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  • SECTION ONE Assessing the Marketplace 2
  • 1 Overview of Marketing 2
  • 2 Developing Marketing Strategies 30
  • 3 Marketing Ethics 58
  • 4 Analyzing the Marketing Environment 84
  • SECTION TWO Understanding the Marketplace 116
  • 5 Consumer Behavior 116
  • 6 Business-to-Business Marketing 148
  • Role of the Internet in Business-to-Business Marketing 166
  • 7 Global Marketing 174
  • SECTION THREE Targeting the Marketplace 208
  • Some Final Thoughts on the Marketing Research Process 262
  • SECTION FOUR Value Creation 268
  • 10 Product, Branding, and Packaging Decisions 268
  • 12 Services: The Intangible Product 326
  • SECTION FIVE Value Capture 354
  • 13 Pricing Concepts for Establishing Value 354
  • SECTION SIX Value Delivery: Designing the Channel and Supply Chain 408
  • SECTION SEVEN Value Communication 462
  • 18 Advertising and Sales Promotions 486
  • 19 Personal Selling and Sales Management 512
  • The Scope and Nature of Personal Selling 514
  • Overview of Marketing
  • What Is Marketing?
  • What Is Value-Based Marketing?
  • Why Is Marketing Important?
  • Summing Up
  • The Strategic Marketing Planning Process
  • Growth Strategies
  • Macro Strategies
  • The Scope of Marketing Ethics
  • Ethical Issues Associated with Marketing Decisions
  • Integrating Ethics into Marketing Strategy
  • Understanding Ethics Using Scenarios
  • A Marketing Environment Analysis Framework
  • The Immediate Environment
  • Macroenvironmental Factors
  • Scenario Planning
  • The Consumer Decision Process
  • Factors Influencing the Consumer Decision Process
  • The Business-to-Business Buying Process
  • Factors Affecting the Buying Process
  • Role of the Internet in Business-to-Business Marketing
  • Growth of the Global Economy: Globalization of Marketing and Production
  • Assessing Global Markets
  • Choosing a Global Entry Strategy
  • Choosing a Global Marketing Strategy
  • Ethical Issues in Global Marketing
  • Positioning Stages
  • Using Marketing Information Systems to Create Better Value
  • The Ethics of Using Customer Information
  • The Marketing Research Process
  • Some Final Thoughts on the Marketing Research Process
  • Product Assortment and Product Line Decisions
  • Branding Strategies
  • Innovation and Value
  • Early Adopters
  • Early Majority
  • How Firms Develop New Products
  • Idea Generation
  • Concept Testing
  • Market Testing
  • Product Launch
  • The Product Life Cycle
  • Maturity Stage
  • Marketing Applications
  • Services Marketing Differs from Product Marketing
  • Providing Great Service: The Gaps Model
  • The Five Cs of Pricing
  • Channel Members
  • Macro Influences on Pricing
  • Economic Factors
  • Pricing Strategies
  • Competitor-Based Methods
  • Psychological Factors Affecting Value-Based Pricing Strategies
  • The Price–Quality Relationship
  • New Product Pricing
  • Price Skimming
  • Market Penetration Pricing
  • Consumer Price Reductions
  • Legal Aspects and Ethics of Pricing
  • Predatory Pricing
  • Supply Chain, Marketing Channels, and Logistics Are Related
  • Supply Chains Add Value
  • Making Information Flow
  • Electronic Data Interchange
  • Making Merchandise Flow
  • Storing and Cross-Docking
  • Designing Supply Chains
  • Managing the Supply Chain
  • The Changing Retail Landscape
  • How Do Retailers Create Value?
  • Using the Four Ps to Create Value in Retailing
  • Internet and Electronic Retailing
  • Types of Retailers
  • Food Retailers
  • Communicating with Consumers
  • The Communication Process
  • The AIDA Model
  • Elements of an Integrated Marketing Communication Strategy
  • Personal Selling
  • Sales Promotions
  • Direct Marketing
  • Electronic Media
  • Legal and Ethical Issues in IMC
  • 1. Identify Target Audience
  • 2. Set Advertising Objectives
  • 3. Determine the Advertising Budget
  • 4. Convey the Message
  • 5. Evaluate and Select Media
  • 6. Create Advertisements
  • Regulatory and Ethical Issues in Advertising
  • The Scope and Nature of Personal Selling
  • Personal Selling and Marketing Strategy
  • The Value Added by Personal Selling
  • The Personal Selling Process
  • The Impact of Technology and the Internet on Personal Selling
  • Ethical and Legal Issues in Personal Selling
  • Managing the Sales Force



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Dhruv Grewal, PhD

Babson College

Michael Levy, PhD

Babson College

Boston Burr Ridge, IL Dubuque, IA New York San Francisco St. Louis
Bangkok Bogotá Caracas Kuala Lumpur Lisbon London Madrid Mexico City
Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto

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Published by McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the
Americas, New York, NY 10020. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
No part of this publication may be reproduced or distributed in any form or by any means, or stored in
a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc.,
including, but not limited to, in any network or other electronic storage or transmission, or broadcast for
distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the
United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 0 WCK/WCK 0 9 8 7 6


MHID 0-07-304902-6

Editorial director: John E. Biernat
Publisher: Andy Winston
Developmental editor: Sarah Crago
Marketing manager: Trent Whatcott
Media producer: Benjamin Curless
Lead project manager: Christine A. Vaughan
Lead production supervisor: Michael McCormick
Senior designer: Kami Carter
Senior photo research coordinator: Jeremy Cheshareck
Photo researcher: Mike Hruby
Media project manager: Lynn M. Bluhm
Typeface: 10/12 Palatino
Compositor: Precision Graphics
Printer: Quebecor World Versailles
Cover image: © Jess Dixon Photography

Library of Congress Cataloging-in-Publication Data

Grewal, Dhruv.
Marketing / Dhruv Grewal, Michael Levy.
p. cm.
Includes index.
ISBN-13: 978-0-07-304902-1 (alk. paper)
ISBN-10: 0-07-304902-6 (alk. paper)
1. Marketing. I. Levy, Michael. II. Title.
HF5415.G675 2008



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To those who had a strong positive influence
on the early years of our careers:

James Littlefield, Professor of Marketing, Virginia Tech
Kent B. Monroe, John M. Jones Professor of Marketing,
University of Illinois
A. Coskun Samli, Professor of Marketing,
University of North Florida
Dianna L. Stone, Professor of Management,
University of Central Florida

—Dhruv Grewal

James L. Ginter, Professor Emeritus,
The Ohio State University
Roger A. Kerin, Harold C. Simmons Distinguished Professor
of Marketing, Southern Methodist University
Mike Harvey, Hearin Professor of Global Business,
The University of Mississippi
Bernard J. LaLonde, Professor Emeritus,
The Ohio State University
Barton A. Weitz, JCPenney Eminent Scholar,
The University of Florida

—Michael Levy

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about the authors

Dhruv Grewal

Dhruv Grewal, PhD (Virginia Tech), is the Toyota Chair
in Commerce and Electronic Business and a profes-
sor of marketing at Babson College. His research and
teaching interests focus on marketing foundations,
marketing research, retailing, pricing, and value-
based strategies. He was awarded the 2005 Lifetime
Achievement in Behavioral Pricing Award by Fordham
University. He is a “Distinguished Fellow” of the Acad-
emy of Marketing Science. He has also coauthored
Marketing Research (2004, 2007).
Professor Grewal has published over 70 articles
in journals such as Journal of Marketing, Journal of
Consumer Research, Journal of Marketing Research,
Journal of Retailing,
and Journal of the Academy of
Marketing Science.
He currently serves on numerous
editorial review boards, including Journal of Retailing,
Journal of the Academy of Marketing Science, Journal
of Interactive Marketing,
and Journal of Public Policy &
He served as co-editor of Journal of Retail-
from 2001–2007.
Professor Grewal has won many awards for his
teaching including, 2005 Sherwin-Williams Distin-
guished Teaching Award, SMA; 2003 AMA Award for
Innovative Excellence in Marketing Education; 1999
AMS Great Teachers in Marketing Award; Executive
MBA Teaching Excellence Award (1998); School of Busi-
ness Teaching Excellence Awards (1993, 1999); and Vir-
ginia Tech Certificate of Recognition for Outstanding
Teaching (1989). He co-chaired: 1993 AMS Conference,
1998 Winter AMA Conference, a 1998 Marketing Sci-
ence Institute Conference, 2001 AMA doctoral consor-
tium, and 2006 Summer AMA Conference.
Professor Grewal has taught executive seminars
and courses and/or worked on research projects with
numerous firms, such as IRI, TJX, Radio Shack, Monsan-
to, McKinsey, Motorola, and numerous law firms. He
has taught seminars in the U.S., Europe, and Asia.

Michael Levy

Michael Levy, PhD, is the Charles Clarke Reynolds Pro-
fessor of Marketing and Director of the Retail Supply
Chain Institute at Babson College. He received his
PhD in business administration from The Ohio State
University and his undergraduate and MS degrees in
business administration from the University of Colo-
rado at Boulder. He taught at Southern Methodist
University before joining the faculty as professor and
chair of the marketing department at the University
of Miami.

Professor Levy has developed a strong stream of
research in retailing, business logistics, financial re-
tailing strategy, pricing, and sales management. He
has published over 50 articles in leading marketing
and logistics journals, including the Journal of Retail-
ing, Journal of Marketing,
Journal of the Academy of
Marketing Science,
and Journal of Marketing Research.
He currently serves on the editorial review board of
the Journal of Retailing, Journal of the Academy of
Marketing Science, International Journal of Logistics
Management, International Journal of Logistics and
Materials Management, ECR Journal,
and European
Business Review.
He is coauthor of Retailing Manage-
6e (2007), the best-selling college-level retail-
ing text in the world. Professor Levy was co-editor of
Journal of Retailing from 2001–2007.
Professor Levy has worked in retailing and relat-
ed disciplines throughout his professional life. Prior
to his academic career, he worked for several retail-
ers and a housewares distributor in Colorado. He has
performed research projects with many retailers and
retail technology firms, including Accenture, Federat-
ed Department Stores, Khimetrics, Mervyn’s, Neiman
Marcus, ProfitLogic (Oracle), Zale Corporation, and
numerous law firms. He co-chaired the 1993 Acad-
emy of Marketing Science conference and the 2006
Summer AMA conference.

Authors Michael Levy (left)
and Dhruv Grewal (right).

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Welcome to the first
edition of Marketing!

We are proud to say that our book is the first new, comprehensive textbook in
marketing in over two decades. In the summer of 2004, the American Marketing
Association revised its nearly 20 year old definition of marketing, redefining
marketing as “an organizational function and a set of processes for creating,
communicating, and delivering value to customers and for managing customer
relationships in ways that benefit the organization and its stakeholders.” Our
book, Marketing, is the first marketing principles textbook to fully integrate this
new definition, emphasizing the value and the role of the customer in marketing
organizations and activities.

When we, the authors, sat down to write this book, it seemed imperative that
the evolution of the field and practice of marketing be at the forefront. We wanted
to be sure that we were fully educating today’s student about current marketing
trends and practices, so we integrated newer concepts such as value creation,
globalization, technology, entrepreneurship, ethics, and services marketing into
the traditional marketing instruction. In this book, we will examine how firms
assess, analyze, create, deliver, communicate, and capture value. We will explore
both the fundamentals in marketing and new influencers, such as value-based
pricing and the Internet that are shaping the way businesses communicate with
their customers in today’s marketing environment.

It is not often that textbook authors get the opportunity to design, plan, and
write a book that is totally up to date and reflects not only the current trends
in the marketplace, but also the needs of instructors and students. During the
writing and revising of this book, over the course of three years, we’ve sought the
advice and expertise of hundreds of marketing and educational professionals,
and we’ve taken all of their guidance to heart. We are grateful to the hundreds
of individuals who participated in the focus groups, surveys, and personal
conversations that helped mold this book, and we hope that you, the reader, will
learn from and enjoy the results.


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Regardless of your age, your gender, or the city in which you
live, you already know something about marketing.
You have
been an involved consumer in the marketing process since childhood when, for
example, you accompanied your mother or father to the supermarket and asked to
buy a particular brand of cereal because you saw a friend eating it or heard about
it on television. The prize inside the box of cereal was of value to you as a child; the
nutritional information offered on the box panel was of value to your mother or
father. Once you begin to explore the many ways in which companies and brands
create value for their customers through marketing, you will also begin to appreciate
the complex set of decisions and activities that are necessary to provide you with the
products and services you use every day.

The function of marketing is multi-faceted, but its fundamental
purpose is to create value. Consider these examples:

Not too long ago water was simply one of the most basic
natural elements.
It came out of a faucet in your home and was
consumed for the purposes of drinking, washing, etc. Taking a
cue from European firms like Perrier in France and San Pellegrino
in Italy, US-based firms such as Poland Springs, Arrowhead, and
Aquafina created new products that customers find valuable by
bottling water in attractive and easy to carry packages. Today
bottled water is a $35 billion worldwide industry with US sales in
excess of $6 billion.

Why do people buy roughed-up jeans for well over a hundred dollars when they
could buy Wrangler jeans at Wal-Mart for under twenty?
The answer lies in
marketing brand value: because brands like Diesel and Seven for All Mankind have
created a cache for their brands with edgy advertising and innovative washes and
styles. When trendsetters start to wear these brands, others follow.

what is marketing?


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• The first section of the text contains four
chapters, and the central theme of the section
is “Assessing the Marketplace.” Following
an introduction to marketing in Chapter 1,
Chapter 2 then focuses
on how a firm develops
a marketing plan. A
central theme of the
chapter is how firms
can effectively create,
capture, deliver and
communicate value to
their customers. Chapter
3 focuses attention
on Marketing Ethics.
An ethical decision
framework is developed
and presented. The key
ethical concepts are linked back to the marketing
plan introduced in Chapter 2. Finally, Chapter
4 (Analyzing the Marketing Environment)
focuses on how marketers can systematically
uncover and evaluate opportunities. Key
elements of scenario planning are introduced
and presented to demonstrate how to analyze
and capitalize on opportunities presented.

• The second section of the book deals
with “Understanding the Marketplace” and is
composed of three chapters. Chapter 5,
Consumer Behavior, focuses on all aspects of
understanding why consumers purchase
products and services. The consumer decision
process is highlighted. Chapter 6, Business-to-
Business Marketing, focuses on all aspects
pertaining to why and how business-to-
business buying takes place. Finally, Chapter 7
focuses on global markets. Thus, the three
chapters move from creating value for the
individual/consumer to the firm/business to
the global level.

• The third section of the book deals with
“Targeting the Marketplace.” Two chapters
compose this section. Chapter 8 focuses on
Segmentation, Targeting, and Positioning. In
this chapter, we focus on how firms segment
the marketplace, then pick a target market and
finally position their good/service in line with
their customers’ needs and wants. Chapter 9 on
Marketing Research identifies the various tools
and techniques that marketers use to uncover
these needs and ensure that they create goods
and services that provide value to their target

The prevalence and power of the Internet have created a marketplace of better informed and savvy

customers than ever before. Those who teach the marketers of the future need to account for the consumer’s

ability to assess the marketplace at their fingertips and discern good value from poor value. This textbook,

Marketing 1e, is all about the core concepts and tools that help marketers create value for customers.

Throughout this book you will find many other examples that define how companies create value for

customers through branding, packaging, pricing, retailing, service, and advertising. We introduce the concept

of value in Chapter 1 and carry it through the entire text:


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Marketing devotes three chapters to
Value Creation. The first two, Chapter
10, “Product, Branding, and Packaging
Decisions,” and Chapter 11, “Developing
New Products” cover the development and
management of products and brands. While
many of the concepts involved in developing
and managing services are similar to those of
physical brands, Chapter 12, “Services: The
Intangible Product” addresses the unique
challenges of the marketing of services.

• Pricing is the activity within a firm
responsible for Value Capture by bringing
in money and affecting revenues. Marketing
devotes two chapters to pricing capturing
values for the firm. Chapter 13 examines
the importance of setting the right price, the
relationship between price and quantity sold,
break-even analysis, the impact of price wars,
and how the Internet has changed the way
people shop. Chapter 14 looks specifically at
how to set prices.

• One important reason why Wal-Mart has
become the world’s largest retailer is their
Value Delivery system. They time the
delivery of merchandise to get to stores just

in time to meet customer demand. To achieve
this, they have initiated many innovative
programs with their vendors and developed
sophisticated transportation and warehousing
systems. Marketing devotes two chapters
to value delivery. Chapter 15 takes a look at
the entire supply chain, while Chapter 16
concentrates on retailing.

• Today’s methods of Value Communi-
are more complex because of new
technologies that add e-mail, Blogs, Internet,
and Pod casts to the advertising mix that once
only utilized radio and television to relay
messages to consumers. Marketing devotes
three chapters to value communication. Chap-
ter 17 introduces the breadth of integrated
marketing communications. Chapter 18 is de-
voted specifically to advertising, while Chap-
ter 19 covers personal selling.

• You will also find the value theme integrated
throughout the text in the Adding Value
boxes that occur in each chapter. These features
illustrate how firms find ultimate success by
adding value to their products and services.


Adding Value 3.1

Coca-Cola Fights HIV/AIDS in Africa

Beginning in2001,the Coca-Cola Africa Foundation
was formed toreduce the impact of HIV/AIDS onCoca-
Cola’s 60,000employees and 40independent bottlers
inAfrica.At present,100percent of Coca-Cola’s inde-
pendent bottling companies in54Africancountries are
enrolled inthefoundation’s programs.All theiremploy-
ees and employees’families areeligibletoreceiveben-
efits,including access toantiretroviral drugs,testing,
counseling,prevention,and treatment.The founda-
tion’s outreachalsoextends beyond employees and
intothe community.10

The Coca-Cola Africa Foundationfocuses its efforts
onthree key areas that affect the communities in
whichCoca-Cola operates:healthcare,education,and
the environment.The many projects supported by
the foundationcost millions of dollars eachyear,but
Coca-Cola offers more thanjust funding.By using its
distributionnetwork,one of the most extensive in
Africa,Coca-Cola cantransport vital materials torural
communities across the continent.It alsois able to
reachareas of Africa towhichAIDS/HIVworkers have
not previously had easy access and thereby ensure
that people inthose areas canobtain
informationabout the preventionand
treatment of HIV/AIDS.Even Coca-
Cola’s marketing expertise is being
used toraise awareness of key issues
suchas HIVprevention.By leverag-
ing its corporate assets,Coca-Cola has
made a positive contributiontoall

The Coca-ColaAfricaFoundation
provides millions ofdollars each
year toreduce the impact ofHIV/
AIDSonCoca-Cola’s employees and
independent bottlers inAfrica.



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In addition to our emphasis on value in Marketing, you will also find
integrated and highlighted coverage of ethics, entrepreneurship, services, and
globalization within the framework of the marketing discipline:

Marketing contains an entire chapter on
Marketing Ethics. Placed early in the text
(Chapter 3), it provides rich illustrations of
corporate responsibility, and introduces an
ethical decision-making framework that is
useful for assessing potentially ethically
troubling situations that are posed throughout
the rest of the book. It therefore sets the tone
for ethical material in each subsequent chapter.
In addition, each chapter contains an Ethical
Dilemma box with a compelling ethical
discussion and end-of-chapter discussion
questions that force students to consider and
evaluate each situation.

• Entrepreneurship. An entrepreneur-
ial spirit pervades most marketing innova-
tions and is necessary to keep firms growing
and healthy. Marketing nurtures that entrepre-
neurial spirit by providing examples of young
entrepreneurial firms and successful entrepre-
neurs wherever possible. Each chapter also
contains an Entrepreneurial Marketing box
that depicts recognizable and interesting young
entrepreneurial firms.

Marketing defines Services as the intangible
product and devotes Chapter 12 to the topic. A
balanced approach to presenting products and
services is used throughout. Examples of great
service businesses and how product-oriented
businesses provide great service abound.

Most firms are involved in Global
at some level. Giant firms such
as Procter & Gamble, Starbucks, and United
Airlines have global operations. But small
entrepreneurial firms are also involved because
they get their materials, products, or services
from firms located in other countries. Global
examples are woven throughout each chapter
of Marketing. In addition, Chapter 7 is devoted
exclusively to the topic.

derstanding the Marketplace

Trade AgreementsMarkete

Protesting the War with the Wallet

Ethical Dilemma 7.2

Is “Made in the U.S.A” more a hindrance than a help in U.S. firms’ efforts to penetrate the
global marketplace?22

According to the results of a recent survey of 8,000 consumers in
five countries (Canada, China, France, Germany, Russia, and the United Kingdom), being
an American firm may increasingly become a hindrance. The survey found that 20 per-
cent of respondents from Europe and Canada stated that they were consciously avoiding
purchasing U.S. products as a form of protest against U.S. foreign policy, especially its
actions in Iraq.

The survey also asked the respondents if they were intentionally avoiding purchasing
products from 40 U.S. corporations. Corporations viewed as being “more American” fared
the worst. Sixty percent of respondents said that they would not buy Marlboro, and 48
percent claimed they would “definitely avoid” using American Express. The other brands
that respondents stated they were “most avoiding” were Exxon-Mobile, AOL, Chevron,
Texaco, United Airlines, Budweiser, Chrysler, Barbie Dolls, Starbucks, and General Motors.
Adding to the bad news for U.S. corporations, 50 percent of the survey respondents stated
they distrusted U.S. firms because of their perceived involvement in foreign policy.

The dilemma U.S. firms
face is how to counter this
negativity abroad but retain
their patriotic reputation
within the United States.
Most of these quintessen-
tially American firms oper-
ate through local partners
and purchase from local
suppliers in their global
operations. So should these
U.S. companies distance
themselves from their U.S.
identity? Should they high-
light that boycotts harm
local economies perhaps
even more than they do the
U.S. economy?

Protesters in Manila boycott McDonald’s and other U.S.-
based firms to protest the U.S.-led war on Iraq.



Entrepreneurial Marketing 11.1

Geox,the Holy Shoe51

theheat andhisallergies,hefoundheneededtopoke
holesinthesolesofhisshoestolet aircirculatearound
hisfeet.Whenhewent backtoItaly,Polegatodecidedto
forEarth,and“x,”tosuggest atechnologicalfeel.
Polegatotook his innovative idea for“breathable”
or“ventilated”shoes toleading manufacturers suchas
Fila,Nike,Adidas,and Timberland.Nonewas interested.
But whenPolegatointroduced Geox shoes himself in
Europe,despite anotherwise saturated shoe market,
the brand was a big hit.Nowsold inthe firm’s own
chain of stores and in the United States through
upscale retail chains,Geox sells approximately 10mil-
lionpairs of shoes annually and plans toexpand to150
stores inItaly and 100overseas.

ventilatedshoes tokeephis feet cool
inhot weather.




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why will instructors

enjoy using this book?

Tradition. Marketing draws from a history of outstanding marketing texts. As such,
users of other books will feel confident and comfortable with the material in this new text. We
honor all the traditional marketing concepts, but make them current, relevant and fun for your
students to learn.

Assessment. Business schools and accrediting organizations are demanding that
students be accountable for specific material that is essential for any marketing practitioner.
Of course, Marketing provides students with the knowledge of the language of marketing.
In addition, students will come away with a set of tools that is essential to be successful in
marketing careers. But the material goes beyond the printed page. The Online Learning Center
contains an Interactive Student Tool Kit. The Tool Kit is a set of interactive exercises that are
working models of the concepts presented in the text. Sophisticated, fun, and instructive, this
Interactive Tool Kit contains up to 3 gradable assignments on each of the following concepts:

Outstanding Ancillary Materials. In addition to the Tool Kit, Marketing
provides instructors with a broad spectrum of high-quality supplements:

SWOT Analysis (Chapter 2)
Compensatory versus Non-compensatory
Consumer Decision Making (Chapter 5)
• Vendor Evaluation Analysis (Chapter 6)

Market Positioning Map (Chapter 8)
Service Quality (Chapter 12)
Break-even Analysis (Chapter 13)
Developing an Advertisement (Chapter 18)

Two sets of state-of-the-art PowerPoint presentations for each chapter. One set contains pictures,
screen grabs, key terms, interactive exhibits, and embedded videos. The other is a frills-free
version, ideal for customizing.

A user-friendly, yet comprehensive Instructors’ Manual. In addition to the lecture notes and end
of chapter solutions, you will also find additional assignments, examples, and in-class activities
that you can use to enhance your classroom lectures. This IM is available on the Instructor’s side
of the Online Learning Center and in hard copy.

A video program on DVD consisting of more than 15 segments in a variety of lengths to provide
flexibility for your classroom. Some of the firms featured in these videos are Newman’s Own
Organics, Taco Bell, and Netflix. The bottled water industry is covered in one long segment that
integrates several of the key concepts discussed in this book.

One of the most important aspects of the teaching package is the Test bank. The model for this
test bank is unique, and was designed by a focus group of instructors. The test bank provides
approximately 130 questions per chapter. Each question is keyed to chapter learning objectives
and linked to the current AACSB standards. In this test bank you will find a balanced mixture
of true/false, multiple-choice, short answer, and essay questions that are labeled as definition,
conception, or application driven.


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A Compelling Read. Marketing was written with the student in mind. The
examples are current and appealing, and feature a wide range of products and services
that will be recognizable to a diverse group of readers.

Unique End-of-Chapter Applications and Exercises

Marketing Applications. Each chapter concludes with eight to eleven Marketing
Applications. These questions ask students to apply what they have learned to
marketing scenarios that are relevant to their lives.

Ethical Dilemma. At least one of the Marketing Applications in each chapter poses an
ethical dilemma based on material covered in the chapter. For instance, in Chapter 7
on global marketing, we pose the issue of offshore tax preparation work being done at
a local accounting firm that communicates a personal commitment to each customer.
Students can apply the ethical decision-making framework introduced in Chapter 3 to
these marketing situations.

Net Savvy. Each chapter contains two exercises that force
students to the Internet to apply material covered in the text.
For example, in Chapter 18 on advertising we direct students
to the Childrens’s Advertising Review Unit, one of the major
self-regulatory bodies for childrens’s advertising at www.caru.
org. We ask students to choose a press release and discuss
what action CARU took against the identified company or
group and the legal and ethical issues addressed in the case.

End-of-Chapter Cases. Each chapter ends with a 2-3 page case
covering a current marketing idea, concept, or company.

• Web Site for Students (www.mhhe.com/grewal-levy)

The Online Learning Center will help students and instructors use Marketing effectively.
Some of the features on the Web site are:

• The Interactive Student Tool Kit

• Multiple-choice questions on the student site

• Marketer’s Showdown and other selections from the book’s video program

We’ve created this book and support package to give both instructors and
students the best possible learning experience. We truly hope that you
and your students fully enjoy this book and the tools that accompany it.

why will students

enjoy using this book?

E X H I B I T c5.1Smart Models Available in the U.K.

g r e 4 9 0 2 6 _ c h 0 5 . i n d d 1 4 4

1 1 / 3 0 / 0 6 1 1 : 3 1 : 0 1 A M


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Throughout the development of this text, several outstanding individuals were
integrally involved and made substantial contributions. In particular, we’d like to
thank Larry D. Compeau (Clarkson University), Rajesh Chandrashekaran (Fair-
leigh Dickinson University), Rajiv Dant (University of Southern Florida), Nancy
Dlott (Babson College), Gopal Iyer (Florida International University), Jeanne S.
Munger (University of Southern Maine), Julie H. Rusch, and Morgan Walters (Bab-
son College) for their contributions to several chapters.
We also acknowledge the contributions of our colleagues at Babson College,
particularly, Danna Greenberg, Kate McKone-Sweet and Lydia Moland, for con-
ceptualizing the ethical decision-making framework in Chapter 3. We also wish to
thank Ross Petty at Babson College for his insights on legal issues discussed in the
text, and to Abdul Ali, Britt Hackmann, Kathy Harris, Robb Kopp, Joan Lindsey-
Mullikin, Anne Roggeveen, David Snavely, and Zhen Zhu for sharing teaching
materials, reviewing manuscript, and being sounding boards for ideas.
We wish to express our sincere appreciation to Cathy Curran-Kelly (Univer-
sity of Massachusetts, Dartmouth), for preparing the Instructor’s Manual, Caro-
line Juszczak for the Powerpoint slides, David Folson for the test bank, and Kelly
Luchtman and Jennifer Locke with the video production. We also appreciate the
feedback provided by Elisabeth Nevins Caswell and Elisa Adams.
The support, expertise, and occasional coercion from our publisher, Andy Win-
ston, sponsoring editor, Barrett Koger and development editor, Sarah Crago, are
greatly appreciated. The book would also never have come together without the edi-
torial and production staff at McGraw-Hill/Irwin: Trent Whatcott, marketing man-
ager; Christine Vaughan, lead project manager; Kami Carter, senior designer; Jer-
emy Cheshareck, senior photo research coordinator; Mike Hruby, photo researcher;
Cathy Tepper, lead media project manager; Ben Curless and Aliya Haque, media
technology producers; and Michael McCormick, lead production supervisor.
Our colleagues in industry have been invaluable in providing us with case,
video, advertising, and photo materials. They include: Jacquelyn A. Ottman (J.
Ottman Consulting); Andrea Gallagher (IRI); Marty Ordman and Betta Gallego
(Dole); Michael Buckley, Mark Bauer, and Max Ward (Staples); Peter Meehan and
Nell Newman (Newman’s Own Organics); Steve Swasey (NetFlicks); Will Bortz
(Taco-Bell); Dan Sullivan (New Balance), Jenny Dervin, (JetBlue); Susan Heaney
(Avon Foundation); Nancy Hirshberg (Stonyfield Farms); Zoe Jackson (MOMA);
and Douglas Riggan (Burger King).
Over the years, we have had the opportunity to work with many talented and
insightful colleagues. We have benefited from our research and discussions with
them. Some of these colleagues are: Arun Sharma, A. Parasuraman, R. Krishnan,
Howard Marmorstein, Anuj Mehrotra and Michael Tsiros and Maria Giordano (all
from University of Miami); Glenn Voss and Mitzi Montoya-Weiss (North Carolina.
State University); Kathleen Seiders (Boston College); Rob Palmatier (University
of Cincinnati); Praveen Kopalle, Scott Neslin and Kusum Ailawadi (Dartmouth);
Robert Peterson and Andrea Godfrey (University of Texas at Austin); Don Lehm-
ann (Columbia); Ruth Bolton, Steve Brown and Terry Bristol (Arizona State Uni-
versity), Julie Baker and William Cron (Texas Christian University); Venkatesh
Shankar, Len Berry and Manjit Yadav (Texas A&M); Jerry Gotlieb (University of
Western Kentucky); Hooman Estelami (Fordham University); Ken Evans (Uni-
versity of Oklahoma); Monika Kukar Kinney (University of Richmond); Ronnie
Goodstein (Georgetown); James Hess (University of Houston); Anthony Miyazaki
and Walfried Lassar (Florida International University); Tamara Mangleburg (Flor-

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Dennis Arnett

Texas Tech University

Ainsworth Bailey

University of Toledo

Joyce Banjac

Myers University

Harvey Bauman

Lees McRae College

Sandy Becker

Rutgers Business School

Ellen Benowitz

Mercer County Community College

Gary Benton

Western Kentucky University

Joseph Ben-Ur

University of Houston at Victoria

Patricia Bernson

County College of Morris

Jan Bingen

Little Priest Tribal College

Karen Bowman

University of California

Tom Boyd

California State University Fullerton

Nancy Boykin

Tarleton State University

Cathy Brenan

Northland Community
and Technical College

Martin Bressler

Houston Baptist University

Claudia Bridges

California State University

Greg Broekemier

University of Nebraska Kearney

Rae Caloura

Johnson & Wales University

Michaelle Cameron

St. Edwards University

Lindell Chew

Linn University of Missouri

Dorene Ciletti

Duquesne University

Joyce Claterbos

University of Kansas

Gloria Cockerell

Collin County College

Mark E Collins

University of Tennessee

Sherry Cook

Southwest Missouri State University

Joseph DeFilippe

Suffolk County Community College

Kimberly Donahue

Indiana University Purdue University
at Indianapolis

Michael Drafke

College of DuPage

Leon Dube

Texas A & M University

Nancy Evans

New River Community College

Joyce Fairchild

Northern Virginia Community College

David J. Faulds

University of Louisville

Larry Feick

University of Pittsburg

Leisa Flynn

Florida State University

William Foxx

Auburn University

Douglas Friedman

Penn State University

Stanley Garfunkel

Queensborough Community College

S J Garner

Eastern Kentucky University

David Gerth

Nashville State Community College

Kelly Gillerlain

Tidewater Community College

Jana Goodrich

Penn State Behrend

Robin Grambling

University of Texas at El Paso

Kimberly D. Grantham

University of Georgia

James I. Gray

Florida Atlantic University

Reetika Gupta

Lehigh University

Clark Hallpike

Elgin Community College

James E. Hansen

University of Akron

Lynn Harris

Shippensburg University

Linda Hefferin

Elgin Community College

Lewis Hershey

Fayetteville State University

Adrienne Hinds

Northern Virginia Community College
at Annandale



ida Atlantic University); David Hardesty (University of Kentucky); Greg Marshall
(Rollins College); M. Joseph Sirgy, Julie Ozanne, Ed Fern (Virginia Tech); Merrie
Brucks, Ajith Kumar (University of Arizona); Valerie Folkes (University of South-
ern California); Carolyn Costley (University of Waikato); William Dodds (Ft. Lewis
College); Ramon Avila (Ball State University); Douglas M. Lambert, Walter Zinn
(The Ohio State University); Eugene Stone-Romeo (University of Central Florida);
Norm Borin (Cal Poly San Luis Obispo); Abhijit Biswas and Sujay Dutta (Wayne
State University); Wagner Kamakura (Duke); Raj Srivastava (Emory); Cheryl Ni-
kata (University of Illinois, Chicago); K. Sivakumar (Lehigh University); Nam-
woon Kim (Hong Kong Polytechnic University); Raj Suri (Drexel); Jean-Charles
Chebat (HEC Montreal); Thomas Rudolph (St. Gallen University); Alan Dubin-
sky (Purdue University); Michael M. Van Breda, Daniel J. Howard, Jack Webster;
(Southern Methodist University); Charles A. Ingene (University of Mississippi);
and Dwight Grant (University of New Mexico).
Marketing has benefited from the reviews, focus groups, and individual discus-
sions with several leading scholars and teachers of marketing. Together, these review-
ers spent hundreds of hours reading, discussing, and critiquing the manuscript.
We gratefully acknowledge

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Ronald Hoverstad

University of the Pacific

James Hunt

University of North Carolina

Julie Huntley

Oral Roberts University

Doug Johansen

University of North Florida

Janice Karlen

CUNY – LaGuardia Community

Eric J. Karson

Villanova University

Dennis Lee Kovach

Community College
of Allegheny County

John Kuzma

Minnesota State University at Mankato

Sandie Lakin

Hesser College

Timothy Landry

University of Oklahoma

Don Larson

Ohio State University

Felicia Lassk

Northeastern University

J Ford Laumer

Auburn University

Kenneth Lawrence

New Jersey IT

Paul Londrigan

Mott Community College

Terry Lowe

Heartland Community College

Renee Pfeifer-Luckett

University of Wisconsin at Whitewater

Alicia Lupinacci

Tarrant Community College

Stanley Madden

Baylor University

Lynda Maddox

George Washington University

Cesar Maloles

California State University, East Bay

Karl Mann

Tennessee Tech University

Cathy Martin

University of Akron

Tamara Masters

Brigham Young University

Erika Matulich

University of Tampa

Nancy McClure

University of Central Oklahoma

Ivor Mitchell

University of Nevada Reno

Mark Mitchell

University of South Carolina

Rex Moody

Central Washington University
at Ellensburg

James E. Murrow

Drury University

Noreen Nackenson

Nassau Community College

Sandra Blake Neis

Borough of Manhattan
Community College

John Newbold

Sam Houston State University

Martin Nunlee

Syracuse University

Karen Overton

Houston Community College

Deborah L. Owens

University of Akron

Richard Pascarelli

Adelphi University

Glenn Perser

Houston Community College

Diane Persky

Yeshiva University

Susan Peters

California State Polytechnic
University at Pomona

Gary Pieske

Minnesota State Community
and Technical College

Jeff Podoshen

Temple University

Carmen Powers

Monroe Community College

Rosemary Ramsey

Wright State University

Srikumar Rao

Long Island University

Kristen Regine

Johnston & Wales University

Joseph Reihing

Nassau Community College

Janet Robinson

Mount St. Mary’s College

Heidi Rottier

Bradley University

Juanita Roxas

California State Polytechnic University

Shikhar Sarin

Boise State University

Carl Saxby

University of Southern Indiana

Laura Shallow

St. Xavier University

Erin Sims

Devry University at Pomona

Lois J. Smith

University of Wisconsin

Brent Sorenson

University of Minnesota-Crookston

Randy Stuart

Kennesaw State University

James Swanson

Kishwaukee College

Robert R. Tangsrud, Jr.

Univeristy of North Dakota

Frank Tobolski

Lake in the Hills

Louis A. Tucci

College of New Jersey

Ven Venkatesan

University of Rhode Island at Kingston

Steve Vitucci

Tarleton University Central Texas

Keith Wade

Webber International University

Bryan Watkins

Dominican University, Priory Campus

Ludmilla Wells

Florida Gulf Coast University

Thomas Whipple

Cleveland State University

Tom Whitman

Mary Washington College

Kathleen Williamson

University of Houston-Clear Lake

Phillip Wilson

Midwestern State University

Doug Witt

Brigham Young University

Kim Wong

Albuquerque Tech Institute

Esther Page-Wood

Western Michigan University



Finally, we’d like to thank our families: Diana, Lauren and Alex Grewal, and
Marcia and Eva Levy for their support and encouragement in this endeavor.

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brief contents

SECTION ONE Assessing the Marketplace 2

1 Overview of Marketing 2
2 Developing Marketing Strategies 30
3 Marketing Ethics 58
4 Analyzing the Marketing Environment 84

SECTION TWO Understanding the Marketplace 116

5 Consumer Behavior 116
6 Business-to-Business Marketing 148
7 Global Marketing 174

SECTION THREE Targeting the Marketplace 208

8 Segmentation, Targeting, and Positioning 208
9 Marketing Research and Information Systems 240

SECTION FOUR Value Creation 268

10 Product, Branding, and Packaging Decisions 268
11 Developing New Products 298
12 Services: The Intangible Product 326

SECTION FIVE Value Capture 354

13 Pricing Concepts for Establishing Value 354
14 Strategic Pricing Methods 382

SECTION SIX Value Delivery: Designing the Channel and Supply
Chain 408

15 Supply Chain Management 408
16 Retailing 438

SECTION SEVEN Value Communication 462

17 Integrated Marketing Communications 462
18 Advertising and Sales Promotions 486
19 Personal Selling and Sales Management 512

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table of contents

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