Part 1 Initiating the Marketing Process...

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Preface XX

Part 1 Initiating the Marketing Process 2

1 Marketing: Customer Value, Satisfaction, Customer Relationships, and Customer Experiences 4

Stratus Vineyards: An Eco-Winemaking Success Story 5What Marketing Is and What It Is Not 7

Marketing: Defined 7Requirements for Marketing to Occur 7The Breadth and Depth of Marketing 8The Diverse Factors Influencing Marketing Activities 10

How Marketing Discovers and Satisfies Consumer Needs 11Discovering Consumer Needs 11Satisfying Consumer Needs 12

Ethics and Social Responsibility Alert: Marketing to Canadian Children 13

The Marketing Program 14A Marketing Program for Stratus Vineyards 14

How Marketing Became So Important 15

WebLink: The Stratus Vineyards Story 15

Evolution of North American Businesses 16Ethics and Social Responsibility: Balancing the Interests of Different

Groups 19

Marketing NewsNet: How Some Canadian Companies Are Creating and Managing Customer Experiences 20

Chapter in Review 21Focusing on Key Terms 22Discussion and Application Questions 22Going Online 22

Video Case 1 Stratus Vineyards: An Eco-Winemaking Success Story 23

2 Developing Successful Marketing Strategies 26

Bombardier—A Canadian Company Moving People on a Global Scale 27

Levels of Strategy in Organizations 28Today’s Organizations: Kinds, Levels, and Teams 28Strategy Issues in Organizations 30

Ethics and Social Responsibility Alert: The Global Dilemma: How to Achieve Sustainable Development 32

Setting Strategic Directions 33A Look Around: Where Are We Now? 33Growth Strategies: Where Do We Want to Go? 34

CONTENTS

Contentsvi

Marketing NewsNet: Growing by Using Multiple Market-Product Strategies 37

The Strategic Marketing Process 37Strategic Marketing Process: The Planning Phase 38

WebLink: Ben & Jerry’s Flavours: From Chocolate Fudge Brownie Ice Cream and One Sweet Whirled Novelty Bars to . . . the Flavour Graveyard 40

Strategic Marketing Process: The Implementation Phase 42Strategic Marketing Process: The Control Phase 44


Video Case 2 YouTube 47

Appendix A: Creating an Effective Marketing Plan 49

3 Scanning the Marketing Environment 68

A New Marketing Trend—Trysumers! Seeking New Experiences! 69The Importance of Environmental Scanning 71

Tracking Environmental Trends 71An Environmental Scan of Canada 72

Social Forces 72Demographics 72Culture 76

Marketing NewsNet: The Challenge of Ethnic Marketing in Canada 77

Economic Forces 79Macroeconomic Conditions 79Consumer Income 80

WebLink: Family Income in Canada by Province and Territory 80

Technological Forces 81Technology’s Impact on Marketers 81Technology’s Impact on Customers 82

Competitive Forces 84Alternative Forms of Competition 84Components of Competition 84Small Businesses as Competitors 85Pure-Play Online Competitors 85

Regulatory Forces 85Protecting Competition and Consumers 85Self-Regulation 87Consumerism 87

Ethics and Social Responsibility Alert: Protecting Canadian Consumers’ Privacy 88


Video Case 3 Becoming an Environmental Scanner 90

Contents vii

4 Ethics and Social Responsibility in Marketing 92

Canadian Automakers Make a Commitment to Canada 93Nature and Significance of Marketing Ethics 95

Ethical/Legal Framework in Marketing 95Current Perceptions of Ethical Behaviour 96

Understanding Ethical Marketing Behaviour 96Societal Culture and Norms 97

Marketing NewsNet: How Canadian Business Students Perceive the Ethical Climate in Canada 97

Business Culture and Industry Practices 98Corporate Culture and Expectations 99

WebLink: The Corruption Perceptions Index 99

Personal Moral Philosophy and Ethical Behaviour 101Understanding Social Responsibility in Marketing 102

Concepts of Social Responsibility 102The Social Audit 104Turning the Table: Consumer Ethics and Social Responsibility 106


Video Case 4 Starbucks Corporation: Serving More Than Coffee 109

Part 2 Understanding BUyers and Markets 112

5 Consumer Behaviour 114

Getting to Know the Automobile Custom(H)er and Influenc(H)er 115Consumer Purchase Decision Process 116

Problem Recognition 116Information Search 116Alternative Evaluations 117Purchase Decision 117Postpurchase Behaviour 118Involvement and Problem-Solving Variations 118Situational Influences 120

Psychological Influences on Consumer Behaviour 121Motivation and Personality 121Perception 122

Ethics and Social Responsibility Alert: The Ethics of Subliminal Messages 124

Learning 124Values, Beliefs, and Attitudes 125Lifestyle 126

WebLink: Identify the PRIZMCE Segment (Cluster) You Belong To 126

Sociocultural Influences on Consumer Behaviour 127Personal Influence 127Reference Groups 129

Contentsviii

Family Influence 129Social Class 132Culture and Subculture 132

Marketing NewsNet: How You Know You Are Canadian 133


Video Case 5 The Consumer on the Couch 138

6 Organizational Markets and Buyer Behaviour 140

Dofasco Inc.: Achieving Success in the Business-to-Business (B2B) Marketplace 141

The Nature and Size of Organizational Markets 142Industrial Markets 143Reseller Markets 143Government Markets 143Global Organizational Markets 143

Marketing NewsNet: The Importance of Canada’s Manufacturing Sector 144

Measuring Domestic and Global Industrial, Reseller, and Government Markets 144

Characteristics of Organizational Buying 146Demand Characteristics 146Size of the Order or Purchase 147Number of Potential Buyers 147Organizational Buying Objectives 147Organizational Buying Criteria 147Buyer–Seller Relationships and Supply Partnerships 148The Buying Centre: A Cross-Functional Group 149

Ethics and Social Responsibility Alert: Scratching Each Other’s Back: The Ethics of Reciprocity in Organizational Buying 149

Charting the Organizational Buying Process 152Stages in the Organizational Buying Process 152Buying a Machine Vision System 153

Online Buying in Organizational Markets 155Prominence of Online Buying in Organizational Markets 155E-Marketplaces: Virtual Organizational Markets 155Online Auctions in Organizational Markets 156

WebLink: eBay Means Business, Too 156


Video Case 6 Producer Her Inc. 160

Contents ix

7 Reaching Global Markets 162

Canadian Companies Compete Successfully in the Global Marketplace 163

Dynamics of World Trade 164World Trade 164Competitive Advantage of Nations 166

Marketing in a Borderless Economic World 168

Marketing NewsNet: Canada’s Hottest Export Markets 168

Decline of Economic Protectionism 169

Ethics and Social Responsibility Alert: Global Ethics and Global Economics—The Case of Protectionism 170

Rise of Economic Integration 170A New Reality: Global Competition among Global Companies for

Global Consumers 172Emergence of a Networked Global Marketspace 174

A Global Environmental Scan 175Cultural Diversity 175Economic Considerations 178Political-Regulatory Climate 181

WebLink: Checking a Country’s Political Risk Rating 182

Global Market-Entry Strategies 182Exporting 182Licensing 184Joint Venture 184Direct Investment 185

Crafting a Worldwide Marketing Program 185Product and Promotion Strategies 186Distribution Strategy 187Pricing Strategy 188


Video Case 7 CNS Breathe Right® Strips: Going Global 191

Contentsx

Part 3 targeting Marketing OPPOrtUnities 194

8 Marketing Research: From Information to Action 196

The Internet Is Reinventing Marketing Research 197What Is Marketing Research? 198Types of Marketing Research 199

Exploratory Research 199Descriptive Research 200Causal Research 200

The Marketing Research Process 200Problem Definition 202

Exploratory Research 202Formal Research Design 206

Survey 206Experiment 210Observation 211Is There an Optimal Research Design? 212

Marketing NewsNet: Neuromarketing Research 213

Sampling 213Data Collection and Analysis 214Conclusions and Report 215Ethical Issues in the Marketing Research Process 215

Ethics and Social Responsibility Alert: A New Charter of Respondent Rights 216

Using a Marketing Information System to Trigger Marketing Actions 216

The Marketing Manager’s View of Sales “Drivers” 217Key Elements of a Marketing Information System 217Data Mining: Searching the Data Ocean 217

WebLink: The Latest News in Marketing Research 219


Video Case 8 Mystery Shopping as a Marketing Research Tool 221

9 Market Segmentation, Targeting, and Positioning 224

Had A Good Night Sleep Lately? If Not, It Might Not Be Your Mattress. It Could Be Your Bed Pillow! 225

Why Segment Markets? 226What Market Segmentation Means 226When to Segment Markets 227

WebLink: Customizing Your Own Designer Shoes 229

Steps in Segmenting and Targeting Markets 230Step 1: Group Potential Buyers into Segments 230

Marketing NewsNet: Segmentation Is Not Easy 231

Step 2: Group Products to Be Sold into Categories 235

Contents xi

Step 3: Develop a Market-Product Grid and Estimate Size of Markets 236

Step 4: Select Target Markets 236Step 5: Take Marketing Actions to Reach Target Markets 237

Ethics and Social Responsibility Alert: De-selection of Customers or Customer Segments 238

Positioning the Product 239Two Approaches to Product Positioning 239Product Positioning Using Perceptual Maps 240

Sales Forecasting Techniques 242Judgments of the Decision Maker 242Surveys of Knowledgeable Groups 243Statistical Methods 243


Video Case 9 Cybersurf Corporation 246

Part 4 satisfying Marketing OPPOrtUnities 248

10 Developing New Products and Services 250

3M’s New Greptile Grip Golf Glove: How to Get to the Top of the Leaderboard 251

The Variations of Products 253Product Line and Product Mix 253Classifying Products 253

Classifying Consumer and Business Goods 254Classification of Consumer Goods 254Classification of Business Goods 255

What Is a New Product? 256Newness Compared with Existing Products 256Newness in Legal Terms 257Newness from the Company’s Perspective 257Newness from the Consumer’s Perspective 257What are New Services? 258

Why New Products or Services Succeed or Fail 259Marketing Reasons for New-Product Failures 259

Marketing NewsNet: What Separates New-Product Winners and Losers 260

A Look at Some Failures 261The New-Product Process 262

New-Product Strategy Development 262Idea Generation 263

WebLink: IDEO—Where Design Is Not a Noun . . . It’s a Verb 264

Screening and Evaluation 265Business Analysis 267Development 267

Contentsxii

Market Testing 268

Ethics and Social Responsibility Alert: SUVs versus Cars: Godzilla Meets a Chimp? 268

Commercialization 269Chapter in Review 271Focusing on Key Terms 272Discussion and Application Questions 272Going Online 272

Video Case 10 3M™ Greptile Grip™ Golf Glove: Great Gripping! 273

11 Managing Products and Brands 276

Clearly Canadian: Product and Brand Management in a Competitive Environment 277

Product Life Cycle 278Introduction Stage 278Growth Stage 280Maturity Stage 281Decline Stage 281Some Dimensions of the Product Life Cycle 282

Managing the Product Life Cycle 284Role of a Product Manager 284Modifying the Product 284Modifying the Market 285Repositioning the Product 286

Ethics and Social Responsibility Alert: Consumer Economics of Downsizing: Get Less, Pay More 286

Branding and Brand Management 287Brand Personality and Brand Equity 288

Marketing NewsNet: Top Global and Top Canadian Brands 290

Picking a Good Brand Name 292Branding Strategies 292

WebLink: Have an Idea for a Brand or Trade Name? Check It Out! 293

Marketing NewsNet: Creating Customer Value through Packaging: Pez Heads Dispense More Than Candy 296

Packaging and Labelling 296Creating Customer Value through Packaging and Labelling 296Global Trends in Packaging 298

Product Warranty 298Chapter in Review 299Focusing on Key Terms 300Discussion and Application Questions 300Going Online 301

Video Case 11 Brand Manitoba 302

Contents xiii

12 Managing Services 304

The Hard Rock Cafe Knows What You Want: An Exceptional and Memorable Experience! 305

The Service Economy 306The Uniqueness of Services 307

The Service Continuum 310How Consumers Purchase Services 310

Purchasing a Service 311Customer Contact Audit 312Postpurchase Evaluation 313

Ethics and Social Responsibility Alert: Customer Behaviour Can Affect the Perception of Service Quality 315

Managing the Marketing of Services: The Eight Ps 315Product (Service) 316Price 316Place (Distribution) 317Promotion 317

WebLink: lookUPNorth’s Tourism Initiative 317

People 318Physical Evidence 318Process 318Productivity 319

Services in the Future 320

Marketing NewsNet: Marketing Experiences! 321


Video Case 12 The Canadian Football League (CFL) 324

13 Pricing Products and Services 326

Here’s a Pricing Problem for You! 327Nature and Importance of Price 328

What Is a Price? 329Price as an Indicator of Value 329Price in the Marketing Mix 330

Step 1: Identifying Pricing Constraints and Objectives 331Identifying Pricing Constraints 331

Ethics and Social Responsibility Alert: Getting an Unfair Premium Price? 331

Identifying Pricing Objectives 333Step 2: Estimating Demand and Revenue 335

Fundamentals of Estimating Demand 335Fundamentals of Estimating Revenue 336

Step 3: Estimating Cost, Volume, and Profit Relationships 337The Importance of Controlling Costs 337Break-Even Analysis 337

Contentsxiv

Calculating a Break-Even Point 337Application of Break-Even Analysis 339

Step 4: Selecting an Approximate Price Level 339Demand-Oriented Approaches 339

Marketing NewsNet: Energizer’s Lesson in Price Perception: Value Lies in the Eye of the Beholder 341

Cost-Oriented Approaches 342Profit-Oriented Approaches 343Competition-Oriented Approaches 344

Step 5: Setting the List or Quoted Price 345One-Price Policy versus Flexible-Price Policy 345Company, Customer, and Competitive Effects 346

Step 6: Making Special Adjustments to the List or Quoted Price 348Discounts 348Allowances 349Geographical Adjustments 349Legal and Regulatory Aspects of Pricing 350

WebLink: Deceptive Pricing Practices and the Competition Bureau 351


Video Case 13 Washburn International, Inc. 354

Appendix B: Financial Aspects of Marketing 356

14 Managing Marketing Channels and Supply Chains 364

Apple Stores: Creating and Delivering the “Apple Experience” in a Marketing Channel 365

Nature and Importance of Marketing Channels 366Defining Marketing Channels of Distribution 366Value Created by Intermediaries 366Consumer Benefits from Intermediaries 368

Channel Structure and Organization 368Marketing Channels for Consumer Goods and Services 368Marketing Channels for Business Goods and Services 370Electronic Marketing Channels 370Direct Marketing Channels 371Multiple Channels and Strategic Alliances 371A Closer Look at Channel Intermediaries 372Vertical Marketing Systems and Channel Partnerships 373

Channel Choice and Management 375Factors Affecting Channel Choice and Management 375Channel Design Considerations 376

WebLink: Need Cash Fast? Check the Visa ATM Locator 377

Global Dimensions of Marketing Channels 378Channel Relationships: Conflict, Cooperation, and Law 378

Ethics and Social Responsibility Alert: The Ethics of Slotting Allowances 379

Contents xv

Logistics and Supply Chain Management 380Sourcing, Assembling, and Delivering a New Car: The Automotive

Supply Chain 381Supply Chain Management and Marketing Strategy 382

Information and Logistics Management Objective in a Supply Chain 384

Information’s Role in Supply Chain Responsiveness and Efficiency 384

Total Logistics Cost Concept 385Customer Service Concept 385

Key Logistics Functions in a Supply Chain 386Transportation 386Warehousing and Materials Handling 387

Marketing NewsNet: Canada’s Ice Road 388

Order Processing 389Inventory Management 390Closing the Loop: Reverse Logistics 391


Video Case 14 Amazon: Delivering the Goods . . . Millions of Times Each Day! 394

15 Retailing 396

Tim Hortons and 15 Million Canadians! 397The Value and Scope of Retailing 398

Classifying Retail Outlets 399Form of Ownership 399Level of Service 401Merchandise Line 401

Nonstore Retailing 403Automatic Vending 403Direct Mail and Catalogues 404Television Home Shopping 404Online Retailing 404Telemarketing 405

WebLink: Dress (Your Virtual Model) for Success! 405

Direct Selling 406Retailing Strategy 406

Positioning a Retail Store 406Retailing Mix 408

Marketing NewsNet: Canada’s Lifestyle Centres: It’s All about the Experience 411

The Changing Nature of Retailing 412The Wheel of Retailing 413The Retail Life Cycle 414

Contentsxvi

Challenges Canadian Retailers Face As They Pursue Sustainable Growth 415

The Use of Integrated Multichannel Retailing 415Embracing Technology and Using It Wisely 415Better Understanding of the Complex Canadian Shopper 416Demonstrating Corporate Social Responsibility and Going

Green 416Providing a Satisfying Customer Experience 417Effective Use of Human Capital 417

Ethics and Social Responsibility Alert: Biometric Payment Systems: The Possible Dark Side 417


Video Case 15 West Edmonton Mall 420

16 Integrated Marketing Communications and Direct Marketing 422

ckIN2U: Reaching 18- to 24-Year-Olds in an Integrated, Interactive, and Tech-Driven Manner 423

The Communication Process 425Encoding and Decoding 425Feedback 426Noise 427

The Promotional Elements 427Advertising 428Personal Selling 428Public Relations 429Sales Promotion 429Direct Marketing 430

Integrated Marketing Communications—Developing the Promotional Mix 430

The Target Audience 430

Marketing NewsNet: How Combining Online and Traditional Media Created Impactful Integration 431

The Product Life Cycle 432Product Characteristics 433Stages of the Buying Decision 434Channel Strategies 434

Developing the Promotion Program 436Identifying the Target Audience 436Specifying Promotion Objectives 437Setting the Promotion Budget 437Selecting the Right Promotional Tools 438Designing the Promotion 439Scheduling the Promotion 439

Executing and Evaluating the Promotion Program 439

WebLink: A Look at One Agency’s Approach to IMC 440

Contents xvii

Direct Marketing 441The Growth of Direct Marketing 441The Value of Direct Marketing 442Technological, Global, and Ethical Issues in Direct Marketing 443

Ethics and Social Responsibility Alert: Cookies Are a Concern to Canadians 443


Video Case 16 UPS: Repositioning a Business with IMC 446

17 Advertising, Sales Promotion, and Public Relations 448

So, How Would You Like to Be a Canadian AdFarmer 449Types of Advertisements 450

Product Advertisements 451Institutional Advertisements 451

Developing the Advertising Program 452Identifying the Target Audience 452Specifying Advertising Objectives 453Setting the Advertising Budget 453Designing the Advertisement 453Selecting the Right Media 455

Marketing NewsNet: Recency versus Frequency 457

Different Media Alternatives 457Scheduling the Advertising 463

WebLink: IAB of Canada and Internet/Online Advertising 463

Executing the Advertising Program 464Pretesting the Advertising 464Carrying Out the Advertising Program 465

Evaluating the Advertising Program 466Post-testing the Advertising 466Making Needed Changes 466

Sales Promotion 467The Importance of Sales Promotion 467Consumer-Oriented Sales Promotions 467Trade-Oriented Sales Promotions 470

Public Relations 472Public Relations Tools 472

Ethics and Social Responsibility Alert: Is PETA’s PR Believable? 473


Video Case 17 AdFarm 476

Contentsxviii

18 Personal Selling and Sales Management 478

Meet Julie Robertson, iLearning Sales Specialist! 479Scope and Significance of Personal Selling and Sales Management 481

Nature of Personal Selling and Sales Management 481Pervasiveness of Selling 481Personal Selling in Marketing 482Creating Customer Value through Salespeople: Relationship and

Partnership Selling 482The Many Forms of Personal Selling 483

Order Taking 483Order Getting 484Customer Sales Support Personnel 485

The Personal Selling Process: Building Relationships 486Prospecting 486Preapproach 487Approach 488Presentation 488Close 490

Marketing NewsNet: The Subtlety of Saying Yes in East Asia 490

Follow-Up 491The Sales Management Process 491

Sales Plan Formulation: Setting Direction 492

Ethics and Social Responsibility Alert: The Ethics of Asking Customers about Competitors 492

Sales Plan Implementation: Putting the Plan into Action 496

WebLink: What Is Your Emotional Intelligence? 497

Marketing NewsNet: Sales Training Should Include Gender Intelligence 498

Salesforce Evaluation and Control 499Technology and the Salesforce 500


Video Case 18 Reebok: Relationship Selling and Customer Value 503

Contents xix

Part 5 Managing the Marketing Process 506

19 Pulling It All Together: The Strategic Marketing Process 508

WestJet: Crafting Strategy in an Evolving Marketing Environment 509Marketing Basics: Doing What Works and Allocating Resources 510

Finding and Using What Really Works 510Allocating Marketing Resources Using Sales Response

Functions 511The Planning Phase of the Strategic Marketing Process 514

The Variety of Marketing Plans 514Long-Range Marketing Plans 514Marketing Planning Frameworks: The Search for Growth 515

Marketing NewsNet: A Key Strategy Issue: Finding Synergies 519

Some Planning and Strategy Lessons 521

Ethics and Social Responsibility Alert: Strategy Includes Good Citizenship and Sustainable Development 522

The Implementation Phase of the Strategic Marketing Process 523Is Planning or Implementation the Problem? 523Increasing Emphasis on Marketing Implementation 523

WebLink: Want to Be a BCG Consultant? Solve the Trevor’s Toys Online

Case 523

Improving Implementation of Marketing Programs 524Organizing for Marketing 526

The Control Phase of the Strategic Marketing Process 529The Marketing Control Process 529Sales Analysis 530Profitability Analysis and ROI Marketing 530


Video Case 19 WestJet: On the Fly 533

Glossary 535Chapter Notes 545Credits 560Name Index 562Company/Product Index 563Subject Index 570

Part 1 Initiating the Marketing Process...

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