Reebok competitor rt 5.1 treadmill costco

Pricing In Marketing

MARKETING 7E

This page intentionally left blank

realChoices People

MARKETING 7E

Michael R. SOLOMON SAINT JOSEPH’S UNIVERSITY

Greg W. MARSHALL ROLLINS COLLEGE

Elnora W. STUART THE UNIVERSITY OF SOUTH CAROLINA

UPSTATE

Prentice Hall Boston Columbus Indianapolis New York San Francisco Upper Saddle River

Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo

Editorial Director: Sally Yagan Editor in Chief: Eric Svendsen Acquisitions Editor: Melissa Sabella Director of Editorial Services: Ashley Santora Editorial Project Manager: Kierra Bloom Editorial Assistant: Elisabeth Scarpa Director of Marketing: Patrice Lumumba Jones Senior Marketing Manager: Anne Fahlgren Marketing Assistant: Melinda Jensen Senior Managing Editor: Judy Leale Project Manager: Becca Richter Senior Operations Supervisor: Arnold Vila

Creative Director: Jon Christiana Senior Art Director: Blair Brown Text and Cover Designer: Blair Brown Media Project Manager, Production: Lisa Rinaldi Media Project Manager, Editorial: Denise Vaughn Full-Service Project Management: S4Carlisle Publishing

Services Composition: S4Carlisle Publishing Services Printer/Bindery: Courier/Kendalville Cover Printer: Courier/Kendalville Text Font: Palatino

Library of Congress Cataloging-in-Publication Data

Solomon, Michael R. Marketing : real people, real choices / Michael R. Solomon, Greg W. Marshall, Elnora W. Stuart. – 7th ed.

p. cm. ISBN-13: 978-0-13-217684-2 ISBN-10: 0-13-217684-X 1. Marketing--Vocational guidance. I. Marshall, Greg W. II. Stuart, Elnora W. III. Title. HF5415.35.S65 2011 658.8--dc22

2010051148

Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on appropriate page within text.

Microsoft® and Windows® are registered trademarks of the Microsoft Corporation in the U.S.A. and other countries. Screen shots and icons reprinted with permission from the Microsoft Corporation. This book is not sponsored or endorsed by or affiliated with the Microsoft Corporation.

Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc., publishing as Prentice Hall, One Lake Street, Upper Saddle River, New Jersey 07458. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458.

Many of the designations by manufacturers and seller to distinguish their products are claimed as trademarks. Where those designations appear in this book, and the publisher was aware of a trademark claim, the designations have been printed in initial caps or all caps.

10 9 8 7 6 5 4 3 2 1

ISBN 10: 0-13-217684-X ISBN 13: 978-0-13-217684-2

To Gail, Amanda, Zachary, Alex, Orly, Rose, and Munchy—my favorite market segment

—M.S.

To Patti and Justin

—G.M.

To Sonny, Patrick, Gabriela, and Marge

—E.S.

This page intentionally left blank

Brief Contents Preface xvii

PART ONE Make Marketing Value Decisions 2

CHAPTER 1 Welcome to the World of Marketing: Create and Deliver Value 4

CHAPTER 2 Strategic Market Planning: Take the Big Picture 38

CHAPTER 3 Thrive in the Marketing Environment: The World Is Flat 66

PART TWO Understand Consumers’ Value Needs 98

CHAPTER 4 Marketing Research: Gather, Analyze, and Use Information 100

CHAPTER 5 Consumer Behavior: How and Why We Buy 128

CHAPTER 6 Business-to-Business Markets: How and Why Organizations Buy 156

CHAPTER 7 Sharpen the Focus: Target Marketing Strategies and Customer Relationship Management 182

PART THREE Create the Value Proposition 214

CHAPTER 8 Create the Product 216

CHAPTER 9 Manage the Product 244

CHAPTER 10 Services and Other Intangibles: Marketing the Product That Isn’t There 272

CHAPTER 11 Price the Product 296

PART FOUR Communicate the Value Proposition 346

CHAPTER 12 One-to-One to Many-to-Many: Traditional and New Media 348

CHAPTER 13 One-to-Many: Advertising, Public Relations, and Consumer Sales Promotion 378

CHAPTER 14 One-to-One: Trade Promotion, Direct Marketing, and Personal Selling 418

PART FIVE Deliver the Value Proposition 444

CHAPTER 15 Deliver Value through Supply Chain Management, Channels of Distribution, and Logistics 446

CHAPTER 16 Retailing: Bricks and Clicks 478

Appendix Marketing Plan: The S&S Smoothie Company 510

Notes 523

Glossary 540

Index 556

vii

This page intentionally left blank

ix

Contents Preface xvii

PART ONE Make Marketing Value Decisions 2

CHAPTER 1: Welcome to the World of Marketing: Create and Deliver Value....................4

Real People, Real Choices: Here’s my problem. . . 5

WELCOME TO BRAND YOU 6

THE WHO AND WHERE OF MARKETING 7

Marketing’s Role in the Firm: Cross-Functional Relationships 8

Where Do You Fit In? Careers in Marketing 8 MARKETING CREATES VALUE 8

Marketing Meets Needs 8 Marketing Creates Utility 11 Marketing and Exchange 12

WHEN DID MARKETING BEGIN? THE EVOLUTION OF A CONCEPT 13

The Production Era 13 The Sales Era 13 The Relationship Era 15 The Triple Bottom Line Orientation 15

WHAT CAN WE MARKET? 18

Lasers to Lady Gaga 18 Consumer Goods and Services 19 Business-to-Business Goods and Services 19 Not-for-Profit Marketing 20 Idea, Place, and People Marketing 20

RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 20 THE VALUE OF MARKETING AND THE MARKETING OF VALUE 21

Value from the Customer’s Perspective 22 Value from the Seller’s Perspective 22 Provide Value Through Competitive Advantage 23 Add Value Through the Value Chain 24 How Do We Know What’s Valuable? 25 Consumer-Generated Value: From Audience

to Community 25 Value from Society’s Perspective 27 Is Marketing Evil? 28 The Dark Side of Marketing 28

MARKETING AS A PROCESS 30

Marketing Planning 30 Marketing’s Tools: The Marketing Mix 31

Real People, Real Choices: Here’s my choice... 33

Study Map 33

Objective Summary 33

Key Terms 33

Chapter Questions and Activities 36

Marketing in Action Case: Real Choices at Colgate-Palmolive 37

CHAPTER 2: Strategic Market Planning: Take the Big Picture ..........................................38

Real People, Real Choices: Here’s my problem. . . 39

BUSINESS PLANNING: COMPOSE THE BIG PICTURE 40

Ethics Is Up Front in Marketing Planning 41 RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 42 STRATEGIC PLANNING: FRAME THE PICTURE 46

Step 1: Define the Mission 46 Step 2: Evaluate the Internal and External Environment 47 Step 3: Set Organizational or SBU Objectives 48 Step 4: Establish the Business Portfolio 49 Step 5: Develop Growth Strategies 51

MARKETING PLANNING: SELECT THE CAMERA SETTING 53

Step 1: Perform a Situation Analysis 53 Step 2: Set Marketing Objectives 54 Step 3: Develop Marketing Strategies 54 Step 4: Implement and Control the Marketing Plan 55 Action Plans 58 Make Your Life Easier! Use the Marketing Planning

Template 60 Operational Planning: Day-to-Day Execution of Marketing

Plans 60

Real People, Real Choices: Here’s my choice. . . 61

Study Map 62

Objective Summary 62

Key Terms 62

Chapter Questions and Activities 63

Marketing in Action Case: Real Choices for the Apple iPhone 64

CHAPTER 3: Thrive in the Marketing Environment: The World Is Flat ..........................66

Real People, Real Choices: Here’s my problem. . . 67

DECISIONS, DECISIONS 68

x | C O N T E N T S

TAKE A BOW: MARKETING ON THE GLOBAL STAGE 68

World Trade 69 Should We Go Global? 70

UNDERSTAND INTERNATIONAL, REGIONAL, AND COUNTRY REGULATIONS 71

Initiatives in International Cooperation and Regulation 72 Economic Communities 72

ANALYZE THE MARKETING ENVIRONMENT 73

The Economic Environment 74 The Competitive Environment 77 The Technological Environment 79 The Political and Legal Environment 79 The Sociocultural Environment 83

IS THE WORLD FLAT OR NOT? HOW “GLOBAL” SHOULD A GLOBAL MARKETING STRATEGY BE? 87

Company-Level Decisions: The Market Entry Strategy 87 RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 87

Product-Level Decisions: The Marketing Mix Strategy 90

Real People, Real Choices: Here’s my choice. . . 93

Study Map 93

Objective Summary 93

Key Terms 93

Chapter Questions and Activities 96

Marketing in Action Case: Real Choices at Mattel 97

PART TWO Understand Consumers’ Value Needs 98

CHAPTER 4: Marketing Research: Gather, Analyze, and Use Information ..........................100

Real People, Real Choices: Here’s my problem. . . 101

KNOWLEDGE IS POWER 102

The Marketing Information System 102 RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 103

The Marketing Decision Support System 106 SEARCHING FOR GOLD: DATA MINING 107

STEPS IN THE MARKETING RESEARCH PROCESS 108

Step 1: Define the Research Problem 108 Step 2: Determine the Research Design 109 Step 3: Choose the Method to Collect Primary Data 113 Step 4: Design the Sample 119 Step 5: Collect the Data 120 Step 6: Analyze and Interpret the Data 121 Step 7: Prepare the Research Report 122

Real People, Real Choices: Here’s my choice. . . 123

Study Map 124

Objective Summary 124

Key Terms 124

Chapter Questions and Activities 126

Marketing in Action Case: Real Choices at IMMI 127

CHAPTER 5: Consumer Behavior: How and Why We Buy ....................................................128

Real People, Real Choices: Here’s my problem. . . 129

DECISIONS, DECISIONS 130

THE CONSUMER DECISION-MAKING PROCESS 130

Not All Decisions Are the Same 131 Step 1: Problem Recognition 133 Step 2: Information Search 134 Step 3: Evaluation of Alternatives 135 Step 4: Product Choice 136

RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 136

Step 5: Postpurchase Evaluation 137 INTERNAL INFLUENCES ON CONSUMERS’ DECISIONS 138

Perception 138 Motivation 140 Learning 140 Attitudes 142 Personality and the Self: Are You What You Buy? 143 Age 143 Lifestyle 144

SITUATIONAL AND SOCIAL INFLUENCES ON CONSUMERS’ DECISIONS 145

Situational Influences 145 Social Influences on Consumers’ Decisions 146

Real People, Real Choices: Here’s my choice. . . 150

Study Map 151

Objective Summary 151

Key Terms 151

Chapter Questions and Activities 153

Marketing in Action Case: Real Choices at Lexus 155

CHAPTER 6: Business-to-Business Markets: How and Why Organizations Buy ....156

Real People, Real Choices: Here’s my problem. . . 157

BUSINESS MARKETS: BUYING AND SELLING WHEN THE CUSTOMER IS ANOTHER FIRM 158

Factors That Make a Difference in Business Markets 159 Size of Purchases 161 B2B Demand 161 Types of Business-to-Business Customers 163

C O N T E N T S | xi

BUSINESS-TO-BUSINESS E-COMMERCE AND SOCIAL MEDIA 165

Intranets, Extranets, and Private Exchanges 165 The Dark Side of B2B E-Commerce 166 B2B and Social Media 166

BUSINESS BUYING SITUATIONS AND THE BUSINESS BUYING DECISION PROCESS 168

The Buyclass Framework 168 Professional Buyers and Buying Centers 170 The Business Buying Decision Process 171

RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 174

Real People, Real Choices: Here’s my choice. . . 177

Study Map 178

Objective Summary 178

Key Terms 178

Chapter Questions and Activities 179

Marketing in Action Case: Real Choices at The Filter 180

CHAPTER 7: Sharpen the Focus: Target Marketing Strategies and Customer Relationship Management....................................................182

Real People, Real Choices: Here’s my problem. . . 183

TARGET MARKETING STRATEGY: SELECT AND ENTER A MARKET 184

STEP 1: SEGMENTATION 185

Segment Consumer Markets 185 Segment by Psychographics 194 Segment by Behavior 196 Segment Business-to-Business Markets 197

STEP 2: TARGETING 198

Targeting in Three Steps 198 STEP 3: POSITIONING 201

RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 201

Steps in Positioning 202 Bring a Product to Life: The Brand Personality 203

CUSTOMER RELATIONSHIP MANAGEMENT (CRM): TOWARD A SEGMENT OF ONE 204

CRM: A New Perspective on an Old Problem 205 Characteristics of CRM 206

Real People, Real Choices: Here’s my choice. . . 209

Study Map 210

Objective Summary 210

Key Terms 210

Chapter Questions and Activities 212

Choices: What Do You Think? 212

Marketing in Action Case: Real Choices at Subaru 213

PART THREE Create the Value Proposition 214

CHAPTER 8: Create the Product ............216 Real People, Real Choices: Here’s my problem. . . 217

BUILD A BETTER MOUSETRAP—AND ADD VALUE 218

Layers of the Product Concept 219 HOW MARKETERS CLASSIFY PRODUCTS 221

How Long Do Products Last? 221 How Do Consumers Buy Products? 222 How Do Businesses Buy Products? 224

“NEW AND IMPROVED!” THE PROCESS OF INNOVATION 225

Types of Innovations 225 Continuous Innovations 226 Dynamically Continuous Innovations 226 Discontinuous Innovations 227 How Do We Measure Innovation? 227

NEW PRODUCT DEVELOPMENT 228

Phase 1: Idea Generation 228 Phase 2: Product Concept Development

and Screening 228 Phase 3: Marketing Strategy Development 229 Phase 4: Business Analysis 229 Phase 5: Technical Development 230 Phase 6: Test Marketing 231 Phase 7: Commercialization 232

ADOPTION AND DIFFUSION OF NEW PRODUCTS 233

RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 233

Stages in Consumers’ Adoption of a New Product 234 Innovator Categories 236 Product Factors That Affect the Rate of Adoption 238

Real People, Real Choices: Here’s my choice. . . 239

Study Map 240

Objective Summary 240

Key Terms 240

Chapter Questions and Activities 242

Marketing in Action Case: Real Choices at KFC 243

CHAPTER 9: Manage the Product ..........244 Real People, Real Choices: Here’s my problem. . . 245

PRODUCT PLANNING: USE PRODUCT OBJECTIVES TO DECIDE ON A PRODUCT STRATEGY 246

Objectives and Strategies for Individual Products 247 Objectives and Strategies for Multiple Products 248 Product Mix Strategies 249

xii | C O N T E N T S

Quality as a Product Objective: The Science of TQM 250 Quality Guidelines 250

MARKETING THROUGHOUT THE PRODUCT LIFE CYCLE 252

The Introduction Stage 252 The Growth Stage 254 The Maturity Stage 254 The Decline Stage 254

CREATE PRODUCT IDENTITY: BRANDING DECISIONS 255

What’s in a Name (or a Symbol)? 255 Why Brands Matter 257 Branding Strategies 259 Individual Brands versus Family Brands 260 National and Store Brands 260 Generic Brands 261 Licensing 261 Cobranding 261 Brand Metrics 262

CREATE PRODUCT IDENTITY: THE PACKAGE AND LABEL 262

What Packages Do 263 Design Effective Packaging 264 Labeling Regulations 265

RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 265 ORGANIZE FOR EFFECTIVE PRODUCT MANAGEMENT 266

Manage Existing Products 266 Brand Managers 266 Product Category Managers 266 Market Managers 267 Organize for New-Product Development 267

Real People, Real Choices: Here’s my choice. . . 267

Study Map 268

Objective Summary 268

Key Terms 268

Chapter Questions and Activities 270

Marketing in Action Case: Real Choices at Starbucks 271

CHAPTER 10: Services and Other Intangibles: Marketing the Product That Isn’t There ..............................................................272

Real People, Real Choices: Here’s my problem. . . 273

MARKETING WHAT ISN’T THERE 274

What Is a Service? 274 Characteristics of Services 274 The Service Encounter 277 How We Classify Services? 278 Core and Augmented Services 279

Physical Elements of the Service Encounter: Servicescapes and Other Tangibles 280

RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 280 HOW WE PROVIDE QUALITY SERVICE 281

Service Quality Attributes 282 How We Measure Service Quality 283 Strategic Issues When We Deliver Service

Quality 285 MARKETING PEOPLE, PLACES, AND IDEAS 286

Marketing People 286 Marketing Places 288 Marketing Ideas 289 The Future of Services 289

Real People, Real Choices: Here’s my choice. . . 291

Study Map 292

Objective Summary 292

Key Terms 292

Chapter Questions and Activities 294

Marketing in Action Case: Real Choices at Clear & SIMPLE™ 295

CHAPTER 11: Price the Product ............296 Real People, Real Choices: Here’s My problem. . . 297

“YES, BUT WHAT DOES IT COST?” 298

What Is Price? 298 Step 1: Develop Pricing Objectives 300

COSTS, DEMAND, REVENUE, AND THE PRICING ENVIRONMENT 302

Step 2: Estimate Demand 302 Step 3: Determine Costs 307 Step 4: Evaluate the Pricing Environment 312

PRICING THE PRODUCT: ESTABLISHING STRATEGIES AND TACTICS 316

Step 5: Choose a Pricing Strategy 316 Step 6: Develop Pricing Tactics 320

PRICING AND ELECTRONIC COMMERCE 323

Dynamic Pricing Strategies 323 Online Auctions 323 Freenomics: What If We Just Give It Away? 323 Pricing Advantages for Online Shoppers 324

PSYCHOLOGICAL, LEGAL, AND ETHICAL ASPECTS OF PRICING 325

Psychological Issues in Setting Prices 325 Psychological Pricing Strategies 326 Legal and Ethical Considerations in B2C Pricing 327 Legal Issues in B2B Pricing 328

RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 329

C O N T E N T S | xiii

Real People, Real Choices: Here’s my choice. . . 330

Study Map 331

Objective Summary 331

Key Terms 331

Chapter Questions and Activities 334

Marketing in Action Case: Real Choices at Amazon 335

Marketing Math ..................................................................336 INCOME STATEMENT AND BALANCE SHEET 336

IMPORTANT FINANCIAL PERFORMANCE RATIOS 339

Operating Ratios 340 INVENTORY TURNOVER RATE 340

RETURN ON INVESTMENT 341

PRICE ELASTICITY 342

COST-PLUS PRICING 343

Markup on Cost 343 Markup on Selling Price 343

PART FOUR Communicate the Value Proposition 346

CHAPTER 12: One-to-One to Many-to- Many: Traditional and New Media....................348

Real People, Real Choices: Here’s My problem. . . 349

THE TRADITIONAL COMMUNICATION MODEL: ONE-TO-MANY 350

The Communication Model 352 The Traditional Promotion Mix 355

THE UPDATED COMMUNICATION MODEL: MANY-TO-MANY 358

Buzz Building 359 RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 360

New Social Media 362 PROMOTIONAL PLANNING IN A WEB 2.0 WORLD 366

Step 1. Identify the Target Audience(s) 366 Step 2. Establish the Communication Objectives 367 Step 3: Determine and Allocate the Marketing

Communication Budget 368 Step 4: Design the Promotion Mix 371 Step 5: Evaluate the Effectiveness of the Communication

Program 372 Multichannel Promotional Strategies 372

Real People, Real Choices: Here’s my choice... 373

Study Map 374 Objective Summary 374 Key Terms 374 Chapter Questions and Activities 376 Marketing in Action Case: Real Choices American Express 377

CHAPTER 13: One-to-Many: Advertising, Public Relations, and Consumer Sales Promotion ........................................................378

Real People, Real Choices: Here is My problem. . . 379

ADVERTISING: THE IMAGE OF MARKETING 380

Types of Advertising 381 Who Creates Advertising? 382 User-Generated Advertising Content: Do-it-Yourself

Advertising, and Crowdsourcing 383 Ethical Issues in Advertising 384

RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 385 DEVELOP THE ADVERTISING CAMPAIGN 386

Step 1: Understand the Target Audience 386 Step 2: Establish Message and Budget Objectives 387 Step 3: Create the Ads 387 Step 4: Pretest What the Ads Will Say 391 Step 5: Choose the Media Type(s) and Media Schedule 392 Step 6: Evaluate the Advertising 401

PUBLIC RELATIONS 402

Plan a Public Relations Campaign 403 Public Relations Objectives 404 Public Relations Tactics 406

SALES PROMOTION 408

Sales Promotion Directed toward Consumers 408

Real People, Real Choices: Here’s my choice. . . 412

Study Map 412

Objective Summary 412

Key Terms 412

Chapter Questions and Activities 415

Marketing in Action Case: Real Choices at JetBlue 417

CHAPTER 14: One-to-One: Trade Promotion, Direct Marketing, and Personal Selling..............................................................418

Real People, Real Choices: Here’s My problem. . . 419

TRADE SALES PROMOTION: TARGETING THE B2B CUSTOMER 420

Discount Promotions 421 Sales Promotion Designed to Increase Industry

Visibility 422 DIRECT MARKETING 423

Mail Order 423 Direct Mail 424 Telemarketing 425 Direct-Response Advertising 425 M-Commerce 426

xiv | C O N T E N T S

RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 426 PERSONAL SELLING: ADDING THE PERSONAL TOUCH TO THE PROMOTION MIX 427

The Role of Personal Selling in the Marketing Mix 427 Technology and Personal Selling 429

THE LANDSCAPE OF MODERN PERSONAL SELLING 431

Types of Sales Jobs 431 Two Approaches to Personal Selling 432

THE CREATIVE SELLING PROCESS 433

Step 1: Prospect and Qualify 433 Step 2: Preapproach 434 Step 3: Approach 435 Step 4: Sales Presentation 435 Step 5: Handle Objections 435 Step 6: Close the Sale 435 Step 7: Follow-up 436

SALES MANAGEMENT 436

Set Sales Force Objectives 436 Create a Sales Force Strategy 437 Recruit, Train, and Reward the Sales Force 437 Evaluate the Sales Force 438

Real People, Real Choices: Here’s my choice. . . 439

Study Map 440

Objective Summary 440

Key Terms 440

Chapter Questions and Activities 442

Marketing in Action Case: Real Choices at Frito-Lay 443

PART FIVE Deliver the Value Proposition 444

CHAPTER 15: Deliver Value through Supply Chain Management, Channels of Distribution, and Logistics ..................................................446

Real People, Real Choices: Here’s my problem . . . 447

PLACE: THE FINAL FRONTIER 448

Supply Chain Management 449 DISTRIBUTION CHANNELS: GET IT THERE 450

Functions of Distribution Channels 451 The Internet in the Distribution Channel 452

WHOLESALING INTERMEDIARIES 453

Independent Intermediaries 454 Merchandise Agents or Brokers 456 Manufacturer-Owned Intermediaries 456

TYPES OF DISTRIBUTION CHANNELS 457

Consumer Channels 457 B2B Channels 460 Dual and Hybrid Distribution Systems 460 Distribution Channels and the Marketing Mix 460 Ethics in the Distribution Channel 461

PLAN A CHANNEL STRATEGY 461

Step 1: Develop Distribution Objectives 462 Step 2: Evaluate Internal and External Environmental

Influences 462 Step 3: Choose a Distribution Strategy 462 Intensive, Exclusive, or Selective Distribution? 464 Step 4: Develop Distribution Tactics 465

RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 466 LOGISTICS: IMPLEMENT THE SUPPLY CHAIN 467

The Lowdown on Logistics 468 Inventory Control: JIT, RFID, and Fast Fashion 471 Supply Chain Metrics 472

Real People, Real Choices: Here’s my choice. . . 473

Study Map 474

Objective Summary 474

Key Terms 474

Chapter Questions and Activities 476

Marketing in Action Case: Real Choices at Walmart 477

CHAPTER 16: Retailing: Bricks and Clicks........................................................478

Real People, Real Choices: Here’s my problem. . . 479

RETAILING: SPECIAL DELIVERY 480

Retailing: A Mixed (Shopping) Bag 480 The Evolution of Retailing 481 The Evolution Continues: What’s “In Store”

for the Future? 484 Ethical Problems in Retailing 486

FROM MOM-AND-POP TO SUPER WALMART: HOW MARKETERS CLASSIFY RETAIL STORES 487

Classify Retailers by What They Sell 487 RIPPED FROM THE HEADLINES: Ethical/Sustainable Decisions in the Real World 487

Classify Retailers by Level of Service 488 Classify Retailers by Merchandise Selection 488 Major Types of Retailers 489

NONSTORE RETAILING 493

Direct Selling 493 Automatic Vending 494 B2C E-Commerce 495

DEVELOP A STORE POSITIONING STRATEGY: RETAILING AS THEATER 498

Store Image 499 Build the Theater: Store Location 502

Real People, Real Choices: Here’s my choice. . . 504

Study Map 505

Objective Summary 505

Key Terms 505

C O N T E N T S | xv

Chapter Questions and Activities 507

Marketing in Action Case: Real Choices at IKEA 509

Appendix Marketing Plan: The S&S Smoothie Company ..........................................................................510

NOTES 523

GLOSSARY 540

INDEX 556

This page intentionally left blank

xvii

Preface WHAT’S NEW IN THE 7TH EDITION? What’s new in the 7th edition is what’s new in marketing; more on metrics, a rethinking of advertising and promotions, and even stronger links to the real world of marketing by showing how concepts are linked with marketing planning.

Here’s just a sample of what we changed.

Greater focus on marketing metrics: • Specific exercises in every chapter and revised pedagogical material that includes fo-

cused in-class and homework activities and research that encourage improved critical thinking and decision-making skills.

Rethinking how companies are approaching advertising and promotion: • Major revision and recasting of the entire promotion/marketing communication series of

chapters (13, 14, 15) around messaging-to-many versus messaging-to-one models. In- cludes heightened attention to social networking as a marketing communication option of increasing importance. Covers emerging topics such as geospatial platforms, user- generated content (UCG), augmented reality, owned/earned/paid media, multichannel strategies.

Linking marketing planning with concepts: • The addition of Part Openers that add value in two ways: (1) provide you with a brief

overview of the key learning to come within the part chapters, and (2) link those learn- ing elements to application in a threaded example marketing plan, with the suggestion “You can do it too”—leading readers to mymarketinglab and the opportunity to develop a semester marketing plan project assignment.

Marketing Executive Advisory Panel: • We pride ourselves on our inclusion of cutting-edge, industry-relevant material in

each new edition. In the 7th edition we’ve taken the extra step of reaching out to ac- tual executives to be sure we’re covering what you need to learn. Our Marketing Ex- ecutive Advisory Panel is composed of industry leaders who have a handle on what the practice of marketing will probably look like when you graduate in a few years. We’ve asked these individuals to tell us what they believe students need to know— and to share with us what frustrates them about what current college graduates or new hires don’t know. Our panel’s feedback helped to shape the new content you will see in this edition.

And more! • New boxed features on The Cutting Edge trends in technology in every chapter. • Completely updated and integrated “figures” program for every chapter, with the fig-

ures tied to specific chapter objectives as a way to visually illustrate the main takeaways from each chapter. For your convenience, figures are labeled as either Snapshot or

Process, and the icons you see here appear in the text references to the figures.

Features of the 7th Edition of Real People, Real Choices Meet Real Marketers Many of the “Real People, Real Choices” vignettes are new to this edition, featuring a vari- ety of decision makers, from CEOs to brand managers. Here is just a sample of the marketers we feature:

• Joe Kennedy, Pandora

• Jay Minkoff, First Flavor

• Ryan Garton, Discover

• Jim Multari, Sprout Networks

• David Clark, General Mills

• Mike Monello, Campfire

• Mark Brownstein, Brownstein Group

• Heather Mayo, Sam’s Club

• Stan Clark, Eskimo Joe’s

Ethics and Sustainability in Marketing Because the role of ethics and sustainability in business and in marketing is so important, we focus on these topics not just in a single chapter but in EVERY CHAPTER of the book. These “Ripped from the Headlines” boxes feature real-life examples of ethical and sustain- able decisions marketers are faced with on a day-to-day basis.

Cutting-Edge Technology With technology evolving at a rapid-fire pace, it’s now more important than ever for today’s marketers to stay on the cutting edge of the latest technological developments. Viral mar- keting campaigns are just the tip of the iceberg! From Cargoshell’s innovative sustainable shipping containers to virtual worlds accessed via a pair of Adidas sneakers, “The Cutting Edge” boxes feature the most current technological advances and explain how companies are using them to creatively get their messages out to consumers.

An Easy-to-Follow Marketing Plan Template Marketing: Real People, Real Choices, 7th edition includes a tear-out template of a marketing plan you can use as you make your way through the book. The template provides a frame- work that will enable you to organize marketing concepts by chapter and create a solid mar- keting plan of your own. On the back of the template is a contemporary world map as a reminder that all marketing today is global. We encourage you to keep this tear-out as a handy reference after the class.

Learning How to Market Yourself: Brand You Products aren’t alone in benefiting from branding—people can benefit, too. Branding strate- gies help professionals get noticed and position them for exciting new career opportunities. Prepared by Kim Richmond of Saint Joseph’s University, the Brand You handbook gives you concrete advice on how to thrive in a competitive marketplace and provides a hands-on ap- proach to achieving career success. This separate Brand You supplement can be purchased at www.mypearsonstore.com.

xviii | P R E FA C E

www.mypearsonstore.com
P R E FA C E | xix

End-of-chapter Study Map Each chapter now has an integrative study map for students that includes an Objective Sum- mary, Key Terms, and student assessment opportunities of several types: Concepts: Test Your Knowledge; Activities: Apply What You’ve Learned; Marketing Metrics Exercise; (more on this one below); Choices: What Do You Think?, and Miniproject: Learn By Doing. By com- pleting these assessments students and instructors achieve maximum assurance of learning.

Measuring the Value of Marketing through Marketing Metrics Just how do marketers add value to a company, and can that value be quantified? More and more, businesses demand accountability, and marketers respond as they develop a variety of “scorecards” that show how specific marketing activities directly affect their company’s ROI—return on investment. And on the job, the decisions that marketers make increasingly come from data and calculations and less from instinct. Each end-of-chapter includes exer- cises that provide real-world examples of the measures marketers use to help them make good decisions.

All New and Updated End-of-Chapter Cases in This Edition Each chapter concludes with an exciting “Marketing in Action” mini-case about a real firm facing real marketing challenges. Questions at the end let you make the call to get the com- pany on the right track.

Student Resources