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Contents
Preface xvi
Section One
The Role of Marketing in Developing
Successful Business Strategies 1
1 The Marketing Management
Process 2
Samsung—Building a Global Brand 2
New Competitive and Marketing Strategies
The Results 3
Marketing Challenges Addressed in Chapter 1 3
Why Are Marketing Decisions Important? 4
The Importance of the Top Line 5
Marketing Creates Value by Facilitating Exchange
Relationships 5
What Factors Are Necessary for a Successful
Exchange Relationship? 5
1. Who Markets and Who Buys? The Parties
in an Exchange 6
2. Customer Needs and Wants 7
3. What Gets Exchanged? Products
and Services 10
4. How Exchanges Create Value 10
5. Defining a Market 12
What Does Effective Marketing Practice
Look Like? 13
Marketing Management—A Definition 13
Integrating Marketing Plans with the Company’s
Strategies and Resources 15
Market Opportunity Analysis 16
Formulating Strategic Marketing Programs 17
Formulating Strategic Marketing Programs
for Specific Situations 18
Implementation and Control of the Marketing
Program 19
The Marketing Plan—A Blueprint
for Action 19
Who Does What? 21
Marketing Institutions 21
Who Pays the Cost of Marketing Activities—
And Are They Worth It? 22
Room for Improvement in Marketing
Efficiency 23
The Role of the Marketing Decision Maker 23
Some Recent Developments Affecting Marketing
Management 24
2 Globalization 24
Increased Importance of Service 25
Information Technology 25
Relationships across Functions and Firms 27
Take-aways 27
Endnotes 28
2 The Marketing Implications of Corporate
and Business Strategies 30
IBM Switches Strategies 30
Technology Changes and Competitor Actions
Require a Shift in Strategy 30
A New Corporate Strategy 31
New Business and Marketing Strategies 31
The Bottom Line 32
Marketing Challenges Addressed in Chapter 2 32
What Is Marketing’s Role in Formulating and
Implementing Strategies? 33
Market-Oriented Management 35
Does Being Market-Oriented Pay? 35
Factors That Mediate Marketing’s Strategic
Role 36
Three Levels of Strategy: Similar Components,
but Different Issues 39
Strategy: A Definition 39
The Components of Strategy 39
The Hierarchy of Strategies 40
Corporate Strategy 40
vii
viii
Business-Level Strategy 42
Marketing Strategy 42
The Marketing Implications of Corporate Strategy
Decisions 42
Corporate Scope—Defining the Firm’s
Mission 42
Corporate Objectives 47
Corporate Sources of Competitive
Advantage 49
Corporate Growth Strategies 49
Allocating Corporate Resources 52
Limitations of the Growth-Share Matrix
Sources of Synergy 57
The Marketing Implications of Business-Unit
Strategy Decisions 58
How Should Strategic Business Units
Be Designed? 59
The Business Unit’s Objectives 59
The Business Unit’s Competitive
Strategy 60
Take-aways 62
Endnotes 62
Section Two
Market Opportunity Analysis 67
3 Understanding Market
Opportunities 68
The Cellular Telephone Business: Increasing
Competition in a Growing Market 68
The Mobile Telephony Market 68
Cell Phone Manufacturing 68
Cell Phone Service Providers 69
Network Equipment Down, Too 69
Marketing Challenges Addressed in Chapter 3
Markets and Industries: What’s the Difference?
Assessing Market and Industry Attractiveness
Macro Trend Analysis: A Framework for Assessing
Market Attractiveness, Macro Level 72
The Demographic Environment 72
The Sociocultural Environment 75
The Economic Environment 76
The Regulatory Environment 77
The Technological Environment 78
The Natural Environment 79
Contents
Your Market Is Attractive: What about Your
Industry? 80
Porter’s Five Competitive Forces 80
A Five Forces Analysis of the Cellular Phone
Service Industry 83
Challenges in Macro-Level Market and Industry
Analysis 84
Information Sources for Macro-Level
Analyses 85
Understanding Markets at the Micro Level 86
54 Understanding Industries at the Micro Level 88
The Team Domains: The Key to the Pursuit of
Attractive Opportunities 89
Mission, Aspirations, and Risk Propensity 89
Ability to Execute on the Industry’s Critical
Success Factors 90
It’s Who You Know, Not What You Know 90
Putting the Seven Domains to Work 91
Anticipating and Responding to Environmental
Change 91
Impact and Timing of Event 92
Swimming Upstream or Downstream:
An Important Strategic Choice 93
Take-aways 93
Endnotes 94
4 Understanding Consumer Buying
Behavior 96
Cruise Ships—Not Just for Grandma and Grandpa
Anymore 96
Savvy Marketing Helped Fuel Industry
70 Growth 96
70 Future Challenges 97
71 Marketing Challenges Addressed in Chapter 4 98
The Psychological Importance of the Purchase
Affects the Decision-Making Process 99
How Do Consumers Make High-Involvement
Purchase Decisions? 99
Low-Involvement Purchase Decisions 107
Understanding the Target Consumer’s Level
of Involvement Enables Better Marketing
Decisions 107
Contents ix

Why People Buy Different Things: Part 1— Installations 142

The Marketing Implications of Psychological
and Personal Influences 111
Perception and Memory 111
Needs and Attitudes 112
Demographics, Personality, and Lifestyle
Why People Buy Different Things: Part 2—The
Marketing Implications of Social Influences 117
Culture 117
Social Class 118
Reference Groups 118
The Family 119
Take-aways 120
Endnotes 120
5 Understanding Organizational Markets
and Buying Behavior 122
DHL Supply Chain: Building Long-Term
Relationships with Organizational Buyers 122
Building Long-Term Relationships with
Customers 122
Long-Term Relationships Enhance Long-Term
Performance 123
Marketing Challenges Addressed in Chapter 5
Who Is the Customer? 124
A Comparison of Organizational versus
Consumer Markets 124
What Do the Unique Characteristics of
Organizational Markets Imply for Marketing
Programs? 126
The Organizational Customer Is Usually a Group
of Individuals 126
How Organizational Members Make Purchase
Decisions 129
Types of Buying Situations 129
The Purchase Decision-Making Process 130
The Marketing Implications of Different
Organizational Purchasing Situations 136
Purchasing Processes in Government
Markets 138
Selling Different Kinds of Goods and Services
to Organizations Requires Different Marketing
Programs 139
Raw Materials 139
Component Materials and Parts 141
Accessory Equipment 142
Operating Supplies 143
Business Services 143
Take-aways 144
115 Endnotes 144
6 Measuring Market Opportunities:
Forecasting and Market
Knowledge 146
Intel’s Secret Weapon 146
Bell’s Charter at Intel 146
How Do Anthropology and Ethnography
Work? 147
What Is Bell Learning about Generation X? 147
Can Bell’s Work Make a Difference? 147
Marketing Challenges Addressed in Chapter 6 148
Every Forecast Is Wrong! 148
A Forecaster’s Tool Kit: A Tool for Every
Forecasting Setting 149
Statistical and Other Quantitative Methods 150
Observation 151
123 Surveys or Focus Groups 151
Analogy 153
Judgment 153
Market Tests 154
Psychological Biases in Forecasting 154
Mathematics Entailed in Forecasting 154
Rate of Diffusion of Innovations: Another
Perspective on Forecasting 156
The Adoption Process and Rate of
Adoption 156
Adopter Categories 157
Implications of Diffusion of Innovation
Theory for Forecasting Sales of New Products
and New Firms 157
Cautions and Caveats in Forecasting 159
Keys to Good Forecasting 159
Common Sources of Error in Forecasting 160
Why Data? Why Marketing Research? 160
Customer Relationship Management: Charting a Path
toward Competitive Advantage 162
Internal Records Systems 162
Marketing Databases Make CRM Possible 163
x Contents
Why CRM Efforts Fail 166
Client Contact Systems 166
Competitive Intelligence Systems 167
Marketing Research: A Foundation for Marketing
Decision Making 167
Step 1: Identify the Managerial Problem
and Establish Research Objectives 168
Step 2: Determine the Data Sources
and Types of Data Required 169
Step 3: Design the Research 171
Step 4: Collect the Data 174
Step 5: Analyze the Data 174
Step 6: Report the Results to the Decision
Maker 175
What Users of Marketing Research
Should Ask 175
Rudimentary Competence: Are We
There Yet? 175
Take-aways 176
Endnotes 176
7 Targeting Attractive Market
Segments 178
The Developing World’s Emerging Middle Class 178
The New Middle Class: Who and How
Large? 178
Targeting India’s New Middle Class 179
Targeting: One Ingredient in Marketing
Success 179
Marketing Challenges Addressed in Chapter 7
Do Market Segmentation and Target Marketing
Make Sense in Today’s Global Economy? 180
Most Markets Are Heterogeneous 181
Today’s Market Realities Often Make
Segmentation Imperative 181
How Are Market Segments Best Defined? 182
Who They Are: Segmenting
Demographically 183
Where They Are: Segmenting
Geographically 185
Geodemographic Segmentation 185
How They Behave: Behavioral
Segmentation 186
Innovative Segmentation: A Key to Marketing
Breakthroughs 189
Choosing Attractive Market Segments: A Five-Step
Process 189
Step 1: Select Market-Attractiveness
and Competitive-Position Factors 190
Step 2: Weight Each Factor 193
Step 3: Rate Segments on Each Factor, Plot
Results on Matrices 193
Step 4: Project Future Position for Each
Segment 195
Step 5: Choose Segments to Target, Allocate
Resources 195
Different Targeting Strategies Suit Different
Opportunities 196
Niche-Market Strategy 197
Mass-Market Strategy 197
Growth-Market Strategy 198
Global Market Segmentation 198
Take-aways 199
Endnotes 200
8 Differentiation and Brand
Positioning 202
Fast Food Turns Healthy 202
The Jared Diet 202
Repositioning Fuels Subway’s Growth 202
Value: A Second Dimension to Subway’s
Positioning 203
Marketing Challenges Addressed
in Chapter 8 203
180 Differentiation: One Key to Customer Preference
and Competitive Advantage 204
Differentiation among Competing Brands 205
Physical Positioning 205
Limitations of Physical Positioning 206
Perceptual Positioning 206
Levers Marketers Can Use to Establish Brand
Positioning 207
Preparing the Foundation for Marketing Strategies:
The Brand Positioning Process 208
Step 1: Identify a Relevant Set of Competitive
Products 209
Step 2: Identify Determinant Attributes 210
Step 3: Collect Data about Customers’ Perceptions
for Brands in the Competitive Set 212
Contents xi

Step 4: Analyze the Current Positions of Brands Appropriate Conditions for a Prospector
in the Competitive Set 212 Strategy 238
Step 5: Determine Customers’ Most Preferred Appropriate Conditions for an Analyzer
Combination of Attributes 216 Strategy 240
Step 6: Consider Fit of Possible Positions Appropriate Conditions for a Defender
with Customer Needs and Segment Strategy 240
Attractiveness 218 How Different Business Strategies Influence
Step 7: Write Positioning Statement or Value Marketing Decisions 242
Proposition to Guide Development of Marketing
Strategy 218 Product Policies 243
Pricing Policies 245
The Outcome of Effective Positioning: Building Distribution Policies 245
Brand Equity 221 Promotion Policies 245
Managing Brand Equity 222 What If the Best Marketing Program for a
Some Caveats in Positioning Decision-Making 223 Product Does Not Fit the Business’s Competitive
Take-aways 224 Strategy? 246
Endnotes 224 Take-aways 248
Endnotes 248
Section Three
Developing Strategic Marketing 10 Product Decisions 250
Programs 225 Product Decisions in a Services Business 250
9 Business Strategies: A Foundation for Marketing Challenges Addressed in Chapter 10 251
Marketing Program Decisions 226 Product Design Decisions for Competitive
Business Strategies and Marketing Advantage 252
Programs at 3M 226 Goods and Services: Are the Product Decisions
Marketing Challenges Addressed in Chapter 9 228 the Same? 253
Product Quality and Features Decisions 253
How Do Businesses Compete? 229 Branding Decisions 255
Generic Business-Level Competitive Packaging Decisions 258
Strategies 229 Services Decisions and Warranties 258
Do the Same Competitive Strategies Work Managing Product Lines for Customer Appeal
for Single-Business Firms and Start-ups? 232 and Profit Performance 259
Do the Same Competitive Strategies Work
for Service Businesses? 232 Product Systems 260
Do the Same Competitive Strategies Work New Product Development Process Decisions 261
for Global Competitors? 234 The Importance of New Products to Long-Term
Will the Internet Change Everything? 234 Profitability 261
How Do Competitive Strategies Differ from New Product Success and Failure 261
One Another? 235 Organizing for New Product Development 262
Differences in Scope 235 Key Decisions in the New Product Development
Differences in Goals and Objectives 237 Process 263
Differences in Resource Deployments 237 Limitations of Stage Gate Thinking and
Differences in Sources of Synergy 238 Processes 270

Deciding When a Strategy Is Appropriate: Product Decisions over the Product Life Cycle 271
The Fit between Business Strategies and the Market and Competitive Implications of Product
Environment 238 Life Cycle Stages 272
xii
Strategic Implications of the Product Life
Cycle 277
Limitations of the Product Life Cycle
Framework 278
Take-aways 278
Endnotes 278
11 Pricing Decisions 280
Ryanair: Low Prices, High Profits—But Increasing
Costs 280
Marketing Challenges Addressed in Chapter 11
A Process for Making Pricing Decisions 282
Strategic Pricing Objectives 283
Estimating Demand and Perceived Value 286
Estimating Costs 289
Analyzing Competitors’ Costs and Prices 290
Methods Managers Use to Determine an Appropriate
Price Level 291
Cost-Oriented Methods 291
Competition-Oriented Methods 293
Customer-Oriented Methods 295
Deciding on a Price Structure: Adapting Prices to
Market Variations 299
Geographic Adjustments 299
Global Adjustments 300
Discounts and Allowances 301
Differential Pricing 303
Product-Line Pricing Adjustments 305
Take-aways 306
Endnotes 306
12 Distribution Channel Decisions
Selling Soft Drinks in Africa—Coke Builds
a Distribution System 308
Marketing Challenges Addressed in Chapter 12
Why Do Multifirm Marketing Channels Exist?
Designing Distribution Channels: What Are the
Objectives to Be Accomplished? 311
Product Availability 311
Meeting Customers’ Service Requirements
Promotional Effort 314
Market Information 314
Cost-Effectiveness 314
Flexibility 314
Contents
Designing Distribution Channels: What Kinds
of Institutions Might Be Included? 315
Merchant Wholesalers 315
Agent Middlemen 315
Retailers 316
Nonstore Retailing 317
Channel Design Alternatives 318
Alternative Consumer Goods Channels 319
Alternative Industrial Goods Channels 320
Which Alternative Is Best? It Depends on the Firm’s
281 Objectives and Resources 320
Availability and the Satisfaction of Customer
Service Requirements 321
Promotional Effort, Market Information,
and Postsale Service Objectives 323
Cost-Effectiveness 324
Flexibility 326
Multichannel Distribution 326
Channel Design for Global Markets 327
Market Entry Strategies 327
Channel Alternatives 328
Channel Design for Services 330
Channel Management Decisions 331
Vertical Marketing Systems 331
Sources of Channel Power 334
Channel Control Strategies 334
Trade Promotions—Incentives for Motivating
Channel Members 335
Channel Conflicts and Resolution
Strategies 338
Take-aways 339
Endnotes 340
308
13 Integrated Promotion Decisions 342
Nano Goes Nowhere 342
309
Marketing Missteps 342
310 Tata Responds 343
Marketing Challenges Addressed in Chapter 13 343
The Promotion Mix: A Communication Tool Kit 344
313 Developing an Integrated Marketing Communications
Plan 345
Step 1: Define the Audience(s) to Be Targeted 345
Step 2: Set the Promotional Objectives 346
Step 3: Set the Promotion Budget 347
Contents
Step 4: Design the Promotion Mix 348
Step 5: Evaluate the Results 350
The Nitty-Gritty of Promotional Decision
Making 351
Making Advertising Decisions 351
Making Personal Selling Decisions 362
Making Sales Promotion Decisions 367
Making Public Relations Decisions 368
. . . And All the Rest 369
Take-aways 370
Endnotes 370
Section Four
Strategic Marketing Programs
for Selected Situations 373
14 Marketing Strategies for a Digitally
Networked World 374
Opportunities in the App Economy 374
Games as Apps 374
More than Games 374
Business Models 375
Is It Real, or Is It a Bubble? 375
Marketing Challenges Addressed in Chapter 14
Does Every Company Need a Social Media
Strategy? 376
Threats or Opportunities? The Inherent Advantages
and Disadvantages of the Digital World for
Marketers 378
The Syndication of Information 378
Increasing Returns to Scale of Network
Products 379
The Ability to Efficiently Personalize
and Customize Market Offerings 380
Disintermediation and Restructuring of
Distribution Channels 380
Global Reach, 24/7 Access, and Instantaneous
Delivery 382
Are These Digital World Attributes
Opportunities or Threats? 382
First-Mover Advantage: Fact or Fiction? 384
Developing a Strategy for a Digitally Networked
World 385
Marketing Applications for a Digitally
Networked World 385
xiii
Developing Digital World Marketing Strategies:
The Critical Questions 391
Managing Digitally Networked Strategies:
The Talent Gap 395
Developing Strategies to Serve Digital World
Markets 396
Serving the Dot-Com Markets of Tomorrow 397
Take-aways 398
Endnotes 398
15 Strategies for New and Growing
Markets 400
Canon, Inc.—Success That Is Hard to Copy 400
Marketing Challenges Addressed in Chapter 15 401
How New Is New? 402
Market Entry Strategies: Is It Better to Be a Pioneer
or a Follower? 404
Pioneer Strategy 404
Not All Pioneers Capitalize on Their Potential
Advantages 406
Follower Strategy 407
Determinants of Success for Pioneers
375 and Followers 408
Strategic Marketing Programs for Pioneers 410
Mass-Market Penetration 410
Niche Penetration 410
Skimming and Early Withdrawal 412
Marketing Program Components for a
Mass-Market Penetration Strategy 412
Marketing Program Components for a Niche
Penetration Strategy 415
Marketing Program Components for
a Skimming Strategy 417
Growth-Market Strategies for Market Leaders 417
Marketing Objectives for Share Leaders 418
Marketing Actions and Strategies to Achieve
Share-Maintenance Objectives 418
Fortress, or Position Defense, Strategy 420
Flanker Strategy 423
Confrontation Strategy 423
Market Expansion 424
Contraction or Strategic Withdrawal 425
Share-Growth Strategies for Followers 425
Marketing Objectives for Followers 425
xiv
Marketing Actions and Strategies to Achieve
Share Growth 425
Frontal Attack Strategy 426
Leapfrog Strategy 430
Flanking and Encirclement Strategies 430
Supporting Evidence 431
Take-aways 432
Endnotes 433
16 Strategies for Mature and Declining
Markets 436
Johnson Controls—Making Money in Mature
Markets 436
Marketing Challenges Addressed
in Chapter 16 437
Challenges in Mature Markets 438
Challenges in Declining Markets 438
Strategic Choices in Mature Markets 438
Strategies for Maintaining Competitive
Advantage 439
Methods of Differentiation 440
Are the Dimensions the Same for Service
Quality on the Internet? 443
Methods of Maintaining a Low-Cost
Position 445
Customers’ Satisfaction and Loyalty
Are Crucial for Maximizing Their Lifetime
Value 447
Marketing Strategies for Mature Markets
Strategies for Maintaining Current Market
Share 449
Strategies for Extending Volume
Growth 451
Strategies for Declining Markets 457
Relative Attractiveness of Declining
Markets 457
Divestment or Liquidation 460
Marketing Strategies for Remaining
Competitors 460
Take-aways 463
Endnotes 464
Contents
Section Five
Implementing and Controlling
Marketing Programs 465
17 Organizing and Planning for Effective
Implementation 466
Electrolux—Organizing to Rule the World of
Household Appliances 466
Too Many Brands, Too Little Coordination 466
A New Structure to Implement the New
Strategy 467
Preliminary Results 467
Marketing Challenges Addressed in Chapter 17 468
Designing Appropriate Administrative Relationships
for the Implementation of Different Competitive
Strategies 469
Business-Unit Autonomy 469
Shared Programs and Facilities 471
Evaluation and Reward Systems 472
Designing Appropriate Organizational Structures
and Processes for Implementing Different
Strategies 472
Functional Competencies and Resource
Allocation 472
Additional Considerations for Service
Organizations 474
Organizational Structures 475
Recent Trends in Organizational Design 480
Organizational Adjustments as Firms Grow
and Markets Change 481
449 Organizational Designs for Selling in Global
Markets 482
Marketing Plans: The Foundation for Implementing
Marketing Actions 483
The Situational Analysis 487
Key Issues 488
Objectives 489
Marketing Strategy 489
Action Plans 489
Projected Profit-and-Loss Statement 490
Contingency Plans 490
Take-aways 490
Endnotes 490
Contents xv

18 Measuring and Delivering Marketing When and How Often Is the Information
Performance 492 Needed? 510
In What Media and in What Format(s) or Levels
Metrics Pay for Walmart 492 of Aggregation Should the Information Be
Changing Metrics for a Changing Strategy 493 Provided? 511
Can Walmart’s Overseas Stores Plug Does Your System of Marketing Metrics
the Gap? 493 Measure Up? 511
Marketing Challenges Addressed in Chapter 18 493 What Contingencies Should Be
Planned For? 512
Designing Marketing Metrics Step by Step 495 Global Marketing Monitoring 514
Setting Standards of Performance 496 A Tool for Periodic Assessment of Marketing
Specifying and Obtaining Feedback Data 501 Performance: The Marketing Audit 515
Evaluating Feedback Data 501
Taking Corrective Action 502 Types of Audits 515
Design Decisions for Strategic Monitoring Measuring and Delivering Marketing
Systems 503 Performance 516
Identifying Key Variables 503 Take-aways 518
Tracking and Monitoring 504 Endnotes 518
Strategy Reassessment 504
Design Decisions for Marketing Metrics 504 Index 519
Who Needs What Information? 505
SEO and SEM Analysis 509
Preface

Why This Book? experience spans a broad variety of manufacturing,

service, software, and distribution industries and
has taken us—and thereby you, the reader—around

W
HY DID YOUR INSTRUCTOR CHOOSE
THIS BOOK? Chances are, it was for one or the world many times. Simply put, we’ve actually
done what we teach, as well as what we write about
more of the following reasons:
in this book.
● Your instructor has designed his or her course
As the reader will see from the outset in Chapter 1,
around the use of cases, a real-world project, or a
marketing decision-making is a critical activity in
marketing simulation such as Markstrat, to bring
every firm, from start-ups to big companies with tra-
marketing decision-making to life. This book has
ditional marketing departments. Further, it is not just
been written with exactly these kinds of instructors in
marketing managers who make marketing decisions.
mind. Thus, one of your instructor’s key objectives
People in nearly every role in every company can
is to give you the necessary tools and frameworks
have powerful influence on how happy customers are,
to enable you to be an effective contributor to mar-
or are not, with the goods and services the company
keting decision-making—regardless of whether
provides. Stockbrokers must attract new customers.
you follow a career in marketing positions per se,
Accounting and consulting firms must find ways to
in another functional area, or as an entrepreneur or
differentiate their services from other providers so
in other general management roles. This book’s focus
their customers have reasons to give them their busi-
on strategic decision-making sets it apart from
ness. Software engineers must understand how their
other texts that place greater emphasis on descrip-
technology can benefit the intended customer, for
tion of marketing phenomena than on the strategic
without such benefits, customers will not buy. Thus,
and tactical marketing decisions that managers and
we have written this book to meet the marketing needs
entrepreneurs must make each and every day.
of readers who hope to make a difference in the long-
● Your instructor wants to use the most current and
term strategic success of their organizations—whether
most internet-savvy book available. We integrate
the latest web and social networking developments, their principal roles are in marketing or otherwise.
from Aprimo to Zynga and more, throughout the In this brief preface, we want to say a bit more about
book, and we devote an entire chapter, Chapter 14, each of the three distinctive benefits, listed above, that
to the development of marketing strategies for this book offers its readers. We also point out the key
today’s digitally networked world. In addition, we changes in this edition compared to previous ones;
supplement the book with an interactive website to and we thank our many students, colleagues, and oth-
help you self-test what you learn and to help your ers from whom we have learned so much and without
instructor choose the best cases and other materials whom this book would not have been possible.
and in-class activities.
Our goal—and probably that of your instructor as
well—is to make both the latest internet-based tools
as well as time-tested marketing principles relevant A Focus on Strategic
to those of you who will work in companies of all Decision-Making
kinds, dot-com and otherwise.
● Your instructor appreciates and believes you will Previous editions of this book have been known for
benefit from the real-world, global perspectives their strategic approach, an approach that helps clarify
offered by the authors of this book. Our combined the relationships among corporate, business-level, and
entrepreneurial, marketing management, and consulting marketing strategies for firms large and small; the

xvi
Preface
relationships between marketing strategies and the
marketing environment; and the relationships between
marketing and other functional areas in the firm. This
eighth edition retains this strategic perspective while
providing the reader with specific tools and frame-
works for making marketing decisions that take best
advantage of the conditions in which the firm finds
itself—both internally, in terms of the firm’s mission
and competencies, and externally, in terms of the mar-
ket and competitive context in which it operates.
By focusing on decision-making, we believe we’ve
written the best textbook available for instructors who
incorporate case-based teaching, marketing simulations,
and/or course-long projects like the development of a
marketing plan in their course design. And, by keep-
ing each chapter—and the book in total—concise and
readable, we allow space in students’ busy schedules for
instructors to add supplemental readings to highlight the
latest in marketing thinking.
Our decision-focused approach is also important to
students and executives who are our readers, because,
in most well-designed marketing management classes
and executive courses, the students or participants will
be asked to make numerous decisions—decisions in
case studies about what the protagonist in the case
should do; decisions in a course project, such as those
entailed in developing a marketing plan; or decisions
in a marketing simulation.
Our decision-focused approach is also important to
employers, who tell us they want today’s graduates to
be prepared to “hit the ground running” and contrib-
ute to the firm’s decision-making from day one. The
ability to bring thoughtful and disciplined tools and
frameworks—as opposed to seat-of-the-pants hunches
or blind intuition—to marketing decision-making is
one of the key assets today’s business school gradu-
ates offer their employers. This book puts the tools in
the tool box to make this happen. In the end, employ-
ers want to know what their new hires can do, not just
what they know.
Web-Savvy Insights
This book brings a realistic and informed perspective
to an important question many students have been
asking in recent years: “Has the advent of the inter-
net changed all the rules?” Our answer is, “Well, yes
and no.” On the one hand, the internet has made avail-
able a host of new marketing tools, from Facebook
xvii
to e-mail marketing to delivery of digital goods and
services over the internet, many of which are avail-
able to companies in every industry. On the other
hand, time-tested marketing fundamentals, such as
understanding one’s customers and competitors and
meeting customer needs in ways that are differentiated
from the offerings of those competitors, have become
even more important in the fast-moving digital world,
as the many dot-com failures attest.
Thus, throughout the book, we integrate examples
of dot-com companies—both successful and not—to
show how both yesterday’s and today’s marketing
tools and decision frameworks can most effectively
be applied. Because the advent of social networking
and other new technologies is so important in its own
right, however, we also devote Chapter 14 to this fast-
growing arena. This chapter provides for marketers in
all kinds of companies a road map for decisions about
where, when, and how to deploy the tools now avail-
able in today’s digitally networked world.
A Real-World,
Global Perspective
Theory is important, because it enhances our under-
standing of business phenomena and helps managers
think about what they should do. It is in the applica-
tion of theory—the world of marketing practice—
where we believe this book excels. Our decision focus
is all about application. But we don’t just bring an
academic perspective to the party, important as that
perspective is.
One of us, John Mullins, brings to this book 20 years
of executive experience in the retailing industry in the
United States, including three entrepreneurial compa-
nies. John now works in Europe at the London Busi-
ness School, where he draws on the perspectives of
MBA students and executive education participants
from more than 120 countries to inform this book with
the realities of building vibrant businesses in today’s
global economy. John’s work in executive education
regularly takes him not only to North America and
Europe, but to Africa, Asia, and Latin America as well.
His first-hand vantage point into these fast-growing
regions will be evident to readers of this book.
Orv Walker spent most of his career at the Carlson
School of Management at the University of Minnesota,
where he worked with some of the world’s leading
consumer goods marketers and won the marketing
xviii
discipline’s most prestigious awards for his research.
Orv also enjoyed a number of years running a business
as a vintner in the rolling hills of western Wisconsin.
Both of us have contributed the fruits of our research
to the growing body of knowledge in the marketing
management, marketing strategy, new product devel-
opment, and entrepreneurship arenas. The result of
our collective experience and expertise is a book filled
with examples of real people from around the world
making real decisions, examples of start-ups and high-
growth companies as well as examples of larger, more
established firms.
What’s New in This Edition?
In this eighth edition of Marketing Management, we’ve
done significant updating to reflect four key trends
that are sweeping the world of marketing theory and
practice and changing the aspirations of graduates
everywhere:
● The growing interest of many of today’s students in all
things entrepreneurial and in learning what it will
take to run their own companies, whether now—
upon, or even before graduation—or at some later
point in their careers.
● The growing importance of fast-growing emerging
markets like India and China on the global eco-
nomic stage and the growing realization in companies
everywhere that business today is a global game.
● The changing nature of marketing research. These
changes are being brought about by two factors:
the power of the internet to make many kinds of
research both less expensive and faster to carry
out, and by a growing recognition that understand-
ing customer needs in today’s increasingly com-
plex world requires more than a consumer survey
administered now and again.
● The growing ubiquity and power of social networks—
Facebook, Linkedln, Twitter, and the like—which
offer numerous opportunities for marketers of all
kinds, whether companies with goods of services
to market or political uprisings seeking to change
the world.
We’ve addressed the first of these issues, the grow-
ing interest of students in entrepreneurship by con-
tinuing to add new examples throughout the book
about how entrepreneurial companies—not just large,
established ones—are applying the tools and concepts
that this book brings to life. The author team knows
from experience that the entrepreneurial path makes
Preface
for achallenging—and always exciting—career path.
As increasing numbers of today’s graduates are taking
the entrepreneurial plunge, we’d like our readers who
choose such a path to be well-equipped for the journey.
Recent editions of this book have been known for
their real-world global perspective and this edition is
no exception. We’ve continued to work hard in this
revision to add examples from fast-growing emerg-
ing economies like India, China, and elsewhere. Four
new globally focused case vignettes—on the emerg-
ing middle class in the developing world (Chapter 7)
on marketing Coca-Cola in China (Chapter 12): on the
marketing of the Tata Nano, the world’s least expen-
sive automobile (Chapter 13): and on the strategy and
global organizational structure that Swedish appliance-
maker Electrolux employs (Chapter 17)—will provide
our readers with new insight into marketing on today’s
global stage. For almost every company, it seems,
India or China—or Brazil, Russia, or another devel-
oping country—is important as a source of supply or
labor, as a market for what the company produces,
or both.
To address the changing nature of marketing re-
search, we’ve done a significant updating of Chapter 6.
We now open the chapter with a case vignette on
Intel’s secret weapon, an anthropologist and ethnogra-
pher named Genevieve Bell, whose team’s consumer
insights—along with those of other technology-driven
companies that are ramping up their qualitative and
ethnographic research efforts—are changing the way
high-tech products are conceived and developed.
Throughout the chapter, we address the many changes
in marketing research—and in forecasting, too—that
these and other changes, including the growing clout
of social networks and other web-based phenomena,
are bringing about.
Perhaps nothing, however, provides a greater
opportunity for today’s marketing graduates than the
growing ubiquity and power of social networks and
their applicability for marketers of all kinds. Thus,
we’ve done a major updating of Chapter 14 to accom-
plish two things. First, we’ve removed much of the
earlier material that described many of the market-
ing possibilities of the internet, since many of today’s
internet marketing tools are well understood by
today’s web-savvy readers. Second, we’ve refocused
the chapter on the reality that today we live and work
in a digitally networked world. A new case vignette
opens the chapter with a look at the burgeoning array
of opportunities in the market for apps. In addition,
Preface
throughout the chapter, dozens of new examples
address the social networking phenomenon, mobile
and location-based advertising, and other digital world
developments from a variety of perspectives.
As today’s digitally networked world continues its
rapid evolution, keeping students (the easy part, since
many of the most important changes are being led by
members of their generation) and instructors (the harder
part!) current on such developments is essential and, in
our view, well worth the entire chapter we dedicate to it.
In addition to the major changes we’ve noted
above, every chapter has undergone rigorous scrutiny,
with materials refreshed and updated, new examples
added, outdated ones deleted, and some of the lat-
est empirical evidence incorporated so readers know
what works and what doesn’t. Instructors will be
pleased to know, however, that the structure and flow
of this eighth edition remains unchanged. Our purpose
in each and every change we have made is to better
prepare the reader to “hit the ground running” and
contribute to marketing decision-making from what-
ever vantage point in the organization he or she sits.
Our focus on strategic decision-making remains, as
always, the key strength of this book.
Additional Resources
Supplemental materials for instructors and students
are available on the book website at www.mhhe.com/
mullins8e. Instructor resources include an instructor’s
manual, PowerPoints, and a test bank. A list of rec-
ommended cases and supplementary readings is also
available. These materials range from both classical
and recent practitioner-focused articles from Harvard
Business Review and MIT Sloan Management Review
to carefully selected, classroom-ready, knock-your-
socks-off teaching cases set all over the world (all
xix
with teaching notes available), in companies large
and small, old and new. They’ll help any instructor
keep his or her course bang up to date and pragmati-
cally focused.
Thanks!
Simply put, this book is not solely our work—far
from it. Many of our students, colleagues, and those
we work with in industry have made contributions
that have significantly shaped our perspectives on
marketing decision-making. We are grateful to all
of them. We wish to give thanks to the individuals
who reviewed the previous edition of this text and
provided useful feedback: Catharine Curran, Univer-
sity of Massachusetts–Dartmouth; Anna Andriasova,
University of Maryland University College; Sanjay S.
Mehta, Sam Houston State University; Prema Nakra,
Marist College.
We also thank a small army of talented people at
McGraw-Hill/Irwin for their work that has turned our
rough manuscript into an attractive and readable book.
In particular, our editors, Laura Spell and Lori Bradshaw,
have been instrumental in giving birth to this edition.
Without them, we’d probably still be writing!
Finally, we thank Harper Boyd, without whom this
book would not exist, and our parents, without whom,
of course, neither of us would be here. To all of you
we extend our love, our respect, and our gratitude for
passing on to us your curiosity and your passion for
learning. We therefore dedicate this book to Harper
Boyd, to Jeannette and Orville Walker, Sr., and to
Alice and Jack Mullins.
John W. Mullins
Orville C. Walker, Jr.
London, U.K.; Madison, Wisconsin
Summer 2011
Walkthrough
Case Vignette
These vignettes have been chosen to increase C HAPTER S IX
the book’s global focus and international
perspective.
Measuring Market
Opportunities: Forecasting
and Market Knowledge
Intel’s Secret Weapon1

G
ENEVIEVE BELL HAS A RADICAL directions, leading new product strategy and defini-
IDEA. Bell, the only female among Intel’s ros- tion, and driving consumer-centric product innovation
ter of top technical talent dubbed Intel Fellows, and thinking across the company. All this is everyday
and Director of Intel’s User Experience Group, thinks work for this wiry-haired woman who as a very small
the world would be a better place if we can better under- girl used to kill things—frogs and the like—growing
stand how people would like to use technology, rather up in an aboriginal community in Australia’s outback.
than tossing technology that people don’t really want Why is there a role like Bell’s at Intel today? “I
into the market at an alarming pace. Bell was given her joined Intel in 1998,” she recalls, “There was a col-
own lab at Intel in 2010, an event that may change Intel, lective sense in Intel’s senior management that they
or even the future of technology itself. didn’t know what was going to happen when PCs
“Imagine,” says Bell, “If we were willing to take on became mass market. They knew they had market
board the ways in which PCs don’t work and applied research, they knew they had the skills to size markets
that to other technologies such as our refrigerators or and how to survey people, and a little bit of usability
televisions. If your fridge said, “I’m terribly sorry, you work was going on even then, but I think the sense
cannot have that cold milk until I’ve rebooted myself of what was missing was this notion about what was
and downloaded new drivers!” or your TV said, “You motivating people, what did they care about and was
gives his or her permission to be sent marketing messages. Were this not the case, cannot
the watch the end of the cricket match because I am there an opportunity if you understood the things to
system would be inundated with unwanted messages to the point that it would come todefragging
a my hard drive,” we would all go insane.” drive new uses of technology.”
screeching halt!19 The growth of unwelcome e-mails, or spam, is a customer problem that “For many years thereafter, a part of every pres-
entation I gave, every class I taught, every meeting I
software makers are working hard to address. Bell’s Charter at Intel attended was explaining what an anthropologist was,
Blogging is another fast-growing internet application. Given the ease with which any-
what ethnography was, what was user centered design
one can now post material on the web, companies large and small are developing blogs In Bell’s view, her charter at Intel is straightforward, and why it was going to be a useful tool at Intel.” In
with which they can, sometimes anonymously, promote their products or ideas or even dis-
“To provide insights and inspire innovation.” Her team her 13 years at Intel, Bell has fundamentally changed
parage competition. There are even sites (for example, www.betterbusinessblogging.com of )social scientists, interaction designers and human how the company envisions, plans, and develops its
to help businesses develop their blogs! factors engineers is charged with setting research product platforms.
Podcasting, a technology that provides a way for consumers to receive audio via the
internet, is another growing web-based application. Advertisers and other providers such
146
as CNN, the Cable News Network, provide short audio feeds that can be downloaded and
listened to on a PC or on a portable MP3 player.
While the new media seem, on the surface, to be radically different from their more
traditional counterparts—radio, television, and print—the logic entailed in planning their
roles in promotional programs is no different than for other media. Considerations of
reach, frequency, and cost—measured in cost per thousand impressions (or “hits” or
“click-throughs” on the web)—provide a means of comparing their value to one another
and to traditional media. Cost per acquisition, another measure, is useful for web adver-
tising that results directly in actual customer purchases, a model familiar in the direct-
marketing industry. To the extent that new media performance can be measured (How
many extra customers does a restaurant get for weekday lunches as a result of its ad, and
at what cost per customer?), marketers will be encouraged to use them to their full eco-
nomic potential.
The rapid growth of these and other new media has led to a variety of ethical issues
marketers must address, including the implications of location-based services discussed in
Ethical Perspective 13.2.
International Media Global advertising has been aided by the rise of globally ori-
ented television media like CNN, MTV, and ESPN, all of which originate primarily in the
United States, and a variety of other media like STAR-TV and Al Jazeera, which originate
in Asia and the Middle East, respectively. The ability of media like these to deliver to Ethical Perspectives
Ethical Perspective 13.2 The Centre for Democracy and Technology, a privacy These minicases highlight ethical issues that
Do You Really Want Burglars to Know advocate, argues that the privacy policies of companies
Where You Are? that are collecting and using location-based data are
“uneven at best and inadequate at worst.”
commonly arise in marketing management.
The creators of PleaseRobMe.com, a simple website Some companies are better, of course, and some
that publishes a live feed of location-based posts worse. Loopt includes software that monitors its ser-
that appear on Twitter, points out that the tweet- vice for suspicious patterns of behaviour, it says. But
ers are somewhere other than at home. The site’s politicians are getting into the act, holding a congres-
creators want to highlight the fact that tweeters on sional hearing in Washington to examine the impli-
the likes of Foursquare and other location-based cations of such services and their rapid growth. If
services give away information that burglars would web-savvy burglars want to take advantage of all this
love to have. data, it would appear that they’d better do so soon.
But the founders of location-based services and the
venture capitalists backing them will have to deal with Source: “Follow Me,” The Economist, March 6, 2010, p. 81.
growing concerns that collecting information about peo- For more on Foursquare and Loopt, see www.foursquare.com and
ple’s movements may have unintended consequences. www.loopt.com.

xx
 much h lik
like th
Strategic Issue
Stattisstic
Sta ti al me
metho
hodds gen
enerarally
ly ass
ssumme ththat
at
CenturyLinkk Strategic Issue
the
he futur
fu ure will lookok ve
veryy muc
much llikee the
he
Mountain an n
passt.
p t SoSom me
etiimess th
his is noot th
the case e. when its statt Highlight critical information and crucial questions
failed to allo
throughout each chapter.

cal data that are available. Whee

to introduce a new flavor, its m
Global Perspective
to forecast the sales for the new
w and Internet Icons
high-technology products, for w
extremely expensive to producee Identify global examples as well as effective internet
marketing for both new and economic marketers.

music from iTunes and for the

which to play them. First, Napp
rage with consumers (though n
convinced the courts that Napstt
Take-aways than 300 million units, proving
End-of-chapter points review the most use of analogs like these, as w
important “lessons learned” from each not to copy—is
py a crucial appro
chapter.

Take-aways
1. Every forecast and estimate of market potential is
wrong! Evidence-based forecasts and estimates,
prepared using the tools provided in this chapter, are
far more credible—and generally more accurate—than
3. Superior market knowledge is not only an important
source of competitive advantage, but it also results in
happier, higher volume of, and more loyal customers.
Thus, the systematic development of market knowledge

xxi
This page intentionally left blank
Section One

The Role of Marketing

in Developing Successful
Business Strategies

Chap t e r 1 The Marketing C h apter 2 The Marketing

Management Process Implications of
Corporate and
Business Strategies

1
 C HAPTER O NE

The Marketing
Management Process
Samsung—Building a Global Brand1

S
AMSUNG ELECTRONICS is the largest com-
ponent of South Korea’s largest chaebol—one
of the giant family-controlled conglomerates
that have been instrumental in building the country’s
economy over the last half century. Samsung’s elec-
tronics unit started out in 1970 making cheap TV sets
for the Sanyo label. Over time it morphed into a tech-
nically innovative company that was one of the pio-
neers in developing flat-screen displays, plasma TVs,
multifunction cell phones, and other digital devices.
But until the mid-1990s, the unit competed primarily
by (a) producing technical components or low-cost
manufactured products for firms with better-known
brands, such as Dell, Hewlett-Packard, and General
Electric; and (b) selling me-too consumer products—
like TVs and microwave ovens—under the Samsung
brand through discount chains like Walmart at very
low prices.
Samsung’s cost-driven competitive strategy worked
well until 1996, but then several shocks in its mar-
ket and competitive environments forced a major
reevaluation. First, the global market for memory
chips and other components Samsun supplied for
other electronics brands softened because of increased
competition and excess capacity. At about the same
time, sales of Samsung’s own branded products were
also declining. As Yun Jong-yong—a company vet-
eran who was brought in as CEO of the electronics
unit—complained, Samsung could build a TV that
was technically as good as a Sony, but because of the
down-market image of the Samsung brand its sets sat
at the back of the store or piled up in discount chains.
Finally, the Asian financial crisis of 1997 made a
major strategic shift essential for the unit’s survival.
New Competitive and
Marketing Strategies
Mr. Yun initiated an ambitious new competitive strat-
egy aimed at developing and marketing technically
superior products while building an image of Samsung
as a stylish, high-quality brand commanding a pre-
mium price. The objective was to establish a unique
competitive position using technical innovation and
design to appeal to younger and relatively upscale cus-
tomers around the world. “If we were to continue com-
peting only on price,” Mr. Yun argued, “the Chinese
would slaughter us.”
Technical Innovation and R&D In order to
implement its new competitive strategy, Samsung had
to become a pioneer in developing new digital tech-
nologies. While Sony and other rivals had a substan-
tial lead in consumer electronics, that lead was rooted
in the analog world. The digital world required new
technical innovations. Consequently, the firm shifted
substantial resources into R&D focused on technolo-
gies such as large-area LCDs, display drivers and chip
sets, and mobile telephony. In the 2009 fiscal year, it

2
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A padre lifted hand in blessing; Señora Vallejo smiled; the Governor
nodded in approval; Gonzales, good pirate, swore softly under his
breath at this display of young affection; and Sergeant Cassara
slapped his thigh and cried unto the sky.
“Dios! So I cannot slay him after all? He is a friend of the Governor,
eh? Not Fly-by-Night, but Rojerio Rocha, a proper fellow! I shall go
mad! Better, I shall go to sleep for the saints know I need it!”
He threw himself on the ground against the wall; and presently he
snored.
And so the tale ends as it began, with Sergeant Carlos Cassara.

THE END
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