0273693980_COVER 30/11/05 5:10 pm Page 1 Marketing Management “Peter Doyle has been an inspiration to marketing managers, researchers and educators for generations. This book is not a routine discourse on marketing and strategy but a refreshing, insightful and original guide to winning in markets.” John Saunders, Professor of Marketing, Head of Aston Business School and Pro-Vice Chancellor of Aston University “I strongly recommend this book to all who consider themselves to be serious marketing professionals.” Ann Murray-Chatterton, Director of Training and Development, Institute of Practitioners in Advertising Peter Doyle Marketing Management and Strategy, fourth edition, is a concise, practical management guide to the New to this edition Phillip Stern latest ideas in marketing and strategy for MBA New international case examples throughout the and executive courses. Adopted by many leading book including Hewlett Packard, Mars, First Direct, business schools, the book focuses on key issues Microsoft, Fronterra, Pfizer, NEXT and Intel. relevant to modern business, drawing on the authors’ experience as consultants to many major Expanded contributions on Segmentation and international companies. Positioning (Chapter 3), Market Dynamics and Competitive Strategy (Chapter 5) and Building and With its interdisciplinary approach, this book gives Successful Brands (Chapter 6). practical, step-by-step guides to developing a New section on Corporate Social Responsibility marketing strategy, making pricing decisions and (Chapter 12). Strategy developing advertising and communications plans. Marketing “This is a text which both MBA students and marketing managers will find of real value. It applies relevant theory to important practical issues.” Management Fred Feinberg, Bank One Corporation Chair, Ross School of Business, University of Michigan “I enjoyed Peter Doyle's teaching and have the highest regard for this book. I am very pleased to see the continuation of his work with the new edition.” fourth Tim Mason, Marketing Director, Tesco PLC edition and Strategy Doyle Peter Doyle (1943-2003), MBA, PhD, was Professor of Marketing and Strategic Management at the University of Warwick, where he headed both the executive and MBA programmes. He was one of the world’s leading academics and consulted for many top international companies including Coca-Cola, Mars, Tesco, IBM, Nestle, British Airways, British Telecom, Unilever, Shell, Hewlett-Packard. He also wrote a regular column on business matters for the Guardian newspaper. and Philip Stern is Senior Lecturer in Marketing and Strategic Management at Warwick Business School and Academic Director of the Executive MBA programme. His research is focused on market segmentation, the pharmaceutical industry and the Stern prescribing behaviour of general practitioners. His publications include articles in Journal of Brand Management, Journal of Marketing Education, and International Journal of Medical Marketing. His consultancy clients include Procter and Gamble, Napp fourth edition Pharmaceuticals, Novartis, IMS, GfK, GSK, Lilly Industries, Midlands Electricity, Abbey, MFI, Premier Farnell, IMI and the National Audit Office. Additional instructor and student support at www.pearson-books.com An imprint of www.pearsoned.co.uk/doyle 9736 MMST_A01.QXD 12/5/05 3:01 PM Page i MARKETING MANAGEMENT AND STRATEGY 9736 MMST_A01.QXD 12/5/05 3:01 PM Page ii We work with leading authors to develop the strongest educational materials in marketing, bringing cutting-edge thinking and best learning practice to a global market. Under a range of well-known imprints, including Financial Times Prentice Hall, we craft high quality print and electronic publications which help readers to understand and apply their content, whether studying or at work. To find out more about the complete range of our publishing please visit us on the World Wide Web at: www.pearsoned.co.uk 9736 MMST_A01.QXD 12/5/05 3:01 PM Page iii Fourth Edition MARKETING MANAGEMENT AND STRATEGY Peter Doyle and Philip Stern 9736 MMST_A01.QXD 12/5/05 3:01 PM Page iv 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.pearsoned.co.uk First published under the Prentice Hall imprint 1994 Second edition 1998 Third edition 2002 Fourth edition 2006 © Pearson Education Limited 1998, 2002, 2006 The rights of Peter Doyle and Philip Stern to be identified as authors of this work have been asserted by the authors in accordance with the Copyright, Designs, and Patents Act 1988. 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 Publishers or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London W1T 4LP. 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-13: 978-0-273-69398-7 ISBN-10: 0-273-69398-0 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Doyle, Peter, 1943 June 23-2003. Marketing management and strategy / Peter Doyle and Phil Stern.-- 4th ed. p. cm. Includes bibliographical references and index. ISBN 0-273-69398-0 pbk 1. Marketing. 2. Marketing–Management. I. Stern, Phil, 1954- II. Title. HF5415.D753 2006 658.8--dc22 2005052643 10 9 8 7 6 5 4 3 2 1 10 09 08 07 06 Typeset in 9/13pt Stone Serif by 30. Printed and bound by Mateau Cromo Artes Graficas, Madrid, Spain. The publisher’s policy is to use paper manufactured from sustainable forests. 9736 MMST_A01.QXD 12/5/05 3:01 PM Page v Contents Preface vii Summary 91 About the authors xi Questions 91 Acknowledgements xii Notes 92 Chapter 1 Chapter 4 MANAGEMENT: OBJECTIVES AND TASKS 1 STRATEGIC MARKET PLANNING 93 Objectives and success 2 Adapting to change 94 Stakeholders’ objectives and constraints 10 Evolution of planning systems 98 Developing balanced objectives 14 Corporate strategy 101 Developing a strategy 17 Business unit strategy 117 Criteria for strategic success 20 Summary 127 Strategic intent 22 Questions 128 Core competences 23 Notes 128 Organisational dimensions 25 Summary 28 Chapter 5 Questions 28 MARKET DYNAMICS AND COMPETITIVE Notes 29 STRATEGY 131 Cycles of confusion 132 Chapter 2 Market dynamics 137 THE CUSTOMER-LED BUSINESS 31 The evolution of markets 140 The theory of marketing 32 Formulating marketing strategies 149 The customer-led business 37 Niche companies 158 Success 40 Summary 160 Focus on needs 42 Questions 160 Organisation 45 Notes 161 Competitive advantage 47 Entire business 48 Chapter 6 Customers as assets 49 BUILDING SUCCESSFUL BRANDS 163 Creating the customer-led business 52 Products and brands 164 Summary 60 Added values 166 Questions 60 How to build brands 172 Notes 60 The benefits of brands 177 Multibranding, line and brand extensions 180 Chapter 3 Revitalisation, repositioning and rationalisation 183 SEGMENTATION, POSITIONING AND THE Regional and global brands 186 MARKETING MIX 63 Buying versus building brands 188 Market segmentation 64 Valuing brands 190 Dynamic targeting strategies 74 The branding dilemma 190 Creating the differential advantage 78 Summary 192 Positioning strategy 84 Questions 192 The marketing plan 85 Notes 193 Market-centred organisations 89 v 9736 MMST_A01.QXD 12/5/05 3:01 PM Page vi Contents Chapter 7 Questions 318 INNOVATION AND NEW PRODUCT Notes 318 DEVELOPMENT 195 Chapter 11 Meaning of innovation 196 MANAGING MARKETING CHANNELS 319 Why innovate? 198 Strategic opportunities for fast innovators 202 The role of channels 321 Barriers to innovation 204 Designing distribution channels 324 Organising for innovation 206 Managing distribution channels 330 New product development process 210 Channel evolution 333 Customer adoption process 219 Organising distribution 337 Summary 223 Summary 345 Questions 223 Questions 345 Notes 223 Notes 346 Chapter 8 Chapter 12 MARKETING IN SERVICE BUSINESS 347 PRICING POLICY: DELIVERING VALUE 225 Nature of services 349 Assessing price competitiveness 227 Establishing initial prices 229 Service characteristics 351 Initiating price changes 238 Service tasks 355 Controlling reseller mark-ups 241 Services marketing strategy 361 Summary 245 Summary 376 Questions 245 Questions 377 Notes 246 Notes 377 Chapter 13 Chapter 9 TURNAROUND MANAGEMENT 379 COMMUNICATIONS STRATEGY 247 Short- versus long-term improvements 380 Introduction 248 Types of industry change 382 Communications and buyer behaviour 250 Some financial concepts 385 Advertising planning 259 Consolidation phase 388 Direct response marketing 272 Transformation programme 397 Interactive marketing 274 Summary 407 Sales promotion 275 Questions 408 Public relations 279 Notes 408 Determining the communications mix 281 Summary 284 Chapter 14 Questions 285 MARKETING IN THE FUTURE 409 Notes 286 Marketing: a recapitulation 410 Chapter 10 Changing marketing environment 413 MANAGING PERSONAL SELLING 287 Less significant than predicted? 417 More significant than predicted? 419 Salesforce objectives 288 Corporate social