Principles & Practice of Marketing

Principles & Practice of Marketing

Jim Blythe

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Principles & Practice of Marketing Jim Blythe

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Copyright 2006 Thomson Learning The Thomson logo is a registered trademark used herein under licence. For more information, contact Thomson Learning High Holborn House 50-51 Bedford Row London WC1R 4LR or visit us on the World Wide Web at: http://www.thomsonlearning.co.uk

ISBN-13: 978-1-84480-120-6 ISBN-10: 1-84480-120-9

This edition published 2006 by Thomson Learning. All rights reserved by Thomson Learning 2006. The text of this publication, or any part thereof, may not be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, storage in an information retrieval system, or otherwise, without prior permission of the publisher. While the publisher has taken all reasonable care in the preparation of this book the publisher makes no representation, express or implied, with regard to the accuracy of the information contained in this book and cannot accept any legal responsibility or liability for any errors or omissions from the book or the consequences thereof.

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Brief contents
Part One Concepts and Contexts
1 2 3

Managing the Exchange Process 2 The Marketing Environment 29 Marketing Domains 60

Part Two Markets and People

4 5 6 7 8 9

101

Consumer Behaviour 102 Organisational Buying Behaviour 149 Segmentation,Targeting and Positioning 175 Marketing Information and Research 210 Communications Theories 248 International Marketing 295

Part Three Strategy 329

10 11 Creating Competitive Advantage 330 Building Customer Relationships 366

Part Four Marketing in Practice

12 13 14 15 16 17 18 19 20 21 22

393

Product Portfolio 395 New Product Development 419 Pricing 445 Advertising 478 Public Relations and Sponsorship 513 Selling and Key-Account Management 543 Exhibitions and Sales Promotions 576 Direct and On-line Marketing 605 Managing Channels 641 Intermediaries 676 People, Process and Physical Evidence 703

Contents
Preface xiii Walk through tour xvi Website box Preview case revisited Amway Case Study ICANN 58 57

Part one Concepts and Contexts

1

3
1

The Marketing Domains 60

Learning Objectives 61 Introduction 61 Preview case Ty Hafan The Childrens Hospice in Wales 62 Non-profit Marketing 62 Marketing in Practice Canadian Identity 65 Internal Marketing 66 Marketing in Practice Aer Lingus 67 Marketing in Practice Southwest Airlines 68 Marketing in Practice Labyrinth Solutions Ltd 77 Social Responsibility and Ethics 78 Marketing in Practice Recycling 86 Services Marketing 88 Branding 89 Marketing in Practice The Pepsi Challenge 90 Summary 94 Chapter review questions 94 Preview case revisited Ty Hafan 95 Case Study Claims Direct 96

Managing the exchange process 2

Learning Objectives 3 Introduction 3 Preview case Opodo 4 Definitions of Marketing 4 The Marketing Concept 6 Marketing in Practice Fair Trade 7 Customer Needs 11 What Marketers Do 13 Marketing in Practice Drink Up! 15 Antecedents of Marketing 17 The Scope of Marketing 22 Marketing in Practice Spar Wholesalers 23 Summary 25 Chapter review questions 26 Preview case revisited Opodo 26 Case Study Paradores de Turisimo 27

The Marketing Environment 29

Learning Objectives 30 Introduction 30 Preview case Amway and the Internet 31 Classifying Environmental Factors 31 Macro- versus Micro-environment 32 Marketing in Practice The World Trade Organisation 35 Marketing in Practice Saga Holidays 38 Marketing in Practice The Atkins Diet 40 Marketing in Practice Intervention by Regulars 48 The Micro-environment 49 Marketing in Practice Airbus Industrie 53 Internal Environment 55 Summary 56 Chapter review questions 57

Part two Markets and People

4

101

Consumer Behaviour 102

Learning Objectives 103 Introduction 103 Preview case Amena Movies 104 The Decision-Making Process 104 Pre-purchase Activities 107 Marketing in Practice Tesco 110 Consumption of the Product 114 Marketing in Practice Granite Rock 118 Disposal 119 Marketing in Practice Trade-In 120 Influences on the Buying Decision 120

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Contents

Drive, Motivation and Hedonism 121 Involvement 122 Marketing in Practice Manchester United 124 Learning and Perception 125 Marketing in Practice KLM Flying Dutchman 129 Peer and Reference Groups and the Family 135 Marketing in Practice Tribalism 136 The Family 138 Self-Concept 142 Summary 143 Chapter review questions 144 Preview case revisited Amena 144 Case Study Dont forget its a diesel 145

Targeting 200 Positioning 202 Re-positioning 205 Summary 205 Preview case revisited P&O 206 Case Study Continental Tyre AG 207

Marketing Information and Research 210

Learning Objectives 211 Introduction 211 Preview case Dirty Linen 212 Types of Marketing Research 212 Applied Marketing Research 214 Marketing Information Systems 215 Data Types 216 Planning for Research 216 Obtaining Information: Secondary Sources 219 Marketing in Practice Mintel 219 Obtaining Information: Primary Sources 219 Marketing in Practice Sports Council for Wales 223 Observation and Experiment 229 Marketing in Practice Loyalty Cards 230 Marketing in Practice Fisher Price 231 Analysing and Interpreting Quantitative Data 235 Qualitative Research 238 Marketing in Practice Biasing Respondents 239 Ethics in Marketing Research 242 Summary 244 Chapter review questions 244 Preview case revisited Dirty Linen 245 Case Study Insight Express 245

Organisational Buying Behaviour 149

Learning Objectives 150 Introduction 150 Preview case CMS Webview 151 The Decision-making Unit 151 Marketing in Practice Lockheed 156 Classifying Business Customers 158 Marketing in Practice 2001 Electronic Components Ltd 159 Marketing in Practice B&W Speakers 161 Marketing in Practice The European Union 162 Buyers Techniques 164 The Buygrid Framework 165 Value Analysis 167 Evaluating Supplier Capitability 168 Evaluating Supplier Performance 169 Summary 17 0 Chapter review questions 171 Preview case revisited CMS Webview 171 Case Study Aircraft carriers 172

Communications Theories 248

Learning Objectives 249 Introduction 249 Preview case Mini 250 Attitude Formation and Change 250 Communication 256 The Hierarchy of Communication Effects 260 E-Marketing in Practice Search Engines 261 Signs and Meaning 261 Miscommunication 265 Elements of the Communications Mix 271 Structuring the Communications Mix 273 Mechanisms of Personal Influence 274

Segmentation, Targeting and Positioning 175

Learning Objectives 176 Introduction 176 Segmentation 176 Preview case P&O Ferries 177 Segmenting the Market 180 Marketing in Practice Dutch Cheese 183 Marketing in Practice Pink Pound Travel 189 Marketing in Practice Frizzell Insurance 192 Segmenting Business Markets 193

Contents

ix

E-Marketing in Practice Viral Marketing 275 Formulating a Strategy 275 Push vs. Pull Strategies 275 Budgeting 277 Planning the Campaign 278 Tactical Considerations 279 Putting it all Together 280 Integration of Marketing Communications 281 International Marketing Communications 284 E-Marketing in Practice HSBC 286 Researching the Effectiveness of Communications 286 Summary 289 Chapter review questions 290 Preview case revisited Mini Cooper 291 Case Study Full Stop 291

International Marketing 295

Learning Objectives 296 Introduction 296 Preview case Levi Strauss 296 Globalisation of Trade 297 International Business Perspectives 299 Assessing Market Attractiveness 301 Marketing in Practice Tjaereborg 301 Global Strategy 306 Culture 308 Marketing in Practice Watch Your Language! 310 E-Marketing in Practice Global E-tailing 314 Market Entry Tactics 316 Payment for Goods 321 Marketing in Practice McDonnell Douglas 322 Summary 323 Chapter review questions 324 Preview case revisited Levi Strauss 324 Case Study The New Ten 325

Marketing Strategy and Corporate Strategy 335 Strategic Planning 337 The Written Document 339 Setting Objectives 340 Complexity and Objective Setting 341 Market Strategies 343 Marketing in Practice Hull Telephone System 344 Competitive Positions 347 Marketing in Practice BMI Baby 348 Competitive Moves 348 Collaborating with Competitors 353 Growth Strategies 354 Value-based Marketing 356 Does Strategy Matter? 357 Summary 361 Chapter review questions 361 Preview case revisited IMG Sports Agency 362 Case Study Proctor and Gamble 362

11 Building Customer Relationships 366

Learning Objectives 367 Introduction 367 Preview case The DVLA 368 The Value Chain 368 E-Marketing in Practice Eurotunnel 372 Building Relationships 372 Quality, Value and Service 375 E-Marketing in Practice VDSA 376 Managing the Relationship in Consumer Markets 378 Marketing in Practice Brand Relationships 380 Customer Retention Strategies 381 Marketing in Practice IKEA 383 Customer Winback 384 Summary 387 Chapter review questions 387 Preview case revisited The DVLA 388 Case Study Uniao Digital Perifericos LTDA 388

Part three Strategy 329

10 Creating Competitive Advantage 330
Learning Objectives 331 Introduction 331 Preview case IMG Sports Agency Defining Strategy 333 The Nature of Strategy 333 332

Part four Marketing in Practice

Learning Objectives 396 Introduction 396

393

12 Product Portfolio 395

Contents

Preview case HJ Heinz 397 The Product Life Cycle 397 Managing Product Portfolios 400 The Boston Consulting Group Matrix 401 The General Electric Market AttractivenessCompetitive Position model 404 Positives and Problems with Grid Analysis 406 Service Products 406 E-Marketing in Practice The Dot.Com Bubble 409 Marketing in Practice Paying for Services 411 Industrial Product Strategy 411 Packaging 413 Summary 415 Chapter review questions 415 Preview case revisited HJ Heinz 416 Case Study Smith and Nephew 416

Determining Demand Customer Perceptions of Price 454 Price Sensitivity 455 Costs 456 Competition 457 Pricing Methods 458 Customer-based Pricing Methods 459 Marketing in Practice Last-minute Holidays 460 Pricing in International Markets 467 Pricing Policies in Business-to-Business Markets 469 Legality of Pricing Policies 470 Transfer Pricing 470 Competitive Bidding 470 Summary 473 Chapter review questions 474 Preview case revisited International Software Market 474 Case Study Internet Auctions 475

13 New Product Development 419

Learning Objectives 420 Introduction 420 Preview case Gillette 421 Types of New Product 421 The New Product Development Process 424 Marketing in Practice James Dyson 425 Sources of Ideas 426 Organising for New Product Development 428 Marketing in Practice Staplethorne 428 Diffusion of Innovation 431 E-Marketing in Practice The Spidercatcher 435 Influences on the Diffusion Process 437 Summary 440 Chapter review questions 440 Preview case revisited Gillette 441 Case Study Innovations Catalogue 441

15 Advertising 478
Learning Objectives 479 Introduction 479 Preview case Scotiabank 480 How Advertising Works 480 Developing an Advertising Strategy 481 Marketing in Practice David Ogilvy 484 Types of Media 485 Transport Advertising 501 Marketing in Practice The London Underground 502 Marketing in Practice Baconinflate 503 E-Marketing in Practice thisismoney.com 506 Summary 507 Chapter review questions 508 Preview case revisited Scotiabank 508 Case Study Viral Marketing 509

14 Pricing 445
Learning Objectives 446 Introduction 446 Preview case International Software Market 447 Price and the Bottom Line 447 The Pricing Process 448 Pricing Objectives 450 Pricing Strategy 450 Marketing in Practice Lucies Farm Tesco and Levis 453

16 Public Relations and Sponsorship 513

Learning Objectives 514 Introduction 514 Preview case Belmont, Western Australia 515 PR and External Communication 515 Tools of Public Relations 517 Creating and Managing a Reputation 520

451

Contents

xi

Image 522 Marketing in Practice Best-laid Plans 523 Corporate Image and Added Value 524 Risk Management 525 Marketing in Practice Bhopal 527 The Role of PR in the Organisation 528 Internal Communications Media 528 Sponsorship 531 Marketing in Practice Lincoln Mercury 533 Using Outside Agencies to Build Corporate Image 533 Developing a Brief 537 Measuring Outcomes 538 Summary 539 Chapter review questions 539 Preview case revisited Belmont 540 Case Study Business-to-Business Sponsorship 540

17 Selling and Key-Account Management 543

Learning Objectives 544 Introduction 544 Preview case Lloyds TSB 545 The Role of Personal Selling 545 E-Marketing in Practice Handbag.com 547 A Marketers View 547 The Salespersons-Eye View 548 Types of Salesperson 552 Marketing in Practice Mitsubishi-Tokyo Pharmaceuticals 554 The Selling Cycle 554 The Sales Presentation 555 Key-Account Selling 561 The KAM/PPF Model 564 Negotiation 566 Managing the Salesforce 568 Summary 572 Chapter review questions 572 Preview case revisited Lloyds TSB 573 Case Study Deloitte 573

Research into Exhibitions 580 Visitor Expectations 582 Exhibitions and Key Account Management 583 Marketing in Practice ExpoInter 584 Why Exhibitions Fail 587 Planning for Exhibitions 587 Managing the Exhibition Stand 589 Alternatives to Exhibitions 591 Sales Promotion 592 Marketing in Practice Goldwell 593 Categories of Sales Promotion 594 Sales Promotion Techniques 596 Marketing in Practice Hoover 597 Integrating Sales Promotions with other Communications Tools 599 Summary 600 Chapter review questions 600 Preview case revisited The London Air Show 601 Case Study Tescos Computers for Schools 602

19 Direct and On-line Marketing 605

Learning Objectives 606 Introduction 606 Preview case Technovations 607 The Basis of Direct Marketing 607 Database Marketing 608 Marketing in Practice Henry Doubleday Research Association 610 Managing Direct Marketing 614 Marketing in Practice Heist 616 Tools of Direct Marketing 617 Internet Marketing 627 Internalisation and the Internet 630 E-Marketing in Practice Boo.com 632 Buyer Behaviour and the Internet 633 Barriers to Use of the Internet 635 Summary 637 Chapter review questions 637 Preview case revisited Technovations 638 Case Study E-Bay 638

18 Exhibitions and Sales Promotions 576

Learning Objectives 577 Introduction 577 Preview case The London Air Show 578 Exhibitions and Trade Fairs as Communication 578

20 Managing Channels 641

Learning Objectives 642 Introduction 642 Preview case Giant Bicycles 643 Functions of Intermediaries 643 Intermediaries in Industrial Channels 645

xii

Contents

Marketing in Practice Tyron 646 Channel Strategy 647 E-Marketing in Practice Dell Computers 648 Distribution Intensity 650 Selecting a Distributor 651 Managing Distribution Channels 655 Logistics and the Supply Chain 657 Managing the Supply Chain 661 Establishing and Maintaining Relationships 663 Channel System Orientation 664 Inventory Management 665 International Trade 667 Marketing in Practice Little Old Winedrinker Me 668 Transportation Methods 669 Summary 671 Chapter review questions 672 Preview case revisited Giant Bicycles 672 Case Study C.A. Papaellina and Co, Ltd 673

Service Levels 692 Merchandise Levels 693 Marketing in Practice Tie Rack 694 Strategic Decisions in Retailing 694 Competitive Positioning for Retailers 696 Layout and Display Strategies 697 Summary 699 Chapter review questions 699 Preview case revisited Youngs HomeBrew 700 Case Study IKEA 700

22 People, Process and Physical Evidence 703

Learning Objectives 704 Introduction 704 Preview case easyJet 705 Services Marketing 705 Marketing in Practice Credit Card Tarts 708 People 709 Marketing in Practice IKEAs Co-workers 710 Process 713 Marketing in Practice Vidal Sassoon 717 Physical Evidence 718 Summary 720 Preview case revisited easyJet 720 Case Study Twenty-first Century Banking 721 Glossary Index 725

21 Intermediaries 676
Learning Objectives 677 Introduction 677 Categorising Intermediaries 677 Preview case Youngs Home-Brew 678 Marketing in Practice Holiday Inns 683 Shopping Behaviour 687 Non-store Retailing 689 Marketing in Practice Party Time 690

733

Preface
Introduction
Over the past twenty years or so, marketing has become one of the most popular and exciting disciplines in most business schools and universities. The reasons for this are obscure, but may well lie in the fact that we are all consumers. Understanding how the exchanges between sellers and buyers operate, and understanding what motivates people to buy, are subjects which all of us can relate to. Perhaps less creditably, marketing has been seen as a kind of magic wand for making businesses succeed: many company directors seem to think that bringing in a top-class marketer will make customers flock in. In fact, marketers are not magicians, and merely drafting in someone with marketing expertise will not make any difference to a firms success unless it is backed up with a real concern for, and understanding of, customer needs.

Who Should Use This Text

The text has been designed primarily for undergraduates on general business studies or marketing courses, but works equally well for HND students and MBA students who have not studied marketing before. Students on Chartered Institute of Marketing Certificate and Diploma courses will find everything they need in the book, and for practitioners it should provide a useful update on current academic thinking and research.

Aim and Structure of the Text

The intention of this book is to explain the received wisdom about marketing, and at the same time provide the counter-arguments which moderate the debate. The book examines what marketing will and will not do, and seeks to strike a balance between academic thinking and practical experience. The book begins with some of the key theoretical underpinnings of marketing thought, the concepts and contexts within which academic marketers consider marketing issues. The second section of the book deals with markets and people. People are at the heart of all businesses, but marketers are especially concerned with customers and consumers: markets are themselves made up of buyers and sellers, so a concern for people and their needs is central to marketing thought. The third section of the book looks at the strategic issues in marketing positioning the firm and its products advantageously against competitors, and building relationships with customers. The final, and largest, section of the book deals with the tactics of marketing. For most non-marketers, the tactical aspects (promotion, personal selling, pricing, new product development) are the most prominent part of marketing. It is common to say that these elements are like the tip of an iceberg, with the most important marketing activities happening out of the sight of onlookers. This may be true, but in fact it is the tactical aspects of marketing that occupy most of the attention of practitioners the salespeople, media buyers, brand managers, advertising executives and so forth who are engaged in marketing on a day-to-day basis.

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Preface

Text Book Features

To help you get the most from the book, there are various features in the text. First, each chapter contains three or four Marketing in Practice boxes. These are intended to give live, up to date examples of current marketing issues and practice: they are additional to examples in the text, and go into more detail. Second, there are two cases studies in each chapter: One opens the chapter in order to flag up the issues, and is revisited at the end to show how the company involved solved its difficulties. The second case offers an opportunity for you to test your understanding of the issues contained in the chapter. Third, each chapter contains a set of Talking Points, which are boxed statements which challenge the accepted views in the text. Talking Points are intended to stimulate argument and deeper thought about the issues: they are deliberately provocative! You should try to use these to understand the debate, and to develop critical thinking: you should not simply accept the view that, because something is printed in a textbook, it must be true. Fourth, each chapter has a set of chapter review questions at the end. These link to the key points in the chapter, and are for you to use to check your understanding of the chapter. Signposting the chapter is achieved by outlining the key learning objectives at the beginning: these are reprised at the end in the Summary, and at various points in the chapter there are markers to show where key outcomes are covered. These pointers should be used for revision purposes, however it would be difficult or impossible to understand the chapter just by looking for the key points!

Supplementary Material
There is a website to accompany the text, the details of which are printed opposite. This book and its accompanying materials are not a substitute for your lectures, but they should give you a solid basis on which to build an understanding of current marketing thought and practice.

Thanks
Finally, I would like to acknowledge the people who have helped me in writing this book. First, my friends and colleagues at Thomson, Anna and Jennifer in particular, for their patience and support in particular for remaining positive about me and the book during the difficult times. Second, my colleagues at the University of Glamorgan for help, advice, friendship and practical guidance. Third, my wife Sue for bringing me tea and calming me down. Finally, I would like to thank my many students. Some were excellent scholars who asked me difficult questions and made me think, some were terrible scholars who made me work harder as a teacher, some were class comedians who made me laugh: wherever you are and whatever you are doing, thanks for being such fun to work with!

Visit the supporting website at www.thomsonlearning.co.uk/blytheppm to find further teaching and learning material, including:
Student
MCQs to test your learning Links to useful companies, news and other relevant sites Glossary explaining key terms Internet Exercises A Guide to Writing a Marketing Plan and relevant examples Full length cases allowing more detailed study

Lecturers
Further Case Studies Teaching Notes and answers to the Case Studies provided in the text Instructors Manual Including how to teach from this text, suggested answers to the Review Questions and answers to the Internet Exercises Downloadable PowerPoint slides Varying Course outlines Further questions to be used in tutorials and seminars and suggested answers Further questions and exercises including essay questions, practical exercises and tutorial exercises

Supplementary resources
ExamView This testbank and test generator provides a huge amount of different types of questions, allowing lecturers to create on-line, paper and local area network (LAN) tests. This CD-based product is only available from your Thomson sales representative.

Virtual Learning Environment

All of the web material is available in a format that is compatible with virtual learning environments such as Blackboard and WebCT. This version of the product is only available from your Thomson sales representative.

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Walk Through Tour

176 Part two Markets and People Chapter two The Marketing Environment 31

Learning Objectives
After reading this chapter, you should be able to:

Preview case Amway and the Internet

1 2 3 4 5 6 7

Understand the basic concept behind segmentation. Explain the role of marketing research in segmenting markets. Describe some of the commonest methods of segmenting markets. Explain the role of targeting. Explain the potential strategic issues in targeting. Explain what positioning implies for customers. Understand the key features of successful positioning.

Introduction

egmentation is about separating the overall market into groups of customers with similar needs. Targeting is about developing variations on the basic product to meet the needs of these different groups. Segmentation can be defined as the grouping of individuals or organisations with similar needs, those needs being capable of being met by a single product offering. Targeting also implies deciding which groups of customers are the best ones to aim for. A basic tenet of business (and of life in general) is that it is impossible to please everybody. This means that marketers need to consider which segments they cannot please, and which they can, and then decide which of these segments will also be profitable. There are very few products which please everybody in fact, it is difficult to think of any. Even products such as Coca-Cola, which has penetrated soft-drink markets in almost every country on the planet and is the worlds most recognised brand only has a minority share of the worlds soft drinks market. Marketers therefore seek to position their products appropriately relative to competitors: positioning is, of course, in the minds of consumers. The relationship between segmentation, targeting and positioning is shown in Figure 6.1.

n 1959, Rich DeVos and Jay Van Andel founded Amway, operating out of the basements of their homes. The partners were ex-servicemen who believed in the American way hence the name of the firm. Amway operated then, and operates now, by encouraging people to found their own businesses to sell Amway products. The products range from household cleaning materials through to cosmetics, and all are sold by individuals operating from their own homes. Amway products are not available in retail shops, and most of the individuals selling them deal only with their friends, work colleagues and families. The system is relatively straightforward. Amway sells the products to individuals (called Independent Business Owners) who then have two responsibilities. First, they sell products on to final consumers, and second they recruit more people to become independent business owners. Recruiting more IBOs means that the recruiter moves up the Amway hierarchy and earns commission based on the new recruits sales levels. This system, known as multilevel marketing, means that Amway has automatic growth built into it, and so by 1980 the firms turnover passed the billion-dollar mark no mean achievement in only 20 years. By 2004 the company had 3.3 million IBOs in 80 countries worldwide, with little sign of the growth slowing down. However, several changes in the companys marketing environment were apparent. First, many other multilevel marketing operations had come into existence since 1959. These included several hundred companies marketing miracle cure products of dubious efficacy. Reputable and honest multilevel marketing companies represented competition for Amway, not for products but for recruits. The dishonest and disrep-

utable companies represented a more insidious threat they gave multilevel marketing a bad name, putting off many people who might otherwise have had successful careers with Amway. The second problem arose because of a rash of schemes which looked like multilevel marketing but in fact were not. These schemes paid commission for recruiting people, so that the main activity for a member was finding unsuspecting victims to offload over-priced goods onto. These pyramid schemes, as they are known, had little or no intention of selling products to end consumers. Recruits were encouraged to pay for large stocks of product, and the only way they could recoup their losses was to find someone else to sell the stock to. Many people lost their life savings in such schemes, which provoked governments worldwide to introduce strict legislation regarding all schemes involving individuals recruiting other individuals. This meant that Amway had to adapt its systems to respond to Government restrictions in all the countries within which it operates. A third problem became apparent in the late 1990s, with the rapid growth of the Internet worldwide. The main advantage (for consumers) of buying from Amway is the convenience of obtaining the products directly from a friend, neighbour or work colleague, thus avoiding a trip to the shops. The Internet represented both an opportunity and a threat for Amway, since on-line purchasing operates 24 hours a day 7 days a week, but on the other hand the company was well-placed to take advantage of e-commerce, since it already had worldwide distribution systems in place. For Amway, constant growth was therefore going hand-in-hand with a constant need to adapt to the trading environment.

Segmentation
The purpose of segmenting the market is to ensure, as far as possible, that resources are directed at those individuals or organisations which are likely to yield the best returns. All firms operate with limited resources: taking a scattergun approach to marketing activities rather than aiming at specific groups will inevitably waste those resources.

Classifying Environmental Factors

Factors within the environment can be classified in a number of ways. First, the environment can be considered in terms of those elements which affect all firms within the industry (the macro environment), as opposed to those elements which only affect the individual firm (the micro environment). In general, the macro environment is difficult to

Learning Objectives appear at the start of every chapter to help you monitor your understanding and progress through the chapter. Each chapter also ends with a summary section that recaps the key content for revision purposes

Learning Logo When the Learning Objectives are covered within the text they are identified clearly in the margin, acting as a useful revision tool

Preview Case each chapter begins with an in depth case study which sets the scene for the chapter. This case study is then revised at the end of each chapter which shows the reader how the knowledge learnt within the chapter is integrated within the real world example

Chapter two The Marketing Environment

35

152
Chapter nine International Marketing 299

Part two Markets and People

Marketing in Practice The World Trade Organisation

fter the Second World War, Governments were faced with the task of rebuilding the world economy and putting it onto a peaceful footing. At the heart of their thinking was the elimination of protectionism the policy of preventing imports in order to protect ones own industries. Trade is always good so presumably removing the barriers to trade will increase wealth and welfare for everybody. Each country would (in theory) produce what it is best able to produce, and would have access to markets throughout the world, selling its goods in exchange for goods produced elsewhere. Of course, in practice there were many difficulties to overcome. The countries involved naturally wanted to preserve their own industries while opening up access to other markets, and in any case the problems involved in dismantling Customs tariffs and import regulations proved to be much more complex than at first appeared. In addition, it had to be recognised that some very poor countries were simply unable to open up their markets, since they had little to sell and already suffered from high unemployment: a period of readjustment that might have involved almost negligible temporary falls in the standard of living of a rich country would mean mass starvation in some Third World countries.

However, the General Agreement on Tariffs and Trade (GATT), as it was then known, held a lengthy series of talks which each reduced the barriers to trade. The final round of GATT talks, called the Uruguay Round, lasted from 1986 to 1994 and culminated in the founding of the World Trade Organisation (WTO) in 1995. The WTO has 146 member countries (as of April 2003) and is the regulatory body on world trade. It has powers to regulate abuses of free trade, and has been instrumental in reducing customs tariffs and other barriers to trade, to the benefit of all member states. Over the 50 years since GATT was founded, world trade has increased 22-fold. Exports worldwide grew by an average 6 per cent annually, creating jobs and reducing the cost of goods throughout the world. The WTO continues to act as a forum for negotiation: agriculture, services, unfair subsidies, intellectual property, transparency in Government procurement, and a range of issues raised by Third World countries as they struggle to develop and to integrate themselves with the industrialised nations. There is little doubt that the activities of the WTO, and GATT before it, have contributed greatly to the growth of globalisation: the greater efficiency generated by opening up larger markets has meant a dramatic reduction in the cost of many goods, and consequently a dramatic rise in the worlds standard of living. There is much still to do, but the WTO will continue to work towards a tariff-free and barrier-free world.

Talking Point If globalisation is such a great idea, why is it that so many people protest about it? The anti-globalisation movement has tried to disrupt trade talks, has attacked global companies such as McDonalds, and has protested to the point of rioting in all parts of the globe. Paradoxically, the antiglobalisation movement is itself global. So whats the problem? Anti-globalists say that having everybody use the same products, watch the same TV shows, and wear the same clothes is destroying the worlds cultural diversity and reducing everything to the same grey goo. Also, they argue that globalised companies are too powerful they are more powerful than national governments, in fact, and can literally ignore democratically elected representatives. Eventually, the argument runs, we will all be controlled by big business if we arent already. On the other hand, if people didnt want the goods they wouldnt buy them. We know that McDonalds is an American corporation thats part of the fun. And isnt sharing ideas a positive thing for the world, rather than keeping to some dogmatic principle?

Gatekeepers. These individuals control the flow of knowledge, either by being proactive in collecting information, or by filtering it. They could be junior staff w are told to visit a trade fair and collect brochures, or a personal assistant who sees his or her role as being to prevent salespeople from wasting the decision-maker time. Buyers. The individuals given the task of sourcing suppliers and negotiating the final deal. Often these are purchasing agents who complete the administrative task necessary for buying. These people often work to a specific brief, and may have very little autonomy, even though they may be the only contact a suppliers salespeople have at the purchasing organisation. Deciders. These are the people who make the final decisions, and may be senior managers or specialists. They may never meet any representatives of the supplyin companies. Deciders generally rely heavily on advice from other members of the DMU. Users. These are the people who will be using the products which are supplied: they may be engineers or technicians, or even the cleaning staff who use cleaning products. Their opinions may well be sought by the deciders, and in many cases th users are also the initiators. Influencers. These people have the ear of the deciders. They are trusted advise but from the supplying companys viewpoint they are extremely difficult to identi Influencers may be employed by the purchasing firm (for example, engineers, information systems managers or research managers) or they may be consultants (for example, architects, acoustics and safety consultants). An influencer might even be the deciders golf partner, old college friend, or teenage son.

International Business Perspectives

The philosophy behind the companys internationalisation effort is an important starting point for understanding the possible strategic and tactical approaches which might be taken to internationalisation. One classification of business perspectives is the EPRG classification (Muhlbacher et al. 1999). This classification is as shown in Table 9.1. There are two main schools of thought on the internationalisation of the firm. The first is the Uppsala, or stages of development, approach in which it is believed that firms go through a series of stages in becoming international and (eventually) global firms (see Figure 9.2). The stages are as follows: Table 9.1 Classification of international perspectives
Ethnocentric Perspective Polycentric perspective

Do global corporations really erode cultures?

Henry Westheim/Alamy

These categories are not, of course, mutually exclusive. A user might also be an influenc or a gatekeeper might also be an initiator. The categories were originally developed explain purchasing within families which may be an example of the apparent similarit between business-to-business marketing and consumer marketing. In fact, the members of the decision-making unit are affected both by rational a emotional motivations. Salespeople are well aware that buyers are affected by their liki or dislike for the suppliers representatives, and buyers will often be working to their ow

Two problems arise from the forecasting process. First, predicting the future is by no means a simple matter, because there are too many factors to take into account. Second, the impact of economic change will differ according to the business the firm is in, and even according to the structure and positioning of the business within the market. For example, an exporting business will be badly hurt by a rise in interest rates, since this will increase the value of the currency (making exports more expensive) and will also mean that the firm has higher overheads due to servicing debt. Even in the case of two firms within the same industry, one firm might have less reliance on debt than the other and therefore be less affected by a rise in interest rates. Another source of economic control by Governments is intervention in the markets. Governments can intervene in international money markets, buying or selling their own currencies in order to affect the value of the currency relative to other currencies. They might also intervene in commercial markets, buying up surplus stocks in order to maintain price levels. This type of intervention is a great deal less common than it once was, first because few Governments have the necessary financial reserves or purchasing power to affect global markets, and second because such intervention is often outlawed by international trading agreements since it amounts to an unfair subsidy of the Governments national industries.

An ethnocentric manager sees the domestic market as the most important, and the overseas markets as inferior. Often such managers do not perceive foreign imports as representing a serious threat at all. Polycentric managers look at each overseas market as if it were a separate domestic market. Each country is seen as a separate entity, and the firm seeks to be seen as a local firm within that country. Each market has its own manufacturing and marketing facilities, and there is only limited overlap. Regional orientation means grouping countries together, usually on a geographical basis, and providing for the specific needs of consumers within those countries. National boundaries are respected, but do not have the same importance as cultural differences. The truly global geocentric marketer thinks of the world as a single market, with opportunities for procurement, production and sales in whichever market segments are the most appropriate. Global marketers look for global segments (for example the global youth market), and for global opportunities to rationalise communications, production, and product development.

Figure 5.1 Relationships in the DMU

Dialogue between buyer and seller

Regional perspective

Influencer: acts as an adviser to the decider

Geocentric perspective

Information from suppliers

Gatekeeper: filters information from suppliers

Decider: makes the decision to buy

Purchase decision

Buyer: negotiates purchase with supplier

Initiator: recognises the problem

User: may flag up problem, may be lt d b d id

Marketing in Practice boxes are provided throughout which illustrate how marketing is applied in the real world

Talking points are provided throughout the text: these challenge the theory within the text, and provoke critical thinking and discussions in class

Glossary terms are highlighted in colour throughout and explained in full in a Glossary at the end of the book, enabling you to find explanations of key terms quickly

xvii

372

Part three Strategy

Chapter four Consumer Behaviour

143

144

Part two Markets and People

E-Marketing in Practice Eurotunnel

3 Ideal self. The person we wish we were.

Societe Generale DEntreprise. In normal times, these companies are competitors, but the sheer size of the project meant that one company alone could not handle the job. Each of the companies involved had, in typical builder fashion, other jobs on at the time. Wimpey was Britains biggest house builder, Taylor Woodrow had a series of office-building contracts, Costain had road-building contracts, and so forth. The companies were collaborators on the Tunnel, but competitors for the other jobs yet managed to make the project work. Eurotunnel was, and still is, the largest civil engineering project the world has ever seen. It could not have been completed without the establishment of a number of value networks concrete suppliers delivering to the Eurotunnel as well as to individual consortium members, railway companies buying tunnel track as well as office buildings, and so forth. The complexity of the total network involved almost every construction company, supplier, and customer in both Britain and France, and affected firms throughout the world.

4 Looking-glass self. The way we think other people see us. Each of these components has purchasing implications. The real self drives conspicuous consumption of cars, fashion, hairdressing and all the outward manifestations of self. Selfimage drives purchases of goods which fit the values and lifestyle of the individual, both conspicuously and inconspicuously. Ideal self drives self-improvement purchases such as education, cosmetic surgery, musical instruments, and self-help books. Looking-glass self is a reflection of real self, so similar drives will result. Self-concept has been shown to drive peoples behaviour on holiday. Some people clearly behave very differently on holiday than they do when at home, almost becoming new people: this is reflected in the type of holiday purchased and the types of activities undertaken (Todd 2001). Self-concept is, like attitude, learned and purposeful. It is also stable over time, within limits, and is unique to the individual.

Chapter review questions

1 What is the role of classical conditioning in advertising? 2 How does drive relate to motivation? 3 Under what circumstances would you expect someone to undertake an extensive external search? 4 Why do people become involved with specific brands? 5 What is the role of self-concept in buying fashion wear? 6 How might a firm use operant conditioning to encourage repeat purchases of a product? 7 What is meant by forward conditioning, and how would this relate to the use of music in advertising? 8 Why are families an important influence on decision-making? 9 Why is perception described as being both analytic and synthetic? 10 How might a service firm (such as a restaurant) minimise the perception of risk?

utting a tunnel under the English Channel, to connect Britain with Continental Europe, is an idea which has been around since 1802. Most of the opposition to the idea came from the military people the English Channel has proved to be a successful defence for Britain for thousands of years. The growth of the European Union changed that, however and the obvious fact that a bridge or tunnel is easily dynamited may have swayed the argument somewhat. In 1986, Margaret Thatcher (for Britain) and Francois Mitterand (for France) signed a treaty which authorised the tunnel to be built. The tunnel was built by a consortium of British and French civil engineering contractors. For the British, Taylor Woodrow, Costain, Wimpey, Balfour Beatty and Tarmac: for the French, Bouygues, Dumez, Spie Batignolles, Societe Auxiliaire DEntreprises and

Summary

Building Relationships
Building long-term relationships with customers has long been practised in business-tobusiness marketing. This is because there are relatively few customers in business markets, so that the loss of even one customer can have serious consequences. For example, there are only nine major High Street banks in Britain: a company specialising in computer software for cash point machines would be ill-advised to create a bad relationship with even one of them. Relationship marketing has met with rather less success in consumer markets, perhaps because consumers do not see any advantage in establishing a close relationship with the firms that supply the goods they use. The history of relationship marketing goes back to the Japanese keiretsu system, in which the companies in the value chain become extremely closely linked through a system of agreements, often for exclusive supply of components and raw materials. The keiretsu operate mainly on verbal agreements: Japanese businesses rarely worry too much about written contracts, since the Japanese legal system is not geared to enforcing such contracts. The result is a system which involves high degrees of trust and loyalty, and which apparently functions extremely efficiently. The lesson was not lost on Western organisations. Companies such as Bose, Compaq and Motorola began to send their engineering personnel to their suppliers in order to liaise on new product development and to consider ways of making the supply process more efficient, and they also stationed their salesforce in the retailers offices to help in merchandising the products (Leenders and Blenkhorn 1988). Upstream and downstream involvement by the major companies in running the value chain made everything work more efficiently, and therefore more profitably for all concerned.

f consumers are at the centre of everything that marketers do, consumer behaviour should be the starting-point in developing any marketing strategy. Consumer behaviour is not especially different from any other type of human behaviour: most behaviour is aimed at making life more convenient and comfortable. For human beings, this includes ensuring that we fit in with the people around us, and do not attract ridicule or abuse from them. Human behaviour is complex, and involves many exchanges at many different levels. It is those exchanges which marketers seek to influence and facilitate. The key points from this chapter are as follows:

Goals operate in hierarchies: establishing an

end goal will lead to establishing a set of subgoals.

Voiced complaints should be encouraged,

Preview case revisited Amena

because a voiced complaint is easier to deal with and less damaging than either private complaints or third-party complaints.
Operant conditioning involves action on the part

of the person being conditioned.

Families have the greatest influence on

behaviour, but other groups are also important.

Perception is both analytic and synthetic, but

People are not entirely rational when making

generates the only reality the individual has.

Self-concept is one of the most important non-

purchasing decisions emotional issues are also involved.

The less the individual knows about the product,

rational drivers for consumer behaviour.

Self-concept is, learned and purposeful. It is also

mena is rapidly finding itself in a difficult position, largely because it has not delivered on its promise, at least as far as some customers are concerned. Young people in urban areas find the system perfect the signals penetrate buildings easily, and the system can handle large numbers of calls so there is rarely a problem in getting a signal and a line. The picture looks very different, however, once the customer moves outside the city. The counter-website is a prime example of a private response except that it is happening in a very public forum. Amena may, of course, feel that the people who are posting their complaints on the

the longer the problem-solving behaviour will take.

The cost of obtaining information will be weighed

website are simply a bunch of soreheads without a real basis for their complaint, but in practice the dead spots are very real. The company is therefore faced with a choice either they can upgrade the system so that post-purchase dissonance is reduced or eliminated, or they can be much clearer in their promotional material in saying that the telephones are really only useful in cities. Simply selling telephones to anybody who asks for one is not a realistic option, because it stores up trouble for the future. Customers learn, and act on what they have learned in this case, they are acting in ways which could be damaging to the company.

stable over time, within limits, and is unique to the individual.

against the value of the information.

E-Marketing in Practice boxes show the role that electronic communications technology plays in marketing and provide up-to-date examples

Summaries each chapter ends with a comprehensive summary that provides a thorough re-cap of the key issues in each chapter, helping you to assess your understanding and revise key content

Review Questions are provided at the end of each chapter to help reinforce and test your knowledge and understanding, and provide a basis for group discussions and activities

Chapter four Consumer Behaviour

145

326

Part two Markets and People

Case Study: Dont Forget Its a Diesel

References
Bangeman, M. (1992): Meeting the Global Challenge (London: Kogan Page). Boyacigiller, N. (1991): The role of expatriates in the management of interdependence, complexity and risk in multinational corporations. Journal of International Business Studies. Cavusgil, S.T. and Kirpalani, V.H. (1993): Introducing products into export markets: success factors. Journal of Business Research 27(1), 115. Chetty, C. and Campbell-Hunt, Colin (2004): A strategic approach to internationalisation: a traditional vs. a born global approach. Journal of International Marketing 12(1), 5781. Deyliner, N. (1990): The effects of religious factors on durable goods purchase decisions. Journal of Consumer Marketing 7(3), 2738. Dunning, John H. (1993): The Globalisation of Business (London: Routledge). Ferraro, G.P. (2001): The Cultural Dimensions of International Business (Harlow: Prentice Hall). Harris, Greg (1996): International advertising: developmental and implementational issues. Journal of Marketing Management 12(6), 551560. Hofstede, Geert (1980): Cultures Consequences: International differences in work-related values (Beverly Hills, CA: Sage). Jamal, Ahmed (2003): Marketing in a multicultural world: the interplay of marketing, ethnicity and consumption. European Journal of Marketing 37(11), 15991620. Keegan W.J. (1989): Multinational Marketing Management (New York: Prentice Hall). McEnery, J. and Desharnais, G. (1990): Culture shock. Training and Development Journal 44(4), 4347. Moen, Oystein, Endresen, Iver and Gavlen, Morten (2003): Executive insights into the use of the Internet in international marketing: a case study of small computer firms. Journal of International Marketing 11(4), 129149. Muhlbacker, Hans, Dahringer, Lee and Leihs, Helmuth (1999): International Marketing: a global perspective (London: Thomson). Murdock, G.P. (1945): The common denominator of cultures. In R. Linton (ed.) The Science of Man (New York: Columbia University Press). Okazki, Shintaro (2005): Searching the Web for global brands: how American brands standardise their websites in Europe. European Journal of Marketing 39(1/2), 87109. Pedersen, Torbin and Pedersen, Bent (2004): Learning about foreign markets: are entrant firms exposed to a shock effect? Journal of International Marketing 12(1), 103123. Pressey, Andrew D. and Selassie, Habte G. (2002): Are cultural differences overrated? Examining the influence of national culture on international buyer-seller relationships. Journal of Consumer Behaviour 2(4), 354368. Singh, Nitish; Kumar, Vikas and Baack, Daniel (2005): Adaptation of cultural content: evidence from B2C e-commerce firms. European Journal of Marketing 39(1/2), 7186. Usunier, J.C. (1993): International Marketing: A cultural approach (Harlow: Prentice Hall). Vallaster, Christine and DeChernatony, Leslie (2005): Internationalisation of service brands: the role of leadership during the international brand-building process. Journal of Marketing Management 21(1/2), 181203. Whitelock, J. and Jobber, D. (1994): The impact of competitor environment on initial market entry in a new, non-domestic market. Proceedings of the Marketing Education Group Conference, Coleraine, July pp 10081017.

iesel fuel was, at one time, solely used for heavy lorries. In the UK, it was sold as DERV, which stands for Diesel Engined Road Vehicle, and was regarded as the fuel of choice for smelly, noisy, lowperformance road haulage. For vehicles travelling long distances at steady speeds, diesel is the perfect fuel diesel engines like work, but do not like constant acceleration and deceleration. However, the oil crisis of the 1970s led to the development of efficient, high-performance diesel engines for cars. Much better fuel economy, less harmful emissions, and substantially lower prices for diesel meant that many motorists in continental Europe were eager to buy diesel cars. For the type of high-mileage driving common in large countries like France and Germany, the diesel engines greater reliability and fuel efficiency meant that it quickly became a popular choice for many motorists. Within the UK the advantages were less obvious. A more crowded country, with more urban driving in most drivers repertoire, meant that improved fuel economy weighed less heavily than poorer acceleration. Also, the difference between the cost of diesel and the cost of petrol was not as great as in, say, France or Spain. By 1997, more than half of new cars sold in France and Spain were dieselfuelled, compared with only 16 per cent in the UK. Then in 1997 a new Government was elected, and fuel prices began to rise dramatically to the point where, by 2003, UK petrol was the highest-priced in Europe and motorists were really feeling the pinch. Over the five years from 1997 to 2002, sales of diesel cars doubled, and most of the growth was in the medium-sized range. Current projections indicate that the UK may well catch up with France by 2010: diesels now account for 60 per cent of French cars, and given that diesel fuel is only 70 per cent of the price of petrol in France, this trend is unlikely to reverse. In the UK, diesel fuel sells for around the same price as petrol, but the improved mileage compensates for the extra cost, and in the longer run it is likely that EU emission rules will force the UK Government to reduce the taxation on diesel in order to encourage more drivers to switch.

Against this background Volkswagen stepped in to grab its share of the market. German manufacturers in general are the worlds biggest exporters of diesel cars (after all, the diesel engine is a German invention) and Volkswagen saw a golden opportunity in the UK. VW aimed to become the diesel market leader by the end of 2002, and to do so profitably: no mean feat in a market where diesels were still seen as a necessary evil rather than an exciting alternative. To achieve this ambitious goal, VW began on a campaign designed to overcome the workhorse image of diesels. The campaign was centred on a series of TV adverts which the strapline Dont Forget its a Diesel. The campaign was designed to be humorous, showing people putting reminder notes on their windscreens, painting Diesel on the garage doors, and tying knots in their handkerchiefs. The TV campaign was backed up by billboard and press advertising, showing drivers stretching the diesel filler hose because they had pulled up at the wrong pump, and so forth. The end result of this unprecedented campaign was first that consumers remembered the advertisements they generated higher than average customer recall. Second, 84 per cent of those who recalled seeing the adverts felt that the advertising communicated that diesel cars are as good as petrol cars. Third, VWs diesel sales grew by 40 per cent, making the company the market leader and displacing Peugeot, whose sales over the same period grew by only 20 per cent. This was despite the fact that the company actually raised its prices in anticipation of substantially-increased demand, so that profits rose dramatically. 43 per cent of VWs new cars sold in the UK were diesel during 2002, and the company has built on this success ever since: the advertising campaign was run again in 2003 and 2004, with equally spectacular results. If the UK catches up with the rest of Europe in terms of its diesel sales (and recent legislation on emissions indicate that it will) VWs impressive market share will certainly pay off dramatically.

Further reading
There are many books on international business, most of them using the term global rather than international. Here is a selection. H.D. Hennessey and Jean-Paul Jeannet (2003): Global Account Management: Creating value (Oxford: John Wiley). This is a very comprehensive guide to global marketing, providing a well-structured, in-depth textbook on the topic. For a more practitioner-orientated account of global marketing, Speare, N., Wilson K. and Reese, S.J. (2001): book, Successful Global Account Management (London: Kogan Page) is a book

Case Studies close each chapter and show how each chapters main issues are applied in real-life marketing situations. Each case is accompanied by questions to help you test your understanding of the issues

Further Reading and References Comprehensive references and annotated further reading at the end of each chapter allows you to explore he subject further, and act as a starting point for projects and assignments

xviii

Reviewers
The author and publishers would like to thank the following people for their help in reviewing the book. Mary Brennan, University of Newcastle Manto Gotsi, University of Aberdeen Chris Hackley, The University of Birmingham Matthew Higgins, University of Leicester Maria Hopwood, University of Teesside Alice Maltby, University of the West of England Piet Pauwels, University of Maastricht Jenny Reid, Napier University Nina Reynolds, University of Wales Swansea Eva Ronstrm, University of Jonkoping Mark Seager, Trinity and All Saints College, Leeds

Case studies
Extra case studies written by the people listed below are featured on the companion website. Peter Murphy, University of Teesside Poul Houman Andersen, Aarhus School of Business Ann Torres, National University of Ireland, Galway Edel Foley, Dublin Institute of Technology

Study & Research Skills

Thomson Learning publishes a range of study skill and research methods texts to help students through a variety of courses. A selection are displayed below. For the full range visit our website at http://hed.thomsonlearning.co.uk.

Computer Skills
We also have a range of practical, hands-on manuals to help students brush up their basic skills or to learn new programmes. Visit the Thomson Course Technology website at: http://www.course.com/.

Part one Concepts and Contexts

his section is intended to lay the theoretical and conceptual groundwork for the rest of the book. Like any other business activity, marketing functions within a set of

concepts and has a set of antecedents: this section seeks to outline the boundaries and constraints on both marketing practice and marketing thought. Chapter One explains how theory from other disciplines has contributed to the development of marketing thought. Marketing is a hybrid discipline, and a relatively young one which is still building its body of theoretical research: marketing has grown from practice, and academics have sought to explain the workings of marketing by using theories already developed elsewhere. Chapter Two looks at marketing within the wider business world: the environment within which marketing operates, and the influences of the environment on marketing activities. Chapter Three is about the areas in which marketing has a role. It covers the different types of marketing, and the role marketing has in different business contexts. The chapter seeks to show where the boundaries lie: what is and is not marketing.

Chapter 1 Managing the exchange process

Part one Concepts and Contexts

1 2 3

Managing the Exchange Process The Marketing Environment Marketing Domains

Part two Markets and People

4 5 6 7 8 9

Consumer Behaviour Organisational Buying Behaviour Segmentation, Targeting and Positioning Marketing Information and Research Communications Theories International Marketing

Part three Strategy

10 Creating Competitive Advantage 11 Building Customer Relationships

Part four Marketing in Practice

12 Product Portfolio 13 New Product Development 14 Pricing 15 Advertising 16 Public Relations and Sponsorship 17 Selling and Key-Account Management 18 Exhibitions and Sales Promotions 19 Direct and On-line Marketing 20 Managing Channels 21 Intermediaries 22 People, Process and Physical Evidence

Chapter one Managing the Exchange Process

Learning Objectives
After working through this chapter, you should be able to:

1 2 3 4 5 6 7

Compare the different definitions of marketing in common use. Explain marketings role in managing the exchange process. Explain the importance of customers to marketing. Describe the relationship between marketing and other business specialisms. Explain the role of needs and wants in marketing. Describe the contribution other disciplines have made to marketing thought. Describe the different subdivisions of marketing.

Introduction

arketing has been variously defined. It is a relatively new discipline, so academic debate is varied and lively: it is a business function which is continually growing and developing, with practitioners introducing new techniques and approaches at a rate which would be unthinkable for lawyers and accountants, and difficult even for engineers and designers. Marketers act at the interface between the company and its customers. They need to coordinate the companys activities with the needs of customers, and to communicate the companys offerings to its target groups. This chapter outlines the development of marketing, and the contributions which have been made by other disciplines. Perhaps strangely (considering the powerful role of communication in marketing) the profession has generally received a bad press. Marketing has typically been associated with tricks or gimmicks, and there is a commonly-held perception that marketing is about persuading people to buy things they do not need or want. In fact, these criticisms are unfair: marketing is about creating value, not creating needs, and is concerned with creating and retaining customers. The ideal situation for any marketer is that customers return regularly and buy again and again a situation which is unlikely to occur if the customers did not feel that they had been fairly treated in the first place. It is well known that it is cheaper to keep an existing customer than it is to recruit a new one research shows that it is up to six times more expensive to recruit than to retain (Rosenberg and Czepeil 1983). Long-term customer satisfaction can only happen if the organisation offers value for money not necessarily cheapness, but good value. Marketing is therefore concerned with providing people with products and services which work effectively, continue to work effectively in the longer term, and are offered at a fair price.

Part one Concepts and contexts

Preview case Opodo

podo would not exist were it not for the Internet. It is a combined marketing effort of nine major airlines: Alitalia, British Airways, Lufthansa, Air France, Aer Lingus, Austrian Airlines, Finnair, Iberia, and KLM. All these airlines are the so-called flag-carriers for their native countries. In other words, each one is the national airline of its country, and most are either Government-owned or are substantially owned by their Governments. In the past, such airlines enjoyed a privileged status. They could not go bankrupt, because their governments would always bale them out. Each government had the power to negotiate routes and fares with other governments, and in most cases they would not allow other airlines to land at their airports without having reciprocal agreements with the foreign country. These agreements resulted in higher fares for passengers and (in most cases) a less efficient service fares were fixed, routes were sometimes over-provided for because both governments insisted that their airlines be allowed to fly the route, and in other cases routes were not flown despite customer demand because the respective governments could not reach agreement. During the 1980s and 1990s pressure grew from consumers to deregulate the airline industry, and allow companies to fly from and to any airport without Government intervention (subject, of course, to air traffic control and operational restrictions). Privatisation of former

State industries was fashionable and popular with the electorate, and at the same time pressure from within the European Union to remove anti-competitive practices and Government subsidies also grew. The end result was a relaxation of the regulations to the point where new, cheap airlines could flourish. Companies such as EasyJet, Buzz, Go, Ryanair and BMI Baby all made deep inroads into the market. The common characteristic of these companies was that they made extensive use of the Internet, effectively giving customers access to their booking computers, and they all offered a no-frills service with costs cut to the bone. For national airlines the results were potentially disastrous. Losing the protection of their governments at the same time as they were experiencing a dramatic increase in competition was an appalling combination: Swissair and Sabena went bankrupt, leaving Switzerland and Belgium temporarily without a flag carrier, and other national airlines suffered similar setbacks. After all, if British Airways were charging around 160 for a flight from Cardiff to Paris, compared with BMI Baby who on occasions were charging less than 40 including all airport charges and taxes, the fact that BMI Baby do not provide a free in-flight meal appeared to be a fairly minor issue for the average passenger. Clearly something drastic had to be done and Opodo was the answer.

Definitions of Marketing
Unlike accountancy or the legal profession, marketing still needs to define its remit to nonmarketers. There are several definitions of marketing in current use, and each suffers from some weaknesses: a universally-agreed definition of what marketing is has not yet been achieved. American marketing guru Philip Kotler defines marketing as follows (Kotler et al. 2003): Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.

Chapter one Managing the Exchange Process

This definition includes the concept of value, which is an important aspect of marketing. Value is the relationship between what is paid and what is received, and can be increased or reduced by marketing activities. For example, marketers can include an extra quantity of the product (10 per cent extra free) as a way of increasing value for the customer, or (more profitably) might add an extra feature which costs the firm very little but which greatly increases the value for the customer. The problem with Kotlers definition is that it tries to include all human exchange processes, and does not differentiate between the buyer and the seller. This makes the definition very broad, and some might argue that the definition is too broad to be of much use in deciding what is marketing and what is not. For example, Kotler is apparently arguing that a parent who offers a child a trip to the zoo in exchange for tidying up his room is engaged in marketing, and (more importantly) that the child himself is also engaged in marketing. This would strike many people as being somewhat odd. Another interesting aspect of the Kotler definition is the use of the terms need and want. To most non-marketers, a need is something which is essential to survival, whereas a want is something which is no more than a passing fancy. For marketers, these definitions are inadequate because there are so many products which are essential to some people, luxuries to others, and actually dangerous for others. For example, diabetics need insulin in order to survive, but for non-diabetics an injection of insulin could easily prove fatal. Even for the same individual, a product might be essential for survival at one time, but a luxury at another. At the extreme, if one were starving then a plate of caviar might be essential to life, but in a restaurant it would be a luxury. This is not inherently a problem with the Kotler definition, but such definitions of terms need to be addressed if the Kotler definition is to be understood and applied. The Chartered Institute of Marketing (CIM) uses the following definition: Marketing is the management process which identifies, anticipates, and supplies customer requirements efficiently and profitably. This definition tries to capture a somewhat complex set of ideas concisely. The concept of putting the customer at the centre of the business strategy is key to marketing, and the definition also includes the idea that we are not interested in any and every customer, but only those whose needs can be satisfied profitably. Identifying customer needs and supplying products and services which satisfy those needs covers a wide range of activities from market research through to new product development. The definition also says that marketing is a management process, in other words it requires planning and analysis, resources, investment of money and time, and monitoring and evaluation. On the other hand the definition has several weaknesses. First, there is a branch of marketing which deals with non-profit organisations such as charities or Government departments. Few people would argue that a campaign against child abuse carried out by the NSPCC or an anti-smoking advertising campaign carried out by the Department of Health are not marketing activities, yet they are outside the scope of the CIM definition because they are not profit-orientated. Second, the definition excludes other stakeholders such as employees and shareholders. In each case, marketers have an input in communicating with, and meeting the needs of, these groups. Third, the people whose needs are being met are not always customers for example, a mother who buys football boots for her tenyear-old son is a customer, but it is not her needs which are being met (except in the limited sense that she needs to be regarded as a kind and generous mother). Another commonly-quoted definition is that provided by the American Marketing Association as follows: Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services to create exchange and satisfy individual and organizational objectives.

Part one Concepts and contexts

This definition agrees that marketing is a management process, and that it is about satisfying individual objectives: it also introduces the idea that marketing is about creating exchange, and that it is about meeting organisational objectives whether this means profit or not. The definition still suffers from a narrow focus, however. For example, marketers are often concerned about competitors, but neither of the foregoing definitions address this. Companies and other organisations might do an excellent job of meeting customer needs at a fair price, but still fail simply because other companies offer even better products or even better prices or, more confusing still, might offer a product which is actually worse and more expensive, but is offered at a more convenient location or time. For example, a traveller arriving late at night in a strange town is not in a position to shop around for hotels and will probably stay at the first one with an available room. Another definition, which includes this idea, is offered by Jobber (2003): Marketing is the process of achieving corporate goals through meeting and exceeding customer needs better than the competition. The implication of this is that all the activities of the company should be geared towards meeting customer needs rather than those of other stakeholders. This is not necessarily unreasonable: after all, without customers there is no business. Peter Drucker (1999) stated: Because the purpose of business is to create and keep customers, it has only two central functions: marketing and innovation. The basic function of marketing is to attract and retain customers at a profit. From the viewpoint of the student, studying marketing is complicated somewhat by the lack of a clear definition of what marketing is. It is obviously difficult to know what to study if one does not know what the boundaries of the subject are. To clarify things a little, it may be useful to consider the development of marketing as an academic subject, and also to consider the contributions made to it by other, older disciplines.

The Marketing Concept

The philosophical idea underlying all marketing thought is that corporate success comes from satisfying customer needs. The idea of placing customers at the centre of everything the company does is basic to marketing thought: this idea of customer centrality is the key concept in marketing. Recent research has shown that there is a positive association between customer satisfaction and shareholder value: this is a clear vindication of the marketing concept (Anderson et al. 2004). The marketing concept did not arrive fully-formed. It is popularly supposed to have developed through series of business orientations, as shown in Table 1.1. Some marketers have moved the concept a step further on by referring to societal marketing. Societal marketing includes the concept that companies have a responsibility for the needs of society as a whole, and so should include environmental impact and the impact of their products on non-users (Kotler et al. 2003). For societal marketers, sustainability is a key issue, as well as impact assessment of the long-term results of use of the product. For example, there is an argument that car manufacturers should reduce noise pollution by making cars quieter to run, but many manufacturers simply make the car more soundproof for its occupants and do not worry overmuch about the neighbours.

Chapter one Managing the Exchange Process

Table 1.1 Business orientations

Production orientation A focus on manufacturing, on improving the process so as to reduce costs and increase efficiency, and on making a profit through selling large volumes of goods. The focus here is on quality, and on product features. Product orientation aims to produce the best possible product with the maximum number of features. The company seeks to use aggressive and sometimes devious selling techniques to move the product. Profit comes from quick turnover and high volume. Defining what customers want and ensuring that the companys activities are arranged in a way which will achieve customer satisfaction.

Product orientation

Selling orientation

Marketing

Marketing in Practice Fair Trade

n a globalised world, major companies hold most of the cards, especially when dealing in agricultural products from poor countries. For example, the major American fruit importers virtually own countries such as Honduras and Costa Rica the socalled banana republics because they represent the only customers for these countries products. Bananas which cost fractions of a penny from the producers sell for hundreds of times the price in retail outlets in the wealthy nations of Europe and the Americas. If business is bad, the major companies simply cut the price they pay the growers thus transferring wealth from the poor to the rich. The same is true of coffee growers, tea pickers, and many other Third World producers.

Fair Trade is an attempt to redress this imbalance. The Fair Trade aim is first to ensure that growers always receive enough for their crops to maintain a good standard of living. Whatever price increase this means for the growers is passed on to consumers, but because the growers price is so low to start with, even a doubling of the price does not lead to a proportionate doubling of price when the product reaches the consumers. Of course, prices do go up at the retail stores, so the Fair Trade companies make a point of explaining that the product has been bought from independent growers who have been paid a fair price. For many consumers, especially those with a strong social conscience, this actually represents an advantage: knowing that the products have come from growers who are not being exploited is a comforting thought, and in fact one which is worth paying for.

This issue has been debated by marketing academics on the grounds that marketing needs to have some boundaries. The idea that marketing is everything, because so much human activity revolves around exchanges or the results of exchanges, is an idea which has been brought into disrepute by many academics. There are, of course, many adherents to the societal marketing concept, although it is difficult to implement in practice and few companies are in a position to adopt such an altruistic approach. Production orientation had its beginnings at the start of the Industrial Revolution. Up until the nineteenth century, almost everything was hand-made and made to measure. Clothing was tailored to fit almost exactly, houses and vehicles were produced to customer specification, and relatively few items were standardised. This meant that items were relatively expensive. When machines were introduced to speed up the manufacturing process, costs dropped dramatically, so much so that prices could also be cut provided the goods could be sold rapidly. The longer the production run, the lower the costs and consequently the greater the profit: at the same time, customers were prepared to accept items which

Part one Concepts and contexts

were not exactly meeting their needs, on the basis that the prices were a fraction of what they would have had to pay for the perfect, tailor-made article. For manufacturers, the key to success was therefore ever more efficient production, but at the cost of meeting individual customers needs. Product orientation was a result of oversupply of basic goods. Once everyone already owned the basic products, manufacturers needed to provide something different in order to find new customers. Better-quality products, often with more features, began to be introduced. By the late nineteenth century, extravagant claims were being made for products on the basis of their quality and features. Manufacturers recognised that different customers have different needs, but sought to resolve this by adding in every possible feature. The drawback is that the price of the product increases dramatically under product orientation, and customers are not always prepared to pay for features they will never use. Modern examples of product orientation include the Kirby vacuum cleaner, which has a multitude of features and can clean virtually anything, and Microsoft Windows software. In the case of the Kirby cleaner, the end price of the product is perhaps ten times that of a basic vacuum cleaner, a price which most people are unable or unwilling to pay. In the case of Windows software, the marginal cost of adding extra features to the CD set is tiny compared with the cost of producing separate CDs for each customer group, so it is vastly more efficient to send out everything to everybody and allow each customer to install and use the features they need. The basic difficulty with both production orientation and product orientation is that they ignore the diversity of customers and consumers. Customers differ from each other in terms of their needs there is no such thing as the customer. Sales orientation assumes that people will not buy anything unless they are persuaded to do so. Sales orientation should not be confused with personal selling: sales people do not operate on the basis of persuasion, but rather on the basis of identifying and meeting individual customers needs. Sales orientation, on the other hand, concentrates on the needs of the seller rather than the needs of the buyer. The assumption is that customers do not really want to spend their money, that they must be persuaded, that they will not mind being persuaded and will be happy for the salesperson to call again and persuade them some more, and that success comes through using aggressive promotional techniques. Sales orientation is still fairly common, and often results in short-term gains. In the longer term, customers will judge the company on the quality of its products and after-sales service, and (ultimately) on value for money. Marketing orientation means being driven by customer needs. One of the key elements of marketing orientation is that customers can be grouped according to their different needs, so that a slightly different product can be offered to each group. Differentiation allows the company to provide for the needs of a larger group in total, because each target segment of the market is able to satisfy its needs through purchase of the company product. The assumption is that customers actually want to satisfy their needs, and are prepared to pay money for products which do so. Marketing orientation also includes the idea that customers need information about the products, advice about using the products, advice about availability of products, and so forth. In other words, marketers believe that customer needs go beyond the basic core benefits of the product itself. For example, recent research has shown that American consumers no longer know how to choose fresh produce: this means that, increasingly, people seek the reassurance of a brand (even if it is the local supermarkets guarantee of quality). This has opened up opportunities for farmers and others in the food supply chain to provide the type of quality assurance modern consumers need (Stanton and Herbst 2005). Marketing orientation also implies that customer needs are the driving force throughout the organisation. This means that everyone in the organisation, from the salespeople through to the factory workers, needs to consider customer needs at every stage.

Chapter one Managing the Exchange Process

Quality control in the factory, accurate information given by telephonists and receptionists, and courteous deliveries by drivers all play a part in delivering customer value. Narver and Slater (1990) identified three components which determine the degree to which a company is marketing-orientated: competitor orientation, customer orientation, and interfunctional co-ordination. Customer orientation is the degree to which the organisation understands its customers. The better the understanding, the better able the firm is to create value for the customers. Since value is defined by the customers and not by the firm, customer orientation means that the firm can make better offers to customers and thus receive better payments in return. Competitor orientation is the degree to which the company understands what other firms are offering to customers. These firms may be offering radically different products: the issue is whether the customer perceives the products as offering the same (or better) value. For example, a couple looking for a night out may compare the relative merits of cinemas, night clubs, restaurants, bowling alleys, or theatres. Each of those companies is competing with the others, but the nightclub may only consider other nightclubs as competition, or the bowling alley may not recognise competition from the restaurant. Interfunctional co-ordination is the degree to which the internal structure of the organisation, and the attitudes of its members, combine to deliver marketing orientation. There is no point in the marketing managers developing good ideas for improving the companys offering to its customers if the employees of the firm are prevented from delivering the promises, or are unwilling to do so. Of course these three components can be broken down into smaller elements. Figure 1.1 shows the main elements in marketing orientation. Figure 1.1: Elements in marketing orientation

Customer orientation Market research. Opening hours geared to customers purchasing needs, not staff social needs. Prime car park spaces reserved for customers, not senior managers. Advertising based on what customers need to hear, not on what managers want to say.

Competitor orientation Competitors and their products are monitored carefully. Potential competitive response is considered when new initiatives are discussed. Channels of distribution bypass competitors. Company is aware of how customers perceive them relative to competitors.

PROFITABILITY

Employees have the power to correct customer complaints as they occur. Goods are distributed through channels which are most convenient for customers. Staff are trained to put the customer first.

Inter-functional co-ordination

10

Part one Concepts and contexts

In order to achieve a marketing orientation, firms need to be close to their customers and consumers. For some companies this is not a problem, because they have direct contact with the ultimate consumers. Service industries such as airlines, restaurants and hairdressers have direct contact with the end users of their products, and can fine-tune the delivery to meet customer needs. Other industries such as the food canning industry have contact with their customers (the wholesalers and retailers who handle their products) but do not have contact with the end consumers. These companies may use market research to find out what consumers actually need, or may rely on the retailers to understand the customers and pass on their requirements. One of the main problems in becoming marketing orientated is that other departments within the firm find it creates conflicts. For example, the firms marketers may identify a group of consumers who have a need for a particular set of product features. This may cause the firms engineers a problem in developing a product with those features. Table 1.2 illustrates some of the conflicts which occur when a firm needs to consider the needs of consumers. These conflicts can be helped by explaining the reasons for adopting a customer focus. The problem is that some people will interpret customer focus as meaning that the Table 1.2 Internal conflicts with non-marketers
Situation Credit control Problem The customers may want longer credit terms. This will cause cashflow problems, which creates problems for the finance director. Each customer wants slightly different features, but production economics rely on long production runs. Resolution Allow customers to pay extra for the credit. Marketing is not about giving customers everything they want: it is about selling customers everything they want. Identify groups of customers with similar needs. If the group is big enough to support a large production run, there is no problem: if the group is small, but is prepared to pay more for a custom product, again there is no problem. Arrange for a return load pick-up system, or subcontract the deliveries to a parcel delivery company which can deliver to many small firms. In the motor industry, there are specialist firms called motor factors which do this. Complaints can be repeated elsewhere: word-ofmouth is a powerful medium for destroying a firms reputation. On the other hand, research shows that complaints which are handled entirely to the customers satisfaction actually increase customer loyalty and encourage positive word of mouth (Coca-Cola Company 1986). The growth of relationship marketing (see Chapter 11) and just-in-time purchasing have helped to bring marketers and purchasers closer together. An understanding of the reasons for retaining flexibility will, of course, help in this context.

New product development

Delivery service levels

Customers may want regular small deliveries (for example, car parts for small garages). This means that delivery vehicles are sometimes running with small loads, or even empty. Customers may not always be satisfied with the firm and its services, which creates a problem for everyone. Some firms only respond when sued, relying on the contract to cover themselves against dissatisfied customers.

Handling complaints

Purchasing of supplies

Purchasing departments can become overly concerned with price to the exclusion of other considerations. Standardisation of components makes inputs cheaper, but reduces flexibility.

Chapter one Managing the Exchange Process

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company should give the customers everything they want low prices, high quality, perfect after-sales service and so forth. This is not actually what the marketing concept says: to give everything away would mean losing money, which of course is not the way to run a business. The marketing concept implies that companies should offer a selected group of customers everything necessary to meet their needs (within the specific product category) because this is the most effective way of justifying the higher prices necessary to provide the product and make a profit. There is evidence to show that satisfied customers are prepared to pay more for the products they buy and why should this not be so? Better to pay a little more for something that meets a need than buy a cheap product which does not work (Homburg et al. 2005). Interestingly, there is evidence to show that engineers are generally positive towards marketing and marketers (Shaw and Shaw 2003).

Talking Point Some writers have taken the view that all employees are
marketers now, because everybody in the organisation has a responsibility for customer satisfaction. The problem with this view is a conceptual one: if everybody in the organisation is a marketer, what role remains for the marketing managers? Presumably marketing must have some boundaries!

Customer Needs
Customers in general have a set of generic needs which marketers seek to fulfil. These are shown in Table 1.3. Customer needs therefore go beyond the product itself, and (since customers are human beings) go beyond the simple physical needs of food, clothing and shelter.

Talking Point

How do we define need? Is it something without which life would be impossible? Is water a need? Maybe but what about people who drink orange juice, beer, tea, or even Coca-Cola but rarely drink a plain glass of water? And if water is so essential, does that mean that Evian or Perrier are essential to life? Perhaps beer is a luxury. But beer is often the basis of a persons social Buying alcohol or buying a social life? Tomaz Levstek/Istock life, and people who have no social life go mad, or at least a little odd. Defining whether a product is a need or a want or a luxury is really not very easy what is a luxury to one person is a necessity to another, because people are not simply driven by their animal needs. In fact, in modern, wealthy, Western nations very few people have to be concerned about their physical needs. Most of us are concerned about our social and psychological needs which is why teenagers need the latest trainers!

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Part one Concepts and contexts

Table 1.3 Customer needs

Type of need Current product needs Example All customers for a given product have needs based on the features and benefits of the product. This also relates to the quantities they are likely to buy, and any problems they might experience with the products. Predicting future demand is a key function of market research. Typically, this is carried out by talking to potential and actual customers and making an assessment of likely purchase quantities. Like any other predictions of the future, the results are unlikely to be perfect, but sales forecasting is essential if resources are to be put in place to ensure that supplies are available to meet demand. Equally, over-optimistic forecasts can result in over-supply and consequent problems in getting rid of excess product. Selling off excess product at cut prices generates problems beyond the immediate loss of profit: damage to the reputation of the brand may continue for years afterwards. Customers will naturally want to buy products at the lowest possible prices. Pricing is not straightforward for marketers: it is not simply a matter of adding up what it costs to supply the product, adding on a profit margin and then selling the product. Customers will only pay what they feel is reasonable for the product, basing this on what they perceive to be the benefits they will get from buying the product. Customers will therefore not pay more than the fair price, and charging them less is simply giving away profit. There is more on this in Chapter 14. Customers need to know about a product and understand what benefits will accrue from buying it. They also need to know what the drawbacks are of owning the product, but this information is unlikely to be provided by the organisation. For major purchases, customers will seek this information elsewhere. Information needs to be presented in an appropriate place and format, and should be accurate. Products need to be in the right place at the right time. This means that suppliers need to recruit the appropriate intermediaries (wholesalers and retailers) and to ensure efficient transport systems to move the products to the point of sale in a way that ensures they arrive in good condition, but at the same time in as economical a manner as possible.

Future needs

Desired pricing levels

Information needs

Product availability

People need many things apart from survival, and in the Western world people are wealthy enough that they can afford to meet higher-level needs. Needs can be categorised: perhaps the most famous model for this is Maslows Hierarchy of Needs. Maslow postulated that everyone has the same basic needs, and that these needs are met in order. The model assumes that people need to meet their survival needs first, then security needs, then the need to belong, then esteem needs, then aesthetic needs, and finally the need for selfactualisation (see Figure 1.2). If we imagine someone stranded on a desert island, it is easy to see that the first priority is to find food, drinking water, and shelter. Once these have been found, our castaway will seek to secure them, but once these physical needs have been met, the castaway is likely to consider trying to find some other people to relate to. Having found a group to belong to, the castaway might seek to become respected by the group. Having sufficient supplies to meet survival needs, and being a respected member of a group, our castaway is able to turn to the finer things in life: art, music, and so forth. Finally our castaway is able to consider the future, and what he or she would like to achieve in life. This hierarchy of needs is a useful concept because it illustrates clearly how human beings needs differ from those of most animals. Because we have very extensive social needs and psychological needs as well as physical needs, our behaviour is more complex than most animals and we become engaged in exchange processes. Purchasing behaviour is thus directly affected by these higher-order needs.

Chapter one Managing the Exchange Process

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Figure 1.2 Maslows Hierarchy of Needs

Selfactualisation Aesthetic needs Esteem needs Belonging needs Security needs: safety Survival needs: food, clothing, shelter Physical needs Social needs Psychological needs

The main problem with Maslows hierarchy is that it is not actually a hierarchy. People are far more complex than this, and also are far more individual than this. The clich of an artist starving in a garret is a prime example: people will often go without the basic physical necessities of life in order to self-actualise or meet aesthetic needs. Likewise, a homeless person might well seek out the company of others (thus meeting a social need) without knowing where the next meal is coming from, or having a bed for the night. Having said that, it seems likely that the main preoccupation of a homeless person is likely to be finding food and shelter, even if other needs are met along the way, and that a wealthy person is unlikely to spend much time thinking about whether their survival is threatened.

What Marketers Do
Marketing management is responsible for handling specific aspects of the marketing function. In practice, these functions may appear in departments other than the marketing department as such, but they are nonetheless marketing functions since they directly address customer needs. These aspects are known collectively as the marketing mix. Several models exist for defining the marketing mix, and each model has drawbacks. One of the earliest attempts to define the mix came from McCarthy (1960), and defined the marketing mix in terms of product, price, place and promotion. This conveniently pigeonholed everything into four categories (all starting with P) but was an incomplete picture. In 1982, Booms and Bitner added three more Ps (people, process and physical evidence) to encompass the extra elements present in service industries, which after all represent the bulk of products in a modern society. This 7P model has been widely adopted, not so much for its accuracy (because like most models it omits a great deal) but because it is easy to remember and understand. Product is the bundle of benefits which the supplier offers to the purchaser. The particular set of benefits on offer will appeal to a specific group of consumers: it is extremely unlikely that any product will appeal to everyone. Even products such as Coca-Cola, which is sold worldwide and is the worlds most recognised brand name has only a minority share of the soft drinks market. Many people simply do not like it, or think it is too expensive, or prefer other drinks which meet their needs better. Attempts to create a perfect product which suits everybody are likely to result in over-complex, over-expensive products, which is why product orientation has fallen into disrepute.

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Part one Concepts and contexts

Price is the total cost to the customer of buying the product. It therefore goes beyond the simple monetary costs: customers also consider the difficulty of purchase, the cost of ownership of the product, and even the embarrassment factor of owning the wrong brand. Some products have psychological associations which customers find costly. However, even the financial cost of purchase is by no means simple, because there is a complex relationship between money price and value. Price has a strategic dimension for marketers, in that there is (for most products) a relationship between price and sales volume. The lower the price, the greater the volume (in general). On the other hand, there is also a reverse relationship between price and perceived quality (the higher the price, the greater the quality). Balancing these different elements of price is a function of marketing management, not a function of financial management. Price is a fairly flexible element of the mix, since it is relatively easy to change prices in response to demand fluctuations, but continually changing prices can lead to confusion (and even suspicion) on the part of customers. Place is the location where the exchange takes place. This may be a retail store, it may be a catalogue, it may be a restaurant, or it may be a website. Deciding on the appropriate place for the exchange is not merely a matter of moving goods around (although physical distribution is one aspect of the process) but is rather a strategic issue. The decisions revolve around making it as easy as possible for customers to find the goods and make the purchase, and also using channels which give the appropriate image for the product. For example, retailing a product through discount stores gives a completely different impression from retailing the same product through exclusive department stores. A final issue in place decisions is the problem of power relationships in the distribution channels. In the food industry, the major supermarkets essentially control the market, with farmers and food processing firms having to accept whatever conditions are applied by the retailers. In other industries (notably the hamburger industry), the producers have the upper hand, with retailers being compelled to accept the terms laid down. Promotion is such a large part of marketing that it is often mistaken for the whole of marketing. Promotion encompasses all the communications activities of marketing: advertising, public relations, sales promotions, personal selling, and so forth. Promotion is not simply a hard sell, however: it is a way of meeting customers information needs, at least in part. It is also, to an extent, persuasive in that most marketing communications emphasise the good aspects of owning products and downplay the bad aspects. People are crucial to success in marketing, particularly in service industries. Customers in a restaurant are not simply buying a meal: they are buying the skill of the chef in preparing and presenting the food, the service of the waiters in delivering the food, and even the quality of the washer-up in ensuring clean cutlery and crockery. The same is true in other industries, because companies do not buy or sell products a company is a legal fiction. People buy and sell products, sometimes on behalf of organisations, and by so doing go some way towards meeting their own needs. Process is the set of activities which lead to delivery of the product benefits. In service industries, the process of delivery makes a difference to the benefits obtained. For example, consider the process of going out for a hamburger. In a corner take-away the hamburger will be cooked to order (which means waiting a few minutes) and will be eaten either standing up in the shop or on the street walking somewhere else. The process is quick, but basic, and is useful to someone who likes freshly-cooked food but does not at present have much time for a meal. Further up the scale of service would be a hamburger chain such as McDonalds or Burger King, where the food is not as fresh but is delivered quickly and can be eaten either on the street or sitting down at clean but basic tables. This process meets the needs of someone who is in a hurry, and likes reliable food, but is not too worried that the burger might have been sitting under a warming grill for several minutes. Next up the scale might be Hard Rock Caf, where the burgers are freshlycooked and served by a waiter or waitress, where the ambience is exciting and interesting, where music is played and where the process becomes an experience. This would meet the

Chapter one Managing the Exchange Process

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needs of someone who has an interest in music, or who is perhaps on a date or out with friends. Finally, an expensive restaurant might have waiters in jackets, soft lights and soft music, a wine list, and silver cutlery. The hamburger is now called a Vienna steak, and would suit the needs of someone who likes to know what he is eating, but is on a special

Marketing in Practice Drink Up!

rocess is often subject to local customs and habits. In the UK, patrons of bars pay for their drinks as they get them, they go to the bar to buy the drinks and then move away from the bar to tables or to standing areas away from the bar itself in order to allow other drinkers to order. Apart from an occasional foray to collect glasses, the bar staff remain firmly separated from the customers. No-one ever gives a tip in a pub, although one might occasionally offer to buy a drink for the bar staff, if one is a regular customer. In Spain, on the other hand, drinks are paid for at the end of the session, before leaving the bar. Drinkers may stand at the bar, or sit at tables, or of course sit outside: bar staff will bring drinks over for patrons who are away from the bar, and in many Spanish bars free snacks are also provided. Spaniards do not drink much without eating: food and alcohol are seen as natural accompaniments to one another. The free snacks (tapas) do not appear with every drink beer, wine and some cocktails are regarded as before-meals drinks, and tapas will be served. Baileys, cognac and some liqueurs are regarded as after-dinner drinks, and no tapas will appear. Tipping happens, but its usually only a few small coins left for the person who clears the table. It is usual to drop any shellfish shells, nut shells, cigarette ends, and used serviettes onto the bar floor, because a dirty floor is a sign of a good bar the staff are too busy to clean up. In Brazil, it is usual in many bars to pay for the drinks in advance, and present the till receipt to the bar staff in order to be served. Food is not commonly available in Brazilian bars, but highpowered alcohol is. There are no licensing laws in Brazil, so in some major cities (notably Rio de Janeiro) street bars spring up in the evenings, with people selling beer out of cold boxes and cooking food over open-air barbecues, with dancing to impromptu bands or portable disco equipment.

In the United States people pay for their drinks as they get them, and commonly sit at the bar to be served. Waiter service is available at tables, but tipping is almost mandatory and runs from fifteen per cent of the bill upwards. Bars are kept spotlessly clean, and in some cases smoking is not permitted in California and New York it is illegal to smoke in bars. In Australia, bars frequently double as betting offices, with gambling machines and horse racing bets being taken either through machines or over the bar. Australian bars are sometimes ankle-deep in discarded betting slips. Australians pay for their drinks as they get them, and do not usually tip the bars are often called hotels, although they do not all have rooms for guests. Table service is unlikely. In India, several states do not allow alcohol at all. In the others, bars are often hidden away as drinking is regarded as shameful and is for men only most bars do not allow women in at all, except those in tourist areas. The range of alcoholic drinks on offer is extremely limited usually only beer is available, but occasionally gin or whisky will also be on the menu. Interestingly, Indian tonic water is unknown. In Thailand, drinkers get together in bars or restaurants and order a full bottle of spirits each. Typical Thai drinkers drink in order to get drunk, and do so as quickly as possible. Violence as a result of this is extremely rare but a lot of singing and laughter does result. Bar staff frequently join in the party, which can make getting served somewhat problematic. In Saudi Arabia, alcohol is illegal, so expatriates working there get together at private parties to drink alcohol. If they are caught, they can be severely punished flogging has been known to happen but this does not prevent them from enjoying an occasional party. Throughout the world, people get together to drink alcohol and talk. Yet each country has different processes for doing this, and each countrys marketers need to address these different purchasing customs. Cultural differences such as these pervade all aspects of marketing.

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Part one Concepts and contexts

date. Note that the same person could fit into each of these categories at different times, depending on circumstances. Physical evidence is the tangible proof that the service has been delivered. In the case of a restaurant, the food and the surroundings provide good physical evidence of the quality of the service (and probably the price, too). For an insurance company, physical evidence might be the policy documents. Physical evidence is important in services marketing because often (as in insurance) the customer is buying a promise. The policy document is therefore a reassurance that the insurance actually exists. The reverse can also be the case: the lack of physical evidence of a booking on a ticketless airline reassures the customer that every possible cost has been cut, while the physical evidence of a modern aircraft assures the customer that essential costs have been met. Mixing the 7Ps in the correct way should help the organisation to achieve a competitive advantage, which is of course essential to any business. However, the concept of the marketing mix has been criticised. First, the mix has been criticised on the grounds that it implies a set of sharp boundaries between its elements. In fact, each element impinges on every other element to some extent as mentioned above, the retailer in which the product is sold gives an impression of the product, which is presumably part of promotion. Likewise, the process of delivery of a hamburger provides different benefits in each case, so is presumably part of the product. Examples of other cross-overs abound. Second, the mix has been criticised because it does not cover everything that marketers do. There is nothing about internal marketing (the establishment of relationships and exchanges within the organisation). There is nothing about competition. There is nothing about managing long-term relationships with customers. Third, the marketing mix concept implies that marketing is something which is done to customers, rather than something which seeks co-operation and interaction between customers and the organisation. Fourth, the mix is almost entirely focused on consumers, whereas in fact the bulk of marketing activity is carried out between businesses (Raffia and Ahmed 1992). This business-to-business marketing is perhaps less well-researched and generally attracts less attention because it operates at a lower profile. In business-to-business marketing, success does not come from manipulation of the marketing mix components, but from establishing long-term relationships between the firms concerned. If these relationships are strong enough, they act as a barrier to entry for other suppliers (Ford et al. 1986). These criticisms do not mean that the model is of no use. All models are an abstract of reality, so do not give the whole picture. The model does help in considering issues or planning ways of managing the business, but it should not be treated as if it provides all the answers.

Talking Point Models often seem to be flawed. Any model can be criticised and often is! So why do we use them at all? Is it possible to create the perfect model? A model is an abstraction of reality, a simplification intended to make reality easier to understand. Therefore some things have to be left out, which means there will be gaps in our understanding, and the model may not always be easily applied in practice. We all know that a model railway is a good way of seeing how railways operate the tracks, the carriages, the signal boxes, the points, and so forth can all be made up as miniature replicas of the real thing. But if we need to go from London to Glasgow, we need a real train!

Chapter one Managing the Exchange Process

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Antecedents of Marketing
Marketing has developed as a result of inputs from many other disciplines. Essentially, marketing is an applied social science, and therefore it owes a great deal to other social sciences.

Economics
An early examination of the mechanics of exchange processes came from Adam Smith. Smith was the first writer to state that the customer is king, and he outlined the law of supply and demand, which he thought explained how prices are fixed (see Figure 1.3). Essentially, as the supply of a given product increases, the suppliers need to reduce prices in order to sell their goods: as the supply shrinks, customers must offer more in order to obtain the product. Higher prices will attract more suppliers into the marketplace, until the price stabilises at a point where supply equals demand, and likewise lower prices will force some suppliers out of the market. Although this is a useful concept, it makes several assumptions which are unlikely to be true in the real world. First, it assumes that all the suppliers are providing identical products, whereas in the real world suppliers go to some considerable trouble to differentiate their products from competing products. Second, the model assumes that consumers will be prepared to shop around, and will know where the cheaper products are available. Third, it assumes that no supplier (or customer) has sufficient clout to affect the price, which is of course unlikely. Some examples do exist of this type of market, however: the international money markets and stock exchanges are two such examples. Smith also contributed the concept that different countries have what he called natural advantages in producing some goods, and that therefore international trade could only be advantageous since each country could produce what it could most easily and cheaply produce, and therefore maximum efficiency would result. The general principle that fair exchange leaves both parties better off is fundamental to marketing thinking: if it were not the case, trade would be impossible since one or other party would not go ahead. This concept eventually led to the development of the Edgeworth Box (see Figure 1.5), which explains how trade operates. The Edgeworth Box has its starting-point in the concept of indifference curves. An indifference curve assumes that an individual has a trade-off between different items in his or her portfolio of wealth. For example, most people have a store of food in their houses, and a store of money in the bank. Up to a point, it does not matter much if one spends some Figure 1.3 Supply and demand

Demand

Supply

Price

Quantity

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Part one Concepts and contexts

of the money (reducing the store of cash) in order to increase the store of food, but as the imbalance grows, the level of food which needs to be bought to compensate for the reduction in savings will have to increase. In other words, if the freezer is already full the consumer would have to see a really irresistible bargain in frozen turkeys in order to make the purchase. The same is true in the other direction if food stocks go too low, the individual will certainly spend a portion of his or her savings to restock the larder, and the bank would have to offer an extremely high interest rate to prevent this happening. An indifference curve which illustrates this is shown in Figure 1.4. Note that the curve ends before it reaches the limit this is because the individual will have a cut-off point, not wishing to have no money at all but plenty of food, or no stocks of food but plenty of money. If we consider a simple case of two individuals, each of whom has a supply of food and a supply of money, we can map the total supply of food and money as shown in Figure 1.5. Here, Person A and Person B are each indifferent as to how much food or money they have provided the totals fall somewhere along the indifference curve. However, it is possible to consider Point C, which is a point at which the total amount of food and money could be divided between the two people, but which lies above each of their indifference curves. This means that both are actually better off in terms of both food and money. Point C is on the contract line, which is a line along which either party would be better off. Note that the nearer Point C is to an individuals indifference curve, the better off the other individual Figure 1.4 Indifference Curve

Money

Frozen turkeys

Figure 1.5 Edgeworth Box

Individual A

C Total supply of money of both individuals

Contract line

Individual B Total supply of frozen turkeys of both individuals

Chapter one Managing the Exchange Process

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will be, so the actual point at which the exchange is made will depend on the negotiating skills or power relationships of the parties. In the diagram, individual B is obviously not as skilled a bargainer as individual A. At first, it appears counter-intuitive that an exchange results in both parties being better off in terms of both money and turkeys. This apparent anomaly comes about because each individual has a different view of the relative values of food and money. This is clearly the case if the individuals are, respectively, a grocer and a consumer. The grocer would rather have the money than have the food, since he or she has more than enough food for personal use, whereas the consumer would clearly prefer to have the food rather than the money. This concept is important because it negates the idea that market value is fixed. All values are subjective, and depend on the perceptions and situation of the individual. Another useful contribution by economists is the concept of elasticity of demand. This model says that the demand for different products is affected by price to differing extents. For example, the overall demand for wedding rings or artificial limbs is unaffected by price (even though individual manufacturers wedding rings or wooden legs might be). Such products are said to be price inelastic. On the other hand, other products are affected seriously by very small changes in price: these are said to be price elastic (see Figures 1.6 and 1.7). Elasticity of demand affects the degree to which marketers can set prices relative to their competitors, and also in an absolute sense relative to other products. An interesting point which arises from the price elasticity concept is that there is no product which is totally price inelastic. In other words, there is no known product which people would buy no matter what the price charged. This is important because it means that there is no single product which can truly be classed as a necessity of life if such a Figure 1.6 Inelastic Demand Curve

Price

Quantity demanded

Figure 1.7 Elastic Demand Curve

Price

Quantity demanded

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Part one Concepts and contexts

product existed, it would be totally price inelastic. The corollary to this is that no product (presumably) exists which can be defined entirely as a luxury, since such a product would be totally price elastic even a tiny rise in price would prevent any sales, since no-one actually needs the product. Economists also contributed to competition theory. The main types of competition are shown in Table 1.4. Finally, economists have contributed the concept of the economic choice. This means that money which is spent on one thing cannot be spent on another so an individual is forced to make choices. The decision to buy one thing can be translated as a decision not to buy something else. This means that competition is by no means clear-cut: marketers are not only competing with other firms in the same industry, they are (in effect) competing with all other ways in which consumers can spend their money. If mortgages rise, spending on consumer durables will fall, for example. The problem with most economic models is that unrealistic assumptions are made for the purpose of simplifying the model. For example, economists often assume that buyers are rational, that consumers have perfect knowledge of the market, assume that people act in ways which maximise their welfare, and that all brands are essentially interchangeable. In fact none of these assumptions stands up to close scrutiny.

Sociology
Sociology is the study of human beings in groups. Group behaviour is extremely important to human beings: how our friends and family see us, what we have to do to be effective employees, and what we feel about our place in society colours all our behaviour, including our purchase behaviour.

Table 1.4 Competition

Type of competition Perfect competition Explanation

This is a condition where there are many suppliers none of whom is large enough to control the market, many customers who also cannot individually influence the market, and a product which is homogeneous, i.e. does not differ from one supplier to another. Perfect competition also assumes that all parties have complete knowledge of the market. In practice, this type of competition does not exist, apart from a few special cases such as the international money markets. An oligopoly exists when a few companies control the supply of goods. Oligopolies almost always fix prices, either by agreeing prices between themselves (a practice which is illegal in most countries) or by being very careful not to start a price war by undercutting each other. This is a circumstance in which one company supplies the entire market. Very few monopolies exist, since they almost invariably lead to companies setting excessively high prices and earning excessively high profits. In most countries monopolies are carefully regulated, and even prevented, by Government intervention. However, there are cases where a monopoly is almost inevitable the railway systems in most countries are monopolies, for example. This occurs when one large company has a controlling share of the market, and other small companies follow its lead in setting prices and producing goods. This is the commonest type of competition.

Oligopoly

Monopoly

Monopolistic competition

Chapter one Managing the Exchange Process

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Talking Point In recent years many former Government-owned enterprises have been privatised and competing organisations have been set up. In the UK, the telephone system, electricity and gas production and delivery, and even the railways were all former Government monopolies, but are now privately owned and operate in competitive markets. Yet surely all this means is that there is duplication of effort, and a degree of confusion for consumers. Train tickets are only valid on some routes, there are several competing companies providing directory enquiries, people are unable to take their telephone numbers with them if they move house, and so forth. On the other hand, advocates of privatisation say that duplication of effort is better than no effort at all, which is too often what happens in nationalised industries. And to be fair, prices for energy have fallen, most public telephone boxes work now, and some rail companies have been investing in some very impressive rolling stock.
Human beings are all members of several groups, and in general wish to be part of one or more groups. In order to join or remain in a given group, individuals need to act in particular ways, and this often means buying the right items or the right services. Some examples of groups are the family, friends, work colleagues, clubs or societies, and even those groups to which we belong by reason of gender or race. There are also groups to which we do not belong, and would not want to belong to: for example, most of us would not want to be thought of as stupid, nave or uneducated so we may go out of our way to learn about some subjects in order to appear knowledgeable. An understanding of how these groups operate is essential to understanding consumer behaviour: there is more on this in Chapter 4.

Psychology
Psychology is the study of thought patterns of individuals. Like sociology, the contribution to marketing lies in the area of consumer behaviour. Such areas as perception, learning, motivation, attitude formation and attitude change, and our involvement with brands and products are basic to our understanding of purchasing behaviour. Because psychology is concerned with the internal workings of the mind, it has much to tell us about communications and about how people develop relationships with the products they buy. Making those relationships more relevant and important is the role of marketing. Again, there is more on this topic in Chapter Four.

Anthropology
This is the study of human cultures. A culture is a set of shared beliefs which includes religion, language, customs, child-rearing practices, gender roles and so forth. Anthropologists study the way these shared values and beliefs colour behaviour, and marketers can use this information to predict ways in which people will respond to product offerings.

Trekkies making a statement about who they are.

Mark Peterson/CORBIS

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Part one Concepts and contexts

Culture is particularly important in international marketing, where products are crossing cultural barriers. For example, McDonalds hamburgers are made from lamb in India, where the cow is sacred to Hindus. All three behavioural sciences (psychology, sociology and anthropology) have considerable overlaps with each other. They mainly contribute to marketing in the areas of buyer behaviour (understanding how people make purchasing decisions and act on them) and marketing communications (understanding how people interpret and remember messages).

Corporate strategy
Strategy is about positioning the organisation correctly for its survival and growth. Strategic thinking comes originally from military management, and much of the terminology used is the same as that of warfare. Marketers talk about campaigns, targets, capturing market share and so forth, but in fact much corporate strategy involves placing the organisation in a niche in the market where it will not upset potential competitors and attract retaliation. The marketing strategy clearly needs to find a place within the corporate strategy, but for marketing-orientated firms the marketing strategy actually is the corporate strategy. Figure 1.8 Antecedents of marketing

SOCIAL SCIENCES Sociology: people in groups Psychology: people as individuals Anthropology: study of cultures

BUSINESS DISCIPLINES

Economics: study of wealth creation MARKETING Corporate strategy: study of competitive advantage

The Scope of Marketing

Marketing divides into a number of different applications, each of which will be examined in more detail in later chapters of this book. Because marketing embraces such a broad spectrum of human activity (indeed, as we saw earlier some say that marketing covers virtually everything that humans do) it is inevitable that different branches of applied marketing will emerge.

Consumer marketing
Consumer marketing is concerned with the exchange processes which take place at the end of the supply chain, at the point at which the goods and services are used up and disposed of. Because we are all consumers, this is the area that impinges on our daily lives the most, and (for many people) appears to be the whole of marketing. This view is bolstered by the way marketing is taught: examples taken from consumer marketing are most often used because they are easy to relate to.

Chapter one Managing the Exchange Process

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Consumer marketing has also been the starting-point for the development of marketing theory. Because consumer markets are large, with many potential customers and competitors, the markets are complex and interesting. Companies in consumer markets see marketing as providing a suitable competitive edge, and have therefore embraced the marketing concept wholeheartedly. Marketing theory owes much to the development of theories of consumer behaviour, which in turn derive from sociological and psychological theory. These theories have also been applied in areas other than consumer marketing.

Industrial marketing
Industrial marketing examines earlier stages in the supply chain. Although the goods ultimately end up in the hands of consumers, products pass through many stages before arriving on the retailers shelves. Industrial marketing is concerned with exchanges between organisations and is about supplies of raw materials, components, and finished products. Organisations with a marketing orientation are more successful than those without one (Avlonitis et al. 1997). Business-to-business deals are, ultimately, driven by consumer demand, but ensuring that the needs of the customer business are met is an important stage in the process because it smooths out inefficiencies in the system and makes the process more effective. At the level of the individual organisation, the company which is best able to meet the overall needs of the customer company will get the business.

Image courtesy of the Advertising Archives

Marketing in Practice Spar Wholesalers

ithin the UK and other Northern European countries, Spar is a well-known brand: however, most people associate it with convenience stores (corner shops). In fact, Spar is a wholesaler, providing full services to retailers, including ownbrand goods and promotional materials. The retailers in the Spar network are actually independent businesses. Each business owner contracts

with Spar to buy a major proportion of their stock from the wholesaler, in exchange for the use of the Spar brand. Spar provides business advice, promotional activities, display materials, own-brand products, and so forth enabling the independents to compete more effectively with major supermarket chains. For Spar, the benefit is that the company has a captive audience of retailers who regularly buy its products. The relationship between wholesaler and retailers is therefore mutually beneficial Spar have achieved their dominance of the convenience store market simply by understanding the needs of the retailers.

In fact, industrial marketing does not receive the attention it deserves. In terms of turnover, industrial markets overall are much bigger than consumer markets, yet have fewer customers which means that order values are much larger. The success of industrial markets depends on the success of consumer markets, but the reverse is also the case: without an efficient and effective industrial supply chain, consumer needs cannot be met.

Service marketing
A service product is one which is essentially intangible: examples include hairdressing, medical services, accountancy, and insurance. Some observers do not accept that there is a real difference between physical products and service products, and in some respects there are strong arguments in favour of this viewpoint. Any service product contains some tangible elements, and any physical product

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contains some service aspects. Since there are numerous examples of situations where a service product can substitute for a physical one and vice-versa, the distinction can seem to be an artificial one. Having said that, there are differences in the way that intangible aspects of a product need to be marketed, and there are different information needs on the part of consumers. The service sector is, in most Western countries, the largest proportion of the gross national product and far and away the largest employer, so services marketing is of great importance to national prosperity. In addition, marketers of physical products have found that enhancing the services element of their products is a good way to add value for the consumer. For example, companies selling computers offer on-line support services as a way of generating extra revenue and at the same time increasing the value of the product to the consumers.

Not-for-profit marketing
Not-for-profit marketing is concerned with those organisations whose goals are something other than a profit. These include charities, hospitals, Government organisations, schools, and some arts organisations. In many cases, the exchange these organisations seek is not monetary at all the Government might run a campaign to discourage smoking, or to reduce drunken driving, and measure its success in terms of the number of people who quit smoking or the reduction in arrests of and accidents caused by drunk drivers. In other cases, money might change hands. Charities are becoming increasingly sophisticated at fund-raising, using TV advertising campaigns, mailings, and even telephone selling to encourage donations. Success is measured by the amount of money raised, but can also be measured in terms of raising the profile of the issues the charity was formed to address. For example, the UK childrens charity the NSPCC (National Society for the Prevention of Cruelty to Children) runs advertising campaigns aimed at encouraging people to report cases of child abuse. This advertising also helps with fund-raising. In either case, profit is not the motive: as a charity, the NSPCC is non-profit-making.

Small business marketing

Much marketing theory (and practice) focuses on large organisations. Small businesses have specific problems of their own, largely related to their limited resources and non-specialist management. Someone running a small business has to be the marketer, the financial director, the personnel manager, the chief production manager, and the head of research and development. Because many small businesses come into existence because the owner has a particular expertise in producing something (whether this is haircuts, hamburgers or electronic components) small businesses tend to have production or product orientation.

International marketing
The conceptual basis for international marketing has recently gone through a transformation in which a distinction has been drawn between the international and the global. International marketing implies an emphasis on producing goods in one country and selling them in another, perhaps with some local assembly in the destination country. Global marketing implies a wider vision in which the company sources raw materials and components in a variety of countries, manufactures in a variety of countries, and markets its goods in the same or different countries. Globalisation of business has been a major issue in world politics, since fullyglobalised companies are difficult to control and can often act as if they are above Government intervention. Also, there are issues about the homogenisation of cultures and the erosion of national diversity as globalised companies force local businesses to close

Chapter one Managing the Exchange Process

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down. There is perhaps a responsibility on marketers to seek ways of minimising the damage from globalisation while maximising the economies of scale and other advantages which come from addressing global markets. One of the key drivers for globalisation is the identification of market segments which cross national boundaries. This allows for the development of products which have very specific features which appeal to only a tiny proportion of the population, since even a segment representing 0.01 per cent of the worlds population is numbered in the hundreds of thousands. Thus a producer will obtain economies of scale in manufacturing for this segment, whereas the same segment (on a national basis) would not support development of the product. In order to operate in global markets (or international markets) firms need to adapt the marketing mix to meet local conditions. For most global firms, this means making compromises. On the one hand, a single marketing message means that the firm benefits from economies of scale in its marketing activities, on the other hand a single message will not appeal to the diversity of cultures which exist worldwide.

Summary

arketing is a young discipline, yet it has captured the imagination of managers and academics alike. As a result, there is a lively debate about the nature and scope of marketing which means in turn that definitions of what marketing is and what it should be are still emerging. For some people, marketing is about managing exchange. For others, it is about meeting customer needs at a profit (or in ways which lead to other organisational objectives). For others, marketing is everything that businesses do, and for yet others marketing is what marketers do. All these definitions have some degree of truth in them. The key issue in practice is that marketers should not try to please everybody. A marketer should be content to meet some of the needs of some of the customers most of the time trying to do more is unlikely to be practical. The key points from this chapter are as follows:
G There is no single definition of marketing in

G Marketers put the satisfaction of customer need

at the centre of everything they do.

G Marketing often conflicts with other business

specialisms.
G Peoples needs go far beyond mere survival. G Marketing draws from many other disciplines,

including economics, sociology, anthropology, psychology and corporate strategy.

G Marketing subdivides into specialist areas such

as services marketing, non-profit marketing and so forth, each of which has its own set of parameters and techniques. However marketing is viewed, whether as a quick fix, or a function of the business, or as the guiding philosophy of the business, there is no disagreement that companies need to take care of their customers. As Sam Walton, charismatic founder of Wal-Mart (the worlds biggest retailer) once said:

common use.
G Marketing is about exchange.

There is only one boss the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.

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Part one Concepts and contexts

Chapter review questions

1 Describe how the Edgeworth Box makes trade possible. 2 Which behavioural sciences have contributed to marketing theory? 3 What are some of the practical difficulties in becoming truly customer-centred? 4 What is the difference between needs and wants? 5 What are the problems of defining marketing as being simply the management of exchange? 6 What is the difference between product orientation and production orientation? 7 What are the major drawbacks of the 7P model? 8 What problems might arise in defining who the customer is in a non-profit market? 9 Why might some people feel that globalisation is a bad thing? 10 Explain price elasticity of demand.

Preview case revisited Opodo

he major airlines realised that the new cheap airlines appearing on the Internet were offering very real advantages for customers. These advantages were not confined to low prices the Internetbased airlines also offered much more convenient booking systems because the Internet operates twenty-four hours a day, three hundred and sixty-five days a year. Major airlines, on the other hand, were still getting the bulk of their business through travel agents, and were paying them commission for making the bookings. Opodo was set up as the solution to the problem. The airlines realised that they would need to offer something the low-cost airlines did not have if they were to compete effectively, and they also knew that Opodo would need to operate independently of the airlines if it was to be credible. Opodo therefore offers direct Internet booking for over 500 airlines, not just the companies which set it up. The site also offers access to 45,000 hotels and 7,000 car-hire operators

worldwide, with the facility to make on-line bookings throughout. The company has established partnerships with leading travel guides so that information about destinations can be accessed on the website, and prospective travellers can search the site for types of destination (for example, generate a list of ski resorts) as well as look for flights on the basis of cheapness, directness, or specific airline. Opodo say that their aim is to put the customer in control to provide the tools, information and inspiration to travel where they want, when they want, and how they want. So far, the company only has websites in nine markets, but plans to expand into other European countries as business increases. Because the booking system is more efficient than using travel agents, the airlines are able to offer competitive fares, but it is the added value of Opodo, plus the range of destinations available, that really give the traditional airlines their competitive edge.

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Case study Paradores de Turisimo

he Paradors of Spain (Paradores in Castilian) are among the most luxurious and character-filled hotels in Europe. The Spanish Government owns all 89 of them, and they are run on a non-profit basis, but what makes them unique is the buildings from which they operate. The parador system was first established in 1926 as a way of preserving buildings of historic importance. Like other European countries, Spain has many such buildings, but the Spanish economy has never generated enough surplus income for the buildings to be maintained solely from taxation. So in typical Spanish fashion, the Government turned to its second biggest income generator, tourism, to provide the answer. Converting ancient monasteries, castles, Moorish palaces, fortresses and convents into modern hotels was no small feat, but the results are astounding. In Canadas del Teide, in Tenerife, the hotel is in the crater of an extinct volcano. In Granada, the parador is inside the grounds of the Alhambra Palace, the twelfth-century base of the Moorish rulers of Spain. In Santiago de Compostela, the parador (called the Hostal de los Reyes Catolicos) is reputedly the oldest hotel in the world, originally built to house pilgrims on their way to the shrine in the town. The fact that the buildings are old does not mean that the business is run in an old-fashioned way, however. Paradores de Espana has its own website, with an on-line booking system and virtual tours of the hotels themselves. The site contains details of the surrounding areas, and instructions for finding the hotels. The hotels provide top-class facilities, including health and fitness clubs, business centres, and superb restaurants specialising in regional cuisine (for example, at Javea on the Costa Blanca the restaurant serves paella with duck and red peppers, and a local version of paella made with noodles instead of rice). Frequently the hotels are furnished with antiques, tapestries, and original paintings and sculptures. Not all the hotels are in ancient buildings. Some (like the one inside Mount Teide) have been built at sites of outstanding natural beauty, and they are often built in areas which are outside the tourism mainstream. Hence there are none in Barcelona or Madrid, but there are four within an hours drive of Madrid.

Prices are, of course, high relative to other hotels in Spain. Around B130200 for a double room will get you a night in one, with dinner costing a further B2040 a head on average. By Northern European standards this represents a bargain, so there are people who travel to Spain specifically to stay in paradors. The Government uses a range of approaches to marketing the hotels. Apart from the website, the hotels are marketed through travel agents. Special offers appear at different times of the year: for the 2004 season the organisation offered a five-night card, allowing the holder to stay in five different paradors for B345.60. There was also the Dream Week Passport, which allowed the holder to stay 6 consecutive nights in paradors for B377.04, and a two-night special which allowed the holder to stay two nights on a half-board basis, on selected nights, at 20 per cent discount. Perhaps the most generous offer was the young persons getaway deal, which provided bed and breakfast (during off-peak times) for only B37.70. This ticket was only available to those aged between 20 and 30. Similar deals existed for the over-60s. There is even a Friends of the Paradors organisation to join. Members gain discounts on accommodation, and regular newsletters about the paradors. Paradores de Turismo represent an ideal way for the Spanish Government to achieve its objectives. First, the historic buildings are preserved and in fact improved in many ways to ensure their survival for years to come. Second, tourism in less popular regions is encouraged, which helps local economies and provides jobs. Third, the paradors attract tourists into Spain, contributing foreign currency to the Spanish economy. From the viewpoint of the guests at the hotels, the paradors provide luxurious accommodation at a reasonable price in some of the most exciting locations in the world.

Case Study Questions

1 How does the Spanish Governments policy on running the paradors fit in with the definitions of marketing at the beginning of the chapter? In terms of Maslows hierarchy, what customer needs do paradors meet?

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3 4

Why do paradors offer deals to young people? Why is it important for the restaurants to offer regional specialities?

5 6

What competitive environment are paradors in? How do the paradors meet the competitive threat, since they obviously do not do so on price?

References
Avlonitis, G. et al. (1997): Marketing orientation and company performance: industrial vs. consumer goods companies. Industrial Marketing Management 26(5), 385402. Booms, B.H. and Bitner, M.J. (1982): Marketing strategies and organisation structures for service firms. In Donnelly, J.H. and George, W.R. (eds) Marketing of Services. (Chicago: American Marketing Association, pp. 4752). The Coca Cola Company (1981): Measuring the Grapevine: consumer response and word-ofmouth. Drucker, P.F. (1999): The Practice of Management (London: Heinemann). Ford, D.H., Hakansson, H., and Johanson, J. (1986): How do companies interact? Industrial Marketing and Purchasing 1(1), 2641. Homburg, Christian, Koschate, Nicole and Hoyer, Wayne D. (2005): Do satisfied customers really pay more? A study of the relationship between customer satisfaction and willingness to pay. Journal of Marketing 69(2), 8496. Jobber, D. (2003): Principles and Practice of Marketing (Maidenhead: McGraw-Hill). Kotler, P., Armstrong, J., Saunders, G. and Wong, V. (2003): Principles of Marketing (Harlow: FT Prentice Hall). Maslow, A. (1954): Motivation and Personality (New York: Harper and Row). Narver, J.C. and Slater, S.F. (1990): The effects of a market orientation on business profitability. Journal of Marketing 54 (October), 2055. Raffia, M. and Ahmed, P.K. (1992): The Marketing Mix Reconsidered. Proceedings of the Marketing Education Group Conference, Salford, pp. 43951. Rosenberg, I.J. and Czepeil J.A. (1983): A marketing approach to customer retention. Journal of Consumer Marketing 2, 4551. Shaw, Vivienne and Shaw, Christopher T. (2003): Marketing: the engineers perspective. Journal of Marketing Management 19, 345378. Stanton, John L. and Herbst, Kenneth C. (2005): Commodities must begin to act like branded companies: some perspectives from the United States. Journal of Marketing Management 21(1/2), 718.

Further reading
The material in this chapter is covered in introductory marketing texts rather than in dedicated textbooks. For the arguments in favour of marketing is everything see Kotler, Armstrong, Saunders and Wong: Principles of Marketing (FT Prentice Hall). For contributions from economics, John Sloman and Mark Sutcliffe (2004) have written Economics for Business (Harlow: FT Prentice Hall), which ties economic theory to the real world of business in a way which is interesting and relevant. For contributions from the behavioural sciences, there are many books on psychology, sociology and anthropology, but you may want to read Chapter 4 first as there is much more on these topics in that chapter.

Glossary
Achievers People who seek respect by buying appropriate products. ACORN A geographical segmentation method: A Classification Of Residential Neighbourhoods. Actual state The situation the individual is currently experiencing. Adapter A company which produces new products, superior to those produced by the market leader. Advertising A paid message inserted in a medium. Advertising research Investigations into the effectiveness and potential effectiveness of marketing communications. Affect The emotional component of attitude. Affective Relating to emotional factors. Aftermarket See MRO. Aggressive Someone who usually moves against people, and controls fear and emotions in a quest for success, prestige and admiration. Alliteration Using similar sounds in a slogan to aid memory. Ambient advertising Advertising which becomes part of the environment. Ambiguity The degree to which stimuli can be interpreted in different ways. Anthropology The study of culture. Associative group A group to which one would like to belong. Assonance Repetition of vowels in a slogan to aid memory. Assortment adjustment Changing the proportions of products owned in order to increase satisfaction. Assortment depletion Using up resources or wearing out products. Attitude A learned tendency to respond in a consistent manner to a specific stimulus or object. Audience fade-out The tendency for TV viewers to leave the room or lose concentration when the commercial breaks occur. Automatic group/category group A group to which one belongs by virtue of birth. Backward conditioning The unconditioned stimulus comes before the conditioned stimulus. Banners Advertising messages on websites. Barrier to entry A factor which prevents a firm from entering a specific market. Belief An understanding that an object possesses a particular attribute. Belongers People who seek to join groups in society. Benchmarking Setting performance parameters by comparing performance with that of the best of the competing firms. Bias Errors in research results caused by failures in the research design or sampling method. Boundary scanning The practice of monitoring the interfaces between the firms and its publics. Boycott To avoid buying a companys products. Brainstorming Generating new product ideas by group discussion. Brand The focus of marketing activities. Brand audit The process of determining whether a specific brand is being marketed effectively. Brokers Intermediaries who bring buyers and sellers together, but do not themselves handle goods. Buyback An agreement on the part of a supplier to accept payment in finished products. Buyer The person who negotiates the purchase. Cash cow A product with a large share of a mature market. Catalogue showrooms Retailers which have a bricks-andmortar presence, but which use a brochure to display the goods rather than display shelves. Categorical plan An approach to valuing suppliers based on salient performance factors. Categorisation Filing information with similar information. Central route Cognitive approach to changing behaviour. Chunking The mental process whereby information is stored alongside connected information. Classical conditioning The instilling of automatic responses in an individual by repetition of stimulus and reward. Cloner A company which produces copies of products sold by the market leader. Closed questions Inquiries to which there will only be a small range of possible answers, usually only yes or no. Clutter Excessive advertising. Coercive power Potential for control derived from the ability to punish the other party. Cognition The rational component of attitude. Cognitive Relating to rational factors. Cognitive effort The degree of effort the consumer is prepared to put into thinking about the product offering Cognitive structure The way information is fitted into the existing knowledge. Commission Performance-related payments made to salespeople. Comparative advantage The degree to which one country is better at producing certain goods than another. Compatibility The degree to which a product fits into the adopters life. Compensatory Of a heuristic, one which allows negative features to be offset against positive features.

726

Glossary

Competitor orientation The belief that corporate success comes from understanding competitors. Complexity The degree to which the product is difficult to understand. Compliant Someone who moves towards people, has goodness, sympathy, love, unselfishness and humility. Compulsive consumption An obsessive need to buy and use products. Conation Intended behaviour. Concept testing A market research exercise in which feedback is obtained on the basic idea for a new product. Concessionaires Firms which rent space in department stores, paying a rental and usually a commission on sales. Conclusive research Investigations intended to provide answers to problems. Conditioned response A response which results from exposure to a conditioned stimulus. Conditioned stimulus A stimulus offered at the same time as an unconditioned stimulus, with the intention of creating an artificial association between it and the unconditioned response. Conditions Situations which make a sale impossible. Confidentiality agreement A contract between two parties containing clauses to the effect that each will keep the others secrets. Confirming houses An organisation which handles the mechanics of exporting and importing on behalf of manufacturers or buyers. Conjunctive Heuristics which are considered together. Connotative Having the same meaning for everybody. Consideration set The group of products which might be capable of meeting a need. Consumer One who obtains the benefits from a product. Consumerism The set of organised activities intended to promote the needs of the consumer against those of the firm. Contactors Staff who have daily contact with customers. Continuous innovation Incremental improvements in an existing product. Convenience sample Selecting respondents by availability, without regard to characteristics of the respondents. Convenience stores Stores which are located in residential areas, and which stock frequently purchased items. Core competences The central, most important aspects of the companys abilities. Corporate reputation The overall image of the organisation. Cost-plus pricing Setting prices by calculating the outlay on producing the items, and adding on a profit margin. Cost-ratio plan A method of evaluating suppliers based on the costs of doing business with them. Counterpurchase An agreement on the part of a supplier to accept payment in kind, or to spend the proceeds of the sale in the country in which the sale is made. Countertrading Bartering of goods in international markets. Cross-selling Selling new product lines to an existing customer.

Cue An external trigger which encourages learning. Culture The set of shared beliefs and behaviours common to an identifiable group of people. Customary price The price a product has always been sold for. Customer One who decides on payment for a product. Customer intimacy The degree to which a firm is close to its customers. Customer orientation The belief that corporate success comes from understanding and meeting customer needs. Customer research Investigations into the behaviour of purchasers of the product. Customer size specialist A company which specialises in dealing with customers of a specific size. Customer-specified innovation New product ideas which are generated by customers. Cut-off A filtering device which involves deciding the outer limits of acceptability for a given products chatracteristics. Database marketing Using a list of customers or potential customers stored on a computer to drive the marketing effort. Decider The person who has the power to agree a purchase. Decision tree A diagrammatic representation of the route a manager must take to reach a decision. Decision-making unit A group of people who, between them, decide on purchases. Del credere agents Intermediaries who do not take title to the goods, but who do accept the credit risk from customers. Delphi A system of research under which opinions are sought iteratively from experts. Demand pricing Calculating price according to what consumers are prepared to pay. Demographics The study of the structure of the population. Denotative Having a unique meaning for an individual. Deontology The belief that actions can be judged independently of outcome. Dependent variable The stimulus which is applied to generate a response. Desired state The situation the individual wishes to be in. Detached Someone who moves away from people, and is self-sufficient and independent. Dichotomous question An inquiry which can only be answered yes or no. Differentiation Factors which distinguish one product from another. Direct-response advertising Messages inserted in a medium with the intention of generating a dialogue with potential consumers. Discontinuous innovation A new product which significantly changes consumers lifestyles. Discount sheds Out-of-town stores offering a wide range of products at low prices. Discounters Retailers which carry a limited range of stock at low prices.

Glossary

727

Discrimination The ability to distinguish between similar stimuli. Dissociative group A group to which one would not wish to belong. Dissonance The emotional state created when expectations do not match with outcomes. Distribution research Investigations into the effectiveness of different outlets for products. Dodo A product with a small share of a shrinking market. Dog A product with a small share of a mature market. Dramaturgical analogy The view that life is essentially theatrical in nature. Drive The force generated in an individual as a result of a felt need. Dumping Disposing of products in a foreign market at prices below the cost of production. Eclectic All-encompassing, taking account of all factors. Economic choice The inability to spend the same money twice. Economics The study of supply and demand. Economies of scale Cost savings resulting from large production runs. Elaboration The structuring of the information within the brain, and adding to it from memory in order to form a coherent whole Elasticity of demand The degree to which peoples propensity to buy a product is affected by price changes. Empowerment Giving staff the ability to resolve customer problems without recourse to higher management. End user The person or company who uses the product, without selling it on or converting it to something else. End-of-pipe solution Cleaning up pollution after it has been created rather than re-engineering the process so that pollution is not produced. End-use specialist A company specialising in customers who use the product in a specific way. Environment research Investigations into the external factors which impinge on the organisations activities. Environmental scanning Continuous monitoring of external factors which might impinge on the organisations activities. Ethics A set of rules for good behaviour. Ethnicity Cultural background. Ethnocentrism The belief that ones own culture is superior to others. Experiment A research technique in which a controlled situation is used to determine consumer response to a given stimulus. Exploratory research Investigations intended to identify problems. Export agents A person or company that takes responsibility for organising the export of goods without taking title of the goods. Export house An organisation which buys goods for sale abroad.

Extended problem-solving Non-routine purchase behaviour. Extension Increasing the number of products owned. External environment Factors which operate outside the organisation. External search Looking for information in places other than memory. External validity A condition where a research exercise would generate the same results if it were repeated elsewhere. Extinction The gradual weakening of conditioning over time. Factors Intermediaries who hold stocks of product, but do not take title to the goods. Familiarity The degree to which an object is known. Field research Investigations carried out in the marketplace. Financial risk The danger of losing money as the result of a purchase. First-time prospects Potential customers with whom the company has never done business before. Focus group Respondents brought together to discuss a research question in a controlled and structured manner under the guidance of a researcher. Focus strategy The practice of targeting a small segment of the market. Foregrounding Bringing an advertising slogan to the forefront of customers minds. Formal group A group with a known, recorded membership list. Formal structure The official relationships between members of an organisation. Forward conditioning The conditioned stimulus comes before the unconditioned stimulus. Franchising An agreement to use a firms business methods and intellectual property in return for a fee and a royalty. Frequency Number of times each consumer is exposed to the communication. Gatekeeper The person who controls the flow of information. Generalisation The tendency for the individual to react in several ways to the conditioned stimulus. Generally concerned One who believes that the environment is important, but does little to change his or her behaviour accordingly. Geocentrism Viewing corporate activities in a global manner. Geographical proximity The closeness of the market in physical terms. Global customers Firms which are willing to purchase products outside their domestic markets and tend to have global control of purchasing from headquarters. Globalisation The view of the world as a single market and single source of supply. Goal An objective.

728

Glossary

Green activist One who is proactive in espousing an environmentally friendly lifestyle. Green customer One whose purchases are influenced by environmental concerns. Green thinker One who believes in being environmentally friendly. Grey market 1. Re-import of brands from markets where the prices are lower. 2. Older consumers. Hedonic needs Needs which relate to the pleasurable aspects of ownership. Heuristic A decision-making rule. High-context culture A culture which is homogenous and has rigid rules. Homophilous influence The love of being like everyone else. House journal A medium for disseminating information within an organisation. Ideal self The person we wish we were. Identifiers The major variables in segmentation which can be listed without carrying out extensive research. Image The overall impression a company or brand has in the eyes of its publics. Imitator A company which makes somewhat differentiated products which are similar to those produced by the market leader. Import houses An organisation which buys goods in from abroad. Impulse purchases Purchases made without apparent conscious thought. Independent variable The response resulting from a dependent variable. Indifference curve A diagrammatic representation of the trade-offs people have between products. Influencer The person who has the ability to sway the judgement of a decider. Influencers Staff who can affect the way customers are treated, even though they have no direct access to them. Infomercial A feature-length programme about a product. Informal group A group which does not have a fixed membership list or known rules. Informal structure The unofficial relationships between members of an organisation. Infrastructure The physical resources available to the firm for logistical processes. Initiator The person who first recognises a problem. Inner directed Motivated by forces originating within the individual. Innovation cost The expenditure of money and effort resulting from adopting a new product. Inseparability In services, production and consumption occur at the same time. Instrumentality The subjective capacity of the object to attain the value in question. Intangibility The inability to touch a service. Internal ad hoc data Information supplied by systems within the organisation for a specific purpose.

Internal continuous data Information supplied by systems within the organisation on a constant basis. Internal environment Factors which operate within the organisation. Internal marketing The practice of creating goodwill among employees. Internal validity A condition where a research exercise provides evidence which supports what the exercise was intended to discover. Intranet A computer-mediated system for internal communications within an organisation. Involvement Emotional attachment to a product or brand. Isolateds Staff who have no relationship at all with customers. Judgement sample Selecting respondents according to criteria established by the researcher. Junk mail Poorly-targeted direct mailings. Key account A customer or potential customer with strategic importance to the firm. Key-account manager Someone charged with the task of managing the relationship with a strategically important customer. Law of primacy The law which states that early learning about an object will colour future experiences of the object, and future interpretations of that experience. Leads People who are prepared to hear what a salesperson has to say. Least dependent person The individual with the most power in a group. Legitimate power Potential for control derived from a legal or contractual position. Lexicographic A hierarchy of heuristics. Licensing An agreement to use a firms intellectual property in exchange for a royalty. Limited problem-solving Routine purchasing behaviour. Liner A ship or aircraft which operates on a regular route at fixed times. Livery Painting a public-transport vehicle in corporate colours or advertising. Lobbying Making representations to politicians with the aim of changing legislation. Logistics The co-ordination of the supply chain to achieve a seamless flow from raw materials through to the consumer. Longitudinal study Research which is carried out over a lengthy time period. Looking-glass self The way we think other people see us. Low-context culture A culture which is heterogenous and has tolerant rules. Loyalty The tendency to repeat purchase of a brand. Macro environment Factors which affect all the firms in an industry. Margin Gross profit calculated as a proportion of the price a product is sold for. Market challenger A company which seeks to grow at the expense of the market leader.

Glossary

729

Market follower A company which follows the lead of the main company in the market. Market nicher A firm which is content with a small segment of the market. Market research Investigations intended to improve knowledge about customers and competitors. Market segment A group of people having similar needs. Marketing information system Mechanisms for providing a constant flow of information about markets. Marketing orientation The belief that corporate success comes from understanding the relationships in the market. Marketing research Information gathering for the purpose of improving the organisations effectiveness in the market. Mark-up Gross profit calculated as a proportion of the price paid for an item. Maturation The development of the organism over time. Mechanics In sales promotion, the activities the customer must undertake. Memory the mechanism by which learned information is stored Message intrigue The increased interest developed by ambiguous communications. Metaphor A sign which relates to an object. Micro environment Factors which only affect one firm. Missionary A salesperson who does not sell directly, but who has the task of spreading the word about a product to people who influence purchase. Modified rebuy A repeat purchase where some changes have been made. Modifiers Staff who have some contact with customers for specific purposes. Monopolistic competition A situation in which one company exercises strong influence in the market, but other companies can still enter the market and compete effectively. Monopoly A situation in which one company controls the market. Mortality The tendency for respondents to disappear over time. Motivation The force that moves an individual towards a specific set of solutions. MRO Maintenance, repair and overhauling company. Multibuys A sales promotion in which customers are offered extra packs of product when they buy one or more packs. Multinational global customers Customers who source products globally, and also use the products globally. Mystery shoppers A marketing research technique whereby the researcher pretends to be a customer. Myths Heroic stories about a product. Narrowcast Accurate targeting of audiences in broadcast media. National global customers Customers who source products globally, but only use them within their national borders.

Need A perceived lack of something. New task A purchase which has no precedent. Niche marketing Serving a small segment. Non-compensatory Of a heuristic, one which does not allow a positive feature to offset a negative feature. Non-shopping products Products which require little information search or decision-making. Non-universal ownership Not owned by people who are not members of the group. Normative compliance The pressure to conform to group norms of behaviour. Novices Customers who have purchased the product for the first time within the last 90 days. Objections Questions raised by a prospect in the course of a sales presentation. Objective Not subject to bias from the individual. Observability The degree to which the product can be seen by others. Odd-even pricing Using 99c or 95p endings on prices. OEM Original equipment manufacturer. Oligopoly A situation in which a group of companies control the market between them. Open questions Inquiries to which there might be a wide range of possible answers. Operant conditioning The instilling of automatic responses via the active participation of the individual. Optimum stimulation level The level at which the gap between the desired state and the actual state has not yet become unpleasant. Outbound logistics Controlling the flow of product from the organisation to its customers. Outer directed Taking ones cue from the behaviour of others. Outshopping Shopping outside the area in which one lives. Panel A permanently established group of research respondents. Party plan A direct-marketing tool in which the salesperson holds private presentations for groups of friends in a private home. Penetration pricing Setting low prices in an attempt to capture a large market share. People The individuals involved in providing customer satisfaction. Perceived cost of search The degree to which an individual believes that an information search will be too arduous or expensive. Perception The process of building up a mental map of the world. Perceptual map The individuals view of competing products. Perfect competition A state of affairs where everyone in the market has perfect knowledge, and no one buyer or seller can influence the market. Peripheral route Affective approach to changing behaviour. Perishability Services cannot be stockpiled.

730

Glossary

Personal sources The meansend knowledge stored in an individuals memory. Physical distribution The movement of products from producer to retailer and ultimately to the consumer. Physical distribution Moving goods from the producer to the consumer, along the value chain. Physical evidence The tangible proof that a service has taken place. Physical risk The danger of physical harm as the result of a purchase. Piggy-backing Attaching one product to another for the purposes of sales promotion. Place The location where the exchange takes place. Polycentrism Viewing corporate activities as emanating from centres in a number of countries. Polymorphism Bundling data and code to create an object Pop-ups Advertising messages which appear on websites. Positioning Placing the product in the appropriate location in the consumers perceptual maps. Post-purchase evaluation The process of deciding whether the outcome of a purchase has been appropriate or not. Preliminary research Investigations intended to outline the dimensions of a problem. Presence website A website which is not interactive, but directs customers to another medium. Press releases News stories about the organisation. Price The exchange that the customer makes in order to obtain a product. Primary data Information collected first-hand for a specific purpose. Primary group The group of people who are closest to the individual. Private responses Complaints made to friends or family about a product or company. Problem child A product with a small share of a growing market. Process The set of activities which together produce customer satisfaction. Procurement Obtaining goods to be used in production or running the organisation. Product A bundle of benefits. Product champion An individual who has or is given the role of guiding a new product through the development process. Product life cycle The process of launch, growth, maturity and decline which products are thought to go through. Product orientation The belief that corporate success comes from having the best product. Product portfolio The range of goods offered by a firm. Product research Investigations intended to generate knowledge which can be used to inform new product development. Production orientation The belief that corporate successs comes from efficient production. Product-line pricing In circumstances where sales of one product are dependent on sales of another, calculating both prices to take account of the price of each product.

Project teams Groups of people with the responsibility for guiding products through the development process. Projective technique A research method which invites respondents to say what they think another person might answer to a specific question or problem. Promotion Marketing communications. Prospects People who have a need for a product, and the means to pay for it. Psychological proximity The degree to which countries are culturally close to each other. Psychology The study of thought processes. Psychology of complication The desire to make ones life more complex and therefore more interesting. Psychology of simplification The desire to make ones life simpler and therefore less demanding. Psychosocial risk The danger of looking foolish as a result of a purchase. Public relations The practice of creating goodwill towards an organisation. Publics The groups of people with whom the organisation interacts. Pull strategy Promoting to end users in order to pull products through the distribution channel. Push strategy Promoting to channel intermediaries in order to push products through the distribution channel. Qualitative data Information which cannot be expressed numerically. Quantitative data Information which can be expressed numerically. Quota sampling Selecting respondents according to a set of pre-arranged parameters. Reach Number of potential consumers a communication reaches. Real self The objective self that others observe. Recession A situation in which gross national production falls for three consecutive months. Redundancy In communications, sending a message by more than one route, to ensure a correct delivery. Reference group A group from whom one takes behavioural cues. Referent power Potential for control derived from a position of authority. Registration A system for protecting brand names. Regression effect The tendency for extremes to move towards the middle in longitudinal studies. Reinforcement Increasing the strength of learning by rewarding appropriate behaviour. Relationship marketing The practice of concentrating on the lifetime value of customers rather than their value in the single transaction. Relative advantage The degree to which a new product is better than the one it replaces. Replenishment Replacing products which have been worn out or used up. Research plan An outline of the steps which must be taken in gathering information systematically.

Glossary

731

Reseller organisation A firm which buys goods in order to sell them on to other firms or consumers. Response The reaction the consumer makes to the interaction between a drive and a cue. Retention The stability of the learned material over time Role The position one has in the group. Rookie A new sales recruit. Roughs Draft advertising materials produced for a clients approval. Sales cycle The series of activities undertaken by salespeople. Sales orientation The belief that corporate success comes from having proactive salespeople. Sales presentation A structured interview in which a salesperson ascertains a customers needs, and offers a solution which will meet those needs. Sales research Investigations into aspects of the personal selling function, including the performances of individual salespeople. Salient belief An understanding that an object possesses a relevant attribute. Sampling Selecting appropriate respondents for research. Scamps See Roughs Screening Selecting new product ideas for further development. Second lifetime value The value of a former customer who has been won back to the firms products. Secondary data Information collected second-hand: information which was originally collected for a different purpose from that which the researcher now wants to use it. Secondary group A group to which one belongs, but which one does not relate to on a regular basis. Second-market discounting Charging lower prices in some markets or to some market segments than in others. Segmentation Dividing the market into groups of people with similar needs. Selectivity Selecting from external stimuli. Self-concept Ones view of oneself. Semiotics The study of meaning. Shelf price The cost of a product when it is on the shelf, not including delivery costs etc. Shopping products Products which require extensive information search and decision-making. Signal A feature of the product or its surrounding attributes which convey meaning about the product. Silent seller The book of sales materials carried by sales representatives. Simultaneous conditioning The conditioned stimulus and the unconditioned stimulus are offered at the same time. Simultaneous engineering Carrying out development processes in parallel rather than sequentially in order to reduce time to market. Situational factors Elements of the immediate surroundings which affect decision-making. Situational sources Sources of involvement derived from immediate social or cultural factors.

Skimming Pricing products highly at first, but reducing the price steadily as the product moves through its life cycle. SMS Short Message Service, or texting on cellular telephones. Socio-cultural Appertaining to the social effects of buying or not buying a product. Sociology The study of behaviour in groups. Sophisticates Customers who have purchased the product before and are ready to rebuy or have recently repurchased. Spam Unwanted commercial e-mails. Species response tendencies Automatic behaviour as a result of instinct rather than learning. Specific-customer specialist A company which specialises in dealing with a narrow range of customers. Spin-doctoring Attempts to cover up bad news by slanting it in a way which puts the organisation in a favourable light. Sponsorship Payment to a cause or event in exchange for publicity. Stakeholders People who are impacted by corporate activities. Stars Products with a large share of a growing market. Straight rebuy A repeat purchase with no modifications. Strap line The slogan at the end of an advertisement. Structured observation A marketing research technique which involves directly watching consumer behaviour. Subjective Appertaining to the individual. Subjectivity Relating to the individual. Sugging Selling under the guise of market research. Supply chain The organisations which add value to the product as it moves from raw materials to consumer. Survivors Those people who struggle to maintain any kind of lifestyle. Sustainers People living close to the subsistence level. Switching cost The expenditure of money and effort resulting from changing from one product to another. System selling Marketing on a one-to-one basis by a team of salespeople. Targeting Choosing which segments to service. Tariff barriers Customs duties which make a product less competitive in an overseas market. Teaser campaign An advertising campaign in two stages: the first stage involves a message which in itself is meaningless, but which is explained by later advertisements in the second stage. Technophobe Someone who does not like new products. Technophone Someone who has an interest in new technology. Telemarketing Selling or researching via the telephone. Teleology The belief that acts can be judged by their outcomes. Telesales Selling over the telephone. Territory The geographical area or group of potential customers allocated to a salesperson.

732

Glossary

Test marketing Offering a product to a small group of consumers in order to judge the likely response from a large group of consumers. Third-party responses Complaints made via lawyers or consumer rights advocates. Time series Analysis which shows how the situation has progressed over a period, carried out in order to predict likely future trends. Trade association A group of companies in the same industry, set up to look after the collective interests of the group. Trade up Buy the more expensive model. Tramp ship A ship which does not follow set routes, but which sails when it has a cargo for a particular port. Transfer pricing Internal pricing in a multinational company. Trialibility The degree to which the product can be tried out before adoption. Triangulation Using more than one research method to answer the same question in order to reduce the chances of errors. Turnkey contract An agreement whereby one firm establishes an entire business in a foreign country and subsequently hands over the business to another firm, in exchange for a fee and occasionally royalties. Unconditioned response The existing automatic response of the individual to an unconditioned stimulus. Unconditioned stimulus A stimulus which would normally produce a known reaction in an individual: this stimulus is offered as part of the conditioning process. User The person who uses the product. Utilitarian Appertaining to the practical aspects of ownership. Value The benefit a customer obtains from a product. Value analysis A method of evaluating components, raw materials and even manufacturing processes in order to determine ways of cutting costs or improving finished products.

Value breakdown A situation in which the service offered by a producer does not materialise. Value chain The firms involved in the process of turning raw materials into products. Value chain analysis Assessment of ways in which organisations add value to the products they handle. Value network The group of organisations which collectively add value to raw materials. Value-based marketing Marketing whose end goal is raising the share value of the company. Variability In services, there will be a difference between one service and the next, even from the same supplier. Vertical integration A situation in which one company controls or owns suppliers and customers throughout the supply chain. Virtual products Anything which can be sold and delivered via the Internet. Visible Able to be seen by others. Voice responses Complaints made directly to the supplier. Wall newspaper A poster giving information to employees. Want A specific satisfier for a need. War horse A product with a large share of a shrinking market. Website A page on the Internet designed for and dedicated to an organisation or individual. Weighted-point plan A method of evaluating suppliers based on factors which are of greatest importance to the company. Wicked problem A problem whose solutions create more problems. Zapping Using the TV remote control to avoid advertising messages. Zipping Using the fast-forward on a VCR to skip past TV advertising.

Index
achievers 725 Ackoff, R.L. 340 ACORN 694, 725 active media 4907 activity based costing (ABC) 456 actual state 1056, 725 adapter 725 added value 5245 advertising 47, 480, 725 budget-setting 823 channel 4845 developing strategy 4825 effectiveness 2878 feedback 485 levels of involvement 481 message 4834 objectives 82 research 725 strong theory 4801 types of media 485501 weak theory 481 advertising research 213 affect 725 affective 725 after-sales activities 555, 561 aftermarket see MRO agents 6789 aggressive 192, 725 Ahmed, P.K. 16 AIDS 656 Ailawadi, K.L. 692 airborne advertising 5023 hot-air balloons 503 skywriting 503 Airbus Industrie 53 Ajzen, I. 252 alliteration 725 Allport, G.W. 250 ambient advertising 5035, 725 ambiguity 132, 725 Ambler, T. 389 Amena Moviles 104, 144 American Express (AMEX) 708 American Marketing Association (AMA) 5 stakeholders 6 Ames, B. 457 Amway 31, 57 Anderson, C.H. 694 Anderson, E. 556 Anderson, E.W. 6 Anderson, R.E. 464, 553 Ansoff, H.I. 333, 354 anthropology 212, 104, 725 Areni, C.S. 487 Asch, S.E. 135 aspirational groups 135 associative group 725 assonance 725 assortment adjustment 108 assortment depletion 106, 725 Atkins diet 40 attitude 2502, 725 changing 2545 formation 2523 measurement 2556 audience fade-out 725 automatic group/category group 136, 725 Avloniti, G. 23 backward conditioning 126, 725 BAE 1723 Bagwell, L.S. 90 Bailey, 118 Baines, P.R. 204 Bakamitsos, G. 492 Baker, M.J. 138 Baker, S. 123 Balabanis, G. 116 Balogh, P. 580 Bangeman, M. 310 banners 505, 725 Bardacki, A. 179 Barich, H. 199 Barksdale, H.C. 403 Barnard, N. 505 Barnhouse, S.H. 153 barrier to entry 725 Baruch, Y. 360 Barus, B.L. 390 Bauer, R.A. 109 Bayson, T. 381 Beardon, W.O. 135 behavioural segmentation 1801 attitude towards product 182 benefits sought 181 buyer readiness 182 purchase behaviour 1812 purchase occasion 181 usage 182 Belanger, F. 629 Belbin, R.M. 712 belief 725 Bello, D.C. 583 belongers 725 Benady, D. 45, 414 benchmarking 3768, 725 Bendixen, M. 166 Berney-Reddish, I.A. 487 Bernheim, B.D. 90 Bharadwaj, N. 168 Bhate, S. 438 bias 725 Biel, A.L. 493 Bierley, C. 126 billboard advertising 499500 designing 501 Bird, D. 618 Bitner, M.J. 335, 407, 410, 549, 656, 690 Black, A. 356, 524 Blackwell, R.D. 103, 105 Blankson, C. 202 Blenkhorn, D.L. 372 Bloch, P.H. 110 Blythe, J. 438, 481, 487, 578, 579, 580, 582, 584, 588, 624 Bodkin, C.D. 200 Bolls, P.D. 492 Bone, P.F. 434 Bonoma, T.V. 197, 201 Boo.com 632 Booms, B.H. 335, 410, 549 Boote, J. 116 Booz-Allen, 421 Borremans, T. 281 Boston Consulting Group Matrix (BCG) 4014 bottom line 4478 boundary scanning 5201, 725 Bounds, W. 502 Bowman, R.J. 663 Boyacigiller, N. 320 boycott 725 Bradford, K.D. 373 brainstorming 427, 725 brand 725 audit 725

734

Index

information seekers 124 loyalists 124 relationships 380 routine buyers 124 switchers 124 branding 8992 names 92 planning 92 semiotics 923 Brennan, R.D. 169 Bridgewater, C.A. 493 brief 5378 Brierley, S. 500 Briggs, K. 191 Britt, S. 134 brokers 725 Brooks, B.L. 566 Brown, G. 286 Brown, S. 383 Bucklin, L.P. 111 budgeting 277 Buschke, H. 90 business customers 15863 business markets, segmenting 193200 business-to-business (B2B) pricing policies 46970 sponsorship 5401 buyback 725 buyers 152, 725 cultural influences 155 economic influences 154 ethical influences 154 legal influences 154 physical influences 154 political influences 154 techniques 1645 technological 154 buygrid framework 1657 buying decision, influences 1201 Caccioppo, J.T. 253 Calentone, R.J. 422 campaign planning 2789 Campbell-Hunt, C. 300 Canadian identity 65 capital requirements 51 Carbonell-Foulquie, P. 430 Cardozo, R.N. 165 cash cow 401, 725 catalogue marketing 6267 catalogue showrooms 687, 725 categorical plan 725 categorisation 133 Cavanaugh, R.E. 352 Cavusgil, S.T. 306 Cavusgil, T.S. 467

Caywood, C. 282 central route 725 Cespedes, F.V. 552 Chaiken, S. 253 Chandon, J.-L. 505 Chandon, P. 227 channel design 649 channel management 6557 channel strategy 64750 channel system orientation 6645 charities 63 Chaston, I. 373 Chesbrough, H.W. 193 Cheshire, S. 633 Chetty, C. 300 children 142 Chimhanzi, J. 56 Choi, C.J. 407 choice 11213 Chonko, L.B. 580, 583 Christopher, M. 377 chunking 89, 725 Churchill, G.A. Jr 116, 138 Cillan, J.G. 373 cinema advertising 490, 4978 Claims Direct 967 Clark, K. 91 Clarke, A.H. 201 classical conditioning 725 classical learning theory 1257 Claycomb, C. 157 Clifford, D.K. 352 cloner 725 closed questions 5567, 725 closing techniques 55960 clutter 277, 725 CMS Webview 151, 171 Coaker, J.W. 166 Cobb, K.J. 118 coercive power 725 cognition 725 effort 130, 725 learning 1303 mapping 133 structure 130, 725 Cohen, J.B. 192 Colley, R.H. 286 commercial organisations 1589 commission 725 communication 2569 hierarchy of effects 2601 integration 2813 internal media 52831 international 2845 mix 2713 new products 438 personal influence 274

planning 276 planning campaign 2789 putting it all together 2801 research effectiveness 2869 sales promotion 599 strategy 2756 tactical considerations 27980 comparative advantage 297, 725 compatibility 436, 725 compensatory 11213, 725 competition 4950, 457 bidding 4703 global 298 monopolistic 20 moves 3489 perfect 20 competitive position model 4046 competitive strategies customer intimacy 348 differentiation 347 focus 347 operational excellence 347 overall cost leadership 347 product leadership 348 competitor collaboration 3534 orientation 725 pricing strategy 4534 complexity 436, 726 compliant 192, 726 compulsive consumption 116, 726 conation 726 concept testing 425, 726 concessionaires 726 conclusive research 726 conditioned response 726 conditioned stimulus 726 conditions 5589, 726 confidentiality agreement 654, 726 confirming houses 316, 726 conjunctive 113, 726 connotative 261 consideration set 726 consumer 726 early adopters 432 early majority 432 innovators 432 laggards 432 late majority 432 Consumer Decision Process (CDP) model 105 consumer market 3789 frequent flyer programmes 380 Friends schemes 380 supermarket loyalty cards 37980 consumer marketing 223 consumerism 37, 726

Index

735

consumption 11415 feelings vs situations 115 pot-purchase dissonance 11619 pre-purchase expectations 116 contactors 709, 726 Continental Tyre AG 2078 continuous innovation 423, 726 convenience sample 726 convenience stores 6856, 726 Cooper, M.C. 661 Cooper, R.G. 422, 424 Cordeiro, J.J. 522 Cornelissen, J. 516 corporate advertising 517 culture 56 reputation 726 strategy 22 cost advantages independent of scale 52 cost-plus pricing 726 cost-ratio plan 726 Costa, J.A. 264 costs 4567 counterpurchase 321, 726 countertrading 321, 726 Cova, B. 136, 496 Cova, V. 136 Craig, C.S. 633, 635 Cravens, D.W. 335, 336 Crimp, M. 480 crisis team 526 Cron, W.L. 581 cross-selling 726 Cruijsen, H. 37, 38 cue 132, 726 culture 36, 3941, 56, 2634, 308, 726 concept 309 influences 310 language 309 language/non-language influences 31215 models 31112 non-verbal language 309 religion 308 shared beliefs/ethics 309 social sructure 309 Cummings, T.G. 712 customary price 4601, 726 customer 55, 726 business 15863 customer orientation 726 intimacy 726 needs 1113 orientation 9 price perceptions 4545 research 21213, 726 size specialist 726

customer retention 381 interface with customer 3823 loyalty programmes 3812 problem solving 383 terminating relationship 3834 customer winback 384 segmenting defectors 3846 customer-based pricing 45966 customer-specified innovation 427, 726 cut-off 726 Czepil, J.A. 3 Czinkota, M. 468 Czinkota, M.R. 649 DAGMAR (Defining Advertising Goals Measuring Advertising Results) 286 DApris, R. 67 data types 216 database 45 database marketing 608, 61014, 726 application forms 612 company records 611 complaints 61213 enquiries from potential customers 611 exchange data 61112 information 614 loyalty cards 613 organised events 613 responses to previous activities 613 responses to sales promotion 611 salesforce records 612 sequential vs relational 612 surveys 613 warranty/guarantee cards 611 David, K. 79, 155 Davies, B.J. 690 Davies, I. 414 Day, G.S. 195, 205, 457 Day, R.L. 116, 118 De Geus, A. 356, 524 decider 152, 726 decision tree 726 decision-making process 1047 decision-making unit (DMU) 1518, 726 DeCormier, R. 548 Deephouse, D.L. 520 Deetz, S.A. 259 del credere agents 726 Dell Computers 648 Della Bita, A. 153 Deloitte 5734 Delphi 726

demand pricing 4613, 726 DeMello, G.E. 116 demographic segmentation 184 ACORN classifications 1856 age segmentation 187 gender 1878 income 1889 religion, ethnicity, nationality 189 demographics 36, 378, 64, 726 Demsetz, H. 90 department stores 6867 dependent variable 231, 726 desired state 1056, 726 detached variable 192, 726 DeVoe, M. 501 Dewey, J. 104 Deyliner, N. 308 Dibb, S. 136, 195 Dibley, A. 123 dichotomous question 726 diesel fuel 145 differentiation 51, 278, 347, 726 diffusion process 4312 attributes 4357 awareness 4345 communication 438 consumer classification 432 influences 4379 newness 438 price 438 social system 4389 speed 439 theories 4324 Dillman, D. 224 Dion, P. 556 direct mail 61720 direct marketing continuity 608 control 607 drivers 609 integrated 608 interaction 607 managing 61417 peripheral 608 segmentation 615 stand alone 608 targeting 607 tools 61727 direct-response 279 advertising 6246, 726 radio 627 television (DRTV) 625 discontinuous innovation 424 discount sheds 687, 726 discounters 687, 726 discrimination 726 disposal 11920

736

Index

dissocative group 726 dissociative group 135 dissonance 434, 726 distribution exclusive 651 intensity 6501 managing 6557 research 214, 727 selecting 6515 selective 6501 distribution channels access 52 pricing strategy 453 dodo 404, 727 dog 402, 727 Doherty, N.F. 630 Dolan, R.J. 455 Donaldson, W. 552 Donnelly, J.H. 191 door-to-door selling 689 Douglas, C. 490 Dowling, G.R. 520 Dowst, S. 168 Doyle, P. 356, 357 Doz, Y. 353 dramaturgical analogy 727 drive 121, 132, 727 Droge, C. 119 dumping 727 Duncan, T. 282 Dunleavy, J. 373 Dunning, J.H. 300 Dutch cheese 183 DVLA 368, 388 dynamically continuous innovation 423 e-bay 6389 e-commerce 689 e-mail advertising 506 easyJet 705, 720 eclectic 300, 727 economic choice 727 economics 1720, 104, 727 economies of scale 51, 297, 727 economy forecasting process 345 Government control 345 interest rates 34 Keynesian 36 level of demand 33 monetarism 34 recession 33 Edgworth Box 1718 Ehrenberg, A.S.C. 481, 505 Ekstrom, K.M. 142 El-Murad, J. 490

elaboration 727 elasticity of demand 1920, 727 Elliott, R. 496 empowerment 71112, 727 end user 727 end-of-pipe solution 727 end-use specialist 727 Eng, T.-Y. 662 Engel, J.F. 256, 433 Ensor, J. 138 environment cultural 3941 economic 338 influencing macro environment 47 macro vs micro 3247 micro 4955 political and legal 413 pricing strategy 452 research 727 socio-cultural 369 environmental factors 312 environmental scanning 216, 727 environmentalism 81 customers 81, 83 employees 82 ethical investment 83 green pressure groups 812 legislation 82 media 83 sustainable sourcing 845 EPOS 6901 Essoo, N. 136 ethics 37, 78, 727 codes 79 corporate culture 7980 deontological 789, 726 industry 79 marketing research 2423 packaging 414 physical environment 80 societal 79 teleological 78, 731 ethnicity 189, 727 ethnocentrism 727 Etzel, M.J. 135 European Union (EU) 43, 162 advertising 445 currency fluctuations 44 frontier controls 44 safety standards 44 technical standards 434 Eurotunnel 372 Evans, J. 373 Evans, M. 503, 691 exhibitions 5789 alternatives 5912

failure 587 key account management 5836 planning 5879 research into 5802 stand management 58991 visitor expectations 5823 expectations 133 experiment 2313, 727 design 2334 exploratory research 727 Expointer 584 export agents 316 export houses 316, 727 extended problem-solving 109, 727 extension 727 external environment 727 external search 727 external validity 232, 727 extinction 727 Faber, R.J. 116 factors 727 Fair Trade 7 familiarity 132, 727 family 138, 140 conflict resolution 1401 decision making 140 face-to-face contact 140 influence of children 142 purchasing agent 140 role specialisation 1401 shared consumption 140 subordination of individual needs 140 Ferraro, G.P. 308 field research 727 Filiatrault, P. 66, 141 financial risk 109, 727 Finlay, P. 713 first-time prospects 199, 727 Fishbein, M. 252 Fitzpatrick, P.B. 653 Five Forces Model (Porters) 50 bargaining power of customers 50, 51 bargaining power of suppliers 50 rivalry among current competitors 50 threat of new entrants 50, 51 threat of substitute products/ services 50 Fletcher, R. 630, 633 Flint, D.J. 663 Fock, H. 66 focus group 238, 727 focus strategy 727 Ford, D.H. 16

Index

737

foregrounding 727 formal group formal structure 727 formal groups 135 forward conditioning 727 Foxall, G. 504 Foxall, G.R. 438 Fraedrich, J. 79 franchising 317, 533, 6823, 692, 727 Freeman, J. 358 French, J.R. 73 Freytag, P.V. 201 Friege, C. 384, 385 Frizzell Insurance 192 Fujimoto, T. 91 functional risk 109 gatekeeper 152, 727 Gatignon, H. 439 Geiger, S. 550 General Electric (GE) Matrix 4046 generally-concerned 83, 727 geocentrism 727 geographic segmentation 1824 geographical proximity 302 Giant Manufacturing Company 643, 672 Gillespie, K. 200 Gillette 421, 441 global customers 727 global segmentation 200 globalisation 245, 2978, 727 culture 30815 international business perspective 299301 market attractiveness 3016 market entry tactics 31621 payment for goods 3213 strategy 3068 goal 11112, 727 Goffman, E. 142 Goldsmith, R.E. 504 Goldwell 593 Goodpaster, K.E. 80 Gordon, W. 93 Gorn, G.G. 126 Gorn, G.J. 241 government organisations 1602 Gramman, J. 579, 582 Grandcolas, U. 240 Granite Rock 118 Grapentine, T. 239, 504 green activist 727 customer 727 thinker 727 green activists 83 green customers 83

Greenberg, D. 412 Greenley, G.E. 390 grey market 727 grid analysis 408 Griffin, J. 383 groups 1358 growth strategies 3546 Grunert, K.D. 229 Gteiner, G. 333 Gueguen, N. 464 Gummeson, E. 375, 410 Gupta, S. 381 Haines, D.W. 351 Haines, G.H. 434 Hall, E.T. 473 Halstead, D. 119 Hamel, G. 353, 421 Hamilton, 421 handbag.com 547 Handy, C. 713 Hannan, M.T. 358 Harlam, B. 692 Harris, C.E. 403 Harris, P. 516 Hawes, J.M. 153 Hax, A.C. 334 Hayward, R. 515 hedonic needs 727 hedonism 122 Hefler, M. 532 HJ Heinz 397, 416 heist 616 Hennart, J.F. 353 Henry Doubleday Research Association 610 Herbst, K.C. 8 Herzberg, F. 570 heuristic 727 hierarchy of needs 213, 5701 high-context culture 727 Hingley, M.K. 656 Hirschmann, E.C. 122 Hlavacek, J.D. 457 Hoch, S.J. 131 Hofstede, G. 264, 311 Holbrok, M.B. 116 Holbrook, M.B. 122 Holder, D. 607 Holiday Inns 683 Holmlund, M. 373 Homburg, C. 347 Homer, P.M. 251 homophilous influence 727 Hoover 597 Horney, K. 192 Horton, B. 504

house journal 728 advertisements 76 distribution 76 frequency 76 issues 530 policy 76 price 76 printing process 76 quantity 75 readership 75 style/format 76 types 75, 5289 Howard, M. 138 Hoyer, W.D. 107 HSBC 286 Huang, X. 422 human resources management 370 Hunt, 373 Hunt, S.D. 664 hypermarkets 686 ICANN 58 ideal self 143, 728 ideas 425 brainstorming 427 customer-specified innovation 427 generation by employees/ managers 427 market feedback 426 recycling existing technology 427 technological advance 426 identifiers 728 IKEA 7001, 710 image 5224, 728 added value 5245 building 278 outside agencies 5337 IMG Sports Agency 332, 362 imitator 728 import houses 316, 728 impulse purchases 108, 728 income change 106 Independent Television Commission (ITC) 45 independent variable 2312, 728 indifference curve 1718, 728 industrial marketing 23 industrial product strategy 41113 industry issues 54 competitive information 54 cost of leaving the industry 54 cost structures 54 degree of concentration 54 investment structures 54

738

Index

rate of growth of industry 54 strategic objectives of competitors 54 influencer 152, 709, 728 infomercial 728 informal group 136, 728 informal structure 556, 728 information analysis 131 primary sources 21929 search 10911 secondary sources 219 infrastructure 370, 728 initiator 728 inner directed 137, 728 innovation 4234, 427 cost 434, 728 diffusion 4317 innovation strategy defensive 429 dependent 429 imitative 429 offensive 429 opportunist 429 traditional 429, 430 Innovations Catalogue 4412 inseparability 728 institutional organisations 163 instrumentality 728 intangibility 728 interfunctional co-ordination 9 intermediaries categories 67787 functions 6435 industrial channels 6457 internal ad hoc data 21516, 728 briefings 778, 531 communications media 758 continuous data 215, 728 environment 556, 728 validity 232, 728 internal marketing 667, 728 communication 70 distribution 701 employees viewpoint 679 negotiation 735 persuasion 713 public relations 6970 international marketing 245, 4679 international trade 6679 internationalisation 299301 Internet 698 advertising 5057 auctions 4756 research 2401 Internet marketing 6279

adoption 62930 barriers to use 6356 buyer behaviour 6335 internationalisation 6303 interview surveys 220 inventory management 6656 involvement 122, 728 categories 124 environmental 123 levels 123 loyalty 123 situational 123 isolateds 709, 728 Izquierdo, C.C. 373 Jamal, A. 189, 306 Jansson, C. 134 Jayawardene, C. 88 Jefkins, F. 491 Jobber, 215 Jobber, D. 6, 71, 548 Johne, A. 429 joint ventures 31617 Jones, J.P. 481 Jose Sanzo, M. 169 Judd, 709 judgment sample 728 junk mail 728 just-in-time (JIT) 666 Kalafatis, S.P. 202 KAM/PPF model 5645, 5846 Kanter, R.M. 70 Katz, E. 257 Keegan, W. 284 Keegan, W.J. 315, 469 Keller, K.L. 108 Kelly, P. 166 Kennedy, G. 74 Kerin, R.A. 581 key account 532, 5836, 728 key-account manager 167, 728 Kijewski, V. 167, 578 Kinnear, T.C. 256 Kirby, P.N. 464 Kirpalani, V.H. 306 Kirton, M. 438 Kitchen, P.J. 531 Klein, J. 119 Kleinschmidt, E.J. 424 KLM 129 Koestler, A. 91 Koretz, G. 135 Kosnik, T.J. 651 Kotler, P. 45, 8, 64, 408 Kotlov, V. 464 Kottasz, R. 63

Krishna, A. 589 Kroeber-Riel, W. 126 Kuester, S. 439 laboratory techniques 2889 LaLonde, B.J. 661 Lambert-Pandraud, R. 112 Lane, N. 568 Laskin, R. 373 Lastminute.com 460 law of primacy 728 Lazarsfield, P. 257 Lazarsfield, P.F. 432 leads 728 leaky bucket syndrome 616 learning 125 classical theory 1257 cognitive 1303 from experience 131 operant conditioning 12730 perception 1335 least dependent person 728 Leather, P. 491 Leenders, M.R. 372 legislation consumer protection 42 contract law 42 control of opening hours 42 legitimate power 728 Legoherel, P. 464 Leichty, M. 116 Levi Strauss 2967, 324, 453 lexicographic 113, 728 licensing 317, 67982, 728 Lichenstein, 63 Liefeld, J.P. 204 Lieshout, K.F.M. 366427 limited problem-solving 1089, 728 liner 728 livery 502, 728 Lloyds TSB 545, 573 lobbying 517, 728 local government 43 Lockheed 156 logistics 65761, 728 Lohtia, R. 583 London Air Show 601 longitudinal study 728 looking-glass self 143, 728 Loudon, D. 153 low-context culture 728 Lowenstein, M. 383 loyalty 123, 728 Lucies Farm 451 Lund, P.R. 549, 557 Lye, A. 113

Index

739

Macaulay, J. 64 McCarthy, E. 450 McCarthy, E.J. 13 McCartney, N. 623 McCracken, G. 264 McDonald, J.B. 157 McDonald, M.H.B. 340 McGoldrick, P. 695, 697 MacInnis, D.J. 116 MacKay, E.S. 340 McKechnie, S. 491 McKenna, R. 556 Mckinsey Marketing Practice 634 McLuhan, R. 505 McNulty, W.K. 137 macro environment 31, 728 vs micro environment 3248 McSweeney, F.K. 126 Majaro, S. 285 Majewski, B.M. 412 Malhotra, N.K. 195 management contracts 6834 Manchester United 124 Mantovani, G. 259 Manz, C.C. 138 Marchand, J. 66 margin 728 Marinova, D. 439 mark-up 459, 728 market attractiveness 3016, 4046 challenger 3501, 728 entry 31621 follower 3512, 728 leader 34950 nicher 352, 728 segment 728 strategies 3436 marketers 1316 marketing antecedents 1722 concept 611 definitions 3, 46 environment 214 information system 21516, 728 mass 179 not-for-profit 24 orientation 811, 728 scope 225 marketing research 728 applied 21415 ethics 2423 types 21214 Markus, H. 251 Martin, C.L. 118 Marx, W. 656 Maslow, A. 1213, 570

Mason, J. 138 Mason, R. 341 Matthews, J.B. Jr 80 maturation 125, 728 Maxham, J.G. 709 meanings 2612 mechanics 729 media event 51819 internal communication 52831 types 485501 meetings democratically participative 78 largely ritualistic 77 marginally informative 77 nominally consultative 78 memory 729 Mercer, D. 90 merchandise levels 6934 merchandisers 533 message intrigue 434, 729 metaphor 729 Michalski, S. 374 micro environment 31, 729 vs macro environment 3248 micromarketing 179 Midgely, D.F. 437 Millman, A.F. 552 Millman, T. 374, 565 Millman-Wilson model 565 Miner, J. 333 Mini Cooper 250, 2901 Miniard, P.W. 253 Mintel 219 Mintzberg, H. 339, 358, 360 miscommunication 265 confusion 267, 269 (dis)agreement 267, 269 disruption 2667 distortion 266 implication 2656 (mis)understanding 2678, 270 personal transformation 268, 270 missionary 532, 729 Mitchell, S. 438 Mitroff, I. 341 Mitsubishi-Tokyo Pharmaceuticals 554 modified rebuy 164, 729 modifiers 709, 729 Moller, K. 167 monetarism 34 Monnier, P.D. 633 Monopolies and Mergers Commission (MMC) 46 monopolistic competition 729 monopoly 20, 729

Montgomery, D.B. 457 Moore, C.M. 655 Moore, G.A. 457 Morgan, 373 Morgan, N. 70 Morgan, R.M. 664 Moriarty, R.T. 651 mortality 233, 729 Mortimore, R. 65 motivation 1212, 132, 729 MRO 729 Muhlbacher, H. 299 Muller, B. 505 multibuys 598, 729 multinational global customers 729 Multistage Interaction model 433 Munuera, J.L. 583 Murdock, G.P. 311 Murphy, J.A. 712 Myers, G. 501 Myers, I. 191 mystery shoppers 231, 729 myths 729 Narayan, V.G. 456 Narayandas, D. 374 narrowcast 729 NASA model 557 national global customers 729 need 5, 729 negotiation 73, 5668 concession analysis 73 politics 735 tactics 56970 Nelson, V.M. 134 Netemeyer, R.G. 709 new product categories 4212 classification 4234 success 4223 new product development (NPD) allegory 430 antinomy 430 arcadia 430 aura 430 business analysis 425 characteristics 4357 commercialisation 425 concept testing 425 customer acceptance 431 financial performance 431 idea generation 425 market opportunity 431 market testing 425 organising 42831 process model 4246 product development 425

740

Index

screening 425 strategic fit 430 strategy 424 technical feasibility 430 new task 1645, 729 niche marketing 179, 687, 729 Nijssen, E.J. 427 non-compensatory 11213, 729 non-profit marketing 626 non-shopping products 729 non-store-retailing 68992 non-universal ownership 729 normative compliance 729 North American Industrial Classification (NAIC) 198 novices 199, 729 Novich, N.S. 664 Nowak, G. 281 NSPCC 2912 objections 5567, 5589, 729 objective 729 observability 220, 22731, 436, 729 odd-even pricing 729 Oederkerken-Schroeder, 373 Office of Fair Trading 456 Oftel 457 OGuinn, T.C. 116 Okazaki, S. 314 oligopoly 20, 729 Olivieri, C. 373 Olshavsky, R.W. 438, 439 Onkvis, S. 125 Onkvisit, S. 108 open meetings 778, 531 open questions 5567, 729 operant conditioning 12730, 729 Opodo 4, 26 optimum stimulation level 729 original-equipment manufacturers (OEM) 1589, 729 Ostergaard, B.E. 486 OSullivan, T. 262 outbound logistics 729 outer directed 729 outshopping 729 ozone layer 856 P&O Ferries 1778, 2067 packaging 413 ethical issues 414 functions 414 recycled, recyclable, nonwasteful 85 panel 221, 729 C.A. Papaelina & Co Ltd 6734 Paradores de Turisimo 27

Parasuraman, A. 375 party plan 689, 729 Patterson, P.G. 381 Pavia, T.M. 264 Pawels, K. 390 Pearson, A.J. 528 Pedersen, B. 308 Pedersen, T. 308 peer group 1358 Pegram, G. 63 penetration pricing 466, 729 people 14, 70913, 729 Pepsi Challenge 89 perceived cost of search 109, 729 perception 1335, 729 perceptual map 116, 729 perfect competition 729 peripheral route 729 perishability 729 Perrault, W.D. Jr 450 personal influence 274 personal selling 5457 marketers model 5478 salespersons-eye view 54852 personal sources 729 persuasion 71 articulate shared vision 71 communicate and train 71 eliminate misunderstandings 72 establish two-way communication 73 gain acceptance by association 72 leave room for local control over details 72 support words with action 723 Petrison, L.A. 282 Pettigrew, A. 333 Petty, R.E. 253 Phelps, J. 281 physical distribution 657, 729 physical evidence 16, 71819, 729 physical risk 109, 729 Pieperl, M. 360 Piercy, N. 70, 71, 335, 336 Piercy, N.F. 568 Pieters, R. 487 piggy-backing 596, 729 place 14, 729 planning 21618 Png, J.P. 90 politics 73 build coalitions 74 decision control 75 display support 74 invite opposition in 74 overt power play 734 patent legislation 412

safety regulations 42 taxation 42 use of language 75 warn opposition 745 pollution 87 polycentrism 729 polymorphism 611, 729 pop-ups 506, 729 Porter, M.E. 333, 348, 369 positioning 2024, 278, 730 clarity 204 competitiveness 204 consistency 204 credibility 204 post-purchase evaluation 11618, 730 Prabhu, J.C. 439 Prahalad, C.K. 353, 421 pre-purchase activities 1079 goals 11112 making the choice 11213 search for information 10911 pre-testing 288 predatory pricing 466 preliminary research 730 presence website 506, 730 press releases 51720, 730 Pressey, A.D. 311 price 14, 4478, 730 business-to-business markets 46970 competitor-based 4656 customer perceptions 4545 international markets 4679 legality of policies 470 mark-up 459 methods 4589 new products 438 objectives 450 process 4489 sensitivity 4556 strategy 4504 transfer 470 Price, E. 583 primary data 730 primary group 135, 730 print advertising 4867 creative issues 48790 private exhibitions 591 private responses 118, 730 problem child 401, 730 problem-solving 1089 process 1416, 71314, 730 basic assets 713 explicit knowledge 713 procedure 714 service 71517 tacit knowledge 71314

Index

741

Proctor and Gamble 3624 Proctor, T. 212, 231 procurement 370, 730 product 13, 730 champion 730 differentiation 51, 278 life cycle 730 orientation 730 portfolio 730 testing 867 product life cycle (PLC) 3979 decline 400 growth 400 international 298 introduction 399 maturity 400 product portfolios 4001 product research 213, 730 product-line pricing 463, 730 production orientation 78, 8, 730 project teams 730 projective technique 227, 730 promotion 14, 730 prospects 730 psychographic segmentation 18991 personality characteristics 1912 psychology of simplification 730 psychological pricing 464 psychological proximity 302, 730 psychology 21, 104, 730 psychology of complication 730 psychosocial risk 109, 730 public relations (PR) 6970, 51516, 730 developing brief 5378 measuring outcomes 538 organisational 528 outside agencies 5337 tools 51720 publicity stunts 517 publics 730 qualitative data 730 qualitative research 23842 analysis of written documents 238 group discussions/focus groups 238 open-ended interviews 238 quality 3756 quantitative data 2201, 730 analysing 2358 questionnaires 220 analysing 2279 design 2247 Quinn, F.J. 662 quota sampling 730

Rackham, N. 548, 564 radio advertising 490, 4945 producing 4957 Raffia, M. 16 Raia, E. 168 Rainbow, 215 Raju, P.S. 121 Ramaswamy, S.N. 570 Rangajaran, D. 570 Rangan, V.K. 374 Rao, C.P. 199 Raven, B. 73 Ray, N.M. 241 Rayner, T. 578, 588 re-positioning 205 re-segmentation 199 real self 142, 730 recession 33, 3556, 730 Reed, D. 373, 618 reference group 1358, 730 referent power 730 registration 730 regression effect 233, 730 regulatory bodies 45 intervention by 48 Reichheld, F. 381 Reichheld, F.F. 706, 707 Reicken, G. 64 reinforcement 132, 730 relationship marketing 3724, 730 consumer market 37881 customer retention strategies 3814 customer winback 3846 ending relationships 3745 relationships 6634 relative advantage 436, 730 replenishment 730 reports 2412 reputation 5202 research plan 730 reseller organisation 15960, 730 resources 56, 298 response 132, 730 retail competitive positioning 6967 cost of premises 695 layout/display 6978 location-decision 6946 merchandise 6934 service 6923 shopping behaviour 6879 types 68991 retail ownership contractual 692 corporate chain 692

franchising 692 independents 692 retailers 6847 retention 133, 730 Rich, S.A. 465 Rickards, 217 Ridgway, N.M. 107 Ries, A.I. 202 risk management 10911, 5256 dealing with media 5268 establishing crisis team 526 Ritchie, J.R. 141 Ritson, M. 496 roadshows 592 Roberts, K. 373, 707 Roberts, P.W. 520 Robertson, T. 556 Robertson, T.S. 199, 423, 439 Rogers, E.M. 432, 435 Rohrs, F.R. 64 role model 138 Ronchetto, J.R. Jr 153 Ronkainen, I.A. 468, 649 rookie 571, 730 Rose, R.L. 566 Rosenau, M.D. Jr 439 Rosenberg, I.J. 3 Rosenberg, M.J. 254, 256 Rosenbloom, B. 553 rote 730 roughs 730 Ruiz, S. 583 Saga 38 sales cycle 5545, 730 sales orientation 8, 730 sales presentation 555, 730 after-sales service 561 asking questions 5568 closing sale 55960 handling objections 5589 opening 5556 post-presentation activities 560 presentation 556 sales promotion 5924 bundling 596 categories 5945 free gift 596 free tastings 596 immediate discounts 598 instant lottery/scratchcard 596 integrating 599 joint 5978 loyalty cards 596 money-off vouchers 596

742

Index

off-the-shelf 597 techniques 5969 two-for-one 596 sales promotion price 5989 sales research 214, 730 salesforce managing 568, 5702 motivation 5701 payment 570 recruitment 568 territories 5712 training 568, 570 salesperson agent 533 consumer (in)direct 532 franchise 533 government institutional direct 532 industrial direct 532 key account 532 merchandisers 533 missionary 532 system selling 533 telesales 533 types 5523 view of selling 54852 salient belief 730 Sambharaya, R. 522 sampling 2214, 730 Sampson, P. 181 Santos, J. 116 Sargeant, A. 64 Sarkar, R.G. 456 Sasser, W.E. Jr 706, 707 Sawhney, M. 630 scamps 730 Scarpa, C. 407 Schindler, R.M. 464 Schramm, W.A. 257 Schuster, C.P. 200 Schwartz, A. 583 Scotiabank 480, 5089 screening 425, 730 screwdriver establishments 31920 second lifetime value 3846, 731 second-marketing discounting 4645, 731 secondary data 731 secondary group 135, 731 segmentation 176, 1789, 731 customer classification 1989 industry classification 1978 market 179, 1804, 18792 nested approach 197 purchase decision process 199 segmentation variables 1949

a posteriori 195 a priori 195 infrastructure barriers 1956 Selassie, H.G. 311 selectivity 133, 731 self-concept 1423, 731 self-image 142 semantics 263 semiotics 923, 262, 731 service levels 6923 service processes 71517 service products 4067 categories 408 continuum 407 people 410 physical evidence 411 problems 4078 process 411 risks 40910 services marketing 234, 889, 7059 loyalty 7067 purchase sequence 707 risks 708 Shankar, A. 504, 505 Shapiro, B.P. 197, 201 Sharland, A. 580 Sharma, S. 264 Shaw, C.T. 11 Shaw, J.J. 108, 125 Shaw, V. 11 shelf price 731 Shermohamad, A. 191 Shimp, T. 264 Shipley, D. 578, 580 shopping behaviour 687 choice of retailer 689 personal motives 688 profiles 688 social motives 687 shopping products 731 Shostack, G.L. 715 signal 731 signs 261 silent languages 2634 silent seller 731 Simkin, L. 195 Simmons, C. 464 Sims, H.P. 138 simultaneous conditioning 126, 731 simultaneous engineering 731 Singh, J. 117, 570 Siomkos, G.J. 492 situational factors 731 situational sources 731 Skerlos, K. 580, 582 skimming 4634, 731

small business marketing 24 Smart, D.T. 118 SMARTT model 537 Smith, D.H. 64 Smith, K. 157 Smith, K.H. 484 Smith, N.C. 414 Smith and Nephew 41617 SMS 6224, 731 Snelson, P. 429 social responsibility 7880 ecological environment 814 pollution control 87 protecting ozone layer 856 recycled, recyclable, nonwasteful packaging 85 testing products on animals 867 use of environmentally-friendly components/ingredients 845 socio-cultural 731 sociology 201, 104, 731 sophisticates 199, 731 sore competences 726 Sorescu, A.B. 439 spam 731 species response tendencies 125, 731 specific-customer specialist 731 Spidercatcher 435 spin doctoring 520, 731 sponsorship 517, 5313, 731 B2B 5401 Srinivas, S. 412 Stacey, R.D. 338 Staelin, R. 108 staff relationships 556 stakeholders 731 Stalk, G. 714 Standard Industrial Classification (SIC) 1978 Stanton, J.L. 8 Stapel, J. 286, 493 Staplethorne Ltd 428 simultaneous engineering 429 stars 401, 731 statistical analysis 2378 statistical designs 2345 Stauss, B. 384, 385 Steen, J. 264 Steenhuysen, J. 494 Stone, M. 608, 616 Stottinger, B. 467 straight rebuy 164, 731 strap line 731 strategies, growth 3546 strategy

Index

743

classicist 358, 360 competitive moves 34853 competitive positions 3478 complexity/objectives 3413 corporate 3357 definitions 333 demarketing 346 early-entry 345 evolutionist 358, 360 first-in 345 formulatin 275 generic 35760 harvesting 346 importance 35760 key-market 346 laggard-entry 345 level of commitment 345 marginal markets 346 market-dilution 348 market-geography 3434 market-scope 343 marketing 3357 national-market 3445 nature 3335 planning 3379 price 4504 processualist 358, 360 push vs pull 2756 regional-market 344 retail location 6946 setting ojectives 3401 systemic 358, 360 written document 33940 structured observation 731 Stutts, M.A. 484 subjective 731 subjectivity 133, 731 sugging 731 supermarkets 686 supplier capability 168 supplier performance 169 supply chain 731 logistics 65761 management 6613 Suri, R. 464 survivors 731 sustainers 731 Svahn, S. 167 switching cost 52, 434, 731 syntactics 2623 system selling 533, 731 tactics 27980 Tanner, J.F. 580, 583 targeting 2002, 731 tariff barriers 318, 731

Tax, S. 383 team-building 71213 teaser campaign 731 technology 524, 298 development 370 technophobe 4378, 731 technophone 437 Technovations 607, 638 telemarketing 45, 6202, 731 telesales 533, 731 television advertising 4904 Terpstra, V. 79, 155 territory 5712, 731 Tesco 110, 453, 602 test marketing 221, 235, 731 third-party responses 11819, 731 thisismoney.com 506 Thompson, J.L. 333 Tie Rack 694 time series 234, 731 Tinson, J. 138 Tjaereborg 301 Todd, S. 143 total quality management (TQM) 376 trade association 731 trade fairs 5789, 586 trade liberalisation 297 trade up 731 trading standards 42 tramp ship 731 transfer pricing 470, 731 transport advertising 5013 airfreight 670 cost 670 rail 671 road 6701 sea freight 670 selecting 669 Traynor, 375 Treacy, M. 347, 348 trialibility 436, 731 trianulation 220 tribalism 136 trickle-down theory 432 Trout, J. 202 Tse, A.C.B. 349 Turley, D. 550 turnkey contract 683, 731 two-step flow theory 4323 Ty Hafan Childrens Hospice 62 Tyron Automotive Group Ltd 646 unconditioned response 731 unconditioned stimulus 732 Uniao Digital Perifericos LTDA 3889

Urbany, J.E. 110 user 152, 732 Usunier, J.C. 308 utilitarian 732 Vakratsas, D. 389 Valentin, V. 93 value 732 analysis 1678, 732 breakdown 383, 732 network 371, 732 value chain 36871, 732 analysis 3689 core activities 370 value-based marketing 3567, 732 Van Slyke, C. 629 Varey, R. 258, 259 variability 732 variety stores 687 Veblen, T. 432 Venkatraman, M.P. 433 Verhoef, P.C. 382, 691 vertical integration 51, 732 Vidal Sassoon 717 viral marketing 275, 50910 virtual products 732 visible 732 Vision Site Design Awards (VSDA) 376 Viswathanan, M. 134 voice responses 117, 732 wall newspaper 75, 732 Wang, P. 282 Wang, Z. 199 Wangenheim, F. 381 Wansink, B. 114 want 5, 732 war horse 4034, 732 Ward, S. 241 Warshaw, M.R. 256 Webers Law 133 website 77, 732 internal 5301 Webster, E. 335 Webster, F.E. 151 Wedel, M. 487 Wefeld, J.P. 229 weighted-point plan 732 Weitz, B.A. 373 Wenham, K. 63 West, D. 64 Whipp, R. 333 Whitelock, J. 179 Whittington, R. 357 wholesalers 684, 686

744

Index

wicked problem 732 Wiersema, F. 347, 348 Williamson, O.E. 358 Wills, J. 438 Wilson, G. 74 Wilson, K.J. 373, 552, 553, 565, 584 Wind, Y. 151 Woodruff, R.B. 116 word-of-mouth advertising 517 Wright, L.T. 480 written documents 339 mission statement 340 objectives statement 340 vision statement 340

Wymer, W.W. 64 Wyner, G.A. 241 Yavas, U. 64 Yip, G.S. 200 Yoon, E. 167 Yoon, S.-G. 251 Young, R. 414 Young-Won Ha 131 Youngs Home-Brew 678, 700 Zabin, J. 630 Zafer Erdogan, B. 531 Zajone, R.B. 251

Zaltman, G. 239 zapping 732 Zeithaml, V.A. 407 Zheng Zhou, K. 439 Zimmerman, A.S. 653 Zinkhan, G.M. 191 zipping 732 Zufryden, F.S. 491