Ninth Edition J. Paul Peter

Knowledge and Skills Ninth Edition J. Paul Peter University of Wisconsin—Madison James H. Donnelly, Jr. University of Kentucky McGraw-Hill Irwln Bosto...

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Marketin Management Knowledge and Skills

Ninth Edition

J. Paul Peter University of Wisconsin—Madison

James H. Donnelly, Jr. University of Kentucky

McGraw-Hill Irwln Boston Burr Ridge, IL Dubuque, IA New York San Francisco St. Louis Bangkok Bogota Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto

Contents SECTION I ESSENTIALS OF MARKETING MANAGEMENT 1

PART A INTRODUCTION

Chapter 1 Strategic Planning and the Marketing Management Process 4

6

The Marketing Management Process

15

Situation Analysis 16 Marketing Planning 18 Implementation and Control of the Marketing Plan 20 Marketing Information Systems and Marketing Research 20 i

The Strategic Plan, the Marketing-Plan, and Other Functional Area Plans 20 Marketing Role in Cross-Functional Strategic Planning 20

25

PARTB MARKETING INFORMATION, RESEARCH, AND UNDERSTANDING THE TARGET MARKET 29 Chapter 2 Marketing Research: Process and Systems for Decision Making 30 The Role of Marketing Research 30 The Marketing Research Process 31 Purpose of the Research 31 Plan of the Research 32

Chapter 3 Consumer Behavior 42 Social Influences on Consumer Decision Making 43

Strategic Planning and Marketing Management The Strategic Planning Process 7 The Complete Strategic Plan 15

Conclusion 22 Appendix Portfolio Models

37 37

Marketing Information Systems 40 Conclusion 41

3

The Marketing Concept 4 What Is Marketing? 5 What Is Strategic Planning?

Performance of the Research Processing of Research Data Preparation of the Research Report 38 Limitations of the Research Process 38

Culture and Subculture 43 Social Class 44 Reference Groups and Families

45

Marketing Influences on Consumer Decision Making 45 Product Influences 45 Price Influences 45 Promotion Influences 46 Place Influences 46

Situational Influences on Consumer Decision Making 47 Psychological Influences on Consumer Decision Making 47 Product Knowledge 47 Product Involvement 48

Consumer Decision Making

48

Need Recognition 49 Alternative Search 50 Alternative Evaluation 51 Purchase Decision 51 Postpurchase Evaluation 52

Conclusion

54

Chapter 4 Business, Government, and Institutional Buying 55 Categories of Organizational Buyers

55

Producers 55 Intermediaries 56 Government Agencies 56 Other Institutions 56

The Organizational Buying Process

56

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Contents

Organizing for Product Management Conclusion 95

Purchase-Type Influences on Organizational Buying 57 Straight Rebuy 57 Modified Rebuy 5 7 New Task Purchase 5 7

Structural Influences on Organizational Buying

58

Purchasing Roles 58 Organization-Specific Factors 59 Purchasing Policies and Procedures 59 Personal Motivations 60 Role Perceptions 60 Organizational Need 63 Vendor Analysis 63 Purchase Activities 63 Postpurchase Evaluation 63

Conclusion

Delineate the Firm's Current Situation 66 Determine Consumer Needs and Wants 67 Divide Markets on Relevant Dimensions 67 A Priori versus Post Hoc Segmentation 68 Relevance of Segmentation Dimensions 68 Bases for Segmentation 69

Develop Product Positioning 75 Decide Segmentation Strategy 76 Design Marketing Mix Strategy 77 Conclusion 78

Product Definition 80 Product Classification 81 Product Quality and Value 82 Product Mix and Product Line 83 Branding and Brand Equity 84 Packaging 88

Product Life Cycle

89

Product Adoption and Diffusion 91

The Product Audit

92

Deletions 92 Product Improvement 92

104

Causes of New Product Failure Needfor Research

Conclusion

107

107

108

Chapter 8 Integrated Marketing Communications: Advertising, Sales Promotion, Public Relations, and Direct Marketing 109 Strategic Goals of Marketing Communication Create Awareness 109 Build Positive Images 110 Identify Prospects 110 Build Channel Relationships Retain Customers 110

PARTC THE MARKETING MIX 79

Basic Issues in Product Management

99

Idea Generation 99 Idea Screening 101 Project Planning 101 Product Development 102 Test Marketing 102 Commercialization 103 The Importance of Time 103 Quality Level 104 Product Features 106 Product Design 106 Product Safety 106

66

Chapter 6 Product and Brand Strategy

62

60

Some Important New Product Decisions

65

Chapter 5 Market Segmentation

Chapter 7 New Product Planning and Development 96 New Product Strategy 97 New Product Planning and Development Process

Behavioral Influences on Organizational Buying

Stages in the Organizational Buying Process

94

80 80

110

The Promotion Mix 110 Integrated Marketing Communications 111 Advertising: Planning and Strategy 113 Objectives of Advertising

Advertising Decisions

113

114

The Expenditure Question 115 The Allocation Question 117

Sales Promotion

121

Push versus Pull Marketing 121 Trade Sales Promotions 123 Consumer Promotions 123 What Sales Promotion Can and Can't Do

Public Relations 125 Direct Marketing 125 Conclusion 126

123

109

Contents

Appendix Major Federal Agencies Involved in Control of Advertising 127

A General Pricing Model 165 Set Pricing Objectives 165 Evaluate Product-Price Relationships 165 Estimate Costs and Other Price Limitations 166 Analyze Profit Potential 167 Set Initial Price Structure 167 Change Price as Needed 168 Conclusion 168

Chapter 9 Personal Selling, Relationship Building, and Sales Management 128 Importance of Personal Selling 128 The Sales Process 129 Objectives of the Sales Force 129 The Sales Relationship-Building Process 130 People Who Support the Sales Force 135 Managing the Sales and Relationship-Building Process 136 The Sales Management Task 137 Controlling the Sales Force 138 Motivating and Compensating Performance 141 Conclusion 142

Chapter 10 Distribution Strategy

PART D MARKETING IN SPECIAL FIELDS 169 Chapter 12 The Marketing of Services

Important Characteristics of Services 172 Intangibility 172 Inseparability 173 Perishability and Fluctuating Demand 174 Client Relationship 174 Customer Effort 175 Uniformity 176 Providing Quality Services 176 Customer Satisfaction Measurement 177 The Importance of Internal Marketing 177 Overcoming the Obstacles in Service Marketing 178 Limited View of Marketing 179 Limited Competition 179 Noncreative Management 179 No Obsolescence 180 The Service Challenge 180 Banking 181 Health Care 181 Insurance 182 Travel 182 Implications for Service Marketers 183 Conclusion 184

143

The Need for Marketing Intermediaries 143 Classification of Marketing Intermediaries and Functions 143 Channels of Distribution 145 Selecting Channels of Distribution 146 Specific Considerations 146 Managing a Channel of Distribution 149 Relationship Marketing in Channels 149 Vertical Marketing Systems 149 Wholesaling 152 Store and Nonstore Retailing 153 Store Retailing 153 Nonstore Retailing 154 Conclusion 157

Chapter 11 Pricing Strategy

159

Demand Influences on Pricing Decisions 159 Demographic Factors 159 Psychological Factors 159 Price Elasticity 160 Supply Influences on Pricing Decisions 161 Pricing Objectives 161 Cost Considerations in Pricing 161 Product Considerations in Pricing 163 Environmental Influences on Pricing Decisions Competition 164 Government Regulations 164

170

Chapter 13 Global Marketing

164

185

The Competitive Advantage of Nations 186 Organizing for Global Marketing 187 Problems with Entering Foreign Markets 187 Organizing the Multinational Company 189 Programming for Global Marketing 192 Global Marketing Research 192 Global Product Strategy 194 Global Distribution Strategy 195

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Contents

Global Pricing Strategy 196 Global Advertising and Sales Promotion Strategy 196

Entry and Growth Strategies for Global Marketing 197 Conclusion 199

SECTION II ANALYZING MARKETING PROBLEMS AND CASES 201 A Case Analysis Framework

202

1. Analyze and Record the Current Situation 203 2. Analyze and Record Problems and Their Core Elements 207 3. Formulate, Evaluate, and Record Alternative Courses of Action 208 4. Select and Record the Chosen Alternative and Implementation Details 208

Pitfalls to Avoid in Case Analysis 209 Communicating Case Analyses 210 The Written Report 211 The Oral Presentation 213

Conclusion

Discovering Product Assortments Online 230 Exercise 5

Brand Equity on the Internet

230

Exercise 6

The Impact of Communities on Marketing 231 Exercise 7

Pricing Issues on the Internet

231

Selecting the Internet as a Distribution Channel 231

SECTION III FINANCIAL ANALYSIS FOR MARKETING DECISIONS 215 216

Break-Even Analysis 216 Net Present Value Analysis 218 Ratio Analysis 220

Conclusion

Exercise 4

Exercise 8

214

Financial Analysis

Exercise 3

Consumer Decision-Making Process 229

224

Exercise 9 Internet Advertising 232 Exercise 10

The Adaptation of Services to the Internet 233

SECTION IV INTERNET EXERCISES AND SOURCES OF MARKETING INFORMATION 225 PART A INTERNET EXERCISES 227 Charles Heath: University of Kentucky Exercise 1 Corporate Web Sites 228

Exercise 11

Marketing Communications Techniques in the Internet Age 233

PARTB INTERNET SOURCES OF MARKETING INFORMATION 235 Charles Heath: University of Kentucky

Exercise 2

SECTION V

Online versus Offline Retail Experiences 228

MARKETING MANAGEMENT CASES 241

Contents xv

CASE GROUP A

Case 8

MARKET OPPORTUNITY ANALYSIS 243

Pfizer, Inc., Animal Health Products—Industry Downturns and Marketing Strategy 311 Jakki J. Mohr and Sara Streeter: University of Montana

Casei

McDonald's Corporation in the New Millenium 243 J. Paul Peter and Ashish Gokhale: University of Wisconsin-Madison

Case 9

The Launch of the Sony Playstation 3 321 David Wesley and Gloria Barczak: Northeastern University

Case 2

South Delaware Coors, Inc. 250 James E. Nelson and Eric J. Karson: University of Colorado

Case 10

Snacks to Go 336 JoAnn K. Linrud: Central Michigan University

Case 3

Ruth's Chris: The High Stakes of International Expansion 259 Allen H. Kupetz and lion Alon: University of Western Ontario

Case 4

Coach Inc.: Is Its Advantage in Luxury Handbags Sustainable? 266 John E. Gamble: University of South Alabama

CASE GROUP C PROMOTION STRATEGY

353

Case 11

Wind Technology

353

Ken Manning: University of South Carolina Jakki J. Mohr: University of Montana

Case 12

Mountain Dew: Selecting New Creative 359 Douglas B. Holt: Oxford University

Case 5

Panera Bread Company

281

Arthur A. Thompson: The University of Alabama

Case 13 Red Bull

376

Richard R. Johnson, Jordan Mitchell, Paul W. Farris and Ervin Shames: University of Virginia

CASE GROUP B

Case 14

PRODUCT STRATEGY 297

"Hips Feel Good"—Dove's Campaign for Real Beauty 390

Case 6 Starbucks—Early 2008

297

David Wesley: Northeastern University

J. Paul Peter: University of Wisconsin-Madison

CASE GROUP D

Case 7 easyCar.com

Case 15 302

John J. Lawrence: University of Idaho Luis Solis: University of Idaho Instituto de Empresa

DISTRIBUTION STRATEGY 404 IKEA's Global Strategy: Furnishing the World 404 Paul Kolesa

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Case 16 Blockbuster Entertainment Corporation 412 James A. Kidney: Southern Connecticut State University Case 17 eBay: In a League by Itself

423

Louis Marino and Patrick Kreiser: The University of Alabama Case 18 Wal-Mart Stores, Inc.: A New Set of Challenges 451 Arthur A. Thompson: The University of Alabama CASE GROUP E PRICING STRATEGY Case 19 Schwinn Bicycles

Case 24 Abercrombie & Fitch: An Upscale Sporting Goods Retailer Becomes a Leader In Trendy Apparel 516 Janet Rovenpor: Manhatten College Case 25 Philip Morris Companies

539

Keith Robbins: George Mason University

SECTION VI STRATEGIC MARKETING CASES Casei Yum! Brands, Pizza Hut, and KFC

555

Jeffrey A. Krug: Appalachian State University 480

480

J. Paul Peter: University of Wisconsin-Madison

Case 2 Caterpillar, Inc.

569

Sara L. Pitterle and J. Paul Peter: University of Wisconsin-Madison

Case 20 Toyota 483

Case 3 EMR Innovations

Brian Brenner and Chester Dawson: BusinessWeek

Kay M. Palan: Iowa State University

Case 21 Cowgirl Chocolates

Case 4 Harley-Davidson, Inc.—Motorcycle Division 592

490

John J. Lawrence, Linda J. Morris, and Joseph J. Geiger: University of Idaho Case 22 Clearwater Technologies

503

Susan F. Sieloff and Raymond M. Kinnunen: Northeastern University CASE GROUP F SOCIAL AND ETHICAL ISSUES IN MARKETING MANAGEMENT 508 Case 23 E. & J. Gallo Winery

553

508

A. J. Strickland III and Daniel C. Thurman: The University of Alabama

581

J. Paul Peter: University of Wisconsin-Madison Case 5 PepsiCo in 2007: Strategies to Increase Shareholder Value 605 John E. Gamble: University of South Alabama Case 6 Kikkoman Corporation in the Mid-1990s: Market Maturity, Diversification, and Globalization 622 Norihito Tanaka: Kanagawa University Marilyn L. Taylor: University of Missouri at Kansas City Joyce A. Claterbos: University of Kansas

Contents

Case 7 The Black & Decker Corporation

SECTION VII 644

John E. Gamble: University of South Alabama Arthur A. Thompson: University of Alabama Case 8 Expresso Espresso

666

Calvin M. Bacon, Jr.: University of South Alabama Case 9 Krispy Kreme Doughnuts in 2005: Are the Glory Days Over? 688 Arthur A. Thompson: University of Alabama Amit J. Shah: Frostburg State University Case 10 Dell, Inc., in 2005: A Winning Strategy? 713 Arthur A. Thompson: University of Alabama John E. Gamble: University of South Alabama

DEVELOPING MARKETING PLANS 743 A Marketing Plan Framework 744 Title Page 745 Executive Summary 745 Table of Contents 746 Introduction 746 Situational Analysis 746 Marketing Planning 746 Implementation and Control of the Marketing Plan 748 Summary 750 Appendix—Financial Analysis 750 References 753

Conclusion 753 Chapter Notes Index

762

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