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Principles of Marketing
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Principles of Marketing
Global Edition
Philip Kotler Northwestern University
Gary Armstrong University of North Carolina
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15e
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The rights of Philip Kotler and Gary Armstrong to be identified as authors of this work has been asserted by
them in accordance with the Copyright, Designs and Patents Act 1988.
Authorised adaptation from the United States edition, entitled Principles of Marketing, 15th Edition, ISBN 978-0-13-325541-6 by Philip Kotler and Gary Armstrong, published by Pearson Education © 2014.
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Dedication
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About The Authors
Philip Kotler is S. C. Johnson & Son Distinguished Professor
of International Marketing at
the Kellogg School of Manage-
ment, Northwestern Univer-
sity. He received his master’s
degree from the University
of Chicago and his PhD from
M.I.T., both in economics. Dr.
Kotler is author of Marketing Management (Pearson Prentice Hall), now in its fourteenth
edition and the most widely
used marketing textbook in
graduate schools of business worldwide. He has authored doz-
ens of other successful books and has written more than 100
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 two ma-
jor awards: the Distinguished Marketing Educator of the Year
Award given by the American Marketing Association and the
Philip Kotler Award for Excellence in Health Care Marketing pre-
sented by the Academy for Health Care Services Marketing. 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 Mar- keting Research Award; and the Paul D. Converse Award, given by the American 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 influen-
tial business thinkers. In a recent Financial Times poll of 1,000 se- nior executives across the world, Professor Kotler was ranked
as the fourth “most influential business writer/guru” of the
twenty-first century. And he recently topped BusinessEducators
.com’s “Management A-List of Academics,” based on outstand-
ing achievements as well as Google global Web search interest.
Dr. Kotler has served as chairman of the College on Mar-
keting of the Institute of Management 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.
Gary Armstrong is Crist W. Blackwell Distinguished Profes-
sor Emeritus of Undergraduate
Education in the Kenan-Flagler
Business School at the Uni-
versity of North Carolina at
Chapel Hill. He holds under-
graduate and master’s degrees
in business from Wayne State
University in Detroit, and he
received his PhD in marketing
from Northwestern Univer-
sity. Dr. Armstrong has con-
tributed numerous articles to
leading business journals. As a consultant and researcher, he
has worked with many companies on marketing research, sales
management, and marketing strategy.
But Professor Armstrong’s first love has always been
teaching. His long-held Blackwell Distinguished Professor-
ship is the only permanently endowed professorship for dis-
tinguished undergraduate teaching at the University of North
Carolina (UNC) at Chapel Hill. He has been very active in the
teaching and administration of Kenan-Flagler’s undergradu-
ate 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 campus-wide
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 teach-
ing honor bestowed by the 16-campus University of North
Carolina system.
7
As a team, Philip Kotler and Gary Armstrong provide a blend of skills uniquely suited to writing
an introductory marketing text. Professor Kotler is
one of the world’s leading authorities on marketing.
Professor Armstrong is an award-winning teacher
of undergraduate business students. Together they
make the complex world of marketing practical,
approachable, and enjoyable.
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9
Preface 16
Part 1 Defining Marketing and the Marketing Process 24 1 Marketing: Creating and Capturing Customer Value 24
2 Company and Marketing Strategy: Partnering to Build Customer Relationships 60
Part 2 Understanding the Marketplace and Consumers 90 3 Analyzing the Marketing Environment 90
4 Managing Marketing Information to Gain Customer Insights 122
5 Consumer Markets and Consumer Buyer Behavior 156
6 Business Markets and Business Buyer Behavior 188
Part 3 Designing a Customer-Driven Strategy and Mix 212 7 Customer-Driven Marketing Strategy: Creating Value for Target Customers 212
8 Products, Services, and Brands: Building Customer Value 246
9 New-Product Development and Product Life-Cycle Strategies 282
10 Pricing: Understanding and Capturing Customer Value 310
11 Pricing Strategies: Additional Considerations 334
12 Marketing Channels: Delivering Customer Value 360
13 Retailing and Wholesaling 394
14 Communicating Customer Value: Integrated Marketing Communications Strategy 426
15 Advertising and Public Relations 454
16 Personal Selling and Sales Promotion 482
17 Direct and Online Marketing: Building Direct Customer Relationships 514
Part 4 Extending Marketing 546 18 Creating Competitive Advantage 546
19 The Global Marketplace 572
20 Sustainable Marketing: Social Responsibility and Ethics 602
Appendix 1 Marketing Plan 633
Appendix 2 Marketing by the Numbers 643
Appendix 3 Marketing Careers 661
Glossary 673
Index 683
Brief Contents
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Preface 16
Part 1: Defining Marketing and the Marketing Process 24
Marketing: Creating and Capturing Customer Value 24
What Is Marketing? 26
Marketing Defined 27 | The Marketing Process 27
Understanding the Marketplace and Customer Needs 28
Customer Needs, Wants, and Demands 28 | Market
Offerings—Products, Services, and Experiences 28 |
Customer Value and Satisfaction 29 | Exchanges and
Relationships 29 | Markets 29
Designing a Customer-Driven Marketing Strategy 30
Selecting Customers to Serve 31 | Choosing a Value
Proposition 31 | Marketing Management Orientations 31
Preparing an Integrated Marketing Plan and Program 34
Building Customer Relationships 34
Customer Relationship Management 34 | The Changing
Nature of Customer Relationships 38 | Partner Relationship
Management 41
Capturing Value from Customers 41
Creating Customer Loyalty and Retention 42 | Growing Share
of Customer 42 | Building Customer Equity 43
The Changing Marketing Landscape 44
The Changing Economic Environment 44 | The Digital
Age 45 | The Growth of Not-for-Profit Marketing 48 | Rapid
Globalization 48 | Sustainable Marketing—The Call for More
Social Responsibility 49
So, What Is Marketing? Pulling It All Together 50
Reviewing Objectives and Key Terms 51 | Objectives Review 51 |
Key Terms 53 | Discussion and Critical Thinking 53 |
Discussion Questions 53 | Critical Thinking Exercises 53 |
Applications and Cases 54 | Marketing Technology 54 |
Marketing Ethics 54 | Marketing by the Numbers 54 | Video Case:
Zappos 55 | Company Case: Abou Shakra Restaurant 55
1
Contents
Company and Marketing Strategy: Partnering to Build Customer Relationships 60
Company-Wide Strategic Planning: Defining Marketing’s
Role 63
Defining a Market-Oriented Mission 63 | Setting Company
Objectives and Goals 64 | Designing the Business Portfolio 65
Planning Marketing: Partnering to Build Customer
Relationships 70
Partnering with Other Company Departments 71 | Partnering
with Others in the Marketing System 72
Marketing Strategy and the Marketing Mix 72
Customer-Driven Marketing Strategy 73 | Developing an
Integrated Marketing Mix 76
Managing the Marketing Effort 77
Marketing Analysis 77 | Marketing Planning 78 | Marketing
Implementation 79 | Marketing Department Organization 80 |
Marketing Control 81
Measuring and Managing Return on Marketing Investment 81
Reviewing Objectives and Key Terms 61 | Objectives Review
83 | Key Terms 62 | Discussion and Critical Thinking 62 |
Discussion Questions 84 | Critical Thinking Exercises 63 |
Applications and Cases 63 | Marketing Technology 85 |
Marketing Ethics 63 | Marketing by the Numbers 85 |
Video Case: OXO 64 | Company Case: Trap-Ease America 86
Part 2: Understanding the Marketplace and Consumers 90
Analyzing the Marketing Environment 90
The Microenvironment 93
The Company 93 | Suppliers 93 | Marketing Intermediaries 94 |
Competitors 94 | Publics 95 | Customers 95
The Macroenvironment 96
The Demographic Environment 96 | The Economic
Environment 103 | The Natural Environment 104 |
2
3
Part 1: Defining Marketing and the Marketing Process (Chapters 1–2)
Part 2: Understanding the Marketplace and Consumers (Chapters 3–6)
Part 3: Designing a Customer-Driven Strategy and Mix (Chapters 7–17)
Part 4: Extending Marketing (Chapters 18–20)
11
2
12 Contents
The Technological Environment 106 | The Political and Social
Environment 107 | The Cultural Environment 110
Responding to the Marketing Environment 113
Reviewing Objectives and Key Terms 93 | Objectives Review
115 | Key Terms 94 | Discussion and Critical Thinking 94 |
Discussion Questions 116 | Critical Thinking Exercises 95 |
Applications and Cases 95 | Marketing Technology 117 |
Marketing Ethics 95 | Marketing by the Numbers 96 |
Video Case: Ecoist 96 | Company Case: Xerox 118
Managing Marketing Information to Gain Customer Insights 122
Marketing Information and Customer Insights 124
Assessing Marketing Information Needs 125
Developing Marketing Information 126
Internal Data 126 | Competitive Marketing Intelligence 127
Marketing Research 128
Defining the Problem and Research Objectives 129 |
Developing the Research Plan 129 | Gathering Secondary
Data 130 | Primary Data Collection 131 | Implementing the
Research Plan 140 | Interpreting and Reporting the Findings 141
Analyzing and Using Marketing Information 141
Customer Relationship Management 141 | Distributing and
Using Marketing Information 142
Other Marketing Information Considerations 144
Marketing Research in Small Businesses and Nonprofit
Organizations 145 | International Marketing Research 146 |
Public Policy and Ethics in Marketing Research 147
Reviewing Objectives and Key Terms 126 | Objectives Review
148 | Key Terms 149 | Discussion and Critical Thinking 128 |
Discussion Questions 128 | Critical Thinking Exercises 128 |
Applications and Cases 128 | Marketing Technology 150 |
Marketing Ethics 129 | Marketing by the Numbers 129 | Video
Case: Domino’s 151 | Company Case: Meredith 152
Consumer Markets and Consumer Buyer Behavior 156
Model of Consumer Behavior 158
Characteristics Affecting Consumer Behavior 159
Cultural Factors 159 | Social Factors 162 | Personal
Factors 167 | Psychological Factors 171
Types of Buying Decision Behavior 174
Complex Buying Behavior 174 | Dissonance-Reducing Buying
Behavior 175 | Habitual Buying Behavior 175 | Variety-Seeking
Buying Behavior 175
The Buyer Decision Process 176
Need Recognition 176 | Information Search 176 | Evaluation
of Alternatives 177 | Purchase Decision 177 | Postpurchase
Behavior 178
4
5
The Buyer Decision Process for New Products 178
Stages in the Adoption Process 179 | Individual Differences in
Innovativeness 179 | Influence of Product Characteristics on
Rate of Adoption 180
Reviewing Objectives and Key Terms 159 | Objectives Review
181 | Key Terms 160 | Discussion and Critical Thinking 160 |
Discussion Questions 160 | Critical Thinking Exercises 182 |
Applications and Cases 161 | Marketing Technology 161 |
Marketing Ethics 161 | Marketing by the Numbers 183 | Video
Case: Goodwill Industries 162 | Company Case: Porsche 184
Business Markets and Business Buyer Behavior 188
Business Markets 190
Market Structure and Demand 191 | Nature of the Buying Unit 191
Business Buyer Behavior 193
Major Types of Buying Situations 193 | Participants in
the Business Buying Process 194 | Major Influences on
Business Buyers 194 | The Business Buying Process 197 |
E-Procurement: Buying on the Internet 199
Institutional and Government Markets 200
Institutional Markets 202 | Government Markets 203
Reviewing Objectives and Key Terms 183 | Objectives
Review 205 | Key Terms 184 | Discussion and Critical Thinking
184 | Discussion Questions 206 | Critical Thinking Exercises
185 | Applications and Cases 185 | Marketing Technology 185 |
Marketing Ethics 207 | Marketing by the Numbers 186 | Video
Case: Eaton 186 | Company Case: Cisco Systems 208
Part 3: Designing a Customer-Driven Strategy and Mix 212
Customer-Driven Marketing Strategy: Creating Value for Target Customers 212
Market Segmentation 215
Segmenting Consumer Markets 215 | Segmenting Business
Markets 222 | Segmenting International Markets 223 |
Requirements for Effective Segmentation 224
Market Targeting 224
Evaluating Market Segments 224 | Selecting Target Market
Segments 225
Differentiation and Positioning 232
Positioning Maps 232 | Choosing a Differentiation and
Positioning Strategy 233 | Communicating and Delivering the
Chosen Position 238
Reviewing Objectives and Key Terms 217 | Objectives Review
217 | Key Terms 240 | Discussion and Critical Thinking 218 |
Discussion Questions 218 | Critical Thinking Exercises 240 |
Applications and Cases 219 | Marketing Technology 219 |
Marketing Ethics 241 | Marketing by the Numbers 219 | Video
Case: Boston Harbor Cruises 241 | Company Case: Bentley
Motors 242
6
7
Contents 13
Products, Services, and Brands: Building Customer Value 246
What Is a Product? 248
Products, Services, and Experiences 249 | Levels of
Product and Services 249 | Product and Service
Classifications 250
Product and Service Decisions 253
Individual Product and Service Decisions 253 | Product Line
Decisions 258 | Product Mix Decisions 258
Services Marketing 259
The Nature and Characteristics of a Service 260 | Marketing
Strategies for Service Firms 261
Branding Strategy: Building Strong Brands 266
Brand Equity 266
Building Strong Brands 267 | Managing Brands 274
Reviewing Objectives and Key Terms 253 | Objectives Review
275 | Key Terms 254 | Discussion and Critical Thinking 254 |
Discussion Questions 254 | Critical Thinking Exercise 276 |
Applications and Cases 255 | Marketing Technology 255 |
Marketing Ethics 255 | Marketing by the Numbers 255 | Video
Case: Life Is Good 277 | Company Case: Mavi Jeans 278
New-Product Development and Product Life-Cycle Strategies 282
New-Product Development Strategy 284
The New-Product Development Process 285
Idea Generation 285 | Idea Screening 287 | Concept
Development and Testing 289 | Marketing Strategy
Development 290 | Business Analysis 291 | Product
Development 291 | Test Marketing 292 |
Commercialization 293
Managing New-Product Development 293
Customer-Centered New-Product Development 293 | Team-
Based New-Product Development 294 | Systematic New-
Product Development 294 | New-Product Development in
Turbulent Times 295
Product Life-Cycle Strategies 295
Introduction Stage 297 | Growth Stage 298 | Maturity Stage
298 | Decline Stage 299
Additional Product and Service Considerations 301
Product Decisions and Social Responsibility 301 |
International Product and Services Marketing 303
Reviewing Objectives and Key Terms 282 | Objectives Review
282 | Key Terms 283 | Discussion and Critical Thinking 283 |
Discussion Questions 283 | Critical Thinking Exercises 305 |
Applications and Cases 284 | Marketing Technology 284 |
Marketing Ethics 284 | Marketing by the Numbers 306 | Video
Case: Subaru 285 | Company Case: Google 307
8
9
Pricing: Understanding and Capturing Customer Value 310
What Is a Price? 312
Major Pricing Strategies 313
Customer Value-Based Pricing 313 | Cost-Based Pricing 317 |
Competition-Based Pricing 321
Other Internal and External Considerations Affecting Price
Decisions 321
Overall Marketing Strategy, Objectives, and Mix 321 |
Organizational Considerations 324 | The Market and
Demand 324 | The Economy 327 | Other External Factors 327
Reviewing Objectives and Key Terms 306 | Objectives
Review 328 | Key Terms 307 | Discussion and Critical
Thinking 307 | Discussion Questions 307 | Critical Thinking
Exercises 329 | Applications and Cases 308 | Marketing
Technology 308 | Marketing Ethics 308 | Marketing by the
Numbers 330 | Video Case: Smashburger 309 | Company Case:
Cath Kidston 331
Pricing Strategies: Additional Considerations 334
New-Product Pricing Strategies 336
Market-Skimming Pricing 336 | Market-Penetration
Pricing 337
Product Mix Pricing Strategies 337
Product Line Pricing 338 | Optional Product Pricing 338 |
Captive Product Pricing 338 | By-Product Pricing 339 |
Product Bundle Pricing 339
Price Adjustment Strategies 339
Discount and Allowance Pricing 340 | Segmented Pricing 340 |
Psychological Pricing 341 | Promotional Pricing 343 |
Geographical Pricing 344 | Dynamic and Internet Pricing 345 |
International Pricing 346
Price Changes 347
Initiating Price Changes 347 | Responding to Price
Changes 350
Public Policy and Pricing 351
Pricing within Channel Levels 352 | Pricing across Channel
Levels 352
Reviewing Objectives and Key Terms 331 | Objectives
Review 353 | Key Terms 332 | Discussion and Critical
Thinking 333 | Discussion Questions 333 | Critical Thinking
Exercises 333 | Applications and Cases 333 | Marketing
Technology 355 | Marketing Ethics 334 | Marketing by the
Numbers 334 | Video Case: Hammerpress 356 | Company Case:
Amazon vs. Walmart 357
10
11
14 Contents
Marketing Channels: Delivering Customer Value 360
Supply Chains and the Value Delivery Network 362
The Nature and Importance of Marketing Channels 363
How Channel Members Add Value 364 | Number of Channel
Levels 365
Channel Behavior and Organization 366
Channel Behavior 366 | Vertical Marketing Systems 367 |
Horizontal Marketing Systems 369 | Multichannel Distribution
Systems 370 | Changing Channel Organization 370
Channel Design Decisions 371
Analyzing Consumer Needs 372 | Setting Channel Objectives 372
Identifying Major Alternatives 373 | Evaluating the Major
Alternatives 374 | Designing International Distribution Channels 374
Channel Management Decisions 375
Selecting Channel Members 375 | Managing and Motivating
Channel Members 376 | Evaluating Channel Members 376
Public Policy and Distribution Decisions 376
Marketing Logistics and Supply Chain Management 379
Nature and Importance of Marketing Logistics 379 | Goals of
the Logistics System 380 | Major Logistics Functions 381 |
Integrated Logistics Management 383
Reviewing Objectives and Key Terms 365 | Objectives Review
387 | Key Terms 366 | Discussion and Critical Thinking 367 |
Discussion Questions 367 | Critical Thinking Exercises 367 |
Applications and Cases 367 | Marketing Technology 389 |
Marketing Ethics 368 | Marketing by the Numbers 368 | Video
Case: Gaviña Gourmet Coffee 368 | Company Case: Pandora 390
Retailing and Wholesaling 394
Retailing 374
Types of Retailers 397 | Retailer Marketing Decisions 402 |
Retailing Trends and Developments 408
Wholesaling 414
Types of Wholesalers 415 | Wholesaler Marketing
Decisions 415 | Trends in Wholesaling 418
Reviewing Objectives and Key Terms 397 | Objectives
Review 419 | Key Terms 398 | Discussion and Critical
Thinking 398 | Discussion Questions 420 | Critical Thinking
Exercises 399 | Applications and Cases 399 | Marketing
Technology 399 | Marketing Ethics 421 | Marketing by the
Numbers 400 | Video Case: Home Shopping Network 400 |
Company Case: Leader Price 422
Communicating Customer Value: Integrated Marketing Communications Strategy 426
The Promotion Mix 428
Integrated Marketing Communications 429
12
13
14
The New Marketing Communications Model 429 | The Need
for Integrated Marketing Communications 431
A View of the Communication Process 434
Steps in Developing Effective Marketing Communication 435
Identifying the Target Audience 436 | Determining the
Communication Objectives 436 | Designing a Message 437 |
Choosing Media 438 | Selecting the Message Source 439 |
Collecting Feedback 440
Setting the Total Promotion Budget and Mix 440
Setting the Total Promotion Budget 440 | Shaping the Overall
Promotion Mix 443 | Integrating the Promotion Mix 445
Socially Responsible Marketing Communication 446
Advertising and Sales Promotion 446 | Personal Selling 446
Reviewing Objectives and Key Terms 425 | Objectives Review
447 | Key Terms 426 | Discussion and Critical Thinking 426 |
Discussion Questions 448 | Critical Thinking Exercises 427 |
Applications and Cases 427 | Marketing Technology 427 |
Marketing Ethics 449 | Marketing by the Numbers 428 | Video
Case: OXO 428 | Company Case: Red Bull 450
Advertising and Public Relations 454
Advertising 456
Setting Advertising Objectives 457 | Setting the Advertising
Budget 459 | Developing Advertising Strategy 459 | Evaluating
Advertising Effectiveness and the Return on Advertising
Investment 469 | Other Advertising Considerations 470
Public Relations 472
The Role and Impact of PR 472 | Major Public Relations
Tools 473
Reviewing Objectives and Key Terms 453 | Objectives Review 475 |
Key Terms 454 | Discussion and Critical Thinking 454 | Discussion
Questions 476 | Critical Thinking Exercise 455 | Applications and
Cases 455 | Marketing Technology 455 | Marketing Ethics 477 | Marketing by the Numbers 456 | Video Case: E*trade 456 | Company
Case: The Super Bowl 478
Personal Selling and Sales Promotion 482
Personal Selling 484
The Nature of Personal Selling 484 | The Role of the Sales
Force 485
Managing the Sales Force 486
Designing the Sales Force Strategy and Structure 487 |
Recruiting and Selecting Salespeople 490 | Training
Salespeople 491 | Compensating Salespeople 492 |
Supervising and Motivating Salespeople 492 |
Evaluating Salespeople and Sales Force Performance 496
The Personal Selling Process 497
Steps in the Selling Process 497 | Personal Selling
and Managing Customer Relationships 499
15
16
Contents 15
Sales Promotion 501
The Rapid Growth of Sales Promotion 502 | Sales Promotion
Objectives 502 | Major Sales Promotion Tools 503 |
Developing the Sales Promotion Program 506
Reviewing Objectives and Key Terms 485 | Objectives Review
507 | Key Terms 486 | Discussion and Critical Thinking 486 |
Discussion Questions 486 | Critical Thinking Exercise 508 |
Applications and Cases 487 | Marketing Technology 487 |
Marketing Ethics 487 | Marketing by the Numbers 509 | Video
Case: MedTronic 488 | Company Case: Salesforce.com 510
Direct and Online Marketing: Building Direct Customer Relationships 514
The New Direct Marketing Model 516
Growth and Benefits of Direct Marketing 517
Benefits to Buyers 517 | Benefits to Sellers 518
Customer Databases and Direct Marketing 518
Forms of Direct Marketing 521
Direct-Mail Marketing 521 | Catalog Marketing 522 |
Telemarketing 523 | Direct-Response Television Marketing 523 |
Kiosk Marketing 524
Online Marketing 525
Marketing and the Internet 525 | Online Marketing Domains
526 | Setting Up an Online Marketing Presence 528
Public Policy Issues in Direct Marketing 536
Irritation, Unfairness, Deception, and Fraud 536 | Consumer
Privacy 537 | A Need for Action 537
Reviewing Objectives and Key Terms 517 | Objectives Review
539 | Key Terms 518 | Discussion and Critical Thinking 518 |
Discussion Questions 518 | Critical Thinking Exercises 540 |
Applications and Cases 519 | Marketing Technology 519 |
Marketing Ethics 519 | Marketing by the Numbers 541 | Video
Case: Home Shopping Network 520 | Company Case: EBay 542
Part 4: Extending Marketing 546
Creating Competitive Advantage 546
Competitor Analysis 548
Identifying Competitors 549 | Assessing Competitors 551 |
Selecting Competitors to Attack and Avoid 553 | Designing a
Competitive Intelligence System 555
Competitive Strategies 555
Approaches to Marketing Strategy 555 | Basic Competitive
Strategies 557 | Competitive Positions 558 | Market Leader
Strategies 560 | Market Challenger Strategies 563 | Market
Follower Strategies 564 | Market Nicher Strategies 564
Balancing Customer and Competitor Orientations 565
Reviewing Objectives and Key Terms 544 | Objectives Review 566 |
Key Terms 545 | Discussion and Critical Thinking 545 | Discussing
the Concepts 545 | Critical Thinking Exercises 567 | Applications
17
18
and Cases 546 | Marketing Technology 546 | Marketing Ethics 546 |
Marketing by the Numbers 546 | Video Case: Umpqua Bank 568 |
Company Case: Ford 569
The Global Marketplace 572
Global Marketing Today 574
Looking at the Global Marketing Environment 576
The International Trade System 576 | Economic Environment 578 |
Political-Legal Environment 580 | Cultural Environment 581
Deciding Whether to Go Global 583
Deciding Which Markets to Enter 584
Deciding How to Enter the Market 585
Exporting 585 | Joint Venturing 586 | Direct Investment 587
Deciding on the Global Marketing Program 588
Product 590 | Promotion 592 | Price 593 | Distribution
Channels 593
Deciding on the Global Marketing Organization 594
Reviewing Objectives and Key Terms 573 | Objectives Review
595 | Key Terms 574 | Discussion and Critical Thinking 574 |
Discussion Questions 596 | Critical Thinking Exercises 575 |
Applications and Cases 575 | Marketing Technology 575 |
Marketing Ethics 575 | Marketing by the Numbers 597 | Video
Case: The U.S. Film Industry 576 | Company Case: Buick 598
Sustainable Marketing: Social Responsibility and Ethics 602
Sustainable Marketing 604
Social Criticisms of Marketing 606
Marketing’s Impact on Individual Consumers 606 | Marketing’s
Impact on Society as a Whole 610 | Marketing’s Impact on
Other Businesses 612
Consumer Actions to Promote Sustainable Marketing 613
Consumerism 613 | Environmentalism 614 | Public Actions to
Regulate Marketing 618
Business Actions Toward Sustainable Marketing 618
Sustainable Marketing Principles 619 | Marketing Ethics 623 |
The Sustainable Company 625
Reviewing Objectives and Key Terms 604 | Objectives Review
626 | Key Terms 605 | Discussion and Critical Thinking 605 |
Discussion Questions 605 | Critical Thinking Exercises 605 |
Applications and Cases 605 | Marketing Technology 627 |
Marketing Ethics 606 | Marketing by the Numbers 606 | Video
Case: Life Is Good 606 | Company Case: International Paper 628
Appendix 1: Marketing Plan 633
Appendix 2: Marketing by the Numbers 643
Appendix 3: Marketing Careers 661
Glossary 673
Index 683
19
20
The Fifteenth Edition of Principles of Marketing
Students across six continents, more than 40 countries, and 24 languages rely on Kotler/
Armstrong’s Principles of Marketing
Principles of Marketing remains the
and Relationships
Principles of Marketing
Creating value for customers in order to capture value from customers in return. Today’s creating customer value and managing customer relationships
creates customer captures
Preface
16
Preface 17
deep focus on brands, anchored by the Chapter 30 section “Branding Strategy: Building
Strong Brands.”
3. Harnessing new marketing technologies. New digital and other high-tech marketing de- velopments are dramatically changing how consumers and marketers relate to one
another. No other force is having more impact than technology on marketing strategy
and practice. The fifteenth edition thoroughly explores the new technologies impacting
marketing, from digital relationship-building tools in Chapter 1 to new digital market-
ing and online technologies in Chapters 15 and 17 to the exploding use of online social
networks and consumer-generated marketing in Chapters 1, 5, 14, 15, 17—and just
about everywhere else in the text.
4. Measuring and managing return on marketing. Especially in uncertain economic times, marketing managers must ensure that their marketing dollars are being well spent.
In the past, many marketers spent freely on big, expensive marketing programs, often
without thinking carefully about the financial returns on their spending. But all that
has changed rapidly. “Marketing accountability”—measuring and managing return
on marketing investments—has now become an important part of strategic marketing
decision making. This emphasis on marketing accountability is addressed throughout
the fifteenth edition.
5. Sustainable marketing around the globe. As technological developments make the world an increasingly smaller and more fragile place, marketers must be skilled at marketing
their brands globally and in sustainable ways. New material throughout the fifteenth
edition emphasizes the concepts of global marketing and sustainable marketing—
meeting the present needs of consumers and businesses while also preserving or
enhancing the ability of future generations to meet their needs. The fifteenth edition
integrates global marketing and sustainability topics throughout the text. It then pro-
vides focused coverage of each topic in Chapters 41 and 42, respectively.
New in the Fifteenth Edition We’ve thoroughly revised the fifteenth edition of Principles of Marketing to reflect the major trends and forces impacting marketing in this high-tech era of customer value and relation-
ships. Here are just some of the major and continuing changes you’ll find in this edition:
now affecting the ways in which marketers and customers learn about and relate to
each other. In recent years, nothing has had greater impact than technology on consum-
ers and the marketers who serve them. Every chapter of the fifteenth edition features
new, revised, and expanded discussions of the explosive impact of the exciting new marketing technologies shaping marketing strategy and practice—from online social networks and brand communities discussed in Chapters 1, 5, 14, 15, and 17; to “online
listening” and Webnology research tools in Chapter 4, neuromarketing in Chapter 5,
Create value for customers and build customer relationships
Capture value from customers in return
Capture value from customers to create profits and customer equity
Build profitable relationships and create customer
delight
Construct an integrated
marketing program that delivers
superior value
Design a customer-driven
marketing strategy
Understand the marketplace and customer needs
and wants
Marketing: Creating and Capturing Customer Value
FIGURE | 1.1 A Simple Model of the Marketing Process
18 Preface
and location-based marketing in Chapter 7; to the use of social networks in business-to-
business marketing and sales in Chapters 6 and 16; to Internet and mobile marketing
and other new communications technologies in Chapters 1, 14, 15, 17, and throughout.
The fifteenth edition is packed with new stories and examples illustrating how com-
panies employ technology to gain competitive advantage—from traditional marketing
all-stars such as P&G, McDonald’s, and Nike to new-age digital competitors such as
Apple, Google, Amazon.com, and Facebook.
customer-value framework from previous editions. The customer-value model presented in the first chapter is fully integrated throughout the remainder of the book. No other marketing
text presents such a clear and compelling customer-value approach.
changing nature of customer relationships with companies and brands. Today’s marketers are creating deep consumer involvement and a sense of customer community surrounding
their brands—making brands a meaningful part of consumers’ conversations and lives.
Today’s new relationship-building tools include everything from Web sites, blogs, in-
person events, and video sharing to online communities and social networks such as
Facebook, YouTube, Pinterest, Twitter, or a company’s own social networking sites. For
just a few examples, see Chapter 1 (the section “The Changing Nature of Customer Re-
lationships”); Chapter 4 (qualitative approaches to gaining deeper customer insights);
Chapter 5 (managing online influence and marketing through social networks); Chap-
ter 9 (customer-driven new-product development and co-creation); Chapters 14 and
15 (the shift toward more personalized, interactive communications); and Chapter 39
(online social networks, customer communities, and direct digital media).
-
ward two-way interactions between customers and brands, including such topics as
customer-managed relationships, consumer empowerment, crowdsourcing, customer co-creation, and consumer-generated marketing. Today’s more empowered customers are giving as much as they get in the form of two-way relationships (Chapter 1), a more
active role in providing customer insights (Chapter 4), crowdsourcing and co-creating new
products (Chapter 8), consumer-generated marketing content (Chapters 1 and 15), devel-
oping or passing along brand messages (Chapters 1, 5, 8, 14, and 15), interacting in cus-
tomer communities (Chapters 5, 15, and 17), and other developments.
-
sumers are dealing with marketing in an uncertain economy in the lingering after- math of the recent Great Recession. Starting with a section and feature in Chapter 1
and continuing with new sections, discussions, and examples integrated throughout
the text, the fifteenth edition shows how now, even as the economy recovers, marketers
must focus on creating customer value and sharpening their value propositions in this
era of more sensible consumption.
sustainable marketing. The discussion begins in Chapter 1 and ends in Chapter 20, which pulls marketing concepts together under a sustainable marketing framework. In
between, frequent discussions and examples show how sustainable marketing calls for
socially and environmentally responsible actions that meet both the immediate and the
future needs of customers, companies, and society as a whole.
global mar- keting. As the world becomes a smaller, more competitive place, markets face new global marketing challenges and opportunities, especially in fast-growing emerging markets
such as China, India, Brazil, Africa, and others. You’ll find much new coverage of global
marketing throughout the text, starting in Chapter 1 and discussed fully in Chapter 19.
in the fast-changing areas of integrated marketing communications and direct and online marketing. It tells how marketers are blending the new digital and direct technologies—everything from Internet and mobile marketing to blogs, viral videos,
and online social networks—with traditional media to create more targeted, personal,
and interactive customer relationships. Marketers are no longer simply creating inte-
grated promotion programs, they are practicing marketing content management in paid, owned, earned, and shared media. No other text provides more current or encompass-
ing coverage of these exciting developments.
Preface 19
measuring and managing return on marketing, including many new end-of-chapter financial and quantitative marketing exercises that let students apply analytical thinking to relevant concepts in each chap-
ter and link chapter concepts to the text’s innovative and comprehensive Appendix 2:
Marketing by the Numbers.
innovative learning design. The text’s active and integrative presentation includes learning enhancements such as
annotated chapter-opening stories, a chapter-opening objective outline, and ex-
planatory author comments on major chapter figures. The chapter-opening layout
helps to preview and position the chapter and its key concepts. Figures annotated
with author comments help students to simplify and organize chapter material.
End-of-chapter features help to summarize important chapter concepts and high-
light important themes, such as marketing technology, ethics, and financial market-
ing analysis. This innovative learning design facilitates student understanding and
eases learning.
which students can apply what they learn to actual company situations. The fifteenth
edition also features many new video cases, with brief end-of-chapter summaries and
discussion questions. A newly revised Appendix 1: Marketing Plan presents a brand new marketing plan by which students can apply text concepts to a hypothetical brand
and situation. Finally, all of the chapter-opening stories and Real Marketing highlights
in the fifteenth edition are either new or revised for currency.
An Emphasis on Real Marketing Principles of Marketing, fifteenth edition, takes a practical marketing-management approach, providing countless in-depth, real-life examples and stories that show concepts in action
and reveal the drama of modern marketing. In the fifteenth edition, every chapter-opening
vignette and Real Marketing highlight is new or revised, providing fresh insights into real
marketing practices. Learn how:
made it the world’s leading online retailer.
and profitable online marketers—but it’s just getting started.
even a dominant marketing leader—fails to adapt to its changing environment.
listening to customers and using the insights gained to develop better products and
marketing.
that has produced stunning sales and profit results.
showrooms to scope out merchandise.
-
pany as “socially responsible”—doing good is ingrained in everything the company
does.
-
chant, are fighting it out online on price.
expressive lifestyle brand befitting current times.
some honey.”
-
ers asking: “Who needs face-to-face selling anymore?”
same time reducing its impact on the planet.
20 Preface
Beyond these features, each chapter is packed with countless real, relevant, and timely
examples that reinforce key concepts. No other text brings marketing to life like the fifteenth
edition of Principles of Marketing.
Learning Aids That Create More Value for You A wealth of chapter-opening, within-chapter, and end-of-chapter learning devices help you
to learn, link, and apply major concepts:
Integrated chapter-opening preview sections. The active and integrative chapter-opening spread in each chapter starts with a Chapter Preview, which briefly previews chapter concepts, links them with previous chapter concepts, and introduces the chapter-
opening story. This leads to a chapter-opening vignette—an engaging, deeply devel-
oped, illustrated, and annotated marketing story that introduces the chapter material
and sparks your interest. Finally, an Objective Outline provides a helpful preview of chapter contents and learning objectives, complete with page numbers.
Real Marketing highlights. Each chapter contains two carefully developed highlight features that provide an in-depth look at real marketing practices of large and small
companies.
Author figure annotations. Each figure contains author comments that aid your under- standing and help organize major text sections.
Reviewing Objectives and Key Terms. A summary at the end of each chapter reviews ma- jor chapter concepts, chapter objectives, and key terms.
Discussion and Critical Thinking Questions and Exercises. Sections at the end of each chap- ter help you to keep track of and apply what you’ve learned in the chapter.
Applications and Cases. Brief Marketing Technology, Marketing Ethics, and Marketing by the Numbers sections at the end of each chapter provide short application cases that facilitate discussion of current issues and company situations in areas such as market-
ing technology, ethics, and financial marketing analysis. A Video Case section contains short vignettes with discussion questions to be used with a set of mostly new four- to
seven-minute videos that accompany the fifteenth edition. End-of-chapter Company Case sections provide all-new or revised company cases that help you to apply major marketing concepts to real company and brand situations.
Marketing Plan appendix. Appendix 1 contains a brand new sample marketing plan that helps you to apply important marketing planning concepts.
Marketing by the Numbers appendix. An innovative Appendix 2 provides you with a comprehensive introduction to the marketing financial analysis that helps to guide,
assess, and support marketing decisions. An exercise at the end of each chapter lets
you apply analytical and financial thinking to relevant chapter concepts and links the
chapter to the Marketing by the Numbers appendix.
More than ever before, the fifteenth edition of Principles of Marketing creates value for you— it gives you all you need to know about marketing in an effective and enjoyable total learn-
ing package!
Supplements for Instructors The following supplements are available to adopting instructors at the Pearson Instructor
Resource Center, http://www.pearsonglobaleditions.com/kotler.
Instructor’s Manual: provides the following for every chapter in the book: overview, outline, end-of-chapter solutions, additional projects, and examples and Web resources.
Test Bank: includes 3,000 questions, consisting of multiple-choice, true/false, short- answer, and essay questions.
Image Library: access many of the images, ads, and illustrations from the text. PowerPoint slides: includes basic chapter outlines, key points from each chapter, ad- vertisements and art from the text, and discussion questions.
No book is the work only of its authors. We greatly appreciate the valuable contributions of
several people who helped make this new edition possible. As always, we owe very special
thanks to Keri Jean Miksza for her dedicated and valuable help in all phases of the project, and to her husband Pete and little daughters Lucy and Mary for all the support they pro-
vide Keri during this often-hectic project.
We owe substantial thanks to Andy Norman of Drake University, for his valuable revi-
sion advice and skillful contributions in developing chapter vignettes and highlights, com-
pany and video cases, the Marketing Plan appendix, and selected marketing stories. This
edition has benefited greatly from Andy’s assistance. We also thank Laurie Babin of the Uni-
versity of Louisiana at Monroe for her dedicated efforts in preparing end-of-chapter materi-
als and keeping our Marketing by the Numbers appendix fresh. Additional thanks also go
to Dr. Andrew Lingwall of the Clarion University of Pennsylvania for revising the Instruc-
tor’s Manual, to Mary Albrecht of Maryville University for revising the PowerPoint sets,
and to the team at ANSR Source Group for revising the Test Bank for the fifteenth edition.
Many reviewers at other colleges and universities provided valuable comments and
suggestions for this and previous editions. We are indebted to the following colleagues for
their thoughtful input:
Acknowledgments
Fifteenth Edition Reviewers Greg Black, Metropolitan State University of Denver
Rod Carveth, Naugatuck Valley Community College
Linda Morable, Richland College
Randy Moser, Elon University
David Murphy, Madisonville Community College
Donna Waldron, Manchester Community College
Douglas Witt, Brigham Young University
Fourteenth Edition Reviewers Rod Carveth, Naugatuck Valley Community College
Anindja Chatterjee, Slippery Rock University of Pennsylvania
Mary Conran, Temple University
Eloise Coupey, Virginia Tech
Alan Dick, University of Buffalo
Karen Gore, Ivy Tech Community College, Evansville Campus
Charles Lee, Chestnut Hill College
Samuel McNeely, Murray State University
Chip Miller, Drake University
David Murphy, Madisonville Community College
Esther Page-Wood, Western Michigan University
Tim Reisenwitz, Valdosta State University
Mary Ellen Rosetti, Hudson Valley Community College
William Ryan, University of Connecticut
Roberta Schultz, Western Michigan University
J. Alexander Smith, Oklahoma City University
Deb Utter, Boston University
Donna Waldron, Manchester Community College
Wendel Weaver, Oklahoma Wesleyan University
21
22 Acknowledgments
We also owe a great deal to the people at Pearson who helped develop this book. Se-
nior Acquisitions Editor Erin Gardner provided fresh ideas and support throughout the
revision. Project Manager Meeta Pendharkar provided valuable assistance in managing
the many facets of this complex revision project. Senior Art Director Janet Slowik devel-
oped the fifteenth edition’s exciting design, and Senior Production Project Manager Karalyn
Holland helped guide the book through the complex production process. We’d also like to
thank Stephanie Wall, Anne Fahlgren, Judy Leale, and Jacob Garber for their contributions.
We are proud to be associated with the fine professionals at Pearson Education. We also owe
a mighty debt of gratitude to Project Editor Roxanne Klaas and the fine team at S4Carlisle
Publishing Services.
Finally, we owe many thanks to our families for all of their support and
encouragement—Kathy, Betty, Mandy, Matt, KC, Keri, Delaney, Molly, Macy, and Ben
from the Armstrong clan and Nancy, Amy, Melissa, and Jessica from the Kotler family.
To them, we dedicate this book.
Gary Armstrong Philip Kotler
Global Edition Reviewers
Global Edition Contributors
Dr. Moh’d A Al-hawari, Business College, University of
Sharjah, UAE.
Assoc. Prof. Dr. Serap Atakan, Department of Business
Administration, Istanbul Bilgi University, Turkey.
Professor Alan Au, Associate Dean, Lee Shau Kee School of
Business and Administration, The Open University of
Hong Kong, Hong Kong.
Nadia Azzam, Department of Marketing, Lebanese American
University, Beirut, Lebanon.
Dr. Jeanne Sørensen Bentzen, Department of Business and
Management, Aalborg University, Denmark.
Prof. Erinc Boge, Faculty of Economics and Administrative
Sciences, Baskent University Ankara, Turkey.
Dina Ashmawy, School of Business, The American University
in Cairo, Egypt
Rania Deeb, Business Consultant, United Arab Emirates.
Randa Fadly, School of Business, The American University in
Cairo, Egypt.
Dr. ‘Tunji Gbadamosi, Royal Docks Business School,
University of East London, UK.
Ali El Hallak, Digital Marketing Strategist.
Dr. Hamed M. Shamma, School of Business, The American
University in Cairo, Egypt.
Tanja Dmitrović , Faculty of Economics, University of
Ljubljana, Slovenia.
Prof. Dr. Michael A. Grund, Head Center for Marketing, HWZ
University of Applied Sciences in Business Administration
Zurich, Switzerland.
Li Sean Lum, Wawasan Open University, Malaysia.
Daisy Lee Suet Mui, Department of Marketing, City
University of Hong Kong.
Caroline Rosie Jeffrey Nasah, Labuan School of International
Business and Finance, Universiti Malaysia Sabah, Malaysia.
Andrew Ng, Faculty of Engineering, National University of
Singapore.
Dr. Frederick Yim, Hong Kong Baptist University.
Dr. Ronan de Kervenoael, School of Management, Sabanci
University, Turkey, and Aston Business School, UK.
Jie Liu, Department of Business and Management Studies,
Manchester Metropolitan University, UK.
Lora Saleh, School of Business, The American University in
Cairo, Egypt.
Serdar Sayman, Business Administration Department, Koç
University, Istanbul, Turkey
Sophie Yang, Department of Strategy & Applied Management,
Coventry Business School, Coventry University.
Principles of Marketing
Amazon.com’s deep-down passion for
creating customer value and relationships has made it the world’s leading online retailer. Amazon has become the model
for companies that are obsessively and successfully focused on delivering customer value.
Part 1: Defining Marketing and the Marketing Process (Chapters 1–2)
Part 2: Understanding the Marketplace and Consumers (Chapters 3–6)
Part 3: Designing a Customer-Driven Strategy and Mix (Chapters 7–17)
Part 4: Extending Marketing (Chapters 18–20)
Bezos puts it in three simple words: “Obsess over customers.”
To its core, the company is relentlessly customer driven. “The
thing that drives everything is creating genuine value for cus-
tomers,” says Bezos. Amazon believes that if it does what’s good
for customers, profits will follow. So the company starts with
the customer and works backward. Rather than asking what it
can do with its current capabilities, Amazon first asks Who are
our customers? What do they need? Then, it develops whatever
capabilities are required to meet those customer needs.
At Amazon, such words are more than just “customer-
speak.” Every decision is made with an eye toward improving
the Amazon.com customer experience. In fact, at many Amazon
meetings, the most influential figure in the room is “the empty
W hen you think of shopping online, chances are
good that you think first of Amazon. The online
pioneer first opened its virtual doors in 1995,
selling books out of founder Jeff Bezos’s garage
in suburban Seattle. Amazon still sells books—lots and lots of
books. But it now sells just about everything else as well, from
music, electronics, tools, housewares, apparel, and groceries to
loose diamonds and Maine lobsters.
From the start, Amazon has grown explosively. Its annual
sales have rocketed from a modest $150 million in 1997 to more
than $48 billion today. During the past two years alone, despite
a shaky economy, Amazon’s revenues and profits both nearly
doubled, growing by 40 percent annually. This past holiday sea-
son, at one point, Amazon.com’s more than 173 million active
customers worldwide were purchasing 110 items
per second. Analysts predict that by 2015,
Amazon will become the youngest
company in history to hit $100 bil-
lion in revenues (it took Walmart 34
years). That would make it the na-
tion’s second largest retailer, trailing
only Walmart.
What has made Amazon such an
amazing success story? Founder and CEO
Amazon.com: Obsessed with Creating Customer Value and Relationships
Understanding these basic concepts and forming your own ideas
about what they really mean to you will provide a solid foundation
for all that follows.
Let’s start with a good story about marketing in action at
Amazon.com, by far the world’s leading online marketer. The se-
cret to Amazon’s success? It’s really no secret at all. Amazon is
flat-out customer obsessed. It has a deep-down passion for creat-
ing customer value and relationships. In return, customers reward
Amazon with their buying dollars and loyalty. You’ll see this theme
of creating customer value in order to capture value in return re-
peated throughout this chapter and the remainder of the text.
Chapter Preview This chapter introduces you to
the basic concepts of market-
ing. We start with the question: What is marketing? Simply put,
marketing is managing profitable customer relationships. The aim
of marketing is to create value for customers in order to capture
value from customers in return. Next we discuss the five steps
in the marketing process—from understanding customer needs,
to designing customer-driven marketing strategies and integrated
marketing programs, to building customer relationships and cap-
turing value for the firm. Finally, we discuss the major trends and
forces affecting marketing in this age of customer relationships.
Marketing Creating and Capturing Customer Value1
Chapter 1 | Marketing: Creating and Capturing Customer Value 25 chair”—literally an empty chair at the table that represents the
important customer. At times, the empty chair isn’t empty,
but is occupied by a “Customer Experience Bar Raiser,” an em
ployee who is specially trained to represent customers’ interests.
To give the empty chair a loud, clear voice, Amazon relentlessly
related goals.
Amazon’s obsession with serving the needs of its custom
ers drives the company to take risks and innovate in ways that
ever original product. The Kindle took more than four years and
the company’s number one selling product, and Amazon.com
bined. What’s more, the company’s new Kindle Fire tablet now
started as an effort to improve the customer experience now
gives Amazon a powerful presence in the burgeoning world of
music, videos, and apps sold by Amazon, it makes interacting
with the online giant easier than ever.
Perhaps more important than what Amazon sells is how it sells. Amazon wants to deliver a special experience to every cus
tomer. Most Amazon.com regulars feel a surprisingly strong rela
tionship with the company, especially given the almost complete
lack of actual human interaction. Amazon obsesses over making
each customer’s experience uniquely personal. For example, the
Amazon.com site greets customers with their very own person
alized home pages, and its “Recommendations for You” feature
offers personalized product recommendations. Amazon was the
sifts through each customer’s past purchases and the purchas
personalized site content. Amazon wants to personalize the shop
ping experience for each individual customer. If it has 173 million
customers, it reasons, it should have 173 million stores.
huge selection, good value, low prices, and convenience. But it’s
the “discovery” factor that makes the buying experience really
special. Once on the Amazon.com site, you’re compelled to stay
for a while—looking, learning, and discovering. Amazon .com
has become a kind of online community in which customers
can browse for products, research purchase alternatives, share
opinions and reviews with other visitors, and chat online with
authors and experts. In this way, Amazon does much more than
just sell goods online. It creates direct, personalized customer
relationships and satisfying online experiences. Year after year,
Amazon places at or near the top of almost every customer sat
isfaction ranking, regardless of industry.
To create even greater selection and discovery for custom
ers, Amazon long ago began allowing competing retailers—
stores—to offer their products on Amazon.com, creating a vir
tual shopping mall of incredible proportions. It even encourages
customers to sell used items on the site. And with the recent
business and industrial customers with products ranging from
Amazon.com does
much more than just sell
goods online. It creates
satisfying online customer
experiences. “The thing
that drives everything is
creating genuine value for
customers,” says Amazon
founder and CEO Bezos,
shown above.
Contour by Getty Images
tors and industrial cutting tools.
The broader selection attracts more
“We are becoming increasingly im
portant in the lives of our custom
ers,” says an Amazon marketing
executive.
Based on its powerful growth,
many analysts have speculated
that Amazon.com will become the
Walmart of the Web. In fact, some
argue, it already is. Although Walmart’s total sales of $444 bil
lion dwarf Amazon’s $48 billion in sales, Amazon’s Internet
chasing Amazon on the Web. Put another way, Walmart wants
to become the Amazon.com of the Web, not the other way
around. However, despite its mammoth proportions, to catch
Amazon online, Walmart will have to match the superb Ama
zon customer experience, and that won’t be easy.
Whatever the eventual outcome, Amazon has become the
poster child for companies that are obsessively and successfully
focused on delivering customer value. Jeff Bezos has known from
the very start that if Amazon creates superior value for customers,
it will earn their business in return, and if it earns their business, 1
26 Part 1 | Defining Marketing and the Marketing Process
Objective Outline
Objective 1 Defi ne marketing and outline the steps in the marketing process.
What Is Marketing? (pp 26–28)
Objective 2 Explain the importance of understanding the marketplace and customers and identify the fi ve core marketplace concepts.
Understanding the Marketplace and Customer Needs (pp 28–30)
Objective 3 management orientations that guide marketing strategy.
(pp 30–33)
Preparing an Integrated Marketing Plan and Program (p 34)
Objective 4 Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return.
Building Customer Relationships (pp 34–41)
Capturing Value from Customers (pp 41–44)
Objective 5 Describe the major trends and forces that are changing the marketing landscape in this age of relationships.
The Changing Marketing Landscape (pp 44–51)
Today’s successful Amazon, they are strongly customer focused and heavily committed to marketing. These companies
markets. They motivate everyone in the organization to help build lasting customer rela
tionships based on creating value.
Customer relationships and value are especially important today. Facing dramatic techno
logical changes and deep economic, social, and environmental challenges, today’s customers
are spending more carefully and reassessing their relationships with brands. In turn, it’s more
important than ever to build strong customer relationships based on real and enduring value.
What Is Marketing? Marketing, more than any other business function, deals with customers. Although we will
Marketing is managing profitable customer relationships. The twofold goal of marketing is to attract new customers by promising superior value and to keep and grow current cus
tomers by delivering satisfaction.
Objective 1 Defi ne marketing and outline the
steps in the marketing process.
Chapter 1 | Marketing: Creating and Capturing Customer Value 27
favorite place and way to eat” the world over, giving it nearly as much market share as its
nearest four competitors combined. Walmart has become the world’s largest retailer—and 2
and even churches.
You already know a lot about marketing—it’s all around you. Marketing comes to
stuff your mailbox. But in recent years, marketers have assembled a host of new marketing
approaches, everything from imaginative Web sites and smartphone apps to online social
networks and blogs. These new approaches do more than just blast out messages to the
masses. They reach you directly and personally. Today’s marketers want to become a part
of your life and enrich your experiences with their brands—to help you live their brands. At home, at school, where you work, and where you play, you see marketing in almost
everything you do. Yet, there is much more to marketing than meets the consumer’s casual eye.
Behind it all is a massive network of people and activities competing for your attention and pur
chases. This book will give you a complete introduction to the basic concepts and practices of
Marketing Defi ned What is marketing? Many people think of marketing as only selling and advertising. We
However, selling and advertising are only the tip of the marketing iceberg.
Today, marketing must be understood not in the old sense of making a sale—“telling
and selling”—but in the new sense of satisfying customer needs. If the marketer understands consumer needs; develops products that provide superior customer value; and prices, dis
tributes, and promotes them effectively, these products will sell easily. In fact, according to
management guru Peter Drucker, “The aim of marketing is to make selling unnecessary.”3
marketing mix—a set of marketing tools that work together to satisfy customer needs and build customer relationships.
and organizations obtain what they need and want through creating and exchanging value
marketing as the process
by which companies create value for customers and build strong customer relationships in
order to capture value from customers in return.4
The Marketing Process Figure 1.1
steps, companies work to understand consumers, create customer value, and build strong
customer value. By creating value for consumers, they in turn capture value from consumers
In this chapter and the next, we will examine the steps of this simple model of mar
keting. In this chapter, we review each step but focus more on the customer relationship
Marketing
The process by which companies create
value for customers and build strong
customer relationships in order to capture
value from customers in return.
for customers from customers
This important figure shows marketing in
mers, marketers capture value from
process forms the marketing framework for the rest of the chapter and the remainder of the text.
FIGURE | 1.1
A Simple Model of the Marketing Process
28 Part 1 | Defining Marketing and the Marketing Process steps—understanding customers, building customer relationships, and capturing value
from customers. In Chapter 2, we look more deeply into the second and third steps—
designing marketing strategies and constructing marketing programs.
Understanding the Marketplace and Customer Needs
(1) needs, wants, and demands; (2) market offerings (products, services, and experiences); (3) value and satisfaction; (4) exchanges and relationships; and (5) markets.
Customer Needs, Wants, and Demands The most basic concept underlying marketing is that of human needs. Human needs are
states of felt deprivation. They include basic physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual expression. Marketers did not create these needs; they are a basic part of the human makeup.
Wants are the form human needs take as they are shaped by culture and individual
personality. An American needs food but wants a Big Mac, french fries, and a soft drink. A person in Papua, New Guinea, needs food but wants taro, rice, yams, and pork. Wants are shaped by one’s society and are described in terms of objects that will satisfy those needs.
When backed by buying power, wants become demands. Given their wants and resources,
Outstanding marketing companies go to great lengths to learn about and under
stand their customers’ needs, wants, and demands. They conduct consumer research
and analyze mountains of customer data. Their people at all levels—including top
management—stay close to customers. For example, Kroger chairman and CEO David
Dillon regularly dons blue jeans and roams the aisles of local Kroger supermarkets,
blending in with and talking to other shoppers. He wants to see his stores through cus
to customers, successful Ford CEO Alan Mulally has been known to spend time selling
cars at Ford dealerships.5