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Part 1：Customer Focus and Marketing Management 1

1 THE CONCEPT OF MARKETING 1

The Marketing Concept 6

ILLUSTRATION：AT＆T 7

Different Organizational Philosophies 7

What Is Customer Orientation？ 9

An Alternative Perspective 11

The Changing Nature of Marketing 14

The Increased Adoption of Information Technology 14

The Rapid Commercialization of the Internet 16

The Continued Globalization of Business 19

The Value of the Customer Base 21

The Focus of This Book 22

Executive Summary 23

Chapter Questions 23

Further Reading 24

2 THE MARKETING MANAGER’S JOB 25

The Job of the Marketing Manager 27

ILLUSTRATION：Motorola 32

The Marketing Plan 32

ILLUSTRATION：Cadillac 35

The Lessons 38

Introduction to the Integrated Case 40

Executive Summary 44

Chapter Questions 44

Further Reading 44

Part 2：The Development of a Marketing Strategy 45

3 A STRATEGIC MARKETING FRAMEWORK 45

Complete Marketing Strategy 46

Objectives 48

Strategic Alternatives，Customer Targets，and Competitor Targets 49

Product Features 51

The Core Strategy：Competitive Advantage 52

Product Positioning 62

ILLUSTRATION：Metaxa 64

The Value Proposition 64

Marketing Strategies over the Product Life Cycle 65

Strategies for the Introductory Phase 66

Growth Strategies 67

Strategies for Maturity 68

Strategies for Decline 69

Product Line Strategy 69

Executive Summary 72

Chapter Questions 72

Integrated Case Application Exercises：Developing Marketing Strategy in the Personal Computer Industry 73

Further Reading 73

4 MARKETING RESEARCH 75

The Research Process 79

Secondary Data Sources 81

Internal 81

External 82

Primary Data Sources 87

Informal 87

Qualitative Research 88

Observations 91

Surveys 91

Panels 93

Experiments 94

Models and Simulations 96

Market Potential and Sales Forecasting 96

Market Potential 96

Forecasting 98

A Tip 103

Executive Summary 103

Chapter Questions 104

Integrated Case Application Exercises：Marketing Research in the Personal Computer Industry 104

Further Reading 105

5 CONSUMER BEHAVIOR AND ANALYSIS 107

Who Are the Consumers？ 109

Segmentation Variables 111

Marketing Research Implications：Data Collection 119

Marketing Research Implications：Developing Target Markets 122

ILLUSTRATION：Harley Davidson 123

Why Do Consumers Buy？ 127

How Do Consumers Make Purchase Decisions？ 131

Search for Alternatives 131

What Happens Next？ 132

Evaluating Options in the Consideration Set 132

Postpurchase Behavior 135

Where Do Customers Buy？ 136

When Do Customers Buy？ 137

ILLUSTRATION：Mango 137

Executive Summary 139

Chapter Questions 139

Integrated Case Application Exercises：Consumer Behavior in the PC Industry 139

Further Reading 140

6 ORGANIZATIONAL BUYING BEHAVIOR 141

Industrial Versus Consumer Marketing 143

Derived Demand 143

Product Complexity 144

Buyer-Seller Interdependence 144

Buying Process Complexity 144

Who Are the Customers？ 145

Segmentation Variables 145

Marketing Research Implications：Data Collection 149

Marketing Research Implications：Developing Target Markets 150

ILLUSTRATION：Signode Industries 150

Why Do Customers Buy？ 153

How Do Customers Make Purchase Decisions？ 155

The Buying Center 156

The Buying Process 158

External and Internal Influences on Purchasing Behavior 161

Where Do Customers Buy？ 161

When Do Customers Buy？ 161

Executive Summary 163

Chapter Questions 163

Integrated Case Application Exercises：Customer Behavior for the PC Industry 164

Further Reading 164

7 MARKET STRUCTURE AND COMPETITOR ANALYSIS 165

Market Structure Analysis 167

Definitions 167

Measurement Issues 172

Competitor Analysis 176

Key Objectives 177

Competitor Strategies 178

Competitor Strengths and Weaknesses 182

Expected Future Strategies 185

Where Do We Get the Information？ 186

Secondary Sources 187

Primary Sources 188

Competitive Strategy：Some Game Theory Notions 188

Executive Summary 191

Chapter Questions 192

Integrated Case Application Exercises：Market Structure and Competitor Analysis in the PC Industry 192

Further Reading 192

Part 3：Marketing Mix Decision-Making 193

8 COMMUNICATIONS AND ADVERTISING STRATEGY 193

Communications 196

Integrated Marketing Communications 200

Advertising 200

Direct Marketing 201

Sales Promotion 202

Publicity and Public Relations 202

Personal Selling 202

Miscellaneous Communications Activities 203

ILLUSTRATION：Amdahl Corporation 203

ILLUSTRATION：M＆M Mars 204

Advertising Management 205

Selecting the Target Audience 207

Setting Advertising Goals 207

Developing the Message Strategy 209

Evaluating Message Copy 213

Selecting Media 216

Budgeting 221

Measuring Advertising Effects 227

Executive Summary 230

Chapter Questions 230

Integrated Case Application Exercises：Communication in the PC Industry 231

Further Reading 231

9 CHANNELS OF DISTRIBUTION 233

The Importance of Channels of Distribution 234

Channel Dynamics 239

Channel Functions 241

Marketing Research 241

Communications 241

Contact 241

Matching/ Customizing 241

Negotiation 241

Physical Distribution 241

Financing 242

Risk-Taking 242

Service 242

Relationship Management 242

Product Assembly 242

Framework for Choosing Among Channels 242

Factors Affecting the Channel System 243

Customer Behavior 243

Competitors 244

The Marketing Strategy 246

Resources 246

Channel Options 247

Direct and Indirect Channels 247

Multiple-Channel Systems 248

ILLUSTRATION：Ingersoll-Rand 249

Hybrid Systems 250

ILLUSTRATION：Digital Equipment Company 251

Channel Power and Management 252

Channel Power 252

Channel Management 253

Some Special Topics in Channels of Distribution 256

Using the Web 256

Some Supermarket Issues 258

Multilevel Marketing 259

Direct Marketing 260

ILLUSTRATION：Mercedes-Benz 261

ILLUSTRATION：ON Technology 262

Executive SummaRY 263

Chapter Questions 263

Integrated Case Application Exercises：Distribution Channels in the PC Industry 264

FuRTher Reading 264

10 PERSONAL SELLING 265

The Sales Force and the Marketing Organization 268

Types of Sales Organizations 268

National/Key Accounts Organizations 270

ILLUSTRATION：Marriott Lodging 271

What Does a Salesperson Do？ 272

Directing the Sales Force 273

Determinants of Performance 273

Designing Sales Territories 276

Determining the Size of the Sales Force 277

Designing Sales Territories 276

ILLUSTRATION：Syntex Corporation 280

Setting Sales Quotas 282

Sales Volume-Based 282

Financially Based Quotas 282

Activity-Based Quotas 282

Combinations 282

Compensation 283

Straight Salary 283

Straight Commission 284

Combination Plans 284

Controlling and Evaluating the Sales Force 285

The Changing Nature of the Sales Force 286

The Impact of Technology 286

ILLUSTRATION：Lanier Worldwide 289

The Salesperson’s Job 290

Executive Summary 291

Chapter Questions 291

Integrated Case Application Exercises：Sales Management in the PC Industry 291

Further Reading 292

11 PRICING 293

The Role of Marketing Strategy in Pricing 294

Perceived Value 297

Customer Value 297

A Framework 301

Price Elasticity 301

Calculating Customer Value 301

ILLUSTRATION：Hewlett-Packard 304

ILLUSTRATION：Rocket Science Inc 305

ILLUSTRATION：Rolling Rock Beer 305

Using the Perceived Value Concept 306

Competition and Pricing 307

Competitors’ Costs 307

The Role of Costs 308

Deciding How Much of the Strategic Pricing Gap to Capture 309

Pricing Objectives 310

Psychological Aspects of Price 311

Stage of the Product Life Cycle 313

Industry Conditions 315

Who Is the Decision Maker？ 315

Specific Pricing Tactics 316

Product Line Pricing 316

Value Pricing 317

Differential Pricing 318

Competing Against Private Labels 319

Pricing and the Internet 320

Executive Summary 323

Chapter Questions 324

Integrated Case Application Exercises：Pricing in the PC Market 324

Further Reading 325

12 SALES PROMOTION 327

Types of Sales Promotion 332

Consumer Promotions 333

ILLUSTRATION：Beiersdorf 340

Trade Promotions 341

Retailer Promotions 342

Promotion Strategy，Objectives，and Evaluation 342

Customer-Oriented Promotions 342

Trade Promotion 345

ILLUSTRATION：Proctor ＆ Gamble 348

Retail Promotion 348

Promotion Budgeting 349

Advertising and Promotion Budget 349

Allocating Money Between Advertising and Promotion 349

Sales Promotion and Information Technology 352

In-Store Information Technology 352

Using the Internet 352

Executive Summary 353

Chapter Questions 355

Integrated Case Application Exercises：Sales Promotion in the PC Industry 355

Further Reading 356

Part 4：Special Topics in Marketing Management 357

13 CUSTOMER RELATIONSHIP MANAGEMENT 357

The Economics of Loyalty 359

Acquisition Cost 361

Base Profit 361

Revenue Growth 361

Operating Costs 362

Referrals 362

Price Premium 362

The Total Effect 362

Approaches to Customer Retention 364

Customer Satisfaction 364

Customer Value Management 367

Customer Service 370

Loyalty Programs 374

OtherIdeas 377

Mass Customization 378

Marketing Information Systems 382

ILLUSTRATION：Harrah’s Entertainment 382

ILLUSTRATION：UPS 382

Executive Summary 384

Chapter Questions 385

Integrated Case Application Exercises：Relationship Management in the PC Industry 385

Further Reading 386

14 STRATEGIES FOR SERVICE MARKETS 387

The Nature of Services 390

A Classification of Goods 390

Characteristics of Services 391

Service Quality 391

The Service Quality Model 391

The Dimensions of Service Quality 392

Gaps in Perceptions of Quality 393

Measuring Service Quality 395

The Return on Quality 396

Strategic Issues 397

The Problem of Intangibility 397

The Problem of Low Barriers to Entry 398

Service Design 401

ILLUSTRATION：Singapore Airlines 403

Marketing Mix Implications of Service Marketing 405

Channels of Distribution 405

Advertising 406

Pricing 408

The Impact of Technology on Service Marketing 409

ILLUSTRATION：Financial Services 409

Executive Summary 411

Chapter Questions 411

Integrated Case Application Exercises：Service Marketing in the PC Industry 412

Further Reading 412

15 STRATEGIES FOR TECHNOLOGY-BASED MARKETS 413

Customer Behavior 416

Factors Affecting the Adoption Rate of New Technologies 416

ILLUSTRATION：Fax Machines 419

Perceived Risk 419

The Problem of High-Tech Versus High-Touch 420

The Diffusion of Innovations 420

Marketing Strategies for High-Tech Products 422

The Chasm Model 422

ILLUSTRATION：Baan Co 426

ILLUSTRATION：Netscape 426

Switching Costs and Lock-In 426

Market Segmentation Issues 427

Positioning 428

ILLUSTRATION：DNA Plant Technology Corporation 429

Positioning Through Branding 430

Handling Overlapping Technologies 432

Marketing Mix Issues 433

Channels of Distribution 433

ILLUSTRATION：OEMs 436

ILLUSTRATION：VARs 436

Other Marketing Mix Variables 437

Executive Summary 437

Chapter Questions 438

Integrated Case Application Exercises：High-Tech Marketing and the PC Industry 439

Further Reading 439

16 GLOBAL MARKETING STRATEGIES 441

The Global Marketing Debate 446

ILLUSTRATION：Orangina 448

ILLUSTRATION：Tambrands 448

Strategic Issues 449

Market Entry Strategies 449

Modes of Operation 455

ILLUSTRATION：Fuji Xerox 456

Consumer Behavior：The Importance of Cultural Differences 458

Product Positioning 460

ILLUSTRATION：Saatchi ＆ Saatchi 460

Global Branding 462

ILLUSTRATION：Lucky-Goldstar 463

Defending Local Markets 463

ILLUSTRATION：India 464

Marketing Mix Implications 465

Channels of Distribution 465

ILLUSTRATION：Proctor ＆ Gamble 467

Pricing 468

Advertising and Promotion 470

The Impact of the Internet 471

Executive Summary 472

Chapter Questions 473

Integrated Case Application Exercises：Global Marketing and the PC Industry 473

Further Reading 474

17 NEW PRODUCT DEVELOPMENT 475

Factors Affecting New Product Success or Failure 479

Approaches to New Product Development 481

The Classic Linear Approach 481

The Rugby Approach 483

The Target Costing Approach 485

ILLUSTRATION：Nissan 485

Steps in the New Product Development Process 487

New Product Concept Generation 487

Screening New Product Concepts 489

Product Definition 490

Forecasting Demand 494

ILLUSTRATION：Nestle 499

Topics in New Product Development 501

The Importance of Shorter Product Development Cycles 501

Improving the Integration of Marketing and R＆D 503

Executive Summary 504

Chapter Questions 505

Integrated Case Application Exercises：New Product Development and the PC Industry 505

Further Reading 505

Notes 507

Glossary 525

Index 535