Marketing Strategy and Management / Michael J

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First published 2014 by PALGRAVE

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ISBN 978–1–137–02582–1

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Library of Congress Cataloging-in-Publication Data

Baker, Michael John.

Marketing strategy and management / Michael J. Baker, Emeritus Professor of Marketing,University of Strathclyde, Visiting Professor of Marketing at Monash University, Australia and Special Professor of Marketing at Nottingham University Business School, UK.—Fifth edition. pages cm

Summary: “The fifth edition of Marketing Strategy and Management builds upon Michael Baker’s reputation for academic rigor. It retains the traditional, functional (4Ps) approach to marketing but incorporates current research, topical examples and case studies, encouraging students to apply theoretical principles and frameworks to real-world situations”—Provided by publisher. ISBN 978–1–137–02582–1 (paperback) 1. Marketing—Management. 2. Marketing. I. Title. HF5415.13.B353 2014 658.8—dc23 2014029675

Typeset by MPS Limited, Chennai, India.

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BRIEF CONTENTS BRIEF CONTENTS vi PART III LIST OF FIGURES vii MANAGING THE LIST OF TABLES ix MARKETING MIX 293 PREFACE TO THE FIFTH EDITION x ACKNOWLEDGEMENTS xi 13 THE MARKETING MIX 295 ACRONYMS xii 14 PRODUCT/SERVICE POLICY 1 OVERVIEW AND EXECUTIVE AND MANAGEMENT 309 SUMMARY 1 15 PACKAGING AND DESIGN 343

PART I 16 PRICING POLICY AND MANAGEMENT 352 STRATEGY ISSUES 23 17 DISTRIBUTION AND SALES 2 MARKETING AND CORPORATE POLICY 379 STRATEGY 25 18 INTEGRATED MARKETING 3 MARKETING AND COMMUNICATIONS 399 COMPETITION 60 19 BRANDING 421 4 PRINCIPLES OF STRATEGIC MARKETING PLANNING 87 20 MARKETING IN A FOREIGN ENVIRONMENT AND 5 ANALYTICAL FRAMEWORKS GLOBALISATION 441 FOR STRATEGIC MARKETING PLANNING 112 PART IV 6 MARKETING INTELLIGENCE – IMPLEMENTING MARKETING 457 RESEARCH FOR MARKETING 146 21 CUSTOMER CARE AND PART II SERVICE 459 THE MARKETING 22 DEVELOPING A MARKETING APPRECIATION 167 CULTURE 485

7 MACRO-ENVIRONMENTAL 23 THE (SHORT-TERM) ANALYSIS 169 MARKETING PLAN 496

8 CUSTOMER ANALYSIS 194 24 IMPLEMENTATION AND CONTROL 504 9 INDUSTRY AND COMPETITOR ANALYSIS 212 25 TRANSFORMATIONAL MARKETING – THE WAY 10 INTERNAL (SELF-) ANALYSIS 239 AHEAD 524 11 MATCHING – PUTTING IT ALL TOGETHER 248 INDEX 535

12 MARKET SEGMENTATION 257

A List of Full Contents is available on www.palgrave.com/companion/ baker-marketing-strategy5

vi BRIEF CONTENTS

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1 OVERVIEW AND EXECUTIVE SUMMARY

INTRODUCTION their success and the lessons to be learned from them. By the end of the chapter a convincing case has been In general, textbooks conform to a structure and for- made, but it raises a number of specific questions each mat designed to facilitate a formal study of the subject. of which then becomes the subject of a separate chapter Introductory textbooks are largely descriptive and pro- which examines them in detail. vide an overview of what is known and accepted about In addition, one of the several reviewers commis- the subject. More advanced textbooks are usually analyt- sioned by the publisher to advise on the preparation of ical and acknowledge alternative points of view that may a new edition of this book offered the opinion that the challenge the normative theory. Few textbooks adopt the summary of lessons to be learned presented in each chap- format of ‘bestsellers’ in which the opening chapter sum- ter would have made a good introduction to the book as marises the key features of the book as a whole, with the a whole and might be more effective than leaving it to remaining chapters containing the information and evi- the end of the book. In light of this example and advice dence that illuminate and support the statement of these I have decided to adopt a similar approach in prepar- distinguishing characteristics. ing this fifth edition of my own attempt to capture and This point was brought home to me in an article by explain what marketing strategy and management are Mark Uncles (1997) in which he argued for an alternative all about. By adopting this approach I hope that the first to the conventional doctoral thesis that follows a widely chapter will provide a synoptic overview of the scope accepted format in which discussion of the findings is and coverage of the book as a whole that will be useful to reserved for the last chapter, making it more like a mur- those seeking a general survey of the subject as either an der mystery than a report of original research. In Mark’s introduction or a reminder. And, for those with interest in view there is much to be said for presenting the findings a specific topic it will indicate where this ‘sits’ in relation first and then describing the evidence and procedures to other aspects of marketing strategy and management underpinning them. In support of his argument he cites and where to go for explicit treatment of it. Sobel’s book Longitude in which there is a complete As well as providing an overview of the content of summary of the work in the first chapter but ‘the results the book as a whole, the new structure suggests that the are so captivating and compelling that most readers will content can be fairly readily adapted to the needs of the be more than willing to read on’ (1995). reader. Reviews of the manuscript indicated that the com- While few, if any, textbooks attempt this, it is nota- prehensive nature of the text was seen as an important ble that the most widely read management ‘bestsellers’ strength. However, the result is a large book that may be follow this approach. For example, Hermann Simon’s potentially offputting for students, especially where their ‘Hidden Champions’ chronicles the successful strategies curriculum does not call for coverage of all the topics of companies that are world market leaders but largely that have been included, as well as practitioners accus- unknown to others outside of their industry (2009). In tomed to more concise written documents. the opening chapter he introduces 46 such companies, As the title of the chapter indicates, this is both and describes their defining characteristics, the basis of an overview and an executive summary in which a

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synopsis of each chapter/topic is clearly identified. So, MARKETING’S DOMAIN if you read all of this chapter, you will be introduced to each of the topics and given a summary of what are seen Given the ever increasing availability of information it as the most important issues associated with it, together has become commonplace to summarise the content of with specific advice on their application in practice. You a communication so that one can decide whether it is of can then decide which of the more detailed accounts to potential interest or not. To facilitate this most written consult for additional and supporting information and reports and texts are introduced by means of a Foreword, analysis. The presentation is also sequential and sub- Preface, Abstract or, in the case of management informa- divided into four parts each of which deals with a group tion, an Executive Summary. Accordingly, in this new of closely related themes – Part I, Strategy Issues; edition it has been decided to attempt to summarise the Part II, Research and Analysis; Part III, Managing the key issues/conclusions associated with specific topics Marketing Mix and Part IV, Implementing Marketing. that are the subject of chapters dedicated to them. Accordingly, each Part may be considered as a separate To begin with it is important to attempt to define the module suitable for study in its own right. Similarly, nature, scope and (current) boundaries of the field of if topics like Branding, International Marketing, study – what academics often refer to as its ‘domain’ – Innovation and New Product Development are available as a basis for establishing what may be learned from as separate subjects for study in a course, then these reading about it. In doing so, however, authors will make chapters can be skipped over. assumptions about the information needs of prospective Some reviewers of the manuscript observed that it readers that will depend upon their existing knowledge, would be helpful to include more recent, that is, post- experience and the reason that they are considering 2000 references. Where appropriate we have done this reading a ‘textbook’ in the first place. To cater for these but we would remind the reader that references cited differing needs the safest approach is to attempt a com- in the text are intended to identify original sources prehensive coverage of the field of study but leave it to that were often the catalyst for the emergence of new the reader to decide on and select the particular content themes that developed into specialised subfields in their that meets their needs. But, the selection of topics, the own right. My intention is to select those seminal works order in which they are presented and their content fol- that are the foundation of the marketing discipline and low a logic decided on by the author, so it will be useful not be distracted by more recent research publica- to summarise the stages of the historical timeline associ- tions unless they significantly add to the narrative and ated with the evolution of marketing leading to its current analysis. In doing so one has to distinguish between status and the challenges that it faces. recency and relevance, as well as accepting that one 1. Human progress and civilisation evolved from the cannot possibly keep on top of developments in every realisation that task specialisation and the exchange subfield. For those who wish to dig deeper we have of surpluses would increase choice and well-being. included Recommended Readings, most of which 2. The development of markets and the creation of a contain extensive referencing and bibliographies about medium of exchange both facilitated and accelerated a chapter topic. the pursuit of specialisation and productivity. In sum, it is really down to the user and/or instructor 3. Early producers interacted closely with their to “pick and mix” to suit their own needs. customers and so understood their requirements One final comment before we start. There are many precisely. other books that offer a more focused examination of 4. Innovation and the application of technology lead specific issues or, alternatively, a more comprehensive to an Industrial Revolution in the 18th century and and extended treatment. We shall refer to many of these a massive increase in output, underpinned by new while attempting to steer a middle course that distin- methods of transportation and distribution. It also guishes what is important and why and illustrating the resulted in a physical separation between producer application of this understanding to practical issues of and consumer and the creation of a psychological who, how, where and when. So, for example, if you want distance between them that needed to be bridged by a clear, authoritative and balanced description of the alternative means of communication including mar- “tools” available to the practising manager, their advan- ket research and advertising. tages and disadvantages, strengths and weaknesses, then 5. Increased prosperity, accompanied by advances in I recommend that you look at Key Strategy Tools by medicine, sanitation and public health, resulted in Vaughan Evans (2013) where you will find 88 entries rapid population growth with a concomitant increase including quite a few that we do not deal with. in demand in the industrialised countries.

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6. To meet domestic demand, new raw materials and subjects but that, in addition, we also required students commodities had to be imported in exchange for to take a compulsory class in Business and Society in manufactured goods giving rise to the development which the emphasis was upon the ethical responsibilities of international trade and colonisation during the of business and its role in society. 19th century. One does not have to look far to see the events that 7. During the early 20th century supply capability have occurred since the publication of the last edition to began to outstrip effective demand and producers understand this apparent volte face. had to develop new strategies and techniques to Clearly, it would be wrong to lay all the blame at the motivate customers to buy their output. door of the banking profession, after all if there had not 8. The Second World War resulted in a huge backlog been many gullible and greedy consumers, who seemed of demand and a period of post-war reconstruc- to assume that if they had to repay their loans this would tion. As demand levelled off in the mid-to-late be easily accomplished out of the ever increasing returns 1950s producers faced increased competition due on investment in property, there would have been no to excess supply and realised they had to make what financial crisis. On the other hand, as more and more they could sell, based on a better understanding of cases of banks mis-selling products to customers surface, customer needs, rather than work harder trying to it is becoming increasingly apparent that the banking sell what they could make. Customer sovereignty profession grossly abused its reputation for prudence and (demand) was recognised as the foundation for probity on which the trust of their customers was based. future business decisions and success (the market- Some might argue that ‘marketing’ should also bear ing concept). some of the blame in that promotion and selling actively 9. But the emphasis in management thinking and lit- encouraged consumers to live beyond their means. But erature still remains on what the supplier needs to this is not the same as proving that marketing is respon- do to achieve success. Only marketing gives equal sible for market imperfections, just as the mis-behaviour attention to both demand (customers) and supply, of some bankers is an argument against the principles of although the ‘Marketing Management’ school of banking and the need for a banking system. thought tends to emphasise what marketers can do So, what is the issue and what caused the ‘crash’? to customers rather than for them. Essentially it was due to a lack of regulation to ensure 10. Economic, social, technological and political devel- that the banks conducted their business in an ethical and opments associated with a wave of newly industri- responsible way. In turn this raises the question as to who alising countries in the 1970s and 1980s, followed was responsible, to which the answer must be bankers by the emerging BRIC economies in the 90s and themselves and the public bodies established to monitor 00s, have transformed competition through globali- and oversee their corporate behaviour. sation, the Internet and the empowerment of cus- A distinguishing feature of all professions is a desire tomers through social media. to regulate practice of that profession and, specifically, 11. The environmental effects of economic growth in the conduct of its members based on the argument terms of sustainability and climate change and their that, due to the highly specialised nature of their work, impact upon the well-being of all the world’s peo- professionally qualified members are most suited to ple call for a new transformational model of social determine what may be regarded as acceptable conduct business based on the principles enshrined in the and behaviour. In the case of certain ‘closed’ professions marketing concept. like medicine, self-regulation is a prized privilege, but in the majority of professions practice is not restricted ETHICS, MORALITY AND MARKETING to the members of the professional body, making it nec- Over 30 years ago, when preparing the first edition of essary for legislation and other forms of regulation to this book, as Dean of the Strathclyde Business School prescribe and enforce codes of conduct. I was approached by our new Vice-Chancellor who In case you are wondering where this is all going, the wished to know why there were no courses in Ethics in point is that marketing, like banking, is an established the business school curriculum. My reply at the time was profession that satisfies all of the criteria expected of an that ethical principles were infused into all our teaching occupation or practice claiming this status. and that to offer a stand-alone course in the subject might Modern professions have largely evolved from full- make it appear as if it was some kind of optional extra. time occupations that marked the adoption of task spe- If approached today I would hope to be able to reply that cialisation as a more effective basis for the organisation not only were ethical concerns incorporated into all our of human activity. Over time many occupations became

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more specialised and a distinction began to develop In the preceding section we proposed a ‘historical between ‘trades’ and professions. Perhaps the most obvi- timeline’ and suggested that we have arrived at a stage ous distinction was that mastery of trades was largely which calls for ‘a new transformational model of social acquired through experiential learning as an apprentice business based on the principles enshrined in the market- under the guidance of a craftsman, whereas in the case ing concept’. Given that this is an advanced text book of professions a body of knowledge developed that could there is an implicit assumption that readers will have be communicated by means of formal instruction in been introduced to the ‘marketing concept’ in an intro- schools, colleges and universities. (In the USA the acid ductory course. In my view the distinction between the test for the recognition of a new academic discipline is marketing concept, a marketing orientation and the prac- that the subject be offered in the curriculum of at least tice of marketing is both clear and straightforward. eight major universities). The marketing concept is what I regard as a philosophy Both trades and professions recognised the impor- of business under which individuals and/organisations tance of collaboration and this led to the formation of freely enter into exchanges with others to their mutual associations at both the national and international level. benefit. In other words it is a business model founded on Similarly, both types of association developed codes of cooperation and collaboration that leads to a win-win out- conduct to govern practice and behaviour of their mem- come with both parties securing the values and benefits bers backed up by disciplinary codes. In the case of they desire to the extent that they develop trust in each professions these were reinforced by the publication of other and would gladly repeat the experience if the need ethical codes which, in turn, enabled members to assume arose. A marketing orientation implies that supply should responsibility for the regulation of their own profession be subservient to demand. If you want to establish what and exclusion from practice by non-members. goods and services have the greatest potential to deliver In the UK there are many professional bodies that have values and benefits, then you should start by engaging in satisfied the stringent requirements of the Privy Council a dialogue with your intended customers to work out what and been awarded a Royal Charter that confers Chartered will satisfy the customer’s requirements. As for market- status on practitioners admitted to the professional body. ing practice and management this embraces all the activi- However, in only a minority of cases have ‘licensing ties necessary to initiate and maintain a dialogue between laws’ been established, making it a requirement that suppliers and customers and the creation and delivery of only chartered practitioners may fill certain roles. The the satisfying experiences to the mutual advantage of both obvious outcome is that only those practitioners who are parties. Put another way marketing depends upon mutual members of a professional body are subject to its code respect and ethical behaviour and so should conform to of conduct and a disciplinary action if they breach its the Golden Rule – ‘Do unto others as you would be done requirements. As for the rest, they can behave as they by’. From time to time, we shall return to this proposi- choose always provided that they act within the law. tion and conclude this overview of marketing strategy and Thirty years ago most persons embarking upon a management with the conclusion that marketing insight, career in banking would have expected to take the exam- ideas and practice offer the best hope for the enhancement inations of the Institute of Bankers and become mem- of human welfare and the achievement of a high standard bers. Today, I suspect that it is a minority. In the case of living for all. of marketing, as a Trustee of the Chartered Institute of In my view, marketing is the discipline best suited to Marketing, I know that there are approximately half a achieve this transformation through identification of the million persons in marketing-related jobs in the UK of strategic issues and their analysis enabling the formula- whom about 5% are members of CIM and subject to its tion of action plans and their effective implementation. code of practice. The implications are clear. Either you In pursuit of this objective, we start with a series of chap- license professions and require the professional bodies to ters that summarise the strategic issues and current views regulate practice or else you set up other regulatory bod- about them to provide both background and a framework ies to perform the same function. As with most things a for the development of action plans. combination of both approaches might be most appropriate under which professional bodies monitor the perfor- To provide a perspective of the book as a whole, mance of individuals while other organisations like the Chapter 2, Marketing and Corporate Strategy, seeks to FSA monitor the behaviour of organisations. However, establish the point of departure by defining the devel- what has become abundantly clear is the need to satisfy opment of the marketing orientation and the nature of point 6 of the Wikipedia milestones and articulate codes marketing strategy, and comparing the latter with the of professional ethics and the means of enforcing them. broader concept of corporate strategy. The conclusion

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is that the two are very similar, although marketing STRATEGY strategy may be seen as a subset of corporate strategy Corporate strategy is the pattern of major objectives, responsible mainly for anticipating and planning. The purposes or goals, and essential policies and plans for larger concept embraces issues of organisation design achieving those goals, stated in such a way as to define and control which go beyond marketing per se. Then, what business the company is in or is to be in, and the it is proposed that there is only a small set of strategic kind of company it is or is to be. options open to the decision-maker and these are defined Strategic decisions at the corporate level are con- as a backcloth for an examination of basic marketing cerned with acquisition, investments and diversification, strategies. The chapter concludes with a statement of the that is, the management of a portfolio of businesses or functions of marketing management – analysis, plan- Strategic Business Units (SBUs). ning, implementation and control – which serves as an At the business or SBU level, strategic decisions introduction to the extended treatment of the topics in focus on how to compete in an industry or product- the remainder of the book. The key ‘takeaways’ from market. Business-level strategy deals with achieving and this chapter are: maintaining a competitive advantage. Strategic decisions at the business level are concerned with selecting target WHAT IS MARKETING? market segments and determining the range of products Throughout its evolution the objective and purpose of to offer. marketing may be defined as being: It is with these issues that this book is concerned. ‘The creation and maintenance of mutually satisfying Probably the most ‘popular’ basis for formulating exchange relationships’. marketing strategy is known as the ‘resource-based The essence of this definition is that two entities – approach’. Proponents of this view consider the success- individuals and/or organisations – voluntarily enter ful firm as a bundle of somewhat unique resources and into an exchange of goods or services that adds value capabilities. If the firm’s core capabilities are scarce, (satisfaction) for both to the extent that they will be will- durable, defensible or hard to imitate, and can be closely ing to repeat the experience if the need arises. aligned with the key success factors of target markets, In the opinion of marketers, recognition of the need to they can form the basis of sustainable competitive advan- establish closer contact with the customer predicates the tage and profit. The central focus of the approach is on adoption of a marketing approach, which may be sum- developing those core capabilities that will be effec- marised as consisting of the following basic steps: tive in various possible market segments and in several 1. Identification of a need which can be satisfied different possible futures. profitably within the constraints and opportunities This process of matching resources with opportunity represented by the potential supplier’s portfolio of comprises six basic steps: resources, and which is consistent with the organisa- 1. Developing scenarios – Chapter 5 tion’s declared objectives 2. Macro environmental analysis – Chapter 7 2. Definition of a particular segment or segments of the 3. Customer analysis – Chapter 8 total demand which offers the best match with the 4. Industry and competitor analysis – Chapter 9 producer’s supply capabilities (the target audience) 5. Internal analysis – Chapter 10 3. Development of a specific product or service tailored 6. The development of strategic alternatives – Chapter 11 to the particular requirement of the target audience 4. Preparation of a marketing plan specifying the strat- BASIC MARKETING STRATEGIES egy to be followed in bringing the offering to the At a very simple level we can isolate three basic mar- attention of the target audience in a way which will keting strategies – undifferentiated, differentiated and differentiate it from competitive alternatives (The concentrated. main elements of such a plan will comprise pricing, An undifferentiated strategy exists when the supplier promotion, selling and distribution policies) offers the same or undifferentiated product to all persons/ 5. Execution of the plan organisations believed to have a demand for a product 6. Monitoring of the results and adjustment as neces- of that type. Three sets of circumstances immediately sary to achieve the predetermined objectives suggest themselves as being suited to an undifferentiated Collectively these activities constitute the objectives of strategy: marketing strategy, and encompass the responsibility of 1. The introduction of an innovation marketing management. All of them will be dealt with in 2. The mature/decay stage of the product life cycle greater detail in later chapters. (PLC)

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3. Commodity marketing where the conditions most based on the organisations competencies are not quite as closely approximate the economist’s model of per- novel as some recent writers imply. fect competition. The traditional marketing mix, based primarily on A differentiated strategy exists where the supplier the 4 Ps of Product, Price, Place and Promotion, is seen seeks to supply a modified version of the basic prod- as the means of making contact with buyers through uct to each of the major subgroups which comprise the transactions. The challenge is to convert these into rela- basic market. (Methods for segmenting markets are tionships and give rise to the emphasis on customer rela- discussed at some length in Chapter 12.) In doing so tionship management (CRM). Mistakenly, the marketing they will develop a different marketing mix in terms management school continues to interpret this as ‘doing of the product’s characteristics, its price, promotion things to customers rather than doing things for them’. and distribution, although attempts will often be made As Jain observed: to standardise on one or more of these factors in the interest of scale economies (usually distribution, e.g. While CRM is absolutely necessary to gain car dealerships, consumer durables, etc.). Such differ- competitive advantage, most firms have failed in entiation is only possible for very large firms that can launching a successful CRM program because CRM achieve a sufficient volume in each of the segments to has been practiced as a technical rather than as a remain competitive. marketing concern. The customer should be the focus For the smaller producer, a concentrated strategy of any CRM exercise. may be the only realistic option. Under this option, the producer selects one of the major market segments and In my view this will only occur when we can escape concentrates all their efforts upon it from the old marketing management paradigm, realise In one of the early standard texts, Business Policy, that that marketing need not be a zero sum game with winners was a foundation for much of the later work on corporate and losers, and subscribe fully to the marketing concept, and marketing strategy, Learned et al. (1965) identified with its philosophy of ‘mutually satisfying exchange a number of criteria that could be used when evaluating relationships’. Evidence of a move towards this philoso- a strategy. Effectively these remain the same and may be phy is apparent in the increased attention being given to summarised as: a belief in corporate social responsibility and the needs 1. A strategy must be clearly identified and understood of all stakeholders. by all the organisations’ stakeholders. In other words, the essence of marketing a proposed 2. The strategy must exploit the environmental oppor- in our 1975 definition. tunities available to the organisation. 3. The strategy must take full advantage of the organisa- Chapter 3 Marketing and Competition. Beginning with a definitions’ strengths and resources. tion of ‘competition’ and the role it performs in ensuring 4. The strategy must be internally consistent, for exam- that scarce resources are used to maximise satisfaction, ple a ‘push’ strategy would be driven by personal we then examine the role which marketing plays in this selling, whereas a ‘pull’ strategy depends heavily on process. The concept of ‘market structure’ is then intro- advertising and promotion. duced both as a consequence of and as an influence upon 5. A strategy must be able to satisfy a comprehensive the conduct and performance of firms in competition and stringent risk assessment. with one another. The concept of international compe- 6. A strategy must be able to appeal to and satisfy the tition is then introduced and supported by an extended values and aspirations of stakeholders. review of Michael Porter’s discussion of The Competitive 7. The strategy must engage fully the efforts of all those Advantage of Nations (1990). Next, we offer a broadly involved in its delivery. based assessment of the contribution of marketing to 8. The strategy should do no harm and make a positive competitive success and conclude with an assessment of contribution to society. what will be necessary to compete successfully in the 9. On implementation a strategy must be carefully mon- future – essentially a knowledge-based, learning organi- itored to ensure it is achieving the desired outcomes sation. Key ‘takeaways’ include: or else modified appropriately. ● Marketing is a discipline like architecture, engi- It is notable that concerns for environmental and social neering and medicine that integrates or synthesises factors, corporate social responsibility and the impor- knowledge and insights from other ‘single’ disci- tance of creating a sustainable competitive advantage plines as a basis for professional practice.

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● ‘Competition is one of society’s most powerful ● Ultimately, only companies can achieve and sustain forces for making things better in many fields of competitive advantage based upon innovation that human endeavour. Competition is pervasive, whether involves the entire value system, sustained through it involves companies contesting markets, countries relentless improvement, supported by continued coping with globalisation, or social organisations investment and a global approach to strategy. responding to societal needs. Every organisation ● While there is a great deal of advice on how to needs a strategy in order to deliver superior value to achieve competitive success there are no magic bul- its customers’. (Michael Porter, 2008, xi) lets. On the assumption that managers follow this ● Traditional notions of competitive advantage need advice (as contained in this book) it becomes clear to be supplemented with views from relational and that ultimately it is the quality of the implementation resource-based theories. Sources of competitive that will determine the outcome. advantage may well lie outside firms’ boundaries. ● The development of a sustainable competitive advan- The fields of strategy, organisational theory and tage depends upon one or more of three things: marketing have several distinct and interrelated 1. Changing the basis of competition explanations. Eight themes are examined for their 2. Redrawing the boundaries between industries central orientations, assumptions and implications. 3. Creating entirely new industries These are distinctive in some senses and overlapping and depends on the identification and deployment of in others. What may be needed is an integration of core competences in a learning organisation with a the different ideas to form a coherent and complete strategic architecture. model that is workable. ● A competence is a bundle of skills and technologies ● The traditional view of the industrial economist is rather than a single discrete skill or technology … that the structure of a market has a major influ- A core competence represents the sum of learning ence on the conduct of firms competing in that across individual skills sets and individual organi- market and that this governs their performance – sational units. what is generally referred to as the structure, con- ● A learning organisation is one skilled in acquiring, duct, performance model. On analysis, however, creating, transferring and retaining knowledge – it is clear that the conduct of firms may have an as well as transforming that knowledge into effect upon market structure, for example, through improved performance or innovative products and merger and acquisitions, as may the actual perfor- services. mance of the competing firms, for example, more ● Strategic architecture is basically a high-level blue- successful firms will increase their market share print for the deployment of new functionalities, the which will impact upon other firms in the industry. acquisition of new competencies or the migration of Irrespective of the causality it is clear that careful existing competencies, and the reconfiguring of the analysis of the three factors – structure, conduct interface with the customers. (p. 118) and performance – is an essential prerequisite to ● Hamel and Prahalad (p. 121) go on to say: understanding the nature and operation of markets A strategic architecture identifies ‘what we and the development of effective strategies to com- must be doing right now’ to intercept the future. pete within them. A strategic architecture is the essential link ● While the theory of markets and competition pro- between today and tomorrow, between short poses that managers and investors will seek to pur- term and long term. It shows the organization sue those opportunities that offer the best returns, in what competencies it must begin building right practice this rarely happens. now, what new customer groups it must begin ● Michael Porter (2008) distinguishes five basic forces to understand right now, what new channels that govern competition in an industry – the threat of it should be exploring right now, what new new entrants, the threat of substitution, the bargaining development priorities it should be pursuing power of suppliers, the bargaining power of customers right now to intercept the future. Strategic and rivalry between current competitors (Porter, 1985). architecture is a broad opportunity approach ● Developments in transportation and communication plan. The question addressed by a strategic have resulted in globalisation and greatly increased architecture is not what we must do to maximize international competition. (These are dealt with in our revenues or share in an existing product detail in a new Chapter 19.) market, but what must we do today, in terms of

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competence acquisition, to prepare ourselves to mechanical and specialised process which has led to its capture a significant share of the future revenues own self-destruction. Such a process is familiar to the in an emerging opportunity arena. student of evolution, for it is clear that while specialisation (i.e. adaptation to the prevailing conditions) may Chapter 4 Principles of Strategic Marketing Planning (SMP) looks first lead to above-average short-term rewards, it also puts at the evolution of management systems and the role you at greatest risk if you become so specialised that you of mission, vision and strategic intent before moving to cannot accommodate or adapt to a change in the envi- the heart of the issue by proposing definitions, a frame- ronment. In that ‘survival’ is generally accepted as the work for SMP and some basic principles to be observed primary object of all organisations, it is clear that short- in developing and implementing a strategic marketing term gain is only to be pursued if it is consistent with plan. It is then argued that the need for SMP is continu- the long-term goals of a firm and does not reduce the ous, in the sense that every innovation contains within firm’s ability to respond to turbulence in its environment. itself the seeds of its own destruction, and will increase We are thus faced with the paradox that while ‘planning’ the user’s awareness and expectations which will pre- has fallen into disrepute for leading us into the present pare the way for new and improved substitutes. Thus impasse, it is also seen as offering the greatest potential marketers need to formulate strategy in terms of the for escaping from it. underlying needs and satisfactions of customers rather While there are many definitions of strategic planning than the specific products or services which serve as the that may differ in the particular, there does appear to be means of delivery of these satisfactions. Equally they a common thread, which is that SMP is concerned with must be sensitive to the inevitability of change summa- establishing the goal or purpose of a ‘strategic business rised in the concept of the product life-cycle (PLC), an unit’ or SBU, and the means chosen for achieving that analysis of which leads to a proposal to use it as a key goal. A Strategic Business Unit – or Strategy Centre – is element in the process of SMP. a business area with an external marketplace for goods Key takeaways include: and services, for which management can determine objectives and execute strategies independent of other Strategic management implies a number of distinc- business areas. It is a business that could probably stand tive characteristics which may be summarised as the alone if divested. Strategic Business Units are the ‘natu- following: ral’ or homogeneous business of a corporation. Small- 1. It involves a proactive rather than reactive approach. and medium-sized enterprises (SMEs) that comprise 2. It is a deliberate self-aware style of management in over 90% of all business units are all SBUs. which managers ‘plan to plan’. The development of a strategic plan starts with the 3. It is a style of management characterised by articulation of an organisation’s Mission that define its ‘rationality’. character, identity and reason for existence; its Vision – 4. It sees strategy as providing a framework within the kind of organisation it aspires to be; and its ‘Strategic which later policies and specific decisions will be intent’ that envisions a desired leadership position and made. establishes the criterion the organisation will use to 5. It involves being able to ask (and answer) the ques- chart its progress. While there is debate about which tions: What are we trying to do? Why? How will we term defines these different attributes, agreement about know when we’ve done it? them is critical for the formulation of clear Objectives. 6. It requires managers who look further ahead, can see A useful acronym used when developing objectives the broad picture, are more analytical and emphasise is SMART, which stands for Specific, Measurable, the need for choice. Achievable, Relevant, Targeted and Timed. 7. It stresses the need for choice in terms of alternative According to management consultant Arthur D. Little futures, priorities between objectives and the genera- the strategic planning process centres on five principles: tion of options. 1. Strategic business units or ‘strategy centres’. 8. It requires close attention to the implementation and 2. Planning is a data-based activity. monitoring of innovative policies and courses of 3. Business is not random; it is shaped by competitive action. economics. 9. It involves an understanding of and sensitivity to 4. There is a finite set of available strategies for each trends in the larger environment. business unit. Over the past 40 years the concept of long-range strate- 5. Strategy selection should be condition-driven not gic planning has changed into an increasingly short-term ambition-driven.

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And a formal plan should cover all the following:

Are you getting these essential deliverables from your strategic marketing plan? Take the marketing health check Market structure and segmentation Score out of 10

● Is there a clear and unambiguous definition of the market you are serving? [ ] ● Is it clearly mapped, showing product/service flows, volumes/values in total, your shares, [ ] decision-makers and critical conclusions for your organisation? ● Are the segments clearly described and quantified? These must be groups of customers with the [ ] same or similar needs, not sectors or demographic groups. ● Are the real needs of these segments properly quantified, with the relative importance of these [ ] needs clearly identified?

Differentiation

● Is there a clear and quantified analysis of how well your company satisfies these needs compared to [ ] competitors? ● Are the opportunities and threats clearly identified by segment? [ ]

Scope

● Are all the segments classified according to their relative potential for growth in profits over the next [ ] three years and according to your company’s relative competitive position in each? ● Are the objectives consistent with their position in the portfolio? (volume, value, market [ ] share, profit) ● Are the strategies (including products, price, place and services) consistent with these [ ] objectives? ● Are the key issues for action for all departments clearly spelled out as key issues to be [ ] addressed?

Value capture

● Do the objectives and strategies add up to the profit goals required by your company? [ ] ● Does the budget follow on logically from all of the above, or is it merely an add-on? [ ]

TOTAL

Health Check Guidelines Scoring guideline: ● 10 – totally ● 8–9 – well on our way ● 6–7 – more than half way there ● 5 – partially ● 3–4 – started, but still a fair way to go ● 1–2 – started, but not really got to grips with it ● 0 – not at all Results guideline: ● 100–120 – stunning, world class; just check you read the questions properly and answered them honestly. ● 80–99 – good performance, the focus now is on the areas of weakness to make you truly world class. ● 60–79 – an urgent need to address these key tasks. ● 40–59 – dire, but if the competition are as equally bad the future could be brilliant, there’s not a moment to lose. ● <40 – desperate, we have to hope the competitors are asleep and keep asleep while you tackle these key tasks.

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A review of attitudes towards the use of strategic plan- strategic business unit. The strategy analysis methods ning covering a period of 30 years or so suggests that have virtually no role in later stages of implementation while managers continue to attach importance to the and monitoring. Key takeaways include process it is frequently less effective than it might be 1. There is a number of organising frameworks, proce- for a variety of reasons identified by research into its dures and techniques designed to assist planners to implementation. impose structure upon the complex and multidimensional problems they wish to solve. Chapter 5 Analytical Frameworks for Strategic Marketing Planning 2. The selection is eclectic not comprehensive and builds upon the foundations introduced in Chapter 4 and based on the belief that simplicity is to be preferred suggests techniques and procedures for implementing to complexity. SMP. To begin with we look at demand curves and the 3. In the final analysis the techniques are aids to deci- product life-cycle (PLC) concept. We propose that the sion-making not substitutes for it. latter provides a highly useful framework for organising our thinking about the evolution of products, firms Chapter 6 Marketing Intelligence – Research for Marketing was placed and industries, and the appropriate strategies and tactics much later in earlier editions as an element of the market- associated with the phases of birth, growth, maturity and ing mix, and a specialised aspect of the management of decline. The inevitability of this progression prompts the the marketing function. Experience with using the text view that an organisation should seek to develop a port- suggests that it would be more appropriate to discuss folio of products which are at different stages of the cycle research methods used in marketing before exploring and so ensure the firm’s long-term survival. Despite the kinds of data the manager requires in developing a some criticism, we believe the growth-share matrix is focused marketing strategy and plan. The chapter opens both valuable and important. Key takeaways include: with a discussion of the factors that create particular dif- 1. The inevitability of change is implicit in the PLC ficulties in seeking to apply formal analytical procedures concept. to marketing decisions, namely: 2. It underlines the importance of having a portfolio of ● Many marketing problems are more or less unique. products at different stages of development. ● Buyers can think for themselves. 3. It requires formal consideration of the competition ● Most marketing problems are very complex. and their relative standing. To help overcome these difficulties, it is argued that the 4. It is intuitively appealing and simple to implement first step must be to establish just what information is conceptually despite the difficulty of operationalis- available or may be acquired, to assess its worth, and ing it in practice. then combine it with one’s own experience and judge- The ideas of the product portfolio and portfolio analy- ment to reach a decision. A review of sources of second- sis may be extended to examine analytical approaches ary and primary data leads naturally into a discussion developed by successful companies such as Shell and of data reduction and analysis as a means of imposing GEC, and the techniques of gap, scenario and SWOT structure and meaning on what otherwise might consti- analysis. A similar approach is described in ‘Baker’s tute an ‘information overload’. Box’ as an introduction to the ideas of segmentation, tar- The chapter concludes with a review of decision- geting and positioning which are the subject of extended making under uncertainty and the ways in which treatment later in the book (Baker, 2006). decision-makers may combine objective ‘facts’ with Strategy analysis methods have the potential to their own subjective judgement to reach a decision using engage management and develop a shared understand- a Bayesian approach. Key takeaways include: ing of strategic processes as well as providing a common ● Organisations that deliberately collect and analyse language and a logical structure that can be used to: information in a formal and structured way outper- ● Isolate areas where critical information is lacking form those that don’t. ● Communicate judgements and assumptions about ● But using formal analytical procedures to solve mar- strategic issues keting problems is difficult because many marketing ● Facilitate the generation of alternatives to be given problems are more or less unique and involve inter- detailed consideration action with customers who can think for themselves ● Identify trade-offs involved in undertaking various and change their behaviour resulting in greater com- strategic alternatives plexity than that associated with other problems. These benefits are primarily realised during the early ● Managers avoid quantitative techniques because they stages of the planning process within a division or do not understand them. However, such techniques

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are necessary to confirm judgements and decisions Key takeaways include: derived from qualitatitve analysis. ● The macro-environment is common to all competi- ● Research for marketing has become the basis of a tors and defines the threats and opportunities facing sophisticated profession of highly qualified consult- an organisation. It is also the major determinant of ants and practitioners, and organisation that collates the courses of action available to an organisation. and analyses information about marketing problems. ● While prediction is notoriously difficult, if not Expertise is readily available and may be outsourced impossible, it is possible to identify ‘megatrends’ and bought in. that will have a major impact on the future environ- ● Marketing strategy and management involves the ment and the threats and opportunities these present. management of both risk and uncertainty. Judgement ● To cope with the turbulence created by these trends based on experience can be factored into a more organisations must undertake long-term strategic objective and formal analysis using Bayesian tech- planning. niques with superior outcomes. ● There are observable regularities in environmental change and development that need to be identified Part II The Marketing Appreciation contains seven chapters. and factored in to this planning. ‘Appreciation’ is a term borrowed from the military ● Having identified the long-term strategic direction to which summarises the process followed in collecting be followed, organisations must develop more pre- as much relevant information as is possible, within the cise forecasts of actions to be taken in the short to prevailing resource constraints, as a basis for estab- medium term in pursuit of their objectives. lishing the nature of a problem and potential courses of ● Firms which have succeeded in these difficult times action for its solution. Chapters 7 to 10 inclusive define possess many common factors including an adap- the four main areas to be evaluated, while Chapter 11 tive and flexible managerial style, a balanced port- details the methodology for collating this informa- folio of products, an emphasis on innovation and a tion to formulate a strategy. Chapter 12 describes the well-developed intelligence and information system broad alternatives of product differentiation versus designed to monitor and anticipate environmental market segmentation as a means of developing a sus- change. tainable competitive advantage and Chapter 13 details the role of reputation and branding in sustaining this Chapter 8 Customer Analysis addresses the nature of ‘buyer advantage. behaviour’ and poses the fundamental question ‘How do buyers choose?’ Following a limited and eclectic review Chapter 7 Macro-environmental Analysis is based on the propo- of four different disciplinary explanations of choice sition that the external environment constitutes the ulti- behaviour, six concepts are examined because of the mate constraint upon the firm and dictates the boundary light they throw on the basic issue of how individuals conditions within which it must operate. Following a and organisations choose between alternatives, namely: review of the major forces that influence and shape the ● Selective perception environment – demographic, social, cultural, political, ● The hierarchy of needs economic, legal and technological factors – attention ● The hierarchy of effects is focused on the argument that there are discernible ● Dissonance cyclical and secular trends in the overall pattern of ● ‘Buy tasks’ and ‘Buy phases’ business activity. An analysis of four basic kinds of ● The characteristics of goods. economic cycle and broad theories of economic growth In and of themselves, none of the basic models, or the lends support for the existence of an underlying pro- key concepts, appears sufficient to reflect the complex- cess or life-cycle and reinforces the use of the PLC as a ity of real-world purchase decisions. So a composite basic organising principle. The need to take account of model of buyer behaviour is proposed that seeks to the nature of competition in the marketplace, discussed incorporate and synthesise both objective and subjective in Chapter 3, is reviewed, with particular emphasis considerations (Baker, 2006). on the importance of non-price competition and the The need for a composite model of buyer behaviour implications this has for marketing strategy. Finally rests essentially on the fact that the total demand for a the chapter provides some guidelines for the commis- product is the aggregate of the demand of all the indi- sioning and execution of an environmental audit as an viduals who have a need for it backed up by purchasing essential prerequisite to the formulation of a marketing power. In that each of these individuals will bring to the strategy. purchase decision their own values and perceptions, we

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have to allow for these when presenting the ‘facts’ about (as each unit is identical you will normally buy from our product to them. However, with limited exceptions, the seller offering the lowest price). very few suppliers can afford to tailor their output to the ● To avoid having to compete on price where the mar- precise needs of the individual customer (even services ket ‘decides’, producers/sellers seek to differentiate have to be standardised to some degree), and it follows their offerings by offering benefits that have mean- that to compete successfully one must steer a careful ingful ‘value’ for the user/buyer. course between complete homogeneity and total het- ● It is the price paid by consumers that measures the erogeneity. To achieve this compromise marketers have value added by the members of the supply chain and developed an extensive range of techniques for aggre- determines whether it is sufficient to cover the costs gating individual demands or, conversely, disaggregating necessary for their survival. Customers really are total demand, into worthwhile groupings or segments. To sovereign. do so calls for a ‘customer audit’ and ‘market segmenta- ● Competition does not only come from organisations tion’ that is the subject of Chapter 12. offering similar products and services, it exists wher- The key takeaways from this chapter are: ever there is an alternative choice that offers greater ● Buying decisions by individuals and on behalf of value in satisfying a customer’s need. organisations are subject to the same basic influ- ● To succeed firms should identify what are the criti- ences, consider the same issues and follow the same cal success factors in the industry/ markets in which sequence. they compete. Five CSFs that lead to success are: ● Many buying decisions are habitual and subject to Customers, Partners, Cultural adaptability, Building inertia. A strong stimulus and argument are required a brand name and a Focused strategy. to interest people in changing their behaviour. ● Superior performance results from the acquisition ● The information used to prompt action and/or behav- and exploitation of core competencies and their ioural change will be interpreted selectively by the unique combination to create a sustainable competi- receiver in terms of their current status and needs and tive advantage. in the light of existing knowledge and beliefs as mod- ● Having identified the CSF and core competencies erated by past experience. relevant to one’s industry/market competitors should ● Detailed knowledge of the customer is essential for be benchmarked to establish what advantages they the development of effective strategy and tactics. enjoy that may be adopted, adapted and improved on ● Self reference, that is, ‘What would I do?’ is usually to enhance one’s own performance. an inadequate basis for decision-making. ● ‘Best practice’ requires excellence in customer relationships. This is founded on six first-level processes Chapter 9 Industry and Competitor Analysis builds upon the designated as: macro-discussion of competition in Chapter 3 by 1. Understanding markets and customers. exploring in more detail, and from a micro- perspective, 2. Involving customers in the design of products competition between the individual players in the indus- and services try. The chapter opens with a review of the nature and 3. The marketing and selling of products and importance of competitor analysis before introducing services the notion of the value chain as a model that helps to 4. Involving customers in the delivery of products highlight the interdependencies between producers, and services their suppliers and their customers – a perspective 5. The provision of customer service which helps explain the growing interest in networks 6. The management of customer information and relationships in recent years. This leads naturally ● You don’t have to own it to use it – outsourcing and into a review of critical success factors, and the skills strategic alliances give access to essential competen- and competencies that firms need to succeed against the cies and success factors you don’t possess yourself. competition. Three further topics included in Chapter 9 are benchmarking, the identification of ‘best practices’ In Chapter 10 Internal analysis attention is directed inwards and the growing importance of strategic alliances, all to identify, and quantify insofar as possible, the firm’s of which have assumed growing importance in recent assets, resources, skills and competencies as a basis years. Key takeaways include: for establishing its strengths and weaknesses through ● Although price is an important consideration it will the execution of a marketing audit. The content and only be decisive when selecting the supplier of iden- implementation of an audit is outlined with a particular tical offerings, that is, commodities or branded goods emphasis on the identification of competencies that can

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Copyrighted matrial – 978–1–137–02582–1 Copyrighted matrial – 978–1–137–02582–1 be used to create a sustainable competitive advantage background to the conduct of a SWOT analysis. Key (SCA). Over time the original sources of SCA may be takeaways are: acquired by competitors or overtaken by technologi- ● Successful management is a process of continual cal innovation, underlining the importance of learning adjustment to a changing environment. from the lessons of history that show why companies ● It is management’s responsibility to exercise control fail. A detailed inquiry reveals that short-term panaceas over the competitive environment and optimise the in the form of management fads and fashions come and return on the resources for which it is responsible. go but that, increasingly, it is people and their knowl- ● To do so it must make a thorough, objective and bal- edge and skills that determine long-run survival and anced view of its own strengths and weaknesses and success. To harness and benefit from these attributes the opportunities and threats that define the environ- requires visionary leadership, effective internal comment in which it is to operate. munication and empowerment of employees to release ● Sustainable competitive advantage, which cannot be their potential to create a learning organisation through easily eroded or replicated by competitors, depends what may be regarded as ‘internal marketing’. Key upon the management of resources that are durable, takeaways are: transferable, and lack transparency and replicability, ● Knowledge is power – and essential if an organisa- that is, they are difficult to imitate. tion is to avoid being ‘surprised’ by changes in its environment that require it to change and adapt if it In Chapter 12 we pick up the idea of Market Segmen tation: is to remain successful. The idea of market segments was raised first when discuss- ● A realistic and continuous appraisal or ‘audit’ of ing demand curves in Chapter 5 where it was noted that the organisational strengths and weaknesses is abso- great majority slope downward from left to right, indicat- lutely necessary to establish where change is required ing that individuals wishing to acquire a category of prod- and how to achieve this. uct would be willing to pay higher amounts for individual ● Long-term competitive advantage arises from dis- products that offered additional features and benefits and tinctive skills and competencies possessed by the so could be differentiated from the ‘basic’ offering. members of an organisation. These need to be rec- We look, first, at the definition of markets and the dif- ognised and released through internal marketing and ference between product differentiation and market seg- the empowerment of individuals. mentation as alternative competitive strategies by which ● A core competence is a combination of comple- the producer seeks to establish dominance over a subset mentary skills and knowledge bases embedded in or subsets of the total market. Next we review a number a group or team that results in the ability to exe- of different approaches to segmentation each of which cute one or more critical processes to a world class would seem to offer particular benefits under given con- standard. ditions and circumstances. Such a review leads naturally to consideration of the Chapter 11 Matching. In Chapter 11 the outputs of the mar- procedures to be followed in segmenting markets and keting appreciation are pulled together in what we call the various methods available. Here the treatment is con- the ‘matching’ process. Matching represents a more bal- cerned with the ‘what’ and the ‘why’ rather than ‘how’, anced view of strategy formulation and execution than and is intended to provide the decision-maker with an that implied by the structure, conduct and performance overview of the policy implications of market segmenta- approach popularised by Michael Porter that tends to tion, rather than a technical description of how to execute emphasise external factors as those determining the a segmentation study which is a subject in its own right. firm’s strategy. While we have acknowledged that the Once one has identified the most attractive segment environment, competition and customers all proscribe in which to compete, the firm has to decide whether it the firm’s freedom of action, they don’t control it. If they is to do this on a basis of cost leadership or differentia- did there would be no need for managers as the course tion. And, as we have seen, a cost leadership strategy is of action available would be predetermined. Because likely to be restricted to a very small number of firms it is not, management can exercise control, and this is which already have an established position in the mar- what it seeks to optimise by matching its strengths with ket and so are able to use aggressive pricing in order to opportunities, avoiding threats and correcting potential introduce new products or product line extensions. But, or actual weaknesses. The view that organisations have while major manufacturers and retailers with a substantial a degree of control over their destiny is implicit in the market share may be able to afford such a strategy, SMEs resource-based view of the firm and we look at this as and new entrants to a market can rarely do so and have to

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adopt a strategy of differentiation to encourage customers This chapter also completes Part II and prepares the way to consider whether they wish to switch to a new supplier for Part III ‘Managing the Marketing Mix’. or become a customer because the new offering has benefits that were not available previously. Given that one In Chapter 13 The Marketing Mix we recognise that has identified the opportunity to offer added value and the marketing planners have a number of key factors or vari- means of creating this, the challenge becomes one of tar- ables which they can manipulate in seeking to devise a geting individuals for whom these values are meaningful distinctive and differentiated marketing plan. Several and then ‘positioning the offering so that this differentia- approaches to classifying the mix elements from the tion is both apparent and attractive’. A short discussion of basic 4 Ps of product, price, promotion and place to the means of achieving this concludes the chapter. Borden’s extended listing of 12 elements are considered. In this chapter a wide range of different approaches The chapter concludes with an examination of the man- is considered in some detail – demographic, locational, agement of the marketing mix and acts as an introduction psychographic and behaviouristic among others – as a to Part III in which we explore each of the major mix ele- basis for suggesting how and when segmentation should ments in some detail. Key takeaways include: be used as an appropriate strategic approach. Key take- ● There are two key decisions which are central to mar- aways include: keting management: the selection of target markets ● The customer must be able to distinguish your offer- which determine where the firm will compete and the ing from those of your competitors if they are to design of the marketing mix (product, price, promo- prefer it. tion and distribution method) which will determine ● ‘Marketing is selling goods that don’t come back to its success in these markets. people who do’ – repeat purchase and the develop- ● The marketing mix refers to the apportionment of ment of trust, commitment and loyalty are essen- effort, the combination, the designing and the inte- tial for the long-run survival and success of an gration of the elements of marketing into a pro- organisation. gramme or ‘mix’ which, on the basis of an appraisal ● To earn trust, commitment and loyalty one must meet of the market forces, will best achieve the objectives or exceed the expectations of the customer. To do so of an enterprise at a given time. requires continuous contact and feedback to confirm ● While the ingredients of the mix are valid in most and update what these expectations are. situations, the mix elements and their relative impor- ● Expectations are formed and shaped by social, cul- tance may differ from industry to industry, from tural and economic factors that influence perception company to company and quite often during the life and choice. All these factors need to be taken into of the product itself. consideration in developing a profile of both actual ● Without losing the essential simplicity of the four Ps and potential customers. model, it is essential to factor the role of People into ● Proven approaches like VALS, ACORN and Mosaic the analysis. can be bought in and provide a framework for ana- ● Despite criticisms of its relevance and application in a lysing one’s own actual and potential market(s) and dynamic and evolving marketing context, practitioners customers. like the 4Ps approach which provides a simple analyti- ● Once segments have been defined it is unlikely that cal framework that can be easily extended and adapted they will only be attractive to a single supplier. To to address the problems which they have to solve. succeed it is necessary to ‘position’ one’s offering to ● There is no single or definitive statement of the mix create a ‘just noticeable difference’ (JND) or ‘unique elements and practitioners must select those that are selling point’ (USP) that is meaningful to the tar- most important to the product-market situation with geted customer. which they are concerned. ● ‘Positioning is something you do in the mind of the prospect’. Chapter 14 Product/service Policy and Management opens with the ● ‘Positioning is an organised system for finding a question ‘Are products and services different?’ While window in the mind. It is based on the concept that ‘services’ have been included in this chapter in previous communication can only take place at the right time editions several reviewers felt that they deserved more and under the right circumstances’. explicit and possibly separate treatment in a chapter of ● Perceptual mapping helps to define how to create their own. This is a valid point of view, as is evident from value added ‘brands’ and communicate their benefits the numerous publications that discuss ‘Services market- effectively. ing’ at length. But it is not one that we share as our resort

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Copyrighted matrial – 978–1–137–02582–1 Copyrighted matrial – 978–1–137–02582–1 to an authoritative dictionary makes clear. In common prior to deciding what combination of ‘product’ and usage ‘product’ is used to identify both physical goods ‘service’ is appropriate. and services that are offered as the basis for a commer- ● Three basic strategies build upon an organisation’s cial transaction, and we intend to use product as a generic current ‘offering’: term embracing both ‘products’ and ‘services’. As will 1. Market penetration: the company seeks increased become clear, the degree of tangibility associated with sales for its present products in its present mar- any ‘offering’ will have important implications for its kets through more aggressive promotion and marketing but, to begin with, we concentrate on generali- distribution. sations that apply to marketing as a whole before looking 2. Market development: the company seeks at exceptions that call for qualification. increased sales by taking its present products into We open with a reminder that most business is trans- new markets (a market segmentation approach). acted by existing organisations with commitments to both 3. Product development: the company seeks products and customers. It follows that a preoccupation increased sales by developing improved products with one’s product is not a negation of the marketing con- for its present markets (a product differentiation cept but an essential precondition of survival. Similarly, approach). it is argued that the emphasis upon user needs and prod- A fourth strategy – Diversification – breaks the uct benefits has distracted attention from the product’s common thread between product and market as it physical characteristics, and it is contended that a more requires the organisation to develop new products even balance needs to be struck between the two for new markets with no prior experience of either. Evaluation of this proposition makes it clear that Mergers and acquisitions are seen as the option most even the most basic of physical products (commodi- likely to succeed. ties) require some services to make them available for ● All four strategies accept the need to adapt, modify consumption while, at the other end of the tangibil- or alter the offering to maintain the organisation’s ity spectrum, pure services (a medical operation) may competitive position. require extensive physical inputs to enable their delivery. ● There is a widely accepted model for new prod- A closer look at the nature and characteristics of services uct development, with defined stages and decision indicates that these may be classified under four main points, that draws on all aspects of an organisation’s headings, namely: intangibility, inseparability, heteroge- expertise and experience. neity and perishability. However, consideration of these ● All products have a ‘life-cycle’ (hence, the product leads to the conclusion that the offering that forms the life-cycle). Each of the four stages – Introduction, basis for an exchange relationship requires a combina- Growth, Maturity and Decline – requires a different tion of both tangible and intangible attributes and ben- strategy and marketing mix. efits, so a successful strategy requires both to be kept ● To ensure long-run survival organisations should in mind. seek to develop a portfolio comprising different The interaction between product and market is products at different stages of their life-cycle. implicit in the four core strategies considered earlier – market penetration, market development, product devel- Chapter 15 Packaging and Design. The focus of this chapter opment and diversification – each of which is reviewed remains on two broad issues: the role of packaging as a in terms of the most appropriate product policy and in the strategic element in the marketing mix and the factors to idea of the product portfolio. To a lesser or greater degree be considered in developing a package. ‘Packaging’ does all require development of the product, which leads natu- not always receive separate treatment in marketing texts, rally to a discussion of the role and nature of the new despite the fact that it may provide ‘the just noticeable product development process and alternative forms for difference’ (or JND) on which so many choice decisions achieving this. Depending upon its stage in the life cycle, hinge. In part this may be because packaging is consid- the product will require differing degrees of emphasis ered an intrinsic element of the product and treated as upon the other elements, and these are summarised in such, in part because it is seen as a promotional tool and terms of the four major stages – introduction, growth, the subject of passing reference alongside a detailed dis- maturity and decline. The chapter concludes with a discussion of advertising. Some definitions of packaging cussion of ways and means of monitoring the product’s that underline the different roles it plays in protecting and performance. Key takeaways from this chapter are: selling goods are presented, followed by an extended dis- ● One first needs to establish the precise needs of the cussion of the five criteria to be considered in developing customer and the benefits that they are looking for, a package – appearance, protection, function, cost and

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disposability. The issues and steps involved in develop- equivalent value, the majority of buyers will patron- ing a pack are reviewed. ise the seller offering the lowest price and greatest In this edition specific reference is also given to the convenience. Two immediate consequences are: importance of ‘Design’ as a differentiating factor and 1. In the market for fast-moving consumer goods source of competitive advantage. Design plays a vital low-cost/value-added has been adopted as a core role in terms of both the appearance and usability of a strategy by major retailers. product (and ‘service’!) either or both of which may pro- 2. In the market for ‘shopping’ goods online retail- vide the critical JND factor. Key takeaways are: ers usually have a lower cost base than high ● Packaging serves two main purposes: it protects the street retailers and can offer lower prices and product in distribution and use and acts as a source home delivery both of which add value for the of information and brand identification for prospec- customer. tive buyers. ● A flexible pricing strategy offers the potential for ● A growing concern for sustainability has given added higher profitability in the long term but, in common emphasis to both these purposes and drawn attention with other elements of the marketing mix, depends to issues of recycling and disposability. upon a clear and detailed understanding of what rep- ● An organisation’s performance in responding to resents ‘value’ to the customer. these issues can have a major effect on public perceptions of its corporate social responsibility. The comparative neglect of ‘Distribution and Sales Policy’ provides the introduction to Chapter 17. Given Chapter 16 Pricing Policy and Management acknowledges that, the functions performed by channels of distribution and while firms prefer to compete on dimensions other than the important role these play in the creation of time, place price, nonetheless price is of critical importance in the and possession utilities, such neglect is seen as surpris- buying decision and calls for a high level of attention. ing. The composition and structure of alternative chan- Accordingly, while marketers might deprecate the econo- nels, and the factors that influence them, are described, mists’ overwhelming emphasis upon price as the mecha- as are the considerations that condition channel selection nism for adjusting supply and demand in the marketplace decisions. In the latter context much will depend upon they can learn many useful lessons from price theory. whether the producer wishes to pursue an undifferenti- A number of key concepts such as elasticity, fixed, vari- ated, differentiated or concentrated marketing strategy able, marginal and opportunity costs are considered, as and intends to push or pull the product through the dis- are some of the major limitations of price theory as an tribution channel. All these alternatives receive attention. explanation of the real world, for example, its assump- The chapter concludes with a brief summary of the per- tion of profit maximisation, lack of dynamism, neglect sonal selling function. Key takeaways are: of subjective factors, etc. Pricing objectives are exam- ● The costs of physical distribution can add up to 50% ined, together with the three broad approaches to price of the final cost of physical goods. Economies and determination – cost plus, flexible mark-up and marginal efficiency in this marketing function can add signifi- cost. Finally, the role of pricing in the marketing mix is cantly to overall profitability. explored as are the three basic strategies – skimming, ● eCommerce offers these benefits by offering an alter- penetration and value based. Key takeaways include: native to ‘bricks and mortar’ outlets with their high ● Price changes are highly visible and likely to have an overheads. immediate effect on buyer behaviour. ● Concerns about pollution involved in transportation are ● Traditionally, buyers associated higher prices with being factored in to the costs in the form of carbon taxes. better quality, probably because sellers often add Location and distance to markets is likely to assume fixed margins to their costs, leading to the assump- greater importance in future marketing decisions. tion that more expensive offerings were of higher ● Personal selling enables an organisation to establish value. and build a relationship with its customers. ● Increased competition, especially from low-cost ● Personal selling creates the opportunity to tailor emerging economies, together with the availability offerings to the precise needs of the customer. of more and better information, have resulted in con- ● Personal selling helps overcome the psychological sumers giving less attention to the price and more distance between an organisation and its custom- to the value of the benefits arising from a purchase. ers, and provides insight into their needs that may ● Given that a major appeal of branding is that every not be easily obtained through conventional market item carrying that brand will be identical, and so of research.

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Chapter 18 deals with the final element of the basic 4Ps Following a brief discussion of these issues, the chap- marketing mix – Integrated Marketing Communications. ter concludes with a look at the problems involved in Like distribution, promotion, and particularly mass- choosing between the various promotional alternatives media advertising, is often regarded as a cost-creating in order to develop an optimum promotional mix. Key function which adds little or nothing to the value of a takeaways from this chapter are: product – a viewpoint which finds little or no support ● Awareness of the existence of a product and knowl- in the evidence presented here. Starting with the argu- edge of its price, performance and availability are all ment that awareness is a necessary prerequisite to pur- necessary prerequisites for the creation of demand, chase, Schramm’s model of the communication process and awareness and knowledge require the commu- is reviewed to clarify the essential point that all infor- nication of information to bring them into existence. mation has to be transmitted by a sender to a receiver. ● Impersonal channels of communication using vari- While personal communication may be the most direct ous broadcast and print media have almost univer- method, it is by no means always the most efficient or sal coverage and are very inexpensive on a cost per cost-effective, and it is here that the impersonal and indi- contact/exposure basis. rect methods classified collectively as ‘promotion’ have ● While exposed to over 1500 promotional messages a an important role to play. Ever since Lord Leverhulme day the great majority of such messages are screened offered the opinion that half his advertising expenditure out by means of selective perception and so have no was wasted, marketers have been increasingly concerned immediate impact on individual behaviour. with the problem of determining which half. To solve this ● By contrast social media such as Facebook, Twitter conundrum one must first have some working hypothesis and LinkedIn are actively accessed and used by indi- as to how advertising works and the two major schools of viduals seeking information. thought – that attitudes cause behaviour and vice versa – ● Effective promotional strategy requires a com- are analysed to throw light on the problem. Once one bination of both impersonal and personal chan- has formed an opinion as to how advertising works it nels of communication (integrated marketing becomes possible to formulate objectives and state poli- communications – IMC). cies for their achievement. ● IMC is a concept of marketing communication plan- A frequent criticism of managers, and marketers in ning that recognises the added value of a comprehen- particular, is that they lack objectivity in their decision- sive plan that evaluates the strategic roles of a variety making and rely too much on judgement and experience, of communication disciplines. unlike decision-makers in other professions who base ● While it is not certain how advertising ‘works’, their decisions on evidence. The potential for evidence- Armstrong has identified a wide selection of based decision-making is illustrated by reference to the principles that are based on clear evidence of its suc- work of Scott Armstrong (2010) who has derived 195 cessful use. principles for developing persuasive communications ● In common with other forms of marketing expendi- from an analysis of the findings of over 100 years of ture the critical thing is to define clearly one’s goals research into this subject. and then measure the outcomes from specific courses Another major development in recent years has of action. been the advent of social media which has revolution- ● Promotion has a major role to play in creating aware- ised organisational communication strategies. In com- ness, conditioning perceptions and suggesting sub- mon with many other subfields of marketing there is jective associations and benefits which may prove a large and growing literature dealing with this topic, determinant in enabling customers to distinguish and only a brief introduction is possible indicating the between two or more competing alternatives. importance of incorporating this new channel of communication into one’s marketing strategy. Given that the Chapter 19 Branding acknowledges the fact that a sustain- planner will have already established the market seg- able competitive advantage depends increasingly upon ment to be addressed, and how their product/brand is the seller’s ability to develop a distinctive personality to be positioned before selecting a promotional strat- and reputation in the perception of prospective buyers. egy, this might be considered a relatively simple task. Key concepts such as positioning, branding, perceptual However, multiple factors have to be taken into account mapping, niche marketing and the augmented product in developing a strategy, setting a promotional budget are defined and described and the chapter concludes with and deciding how to measure the effectiveness of the a discussion of the view that increasingly companies will expenditures incurred. come to be seen as brands.

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Key takeaways include: Bretton Woods agreement established the International ● The difference between an organisation’s liabilities Monetary Fund, the World Bank and GATT to encourage and tangible assets is the ‘goodwill’ felt towards it greater freedom of international trade. However these by existing and potential customers that mirrors their moves, seen as the ‘golden age of controlled capitalism’, current and expected future patronage. The real value collapsed in the 1970s with a period of global economic of ‘goodwill’ is the amount in excess of the value instability resulting largely from OPEC’s ability to con- of the tangible assets that a prospective buyer would trol a large part of the world’s oil supply. The response have to pay the owners of an organisation to buy it from Regan in the USA and Margaret Thatcher in the UK from them and is generally known as ‘brand equity’. was a return to a neoliberal economic and social policy ● Brand equity – and its corollaries corporate identity based on free markets and it was this that acted as a cata- and/or reputation – usually exceeds the value of the lyst for globalisation as we know it today. tangible assets, often by a significant factor. Two theories help explain the drive towards globali- ● A ‘Brand’ acts as a summary statement of the values sation. The first of these is the Theory of Comparative and benefits associated with its acquisition. Advantage, put forward by David Ricardo in the early ● Branding is not simply about logos and trademarks; 19th century, and the second concerns ‘The Stages of it is the basis of a differentiated marketing strategy. Economic Growth’ proposed by Walt Rostow in the ● Brands are built up by persistent differences over the 1960s. Ricardo’s theory demonstrates that, even if one long run and the additional features and benefits that nation has a natural advantage in the production of reflect the specific preferences of the target customer different goods as compared with another, it is still to and segment and so creates added value for both the the benefit of both to concentrate on those in which they firm and its customers. are most productive and to exchange surpluses with each ● Brands give products meaning and direction and other as this will increase the economic welfare beyond create a contract between supplier and customer that achievable from a policy of self-sufficiency and pro- resulting in trust, commitment, loyalty and repeat tectionism. As for Rostow his model identifies an evolu- purchase. tionary cycle through which economies must pass from a ● Almost three-fourth of all customers will pay a 20% traditional agrarian society to an advanced post-industrial price premium for their preferred brand, over 70% status. In that every advanced post-industrial economy use brands to guide buying decisions and 50% of all was once an emerging economy it has been possible to purchases are brand driven. learn from their experience and accelerate the process of economic development and international trade. Chapter 20 Marketing in a Foreign Evironment and ‘Globalisation’ is As a result of accelerating technological change Levitt new to this edition although it was covered previously (1983) articulated the view that globalisation was occur- in the discussion of Current Issues and Future Trends. ring and resulting in ‘the explosive emergence of global Unlike branding that was identified as a distinct ‘ingre- markets for globally standardised products’. While glo- dient’ in Borden’s original conceptualisation of the balisation has occurred Levitt’s prediction was incorrect in marketing mix, globalisation and its impact on inter- that, essentially, he perceived multinational corporations national trade was not included explicitly. The continuing (mainly American) selling the same standardised products growth of emerging economies and their role in interna- in the same way everywhere. Ironically, in other circum- tional trade are seen to require a better understanding stances, he would undoubtedly have described this as a proof the specialist subfield of international marketing and duction orientation centred on selling what one can make. the forces that drive it towards a state that has become While it is true that there are global brands their identified as a globalisation. marketing has frequently been adapted to reflect local Globalisation started around 3000 BC with the conditions – glocalisation – which is a differentiated invention of writing and the wheel when the exchange strategy based on a marketing orientation. In our view of goods and ideas began to develop accompanied by today’s global markets have resulted from accelerating the establishment of ‘empires’ and the growth of inter- technological change reinforced by the development of national trade between them. This trend evolved slowly the Internet and integrated marketing communication until around 1750 which saw the birth of the Industrial that have created the ability to access markets anywhere Revolution and what is generally regarded as the modern in the world at any time. Accordingly, the key takeaways era. However, nation states felt the need to protect their from this chapter are: domestic industries in the interests of national security ● That any organisation of any size has the potential to and it was not until after the Second World War that the compete anywhere. In the absence of protectionist

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policies small, domestic producers can no longer will deliver the promised performance and so provide monopolise their local markets but, by the same the satisfaction which the customer is looking for. And, token, they can offer their goods and services finally, if things go wrong the way in which an organisa- everywhere. tion reacts and seeks to solve problems will have a sig- ● What differentiates the global company is its will- nificant impact on how potential customers regard them ingness and ability to consider the whole world as a when making future purchase decisions. Research sug- potential market and act accordingly. gests that most dissatisfied customers simply take their In Ohmae’s view the global economy has four innate business elsewhere whereas, perhaps perversely, custom- characteristics: ers who complain but receive satisfaction are more likely ● The global economy is borderless in terms of the four to become advocates of that company and promote it by key factors of business life – communications, capi- positive word-of-mouth The chapter concludes with a tal, corporations and consumers. discussion of how one should offer and price customer ● Many activities of the global economy are invisible services. in the sense that they are performed on computer ter- The key takeaway from this chapter is that adding minals rather than in public places/premises. value through the provision of customer care and service ● This potential is enabled by cyber-technology that offers the opportunity to position one’s products/service allows huge amounts of data to be transferred almost differently in the mind of the customer and deserves care- instantaneously. ful consideration when developing the marketing mix. ● Performance is measured in multiples that reflect expectations about the value to be earned from Chapter 22 Developing a Marketing Culture opens with a discus- exploiting future business opportunities. sion of the relationship between organisational structure This chapter concludes Part III and introduces Part IV and strategy formulation. As recognised elsewhere in ‘Implementing Marketing’. the book, most strategies are developed by organisations which already exist. Only rarely does management have Since the publication of the first edition in 1985 the the opportunity of the clean sheet start-up situation so eas- importance of service has become much more widely rec- ily assumed in textbooks. Accordingly, strategy formula- ognised, to the point that specialised textbooks are now tion must take place within the constraints of existing available concerned solely with this aspect of the market- structures, and the existing values and attitudes associ- ing mix. Within a general text it is not possible to give the ated with them. While marketers naturally emphasise the topic extended coverage, but Chapter 21 ‘Customer care importance of a marketing orientation, it is quite clear that and service’ explores some of the key issues of customer other functional aspects of business may colour an organi- care and their contributions to competitive marketing strat- sation’s overall orientation – R&D, production, sales and egy. As was emphasised in Chapter 14 there is a subtle but finance. The nature of these orientations is examined important difference between the notion of a service as an together with the underlying concepts of organisational ‘intangible product’ which is the focus of an exchange and climate, corporate personality and culture as the basis services that enhance and facilitate the consumption and for determining what is required to develop a marketing- usage of the focal product/service. The distinction exists oriented organisation. The chapter concludes with a because while such services as a warranty or a contract review of the issues involved in creating a culture that pro- to repair/maintain a durable product during its lifetime motes this orientation. Central to the task of developing a may appear attractive, the costs of providing such services successful organisation is the definition of a vision which will increase the asking price. The question then becomes will motivate members to strive for its achievement. Such whether the intended customer will perceive the potential a vision helps define the corporate culture, and it is from value of these services as justifying a higher price. this that we derive the specific mission and objectives that Obviously there is no universal or simple answer to underpin the firm’s strategy. Key takeaways include: this question. Our analysis suggests that service plays ● Strategy should determine the structure BUT in an important role in both establishing and sustain- existing organisations the existing structure usually ing the relationship between suppliers and customers. determines the strategy. Anticipation of the user’s needs and the manner in which ● Organisations develop a culture ‘The ways we do they will ‘consume’ the product over time will constitute things around here’ and this is reflected in the strate- a vital input to the original design and manufacture of gic options chosen. the product. Similarly, advice or assistance with installa- ● Since the birth of ‘capitalism’, and the Industrial tion and use will increase the likelihood that the product Revolution that followed, the dominant culture has

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evolved from an emphasis on production, through the actual outcomes. A useful technique for doing this selling to marketing and, since around 1980, finance. is the use of a ‘balanced scorecard’ and this is reviewed ● The financial orientation stresses the maximisation briefly followed by an overview of some of the metrics of shareholder value, but this results in an emphasis devised specifically to measure marketing performance. on the short term as management seeks to maximise The chapter concludes with a short consideration of the their own returns during their own period of office, question as to whether marketing spend should be treated with less concern for the consequences of their as an investment or an expense? actions on those who will follow them. Key takeaways include: ● Shareholders can realise their stake in a company by ● When agreeing the objectives to be achieved from selling it at any time – all other stakeholders stand to the execution of a strategy these should be expressed lose everything. in terms of clear outcomes that are quantified wher- ● There is a need for a more socially responsible, ever possible. sustainable and long-term orientation and culture ● There is a large number of marketing ‘metrics’ that that takes into account the needs of all stakeholders can be used to demonstrate the return on marketing including those that have no direct involvement with expenditures in both the short and long term. an organisation. ● Marketers must use these metrics to provide evidence of the value added by marketing to an organisation’s Chapter 23 takes a brief look at the nature of the Short- overall profitability. Term Marketing Plan. The need for formal plans is ● Marketers would argue that much marketing expend- justified and a normative framework proposed. The con- iture is an investment in the organisation’s long-term ditions necessary for producing market plans are spelt future and so should be ring fenced. out, as are the key elements in the marketing plan itself. ● In the absence of quantified evidence to support this Key takeaways include: claim, top management tends to regard marketing ● A formal marketing plan is essential to provide a expenditure as an operating expense that can be cut benchmark against which to compare progress and back to improve profitability under difficult trading outcomes. conditions. ● The plan should not be seen as a straight jacket but as a statement of intent that may be adapted or changed Chapter 25 Transformational marketing – The way ahead. Two years if necessary. after the publication of the first edition of this book in ● There is widespread agreement about the form and 1985 the United Nations published what has come to be content of a formal marketing plan. You should known as the Brundtland report entitled ‘Our Common observe these conventions. Future’. The objectives and the common thread running through the report are the needs for ‘sustainable devel- Chapter 24 Implementation and Control. Within the constraints opment’. In turn sustainable development is seen to imposed by the environment, the firm will seek to control require meeting the basic needs of all and extending to its own actions in order to achieve its corporate objec- all the opportunity to satisfy their aspirations for a better tives in the most effective and efficient way, and this is life. Since then issues of corporate social responsibil- the theme of Chapter 24. The primary concern of market- ity and governance have become increasingly impor- ers must be to optimise the marketing mix and to do so tant items on the agenda of business organisations, and they must attempt to quantify and measure the contribu- their significance and relevance have been thrown into tion of its different parts. To this end cost–volume–profit sharp relief by the decline in consumer confidence and relationships are examined, as are the concepts of cash trust occasioned by the collapse of the banking sector flow and present value. Next, in order to assess both in 2008. In parallel with the need for business organisa- one’s own and one’s competitors’ performance, a brief tions to look beyond the immediate needs of their share- look is taken at the interpretation of corporate accounts holders and give greater consideration to the welfare of through the use of management ratios. all of their stakeholders and society at large, government In analysing the financial relationships and out- and charitable organisations have become increasingly comes the emphasis must always be on how well one concerned with the promotion of sustainability and is achieving the objectives set out in the strategy. If one the more equitable distribution of the world’s limited is able to do this then it is clear that one must spell out resources. quantifiable measures or targets when formulating the While marketing has often been characterised as the objectives to be attained and then compare these with villain of the piece in that it promotes materialism and

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Copyrighted matrial – 978–1–137–02582–1 Copyrighted matrial – 978–1–137–02582–1 excessive consumption, it has also been recognised that evolve in the future. Over 50 years experience as a prac- the understanding of human behaviour and ways of influ- titioner, consultant and teacher confirms the relevance encing this that are central to the practice of marketing of Santayana’s aphorism that ‘those who forget history may also be adapted and adopted to promote a fairer are condemned to repeat it’. So understanding, and the and more sustainable society. It is this adaptation and insight that it offers, provides an essential foundation for application of marketing that is seen to have the potential successful solutions to problems that involve exchange to transform attitudes and behaviour and given rise to relationships. As such relationships involve interactions Transformational Marketing as the next, logical step between humans, one cannot predict the outcome with in the evolution of the marketing concept. the same accuracy that is possible in problem-solving Some commentators argue that what generically has situations concerned with inanimate objects with known become identified as ‘social business’ calls for us to reject properties. business models based upon capitalism and free markets. Nonetheless, accumulated experience and wisdom An evaluation and analysis of this proposition leads to have enabled the identification of generalisations about the conclusion that, despite some failings, capitalism and decisions and courses of action that result in success- free markets offer the most effective means to stimulate ful outcomes. These form the substance of our book, entrepreneurship and innovation which are critical to the reinforced wherever possible with factual evidence con- achievement of sustainability and universal well-being. cerning cause and effect. We hope you may find it both But, for this claim to achieve general acceptance it is interesting and useful. clear that you have to first change people’s perceptions that organisations that practice marketing are acting primarily if not solely in their own self-interest with little if REFERENCES AND FURTHER READING any regard for the well-being of their customers. And, for that to occur, then fundamentally, it must be apparent that Armstrong, Scott J. (2010) Persuasive Advertising, Basingstoke: their behaviour is driven by a concern for their customers Palgrave Macmillan. Baker, Michael J. (2006) Marketing: An Introductory Text, and their well-being if for no other reason than that it is 7th edition, Helensburgh: Westburn Publishers Limited. critical for their own. This message is the common thread Evans, Vaughan (2013) Key Strategy Tools, Harlow: Pearson. that links our whole discussion of Marketing Strategy Learned, E. P., Christensen, C. R., Andrews, K. R. and Guth, and Management. W. D. (1965) Business Policy: Text and Cases, Homewood, IL: Irwin. In our introduction to this overview we referred to Levitt, T. (1983) ‘The Globalisation of Markets’, Harvard Vaughan Evans and his book Key Strategy Tools and his Business Review, May–June. observation that ‘strategy need not be complex’. In his Porter, M. E. (1985) Competitive Advantage (New York: Free view every manager and entrepreneur should be capable Press). Porter, M. E. (1990) The Competitive Advantage of Nations of formulating a strategy ‘but you do need a process. And (London: Macmillan). the toolkit and know which tools to use and why in which Porter, Michael (2008) On Competition, Boston, MA: Harvard part of the process’. Business Press. In this book we describe and analyse the issues faced Ricardo, David (1817) ‘On the Principles of Political Economy and Taxation’, in Piero Sraffa (ed.) Works and by the chief marketing officer (CMO) in large organi- Correspondence of David Ricardo, Volume I, Cambridge sations when crafting and implementing a marketing University Press, 1951. strategy and entrepreneurs and the CEOs of small- to Rostow, W. W. (1962) The Process of Economic Growth, 2nd medium-sized businesses who are effectively the CMOs edition, New York: McGraw-Hill. Simon, Hermann (2009) Hidden Champions of the Twenty-First for their organisation. In doing so we have tried to avoid Century, Heidelberg: Springer. falling into the trap identified by Evans of writing an Sobel, Dava (1995) Longitude: The True Story of a Lone Genius ‘impenetrable business school textbook, with esoteric, Who Solved the Greatest Scientific Problem of His, Time quasi-academic theories’. That said, we think it is Walker Publishing Company, Inc. Uncles, Mark, Seminar, Monash University, 1997. important that, in addition to being presented with a pro- Uncles, Mark D. (1998) ‘A Structured Approach to the cess and a toolkit, readers should understand both how Presentation of Research Theses’, Australasian Marketing the process has evolved and how it might continue to Journal, 6 (1), 87–94.

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INDEX

A B Aaronovitch, D. 214 Baillie, A. and Johnston, G. 90 Abbott, L. 26, 29, 30, 218–19, 311–12, 477 Bain-Mason paradigm 65 Abell, D. F. 39, 92 Baker, M. J. 117, 118, 119, 148, 331, 339, 381, 395, 441, Abell, D. F. and Hammond, J. S. 92, 98, 134 473, 488, 500 absorption-cost pricing 363 with Foy, Anne 148, 150, 174 Accenture 460, 469 with Hart, S. 75–8, 149, 285–6, 288, 303–4, 329, 330, 321, Achrol, Ravi and Kotler, P. 28–9 332–3, 335, 338, 339–40, 424 ACORN 268–70 et al. 105–6 adopter categories 124 and Srivastava 230 advertising/promotion, how it works 405–7 Baker composite model 203–9 budget setting 416–17 Baker’s Box 136–9 effectiveness 417–18 balanced scorecard 518–20 effectiveness measurement 418–19 Baligh, H. H. and Burton, R. M. 486 objectives 407–10, 411 bandwagon effect 335 strategies 415–16 barriers to entry 67, 69 after-sales services 464 Bart, C. K. 95 Aguilar, F. 149 Barton, Dominic 531–2 AIDA model 200–1, 401 Bates, J. and Parkinson, R. 363 Albrecht, K. 177 Baumol, W. J. 358, 360 Alderson, W. 383 Bayesian analysis 33, 158–65 alternative strategies 39 Beckerman, W. 443 alternatives, identification of 159–60 Beik, L. and Buzby, S. 514–15 AMA – American Marketing Association 35 Beinhocker, Eric and Kaplan, Sarah 108–9 Ambler, T. 407 benchmarking 226–9 Ames, B. C. 104, 112, 453 benefit segmentation 276–7 analysing sample data 157 Bennett, R. C. and Cooper, R. G. 311, 322 analytical frameworks for SMP 10, 112–45 Bennis, W. and Nanus B. 93, 490 Andersen and Fears 80 Bentham, J. 195 Ansoff, I. 32–3, 37, 39, 96, 139–40, 320 Bertini, Marco 368–9 Appreciation-marketing 167–8 best practices 229–30 area samples 153 Blanchard, Robert T. 421 Armstrong, Scott 17, 62, 216, 260, 410–13 Blenel, W. H. and Bender, H. E. 467–8, 476–7 Arthur Andersen 229–30 Bliss, P. 197 Arthur D. Little Inc. (ADL) 246 blogs 414 Aspinwall, L. 202, 314 Blythe, J. and Zimmerman, A. 498 assumptions 500–1 Booz and Co. (Booz, Allen and Hamilton) 323–5, 328–9, attitudes 407–8 330 audits see marketing audits Borden, N. 296–7, 301 augmented product 429, 463 Boston Box /growth-share matrix 127–32 automatic interaction detector (AID) 264 Boston Consulting Group (BCG) 126, 127–32 Avlonitis, G. 122, 313–14, 337–8 Boulding, K. 171 Axelsson, B. and Easton, G. 65 Boyd et al. 407–9

INDEX 535

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brand change, six decades of 525–7 company as 431–3 and values 187–8 equity 427–9, 435 Chandler, A. 92, 486 extensions 437–8 Chang, H. 494 portfolio management 437–8 channels see distribution reputation building 429–31 characteristics of goods 202 what is 423–7 Chartered Institute of Marketing (CIM) 27, 152, 191, 240 brands Chaston, I. 462 and competitive success 422–3 Chevalier, M. and Carty, B. 360 corporate 433–6 Choffray, J. and Lilien, G. 278 global 434–7 choice and the social sciences 195–203 branding 17–8, 421–40 Christopher et al. 467, 471, 477 brand strategy research/segmentation 274–5 chunking of information 114 breakeven analysis 510–13 Clark, J. M. 219 BRIC countries (Brazil, Russia, India, China) 445 Clarkson, A. 225 British Direct Marketing Association (BDMA) Clifford, D. K. and Cavanagh, R. E. 430 Briston, J. H. and Neill, T. J. 345–7 cluster analysis 265–6 Brittan, Samuel 533 ‘clusters’, development of 73–4, 183–4 Broadbent, S. 416–17 clustering techniques Brookings Institution 361 hierarchical 265 Brooks, N. and Simkin, L. 506–7, 508 partitioning 265 Brown, A. 492 density search 265 Brown, S. 32 clumping 265 Brownlie, D. 92, 174, 241 others 266 Brundtland Report 524–5 co-branding 437–8 Bucklin, L. 384–5 Coe, B. J. 365 budget, promotional 416–17 Cohen, William A. 54–5 Burns, T. and Stalker, G. M. 488 Colvin, Geoff 53–4 business analysis 330–1 commercialisation stage of NPD 331 business policy 53–4 communication 501 business strategy or marketing strategy 43–5 communication process 400–5 development of 90–1 common thread 37, 39, 320, 321, 525 buy classes 202 comparative advantage, theory of 445–6 buy phases 201–2 competition 6, 7, 63–4, 217–20 buyer behaviour and the decision maker 203 international 69–71 Baker composite model 203–9 and marketing strategy 68–9 Buyers, C. I. and Holmes, G. A. 193 non-price 220–1 Buzzell, R. and Baker, M. J. 407–8, 506 role of chance 72 Buzzell, R. and Gale, B. 428 role of government 72 Buzzell, R. and Sisodia, R. J. competitive advantage 48–9, 74–5, 213 sources of 64–6 C competitive bidding 372 CACI 268–70 competitive forces 67–8 Campbell, A. and Yeung, S. 93–4 competitive position 95, 136–9 Canadian Office of Tourism 281–3 competitive success and marketing 75–9 Cannon, J. T. 241, 242 competitiveness 214 capitalism 61, 358, 494 UK 183–4 Anglo-Saxon 529 competitor analysis 12, 214–17 Germanic-Alpine 529 complexity theories 66 and social business 530–4 concentrated marketing mix, 48–9, 387, 452 Cardozo, R. N. 278 conjoint analysis 264 Carson, D. 459, 462, 464 Constantinides, E. 304–5 Carson, D. and Gilmore, A. 462–3, 465 consumer decision-journey 413 cash flow and net present value 515–17 consumer learning 334 certainty 158 contagion effect 335 Chamberlin, E. 220 contract packers 347

536 INDEX

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contribution analysis 512 customer loyalty 469–71 contribution approach see pricing customer relationship management CRM 52–4, 461–2 control see Implementation and Control 504–23 customer satisfaction 470–1 convenience goods 314 measurement of 479–81 convenience sample 154 customer satisfaction management CSM 461–2 convergence 169 customer service 467–9 Copeland, M. T. 202, 313 industrialisation of 481–2 core competencies 80–2, 241–3 pricing 479 core strategy 501 strategic use of 474–7 Corey, R. 310 Customer service Excellence 479–81 Corkindale, D. and Kennedy, S. 410–11 customer–supplier alliances 231–5 corporate brand 431–3 cycles and trends 184–8 corporate branding 433–6 Cyert, R. M and March, J. G. 358 corporate culture 489 Czepiel and Kerin 212–3 and transformational marketing 493–4 corporate development, stages of 88 D engineering 493 DEFRA Department of Food, Environment and Rural executive 493 Affairs 203, 255, 344 operational 493 Dart, P. 349 corporate personality data categories 157 corporate reputation 435 data collection 151 corporate social responsibility (CSR) 170, 435, 444 data reduction and analysis 156–8 corporate strategy 32–8 David, F. R. 94 formulation of 102–3 Davidson, H. 196 cost analysis 510–12 Davies, G. and Brooks, J. 285–7 cost analysis contribution approach 512–15 Day, G. 131, 136 cost leadership 117 Day et al. 258–9 cost vs control in channels 386–7, 393–4 de Chernatony, L. and Dall’Olmo Riley, F. D. 424–5 cost-plus pricing 362 Dean, J. 353, 356, 357 costs Deans, K. R. 398 average 355 decision criterion 163 concepts 355, 510, 512 decision trees 160–5 engineering approach 511 analyzing 163–5 fixed 355, 510–12 deferred gratification 188 long-run 355, 510–12 demand 353–5 marginal 355, 512 cross-elasticity 354 opportunity 389, 512 curves 114–15 semi-fixed 510–12 derived 355 short-run 355, 510–12 elasticity 354 statistical approach 510 forecasting 188–9 variable 355, 510–12 industry and company 353 Coyne, et al. 242–3 law of 352 Crisp, R. D. 241 long-run 353 critical success factors (CSFs) 75, 105–6, 223–4, 285 short-run 353 CUGs (currently useful generalisations) 62, 72, 114, Deming, W. 477 491 demographic factors 174–7 Culliton, J. 296 demographic segmentation 267 Cullum, Philip 420 Department for Business Innovation and Skills cultural factors 82 Report 228–9 culture 197 de Solla Price, D. J. 123 culture, developing a marketing 485–94 design 16, 343–4 customer analysis 11–12, 194–211 Dhalla, N. K. and Yuspeh, S. 117 customer audit, conducting a 209–10 Diamantopoulos, A. 362, 364 customer care and service 459–82, 462–7 ‘diamond of national advantage’ 71–2 customer centricity 403 Dibb, S. 280–1 dimensions 465 Dibb and Simkin 260

INDEX 537

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Dichter, E. 196, 272 Erickson, T. 478 Diffenbach, J. 170–1 ethics, morality and marketing 3–4 differentiated marketing 6, 48–9, 131, 279, 387, 452 Evans, Alex 178 diffusion Evans, Vaughan 2, 21, 85 curves 122–5 Evans, J. R. and Berman, B. 387–8 process 122–45 Everitt, B. 265–6 theory 122 evidence-based decision making 216 direct marketing 404–5 evolutionary theories 65 directional policy matrix (DPM) executive summary 499 dissonance 201, 406–7 expectations 465 distribution and sales policy 16, 379–96 expected utility 163 channel characteristics 386 expected value of perfect information (EVPI) 147 channel composition 384–6 explicit knowledge 422–3 channel control decisions 381–2 experience effects 127–8 channel development 382–3 exploration stage of NPD channel selection 386–8 channel strategy 381–2 F channel structure 384–6 Facebook 415, 427, 428 exclusive 387–8 factor rating table 253 functions of channels 383–4 fail, why companies 244–5 growth areas 391–2 Farris, Paul et al 519–20 intensive 387–8 fashion goods 119 policy formulation 388–9 fast second, strategy of and the PLC 395–6 felicific calculus 195 selecting 386–8 Festinger, L. 201 selective 387–8 field survey methods 154–6 diversification Fifield, P. 47 Donaldson, W. 464 financial orientation 76, 487 Doyle, P. 37–8, 301–2, 427–8, 429, 430, 485–6 Finkelman, D. and Goland, A. 474, 475, 476 Drucker, P. 26, 92, 94, 97, 98, 249, 326, 370, 518 firm’s business, concept of 38–9 dual pricing policy 371 Firth, C. 118, 120, 126 Duhigg, Charles 469–70 flexible mark-up pricing 363 Dwek, R. 176 Ford, H. 29, 116, 127, 491 Ford, H. II 358 E forecasting, definition 188 Economic and Social Research Council (ESRC) 380–1 foreign environment, marketing in 441–56 economic cycles 184–7 franchises 394 economic development, stages of 443–4 Frank et al 279 economic factors 179–80 Freud, S. 194–5 economic growth, stages of 186, 444 Frey, A. 345, 347, 349 and marketing 444–5 future, competing for 79–82 efficiency and effectiveness 249 Ehrenberg, A. 62 G electronic commerce 389–93 GM foods 182 areas of growth 391–2 Gabor, A. 358 issues and barriers 392 Gabor and Grainger 358 emergent strategy 31, 45–8 Gaedeke, D. M. and Tootelian, D. 394 Emerson, R. W. 399–400 Galbraith, J. 88, 196, 444 empirical generalisations, see CUGS game theory 65 Enis, B. and Broome, C. 147–8, 159 Gannon, T. A. 472 environment as the ultimate constraint 170–1 gap analysis 139–40 environmental analysis 11, 169–93 general management and marketing management 51–2 attributes 174 General Motors 116 categories 173–4 generic strategies 45–9 framework for 174 geographic (location) segmentation 268–70 scanning 173–4 global brands 434–7 Erdogan, Z. 348 global industry 450

538 INDEX

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global market, characteristics 449–50 Hudson, M. 530–1 global marketing, development 452–3 human behaviour in organisations (HBO) 487 globalisation, see Marketing in Foreign Hunt, S. D. 85 Environments 18–19, 441–56 Hunt, S. and Morgan, R. 252–3 globalisation Huss, W. and Horton, E. 141–2 vs segmentation 447–9 hypothesis testing 158 what is 442–3 Gluck et al 104–5 I Google 94–5, 240 idea generation 328–30 governmental factors 72 implementation and control 504–21 Granovetter, M. S. 65 implementing marketing 457, 491–2 Grant, R. M. 250–1 implicit knowledge 422–3 Grashof, J. F. 241 industry/competitor analysis 12, 212–38 Gray, D. H. 103–4 Industry Classification Benchmark (ICB) 258 Green, P. and Tull, D. 157 industrial products Griliches, Z. 123, 124 equipment 315 Gronroos C. 205, 526 fabricated materials 315 and Voima 245 raw materials 315 growth-share matrix 126–32 supplies 315 growth vector analysis 39–40 industrialisation of service 481 Grunert, K. and Ellegard, S. 223–4 Information Age 180–2 guerrilla marketing 42 information overload 114, 198 guerrilla warfare 81 innovation strategy models 324–5 Guiltinan, J. P. and Paul, G. W. 325 inseparability 319 Gunn, L. 88, 90–1 intangibility 318 Gunter and Furnham 270 integrated marketing communications (IMC) 17, 399–419 definition 402 H interaction and network theories 65–6 habitual behavior 469–70 internal (self) analysis 12–3, 239–47 Hague P. and N. 479–80 internal marketing 245–7, 402–3, 466 Hakansson, H. 65, 235 international market entry 446–7 Haley, R. I. 276–7 international trade 445–6 Halfpenny, P. 149–50 interdisciplinarity 526 halo effect 429 intuitive logics 141–2 Hamel, G. and Prahalad, C. K. 7, 79–82, 93, 101 Hart, Liddell 33 J Harvey, J. and Woods, D. 418 Jafari, A. and Goulding, C. 173–4 Hastorf, A. and Cantril, H. 198 Jain, Subhash 52–3 Hayes, R. and Abernathy, W. 76, 89, 163, 321 Jobber, D. 362 Health Education Board for Scotland (HEBS) 188 Johansson, J. K. and Nonaka, I. 150–1 ‘heavy half’ 153, 275–6 Johne, A. 125, 331, 488 Henderson, B. 127–8 Johnson, Harry 444 Henkoff, R. 106–8 Johnson, S. C. and Jones, C. 323 heterogeneity 319 Johnston, G. 364 Hewlett Packard 95–6 Jolly, V. 450–1 Hiebeler et al 229–30 Joyce, T. 405–7 ‘hierarchy of effects’ 200–1 judgement sample 154 ‘hierarchy of needs’ 200 Juglar cycle 185 Hofer, C. W. and Schendel, D. E. 92 jury of executive opinion 189–90 Holiday Inn 262 just noticeable difference (JND factor) 334, 343, 478 Hollander, S. C. 388 Hollis, N. 434 K Hooley, G. 264 Kalchas, 374 Hooley, G., West, C. and Lynch, J. 149 Kaplan, R. and Norton, D. 518–20 Hout, T., Porter, M. and Rudden, E. 450 Kay, J. 65, 68, 80 Howard, J. 510–12 Keller, K. 438 Huber, G. P. 160–1 key account management 279

INDEX 539

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key international issues 178 McTavish, R. 38–9 key policies 501 macro-environmental analysis 11, 169–93 Kilbourne, W. 372–3 Majaro, S. 298–9 King, S. 421, 431 Makens, J. C. 216–7 Kitchin cycle 184–5 Magee, John 160–2 Kleiner, A. 493–4 Mallen, B. 386 Klemm et al. 94–5 management ratios 517–18 knowledge management 82–3, management systems, evolution of 88–91 checklist 246–7 managing the marketing mix 293 Kondratieff cycle 91, 185–6 the product life cycle 334–8 Kotler, P. 27, 41, 45, 46, 52, 118, 165, 189, 194–5, 219, 240, Mansfield, E. 124 305, 355, 358, 476 marginal cost 512 Kotler, P., Gregor, W. and Rogers, W. 240 market assessment, check list 156 Kotler, P. and Levy, S. 528 market, defining 258–9 Krugman, H. E. 405–5 market development 39 Kuznets cycle 185 market introduction 334–5 market orientation 249, 321–2 L market penetration 118 Labich, K. 244–5 market performance 66–7 Lalonde, B. J. and Zinszer, P. H. 471, 473 market power 65 Lambert, D. 384–5 market pull 107, 321, 322 Laurie, S. and Mortimer, K. 402–3 market segmentation 13–14, 257–91 law of inertia of large numbers 153 a priori 259, 263 law of statistical regularity 153 barriers to 280–1 Lawrence, P. and Lorsch, J. 488, 489 bases for 260–3 Lawson, R. 347 benefit 276–8 Learned et al. 6, 49 business-to-business 278 learning organisation 45–7, 246–7 clustering based 259, 264 Lee, K. and Carter S. 449 definitions 278 Levitt, T. 26, 29, 36–7, 39, 43, 70, 74, 94, 98, 115, 120, 125, demographic 267–71 207, 212, 213, 244, 310, 312, 429, 447–8, 450, 453, 463, flexible 264 466, 475, 481 profiling 269 less developed countries 445 psychographic and behaviouristic 270 limited strategic alternatives 40–3 by social character 272–5 LinkedIn 415 usage 275–6 Lindquist, J. D. 286 market segmentation methods 266–7 Little, Arthur D. (ADL) 33–4, 82–3, 92, 99–103, 246–7 market share 129, 360–1 Lipson, H. A. and Darling, J. R. 297 measuring 328 location, as a basis for segmentation 268–70 strategies 127 Lorenz, C. 92 market structure, conduct and performance 66–8 low involvement 405–6 marketing appreciation 167–8 Luck, D. 338 marketing approach 30 Luck, D. and Ferrell, O. 332, 389 marketing Lynn, R. 360 audits 240–1 and competitive success 75–8 M and economic growth 444–5 McCammon, B. C. 393 as a synthetic discipline 61–3, 302 McCarthy, E. J. 44, 293, 295–6 marketing communications see Integrated Marketing McDonald, M. 9, 97, 99, 100, 104, 109, 497 Communications and Leppard, J. W. 497 marketing concept 26 McKay, E. 96–8, 101, 487, 490 evolution of 296 McKinsey & Co. 27, 34–5, 78, 83–4, 108–9, 221–2, 242–3, marketing culture developing 484–94 339–40, 374, 413, 471 marketing defined 5 McKitterick, J. B. 249 marketing, definitions 27–9, 35 McKonkey, D. D. 500–1 marketing effectiveness 509 McNair, M. 388 marketing function, implementation 491–3

540 INDEX

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marketing health check 9 Mitchell, A. 432 marketing in foreign environments and globalization 18, 19, multidimensional scaling (MDS) 265, 285–6 441–56 multi-domestic industry 450 marketing information system (MkIS) 215–16 multiple convergent process of NPD 332–3 marketing management and general management 27, multiple discriminant analysis (MDA) 264 51–5 multiple regression 264 marketing intelligence 10–1, 146–166 multivariate techniques 264 marketing metrics 435, 505, 519–20 Murphy, J. 430 marketing mix 14, 295–307 criticisms of 302–7 N evolution of concept 296 Naisbitt, John 171 ingredients 296–8 Nancarrow et al 348 managing 293–4 nanotechnology 182 role of pricing 364–6 National Industrial Conference Board (NICB) 188–90 selecting 298–301 Neill, J. 492–3 ‘marketing myopia’ 36–7, 74, 115, 125 net present value 515–17 marketing, organizing for 486–7 new product departments 332 marketing-oriented organisation 27, 249, 489–91 new product development committee 332 marketing orientation 4–5, 29–30, 321–2, 487 new product development cycle 324–5, 328–31 marketing performance measurement 505–7 organisation for 331–4 marketing plan 496–502 new product development venture teams 332 components of 499–502 NICB see National Industrial Conference Board marketing planning see strategic marketing planning niche marketing 288–9 framework for 497–9 strategy 48 marketing planning and practice 105–6 Nike 39 marketing planning, short-term 496–502 Nolan Norton Institute 392 marketing research, need for 147–9 non-price competition 220 Marketing Science Institute (MSI) 126, 427, 505 competitiveness 78 marketing spend 520–1 non-probability samples 155–6 marketing strategy 5–6, 35–6, 48–9 NTIC see standard industrial classification hidden flaws in 49–51 Nylen, D. W. 393–4 or business strategy 43–5 relationships 335 O and Sun Tzu 51 objectives, corporate 95–6, 501 what is? 30–2 formulation 96–7 marketing – the way ahead 527–9 observation 152 Marshall, A. 195 Oburai, P. and Baker, M. J. 64, 230, 231–5 Martin, J. 297–8 Odd pricing 370 Marx, T. G. 104–5, 106 Ohmae, K. 19, 396, 453, 475–6 Maslow, A. 70, 200, 272 O’Malley, L. and Patterson, M. 303–4 mass customization 260 organisational climate 487–8 matching 13, 248–55 O’Shaughnessey, J. 91, 416 matrix analysis 114 Oxenfeldt, A. 356–7 Mattsson, L. G. 65 Ozsomer et al 436–7 mechanistic shift 126 Moutinho, L. 148, 216 P Megatrends 171–3 packaging 15–16, Michaeledou et al 386 characteristics 379–80 Miles and Snow 44–5 criteria 345–8 Miller, G, 114, 288 definitions 345 Ministry of International Trade and Industry (MITI) 446 design 343–5 Minzberg, H. 44–6 development 348–50 Mintzberg and Waters, J. A. 226 environmentally friendly 329 Miracle, G. E. 314 Packard, V. 196, 273 mission, 93–4 paralysis by analysis 217 statement 94–6 Pareto’s Law 115

INDEX 541

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Pavlov, I. 195–6 problem specification 159, 160, 348 pay-back 516 Probst, G. 246 Peattie, Ken 526 product characteristics 312–13 Pemberton, H. E. 122–3 product classification 313–14 penetration pricing 366 product, defined 314–16 strategies 118 product deletion 338 people in the marketing mix 302–3 product development 324–5, 331 perception and pricing 367–9 organization for 331–4 perceptual mapping 136–9, 285–7 product differentiation 259–60 perishability 319 product life-cycle (PLC) 8, 10, 43–4, 117–22, 443, 452 personal selling 394–5 decline 120–2, 337–8 Peterhaf, M. A. 251–2 extension 120, 337 Peters, T. 46–7, 82 growth 118–19, 335–6 Peters, T. and Waterman, R. 72, 76, 78 introduction 117–18, 334–5 Piercy, N. 253–4, 491–2 managing 334–8 PIMS see profit implications of market strategy maturity 119–20, 336–7 PLC see product life cycle use as a planning tool 125–6 points of difference 438 and sales effort 395–6 points of parity 438 product managers 332 policy and strategy 32–3 product performance, monitoring 339–40 political and governmental factors 178–9 product policy 320–4 Polman, Paul 532 product portfolio analysis 126 Porter, M. 6, 7, 30–2, 48–9, 60, 63, 65, 68–9, 70–5, 80, 89, product portfolio concept 325–7 104, 115, 218, 222, 250–1 factors influencing 327–8 Porter and Ketels 183–4 product quality 464 Porter and Kramer 178 product, role of 310–12 portfolio management 437–8 product/service policy and management 309–40 positioning 284–90 product testing 331 in the mind 287–90 production orientation 29–30, 487 postponement 384 profit implications of market strategy (PIMS) 126–7, 360, 428 post-purchase dissonance 201 profit maximisation 355, 358 Prahalad, C. K. and Hamel, G. 226 profits and performance 507–9 Preparing minds 108–9 promotion see integrated marketing communications (IMC) Prestowitz, C. 454 399–419 price determination 362–3 promotion objectives 407–10 price lining 371 promotion policy and management see IMC 399–419 price theory, limitations of 355–6 promotional budget, setting 416–17 pricing policy and management 16, 352–76 promotional strategy, developing 415–16 contribution approach 363–4 psychographic segmentation 270 cost-plus 363 psychological pricing 368–9, 370 in practice 374–6 public relations 410 marginal cost 364 publicity 410–13 marketing oriented 362 published data, sources of 152 and the marketing mix 364–6 push and pull strategies 98, 389 objectives 356–7 in practice 374–6 Q profit 357–60 quantitative techniques 148 sales oriented 360–1 quantitative versus qualitative research 149–51 strategies 366–7 questionnaires, administration 154–5 theoretical foundations 353–6 quota samples 154 and perception 367–9 and sustainability 372–3 R prestige pricing 371 Ragoff, D. and Lynn, R. 360 primary data, collection of 152–3 Raiffa and Schlaiffer 33, 159 probability 161–3 rate of return pricing 363 probability samples 153 Reichheld F. 461

542 INDEX

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relational views 66 screening stage of NPD 330 relationship marketing 27 secondary data 151–2 research for marketing 146–66 segmentation see market segmentation resource-based theory 38, 65, 81, 250–3 selective perception 160, 197–9, 285, 406–7 retail co-operatives 394 Selden, L. and Colvin, G. 209–10 retail revolution 380–1 selectivity of information 114 retailing, wheel of 388 Selznick, P. 94, 224 retromarketing 322 Senge, P. 82 Ricardo, D. 70, 250, 445–6 Service-dominant logic (SDL) 35, 312 Ries, A. and Trout, J. 31, 42, 284–5, 288–90, 521 services 14–14, 316–20 Riesman et al. 270 growth of 317–18 Riesz, P. 321–2 industrialisation of 481 risk 102, 158 marketing 319–20 Roberts and Hill 182 as a marketing strategy 481–2 Robinson et al. 133–4, 201–2, 278 nature and characteristics 318–19 Robinson, J. 220 pricing 464 Rockart, J. F. 223–4 quality 474–5 Rogers, E. 70, 120, 122, 334 types 317–18 Rosenberg, N. and Frischtak, C. R. 186–7 Shaw, Robert 43 Rosenbloom, B. 381 Shell’s Directional Policy Matrix 102, 132–6 Rostow, W. W. 186, 444 shopping goods 314 Rothschild, W. 213 short-term marketing plan 20 Rothwell R. 312 Shostack, G. L. 316–17, 318 Rothwell, R. et al. 323 SIC see standard industrial classification Roxburgh, C. 49–50 Siegel, C. 306–7 Simon, H. A. 358, 371 S Simon, Hermann 1, 365, 367–8 SBU see strategic business unit Singh, Sarwant 171–2 Said, H. 364–5 situation analysis 500 sales force composite (forecast) 190 Sizer, J. 364 sales forecasting 189–90 skills and competences 224–6 definitions 189 skimming strategy 118, 366 methods 189–90 vs penetration as alternative strategies 369–72 preparing 189–91 Sloan, A. 116 sales orientation 30, 487 Slywotsky, A. and Shapiro, B. 520–1 Salter, M. 88 SMART (specific, measurable, achievable, relevant, targeted sample survey 152 and timed) 97 samples – random, systematic, stratified, area 153 Smith, Adam 61, 195, 528, 530, 531 Sampson, P. 150 Smith, R. E. and Swinyard, W. R. 405–6 satisfaction 26 Smith, R. W. 169–70, 259 satisficing 358 social and cultural factors 177–9 Saunders, J. 217–18 social business 529–34 Say’s Law 119, 380 social class 197 scenario planning 107–8, 140–1 social marketing 444 Schein, E. 493–4 social media 413–15 Scherer, F. and Ross D. 63, 66–8 Society of Motor Manufacturers and Traders (SMMT) Schmanlensee, D. 478 275–6 Schnarrs, S. 128 specialty goods 314 Schramm, W. 400–1 speculation 384 Schulz, Don 402 stakeholder philosophy 492–3 Schumpeter, J. 186 standard industrial classification 258 Schwartz, H. and Davis, M. 488–9 Stanton, N. J. 318 Scottish Health Education Group (SHEG)/Scottish Health Stapleton, J. 215 Education Unit (SHEU) see Health Education Board for Stern, L. 386–7 Scotland (HEBS) 198 Stewart, T. A. 460–1 Scott, Bruce 446 Stevenson, H. H. 254

INDEX 543

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strategic alliances 230–1 three eras of marketing 249 strategic architecture 79, 80–1 three in one marketing (3 in 1) 125, 331 strategic business unit (SBU) 5, 8, 33–5, 39, 92, 100–2 Thurow, Lester 244 strategic condition matrix 101–2 time series analysis 190 strategic intent 8, 81, 93–4 Tippler, Kellie 468 strategic management 8 Toffler, A. 448 strategic marketing 35–6 total quality management (TQM) 477–9 decisions 36 transaction cost 64 domain of 36 transformational marketing 20–1, 524–34 strategic marketing planning (SMP) 87–111 and corporate culture 493–4 criticism of/obstacles to 103–6 trend-impact analysis 142 definitions 92–3 trial and error marketing 82 framework for 97–9, 112–45 trends, coalescing 533–4 payoff from 109–10 Tull and Albaum 158 principles 8, 99–102 Turnbull et al. 65 processs 498 Twedt, D. W. 275–6 resistance to 104 Twitter 415 timespan 91–2 strategic planning 106–8 U payoff from 108–9 Udell, J. 219–20 strategy 5, 30–2 uncertainty 158 evaluation of 6 Uncles, M. 1, 62 of the fast second 328–9 undifferentiated marketing strategy 5–6, 48, 387, 452 new paradigm 79 unique selling point (USP) 295 and structure 486–7 Urban G. and Starr, S. 285 stratified sample 153 usage segmentation 275–6 strengths and weaknesses 241, 254 user needs and product characteristics 312–13 substitutability 384 utilities of time, place and possession 383 successive focusing 149 summary statistics 158 V Sun Tzu and marketing strategy 51, 146, 212, 295 value-based pricing 366–7 Supral 199–200 value chain 221–3 sustainable competitive/differential advantage (SCA/SDA) VALS 271–2 44, 81, 169, 243–4, 428 values 96, 270–1 and development 525 van Assen 254 Swalm, R. O. 163 van Duijn, J. 184–6 Switching costs 460 van Waterschoot W. 302 SWOT analysis 98, 99, 142–3, 253–5, 500 and Foscht T. 307 synergy 102, 139, 487 Varadarajan, Rajan 35–6 Vargo and Lusch 35, 312, 315 T Vasconcellos, J. A. 42 Taguiri, R. and Litwin, G. H. 487–8 Veblen, T. 194–5 tamper proof resistance 346 vertical marketing systems (VMS) 393–4 target rate of return 361 vision, corporate 93–4, 490 tasks and objectives method 417 technical development (NPD) 331 W technological factors 180–3 Wasson, C. 334 technological innovations 186–7 Waterman, R. 490 technology market matrix 323 Webster, F. E. 27, 2312, 461 technology orientation 487 Weitz, B. and Wensley, R. 35 technology push 107, 322 Wells, William D. 270 Tellis, G. J. and Crawford, C. M 43 Wensley, R. 44, 135–6, 254 Thomas, H. 161–2 West, C. 217 Thomas, M. and Saxena, N. 223 wholesale co-operatives 394 Thompson, H. V. 311 Wickham et al. 318

544 INDEX

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Wind, Y. 259–62 Y Wind, Y. and Mahajan, V. 327, 328 Yankelovich, D. 260 Woodhall, T. 205 Yeshin, T. 401, 404 Wong et al. 78 Young et al. 279 Worcester, R. M. and Downham, J. 279 Yunus, Muhammed 529 World Economic Forum Competitiveness Index 78

X xerography 152 Xerox 38–9, 152, 226–7

INDEX 545