The Marketing Book This Page Intentionally Left Blank The Marketing Book Fifth Edition Edited by MICHAEL J. BAKER OXFORD AMSTERDAM BOSTON LONDON NEW YORK PARIS SAN DIEGO SAN FRANCISCO SINGAPORE SYDNEY TOKYO Butterworth-Heinemann An imprint of Elsevier Science Linacre House, Jordan Hill, Oxford OX2 8DP 200 Wheeler Road, Burlington MA 01803 First published 1987 Reprinted 1987, 1990 (twice) Second edition, 1991 Reprinted 1992, 1993 Third edition, 1994 Reprinted 1995, 1997 Fourth edition 1999 Reprinted 2000, 2001 Fifth edition, 2003 Copyright © 2003 Michael Baker. All rights reserved Copyright © 2003 contributors of individual chapters. All rights reserved The right of Michael Baker and the individual contributors to be identified as the authors of this work has been asserted in accordance with the Copyright, Designs and Patents Act 1988 No part of this publication may be reproduced in any material form (including photocopying or storing in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication) without the written permission of the copyright holder except in accordance with the provisions of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London, England W1T 4LP.
Applications for the copyright holder’s written permission to reproduce any part of this publication should be addressed to the publisher British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data A catalogue record for this book is available from the Library of Congress ISBN 0 7506 5536 4 For information on all Butterworth-Heinemann publications visit our website at: www.com Composition by Genesis Typesetting, Rochester, Kent Printed and bound in Great Britain Contents List of illustrations xv List of tables xix List of contributors xxiii Preface to the fifth edition xxxiii Part One Organization and Planning for Marketing 1 1 One more time – what is marketing? 3 Michael J. Baker Introduction 3 Marketing as a managerial orientation 4 Marketing myopia – a watershed 5 Life cycles and evolution 7 Marketing misunderstood 8 The marketing function 9 Relationship marketing 11 Summary 14 References 15 Further reading 15 2 Postmodern marketing: everything must go! 16 Stephen Brown Grand opening offer 16 No down payment 17 Money back guarantee 18 Batteries not included 19 Limited time only 22 One careful owner 24 This way up 25 Open other side 27 Closing down sale 28 References 29 Further reading 31 vi Contents 3 Relationship marketing 32 Lisa O’Malley and Caroline Tynan Introduction 32 Relationship marketing defined 33 History of relationship marketing 34 Focal relationships 39 Models of relationship development 40 Critique and emerging issues 44 Conclusion 47 References 48 4 The basics of marketing strategy 53 Robin Wensley Strategy: from formulation to implementation 53 The nature of the competitive market environment 55 The codification of marketing strategy analysis in terms of three strategies, four boxes and five forces 58 The search for generic rules for success amidst diversity 60 Models of competition: game theory versus evolutionary ecology 62 Characterizing marketing strategy in terms of evolving differentiation in time and space 66 Research in marketing strategy: fallacies of free lunches and the nature of answerable research questions 70 The recourse to processes, people and purpose in marketing as well as strategy as a whole 75 The new analytics: resource advantage, co-evolution and agent-based modelling 80 Conclusions: the limits of relevance and the problems of application 81 References and further reading 82 5 Strategic marketing planning: theory and practice 87 Malcolm McDonald Summary 87 Introduction 87 1 The marketing planning process 90 2 Guidelines for effective marketing planning 101 3 Barriers to marketing planning 109 Summary 115 References 116 Further reading 116 Part Two The Framework of Marketing 117 6 Consumer decision making: process, level and style 119 Gordon R. Foxall Introduction 119 The consumer decision process 121 Levels of consumer involvement 125 Contents vii Consumers’ decision styles 127 Implications for marketing management 132 Summary and conclusion 138 References 138 Further reading 140 7 Business-to-business marketing: organizational buying behaviour, relationships and networks 142 Peter W. Turnbull and Sheena Leek Introduction 142 The realities of business markets 144 Organizational buying structures 144 Models of organizational buying behaviour 152 Conclusion 165 References 166 Further reading 169 8 Marketing research 171 John Webb Introduction 171 Definitions of the role of marketing research 172 Types of research 173 The process of marketing research 174 Secondary data 175 Quantitative primary data 177 Questionnaires and their design 180 Qualitative research methods 180 The research process and measurement 184 Attitudes and their measurement 186 Sampling 189 Analysis of the results 192 Presentation of the final report 194 Conclusion 195 References 195 9 Quantitative methods in marketing 197 Luiz Moutinho and Arthur Meidan Introduction 197 Multivariate methods 200 Regression and forecasting techniques 206 Statistical decision theory or stochastic methods 219 Deterministic operational research methods 226 Causal models 235 Hybrid models 236 Network programming models 237 viii Contents Conclusion 240 References 241 Further reading 244 10 Market segmentation 246 Martin Evans Chapter objectives 246 Introduction 246 Historical perspective 247 Segmentation criteria and categories 248 ‘Traditional’ segmentation bases 249 Data-driven segmentation 258 Targeting 276 Positioning 278 Conclusions 280 Review questions 280 References 281 Further reading 282 Part Three Managing the Marketing Function 285 11 Managing the marketing mix 287 Peter Doyle Introduction 287 The traditional approach to the marketing mix 288 The accounting approach to the marketing mix 289 Value-based marketing 291 The marketing mix and shareholder value 294 Making marketing mix decisions 298 Summary 311 References 312 Further reading 313 12 New product development 314 Susan Hart Introduction 314 The process of developing new products 314 The stages of the new product development process 316 Usefulness of models 322 The multiple convergent approach 331 Managing the people in NPD 333 Summary 338 References 338 Further reading 341 Contents ix 13 Pricing 342 Adamantios Diamantopoulos Introduction 342 Is price really that important? 344 The drivers of profit: price, volume and cost 345 Price from the customer’s perspective 348 Understanding price sensitivity 351 Conclusion 356 References 356 14 Selling and sales management 360 Bill Donaldson Introduction 360 The changing role of salespeople 360 The costs of personal selling 362 What we expect salespeople to do – the sales process 363 Sales management issues 366 Conclusion 369 References 370 Further reading 370 15 Brand building 372 Leslie de Chernatony Introduction 372 Spectrum of brand interpretations 373 A model for strategically building brands 383 Summary 392 References 393 Further reading 394 16 The integration of marketing communications 395 Tony Yeshin The blurring of the edges of marketing communications 395 The strategic challenges facing organizations 396 Strategic marketing communications 396 The integration of marketing communications 397 Defining integrated marketing communications 397 The impact of external factors on marketing communications 400 The driving forces behind the growth of integrated marketing communications 404 The impact on marketing communications 405 Relationship marketing 406 The benefits of integrated marketing communications 407 x Contents The process of achieving integration 409 Organizational approaches to integration 410 The barriers to integration 413 The consumer and integrated marketing communications 414 International dimensions of integrated marketing communications 415 Integrated marketing communications – a summary 416 References 417 17 Promotion 419 Keith Crosier Introduction 419 The promotional mix 419 The promotional budget 426 Deploying the promotional mix 429 Developing the message 432 Delivering the message 433 The medium and the message 436 A mix within a mix: synergy or counter-synergy? 436 Pulling it all together: the promotional plan 437 From the plan to the brief 439 The actors in the system 439 Working relationships 441 Choosing the collaborator 443 Remunerating the working partner 445 Measuring campaign effectiveness 449 Understanding the context 451 References 455 18 Sales promotion 458 Sue Peattie and Ken Peattie Introduction 458 Sales promotion defined 458 Understanding sales promotion – a tale of price and prejudice 459 Sales promotion and advertising – the line and the pendulum 465 The growing importance of sales promotion 467 Consumers and sales promotion 469 Communicating through sales promotions 471 Building relationships through promotions 473 Sales promotion’s role in the marketing mix 474 Sales promotions – the most manageable P? 475 Sales promotions mismanagement 475 The future of sales promotion 477 Summary – the changing concept of sales promotion 479 References 481 Further reading 483 Contents xi 19 Integrating customer relationship management and supply chain management 485 Martin Christopher and Adrian Payne Introduction 485 The decline of the brand: the need for integrated CRM and SCM strategies 485 Competing through capabilities 487 A strategic framework for CRM 490 Supply chain management 494 The impact of superior SCM performance 496 CRM and SCM: their role in improving customer service 497 Developing market-driven CRM and SCM strategies 499 Summary: changing the marketing focus 501 References 502 Further reading 502 20 Controlling marketing and the measurement of marketing effectiveness 504 Keith Ward Introduction: scope and content of the chapter 504 Potential for conflict 505 A market-focused mission 507 A sustainable competitive advantage 509 Investing in developing a sustainable competitive advantage 511 Marketing assets: development and maintenance expenditures 513 The financial planning and control process 515 Brand-led strategies 519 Customer-led strategies 522 Product-based strategies 525 Organizational structures: marketing finance managers 528 Summary 528 References 529 Further reading 529 21 Marketing implementation, organizational change and internal marketing strategy 531 Nigel F.
Piercy Introduction 531 Organizational stretch and implementation capabilities 534 Marketing organization and implementation capabilities 536 Identifying implementation problems in marketing 543 Implementation barriers in marketing 547 Marketing implementation and internal marketing strategy 550 Conclusions 556 References 558 Further reading 560 xii Contents Part Four The Application of Marketing 563 22 What are direct marketing and interactive marketing? 565 Graeme McCorkell Introduction 565 Selling direct to the end customer 565 Multichannel marketing 567 Direct marketing is more than selling direct 568 Direct marketing: a new definition 569 Direct marketing and Pareto’s principle 569 Principles of direct marketing 571 What is interactive marketing? 573 Ten ways in which interactive marketing is different 575 The direct and interactive marketer’s information system 576 Data warehousing, CRM and e-CRM 580 Limitations of the customer information system 583 References 584 Further reading 584 23 The marketing of services 585 Adrian Palmer Introduction 585 The development of the service economy 585 Services and consumer value 587 What are services? 588 Classification of services 591 The services marketing mix 598 Managing the marketing effort 606 Summary 607 References 607 Further reading 608 24 International marketing – the issues 610 Stanley J. Paliwoda Overview 610 Why market abroad? What are the driving forces? 610 Situational or environmental analysis 618 Differences between domestic and international marketing 621 Operationalization 627 Continuing and future challenges 629 Maintaining a sustainable advantage 629 Conclusions 630 References 632 Further reading 634 Useful international marketing websites 635 Contents xiii 25 E-marketing 637 Dave Chaffey Introduction 637 What is e-marketing? 637 E-marketing planning 642 Summary 666 References 667 26 Cause-related marketing: who cares wins 669 Sue Adkins Introduction 669 Cause-related marketing defined 669 Cause-related marketing in context 671 Models 676 Towards excellence 680 Case studies 686 Summary 690 References 692 Further reading 692 27 Social marketing 694 Lynn MacFadyen, Martine Stead and Gerard Hastings Introduction 694 Why do social marketing?