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Marketing: Real People, Real Choices, Fifth Edition

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Marketing: Real People, Real Choices, Fifth Edition

by Michael R. Solomon - Saint Joseph’s University; Greg W. Marshall - Rollins College; Elnora W. Stuart - The American University in Cairo

Publisher: Prentice Hall

Copyright Year: 2007

Publishing Date: 2006/11/28

eText ISBN-10: 0-13-229941-0

eText ISBN-13: 978-0-13-229941-1

Print ISBN-10: 0-13-229920-8

Print ISBN-13: 978-0-13-229920-6

Course: Principles of Marketing

Pages: 640

eTextbook $48.80

(180 day subscription)

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Table of Contents | Description

Instructor Resources | Student Resources

ABOUT THIS TITLE - TABLE OF CONTENTS

Dedication, iii

Real People, Real Choices, xix

Meet Real Marketers, Who Make Decisions, xx

Real Marketing Topics and Events, xxii

An Easy-to-Follow Marketing Plan Template, xxiii

An Exciting Company to Follow: QODE, xxiii

Measuring the Value of Marketing Through Marketing Metrics, xxiv

Learning How to Market Yourself: Brand You, xxiv

All End-of-Chapter Cases Are New to This Edition, xxv

Supplements, xxvi

Real People, Real Choices Videos, xxvi

Instructor’s Manual, xxvi

Test Item File: Brand New for You, xxvii

TestGen Software, xxvii

PowerPoints, xxvii

The Video Library, xxviii

Instructor’s Resource Center (IRC), xxviii

OneKey Companion Website, xxix

Study Guide, xxix

VangoNotes, xxix

Brand You Handbook, xxx

About the Authors, xxxi

Michael R. Solomon, xxxi

Greg W. Marshall, xxxi

Elnora W. Stuart, xxxi

Acknowledgments, xxxii

Reviewers, xxxii

Focus Group Participants, xxxii

Executives, Professors, and Students, 1

Executives Featured in “Real People, Real Choices”, 1

Faculty Featured in “Real People, Other Voices”, 1

Students Featured in “Real People, Other Voices”, 1

Reviewers of Previous Editions, 1

Part 1. Making Marketing Value Decisions, 2

1. Welcome to the World of Marketing: Creating and Delivering Value, 2

Welcome to a Branded World, 5

Welcome to Brand You, 5

The Who and Where of Marketing, 6

Marketing’s Role in the Firm: Working Cross-Functionally, 7

Where Do You Fit In? Careers in Marketing, 7

The Value of Marketing, 9

Marketing Is About Meeting Needs, 9

Marketing Is About Creating Utility, 10

Marketing Is About Exchange Relationships, 11

When Did Marketing Begin? The Evolution of a Concept, 12

The Production Era, 13

The Selling Era, 13

The Consumer Era, 14

The New Era: Make Money and Act Ethically, 14

Measuring Value, 16

What Can Be Marketed?, 16

Consumer Goods and Services, 17

Business-to-Business Goods and Services, 17

Not-for-Profit Marketing, 18

Idea, Place, and People Marketing, 18

The Marketing of Value, 19

Value from the Customer’s Perspective, 19

Value from the Seller’s Perspective, 20

Value from Society’s Perspective, 24

The Dark Side of Marketing, 25

Marketing as a Process, 26

Marketing Planning, 27

Marketing’s Tools: The Marketing Mix, 28

Chapter Summary, 31

Chapter Review, 32

Marketing Concepts: Testing Your Knowledge, 32

Marketing Concepts: Discussing Choices and Ethical Issues, 32

Marketing Practice: Applying What You’ve Learned, 33

Marketing Miniproject: Learning by Doing, 33

Marketing Plan Exercise, 34

2. Strategic Market Planning: Capturing the Big Picture, 36

Business Planning: Composing the Big Picture, 40

The Three Levels of Business Planning, 41

Strategic Planning: Framing the Picture, 42

Step 1: Define the Mission, 42

Step 2: Evaluate the Internal and External Environment, 43

Step 3: Set Organizational or SBU Objectives, 45

Step 4: Establish the Business Portfolio, 46

Step 5: Develop Growth Strategies, 48

Marketing Planning: Selecting the Camera Setting, 51

Step 1: Perform a Situation Analysis, 51

Step 2: Set Marketing Objectives, 51

Step 3: Develop Marketing Strategies, 52

Step 4: Implement and Control the Marketing Plan, 54

Creating and Working with a Marketing Plan: Snapping the Picture, 56

Make Your Life Easier!: Use the Marketing Planning Template, 57

Operational Planning: Day-to-Day Execution of Marketing Plans, 57

The Value of a Marketing Culture, 57

Chapter Summary, 60

Chapter Review, 61

Marketing Concepts: Testing Your Knowledge, 61

Marketing Concepts: Discussing Choices and Ethical Issues, 61

Marketing Practice: Applying What You’ve Learned, 61

Marketing Miniproject: Learning by Doing, 62

Marketing Plan Exercise, 62

3. Thriving in the Marketing Environment: The World Is Flat, 64

Welcome to the New Era of Marketing, 67

Doing Good: Ethical Behavior in the Marketplace, 68

Business Ethics, 68

Consumerism: People Fighting Back, 69

Ethics in the Marketing Mix, 71

Doing It Right: Promoting Social Responsibility, 72

Serving the Environment, 73

Serving Society: Cause Marketing, 74

Serving the Community: Promoting Cultural Diversity, 74

Playing on an International Stage: The Complicated World of Global Marketing, 75

World Trade, 75

Making the Decision to Go Global, 76

Road Blocks at the Borders, 77

The Global Marketing Environment, 80

The Economic Environment, 80

The Competitive Environment, 82

The Technological Environment, 84

The Political and Legal Environment, 84

The Sociocultural Environment, 87

Is the World Flat or Not? How “Global” Should a Global Marketing Strategy Be?, 91

Company-Level Decisions: Choosing a Market-Entry Strategy, 91

Born-Global Firms, 93

Product-Level Decisions: Choosing a Marketing Mix Strategy, 94

Standardization versus Localization, 94

Chapter Summary, 98

Chapter Review, 100

Marketing Concepts: Testing Your Knowledge, 100

Marketing Concepts: Discussing Choices and Ethical Issues, 100

Marketing Practice: Applying What You’ve Learned, 100

Marketing Miniproject: Learning by Doing, 101

Marketing Plan Exercise, 102

Part 2. Understanding Consumers’ Value Needs, 104

4. Marketing Research: Gathering, Analyzing, and Using Information, 104

Knowledge Is Power, 107

The Marketing Information System, 107

Marketing Decision Support Systems, 111

Searching for Gold: Data Mining, 112

What Marketers Can Do with Data Mining, 112

Steps in the Marketing Research Process, 113

Step 1: Define the Research Problem, 114

Step 2: Determine the Research Design, 115

Step 3: Choose the Method for Collecting Primary Data, 120

Step 4: Design the Sample, 128

Step 5: Collect the Data, 129

Step 6: Analyze and Interpret the Data, 130

Step 7: Prepare the Research Report, 131

Chapter Summary, 133

Chapter Review, 134

Marketing Concepts: Testing Your Knowledge, 134

Marketing Concepts: Discussing Choices and Ethical Issues, 134

Marketing Practice: Applying What You’ve Learned, 134

Marketing Miniproject: Learning by Doing, 135

Marketing Plan Exercise, 136

5. Consumer Behavior: How and Why People Buy, 138

Decisions, Decisions, 141

Steps in the Consumer Decision-Making Process, 141

Extended Problem Solving versus Habitual Decision Making, 141

Step 1: Problem Recognition, 143

Step 2: Information Search, 144

Step 3: Evaluation of Alternatives, 145

Step 4: Product Choice, 145

Step 5: Postpurchase Evaluation, 146

Internal Influences on Consumers’ Decisions, 147

Perception, 147

Motivation, 149

Personality, 152

The Family Life Cycle, 154

Situational Influences on Consumers’ Decisions, 155

The Physical Environment, 156

Social Influences on Consumers’ Decisions, 157

Subculture, 159

Social Class, 159

Group Membership, 160

Opinion Leaders, 162

Gender Roles, 162

Consumer-To-Consumer E-Commerce, 163

Chapter Summary, 166

Chapter Review, 167

Marketing Concepts: Testing Your Knowledge, 167

Marketing Concepts: Discussing Choices and Ethical Issues, 167

Marketing Practice: Applying What You’ve Learned, 168

Marketing Miniproject: Learning by Doing, 169

Marketing Plan Exercise, 169

6. Business-to-Business Markets: How and Why Organizations Buy, 172

Business Markets: Buying and Selling When Stakes Are High, 175

Characteristics That Make a Difference in Business Markets, 176

Multiple Buyers, 177

Number of Customers, 177

Size of Purchases, 177

Geographic Concentration, 177

Business-to-Business Demand, 178

Derived Demand, 178

Inelastic Demand, 179

Fluctuating Demand, 179

Joint Demand, 179

Types of Business-to-Business Markets, 179

Organizations, 180

North American Industry Classification System, 181

The Nature of Business Buying, 182

The Buying Situation, 182

The Professional Buyer, 184

The Buying Center, 184

The Business Buying Decision Process, 186

Business-to-Business E-Commerce, 190

Intranets, Extranets, and Private Exchanges, 191

Security Threats, 192

Chapter Summary, 194

Chapter Review, 195

Marketing Concepts: Testing Your Knowledge, 195

Marketing Concepts: Discussing Choices and Ethical Issues, 195

Marketing Practice: Applying What You’ve Learned, 195

Marketing Miniproject: Learning by Doing, 196

Marketing Plan Exercise, 197

7. Sharpening the Focus: Target Marketing Strategies and Customer Relationship Management, 200

Target Marketing Strategy: Selecting and Entering a Market, 203

Step 1: Segmentation, 203

Segmenting Consumer Markets, 204

Segmenting Business-to-Business Markets, 216

Step 2: Targeting, 216

Evaluating Market Segments, 216

Developing Segment Profiles, 218

Choosing a Targeting Strategy, 218

Step 3: Positioning, 220

Developing a Positioning Strategy, 220

Bringing a Product to Life: The Brand Personality, 222

Customer Relationship Management: Toward a Segment of One, 224

Four Steps in One-to-One Marketing, 224

CRM: A New Perspective on an Old Problem, 225

Characteristics of CRM, 226

Chapter Summary, 229

Chapter Review, 230

Marketing Concepts: Testing Your Knowledge, 230

Marketing Concepts: Discussing Choices and Ethical Issues, 230

Marketing Practice: Applying What You’ve Learned, 230

Marketing Miniproject: Learning by Doing, 231

Marketing Plan Exercise, 232

Part 3. Creating the Value Proposition, 234

8. Creating the Product, 234

Build a Better Mousetrap: The Value Proposition, 237

Layers of the Product Concept, 238

The Core Product, 239

The Actual Product, 239

The Augmented Product, 239

Classifying Products, 241

Classifying Goods: How Long Does the Product Last?, 242

Classifying Goods: How Do Consumers Buy the Product?, 242

Business-to-Business Products, 244

“New and Improved!:” The Process of Innovation, 245

It’s Important to Understand How Innovations Work, 246

Types of Innovations, 246

Developing New Products, 249

Phase 1: Idea Generation, 250

Phase 2: Product Concept Development and Screening, 251

Phase 3: Marketing Strategy Development, 253

Phase 4: Business Analysis, 253

Phase 5: Technical Development, 254

Phase 6: Test Marketing, 255

Phase 7: Commercialization, 256

Adoption and Diffusion of New Products, 256

Stages in Consumer Adoption of a New Product, 257

The Diffusion of Innovations, 260

How Organizational Differences Affect Adoption, 263

Chapter Summary, 266

Chapter Review, 267

Marketing Concepts: Testing Your Knowledge, 267

Marketing Concepts: Discussing Choices and Ethical Issues, 267

Marketing Practice: Applying What You’ve Learned, 267

Marketing Miniproject: Learning by Doing, 268

Marketing Plan Exercise, 268

9. Managing the Product, 270

Product Planning: Taking the Next Step, 273

Using Product Objectives to Decide on a Product Strategy, 273

Objectives and Strategies for Individual Products, 274

Objectives and Strategies for Multiple Products, 275

Quality as a Product Objective, 278

Marketing Throughout the Product Life Cycle, 281

The Introduction Stage, 282

The Growth Stage, 283

The Maturity Stage, 283

The Decline Stage, 284

Creating Product Identity: Branding Decisions, 286

What’s in a Name (or a Symbol)?, 286

The Importance of Branding, 287

Branding Strategies, 290

Creating Product Identity: Packaging and Labeling Decisions, 293

Packaging Functions, 293

Designing Effective Packaging, 294

Labeling Regulations, 295

Organizing for Effective Product Management, 295

Management of Existing Products, 295

Organizing for New-Product Development, 296

Chapter Summary, 298

Chapter Review, 299

Marketing Concepts: Testing Your Knowledge, 299

Marketing Concepts: Discussing Choices and Ethical Issues, 299

Marketing Practice: Applying What You’ve Learned, 300

Marketing Miniproject: Learning by Doing, 300

Marketing Plan Exercise, 301

10. Services and Other Intangibles: Marketing the Product That Isn’t There, 304

Marketing What Isn’t There, 307

Does Marketing Work for Intangibles?, 307

What Is a Service?, 309

Characteristics of Services, 309

Classifying Services, 312

Core and Augmented Services, 315

Services on the Internet, 316

The Service Encounter, 317

Providing Quality Service, 319

Service Quality Attributes, 319

Measuring Service Quality, 320

Strategic Issues in Service Quality, 322

The Future of Services, 323

Marketing People, Places, and Ideas, 325

Marketing People, 325

Marketing Places, 327

Marketing Ideas, 327

Chapter Summary, 329

Chapter Review, 330

Marketing Concepts: Testing Your Knowledge, 330

Marketing Concepts: Discussing Choices and Ethical Issues, 330

Marketing Practice: Applying What You’ve Learned, 331

Marketing Miniproject: Learning by Doing, 331

Marketing Plan Exercise, 332

11. Pricing the Product, 334

“Yes, but What Does It Cost?”, 337

Step 1: Develop Pricing Objectives, 338

Sales or Market Share Objectives, 338

Profit Objectives, 339

Competitive Effect Objectives, 339

Customer Satisfaction Objectives, 340

Image Enhancement Objectives, 340

Step 2: Estimate Demand, 340

Demand Curves, 340

Price Elasticity of Demand, 343

Step 3: Determine Costs, 345

Types of Costs, 345

Break-Even Analysis, 347

Marginal Analysis, 348

Step 4: Evaluate the Pricing Environment, 349

The Economy, 350

The Competition, 350

Consumer Trends, 351

Step 5: Choose a Pricing Strategy, 351

Pricing Strategies Based on Cost, 351

Pricing Strategies Based on Demand, 352

Pricing Strategies Based on the Competition, 354

Pricing Strategies Based on Customers’ Needs, 354

New-Product Pricing, 355

Step 6: Develop Pricing Tactics, 356

Pricing for Individual Products, 356

Pricing for Multiple Products, 356

Distribution-Based Pricing, 357

Discounting for Channel Members, 357

Pricing and Electronic Commerce, 358

Dynamic Pricing Strategies, 359

Pricing Advantages for Online Shoppers, 359

Psychological Issues in Pricing, 360

Buyers’ Pricing Expectation, 360

Psychological Pricing Strategies, 361

Legal and Ethical Considerations in Pricing, 363

Deceptive Pricing Practices, 363

Unfair Sales Acts, 363

Illegal Business-to-Business Price Discrimination, 364

Price-Fixing, 364

Predatory Pricing, 364

Chapter Summary, 366

Chapter Review, 367

Marketing Concepts: Testing Your Knowledge, 367

Marketing Concepts: Discussing Choices and Ethical Issues, 367

Marketing Practice: Applying What You’ve Learned, 368

Marketing Miniproject: Learning by Doing, 368

Marketing Plan Exercise, 369

Part 4. Communicating the Value Proposition, 372

12. Catching the Buzz: Promotional Strategy and Integrated Marketing Communication, 372

Tailoring Marketing Communication to Customers, 375

The Communication Model, 377

Encoding by the Source (the Marketer), 377

The Message, 378

The Medium, 378

Decoding by the Receiver, 379

Marketing Communication Strategy and the Promotion Mix, 380

Mass Appeals, 380

Personal Appeals, 381

Buzz Appeals, 383

Integrated Marketing Communication, 387

Characteristics of IMC, 388

IMC and Database Marketing, 390

Developing the IMC Plan, 391

Step 1: Identify the Target Audiences, 391

Step 2: Establish the Communication Objectives, 392

Step 3: Determine and Allocate the Marketing Communication Budget, 394

Step 4: Design the Promotion Mix, 396

Step 5: Evaluate the Effectiveness of the Communication Program, 397

Chapter Summary, 400

Chapter Review, 401

Marketing Concepts: Testing Your Knowledge, 401

Marketing Concepts: Discussing Choices and Ethical Issues, 401

Marketing Practice: Applying What You’ve Learned, 401

Marketing Miniproject: Learning by Doing, 402

13. Advertising, Sales Promotion, and Public Relations, 404

Advertising: The Image of Marketing, 407

Types of Advertising, 408

Who Creates Advertising?, 409

Developing the Advertising Campaign, 411

Step 1: Identify the Target Audience, 411

Step 2: Establish Message and Budget Objectives, 412

Step 3: Design the Ads, 412

Step 4: Pretest What the Ads Will Say, 415

Step 5: Choose the Media Type(s) and Media Schedule, 415

Step 6: Evaluate the Advertising, 422

Sales Promotion, 422

Sales Promotion Directed toward the Trade, 423

Sales Promotion Directed toward Consumers, 425

Public Relations, 429

Objectives of Public Relations, 430

Planning a Public Relations Campaign, 432

Public Relations Activities, 432

Chapter Summary, 437

Chapter Review, 438

Marketing Concepts: Testing Your Knowledge, 438

Marketing Concepts: Discussing Choices and Ethical Issues, 438

Marketing Practice: Applying What You’ve Learned, 439

Marketing Miniproject: Learning by Doing, 439

Marketing Plan Exercise, 440

14. Personal Selling, Sales Management, and Direct Marketing, 442

Advertising Is Not the Only Game in Town!, 445

Personal Selling, 445

The Role of Personal Selling, 446

Technology and Personal Selling, 447

Types of Sales Jobs, 448

Approaches to Personal Selling, 449

The Creative Selling Process, 449

Sales Management, 453

Setting Sales Force Objectives, 453

Creating a Sales Force Strategy, 453

Recruiting, Training, and Rewarding the Sales Force, 454

Evaluating the Sales Force, 456

Direct Marketing, 457

Mail Order, 457

Direct-Response Advertising, 458

M-Commerce, 459

Chapter Summary, 460

Chapter Review, 461

Marketing Concepts: Testing Your Knowledge, 461

Marketing Concepts: Discussing Choices and Ethical Issues, 461

Marketing Practice: Applying What You’ve Learned, 461

Marketing Miniproject: Learning by Doing, 462

Marketing Plan Exercise, 462

Part 5. Delivering the Value Proposition, 464

15. Delivering Value through Supply Chain Management: Channels of Distribution and Logistics, 464

Place: The Final Frontier, 467

The Value Chain, 468

Links in the Supply Chain, 469

The Importance of Distribution: You Can’t Sell What Isn’t There!, 471

Functions of Distribution Channels, 471

The Internet in the Distribution Channel, 473

Channel Composition: Types of Wholesaling Intermediaries, 475

Independent Intermediaries, 475

Manufacturer-Owned Intermediaries, 478

Types of Distribution Channels, 478

Consumer Channels, 480

Business-to-Business Channels, 481

Dual Distribution Systems, 481

Hybrid Marketing Systems, 482

Planning a Channel Strategy, 482

Step 1: Develop Distribution Objectives, 482

Step 2: Evaluate Internal and External Environmental Influences, 483

Step 3: Choose a Distribution Strategy, 484

Step 4: Develop Distribution Tactics, 487

Distribution Channels and the Marketing Mix, 489

Logistics: Implementing the Supply Chain, 489

The Lowdown on Logistics, 490

Logistics Functions, 490

Chapter Summary, 495

Chapter Review, 496

Marketing Concepts: Testing Your Knowledge, 496

Marketing Concepts: Discussing Choices and Ethical Issues, 496

Marketing Practice: Applying What You’ve Learned, 496

Marketing Miniproject: Learning by Doing, 497

Marketing Plan Exercise, 497

16. Retailing: Bricks and Clicks, 500

Retailing: Special Delivery, 503

Retailing: A Mixed (Shopping) Bag, 503

The Evolution of Retailing, 504

The Evolution Continues: What’s “In Store” for the Future?, 507

From Mom-and-Pop to Super Wal-Mart: Classifying Retail Stores, 510

Classifying Retailers by What They Sell, 510

Classifying Retailers by Level of Service, 511

Classifying Retailers by Merchandise Selection, 511

Nonstore Retailing, 516

Direct Selling, 516

Automatic Vending, 517

B2C E-Commerce, 518

Benefits of B2C E-Commerce, 518

Limitations of B2C E-Commerce, 520

B2C’s Effect on the Future of Retailing, 522

Developing a Store Positioning Strategy: Retailing as Theater, 522

Store Image, 524

Building the Theater: Store Location, 527

Chapter Summary, 531

Chapter Review, 532

Marketing Concepts: Testing Your Knowledge, 532

Marketing Concepts: Discussing Choices and Ethical Issues, 532

Marketing Practice: Applying What You’ve Learned, 532

Marketing Miniproject: Learning by Doing, 533

Marketing Plan Exercise, 534

A. Qode in Action: Implementing a Marketing Plan, 537

Questions for Rick Szatkowski, 538

Now It’s Your Turn to Do Some Marketing Planning, 542

B. Sample Marketing Plan: The S&S Smoothie Company, 543

Executive Summary, 543

Situation Analysis, 543

Marketing Objectives, 543

Marketing Strategies, 544

Implementation and Control, 544

Situation Analysis, 544

Internal Environment, 544

External Environment, 547

SWOT Analysis, 548

Marketing Objectives, 549

Marketing Strategies, 549

Target Markets, 549

Positioning the Product, 550

Product Strategies, 550

Pricing Strategies, 551

Promotion Strategies, 551

Supply Chain Strategies, 552

Implementation, 552

Measurement and Control Strategies, 552

Trend Analysis, 552

C. Marketing Math, 555

Income Statement and Balance Sheet, 555

Important Financial Performance Ratios, 557

Operating Ratios, 558

Inventory Turnover Rate, 559

Return on Investment, 559

Price Elasticity, 560

Cost-Plus Pricing, 561

Markup on Cost, 561

Markup on Selling Price, 561

Economic Order Quantity, 563

Chapter 10, 572

Chapter 11, 573

Chapter 12, 573

Chapter 13, 574

Chapter 14, 576

Chapter 15, 576

Chapter 16, 576

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ABOUT THIS TITLE - DESCRIPTION

For the Principles of Marketing course. Marketing: Real People, Real Choices is the only text to introduce marketing from the perspective of real people who make real marketing decisions at leading companies every day.

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