MARI(ETING: THEORY AND PRACTICE

Other books by Michael J. Baker include

MARKETING STRATEGY AND MANAGEMENT (2nd edn)

MARKETING: AN INTRODUCTORY TEXT (5th edn)
RESEARCH FOR MARKETING
 MARI(ETING
THEORY AND PRACTICE
Third Edition
Edited by

Michael J. Baker
with Olivier Badot, Ken Bernard, Stephen Brown,
Douglas Brownlie, Sara Carter, K. C. Chan, Bernard Cova,
Keith Crosier, Adamantios Diamantopoulos, Bill Donaldson,
Sean Ennis, Pervez Ghauri, Susan J. Hart, Peter Leeflang, Dale
Littler, Michael C. McDermott, Lyn McGregor, Shan Rajagopal,
Daniel Tixier, John Webb

~
MACMILLAN
Business
Selection, editorial matter Chapters 1,2 and 9
© Michael J. Baker 1976, 1983; 1995

Individual chapters (in order) © Stephen Brown, Lyn McGregor,

Shan Rajagopal, Dale Littler, John Webb, Peter Leeflang, Susan J. Hart,
Adamantios Diamantopoulos, Sean Ennis, Keith Crosier, Douglas Brownlie,
Ken Bernard, Sara Carter, Bill Donaldson, Daniel Tixier, Michael C. McDermott
and K. C. Chan, Pervez Ghauri, K. C. Chan and Michael C. McDermott,
Bernard Cova and Olivier Badot 1995

All rights reserved. No reproduction, copy or transmission of

this publication may be made without written permission.

No paragraph of this publication may be reproduced, copied or

transmitted save with written permission or in accordance with
the provisions of the Copyright, Designs and Patents Act 1988,
or under the terms of any licence permitting limited copying
issued by the Copyright Licensing Agency, 90 Tottenham Court
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Any person who does any unauthorised act in relation to this

publication may be liable to criminal prosecution and civil
claims for damages.

First edition 1976

Reprinted 1979 (twice, 1981)
Second edition 1983
Reprinted 1987, 1988, 1990 (twice), 1993, 1994
Third edition 1995

Published by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 2XS
and London
Companies and representatives
throughout the world

ISBN 978-0-333-64182-8 ISBN 978-1-349-24260-3 (eBook)

DOI 10.1007/978-1-349-24260-3
A catalogue record for this book is available
from the British Library.

10 9 8 7 6 5 4 3 2 1
04 03 02 01 00 99 98 97 96 95
 Contents

List of Tables Vll

List of Figures IX
Preface Xl

1 Evolution of the Marketing Concept 1 10 New Product Development 171

Michael J. Baker (University of Susan J. Hart (Heriot- Watt University)
Strathclyde)
11 Pricing 182
2 The Need for Theory in Marketing 10 Adamantios Diamantopoulos
Michael J. Baker (University of Wales - Swansea)

3 Sources and Status of Marketing 12 Channel Management 198

Theory 23 Sean Ennis (University of
Stephen Brown (University of Stra th clyde)
Ulster)
13 Marketing Communications 216
4 Consumer Behaviour 40 Keith Crosier (University of
Lyn McGregor (University of Strathclyde)
Strathclyde)
14 Analytical Frameworks for Strategic
5 Organisational Buying Behaviour 59 Marketing Planning 250
Shan Rajagopal (University of Douglas Brownlie (University of
Stra th clyde) Stirling)

6 Market Segmentation 90 15 Business to Business Marketing 292

Dale Littler (UMIST) Ken Bernard (University of
Strathclyde)
7 Marketing Research 104
John Webb (University of 16 Retailing 320
Stra th clyde) Sara Carter (University of
Strathclyde)
8 Modelling Markets 125
Peter Leeflang (University of 17 Customer Care 330
Groningen) Bill Donaldson (University of
Strathclyde)
9 Diffusion Theory and Marketing 160
Michael J. Baker (University of 18 Consumerism 346
Strathclyde) Daniel Tixier (ESSEC)

v
VI Contents

19 International Marketing: It's a Mad, 22 Marketing Theory and Practice in a

Mad, Mad, Mad World 359 Postmodern Era 416
Michael C. McDermott (University of Bernard Cova and Olivier Badot (EAP,
Strathclyde) and K. C. Chan (Huskey European School of Management)
Injection Molding Systems)
Index 433
20 Marketing to Eastern Europe 379
Pervez Ghauri

21 Beyond Relationship Marketing:

Flexible and Intelligent Relationship
Management Strategy (FIRMS) 390
K. C. Chan (Huskey Injection
Molding Systems) and
Michael C. McDermott
(University of Strathclyde)
 List of Tables

3.1 Literature and consumption 10.2 Organisation of the new product

behaviour: an example 28 process 179
3.2 Positivist and post-positivist 11.1 A taxonomy of pricing objectives 185
paradigms: key features 31 11.2 Pricing methods 190
4.1 Combining public-private and 12.1 Channel objectives 206
luxury-necessity dimensions with 12.2 Criteria for assessing prospective
product and brand decisions 54 partners 207
5.1 Buying centre roles defined 66 12.3 The weighted average method 208
5.2 The buying decision process by 12.4 MSS ten-point plan for
classes 68 intermediaries 211
5.3 Characteristics of the business 12.5 Training of distributors 212
buying process for different buy 12.6 Main motivators used by
class 71 companies 212
5.4 Seller's strategic responses to 13.1 Hierarchical models of
differing buying situations 81 advertising effect 226
5.5 Purchasing strategy and the 13.2 The hierarchies as a family of
buying situation 84 models 227
6.1 Major segmentation variables 94 13.3 A consolidated hierarchical
6.2 Major ACORN groups 95 model of advertising effect 228
6.3 Occupation and social class 13.4 Relationship between information-
categories 97 processing theory and the
6.4 Consumer clusters for mobile hierarchy of effects 243
communications 98 14.1 Indicators of PLC stage 262
8.1 Developments of scanning in 14.2 Processes driving evolution 262
food-stores 144 14.3 Sources of the experience effect 268
8.2 Parameter estimates and statistics 14.4 Growth-share matrix guidelines 273
of relation 149 14.5 The imbalanced portfolio 273
8.3 Parameter estimates of market 14.6 Strategy requirements dictated by
share models 150 the competitive environment 276
8.4 Average values of parameter 14.7 Measures used in the BAA by
estimates of the SCAN*PRO- General Electric 278
model 151 14.8 Shell's DPM criteria 279
8.5 Statistically significant effects in 14.9 Some characteristics of the three
market share response functions 154 main business postures of the BAA 281
9.1 Features for effective selling in 16.1 Number of UK retail businesses,
machine-tool markets 168 1981-1989 321
10.1 Financial and non-financial 16.2 Total retail trade by broad kind of
measures of new product success 172 business, 1987 321

Vll
Vlll List of Tables

16.3 Market share by sector, 20.5 Large international business

1981-1991 322 investments in Czechoslovakia,
16.4 Retail sales volume, 1990 323 Hungary and Poland, 1989-1991 383
16.5 Weekly household expenditure by 20.6 Number of cars per 1000 people 383
socio-economic group, 1991 324 21.1 The marketing excellence review:
16.6 Attributes of a good shop, best practices 391
April 1990 and April 1992 325 21.2 Comparison of seller and buyer
16.7 Annual press and television retail reactions when the sale is first
advertising expenditure 328 made 392
19.1 A review of the innovation-related 21.3 Contrasting transactional and
internationalisation models 362 relationship marketing 393
19.2 Simple country screening process 21.4 Time, account behaviour and
for Scottish manufacturer of marketing approach 394
environmentally friendly 21.5 Relationship marketing and the
personal soaps 363 account behaviour
19.3 Four strong market forces that spectrum: advice on using the
create change 366 spectrum 396
19.4 Some common dualities in today's 21.6 Levels of corporate-customer
complex organisations 367 relationship 397
19.5 Advertising growth: top ten 21.7 Where relationship marketing
countries, 1993-1996 371 belongs 398
19.6 Elements of an international 21.8 The route to business goal of
manager 376 profit/market share 402
20.1 The countries of Eastern Europe 379 21.9 A comparison of the traditional
20.2 Comparative progress in approach to corporate
Poland, Hungary and management and the new
the Czech Republic 380 approach for FIRMS 407
20.3 Western retailers in Eastern 21.10 The properties of FIRMS 410
Europe by country of origin 381 21.11 The five levels of Flexible
20.4 Registered joint ventures in Intelligent Relationship
selected countries, March 1992 382 Management Strategy 411
 List of Figures

2.1 Bartels's summary of marketing 8.1 Diagram of Urban III (version of

theory 19 SPRINTER Mod III) 132
3.1 Theory-in-use development cycle 26 8.2 The steps in the model building
3.2 The Engel, Kollat and Blackwell process 137
model of consumer behaviour 30 8.3 Points in the marketing channel
3.3 Philosophical discord in marketing: where measures are taken 142
epistemology and ontology 32 8.4 Sales in units and advertising
3.4 The wheel of marketing thought 34 expenditures 146
4.1 Information processing model 46 9.1 Adopter categories 164
4.2 The three-memory system 49 9.2 The product life-cycle 165
4.3 Process model of attitude- 9.3 Features of a machine-tool
behaviour relations 50 considered one of the three most
4.4 Movement of meaning 55 important 169
5.1 Dimensions of OBB knowledge and 10.1 Analysis of the NPD process based
buyer/seller strategy development 60 on Booz, Allen and Hamilton
5.2 Factors influencing organisational (1982) 174
buying behaviour 61 10.2 Horizontal and vertical iteration
5.3 Economic and non-economic in the early stages of the NPD
motives influencing business buyer 67 process 175
5.4 The buying process consideration 69 10.3 Crawford's new product
5.5 Comparison of buying classes 70 development process 176
5.6 The continuum of industrial 10.4 An example of the early stages of
buying situations 72 the multiple convergent process 177
5.7 The Sheth model of business 12.1 The channel as a system of
buyer behaviour 75 relationships 199
5.8 The Webster and Wind model of 12.2 Custom choices at National
organisational buyer behaviour 76 Panasonic Bicycle 202
5.9 Major elements of organisational 12.3 Channel design 205
buying behaviour of Choffray and 13.1 A simplification of the classic
Lilien Model 77 models of consumer behaviour 219
5.10 A dyadic model of buyer 13.2 Marketing communications
behaviour 79 practitioners' behaviour 220
5.11 The interaction model 80 13.3 The marketing communications
5.12 The role of purchasing 83 'synapse' 221
6.1 General approaches to market 13.4 The marketing communications
segmentation 93 transaction 225
6.2 Segmenting the newspaper market 94 13.5 Information-processing behaviour 230

lX
x List of Figures

13.6 Coping with information overload: 15.9 Exchange processes in business-to-

'ladders in the mind' 240 business marketing 309
14.1 The idealised product life-cycle 16.1 Locational categories for
curve 256 hypermarkets, superstores and
14.2 Taxonomy of market evolution 261 retail warehouses 326
14.3 Industry experience curve using 16.2 Benefits of effective retail
logllog scales 268 merchandising policy 327
14.4 The business portfolio and 17.1 Type of exchange 331
associated cash flow 271 19.1 A formal approach to
14.5 Sequences of product-market country/market screening 361
strategies 272 19.2 Current issues in international
14.6 A portfolio of Caterpillar's marketing 377
construction equipment products 274 21.1 The marketing strategy continuum 395
14.7 Strategic environments matrix 275 21.2 From transactions to relationship
14.8 The business assessment array marketing 397
and 'business postures' 277 21.3 Win-win relationships for the
14.9 The directional policy matrix 278 business goal of profit/market
14.10 A product-market evolution share 398
portfolio matrix 282 21.4 The tree of total quality business
15.1 An orientation matrix 294 philosophy 399
15.2 Upstream and downstream 21.5 Total systems diagram for FIRMS 400
activities 295 21.6 Systems diagram for the five
15.3 The value cycle 295 goals of FIRMS 401
15.4 A summary of effects of business 21.7 The logic of profit and market
market characteristics 299 share (virtuous circles) 403
15.5 The central role of sales forecasts 21.8 Fishbone diagram of total quality
in corporate planning and customer service (TQCS) 404
operations 302 21.9 Three levels of strategy: the case
15.6 Advantages and disadvantages of of Okuma Corporation 406
different types of interviews 305 21.10 Synergy in FIRMS 408
15.7 Preferred data collection methods 22.1 The return of community 420
under different survey 22.2 Marketing shifts of object 423
conditions 306 22.3 Marketing shifts of relation 424
15.8 Bonoma and Shapiro's nested 22.4 Marketing shifts of context 425
approach to segmentation 307 22.5 Postmodern marketing? 426
 Preface to the Third Edition
As the publishing history reveals Marketing:
Theory & Practice first appeared in 1976 with a
second edition following in 1983. During this
period the book has been continuously available
and reprinted on numerous occasions. For the
Editor this performance is itself an interesting
example of the inextricable link between theory
and practice as well as a salutary reminder that in
the domain of marketing the unexpected is often
the norm. Normally, in the face of very much in-
creased competition and rapid development in a
product category, one would anticipate that a
product would rapidly become obsolescent and
move into the decline phase of its life-cycle. But,
for Marketing: Theory & Practice this has not
been the case.
Given such a track record it goes without
saying that one should be very clear about one's
objectives before considering tinkering with a
tried and tested formula. Equally, it is clear that
given the extensive and dynamic growth which
has occurred over the past decade or so some
reappraisal of both the market and the product is
called for. As can be seen from the Prefaces to the
earlier editions the original intention was to
provide a synoptic but authoritative overview of
both theory and practice on the major marketing
topics a student (or practitioner) would be likely
to encounter on first acquaintance with the
subject. No particular assumptions were, or are,
made about the age or experience of the pro-
spective reader simply that they were either
coming completely new to the subject or,
perhaps, wished to remind themselves of prin-
ciples or practices which they had not considered
or used for some time. So it is with the Third
Edition - this book is both an introduction to the
subject of marketing as well as a work of refer-
Xl
ence to which the reader may return for revision
or reminder about key concepts and issues which
underpin successful marketing practice.
However, while the objectives remain the same
the growth of the subject itself, as well as the
enormous expansion of the number of students
pursuing both broadly based and specialised
courses, calls for both revision and extension of
the earlier editions. Accordingly, in discussions
with the publishers it was decided that this third
edition would be even more comprehensive than
its predecessors and that, given the creation of an
enlarged European Union, the recruitment of
authors would be extended to include experts
from other centres of marketing excellence. The
results are readily apparent from a comparison of
the contents of the second and third editions. The
second edition comprised 13 Chapters and con-
tained 426 pages; this edition comprises 22
Chapters and 442 pages - a major development
of the earlier editions.
Of the original authors only three remain -
Baker (Chapters 1, 2 and 9), Brownlie (Chapter
14), and Crosier (Chapter 13). Six of the
remaining seventeen chapters cover the same sub-
jects as in the second edition but are by new
authors:
Chapter 3 Sources and Status Stephen Brown
of Marketing
Theory
Chapter 4 Consumer Lyn McGregor
Behaviour
Chapter 5 Organisational Shan Rajagopal
Buyer Behaviour
Chapter 10 New Product Susan J. Hart
Development
Chapter 12 Channel Management Sean Ennis
XlI Preface to the Third Edition

Chapter 16 Retailing Sara Carter

(in place of the chapter
'The Distributive Trades')

It follows that eleven chapters (50%) are

completely new. These are:

Chapter 6 Market Segmentation Dale Littler

Chapter 7 Marketing Research John Webb
Chapter 8 Modelling Markets Peter Leeflang
Chapter 11 Pricing Adamantios
Diamantopolous
Chapter 15 Business to Ken Bernard
Business Marketing
Chapter 17 Customer Care Bill Donaldson
Chapter 18 Consumerism Daniel Tixier
Chapter 19 International Michael C.
Marketing McDermott and
K.c. Chan
Chapter 20 Marketing to Pervez Ghauri
Eastern Europe
Chapter 21 Beyond Relationship K.c. Chan
Marketing and Michael C.
McDermott
Chapter 22 Marketing Theory Bernard Cova
and Practice in a and Olivier
Postmodern Era Badot

While all the authors worked to the same brief

there are, inevitably, differences in the way in
which they interpreted this. That said, it is the
Editor's view that the contributing authors have
provided authoritative overviews of their areas of
expertise and so achieved the primary objective of
creating a work of reference which will be of
value to both newcomers and those wishing to
up-date themselves on current thinking. We hope
it meets with your approval.

MICHAEL J. BAKER