Marketing

Eighth Edition

Dhruv Grewal, PhD

Babson College

Michael Levy, PhD

Babson College
brief contents
SECTION 1 : ASSESSING THE MARKETPLACE 1
1 OVERVIEW OF MARKETING 2
2 DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN 28
APPENDIX 2A: WRITING A MARKETING PLAN 63
3 DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE 82
4 CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY,
AND ETHICS 120
APPENDIX 4A: UNDERSTANDING ETHICS USING SCENARIOS 147
5 ANALYZING THE MARKETING ENVIRONMENT 152

SECTION 2 : UNDERSTANDING THE MARKETPLACE 185

6 CONSUMER BEHAVIOR 186
7 BUSINESS-TO-BUSINESS MARKETING 222
8 GLOBAL MARKETING 246

SECTION 3 : TARGETING THE MARKETPLACE 277

9 SEGMENTATION, TARGETING, AND POSITIONING 278
10 MARKETING RESEARCH AND ANALYTICS 312
APPENDIX 10A: USING SECONDARY DATA TO ASSESS CUSTOMER
LIFETIME VALUE (CLV) 349

SECTION 4 : VALUE CREATION 353

11 PRODUCT, BRANDING, AND PACKAGING DECISIONS 354
12 DEVELOPING NEW PRODUCTS 384
13 SERVICES: THE INTANGIBLE PRODUCT 416

SECTION 5 : VALUE CAPTURE 445

14 PRICING CONCEPTS FOR CAPTURING VALUE 446
15 STRATEGIC PRICING METHODS AND TACTICS 472

SECTION 6 : VALUE DELIVERY: DESIGNING THE CHANNEL

AND SUPPLY CHAIN 499
16 SUPPLY CHAIN AND CHANNEL MANAGEMENT 500
17 RETAILING AND OMNICHANNEL MARKETING 528

SECTION 7 : VALUE COMMUNICATION 559

18 INTEGRATED MARKETING COMMUNICATIONS 560
19 ADVERTISING, PUBLIC RELATIONS, AND SALES PROMOTIONS 588
20 PERSONAL SELLING AND SALES MANAGEMENT 622

Glossary 648
Name Index 663
Company Index 670
Subject Index 674
xxviii
 table of contents
SECTION 1 ASSESSING THE MARKETPLACE 1
1 OVERVIEW OF MARKETING 2
WHAT IS MARKETING? 4
Marketing Is about Satisfying Customer Needs and Wants 5
Adding Value 1.1: The Baby Dove Product Line Extension and
Its Context 6
Marketing Entails an Exchange 6
Marketing Creates Value through Product, Price, Place, and APN Photography/Shutterstock
Promotion Decisions 7
Marketing Can Be Performed by Individuals and Organizations 9
Marketing Affects Various Stakeholders 10
Adding Value 1.2: The Kids Are Marketing All Right: Recycling and
Selling on E-Commerce Platforms 11
Ethical & Societal Dilemma 1.1: Making a Family Business More
Valuable by Addressing Gender Inequality in the Coffee Market 13
THE IMPORTANCE OF MARKETING OVER TIME 13
Production-Oriented Era 13
Sales-Oriented Era 14
Market-Oriented Era 14
Value-Based Marketing Era 14
Adding Value 1.3: A Lipstick Option for Those Who Dream of a
Hermès Bag 15
HOW DOES MARKETING CREATE VALUE, AND HOW DO FIRMS
BECOME MORE VALUE DRIVEN? 17
Adding Value 17
Marketing Analytics 17
Adding Value 1.4: Is There Cash Value in No Cash? Amazon
Thinks So 18
Social and Mobile Marketing 18
Marketing Analytics 1.1: Scan Your Face, Drive Away in Less Than
a Minute: Using Biometrics at Hertz Rental Locations 19
Social & Mobile Marketing 1.1: Marketing Your TikTok Account
by . . . Sleeping? 20
Ethical and Societal Dilemma 20
Ethical & Societal Dilemma 1.2: After Axing Straws, Starbucks
Still Faces Criticism for Single-Use Plastic 21
Reviewing Learning Objectives 22
Key Terms 22
Marketing Digitally 23
Marketing Applications 23
Quiz Yourself 23
Chapter Case Study: A Flood of Water Consumption Choices 24
Quiz Yourself Answer Key 27

xxix
xxx table of contents

2 DEVELOPING MARKETING STRATEGIES AND A

MARKETING PLAN 28
WHAT IS A MARKETING STRATEGY? 30
Customer Excellence 31
Operational Excellence 33
Product Excellence 33
Adding Value 2.1: Beautiful Loyalty: Sally Beauty’s Updated Loyalty
monticello/Shutterstock
Program 34
Locational Excellence 35
Multiple Sources of Advantage 35
THE MARKETING PLAN 35
Step 1: Define the Business Mission and Objectives 37
Step 2: Conduct a Situation Analysis 38
Ethical & Societal Dilemma 2.1: Exchanging a Bottle of Pepsi
for a Can of Water? Finding Packaging Solutions to
Environmental Commitments 40
Step 3: Identify and Evaluate Opportunities Using Segmentation,
Targeting, and Positioning (STP) 40
Adding Value 2.2: The New iPhone SE: What Makes It Different from
Previous Versions? 41
Step 4: Implement Marketing Mix and Allocate Resources 43
Adding Value 2.3: Repositioning Old Spice 44
Step 5: Evaluate Performance Using Marketing Metrics 45
Social & Mobile Marketing 2.1: Making Technology Personal: How
Wayfair Is Leveraging High-Tech Tools to Connect with Consumers 46
Marketing Analytics 2.1: Making a First Impression in Less Than the
First Second: New Evidence about Mobile Marketing 47
Strategic Planning Is Not Sequential 52
GROWTH STRATEGIES 52
Market Penetration 52
Market Development 53
Product Development 53
Diversification 53
Reviewing Learning Objectives 54
Key Terms 56
Marketing Digitally 56
Marketing Applications 56
Quiz Yourself 57
Chapter Case Study: The Coffee Wars 57
Quiz Yourself Answer Key 61
Appendix 2A: Writing a Marketing Plan 63

3 DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE 82

THE 4E FRAMEWORK FOR DIGITAL MARKETING 84
Excite the Customer 85
Educate the Customer 85
Experience the Product or Service 86
Regien Paassen/Shutterstock Engage the Customer 87
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ONLINE MARKETING 89
Core Goals 89
Contextual Elements 90
Content 90
Community 91
Communication 93
Commerce 93
Connection 94
THE WHEEL OF SOCIAL MEDIA ENGAGEMENT 95
The Information Effect 95
Marketing Analytics 3.1: Are Algorithms Discriminatory? Questions
about How Facebook Targets Advertising 96
The Connected Effect 96
Adding Value 3.1: The Portal from Facebook with an Assist from Amazon 97
The Network Effect 98
The Dynamic Effect 98
Social & Mobile Marketing 3.1: Just Don’t Eat the Detergent! Who Is
Responsible for Consumers’ Risky Behaviors? 99
The Timeliness Effect 99
GOING MOBILE AND SOCIAL 100
App Pricing Models 102
HOW DO FIRMS ENGAGE THEIR CUSTOMERS? 103
Listen 103
Analyze 104
Do 105
INFLUENCER MARKETING 108
Assessing the Efficacy of Influencers 108
Types of Influencers 110
Ethical Considerations for Influencer Marketing 111
Reviewing Learning Objectives 113
Key Terms 114
Marketing Digitally 114
Marketing Applications 114
Quiz Yourself 115
Chapter Case Study: Images, Sales, Brands: How Red Bull Uses Various Digital
and Social Media Techniques to Achieve All Its Objectives 115
Quiz Yourself Answer Key 119

4 CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY,

AND ETHICS 120
CONSCIOUS MARKETING 123

Adding Value 4.1: Philanthropy with a Dash of Style: The Elbi–David Yurman
Partnership 124
MARKETING’S GREATER PURPOSE: CORPORATE SOCIAL RESPONSIBILITY
AS AN ELEMENT OF CONSCIOUS MARKETING 125 Thomas Niedermueller/Getty Images

THE STAKEHOLDERS OF CONSCIOUS MARKETING 127

Employees 128
Customers 128
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Ethical & Societal Dilemma 4.1: To What Extent Is YouTube Responsible

for Protecting Children from Targeting? 129
Marketplace 129
Society 130
Environment 130
Adding Value 4.2: Untouched and Empowering, New Aerie Campaign
Showcases Real Women 131
INTEGRATING CONSCIOUS MARKETING THROUGHOUT THE FIRM:
LEADERSHIP AND CULTURE 131
Planning Phase 132
Implementation Phase 133
Control Phase 133
Social & Mobile Marketing 4.1: Do Users Know What They Are Sharing with
Facebook, and Do They Care? 134
Marketing Analytics 4.1: China’s Social Credit System 135
MARKETING ETHICS AS A CONSCIOUS MARKETING PRINCIPLE 135
The Nature of Ethical and Unethical Marketing Decisions 135
Ethics and Corporate Social Responsibility 136
A Framework for Ethical Decision Making 137
Reviewing Learning Objectives 140
Key Terms 141
Marketing Digitally 142
Marketing Applications 142
Quiz Yourself 142
Chapter Case Study: Daily Table 143
Quiz Yourself Answer Key 146
Appendix 4A: Understanding Ethics Using Scenarios 147

5 ANALYZING THE MARKETING ENVIRONMENT 152

A MARKETING ENVIRONMENT ANALYSIS FRAMEWORK 154
THE IMMEDIATE ENVIRONMENT 155
Company Capabilities 155
Competitors 155
Corporate Partners 155
Dani Metaz/Shutterstock Physical Environment 156
Ethical & Societal Dilemma 5.1: Microplastics in the Pool: The Unique
Environmental Harms of Swimwear and Efforts to Address Them 158
MACROENVIRONMENTAL FACTORS 159
Culture 159
Demographics 161
Social & Mobile Marketing 5.1: What Can Pokémon Go Do for Marketers? 163
Social Trends 166
Ethical & Societal Dilemma 5.2: Consumers Insist on Healthy
Foods—Until You Mess with the Color of Their Trix 168
Adding Value 5.1: Realistic Beauty at CVS 169
Technological Advances 170
Marketing Analytics 5.1: Vending Drinks, Gathering Big Data: How Coca-Cola
Relies on Cutting-Edge Analytics to Develop New Drink Flavors 171
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Economic Situation 174

Political/Legal Environment 175
Responding to the Environment 177
Reviewing Learning Objectives 177
Key Terms 178
Marketing Digitally 178
Marketing Applications 179
Quiz Yourself 179
Chapter Case Study: The Rise of the Electric Car 179
Quiz Yourself Answer Key 183

SECTION 2 UNDERSTANDING THE MARKETPLACE 185

6 CONSUMER BEHAVIOR 186
THE CONSUMER DECISION PROCESS 188
Need Recognition 188
Ethical & Societal Dilemma 6.1: CVS Makes Changes to Focus on
Customer Health 190
Search for Information 190
Marketing Analytics 6.1: The Best Behavioral Predictor? What People
Buy on Amazon 192
Ethical & Societal Dilemma 6.2: Is Fashion a Statement? Marketing
Clothing as Political Protest 194
Evaluation of Alternatives 195
Adding Value 6.1: How LaCroix Has Entered Consumers’ Evoked Set Using
Social Media That Highlight Its Determinant Attributes 196
Ethical & Societal Dilemma 6.3: The Gems and Skins Might Be Mark Von Holden/Invision for the

Virtual, but the Money Is Real: In-Game Purchases, Kids, Television Academy/AP Images

and Content 198

Purchase and Consumption 199
Postpurchase 199
FACTORS INFLUENCING THE CONSUMER DECISION PROCESS 202
Psychological Factors 203
Social Factors 207
Situational Factors 208
Adding Value 6.2: Meeting Consumers’ Demands for Healthy While
Also Fulfilling Their Cravings for Salty 211
INVOLVEMENT AND CONSUMER BUYING DECISIONS 211
Extended Problem Solving 212
Limited Problem Solving 213
Reviewing Learning Objectives 214
Key Terms 214
Marketing Digitally 215
Marketing Applications 215
Quiz Yourself 216
Chapter Case Study: Battle of the Titans: Amazon Echo versus Google Home
( and Don’t Forget about Apple) 216
Quiz Yourself Answer Key 221
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7 BUSINESS-TO-BUSINESS MARKETING 222

B2B MARKETS 225
Manufacturers and Service Providers 226
Resellers 226
Institutions 226
Government 226
garmoncheg/Shutterstock
Ethical & Societal Dilemma 7.1: Marketing Human Resources:
The Growing Market for Outsourced Workers 227
THE BUSINESS‐TO‐BUSINESS BUYING PROCESS 228
Stage 1: Need Recognition 228
Stage 2: Product Specification 228
Social & Mobile Marketing 7.1: Stimulating Need Recognition When Selling
Directly to Consumers Necessitates Strategic Advertising Campaigns 229
Stage 3: RFP Process 230
Stage 4: Proposal Analysis, Vendor Negotiation, and Selection 230
Stage 5: Order Specification 231
Stage 6: Vendor Performance Assessment Using Metrics 231
THE BUYING CENTER 232
Organizational Culture 233
Building B2B Relationships 234
Adding Value 7.1: Establishing a Platform for Marketing Brands:
The Wistia Way 236
THE BUYING SITUATION 237

Reviewing Learning Objectives 240

Key Terms 240
Marketing Digitally 241
Marketing Applications 241
Quiz Yourself 241
Chapter Case Study: A True Platform for Sellers: How Alibaba Is Trying to
Take Over the World 242
Quiz Yourself Answer Key 245

8 GLOBAL MARKETING 246

ASSESSING GLOBAL MARKETS 249
Economic Analysis Using Metrics 249
Analyzing Infrastructure and Technological Capabilities 252
Analyzing Governmental Actions 252
Social & Mobile Marketing 8.1: Can a Hashtag Save a National Currency?
Chesnot/Getty Images
Using Twitter to Help Nigeria 254
Analyzing Sociocultural Factors 255
Ethical & Societal Dilemma 8.1: Success and the Challenges It Creates:
How Growing Diaper and Pad Consumption Has Left Personal Goods
Firms with a Growing Problem 256
Ethical & Societal Dilemma 8.2: Dolce & Gabbana Faces Public
Scrutiny in China 257
The Appeal of the BRIC Countries 258
CHOOSING A GLOBAL ENTRY STRATEGY 261
Exporting 261
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Franchising 262
Strategic Alliance 262
Joint Venture 262
Direct Investment 263
CHOOSING A GLOBAL MARKETING STRATEGY 264
Target Market: Segmentation, Targeting, and Positioning 264
Adding Value 8.1: Like Pumpkin and Chocolate Sauce for Your Fries?
McDonald’s Might Be Able to Help with That 266
Adding Value 8.2: Domino’s Growth Plan: Expand Everywhere and Every Way 267
Adding Value 8.3: Forget the Mall, Shoppers Are Buying Gucci at Airports 268
Adding Value 8.4: International Women’s Day as Inspiration for Marketing
Messages 269
Reviewing Learning Objectives 270
Key Terms 271
Marketing Digitally 271
Marketing Applications 271
Quiz Yourself 272
Chapter Case Study: Colonel Sanders Would Be Proud, KFC Is a Global Brand 272
Quiz Yourself Answer Key 276

SECTION 3 TARGETING THE MARKETPLACE 277

9 SEGMENTATION, TARGETING, AND POSITIONING 278
THE SEGMENTATION, TARGETING, AND POSITIONING PROCESS 280
Step 1: Establish the Overall Strategy or Objectives 281
Step 2: Use Segmentation Methods 281
Adding Value 9.1: Dealing with Modern Life by Playing: LEGO Promises
Mindfulness and Meaning for Adults 283
JUPITERIMAGES/BananaStock/
Ethical & Societal Dilemma 9.1: Supporting Black-Owned Businesses
Alamy Stock Photo
Even after They’re Purchased by Conglomerates 285
Social & Mobile Marketing 9.1: Using Our Outdoor Voices, Literally
and Figuratively 286
Marketing Analytics 9.1: Taking the Temperature of Consumers to
Track Disease and Market Products 289
Step 3: Evaluate Segment Attractiveness 291
Step 4: Select a Target Market 294
Adding Value 9.2: When Your Brand Is Popular among a Non–Target Market:
Patagonia’s Decision to Limit Sales to Maintain Its Value-Based
Image 297
Step 5: Identify and Develop Positioning Strategy 297
Positioning Methods 300
Positioning Using Perceptual Mapping 302
Reviewing Learning Objectives 305
Key Terms 306
Marketing Digitally 306
Marketing Applications 306
Quiz Yourself 307
Chapter Case Study: P&G Segments Its Market along Multiple Dimensions 307
Quiz Yourself Answer Key 311
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10 MARKETING RESEARCH AND ANALYTICS 312

THE MARKETING RESEARCH PROCESS 314
Marketing Research Process Step 1: Defining the Objectives and
Research Needs 315
Marketing Research Process Step 2: Designing the Research 316
Marketing Research Process Step 3: Collecting the Data 316
Marketing Research Process Step 4: Analyzing the Data and Developing
Insights 318
Marketing Research Process Step 5: Developing and Implementing an
Action Plan 318
SECONDARY DATA 319
Photo 12/Alamy Stock Photo Inexpensive Secondary Data 319
Syndicated Secondary Data 319
PRIMARY DATA COLLECTION TECHNIQUES 321

Marketing Analytics 10.1: The Under Armour Idea of “Connected

Fitness” 322
Observation 323
In‐Depth Interviews 324
Focus Group Interviews 324
Survey Research 325
Adding Value 10.1: How Booking.com Leveraged Marketing Research to Develop
Novel Offerings for Travelers Looking for Something Different 327
Panel‐ and Scanner‐Based Research 327
Experimental Research 328
Advantages and Disadvantages of Primary and Secondary Research 329
BIG DATA 330

Marketing Analytics 10.2: How Much Is Your Search History Worth?

Would $10 Cover It? Amazon’s Prime Day Offer and Strategy 331
Social & Mobile Marketing 10.1: Selfies as Data: Relying on a New Form of
Self-Reporting to Gauge Consumer Behavior 332
MARKETING ANALYTICS 334
Marketing Decisions 334
Tools and Methods 336
Adding Value 10.2: A Big Meal and Some Big Data: The Expanding
Uses of Data Mining and Analytics in the Restaurant Industry 337
THE ETHICS OF USING CUSTOMER INFORMATION 338

Ethical & Societal Dilemma 10.1: Vacuuming Up More Than Dirt:

The Information Collected by Roomba and Its Potential Uses 339
Reviewing Learning Objectives 341
Key Terms 342
Marketing Digitally 342
Marketing Applications 342
Quiz Yourself 343
Chapter Case Study: Swim, Lift, Play—But Also Donate: Using Marketing
Research to Redefine the YMCA 344
Quiz Yourself Answer Key 348
Appendix 10A: Using Secondary Data to Assess Customer Lifetime
Value (CLV) 349
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SECTION 4 VALUE CREATION 353

11 PRODUCT, BRANDING, AND PACKAGING DECISIONS 354
COMPLEXITY AND TYPES OF PRODUCTS 356
Complexity of Products 356
Types of Products 357
Adding Value 11.1: Have You Seen the One about JS Watch Company? A Luxury
Marketing and Pricing Strategy That Doesn’t Take Itself Too Seriously 358
Jean Catuffe/Getty Images
PRODUCT MIX AND PRODUCT LINE DECISIONS 359
BRANDING 362
Value of Branding for the Customer 362
Brand Equity for the Owner 364
Social & Mobile Marketing 11.1: From Jingles to Music Videos:
Creating an Authentic Auditory Brand 367
BRANDING STRATEGIES 368
Brand Ownership 368
Naming Brands and Product Lines 369
Brand and Line Extensions 370
Co‐branding 372
Brand Licensing 372
Ethical & Societal Dilemma 11.1: Art and the Fashionable Sock:
A New Era in Licensing Agreements 373
Brand Repositioning 374
Adding Value 11.2: An Abbreviation No More: Weight Watchers
Rebrands as Simply WW 375
PACKAGING 375
Product Labeling 377
Reviewing Learning Objectives 378
Key Terms 378
Marketing Digitally 379
Marketing Applications 379
Quiz Yourself 380
Chapter Case Study: Yogurt Lovers Say, “It’s All Greek to Me” 380
Quiz Yourself Answer Key 383

12 DEVELOPING NEW PRODUCTS 384

WHY DO FIRMS CREATE NEW PRODUCTS? 386

Adding Value 12.1: Finding the Hearables Market by Visiting Coachella 387
Changing Customer Needs 387
Ethical & Societal Dilemma 12.1: “Smart” Toys Raise New Privacy Concerns 388
Market Saturation 389
Managing Risk through Diversity 389 DenPhotos/Shutterstock

Adding Value 12.2: Adding Podcasts to Their Portfolios: How Streaming

Services Are Expanding Their Product Lines 390
Fashion Cycles 390
Social & Mobile Marketing 12.1: A Battle Royale for Gamers:
Call of Duty versus Fortnite 391
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Improving Business Relationships 391

DIFFUSION OF INNOVATION 392
Innovators 393
Early Adopters 394
Early Majority 394
Late Majority 395
Laggards 395
Using the Diffusion of Innovation Theory 395
HOW FIRMS DEVELOP NEW PRODUCTS 397
Idea Generation 397
Concept Testing 401
Product Development 402
Market Testing 402
Product Launch 404
Evaluation of Results 404
THE PRODUCT LIFE CYCLE 405
Introduction Stage 406
Growth Stage 406
Maturity Stage 407
Adding Value 12.3: Wearables That Want Your Sweat to Improve
Your Service Access 408
Decline Stage 408
The Shape of the Product Life Cycle Curve 409
Strategies Based on Product Life Cycle: Some Caveats 409
Reviewing Learning Objectives 410
Key Terms 410
Marketing Digitally 411
Marketing Applications 411
Quiz Yourself 412
Chapter Case Study: Hit or Miss, Dyson Wants to Make Products That
Solve Problems in Different Ways 412
Quiz Yourself Answer Key 415

13 SERVICES: THE INTANGIBLE PRODUCT 416

Adding Value 13.1: Hotels on Wheels: A Service Innovation 420

SERVICES MARKETING DIFFERS FROM PRODUCT MARKETING 420
Intangible 420
Inseparable Production and Consumption 421
Ethical & Societal Dilemma 13.1: Snooping on Babysitters, Even before
rblfmr/Shutterstock Hiring Them: The Predictim Service Promise 422
Heterogeneous 422
Perishable 423
Adding Value 13.2: Casper Mattress Dreams Up a Creative Way to Mix
Business with Marketing 424
PROVIDING GREAT SERVICE: THE SERVICE GAPS MODEL 425
The Knowledge Gap: Understanding Customer Expectations 426
The Standards Gap: Setting Service Standards 430
The Delivery Gap: Delivering Service Quality 431
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Adding Value 13.3: Take a Virtual “Test Drive” before Booking

Your Next Trip 433
Social & Mobile Marketing 13.1: The Doctor Will See You Now,
At Least Virtually 435
The Communication Gap: Communicating the Service Promise 435
Service Quality, Customer Satisfaction, and Loyalty 436
Marketing Analytics 13.1: Do Low-Price Shoppers Want Service Too?
Aldi Says So, and It’s Delivering It to Them 437
SERVICE RECOVERY 438
Listening to Customers and Involving Them in Service Recovery 438
Finding a Fair Solution 439
Resolving Problems Quickly 439
Reviewing Learning Objectives 440
Key Terms 440
Marketing Digitally 440
Marketing Applications 441
Quiz Yourself 441
Chapter Case Study: Understanding GrubHub’s Service Quality 442
Quiz Yourself Answer Key 444

SECTION 5 VALUE CAPTURE 445

14 PRICING CONCEPTS FOR CAPTURING VALUE 446
THE FIVE Cs OF PRICING 449
Company Objectives 449
Adding Value 14.1: The Secret to Nissan’s Success: Fleet Sales 451
Adding Value 14.2: Do Airline Passengers Get What They Pay For?
Air France Thinks So, Which Is Why It Charges More 452
Customers 454 opturadesign/Alamy Stock Photo
Marketing Analytics 14.1: The Ultimate Outcomes of Dynamic Pricing 458
Costs 459
Break‐Even Analysis and Decision Making 460
Markup and Target Return Pricing 462
Competition 463
Channel Members 465
Reviewing Learning Objectives 466
Key Terms 466
Marketing Digitally 467
Marketing Applications 467
Quiz Yourself 468
Chapter Case Study: T-Mobile’s Pricing Strategy Is a Game Changer 468
Quiz Yourself Answer Key 471

15 STRATEGIC PRICING METHODS AND TACTICS 472

CONSIDERATIONS FOR SETTING PRICE STRATEGIES 474
Cost‐Based Methods 474
Competition‐Based Methods 475 Tzido Sun/Shutterstock
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Value‐Based Methods 475

Adding Value 15.1: A Price Cut or a Competitive Marketing Tactic?
Amazon’s Price Drop at Whole Foods Is Both 476
Ethical & Societal Dilemma 15.1: Competitive Pricing across Channels:
Target’s Transparency, or Lack Thereof 478
PRICING STRATEGIES 478
Everyday Low Pricing (EDLP) 478
High/Low Pricing 479
New Product Pricing Strategies 479
Adding Value 15.2: The iPhone SE: The Moment When Apple Finally
Began to Follow Conventional Pricing Models 481
PRICING TACTICS 482
Pricing Tactics Aimed at Consumers 482
Business Pricing Tactics and Discounts 485
LEGAL AND ETHICAL ASPECTS OF PRICING 487
Deceptive or Illegal Price Advertising 487
Predatory Pricing 488
Price Discrimination 489
Price Fixing 489
Ethical & Societal Dilemma 15.2: New Advertising Information
about Prescription Drugs: Their Prices! 490
Reviewing Learning Objectives 491
Key Terms 492
Marketing Digitally 492
Marketing Applications 492
Quiz Yourself 493
Chapter Case Study: Pizza Players, Pizza Prices 493
Quiz Yourself Answer Key 498

SECTION 6 VALUE DELIVERY: DESIGNING THE CHANNEL

AND SUPPLY CHAIN 499
16 SUPPLY CHAIN AND CHANNEL MANAGEMENT 500
THE IMPORTANCE OF MARKETING CHANNEL/SUPPLY CHAIN
MANAGEMENT 502
Marketing Channels Add Value 504
Marketing Channel Management Affects Other Aspects of Marketing 505
Adding Value 16.1: Developing Quick Response Systems for
Cover Images/Newscom Unpredictable Sports Outcomes: How Fanatics Gets Gear to
Fans without Delay 506
DESIGNING MARKETING CHANNELS 506
Direct Marketing Channel 507
Indirect Marketing Channel 507
Franchising 508
MANAGING THE MARKETING CHANNEL AND SUPPLY CHAIN 509
Marketing Channel Conflict 509
Power in the Marketing Channel 510
Adding Value 16.2: Milk Is Going Vertical 511
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Managing Marketing Channels and Supply Chains through Strategic

Relationships 512
Adding Value 16.3: Ensuring the Cars Run (Off the Production Line)
despite Disruptions 514
MAKING INFORMATION FLOW THROUGH MARKETING CHANNELS 515
MAKING MERCHANDISE FLOW THROUGH MARKETING CHANNELS 516
Distribution Centers versus Direct Store Delivery 517
Getting Merchandise to Customers 518
Adding Value 16.4: Pick It Up and Put It Down: Where Robots Succeed
and Where They Fail 519
Ethical & Societal Dilemma 16.1: Controlling Theft with Dummy
Packages: Amazon’s Effort to Catch Unethical Delivery Drivers 521
Reviewing Learning Objectives 522
Key Terms 522
Marketing Digitally 523
Marketing Applications 523
Quiz Yourself 523
Chapter Case Study: Grocery Delivery 524
Quiz Yourself Answer Key 527

17 RETAILING AND OMNICHANNEL MARKETING 528

Social & Mobile Marketing 17.1: Groceries Are Essential, and in a

Pandemic, So Are Mobile and Contactless Channels to Get Them 531
CHOOSING RETAILING PARTNERS 532
Channel Structure 533
Customer Expectations 533
Channel Member Characteristics 534 Jennifer Chen/Alamy Stock Photo

Distribution Intensity 534

IDENTIFYING TYPES OF RETAILERS 536
Food Retailers 536
Social & Mobile Marketing 17.2: Can Brick and Mortar Last in an
Online and Mobile Retail World? 537
Adding Value 17.1: When Grocery Shopping Turns into . . . Something Else,
Something Fun 538
General Merchandise Retailers 540
Service Retailers 542
DEVELOPING A RETAIL STRATEGY USING THE SIX Ps 543
Product 543
Price 544
Adding Value 17.2: Expanding the Product Mix: Target’s Extensive
Private-Label Plans 544
Promotion 545
Place 545
Presentation 545
Personnel 546
MANAGING AN OMNICHANNEL STRATEGY 547
Deeper and Broader Selection 547
Personalization 547
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Expanded Market Presence 548

Integrated CRM 548
Brand Image 548
Ethical & Societal Dilemma 17.1: How Retailers and Tech Companies
Collaborate to Create Beacons That Track Shoppers—And What
Shoppers Can Do about It (or Not) 549
Pricing 549
Supply Chain 550
Reviewing Learning Objectives 551
Key Terms 552
Marketing Digitally 552
Marketing Applications 552
Quiz Yourself 553
Chapter Case Study: Ashley Stewart 553
Quiz Yourself Answer Key 558

SECTION 7 VALUE COMMUNICATION 559

18 INTEGRATED MARKETING COMMUNICATIONS 560
COMMUNICATING WITH CONSUMERS 563
The Communication Process 563
Adding Value 18.1: Eleven Loves Eggos; Why Wouldn’t Fans of
Stranger Things Love Them Too? 565
How Consumers Perceive Communication 565
Source: BMW AG Social & Mobile Marketing 18.1: Messaging App Snaps Up
Advertisers with New Enhancements 566
The AIDA Model 566
Adding Value 18.2: But Can the Duck Belt Out a Hit? Aflac’s Country Music
Marketing Communications to Clarify What Its Products Do 569
CHANNELS USED IN AN INTEGRATED MARKETING COMMUNICATIONS
STRATEGY 570

Adding Value 18.3: Dashing beyond Delivery: How DoorDash

Is Leveraging All Its Marketing Options 571
Advertising 572
Public Relations 572
Sales Promotions 572
Personal Selling 573
Direct Marketing 573
Online Marketing 573
Social & Mobile Marketing 18.2: Tasty: A Revolution in Marketing or
Just the Latest Example of IMC? 575
Adding Value 18.4: Combining Two Popular Trends: Advertising through
In-Home Voice Assistants 576
PLANNING FOR AND MEASURING IMC SUCCESS 577
Goals 577
Setting and Allocating the IMC Budget 577
Measuring Success Using Marketing Metrics 578
Planning, Implementing, and Evaluating IMC Programs—An Illustration of
Google Advertising 580
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Reviewing Learning Objectives 582

Key Terms 583
Marketing Digitally 583
Marketing Applications 583
Quiz Yourself 584
Chapter Case Study: Taking IMC to the Max: Pepsi Max and Modern
Communications 584
Quiz Yourself Answer Key 587

19 ADVERTISING, PUBLIC RELATIONS, AND SALES PROMOTIONS 588

STEP 1: IDENTIFY TARGET AUDIENCE 592
STEP 2: SET ADVERTISING OBJECTIVES 592
Informative Advertising 593
Persuasive Advertising 593
Adding Value 19.1: Thinking Big and Small: An Arby’s Advertising
Campaign That Breaks World Records 594 Walt Disney Studios Motion Pictures/
Reminder Advertising 595 Photofest
Focus of Advertisements 595
Ethical & Societal Dilemma 19.1: Effectively Controversial or Just
Plain Cruel? A Public Health Campaign by South Dakota 597
STEP 3: DETERMINE THE ADVERTISING BUDGET 597
STEP 4: CONVEY THE MESSAGE 598
The Message 598
The Appeal 599
STEP 5: EVALUATE AND SELECT MEDIA 601
Mass and Niche Media 602
Choosing the Right Medium 602
Determining the Advertising Schedule 602
Ethical & Societal Dilemma 19.2: It’s Both Cute and Horrifying:
A Historical Ad That Tries to Get Toddlers to Chew More Gum 603
STEP 6: CREATE ADVERTISEMENTS 604
STEP 7: ASSESS IMPACT USING MARKETING METRICS 605

Ethical & Societal Dilemma 19.3: Funny, or a Little Creepy? How

Spotify Uses Highly Specific Data Analysis Results 607
REGULATORY AND ETHICAL ISSUES IN ADVERTISING 608

Ethical & Societal Dilemma 19.4: When Is It Bragging, and When

Is It False Advertising—and Who Decides? Comparative Advertising
by Chevrolet and the Responses by Its Rivals 609
PUBLIC RELATIONS 610
SALES PROMOTION 612
Types of Sales Promotion 612
Using Sales Promotion Tools 615
Reviewing Learning Objectives 616
Key Terms 616
Marketing Digitally 617
Marketing Applications 617
Quiz Yourself 618
xliv table of contents

Chapter Case Study: Beyond Product Placement: The Positive Partnership

of Lexus and Black Panther 618
Quiz Yourself Answer Key 621

20 PERSONAL SELLING AND SALES MANAGEMENT 622

THE SCOPE AND NATURE OF PERSONAL SELLING 624
Personal Selling as a Career 624
The Value Added by Personal Selling 625
Social & Mobile Marketing 20.1: Selling through WhatsApp:
How a Digital Tool Is Altering Sales Practices in India 626
xavierarnau/E+/Getty Images
THE PERSONAL SELLING PROCESS 627
Step 1: Generate and Qualify Leads 627
Adding Value 20.1: A LinkedIn Advertising Campaign That Focuses
on How People Can Sell 628
Step 2: Preapproach and the Use of CRM Systems 629
Step 3: Sales Presentation and Overcoming Reservations 630
Adding Value 20.2: Selling When the Sharks Are Circling:
The Selling Lessons to Learn from Shark Tank Contestants 632
Step 4: Closing the Sale 632
Step 5: Follow‐Up 633
MANAGING THE SALES FORCE 634
Sales Force Structure 635
Ethical & Societal Dilemma 20.1: Are Multilevel Marketing Sales
a Route to Fabulous Wealth or Really Just a Pyramid Scheme? 636
Recruiting and Selecting Salespeople 637
Sales Training 638
Motivating and Compensating Salespeople 638
ETHICAL AND LEGAL ISSUES IN PERSONAL SELLING 640
The Sales Manager and the Sales Force 641
The Sales Force and Corporate Policy 641
The Salesperson and the Customer 641
Reviewing Learning Objectives 642
Key Terms 642
Marketing Digitally 642
Marketing Applications 643
Quiz Yourself 643
Chapter Case Study: Want to Buy a Robot?: Making the Sale 644
Quiz Yourself Answer Key 647

Glossary 648
Name Index 663
Company Index 670
Subject Index 674