A cheerleading staple that was patented in 1971 by herkimer

Marketing Chapter Notes

Marketing

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Marketing T W E L F T H E D I T I O NL A M B / H A I R / M c D A N I E L

CHARLES W. LAMBCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAARRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEESSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS WWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWW................................ LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB M. J. Neeley School of Business

Texas Christian University

JOSEPH F. HAIR, JR.JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPPHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH FFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFF................................ HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR................................ Department of Marketing Kennesaw State University

CARL MCDANIELCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAARRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL MMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMMCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDDAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAANNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEELLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL Department of Marketing

University of Texas at Arlington

Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States

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Marketing 12e Lamb, Hair, McDaniel

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B R I E F C O N T E N T S v

Brief Contents

Preface xiv Acknowledgments xx

1 The World of Marketing 1 1 An Overview of Marketing 2 2 Strategic Planning for Competitive Advantage 24 3 Ethics and Social Responsibility 54 4 The Marketing Environment 86 5 Developing a Global Vision 132

2 Analyzing Marketing Opportunities 183 6 Consumer Decision Making 184 7 Business Marketing 236 8 Segmenting and Targeting Markets 270 9 Decision Support Systems and Marketing

Research 306

3 Product Decisions 355 10 Product Concepts 356 11 Developing and Managing Products 382 12 Services and Nonprofi t Organization Marketing 414

4 Distribution Decisions 445 13 Marketing Channels 446 14 Supply Chain Management 484 15 Retailing 530

5 Promotion and Communication Strategies 575

16 Promotional Planning for Competitive Advantage 576

17 Advertising and Public Relations 608 18 Sales Promotion and Personal Selling 648

6 Pricing Decisions 687 19 Pricing Concepts 688 20 Setting the Right Price 726

7 Technology-Driven Marketing 769 21 Customer Relationship Management (CRM) 770 2 2 Social Media and Marketing 802

Appendix A-1 Glossary G-1 Indexes I-1

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C O N T E N T Svi

Contents

Preface xiv

Acknowledgments xx

The World 1 of Marketing 1 1 An Overview of Marketing 2

What Is Marketing? 2

Marketing Management Philosophies 4 Production Orientation 4 Sales Orientation 5 Market Orientation 5 Societal Marketing Orientation 6

Diff erences Between Sales and Market Orientations 8

The Organization’s Focus 9 The Firm’s Business 13 Those to Whom the Product Is Directed 14 The Firm’s Primary Goal 15 Tools the Organization Uses to Achieve Its Goals 15 A Word of Caution 15

Why Study Marketing? 16 Marketing Plays an Important Role in Society 16 Marketing Is Important to Business 16 Marketing Off ers Outstanding Career Opportunities 16 Marketing Aff ects Your Life Every Day 17

Review and Applications 17 • Key Terms 18 • Exercises 19 • Case Study: Girl Scout Cookies 21 • Company Clips: Method—Live Clean 22 • Notes 23

2 Strategic Planning for Competitive Advantage 24 The Nature of Strategic Planning 25

Strategic Business Units 26

Strategic Alternatives 26 Ansoff ’s Opportunity Matrix 27 The Boston Consulting Group Model 28 The General Electric Model 30 The Marketing Plan 30

Defi ning the Business Mission 32

Conducting a Situation Analysis 33

Competitive Advantage 34 Cost Competitive Advantage 34 Product/Service Diff erentiation Competitive Advantage 35 Niche Competitive Advantage 35 Building Sustainable Competitive Advantage 36

Setting Marketing Plan Objectives 36

Describing the Target Market 38 Target Market Strategy 38

The Marketing Mix 39 Product Strategies 39 Place (Distribution) Strategies 39 Promotion Strategies 40 Pricing Strategies 40

Following Up on the Marketing Plan 42 Implementation 42 Evaluation and Control 43

Eff ective Strategic Planning 45

Review and Applications 46 • Key Terms 49 • Exercises 49 • Case Study: Disney 51 • Company Clips: Method—Healthy Home 52 • Notes 53

3 Ethics and Social Responsibility 54 Determinants of a Civil Society 55

The Concept of Ethical Behavior 57 Ethical Theories 58

Ethical Behavior in Business 60 Morality and Business Ethics 61 Ethical Decision Making 62 Ethical Guidelines and Training 63 Cultural Diff erences in Ethics 65 Ethical Dilemmas Related to Developing Countries 67

Corporate Social Responsibility 69 Sustainability 69 Stakeholders and Social Responsibility 69

Arguments Against and for Corporate Social Responsibility 71

Arguments Against Corporate Social Responsibility 71 Arguments for Social Responsibility 72 Growth of Social Responsibility 73 Green Marketing 75

Cause-Related Marketing 77 Cause-Related Marketing Controversy 78

Review and Applications 79 • Key Terms 81 • Exercises 81 • Case Study: (Product) Red 82 • Company Clips: Method—People Against Dirty 84 • Notes 84

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C O N T E N T S vii

4 The Marketing Environment 86 The External Marketing Environment 87

Understanding the External Environment 88 Environmental Management 89

Social Factors 90 American Values 90 Personality Traits Vary by Region 92 The Growth of Component Lifestyles 93 The Changing Role of Families and Working Women 93 There Is Never Enough Time 94

Demographic Factors 95 Population 95 Tweens 96 Teens 97 Generation Y 98 Generation X 100 Baby Boomers 101

Growing Ethnic Markets 103 Marketing to Hispanic Americans 103 Marketing to African Americans 105 Marketing to Asian Americans 107

Economic Factors 109 Consumers’ Incomes 109 Purchasing Power 110 Infl ation 110 Recession 111

Technological Factors 113 Research 113 Stimulating Innovation 113 Innovation Carries to the Bottom Line 115

Political and Legal Factors 115 Federal Legislation 116 State Laws 117 Regulatory Agencies 118 The Battle Over Consumer Privacy 120

Competitive Factors 121 Competition for Market Share and Profi ts 121 Global Competition 122

Review and Applications 123 • Key Terms 125 • Exercises 126 • Case Study: Daimler/BMW 127 • Company Clips: Method—Entering a Crowded Market 129 • Notes 129

5 Developing a Global Vision 132 Rewards of Global Marketing 133

Importance of Global Marketing to the United States 134 The Fear of Trade and Globalization 135 Benefi ts of Globalization 136

Multinational Firms 137 Currency Fluctuations 140 Global Marketing Standardization 140

External Environment Facing Global Marketers 142 Culture 142 Economic Factors 144 The Global Economy 144

Doing Business in China and India 145 Political Structure and Actions 146 Legal Considerations 146 Uruguay Round, the Failed Doha Round, and Bilateral Agreements 148 North American Free Trade Agreement 149 Central America Free Trade Agreement 150 European Union 150 The World Bank, the International Monetary Fund, and the G-20 153 Demographic Makeup 154 Natural Resources 154

Global Marketing by the Individual Firm 155 Exporting 156 Licensing and Franchising 158 Contract Manufacturing 159 Joint Venture 161 Direct Investment 161

The Global Marketing Mix 162 Product and Promotion 163 One Product, One Message 163 Product Invention 164 Product Adaptation 165 Promotion Adaptation 166 Place (Distribution) 167 Pricing 169 Dumping 169 Countertrade 169

The Impact of the Internet 170

Review and Applications 173 • Key Terms 174 • Exercises 175 • Case Study: P&G, Unilever, Panasonic 176 • Company Clips: Method—Global Beginnings 177 • Notes 178 • Marketing Miscue 180 • Critical Thinking Case 181

Analyzing Marketing 2 Opportunities 183

6 Consumer Decision Making 184 The Importance of Understanding Consumer Behavior 185

Shaping Public Policy and Educating Consumers 186

The Consumer Decision-Making Process 186 Need Recognition 186 Information Search 188 Evaluation of Alternatives and Purchase 192

Postpurchase Behavior 194

Types of Consumer Buying Decisions and Consumer Involvement 195

Factors Determining the Level of Consumer Involvement 197

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C O N T E N T Sviii C O N T E N T Sviii

Not All Involvement Is the Same 198 Marketing Implications of Involvement 199

Factors Infl uencing Consumer Buying Decisions 200

Cultural Infl uences on Consumer Buying Decisions 200

Culture and Values 200 Understanding Cultural Diff erences 204 Subculture 204 Social Class 206

Social Infl uences on Consumer Buying Decisions 208 Reference Groups 209 Opinion Leaders 211 Family 212

Individual Infl uences on Consumer Buying Decisions 214

Gender 214 Age and Family Life-Cycle Stage 215 Personality, Self-Concept, and Lifestyle 216

Psychological Infl uences on Consumer Buying Decisions 218

Perception 219 Motivation 221 Learning 222 Beliefs and Attitudes 224

Review and Applications 228 • Key Terms 230 • Exercises 230 • Case Study: eBay 231 • Company Clips: ReadyMade—Do-It-Yourself 233 • Notes 234

7 Business Marketing 236 What Is Business Marketing? 237

Business Marketing on the Internet 238 Measuring Online Success 240 Trends in B-To-B Internet Marketing 242

Relationship Marketing and Strategic Alliances 243 Strategic Alliances 244 Relationships in Other Cultures 244

Major Categories of Business Customers 246 Producers 246 Resellers 246 Governments 246 Institutions 248

The North American Industry Classifi cation System 248

Business versus Consumer Markets 250 Demand 250 Purchase Volume 251 Number of Customers 251 Location of Buyers 251 Distribution Structure 251 Nature of Buying 252 Nature of Buying Infl uence 252 Type of Negotiations 252 Use of Reciprocity 252 Use of Leasing 252 Primary Promotional Method 253

Types of Business Products 254 Major Equipment 254 Accessory Equipment 254 Raw Materials 254 Component Parts 255 Processed Materials 255 Supplies 255 Business Services 256

Business Buying Behavior 256 Buying Centers 257 Evaluative Criteria 258 Buying Situations 259 Business Ethics 260 Customer Service 260

Review and Applications 262 • Key Terms 264 • Exercises 265 • Case Study: Pantone 266 • Company Clips: ReadyMade —Making Business Relationships 267 • Notes 268

8 Segmenting and Targeting Markets 270 Market Segmentation 271

The Importance of Market Segmentation 272

Criteria for Successful Segmentation 273

Bases for Segmenting Consumer Markets 274 Geographic Segmentation 275 Demographic Segmentation 275 Psychographic Segmentation 281 Benefi t Segmentation 282 Usage-Rate Segmentation 283

Bases for Segmenting Business Markets 284 Company Characteristics 284 Buying Processes 284

Steps in Segmenting a Market 285

Strategies for Selecting Target Markets 286 Undiff erentiated Targeting 288 Concentrated Targeting 289 Multisegment Targeting 290

One-to-One Marketing 292

Positioning 295 Perceptual Mapping 296 Positioning Bases 296 Repositioning 297

Review and Applications 298 • Key Terms 300 • Exercises 300 • Case Study: Coke Zero 302 • Company Clips: ReadyMade—Focus and Segmentation 304 • Notes 304

9 Decision Support Systems and Marketing Research 306 Marketing Decision Support Systems 307

The Role of Marketing Research 308 Management Uses of Marketing Research 309 Understanding the Ever-Changing Marketplace 312

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C O N T E N T S ix

Steps in a Marketing Research Project 313 Secondary Data 315 Marketing Research Aggregators 316 Planning the Research Design and Gathering Primary Data 317 Survey Research 318 Questionnaire Design 321 Observation Research 323 Ethnographic Research 325 Experiments 328 Specifying the Sampling Procedures 328 Collecting the Data 330 Analyzing the Data 330 Preparing and Presenting the Report 331 Following Up 331

Marketing Research on the Internet 332 Advantages of Internet Surveys 333 Uses of the Internet by Marketing Researchers 334 Methods of Conducting Online Surveys 334 Online Panel Providers 334 Online Focus Groups 335 Web Community Research 337 The Role of Consumer Generated Media in Marketing Research 338 Behavioral Targeting 339

Scanner and Machine-Based Research 340 When Should Marketing Research Be Conducted? 342

Competitive Intelligence 343

Review and Applications 344 • Key Terms 347 • Exercises 347 • Case Study: Marriott International 349 • Company Clips: ReadyMade — Ready Research 350 • Notes 351 • Marketing Miscue 352 • Critical Thinking Case 353

Product 3 Decisions 355 10 Product Concepts 356

What Is a Product? 357

Types of Consumer Products 358 Convenience Products 359 Shopping Products 359 Specialty Products 359 Unsought Products 360

Product Items, Lines, and Mixes 360 Adjustments to Product Items, Lines, and Mixes 361

Branding 364 Benefi ts of Branding 364 Branding Strategies 365 Trademarks 367

Packaging 369 Packaging Functions 369 Labeling 370 Universal Product Codes 372

Global Issues in Branding and Packaging 372 Branding 372 Packaging 373

Product Warranties 373

Review and Applications 376 • Key Terms 377 • Exercises 378 • Case Study: Ford Motor Co. 379 • Company Clips: Kodak—Reinventing the Brand 380 • Notes 381

11 Developing and Managing Products 382 The Importance of New Products 383

Categories of New Products 384

The New-Product Development Process 386 New-Product Strategy 386 Idea Generation 387 Idea Screening 389 Business Analysis 389 Development 391 Test Marketing 393 Commercialization 394

Why Some Products Succeed and Others Fail 395

Global Issues in New-Product Development 396

The Spread of New Products 398 Diff usion of Innovation 398 Product Characteristics and the Rate of Adoption 400 Marketing Implications of the Adoption Process 400

Product Life Cycles 402 Introductory Stage 403 Growth Stage 403 Maturity Stage 404 Decline Stage 405 Implications for Marketing Management 405

Review and Applications 408 • Key Terms 409 • Exercises 409 • Marketing Plan Exercise 410 • Case Study: Harmonix 410 • Company Clips: Kodak—Reinventing Photography 412 • Notes 412

12 Services and Nonprofi t Organization Marketing 414 The Importance of Services 415

How Services Diff er from Goods 416 Intangibility 416 Inseparability 416 Heterogeneity 417 Perishability 417

Service Quality 418 The Gap Model of Service Quality 419

Marketing Mixes for Services 421 Product (Service) Strategy 421 Place (Distribution) Strategy 423 Promotion Strategy 424 Price Strategy 425

Relationship Marketing in Services 427

C O N T E N T S ix

Notes 412

12 Services and Nonprofi t Orgggaaanizatatation Marketing 414 The Importance of Services 415

How Services Diff er from Goods 416 Intangibility 416 Inseparability 416 Heterogeneity 417 Perishability 417

Service Quality 418 The Gap Model of Service Quality 419

Marketing Mixes for Services 421 Product (Service) Strategy 421 Place (Distribution) Strategy 423 Promotion Strategy 424 Price Strategy 425

Relationship Marketing in Services 427

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C O N T E N T Sx C O N T E N T Sx

Internal Marketing in Service Firms 428

Global Issues in Services Marketing 429

Nonprofi t Organization Marketing 430 What Is Nonprofi t Organization Marketing? 430 Unique Aspects of Nonprofi t Organization Marketing Strategies 430

Review and Applications 435 • Key Terms 437 • Exercises 437 • Case Study: MinuteClinic 438 • Company Clips: Kodak—Reinventing the Mix 440 • Notes 440 • Marketing Miscue 442 • Critical Thinking Case 443

Distribution 4 Decisions 445 13 Marketing Channels 446

Marketing Channels 447 Providing Specialization and Division of Labor 448 Overcoming Discrepancies 448 Providing Contact Effi ciency 449

Channel Intermediaries and Their Functions 451 Channel Functions Performed by Intermediaries 452

Channel Structures 453 Channels for Consumer Products 454 Channels for Business and Industrial Products 455 Alternative Channel Arrangements 456

Making Channel Strategy Decisions 458 Factors Aff ecting Channel Choice 459 Levels of Distribution Intensity 460

Types of Channel Relationships 463 Channel Relationship Types 463 Cooperative Relationships 465

Managing Channel Relationships 465 Channel Power, Control, and Leadership 466 Channel Confl ict 466 Channel Partnering 468

Channels and Distribution Decisions for Global Markets 470

Developing Global Marketing Channels 470

Channels and Distribution Decisions for Services 472

Review and Applications 476 • Key Terms 478 • Exercises 478 • Case Study: Time Warner/ Viacom 480 • Company Clips: Sephora: Business is Beautiful 481 • Notes 482

14 Supply Chain Management 484 Supply Chains and Supply Chain Management 485

Benefi ts of Supply Chain Management 487

Supply Chain Integration 488 Relationship Integration 488

Measurement Integration 489 Technology and Planning Integration 490 Material and Service Supplier Integration 491 Internal Operations Integration 492 Customer Integration 492 Barriers and Facilitators of Integration 493

The Key Processes of Supply Chain Management 494 Customer Relationship Management 494 Customer Service Management 495 Demand Management 496 Order Fulfi llment 497 Manufacturing Flow Management 498 Supplier Relationship Management 498 Product Development and Commercialization 499 Returns Management 499

Strategic Supply Chain Management Decisions 501 Supply Chain Strategies 501 Mapping the Supply Chain 503

The Logistics Function in the Supply Chain 506 Sourcing and Procurement 507 Order Processing 507 Inventory Management and Control 508 Warehousing and Materials-Handling 510 Transportation 511

Supply Chain Performance Measurement 512 The Balanced Scorecard Approach 513

Green and Sustainable Supply Chain Management 514

Trends in Supply Chain Management 515 Global Supply Chain Management 516 Advanced Computer Technology 517 Outsourcing Logistics Functions 518 Electronic Distribution 519 Supply Chain Security and Resilience 520

Review and Applications 521 • Key Terms 524 • Exercises 524 • Case Study: The U.S. Transportation Industry 526 • Company Clips: Sephora—Business Is Beautiful—Part 2 527 • Notes 527

15 Retailing 530 The Role of Retailing 531

Classifi cation of Retail Operations 532 Ownership 533 Level of Service 533 Product Assortment 533 Price 534

Major Types of Retail Operations 535 Department Stores 535 Specialty Stores 535 Supermarkets 536 Drugstores 537 Convenience Stores 538 Discount Stores 538 Restaurants 541

Nonstore Retailing 542 Automatic Vending 543 Direct Retailing 543

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C O N T E N T S xiC O N T E N T S xi

Direct Marketing 544 Electronic Retailing 545 Shop-at-Home Networks 545 Mobile Retailing/M-Commerce 547

Franchising 548

Retail Marketing Strategy 551 Defi ning a Target Market 551 Choosing the Retailing Mix 552

New Developments in Retailing 561 Interactivity 561 Pop-Up Shops 562

Review and Applications 564 • Key Terms 566 • Exercises 566 • Case Study: Nordstrom 568 • Company Clips: Sephora—Retailing for Success 569 • Notes 570 • Marketing Miscue 572 • Critical Thinking Case 573

Promotion and Communication 5 Strategies 575

16 Promotional Planning for Competitive Advantage 576 The Role of Promotion in the Marketing Mix 577

Marketing Communication 578 The Communication Process 579

The Goals of Promotion 583 Informing 584 Persuading 584 Reminding 585

The Promotional Mix 585 Advertising 585 Public Relations 586 Personal Selling 586 Sales Promotion 587 Social Media 587 The Communication Process and the Promotional Mix 587

Promotional Goals and the AIDA Concept 589

Integrated Marketing Communications 591

Factors Aff ecting the Promotional Mix 592 Nature of the Product 593 Stages in the Product Life Cycle 593 Target Market Characteristics 594 Type of Buying Decision 595 Available Funds 596 Push and Pull Strategies 596

Review and Applications 600 • Key Terms 602 • Exercises 602 • Case Study: HBO’s Blood Virus 604 • Company Clips: Vans—Off the Wall and On Target 606 • Notes 607

17 Advertising and Public Relations 608 The Eff ects of Advertising 608

Advertising and Market Share 610 The Eff ects of Advertising on Consumers 610

Major Types of Advertising 612 Institutional Advertising 613 Product Advertising 614

Creative Decisions in Advertising 616 Identifying Product Benefi ts 617 Developing and Evaluating Advertising Appeals 617 Executing the Message 619 Post-Campaign Evaluation 621

Media Decisions in Advertising 622 Media Types 623 Media Selection Considerations 629 Media Scheduling 631

Public Relations 633 Major Public Relations Tools 634 Managing Unfavorable Publicity 637

Review and Applications 640 • Key Terms 642 • Exercises 642 • Case Study: Burger King 644 • Company Clips: Vans—Off The Wall and On Message 645 • Notes 646

18 Sales Promotion and Personal Selling 648 Sales Promotion 649

The Objectives of Sales Promotion 650

Tools for Consumer Sales Promotion 651 Coupons and Rebates 652 Premiums 654 Loyalty Marketing Programs 655 Contests and Sweepstakes 656 Sampling 657 Point-of-Purchase Promotion 658 Online Sales Promotion 658

Tools for Trade Sales Promotion 659

Personal Selling 661

Relationship Selling 662

Steps in the Selling Process 664 Generating Leads 665 Qualifying Leads 666 Approaching the Customer and Probing Needs 667 Developing and Proposing Solutions 667 Handling Objections 668 Closing the Sale 669 Following Up 669

Sales Management 670 Defi ning Sales Goals and the Sales Process 671 Determining the Sales Force Structure 671 Recruiting and Training the Sales Force 672 Compensating and Motivating the Sales Force 672 Evaluating the Sales Force 674

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C O N T E N T Sxii C O N T E N T Sxii

Review and Applications 675 • Key Terms 678 • Exercises 678 • Case Study: Ron Popeil 679 • Company Clips: Vans—Off the Wall Promotions 681 • Notes 681 • Marketing Miscue 683 • Critical Thinking Case 684

Pricing 6 Decisions 687 19 Pricing Concepts 688

The Importance of Price 689 What Is Price? 689 The Importance of Price to Marketing Managers 690

Pricing Objectives 691 Profi t-Oriented Pricing Objectives 691 Sales-Oriented Pricing Objectives 693 Status Quo Pricing Objectives 694

The Demand Determinant of Price 695 The Nature of Demand 695 How Demand and Supply Establish Prices 696 Elasticity of Demand 697

The Power of Yield Management Systems and Targeting Technology 703

The Cost Determinant of Price 704 Markup Pricing 706 Profi t Maximization Pricing 707 Break-Even Pricing 707

Other Determinants of Price 709 Stages in the Product Life Cycle 709 The Competition 710 Distribution Strategy 711 The Impact of the Internet 712 Promotion Strategy 714 Guaranteed Price Matching and Money Back Guarantees 714 Demands of Large Customers 715 The Relationship of Price to Quality 716

Review and Applications 718 • Key Terms 720 • Exercises 720 • Case Study: Groupon vs. LivingSocial 722 • Company Clips: Acid+All = Serious Pricing 724 • Notes 724

20 Setting the Right Price 726 How to Set a Price on a Product or Service 727

Establish Pricing Goals 727 Estimate Demand, Costs, and Profi ts 728 Choose a Price Strategy 729

The Legality and Ethics of Price Strategy 733 Unfair Trade Practices 733 Price Fixing 734 Price Discrimination 736 Predatory Pricing 736

Tactics for Fine-Tuning the Base Price 738 Discounts, Allowances, Rebates, and Value-Based Pricing 739 Geographic Pricing 742 Other Pricing Tactics 742 Consumer Penalties 750

Product Line Pricing 751 Relationships among Products 751 Joint Costs 751

Pricing during Diffi cult Economic Times 752 Infl ation 752 Recession 754

Review and Applications 758 • Key Terms 760 • Exercises 760 • Case Study: Black Friday Sales 762 • Company Clips: Pricing Perspectives—Method, ReadyMade Magazine, Sephora, Vans, and Acid+All 763 • Notes 764 • Marketing Miscue 766 • Critical Thinking Case 767

Technology-Driven 7 Marketing 769 21 Customer Relationship

Management (CRM) 770 What Is Customer Relationship Management? 771

The Customer Relationship Management Cycle 772 Implementing a Customer Relationship Management System 774

Identify Customer Relationships 775

Understand Interactions of the Current Customer Base 777

Capture Customer Data 779

Store and Integrate Customer Data 781

Identifying the Best Customers 783 Data Mining 783

Leverage Customer Information 786 Campaign Management 786 Retaining Loyal Customers 787 Cross-Selling Other Products and Services 788 Designing Targeted Marketing Communications 788 Reinforcing Customer Purchase Decisions 789 Increasing Eff ectiveness of Distribution Channel Marketing 790 Improving Customer Service 791 Privacy Concerns and CRM 791

Review and Applications 795 • Key Terms 797 • Exercises 797 • Case Study: Petco.Com 798 • Company Clips: Method—Spreading the News about Green Cleaning 800 • Notes 800

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C O N T E N T S xiiiC O N T E N T S xiii

22 Social Media and Marketing 802 What Is Social Media? 803

How Consumers Use Social Media 805 Social Media and Integrated Marketing Communications 806

Creating and Leveraging a Social Media Campaign 807

The Listening System 808 Social Media Objectives 809 Building Trust Online 810

Evaluation and Measurement of Social Media 811

Social Behavior of Consumers 812

Social Media Tools: Consumer and Corporate Generated Content 814

Blogs 814 Social Networks 816 Media Sharing Sites 818

Social News Sites 819 Location-Based Social Networking Sites 819 Review Sites 819 Virtual Worlds and Online Gaming 821

Social Media and Mobile Technology 822 Mobile and Smartphone Technology 822 Applications and Widgets 823 The Changing World of Social Media 825

Review and Applications 826 • Key Terms 827 • Exercises 827 • Case Study: Gatorade’s Eff orts at Integration 828 • Company Clips: Mobile Phone Marketing: Parents Beware 829 • Notes 829 • Marketing Miscue 831 • Critical Thinking Case 832

Appendix A: Marketing Plan A-1

Glossary G-1

Indexes I-1

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P R E FA C Exiv

Importance of the Course You experience marketing through billboards, television commercials, and even in the cereal aisle at the grocery store. The 12th edition of Marketing, with its engaging presentation of concepts, will help you recognize how much marketing principles play a role in your day-to-day lives. With coverage of current market- ing practices and exciting new features Lamb, Hair, and McDaniel’s Marketing will have you saying, “Now that’s marketing!”

New Content In addition to the dozens of new examples in each chapter, we have added new topical content and revised and updated existing material throughout the book. There is an entirely new chapter devoted to the hot topic of social media and mar- keting, which delves into how companies are working to integrate the fast-paced technology into existing marketing plans, and the new ideas that surface every day regarding how to use social media. A new box feature, Marketing Metrics, intro- duces actual metrics, the math behind them, and the importance (and infl uence) of the marketing department in decision making. For more information, see the inside back cover.

TEXT PEDAGOGY REINFORCES LEARNING

Pedagogical features are meant to reinforce learning, but that doesn’t mean that they have to be boring. We have created teaching tools within the text itself that will excite interest as well as teach. Not one of our features is casually included: Each has been designed and written to meet a specifi c learning need, level, or style.

a Terms: Key terms appear in boldface in the text, with defi nitions in the mar- gins, making it easy for students to check their understanding of terminology. A complete alphabetical list of key terms appears at the end of each chapter as a study checklist, with page citations for easy reference.

a Ethics in Marketing boxes: In the 12th edition we continue our emphasis on ethics by integrating the discussion throughout the book via Ethics exercises and Ethics in Marketing boxes. These boxes offer thought-provoking questions focused on ethical decision making. This feature offers examples of how ethics comes into play in many marketing decisions. Are for-profi t universities ethi- cal? Is it right for a country to censor Internet providers? How much control can a person or a company have over online privacy? Is it ethical to charge what the market will bear? Students will consider these and many other hotly debated ethical questions. For more information, see the inside back cover.

a Global Perspectives boxes: Thinking globally should be a part of every man- ager’s tactical and strategic planning. In addition to focusing entirely on global

Preface

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P R E FA C E xv

marketing in Chapter 5, the book contains global marketing subject matter that is fully integrated through the Global Perspectives boxes. The Global Perspectives boxes provide expanded global examples of the marketing issues facing companies on several continents. Each box concludes with thought- provoking questions carefully prepared to stimulate class discussion. For more information, see the inside back cover.

a Customer Experience boxes: At its very best, marketing is about creating an excellent experience for the consumer. Marketing showcases the importance of customer service through Customer Experience boxes. For more information, see the inside back cover.

a “Anatomy of” Feature: The “Anatomy of” graphics illustrate a particular con- cept, using a full page layout and photography to demonstrate the connection between the elements of a concept. Anatomies help you visualize the connec- tion between marketing concepts and their real-world applications.

a Marketing & You surveys: Your courses must be relevant and interactive. The short Marketing & You surveys at the beginning of each chapter are a fun way to introduce a chapter’s topic. Each survey is adapted from material in the Marketing Scales Handbook, and quickly demonstrates that every- one has experience with marketing—even if they don’t know it! Though Marketing & You is not meant to be used in a scientifi c context, it offers an interesting and fun way to introduce the chapter material.

a Visual learning o utcome summaries: Everyone doesn’t learn the same way; some students can read books and understand the concepts just from their verbal presentation. Other students need to rewrite the material in their own words in order to understand it completely. Still others learn best from diagrams and exhibits. Student focus groups have confi rmed this experience, and encouraged the use of the visual Review Learning Outcomes. These boxes are designed to give students a pic- ture of the content to help them recall the major points of the material. These reviews are not meant to repeat every nuance of the chapter con- tent. Rather, they are meant to provide visual cues that prompt the student to recall the salient points in the chapter.

a “By the Numbers” feature: Each chapter concludes with a quick numeric recap of interesting statistics from the chapter. By the Numbers keeps marketing alive for students and acts as an engaging and visual conclusion to the chapter.

a Review and Applications: The end of each chapter contains a section titled Review and Applications, a summary that distills the main points of the chap- ter. Chapter summaries are organized around the learning outcomes so that you can quickly check

exchange People giving up something to receive something they would rather have.

Now, total your score. Read the chapter to fi nd out what your score means at the end.

Please note your opinion on each of the following questions.

Think about where you buy cosmetics or personal care products. Using the following scale, enter the number that indicates how likely you are to:

NOT LIKELY AT ALL 1 2 3 4 5 6 EXTREMELY LIKELY

Say positive things about the company to other people.

Recommend the company to someone who seeks your advice.

Encourage friends and relatives to do business with the company.

Consider the company your fi rst choice to buy cosmetics or per- sonal care products.

Do more business with the company in the next few years.

© iStockphoto.com

/ziggym aj

Defi ne strategic business units Review

SBUSBUSBUS s hs hhaveaveavave:::

•• DiDiDiD stististiinctnctnctct mi mimim ssissississ onsonsonsns • Control l oveoverr

resources

• Competitors • Independent plans

Parent companpany

SBU

Elements of the marketing mix; quadrants in the Boston Consulting Group (BCG) portfolio matrix Percent of English-

language messages mentioning Nike during the World Cup

Million visitors to Bass Pro Shops each year

Macroenvironmental forces aff ecting marketing

Target age group for Ralph Lauren’s Rugby line

Amount needed to develop DuPont’s cost- competitive technology

330 14–29 $100

million9 64

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P R E FA C Exvi

your understanding of chapter concepts. Discussion questions and activities are under the learning outcome to which they pertain.

a Writing questions: To help improve your writing skills, we have included writing exercises in the review section at the end of each chapter. These exercises are marked with the icon shown here. The writing questions are designed to be brie so that you can accomplish writing assignments in a short time.

a Team activities: The ability to work collaboratively is a key to success in today’s business world. End-of-chapter team activities, identifi ed by the icon shown here, give you opportunities to learn to work together by engaging in consensus building and problem solving.

a Online activities: Understanding how to use the Internet for professional (and academic) purposes is critical in today’s business environment. End-of-chapter activities accompanied by the icon to the left give you the opportunity to hone your skills in this area.

a Application exercise: These activities are based on winning teaching ideas from the “Best of the Great Ideas in Teaching Marketing” contest held in conjunc- tion with the publication of the eighth edition. Developed by professors across the country, these exercises allow exploration of the principles of marketing in greater detail through engaging and enjoyable activities. For example, you might be assigned to research the complete supply chain for a specifi ed prod- uct or create an advertising campaign for a product using the rules from the Hasbro game Taboo.

a Ethics exercise: Short ethical dilemmas help students practice doing the right thing. The questions following each scenario prompt students to make an ethical decision and explain the rationale behind it. These exercises demon- strate the limitations to a code of ethics and to reinforce the importance of not simply consulting existing rules of conduct, but also of developing an ethical personality.

a Case studies: All chapters contain a case study with questions that guide you through problems facing real businesses today. These cases focus on a wide variety of companies and products, such as Girl Scout cookies, BMW, Pantone, Marriott, Ford, the hauling capacity of the U.S. transportation industry, Groupon, and others.

a Company clips: All chapters contain a summary of the Company Clip video with related viewing and discussion questions. Company Clips segments average 8 minutes in length, which is enough time to cover core marketing issues facing Method, ReadyMade magazine, Sephora, Vans, Kodak, and Acid + All.

a Marketing miscues: At the end of each part, you will fi nd new cases that describe good and bad ideas that couldn’t make it in the rough-and-tumble marketplace. Often amusing and always interesting, these cases, including Yellow Tail wine’s charitable donation faux pas, Microsoft’s misstep with Angry Birds creators at Rovio, and the controversy behind Four Loko, will help your students avoid the same mistakes made by these well-known companies.

a Critical Thinking cases: In today’s dynamic business environment, marketers must be able to quickly evaluate data and craft appropriate response strate- gies. This edition of Marketing helps develop critical thinking skills with a more challenging comprehensive case at the end of each of the seven major

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

P R E FA C E xvii

parts. The seven new Critical Thinking Cases feature issues confronting well- known brands such as Mary Kay Inc., American Airlines, and Lyon College, and ask students to evaluate the situation, identify key issues, and make decisions.

a Annotated marketing plan: The marketing plan appendix at the end of the book includes annotations that tie each part of the plan to the material throughout the book, allowing students to see the correlation between the chapters in the book and the elements of a professional marketing plan for a real company.

All components of our comprehensive support package have been developed to help you prepare lectures and tests as quickly and easily as possible. We provide a wealth of information and activities beyond the text to supplement your lectures, as well as teaching aids in a variety of formats to fi t your own teaching style.

Online Resources The fi rst marketing course is an important foundation course for students who plan on majoring in marketing, and as a foundation course in business administra- tion programs. The discipline builds on the foundation of several fi elds, borrow- ing concepts from economics, strategy, psychology, and statistics. At fi rst you may notice that there is not as much assigned homework as you might fi nd in courses such as accounting, statistics, or fi nance. Do not get into the habit of thinking that you can get by simply by paying attention and cramming before the midterm and fi nal examinations. A disciplined approach to studying, reading the assigned chap- ters before lectures, and utilizing the online resources that complement this book will help you get the most out of this course and lead to a richer understanding of marketing.

There is a rich collection of study tools that will help you in your marketing course. These resources are available on a number of teaching and learning man- agement systems to best meet you and your instructor’s needs. If your instructor required the online component it would be packaged with this textbook at your campus bookstore. If you purchased your book online or obtained it from an- other source, you can purchase the online resources that accompany this book at CengageBrain: http://www.cengagebrain.com/shop/ISBN/9781111821647.

If your instructor did not assign the online resources, you can still purchase ac- cess at the same URL. The Marketing CourseMate online resources provide a full complement of study aids and enhancements in a very user friendly interface. A more detailed description of the Marketing CourseMate program is provided on the inside front cover of this book.

MEET THE AUTHORS CHARLES W. LAMB

Charles W. Lamb is the M. J. Neeley Professor of Marketing, M. J. Neeley School of Business, Texas Christian University. He served as chair of the department of marketing from 1982 to 1988 and again from 1997 to 2003. He is currently chair of the Department of Information Systems and Supply Chain Management and is a

To get access, visit CengageBrain.com

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P R E FA C Exviii

former president of the Academy of Marketing Science and the Southwestern Mar- keting Association.

Lamb has authored and co-authored more than a dozen books and anthologies on marketing topics and over 150 articles that have appeared in academic journals and conference proceedings.

In 1997, he was awarded the prestigious Chancellor’s Award for Distinguished Research and Creative Activity at TCU. This is the highest honor that the uni- versity bestows on its faculty. Other key honors he has received include the M. J. Neeley School of Business Research Award and selection as a Distinguished Fellow of the Academy of Marketing Science and a Fellow of the Southwestern Marketing Association.

Lamb earned an associate’s degree from Sinclair Community College, a bach- elor’s degree from Miami University, an MBA from Wright State University, and a doctorate from Kent State University. He previously served as assistant and associ- ate professor of marketing at Texas A&M University.

JOSEPH F. HAIR

Joseph Hair is Professor of Marketing at Kennesaw State University. He previously held the Alvin C. Copeland Endowed Chair of Franchising and was Director, Entre- preneurship Institute, Louisiana State University. Hair also held the Phil B. Hardin Chair of Marketing at the University of Mississippi. He has taught graduate and undergraduate marketing, sales management, and marketing research courses.

Hair has authored more than 40 books and over 80 articles in scholarly jour- nals. He has also participated in many university committees and has chaired numerous departmental task forces. He serves on the editorial review boards of several journals.

Hair is a member of the Academy of Marketing Science, American Marketing Association, the Society for Marketing Advances, and the Association for Market- ing and Healthcare Research. He was selected as the 2011 AMS CUTCO/VECTOR Distinguished Marketing Educator, as the 2007 Innovative Marketer of the Year by the Marketing Management Association, and the 2004 recipient of the Academy of Marketing Science Excellence in Teaching Award.

Hair holds a bachelor’s degree in economics, a master’s degree in marketing, and a doctorate in marketing, all from the University of Florida. He also serves as a marketing consultant to businesses in a variety of industries, ranging from food and retail, to fi nancial services, health care, electronics, and the U.S. Departments of Agriculture and Interior.

CARL MCDANIEL

Carl McDaniel is professor emeritus in service at the University of Texas– Arlington. He currently holds courses for the executive MBA program on the Fort Worth campus and in China. He was the chairman of the marketing department at UTA for 32 years. McDaniel’s career spanned more than 40 years, during which he was the recipient of several awards for outstanding teaching. McDaniel has also been a district sales manager for Southwestern Bell Telephone Company and served as a board member of the North Texas Higher Education Authority, a billion-dollar fi nancial institution.

In addition to Marketing, McDaniel has written and co-authored over 50 text- books in marketing and business. McDaniel’s research has appeared in publications such as the Journal of Marketing, Journal of Business Research, Journal of the Academy of Marketing Science, and California Management Review.

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P R E FA C E xix

McDaniel is a member of the American Marketing Association. In addition to his academic experience, McDaniel has business experience as the co-owner of a marketing research fi rm. McDaniel has also served as senior consultant to the International Trade Centre (ITC), Geneva, Switzerland. The ITC’s mission is to help developing nations increase their exports. He has a bachelor’s degree from the University of Arkansas and a master’s degree and doctorate from Arizona State University.

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A C K N O W L E D G M E N T Sxx

This book could not have been written and published without the generous expert assistance of many people. First, we wish to thank Julie Baker and Stacy Landreth Grau, Texas Christian University, and Chad Autry, University of Tennessee, Knoxville, for their contributions to several chapters. We would also like to recognize and thank Vicky Crittenden, Boston College, for con- tributing the Critical Thinking cases and Marketing Miscues. We must also thank David Ferrell for contrib- uting all of the new Case Studies. Special thanks to Pam Rimer for typing the manuscript.

We also wish to thank each of the following persons for their work on the best supplement package that is available today. Our gratitude goes out to Tom Lewis for revising our comprehensive Test Bank and for writing the quizzes that appear in other parts of the package, Laura Rush for designing the fantastic PowerPoint templates, and David Ferrell for executing the revision beautifully.

Our deepest gratitude goes to the team at Cengage Learning, which has made this text a market leader. Jamie Bryant and Laura Rush, our developmental editors at B-books, are world-class in their abilities and dedication. Tambo- rah Moore, our production editor, helped make this text a reality. A special thanks goes to Mike Roche, our editor at Cengage, for his sug- gestions and support.

Finally, we are particularly indebted to our reviewers and to

faculty who have contributed to this edition and throughout the years. A special thanks to Randy Stuart, Kennesaw State University, for his keen eye and willingness to suggest revision.

Keith Absher University of North Alabama

Roshan (Bob) D. Ahuja Xavier University

Wayne Alexander Moorhead State University

Jackie Anderson Davenport University School of Business

Joseph Anderson Northern Arizona University

Linda Anglin Mankato State University

Christopher Anicich California State University, Fullerton

Barry Ashmen Bucks County Community College

Stephen Baglione Saint Leo University

Kathleen M. Bailey Loyola University of New Orleans

Gregory J. Baleja Alma College

Andrew Banasiewicz Louisiana State University

Barry L. Bayus University of North Carolina– Chapel Hill

Fred Beasley Northern Kentucky University

John L. Beisel Pittsburgh State University

Christine A. Bell Albright College

Ken Bell Ellsworth Community College

Thomas S. Bennett Gaston Community College

Marcel L. Berard Community College of Rhode Island

Deirdre Bird Providence College

Robert J. Blake Concordia University

David M. Blanchette Rhode Island College

L. Michelle Bobbitt Bradley University

James C. Boespflug Arapahoe Community College

Larry Borgen Normandale Community College

William H. Brannen Creighton University

David Brennan Webster University

Rich Brown Freed-Hardeman University

William G. Browne Oregon State University

Pat LeMay Burr University of Incarnate Word

Richard M. Burr Trinity University

Acknowledgments

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A C K N O W L E D G M E N T S xxi

Victoria Bush University of Mississippi

Deborah Chiviges Calhoun College of Notre Dame of Maryland

Joseph E. Cantrell DeAnza College

Shery Carder Lake City Community College

G. L. Carr University of Alaska, Anchorage

Stephen B. Castleberry University of Minnesota, Duluth

Ed Cerny University of South Carolina

Meg Clark Cincinnati State Technical and Community College

Irvine Clarke III James Madison University

Barbara Coleman Augusta College

Robert A. Compton Valley Forge Military College

Brian I. Connett California State University, Northridge

John Alan Davis Mohave Community College

Debra Decelles State University of New York–Brockport

Ronald Decker University of Wisconsin, Eau Claire

William M. Diamond State University of New York–Albany

Gary M. Donnelly Casper College

John T. Drea Western Illinois University

Debbie Easterling University of Maryland– Eastern Shore

Jacqueline K. Eastman Valdosta State University

Kevin M. Elliott Mankato State University

G. Scott Erickson Ithaca College

Karen A. Evans Herkimer County Community College

Theresa B. Flaherty Old Dominion University

P. J. Forrest Mississippi College

Raymond Frost Central Connecticut State University

John Gardner State University of New York–Brockport

S. J. Garner Eastern Kentucky University

Leonard R. Geiser Goshen College

Cornelia J. Glenn Owensboro Community College

James H. Glenn Owensboro Community College

Lynn R. Godwin University of St. Thomas

Daniel J. Goebel University of Southern Mississippi

Jana G. Goodrich Pennsylvania State University

Darrell Goudge University of Central Oklahoma

Reginald A. Graham Eastern Montana College

Gordon T. Gray Oklahoma City University

Donna H. Green Wayne State University

Mark Green Simpson College

Dwayne D. Gremler University of Idaho

Alice Griswold Clarke College

Barbara Gross California State University at Northridge

Richard A. Halberg Houghton College

Randall S. Hansen Stetson University

David M. Hardesty University of Miami

Martha Hardesty College of St. Catherine

Dorothy R. Harpool Wichita State University

Hari S. Hariharan University of Wisconsin, Madison

L. Jean Harrison-Walker University of Houston–Clear Lake

Michael Hartford Morehead State University

James W. Harvey George Mason University

Timothy S. Hatten Black Hills State University

Paula J. Haynes University of Tennessee at Chattanooga

James E. Hazeltine Northeastern Illinois University

Charlane Bomrad Held Onondaga Community College

Tom Hickey State University of New York–Oswego

Patricia M. Hopkins California State Polytechnic

Mark B. Houston University of Missouri

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A C K N O W L E D G M E N T Sxxii

Kristen B. Hovsepian Ashland University

Amy R. Hubbert University of Nebraska at Omaha

R. Vish Iyer University of Northern Colorado

Anita Jackson Central Connecticut State University

Anupam Jaju George Mason University

Bruce H. Johnson Gustavus Adolphus College

Russell W. Jones University of Central Oklahoma

Mathew Joseph University of South Alabama

Vaughn Judd Auburn University–Montgomery

Jacqueline J. Kacen University Illinois

Ira S. Kalb University of Southern California

William J. Kehoe University of Virginia

J. Steven Kelly DePaul University

Philip R. Kemp DePaul University

Raymond F. Keyes Boston College

Sylvia Keyes Bridgewater State College

G. Dean Kortge Central Michigan University

John R. Kuzma Minnesota State University, Mankato

Bernard P. Lake Kirkwood Community College

Thomas J. Lang University of Miami

J. Ford Laumer, Jr. Auburn University

Kenneth R. Lawrence New Jersey Institute of Technology

Richard M. Lei Northern Arizona University

Ron Lennon Barry University

Judith J. Leonard Eastern Kentucky University

J. Gordon Long Georgia College

Sandra L. Lueder Sacred Heart University

Michael Luthy Bellarmine College

James L. Macke Cincinnati State Technical and Community College

Charles S. Madden Baylor University

Deanna R. D. Mader Marshall University

Fred H. Mader Marshall University

Larry Maes Davenport University

Shirine Mafi Otterbein College

Jack K. Mandel Nassau Community College

Karl Mann Tennessee Tech University

Phylis M. Mansfi eld Pennsylvania State University–Erie/ Behrend

Cathy L. Martin Northeast Louisiana University

Gregory S. Martin University of West Florida

Irving Mason Herkimer County Community College

Lee H. McCain Seminole Community College

Michael McCall Ithaca College

Nancy Ryan McClure University of Central Oklahoma

Kim McKeage University of Maine

Bronna McNeely Midwestern State University

Sanjay S. Mehta Sam Houston State University

Taylor W. Meloan University of Southern California

Ronald E. Michaels University of Central Florida

Charles E. Michaels, Jr. University of South Florida

Mark A. Mitchell Coastal Carolina University

William C. Moncrief Texas Christian University

Michael C. Murphy Langston University

Elwin Myers Texas A&M University

Suzanne Altobello Nasco Southern Illinois University

Murugappan Natesan University of Alberta

N. Chinna Natesan Southwest Texas State University

Roy E. Nicely Valdosta State College

Carolyn Y. Nicholson Stetson University

Chuck Nielson Louisiana State University

Robert O’Keefe DePaul University

Patrick A. Okonkwo Central Michigan University

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A C K N O W L E D G M E N T S xxiii

Brian Olson Johnson County Community College

Anil M. Pandya Northeastern Illinois University

Michael M. Pearson Loyola University, New Orleans

John Perrachione Truman State University

Monica Perry California State University, Fullerton

Constantine G. Petrides Borough of Manhattan Community College

Julie M. Pharr Tennessee Technological University

Chris Pullig University of Virginia

William Rech Bucks County Community College

Allan C. Reddy Valdosta State University

Joseph Reihing State University of New York–Nassau

Jamie M. Ressler Palm Beach Atlantic University

Sandra Robertson Thomas Nelson Community College

John Ronchetto University of San Diego

Dick Rose University of Phoenix (deceased)

Al Rosenbloom Dominican University

Barbara-Jean Ross Louisiana State University

Lawrence Ross Florida Southern College

Anthony Rossi State University of New York–Brockport

Carl Saxby University of Southern Indiana

Jan Napoleon Saykiewicz Duquesne University

Deborah Reed Scarfi no William Jewel College

Jeffrey Schmidt University of Illinois

Peter A. Schneider Seton Hall University

James A. Seaman Nyack College

Trina Sego Boise State University

Donald R. Self Auburn University– Montgomery

Matthew D. Shank Northern Kentucky University

John Shapiro Northeastern State University

David L. Sherrell University of Memphis

Peggy O. Shields University of Southern Indiana

Mandeep Singh Western Illinois University

Lois J. Smith University of Wisconsin–Whitewater

Mark T. Spence Southern Connecticut State College

James V. Spiers Arizona State University

Thomas Stevenson University of North Carolina– Charlotte

Karen L. Stewart Richard Stockton College

James E. Stoddard University of New Hampshire

Judy Strauss University of Nevada, Reno

Randy Stuart Kennesaw State University

Robin Stuart Marketing Consultant

Susan Sunderline State University of New York–Brockport

Albert J. Taylor Austin Peay State University

Janice E. Taylor Miami University of Ohio

Ronald D. Taylor Mississippi State University

James L. Thomas Jacksonville State University

Kay Blythe Tracy Gettysburg College

Gregory P. Turner College of Charleston

Richard Turshen Pace University

Sandra T. Vernon Fayetteville Technical Community College

Franck Vingeron California State University at Northridge

Charles R. Vitaska Metro State College, Denver

James Ward Arizona State University

Beth A. Walker Arizona State University

Jim Wenthe Georgia College and State University

Stacia Wert-Gray University of Central Oklahoma

Janice K. Williams University of Central Oklahoma

Laura A. Williams San Diego State University

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A C K N O W L E D G M E N T Sxxiv

Elizabeth J. Wilson Boston College

Robert D. Winsor Loyola Marymount University

Leon Winer Pace University

Arch G. Woodside Boston College

Barbara Ross-Wooldridge University of Tampa

Linda Berns Wright Mississippi State University

William R. Wynd Eastern Washington University

Merv H. Yeagle University of Maryland

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To my daughters, Christine Stock, Jennifer McPhaul, and Kara Baker, and to the memory of Frank Mathew Baker.

—Charles W. Lamb

To my newest joy in life, my grandsons Joseph F. Hair, IV ( Joss) and Declan —Joseph F. Hair, Jr.

To Michelle and Mimi Olson —Carl McDaniel

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

1

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2 An Overview of Marketing

24 Strategic Planning for Competitive Advantage

54 Ethics and Social Responsibility

86 The Marketing Environment

132 Developing a Global Vision

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PA R T 1 T H E W O R L D O F M A R K E T I N G2

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chapter

1 An Overview of Marketing

Learning Outcomes

1 Defi ne the term marketing 2 Describe four marketing

management philosophies

3 Discuss the differences between sales and market orientations

4 Describe several reasons for studying marketing

What Is Marketing? What does the term marketing mean to you? Many people think it means the same as personal selling. Others think marketing is the same as advertising. Still others believe marketing has something to do with making products available in stores, arranging displays, and maintaining inventories of products for future sales. Actually, marketing includes all of these activities and more.

Marketing has two facets. First, it is a philosophy, an attitude, a perspective, or a management orientation that stresses customer satisfaction. Second, marketing is activities and processes used to implement this philosophy.

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

1

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ria Marke- ting involves more than just activities performed by the marketing department.

The American Marketing Association’s defi nition of marketing focuses on the second facet. Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.1