automation Systems 166 Other Kinds of Market Knowledge Systems 168 Marketing Research Resolves Specific Marketing Challenges 168 Step l: Identify the Managerial Problem and Establish Research Objectives 168 Step 2: Determine the Data Sources and Types of Data Required 169 Step 3: Design the Research 172 Step 4: Collect the Data 174 Step 5: Analyze the Data 175 Step 6: Report the Results to the Decision Maker 175 What Users of Marketing Research Should Ask 176 Rudimentary Competence: Are We There Yet? 176 Take-aways 177 Endnotes 177 8 Market Segmentation and Target Marketing 180 Blue Ribbon Sports Targets Distance Runners 180 The Unique Needs of Distance Runners 180 The Waffle Revolution 180 Launching and Expanding the Nike Brand 181 World Cup 2002 181 Marketing Challenges Addressed in Chapter 8 181 Why Do Market Segmentation and Target Marketing Make Sense? 182 Most Markets Are Heterogeneous 182 Today?s Market Realities Often Make Segmentation Imperative 183 How Are Market Segments Best Defined? 184 Demographic Descriptors 184 Geographic Descriptors 186 Geodemographic Descriptors 186 Behavioral Descriptors 187 Innovative Segmentation: A Key to Marketing Breakthroughs 189 Choosing Attractive Market Segments: A Five-Step Process 190 Step 1: Select Market-Attractiveness and Competitive-Position Factors 191 Step 2: Weight Each Factor 193 Step 3: Rate Segments on Each Factor, Plot Results on Matrices 193 Step 4: Project Future Position for Each Segment 194 Step 5: Choose Segments to Target, Allocate Resources 195 Different Targeting Strategies Suit Different Opportunities 196 Niche-Market Strategy 197 Mass-Market Strategy 197 Growth-Market Strategy 197 Global Market Segmentation 197 Take-aways 198 Endnotes 198 9 Differentiation and Positioning 200 Repositioning French Wine 200 Marketing Challenges Addressed in Chapter 9 200 Differentiation: One Key to Customer Preference and Competitive Advantage 201 Differentiation in Business Strategies 202 Differentiation among Goods and Services 203 Physical Positioning 203 Limitations of Physical Positioning 204 mul63706_fm.qxd 1/2/04 12:36 PM Page xii CONTENTS xiii Perceptual Positioning 204 Levers Marketers Can Use to Establish Positioning 205 Preparing the Foundation for Marketing Strategies: The Positioning Process 206 Step 1: Identify a Relevant Set of Competitive Products 207 Step 2: Identify Determinant Attributes 207 Step 3: Collect Data about Customers? Perceptions for Products in the Competitive Set 209 Step 4: Analyze the Current Positions of Products in the Competitive Set 209 Step 5: Determine Customers? Most Preferred Combination of Attributes 211 Step 6: Consider Fit of Possible Positions with Customer Needs and Segment Attractiveness 212 Step 7: Write Positioning Statement or Value Proposition to Guide Development of Marketing Strategy 214 Analytical Tools for Positioning Decision Making 216 Take-aways 218 Endnotes 218 SECTION THREE DEVELOPING STRATEGIC MARKETING PROGRAMS 219 10 Business Strategies: A Foundation for Marketing Program Decisions 220 Business Strategies and Marketing Programs at 3M 220 Marketing Challenges Addressed in Chapter 10 221 How Do Businesses Compete? 223 Generic Business-Level Competitive Strategies 223 Do the Same Competitive Strategies Work for Single-Business Firms and Start-ups? 225 Do the Same Competitive Strategies Work for Service Businesses? 226 Do the Same Competitive Strategies Work for Global Competitors? 227 Will the Internet Change Everything? 228 How Do Competitive Strategies Differ from One Another? 229 Differences in Scope 229 Differences in Goals and Objectives 230 Differences in Resource Deployments 231 Differences in Sources of Synergy 231 Deciding When a Strategy Is Appropriate: The Fit between Business Strategies and the Environment 232 Appropriate Conditions for a Prospector Strategy 232 Appropriate Conditions for an Analyzer Strategy 234 Appropriate Conditions for a Defender Strategy 234 How Different Business Strategies Influence Marketing Decisions 235 Product Policies 237 Pricing Policies 238 Distribution Policies 238 Promotion Policies 238 What If the Best Marketing Program for a Product Does Not Fit the Business?s Competitive Strategy? 239 Take-aways 240 Endnotes 241 11 Product Decisions 242 Product Decisions in a Services Business 242 Marketing Challenges Addressed in Chapter 11 243 Product Design Decisions for Competitive Advantage 244 Goods and Services: Are the Product Decisions the Same? 245 Product Quality and Features Decisions 247 Branding Decisions 248 Packaging Decisions 251 Services Decisions and Warranties 251 Managing Product Lines for Customer Appeal and Profit Performance 252 Line Filling 253 Line Stretching 254 Line Extensions 254 mul63706_fm.qxd 1/2/04 12:36 PM Page xiii xiv CONTENTS Brand Extensions 254 Dropping Products 255 Product Systems 255 New Product Development Process Decisions 255 The Importance of New Products to Long-Term Profitability 256 New Product Success and Failure 256 Organizing for New Product Development 257 Key Decisions in the New Product Development Process 258 Take-aways 265 Endnotes 266 12 Pricing Decisions 268 Ryanair: Low Prices but High Profits?So Far 268 Marketing Challenges Addressed in Chapter 12 269 A Process for Making Pricing Decisions 270 Strategic Pricing Objectives 270 Estimating Demand and Perceived Value 274 Estimating Costs 276 Analyzing Competitors? Costs and Prices 278 Methods Managers Use to Determine an Appropriate Price Level 278 Cost-Oriented Methods 278 Competition-Oriented Methods 281 Customer-Oriented Methods 283 Deciding on a Price Structure: Adapting Prices to Market Variations 286 Geographic Adjustments 286 Global Adjustments 287 Discounts and Allowances 288 Differential Pricing 290 Product-Line Pricing Adjustments 291 Take-aways 292 Endnotes 293 13 Distribution Channel Decisions 294 Changing Global Retail Trends Send a ?Get Well? Greeting to Hallmark 294 Marketing Challenges Addressed in Chapter 13 295 Why Do Multifirm Marketing Channels Exist? 296 Designing Distribution Channels: What Are the Objectives to Be Accomplished? 297 Product Availability 299 Meeting Customers? Service Requirements 299 Promotional Effort 300 Market Information 300 Cost-Effectiveness 300 Flexibility 301 Designing Distribution Channels: What Kinds of Institutions Might Be Included? 301 Merchant Wholesalers 301 Agent Middlemen 302 Retailers 302 Nonstore Retailing 303 Channel Design Alternatives 305 Alternative Consumer Goods Channels 305 Alternative Industrial Goods Channels 306 Which Alternative Is Best? It Depends on the Firm?s Objectives and Resources 307 Availability and the Satisfaction of Customer Service Requirements 307 Promotional Effort, Market Information, and Postsale Service Objectives 309 Cost-Effectiveness 310 Flexibility 312 Multichannel Distribution 312 Channel Design for Global Markets 313 Market Entry Strategies 313 Channel Alternatives 314 Channel Design for Services 315 Channel Management Decisions 316 Vertical Marketing Systems 316 Sources of Channel Power 319 Channel Control Strategies 320 Trade Promotions?Incentives for Motivating Channel Members 321 Channel Conflicts and Resolution Strategies 323 Take-aways 324 Endnotes 325 14 Integrated Promotion Decisions 326 Integrated Marketing Communication Takes on Some New Twists 326 Larazade 326 mul63706_fm.qxd 1/2/04 12:36 PM Page xiv CONTENTS xv Big Brother 326 What?s Next? 327 Marketing Challenges Addressed in Chapter 14 327 The Promotion Mix: A Communication Toolkit 328 Developing an Integrated Marketing Communications Plan 329 Step 1: Define the Audience(s) to Be Targeted 329 Step 2: Set the Promotional Objectives 330 Step 3: Set the Promotion Budget 331 Step 4: Design the Promotion Mix 332 Step 5: Evaluate the Results 333 The Nitty-Gritty of Promotional Decision Making 334 Making Advertising Decisions 334 Making Personal Selling Decisions 344 Organizing the Sales Effort in Global Markets 344 Customer Service: An Increasingly Important Personal Selling Function 346 Using Technology to Enhance Sales and Customer Service Performance 347 Recruiting, Training, and Compensating Salespeople: The Keys to Salesforce Performance 348 Evaluating and Controlling Salesforce Performance to Ensure Delivery of Budgeted Results 348 Making Sales Promotion Decisions 349 Making Public Relations Decisions 350 Take-aways 351 Endnotes 351 SECTION FOUR STRATEGIC MARKETING PROGRAMS FOR SELECTED SITUATIONS 353 15 Marketing Strategies for the New Economy 354 Chocolate Company Sweetens the Web 354 Thorntons Goes Online 354 Sweet Rewards 354 Marketing Challenges Addressed in Chapter 15 355 Does Every Company Need a New-Economy Strategy? 356 Threats or Opportunities? The Inherent Advantages and Disadvantages of the New Economy for Marketers 358 The Syndication of Information 358 Increasing Returns to Scale of Network Products 359 The Ability to Efficiently Personalize and Customize Market Offerings 360 Disintermediation and Restructuring of Distribution Channels 361 Global Reach, 24_7 Access, and Instantaneous Delivery 361 Are These New-Economy Attributes Opportunities or Threats? 362 First-Mover Advantage: Fact or Fiction? 365 Developing a New-Economy Strategy: A Decision Framework 365 Marketing Applications for New-Economy Tools 366 Developing New-Economy Marketing Strategies: The Critical Questions 375 Developing Strategies to Serve New-Economy Markets 378 What Lessons Can We Learn from the Dot.com Crash? 379 What Are the Key Success Factors in Serving the Dot.com Markets of Tomorrow? 380 Take-aways 382 Endnotes 382 16 Strategies for New and Growing Markets 384 Canon, Inc.?Success That Is Hard to Copy 384 Marketing Challenges Addressed in Chapter 16 385 How New Is New? 386 Market Entry Strategies: Is It Better to Be a Pioneer or a Follower? 388 Pioneer Strategy 388 Not All Pioneers Capitalize on Their Potential Advantages 390 Follower Strategy 390 Determinants of Success for Pioneers and Followers 391 Strategic Marketing Programs for Pioneers 393 Mass-Market Penetration 393 mul63706_fm.qxd 1/2/04 12:36 PM Page xv xvi CONTENTS Niche Penetration 395 Skimming and Early Withdrawal 395 Marketing Program Components for a Mass- Market Penetration Strategy 396 Marketing Program Components for a Niche Penetration Strategy 400 Marketing Program Components for a Skimming Strategy 400 Growth-Market Strategies for Market Leaders 401 Marketing Objectives for Share Leaders 401 Marketing Actions and Strategies to Achieve Share-Maintenance Objectives 402 Fortress, or Position Defense, Strategy 402 Flanker Strategy 406 Confrontation Strategy 407 Market Expansion 408 Contraction or Strategic Withdrawal 408 Share-Growth Strategies for Followers 409 Marketing Objectives for Followers 409 Marketing Actions and Strategies to Achieve Share Growth 409 Frontal Attack Strategy 411 Leapfrog Strategy 413 Flanking and Encirclement Strategies 414 Supporting Evidence 415 Take-aways 416 Endnotes 417 17 Strategic Choices for Mature and Declining Markets 418 Johnson Controls?Making Money in Mature Markets 418 Marketing Challenges Addressed in Chapter 17 419 Challenges in Mature Markets 420 Challenges in Declining Markets 420 Strategic Choices in Mature Markets 420 Strategies for Maintaining Competitive Advantage 421 Methods of Differentiation 422 Methods of Maintaining a Low-Cost Position 427 Customers? Satisfaction and Loyalty Are Crucial for Maximizing Their Lifetime Value 429 Marketing Strategies for Mature Markets 431 Strategies for Maintaining Current Market Share 431 Strategies for Extending Volume Growth 433 Strategies for Declining Markets 438 Relative Attractiveness of Declining Markets 439 Divestment or Liquidation 441 Marketing Strategies for Remaining Competitors 441 Take-aways 445 Endnotes 445 SECTION FIVE IMPLEMENTING AND CONTROLLING MARKETING PROGRAMS 447 18 Organizing and Planning for Effective Implementation 448 Hewlett-Packard?Reorganizing to Implement a New Strategy 448 The Internet Changed the Firm?s Market Environment 448 Reorganizing to Implement a New Strategy 449 Marketing Challenges Addressed in Chapter 18 450 Designing Appropriate Administrative Relationships for the Implementation of Different Competitive Strategies 451 Business-Unit Autonomy 452 Shared Programs and Facilities 453 Evaluation and Reward Systems 454 Designing Appropriate Organizational Structures and Processes for Implementing Different Strategies 454 Functional Competencies and Resource Allocation 455 Additional Considerations for Service Organizations 455 Organizational Structures 457 Recent Trends in Organizational Design 461 Organizational Adjustments as Firms Grow and Markets Change 462 Organizational Designs for Selling in Global Markets 463 Marketing Plans: The Foundation for Implementing Marketing Actions 465 The Situational Analysis 468 mul63706_fm.qxd 1/2/04 12:36 PM Page xvi CONTENTS xvii Key Issues 470 Objectives 470 Marketing Strategy 470 Action Plans 470 Projected Profit-and-Loss Statement 471 Contingency Plans 471 Take-aways 471 Endnotes 472 19 Measuring and Delivering Marketing Performance 474 Controls Pay for Wal-Mart 474 Marketing Challenges Addressed in Chapter 19 475 Designing Control Systems Step by Step 476 Setting Standards of Performance 477 Specifying and Obtaining Feedback Data 482 Evaluating Feedback Data 482 Taking Corrective Action 483 Design Decisions for Strategic Control Systems 484 Identifying Key Variables 484 Tracking and Monitoring 485 Strategy Reassessment 485 Design Decisions for Marketing Performance Measurement 486 Who Needs What Information? 486 When and How Often Is the Information Needed? 489 In What Media and in What Format(s) or Levels of Aggregation Should the Information Be Provided? 490 What Contingencies Should Be Planned For? 490 Global Marketing Control 492 ATool for Periodic Assessment of Marketing Performance: The Marketing Audit 493 Types of Audits 493 Take-aways 495 Endnotes 495 INDEX 496
Library of Congress Subject Headings for this publication:
Marketing -- Management.