Principles of marketing: a global perspective

Philip Kotier

Gary Armstrong

Swee Hoon Ang

Siew Meng Leong

Chin Tiong Tan

Oliver Yau Hon-Ming

A GLOBAL PERSPECTIVE

Asían Network

for Higher Eaucation

No- 0002

T r r r V •

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PRINCIPLES OF

MARKETIN

A GLOBAL PERSPECTI

Philip Kotier

Gary Armstrong

Swee Hoon Ang

Siew Meng Leong

Chin Tiong Tan

Oliver Yau Hon-Ming

Prentice Hall

is an im p rin t o f

PEARSON

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Published in 2009 by

Prentice Hall

Pearson Education South Asia Pte Ltd

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Singapore 629733

Pearson Education offices in Asia: Bangkok, Beijing, Hong Kong, Jakarta, Kuala Lumpur,

Manila, New Delhi, Seoul, Singapore, Taipei, Tokyo

Authorized adaptation from the United States edition, entitled PRIN CIPLES OF

M ARKETIN G, 12th edition, ISBN: 9780132390026 by KOTLER, PH ILIP AND

ARM STRON G , GARY, published by Pearson Education, Inc., publishing as Prentice

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ABOUT THE AUTHORS

PHILIP KOTLER is the S. C. Johnson & Son Distinguished

Professor of International Marketing at the Kellogg Graduate

School of Management, Northwestern University. He received

his master's degree at the University of Chicago and his

Ph.D. at M.I.T., both in economics. Dr. Kotler is the author of

Marketing Management (Prentice Hall), now in its twelfth

edition and the world's most widely used marketing textbook

in graduate schools of business worldwide. He has authored

dozens of other successful books and has written more than

100 articles in leading journals. He is the only three-time

winner of the coveted Alpha Kappa Psi award for the best

annual article in the Journal of Marketing.

Professor Kotler was named the first recipient of two major awards: the Distinguished

Marketing Educator o f the Year Award given by the American Marketing Association and the

Philip Kotler Award for Excellence in Health Care Marketing presented by the Academy for Health

Care Services Marketing. His numerous other major honors include the Sales and Marketing

Executives International Marketing Educator o f the Year Award; The European Association of

Marketing Consultants and Trainers Marketing Excellence Award; the Charles Coolidge Parlin

Marketing Research Award; and the Paul D. Converse Award, given by the American Marketing

Association to honor "outstanding contributions to science in marketing." In a recent Financial

Times poll of 1,000 senior executives across the world, Professor Kotler was ranked as the

fourth "most influential business writer/guru" of the twenty-first century.

Dr. Kotler has served as chairman of the College of Marketing of the Institute of Management

Sciences, a director of the American Marketing Association, and a trustee of the Marketing

Science Institute. He has consulted with many major U.S. and international companies in

the areas of marketing strategy and planning, marketing organization, and international

marketing. He has traveled extensively throughout Europe, Asia, and South America,

advising companies and governments about global marketing practices and opportunities.

GARY ARMSTRONG is the Crist w. Blackwell Distinguished

Professor of Undergraduate Education in the Kenan-Flagler

Business School at the University of North Carolina at chapel

Hill. He holds undergraduate and master's degrees in business

from Wayne State University in Detroit, and he received

his Ph.D. in marketing from Northwestern University. Dr.

Armstrong has contributed numerous articles to leading

business journals. As a consultant and researcher, he has

worked with many companies on marketing research, sales

management, and marketing strategy.

But Professor Armstrong's first love is teaching. His Blackwell

Distinguished Professorship is the only permanent endowed professorship for distinguished

undergraduate teaching at the University of North Carolina at Chapel Hill. He has been

very active in the teaching and administration of Kenan-Flagler's undergraduate program.

His administrative posts have included chair of Marketing, Associate Director of the

Undergraduate Business Program, Director of the Business Honors Program, and many

others. He works closely with business student groups and has received several campuswide

and Business School teaching awards. He is the only repeat recipient of school's highly

regarded Award for Excellence in Undergraduate Teaching, which he has received three times.

Professor Armstrong recently received the UNC Board of Governors Award for Excellence in

Teaching, the highest teaching honor bestowed by the sixteen-campus University of North

Carolina system.

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A bout the Authors

SWEE HOON ANG is an Associate Professor at the NUS

Business School, National University of Singapore. She received

her Ph.D. from the University of British Columbia. She was a

Visiting Professor at the University of California, Berkeley,

Helsinki School of Economics and Business Administration,

and the China-Europe International Business School. She is

also a co-author of Surviving the New Millennium and Principles

o f Marketing: An Asian Casebook. In addition, she has w’ritten

numerous articles for journals and conferences, including

journal o f Advertising, Marketing Letters, Long Range Planning,

journal o f Business Ethics, Psycholo"-"gy & Marketing, and Journal

o f Cross-Cultural Psychology.Her research and teaching interests are in Asian advertising and

consumer behavior. She has consulted for such companies as Glaxo-Wellcome Pharmaceuticals,

Johnson & Johnson Medical, Nokia, and PSA Corporation.

SIEW MENG LEONG is a Professor at the NUS Business

School, National University of Singapore. He received his MBA

and Ph.D. from the University of Wisconsin, Madison. He is a

co-author of Marketing in the New Asia and Strategic Marketing

Cases for 21st Century Asia. He has published in Journal o f

Consumer Research, Journal o f Marketing, Journal o f Marketing

Research, Journal o f International Business Studies, Marketing

Utters, and other international journals and conference

proceedings. His research focuses on consumer behavior, sales

management, and marketing research. Professor Leong iseditor

of the Asian Journal o f Marketing, an advisory board member of

Behavioral Marketing Abstracts, and an editorial board member of International Journal o f Research

in Marketing, Academy o f Marketing Science Review, and Journal o f Marketing Communications. He

was an advisory council member of the Association for Consumer Research and now serves

on the Academic Standards Council of u21 Pedagógica. He has consulted for such clients as

Citibank, DuPont, Philips, and Singapore Pools.

. CHIN TIONG TAN is Provost at the Singapore Management

University. He received his Ph.D. from Pennsylvania

State University. He has taught at the Helsinki School of

Economics and Business Administration and the University

of Witwatersrand, and was a Visiting Scholar at the Stanford

Business School. He is a co-author of Asia's Tao o f Business and

New Asian Emperors. He has published in Journal o f Consumer

Research, Journal o f International Business Studies, Journal o f

Business and Industrial Marketing, International Marketing Rez’ieu’,

European Journal o f Marketing, and other international journals

and conference proceedings. Professor Tan sits on the boards

of several companies and committees of government agencies. He is academic advisor to the

Singapore Airlines'Management Development Center, and has consulted for companies like

Acer Computer, Altron Group, Inchcape, and Singapore Telecom.

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OLIVER YAU HON-MING is Chair Professor of Marketing

and Director of theUnit for Chinese Management Development,

Faculty of Business at the City University of Hong Kong

(CityU). He holds an International Teacher's Certificate from

CESA (now HEC), France, and a Ph.D. degree in marketing

from the Management Centre, Bradford University, England.

He has held teaching and research positions in four continents,

including South America, Australia, Europe and Asia. Before

he joined CityU, he was with the Chinese University of

Hong Kong, University of Queensland, and the University

of Southern Queensland, Australia. He was appointed as

a visiting or consulting professor by more than 10 major universities in Mainland China,

Australia, Taiwan, and England.

He has published over 200 articles in refereed international journals and conferences,

including the journal o f International Business Studies, journal o f International Marketing, journal

o f Business Ethics, Journal o f Business Research, and the European Journal o f Marketing. He has

also published more than 30 books in both Chinese and English. Being a renowned consultant

in services and marketing research, he has assisted over 50 companies in various countries by

conducting surveys and providing consulting and training services.

He is now a member of the editorial board for more than 10 international journals. He was the

Chairman of the Southeast Asia Region of the Academy of International Business (AIBSEAR)

and Honorary President of the Hong Kong Institute of Marketing. Currently, he is the advisor

of the Hong Kong Professional Validation Council of Hong Kong Industries, and also an

adviser of the Academy of Chinese Marketing.

/

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BRIEF CONTENTS

P a rt 1 D efin in g M a rk e tin g and th e M a rke tin g Process

1 Marketing: Managing Profitable Customer Relationships

2 Company and Marketing Strategy: Partnering to Build

Customer Relationships

Part 2 U n d e rsta n din g th e M arketplace and Consum ers

3 The Marketing Environment

4 Managing Marketing Information

5 Consumer Markets and Consumer Buyer Behavior

6 Business Markets and Business Buyer Behavior

Part 3 D esigning a C ustom er-D riven M a rketin g

S trategy and In te g ra te d M a rke tin g M ix

7 Customer-Driven Marketing Strategy: Creating Value for

Target Customers

8 Product, Services, and Branding Strategy

9 New-Product Development and Product Life-Cyde

Strategies

10 Pricing Products: Understanding and Capturing

' Customer Value

11 Pricing Products: Pricing Strategies

12 Marketing Channels and Supply Chain Management

13 Retailing and Wholesaling

14 CommunicatingCustomer Value: Integrated Marketing

Communications Strategy

15 Advertising and Public Relations

16 Personal Selling and Sales Promotion

17 Direct and Online Marketing: Building Direct

Customer Relationships

Part 4 E xte n d in g M a rk e tin g

18 Creating Competitive Advantage

19 The Global Marketplace

20 Marketing Ethics and Social Responsibility

Appendix 1: Marketing Plan

Appendix 2: Marketing by the Numbers

Appendix 3: Careers in Marketing

References

Glossary

Credits

Index •

2

2

30

58

58

84

114

144

164

164

198

230

258

280

304

334

366

398

428

460

494

494

520

550

577

587

607

619

641

653

655

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CONTENTS

about the authorç üi • message from the

authors xiii • about this boofc xv • preface

xxiii » acknowledgments xxix

Part 1 D efining M arketing and th e M arketing Process 2

Chapter 1 Marketing: Managing Profitable Customer 2

Relationships

What Is Marketing? 4

Marketing Defined 5 m The Marketing Process 5

Understanding the Marketplace and Customer

Needs 5

Customer Needs, Wants, and Demands 5 • Market

Offerings— Products, Services, and Experiences 6

• Customer Value and Satisfaction 6 • Exchanges

and Relationships 7 • Markets 7

Designing a Customer-Driven Marketing

Strategy 8

Selecting Customers to Serve 8 • Choosing a Value

Proposition 8 • Marketing Management

Orientations 9

Preparing an Integrated Marketing Plan and

Program 11

Building Customer Relationships 12

Customer Relationship Management 12 • The

Changing Nature of Customer Relationships 14 e

Partner-Relationship Management 15

Capturing Value from Customers 16

Creating Customer Loyalty and Retention 16 •

Growing Share of Customer'17 • Building

Customer Equity 17

The New M arketing Landscape 20

The New Digital Age 20 • Rapid Globalization 20

• The Call for More Ethics and Social

Responsibility 21 • The Growth of Not-for-Profit

Marketing 21

So, What Is Marketing? Pulling It All Together 22

Reviewing the Concepts 24 ® Reviewing the Key

Terms 25 • Discussing the Concepts 25 •

Applying the Concepts 25 e Focus on

Technology 26 • Focus on Ethics 26

Video Case: Dunkin'Donuts 26

Company Case: Build-A-Bear: Build-A-Memory 27

Chapter 2 Company and Marketing Strategy: Partnering to

Build Customer Relationships 30

Companywide Strategic Planning: Defining

Marketing's Role 32

Defining a Market-Oriented Mission 33 • Setting

Company Objectives and Goals 34 • Designing the

Business Portfolio 35

Planning Marketing: Partnering to Build Customer

Relationships 41

Partnering w itkQ ther Company Departments 41

• Partnering with Others in th e Marketing

System 42..'

M arketing Strategy and the Marketing M ix 43

Customer-Driven Marketing Strategy 44 •

Developing an Integrated Marketing Mix 46

Managing the M arketing Effort 47

Marketing Analysis 47 • Marketing Planning 48 •

Marketing Implementation 48 • Marketing

Department Organization 49 • Marketing'

Control 50

Measuring and Managing Return on M arketing

Investment 51

Reviewing the Concepts-53 • Reviewing the Key

Terms 54 m Discussing the Concepts 54 •

Applying the Concepts 54 • Focus on

Technology 55 • Focus on Ethics 55

Video Case: Harley-Davidson 55

Company Case: Red Bull: Charging Into the Future 56

Part 2 U nderstanding th e M arketplace and 58

Consumers

Chapter 3 The Marketing Environment 58

The Company's M icroenvironm ent 60

The Company 61 » Suppliers 61 • Marketing

Intermediaries 61 s Customers 62 •

Competitors 62 » Publics 62

The Company's M acroenvironm ent 63

Demographic Environment 63 # Economic

Environment 67 • Natural Environment 70 •

Technological Environment 71 • Political

Environment 72 • Cultural Environment 74

Responding to the M arketing Environm ent 76

Reviewing the Concepts 77 • Reviewing the Key

Terms 78 • Discussing the Concepts 78 •

Applying the Concepts 78 • Focus on

Technology 79 0 Focus on Ethics 79

Video Case: American Express 79

Company Case: Toyota Prius: Leading a Wave o f Hybrids 80

Chapter 4 Managing Marketing Information 84

Assessing Marketing Inform ation Needs 87

Developing Marketing Inform ation 88

Internal Data 88 « Marketing Intelligence 88

M arketing Research 89

Defining the Problem and Research Objectives 90

» Developing the Research Plan 90 • Gathering

Secondary Data 91 • Primary Data Collection 92

• Implementing the Research Plan 99 •

Interpreting and Reporting the Findings 100

Analyzing Marketing Inform ation 100

Customer Relationship Management (CRM) 100

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