Armstrong cable economy pack channels

Full-Circle Learning MyLab™: Learning Full Circle for Marketing,

Management, Business Communication, and Intro to Business

BEFORE CLASS

AFTER CLASS DURING

CLASS

Decision Sims, Videos, and Learning

Catalytics

DSMs, pre-lecture homework,

eText

Writing Space, Video

Cases, Quizzes/ Tests

MyLab

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MyMarketingLab: Improves Student Engagement Before, During, and After Class

• NEW! VIDEO LIBRARY – Robust video library with over 100 new book-specific videos that include easy-to-assign assessments, the ability for instructors to add YouTube or other sources, the ability for students to upload video submissions, and the ability for polling and teamwork.

• Decision-making simulations – NEW and improved feedback for students. Place your students in the role of a key decision-maker! Simulations branch based on the decisions students make, providing a variation of scenario paths. Upon completion students receive a grade, as well as a detailed report of the choices and the associated consequences of those decisions.

• Video exercises – UPDATED with new exercises. Engaging videos that bring business concepts to life and explore business topics related to the theory students are learning in class. Quizzes then assess students’ comprehension of the concepts covered in each video.

• Learning Catalytics – A “bring your own device” student engagement, assessment, and classroom intelligence system helps instructors analyze students’ critical-thinking skills during lecture.

• Dynamic Study Modules (DSMs) – UPDATED with additional questions. Through adaptive learning, students get personalized guidance where and when they need it most, creating greater engagement, improving knowledge retention, and supporting subject-matter mastery. Also available on mobile devices.

• Writing Space – UPDATED with new commenting tabs, new prompts, and a new tool for students called Pearson Writer. A single location to develop and assess concept mastery and critical thinking, the Writing Space offers automatic graded, assisted graded, and create your own writing assignments, allowing you to exchange personalized feedback with students quickly and easily.

Writing Space can also check students’ work for improper citation or plagiarism by comparing it against the world’s most accurate text comparison database available from Turnitin.

• Additional Features – Included with the MyLab are a powerful homework and test manager, robust gradebook tracking, Reporting Dashboard, comprehensive online course content, and easily scalable and shareable content.

http://www.pearsonmylabandmastering.com

BREAKTHROUGH

Prep and Engagement

BREAK THRO

UGH

To better resultsTo better results

Critical Thinking

Decision Making

http://www.pearsonmylabandmastering.com
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Marketing An Introduction Thirteenth Edition

GAry ArmstronG University of North Carolina

PhIlIP Kotler Northwestern University

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vii

About the Authors As a team, Gary Armstrong and Philip Kotler provide a blend of skills uniquely suited to writing an introductory marketing text. Professor Armstrong is an award-winning teacher of undergraduate business students. Professor Kotler is one of the world’s leading authorities on marketing. Together they make the complex world of marketing practical, approachable, and enjoyable.

GAry ArmstronG is Crist W. Blackwell Distinguished Professor Emeritus of Undergraduate Education in the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. He holds undergraduate and master’s degrees in business from Wayne State University in Detroit, and he received his Ph.D. in marketing from North- western University. Dr. Armstrong has contributed numerous articles to leading business journals. As a consultant and researcher, he has worked with many companies on market- ing research, sales management, and marketing strategy.

But Professor Armstrong’s first love has always been teaching. His long-held Black- well Distinguished Professorship is the only permanent endowed professorship for distinguished undergraduate teaching at the University of North Carolina at Chapel Hill. He has been very active in the teaching and administration of Kenan-Flagler’s undergraduate program. His administrative posts have included Chair of Marketing, Associate Director of the Undergraduate Business Program, Director of the Business Honors Program, and many others. Through the years, he has worked closely with business student groups and has received several UNC campuswide and Business School teaching awards. He is the only repeat recipient of the school’s highly regarded Award for Excellence in Undergraduate Teaching, which he received three times. Most recently, Professor Armstrong received the UNC Board of Governors Award for Excellence in Teaching, the highest teaching honor bestowed by the 16-campus University of North Carolina system.

PhIlIP Kotler is S. C. Johnson & Son Distinguished Professor of International Mar- keting at the Kellogg School of Management, Northwestern University. He received his master’s degree at the University of Chicago and his Ph.D. at M.I.T., both in economics. Dr. Kotler is author of Marketing Management (Pearson), now in its 15th edition and the most widely used marketing textbook in graduate schools of business worldwide. He has authored dozens of other successful books and has written more than 50 books and 150 articles in leading journals. He is the only three-time winner of the coveted Alpha Kappa Psi award for the best annual article in the Journal of Marketing.

Professor Kotler was named the first recipient of four major awards: the Distinguished Marketing Educator of the Year Award and the William L. Wilkie “Marketing for a Bet- ter World” Award, both given by the American Marketing Association; the Philip Kotler Award for Excellence in Health Care Marketing presented by the Academy for Health Care Services Marketing; and the Sheth Foundation Medal for Exceptional Contribution to Mar- keting Scholarship and Practice. He is a charter member of the Marketing Hall of Fame, was voted the first Leader in Marketing Thought by the American Marketing Associa- tion, and was named the Founder of Modern Marketing Management in the Handbook of Management Thinking. His numerous other major honors include the Sales and Marketing Executives International Marketing Educator of the Year Award; the European Association of Marketing Consultants and Trainers Marketing Excellence Award; the Charles Coolidge Parlin Marketing Research Award; and the Paul D. Converse Award, given by the Ameri- can Marketing Association to honor “outstanding contributions to science in marketing.” A recent Forbes survey ranks Professor Kotler in the top 10 of the world’s most influential business thinkers. And in a recent Financial Times poll of 1,000 senior executives across

viii About the Authors

the world, Professor Kotler was ranked as the fourth “most influential business writer/ guru” of the twenty-first century.

Dr. Kotler has served as chairman of the College of Marketing of the Institute of Man- agement Sciences, a director of the American Marketing Association, and a trustee of the Marketing Science Institute. He has consulted with many major U.S. and international companies in the areas of marketing strategy and planning, marketing organization, and international marketing. He has traveled and lectured extensively throughout Europe, Asia, and South America, advising companies and governments about global marketing practices and opportunities.

ix

Brief Contents PArt 1 DefInInG mArKetInG AnD the mArKetInG ProCess 2

1 Marketing: Creating Customer Value and Engagement 2 2 Company and Marketing Strategy: Partnering to Build Customer Engagement, Value,

and Relationships 38

PArt 2 UnDerstAnDInG the mArKetPlACe AnD CUstomer VAlUe 66

3 Analyzing the Marketing Environment 66 4 Managing Marketing Information to Gain Customer Insights 98 5 Understanding Consumer and Business Buyer Behavior 132

PArt 3 DesIGnInG A CUstomer VAlUe-DrIVen strAteGy AnD mIx 168

6 Customer Value-Driven Marketing Strategy: Creating Value for Target Customers 168 7 Products, Services, and Brands: Building Customer Value 200 8 Developing New Products and Managing the Product Life Cycle 236 9 Pricing: Understanding and Capturing Customer Value 262 10 Marketing Channels: Delivering Customer Value 298 11 Retailing and Wholesaling 332 12 Engaging Customers and Communicating Customer Value: Advertising and Public Relations 364 13 Personal Selling and Sales Promotion 398 14 Direct, Online, Social Media, and Mobile Marketing 428

PArt 4 extenDInG mArKetInG 458

15 The Global Marketplace 458 16 Sustainable Marketing: Social Responsibility and Ethics 488

APPenDIx 1 Company Cases 519 APPenDIx 2 Marketing Plan 551 APPenDIx 3 Marketing by the Numbers 561 APPenDIx 4 Careers in Marketing 579

Glossary 591 References 601 Index 623

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xi

Contents Preface xxi Acknowledgments xxvii

PArt 1 DefInInG mArKetInG AnD the mArKetInG ProCess 2

1 marketing: Creating Customer Value and Engagement 2 ChAPter roAD mAP 2

Objective Outline 2 • Previewing the Concepts 2 • First Stop: Nike’s Customer Value-Driven Marketing 3

What Is marketing? 4 Marketing Defined 5 • The Marketing Process 5

Understanding the marketplace and Customer needs 6 Customer Needs, Wants, and Demands 6 • Market Offerings—Products, Services, and Experiences 6 • Customer Value and Satisfaction 7 • Exchanges and Relationships 7 • Markets 8

Designing a Customer Value-Driven marketing strategy 9 Selecting Customers to Serve 9 • Choosing a Value Proposition 9 • Marketing Management Orientations 9

Preparing an Integrated marketing Plan and Program 12

engaging Customers and managing Customer relationships 13 Customer Relationship Management 13

marketing at Work 1.1: JetBlue: Delighting Customers and Bringing Humanity Back to Air Travel 15 Engaging Customers 18 • Customer Engagement and Today’s Digital and Social Media 18 • Consumer-Generated Marketing 19 • Partner Relationship Management 20

Capturing Value from Customers 20 Creating Customer Loyalty and Retention 21 • Growing Share of Customer 21 • Building Customer Equity 22

the Changing marketing landscape 24 The Digital Age: Online, Mobile, and Social Media Marketing 24

marketing at Work 1.2: Real-Time Marketing: Engaging Consumers in the Moment 26 The Changing Economic Environment 28 • The Growth of Not-for-Profit Marketing 28 • Rapid Globalization 29 • Sustainable Marketing—The Call for More Environmental and Social Responsibility 30

so, What Is marketing? Pulling It All together 31

reVIeWInG AnD extenDInG the ConCePts 33 CHAPTER REVIEW AND CRITICAL THINKING • Objectives Review 33 • Key Terms 34 • Discussion Questions 34 • Critical Thinking Exercises 35 • MINICASES AND APPLICATIONS • Online, Mobile, and Social Media Marketing 35 • Marketing Ethics 35 • Marketing by the Numbers 36 • Video Case 36 • Company Cases 37

xii Contents

2 Company and marketing strategy: Partnering to Build Customer Engagement, Value, and Relationships 38

ChAPter roAD mAP 38

Objective Outline 38 • Previewing the Concepts 38 • First Stop: Starbucks’s Customer Value-Driven Marketing Strategy 39

Company-Wide strategic Planning: Defining marketing’s role 40 Defining a Market-Oriented Mission 41 • Setting Company Objectives and Goals 42 • Designing the Business Portfolio 43

marketing at Work 2.1: ESPN: Skillfully Managing a Complex Brand Portfolio 44

Planning marketing: Partnering to Build Customer relationships 48 Partnering with Other Company Departments 49 • Partnering with Others in the Marketing System 50

marketing strategy and the marketing mix 50 Customer Value-Driven Marketing Strategy 51 • Developing an Integrated Marketing Mix 53

marketing at Work 2.2: DuckDuckGo: Google’s Tiniest, Fiercest Competitor 54

managing the marketing effort 56 Marketing Analysis 56 • Marketing Planning 57 • Marketing Implementation 57 • Marketing Department Organization 59 • Marketing Control 60

measuring and managing marketing return on Investment 60

reVIeWInG AnD extenDInG the ConCePts 62 CHAPTER REVIEW AND CRITICAL THINKING • Objectives Review 62 • Key Terms 63 • Discussion Questions 63 • Critical Thinking Exercises 63 • MINICASES AND APPLICATIONS • Online, Mobile, and Social Media Marketing 64 • Marketing Ethics 64 • Marketing by the Numbers 64 • Video Case 65 • Company Cases 65

PArt 2 UnDerstAnDInG the mArKetPlACe AnD CUstomer VAlUe 66

3 Analyzing the marketing environment 66 ChAPter roAD mAP 66

Objective Outline 66 • Previewing the Concepts 66 • First Stop: Kellogg 67

the microenvironment 68 The Company 68 • Suppliers 69 • Marketing Intermediaries 70 • Competitors 70 • Publics 71 • Customers 72

the macroenvironment 72 The Demographic Environment 72 • The Economic Environment 80 • The Natural Environment 81 • The Technological Environment 82

marketing at Work 3.1: Chipotle’s Environmental Sustainability Mission: Food With Integrity 83 The Political and Social Environment 85 • The Cultural Environment 88

responding to the marketing environment 91 marketing at Work 3.2: In the Social Media Age: When the Dialogue Gets Nasty 92

Contents xiii

reVIeWInG AnD extenDInG the ConCePts 94 CHAPTER REVIEW AND CRITICAL THINKING • Objectives Review 94 • Key Terms 95 • Discussion Questions 95 • Critical Thinking Exercises 95 • MINICASES AND APPLICATIONS • Online, Mobile, and Social Media Marketing 95 • Marketing Ethics 96 • Marketing by the Numbers 96 • Video Case 96 • Company Cases 97

4 managing marketing Information to Gain Customer Insights 98 ChAPter roAD mAP 98

Objective Outline 98 • Previewing the Concepts 98 • First Stop: The LEGO Group 99

marketing Information and Customer Insights 100 Marketing Information and Today’s “Big Data” 101 • Managing Marketing Information 101

Assessing marketing Information needs 102

Developing marketing Information 102 Internal Data 102 • Competitive Marketing Intelligence 103

marketing at Work 4.1: Social Media Command Centers: Listening to and Engaging Customers in Social Space 104

marketing research 106 Defining the Problem and Research Objectives 107 • Developing the Research Plan 107 • Gathering Secondary Data 108 • Primary Data Collection 109 • Implementing the Research Plan 117 • Interpreting and Reporting the Findings 117

Analyzing and Using marketing Information 118 Customer Relationship Management (CRM) 118 • Big Data and Marketing Analytics 119

marketing at Work 4.2: Netflix Streams Success with Big Data and Marketing Analytics 120 Distributing and Using Marketing Information 122

other marketing Information Considerations 123 Marketing Research in Small Businesses and Nonprofit Organizations 123 • International Marketing Research 124 • Public Policy and Ethics in Marketing Research 125

reVIeWInG AnD extenDInG the ConCePts 128 CHAPTER REVIEW AND CRITICAL THINKING • Objectives Review 128 • Key Terms 129 • Discussion Questions 129 • Critical Thinking Exercises 129 • MINICASES AND APPLICATIONS • Online, Mobile, and Social Media Marketing 130 • Marketing Ethics 130 • Marketing by the Numbers 130 • Video Case 131 • Company Cases 131

5 Understanding Consumer and Business Buyer Behavior 132 ChAPter roAD mAP 132

Objective Outline 132 • Previewing the Concepts 132 • First Stop: Harley-Davidson 133

Consumer markets and Consumer Buyer Behavior 134 Model of Consumer Behavior 134 • Characteristics Affecting Consumer Behavior 135

marketing at Work 5.1: Word-of-Mouth Marketing: Sparking Brand Conversations and Helping Them Catch Fire 140

marketing at Work 5.2: Taco Bell: More than Just Tacos, a “Live Más” Lifestyle 144

the Buyer Decision Process 149 Need Recognition 149 • Information Search 149 • Evaluation of Alternatives 150 • Purchase Decision 150 • Postpurchase Behavior 151

the Buyer Decision Process for new Products 151 Stages in the Adoption Process 152 • Individual Differences in Innovativeness 152 • Influence of Product Characteristics on Rate of Adoption 153

Business markets and Business Buyer Behavior 154 Business Markets 154 • Business Buyer Behavior 156 • Engaging Business Buyers with Digital and Social Marketing 161

reVIeWInG AnD extenDInG the ConCePts 164 CHAPTER REVIEW AND CRITICAL THINKING • Objectives Review 164 • Key Terms 165 • Discussion Questions 165 • Critical Thinking Exercises 165 • MINICASES AND APPLICATIONS • Online, Mobile, and Social Media Marketing 166 • Marketing Ethics 166 • Marketing by the Numbers 166 • Video Case 167 • Company Cases 167

PArt 3 DesIGnInG A CUstomer VAlUe-DrIVen strAteGy AnD mIx 168

6 Customer Value-Driven marketing strategy: Creating Value for Target Customers 168 ChAPter roAD mAP 168

Objective Outline 168 • Previewing the Concepts 168 • First Stop: Dunkin’ Donuts 169

market segmentation 170 Segmenting Consumer Markets 171 • Segmenting Business Markets 176 • Segmenting International Markets 177 • Requirements for Effective Segmentation 178

market targeting 179 Evaluating Market Segments 179 • Selecting Target Market Segments 179

marketing at Work 6.1: Hypertargeting: Walking a Fine Line between Serving Customers and Stalking Them 186

Differentiation and Positioning 187 Positioning Maps 188 • Choosing a Differentiation and Positioning Strategy 189

marketing at Work 6.2: Spirit Airlines: Getting Less but Paying Much Less for It 194 Communicating and Delivering the Chosen Position 195

reVIeWInG AnD extenDInG the ConCePts 196 CHAPTER REVIEW AND CRITICAL THINKING • Objectives Review 196 • Key Terms 197 • Discussion Questions 197 • Critical Thinking Exercises 198 • MINICASES AND APPLICATIONS • Online, Mobile, and Social Media Marketing 198 • Marketing Ethics 198 • Marketing by the Numbers 199 • Video Case 199 • Company Cases 199

7 Products, services, and Brands: Building Customer Value 200 ChAPter roAD mAP 200

Objective Outline 200 • Previewing the Concepts 200 • First Stop: GoPro 201

What Is a Product? 202 Products, Services, and Experiences 202 • Levels of Product and Services 203 • Product and Service Classifications 204

xiv Contents

Product and service Decisions 207 Individual Product and Service Decisions 207 • Product Line Decisions 213 • Product Mix Decisions 214

services marketing 215 The Nature and Characteristics of a Service 215 • Marketing Strategies for Service Firms 216 • The Service Profit Chain 217

marketing at Work 7.1: Zappos.com: Taking Care of Those Who Take Care of Customers 218

Branding strategy: Building strong Brands 221 Brand Equity and Brand Value 222 • Building Strong Brands 223 • Managing Brands 229

marketing at Work 7.2: Brand Extensions: Consumers Say “Yeah!” or “Huh?” 230

reVIeWInG AnD extenDInG the ConCePts 232 CHAPTER REVIEW AND CRITICAL THINKING • Objectives Review 232 • Key Terms 233 • Discussion Questions 233 • Critical Thinking Exercises 233 • MINICASES AND APPLICATIONS • Online, Mobile, and Social Media Marketing 234 • Marketing Ethics 234 • Marketing by the Numbers 234 • Video Case 235 • Company Cases 235

8 Developing new Products and Managing the Product Life Cycle 236

ChAPter roAD mAP 236 Objective Outline 236 • Previewing the Concepts 236 • First Stop: Google 237

new Product Development strategy 238

the new Product Development Process 239 Idea Generation 239

marketing at Work 8.1: Crowdsourcing: Throwing the Innovation Doors Wide Open 241 Idea Screening 243 • Concept Development and Testing 243 • Marketing Strategy Development 244 • Business Analysis 245 • Product Development 245 • Test Marketing 246 • Commercialization 247

managing new Product Development 247 Customer-Centered New Product Development 247 • Team-Based New Product Development 248 • Systematic New Product Development 248

Product life-Cycle strategies 249 Introduction Stage 251

marketing at Work 8.2: Managing Mattel’s Product Life Cycle: More Than Just Fun and Games 252 Growth Stage 253 • Maturity Stage 254 • Decline Stage 255

Additional Product and service Considerations 256 Product Decisions and Social Responsibility 256 • International Product and Services Marketing 257

reVIeWInG AnD extenDInG the ConCePts 258 CHAPTER REVIEW AND CRITICAL THINKING • Objectives Review 258 • Key Terms 259 • Discussion Questions 260 • Critical Thinking Exercises 260 • MINICASES AND APPLICATIONS • Online, Mobile, and Social Media Marketing 260 • Marketing Ethics 260 • Marketing by the Numbers 261 • Video Case 261 • Company Cases 261

Contents xv

9 Pricing: Understanding and Capturing Customer Value 262 ChAPter roAD mAP 262

Objective Outline 262 • Previewing the Concepts 262 • First Stop: Amazon versus Walmart 263

What Is a Price? 264

major Pricing strategies 265 Customer Value-Based Pricing 265

marketing at Work 9.1: ALDI: Impressively High Quality at Impossibly Low Prices, Every Day 268 Cost-Based Pricing 269 • Competition-Based Pricing 271

other Internal and external Considerations Affecting Price Decisions 272 Overall Marketing Strategy, Objectives, and Mix 272 • Organizational Considerations 273 • The Market and Demand 274 • The Economy 275 • Other External Factors 276

new Product Pricing strategies 277 Market-Skimming Pricing 277 • Market-Penetration Pricing 277

Product mix Pricing strategies 278 Product Line Pricing 278 • Optional-Product Pricing 279 • Captive-Product Pricing 279 • By-Product Pricing 279 • Product Bundle Pricing 280

Price Adjustment strategies 280 Discount and Allowance Pricing 280 • Segmented Pricing 281 • Psychological Pricing 282 • Promotional Pricing 282 • Geographical Pricing 283 • Dynamic and Online Pricing 284

marketing at Work 9.2: Dynamic Pricing: The Wonders and Woes of Real-Time Price Adjustments 285 International Pricing 287

Price Changes 288 Initiating Price Changes 288 • Responding to Price Changes 290

Public Policy and Pricing 291 Pricing within Channel Levels 292 • Pricing across Channel Levels 293