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Chapter 1
Overview of Marketing

Learning Objectives
Learning Objective 1.1 Define the role of
marketing.
Learning Objective 1.2 Describe the evolution of
marketing over time.
Learning Objective 1.3 Describe how marketers
create value for a product or service.

Water Bottles

CD_works27/Shutterstock

What Is Marketing?

Marketing is the activity, set of institutions, and processes
for creating, capturing, communicating, delivering, and
exchanging offerings that have value for customers, clients,
partners, and society at large.

Alejandro Rivera/Getty Images

Exhibit 1.1 Core Aspects of Marketing

Access the text alternative for slide images.
© McGraw Hill LLC

Marketing Is about Satisfying Customer
Needs and Wants
How does Dove offer value?
• Dove added the Dove
Men+Care line and expanded
into products for babies.

• In advertising to male
consumers, Dove seeks to
acknowledge and recognize
modern men’s caregiving roles,
so it can link these
communications to its baby care
products too.
• Dove seeks to acknowledge
and recognize modern men’s
caregiving roles, so it can link
these communications to its
baby care products.

Dove seeks to acknowledge and recognize
modern men’s caregiving roles, so it can link
these communications to its baby care
products.

Source: Unilever

Exhibit 1.2: Exchange: The Underpinning of
Seller-Buyer Relationships

Exhibit 1.3: The Marketing Mix

Source: McGraw-Hill Global Education Holdings, LLC

Marketing Creates Value through Product,
Price, Place, and Promotion Decisions
The Marketing Mix:

The controllable set
of decisions or
activities that the firm
uses to respond to
the wants of its target
markets.

• Product.
• Price.
• Promotion.
• Place.

Product: Creating Value
The fundamental purpose of
marketing is to create value
by developing a variety of
offerings, including goods,
services, and ideas, to
satisfy customer needs.

• Goods.
• Services.
• Ideas.
Marketing creates value by promoting
ideas, such as bicycle safety.

Source: Street Smart, a public safety campaign of Metro, the District of Columbia, Maryland, and Virginia.

Price: Capturing Value
Price is everything a
buyer gives up (money,
time, energy) in
exchange for the
product or service.

If you don’t mind sitting in a middle seat and
putting all your baggage under your seat, flying on
low-cost carriers like Frontier is a good value.

Kateryna Kukota/Alamy Stock Photo

Place: Delivering the Value Proposition
Place represents all the
marketing processes
necessary to get the product to
the right customer when that
customer wants it.
Place more commonly deals
specifically with retailing and
marketing channel
management, also known as
supply chain management.
Hertz creates customer value by using biometrics to
create a function that recognizes loyal customers
using facial, iris, or fingerprint scans.

Jeff Martin/AP Images

Promotion: Communicating the Value
Proposition
Promotion is
communication by a
marketer that informs,
persuades, and reminds
potential buyers about a
product or service to
influence their buying
decisions and elicit a
response.
Babar books wanted to celebrate the 80th anniversary of the series.
It initiated a $100,000 campaign, working in collaboration with toy
stores and bookstores.
© McGraw Hill LLC

BananaStock/Alamy Images

Exhibit 1.4: Marketing Can Be Performed by
Individuals and by Organizations

Marketing Impacts Various Stakeholders
Customers.

Supply Chain Partners.
Employees.

Industry.
Society.
The Great American Milk Drive, run in conjunction with
Feeding America, seeks to ensure that local food banks are
sufficiently stocked with nutritious, frequently requested items.
© McGraw Hill LLC

Source: America’s Milk Companies

PROGRESS CHECK (1 of 3)
1. What is the definition of marketing?
2. Marketing is about satisfying
blank.

blank and

3. What are the four components of the marketing
mix?

4. Who can perform marketing?

Exhibit 1.5 Marketing Evolution:
Production, Sales, Marketing and Value

Photos (left to right): Ryan McVay/Photodisc/Getty Images; Clement Mok/Photodisc/Getty Images; Lawrence Manning/Corbis/Getty Images; Ryan McVay/Photodisc/Getty Images;
Mark Dierker/McGraw-Hill

Access the text alternative for slide images.
© McGraw Hill LLC

Value-Based Marketing
A Lipstick Option for Those Who Dream of a
Hermès Bag

Value-Based Marketing Era

PROGRESS CHECK (2 of 3)
1. What are the various eras of marketing?

How Does Marketing Create Value and
How Do Firms Become More Value Driven?
Build relationships with customers.

Gather and analyze information.
Balance benefits and costs.
Connect with customers using social and
mobile media.
Access the text alternative for slide images.
© McGraw Hill LLC

Value Stems From Four Main Activities
Adding Value
Using Marketing Analytics
Embracing Social and Mobile Marketing
Ethical and Societal Dilemma: Engaging in
Conscious Marketing
Access the text alternative for slide images.
© McGraw Hill LLC

Marketing Analytics
Companies collect massive amounts of data about
how, when, why, where, and what people buy.

Kroger collects massive amounts of data about how, when, why, where, and what people buy and
then analyzes those data to better serve its customers.
© McGraw Hill LLC

Connecting With Customers Using Social
and Mobile Marketing
Social media ad
spending is growing,
increasing by 32 percent
in 2018 alone.

3.26 billion people link
to some social media
sites through their
mobile devices.
Make travel arrangements online either
through Facebook or hotels’ mobile app and
check-in is a breeze.

Erik Isakson/Blend Images/Getty Images

Resolving Ethical and Societal Dilemmas
Conscious Marketing
Socially Responsible
Firms
Making socially
responsible activities an
integral component of
corporate strategies.
Too Good To Go is a UK-based app that has
partnered with 1,381 food stores to match
hungry customers to restaurants and stores
with surplus food that would otherwise go to
waste.

Guillaume Payen/SOPA Images/LightRocket/Getty Images

PROGRESS CHECK (3 of 3)
1. Does providing a good value mean selling at a
low price?

2. How are marketers connecting with customers
through social and mobile media?

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Chapter 2
Developing Marketing
Strategies and a Marketing
Plan

Learning Objectives
Learning Objective 2.1 Define a marketing strategy.
Learning Objective 2.2 Describe the elements of a marketing plan.
Learning Objective 2.3 Analyze a marketing situation using SWOT
analyses.

Learning Objective 2.4 Describe how a firm chooses which consumer
group(s) to pursue with its marketing efforts.
Learning Objective 2.5 Outline the implementation of the marketing
mix as a means to increase customer value.
Learning Objective 2.6 Summarize portfolio analysis and its use to
evaluate marketing performance.
Learning Objective 2.7 Describe how firms grow their business.

PepsiCo

The development at PepsiCo reflects careful
analysis of the market and efforts to ensure that it
continues to attract a wide range of consumers.
© McGraw Hill LLC

VStock / Alamy, Shutterstock/VDB Photos

What is a Marketing Strategy?
A marketing strategy
identifies:
• A firm’s target market.
• A related marketing
mix.
• The bases on which
the firm plans to build
a sustainable
competitive
advantage.

Shutterstock / SergZSV.ZP

Exhibit 2.1: Macro Strategies for Developing
Customer Value

Access the text alternative for slide images.
© McGraw Hill LLC

Customer Excellence

Retaining loyal
customers.
Providing outstanding
customer service.
Disney’s My Magic system enables users to
swipe their MagicBand wristbands to get on
rides, make purchases, and open their hotel
room door

parrysuwanitch/123RF

Operational Excellence

Efficient
operations

Excellent
supply chain
management

Strong
relationship
with
suppliers

Product Excellence
Provide products with high
perceived value and
effective branding and
positioning.
Bloomberg Businessweek’s
top global brands:
• Apple, Google,
Microsoft, Coca-Cola,
Amazon, Samsung,
Toyota, Facebook,
Mercedes, IBM.
© McGraw Hill LLC

Locational Excellence
Especially important for retailers and service providers.
Many say, “The three most important things in retailing are
location, location, location.”
Competitive advantage based on location is not easily
duplicated. Starbucks makes it difficult for competitors to
enter a market and find good locations.

Multiple Sources of Advantage
A single strategy (low
prices or excellent service)
is usually not enough to
build a sustainable
competitive advantage.
Southwest Airlines
• Provides good service
at a good value (ontime flights that are
reasonably priced).

Carlos E. Santa Maria/Shutterstock

PROGRESS CHECK (1 of 3)
1. What are the various components of a marketing
strategy?

2. List the four macro strategies that can help a
firm develop a sustainable competitive
advantage.

Exhibit 2.2: The Marketing Plan

Access the text alternative for slide images.
© McGraw Hill LLC

Step 1: Define the Business Mission

PepsiCo’s Mission Statement:
“To provide consumers around the world with delicious,
affordable, convenient and complementary foods and
beverages from wholesome breakfasts to healthy and
fun daytime snacks and beverages to evening treats.”
Coke’s Mission Statement:
“To refresh the world … To inspire moments of optimism
and happiness … To create value and make a
difference.”

Step 1: Conduct a Situation Analysis Using
SWOT Analysis

Internal
Strengths

Internal
Weaknesses

External
Opportunities

External
Threats

Exhibit 2.3: Examples of Elements in a SWOT
Analysis (1 of 2)

Pepsi

Environment

Evaluation

Positive

Negative

Internal

Strengths
• Diverse brand portfolio
• Strong celebrity endorsers
• Successful marketing
campaigns with music
industry
• Commitment to social and
environmental charitable
causes

Weaknesses
• Lower brand awareness than
rival Coca-Cola
• Less market share than rival
Coca-Cola
• Environmentally unfriendly
packaging

External

Opportunities
• Expanding health food market
• Growth in global market share
• Acquisition of new brands

Threats
• Water scarcity
• Popularity of reusable water
bottles
• Soda taxes
• Increasing competition in the
snack food market

Sources: Bitesh Bhasin, “SWOT Analysis of Pepsi—PepsiCo SWOT Analysis,” Marketing91, April 3, 2019; Hitesh Bhasin, “SWOT of Coca-Cola,” Marketing91, 2018.

Exhibit 2.3: Examples of Elements in a SWOT
Analysis (2 of 2)

CocaCola

Environment

Evaluation

Positive

Negative

Internal

Strengths
• High market share
• Strong brand
• Strong global presence
• Excellent customer loyalty
• Supply chain

Weaknesses
• Low diversification
• Few healthy beverages

External

Opportunities
• Emerging countries
• Diversifying products
• Bottled water

Threats
• Water scarcity
• Potential market
saturation
• Changes to labeling
regulations
• Increasing competitors

Sources: Bitesh Bhasin, “SWOT Analysis of Pepsi—PepsiCo SWOT Analysis,” Marketing91, April 3, 2019; Hitesh Bhasin, “SWOT of Coca-Cola,” Marketing91, 2018.

Step 3: Identifying and Evaluating
Opportunities Using STP

Segmentation
Targeting
Positioning

Exhibit 2.4: Hertz: Market Segmentation
Illustration
Segments

Cars
Offered

Segment 1

Segment 2

Segment 3

Segment 4

Segment 5

Single thrill
seekers and
gear heads on
vacation

Business
customers
and families
who prefer a
luxurious ride

Environmental
ly conscious
customers

Families

Commercial
customers

Adrenaline
Collection

Prestige
Collection

Green
Traveler
Collection

SUV/Mini
van/4×4
Collection

Commercial
Van/Truck
Collection

Corvette ZHZ

Infiniti QX56

Toyota Prius

Toyota RAV4

Ford Cargo
Van

Chevrolet
Camaro

Cadillac
Escalade

Ford Fusion

Ford Explorer

Market Positioning
Choose which segments to
pursue, then how to position
within those segments.
Define the marketing mix
variables so target customers
have a clear, distinctive, and
desirable understanding of the
product compared to competition.
Hertz positions itself as a quality
car and truck rental company that
is the first choice for each target
segment.

Shutterstock/MuchMania

Step 4: Implement Marketing Mix and Allocate
Resources

Product and Value
Creation

Price and Value
Capture

Place and Value
Delivery

Promotion and
Value
Communication

Product and Value Creation
Successful products and services are those that
customers perceive as valuable enough to purchase.

Dyson creates value with its innovative products (left). It can therefore charge significantly more than
the price charged for conventional fans (right).
Access the text alternative for slide images.
© McGraw Hill LLC

(Left): Source: Dyson, Inc.; (right): Stockbyte/Getty Images

Price and Value Capture
Price is what the customer is willing to pay for
a product they perceive as good value.

Shutterstock / RUBEN M RAMOS

Place and Value Delivery
The product must be
readily accessible
when and where the
customer wants it.
• Dyson provides
product and place
value.
• Where are Dyson
fans available?

Top: Shutterstock/TotallyMJ , Bottom: Shutterstock/Maxx-Studio

Promotion and Value Communication

Advertising
Online
marketing
(including
social
media)

Personal
selling

Integrated
marketing
communications
(IMC)

Direct
marketing

Sales
promotion
Public
relations

Access the text alternative for slide images.
© McGraw Hill LLC

Step 5: Evaluate Performance Using
Marketing Metrics
A metric is a measuring
system that quantifies a
trend, dynamic, or
characteristic.
Metrics are used to
explain why things
happened and also
project the future.

Shutterstock / NicoElNino

Evaluating Performance
Who is accountable for
performance?
EXHIBIT 2.5 Performance Metrics: Coke vs. Pepsi

•

Performance
Objectives, Marketing
Analytics, and Metrics.

•

Financial Performance
Metrics.

•

Portfolio Analysis.
Access the text alternative for slide images.

Source: MarketWatch, Inc.

Exhibit 2.6 Boston Consulting Group Matrix

Photos (top left): DenPhotos/Shutterstock; (top right): Kicking Studio/Shutterstock; (bottom left): Sushiman/Shutterstock;
(bottom right): David Caudery/Tap Magazine/Getty Images
Access the text alternative for slide images.
© McGraw Hill LLC

P&G
Website
28

Which Quadrant?
Whether a product is
classified as a star or
a question mark has
profound implications
on how it is treated
and supported within
the firm.

Top: Ksander/Shutterstock; Bottom: Denis Rozhnovsky / Alamy Stock Photo

PROGRESS CHECK (2 of 3)
1. What are the five steps in creating a marketing
plan?

2. What tool helps a marketer conduct a situation
analysis?
3. What is STP?

4. What do the four quadrants of the portfolio
analysis represent?

Growth Strategies
Exhibit 2.7: Markets/Products and Service Strategies

Access the text alternative for slide images.
© McGraw Hill LLC

Market Penetration
Current marketing mix,
Current customers
Marvel used a market
penetration strategy by
expanding the distribution of
its films:
• Theaters.
• Xfinity.

• DVDs (in a variety of retail
locations).
© McGraw Hill LLC

Shutterstock/Nestor Rizhniak

Market Development
Current Products or
Services.
New Markets.
Marvel pursues such a
market development
strategy when it enhances
the viewing of its movies by
expanding into more global
markets.

Klaus Vedfelt/Getty Images

Product Development
New product or service.
Current target market.
Marvel launched several
successful series on Netflix,
including Jessica
Jones, Daredevil, Iron
Fist, and Luke Cage.
• By developing series designed
for this format, Marvel can
connect with its customers in a
new and important way.

Left: Dragon Images/Shutterstock, Right: Makistock/Shutterstock

Diversification
New product or service.
New market segment.
Related vs. unrelated
diversification.
•

Marvel has pursued related
diversiﬁcation with its home décor.

•

If Marvel ventured into the child
day care service industry, it would
be an unrelated diversiﬁcation
because it is so diﬀerent from its
core business and therefore very
risky.

Photos (top): Interior Design/Shutterstock; (bottom): Ariel Skelley/Photodisc/Getty Images

PROGRESS CHECK (3 of 3)
1. What are the four growth strategies?
2. What type of strategy is growing the business
from existing customers?
3. Which strategy is the riskiest?

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Because learning changes everything.®

Chapter 3
Digital Marketing: Online,
Social, and Mobile

Learning Objectives
Learning Objective 3.1 Describe the 4E framework of digital
marketing.

Learning Objective 3.2 Examine the seven critical elements of online
marketing.
Learning Objective 3.3 Understand the drivers of social media
engagement.

Learning Objective 3.4 Understand various motivations for using
mobile applications.
Learning Objective 3.5 Recognize and understand the components of
a digital marketing strategy.
Learning Objective 3.6 Understand the central factors in picking an
influencer partner.
© McGraw Hill LLC

Hilton

Regien Paassen/Shutterstock

Exhibit 3.1: The 4E Framework for Digital
Marketing

Access the text alternative for slide images.
© McGraw Hill LLC

Excite the Customer
Offer must be relevant
to its targeted customer.
Relevancy can be
achieved by providing
personalized offers.
‫ﻋﺮﻭﺽ‬
‫ﻋﺮﻭﺽ ﻣﺨﺼﺼﻪ ﻟﻠﻌﻤﻴﻞ‬

Marketers use many kinds of digital offers to excite customers,
and to excite them, an offer must be relevant to its targeted
customer. Lush Cosmetics encourages customers to post
pictures of themselves using its products on social media by
promising that if they use #LushLife, they might find
themselves featured on its official page.

Source: Lush Cosmetics/Instagram

Educate the Customer
Golden opportunity to
educate about the
product’s value
proposition and
communicate offered
benefits.

When marketing
ideas, the goal is to
improve people’s
well-being, along with
selling the underlying
concept.
© McGraw Hill LLC

To educate women about how to perform breast self-exams, the #KnowYourLemons
campaign posted pictures of a dozen lemons to teach people about 12 shapes and lumps
they should be looking for when they themselves for cancer each month.

Source: Worldwide Breast Cancer

Experience the Product or Service
Provide vivid information
about a firm’s goods and
services. ‫ﺗﻘﺪﻳﻢ ﻣﻌﻠﻮﻣﺎﺕ ﺣﻴﺔ ﻋﻦ ﺳﻠﻊ ﻭﺧﺪﻣﺎﺕ ﺍﻟﺸﺮﻛﺔ‬
Simulate real experiences.
‫ﻣﺤﺎﻛﺎﺓ ﺍﻟﺘﺠﺎﺭﺏ ﺍﻟﺤﻘﻴﻘﻴﺔ‬

Sephora maintains its own YouTube channel with dedicated videos that
demonstrate how to use specific products like bright pink eyeshadow.

Source: Sephora USA, Inc.

Engage the Customer
Action, loyalty, and
commitment.
Positively engaged
consumers lead to more
profitability.
Engagement can also
backfire.
IKEA engages customers with its “Place” app that enables
customers to select an item from its catalog and then, by
using the camera within the app, visualize the item in their
home or office.

Source: IKEA Systems B.V.

PROGRESS CHECK (1 of 6)
1. What are the 4 Es?
2. What social media elements work best for each
of the 4 Es?

EXHIBIT 3.2: The 7C Online Marketing Framework

Access the text alternative for slide images.
© McGraw Hill LLC

1. Core Goals
The basis of any
marketing strategy is its
goals.
Determine specific
goals.
Align the goals with the
target market and align
the 7Cs with the goals.

Hasbro has embraced online marketing to reflect its core goals. To
introduce this new brand called Hanazuki, it developed an entire
series that viewers can watch on YouTube. The Hanazuki page is
filled with animation, movement, and bright colors, encouraging
visitors to take their time exploring the different characters, watching
videos, downloading apps, and perhaps shopping too.

Source: Hasbro, Inc.

2. Context Elements
Design.

Navigation.
Must be in alignment
with the target market.

Because Walmart’s core goal is to encourage purchases, its commerceoriented website features a simple look and feel. Looking closely at the
design and color scheme, notice that Walmart’s home page aligns with its
adult target market. It is more traditionally focused on selling Hanazuki
merchandise than Hasbro, Inc. with little concern for the brand itself.

Source: Walmart Stores, Inc.

3. Content
Monitor to ensure
relevancy.
Devise appropriate
keywords to improve
organic search.
Implement SEM and
paid search.

‫ﺑﺤﺚ ﻣﺪﻓﻮﻉ ﻟﻤﺤﺮﻛﺎﺕ ﺍﻟﺒﺤﺚ‬
The content of these messages must resonate with its target market, but
need
not always showcase merchandise or services, as in the Facebook
‫ﻋﺸﺎﻥ ﺍﻟﺸﺮﻛﺔ ﺗﻄﻠﻊ ﺍﻭﻝ ﻭﺣﺪﺓ ﻟﻤﺎ ﻧﺒﺤﺚ ﻋﻦ ﻣﻨﺘﺞ‬
post from the jewelry firm, Alex and Ani. The company is not showcasing its
jewelry per se, but rather providing a motivational quote that resonates with
young females, its primary target market.

Source: Alex and Ani, LLC

4. Community
Allow customers to
interact.
Use corporate and
professional blogs.

Engage in
Crowdsourcing.
‫ ﻳﺸﺎﺭﻛﻮﻫﻢ ﺍﻻﻗﺘﺮﺍﺣﺎﺕ‬,‫ﻳﺴﺄﻟﻮ ﺍﻟﻨﺎﺱ ﺷﻮ ﺑﺪﻫﻢ ﻣﻨﺘﺠﺎﺕ‬
Betabrand uses crowdsourcing by having its customers submit clothing
design ideas and feedback on items before they are manufactured.

Source: Betabrand

5. Communication
Clear, helpful, meaningful content enables effective
communication.

Enables interacting with, engaging, and educating
site visitors.
Provide a mechanism for customers to
communicate with the firm.

6. Commerce
Desktop usage is greater,
and conversion rates
higher, for online
purchases.
The most loyal customers
use multiple channels.
Customers want a range of
online purchase options.
Through Sephora’s mobile app, Beauty Insider account holders can check their
loyalty points, access past purchase behavior, receive personalized
recommendations, scan items while in stores, and much more.

Source: Sephora USA, Inc.

7. Connection
Engage customers and
provide a call to action.
Allow customers to
interact with the firm
continuously.
Enable positive
engagement.
A good website or blog engages customers and provides them with a
call to action. Warby Parker connects customers with four call-to-action
buttons inviting visitors to: get started, order frames to try on at home,
take a quiz, and shop online.

Source: Warby Parker

PROGRESS CHECK (2 of 6)
1. Describe the components of the 7C online
marketing framework.
2. Differentiate between organic and paid search.

Exhibit 3.3:
The Wheel of Social Media Engagement

The Information Effect
Outcome in which relevant
information is spread by
firms or individuals to other
members of the social
network.

BigTunaOnline/Shutterstock

The Connected Effect
Outcome that satisfies humans’ innate need to connect with
other people.

Source: William Perugini/Shutterstock

The Network Effect
Outcome in which every post is spread instantaneously
across social media.

Source: Shutterstock/Metamorworks

The Dynamic Effect
Information is exchanged to network participants through
back-and-forth communications.
Examines how people flow in and out of networked
communities as their interests change.

Rawpixel.com/Shutterstock

The Timeliness Effect
Firms must engage with the customer at the right
place and time.

Using beacon technology, Coca-Cola is able to engage customers in
a timely manner by offering moviegoers a free Coke at the moment
they walk into a movie theater.

Source: SeongJoon Cho/Bloomberg/Getty Images

PROGRESS CHECK (3 of 6)
1. What are the five drivers of social media
engagement described in the Wheel of Social
Media Engagement?

Going Mobile and Social
Exhibit 3.4: Seven Primary Motivations for Mobile App Usage

Need for “Me Time”
Need to Socialize
Need to Shop
(showrooming)
Need to Accomplish
Need to Prepare
Need to Discover

Need to Self-Express
With more than 3 billion downloads, Candy Crush Saga clearly fulfills for
many people an important need for unproductive “me time.”

Access the text alternative for slide images.
© McGraw Hill LLC

Source: Alexat25/Shutterstock

App Pricing Models

PROGRESS CHECK (4 of 6)
1. What are the seven types of customer
motivations for using mobile apps?
2. What are the four options for pricing mobile
apps?
3. What are some of the most popular types of
mobile applications?

How Do Firms Engage Their Customers?
Exhibit 3.4: Social Media Engagement Process
‫ﺍﻟﺼﻮﺭﺓ ﻫﻨﺎ ﺍﻓﻀﻞ‬

Access the text alternative for slide images.
© McGraw Hill LLC

Listen

———

Listening helps
determine digital
marketing objectives and
strategies.

Sentimental analysis
allows marketers to
analyze and determine
consumers attitudes and
preferences.
© McGraw Hill LLC

Other companies perform their own analyses, effectively leveraging their
existing capacities for listening to customers. Zappos is known for its
remarkable customer service and attracts plenty of buzz about its
offerings. It takes the information it gathers from listening to customers to
design strategies that emphasize what they like most.

Source: Zappos.com, Inc.

Analyze

Exhibit 3.5: How to Do a Digital Marketing
Campaign

Access the text alternative for slide images.
© McGraw Hill LLC

Do
Develop and implement
campaigns using social
media.

EXHIBIT 3.6 Example Facebook Targeting Choices

Effective implementation
based on social and
mobile media activity.

Source: Facebook

PROGRESS CHECK (5 of 6)
1. What are the components of a digital marketing
strategy?

Influencer Marketing
A marketing strategy that uses
opinion leaders, popular on social
media, to drive marketing
messages to a targeted audience.
Firms hire (or encourage) these
well-known names to promote
brand messages to their networks
of followers.
Big-time influencers like
Ariana Grande have millions
of followers and can
command almost a mil-lion
dollars for a sponsored post.

Source: Lev Radin/Shutterstock

Assessing the Efficacy of Influencers

Relevance

Reach

Response

Return
Influencers like Selena Gomez can reach millions of potential
customers for Coca-Cola with an Instagram post like this one, which
depicts her drinking a Coke with the lyrics from one of her songs on
the bottle.

Source: Selena Gomez/Instagram

Exhibit 3.8: Influencer Marketing Chain of
Events

Access the text alternative for slide images.
© McGraw Hill LLC

Exhibit 3.9: Types of Influencers
Type of Influencer

Definition

Example

Key Channels

Average Cost per Post

Celebrity

Large following, widely
recognized

Social media, print,
television

$3,000–$500,000

Micro

Modest following, niche
interest

Posts on social media
sites, shared promo codes

$80–$500

Blog

Writes for a blog and has
attracted readers and
subscribers with that
content

Reviews on blog, guest
blog posts

$400–$5,500

Social media

Popular on social platforms
(Instagram, YouTube,
Twitter) among followers in
specific target audiences
Key opinion leader or
expert in a specific field

Nespresso relies heavily on
George Clooney to promote its
products in marketing across
platforms, leveraging his cool
image to enhance its appeal but
also his reputation for
environmental sustainability to
promote its own efforts along these
lines
NUX Active (athletic clothing
brand) worked with Sydney
Loveleigh Nelson, whose health
and fitness posts have earned her
about 21,000 followers
The FaceGym spa sponsored a
blog post by lifestyle blogger
Hannah Bronfman to provide
information about its services and
treatments
LaCroix worked with nutritionist
Joy Bauer to create a Twitter post
of a recipe she had created, using
the product
BoxyCharm, a subscription beauty
box service, worked with Kandee
Johnson, a professional makeup
artist, to make videos that
explained each product included in
a box

Pictures posted with the
product, shared hashtags,
videos featuring the
product
Social media, tutorials,
reviews, blog posts,
sponsored print articles,
articles in academic
journals

$100–$500,000

Specialized

$500–$5,000

Source: Kristen Baker, “What Will Influencer Marketing Look Like in 2020?,” HubSpot, December 2, 2019,
© McGraw Hill LLC

Ethical Considerations for Influencer Marketing
Fraudulent Influence
• The incentive to boost follower numbers accordingly has led to
various unethical behaviors.

Disclosing Advertising
• Intent if an influencer is being paid to promote a product, that
information should be clear in the post.

Sincerity
• Effective influence attempts require followers to believe that the
influencer actually likes and appreciates the product.
© McGraw Hill LLC

PROGRESS CHECK (6 of 6)
1. How should firms choose and assess the efficacy
of influencers?

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Chapter 5
Analyzing the Marketing
Environment

Learning Objectives
Learning Objective 5.1 Outline how customers, the
company, competitors, corporate partners, and the
physical environment affect marketing strategy.
Learning Objective 5.2 Explain why marketers must
consider their macroenvironment when they make
decisions.

Learning Objective 5.3 Identify various social trends that
impact marketing.
Learning Objective 5.4 Examine the technological
advances that are influencing marketers.

Exhibit 5.2: Understanding the Marketing
Environment

Access the text alternative for slide images.
© McGraw Hill LLC

Exhibit 5.2: The Immediate Environment

Company Capabilities
Successful marketing
firms focus on
satisfying customer
needs that match their
core competencies.

Corning initially made its name by producing the glass enclosure to encase
Thomas Edison’s lightbulb. But by successfully leveraging its core
competency in glass manufacturing while also recognizing marketplace
trends toward mobile devices, Corning shifted its focus.

Somchai Som/Shutterstock

Competitors
Know their strengths,
weaknesses, and likely
reactions to firm’s
marketing activities.

10’000 Hours/Getty Images

Corporate Partners
Parties that work
with the focal firm.
Nau works with
manufacturers to
develop clothing
from sustainable
materials.
Nau works with its corporate partners to develop socially
responsible outdoor (left) and urban (right) apparel.

(Left): Philipp Nemenz/Getty Images; (right): PeopleImages/Getty Images

Physical Environment
Sustainable development:
Includes land, water, air, and
living organisms.
Products and services are
influenced by how they are
used in the physical
environment, and in turn they
can also influence the physical
environment.
Examples:
• Energy Trends.
• Greener Practices and
Green Marketing.
• Greenwashing.
© McGraw Hill LLC

Caia Image / Image Source

17 Global Goals of Sustainable Development
EXHIBIT 5.3 Global Goals of Sustainable Development

From the United Nations, “Sustainable Development Goals: 17 Goals to Transform Our World,” Last Modified March 18, 2019. The content of this
publication has not been approved by the United Nations and does not reflect the views of the United Nations or its officials or Member States.

Access the text alternative for slide images.
© McGraw Hill LLC

PROGRESS CHECK (1 of 2)
1. What are the components of the immediate
environment?

Macroenvironmental Factors
EXHIBIT 5.4 The Macroenvironment

Culture
Shared meanings, beliefs, morals, values, and customs of a group of
people transmitted by words, literature, and institutions.
Country Culture

• Subtler aspects can be difficult to navigate.
• Sometimes best answer is to establish universal appeal within specific
identities of country culture.
Regional Culture

• For national and global chains, particularly important to cater to
regional preferences.
• McDonald’s – slightly different variations of staple menu.

Demographics
Characteristics of the human
population and segments,
especially those used to
identify consumer markets.
Provides an easily
understood snapshot of the
typical consumer in a specific
target market.
Marketers use data about
consumers to target offers.
census.gov

Shutterstock / astel design

Exhibit 5.5: Generational Cohorts

Generational
cohort

Gen α

Gen Z

Gen Y

Gen X

Baby
Boomers

Range of birth years

2010–
2025

1997–
2009

1981–
1996

1965–
1980

1946–
1964

Age in 2020

0–10

11–23

24–39

40–55

56–74

Millennials and the Rise of the ‘Experience Economy’

Access the text alternative for slide images.
© McGraw Hill LLC

Income

Purchasing power is tied
to income.

Marketing opportunities
exist across the broad
range of income
distribution.
SC Johnson targets the bottom of the
income pyramid by selling pest control
products in Ghana.

NNehring/iStock/Getty Images

Education
Education is related to income, which determines
spending power.

Monkey Business Images/Shutterstock

Gender
Male/female roles have
been shifting.
Marketing has changed
to reflect these shifts.
• Firms may need to be
careful about gender
neutrality in
positioning their
products.

Gorodenkoff/Shutterstock

Ethnicity
Approximately 80% of
all population growth in
the next 20 years is
expected to come from
minority communities

By 2030 the Hispanic
population in the U.S. is
expected to reach more
than 72 million.

Image Source/Getty Images

Social Trends

Sustainability

Health and Wellness

Efficient Utilization and
Distribution of Food

Sustainability
UN Sustainable
Development Goals
focus on social issues
for basic needs.
Certifications from
various agencies may
be important.

pixelliebe/Shutterstock

Health and Wellness
Child and adult obesity

New markets focused
on healthy living
Mobile apps that
support health and
wellness

Shutterstock/Rawpixel.com

Efficient Utilization and Distribution of Food
Diet-related Products

Reducing Hunger
Reducing Food Waste

Steve Cukrov / Alamy

Technological Advances
Technology impacts every aspect of marketing:

• New products and services.
• New forms of communication.
• New retail channels.

Growing importance of mobile devices
New cutting-edge technology:
• Artificial Intelligence.

• Robotics.
• Internet of Things (IoT).
• Privacy Concerns.
Pepper the robot is used in restaurants, hotels, and coffee shops.

Dani Metaz/Shutterstock

Economic Situation
Affects the way consumers buy products and services and
spend money.
Monitor the economic situation in home country and abroad.
Major factors to monitor:
• Inflation.

• Foreign currency fluctuations.
• Interest rates.

Customers formed in line to bank counter
Consumer Confidence Index
© McGraw Hill LLC

Hiya Images/Corbis/Getty Images

Political/Legal Environment

Comprises political parties,
government organizations,
and legislation and laws.
Firms must understand and
comply with
legislation regarding:
• Fair competition.
• Consumer protection.
• Industry-specific regulation.

olegdudko © 123RF.com

Exhibit 5.6: Consumer Protection Legislation
(1 of 2)
Year

Law

1906

Federal Food and Drug Act

1914

1966

1967

1972

Description

Created the Food and DrugAdministration (FDA);
prohibited the manufacture or sale of adulterated or
fraudulently labeled food and drug products.
Federal Trade Commission Act Established the Federal Trade Commission (FTC) to
regulate unfair competitive practices and practices that
deceive or are unfair to consumers.
Fair Packaging and Labeling Act Regulates packaging and labeling of consumer goods;
requires manufacturers to state the contents of the
package, who made it, and the amounts contained
within.
Prohibits the sale of harmful toys and components to
Child Protection Act
children; sets the standard for child- resistant
packaging.
Federal Cigarette Labeling
Requires cigarette packages to display this warning:
and Advertising Act
“Warning:The Surgeon General Has Determined That
Cigarette Smoking Is Dangerous to Your Health.”
Created the Consumer Product Safety Commission
Consumer Product Safety Act
(CPSC), which has the authority to regulate safety
standards for consumer products.

Exhibit 5.6: Consumer Protection Legislation
(2 of 2)
Year

Law

1990

Children’s Television Act

Description

2003

Limits the number of commercials shown during
children’s programming.
Nutrition Labeling and Education Requires food manufacturers to display nutritional
Act
contents on product labels.
Regulates fraudulent activities conducted over the
Telemarketing Sales Rule
telephone. Violators are subject to fines and actions
enforced by the FTC.
Controlling the Assault of NonProhibits misleading commercial e-mail, particularly
Solicited Pornography and
misleading “subject” and “from” lines.
Marketing Act of 2003 (CANSPAMAct)
Amendment to the
Establishes a National Do Not Call Registry, requiring
Telemarketing Sales Rule
telemarketers to abstain from calling consumers who
opt to be placed on the list.
Do Not Spam Law
Created to reduce spam or unwarranted e-mails.

2010

Financial Reform Law

1990
1995

2003

Created the Consumer Financial Protection Bureau,
whose aim is to enforce appropriate consumer-oriented
regulations on a number of financial firms such as banks,
mortgage businesses, and payday and student lenders.
It also set up the Financial Services Oversight Council to
act as an early warning system.
28

Responding to the Environment
Implement strategies
that respond to multiple
environmental forces.
Marketers that succeed
are the ones that
respond quickly,
accurately, and
sensitively to
consumers.

t_kimura/Getty Images

PROGRESS CHECK (2 of 2)
1. What are the six key macroeconomic factors?
2. Differentiate between country culture and
regional culture.

3. What are some important social trends shaping
consumer values and shopping behavior?

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Chapter 6
Consumer Behavior

Learning Objectives
Learning Objective 6.1 Articulate the steps in the consumer
buying process.
Learning Objective 6.2 Describe the difference between functional and
psychological needs.
Learning Objective 6.3 Describe factors that affect information search.
Learning Objective 6.4 Discuss postpurchase outcomes.
Learning Objective 6.5 List the factors that affect the consumer
decision process.
Learning Objective 6.6 Describe how involvement influences the
consumer decision process.

Exhibit 6.1: The Consumer Decision Process

Need Recognition
Wants are goods or services that are not necessarily needed but are
desired.
• Regardless of the level of your hunger, your desire for ice cream will
never be satisﬁed by any type of salad.

Types of needs

• Function needs
• Psychological needs

What needs does a BMW K1600 satisfy?

Bill Pugliano/Getty Images

Search for Information
Internal and external searches for information

Factors Affecting
Consumers’ Search Processes

Perceived Benefits
© McGraw Hill LLC

Perceived Costs
Shutterstock / bleakstar

The Locus of Control

Internal locus of control =
more search activities

External locus of control =
fate or external factors

Actual or Perceived Risk

Evaluation of Alternatives: Attribute Sets

Universal

Retrieval

Evoked

Evaluation of Alternatives
What are some of the features of a vacation
that would in your evaluative criteria?

Shutterstock / Juancat

Exhibit 6.2: Consumer Decision Rules
Compensatory Multi-Attribute Model for Buying Cereal

If the consumer makes a decision using a compensatory
decision rule, which cereal will they choose?
Taste

Calories

Natural/Organic
Claims

Price

Overall
Score

Cheerios

8.2

Post

7.1

Kashi

7.2

If the consumer makes a decision based only on Natural or
Organic claims, which cereal will they choose?

Choice Architecture

Impulse products

Nudge

Defaults
© McGraw Hill LLC

Left: stocking © 123RF.com; Right: Iakov Filimonov/Shutterstock; Bottom: Shutterstock/ever

Purchase and Consumption

Exhibit 6.3: Components of Post purchase
Outcomes

Post purchase Customer Satisfaction
• Build realistic expectations, not too high and not too
low.

• Demonstrate correct product use—improper usage
can cause dissatisfaction.
• Stand behind the product or service by providing
money-back guarantees and warranties.
• Encourage customer feedback, which cuts down on
negative word of mouth and helps marketers adjust
their offerings.

• Periodically make contact with customers and thank
them for their support.
© McGraw Hill LLC

Post purchase Cognitive Dissonance
More likely for products that are:
• Expensive.
• Infrequently purchased.

• Do not work as intended.
• Associated with high levels
of risk.
Firms attempt to reduce
dissonance by reinforcing the
decision:
• Return policies.
• Thank-you letters.

• Congratulations letters.
• Tags on garments.
© McGraw Hill LLC

Shutterstock/Atstock Productions

Post purchase Customer Loyalty
Marketers attempt to
solidify a loyal
relationship.
Firms use analytics
software and customer
relationship
management (CRM)
programs to acquire and
retain loyal customers.
Marketers, such as Amazon, owners of Whole Foods, collect customer
information for their CRM programs from their loyalty cards.

Smith Collection/Gado/Getty Images

Post purchase
Undesirable Consumer Behavior
Negative word of mouth
•

Personal blogs, Twitter,
corporate websites.

Companies use listening
software to identify negative
word of mouth.
If a customer believes a
complaint will result in
positive action, negative
word of mouth is less likely.
© McGraw Hill LLC

Whirlpool posts good as well as bad comments on Twitter. It
believes that posting negative comments opens up
discussions and emphasizes the proactive measures the
company is taking to remedy service or product failures.

Source: Whirlpool

PROGRESS CHECK (1 of 3)
1. Name the five stages in the consumer decision process.
2. What is the difference between a need and a want?
3. Distinguish between functional and psychological needs.
4. What are the various types of perceived risk?
5. What are the differences between compensatory and
noncompensatory decision rules?
6. How do firms enhance post purchase satisfaction and
reduce cognitive dissonance?

Factors Influencing the
Consumer Decision Process
EXHIBIT 6.4 Factors Affecting the Consumer Decision Process

Access the text alternative for slide images.
© McGraw Hill LLC

Psychological Factors: Motives
EXHIBIT 6.5 Maslow’s Hierarchy of Needs

Psychological Factors: Attitude

Cognitive.

Affective.
Behavioral.

Pixel-Shot/Shutterstock

Psychological Factors: Perception

Selection.

Organization.
Interpretation.
How has society’s perception of people with
tattoos changed in recent years?

A. and I. Kruk/Shutterstock

Psychological Factors:
Learning and Memory

Psychological Factors: Lifestyle
Lifestyle involves
decisions in spending
time and money.
Actual vs. Perceived
Lifestyle

Shutterstock/STUDIO DREAM

Social Factors: Family
Firms must consider how
families make purchase
decisions and understand
how various family
members might influence
these decisions.
When families make
purchase decisions, they
often consider the needs
of all the family members.

Peter Muller

Social Factors: Reference Groups

Social Factors: Culture
The shared meanings,
beliefs, morals, values, and
customs of a group of people.
Like reference groups,
cultures influence consumer
behavior.
A cultural group might be as
small as a reference group at
school or as large as a
country or religion.

Jacob Lund/Shutterstock

Situational Factors

Purchase Situation.
Sensory Situation.
Temporal State.

Sensory Situation
Visual.

Auditory.
Olfactory.
Tactile.
Taste.

Purchase Situation
Situational factors may influence your purchase
decisions.

If you are buying jewelry for yourself, you might browse the clearance counter at Kay Jewelers (left). But
if you are buying a gift for your best friend’s birthday, you may go to Tiffany & Co (right).

Temporal State
A purchase situation may have different appeal
levels depending on time of day and the type of
person a consumer is.
Mood swings can alter consumer behavior.

oatawa/Shutterstock

PROGRESS CHECK (2 of 3)
1. What are some examples of specific needs
suggested by Maslow’s hierarchy of needs?
2. Which social factors likely have the most
influence on (a) the purchase of a new outfit for a
job interview and (b) the choice of a college to
attend?
3. What situational factors do firms use to influence
consumer purchase behavior?

Involvement and Consumer Buying Decisions
Exhibit 6.6: Elaboration Likelihood Model

Access the text alternative for slide images.
© McGraw Hill LLC

Involvement and Consumer Buying Decisions
Types of Buying Decisions
Extended Problem Solving

Limited Problem Solving
• Impulse Buying.

• Habitual Decision
Making.

Jeff Greenough/Blend Images/Getty Images

PROGRESS CHECK (3 of 3)
1. How do low- versus high-involvement consumers
process the information in an advertisement?
2. What is the difference between extended versus
limited problem solving?

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Chapter 7
Business-to-Business
Marketing

Learning Objectives
Learning Objective 7.1 Describe the ways in which
business-to-business (B2B) firms segment their
markets.
Learning Objective 7.2 List the steps in the B2B buying
process.

Learning Objective 7.3 Identify the roles within the buying
center.
Learning Objective 7.4 Describe the different types of
organizational cultures.
Learning Objective 7.5 Detail different buying situations.
© McGraw Hill LLC

Exhibit 7.1: B2B Markets

Manufacturers and Service Providers
Buy raw materials, components, or parts.

Manufacture their own goods and ancillary services.

German-based Volkswagen Group, the largest auto
manufacturer in Europe, owns and distributes numerous brands.

rvlsoft/Shutterstock & Alexander Kirch/Shutterstock

Resellers
Resellers are marketing
intermediaries that resell
manufactured products
without significantly
altering their form.

Syda Productions/Shutterstock

Institutions
Hospitals, educational
institutions, and
religious organizations
Examples of purchases
by institutions:
•
•
•
•
•
•

Textbooks.
Capital construction.
Equipment.
Supplies.
Food.
Janitorial services.

Witthaya Prasongsin/Moment/Getty Images

Government
In most countries,
government is one the
largest purchasers of goods
and services.
Local, state, and federal
governments.
The U.S. government
spends approximately $4
trillion annually; Department
of Defense works with
cybersecurity firms.
© McGraw Hill LLC

Wright Studio/Shutterstock

PROGRESS CHECK (1 of 4)
1. What are the various B2B markets?

The B2B Buying Process

EXHIBIT 7.2 Business-to-Business Buying Process

Stage 1: Need Recognition
The B2B process begins
with need recognition.
Can be generated
internally or externally.

stockbroker/123RF

Stage 2: Product Specification
After recognizing the
need and considering
alternative solutions,
create a list of potential
specifications.

Used by
suppliers/vendors to
develop proposals.

Getty Images/Hero Images

Stage 3: RFP Process
Request for Proposal
Vendors or suppliers are invited to bid on supplying
required components and services.
Purchasing company may simply post its RFP
needs on its website, work through various B2B web
portals, or inform their preferred vendors directly.

Contracts Opportunities

Step 4: Proposal Analysis, Vendor
Negotiation, and Selection
The buying organization
evaluates all the
proposals received in
response to an RFP.
Often several vendors
are negotiating against
each other.

Shironosov/Getty Images

Step 5: Order Specification
Firm places the order
with its preferred
supplier (or suppliers).
The exact details of the
purchase are specified,
including penalties for
noncompliance.

Shutterstock / Bacho

Stage 6: Vendor Performance Assessment
Using Metrics
EXHIBIT 7.3: Evaluating a Vendor’s Performance

(1)
Key Issues

(2)
Importance
Score

(3)
Vendor’s
Performance

(4)
Importance ×
Performance
(2) × (3)

Customer Service

0.40

2.0

Issue Resolution

0.20

0.8

Delivery

0.10

0.5

Quality

0.30

0.9

Total

1.0

4.2

PROGRESS CHECK (2 of 4)
1. Identify the stages in the B2B buying process.

2. How do you perform a vendor analysis?

The Buying Center
Exhibit 7.4: Buying Center Roles

Example of Buying Center Roles for a Hospital

Initiator: Doctor

Influencer: Medical device supplier, pharmacy
Decider: Hospital

Buyer: Materials manager
User: Patient
Gatekeeper: Insurance company

Organizational Culture
EXHIBIT 7.5 Organizational Buying Culture

Building B2B Relationships
There are a multitude of ways to enhance B2B
relationships, including the following examples:
• Blogs and social media (LinkedIn, Twitter, Snapchat)
can:
• Build awareness.
• Provide search engine results.

• Educate clients about products and services.
• “Warm up” a seemingly cold corporate culture.

• White papers prepared by B2B marketers provide
information while not appearing as promotion.

PROGRESS CHECK (3 of 4)
1. What are the six buying roles?

2. What are the types of cultures that exist in
buying centers?

Buying Situations
EXHIBIT 7.6 Buying Situations

New Buy
Most likely when purchasing for the first time.
Usually quite involved.

The buying center will probably use all six steps in
the buying process and involve many people in
the buying decision.

Modified Rebuy
Purchasing a similar
product but changing
specifications such as
price, quality level,
customer service level,
options, etc.
Current vendors have
an advantage.

Shutterstock/BabLab

Straight Rebuys
Buying additional units of products that have been
previously purchased.
Most B2B purchases fall into this category.
Usually, the buyer is the only member of the buying
center involved.

Identify the Type of Buying Situation
The manager for a Kroger supermarket considers reordering items for his store. He will negotiate price
concession and quality improvements. The manager
is engaging in a(n)
blank situation.

Denise is sharing with coworkers, “This customer just
made another big order, and they just keep on
coming.” Denise is likely selling to a customer in what
kind of buying situation?

Benjamin, the new sales manager for Burns &
Company, was alarmed that the representatives used
paper to track customer information. He made a
decision to upgrade to a CRM system. For Benjamin,
this represented a(n)
blank situation.

PROGRESS CHECK (4 of 4)
1. How do new buy, straight rebuy, and modified
rebuy differ?

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Chapter 8
Global Marketing

Learning Objectives
Learning Objective 8.1 Describe the components of a
country market assessment.
Learning Objective 8.2 Understand the marketing
opportunities in BRIC countries.

Learning Objective 8.3 Identify the various market entry
strategies.
Learning Objective 8.4 Highlight the similarities and
differences between a domestic marketing strategy
and a global marketing strategy.

Globalization

The processes by
which goods,
services, capital,
people, information,
and ideas flow
across national
borders.

deepblue4you/Getty Images

Assessing Global Markets
EXHIBIT 8.1 Components of a Country Market Assessment

Evaluating the General Economic Environment
Using Economic Metrics

Trade deficit or
surplus

Gross domestic
product (GDP)

Gross national
income (GNI)

Purchasing
power parity
(PPP)

Evaluating Market Size
and Population Growth Rate
Population growth dispersal: strong demand
in BRIC (Brazil, Russia, India, China) nations
Distribution of the population within a
particular region: rural vs. urban

Shutterstock / Pablo Scapinachis

Exhibit 8.2 Big Mac Index

Source: The Economist, “The Big Mac Index,” July 13, 2017,
www.economist.com/content/big-mac-index.

McGraw-Hill Global Education Holdings, LLC

Evaluating Real Income
Firms can make
adjustments to an existing
product or change the price
to meet the unique needs of
a particular country market.
For the Chinese market,
Haier sells washing
machines that can wash
both clothes and vegetables.

Shutterstock/Africa Studio

Analyzing Infrastructure and
Technological Capabilities
Marketers are especially concerned with four
key elements of a country’s infrastructure:
• Transportation.

Analyzing Governmental Actions

Tariffs and Quotas
Tariffs

Quotas

• Tax on Imported
good.

• Minimum or
maximum limit.

• Artificially raises
prices.

• Reduces availability
of imported goods.

Exchange Control
Regulation of a country’s currency
exchange rate: the measure of how much
one currency is worth in relation to
another.
In recent years, the value of the U.S.
dollar has changed significantly
compared with other important world
currencies.
Prices are nearly always lower in the
country of origin because there are no
customs or import duties to pay, and
international transportation expenses are
less than domestic ones.
© McGraw Hill LLC

Trade Agreements
A trade agreement is an intergovernmental
agreement designed to manage and promote trade
activities for a specific region, and a trading bloc
consists of those countries that have signed a
particular trade agreement.

• There have been recent challenges to longestablished regional trade agreements (RTAs),
• Yet RTAs account for more than half of
international trade.
© McGraw Hill LLC

Source: Information about EU members is from

Analyzing Sociocultural Factors
Understanding another culture is crucial to the
success of a global marketing initiative.
Exists on two levels:
• Visible artifacts.

• Underlying values.

Participants in a parade during the 23rd International
Mariachi & Charros festival in Guadalajara Mexico

Kobby Dagan/Shutterstock

Ethical & Societal Dilemma 8.2: Dolce &
Gabbana Faces Public Scrutiny in China
Dolce & Gabbana learned a tough lesson about the
importance of embracing and promoting a local
audience’s culture in a positive way.

An international fashion crisis ensued when designer Dolce & Gabbana released videos
satirizing the Chinese dialect and dining customs. Alibaba and JD.com, China’s two largest ecommerce sites, retaliated by removing Dolce & Gabbana products from their online stores.

Davydenko Yuliia/Shutterstock

Geert Hofstede’s Cultural Dimensions
Individualism

Masculinity

Uncertainty
avoidance

Power
distance

Time
orientation

Culture

Indulgence

Exhibit 8.3: Country Clusters
Power Distance and Individualism

Source: Geert Hofstede, Gert Jan Hofstede, and Michael Minkov, Cultures and Organizations, Software of the Mind, Third Revised Edition, McGraw-Hill 2010, ISBN: 0-07166418-1. © Geert Hofstede B.V. quoted with permission.

The Appeal of the BRIC Countries
Great potential for growth in the global community:

• Brazil.
• Russia.

• India.
• China.

PROGRESS CHECK (1 of 3)
1. What metrics can help analyze the economic
environment of a country?

2. What types of governmental actions should we
be concerned about as we evaluate a country?
3. What are some important cultural dimensions?
4. Why are each of the BRIC countries viewed as
potential candidates for global expansion?

Exhibit 8.4: Global Entry Strategies

Exporting
Exporting means producing
goods in one country and
selling them in another.
This entry strategy requires
the least ﬁnancial risk but
also allows for only a limited
return to the exporting ﬁrm.

Rolex exports its watches to countries all over the
world from its factory in Switzerland.

Jeafish Ping/Shutterstock

Franchising
A franchising contract allows the
franchisee to operate a
business—a retail product or
service firm or a B2B provider—
using the name and business
format developed and supported
by the franchisor.

Many of the best-known retailers
in the United States are also
successful global franchisors,
including McDonald’s, Pizza Hut,
Starbucks, Domino’s Pizza, KFC,
and Holiday Inn.

Elizabeth Cummings/Ecummings00/123RF

Strategic Alliance
Collaborative
relationships between
independent ﬁrms.
The partnering ﬁrms do
not create an equity
partnership.

Xinhua/Alamy Stock Photo

Joint Venture
A joint venture is formed
when a ﬁrm entering a
market pools its resources
with those of a local ﬁrm.
Ownership, control, and
profits are shared.
The local partner offers
the foreign entrant greater
understanding of the
market and access to
resources such as
vendors and real estate.

Atstock Productions/Shutterstock

Direct Investment
Direct investment requires a
ﬁrm to maintain 100 percent
ownership of its plants,
operation facilities, and oﬃces
in a foreign country, often
through the formation of wholly
owned subsidiaries.
Requires the highest level of
investment and exposes the
ﬁrm to signiﬁcant risks,
including the loss of its
operating and/or initial
investments.
© McGraw Hill LLC

China-based Lenovo purchased U.S.-based IBM’s PC division
and Motorola’s handset business unit and has parallel
headquarters in both Beijing and North Carolina.

Source: Lenovo

PROGRESS CHECK (2 of 3)
1. Which global entry strategy has the least risk
and why?

2. Which global entry strategy has the most risk
and why?

Choosing a Global Marketing Strategy:
Segmentation, Targeting, and Positioning (STP)

The Global Marketing Mix:
Global Product or Service Strategies

The Global Marketing Mix:
Global Pricing Strategies

The Global Marketing Mix:
Global Distribution Strategies
Global distribution
networks form complex
value chains.
In developing countries
consumers may shop at
small, family-owned
stores.
Suppliers must be
creative in delivering to
these outlets.
© McGraw Hill LLC

Virojt Changyencham/Moment/Getty Images

The Global Marketing Mix:
Global Communication Strategies
Literacy levels vary by country.

Differences in language and customs affect
communication.
Cultural and religious differences also matter.

Shutterstock / Pyty

PROGRESS CHECK (3 of 3)
1. What are the components of a global marketing
strategy?

2. What are the three global product strategies?

Because learning changes everything.

www.mheducation.com

Because learning changes everything.®

Chapter 9
Segmentation, Targeting,
and Positioning

Learning Objectives
Learning Objective 9.1 Outline the different methods of
segmenting a market.

Learning Objective 9.2 Describe how firms determine
whether a segment is attractive and therefore worth
pursuing.
Learning Objective 9.3 Articulate the difference among
targeting strategies: undifferentiated, differentiated,
concentrated, or micromarketing.
Learning Objective 9.4 Determine the value proposition.
Learning Objective 9.5 Define positioning and describe
how firms do it.
© McGraw Hill LLC

The Segmentation, Targeting, and
Positioning Process
EXHIBIT 9.1 The Segmentation, Targeting, and Positioning (STP) Process

McGraw-Hill Global Education Holdings, LLC

Step 1: Establish the Overall Strategy
or Objectives
Derived from mission
and objectives

Consistent with
SWOT

Food marketers, for instance,
divide the traditional pasta sauce
landscape into with or without
meat. This segmentation method is
based on what consumers derive
from the products.

Shutterstock/svario photo

Step 2: Use Segmentation Methods
EXHIBIT 9.2 Methods for Describing Market Segments

Segmentation Method

Sample Segments

Geographic

Continent: North America, Asia,
Europe, Africa
Within the United States: Pacific,
mountain, central, south, midAtlantic, northeast

Demographic

Age, gender, income, education

Psychographic

Lifestyle, self-concept, self-values

Benefit

Convenience, economy, prestige

Behavioral

Occasion, loyalty

McGraw-Hill Global Education Holdings, LLC

Geographic Segmentation
Market could be grouped by:
Country.

Region.
• Northeast, Southeast.
Areas within region.
• State, city,
neighborhoods, zip
codes.
Most useful for companies whose
products satisfy needs that vary
by region.
© McGraw Hill LLC

Shutterstock/tovovan

Demographic Segmentation

Most common
segmentation strategy.

Easy to identify.
Easy to measure (age,
gender, income,
education).

Shutterstock / astel design

Adding Value 9.1 Dealing with Modern Life by
Playing: LEGO Promises
LEGO is targeting its
bricks and building sets
as the perfect respite for
this demographic
segment, frazzled adults
who just want a break
from modern life.
The casual adult builder
is the new demographic
segment for LEGO.

LEGO’s latest market segment: frazzled adults seeking
to reduce stress with easy-to-build projects like this
25th anniversary set depicting the Central Perk coffee
shop from the TV sitcom Friends.

Ekaterina Minaeva/Alamy Stock Photo

Psychographic Segmentation
How consumers
describe themselves
in terms of:

• Self values.
• Lifestyle.
• Self-concept.

Shutterstock / Zoriana Zaitseva

Benefit Segmentation
Dividing the market into
segments whose needs
and wants are best
satisfied by the product’s
benefits can be a very
powerful tool.
How does the movie
industry use a benefit
segmentation strategy?

LI CHAOSHU/Shutterstock

Behavioral Segmentation
Occasion segmentation:
• Based on when a product or
service is purchased or
consumed.
• Clothing, snack foods.

Loyalty segmentation:
• Loyal customers are the
most profitable in the long
term.
• Hotels, airlines,
restaurants (Starbucks).

Shutterstock / JHershPhoto

Using Multiple Segmentation Methods :
Exhibit 9.4 Examples of Tapestry
Tapestry ™ uses a combination of geographic, demographic,
and lifestyle characteristics to classify consumers.
A table divided into four columns
summarizes the examples of the
Tapestry Segmentation System. The
column headers for columns 2 to 4 are
marked as: Segment 01-Top Rung;
Segemnet-18, Cozy and comfortable;
and Segment-52, Inner city tenants.

McGraw-Hill Global Education Holdings, LLC

PROGRESS CHECK (1 of 2)
1. What are the various segmentation methods?

Step 3: Evaluate Segment Attractiveness
EXHIBIT 9.5 Evaluate Segment Attractiveness

Identifiable
Who is in their market?

Are the segments
distinct from one
another?
Does each segment
require a unique
marketing mix?

estherpoon/Shutterstock.com

Substantial
How large is the market
segment in terms of size
and buying power?
If a market segment is too
small, it won’t generate
sufficient profits.
If its buying power is
insignificant, despite its size,
the marketing mix cannot be
supported.
© McGraw Hill LLC

Photodisc/Getty Images

Reachable
Can the market be reached through persuasive
communication and product distribution?
The consumer must:
• Know the product exists.
• Understand what it can do.
• Recognize how to buy.

Shutterstock/faithie

Responsive
Customers must react similarly and positively to the
firm’s offering.
If a firm cannot provide products and services to
the segment, it shouldn’t be targeted.

Darren Brode/Shutterstock

Profitable
Assess potential profitability of each segment, both
current and future.
Key factors:
• Current market growth rate.
• Future growth rate.
• Market competitiveness.
• Market access costs.

Shutterstock/jeff Metzger

How to Determine the Profitability of a Segment
Segment = Children under 15
• Segment size = 60
million (
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