Nguyên Lý Tiếp Thị - Principles Of Marketing

Specialized Features
New coverage
in every chapter
of the fourteenth
edition shows how companies
and consumers are dealing with
marketing and the uncertain
economy in the aftermath
of the recent Great Recession.
5
1
to EnhanceYour Learning
Throughout the fourteenth
edition, you will find
revised coverage of the
rapidly changing nature of customer
relationships and new material on such
topics as customer-managed
relationships, crowdsourcing, social
networking, and consumer-generated
marketing.
2

From beginning
to end, a fully
integrated
customer value framework
captures the essence of today’s
marketing.
3
The enhanced-learning
design of the book features
annotated, illustrated chapter-
opening vignettes to introduce key chapter
concepts. For each chapter, the Objectives
Outline shows what students will need to
know and where to find it. The end-of-
chapter Reviewing Objectives and Key
Terms summary tie back to the chapter
objectives.
4
Updated annotated figures
and author comments
throughout each chapter
provide the authors’ insights on key points.
5

Learn to think like a marketer using:
• Study Plan. The Study Plan helps ensure that you have a
basic understanding of course material before coming to class by
guiding you directly to the pages you need to review.
• Mini-Simulations. Move beyond the basics with interactive
simulations that place you in a realistic marketing situation and
require you to make decisions based on marketing concepts.
• Applied Theories. Get involved with detailed videos,
interactive cases, and critical-thinking exercises.
• Critical Thinking. Experience real marketing situations that
might not always have a right answer but will have a best answer.
This allows for great discussion and debate with your classmates.
And More:
• Self-Assessments
• Videos
• Pearson eText
• Flash Cards
Go to www.mypearsonmarketinglab.com

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Principles of
Marketing
14|E
PHILIP Kotler Northwestern University
GARY Armstrong University of North Carolina
Pearson Prentice Hall
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Library of Congress Cataloging-in-Publication Data
Kotler, Philip.
Principles of marketing / Philip Kotler, Gary Armstrong. -- 14th ed.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-13-216712-3
ISBN-10: 0-13-216712-3
1. Marketing. I. Armstrong, Gary (Gary M.) II. Title.
HF5415.K636 2011
658.8--dc22
2010052017
10 9 8 7 6 5 4 3 2 1
ISBN 10: 0-13-216712-3
ISBN 13: 978-0-13-216712-3

DEDICATION
To Kathy, Betty, Mandy, Matt, KC, Keri, Delaney, Molly, Macy, and Ben;
and Nancy, Amy, Melissa, and Jessica

vii
As a team, Philip Kotler and Gary Armstrong provide a blend of skills uniquely suited to
writing an introductory marketing text. Professor Kotler is one of the world’s leading au-
thorities on marketing. Professor Armstrong is an award-winning teacher of undergraduate
business students. Together they make the complex world of marketing practical, approach-
able, and enjoyable.
PHILIP KOTLERis S. C. Johnson & Son Distinguished Professor of International
Marketing at the Kellogg 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 econom-
ics. Dr. Kotler is author of Marketing Management (Pearson Prentice Hall), now in its four-
teenth 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 of 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 of 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 sci-
ence in marketing.” Arecent Forbes survey ranks Professor Kotler in the top 10 of the world’s
most influential business thinkers. And in a recent Financial Times poll of 1,000 senior exec-
utives across the world, Professor Kotler was ranked as the fourth “most influential busi-
ness writer/guru” of the twenty-first century.
Dr. Kotler has served as chairman of the College on Marketing of the Institute of Manage-
ment Sciences, a director of the American Marketing Association, and a trustee of the Market-
ing 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 mar-
keting. He has traveled and lectured extensively throughout Europe, Asia, and South America,
advising companies and governments about global marketing practices and opportunities.
GARYARMSTRONGis Crist W. Blackwell Distinguished Professor Emeritus
of Undergraduate Education in the Kenan-Flagler Business School at the University of
North Carolina at Chapel Hill. He holds undergraduate and masters degrees in business
from Wayne State University in Detroit, and he received his Ph.D. in marketing from North-
western University. Dr. Armstrong has contributed numerous articles to leading business
journals. As a consultant and researcher, he has worked with many companies on market-
ing research, sales management, and marketing strategy.
But Professor Armstrong’s first love has always been teaching. His long-held Blackwell
Distinguished Professorship is the only permanent endowed professorship for distin-
guished 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 pro-
gram. His administrative posts have included Chair of Marketing, Associate Director of the
Undergraduate Business Program, Director of the Business Honors Program, and many oth-
ers. Through the years, he has worked closely with business student groups and has re-
ceived 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 received three times. Most recently, Professor Armstrong 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.
ABOUT The Authors

Preface xvi
Part 1: Defining Marketing and the Marketing Process 2
1 Marketing: Creating and Capturing Customer Value 2
2 Company and Marketing Strategy: Partnering to Build Customer Relationships 36
Part 2: Understanding the Marketplace and Consumers 64
3 Analyzing the Marketing Environment 64
4 Managing Marketing Information to Gain Customer Insights 96
5 Consumer Markets and Consumer Buyer Behavior 132
6 Business Markets and Business Buyer Behavior 164
Part 3: Designing a Customer-Driven Strategy and Mix 188
7 Customer-Driven Marketing Strategy: Creating Value for Target Customers 188
8 Products, Services, and Brands: Building Customer Value 222
9 New Product Development and Product Life-Cycle Strategies 258
10 Pricing: Understanding and Capturing Customer Value 288
11 Pricing Strategies 312
12 Marketing Channels: Delivering Customer Value 338
13 Retailing and Wholesaling 372
14 Communicating Customer Value: Integrated Marketing Communications
Strategy 406
15 Advertising and Public Relations 434
16 Personal Selling and Sales Promotion 462
17 Direct and Online Marketing: Building Direct Customer Relationships 494
Part 4: Extending Marketing 526
18 Creating Competitive Advantage 526
19 The Global Marketplace 550
20 Sustainable Marketing: Social Responsibility and Ethics 580
Appendix 1 Marketing Plan A1
Appendix 2 Marketing by the Numbers A11
References R1
Glossary G1
Credits C1
Index I1
ix
BRIEF Contents

Preface xvi
Part 1: Defining Marketing and the Marketing Process 2
Marketing: Creating and Capturing
Customer Value 2
What Is Marketing? 4
Marketing Defined 5 | The Marketing Process 5
Understanding the Marketplace and Customer Needs 6
Customer Needs, Wants, and Demands 6 | Market Offerings—
Products, Services, and Experiences 6 | Customer Value and
Satisfaction 7 | Exchanges and Relationships 7 | Markets 7
Designing a Customer-Driven Marketing Strategy 8
Selecting Customers to Serve 8 | Choosing a Value Proposition 9
| Marketing Management Orientations 9
Preparing an Integrated Marketing Plan and Program 12
Building Customer Relationships 12
Customer Relationship Management 12 | The Changing Nature
of Customer Relationships 16 | Partner Relationship
Management 19
Capturing Value from Customers 20
Creating Customer Loyalty and Retention 20 | Growing Share
of Customer 21 | Building Customer Equity 21
The Changing Marketing Landscape 22
The Uncertain Economic Environment 23 | The Digital Age 26 |
Rapid Globalization 27 | Sustainable Marketing—The Call for
More Social Responsibility 27 | The Growth of Not-for-Profit
Marketing 28
So, What Is Marketing? Pulling It All Together 29
Reviewing Objectives and Key Terms 30 | Key Terms 31 |
Discussing & Applying the Concepts 32 | Focus on
Technology 32 | Focus on Ethics 33 | Marketing & the
Economy 33 | Marketing by the Numbers 33
Video Case: Stew Leonard’s 34
Company Case: JetBlue: Delighting Customers Through
Happy Jetting 34
Company and Marketing Strategy:
Partnering to Build Customer
Relationships 36
Company-Wide Strategic Planning: Defining Marketing’s
Role 38
Defining a Market-Oriented Mission 39 | Setting Company
Objectives and Goals 40 | Designing the Business Portfolio 40
xi
Contents
Planning Marketing: Partnering to Build Customer
Relationships 45
Partnering with Other Company Departments 46 | Partnering
with Others in the Marketing System 47
Marketing Strategy and the Marketing Mix 48
Customer-Driven Marketing Strategy 48 | Developing an
Integrated Marketing Mix 51
Managing the Marketing Effort 53
Marketing Analysis 53 | Marketing Planning 54 | Marketing
Implementation 54 | Marketing Department Organization 55 |
Marketing Control 56
Measuring and Managing Return on Marketing Investment 57
Video Case: Live Nation 62
Company Case: Trap-Ease America: The Big Cheese
of Mousetraps 62
Part 2: Understanding the Marketplace and Consumers 64
Analyzing the Marketing
Environment 64
The Microenvironment 66
The Company 67 | Suppliers 67 | Marketing Intermediaries 68
| Competitors 68 | Publics 69 | Customers 69
The Macroenvironment 70
The Demographic Environment 70 | The Economic
Environment 77 | The Natural Environment 78 | The
Technological Environment 80 | The Political and Social
Environment 81 | The Cultural Environment 86
Responding to the Marketing Environment 89
Video Case: TOMS Shoes 94
Company Case: Target: From “Expect More” to “Pay Less” 94
Managing Marketing Information
to Gain Customer Insights 96
Marketing Information and Customer Insights 98
Assessing Marketing Information Needs 100
Part 1: Defining Marketing and the Marketing Process (Chapters 1–2)
Part 2: Understanding the Marketplace and Consumers (Chapters 3–6)
Part 3: Designing a Customer-Driven Strategy and Mix (Chapters 7–17)
Part 4: Extending Marketing (Chapters 18–20)
1
2
3
4

xii Contents
Developing Marketing Information 100
Internal Data 100 | Competitive Marketing Intelligence 101
Marketing Research 103
Defining the Problem and Research Objectives 103 | Developing
the Research Plan 104 | Gathering Secondary Data 104 |
Primary Data Collection 106 | Implementing the Research
Plan 118 | Interpreting and Reporting the Findings 118
Analyzing and Using Marketing Information 119
Customer Relationship Management 119 | Distributing and
Using Marketing Information 120
Other Marketing Information Considerations 121
Marketing Research in Small Businesses and Nonprofit
Organizations 121 | International Marketing Research 123 |
Public Policy and Ethics in Marketing Research 124
Video Case: Radian6 129
Company Case: Harrah’s Entertainment: Hitting the CRM
Jackpot 129
Consumer Markets and Consumer
Buyer Behavior 132
Model of Consumer Behavior 134
Characteristics Affecting Consumer Behavior 135
Cultural Factors 135 | Social Factors 139 | Personal
Factors 144 | Psychological Factors 147
Types of Buying Decision Behavior 150
Complex Buying Behavior 150 | Dissonance-Reducing Buying
Behavior 151 | Habitual Buying Behavior 151 | Variety-Seeking
Buying Behavior 152
The Buyer Decision Process 152
Need Recognition 152 | Information Search 152 | Evaluation
of Alternatives 153 | Purchase Decision 154 | Postpurchase
Behavior 154
The Buyer Decision Process for New Products 156
Stages in the Adoption Process 156 | Individual Differences
in Innovativeness 157 | Influence of Product Characteristics
on Rate of Adoption 157
Video Case: Radian6 161
Company Case: Porsche: Guarding the Old While Bringing
in the New 162
Business Markets and Business
Buyer Behavior 164
Business Markets 166
Market Structure and Demand 167 | Nature of the Buying
Unit 168 | Types of Decisions and the Decision Process 168
Business Buyer Behavior 170
Major Type of Buying Situations 171 | Participants in the
Business Buying Process 172 | Major Influences on Business
Buyers 173 | The Business Buying Process 176 | E-Procurement:
Buying on the Internet 178
Institutional and Government Markets 180
Institutional Markets 180 | Government Markets 181
Video Case: Eaton 185
Company Case: Cisco Systems: Solving Business Problems
Through Collaboration 186
Part 3: Designing a Customer-Driven Strategy and Mix 188
Customer-Driven Marketing
Strategy: Creating Value for Target
Customers 188
Market Segmentation 190
Segmenting Consumer Markets 191 | Segmenting Business
Markets 198 | Segmenting International Markets 199 |
Requirements for Effective Segmentation 200
Market Targeting 200
Evaluating Market Segments 201 | Selecting Target Market
Segments 201
Differentiation and Positioning 207
Positioning Maps 208 | Choosing a Differentiation and
Positioning Strategy 208 | Communicating and Delivering the
Chosen Position 215
Video Case: Meredith 219
Company Case: Starbucks: Just Who Is the Starbucks
Customer? 219
Products, Services, and Brands:
Building Customer Value 222
What Is a Product? 224
Products, Services, and Experiences 224 | Levels of Product and
Services 225 | Product and Service Classifications 226
Product and Service Decisions 229
Individual Product and Service Decisions 229 | Product Line
Decisions 234 | Product Mix Decisions 235
Services Marketing 236
The Nature and Characteristics of a Service 236 | Marketing
Strategies for Service Firms 238
5
6
7
8

Contents xiii
Branding Strategy: Building Strong Brands 243
Brand Equity 243 | Building Strong Brands 244 | Managing
Brands 251
Video Case: General Mills—GoGurt 255
Company Case: Las Vegas: What’s Not Happening
in Vegas 255
New Product Development and
Product Life-Cycle Strategies 258
New-Product Development Strategy 260
The New-Product Development Process 261
Idea Generation 261 | Idea Screening 264 | Concept
Development and Testing 264 | Marketing Strategy
Development 265 | Business Analysis 266 | Product
Development 266 | Test Marketing 267 |
Commercialization 268
Managing New-Product Development 269
Customer-Centered New-Product Development 269 | Team-
Based New-Product Development 270 | Systematic New-Product
Development 270 | New-Product Development in Turbulent
Times 272
Product Life-Cycle Strategies 273
Introduction Stage 275 | Growth Stage 275 | Maturity
Stage 277 | Decline Stage 278
Additional Product and Service Considerations 280
Product Decisions and Social Responsibility 280 | International
Product and Services Marketing 280
Video Case: General Mills—FiberOne 285
Company Case: Samsung: From Gallop to Run 285
Pricing: Understanding and
Capturing Customer Value 288
What Is a Price? 290
Major Pricing Strategies 291
Customer Value-Based Pricing 291 | Cost-Based Pricing 295 |
Competition-Based Pricing 299
Other Internal and External Considerations Affecting Price
Decisions 300
Overall Marketing Strategy, Objectives, and Mix 300 |
Organizational Considerations 301 | The Market and
Demand 301 | The Economy 303 | Other External Factors 304
Video Case: IKEA 309
Company Case: Southwest Airlines: Balancing the Price-Value
Equation 310
Pricing Strategies 312
New-Product Pricing Strategies 314
Market-Skimming Pricing 314 | Market-Penetration Pricing 314
Product Mix Pricing Strategies 315
Product Line Pricing 315 | Optional Product Pricing 316 |
Captive Product Pricing 316 | By-Product Pricing 316 | Product
Bundle Pricing 318
Price Adjustment Strategies 319
Discount and Allowance Pricing 319 | Segmented Pricing 319 |
Psychological Pricing 320 | Promotional Pricing 321 |
Geographical Pricing 322 | Dynamic Pricing 323 | International
Fricing 324
Price Changes 325
Initiating Price Changes 325 | Responding to Price Changes 327
Public Policy and Marketing 328
Pricing within Channel Levels 328 | Pricing Across Channel
Levels 331
Video Case: Smashburger 335
Company Case: Payless ShoeSource: Paying Less for
Fashion 335
Marketing Channels: Delivering
Customer Value 338
Supply Chains and the Value Delivery Network 340
The Nature and Importance of Marketing Channels 341
How Channel Members Add Value 342 | Number of Channel
Levels 343
Channel Behavior and Organization 344
Channel Behavior 344 | Vertical Marketing Systems 345 |
Horizontal Marketing Systems 348 | Multichannel Distribution
Systems 349 | Changing Channel Organization 350
Channel Design Decisions 351
Analyzing Consumer Needs 351 | Setting Channel
Objectives 352 | Identifying Major Alternatives 352 | Evaluating
the Major Alternatives 353 | Designing International Distribution
Channels 354
Channel Management Decisions 354
Selecting Channel Members 355 | Managing and Motivating
Channel Members 355 | Evaluating Channel Members 356
Public Policy and Distribution Decisions 356
Marketing Logistics and Supply Chain Management 357
Nature and Importance of Marketing Logistics 357 | Goals of the
Logistics System 358 | Major Logistics Functions 360 |
Integrated Logistics Management 363
9
10
12
11

xiv Contents
Video Case: Progressive 369
Company Case: Netflix: Disintermediator or
Disintermediated? 369
Retailing and Wholesaling 372
Retailing 374
Types of Retailers 375 | Retailer Marketing Decisions 382 |
Retailing Trends and Developments 389
Wholesaling 394
Types of Wholesalers 396 | Wholesaler Marketing Decisions 396
| Trends in Wholesaling 399
Video Case: Zappos.com 403
Company Case: Tesco Fresh & Easy: Another British
Invasion 403
Communicating Customer Value:
Integrated Marketing
Communications Strategy 406
The Promotion Mix 408
Integrated Marketing Communications 409
The New Marketing Communications Model 409 | The Need for
Integrated Marketing Communications 410
A View of the Communication Process 414
Steps in Developing Effective Marketing Communication 415
Identifying the Target Audience 415 | Determining the
Communication Objectives 416 | Designing a Message 417 |
Choosing Media 418 | Selecting the Message Source 420 |
Collecting Feedback 420
Setting the Total Promotion Budget and Mix 422
Setting the Total Promotion Budget 422 | Shaping the Overall
Promotion Mix 424 | Integrating the Promotion Mix 426
Socially Responsible Marketing Communication 427
Advertising and Sales Promotion 427 | Personal Selling 428
Video Case: CPϩB 431
Company Case: Pepsi: Can a Soda Really Make the World
a Better Place? 432
Advertising and Public Relations 434
Advertising 436
Setting Advertising Objectives 437 | Setting the Advertising
Budget 438 | Developing Advertising Strategy 439 | Evaluating
Advertising Effectiveness and the Return on Advertising
Investment 449 | Other Advertising Considerations 450
Public Relations 454
The Role and Impact of PR 455 | Major Public Relations
Tools 456
Video Case: E*TRADE 460
Company Case: OgilvyOne: It’s Not Creative Unless It
Sells 460
Personal Selling and Sales
Promotion 462
Personal Selling 464
The Nature of Personal Selling 464 | The Role of the Sales
Force 465
Managing the Sales Force 468
Designing the Sales Force Strategy and Structure 468 |
Recruiting and Selecting Salespeople 472 | Training
Salespeople 473 | Compensating Salespeople 474 | Supervising
and Motivating Salespeople 474 | Evaluating Salespeople and
Sales Force Performance 477
The Personal Selling Process 478
Steps in the Selling Process 478 | Personal Selling and Managing
Customer Relationships 480
Sales Promotion 481
The Rapid Growth of Sales Promotion 482 | Sales Promotion
Objectives 482 | Major Sales Promotion Tools 483 | Developing
the Sales Promotion Program 487
Video Case: Nestlé Waters 491
Company Case: HP: Overhauling a Vast Corporate Sales
Force 491
Direct and Online Marketing:
Building Direct Customer
Relationships 494
The New Direct Marketing Model 496
Growth and Benefits of Direct Marketing 497
Benefits to Buyers 497 | Benefits to Sellers 498
Customer Databases and Direct Marketing 499
Forms of Direct Marketing 500
Direct-Mail Marketing 501 | Catalog Marketing 502 |
Telephone Marketing 502 | Direct-Response Television
Marketing 503 | Kiosk Marketing 504 | New Digital Direct
Marketing Technologies 505
Online Marketing 508
Marketing and the Internet 508 | Online Marketing
Domains 509 | Setting Up an Online Marketing Presence 513
14
15
16
17
13

Contents xv
Public Policy Issues in Direct Marketing 518
Irritation, Unfairness, Deception, and Fraud 518 | Invasion of
Privacy 519 | A Need for Action 520
Video Case: Zappos.com 524
Company Case: EBay: Fixing an Online Marketing Pioneer 524
Part 4: Extending Marketing 526
Creating Competitive
Advantage 526
Competitor Analysis 528
Identifying Competitors 528 | Assessing Competitors 529 |
Selecting Competitors to Attack and Avoid 531 | Designing a
Competitive Intelligence System 533
Competitive Strategies 535
Approaches to Marketing Strategy 535 | Basic Competitive
Strategies 536 | Competitive Positions 538 | Market Leader
Strategies 538 | Market Challenger Strategies 541 | Market
Follower Strategies 542 | Market Nicher Strategies 543
Balancing Customer and Competitor Orientations 544
Video Case: Umpqua Bank 547
Company Case: Ford: Resurrecting an Iconic Company 548
The Global Marketplace 550
Global Marketing Today 552
Looking at the Global Marketing Environment 554
The International Trade System 554 | Economic
Environment 556 | Political-Legal Environment 557 | Cultural
Environment 557
Deciding Whether to Go Global 560
Deciding Which Markets to Enter 561
Deciding How to Enter the Market 562
Exporting 563 | Joint Venturing 563 | Direct Investment 565
Deciding on the Global Marketing Program 565
Product 566 | Promotion 569 | Price 571 | Distribution
Channels 572
Deciding on the Global Marketing Organization 573
Video Case: Monster 577
Company Case: Nokia: Envisioning a Connected World 577
Sustainable Marketing: Social
Responsibility and Ethics 580
Sustainable Marketing 582
Social Criticisms of Marketing 584
Marketing’s Impact on Individual Consumers 584 | Marketing’s
Impact on Society as a Whole 589 | Marketing’s Impact on Other
Businesses 591
Consumer Actions to Promote Sustainable Marketing 592
Consumerism 592 | Environmentalism 593 | Public Actions to
Regulate Marketing 599
Business Actions Toward Sustainable Marketing 599
Sustainable Marketing Principles 599 | Marketing Ethics 604 |
The Sustainable Company 608
Video Case: Land Rover 611
Company Case: International Paper: Combining Industry and
Social Responsibility 611
Appendix 1: Marketing Plan A1
Appendix 2: Marketing by the Numbers A11
References R1
Glossary G1
Credits C1
Index I1
18
19
20

xvi
The Fourteenth Edition of Principles of Marketing!
Still Creating More Value for You!
The goal of every marketer is to create more value for customers. So it makes sense that our
goal for the fourteenth edition is to continue creating more value for you—our customer.
Our goal is to introduce new marketing students to the fascinating world of modern mar-
keting in an innovative and comprehensive yet practical and enjoyable way. We’ve poured
over every page, table, figure, fact, and example in an effort to make this the best text from
which to learn about and teach marketing. Enhanced by mymarketinglab, our online home-
work and personalized study tool, the fourteenth edition creates exceptional value for both
students and professors.
Marketing: Creating Customer Value
and Relationships
Top marketers at outstanding companies share a common goal: putting the consumer at the
heart of marketing. Today’s marketing is all about creating customer value and building
profitable customer relationships. It starts with understanding consumer needs and wants,
determining which target markets the organization can serve best, and developing a com-
pelling value proposition by which the organization can attract and grow valued con-
sumers. If the organization does these things well, it will reap the rewards in terms of mar-
ket share, profits, and customer equity.
Five Major Value Themes
From beginning to end, the fourteenth edition of Principles of Marketing develops an innova-
tive customer-value and customer-relationships framework that captures the essence of to-
day’s marketing. It builds on five major value themes:
1. Creating value for customers in order to capture value from customers in return. To-
day’s marketers must be good at creating customer value and managing customer relation-
ships. Outstanding marketing companies understand the marketplace and customer
needs, design value-creating marketing strategies, develop integrated marketing pro-
grams that deliver customer value and delight, and build strong customer relation-
ships. In return, they capture value from customers in the form of sales, profits, and
customer loyalty.
Preface
Design a
customer-driven
marketing
strategy
Construct an
integrated
marketing program
that delivers
superior value
Build profitable
relationships and
create customer
delight
Capture value
from customers to
create profits and
customer equity
Understand the
marketplace and
customer needs
and wants
Create value for customers and
build customer relationships
Capture value from
customers in return
FIGURE | 1.1
A Simple Model of the Marketing Process
Marketing: Creating and Capturing Customer Value

This innovative customer-value framework is introduced at the start of Chapter 1 in
a five-step marketing process model, which details how marketing creates customer
value and captures value in return. The framework is carefully developed in the first two
chapters and then fully integrated throughout the remainder of the text.
2. Building and managing strong, value-creating brands. Well-positioned brands with
strong brand equity provide the basis upon which to build customer value and prof-
itable customer relationships. Today’s marketers must position their brands powerfully
and manage them well. They must build close brand relationships and experiences
with customers.
3. Measuring and managing return on marketing. Marketing managers must ensure that
their marketing dollars are being well spent. In the past, many marketers spent freely
on big, expensive marketing programs, often without thinking carefully about the
financial returns on their spending. But all that has changed rapidly. “Marketing
accountability”—measuring and managing return on marketing investments—has
now become an important part of strategic marketing decision making. This emphasis
on marketing accountability is addressed throughout the fourteenth edition.
4. Harnessing new marketing technologies. New digital and other high-tech marketing
developments are dramatically changing how consumers and marketers relate to one
another. The fourteenth edition thoroughly explores the new technologies impacting
marketing, from “Web 3.0” in Chapter 1 to new digital marketing and online technolo-
gies in Chapters 15 and 17 to the exploding use of online social networks and customer-
generated marketing in Chapters 1, 5, 14, 15, 17, and elsewhere.
5. Sustainable marketing around the globe. As technological developments make the
world an increasingly smaller and more fragile place, marketers must be good at mar-
keting their brands globally and in sustainable ways. New material throughout the
fourteenth edition emphasizes the concept of sustainable marketing—meeting the pres-
ent needs of consumers and businesses while also preserving or enhancing the ability
of future generations to meet their needs.
New in the Fourteenth Edition
We’ve thoroughly revised the fourteenth edition of Principles of Marketing to reflect the ma-
jor trends and forces impacting marketing in this era of customer value and relationships.
Here are just some of the major and continuing changes you’ll find in this edition.
• New coverage in every chapter of the fourteenth edition shows how companies and
consumers are dealing with marketing and the uncertain economy in the aftermath
of the recent Great Recession. Starting with a major new section in Chapter 1 and
continuing with new sections, discussions, and examples integrated throughout the
text, the fourteenth edition shows how, now more than ever, marketers must focus on
creating customer value and sharpening their value propositions to serve the needs of
today’s more frugal consumers. At the end of each chapter, a new feature—Marketing
and the Economy—provides real examples for discussion and learning.
• Throughout the fourteenth edition, you will find revised coverage of the rapidly
changing nature of customer relationships with companies and brands. Today’s mar-
keters aim to create deep consumer involvement and a sense of community surround-
ing a brand—to make the brand a meaningful part of consumers’ conversations and
their lives. Today’s new relationship-building tools include everything from Web sites,
blogs, in-person events, and video sharing to online communities and social networks
such as Facebook, YouTube, Twitter, or a company’s own social networking sites.
• The fourteenth edition contains new material on the continuing trend toward two-way
interactions between customers and brands, including such topics as customer-
managed relationships, crowdsourcing, and consumer-generated marketing. Today’s
customers are giving as much as they get in the form of two-way relationships (Chap-
ter 1), a more active role in providing customer insights (Chapter 4), crowdsourcing and
shaping new products (Chapter 9), consumer-generated marketing content (Chapters
1, 14, and 15), developing or passing along brand messages (Chapters 1 and 15), inter-
acting in customer communities (Chapters 5, 15, and 17), and other developments.
Preface xvii

• This edition provides revised and expanded discussions of new marketing
technologies, from “Web 3.0” in Chapter 1 to “Webnography” research tools in Chap-
ter 4 to neuromarketing in Chapter 5 and the dazzling new digital marketing and on-
line technologies in Chapters 1, 15, and 17.
• New material throughout the fourteenth edition highlights the increasing importance
of sustainable marketing. The discussion begins in Chapter 1 and ends in Chapter 20,
which pulls marketing together under a sustainable marketing framework. In between,
frequent discussions and examples show how sustainable marketing calls for socially
and environmentally responsible actions that meet both the immediate and the future
needs of customers, companies, and society as a whole.
• The fourteenth edition continues its emphasis on measuring and managing return on
marketing, including many new end-of-chapter financial and quantitative marketing
exercises that let students apply analytical thinking to relevant concepts in each chap-
ter and link chapter concepts to the text’s innovative and comprehensive Appendix 2:
Marketing by the Numbers.
• The fourteenth edition provides revised and expanded coverage of the developments
in the fast-changing areas of integrated marketing communications and direct and on-
line marketing. It tells how marketers are blending the new digital and direct technolo-
gies with traditional media to create more targeted, personal, and interactive customer
relationships. No other text provides more current or encompassing coverage of these
exciting developments.
• Restructured pricing chapters (Chapters 10 and 11) provide improved coverage of pric-
ing strategies and tactics in an uncertain economy. And a reorganized products, ser-
vices, and brands chapter (Chapter 8) helps to promote the text’s coverage of services
marketing and better applies the branding strategy discussions that follow to both
products and services.
• The fourteenth edition continues to improve on its innovative learning design. The
text’s active and integrative presentation includes learning enhancements such as an-
notated chapter-opening stories, a chapter-opening objective outline, and explanatory
author comments on major chapter sections and figures. The chapter-opening layout
helps to preview and position the chapter and its key concepts. Figures annotated with
author comments help students to simplify and organize chapter material. End-of-
chapter features help to summarize important chapter concepts and highlight impor-
tant themes, such as marketing and the economy, marketing technology, ethics, and
financial marketing analysis. In all, the innovative learning design facilitates student
understanding and eases learning.
An Emphasis on Real Marketing
Principles of Marketing features in-depth, real-world examples and stories that show con-
cepts in action and reveal the drama of modern marketing. In the fourteenth edition, every
chapter opening vignette and Real Marketing highlight has been updated or replaced to
provide fresh and relevant insights into real marketing practices. Learn how:
• Web seller Zappos.com’s obsession with creating the very best customer experience has
resulted in avidly loyal customers and astronomical growth.
• Nike’s customer-focused mission and deep sense of customer brand community have
the company sprinting ahead while competitors are gasping for breath.
• Trader Joe’s unique “cheap gourmet” price-value strategy has earned it an almost cult-
like following of devoted customers who love what they get for the prices they pay.
• ESPN has built a global brand empire as much recognized and revered as megabrands
such as Coca-Cola, Nike, or Google.
• Dunkin’ Donuts successfully targets the “Dunkin’ Tribe”—not the Starbucks snob but
the average Joe.
• When it comes to sustainability, no company in the world is doing more good these
days than Walmart. That’s right—big, bad, Walmart.
xviii Preface

• Four Seasons hotels has perfected the art of high-touch, carefully crafted service,
prompting one customer to reflect: “If there’s a heaven, I hope it’s run by Four Seasons.”
• The “Häagen-Dazs loves honey bees” integrated marketing campaign has helped make
Häagen-Dazs more than just another premium ice cream brand—it’s now “a brand
with a heart and a soul.”
• Hyundai hit the accelerator on marketing when the slow economy caused rivals to
throttle down, making it the world’s fastest growing major car company.
• McDonald’s, the quintessentially all-American company, now sells more burgers and
fries outside the United States than within.
• Google’s odyssey into mainland China—and back out again—vividly illustrates the
prospects and perils of going global.
Beyond these features, each chapter is packed with countless real, relevant, and timely
examples that reinforce key concepts. No other text brings marketing to life like the four-
teenth edition of Principles of Marketing.
Valuable Learning Aids
A wealth of chapter-opening, within-chapter, and end-of-chapter learning devices help stu-
dents to learn, link, and apply major concepts:
• Chapter Preview. As part of the active and integrative chapter-opening design, a brief
section at the beginning of each chapter previews chapter concepts, links them with
previous chapter concepts, and introduces the chapter-opening story.
• Chapter-opening marketing stories. Each chapter begins with an engaging, deeply devel-
oped, illustrated, and annotated marketing story that introduces the chapter material
and sparks student interest.
• Objective outline. This chapter-opening feature provides a helpful preview outline of
chapter contents and learning objectives, complete with page numbers.
• Author comments and figure annotations. Throughout the chapter, author comments ease
and enhance student learning by introducing and explaining major chapter sections
and organizing figures.
• Real Marketing highlights. Each chapter contains two highlight features that provide an
in-depth look at real marketing practices of large and small companies.
• Reviewing the Objectives and Key Terms. A summary at the end of each chapter reviews
major chapter concepts, chapter objectives, and key terms.
• Discussing and Applying the Concepts. Each chapter contains a set of discussion questions
and application exercises covering major chapter concepts.
• Marketing and the Economy. End-of-chapter situation descriptions provide for discussion
of the impact of recent economic trends on consumer and marketer decisions.
• Focus on Technology. Application exercises at the end of each chapter provide discussion
of important and emerging marketing technologies in this digital age.
• Focus on Ethics. Situation descriptions and questions at the end of each chapter highlight
important issues in marketing ethics.
• Marketing by the Numbers. An exercise at the end of each chapter lets students apply an-
alytical and financial thinking to relevant chapter concepts and links the chapter to Ap-
pendix 2, Marketing by the Numbers.
• Company Cases. All new or revised company cases for class or written discussion are
provided at the end of each chapter. These cases challenge students to apply marketing
principles to real companies in real situations.
• Video Shorts. Short vignettes and discussion questions appear at the end of every chap-
ter, to be used with the set of mostly new 4- to 7-minute videos that accompany this
edition.
• Marketing Plan appendix. Appendix 1 contains a sample marketing plan that helps stu-
dents to apply important marketing planning concepts.
Preface xix

• Marketing by the Numbers appendix. And innovative Appendix 2 provides students with
a comprehensive introduction to the marketing financial analysis that helps to guide,
assess, and support marketing decisions.
More than ever before, the fourteenth edition of Principles of Marketing creates value for
you—it gives you all you need to know about marketing in an effective and enjoyable total
learning package!
A Valuable Total Teaching and Learning Package
A successful marketing course requires more than a well-written book. A total package of
resources extends this edition’s emphasis on creating value for you. The following aids sup-
port Principles of Marketing, 14e:
Videos
The video library features 20 exciting segments for this edition. All segments are on the DVD
(ISBN: 0-13-216723-9) and in mymarketinglab. Here are just a few of the videos that are of-
fered:
Stew Leonard’s Customer Relationships
Eaton’s Dependable Customer Service
GoGurt’s Winning Brand Management
FiberOne’s Exponential Growth
Nestlé Waters’ Personal Selling
mymarketinglab (www.mypearsonmarketinglab.com) gives you the opportunity to test
yourself on key concepts and skills, track your own progress through the course, and use
the personalized study plan activities—all to help you achieve success in the classroom.
The MyLab that accompanies Principles of Marketing includes:
• Study Plan: The Study Plan helps ensure that you have a basic understanding of course
material before coming to class by guiding you directly to the pages you need to review.
• Mini-Simulations: Move beyond the basics with interactive simulations that place you
in a realistic marketing situation and require you to make decisions based on market-
ing concepts.
• Applied Theories: Get involved with detailed videos, interactive cases, and critical-
thinking exercises.
• Critical Thinking: Get involved with real marketing situations that might not always
have a right answer but will have a best answer. This allows for great discussion and
debate with your classmates.
Plus:
• Interactive Elements: A wealth of hands-on activities and exercises let you experience
and learn firsthand. Whether it is with the online e-book where you can search for spe-
cific keywords or page numbers, highlight specific sections, enter notes right on the
e-book page, and print reading assignments with notes for later review or with other
materials.
Find out more at www.mypearsonmarketinglab.com
xx Preface

Preface xxi
More Valuable Resources
CourseSmart is an exciting new choice for students looking to save money. As an alternative
to purchasing the print textbook, students can purchase an electronic version of the same
content and save up to 50 percent off the suggested list price of the print text. With a
CourseSmart eTextbook, students can search the text, make notes online, print out reading
assignments that incorporate lecture notes, and bookmark important passages for later
review. For more information, or to purchase access to the CourseSmart eTextbook, visit
www.coursesmart.com.

xxii
No book is the work only of its authors. We greatly appreciate the valuable contributions of
several people who helped make this new edition possible. As always, we owe very special
thanks to Keri Jean Miksza for her dedicated and valuable help in all phases of the project,
and to her husband Pete and little daughter Lucy for all the support they provide Keri dur-
ing this often-hectic project.
We thank Andy Norman of Drake University for his skillful development of company
and video cases and help with preparing selected marketing stories; and Lew Brown of the
University of North Carolina at Greensboro for his able assistance in helping prepare se-
lected marketing stories and highlights. We also thank Laurie Babin of the University of
Louisiana at Monroe for her dedicated efforts in preparing end-of-chapter materials and
keeping our Marketing by the Numbers appendix fresh; and to Michelle Rai of Pacific Union
College for her able updates to the Marketing Plan appendix. Additional thanks also go to
Andy Lingwall at Clarion University of Pennsylvania, for his work on the Instructor’s Man-
ual; Peter Bloch at University of Missouri and ANS Source for developing the Power Points;
and Bonnie Flaherty for creating the Test Item File & Study Plan.
Many reviewers at other colleges and universities provided valuable comments and
suggestions for this and previous editions. We are indebted to the following colleagues for
their thoughtful inputs:
Fourteenth Edition Reviewers
Acknowledgments
Alan Dick, University of Buffalo
Rod Carveth, Naugatuck Valley
Community College
Anindja Chatterjee, Slippery Rock
University of Pennsylvania
Mary Conran, Temple University
Eloise Coupey, Virginia Tech
Karen Gore, Ivy Tech Community College,
Evansville Campus
Charles Lee, Chestnut Hill College
Samuel McNeely, Murray State University
Chip Miller, Drake University
David Murphy, Madisonville Community
College
Esther Page-Wood, Western Michigan
University
Tim Reisenwitz, Valdosta State University
Mary Ellen Rosetti, Hudson Valley
Community College
William Ryan, University of Connecticut
Roberta Schultz, Western Michigan
University
J. Alexander Smith, Oklahoma City
University
Deb Utter, Boston University
Donna Waldron, Manchester Community
College
Wendel Weaver, Oklahoma Wesleyan
University
Previous Reviewers
Praveen Aggarwal, University of
Minnesota, Duluth
Ron Adams, University of North Florida
Sana Akili, Iowa State University
Mary Albrecht, Maryville University
Mark Alpert, University of Texas at Austin
Mark Anderson, Eastern Kentucky
University
Lydia E. Anderson, Fresno City College
Allan L. Appell, San Francisco State
University

Preface xxiii
Bruce Lammers, California State
University at North Ridge
J. Ford Laumer, Auburn University
Debra Laverie, Texas Tech University
Kenneth Lawrence, New Jersey Institute of
Technology
Richard Leventhal, Metropolitan State
College, Denver
Charles Lee, Chestnut Hill College
Marilyn Liebrenz-Himes, George
Washington University
Dolly D. Loyd, University of Southern
Mississippi
Kerri Lum, Kapiolani Community College
Larry Maes, Davenport University
Tamara Mangleburg, Florida Atlantic
University
Patricia M. Manninen, North Shore
Community College
Wendy Martin, Judson College, Illinois
Patrick H. McCaskey, Millersville
University
June McDowell-Davis, Catawba
College/High Point University
Samuel McNeely, Murray State University
H. Lee Meadow, Indiana University East
H. Lee Meadow, Northern Illinois
University
John Mellon, College Misericordia
Mohan K. Menon, University of Southern
Alabama
Martin Meyers, University of Wisconsin,
Stevens Point
Chip Miller, Drake University
William Mindak, Tulane University
Ted Mitchell, University of Nevada, Reno
David Murphy, Madisonville Community
College
David M. Nemi, Niagra County
Community College
Carl Obermiller, Seattle University
Howard Olsen, University of Nevada at
Reno
Betty Parker, Western Michigan University
Vanessa Perry, George Washington
University
Susan Peterson, Scottsdale Community
College
Abe Qastin, Lakeland College
Paul Redig, Milwaukee Area Technical
College
Laurie Babin, University of Louisiana at
Monroe
Michael Ballif, University of Utah
Pat Bernson, County College of Morris
Roger Berry, California State University,
Dominguez Hills
Amit Bhatnagar, University of Wisconsin
Donald L. Brady, Millersville University
Thomas Brashear, University of
Massachusetts, Amherst
Fred Brunel, Boston University
Jeff Bryden, Bowling Green University
David J. Burns, Youngstown State
University
Kirsten Cardenas, University of Miami
Rod Carveth, Naugatuck Valley
Community College
Glenn Chappell, Coker College
Hongsik John Cheon, Frostburg State
University
Sang T. Choe, University of Southern
Indiana
Glenn L. Christensen, Brigham Young
University
Kathleen Conklin, St. John Fisher College
Mary Conran, Temple University
Michael Coolsen, Shippensburg University
Alicia Cooper, Morgan State University
Douglas A. Cords, California State
University, Fresno
Preyas Desai, Purdue University
Philip Gelman, College of DuPage
James L. Giordano, La Guardia
Community College
Karen Gore, Ivy Tech Community College,
Evansville Campus
Hugh Guffey, Auburn University
Kenny Herbst, Saint Joseph’s University
Terry Holmes, Murray State University
David Houghton, Charleston Southern
University
Pat Jacoby, Purdue University
Carol Johanek, Washington University
Eileen Kearney, Montgomery County
Community College
Thomas R. Keen, Caldwell College
Tina Kiesler, California State University at
North Ridge
Dmitri Kuksov, Washington University in
St. Louis

xxiv Preface
William Renforth, Angelo State University
Gregory A. Rich, Bowling Green State
University
William Ryan, University of Connecticut
Melinda Schmitz, Pamlico Community
College
Roberta Schultz, Western Michigan
University
Alan T. Shao, University of North
Carolina, Charlotte
Lynne Smith, Carroll Community College
Martin St. John, Westmoreland County
Community College
Randy Stewart, Kennesaw State University
Karen Stone, Southern New Hampshire
University
John Stovall, University of Illinois,
Chicago
Jeff Streiter, SUNY Brockport
Ruth Taylor, Texas State University
Donna Tillman, California State
Polytechnic University
Janice Trafflet, Bucknell University
Rafael Valiente, University of Miami
Simon Walls, University of Tennessee
Donna Waldron, Manchester Community
College
Mark Wasserman, University of Texas
Alvin Williams, University of Southern
Mississippi
Douglas E. Witt, Brigham Young
University
Andrew Yap, Florida International
University
Irvin A. Zaenglein, Northern Michigan
University
Larry Zigler, Highland Community
College
We also owe a great deal to the people at Pearson Prentice Hall who helped develop this
book. Executive Editor Melissa Sabella provided fresh ideas and support throughout to re-
vision. Project Manager Meeta Pendharkar provided valuable assistance in managing the
many facets of this complex revision project. Janet Slowik developed the fourteenth edi-
tion’s exciting design, and Senior Production Project Manager Karalyn Holland helped
guide the book through the complex production process. We’d also like to thank Elisabeth
Scarpa, Anne Fahlgren, and Judy Leale. We are proud to be associated with the fine profes-
sionals at Pearson Prentice Hall. We also owe a mighty debt of gratitude to Project Editor
Lynn Steines and the fine team at S4Carlisle Publishing Services.
Finally, we owe many thanks to our families for all of their support and encouragement
—Kathy, Betty, Mandy, Matt, KC, Keri, Delaney, Molly, Macy, and Ben from the Armstrong
clan and Nancy, Amy, Melissa, and Jessica from the Kotler family. To them, we dedicate this
book.
Gary Armstrong
Philip Kotler

1Chapter Preview This chapter introduces you to
the basic concepts of market-
ing. We start with the question, What is marketing? Simply put, mar-
keting is managing profitable customer relationships. The aim of
marketing is to create value for customers and capture value from cus-
tomers in return. Next we discuss the five steps in the marketing
process—from understanding customer needs, to designing customer-
driven marketing strategies and integrated marketing programs, to
building customer relationships and capturing value for the firm. Fi-
nally, we discuss the major trends and forces affecting marketing in this
age of customer relationships. Understanding these basic concepts
75 percent of Zappos.com’s sales come from repeat customers.
“We actually take a lot of the money that we would have normally
spent on paid advertising and put it back into the customer expe-
rience,” says Hsieh. “We’ve always stuck with customer service,
even when it was not a sexy thing to do.” Adds Aaron Magness,
Zappos’ director of business development and brand marketing,
“We decided if we can put all the money possible into our cus-
tomer service, word of mouth will work in our favor.”
What little advertising the company does do focuses on—
you guessed it—customer service. The most recent Zappos TV
ads feature “Zappets,” puppetlike characters styled after actual
Zappos employees, highlighting interactions between Zappos
customer service reps and customers.
Free delivery, free returns, and a 365-day return policy
have been the cornerstone of Zappos’ customer-centric ap-
proach. To wow customers, it even quietly upgrades the ex-
perience, from four-to-five-day shipping to second-day or
next-day shipping. Its customer service center is staffed 24/7
with 500 highly motivated employees—about one-third of the
company’s payroll—answering 5,000 calls a day. “Those things
are all pretty expensive, but we view that as our marketing dol-
lars,” says Hsieh. “It’s just a lot cheaper to get existing cus-
tomers to buy from you again than it is to try to convince
someone [new].”
I
magine a retailer with service so good its customers wish
it would take over the Internal Revenue Service or start up
an airline. It might sound like a marketing fantasy, but this
scenario is reality for 12-year-old Zappos.com. At Zappos,
the customer experience really does come first—it’s a daily ob-
session. Says Zappos understated CEO, Tony Hsieh (pro-
nounced shay), “Our whole goal at Zappos is for the Zappos
brand to be about the very best customer service and customer
experience.” When it comes to creating customer value and re-
lationships, few companies can match Zappos’ passion.
Launched in 1999 as a Web site that offered the absolute best
selection in shoes—in terms of brands, styles, colors, sizes, and
widths—the online retailer now carries many other categories of
goods, such as clothing, handbags, and accessories. From the
start, the scrappy Web retailer made customer service a corner-
stone of its marketing. As a result, Zappos has grown astronomi-
cally. It now serves more than 10 million customers annually, and
gross merchandise sales top $1 billion, up from only $1.6 million
in 2000. Three percent of the U.S. population now shops at
Zappos.com. And despite the harsh economy, Zappos sales have
continued to soar in recent years.
Interestingly, Zappos doesn’t spend a lot of money on media
advertising. Instead, it relies on customer service so good that cus-
tomers not only come back but also tell their friends. More than
and forming your own ideas about what they really mean to you will
give you a solid foundation for all that follows.
Let’s start with a good story about marketing in action at
Zappos.com, one of the world’s fastest-growing Web retailers. The se-
cret to Zappos’ success? It’s really no secret at all. Zappos is flat-out cus-
tomer obsessed. It has a passion for creating customer value and
relationships. In return, customers reward Zappos with their brand loy-
alty and buying dollars. You’ll see this theme of creating customer
value in order to capture value in return repeated throughout this first
chapter and the remainder of the text.
Part 1: Defining Marketing and the Marketing Process (Chapters 1–2)
Part 2: Understanding the Marketplace and Consumers (Chapters 3–6)
Part 3: Designing a Customer-Driven Strategy and Mix (Chapters 7–17)
Part 4: Extending Marketing (Chapters 18–20)
Marketing
Creating and Capturing Customer Value
Zappos: A Passion for Creating Customer Value and Relationships

Chapter 1 |Marketing: Creating and Capturing Customer Value 3
Zappos has been steadfast in its focus on customer service
even as it’s grown. In a sluggish economy, retailers especially
shouldbefocusingoncustomerservice.ButasHsiehpointsout,it’s
often the first thing to go. “The payoff for great customer service
might be a year or two down the line. And the payoff for having a
great company culture might be three or four years down the line.”
At Zappos, customer intimacy starts with a deep-down,
customer-focused culture. “We have a saying,” proclaims the
company at its Web site. “We are a service company that hap-
pens to sell [shoes (or handbags, or clothing, or eventually, any-
thing and everything)].” The Zappos culture is built around its
10 Core Values, ranging from “Build open and honest relation-
ships with communication” to “Create fun and a little weird-
ness.” Value number one: “Deliver WOW through service!”
Zappos’ online success and passion for customers made it
an ideal match for another highly successful, customer-obsessed
online retailer, Amazon.com, which purchased Zappos in late
2009. Amazon.com appears to be letting Hsieh and Zappos con-
tinue to pursue independently the strategy that has made them
so successful in the past.
To make sure Zappos’ customer obsession permeates the en-
tire organization, each new hire—everyone from the chief execu-
tive officer and chief financial officer to the children’s footwear
buyer—is required to go through four weeks of customer-loyalty
training. In fact, in an effort to weed out the half-hearted,
Zappos actually bribes people to quit. During the four weeks of
customer service training, it offers employees $2,000 cash, plus
payment for the time worked, if they leave the company. The
theory goes that those willing to take the money and run aren’t
right for Zappos’ culture anyway.
Hsieh says that originally the incentive was $100, but the
amount keeps rising because not enough people take it. On av-
erage, only 1 percent takes the offer, and Hsieh believes that’s
too low. Zappos argues that each employee needs to be a great
point of contact with customers. “Getting customers excited
about the service they had at Zappos has to come naturally,”
says Magness. “You can’t teach it; you have to hire for it.”
When dealing with customers, Zappos employees must
check their egos and competitiveness at the door. Customer
service reps are trained to look on at least three rival Web sites
if a shopper asks for specific shoes that Zappos doesn’t have
in stock and refer customers accordingly. “My guess is that
other companies don’t do that,” Hsieh says. “For us, we’re
willing to lose that sale, that transaction in the short term.
We’re focused on building the lifelong loyalty and relation-
ship with the customer.”
Relationships mean everything at Zappos. Hsieh and many
other employees stay in direct touch with customers, with each
other, and with just about anyone else interested in the company.
They use social-networking tools, such as Facebook, Twitter, and
blogs, to share information—
both good and bad. And the
company invites customers
to submit frank online re-
views. Such openness might
worry some retailers, but
Zappos embraces it. As Mag-
ness points out, “You only
need to worry if you have some-
thing to hide,” and Zappos seems
to take even criticism as a free gift
of information.
Zappos has set new standards
in the industry, leading the way for
a new type of consumer-focused company. “There’s something
about these young Internet companies,” says a retailing expert.
“I’m not sure exactly why—if it was because they were born in
a different era, the leadership has a different worldview, or if
they just have amazing access to customer data and see first-
hand what customers are thinking,” he says. “It seems that Zap-
pos is really the poster child for this new age of consumer
companies that truly are customer focused. A lot of companies
like to say they are, but none of them is as serious as Zappos.”
It’s that intense customer focus that has set the stage for Zap-
pos’ growth, as the company branches out into new categories,
such as electronics and home goods. “Hopefully, 10 years from
now, people won’t even realize we started out selling shoes online.
We’ve actually had cus-
tomers ask us if we would
please start an airline or run
the IRS,” Hsieh says,
adding, “30 years from now
I wouldn’t rule out a Zap-
pos airline that’s all about
the very best service.”1
At Zappos, taking care
of customers starts with
a deep-down, customer-
focused culture. Zappos
is “happy to help, 24/7.”
Web seller Zappos is obsessed with creating the very
best customer service and customer experience. In
return, customers reward the company with their
brand loyalty and buying dollars. The result: Zappos’
sales have grown astronomically.

Objective OUTLINE
Define marketing and outline the steps in the marketing process.
What Is Marketing? (4–5)
Explain the importance of understanding customers and the marketplace and identify the
five core marketplace concepts.
Understanding the Marketplace and Customer Needs (6–8)
Identify the key elements of a customer-driven marketing strategy and discuss the
marketing management orientations that guide marketing strategy.
Designing a Customer-Driven Marketing Strategy (8–12)
Preparing an Integrated Marketing Plan and Program (12)
Discuss customer relationship management and identify strategies for creating value for
customers and capturing value from customers in return.
Building Customer Relationships (12–19)
Capturing Value from Customers (20–22)
Describe the major trends and forces that are changing the marketing landscape in this
age of relationships.
The Changing Marketing Landscape (22–30)
Stop here for a second
and think about how
you’d answer this question before
studying marketing. Then see how
your answer changes as you read the
chapter.
Author
Comment
Today’s successfulcompanies have one thing in common: Like Zappos,
they are strongly customer focused and heavily committed to marketing. These companies
share a passion for understanding and satisfying customer needs in well-defined target mar-
kets. They motivate everyone in the organization to help build lasting customer relationships
based on creating value.
Customer relationships and value are especially important today. As the nation’s economy
has recovered following the worst downturn since the Great Depression, more frugal consumers
are spending more carefully and reassessing their relationships with brands. In turn, it’s more
important than ever to build strong customer relationships based on real and enduring value.
What Is Marketing? (pp 4–5)
Marketing, more than any other business function, deals with customers. Although we will
soon explore more-detailed definitions of marketing, perhaps the simplest definition is this
one: Marketing is managing profitable customer relationships. The twofold goal of marketing is to
attract new customers by promising superior value and keep and grow current customers by
delivering satisfaction.
For example, Walmart has become the world’s largest retailer—and the world’s largest
company—by delivering on its promise, “Save money. Live better.” Nintendo surged ahead
in the video-games market behind the pledge that “Wii would like to play,” backed by its
wildly popular Wii console and a growing list of popular games and accessories for all ages.
And McDonald’s fulfills its “i’m lovin’ it” motto by being “our customers’ favorite place and
way to eat” the world over, giving it a market share greater than that of its nearest three com-
petitors combined.2
Sound marketing is critical to the success of every organization. Large for-profit firms, such
as Procter & Gamble, Google, Target, Toyota, and Marriott use marketing. But so do not-for-profit
organizations, such as colleges, hospitals, museums, symphony orchestras, and even churches.4

Create value for customers and
build customer relationships
Capture value from
customers in return
Capture value
from customers to
create profits and
customer equity
Build profitable
relationships and
create customer
delight
Construct an
integrated
marketing program
that delivers
superior value
Design a
customer-driven
marketing
strategy
Understand the
marketplace and
customer needs
and wants
This important figure shows marketing in
a nutshell! By creating value for customers,
marketers capture value from customers in
return. This five-step process forms the
marketing framework for the rest of
the chapter and the remainder of the text.
FIGURE | 1.1
A Simple Model of the Marketing Process
You already know a lot about marketing—it’s all around you. Marketing comes to you
in the good old traditional forms: You see it in the abundance of products at your nearby
shopping mall and the ads that fill your TV screen, spice up your magazines, or stuff your
mailbox. But in recent years, marketers have assembled a host of new marketing ap-
proaches, everything from imaginative Web sites and online social networks to your cell
phone. These new approaches do more than just blast out messages to the masses. They
reach you directly and personally. Today’s marketers want to become a part of your life and
enrich your experiences with their brands—to help you live their brands.
At home, at school, where you work, and where you play, you see marketing in almost
everything you do. Yet, there is much more to marketing than meets the consumer’s casual
eye. Behind it all is a massive network of people and activities competing for your attention
and purchases. This book will give you a complete introduction to the basic concepts and
practices of today’s marketing. In this chapter, we begin by defining marketing and the mar-
keting process.
Marketing Defined
What is marketing? Many people think of marketing as only selling and advertising. We are
bombarded every day with TV commercials, catalogs, sales calls, and e-mail pitches. How-
ever, selling and advertising are only the tip of the marketing iceberg.
Today, marketing must be understood not in the old sense of making a sale—“telling
and selling”—but in the new sense of satisfying customer needs. If the marketer understands
consumer needs; develops products that provide superior customer value; and prices, dis-
tributes, and promotes them effectively, these products will sell easily. In fact, according to
management guru Peter Drucker, “The aim of marketing is to make selling unnecessary.”3
Selling and advertising are only part of a larger “marketing mix”—a set of marketing tools
that work together to satisfy customer needs and build customer relationships.
Broadly defined, marketing is a social and managerial process by which individuals
and organizations obtain what they need and want through creating and exchanging value
with others. In a narrower business context, marketing involves building profitable, value-
laden exchange relationships with customers. Hence, we define marketing as the process
by which companies create value for customers and build strong customer relationships in
order to capture value from customers in return.4
The Marketing Process
Figure 1.1 presents a simple, five-step model of the marketing process. In the first four
steps, companies work to understand consumers, create customer value, and build strong
customer relationships. In the final step, companies reap the rewards of creating superior
customer value. By creating value for consumers, they in turn capture value from consumers
in the form of sales, profits, and long-term customer equity.
In this chapter and the next, we will examine the steps of this simple model of market-
ing. In this chapter, we review each step but focus more on the customer relationship steps—
understanding customers, building customer relationships, and capturing value from
customers. In Chapter 2, we look more deeply into the second and third steps—designing
marketing strategies and constructing marketing programs.
Marketing
The process by which companies create
value for customers and build strong
customer relationships in order to capture
value from customers in return.

6 Part One |Defining Marketing and the Marketing Process
Understanding the Marketplace
and Customer Needs (pp 6–8)
As a first step, marketers need to understand customer needs and wants and the marketplace
in which they operate. We examine five core customer and marketplace concepts: (1) needs,
wants, and demands; (2) market offerings (products, services, and experiences); (3) value and satis-
faction; (4) exchanges and relationships; and (5) markets.
Customer Needs, Wants, and Demands
The most basic concept underlying marketing is that of human needs. Human needs are
states of felt deprivation. They include basic physical needs for food, clothing, warmth, and
safety; social needs for belonging and affection; and individual needs for knowledge and self-
expression. Marketers did not create these needs; they are a basic part of the human makeup.
Wants are the form human needs take as they are shaped by culture and individual
personality. An American needs food but wants a Big Mac, french fries, and a soft drink. A
person in Papua New Guinea needs food but wants taro, rice, yams, and pork. Wants are
shaped by one’s society and are described in terms of objects that will satisfy those needs.
When backed by buying power, wants become demands. Given their wants and resources,
people demand products with benefits that add up to the most value and satisfaction.
Outstanding marketing companies go to great lengths to learn about and understand
their customers’ needs, wants, and demands. They conduct consumer research and analyze
mountains of customer data. Their people at all levels—including top management—stay
close to customers. For example, retailer Cabela’s vice-chairman, James W. Cabela, spends
hours each morning reading through customer comments and hand-delivering them to
each department, circling important customer issues. At Zappos, CEO Tony Hsieh uses
Twitter to build more personal connections with customers and employees. Some 1.6 mil-
lion people follow Hsieh’s Twitter feed. And at P&G, executives from the chief executive of-
ficer down spend time with consumers in their homes and on shopping trips. P&G brand
managers routinely spend a week or two living on the budget of low-end consumers to gain
insights into what they can do to improve customers’ lives.5
Market Offerings—Products, Services,
and Experiences
Consumers’ needs and wants are fulfilled through market offerings—some combination
of products, services, information, or experiences offered to a market to satisfy a need or a
want. Market offerings are not limited to physical products. They also include services—
activities or benefits offered for sale that are essentially intangible and do not result in the
ownership of anything. Examples include banking, airline, hotel, tax preparation, and home
repair services.
More broadly, market offerings
also include other entities, such as
persons,places,organizations,information,
and ideas. For example, the “Pure
Michigan” campaign markets the state
of Michigan as a tourism destination
that “lets unspoiled nature and authen-
ticcharacterreviveyourspirits.” And
the U.S. Forest Service’s “Reconnecting
Kids with Nature” campaign markets
the idea of encouraging urban young
people to explore the joys of nature
firsthand. Its DiscoverTheForest.org
Web site helps children and their par-
ents figure out where to go outdoors
and what to do there.6
Needs
States of felt deprivation.
Wants
The form human needs take as they are
shaped by culture and individual
personality.
Demands
Human wants that are backed by buying
power.
Market offerings
Some combination of products, services,
information, or experiences offered to a
market to satisfy a need or want.
Marketing is all about
creating value for
customers. So, as the first step in the
marketing process, the company must
fully understand consumers and the
marketplace in which it operates.
Author
Comment
Market offerings are not limited to physical products. Here, the U.S. Forest Service markets
the idea of reconnecting young people with exploring the joys of nature firsthand.

Many sellers make the mistake of paying more attention to the specific products they of-
fer than to the benefits and experiences produced by these products. These sellers suffer from
marketing myopia. They are so taken with their products that they focus only on existing
wants and lose sight of underlying customer needs.7
They forget that a product is only a tool
to solve a consumer problem. A manufacturer of quarter-inch drill bits may think that the
customer needs a drill bit. But what the customer really needs is a quarter-inch hole. These
sellers will have trouble if a new product comes along that serves the customer’s need bet-
ter or less expensively. The customer will have the same need but will want the new product.
Smart marketers look beyond the attributes of the products and services they sell. By
orchestrating several services and products, they create brand experiences for consumers. For
example, you don’t just watch a NASCAR race; you immerse yourself in the exhilarating,
high-octane NASCAR experience. Similarly, HP recognizes that a personal computer is
much more than just a collection of wires and electrical components. It’s an intensely per-
sonal user experience. As noted in one HP ad, “There is hardly anything that you own that
is more personal. Your personal computer is your backup brain. It’s your life. . . . It’s your as-
tonishing strategy, staggering proposal, dazzling calculation. It’s your autobiography, writ-
ten in a thousand daily words.”8
Customer Value and Satisfaction
Consumers usually face a broad array of products and services that might satisfy a given
need. How do they choose among these many market offerings? Customers form expecta-
tions about the value and satisfaction that various market offerings will deliver and buy ac-
cordingly. Satisfied customers buy again and tell others about their good experiences.
Dissatisfied customers often switch to competitors and disparage the product to others.
Marketers must be careful to set the right level of expectations. If they set expectations
too low, they may satisfy those who buy but fail to attract enough buyers. If they set expec-
tations too high, buyers will be disappointed. Customer value and customer satisfaction are
key building blocks for developing and managing customer relationships. We will revisit
these core concepts later in the chapter.
Exchanges and Relationships
Marketing occurs when people decide to satisfy needs and wants through exchange rela-
tionships. Exchange is the act of obtaining a desired object from someone by offering some-
thing in return. In the broadest sense, the marketer tries to bring about a response to some
market offering. The response may be more than simply buying or trading products and
services. Apolitical candidate, for instance, wants votes, a church wants membership, an or-
chestra wants an audience, and a social action group wants idea acceptance.
Marketing consists of actions taken to build and maintain desirable exchange
relationships with target audiences involving a product, service, idea, or other object. Beyond
simply attracting new customers and creating transactions, companies want to retain cus-
tomers and grow their businesses. Marketers want to build strong relationships by consis-
tently delivering superior customer value. We will expand on the important concept of
managing customer relationships later in the chapter.
Markets
The concepts of exchange and relationships lead to the concept of a market. A market is the
set of actual and potential buyers of a product or service. These buyers share a particular
need or want that can be satisfied through exchange relationships.
Marketing means managing markets to bring about profitable customer relationships.
However, creating these relationships takes work. Sellers must search for buyers, identify
their needs, design good market offerings, set prices for them, promote them, and store and
deliver them. Activities such as consumer research, product development, communication,
distribution, pricing, and service are core marketing activities.
Although we normally think of marketing as being carried out by sellers, buyers also
carry out marketing. Consumers market when they search for products, interact with
Marketing myopia
The mistake of paying more attention to
the specific products a company offers
than to the benefits and experiences
produced by these products.
Exchange
The act of obtaining a desired object from
someone by offering something in return.
Market
The set of all actual and potential buyers
of a product or service.

Now that the company
fully understands its
consumers and the marketplace, it
must decide which customers it will
serve and how it will bring them value.
Author
Comment
companies to obtain information, and make their purchases. In
fact, today’s digital technologies, from Web sites and online so-
cial networks to cell phones, have empowered consumers and
made marketing a truly interactive affair. Thus, in addition to
customer relationship management, today’s marketers must also deal effectively with
customer-managed relationships. Marketers are no longer asking only “How can we reach
our customers?” but also “How should our customers reach us?” and even “How can our
customers reach each other?”
Figure 1.2 shows the main elements in a marketing system. Marketing involves
serving a market of final consumers in the face of competitors. The company and com-
petitors research the market and interact with consumers to understand their needs.
Then they create and send their market offerings and messages to consumers, either di-
rectly or through marketing intermediaries. Each party in the system is affected by ma-
jor environmental forces (demographic, economic, natural, technological, political, and
social/cultural).
Each party in the system adds value for the next level. The arrows represent relation-
ships that must be developed and managed. Thus, a company’s success at building prof-
itable relationships depends not only on its own actions but also on how well the entire
system serves the needs of final consumers. Walmart cannot fulfill its promise of low prices
unless its suppliers provide merchandise at low costs. And Ford cannot deliver a high qual-
ity car-ownership experience unless its dealers provide outstanding sales and service.
Designing a Customer-Driven
Marketing Strategy (pp 8–12)
Once it fully understands consumers and the marketplace, marketing management can de-
sign a customer-driven marketing strategy. We define marketing management as the art
and science of choosing target markets and building profitable relationships with them. The
marketing manager’s aim is to find, attract, keep, and grow target customers by creating,
delivering, and communicating superior customer value.
To design a winning marketing strategy, the marketing manager must answer two im-
portant questions: What customers will we serve (what’s our target market)? and How can we
serve these customers best (what’s our value proposition)? We will discuss these marketing strat-
egy concepts briefly here and then look at them in more detail in Chapters 2 and 7.
Selecting Customers to Serve
The company must first decide whom it will serve. It does this by dividing the market into
segments of customers (market segmentation) and selecting which segments it will go after
(target marketing). Some people think of marketing management as finding as many cus-
tomers as possible and increasing demand. But marketing managers know that they cannot
serve all customers in every way. By trying to serve all customers, they may not serve any
customers well. Instead, the company wants to select only customers that it can serve well
Marketing management
The art and science of choosing target
markets and building profitable
relationships with them.
Major environmental forces
Consumers
Marketing
intermediaries
Competitors
Company
Suppliers
M
Arrows represent relationships
that must be developed and
managed to create customer
value and profitable customer
relationships.
Each party in the system adds
value. Walmart cannot fulfill
its promise of low prices unless
its suppliers provide low costs.
Ford cannot deliver a high quality
car-ownership experience unless
its dealers provide outstanding
service.
FIGURE | 1.2
A Modern Marketing System

and profitably. For example, Nordstrom profitably targets af-
fluent professionals; Dollar General profitably targets families
with more modest means.
Ultimately, marketing managers must decide which cus-
tomers they want to target and on level, timing, and nature of
their demand. Simply put, marketing management is customer
management and demand management.
Choosing a Value Proposition
The company must also decide how it will serve targeted
customers—how it will differentiate and position itself in the mar-
ketplace.Abrand’s value proposition is the set of benefits or values
it promises to deliver to consumers to satisfy their needs. At
AT&T, it’s “Your World. Delivered.” whereas with T-Mobile,
family and friends can “Stick together.” The diminutive Smart
car suggests that you “Open your mind to the car that challenges
the status quo,” whereas Infiniti “Makes luxury affordable,” and
BMW promises “the ultimate driving machine.”
Such value propositions differentiate one brand from an-
other. They answer the customer’s question, “Why should I
buy your brand rather than a competitor’s?” Companies must
design strong value propositions that give them the greatest
advantage in their target markets. For example, the Smart car
is positioned as compact, yet comfortable; agile, yet economi-
cal; and safe, yet ecological. It’s “sheer automotive genius in a
totally fun, efficient package. Smart thinking, indeed.”
Marketing Management
Orientations
Marketing management wants to design strategies that will
build profitable relationships with target consumers. But what
philosophy should guide these marketing strategies? What weight should be given to the in-
terests of customers, the organization, and society? Very often, these interests conflict.
There are five alternative concepts under which organizations design and carry out their
marketing strategies: the production, product, selling, marketing, and societal marketing concepts.
The Production Concept
The production concept holds that consumers will favor products that are available and
highly affordable. Therefore, management should focus on improving production and dis-
tribution efficiency. This concept is one of the oldest orientations that guides sellers.
The production concept is still a useful philosophy in some situations. For example,
computer maker Lenovo dominates the highly competitive, price-sensitive Chinese PC mar-
ket through low labor costs, high production efficiency, and mass distribution. However, al-
though useful in some situations, the production concept can lead to marketing myopia.
Companies adopting this orientation run a major risk of focusing too narrowly on their
own operations and losing sight of the real objective—satisfying customer needs and
building customer relationships.
The Product Concept
The product concept holds that consumers will favor products that offer the most in qual-
ity, performance, and innovative features. Under this concept, marketing strategy focuses
on making continuous product improvements.
Product quality and improvement are important parts of most marketing strategies.
However, focusing only on the company’s products can also lead to marketing myopia. For
example, some manufacturers believe that if they can “build a better mousetrap, the world
Value propositions: Smart car suggests that you “open your
mind”—“Sorry, big guy. Efficiency is in these days.”
Production concept
The idea that consumers will favor
products that are available and highly
affordable and that the organization
should therefore focus on improving
production and distribution efficiency.
Product concept
The idea that consumers will favor
products that offer the most quality,
performance, and features and that the
organization should therefore devote its
energy to making continuous product
improvements.

MeansStarting
point
EndsFocus
The selling
concept
Profits through
customer
satisfaction
Market
Integrated
marketing
Customer
needs
The marketing
concept
Selling
and
promoting
Factory
Profits through
sales volume
Existing
products
The selling concept takes an
inside-out view that focuses on
existing products and heavy
selling. The aim is to sell what
the company makes rather than
making what the customer wants.
The marketing concept takes an
outside-in view that focuses on
satisfying customer needs as a
path to profits. As Southwest
Airlines’ colorful founder puts it,
“We don’t have a marketing
department, we have a
customer department.”
FIGURE | 1.3
Selling and Marketing
Concepts Contrasted
will beat a path to their doors.” But they are often rudely shocked. Buyers may be looking
for a better solution to a mouse problem but not necessarily for a better mousetrap. The bet-
ter solution might be a chemical spray, an exterminating service, a house cat, or something
else that works even better than a mousetrap. Furthermore, a better mousetrap will not sell
unless the manufacturer designs, packages, and prices it attractively; places it in convenient
distribution channels; brings it to the attention of people who need it; and convinces buyers
that it is a better product.
The Selling Concept
Many companies follow the selling concept, which holds that consumers will not buy
enough of the firm’s products unless it undertakes a large-scale selling and promotion ef-
fort. The selling concept is typically practiced with unsought goods—those that buyers do
not normally think of buying, such as insurance or blood donations. These industries must
be good at tracking down prospects and selling them on a product’s benefits.
Such aggressive selling, however, carries high risks. It focuses on creating sales trans-
actions rather than on building long-term, profitable customer relationships. The aim often
is to sell what the company makes rather than making what the market wants. It assumes
that customers who are coaxed into buying the product will like it. Or, if they don’t like it,
they will possibly forget their disappointment and buy it again later. These are usually poor
assumptions.
The Marketing Concept
The marketing concept holds that achieving organizational goals depends on knowing
the needs and wants of target markets and delivering the desired satisfactions better than
competitors do. Under the marketing concept, customer focus and value are the paths to
sales and profits. Instead of a product-centered “make and sell” philosophy, the marketing
concept is a customer-centered “sense and respond” philosophy. The job is not to find the
right customers for your product but to find the right products for your customers.
Figure 1.3 contrasts the selling concept and the marketing concept. The selling con-
cept takes an inside-out perspective. It starts with the factory, focuses on the company’s ex-
isting products, and calls for heavy selling and promotion to obtain profitable sales. It
focuses primarily on customer conquest—getting short-term sales with little concern about
who buys or why.
In contrast, the marketing concept takes an outside-in perspective. As Herb Kelleher, the
colorful founder of Southwest Airlines puts it, “We don’t have a marketing department; we
have a customer department.” The marketing concept starts with a well-defined market, fo-
cuses on customer needs, and integrates all the marketing activities that affect customers. In
turn, it yields profits by creating lasting relationships with the right customers based on cus-
tomer value and satisfaction.
Implementing the marketing concept often means more than simply responding to cus-
tomers’ stated desires and obvious needs. Customer-driven companies research current cus-
tomers deeply to learn about their desires, gather new product and service ideas, and test
proposed product improvements. Such customer-driven marketing usually works well
when a clear need exists and when customers know what they want.
Selling concept
The idea that consumers will not buy
enough of the firm’s products unless it
undertakes a large-scale selling and
promotion effort.
Marketing concept
A philosophy that holds that achieving
organizational goals depends on knowing
the needs and wants of target markets
and delivering the desired satisfactions
better than competitors do.

In many cases, however, customers don’t know what they
want or even what is possible. For example, even 20 years
ago, how many consumers would have thought to ask for
now-commonplace products such as notebook computers,
cell phones, digital cameras, 24-hour online buying, and
satellite navigation systems in their cars? Such situations call
for customer-driving marketing—understanding customer
needs even better than customers themselves do and creating
products and services that meet existing and latent needs,
now and in the future. As an executive at 3M puts it, “Our
goal is to lead customers where they want to go before they
know where they want to go.”
The Societal Marketing Concept
The societal marketing concept questions whether the
pure marketing concept overlooks possible conflicts between
consumer short-run wants and consumer long-run welfare. Is a
firm that satisfies the immediate needs and wants of target
markets always doing what’s best for its consumers in the
long run? The societal marketing concept holds that market-
ing strategy should deliver value to customers in a way that maintains or improves both the
consumer’s and society’s well-being. It calls for sustainable marketing, socially and environ-
mentally responsible marketing that meets the present needs of consumers and businesses
while also preserving or enhancing the ability of future generations to meet their needs.
Consider today’s bottled water industry. You may view bottled water companies as of-
fering a convenient, tasty, and healthy product. Its packaging suggests “green” images of
pristine lakes and snow-capped mountains. Yet making, filling, and shipping billions of plas-
tic bottles generates huge amounts of carbon dioxide emissions that contribute substantially
to global warming. Further, the plastic bottles pose a substantial recycling and solid waste
disposal problem. Thus, in satisfying short-term consumer wants, the bottled water indus-
try may be causing environmental problems that run against society’s long-run interests.
As Figure 1.4 shows, companies should balance three considerations in setting their
marketing strategies: company profits, consumer wants, and society’s interests. UPS does
this well. Its concern for societal interests has earned it the number one or number two spot
in Fortune magazine’s Most Admired Companies for Social Responsibility rankings in four
of the past five years.
UPS seeks more than just short-run sales and profits. Its three-pronged corporate sus-
tainability mission stresses economic prosperity (profitable growth through a customer
focus), social responsibility (community engagement and individual well-being), and
environmental stewardship (operating efficiently and protecting the environment).
Whether it involves greening up its operations or urging employees to volunteer time
in their communities, UPS proactively seeks opportunities to act responsibly. UPS
Customer-driving marketing: Even 20 years ago, how many
consumers would have thought to ask for now-commonplace
products such as cell phones, notebook computers, iPods, and digital
cameras? Marketers must often understand customer needs even
better than the customers themselves do.
Societal marketing concept
The idea that a company’s marketing
decisions should consider consumers’
wants, the company’s requirements,
consumers’ long-run interests, and
society’s long-run interests.
Societal
marketing
concept
Consumers
(Want satisfaction)
Company
(Profits)
Society
(Human welfare)
UPS knows that doing what’s right benefits
both consumers and the company. Social
responsibility “isn’t just good for the
planet,” says the company. “It’s good
for business.”
FIGURE | 1.4
Three Considerations Underlying
the Societal Marketing Concept

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