Principles of Market
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Acquisitions Editor: Julia Helms Icy Development Editor: Andrew Goss Permissions Manager: Sara Jillings Production Editor: Ian Stoneham Manufacturing Manager: Richard Lamprecht Marketing Manager: Scott Dustan Original eighth edition en titled Principles of Marketing published by Prentice Hall Inc. A Simon & Schuster Company Upper Saddle River New Jersey, USA Copyright © 1999 by Prentice Hall Inc. First European Edition published 1996 Second European Edition published 1999 by Prentice Hal! Europe Authorised for sale only in Europe, the Middle East and Africa Copyright © Prentice Hall Europe 1996,1999 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 prior permission, in writing, from the publisher. Text and cover design: Design Deluxe, Rath, Avon Typeset in lOpt Caslon 224 Book by Goodfellow and Egan, Cambridge Printed and bound in Italy by Rotolito Lombards, Milan British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN 0-13-262254-8 12345 0,3 02 01 00 99 Contents Preface xiii .Summary 32 Guided Tour xx Key Terms 33 About the Autfmrf; xxii Discussing the Issues 33 Applying the Concepts 34 References 34 Part One Case 1 Amphitrion: Your Ultimate Host in Marketing and the Greece 36 Marketing Process 2 Chapter 2 Chapter 1 Marketing and Society; Social Responsibility Marketing in a Changing World: and Marketing Ethics 39 Satisfying Hitman Needs 4 Chapter Objectives 39 Chapter Objectives 4 Preview Case Brown & Williamson Tobacco: Preview Case Nike 4 'Keeping Smokers Addicted' 39 Introduction 7 Introduction 42 What is Marketing? 9 Social Criticisms of Marketing 43 Needs, Wants and Demands 10 Marketing's Impact on Individual Consumers 43 Products and Services 11 Marketing's Impact on Society as a Whole 52 Value, Satisfaction and Quality 11 Marketing's Impact on Other Businesses 54 Exchange, Transactions and Relationships 12 Citizen and Public Actions to Regulate Markets 14 Marketing 55 Marketing 15 Consumerism 55 Marketing Management 16 Environmentalism 57 Demand Management 16 Public Actions to Regulate Marketing 58 Marketing Management Philosophies 17 Business Actions Towards Socially Responsible The Production Concept 17 Marketing 60 The Product Concept 18 Enlightened Marketing 61 The Selling Concept 18 Marketing Ethics 64 The Marketing Concept J9 Principles for Public Policy Towards Marketing 68 The Societal Marketing Concept 22 The Principle of Consumer and Producer Marketing Challenges into the Next Century 24 Freedom 68 Growth of Non-Prof it Marketing 24 The Principle of Curbing Potential Harm 68 The Information Technology Boom 26 The Principle of Meeting Basie Needs 70 Rapid Globalization 28 The Principle of Economic Efficiency 71 The Changing World Economy 30 The Principle of Innovation 71 The Call for More Ethics and Social The Principle of Consumer Education and Responsibility 31 Information 72 The New Marketing Landscape 31 The Principle of Consumer Protection 72 Contents * vii Sum mar;7 72 Key Terms 124 Key Terms 73 Discussing the Issues 124 Discussing the Issues 73 Applying the Concepts 124 Applying the Concepts 74 References 125 References 75 Cuse 3 Look Out Lipton, Here Comes Oolong! )26 Case 2 Nestle: Singled Out Again and Again 76 Overview Case One KitKat: Have a Break .. 131 Chapter 3 Part Two Strategic Marketing Planning 81 The Marketing Setting 140 Chapter Objectives 81 Preview Case Levi's Strategic Marketing and Planning 81 Chapter 4 Introduction 84 The Marketing Environment 142 Strategic Planning 85 Overview of Planning 85 Chapter Objectives 142 The Planning Process 86 Preview Case Unilever: Power? 142 The Strategic Plan 87 The Mission 87 Introduction 146 From Mission to Strategic Objectives 90 The Company's Mieroenvironment 146 Strategic Audit 91 The Company 146 SWOT Analysis 94 Suppliers 147 The Business Portfolio 96 Marketing Intermediaries 147 Developing Growth Strategies 102 Customers 148 Marketing Within Strategic Planning 102 Competitors 149 Planning Functional Strategies 102 Publics 149 Marketing's Role in Strategic Planning 103 The Company's Macroenvironment 151 Marketing and the Other Business Functions 104 Demographic Environment 151 Conflict Between Departments 104 Economic Environment 158 The Marketing Process 105 Natural Environment 162 Marketing Strategy 106 Technological Environment 165 Marketing Strategies for Competitive Political Environment 167 Advantage 109 Cultural Environment 169 Developing the Marketing Mix 109 Responding to the Marketing Environment 173 The Marketing Plan 111 Summary 173 Executive Summary 111 Key Terms 174 Marketing Audit 111 Discussing the Issues 174 SWOT Analysis 112 Objectives and Issxies 113 Applying the Concepts 175 Marketing Strategy 113 References 175 Marketing Mix 113 Case 4 Shiseido: Rethinking the Future 177 Action Programmes 113 Budgets 113 Controls I ] 5 Chapter 5 Implementation 115 The Global Marketplace 181 Marketing Organization 116 Marketing Control 1.18 Chapter Objectives 181 Implementing Marketing 119 Preview Case McDonald's: Breaking into the Summary 122 South African Market 181 viii • Contents Introduction 184 Cultural Factors 230 Risks in International Marketing 186 Social Factors 235 High Foreign Country Debt 186 Personal Factors 238 Exchange Rate Volatility 186 Psychological Factors 243 Foreign Government Entry Requirements 186 Consumer Decision Process 250 Costs of Marketing Mix Adaptation 187 Types of Buying Decision Behaviour 251 Other Problems 187 Complex Buying Behaviour 251 Analysis of International Market Opportunity 187 Dissonance-Reducing Buying Behaviour 252 Deciding Whether or Not to Go Abroad 187 Habitual Buying Behaviour 252 Understanding the Global Environment 189 Variety-Seeking Buying Behaviour 253 Deciding which Markets to Enter 201 The Buyer Decision Process 253 Defining International Marketing Objectives and Need Recognition 254 Policies 201 Information Search 254 Establishing Market Entry Mode 203 Evaluation of Alternatives 255 Exporting 203 Purchase Decision 258 Joint Venturing 204 Postpurcbase Behaviour 258 Direct Investment 207 The Buyer Decision Process for New Products 260 Allocating Necessary Resources 208 Stages in the Adoption Process 260 Individual Differences in Innovativeness 261 Developing a Strategic Marketing Plan 209 Role of Personal Influence 262 Standardization or Adaptation for International Influence of Product Characteristics on Rate of Markets? 209 Adoption 263 Product 212 Promotion 2.13 Consumer Behaviour Across International Borders Price 214 263 Distribution Channels 215 Summary 264 Organizing an Operational Team and Key Terms 265 Implementing a Marketing Strategy 216 Discussing the Issues 265 Export Department 216 Applying the Concepts 266 International Division 216 Global Organization 217 References 266 Evaluation and Control of Operations 218 Case 6 Bic Versus Gillette: The Disposable Wars 268 Summary 218 Key Terms 220 Diseussing the Issues 220 Chapter 7 Applying the Concepts 221 Business Markets and Business References 221 Buyer Behaviour 273 Case 5 Procter & Gamble: Going Global in Cosmetics 222 Chapter Objectives 273 Preview Case Selling Business Jets: The Ultimate Chapter 6 Executive Toy 273 Consumer Buyer Behaviour 227 Introduction 276 Business Markets 277 Chapter Objectives 227 Characteristics of Business Markets 277 Preview Case Sheba: The Pet's St Valentine's Day A Model of Business Buyer Behaviour 282 227 Business Buyer Behaviour 282 Introduction 229 What Buying Decisions Do Business Buyers Make? 283 Models of Consumer Behaviour 229 Who Participates in the Business Buying Characteristics Affecting Consumer Behaviour 230 Process? 284 Contents IX What arc the Main Influences on Business Discussing the Issues 357 Buyers? 286 Applying the Goncepts 357 How Do Business Buyers Make their Buying References 357 Decisions? 292 Case 8 Act I: Feeling Out the Appliance Controls Institutional and Government Markets 295 Market 359 Institutional Markets 296 Government Markets 296 Overview Case Two Ballygowan Springs into New Age Kisqua 363 Summary 300 Key Terms 300 Discussing the Issues 301 Applying the Goncepts 301 Part Three References 301 Case 7 Troll-AEG 303 Core Strategy 374 ChapterS Market Information and Chapter 9 Marketing Kesearch 313 Market Segmentation and Targeting 376 Chapter Objectives 313 Chapter Objectives 376 Preview Case Qantas: Taking Off in Tomorrow's Preview Case Procter Ik Gamble: How Many is Market 313 Too Many? 376 Introduction 316 Introduction 379 The Marketing Information System 317 Market Segmentation 379 Levels of Market Segmentation 379 Developing Information 317 Segmenting Consumer Markets 385 Internal Records 318 Segmenting Business Markets 401 Marketing Intelligence 318 Segmenting International Markets 403 Marketing Research 320 Multivariate Segmentation 404 The Marketing Research Process 320 Developing Market Segments 408 Demand Estimation 335 Requirements for Effective Segmentation 409 Defining the Market 338 Market Targeting 412 Measuring Current Market Demand 340 Evaluating Market Segments 412 Estimating Total Market Demand 340 Segment Strategy 414 Estimating Area and Market Demand 342 Summary 417 Estimating Actual Sales and Market Shares 344 Key Terms 418 Forecasting Future Demand 344 Survey of Buyers' Intentions 345 Discussing the Issues 418 Composite of Sales Force Opinions 346 Applying the Concepts 419 Expert Opinion 346 References 419