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Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

Full-Circle Learning My Lab™: Learning Full Circle for Marketing, Management, Business Communication, Intro to Business, and MIS BEFORE CLASS AFTER CLASSDURING CLASSDecision Sims, Videos, and Learning Catalytics DSM's, pre-lecture homework, e T ext Writing Space, Video Cases, Quiz-zes/T ests My Lab

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

Critical Thinking My Marketing Lab™: Improves Student Engagement Before, During, and After Class Decision Making Prep and Engagement Video exercises -engaging videos that bring business concepts to life and explore business topics related to the theory students are learning in class. Quizzes then assess students' comprehension of the concepts covered in each video. Learning Catalytics -a “bring your own device” student engagement, assessment, and classroom intelligence system helps instructors analyze students' critical-thinking skills during lecture. Dynamic Study Modules (DSMs) -through adaptive learning, students get personalized guidance where and when they need it most, creating greater engagement, improving knowledge retention, and supporting subject-matter mastery. Also available on mobile devices. Business T oday -bring current events alive in your classroom with videos, discussion questions, and author blogs. Be sure to check back often, this section changes daily. Decision-making simulations -place your students in the role of a key decision-maker. The simulation will change and branch based on the decisions students make, providing a variation of scenario paths. Upon completion of each simulation, students receive a grade, as well as a detailed report of the choices they made during the simulation and the associated consequences of those decisions. Writing Space -better writers make great learners—who perform better in their courses. Providing a single location to develop and assess concept mastery and critical thinking, the Writing Space offers automatic graded, assisted graded, and create-your-own writing assignments, allowing you to exchange personalized feedback with students quickly and easily. Writing Space can also check students' work for improper citation or plagiarism by comparing it against the world's most accurate text comparison database available from T urnitin. Additional Features -included with the My Lab are a powerful homework and test manager, robust gradebook tracking, comprehensive online course content, and easily scalable and shareable content. http://www. pearsonmylabandmastering. com

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

15 Phili P Kotler Northwestern University Kevin lane Keller Dartmouth College Boston Columbus Indianapolis New Y ork San Francisco Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Marketing Management Global Edition

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

Vice President, Business Publishing: Donna Battista Editor-in-Chief: Stephanie Wall Acquisitions Editor: Mark Gaffney Development Editor: Elisa Adams Senior Acquisitions Editor, Global Editions: Steven Jackson Project Editor, Global Editions: Suchismita Ukil Program Manager Team Lead: Ashley Santora Program Manager: Jennifer Collins Editorial Assistant: Daniel Petrino Vice President, Product Marketing: Maggie Moylan Director of Marketing, Digital Services and Products: Jeanette Koskinas Executive Product Marketing Manager: Anne Fahlgren Field Marketing Manager: Lenny Ann Raper Senior Strategic Marketing Manager: Erin Gardner Project Manager Team Lead: Judy Leale Project Manager: Becca Groves Media Production Manager, Global Editions: M. Vikram Kumar Senior Production Controller, Global Editions: Trudy Kimber Operations Specialist: Carol Melville Creative Director: Blair Brown Senior Art Director: Janet Slowik Cover Designer: Lumina Datamatics Ltd. Vice President, Director of Digital Strategy & Assessment: Paul Gentile Manager of Learning Applications: Paul Deluca Digital Editor: Brian Surette Digital Studio Manager: Diane Lombardo Digital Studio Project Manager: Robin Lazrus Digital Studio Project Manager: Alana Coles Digital Studio Project Manager: Monique Lawrence Digital Studio Project Manager: Regina Da Silva Full-Service Project Management and Composition: Integra Software Services Pvt Ltd. Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www. pearsonglobaleditions. com © Pearson Education Limited 2016 The rights of Philip Kotler and Kevin Lane Keller to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. Authorized adaptation from the United States edition, entitled Marketing Management, 15th edition, ISBN 978-0-13-385646-0, by Philip Kotler and Kevin Lane Keller, published by Pearson Education, Inc. © 2016. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a license permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6-10 Kirby Street, London EC1N 8TS. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners. ISBN 10: 1-292-09262-9 ISBN 13: 978-1-292-09262-1 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library 10 9 8 7 6 5 4 3 2 1 14 13 12 11 Typeset in Minion Pro 9. 5/11. 5 by Integra Software Services Pvt Ltd. Printed and bound by Courier/Kendallville in the United States of America

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

This book is dedicated to my wife and best friend, Nancy, with love. —PK This book is dedicated to my wife, Punam, and my two daughters, Carolyn and Allison, with much love and thanks. —KLK

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

4Philip Kotler is one of the world's leading authorities on marketing. He is the S. C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management, Northwestern University. He received his master's degree at the University of Chicago and his Ph. D. at MIT, both in economics. He did postdoctoral work in mathematics at Harvard University and in behav-ioral science at the University of Chicago. Dr. Kotler is the coauthor of Principles of Marketing and Marketing: An Introduction. His Strategic Marketing for Nonprofit Organizations, now in its seventh edition, is the best seller in that specialized area. Dr. Kotler's other books include Marketing Models; The New Competition; Marketing Professional Services; Strategic Marketing for Educational Institutions; Marketing for Health Care Organizations; Marketing Congregations; High Visibility; Social Marketing; Marketing Places; The Marketing of Nations; Marketing for Hospitality and Tourism; Standing Room Only—Strategies for Marketing the Performing Arts; Museum Strategy and Marketing; Marketing Moves; Kotler on Marketing; Lateral Marketing; Winning at Innovation; Ten Deadly Marketing Sins; Chaotics; Marketing Your Way to Growth; Winning Global Markets; and Corporate Social Responsibility. In addition, he has published more than 150 articles in leading journals, including the Harvard Business Review, Sloan Management Review, Business Horizons, California Management Review, the Journal of Marketing, the Journal of Marketing Research, Management Science, the Journal of Business Strategy, and Futurist. He is the only three-time winner of the coveted Alpha Kappa Psi award for the best annual article published in the Journal of Marketing. Professor Kotler was the first recipient of the American Marketing Association's (AMA) Distinguished Marketing Educator Award (1985). The European Association of Marketing Consultants and Sales Trainers awarded him their Prize for Marketing Excellence. He was chosen as the Leader in Marketing Thought by the Academic Members of the AMA in a 1975 survey. He also received the 1978 Paul Converse Award of the AMA, honoring his original contribution to marketing. In 1995, the Sales and Marketing Executives International (SMEI) named him Marketer of the Year. In 2002, Professor Kotler received the Distinguished Educator Award from the Academy of Marketing Science. In 2013, he received the William L. Wilkie “Marketing for a Better World” Award and subsequently received the Sheth Foundation Medal for Exceptional Contribution to Marketing Scholarship and Practice. In 2014, he was inducted in the Marketing Hall of Fame. He has received honorary doctoral degrees from Stockholm University, the University of Zurich, Athens University of Economics and Business, De Paul University, the Cracow School of Business and Economics, Groupe H. E. C. in Paris, the Budapest School of Economic Science and Public Administration, the University of Economics and Business Administration in Vienna, and Plekhanov Russian Academy of Economics. Professor Kotler has been a consultant to many major U. S. and foreign companies, including IBM, General Electric, AT&T, Honeywell, Bank of America, Merck, SAS Airlines, Michelin, and others in the areas of marketing strategy and planning, marketing organization, and international marketing. He has been Chairman of the College of Marketing of the Institute of Management Sciences, a Director of the American Marketing Association, a Trustee of the Marketing Science Institute, a Director of the MAC Group, a member of the Yankelovich Advisory Board, and a member of the Copernicus Advisory Board. He was a member of the Board of Governors of the School of the Art Institute of Chicago and a member of the Advisory Board of the Drucker Foundation. He has traveled extensively throughout Europe, Asia, and South America, advising and lecturing to many companies about global marketing opportunities. about the authors Philip Kotler

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

5Kevin Lane Keller is the E. B. Osborn Professor of Marketing at the Tuck School of Business at Dartmouth College. Professor Keller has degrees from Cornell, Carnegie-Mellon, and Duke universities. At Dartmouth, he teaches MBA courses on mar-keting management and strategic brand management and lectures in executive programs on those topics. Previously, Professor Keller was on the faculty at Stanford University, where he also served as the head of the marketing group. Additionally, he has been on the faculty at the University of California at Berkeley and the University of North Carolina at Chapel Hill, has been a visiting professor at Duke University and the Australian Graduate School of Management, and has two years of industry experience as Marketing Consultant for Bank of America. Professor Keller's general area of expertise lies in marketing strategy and planning and branding. His specific research interest is in how understanding theories and concepts related to consumer behavior can improve marketing strategies. His research has been published in three of the major marketing journals: the Journal of Marketing, the Journal of Marketing Research, and the Journal of Consumer Research. He also has served on the Editorial Review Boards of those journals. With more than 90 pub-lished papers, his research has been widely cited and has received numerous awards. Actively involved with industry, he has worked on a host of different types of marketing projects. He has served as a long-term consultant and advisor to marketers for some of the world's most successful brands, including Accenture, American Express, Disney, Ford, Intel, Levi Strauss, Procter & Gamble, and Samsung. Additional brand consulting activities have been with other top companies such as Allstate, Beiersdorf (Nivea), Blue Cross Blue Shield, Campbell, Colgate, Eli Lilly, Exxon Mobil, General Mills, Gf K, Goodyear, Hasbro, Intuit, Johnson & Johnson, Kodak, L. L. Bean, Mayo Clinic, MTV, Nordstrom, Ocean Spray, Red Hat, SAB Miller, Shell Oil, Starbucks, Unilever, and Young & Rubicam. He has also served as an academic trustee for the Marketing Science Institute and served as their Executive Director from July 1, 2013, to July 1, 2015. A popular and highly sought-after speaker, he has made speeches and conducted marketing semi-nars to top executives in a variety of forums. Some of his senior management and marketing training clients have included include such diverse business organizations as Cisco, Coca-Cola, Deutsche Telekom, Exxon Mobil, GE, Google, IBM, Macy's, Microsoft, Nestle, Novartis, Pepsico, SC Johnson and Wyeth. He has lectured all over the world, from Seoul to Johannesburg, from Sydney to Stockholm, and from Sao Paulo to Mumbai. He has served as keynote speaker at conferences with hundreds to thousands of participants. Professor Keller is currently conducting a variety of studies that address strategies to build, mea-sure, and manage brand equity. His textbook on those subjects, Strategic Brand Management, in its fourth edition, has been adopted at top business schools and leading firms around the world and has been heralded as the “bible of branding. ” An avid sports, music, and film enthusiast, in his so-called spare time, he has helped to manage and market, as well as serve as executive producer for, one of Australia's great rock-and-roll treasures, The Church, as well as American power-pop legends Tommy Keene and Dwight Twilley. He also serves on the Board of Directors for The Doug Flutie, Jr. Foundation for Autism, the Lebanon Opera House, and the Montshire Museum of Science. Professor Keller lives in Etna, NH, with his wife, Punam (also a Tuck marketing professor), and his two daughters, Carolyn and Allison. Kevin Lane Keller

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

6Brief Contents Preface 17 Part 1 Understanding Marketing Management 24 Chapter 1 Defining Marketing for the New Realities 25 Chapter 2 Developing Marketing Strategies and Plans 57 Part 2 Capturing Marketing Insights 88 Chapter 3 Collecting Information and Forecasting Demand 89 Chapter 4 Conducting Marketing Research 121 Part 3 Connecting with Customers 148 Chapter 5 Creating Long-Term Loyalty Relationships 149 Chapter 6 Analyzing Consumer Markets 179 Chapter 7 Analyzing Business Markets 211 Chapter 8 Tapping into Global Markets 239 Part 4 Building Strong Brands 266 Chapter 9 Identifying Market Segments and Targets 267 Chapter 10 Crafting the Brand Positioning 297 Chapter 11 Creating Brand Equity 321 Chapter 12 Addressing Competition and Driving Growth 357 Part 5 Creating Value 388 Chapter 13 Setting Product Strategy 389 Chapter 14 Designing and Managing Services 421 Chapter 15 Introducing New Market Offerings 451 Chapter 16 Developing Pricing Strategies and Programs 483 Part 6 Delivering Value 514 Chapter 17 Designing and Managing Integrated Marketing Channels 515 Chapter 18 Managing Retailing, Wholesaling, and Logistics 549 Part 7 Communicating Value 578 Chapter 19 Designing and Managing Integrated Marketing Communications 579 Chapter 20 Managing Mass Communications: Advertising, Sales Promotions, Events and Experiences, and Public Relations 607 Chapter 21 Managing Digital Communications: Online, Social Media, and Mobile 637 Chapter 22 Managing Personal Communications: Direct and Database Marketing and Personal Selling 657 Part 8 Conducting Marketing Responsibly for Long-Term Success 678 Chapter 23 Managing a Holistic Marketing Organization for the Long Run 679 appendix: Sonic Marketing Plan and Exercises a1 Endnotes E1 Glossary G1 Name Index I1 Company, Brand, and Organization Index I5 Subject Index I18

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

7Contents Preface 17 Part 1 Understanding Marketing Management 24 Chapter 1 Defining Marketing for the New Realities 25 The Value of Marketing 25 Marketing Decision Making 25 Winning Marketing 26 The Scope of Marketing 27 What Is Marketing? 27 What Is Marketed? 27 Who Markets? 29 Core Marketing Concepts 31 Needs, Wants, and Demands 31 Target Markets, Positioning, and Segmentation 31 Offerings and Brands 32 Marketing Channels 32 Paid, Owned, and Earned Media 32 Impressions and Engagement 32 Value and Satisfaction 33 Supply Chain 33 Competition 34 Marketing Environment 34 The New Marketing Realities 35 Technology 35 Globalization 36 Social Responsibility 36 Mark Et ING INSIG ht Getting to Marketing 3. 0 37 A Dramatically Changed Marketplace 38 New Consumer Capabilities 38 New Company Capabilities 39 Changing Channels 41 Heightened Competition 41 Marketing in Practice 41 Marketing Balance 41 Mark Et ING MEMO Reinventing Marketing at Coca-Cola 42 Marketing Accountability 42 Marketing in the Organization 42 Company Orientation toward the Marketplace 42 The Production Concept 42 The Product Concept 43The Selling Concept 43 The Marketing Concept 43 The Holistic Marketing Concept 43 Updating the Four Ps 47 Mark Et ING INSIG ht Understanding the 4 As of Marketing 48 Marketing Management Tasks 49 Developing Marketing Strategies and Plans 49 Capturing Marketing Insights 50 Connecting with Customers 50 Building Strong Brands 50 Mark Et ING MEMO Marketers' Frequently Asked Questions 50 Creating Value 51 Delivering Value 51 Communicating Value 51 Conducting Marketing Responsibly for Long-Term Success 51 Summary 51 applications 52 Mark Et ING Ex CEll ENCE Nike 52 Mark Et ING Ex CEll ENCE Google 54 Chapter 2 Developing Marketing Strategies and Plans 57 Marketing and Customer Value 57 The Value Delivery Process 57 The Value Chain 58 Core Competencies 58 The Central Role of Strategic Planning 59 Corporate and Division Strategic Planning 60 Mark Et ING MEMO What Does It Take to Be a Successful CMO? 61 Defining the Corporate Mission 61 Establishing Strategic Business Units 64 Assigning Resources to Each SBU 64 Assessing Growth Opportunities 64 Organization and Organizational Culture 68 Marketing Innovation 69 Mark Et ING INSIG ht Creating Innovative Marketing 69 Business Unit Strategic Planning 70 The Business Mission 71 SWOT Analysis 71

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

8Mark Et ING MEMO Checklist for Evaluating Strengths/Weaknesses Analysis 73 Goal Formulation 74 Strategic Formulation 74 Program Formulation and Implementation 75 Mark Et ING INSIG ht Businesses Charting a New Direction 76 Feedback and Control 77 The Nature and Contents of a Marketing Plan 77 Mark Et ING MEMO Marketing Plan Criteria 77 The Role of Research 78 The Role of Relationships 78 From Marketing Plan to Marketing Action 79 Summary 79 applications 80 Mark Et ING Ex CEll ENCE Electrolux 80 Mark Et ING Ex CEll ENCE Emirates 81 Sample Marketing Plan: Pegasus Sports International 83 Part 2 Capturing Marketing Insights 88 Chapter 3 Collecting Information and Forecasting Demand 89 Components of a Modern Marketing Information System 89 Internal Records 91 The Order-to-Payment Cycle 91 Sales Information Systems 91 Databases, Data Warehousing, and Data Mining 91 Mark Et ING INSIG ht Digging Into Big Data 92 Marketing Intelligence 92 The Marketing Intelligence System 92 Collecting Marketing Intelligence on the Internet 94 Communicating and Acting on Marketing Intelligence 94 Analyzing the Macroenvironment 94 Needs and Trends 95 Identifying the Major Forces 95 The Demographic Environment 96Mark Et ING MEMO Finding Gold at the Bottom of the Pyramid 97 The Economic Environment 99 The Sociocultural Environment 100 The Natural Environment 101 Mark Et ING INSIG ht The Green Marketing Revolution 103 The Technological Environment 104 The Political-Legal Environment 105 Mark Et ING INSIG ht Watching Out for Big Brother 107 Forecasting and Demand Measurement 107 The Measures of Market Demand 108 A Vocabulary for Demand Measurement 109 Estimating Current Demand 111 Estimating Future Demand 113 Summary 115 applications 116 Mark Et ING Ex CEll ENCE Microsoft 116 Mark Et ING Ex CEll ENCE Ferrero 117 Chapter 4 Conducting Marketing Research 121 The Scope of Marketing Research 121 Importance of Marketing Insights 121 Who Does Marketing Research? 122 Overcoming Barriers to the Use of Marketing Research 123 The Marketing Research Process 124 Step 1: Define the Problem, the Decision Alternatives, and the Research Objectives 124 Step 2: Develop the Research Plan 125 Mark Et ING MEMO Conducting Informative Focus Groups 127 Mark Et ING MEMO Marketing Questionnaire Dos And Don'ts 130 Mark Et ING INSIG ht Getting into the Heads of Consumers 131 Mark Et ING INSIG ht Understanding Brain Science 133 Step 3: Collect the Information 135 Step 4: Analyze the Information 135 Step 5: Present the Findings 135 Mark Et ING INSIG ht Bringing Marketing Research to Life with Personas 136

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

9Step 6: Make the Decision 136 Measuring Marketing Productivity 137 Marketing Metrics 137 Mark Et ING MEMO Measuring Social Media ROI 139 Marketing-Mix Modeling 140 Marketing Dashboards 140 Mark Et ING MEMO Designing Effective Marketing Dashboards 141 Summary 143 applications 143 Mark Et ING Ex CEll ENCE IDEO 144 Mark Et ING Ex CEll ENCE Intuit 146 Part 3 Connecting with Customers 148 Chapter 5 Creating Long-Term Loyalty Relationships 149 Building Customer Value, Satisfaction, and Loyalty 149 Customer-Perceived Value 150 Total Customer Satisfaction 153 Monitoring Satisfaction 155 Product and Service Quality 156 Mark Et ING INSIG ht Net Promoter and Customer Satisfaction 157 Maximizing Customer Lifetime Value 158 Customer Profitability 159 Measuring Customer Lifetime Value 160 Attracting and Retaining Customers 160 Mark Et ING MEMO Calculating Customer Lifetime Value 161 Building Loyalty 164 Brand Communities 165 Win-Backs 168 Cultivating Customer Relationships 168 Customer Relationship Management 168 Mark Et ING INSIG ht The Behavioral Targeting Controversy 169 Summary 174 applications 174 Mark Et ING Ex CEll ENCE Audi 175 Mark Et ING Ex CEll ENCE Harley-Davidson 176Chapter 6 Analyzing Consumer Markets 179 What Influences Consumer Behavior? 179 Cultural Factors 179 Social Factors 181 Personal Factors 183 Mark Et ING MEMO The Average U. S. Consumer Quiz 184 Key Psychological Processes 187 Motivation 187 Perception 189 Mark Et ING MEMO The Power of Sensory Marketing 189 Learning 191 Emotions 192 Memory 193 The Buying Decision Process: The Five-Stage Model 194 Problem Recognition 195 Information Search 196 Evaluation of Alternatives 197 Purchase Decision 198 Postpurchase Behavior 200 Moderating Effects on Consumer Decision Making 202 Behavioral Decision Theory and Behavioral Economics 202 Decision Heuristics 203 Framing 204 Summary 205 applications 205 Mark Et ING Ex CEll ENCE Disney 206 Mark Et ING Ex CEll ENCE IKEA 207 Chapter 7 Analyzing Business Markets 211 What is Organizational Buying? 211 The Business Market versus the Consumer Market 211 Buying Situations 214 Participants in the Business Buying Process 215 The Buying Center 216 Buying Center Influences 216 Targeting Firms and Buying Centers 217 Mark Et ING INSIG ht Big Sales to Small Businesses 218 The Purchasing/Procurement Process 219 Stages in the Buying Process 220 Problem Recognition 220

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

10General Need Description and Product Specification 221 Supplier Search 221 Proposal Solicitation 223 Supplier Selection 223 Mark Et ING MEMO Developing Compelling Customer Value Propositions 224 Order-Routine Specification 226 Performance Review 226 Developing Effective Business-to-Business Marketing Programs 226 Communication and Branding Activities 226 Systems Buying and Selling 228 Mark Et ING MEMO Spreading the Word with Customer Reference Programs 229 Role of Services 229 Managing Business-to-Business Customer Relationships 230 The Benefits of Vertical Coordination 230 Mark Et ING INSIG ht Establishing Corporate Trust, Credibility, and Reputation 231 Risks and Opportunism in Business Relationships 231 Institutional and Government Markets 233 Summary 234 applications 235 Mark Et ING Ex CEll ENCE Accenture 235 Mark Et ING Ex CEll ENCE GE 236 Chapter 8 Tapping into Global Markets 239 Competing on a Global Basis 239 Deciding Whether to Go Abroad 241 Deciding Which Markets to Enter 242 How Many Markets to Enter 242 Evaluating Potential Markets 243 Succeeding in Developing Markets 243 Deciding How to Enter the Market 248 Indirect and Direct Export 249 Licensing 249 Joint Ventures 250 Direct Investment 250 Acquisition 250 Deciding on the Marketing Program 251 Global Similarities and Differences 252 Marketing Adaptation 253 Global Product Strategies 254Global Communication Strategies 257 Global Pricing Strategies 257 Global Distribution Strategies 259 Country-of-Origin Effects 260 Building Country Images 260 Consumer Perceptions of Country of Origin 261 Summary 262 applications 263 Mark Et ING Ex CEll ENCE Twitter 263 Mark Et ING Ex CEll ENCE L'Oréal 264 Part 4 Building Strong Brands 266 Chapter 9 Identifying Market Segments and Targets 267 Bases for Segmenting Consumer Markets 268 Geographic Segmentation 268 Demographic Segmentation 271 Psychographic Segmentation 280 Behavioral Segmentation 281 How Should Business Markets Be Segmented? 283 Market Targeting 284 Effective Segmentation Criteria 285 Evaluating and Selecting the Market Segments 286 Mark Et ING INSIG ht Chasing the Long Tail 289 Mark Et ING MEMO Protecting Kids Online 291 Summary 291 applications 292 Mark Et ING Ex CEll ENCE HSBC 292 Mark Et ING Ex CEll ENCE BMW 294 Chapter 10 Crafting the Brand Positioning 297 Developing a Brand Positioning 297 Understanding Positioning and Value Propositions 297 Choosing a Competitive Frame of Reference 298 Identifying Potential Points-of-Difference and Points-of-Parity 300

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

11Choosing Specific POPs and PODs 304 Brand Mantras 307 Establishing a Brand Positioning 309 Mark Et ING MEMO Constructing a Brand Positioning Bull's-eye 309 Alternative Approaches to Positioning 313 Brand Narratives and Storytelling 313 Cultural Branding 314 Positioning and Branding for A Small Business 314 Summary 317 applications 317 Mark Et ING Ex CEll ENCE Nespresso 318 Mark Et ING Ex CEll ENCE Philips 319 Chapter 11 Creating Brand Equity 321 How Does Branding Work? 321 The Role of Brands 322 The Scope of Branding 323 Defining Brand Equity 324 Brand Equity Models 326 Mark Et ING INSIG ht Brand Bubble Trouble 328 Building Brand Equity 331 Mark Et ING MEMO The Marketing Magic of Characters 332 Designing Holistic Marketing Activities 332 Leveraging Secondary Associations 334 Internal Branding 336 Measuring Brand Equity 337 Mark Et ING INSIG ht The Brand Value Chain 337 Mark Et ING INSIG ht What Is a Brand Worth? 339 Managing Brand Equity 340 Brand Reinforcement 340 Brand Revitalization 341 Devising a Branding Strategy 343 Branding Decisions 344 Brand Portfolios 345 Brand Extensions 347 Customer Equity 350 Mark Et ING MEMO Twenty-First-Century Branding 351Summary 352 applications 352 Mark Et ING Ex CEll ENCE Mc Donald's 353 Mark Et ING Ex CEll ENCE Procter & Gamble 354 Chapter 12 Addressing Competition and Driving Growth 357 Growth 357 Growth Strategies 357 Growing the Core 358 Competitive Strategies for Market Leaders 359 Expanding Total Market Demand 360 Protecting Market Share 361 Increasing Market Share 363 Other Competitive Strategies 364 Market-Challenger Strategies 364 Market-Follower Strategies 366 Mark Et ING INSIG ht The Costs and Benefits of Fast Fashion 367 Market-Nicher Strategies 368 Mark Et ING MEMO Niche Specialist Roles 370 Product Life-Cycle Marketing Strategies 370 Product Life Cycles 370 Style, Fashion, and Fad Life Cycles 371 Marketing Strategies: Introduction Stage and the Pioneer Advantage 373 Mark Et ING INSIG ht Understanding Double Jeopardy 374 Marketing Strategies: Growth Stage 375 Marketing Strategies: Maturity Stage 376 Marketing Strategies: Decline Stage 377 Mark Et ING MEMO Managing a Marketing Crisis 378 Evidence for the Product Life-Cycle Concept 380 Critique of the Product Life-Cycle Concept 381 Market Evolution 381 Marketing in a Slow-Growth Economy 381 Explore the Upside of Increasing Investment 381 Get Closer to Customers 382 Review Budget Allocations 382 Put Forth the Most Compelling Value Proposition 382 Fine-Tune Brand and Product Offerings 383

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

12Summary 384 applications 384 Mark Et ING Ex CEll ENCE Samsung 385 Mark Et ING Ex CEll ENCE SABIC 386 Part 5 Creating Value 388 Chapter 13 Setting Product Strategy 389 Product Characteristics and Classifications 389 Product Levels: The Customer-Value Hierarchy 389 Product Classifications 391 Differentiation 392 Product Differentiation 393 Services Differentiation 394 Design 396 Design Leaders 396 Power of Design 397 Approaches to Design 397 Luxury Products 398 Characterizing Luxury Brands 398 Growing Luxury Brands 398 Marketing Luxury Brands 399 Environmental Issues 400 Mark Et ING MEMO A Sip or A Gulp: Environmental Concerns in the Water Industry 401 Product and Brand Relationships 401 The Product Hierarchy 402 Product Systems and Mixes 402 Product Line Analysis 403 Product Line Length 404 Mark Et ING INSIG ht When Less Is More 405 Product Mix Pricing 408 Co-Branding and Ingredient Branding 409 Mark Et ING MEMO Product-Bundle Pricing Considerations 410 Packaging, Labeling, Warranties, and Guarantees 412 Packaging 412 Labeling 414 Warranties and Guarantees 415 Summary 415 applications 416Mark Et ING Ex CEll ENCE Nivea 416 Mark Et ING Ex CEll ENCE Toyota 418 Chapter 14 Designing and Managing Services 421 The Nature of Services 421 Service Industries Are Everywhere 421 Categories of Service Mix 422 Distinctive Characteristics of Services 424 The New Services Realities 428 A Shifting Customer Relationship 428 Mark Et ING MEMO Lights! Cameras! Customer Service Disasters! 430 Achieving Excellence In Services Marketing 431 Marketing Excellence 431 Technology and Service Delivery 432 Best Practices of Top Service Companies 433 Differentiating Services 435 Mark Et ING INSIG ht Improving Company Call Centers 436 Managing Service Quality 439 Managing Customer Expectations 440 Mark Et ING MEMO Recommendations for Improving Service Quality 441 Incorporating Self-Service Technologies (SSTS) 443 Managing Product-Support Services 444 Identifying and Satisfying Customer Needs 444 Postsale Service Strategy 445 Summary 445 applications 446 Mark Et ING Ex CEll ENCE Club Med 446 Mark Et ING Ex CEll ENCE Parkway Group Hotels 448 Chapter 15 Introducing New Market Offerings 451 New-Product Options 451 Make or Buy 451 Types of New Products 452

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

13Challenges in New-Product Development 453 The Innovation Imperative 454 New-Product Success 454 New-Product Failure 455 Organizational Arrangements 456 Budgeting for New-Product Development 456 Organizing New-Product Development 457 Managing the Development Process: Ideas 460 Generating Ideas 460 Mark Et ING MEMO Ten Ways to Find Great New-Product Ideas 460 Mark Et ING INSIG ht P&G'S Connect + Develop Approach to Innovation 461 Mark Et ING MEMO Seven Ways to Draw New Ideas from Your Customers 462 Mark Et ING MEMO How to Run a Successful Brainstorming Session 464 Using Idea Screening 465 Managing the Development Process: Concept to Strategy 467 Concept Development and Testing 467 Marketing Strategy Development 470 Business Analysis 470 Managing the Development Process: Development to Commercialization 472 Product Development 472 Market Testing 473 Commercialization 475 The Consumer-Adoption Process 476 Stages in the Adoption Process 476 Factors Influencing the Adoption Process 476 Summary 478 applications 479 Mark Et ING Ex CEll ENCE Apple 479 Mark Et ING Ex CEll ENCE Salesforce. com 481 Chapter 16 Developing Pricing Strategies and Programs 483 Understanding Pricing 483 Pricing in a Digital World 484 A Changing Pricing Environment 484 Mark Et ING INSIG ht Giving It All Away 485 How Companies Price 486 Consumer Psychology and Pricing 487Setting the Price 489 Step 1: Selecting the Pricing Objective 489 Mark Et ING INSIG ht Trading Up, Down, and Over 490 Step 2: Determining Demand 492 Step 3: Estimating Costs 494 Mark Et ING MEMO How to Cut Costs 496 Step 4: Analyzing Competitors' Costs, Prices, and Offers 496 Step 5: Selecting a Pricing Method 497 Step 6: Selecting the Final Price 502 Mark Et ING INSIG ht Stealth Price Increases 503 Adapting the Price 504 Geographical Pricing (Cash, Countertrade, Barter) 504 Price Discounts and Allowances 504 Promotional Pricing 505 Differentiated Pricing 506 Initiating and Responding to Price Changes 507 Initiating Price Cuts 507 Initiating Price Increases 508 Anticipating Competitive Responses 508 Responding to Competitors' Price Changes 509 Summary 510 applications 510 Mark Et ING Ex CEll ENCE e Bay 511 Mark Et ING Ex CEll ENCE Air Arabia 512 Part 6 Delivering Value 514 Chapter 17 Designing and Managing Integrated Marketing Channels 515 Marketing Channels and Value Networks 516 The Importance of Channels 516 Multichannel Marketing 516 Integrating Multichannel Marketing Systems 517 Value Networks 519 The Digital Channels Revolution 520 The Role of Marketing Channels 521 Channel Functions and Flows 522 Channel Levels 523 Service Sector Channels 524

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

14Channel-Design Decisions 525 Analyzing Customer Needs and Wants 525 Mark Et ING INSIG ht Understanding the Showrooming Phenomena 525 Establishing Objectives and Constraints 526 Identifying Major Channel Alternatives 527 Evaluating Major Channel Alternatives 529 Channel-Management Decisions 530 Selecting Channel Members 530 Training and Motivating Channel Members 530 Evaluating Channel Members 531 Modifying Channel Design and Arrangements 532 Channel Modification Decisions 532 Global Channel Considerations 532 Channel Integration and Systems 534 Vertical Marketing Systems 534 Horizontal Marketing Systems 536 E-Commerce Marketing Practices 536 Pure-Click Companies 536 Brick-and-Click Companies 537 M-Commerce Marketing Practices 538 Changes in Customer and Company Behavior 539 M-Commerce Marketing Practices 539 Privacy 540 Conflict, Cooperation, and Competition 540 Types of Conflict and Competition 541 Causes of Channel Conflict 541 Managing Channel Conflict 541 Dilution and Cannibalization 543 Legal and Ethical Issues in Channel Relations 543 Summary 543 applications 544 Mark Et ING Ex CEll ENCE Amazon. com 544 Mark Et ING Ex CEll ENCE Tesco 546 Chapter 18 Managing Retailing,Wholesaling, and Logistics 549 Retailing 549 Types of Retailers 550 Mark Et ING MEMO Innovative Retail Organizations 551 The Modern Retail Marketing Environment 554Mark Et ING INSIG ht The Growth of Shopper Marketing 556 Marketing Decisions 557 Mark Et ING MEMO Helping Stores to Sell 562 Private Labels 563 Role of Private Labels 564 Private-Label Success Factors 564 Mark Et ING INSIG ht Manufacturer's Response to the Private-Label Threat 565 Wholesaling 565 Trends in Wholesaling 567 Market Logistics 567 Integrated Logistics Systems 568 Market-Logistics Objectives 569 Market-Logistics Decisions 570 Summary 573 applications 574 Mark Et ING Ex CEll ENCE Zara 574 Mark Et ING Ex CEll ENCE Best Buy 576 Part 7 Communicating Value 578 Chapter 19 Designing and Managing Integrated Marketing Communications 579 The Role of Marketing Communications 580 The Changing Marketing Communications Environment 580 Mark Et ING INSIG ht Don't Touch That Remote 580 Marketing Communications Mix 581 How Do Marketing Communications Work? 583 The Communications Process Models 584 Developing Effective Communications 586 Identify the Target Audience 586 Set the Communications Objectives 587 Design the Communications 587 Select the Communications Channels 590 Mark Et ING MEMO Celebrity Endorsements as a Message Strategy 591 Mark Et ING INSIG ht Playing Tricks to Build a Brand 593

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

15Establish the Total Marketing Communications Budget 594 Selecting the Marketing Communications Mix 595 Characteristics of the Marketing Communications Mix 596 Factors in Setting the Marketing Communications Mix 597 Measuring Communication Results 599 Managing the Integrated Marketing Communications Process 599 Coordinating Media 601 Implementing IMC 601 Mark Et ING MEMO How Integrated Is Your IMC Program? 601 Summary 602 applications 603 Mark Et ING Ex CEll ENCE Red Bull 603 Mark Et ING Ex CEll ENCE L'Oreal 604 Chapter 20 Managing Mass Communications: Advertising, Sales Promotions, Events and Experiences, and Public Relations 607 Developing and Managing an Advertising Program 608 Setting the Advertising Objectives 609 Deciding on the Advertising Budget 609 Developing the Advertising Campaign 610 Mark Et ING MEMO Print Ad Evaluation Criteria 612 Mark Et ING INSIG ht Off-Air Ad Battles 614 Choosing Media 615 Mark Et ING INSIG ht Playing Games with Brands 618 Mark Et ING MEMO Winning The Super Bowl of Advertising 619 Evaluating Advertising Effectiveness 621 Sales Promotion 622 Advertising Versus Promotion 622 Major Decisions 623 Events and Experiences 626 Events Objectives 626 Major Sponsorship Decisions 627Mark Et ING MEMO Measuring High- Performance Sponsorship Programs 628 Creating Experiences 628 Public Relations 629 Marketing Public Relations 629 Major Decisions in Marketing PR 630 Summary 631 applications 632 Mark Et ING Ex CEll ENCE Evian 632 Mark Et ING Ex CEll ENCE Gillette 634 Chapter 21 Managing Digital Communications: Online, Social Media, and Mobile 637 Online Marketing 637 Advantages and Disadvantages of Online Marketing Communications 638 Online Marketing Communication Options 639 Mark Et ING MEMO How to Maximize the Marketing Value of E-mails 642 Social Media 642 Social Media Platforms 643 Using Social Media 644 Word of Mouth 645 Forms of Word of Mouth 646 Creating Word-of-Mouth Buzz 646 Mark Et ING MEMO How to Start a Buzz Fire 648 Mark Et ING INSIG ht Tracking Online Buzz 649 Measuring the Effects of Word of Mouth 650 Mobile Marketing 650 The Scope of Mobile Marketing 650 Developing Effective Mobile Marketing Programs 651 Mobile Marketing across Markets 651 Summary 652 applications 653 Mark Et ING Ex CEll ENCE Facebook 653 Mark Et ING Ex CEll ENCE Unilever (Axe and Dove) 654

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16Chapter 22 Managing Personal Communications: Direct and Database Marketing and Personal Selling 657 Direct Marketing 657 The Benefits of Direct Marketing 658 Direct Mail 659 Catalog Marketing 660 Telemarketing 660 Other Media for Direct-Response Marketing 661 Public and Ethical Issues in Direct Marketing 661 Customer Databases and Database Marketing 662 Customer Databases 662 Data Warehouses and Data Mining 662 The Downside of Database Marketing 664 Designing the Sales Force 664 Sales Force Objectives and Strategy 666 Sales Force Structure 667 Mark Et ING INSIG ht Major Account Management 668 Sales Force Size 668 Sales Force Compensation 668 Managing the Sales Force 669 Recruiting and Selecting Representatives 669 Training and Supervising Sales Representatives 669 Sales Rep Productivity 670 Motivating Sales Representatives 670 Evaluating Sales Representatives 671 Principles of Personal Selling 673 The Six Steps 673 Relationship Marketing 674 Summary 675 applications 675 Mark Et ING Ex CEll ENCE Progressive 676 Mark Et ING Ex CEll ENCE Victoria's Secret 677 Part 8 Conducting Marketing Responsibly for Long-term Success 678 Chapter 23 Managing a Holistic Marketing Organization for the Long Run 679 Trends in Marketing Practices 679 Internal Marketing 680Mark Et ING MEMO Characteristics of Company Departments That Are Truly Customer Driven 681 Organizing the Marketing Department 682 Relationships with Other Departments 684 Building a Creative Marketing Organization 684 Mark Et ING INSIG ht The Marketing CEO 685 Socially Responsible Marketing 685 Corporate Social Responsibility 686 Mark Et ING INSIG ht The Rise of Organic 689 Socially Responsible Business Models 690 Cause-Related Marketing 690 Mark Et ING MEMO Making a Difference: Top 10 Tips for Cause Branding 693 Social Marketing 694 Marketing Implementation and Control 697 Marketing Implementation 697 Marketing Control 697 The Future of Marketing 702 Mark Et ING MEMO Major Marketing Weaknesses 703 Summary 705 applications 705 Mark Et ING Ex CEll ENCE Starbucks 706 Mark Et ING Ex CEll ENCE Virgin Group 707 appendix Tools for Marketing Control 709 appendix: Sonic Marketing Plan and Exercises a1 Endnotes E1 Glossary G1 Name Index I1 Company, Brand, and Organization Index I5 Subject Index I18

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17Preface What's New in the 15th Edition The 15th edition of Marketing Management is a landmark entry in the long successful history of the market leader. With the 15th edition, great care was taken to provide an introductory guide to marketing management that truly reflects the modern realities of marketing. In doing so, classic concepts, guidelines, and examples were retained while new ones were added as appropriate. Three broad forces—globalization, technology, and social responsibility—were identified as critical to the success of modern marketing programs. These three topics are evident all through the text. As has been the case for a number of editions now, the overriding goal of the revision for the 15th edition of Marketing Management was to create as comprehensive, current, and engaging a MBA marketing textbook as possible. Where appropriate, new material was added, old material was updated, and no longer relevant or necessary material was deleted. Even though marketing is changing in many significant ways these days, many core elements remain, and we feel strongly that a balanced approach of classic and contemporary approaches and perspectives is the way to go. Marketing Management, 15th edition, allows those instructors who have used the 14th edition to build on what they have learned and done while at the same time offering a text that is unsurpassed in breadth, depth, and relevance for students experiencing Marketing Management for the first time. The successful across-chapter reorganization into eight parts that began with the 12th edition of Marketing Management has largely been preserved, although several adjustments have been made to improve student understanding, as described below. Many of the favorably received within-chapter features that have been introduced through the years, such as topical chapter openers, in-text boxes highlighting noteworthy compa-nies or issues, and the Marketing Insight and Marketing Memo boxes that provide in-depth conceptual and practical commentary, have been retained. Significant changes to the 15th edition include: Brand-new opening vignettes for each chapter set the stage for the chapter material to follow. By covering topical brands or companies, the vignettes are great classroom discussion starters. Almost half of the in-text boxes are new. These boxes provide vivid illustrations of chapter concepts using actual companies and situations. The boxes cover a variety of products, services, and markets, and many have accompanying illustrations in the form of ads or product shots. Each end-of-chapter section now includes two expanded Marketing Excellence mini-cases highlighting innovative, insightful marketing accomplishments by leading organizations. Each case includes questions that promote classroom discussion and student analysis. The global chapter (8, previously Chapter 21) has been moved into Part 3 on Connecting with Customers and the new products chapter (15, previously Chapter 20) has been moved into Part 5 on Creating Value. The positioning and brand chapters (10 and 11) have been switched to allow for the conventional STP sequencing. These moves permit richer coverage of the topics and better align with many instructors' teaching strategy. A new chapter (21) titled Managing Digital Communications: Online, Social Media, and Mobile has been added to better highlight that important topic. Significant attention is paid throughout the text to what a new section in Chapter 1 calls “the digital revolution. ” The concluding chapter (23) has been retitled “Managing a Holistic Marketing Organization for the Long Run” and addresses corporate social responsibility, business ethics, and sustainability, among other topics. Chapter 12 (previously Chapter 11) has been retitled “ Addressing Competition and Driving Growth” to acknowledge the importance of growth to an organization. What Is Marketing Management All About? Marketing Management is the leading marketing text because its content and organization consistently reflect changes in marketing theory and practice. The very first edition of Marketing Management, published in 1967, introduced the concept that companies must be customer and market driven. But there was little mention of

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

18what have now become fundamental topics such as segmentation, targeting, and positioning. Concepts such as brand equity, customer value analysis, database marketing, e-commerce, value networks, hybrid channels, supply chain management, and integrated marketing communications were not even part of the marketing vocabulary then. Marketing Management continues to reflect the changes in the marketing discipline over the past almost 50 years. Firms now sell goods and services through a variety of direct and indirect channels. Mass advertis-ing is not nearly as effective as it was, so marketers are exploring new forms of communication, such as experiential, entertainment, and viral marketing. Customers are telling companies what types of product or services they want and when, where, and how they want to buy them. They are increasingly reporting to other consumers what they think of specific companies and products—using e-mail, blogs, podcasts, and other digital media to do so. Company messages are becoming a smaller fraction of the total “conversation” about products and services. In response, companies have shifted gears from managing product portfolios to managing customer portfolios, compiling databases on individual customers so they can understand them better and construct individualized offerings and messages. They are doing less product and service standardization and more niching and customization. They are replacing monologues with customer dialogues. They are improving their methods of measuring customer profitability and customer lifetime value. They are intent on measur-ing the return on their marketing investment and its impact on shareholder value. They are also concerned with the ethical and social implications of their marketing decisions. As companies change, so does their marketing organization. Marketing is no longer a company depart-ment charged with a limited number of tasks—it is a company-wide undertaking. It drives the company's vision, mission, and strategic planning. Marketing includes decisions like whom the company wants as its customers, which of their needs to satisfy, what products and services to offer, what prices to set, what communications to send and receive, what channels of distribution to use, and what partnerships to develop. Marketing succeeds only when all departments work together to achieve goals: when engineering designs the right products; finance furnishes the required funds; purchasing buys high-quality materials; produc-tion makes high-quality products on time; and accounting measures the profitability of different customers, products, and areas. To address all these different shifts, good marketers are practicing holistic marketing. Holistic marketing is the development, design, and implementation of marketing programs, processes, and activities that recog-nize the breadth and interdependencies of today's marketing environment. Four key dimensions of holistic marketing are: 1. Internal marketing —ensuring everyone in the organization embraces appropriate marketing principles, especially senior management. 2. Integrated marketing —ensuring that multiple means of creating, delivering, and communicating value are employed and combined in the best way. 3. Relationship marketing —having rich, multifaceted relationships with customers, channel members, and other marketing partners. 4. Performance marketing —understanding returns to the business from marketing activities and programs, as well as addressing broader concerns and their legal, ethical, social, and environmental effects. These four dimensions are woven throughout the book and at times spelled out explicitly. The text is organized to specifically address the following eight tasks that constitute modern marketing management in the 21st century: 1. Developing marketing strategies and plans 2. Capturing marketing insights 3. Connecting with customers 4. Building strong brands 5. Creating value 6. Delivering value 7. Communicating value 8. Conducting marketing responsibly for long-term success

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

19What Makes Marketing Management the Marketing Leader? Marketing is of interest to everyone, whether they are marketing goods, services, properties, persons, places, events, information, ideas, or organizations. As it has maintained its respected position among students, educators, and businesspeople, Marketing Management has kept up to date and contemporary. Students (and instructors) feel that the book is talking directly to them in terms of both content and delivery. Marketing Management owes its marketplace success to its ability to maximize three dimensions that characterize the best marketing texts—depth, breadth, and relevance—as measured by the following criteria: Depth. Does the book have solid academic grounding? Does it contain important theoretical concepts, models, and frameworks? Does it provide conceptual guidance to solve practical problems? Breadth. Does the book cover all the right topics? Does it provide the proper amount of emphasis on those topics? Relevance. Does the book engage the reader? Is it interesting to read? Does it have lots of compelling examples? The 15th edition builds on the fundamental strengths of past editions that collectively distinguish it from all other marketing management texts: Managerial orientation. The book focuses on the major decisions that marketing managers and top management face in their efforts to harmonize the organization's objectives, capabilities, and resources with marketplace needs and opportunities. Analytical approach. Marketing Management presents conceptual tools and frameworks for analyz-ing recurring problems in marketing management. Cases and examples illustrate effective marketing principles, strategies, and practices. Multidisciplinary perspective. The book draws on the rich findings of various scientific disciplines— economics, behavioral science, management theory, and mathematics—for fundamental concepts and tools directly applicable to marketing challenges. Universal applications. The book applies strategic thinking to the complete spectrum of marketing: products, services, persons, places, information, ideas, and causes; consumer and business markets; profit and nonprofit organizations; domestic and foreign companies; small and large firms; manufacturing and intermediary businesses; and low-and high-tech industries. Comprehensive and balanced coverage. Marketing Management covers all the topics an informed marketing manager needs to understand to execute strategic, tactical, and administrative marketing. Instructor Resources At the Instructor Resource Center, www. pearsonglobaleditions. com/kotler, instructors can easily register to gain access to a variety of instructor resources available with this text in downloadable format. If assistance is needed, our dedicated technical support team is ready to help with the media supplements that accompany this text. Visit http://247. pearsoned. com for answers to frequently asked questions and toll-free user support phone numbers. The following supplements are available with this text: Instructor's Resource Manual Test Bank Test Gen® Computerized Test Bank Power Point Presentation Image Library

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

20acknowledgments the 15th edition bears the imprint of many people. From Phil Kotler: My colleagues and associates at the Kellogg School of Management at Northwestern University continue to have an important impact on my thinking: Nidhi Agrawal, Eric T. Anderson, James C. Anderson, Robert C. Blattberg, Miguel C. Brendl, Bobby J. Calder, Gregory S. Carpenter, Alex Chernev, Anne T. Coughlan, David Gal, Kent Grayson, Karsten Hansen, Dipak C. Jain, Lakshman Krishnamurti, Angela Lee, Vincent Nijs, Yi Qian, Mohanbir S. Sawhney, Louis W. Stern, Brian Sternthal, Alice M. Tybout, and Andris A. Zoltners. I also want to thank the S. C. Johnson Family for the generous support of my chair at the Kellogg School. Completing the Northwestern team are my former Deans, Donald P. Jacobs and Dipak Jain and my current Dean, Sally Blount, for provid-ing generous support for my research and writing. Several former faculty members of the marketing department had a great influence on my think-ing: Steuart Henderson Britt, Richard M. Clewett, Ralph Westfall, Harper W. Boyd, Sidney J. Levy, John Sherry, and John Hauser. I also want to acknowledge Gary Armstrong for our work on Principles of Marketing. I am indebted to the following coauthors of international editions of Marketing Management and Principles of Marketing who have taught me a great deal as we worked together to adapt marketing manage-ment thinking to the problems of different nations: Swee-Hoon Ang and Siew-Meng Leong, National University of Singapore Chin-Tiong Tan, Singapore Management University Friedhelm W. Bliemel, Universitat Kaiserslautern (Germany) Linden Brown; Stewart Adam, Deakin University; Suzan Burton: Macquarie Graduate School of Management, and Sara Denize, University of Western Sydney (Australia) Bernard Dubois, Groupe HEC School of Management (France) and Delphine Manceau, ESCP-EAP European School of Management John Saunders, Loughborough University and Veronica Wong, Warwick University (United Kingdom) Jacob Hornick, Tel Aviv University (Israel) Walter Giorgio Scott, Universita Cattolica del Sacro Cuore (Italy) Peggy Cunningham, Queen's University (Canada) I also want to acknowledge how much I have learned from working with coauthors on more special-ized marketing subjects: Alan Andreasen, Christer Asplund, Paul N. Bloom, John Bowen, Roberta C. Clarke, Karen Fox, David Gertner, Michael Hamlin, Thomas Hayes, Donald Haider, Hooi Den Hua, Dipak Jain, Somkid Jatusripitak, Hermawan Kartajaya, Milton Kotler, Neil Kotler, Nancy Lee, Sandra Liu, Suvit Maesincee, James Maken, Waldemar Pfoertsch, Gustave Rath, Irving Rein, Eduardo Roberto, Joanne Scheff, Norman Shawchuck, Joel Shalowitz, Ben Shields, Francois Simon, Robert Stevens, Martin Stoller, Fernando Trias de Bes, Bruce Wrenn, and David Y oung. My overriding debt continues to be to my lovely wife, Nancy, who provided me with the time, support, and inspiration needed to prepare this edition. It is truly our book. From Kevin Lane Keller: I continually benefit from the wisdom of my marketing colleagues at Tuck— Punam Keller, Scott Neslin, Kusum Ailawadi, Praveen Kopalle, Peter Golder, Ellie Kyung, Y aniv Dover, Eesha Sharma, Fred Webster, Gert Assmus, and John Farley—as well as the leadership of Dean Paul Danos. I also gratefully acknowledge the invaluable research and teaching contributions from my faculty colleagues and collaborators through the years. I owe a considerable debt of gratitude to Duke University's Jim Bettman and Rick Staelin for helping to get my academic career started and serving as positive role models to this day. I am also appreciative of all that I have learned from working with many industry executives who have generously shared their insights and experiences. With this 15th edition, I received some extremely help-ful research assistance from a talented group of Dartmouth undergraduate RAs—Caroline Buck, James Carlson, Ryan Galloway, Jack Heise, Jeff Keller, Jill Lyon, Richard Newsome-White, Rahul Raina, and Cameron Woodworth, —who were as accurate, thorough, dependable, and cheerful as you could possibly imagine. Alison Pearson provided superb administrative support. Finally, I give special thanks to Punam, my wife, and Carolyn and Allison, my daughters, who make it all happen and make it all worthwhile.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

21We are indebted to the following colleagues at other universities who reviewed this new edition: Jennifer Barr, Richard Stockton College Lawrence Kenneth Duke, Drexel University Le Bow College of Business Barbara S. Faries, Mission College, Santa Clara, CA William E. Fillner, Hiram College Frank J. Franzak,Virginia Commonwealth University Robert Galka, De Paul University Albert N. Greco, Fordham University John A. Hobbs, University of Oklahoma Brian Larson,Widener University Anthony Racka, Oakland Community College, Auburn Hills, MI Jamie Ressler, Palm Beach Atlantic University James E. Shapiro, University of New Haven George David Shows, Louisiana Tech University We would also like to thank colleagues who have reviewed previous editions of Marketing Management : Homero Aguirre, TAMIU Alan Au, University of Hong Kong Hiram Barksdale, University of Georgia Boris Becker, Oregon State University Sandy Becker, Rutgers University Parimal Bhagat, Indiana University of Pennsylvania Sunil Bhatla, Case Western Reserve University Michael Bruce, Anderson University Frederic Brunel, Boston University John Burnett, University of Denver Lisa Cain, University of California at Berkeley and Mills College Surjit Chhabra, De Paul University Yun Chu, Frostburg State University Dennis Clayson, University of Northern Iowa Bob Cline, University of Iowa Brent Cunningham, Jacksonville State University Hugh Daubek, Purdue University John Deighton, University of Chicago Kathleen Dominick, Rider University Tad Duffy, Golden Gate University Mohan Dutta, Purdue University Barbara Dyer, University of North Carolina at Greensboro Jackkie Eastman,Valdosta State University Steve Edison, University of Arkansas-Little Rock Alton Erdem, University of Houston at Clear Lake Elizabeth Evans, Concordia University Barb Finer, Suffolk University Chic Fojtik, Pepperdine University Renee Foster, Delta State University Ralph Gaedeke, California State University, Sacramento Robert Galka, De Paul University Betsy Gelb, University of Houston at Clear Lake Dennis Gensch, University of Wisconsin, Milwaukee David Georgoff, Florida Atlantic University Rashi Glazer, University of California, Berkeley Bill Gray, Keller Graduate School of Management Barbara Gross, California State University at Northridge Lewis Hershey, Fayetteville State University Thomas Hewett, Kaplan University Mary Higby, University of Detroit-Mercy Arun Jain, State University of New Y ork, Buffalo Michelle Kunz, Morehead State University Eric Langer, Johns Hopkins University Even Lanseng, Norwegian School of Management Ron Lennon, Barry University Michael Lodato, California Lutheran University Henry Loehr, Pfeiffer University-Charlotte Bart Macchiette, Plymouth University Susan Mann, Bluefield State College Charles Martin,Wichita State University H. Lee Matthews, Ohio State University

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

22Paul Mc Devitt, University of Illinois at Springfield Mary Ann Mc Grath, Loyola University, Chicago John Mc Keever, University of Houston Kenneth P. Mead, Central Connecticut State University Henry Metzner, University of Missouri, Rolla Robert Mika, Monmouth University Mark Mitchell, Coastal Carolina University Francis Mulhern, Northwestern University Pat Murphy, University of Notre Dame Jim Murrow, Drury College Zhou Nan, University of Hong Kong Nicholas Nugent, Boston College Nnamdi Osakwe, Bryant & Stratton College Donald Outland, University of Texas, Austin Albert Page, University of Illinois, Chicago Y oung-Hoon Park, Cornell University Koen Pauwels, Dartmouth College Lisa Klein Pearo, Cornell University Keith Penney, Webster University Patricia Perry, University of Alabama Mike Powell, North Georgia College and State University Hank Pruden, Golden Gate University Christopher Puto, Arizona State University Abe Qstin, Lakeland University Lopo Rego, University of Iowa Richard Rexeisen, University of St. Thomas William Rice, California State University-Fresno Scott D. Roberts, Northern Arizona University Bill Robinson, Purdue University Robert Roe, University of Wyoming Jan Napoleon Saykiewicz, Duquesne University Larry Schramm, Oakland University Alex Sharland, Hofstra University Dean Siewers, Rochester Institute of Technology Anusorn Singhapakdi, Old Dominion University Jim Skertich, Upper Iowa University Allen Smith, Florida Atlantic University Joe Spencer, Anderson University Mark Spriggs, University of St. Thomas Nancy Stephens, Arizona State University Michael Swenso, Brigham Y oung University, Marriott School Thomas Tellefsen, The College of Staten Island-CUNY Daniel Turner, University of Washington Sean Valentine, University of Wyoming Ann Veeck, West Michigan University R. Venkatesh, University of Pittsburgh Edward Volchok, Stevens Institute of Management D. J. Wasmer, St. Mary-of-the-Woods College Zac Williams, Mississippi State University Greg Wood, Canisius College Kevin Zeng Zhou, University of Hong Kong A warm welcome and many thanks to the following people who contributed to the global case studies developed for the 14th edition: Mairead Brady, Trinity College John R. Brooks, Jr., Houston Baptist University Sylvain Charlebois, University of Regina Geoffrey da Silva, Temasek Business School Malcolm Goodman, Durham University Torben Hansen, Copenhagen Business School Abraham Koshy, Sanjeev Tripathi, and Abhishek, Indian Institute of Management Ahmedabad Peter Ling, Edith Cowan University Marianne Marando, Seneca College Lu Taihong, Sun Y at-Sen University

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

The talented staff at Pearson deserves praise for their role in shaping the 15th edition. We want to thank our editor, Mark Gaffney, for his contribution to this revision, as well as our program manager, Jennifer M. Collins. We also want to thank our project manager, Becca Groves, for making sure everything was moving along and falling into place in such a personable way, both with regard to the book and supple-ments. We benefited greatly from the superb editorial help of Elisa Adams, who lent her considerable talents as a development editor to this edition. We also thank our marketing managers, Anne Fahlgren and Lenny Ann Raper. Certainly, we are grateful for the editorial support provided by Daniel Petrino. Lastly, we' d like to thank the following My Lab contributors: Susan C. Schanne, School of Management, Eastern Michigan University, and Barbara S. Faries, MBA, Mission College, Santa Clara. Philip Kotler S. C. Johnson Distinguished Professor of International Marketing, Kellogg School of Management, Northwestern University, Evanston, Illinois Kevin Lane Keller E. B. Osborn Professor of Marketing, Tuck School of Business, Dartmouth College, Hanover, New Hampshire 23Pearson would like to thank and acknowledge the following people for their work on the Global Edition: Contributors Andrea Rumler, Berlin School of Economics and Law, Germany Abderrahman Hassi, Al Akhawayn University, Morocco Afifa Bouguerra, University of Toulouse, France Bouchra Hamelin, Al Akhawayn University, Morocco Abdelhamid Bennani Bouchiba, Al Akhawayn University, Morocco Muneeza Shoaib, Middlesex University Dubai, UAEReviewers Naila Aaijaz, International Professors Project Frances Ekwulungo, University of Westminster, UK Michael Gründ, Zurich University of Applied Sciences in Business Administration, Switzerland Mohamed Dahlan Ibrahim, Universiti Malaysia Kelantan, Malaysia Jawahitha Sarabdeen, University of Wollongong in Dubai, UAE

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

24 In This Chapter, We Will Address the Following Questions 1. Why is marketing important? (p. 25) 2. What is the scope of marketing? (p. 27) 3. What are some core marketing concepts? (p. 31) 4. What forces are defining the new marketing realities? (p. 35) 5. What new capabilities have these forces given consumers and companies? (p. 38) 6. What does a holistic marketing philosophy include? (p. 42) 7. What tasks are necessary for successful marketing management? (p. 49)Understanding Marketing Management Part 1 Unilever is fundamentally changing how it is doing its marketing, including putting more emphasis on developing markets. Source: Bloomberg via Getty Images Chapter 1 Defining Marketing for the New Realities Chapter 2 Developing Marketing Strategies and Plans Improve Y our Grade! Over 10 million students improved their results using the Pearson My Labs. Visit mymktlab. com for simulations, tutorials, and end-of-chapter problems. My Marketing Lab™

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

25 The Value of Marketing Finance, operations, accounting, and other business functions won't really matter without sufficient demand for products and services so the firm can make a profit. In other words, there must be a top line for there to be a bottom line. Thus, financial success often depends on marketing ability. Marketing's value extends to society as a whole. It has helped introduce new or enhanced products that ease or enrich people's lives. Successful marketing builds demand for products and services, which, in turn, creates jobs. By contributing to the bottom line, success-ful marketing also allows firms to more fully engage in socially responsible activities. 2 Market In G Dec Is Ion Mak In G CEOs recognize that marketing builds strong brands and a loyal customer base, intangible assets that contrib-ute heavily to the value of a firm. 3 Many firms, even service and nonprofit, now have a chief marketing officer (CMO) to put marketing on a more equal footing with other C-level executives such as the chief financial officer (CFO) or chief information officer (CIO). 4Good marketing is no accident.   It is both an art and a science, and it results from careful planning and execution using state-of-the-art tools and techniques. In this book, we describe how skillful marketers are updating classic practices and inventing new ones to find creative, practical solutions to  new marketing realities. In the first chapter, we lay our foundation by reviewing important marketing concepts, tools, frameworks, and issues. Formally and informally, people and organizations engage in a vast number of activities  we can call marketing. In the face of a digital revolution and other major changes in the business environment, good marketing today is both increasingly vital and radically new. Consider Unilever. 1 Under the leadership of ex-P&G marketing executive Paul Polman and marketing whiz Keith Weed, Unilever is steering in an aggressive new direction. Its new marketing model “Crafting Brands for Life” establishes social, economic, and product missions for each brand, including Dove, Ben & Jerry's, Lifebuoy, and Knorr. Polman states, “I have a vision of all of our brands being a force for good, with each having over a billion fans or more to help drive change. ” One part of the mission, for instance, is sustainability—specifically, to halve its ecological footprint while doubling revenues. To improve advertising and marketing communications, it aims to strike a balance between “magic” and “logic,” doubling marketing training expenditures and emphasizing ad research. To better understand the digital world, CMO Weed took 26 top marketing executives to Silicon Valley to visit Google, Facebook, and Hulu and led a similar group to visit Hollywood executives at Disney and Universal. Unile-ver has set its sights on developing and emerging (D&E) markets, hoping to grow 15 percent to 20 percent annually in China and to draw 70 percent to 75 percent of business from D&E markets by 2020. The company has also adopted “reverse innovation” by apply-ing branding and packaging innovations from developing markets to recession-hit developed markets. In Spain, it now sells Surf deter-gent in five-wash packs. In Greece, it offers mashed potatoes and mayonnaise in small packages. Defining Marketing for the New Realities1

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

26 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T In an Internet-fueled environment where consumers, competition, technology, and economic forces change rapidly and consequences quickly multiply, marketers must choose features, prices, and markets and decide how much to spend on advertising, sales, and online and mobile marketing. Meanwhile, the economic downturn that began globally in 2008 and the sluggish recovery since have brought budget cuts and intense pressure to make every marketing dollar count. There is little margin for error in marketing. Just a short time ago, My Space, Y ahoo!, Blockbuster, and Barnes & Noble were admired leaders in their industries. What a difference a few years can make! Each of these brands has been completely overtaken by an upstart challenger—Facebook, Google, Netflix, and Amazon—and they now struggle, sometimes unsuccessfully, for mere survival. Firms must constantly move forward. At greatest risk are those that fail to carefully monitor their customers and competitors, continuously improve their value offerings and marketing strategies, or satisfy their employees, stockholders, suppliers, and channel partners in the process. WInn In G Market In G Skillful marketing is a never-ending pursuit, but some businesses are adapting and thriving in these changing times. Consider American Express. 5 AMeric An ex Press: s MALL Business s Aturd Ay Launched in 2010 via radio and TV ads, social media, and PR, American Express's Small Business Saturday program encouraged people to shop at smaller, local retailers on the Saturday after Thanksgiving. Among businesses that participated, sales rose 28 percent. In 2012, American Express provided social media marketing kits, e-mail templates, and signage to help spread the word. More than 350 small business organizations supported the initiative, more than 3 million users “liked” the Small Business Saturday Facebook page, and 213,000 related tweets were posted on Twitter. President Obama tweeted, “Today, sup-port small businesses in your community by shopping at your favorite store” and took his daughters to local bookstores. American Express cardholders got a $25 rebate for shopping at local, independent stores on Small Business Saturday. The company reported a roughly 21 percent increase in transactions for both 2011 and 2012 due to the program. Other top marketers are following suit. Using a Web-only campaign, BMW claimed a $110 million revenue gain for its 1-series. More than 3 million people saw a five-video teaser campaign, and 20,000 gave their contact details. BMW also targeted influential bloggers and used feedback from social media as input to styling and sales forecasts. 6 Even business-to-business firms are getting into the action. Corning has struggled transcending its reputa-tion as sellers of Pyrex cookware—a business it sold more than a decade ago—to its current status as makers of highly engineered specialty glass and ceramic products. To expand the vision on Wall Street as a company with a rich portfolio, Corning created a Y ou Tube video, “ A  Day Made of Glass ... Made Possible by Corning. ” Unconventionally long but beautifully put together, within three weeks it attracted more than a million views. Much of the social conversation it created revolved around themes of glass, product toughness, and hope for the future—exactly what Corning wanted. 7 Source: Wire Image for American Express American Express' Small Business Saturday has struck a chord with consumers, including TV celebrity Katie Couric.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 27 The Scope of Marketing To be a marketer, you need to understand what marketing is, how it works, who does it, and what is marketed. What Is Market In G? Marketing is about identifying and meeting human and social needs. One of the shortest good definitions of marketing is “meeting needs profitably. ” When Google recognized that people needed to more effectively and efficiently access information on the Internet, it created a powerful search engine that organized and prioritized queries. When IKEA noticed that people wanted good furnishings at substantially lower prices, it created knock-down furniture. These two firms demonstrated marketing savvy and turned a private or social need into a profit-able business opportunity. The American Marketing Association offers the following formal definition: Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. 8 Coping with these exchange processes calls for a considerable amount of work and skill. Marketing management takes place when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties. Thus, we see marketing management as the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. We can distinguish between a social and a managerial definition of marketing. A social definition shows the role marketing plays in society; for example, one marketer has said that marketing's role is to “deliver a higher standard of living. ” Here is a social definition that serves our purpose: Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others. Cocreation of value among consumers and with businesses and the importance of value creation and sharing have become important themes in the development of modern marketing thought. 9 Managers sometimes think of marketing as “the art of selling products, ” but many people  are surprised when they hear that selling is not the most important part of marketing! Selling is only the tip of the marketing iceberg. Peter Drucker, famed management theorist, put it this way:10 There will always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available. When Nintendo designed its Wii game system, when Apple launched its i Pad tablet computer, and when Toyota introduced its Prius hybrid automobile, these manufacturers were swamped with orders because they had designed the right product, based on careful marketing homework about consumers, competition, and all the external fac-tors that affect cost and demand. What Is Markete D? Marketers market 10 main types of entities: goods, services, events, experiences, persons, places, properties, orga-nizations, information, and ideas. Let's take a quick look at these categories. Goods Physical goods constitute the bulk of most countries' production and marketing efforts. Each year, U. S. companies market billions of fresh, canned, bagged, and frozen food products and millions of cars, refrigerators, televisions, machines, and other mainstays of a modern economy. services As economies advance, a growing proportion of their activities focuses on the production of services. The U. S. economy today produces a services-to-goods mix of roughly two-thirds to one-third. 11 Services include the work of airlines, hotels, car rental firms, barbers and beauticians, maintenance and repair people, and accountants, bankers, lawyers, engineers, doctors, software programmers, and management consultants. Many market offerings mix goods and services, such as a fast-food meal. events Marketers promote time-based events, such as major trade shows, artistic performances, and company anniversaries. Global sporting events such as the Olympics and the World Cup are promoted aggressively to companies and fans. Local events include craft fairs, bookstore readings, and farmer's markets. experiences By orchestrating several services and goods, a firm can create, stage, and market experiences. Walt Disney World's Magic Kingdom lets customers visit a fairy kingdom, a pirate ship, or a haunted house.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

28 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T Customized experiences include a week at a baseball camp with retired baseball greats, a four-day rock and roll fantasy camp, and a climb up Mount Everest. persons Artists, musicians, CEOs, physicians, high-profile lawyers and financiers, and other professionals often get help from marketers. 12 Many athletes and entertainers have done a masterful job of marketing themselves—NFL quarterback Peyton Manning, talk show veteran Oprah Winfrey, and rock and roll legends The Rolling Stones. Management consultant Tom Peters, himself a master at self-branding, has advised each person to become a “brand. ” places Cities, states, regions, and whole nations compete to attract tourists, residents, factories, and company headquarters. 13 Place marketers include economic development specialists, real estate agents, commercial banks, local business associations, and advertising and public relations agencies. The Las Vegas Convention & Visitors Authority has met with much success with its provocative ad campaign “What Happens Here, Stays Here, ” portraying Las Vegas as “an adult playground. ” properties Properties are intangible rights of ownership to either real property (real estate) or financial property (stocks and bonds). They are bought and sold, and these exchanges require marketing. Real estate agents work for property owners or sellers, or they buy and sell residential or commercial real estate. Investment companies and banks market securities to both institutional and individual investors. or Ganizations Museums, performing arts organizations, corporations, and nonprofits all use marketing to boost their public images and compete for audiences and funds. Some universities have created chief marketing officer (CMO) positions to better manage their school identity and image, via everything from admission brochures and Twitter feeds to brand strategy. 14 Source: © Mc Clatchy-Tribune Information Services /Alamy The pageantry of the Olympics, shown here in Sochi, Russia, adds to its marketability. Oprah Winfrey has built a personal brand worth billions which she has used across many lines of business. Source: Chris Pizzello/Invision/AP

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 29 information Information is essentially what books, schools, and universities produce, market, and distribute at a price to parents, students, and communities. Firms make business decisions using information supplied by organizations like Thomson Reuters: “We combine industry expertise with innovative technology to deliver critical information to leading decision makers in the financial, legal, tax and accounting, healthcare, science and media markets, powered by the world's most trusted news organization. ”15 ideas Every market offering includes a basic idea. Charles Revson of Revlon once observed: “In the factory we make cosmetics; in the drugstore we sell hope. ” Products and services are platforms for delivering some idea or benefit. Social marketers promote such ideas as “Friends Don't Let Friends Drive Drunk” and “ A Mind Is a Terrible Thing to Waste. ” Who Markets? marketers and prospects A marketer is someone who seeks a response—attention, a purchase, a vote, a donation—from another party, called the prospect. If two parties are seeking to sell something to each other, we call them both marketers. Marketers are skilled at stimulating demand for their products, but that's a limited view of what they do. They also seek to influence the level, timing, and composition of demand to meet the organization's objectives. Eight demand states are possible: 1. Negative demand —Consumers dislike the product and may even pay to avoid it. 2. Nonexistent demand —Consumers may be unaware of or uninterested in the product. 3. Latent demand —Consumers may share a strong need that cannot be satisfied by an existing product. 4. Declining demand —Consumers begin to buy the product less frequently or not at all. 5. Irregular demand —Consumer purchases vary on a seasonal, monthly, weekly, daily, or even hourly basis. 6. Full demand —Consumers are adequately buying all products put into the marketplace. 7. Overfull demand —More consumers would like to buy the product than can be satisfied. 8. Unwholesome demand —Consumers may be attracted to products that have undesirable social consequences. In each case, marketers must identify the underlying cause(s) of the demand state and determine a plan of action to shift demand to a more desired state. markets Traditionally, a “market” was a physical place where buyers and sellers gathered to buy and sell goods. Economists describe a market as a collection of buyers and sellers who transact over a particular product or product class (such as the housing market or the grain market). Five basic markets and their connecting flows are shown in Figure 1. 1. Manufacturers go to resource markets (raw material markets, labor markets, money markets), buy resources and turn them into goods and services, and sell finished products to intermediaries, who sell them to consumers. Consumers sell their labor and receive money with which they pay for goods and services. The government collects tax revenues to buy goods from resource, Taxes, goods Services, money Services, money Money Goods and ser vices Money Goods and ser vices Services, money Taxes Taxes, goods Services Taxes, goods Resources Money Resources Money Resource markets Consumer markets Manuf acturer markets Intermedia ry markets Government markets| Fig. 1. 1 | Structure of Flows in a Modern Exchange Economy

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

30 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T manufacturer, and intermediary markets and uses these goods and services to provide public services. Each nation's economy, and the global economy, consists of interacting sets of markets linked through exchange processes. Marketers view sellers as the industry and use the term market to describe customer groups. They talk about need markets (the diet-seeking market), product markets (the shoe market), demographic markets (the “millennium” youth market), geographic markets (the Chinese market), or voter markets, labor markets, and donor markets. Figure 1. 2 shows how sellers and buyers are connected by four flows. Sellers send goods and services and com-munications such as ads and direct mail to the market; in return they receive money and information such as cus-tomer attitudes and sales data. The inner loop shows an exchange of money for goods and services; the outer loop shows an exchange of information. key customer markets Consider the following key customer markets: consumer, business, global, and nonprofit. Consumer Markets Companies selling mass consumer goods and services such as juices, cosmetics, athletic shoes, and air travel establish a strong brand image by developing a superior product or service, ensuring its availability, and backing it with engaging communications and reliable performance. Business Markets Companies selling business goods and services often face well-informed professional buyers skilled at evaluating competitive offerings. Advertising and Web sites can play a role, but the sales force, the price, and the seller's reputation may play a greater one. Global Markets Companies in the global marketplace navigate cultural, language, legal, and political differences while deciding which countries to enter, how to enter each (as exporter, licenser, joint venture partner, contract manufacturer, or solo manufacturer), how to adapt product and service features to each country, how to set prices, and how to communicate in different cultures. Nonprofit and Governmental Markets Companies selling to nonprofit organizations with limited purchasing power such as churches, universities, charitable organizations, and government agencies need to price carefully. Much government purchasing requires bids; buyers often focus on practical solutions and favor the lowest bid, other things equal. 16 Money Information Goods/ser vices Communication Market (a collection of buyers)Industr y (a collection of sellers)| Fig. 1. 2 | A Simple Marketing System Source: © Travel Pictures/Alamy Governments are a key customer market for many companies.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 31 Core Marketing Concepts To understand the marketing function, we need to understand the following core set of concepts (see Table 1. 1). nee Ds, Wants, an D De Man Ds Needs are the basic human requirements such as for air, food, water, clothing, and shelter. Humans also have strong needs for recreation, education, and entertainment. These needs become wants when directed to specific objects that might satisfy the need. A U. S. consumer needs food but may want a Chicago-style “deep-dish” pizza and a craft beer. A person in Afghanistan needs food but may want rice, lamb, and carrots. Our wants are shaped by our society. Demands are wants for specific products backed by an ability to pay. Many people want a Mercedes; only a few can buy one. Companies must measure not only how many people want their product, but also how many are will-ing and able to buy it. These distinctions shed light on the criticism that “marketers get people to buy things they don't want. ” Marketers do not create needs: Needs pre-exist marketers. Marketers might promote the idea that a Mercedes satis-fies a person's need for social status. They do not, however, create the need for social status. Some customers have needs of which they are not fully conscious or cannot articulate. What does the customer mean in asking for a “powerful” lawn mower or a “peaceful” hotel? The marketer must probe further. We can distin-guish five types of needs: 1. Stated needs (The customer wants an inexpensive car. ) 2. Real needs (The customer wants a car whose operating cost, not initial price, is low. ) 3. Unstated needs (The customer expects good service from the dealer. ) 4. Delight needs (The customer would like the dealer to include an onboard GPS system. ) 5. Secret needs (The customer wants friends to see him or her as a savvy consumer. ) Responding only to the stated need may shortchange the customer. 17 Consumers did not know much about tablet computers when they were first introduced, but Apple worked hard to shape consumer perceptions of them. To gain an edge, companies must help customers learn what they want. tar Get Markets, Pos It Ion In G, an D se GMentat Ion Not everyone likes the same cereal, restaurant, university, or movie. Marketers therefore identify distinct segments of buyers by identifying demographic, psychographic, and behavioral differences between them. They then decide which segment(s) present the greatest opportunities. For each of these target markets, the firm develops a market table 1. 1 Core Marketing Concepts Needs, Wants, and Demands Target Markets, Positioning, and Segmentation Offerings and Brands Marketing Channels Paid, Owned, and Earned Media Impressions and Engagement Value and Satisfaction Supply Chain Competition Marketing Environment

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

32 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T offering that it positions in target buyers' minds as delivering some key benefit(s). Volvo develops its cars for the buyer to whom safety is a major concern, positioning them as the safest a customer can buy. Porsche targets buyers who seek pleasure and excitement in driving and want to make a statement about their wheels. offer In Gs an D Bran Ds Companies address customer needs by putting forth a value proposition, a set of benefits that satisfy those needs. The intangible value proposition is made physical by an offering, which can be a combination of products, services, information, and experiences. A brand is an offering from a known source. A brand name such as Apple carries many different kinds of associations in people's minds that make up its image: creative, innovative, easy-to-use, fun, cool, i Pod, i Phone, and i Pad to name just a few. All companies strive to build a brand image with as many strong, favorable, and unique brand associations as possible. Market In G channels To reach a target market, the marketer uses three kinds of marketing channels. Communication channels deliver and receive messages from target buyers and include newspapers, magazines, radio, television, mail, telephone, smart phone, billboards, posters, fliers, CDs, audiotapes, and the Internet. Beyond these, firms communicate through the look of their retail stores and Web sites and other media, adding dialogue channels such as e-mail, blogs, text messages, and URLs to familiar monologue channels such as ads. Distribution channels help display, sell, or deliver the physical product or service(s) to the buyer or user. These channels may be direct via the Internet, mail, or mobile phone or telephone or indirect with distributors, wholesal-ers, retailers, and agents as intermediaries. To carry out transactions with potential buyers, the marketer also uses service channels that include warehouses, transportation companies, banks, and insurance companies. Marketers clearly face a design challenge in choosing the best mix of communication, distribution, and service channels for their offerings. Pa ID, o Wne D, an D earne D Me DIa The rise of digital media gives marketers a host of new ways to interact with consumers and customers. We can group communication options into three categories. 18 Paid media include TV, magazine and display ads, paid search, and sponsorships, all of which allow marketers to show their ad or brand for a fee. Owned media are communication channels marketers actually own, like a company or brand brochure, Web site, blog, Facebook page, or Twitter account. Earned media are streams in which consumers, the press, or other outsid-ers voluntarily communicate something about the brand via word of mouth, buzz, or viral marketing meth-ods. The emergence of earned media has allowed some companies, such as Chipotle, to reduce paid media expenditures. 19 chi POt Le One of the fastest-growing restaurant chains over the last decade, Chipotle is commit-ted to fresh food. The company supports family farms and sources sustainable ingredients from local growers who behave responsibly toward animals and the environment. It has over 1,600 stores and over 1. 7 million social media fans-yet spends next to nothing on traditional paid media. Instead Chipotle engages customers through Facebook, Twitter, and other social media via its grassroots “Food With Integrity” digital strategy which puts the focus on what it sells and where it comes from. As CMO Mark Crumpacker notes, “Typically, fast-food marketing is a game of trying to obscure the truth. The more people know about most fast-food companies, the less likely they'd want to be a customer. ” You Tube videos with country legend Willie Nelson and indie rocker Karen O from the Yeah Yeah Yeahs musically made Chipotle's case against processed foods and the industrialization of family farms. IMPress Ions an D en Ga Ge Ment Marketers now think of three “screens” or means to reach consumers: TV, Internet, and mobile. Surprisingly, the rise of digital options did not initially depress the amount of TV viewing, in part because, as one Nielsen study found, three of five consumers use two screens at once. 20

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 33 Impressions, which occur when consumers view a communication, are a useful metric for tracking the scope or breadth of a communication's reach that can also be compared across all communication types. The downside is that impressions don't provide any insight into the results of viewing the communication. Engagement is the extent of a customer's attention and active involvement with a communication. It reflects a much more active response than a mere impression and is more likely to create value for the firm. Some online measures of engagements are Facebook “likes, ” Twitter tweets, comments on a blog or Web site, and sharing of video or other content. Engagement can extend to personal experiences that augment or transform a firm's products and services. Value an D sat Isfact Ion The buyer chooses the offerings he or she perceives to deliver the most value, the sum of the tangible and intangible benefits and costs. Value, a central marketing concept, is primarily a combination of quality, service, and price (qsp), called the customer value triad. Value perceptions increase with quality and service but decrease with price. We can think of marketing as the identification, creation, communication, delivery, and monitoring of customer value. Satisfaction reflects a person's judgment of a product's perceived performance in relationship to expectations. If performance falls short of expectations, the customer is disappointed. If it matches expectations, the customer is satis-fied. If it exceeds them, the customer is delighted. su PPl Y cha In The supply chain is a channel stretching from raw materials to components to finished products carried to final buyers. As Figure 1. 3 shows, the supply chain for coffee may start with Ethiopian farmers who plant, tend, and pick the coffee beans and sell their harvest. If sold through a Fair Trade cooperative, the coffee is washed, dried, and packaged for shipment by an Alternative Trading Organization (ATO) that pays a minimum of $1. 26 a pound. The ATO transports the coffee to the developed world where it can sell it directly or via retail channels. Each company in the chain captures only a certain percentage of the total value generated by the supply chain's value delivery system. When a company acquires competitors or expands upstream or downstream, its aim is to capture a higher percentage of supply chain value. Problems with a supply chain can be damaging or even fatal for a business. When Johnson & Johnson ran  into manufacturing problems with its consumer products unit (which makes Tylenol and other prod-ucts), it hired away from Bayer AG a top executive known for her skill at fixing consumer and supply chain problems. 21 Chipotle found marketplace success with little paid media, focusing on social media to tell its story of “Food With Integrity. ”

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

34 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T co MPet It Ion Competition includes all the actual and potential rival offerings and substitutes a buyer might consider. An automobile manufacturer can buy steel from U. S. Steel in the United States, from a foreign firm in Japan or Korea, or from a mini-mill such as Nucor at a cost savings, or it can buy aluminum parts from Alcoa to reduce the car's weight or engineered plastics from Saudi Basic Industries Corporation (SABIC) instead of steel. Clearly, U. S. Steel is more likely to be hurt by substitute products than by other integrated steel companies and would be defining its competition too narrowly if it didn't recognize this. Market In G en VIron Ment The marketing environment consists of the task environment and the broad environment. The  task environ-ment includes the actors engaged in producing, distributing, and promoting the offering. These are the company, suppliers, distributors, dealers, and target customers. In the supplier group are material suppliers and service suppliers, such as marketing research agencies, advertising agencies, banking and insurance companies, transpor-tation companies, and telecommunications companies. Distributors and dealers include agents, brokers, manufac-turer representatives, and others who facilitate finding and selling to customers. The broad environment consists of six components: demographic environment, economic environment, social-cultural environment, natural environment, technological environment, and political-legal environ-ment. Marketers must pay close attention to the trends and developments in these and adjust their marketing strategies as needed. New opportunities are  constantly emerging that await the right marketing savvy and ingenuity. Consider Pinterest. 22 Pinterest One of the fastest-growing social media sites ever-its surpassed 10 million monthly unique U. S. visitors in January 2012 and doubled that just four months later-Pinterest is a visual bookmarking tool that lets users collect and share images of projects or products on digital scrapbooks or “pinboards. ” Especially popular with women planning weddings, saving recipes, and designing kitchen upgrades, Pinterest has driven more traffic to websites in a month than Twitter, Google+, Linked In, and You Tube combined. Part of its appeal is its unique customizable grid of images. Pinterest's sweet spot is that users are often in a shopping mindset; one study showed almost 70% of online purchasers who found a product via Pinterest went on to buy, compared to 40% for Facebook. Brands from Dell and Mercedes-Benz to Peanut Butter & Co. and Zombie SAK are integrat-ing the site into their social media strategies. Nevertheless, Pinterest is still exploring how to best monetize its business venture. Coffee is sold directly or via retail channels Ethiopian f armers grow and har vest coffee beans Farmers sell the beans to F air Trade cooperative Coffee is washed, dried, and packaged for shipment Alternative T rading Organization transports beans to developed world | Fig. 1. 3 | The Supply Chain for Coffee

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 35 The New Marketing Realities The marketplace is dramatically different from even 10 years ago, with new marketing behaviors, opportunities, and challenges emerging. In this book we focus on three transformative forces: technology, globalization, and social responsibility. technolo GY The pace of change and the scale of technological achievement can be staggering. The number of mobile phones in India recently exceeded 500 million, Facebook's monthly users passed 1 billion, and more than half of African urban residents were able to access the Internet monthly. 23 With the rapid rise of e-commerce, the mobile Internet, and Web penetration in emerging markets, the Boston Consulting Group believes brand marketers must enhance their “digital balance sheets. ” 24 Massive amounts of information and data about almost everything are now available to consumers and marketers. In fact, technology research specialists Gartner predicts that by 2017, CMOs will spend more time on information technology (IT) than chief information officers (CIOs). Aetna's CMO and CIO have already collaborated suc-cessfully for years, launching new products and services including i Triage, a popular health app for the i Phone. With i Triage, users can research ailments, find nearby physicians, and learn about prescribed medicines. 25 Procter & Gamble (P&G) is determined to stay ahead of technology trends. 26 P&G P&G uses the latest Web-based tools in all 80 countries where it sells products: ubiquitous high-speed networking, data visualization, and high-speed analysis of multiple information streams. In 40 locations worldwide, a mas-sive business sphere can display real-time market share, profits, and prices by country, region, brand, and product. Tide laundry detergent has a dedicated “news desk” that monitors social media chatter and joins in when relevant. When Tide was used to clean up a nasty fuel spill in a NASCAR race, the brand ran social media ads with real news footage within 72 hours. P&G looks at a wide range of technology applications. One pilot study showed that field salespeople increased revenue 1. 5 percent merely by using i Pads to show store customers the layouts of different floor displays. Pinterest has tapped into consumer desire to collect and share personally relevant images online.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

36 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T The old credo “information is power” is giving way to the new idea that “sharing information is power. ”27 Software giant SAP's online community numbers more than 2 million customers, partners, and others. Once a year, 100 are chosen to contribute ideas to product development. 28 At the other end of the size spectrum, by running Facebook ads offering a free cut, shampoo, and hot towel treatment to new customers in exchange for name, phone number, e-mail address, and preferred social network, The Gent's Place barbershop in Frisco, TX, has picked up 5,000 clients. Its average marketing cost for each was $10. 13, which it quickly recoups from repeat purchases. 29 Even traditional marketing activities are profoundly affected by technology. To improve sales force effectiveness, drug maker Roche decided to issues i Pads to its entire sales team. Though the company had a sophisticated cus-tomer relationship management (CRM) software system before, it still depended on sales reps to accurately input data in a timely fashion, which unfortunately did not always happen. With i Pads, however, sales teams can do real-time data entry, improving the quality of the data entered while freeing up time for other tasks. 30 Glo Bal Izat Ion The world has become a smaller place. New transportation, shipping, and communication technologies have made it easier for us to know the rest of the world, to travel, to buy and sell anywhere. By 2025, annual consumption in emerging markets will total $30 trillion and contribute more than 70 percent of global GDP growth. 31 A staggering 56 percent of global financial services consumption is forecast to come from emerging markets by 2050, up from 18 percent in 2010. Demographic trends favor developing markets such as India, Pakistan, and Egypt, with populations whose median age is below 25. In terms of growth of the middle class, defined as earning more than $3,000 per year, the Philippines, China, and Peru are the three fastest-growing countries. 32 Globalization has made countries increasingly multicultural. U. S. minorities have much economic clout, and their buying power is growing faster than that of the general population. According to the University of Georgia's Terry College of Business minority buying report, the combined buying power of U. S. racial minorities (African Americans, Asians, and Native Americans) is projected to rise from $1. 6 trillion in 2010 to $2. 1 trillion in 2015, accounting for 15 percent of the nation's total. The buying power of U. S. Hispanics will rise from $1 trillion in 2010 to $1. 5 trillion in 2015, nearly 11 percent of the nation's total. One survey found that 87 percent of companies planned to increase or maintain multicultural media budgets. 33 Globalization changes innovation and product development as companies take ideas and lessons from one country and apply them to another. After years of little success with its premium ultrasound scanners in the Chinese market, GE successfully developed a portable, ultra-low-cost version that addressed the country's unique market needs. Later, it began to successfully sell the product throughout the developed world for use in ambu-lances and operating rooms where existing models were too big. 34 soc Ial res Pons IBIl It Y Poverty, pollution, water shortages, climate change, wars, and wealth concentration demand our attention. The private sector is taking some responsibility for improving living conditions, and firms all over the world have elevated the role of corporate social responsibility. Source: Getty Images for NASCARWhen Tide was used to clean a fuel spill at a NASCAR, P&G quickly spread the word on social media.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 37 Because marketing's effects extend to society as a whole, marketers must consider the ethical, environmen-tal, legal, and social context of their activities. 35 “Marketing Insight: Getting to Marketing 3. 0” describes how companies need to change to do that. The organization's task is thus to determine the needs, wants, and interests of target markets and satisfy them more effectively and efficiently than competitors while preserving or enhancing consumers' and society's long-term well-being. Source: Photographer: Morad Bouchakour. Courtesy of General Electric Company. Product introduced into developing markets, such as GE's portable ultrasound scanner, are finding success in developed markets too. Getting to Marketing 3. 0 Philip Kotler, Hermawan Kartayaya, and Iwan Setiawan believe today's customers want marketers to treat them as whole human beings and acknowledge that their needs extend beyond pure con-sumerism. Successful marketing is thus distinguished by its human or emotional element. A third wave of thinking, values-driven and heralded as “Marketing 3. 0,” has moved us beyond the product-centric and consumer-centric models of the past, these authors say. Its three central trends are increased consumer participation and collaborative marketing, globalization, and and the rise of a creative society. We live with sustained technological development—low-cost Internet, cheap computers and mobile phones, open source services and systems. Expressive and collaborative social media, such as Facebook and Wikipedia, have changed the way market-ers operate and interact with consumers. Culturally relevant brands can have far-reaching effects. A cultural brand might position itself as a national or local alternative to a global brand with poor environmental standards, for instance. Creative people are increasingly the backbone of developed economies. Marketing can now help companies tap into creativity and spirituality by instilling marketing values in corporate culture, vision, and mission. These authors believe the future of marketing will be horizontal: consumer-to-consumer. They feel the recent economic downturn has not fostered trust in the marketplace and that customers now increas-ingly turn to one another for credible advice and information when selecting products. Sources : Philip Kotler, Hermawan Kartajaya, and Iwan Setiawan, Marketing 3. 0: From Products to Customers to the Human Spirit (Hoboken, NJ: Wiley, 2010); Michael Krauss, “Evolution of an Academic: Kotler on Marketing 3. 0,” Marketing News, January 30, 2011; Vivek Kaul, “Beyond Advertising: Philip Kotler Remains One of the Most Influential Marketing Thinkers,” The Economic Times, February 29, 2012. For more stimulating related ideas, see also Jim Stengel, Grow: How Ideals Power Growth and Profit at the World's Greatest Companies (New York: Crown, 2011). marketing insight

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

38 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T As goods become more commoditized and consumers grow more socially conscious, some companies—including The Body Shop, Timberland, and Patagonia—incorporate social responsibility as a way to differentiate themselves from competitors, build consumer preference, and achieve notable sales and profit gains. 36 A Dramatically Changed Marketplace These three forces—technology, globalization, and social responsibility—have dramatically changed the mar-ketplace, bringing consumers and companies new capabilities. The marketplace is also being transformed by changes in channel structure and heightened competition. ne W consu Mer ca Pa BIl It Ies Social media is an explosive worldwide phenomenon. In Germany, the percentage of consumers over 65 accessing the Internet increased from 24 percent to 33 percent from 2011 to 2012; most belonged to a social media service. The number of Germans browsing the Web wirelessly increased to 29 million in 2012 and was expected to hit 60 million in 2016. More than 10 percent of Germans were using tablets to access the Internet in 2012. Almost two-thirds of German companies surveyed in 2012 reported positive payback to their social media activities (Facebook, Twitter, social media newsrooms, customer feedback communities). 37 Empowerment is not just about technology, though. Consumers are willing to move to another brand if they think they are not being treated right or do not like what they are seeing, as Progressive Insurance found out. 38 Pr OGressi Ve insur Ance Kate Fisher, a Progressive customer, was killed by an underinsured driver who ran a red light. Her family felt they had to sue the driver for negligence to prompt Progressive to make up what the driver could not pay. Matt Fisher, Kate's brother, was furious when Progressive actively participated in the negligent driver's legal defense. His Tumblr post, “My Sister Paid Progressive Insurance to Defend Her Killer in Court,” was picked up by media outlets and sparked public outrage on Progressive's Facebook and Twitter pages. More than 1,000 customers reported dropping Progressive, and many more said they would not do business with the company. Although Progressive felt it had defensible business reasons for its actions, critics were enraged by its awkward responses, like: “We fully investigated this claim and relevant background and feel we properly handled the claim within our contractual obligations. ” After a few tumultuous days, Progressive reportedly settled with the Fishers for tens of thousands of dollars more than the $76,000 they had sought. Expanded information, communication, and mobility enable customers to make better choices and share their preferences and opinions with others around the world. Table 1. 2 summarizes some of the new consumer capabili-ties we outline next. Consumers can use the Internet as a powerful information and purchasing aid. From the home, office, or mobile phone, they can compare product prices and features, consult user reviews, and order goods online table 1. 2 New Consumer Capabilities Can use the Internet as a powerful information and purchasing aid Can search, communicate, and purchase on the move Can tap into social media to share opinions and express loyalty Can actively interact with companies Can reject marketing they find inappropriate

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 39 from anywhere in the world 24 hours a day, seven days a week, bypassing limited local offerings and real-izing significant price savings. They can also engage in “showrooming”: comparing products in stores but buying online. 39 Because consumers and other constituents can in fact track down virtually any kind of company information, firms now realize that transparency in corporate words and actions is of paramount importance. Consumers can search, communicate, and purchase on the move. Consumers increasingly integrate smart phones and tablets into their daily lives. One study found the majority of European smart phone own-ers use their devices to research products and make purchases. 40 There is one cell phone for every two people on the planet—and 10 times more cell phones are produced globally each day than babies are born. Telecommunications is one of the world's trillion-dollar industries, along with tourism, military, food, and automobiles. 41 Consumers can tap into social media to share opinions and express loyalty. Personal connections and user-generated content thrive on social media such as Facebook, Flickr, Wikipedia, and Y ou Tube. Sites like Dogster for dog lovers, Trip Advisor for travelers, and Moterus for bikers bring together consumers with a common interest. At Car Space. com, auto enthusiasts talk about chrome rims, the latest BMW model, and where to find a great local mechanic. Consumers can actively interact with companies. Consumers see their favorite companies as work-shops from which to draw out the offerings they want. By opting in or out of lists, they can receive marketing and sales-related communications, discounts, coupons, and other special deals. With smart phones, they can scan barcodes and QR (Quick Response) codes to access a brand's Web site and other information. 42 Consumers can reject marketing they find inappropriate. Some customers today may see fewer product differences and feel less brand loyal. Others may become more price-and quality-sensitive in their search for value. Almost two-thirds of consumers in one survey reported that they disliked advertising. 43 For these and other reasons, consumers can be less tolerant about undesired marketing. They can choose to screen out online messages, skip commercials with their DVRs, and avoid marketing appeals through the mail or over the phone. ne W co MPan Y ca Pa BIl It Ies At the same time, globalization, social responsibility, and technology have also generated a new set of capabilities to help companies cope and respond (see Table 1. 3). Companies can use the Internet as a powerful information and sales channel, including for individually dif-ferentiated goods. A Web site can list products and services, history, business philosophy, job opportunities, and other information of interest to consumers worldwide. Solo Cup marketers note that linking their store-fronts to their Web site and Facebook page makes it easier for consumers to buy Solo paper cups and plates while engaging with the brand online. 44 Thanks to advances in factory customization, computer technology, and database marketing software, companies can allow customers to buy M&M candies with their names on table 1. 3 New Company Capabilities Can use the Internet as a powerful information and sales channel, including for individually differentiated goods Can collect fuller and richer information about markets, customers, prospects, and competitors Can reach customers quickly and efficiently via social media and mobile marketing, sending targeted ads, coupons, and information Can improve purchasing, recruiting, training, and internal and external communications Can improve cost efficiency

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

40 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T them, Wheaties boxes or Jones soda cans with their picture on the front, and Heinz ketchup bottles with cus-tomized messages. 45 Companies can collect fuller and richer information about markets, customers, prospects, and competitors. Marketers can conduct fresh marketing research by using the Internet to arrange focus groups, send out  questionnaires, and gather primary data in several other ways. They can assemble information about  individual customers' purchases, preferences, demographics, and profitability. The drugstore chain CVS uses loyalty-card data to better understand what consumers purchase, the frequency of store visits, and other buying preferences. Its Extra Care program supports 69 million shoppers in more than 7,300  stores. Eighty-two percent of CVS's front store (non-pharmacy) sales go through the Extra Care program. 46 Companies can reach consumers quickly and efficiently via social media and mobile marketing, sending tar-geted ads, coupons, and information. GPS technology can pinpoint consumers' exact location, letting marketers send them messages at the mall with wish-list reminders and coupons or offers good only that day. Location-based advertising is attractive because it reaches consumers closer to the point of sale. Social media and buzz are also powerful. Over a two-year period, Dell took in more than $2 million in U. S. revenue from coupons provided through Twitter and another $1 million from people who started at Twitter and bought a new computer on Dell's Web site. By mid-2012, the @Dell Outlet Twitter account had more than 1. 6 million followers. 47 Word-of-mouth marketing agency Bzz Agent recruited 600,000 consumers who voluntarily join promotional programs for products and services they deem worth talking about. Companies can improve purchasing, recruiting, training, and internal and external communications. Firms can recruit new employees online, and many have Internet training products for their employees, dealers, and agents. Blogging has waned as companies embrace social media. “We want to be where our customers are, ” said Bank of America after dropping its blog in favor of Facebook and Twitter. 48 Farmers Insurance uses specialized software to help its 15,000 agents nationwide maintain their own Facebook pages. 49 Via intranets and databases, employees can query one another, seek advice, and exchange informa-tion. Seeking a single online employee portal that transcended business units, General Motors launched a platform called my Socrates in 2006 to carry announcements, news, links, and historical information. GM credits the portal with $17. 4 million in cost savings to date. 50 Popular hybrid Twitter/Facebook-type prod-ucts designed especially for business employees have been introduced by Salesforce. com, IBM, and several start-ups. 51 Companies can improve their cost efficiency. Corporate buyers can achieve substantial savings by using the Internet to compare sellers' prices and purchase materials at auction or by posting their own terms in reverse auctions. Companies can improve logistics and operations to reap substantial cost savings while improving accuracy and service quality. Small businesses can especially unleash the power of the Internet. Physicians operating a small practice can use Facebook-like services such as Doximity to connect with referring physicians and specialists. 52 Many different products, such as M&Ms, can now be customized by consumers.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 41 chan GIn G channels One of the reasons consumers have more choices is that channels of distribution have changed as a result of retail transformation and disintermediation. Retail transformation. Store-based retailers face competition from catalog houses; direct-mail firms; newspaper, magazine, and TV direct-to-customer ads; home shopping TV; and e-commerce. In response, entrepreneurial retailers are building entertainment into their stores with coffee bars, demonstrations, and performances, marketing an “experience” rather than a product assortment. Disintermediation. Early dot-coms such as Amazon. com, E*TRADE, and others successfully created dis-intermediation in the delivery of products and services by intervening in the traditional flow of goods. In response, traditional companies engaged in reintermediation and became “brick-and-click” retailers, adding online services to their offerings. Some with plentiful resources and established brand names became stronger contenders than pure-click firms. he IGhtene D co MPet It Ion While globalization has created intense competition among domestic and foreign brands, the rise of private labels and mega-brands and a trend toward deregulation and privatization have also increased competition. Private labels. Brand manufacturers are further buffeted by powerful retailers that market their own store brands, increasingly indistinguishable from any other type of brand. Mega-brands. Many strong brands have become mega-brands and extended into related product categories, including new opportunities at the intersection of two or more industries. Computing, telecommunications, and consumer electronics are converging, with Apple and Samsung releasing a stream of state-of-the-art devices from MP3 players to LCD TVs to fully loaded smart phones. Deregulation. Many countries have deregulated industries to create greater competition and growth oppor-tunities. In the United States, laws restricting financial services, telecommunications, and electric utilities have all been loosened in the spirit of greater competition. Privatization. Many countries have converted public companies to private ownership and  management to increase their efficiency. The telecommuni-cations industry has seen much privatization in countries such as Australia, France, Germany, Italy, Turkey, and Japan. 53 Marketing in Practice Given the new marketing realities, organizations are challenging their marketers to find the best balance of old and new and to provide demonstrable evidence of success. “Marketing Memo: Reinventing Marketing at Coca-Cola” describes some of the many different ways that that top marketing organization has changed. Market In G Balance Companies must always move forward, innovating products and services, staying in touch with customer needs, and seeking new advantages rather than relying on past strengths. India's Hindustan Unilever asks all staff members— not just marketers—to obtain a “consumer license” to work on its brands, which requires spending 50 hours of face time with shoppers. As one senior executive noted, “Our consumers are moving faster than marketers do; whether in terms of rural or urban changes or the way they consume media and entertainment. ”54 Moving forward especially means incorporating the Internet and digital efforts into marketing plans. Marketers must balance increased spending on search advertising, social media, e-mails, and text messages with appropriate spend-ing on traditional marketing communications. But they must do so in tough economic times, when accountability has become a top priority and returns on investment are expected from every marketing activity. The ideal is retaining win-ning practices from the past while adding fresh approaches that reflect the new marketing realities. 55 Source: Associated Press Coca-Cola reinforces its message of happiness with special promotional “Hug Me” vending machines which dispense free product.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

42 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T Market In G accounta BIl It Y Marketers are increasingly asked to justify their investments in financial and profitability terms, as well as in terms of building the brand and growing the customer base. Organizations recognize that much of their market value comes from intangible assets, particularly brands, customer base, employees, distributor and supplier relations, and intellectual capital. They are thus applying more metrics—brand equity, customer lifetime value, return on marketing investment (ROMI)—to understand and measure their marketing and business performance and a broader variety of financial measures to assess the direct and indirect value their marketing efforts create. Market In G In the or Gan Izat Ion As the late David Packard of Hewlett-Packard observed, “Marketing is far too important to leave to the marketing department. ” Increasingly, marketing is not done only by the marketing department; every employee has an impact on the customer. Marketers now must properly manage all possible touch points: store layouts, package designs, product functions, employee training, and shipping and logistics. To create a strong marketing organization, mar-keters must think like executives in other departments, and executives in other departments must think more like marketers. Interdepartmental teamwork that includes marketers is needed to manage key processes like production innovation, new-business development, customer acquisition and retention, and order fulfillment. Company Orientation toward the Marketplace Given these new marketing realities, what philosophy should guide a company's marketing efforts? Let's first re-view the evolution of marketing philosophies. the Pro Duct Ion conce Pt The production concept is one of the oldest concepts in business. It holds that consumers prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high pro-duction efficiency, low costs, and mass distribution. This orientation has made sense in developing countries such Coca-Cola is fundamentally changing the way it does marketing, primarily by adding a strong digital component to its traditional marketing tools. The new model is based on moving consumers from impressions to expressions to conversations to transactions. Coca-Cola defines consumer expressions as any level of engagement with brand content: a comment, “like,” or share on Facebook, a Tweet, or an uploaded photo or video. Coca-Cola strives to put strongly sharable pieces of communications online that will generate impressions but also lead to expres-sions from consumers who join or extend the communication storyline and ultimately buy the product. These communications focus on the core themes of “happiness” and “optimism” that define the brand's positioning. One successful application is the video of the “Hug Me” vending machine in Singapore that dispensed cans of Coke when people put their arms around it and hugged it. Within in a week, the video generated 112 million impressions. Coca-Cola actively experiments, allocating 70 percent of its budget to activities it knows will work, 20 percent to improving those activities, and 10 percent to experimentation. The company accepts that experiments can fail but believes in taking chances to learn and develop better solutions. Even in its traditional advertising and promotion, it looks for innovation. For instance, Coca-Cola places much importance on cultural leadership and causes that benefit others. The mission of its Artic Home project is to protect the habitat of polar bears—who have starred in animated form in its holiday ads for years. Committing $3 million to the World Wildlife Fund, Coca-Cola drew attention to the project by turning its traditional red cans white. Sources : Joe Tripodi, “Coca-Cola Marketing Shifts from Impressions to Expressions,” Harvard Business Review, HBR Blog Network, April 27, 2011; Tim Nudd, “Coca-Cola Joins the Revolution in World Where the Mob Rules,” Adweek, June 19, 2012; Surajeet Das Gupta and Vivea Susan Pinto, “Q&A: Joseph Tripodi,” Business Standard, November 3, 2011; “Coca-Cola Sets Facebook Record,” www. warc. com, September 6, 2012. Reinventing Marketing at Coca-Cola marketing memo

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 43 as China, where the largest PC manufacturer, Legend (principal owner of Lenovo Group), and domestic appli-ances giant Haier have taken advantage of the country's huge and inexpensive labor pool to dominate the market. Marketers also use the production concept when they want to expand the market. the Pro Duct conce Pt The product concept proposes that consumers favor products offering the most quality, performance, or innovative features. However, managers are sometimes caught in a love affair with their products. They might commit the “better-mousetrap” fallacy, believing a better product will by itself lead people to beat a path to their door. As many start-ups have learned the hard way, a new or improved product will not necessarily be successful unless it's priced, distributed, advertised, and sold properly. the sell In G conce Pt The selling concept holds that consumers and businesses, if left alone, won't buy enough of the organization's products. It is practiced most aggressively with unsought goods—goods buyers don't normally think of buying such as insurance and cemetery plots—and when firms with overcapacity aim to sell what they make, rather than make what the market wants. Marketing based on hard selling is risky. It assumes customers coaxed into buying a product not only won't return or bad-mouth it or complain to consumer organizations but might even buy it again. the Market In G conce Pt The marketing concept emerged in the mid-1950s as a customer-centered, sense-and-respond philosophy. The job is to find not the right customers for your products, but the right products for your customers. Dell doesn't pre-pare a PC or laptop for its target market. Rather, it provides product platforms on which each person customizes the features he or she desires in the machine. The marketing concept holds that the key to achieving organizational goals is being more effective than com-petitors in creating, delivering, and communicating superior customer value to your target markets. Harvard's Theodore Levitt drew a perceptive contrast between the selling and marketing concepts: 56 Selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is preoccupied with the seller's need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering, and finally consuming it. the hol Ist Ic Market In G conce Pt Without question, the trends and forces that have defined the new marketing realities in the first years of the 21st century are leading business firms to embrace a new set of beliefs and practices. The holistic marketing concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies. Holistic marketing acknowledges that everything matters in mar-keting—and that a broad, integrated perspective is often necessary. Holistic marketing thus recognizes and reconciles the scope and complexities of marketing activities. Figure 1. 4 provides a schematic overview of four broad components characterizing holistic marketing: relationship market-ing, integrated marketing, internal marketing, and performance marketing. We'll examine these major themes throughout this book. relationship marketin G Increasingly, a key goal of marketing is to develop deep, enduring relationships with people and organizations that directly or indirectly affect the success of the firm's marketing activities. Relationship marketing aims to build mutually satisfying long-term relationships with key constituents in order to earn and retain their business. Four key constituents for relationship marketing are customers, employees, marketing partners (channels, sup-pliers, distributors, dealers, agencies), and members of the financial community (shareholders, investors, analysts). Marketers must create prosperity among all these constituents and balance the returns to all key stakeholders. To develop strong relationships with them requires understanding their capabilities and resources, needs, goals, and desires.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

44 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T The ultimate outcome of relationship marketing is a unique company asset called a marketing network, con-sisting of the company and its supporting stakeholders—customers, employees, suppliers, distributors, retailers, and others—with whom it has built mutually profitable business relationships. The operating principle is simple: build an effective network of relationships with key stakeholders, and profits will follow. Thus more companies are choosing to own brands rather than physical assets, and they are subcontracting activities to firms that can do them better and more cheaply while retaining core activities at home. Companies are also shaping separate offers, services, and messages to individual customers, based on infor-mation about their past transactions, demographics, psychographics, and media and distribution preferences. By focusing on their most profitable customers, products, and channels, these firms hope to achieve profitable growth, capturing a larger share of each customer's expenditures by building high customer loyalty. They estimate individual customer lifetime value and design their market offerings and prices to make a profit over the cus-tomer's lifetime. Marketing must skillfully conduct not only customer relationship management (CRM), but partner relation-ship management (PRM) as well. Companies are deepening their partnering arrangements with key suppliers and distributors, seeing them as partners in delivering value to final customers so everybody benefits. IBM is a business-to-business powerhouse that has learned the value of strong customer bonds. 57 i BM Having celebrated its 100th corporate anniversary in 2011, IBM is a remarkable survivor that has main-tained market leadership for decades in the challenging technology industry. The company has managed to success-fully evolve its business and seamlessly update the focus of its products and services numerous times in its history— from mainframes to PCs to its current emphasis on cloud computing, “big data,” and IT services. Part of the reason is that IBM's well-trained sales force and service organization offer real value to customers by staying close to them and fully understanding their requirements. IBM often even cocreates products with customers; with the state of New York it developed a method for detecting tax evasion that reportedly saved taxpayers $1. 6 billion over a seven-year period. As famed Harvard Business School professor Rosabeth Moss Kanter has noted, “IBM is not a technology company but a company solving problems using technology. ” inte Grated marketin G Integrated marketing occurs when the marketer devises marketing activities and assembles marketing programs to create, communicate, and deliver value for consumers such that “the whole is greater than the sum of its parts. ” Two key themes are that (1) many different marketing activities can create, communicate, and deliver value and (2) marketers should design and implement any one marketing activity with all other activities in mind. When a hospital buys an MRI machine from General Electric's Financial community Customers Partners Employees Products & services Channels Price Communications Senior management Other departments Marketing department Social Ethics Integrated marketing Holistic marketing Legal Environment Internal marketing Relationship marketing Performance marketing Brand & customer equity Sales revenue| Fig. 1. 4 | Holistic Marketing Dimensions

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 45 Medical Systems division, for instance, it expects good installation, maintenance, and training services to go with the purchase. The company must develop an integrated channel strategy. It should assess each channel option for its direct effect on product sales and brand equity, as well as its indirect effect through interactions with other channel options. All company communications also must be integrated so communication options reinforce and complement each other. A marketer might selectively employ television, radio, and print advertising, public relations and events, and PR and Web site communications so each contributes on its own and improves the effectiveness of the others. Each must also deliver a consistent brand message at every contact. Consider this award-winning campaign for Iceland. 58 ice LAnd Already reeling from some of the biggest losses in the global financial crisis in 2008, Iceland faced more misfortune when dormant volcano Eyjafjallajökull unexpectedly erupted in April 2010. Its enormous plumes of ash created the largest air-travel disruption since World War II, resulting in a wave of negative press and bad feelings throughout Europe and elsewhere. With tourism generating around 20 percent of the country's foreign exchange and bookings plummeting, government and tourism officials decided to launch “Inspired by Iceland. ” This campaign was based on the insight that 80 percent of visitors to Iceland recommend the destination to friends and family. The coun-try's own citizens were recruited to tell their stories and encourage others to join in via a Web site or Twitter, Facebook, and Vimeo. Celebrities such as Yoko Ono and Eric Clapton shared their experiences, and live concerts generated PR. Real-time Web cams across the country showed that the country was not ash-covered but green. The campaign was wildly successful—22. 5 million stories were created by people all over the world—and ensuing bookings were dra-matically above forecasts. internal marketin G Internal marketing, an element of holistic marketing, is the task of hiring, training, and motivating able employees who want to serve customers well. Smart marketers recognize that marketing activities within the company can be as important—or even more important—than those directed outside the company. It makes no sense to promise excellent service before the company's staff is ready to provide it. Marketing succeeds only when all departments work together to achieve customer goals (see Table 1. 4): when engineering designs the right products, finance furnishes the right amount of funding, purchasing buys the right materials, production makes the right products in the right time horizon, and accounting measures profitability Iceland's fully integrated modern tourism campaign helped to halt a slide in visitors to the country.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

46 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T table 1. 4 Assessing Which Company Departments Are Customer-Minded R&D They spend time meeting customers and listening to their problems. They welcome the involvement of marketing, manufacturing, and other departments to each new project. They benchmark competitors' products and seek “best of class” solutions. They solicit customer reactions and suggestions as the project progresses. They continuously improve and refine the product on the basis of market feedback. Purchasing They proactively search for the best suppliers. They build long-term relationships with fewer but more reliable, high-quality suppliers. They don't compromise quality for price savings. Manufacturing They invite customers to visit and tour their plants. They visit customer plants. They willingly work overtime to meet promised delivery schedules. They continuously search for ways to produce goods faster and/or at lower cost. They continuously improve product quality, aiming for zero defects. They meet customer requirements for “customization” where possible. Marketing They study customer needs and wants in well-defined market segments. They allocate marketing effort in relation to the long-run profit potential of the targeted segments. They develop winning offers for each target segment. They measure company image and customer satisfaction on a continuous basis. They continuously gather and evaluate ideas for new products, product improvements, and services. They urge all company departments and employees to be customer centered. Sales They have specialized knowledge of the customer's industry. They strive to give the customer “the best solution. ” They make only promises that they can keep. They feed back customers' needs and ideas to those in charge of product development. They serve the same customers for a long period of time. Logistics They set a high standard for service delivery time and meet this standard consistently. They operate a knowledgeable and friendly customer service department that can answer questions, handle complaints, and resolve prob-lems in a satisfactory and timely manner. Accounting They prepare periodic “profitability” reports by product, market segment, geographic areas (regions, sales territories), order sizes, channels, and individual customers. They prepare invoices tailored to customer needs and answer customer queries courteously and quickly. Finance They understand and support marketing expenditures (e. g., image advertising) that produce long-term customer preference and loyalty. They tailor the financial package to the customer's financial requirements. They make quick decisions on customer creditworthiness. Public Relations They send out favorable news about the company and “damage control” unfavorable news. They act as an internal customer and public advocate for better company policies and practices. Source: © Philip Kotler, Kotler on Marketing (New York: Free Press, 1999), pp. 21-22. Reprinted with permission of The Free Press, a Division of Simon & Schuster Adult Publishing Group. Copyright © 1999 by Philip Kotler. All rights reserved.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 47 in the right ways. Such interdepartmental harmony can only truly coalesce, however, when senior management clearly communicates a vision of how the company's marketing orientation and philosophy serve customers. The following example highlights some of the potential challenge in integrating marketing: The marketing vice president of a major European airline wants to increase the airline's traffic share. His strategy is to build up customer satisfaction by providing better food, cleaner cabins, better-trained cabin crews, and lower fares, yet he has no authority in these matters. The catering department chooses food that keeps food costs down; the maintenance department uses inexpensive cleaning services; the human resources department hires people without regard to whether they are naturally friendly; the finance de-partment sets the fares. Because these departments generally take a cost or production point of view, the vice president of marketing is stymied in his efforts to create an integrated marketing program. Internal marketing requires vertical alignment with senior management and horizontal alignment with other departments so everyone understands, appreciates, and supports the marketing effort. performance marketin G Performance marketing requires understanding the financial and nonfinancial returns to business and society from marketing activities and programs. As noted previously, top marketers are increasingly going beyond sales revenue to examine the marketing scorecard and interpret what is happening to market share, customer loss rate, customer satisfaction, product quality, and other measures. They are also considering the legal, ethical, social, and environmental effects of marketing activities and programs. When they founded Ben & Jerry's, Ben Cohen and Jerry Greenfield embraced the performance marketing concept by dividing the traditional financial bottom line into a “double bottom line” that also measured the envi-ronmental impact of their products and processes. That later expanded into a “triple bottom line” to represent the social impacts, negative and positive, of the firm's entire range of business activities. Many firms have failed to live up to their legal and ethical responsibilites, and consumers are demanding more responsible behavior. 59 One research study reported that at least one-third of consumers around the world believed that banks, insurance providers, and packaged-food companies should be subject to stricter regulation. 60 Updating the Four Ps Many years ago, Mc Carthy classified various marketing activities into marketing-mix tools of four broad kinds, which he called the four Ps of marketing: product, price, place, and promotion. 61 The marketing variables under each P are shown in Figure 1. 5. A complementary view of the four Ps can be found in Marketing Insight: Understanding the 4 As of Marketing, ” Given the breadth, complexity, and richness of marketing, however—as exemplified by holistic marketing— clearly these four Ps are not the whole story anymore. If we update them to  reflect the holistic marketing Marketing mix PLACE Channels Coverage Assortments Locations Inventor y Transport PROMO TION Sales promotion Advertising Sales force Public relations Direct marketing PRICE List price Discounts Allowances Payment period Credit terms PRODUCT Product v ariety Quality Design Features Brand name Packaging Sizes Services Warranties Returns| Fig. 1. 5 | The Four P Components of the Marketing Mix

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

48 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T concept, we arrive at a more representative set that encompasses modern marketing realities: people, processes, programs, and performance, as in Figure 1. 6. People reflects, in part, internal marketing and the fact that employees are critical to marketing success. Marketing will only be as good as the people inside the organization. It also reflects the fact that marketers must view consumers as people to understand their lives more broadly, and not just as shoppers who consume products and services. Processes reflects all the creativity, discipline, and structure brought to marketing management. Marketers must avoid ad hoc planning and decision making and ensure that state-of-the-art marketing ideas and concepts play an Marketing Mix Four Ps Product Place Promotion Price Modern Marketing Management Four Ps People Processes Programs Performance| Fig. 1. 6 | The Evolution of Marketing Management Accessibility Accessibility, the extent to which customers are able to readily acquire the product, has two dimensions: availability and convenience. Successful companies develop innovative ways to deliver both, as on-line shoe retailer Zappos does with excellent customer service and return policies and its tracking of up-to-the-minute information about warehouse stock, brands, and styles. Awareness Awareness is the extent to which customers are informed regarding the product's characteristics, persuaded to try it, and reminded to repurchase. It has two dimensions: brand awareness and product knowledge. Sheth and Sisodia say awareness is ripest for improve-ment because most companies are either ineffectual or inefficient at developing it. For instance, properly done advertising can be incred-ibly powerful, but word-of-mouth marketing and co-marketing can more effectively reach potential customers. Sheth and Sisodia base the 4 As framework on the four distinctive roles a consumer plays in the marketplace—seeker, buyer, payer, and user. A fifth consumer role—evangelizer—captures the fact that consumers often recommend products to others and are increasingly critical with the advent of the Internet and social media platforms. Note that we can easily relate the 4 As to the traditional 4 Ps. Marketers set the product (which mainly influences acceptability), the price (which mainly influences affordability), the place (which mainly influences accessibility), and promotion (which mainly influences awareness). Sources: Jagdish N. Sheth and Rajendra Sisodia, The 4 A's of Marketing: Creating Value for Customer, Company and Society (New York: Routledge, 2012); “New Rules: Jagdish Sheth Outlines 4A's of Marketing,” The Financial Express, April 6, 2004; “Industry Leaders Discuss Marketing for Not for Profit Organizations @ BIMTECH Marketing Summit,” www. mbauniverse. com, May 1, 2012. marketing insight Understanding the 4 As of Marketing According to Jagdish Sheth and Rajendra Sisodia, poor management as a consequence of not knowing what drives consumers is behind the majority of marketing failures. The authors make the case that consumer knowledge is a much more reliable route to success. Their customer-centric marketing management framework emphasizes what they believe are the most important consumer values—acceptability, affordability, accessibility, and awareness—which they dub the four As. Acceptability Acceptability is the extent to which a firm's total product offer-ing exceeds customer expectations. The authors assert that Ac-ceptability is the dominant component in the framework and that design, in turn, is at the root of acceptability. Functional aspects of design can be boosted by, for instance, enhancing the core benefit or increasing reliability of the product; psychological acceptability can be improved with changes to brand image, packing and de-sign, and positioning. Affordability Affordability is the extent to which customers in the target market are able and willing to pay the product's price. It has two dimensions: economic (ability to pay) and psychological (willingness to pay). Acceptability combined with affordability determines the product's value proposition. When Peachtree Software lowered the price of its accounting software from $5000 to $199 and started charging for customer support, sales demand increased enormously.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 49 appropriate role in all they do, including creating mutually beneficial long-term relationships and imaginatively generating insights and breakthrough products, services, and marketing activities. Programs reflects all the firm's consumer-directed activities. It encompasses the old four Ps as well as a range of other marketing activities that might not fit as neatly into the old view of marketing. Regardless of whether they are online or offline, traditional or nontraditional, these activities must be integrated such that their whole is greater than the sum of their parts and they accomplish multiple objectives for the firm. We define performance as in holistic marketing, to capture the range of possible outcome measures that have financial and nonfinancial implications (profitability as well as brand and customer equity) and implications beyond the company itself (social responsibility, legal, ethical, and the environment). Finally, these new four Ps actually apply to all disciplines within the company, and by thinking this way, manag-ers more closely align themselves with the rest of the company. Marketing Management Tasks Figure 1. 7 summarizes the three major market forces, two key market outcomes, and four fundamental pillars of holistic marketing that help to capture the new marketing realities. With these concepts in place, we can identify a specific set of tasks that make up successful marketing management and marketing leadership. We'll use the fol-lowing situation to illustrate these tasks in the context of the plan of the book. (The “Marketing Memo: Marketers' Frequently Asked Questions” is a good checklist for the questions marketing managers ask, all of which we examine in this book. ) Zeus Inc. (name disguised) operates in several industries, including chemicals, cameras, and film. The company is organized into SBUs. Corporate management is considering what to do with its Atlas camera division, which produces a range of professional quality 35mm and consumer-friendly digital cameras. Although Zeus has a sizable share and is producing revenue, the 35mm market is rapidly declining at an accelerating rate. In the much faster-growing digital camera segment, Zeus faces strong competition and has been slow to gain sales. Zeus's corporate management wants Atlas's marketing group to produce a strong turnaround plan for the division. De Velo PIn G Market In G strate GIes an D Plans The first task facing Atlas is to identify its potential long-run opportunities, given its market experience and core competencies (see Chapter 2). Atlas can design its cameras with better features. It can make a line of digital video cameras, or it can use its core competency in optics to design a line of binoculars and telescopes. Whichever direction it chooses, it must develop concrete marketing plans that specify the marketing strategy and tactics going forward. Relationship Marketing Integrated Marketing Internal Marketing Performance Marketing Technology Social Responsibility New Consumer Capabilities New Company Capabilities Three Major Market Forces Two Key Market Outcomes Four Fundamental Pillars of Holistic Marketing The New Marketing Realities Globalization| Fig. 1. 7 | The New Marketing Realities

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

50 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T ca Ptur In G Market In G Ins IGhts Atlas needs a reliable marketing information system to closely monitor its marketing environment so it can continually assess market potential and forecast demand. Its microenvironment consists of all the players who affect its ability to produce and sell cameras—suppliers, marketing intermediaries, customers, and competitors. Its macroenvironment includes demographic, economic, physical, technological, political-legal, and social-cultural forces that affect sales and profits (see Chapter 3). Atlas also needs a dependable marketing research system. To transform strategy into programs, marketing managers must make basic decisions about their expenditures, activities, and budget allocations. They may use sales-response functions that show how the amount of money spent in each application will affect sales and profits (see Chapter 4). connect In G WIth custo Mers Atlas must consider how to best create value for its chosen target markets and develop strong, profitable, long-term relationships with customers (see Chapter 5). To do so, it needs to understand consumer markets (see Chapter 6). Who buys cameras, and why? What features and prices are they looking for, and where do they shop? Atlas also sells 35mm cameras to business markets, including large corporations, professional firms, retailers, and government agencies (see Chapter 7), where purchasing agents or buying committees make the decisions. Atlas needs to gain a full understanding of how organizational buyers buy. It needs a sales force well trained in presenting product ben-efits. Atlas must also take into account changing global opportunities and challenges (see Chapter 8). Bu Il DIn G stron G Bran Ds Atlas will not want to market to all possible customers. It must divide the market into major market segments, eval-uate each one, and target those it can best serve (see Chapter 9). Suppose Atlas decides to focus on the consumer market and develop a positioning strategy (see Chapter 10). Should it position itself as the “Cadillac” brand, offer-ing superior cameras at a premium price with excellent service and strong advertising? Should it build a simple, low-priced camera aimed at more price-conscious consumers? Or something in between? Atlas must understand the strengths and weaknesses of the Zeus brand as customers see it (see Chapter 11). Is its 35mm film heritage a handicap in the digital camera market? Atlas must consider growth strategies while also paying close attention to competitors (see Chapter 12), antici-pating their moves and knowing how to react quickly and decisively. It may want to initiate some surprise moves, in which case it needs to anticipate how its competitors will respond. 1. How can we spot and choose the right market segment(s)? 2. How can we differentiate our offerings? 3. How should we respond to customers who buy on price? 4. How can we compete against lower-cost, lower-price competitors? 5. How far can we go in customizing our offering for each customer? 6. How can we grow our business? 7. How can we build stronger brands? 8. How can we reduce the cost of customer acquisition? 9. How can we keep our customers loyal longer? 10. How can we tell which customers are more important? 11. How can we measure the payback from different types of marketing communications? 12. How can we improve sales force productivity? 13. How can we establish multiple channels and yet manage channel conflict? 14. How can we get the other company departments to be more customer-oriented?Marketers' Frequently Asked Questions marketing memo

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 51 creat In G Value At the heart of the marketing program is the product—the firm's tangible offering to the market, which includes the product quality, design, features, and packaging (see Chapter 13). To gain a competitive advantage, Atlas may provide leasing, delivery, repair, and training as part of its product offering (see Chapter 14). Based on its product positioning, Atlas must initiate new-product development, testing, and launching as part of its long-term view (see Chapter 15). A critical marketing decision relates to price (see Chapter 16). Atlas must decide on wholesale and retail prices, discounts, allowances, and credit terms. Its price should match well with the offer's perceived value; otherwise, buyers will turn to competitors' products. Del IVer In G Value Atlas must also determine how to properly deliver to the target market the value embodied in its products and services. Channel activities include those the company undertakes to make the product accessible and available to target customers (see Chapter 17). Atlas must identify, recruit, and link various marketing facilitators to supply its products and services efficiently to the target market. It must understand the various types of retailers, wholesal-ers, and physical-distribution firms and how they make their decisions (see Chapter 18). co MMun Icat In G Value Atlas must also adequately communicate to the target market the value embodied by its products and services. It will need an integrated marketing communication program that maximizes the individual and collective con-tribution of all communication activities (see Chapter 19). Atlas needs to set up mass communication programs consisting of advertising, sales promotion, events, and public relations (see Chapter 21). It also has to tap into online, social media, and mobile options to reach consumers whenever and wherever it may be appropriate (see Chapter 20). Atlas also needs to plan more personal communications, in the form of direct and database market-ing, as well as hire, train, and motivate salespeople (see Chapter 22). con Duct In G Market In G res Pons IBl Y for lon G-ter M success Finally, Atlas must build a marketing organization capable of responsibly implementing the marketing plan (see Chapter 23). Because surprises and disappointments can occur as marketing plans unfold, Atlas will need feedback and control to understand the efficiency and effectiveness of its marketing activities and how it can improve them. experience. To create a strong marketing organiza-tion, marketers must think like executives in other departments, and executives in other departments must think more like marketers. 4. Today's marketplace is fundamentally different as a result of major societal forces that have resulted in  many new consumer and company capabilities. In particular, technology, globalization, and social responsibility have created new opportunities and challenges and significantly changed marketing man-agement. Companies seek the right balance of tried-and-true methods with breakthrough new approaches to achieve marketing excellence. 5. There are five competing concepts under which orga-nizations can choose to conduct their business: the production concept, the product concept, the sell-Summary 1. Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relation-ships in ways that benefit the organization and its stake-holders. Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. 2. Marketers are skilled at managing demand: They seek to influence its level, timing, and composition for goods, services, events, experiences, persons, places, prop-erties, organizations, information, and ideas. They also operate in four different marketplaces: consumer, busi-ness, global, and nonprofit. 3. Marketing is not done only by the marketing depart-ment. It needs to affect every aspect of the customer

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

52 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T the company's first spokesperson, had an irreverent attitude that matched Nike's spirit. In 1985, Nike signed up then-rookie guard Michael Jordan as a spokesperson. Jordan was still an up-and-comer, but he personified superior performance. Nike's bet paid off—the Air Jordan line of basketball shoes flew off the shelves and revenues hit more than $100 mil-lion in the first year alone. As one reporter stated, “Few marketers have so reliably been able to identify and sign athletes who transcend their sports to such great effect. ” In 1988, Nike aired the first ads in its $20 million “Just Do It” ad campaign. The campaign, which ultimately fea-tured 12 TV spots in all, subtly challenged a generation of athletic enthusiasts to chase their goals. It was a natural manifestation of Nike's attitude of self-empowerment through sports. Marketing Excellence >> Nike Nike hit the ground running in 1962. Originally known as Blue Ribbon Sports, the company focused on providing high-quality running shoes designed for athletes by ath-letes. Founder Philip Knight believed high-tech shoes for runners could be manufactured at competitive prices if imported from abroad. Nike's commitment to design-ing innovative footwear for serious athletes helped build a cult following among U. S. consumers. Nike believed in a “pyramid of influence” where the preferences of a small percentage of top athletes influ-enced the product and brand choices of others. Nike's marketing campaigns have always featured accom-plished athletes. For example, runner Steve Prefontaine, Applications Marketing Debate Does Marketing Create or Satisfy Needs? Marketing has often been defined in terms of satisfying customers' needs and wants. Critics, however, maintain that marketing goes beyond that and creates needs and wants that did not exist before. They feel marketers encour-age consumers to spend more money than they should on goods and services they do not really need. Take a position: Marketing shapes consumer needs and wants versus Marketing merely reflects the needs and wants of consumers. Marketing Discussion Shifts in Marketing Consider the three key forces driving the new marketing realities. How are they likely to change in the future? What other major trends or forces might affect marketing?My Marketing Lab Go to mymktlab. com to complete the problems marked with this icon as well as for additional Assisted-graded writing questions. ing concept, the marketing concept, and the holistic marketing concept. The first three are of limited use today. 6. The holistic marketing concept is based on the devel-opment, design, and implementation of marketing pro-grams, processes, and activities that recognize their breadth and interdependencies. Holistic marketing rec-ognizes that everything matters in marketing and that a broad, integrated perspective is often necessary. Four components of holistic marketing are relationship mar-keting, integrated marketing, internal marketing, and performance marketing. 7. The set of tasks necessary for successful marketing management includes developing marketing strategies and plans, capturing marketing insights, connecting with customers, building strong brands, creating, deliv-ering, and communicating value, and creating long-term growth.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 53 As Nike began expanding overseas, the com-pany learned that its U. S.-style ads were seen as too aggressive in Europe, Asia, and South America. Nike realized it had to “authenticate” its brand in other countries, so it focused on soccer (called football outside the United States) and became active as a sponsor of youth leagues, local clubs, and national teams. However, for Nike to build authenticity among the soccer audience, consumers had to see professional ath-letes using its product, especially athletes who won. Nike's big break came in 1994 when the Brazilian team (the only national team for which Nike had any real sponsorship) won the World Cup. That victory transformed Nike's international image from a sneaker company into a brand that represented emotion, allegiance, and identifi-cation. Nike's new alliance with soccer helped propel the brand's growth internationally. In 2003, overseas revenues surpassed U. S. revenues for the first time, and in 2007, Nike acquired Umbro, a British maker of soccer-related footwear, apparel, and equipment. The acquisition made Nike the sole supplier to more than 100 professional soc-cer teams around the world and boosted Nike's interna-tional presence and authenticity in soccer. The company sold Umbro in 2012 for $225 million. In recent years, Nike's international efforts have been focused on emerging markets. During the 2008 Summer Olympics in Beijing, Nike honed in on China and devel-oped an aggressive marketing strategy that countered Adidas's sponsorship of the Olympic Games. Nike re-ceived special permission from the International Olympic Committee to run Nike ads featuring Olympic athletes during the games. In addition, Nike sponsored several teams and athletes, including most of the Chinese teams. This aggressive sponsorship strategy helped ignite sales in the Asian region by 15 percent. In addition to expanding overseas, Nike has success-fully expanded its brand into many sports and athletic categories, including footwear, apparel, and equipment. Nike continues to partner with high-profile and influential athletes, coaches, teams, and leagues to build credibility in these categories. For example, Nike aligned with tennis stars Maria Sharapova, Roger Federer, and Rafael Nadal to push its line of tennis clothing and gear. Some called the famous 2008 Wimbledon match between Roger Federer and Rafael Nadal—both dressed in swooshes from head to toe—a five-hour Nike commercial valued at $10. 6 million. To promote its line of basketball shoes and apparel, Nike has partnered with basketball superstars such as Kobe Bryant and Le Bron James. In golf, Nike's swoosh appears on many golfers but most famously on Tiger Woods. In the years since Nike first partnered with Woods, Nike Golf has grown into a $523 million busi-ness and literally changed the way golfers dress and play today. Tiger's powerful influence on the game and his Nike-emblazoned style has turned the greens at the majors into “golf's fashion runway. ” Nike is the biggest sponsor of athletes in the world and plans to spend more than $3 billion in athletic endorsements between 2012 and 2017. The com-pany also has a history of standing by its athletes, such as Tiger Woods and Kobe Bryant, even as they struggle with personal problems. It severed its rela-tionship with Lance Armstrong in 2012, however, after strong evidence showed that the cyclist doped during his time as an athlete and while competing during all Tour de Frances. Nike released a statement explain-ing, “Nike does not condone the use of illegal perfor-mance enhancing drugs in any manner. ” Prior to the scandal, the company had helped develop Armstrong's LIVESTRONG campaign to raise funds for cancer. It designed, manufactured, and sold more than 80 million yellow LIVESTRONG bracelets, netting $500 million for the Lance Armstrong Foundation. While Nike's athletic endorsements help inspire and reach consumers, its most recent innovations in technology have resulted in more loyal and emotion-ally connected consumers. For example, Nike's lead in the running category has grown to 60 percent market share thanks to its revolutionary running application and community called Nike+ (plus). Nike+ allows runners to engage in the ultimate running experience by seeing their real-time pace, distance, and route and by giv-ing them coaching tips and online sharing capabilities. Nike expanded Nike+ to focus on key growth areas like basketball and exercise and recently launched Nike+ Basketball, Nike+ Kinect, and Nike+Fuelband, a bracelet/ app that tracks daily activities. Like many companies, Nike is trying to make its com-pany and products more eco-friendly. However, unlike many companies, it does not promote these efforts. One brand consultant explained, “Nike has always been about winning. How is sustainability relevant to its brand?” Nike executives agree that promoting an eco-friendly message would distract from its slick high-tech image, so efforts like recycling old shoes into new shoes are kept quiet. As a result of its successful expansion across geo-graphic markets and product categories, Nike is the top athletic apparel and footwear manufacturer in the world. In 2014, revenues exceeded $27 billion, and Nike dominated the athletic footwear market with 31 percent market share globally and 50 percent market share in the United States. Swooshes abound on everything from wristwatches to skateboards to swimming caps. The firm's long-term strat-egy, however, is focused on running, basketball, foot-ball/soccer, men's training, women's training, and action sports.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

54 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T With its ability to deploy data that enable up-to-the-minute improvements in a Web marketing program, Google supports a style of marketing in which the adver-tising resources and budget can be constantly monitored and optimized. Google calls this approach “marketing asset management,” implying that advertising should be managed like assets in a portfolio depending on the market conditions. Rather than following a marketing plan developed months in advance, companies use the real-time data collected on their campaigns to optimize the campaign's effectiveness and be more responsive to the market. Since its launch, Google has expanded far beyond its search capabilities with numerous other products, applications, and tools that benefit both consumers and businesses. The goal behind each product was to help users find information they need and to help them get things done better, faster, and easier than before. Today, Google's wide range of products and services fall into the following categories: Web (Web Search, i Google, Google Chrome), Mobile (Mobile, Search for Mobile, Maps for Mobile), Media (Picasa, Google Play, Youtube. com, which Google acquired in 2006 for $1. 65 billion), Geo (Earth, Maps), Home & Office (Docs, Gmail, Calendar), Social (Google+, Blogger), Specialized Search (Patents, Finance, Scholarly Papers), and Innovation. As the world becomes more mobile, Google is bet-ting big in the mobile category. In 2008, Google launched Android, a mobile operating system that went head to head with Apple's i Phone. The biggest differentia-tion between the two was that Android was free, open sourced, and backed by a multimillion-dollar investment. That meant Google wanted its partners to help build and design Android over the years. The investment paid off, and by 2010, Android became the number-one mobile operating system in the market. As Google expanded into mobile technology, it quickly became the leader in mobile advertising with 75 percent market share for search ads and approximately 50 percent market share for all mobile ads. In 2012, Google entered the mobile device category when it purchased Motorola and launched the Nexus 7, a sleek tablet that competed directly with the i Pad and Kindle. As Google looks toward Marketing Excellence >> Google In 1998, two Stanford University Ph D students, Larry Page and Sergey Brin, founded a search engine com-pany and named it Google. The name plays on the number googol —1 followed by 100 zeroes—and refers to the massive quantity of data available online that the company helps users find. Google's corporate mission is “To organize the world's information and make it uni-versally accessible and useful. ” As such, the company focuses first and foremost on creating the perfect search engine. Google search works because it uses the mil-lions of links on other Web sites to help determine which sites offer the most valuable content. The company has become the worldwide market leader for search engines through its strategic business focus and constant prod-uct innovation. Google creates and distributes its products for free, which in turn has attracted a host of online advertisers seeking targeted advertising space. About 96 percent of its revenues come from online advertising, which means that creating new advertising space is critical to the company's growth. Google sells advertising space on its search pages through a program called Ad Words, which is linked to specific keywords. Hundreds of thousands of companies use Ad Words by buying “search ads,” little text-based boxes shown alongside relevant search results that advertisers pay for only when users click on them. Google also runs an advertising program called Ad Sense, which allows any Web site to display targeted Google ads relevant to the content of its site. Web site publishers earn money every time their visitors click on these ads. In addition to offering prime online real estate for advertisers, Google adds value by providing tools so businesses can better target their ads and understand the effectiveness of their marketing. Google Analytics, for example, is free to Google's advertisers and provides a custom report detailing how Internet users found the site, what ads they saw and/or clicked on, how they behaved on the site, and how much traffic was generated. Questions 1. What are the pros, cons, and risks associated with Nike's core marketing strategy? 2. If you were Adidas, how would you compete with Nike? Sources: Justin Ewers and Tim Smart, “A Designer Swooshes In,” U. S. News & World Report, January 26, 2004, p. 12; “Corporate Media Executive of the Year,” Delaney Report, January 12, 2004, p. 1; Barbara Lippert, “Game Changers: Inside the Three Greatest Ad Campaigns of the Past Three Decades,” Adweek, November 17, 2008; “10 Top Nontraditional Campaigns,” Advertising Age, December 22, 2003, p. 24; Chris Zook and James Allen, “Growth Outside the Core,” Harvard Business Review, December 2003, p. 66; Jeremy Mullman, “NIKE; What Slowdown? Swoosh Rides Games to New High,” Advertising Age, October 20, 2008, p. 34; Allison Kaplan, “Look Just Like Tiger (until You Swing),” America's Intelligence Wire, August 9, 2009; Reena Jana and Burt Helm, “Nike Goes Green, Very Quietly,” Business Week, June 22, 2009; Emily Jane Fox and Chris Isidore, “Nike Ends Contracts with Armstrong,” CNNMoney. com, October 17, 2012; Nike Annual Report 2012.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

defining M ARke Ting fo R The new Re Ali Ties | chapter 1 55 the future, the company wants to offer the ultimate mobile solution—Google mobile devices along with mobile ser-vices so users can use all Google all the time. Google's ultimate goal is to reach as many people as  possible on the Web—whether by PC or by mobile devices. The more users on the Web, the more adver-tising Google can sell. Google's new products not only accomplish this goal but also make the Web a more per-sonalized experience. Google has enjoyed great success as a company and a brand in its short lifetime. From the beginning, it has strived to be one of the “good guys” in the corpo-rate world, supporting a touchy-feely work environment, strong ethics, and a famous founding credo: “Don't be evil. ” Google currently holds a 67 percent market share for core searches in the United States, significantly greater than Microsoft's 17 percent and Yahoo!'s 15 per-cent market shares. Globally, Google holds a more domi-nant lead, with 85 percent market share over Yahoo!'s 8 percent and Microsoft's 3 percent. Google's revenues topped $59 billion in 2013, and the company was ranked the second most powerful brand in the world with a brand value of $107 billion. In addition, Google's $400 billion market capitalization in 2014 edged out companies like Walmart and Microsoft to become the second most valuable company in the world. Questions 1. With a portfolio as diverse as Google's, what are the company's core brand values? 2. What's next for Google? Is the company right to put so much focus on Mobile? Sources: www. google. com; Catherine P. Taylor, “Google Flex,” Adweek, March 20, 2006, cover story; Richard Karpinski, “Keywords, Analytics Help Define User Lifetime Value,” Advertising Age, April 24, 2006, p. S2; Danny Gorog, “Survival Guide,” Herald Sun, March 29, 2006; Julie Schlosser, “Google,” Fortune, October 31, 2005, pp. 168-69; Jefferson Graham, “Google's Profit Sails Past Expectations,” USA Today, October 21, 2005; Dan Frommer,“Google's Android Mobile Platform Is Getting Huge,” Advertising Age, October 8, 2009; Rita Chang, “Google Set for Richer Advertising on Smartphones,” Advertising Age, October 5, 2009; “com Score Releases September 2012 U. S. Search Engine Rankings,” com Score. com, October 11, 2012; Claire Cain Miller, “As Google Changes, Its Revenue Keeps Rising,” The New York Times, July 19, 2012; Roben Farzad, “Google at $400 Billion: A New No. 2 in Market Cap,” Bloomberg Businessweek, February 12, 2104.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

56 In This Chapter, We Will Address the Following Questions 1. How does marketing affect customer value? (p. 57) 2. How is strategic planning carried out at the corporate and divisional levels? (p. 60) 3. How is strategic planning carried out at the business unit level? (p. 70) 4. What does a marketing plan include? (p. 77)HP, led by President and CEO Meg Whitman, is revising its corporate strategy to reflect significant changes in the marketing environment. Source: China Foto Press via Getty Images Improve Y our Grade! Over 10 million students improved their results using the Pearson My Labs. Visit mymktlab. com for simulations, tutorials, and end-of-chapter problems. My Marketing Lab™

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

57 Marketing and Customer Value The task of any business is to deliver customer value at a profit. A company can win only by fine-tuning the value delivery process and choosing, providing, and communicating superior value to increasingly well-informed buyers. The Value Del IVer Y Process The traditional—but dated—view of marketing is that the firm makes something and then sells it, with market-ing taking place during the selling process. Companies that take this view succeed only in economies marked by goods shortages where consumers are not fussy about quality, features, or style—for example, basic staple goods in developing markets. In economies with many different types of people, each with individual wants, perceptions, preferences, and buying criteria, the smart competitor must design and deliver offerings for well-defined target markets. This realization inspired a new view of business processes that places marketing at the beginning of planning. Instead of emphasizing making and selling, companies now see themselves as part of a value delivery process. We can divide the value creation and delivery sequence into three phases. 2 First, choosing the value is the “homework” marketers must do before any product exists. They must segment the market, select the appropri-ate target, and develop the offering's value positioning. The formula “segmentation, targeting, positioning (STP)” is the essence of strategic marketing. The second phase is providing the value. Marketing must identify specific product features, prices, and distribution. The task in the third phase is communicating the value by utilizing the Internet, advertising, sales force, and any other communication tools to announce and promote the product. The value delivery process begins before there is a product and continues through development and after launch. Each phase has cost implications. This chapter begins by examining  some of the stra-tegic marketing implications in creating customer value. We'll look at several perspectives on planning and describe how to draw up a formal marketing plan. Developing the right marketing strategies over time requires a blend of discipline and  flexibility. Firms must stick to a strategy but also constantly improve it. In today's fast-changing marketing world, identifying the best long-term strategies is crucial—but challenging—as HP has been finding out. 1 A true technology pioneer, Hewlett-Packard (HP) has encountered much difficulty in recent years, culminating in a massive quarterly charge of more than $9. 5 billion in 2012, its biggest ever. Of that total, $8 billion was a write-down in the value of its IT services unit as the result of a disastrous acquisition of EDS. Revenue for the unit dropped when customers stopped signing large, long-term outsourcing contracts that were at the core of the unit's business model. A feud with Oracle, among other factors, hurt HP's sales of large servers to business customers. In a maturing market with few good new prod-ucts, PC sales slowed so much that HP announced it was exiting the business. Printer and ink sales dropped as con-sumers began to print less. New CEO Meg Whitman vowed to increase the company's emphasis on design, reorganizing the PC group to come up with a cleaner, minimalist sensibility. Admitting that the company did not yet have a strategy for mobile phones, Whitman acknowledged there was much work to be done. Developing Marketing Strategies and Plans2

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

58 PART 1 | Unde Rs TAnding M ARke Ting M An Age Men T The Value cha In Harvard's Michael Porter has proposed the value chain as a tool for identifying ways to create more customer value. 3 According to this model, every firm is a synthesis of activities performed to design, produce, market, deliver, and support its product. Nine strategically relevant activities—five primary and four support activities— create value and cost in a specific business. The primary activities are (1) inbound logistics, or bringing materials into the business; (2)  operations, or converting materials into final products; (3) outbound logistics, or shipping out final products; (4) mar-keting,  which includes sales; and (5) service. Specialized departments handle the support activities —(1) procurement, (2) technology development, (3) human resource management, and (4) firm infrastructure. (Infrastructure covers the costs of general management, planning, finance, accounting, legal, and government affairs. ) The firm's task is to examine its costs and performance in each value-creating activity, benchmarking against competitors, and look for ways to improve. Managers can identify the “best of class” practices of the world's best companies by consulting customers, suppliers, distributors, financial analysts, trade associations, and the media to see who seems to be doing the best job. Even the best companies can benchmark, against other industries if necessary, to improve their performance. GE has benchmarked against P&G as well as developing its own best practices. 4 The firm's success depends not only on how well each department performs its work, but also on how well the company coordinates departmental activities to conduct core business processes. 5 These processes include: The market-sensing process —gathering and acting upon information about the market The new-offering realization process —researching, developing, and launching new high-quality offerings quickly and within budget The customer acquisition process —defining target markets and prospecting for new customers The customer relationship management process —building deeper understanding, relationships, and offer-ings to individual customers The fulfillment management process —receiving and approving orders, shipping goods on time, and collect-ing payment Strong companies are reengineering their work flows and building cross-functional teams to be responsible for each process. 6 Ford established a cross-functional team to help reduce water usage per vehicle by 30 percent. 7 AT&T, Lexis Nexis, and Pratt & Whitney have reorganized their employees into cross-functional teams; cross-functional teams operate in nonprofit and government organizations as well. 8 A firm also needs to look for competitive advantages beyond its own operations in the value chains of suppli-ers, distributors, and customers. Many companies today have partnered with specific suppliers and distributors to create a superior value delivery network, also called a supply chain. core com Pe Tenc Ies Companies today outsource less-critical resources if they can obtain better quality or lower cost. The key is to own and nurture the resources and competencies that make up the essence of the business. Many textile, chemical, and computer/electronic product firms use offshore manufacturers and focus on product design and develop-ment and marketing, their core competencies. A  core competency has three characteristics: (1) It is a source of competitive advantage and makes a significant contribution to perceived customer benefits; (2) It has applica-tions in a wide variety of markets; and (3) It is difficult for competitors to imitate. Competitive advantage also accompanies distinctive capabilities or excellence in broader business processes. Wharton's George Day sees market-driven organizations as excelling in three distinctive capabilities: market sensing, customer linking, and channel bonding. 9 In terms of market sensing, Day believes tremendous opportu-nities and threats often begin as “weak signals” from the “periphery” of a business. 10 He suggests systematically developing peripheral vision by asking three questions related to learning from the past, evaluating the present, and envisioning the future. Businesses may need to realign themselves to maximize core competencies. Realignment has three steps: (1) (re)defining the business concept or “big idea”; (2) (re)shaping the business scope, sometimes geographically; and (3) (re)positioning the company's brand identity. Peabody Energy implemented a new global organizational structure—creating geographic business units in the Americas, Australia, and Asia—to reflect its growing global footprint. 11 Changes in business fortunes often necessitate realignment and restructuring, as Panasonic and other Japanese technology and electronic companies found. 12

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf

develo Ping M ARke Ting s TRAT egies And Pl Ans | chapter 2 59 Panas Onic As Panasonic approaches its 100th anniversary in 2018, it faces unprecedented difficulties, notably a massive loss of roughly $19 billion over 2011 and 2012. For years, its “Ideas for Life” positioning had fueled innovation, generating successful products like its rugged Toughbook notebook computers. Its television sets and other home electronics ran into trouble, however, when the economy stalled just as consumers began to treat flat-screen LCD televisions as a commodity. Further, a strong yen and high manufacturing costs in Japan made it difficult for Panasonic to compete on price. Anti-Japanese sentiment from a territorial dispute proved a stumbling block in China. Finally, the acquisition of Sanyo in 2009, designed to help the company sell more green-energy products, was disappointing. A major restructuring by new presi-dent Kazuhiro Tsuga in fall 2012 scaled back manufacturing in Japan, abandoned the mobile phone market overseas, and cut back investment in solar panels and rechargeable batteries. Tsuga emphasized that Panasonic will streamline business units and emphasize profit, not just revenue growth. The cen Tral role of s Tra Te GIc Plann In G Only a select group of companies have historically stood out as master marketers (see Table 2. 1). These compa-nies focus on the customer and are organized to respond effectively to changing needs. They all have well-staffed marketing departments, and their other departments accept that the customer is king. They also often have strong marketing leadership in the form of a successful CMO (see “Marketing Memo: What Does It Take to Be a Successful CMO?”). To ensure they execute the right activities, marketers must prioritize strategic planning in three key areas: (1) managing the businesses as an investment portfolio, (2) assessing the market's growth rate and the company's position in that market, and (3) establishing a strategy. The company must develop a game plan for achieving each business's long-run objectives. Most large companies consist of four organizational levels: (1) corporate, (2) division, (3) business unit, and (4) product. Corporate headquarters is responsible for designing a corporate strategic plan to guide the whole enter-prise; it makes decisions on the amount of resources to allocate to each division as well as on which businesses to start or eliminate. Each division establishes a plan covering the allocation of funds to each business unit within the division. Each business unit develops a strategic plan to carry that business unit into a profitable future. Finally, each product level (product line, brand) develops a marketing plan for achieving its objectives. The marketing plan is the central instrument for directing and coordinating the marketing effort. It operates at two levels: strategic and tactical. The strategic marketing plan lays out the target markets and the firm's value proposition, based on an analysis of the best market opportunities. The tactical marketing plan specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, and service. The complete planning, implementation, and control cycle of strategic planning is shown in Figure 2. 1. Next, we con-sider planning at each of the four levels of the organization. Source: Alberto Cristofari/A3/contrasto/Redux Panasonic has encountered some marketplace challenges in recent years, forcing it to make changes in what businesses it is in and how they are run.

Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf