The Marketing Book, Sixth Edition
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The Marketing Book This page intentionally left blank The Marketing Book Sixth Edition Edited by MICHAEL J. BAKER and SUSAN HART AMSTERDAM • BOSTON • HEIDELBERG • LONDON • NEW YORK • OXFORD PARIS • SAN DIEGO • SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO Butterworth-Heinemann is an imprint of Elsevier Butterworth-Heinemann is an imprint of Elsevier Linacre House, Jordan Hill, Oxford OX2 8DP, UK 30 Corporate Drive, Suite 400, Burlington, MA 01803, USA First edition 1987 Reprinted 1987, 1990 (twice) Second edition 1991 Reprinted 1992, 1993 Third edition 1994 Reprinted 1995, 1997 Fourth edition 1999 Reprinted 2000, 2001 Fifth edition 2003 Sixth edition 2008 Copyright © 2008 Elsevier Ltd. 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 the prior written permission of the publisher Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone (ϩ44) (0) 1865 843830; fax (ϩ44) (0) 1865 853333; e-mail: [email protected]. Alternatively you can submit your request online by visiting the Elsevier web site at http://elsevier.com/locate/permissions, and selecting Obtaining permission to use Elsevier material Notice No responsibility is assumed by the publisher for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods, products, instructions or ideas contained in the material herein. 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 A catalog record for this book is available from the Library of Congress ISBN: 978-0-7506-8566-5 For information on all Butterworth-Heinemann publications visit our web site at books.elsevier.com Printed and bound in Great Britain 080910109876 Contents List of illustration xiii List of tables xvii List of contributors xix Preface to the sixth edition xxvii Part One Organization and Planning for Marketing 1 1 One more time: what is marketing? 3 Michael J. Baker Introduction 3 Marketing as a managerial orientation 4 Marketing myopia – a watershed 5 Life cycles and evolution 6 Marketing misunderstood 7 The marketing function 8 Relationship marketing 11 Summary 16 References 17 Further reading 18 2 Postmodern marketing 19 Stephen Brown In the beginning was the word 20 Physician, heal thyself 21 Let there be light 22 The sweet bye and bye 24 Crying in the wilderness 26 Be fruitful and multiply 27 Behold a pale horse 28 The end is nigh 29 References 30 Further reading 31 3 Relationship marketing 33 Lisa O’Malley and Caroline Tynan Introduction 33 History of relationship marketing 34 Focal relationships 37 Relationship marketing in consumer markets 38 Models of relationship development 41 Motivation for relationships and relational success variables 44 vi Contents Critique and emerging issues 45 Customer relationship managers 45 Conclusion 48 References 49 4 The basics of marketing strategy 55 Robin Wensley Strategy: from formulation to implementation 55 The nature of the competitive market environment 56 The codification of marketing strategy analysis in terms of three strategies, four boxes and five forces 58 The search for generic rules for success amidst diversity 60 Models of competition: game theory versus evolutionary ecology 61 Characterizing marketing strategy in terms of evolving differentiation in time and space 63 The nature of research in marketing strategy: fallacies of free lunches and the nature of answerable research questions 66 The new analytics: resource advantage, co-evolution and agent-based modelling 74 Conclusions: the limits of relevance and the problems of application 75 References 76 5 Strategic marketing planning: theory and practice 81 Malcolm McDonald Summary 81 Introduction 81 Part 1 The marketing planning process 83 Part 2 Guidelines for effective marketing planning 93 Part 3 Barriers to marketing planning 99 Summary 105 References 105 Further reading 105 Part Two The Framework of Marketing 107 6 Consumer behaviour 109 Mark Gabbott Consumer behaviour underpinnings 109 Marketing and consumer behaviour 111 The individual 112 The social context of consumption 115 Situation and environmental consumption effects 116 References 118 7 Business-to-business marketing, organizational buying behaviour, interfirm relationships and network behaviour 121 Arch G. Woodside and Kathleen R. Ferris-Costa Introduction 121 How thinking by marketing and purchasing executives is similar to – and departs from – thinking by household consumers 122 Deductive modelling of B2B marketing–purchasing behaviour 125 Inductive modelling of B2B marketing–purchasing behaviour 127 Innovation and diffusion decisions and strategy propositions 129 B2B network research findings and strategy implications 134 Conclusion 137 References 137 Contents vii 8 Marketing research 140 Alan Wilson Introduction 140 The changing marketing research environment 140 The marketing research process 141 Managing the client/agency relationship 153 Ethics in marketing research 153 Summary 155 References 155 9 Qualitative research 156 Len Tiu Wright Introduction 156 Definition and traditions of qualitative research 157 Theory and application 159 Autobiography and biography 160 Phenomenology 160 Grounded theory 160 Ethnography 161 Case study 161 Validity and reliability 162 Triangulation 162 Differences in research traditions: qualitative and quantitative approaches 163 Using computers in qualitative research 164 Data collection methods 165 Questionnaires types 166 Stimulus materials 167 Pushing boundaries in marketing 167 Conclusion 168 References 169 Further reading 169 10 Quantitative methods in marketing 170 Luiz Moutinho Introduction 170 Multivariate methods 173 Regression and forecasting techniques 186 Statistical decision theory or stochastic methods 200 Deterministic operational research methods 204 Causal models 211 Hybrid models 213 Network programming models 216 Conclusion 217 References 218 Further reading 220 11 Market segmentation 222 Yoram (Jerry) Wind and David R. Bell Use of segmentation in marketing and business strategy 223 Decisions required in implementing a segmentation strategy 226 Advances in segmentation research 232 Segmentation in the global information age 237 viii Contents Extending the segmentation concept 239 Issues and associated research agenda 240 References 242 Part Three Managing the Marketing Function 245 12 The marketing mix 247 Michael J. Baker Introduction 247 The evolution of the marketing mix concept 247 Management of the marketing mix 251 Some criticisms of the marketing mix 253 References 258 13 New product development 260 Susan Hart Introduction 260 The process of developing new products 260 The stages of the NPD process 261 Uncertainty and information roles in NPD 266 Usefulness of models 269 Organizational design for NPD 273 Summary 278 References 278 Further reading 279 14 Pricing 281 Tony Cram Introduction 281 Pricing – customer perspective 283 Pricing – competitor perspective 287 Pricing – company perspective 288 Measuring pricing effectiveness 293 Summary 294 References 294 Further reading 295 15 Selling and sales management 296 Bill Donaldson Introduction 296 The changing role of salespeople 296 The costs of personal selling 297 What do we expect salespeople to do? – the sales process 299 Sales management issues 301 Conclusion 304 References 304 Further reading 304 16 Brand building 306 Leslie de Chernatony Introduction 306 Spectrum of brand interpretations 306 Contents ix A model for strategically building brands 316 Summary 324 References 325 Further reading 326 17 Integrated marketing communications 327 Tony Yeshin The importance of integrated marketing communications 327 The blurring of the edges of marketing communications 327 The strategic challenges facing organizations 328 Strategic marketing communications 328 The integration of marketing communications 329 Defining IMC 329 Dimensions of IMC 332 The impact of external factors on marketing communications 333 The driving forces behind the growth of IMC 336 The impact on marketing communications 338 Relationship marketing 339 The benefits of IMC 340 The process of achieving integration 341 Organizational approaches to integration 343 The barriers to integration 346 The consumer and IMC 348 International dimensions of IMC 348 Summary 349 References 350 18 Mass communications 352 Douglas West Introduction 352 Key trends 352 Mass media strategy 354 The media 356 Summary 368 References 370 Recommendations for further reading 371 19 What do we mean by direct, data and digital marketing? 372 Derek Holder What do we mean by direct marketing? 372 From mass marketing to digital marketing 373 Firms that deal direct 375 Multi-channel marketing 375 Direct marketing is more than selling direct 377 Direct, data and digital marketing 378 Direct marketing and Pareto’s Principle 378 Principles of direct, data and digital marketing: TICC 380 What distinguishes digital marketing? 381 10 ways in which digital marketing is different 382 Data: the direct and digital marketer’s information system 384 Data, CRM and eCRM 387 Limitations of the customer information system 389 Summary 390 x Contents 20 A strategic approach to customer relationship management 391 Adrian Payne and Pennie Frow Introduction 391 Defining CRM 392 A strategic framework