Marketing 2018 19th edition William M.

Pride
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 2 018 E D I T I O N | P R I D E & F E R R E L L

MARKETING

WILLIAM M. PRIDE
Texas A & M University

O. C. FERRELL
Auburn University

Australia • Brazil • Mexico • Singapore • United Kingdom • United States

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 Marketing, 2018
William M. Pride, O.C. Ferrell
Vice President, General Manager, Social ­
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Printed in the United States of America
Print Number: 01 Print Year: 2016
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© 2018, 2016 Cengage Learning®
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22/11/16 7:30 pm
 To Nancy, Allen, Carmen, Gracie, Mike, Ashley, Charlie, J.R.,
and Anderson Pride

To James Collins Ferrell and George Collins Ferrell

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72896_fm_hr_i-xxxii.indd 4 22/11/16 7:30 pm
 brief contents

Part 1: Marketing Strategy and Customer Relationships 1

1. An Overview of Strategic Marketing 2
2. Planning, Implementing, and Evaluating Marketing Strategies 32

Part 2: Environmental Forces and Social and Ethical Responsibilities 63

3. The Marketing Environment 64
4. Social Responsibility and Ethics in Marketing 96

Part 3: Marketing Research and Target Market Analysis 129

5. Marketing Research and Information Systems 130
6. Target Markets: Segmentation and Evaluation 164

Part 4: Buying Behavior, Global Marketing, and Digital Marketing 193

7. Consumer Buying Behavior 194
8. Business Markets and Buying Behavior 228
9. Reaching Global Markets 256
10. Digital Marketing and Social Networking 294

Part 5: Product Decisions 327

11. Product Concepts, Branding, and Packaging 328
12. Developing and Managing Products 364
13. Services Marketing 390

Part 6: Distribution Decisions 419

14. Marketing Channels and Supply-Chain Management 420
15. Retailing, Direct Marketing, and Wholesaling 458

Part 7: Promotion Decisions 495

16. Integrated Marketing Communications 496
17. Advertising and Public Relations 528
18. Personal Selling and Sales Promotion 558

Part 8: Pricing Decisions 595

19. Pricing Concepts 596
20. Setting Prices 626

Available only online:

Appendix A: Financial Analysis in Marketing A-1
Appendix B: Sample Marketing Plan B-1
Appendix C: Careers in Marketing C-1
v

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 contents
Preface xvii
Part 1: Marketing Strategy and Customer Relationships
Chapter 1: An Overview of Strategic
Marketing 2
Marketing Insights: Airbnb Facilitates the Sharing Lodging
Experience 3
1-1 Defining Marketing 4
1-1a Marketing Focuses on Customers 5
1-2 Marketing Deals with Products, Distribution,
Promotion, and Price 6
1-2a The Product Variable 6
1-2b The Distribution Variable 7
1-2c The Promotion Variable 8
1-2d The Price Variable 8
1-3 Marketing Creates Value 9
1-3a Marketing Builds Relationships with Customers
and Other Stakeholders 11
1-4 Marketing Occurs in a Dynamic Environment 12
1-5 Understanding the Marketing Concept 13
Entrepreneurship in Marketing: Protein Bar Restaurant:
Satisfying Consumers 15
1-5a Evolution of the Marketing Concept 15
1-5b Implementing the Marketing Concept 16
1-6 Customer Relationship Management 17
1-6a Relationship Marketing 17
1-6b Customer Lifetime Value 18
Snapshot: Top Marketing Challenges 18
1-7 The Importance of Marketing in Our Global
Economy 19
1-7a Marketing Costs Consume a Sizable Portion
of Buyers’ Dollars 19
1-7b Marketing is Used in Nonprofit
Organizations 19
1-7c Marketing Is Important to Businesses
and the Economy 19
1-7d Marketing Fuels Our Global Economy 20
1-7e Marketing Knowledge Enhances Consumer
Awareness 20
1-7f Marketing Connects People through
Technology 20
1-7g Socially Responsible Marketing: Promoting
the Welfare of Customers and Stakeholders 21
iv
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1
1-7h Marketing Offers Many Exciting Career
Prospects 23
Going Green: Lego: Building with Bio-Plastics 23
Summary 24
Important Terms 25
Discussion and Review Questions 25
Video Case 1.1 Cruising to Success: The Tale of
New Belgium Brewing 26
Case 1.2 Dollar Shave Club: The Company for Men 27
Chapter 2 Planning, Implementing,
and Evaluating Marketing Strategies 32
Marketing Insights: Dressbarn Dresses Up Its Strategy 33
2-1 The Strategic Planning Process 34
2-2 Establishing Mission, Goals, and Strategies 35
2-2a Developing Organizational Mission
and Goals 35
2-2b Developing Corporate and Business-Unit
Strategies 36
2-3 Assessing Organizational Resources
and Opportunities 41
2-3a SWOT Analysis 42
Marketing Debate: Should Drugstores Sell Tobacco
Products? 43
2-3b First Mover and Late-Mover Advantage 43
2-4 Developing Marketing Objectives and Marketing
Strategies 44
Going Green: Campbell Soup’s Recipe for Sustainability
and Transparency 45
2-4a Selecting the Target Market 45
2-4b Creating the Marketing Mixes 46
2-5 Managing Marketing Implementation 47
2-5a Organizing the Marketing Unit 47
2-5b Coordinating and Communicating 48
2-5c Establishing a Timetable for Implementation 49
2-6 Evaluating Marketing Strategies 49
2-6a Establishing Performance Standards 49
2-6b Analyzing Actual Performance 50
Snapshot: How much do companies spend
on marketing? 52
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 Contents vii

2-6c Comparing Actual Performance with
Performance Standards and Making
Changes, If Needed 52
2-7 Creating the Marketing Plan 53
Summary 54
Important Terms 56
Discussion and Review Questions 56
Video Case 2.1 BoltBus Offers Affordable Transportation
for Tech-Savvy Consumers 57
Case 2.2 Netflix Uses Technology to Change How We
Watch Videos 58
Strategic Case 1 Sseko Designs: Using Marketing for Social
Impact 59

Part 2: Environmental Forces and Social and Ethical Responsibilities 63

Chapter 3: The Marketing Environment 64
Marketing Insights: Pepsi: A Healthier Alternative 65
3-1 Examining and Responding to the Marketing
Environment 66
3-1a Environmental Scanning and Analysis 66
Emerging Trends in Marketing: Making Trade Fair 67
3-1b Responding to Environmental Forces 67
3-2 Competitive Forces 69
3-2a Types of Competitors 69
3-2b Types of Competitive Structures 70
3-2c Monitoring Competition 71
3-3 Economic Forces 71
3-3a Economic Conditions 72
3-3b Buying Power 73
3-3c Willingness to Spend 74
3-4 Political Forces 75
3-5 Legal and Regulatory Forces 76
3-5a Procompetitive Legislation 76
3-5b Consumer Protection Legislation 78
3-5c Encouraging Compliance with Laws
and Regulations 78
3-5d Regulatory Agencies 79
3-5e  Self-Regulatory Forces 81
3-6 Technological Forces 82
3-6a Impact of Technology 82
Snapshot: Consumer Ownership of Digital Devices 83
3-6b Adoption and Use of Technology 84
3-7 Sociocultural Forces 85
3-7a Demographic and Diversity Characteristics 85
Marketing Debate: Should the FDA ban trans fats from food
products? 85
3-7b Cultural Values 86
3-7c Consumerism 88
Summary 88
Important Terms 89
Discussion and Review Questions 90
Video Case 3.1 Apple vs. Samsung: Gloves Are Off 90
Case 3.2 Volkswagen Hits a Bump in the Road 91
Chapter 4: Social Responsibility and Ethics
in Marketing 96
Marketing Insights: Starbucks Goes Grande on Job
Opportunities 97
4-1 The Nature of Social Responsibility 98
4-1a The Dimensions of Social Responsibility 99
4-1b Social Responsibility Issues 102
Going Green: The Walmart Supply Chain Goes Green 105
4-2 Marketing Ethics 106
4-2a Ethical Issues in Marketing 107
4-2b Ethical Dimensions of Managing
Supply Chain Relationships 109
4-3 The Nature of Marketing Ethics 110
4-3a Individual Factors 110
4-3b Organizational Relationships 111
Snapshot: How Much Time Do Employees Waste
at Work? 111
4-3c Opportunity 112
Entrepreneurship in Marketing: Second City Brings Ethics
Training to Life 113
4-4 Improving Marketing Ethics 113
4-5 Incorporating Social Responsibility and Ethics
Into Strategic Planning 116
4-5a Social Responsibility and Ethics Improve
Marketing Performance 118
Summary 119
Important Terms 121
Discussion and Review Questions 121
Video Case 4.1 Theo Chocolate Makes a Sweet
Difference 121
Case 4.2 Blue Bell Creameries Moo’ves Ahead after
Listeria Crisis 122
Strategic Case 2 REI: An Ethical Consumer
Cooperative 123

Part 3: Marketing Research and Target Market Analysis 129

Chapter 5: Marketing Research and 5-1 The Importance of Marketing Research 132
Information Systems 130 5-2 Types of Research 133
5-2a Exploratory Research 134
Marketing Insights: SamplingLab: Marketing Research Goes
5-2b Conclusive Research 135
Retail 131

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 viii Contents
5-3 The Marketing Research Process 136
5-3a Locating and Defining Problems
or Research Issues 137
5-3b Designing the Research Project 137
5-3c Collecting Data 138
5-3d Interpreting Research Findings 147
5-3e Reporting Research Findings 148
Snapshot: Top 10 Challenges for Marketing
Researchers 149
5-4 Using Technology to Improve Marketing Information
Gathering and Analysis 149
5-4a Marketing Information Systems 150
5-4b Databases 150
5-4c Big Data 151
5-4d Marketing Analytics 153
Emerging Trends in Marketing: Marketing Research Embraces
Analytics 153
5-4e Marketing Decision Support Systems 154
5-5 Issues in Marketing Research 154
5-5a The Importance of Ethical Marketing
Research 154
5-5b International Issues in Marketing
Research 155
Marketing Debate: Anonymous Data Can Still Find You 155
Summary 157
Important Terms 158
Discussion and Review Questions 158
Video Case 5.1 Big Boom Theory: Marketing Research
Targets Baby Boomers 159
Case 5.2 Largest Toymaker in the World: Lego Builds on
Past Success 160
Chapter 6: Target Markets: Segmentation
and Evaluation 164
Marketing Insights: Carnival’s Ten-Brand Targeting
Strategy 165
6-1 What Are Markets? 166
6-2 Target Market Selection Process 167
Part 4: Buying Behavior, Global Marketing, and Digital Marketing 193
Chapter 7: Consumer Buying Behavior 194
Marketing Insights: Need Another Holiday? Marketers
at Amazon and Alibaba Think So 195
7-1 Consumer Buying Decision Process 196
7-1a Problem Recognition 197
7-1b Information Search 197
7-1c Evaluation of Alternatives 198
7-1d Purchase 198
7-1e Postpurchase Evaluation 199
7-2 Types of Consumer Decision Making and Level
of Involvement 199
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6-3 Step 1: Identify the Appropriate Targeting Strategy 168
6-3a Undifferentiated Targeting Strategy 168
6-3b Concentrated Targeting Strategy through
Market Segmentation 168
Going Green: 1 Hotel Stands for Green Luxury 170
6-3c Differentiated Targeting Strategy through
Market Segmentation 171
6-4 Step 2: Determine Which Segmentation Variables
to Use 172
6-4a Variables for Segmenting Consumer
Markets 172
Marketing Debate: Facial Recognition and Privacy 176
Snapshot: Who buys from food trucks? 178
6-4b Variables for Segmenting Business
Markets 178
6-5 Step 3: Develop Market Segment Profiles 180
6-6 Step 4: Evaluate Relevant Market Segments 180
6-6a Sales Estimates 180
6-6b Competitive Assessment 181
6-6c Cost Estimates 182
6-7 Step 5: Select Specific Target Markets 182
6-8 Developing Sales Forecasts 182
6-8a Executive Judgment 183
6-8b Surveys 183
6-8c Time Series Analysis 183
6-8d Regression Analysis 184
6-8e Market Tests 184
6-8f Using Multiple Forecasting Methods 185
Summary 185
Important Terms 186
Discussion and Review Questions 187
Video Case 6.1 Family-Owned Ski Butternut Targets Family
Skiers 187
Case 6.2 Mattel Uses Market Segmentation to Stay
on Top 188
Strategic Case 3 Home Depot Builds on Research,
Segmentation, and Targeting 189
7-2a Consumer Decision Making 199
7-2b Consumer Level of Involvement 201
7-3 Situational Influences on the Buying Decision
Process 201
7-4 Psychological Influences on the Buying Decision
Process 203
7-4a Perception 203
7-4b Motives 205
7-4c Learning 207
7-4d Attitudes 207
7-4e Personality and Self-Concept 209
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 Contents ix

Entrepreneurship in Marketing: What’s a “Glam Bag?” Ipsy 8-5 Reliance on the Internet and other Technology 246
Knows 210 Summary 248
7-4f Lifestyles 210 Important Terms 250
7-5 Social Influences on the Buying Decision Discussion and Review Questions 250
Process 211 Video Case 8.1 Will Apple Pay Pay Off for Retailers? 250
7-5a Roles 211 Case 8.2 General Electric Goes Social to Reach Business
7-5b Family Influences 211 Buyers 251
Snapshot: How much would you pay for good coffee? 211
7-5c Reference Groups 213
7-5d Opinion Leaders 214 Chapter 9: Reaching Global Markets 256
7-5e Social Classes 214 Marketing Insights: Developing Countries Prove Lucrative
7-5f Culture and Subcultures 216 for Unilever 257
Emerging Trends in Marketing: How Global Brands Mark the 9-1 The Nature of Global Marketing Strategy 258
Lunar New Year 219 9-2 Environmental Forces in Global Markets 259
7-6 Consumer Misbehavior 219 9-2a Sociocultural Forces 259
Summary 220 Going Green: A Recipe for Biofuels: Algae 260
Important Terms 222 9-2b Economic Forces 261
Discussion and Review Questions 222 Snapshot: Top 15 Happiest Countries 261
Video Case 7.1 How Ford Drives Future Innovation 222 9-2c Political, Legal, and Regulatory Forces 264
Case 7.2 Disney Markets to the Young and the Young 9-2d Ethical and Social Responsibility Forces 266
at Heart 223 9-2e Competitive Forces 268
9-2f Technological Forces 269
9-3 Regional Trade Alliances, Markets,
Chapter 8: Business Markets and Agreements 269
and Buying Behavior 228 9-3a The North American Free Trade
Marketing Insights: Why Live Oak Bank Targets Small Agreement (NAFTA) 270
Businesses 229 9-3b The European Union (EU) 270
8-1 Business Markets 230 9-3c The Southern Common Market
8-1a Producer Markets 230 (MERCOSUR) 272
8-1b Reseller Markets 231 9-3d The Asia-Pacific Economic Cooperation
8-1c Government Markets 232 (APEC) 272
8-1d Institutional Markets 233 9-3e Association of Southeast Asian Nations
8-2 Using the North American Industry Classification (ASEAN) 273
System to Identify and Assess Business Customers 233 9-3f The World Trade Organization (WTO) 274
8-3 Dimensions of Marketing to Business Customers 235 9-4 Modes of Entry into International Markets 274
8-3a Characteristics of Transactions with Business 9-4a Importing and Exporting 275
Customers 235 9-4b Trading Companies 276
8-3b Attributes of Business Customers 236 9-4c Licensing and Franchising 277
8-3c Primary Concerns of Business 9-4d Contract Manufacturing 277
Customers 236 9-4e Joint Ventures 278
Going Green: Government Buyers Go-Go-Go for Greener 9-4f Direct Ownership 279
Buses 238 9-5 Global Organizational Structures 280
8-3d Methods of Business Buying 239 9-5a Export Departments 280
8-3e Types of Business Purchases 239 9-5b International Divisions 281
8-3f Demand for Business Products 240 9-5c Internationally Integrated Structures 282
Emerging Trends in Marketing: LP Revival Boosts Vinyl Record 9-6 Customization Versus Globalization of International
Manufacturers 241 Marketing Mixes 283
8-4 Business Buying Decisions 242 Emerging Trends in Marketing: Can Netflix Conquer the World? 285
8-4a The Buying Center 242 Summary 285
8-4b Stages of the Business Buying Decision Important Terms 286
Process 243 Discussion and Review Questions 286
Snapshot: How much is sole sourcing used? 245 Video Case 9.1 Alibaba and Global E-Commerce: Should
8-4c Influences on the Business Buying Amazon Be Afraid? 287
Decision Process 245 Case 9.2 NFL Goes Global: From Soccer
to Football? 288

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 x Contents

Chapter 10: Digital Marketing 10-5a Product Considerations 310

and Social Networking 294
Marketing Insights: GE: E-Connecting the World 295
10-1 Defining Digital Marketing 296
10-2 Growth and Benefits of Digital Marketing 297
10-3 Types of Consumer-Generated Marketing and Digital
Media 298
10-3a Social Networks 299
Emerging Trends in Marketing: Iceland’s Cool Play to Drive
Tourism 299
Snapshot: Cost per Facebook Click 301
10-3b Blogs and Wikis 302
10-3c Media-Sharing Sites 303
10-3d Virtual Gaming Sites 305
10-3e Mobile Marketing 305
10-3f Applications and Widgets 307
10-4 Changing Digital Media Behaviors of Consumers 308
10-4a Online Consumer Behavior 308
10-5 E-Marketing Strategy 310
10-5b Distribution Considerations 311
Entrepreneurship in Marketing: Instacart: New Way to ‘Bring
Home the Bacon’ 312
10-5c Promotion Considerations 312
10-5d Pricing Considerations 312
10-6 Ethical and Legal Issues 313
10-6a Privacy 313
10-6b Online Fraud 315
10-6c Intellectual Property 315
Summary 316
Important Terms 317
Discussion and Review Questions 318
Video Case 10.1 Zappos Drives Sales through Relationship
Building on Social Media 318
Case 10.2 The Challenges of Intellectual Property in Digital
Marketing 319
Strategic Case 4 Eaton Corporation: Experts at Targeting
Different Markets 320

Part 5: Product Decisions 327

Chapter 11: Product Concepts, 11-7 Packaging 351

11-7a Packaging Functions 351
Branding, and Packaging 328 11-7b Major Packaging Considerations 352
Marketing Insights: Shinola Is “Built in Detroit” and Is No 11-7c Packaging and Marketing Strategy 353
Longer Shoe Polish 329 11-8 Labeling 355
11-1 What is a Product? 330
Summary 357
Snapshot: Are You Buying Less Music? 331
Important Terms 358
11-2 Classifying Products 331 Discussion and Review Questions 358
11-2a Consumer Products 332 Video Case 11.1 GaGa: Not Just a Lady 359
11-2b Business Products 334 Case 11.2 Hilton Worldwide Expands to New Brands
11-3 Product Line and Product Mix 336 and New Markets 360
11-4 Product Life Cycles and Marketing Strategies 337
11-4a Introduction 337
11-4b Growth 338
Chapter 12: Developing and Managing
11-4c Maturity 339 Products 364
11-4d Decline 340 Marketing Insights: Prettie Girls! A One World Vision 365
Emerging Trends in Marketing: Marketing Marvel’s Cinematic 12-1 Managing Existing Products 366
Universe 341 12-1a Line Extensions 366
11-5 Product Adoption Process 341 12-1b Product Modifications 367
11-6 Branding 342 12-2 Developing New Products 369
11-6a Value of Branding 343 12-2a Idea Generation 370
Marketing Debate: Should the Public Know Who’s Funding 12-2b Screening 371
Research and Advocacy? 343 12-2c Concept Testing 371
11-6b Brand Equity 344 12-2d Business Analysis 372
11-6c Types of Brands 346 12-2e Product Development 373
11-6d Selecting a Brand Name 347 Entrepreneurship in Marketing: Jessica Alba’s Honest
11-6e Protecting a Brand 348 Company Launches Affordable and Safe Beauty
11-6f Branding Strategies 349 and Wellness Products 373
11-6g Brand Extensions 349 12-2f Test Marketing 374
11-6h Co-Branding 350 12-2g Commercialization 375
11-6i Brand Licensing 351 Snapshot: Recent Top 5 Most Memorable Products 377

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12-3 Product Differentiation through Quality, Design,
and Support Services 377
12-3a Product Quality 377
12-3b Product Design and Features 378
12-3c Product Support Services 379
Going Green: Bambike: World’s Greenest Bicycle 379
12-4 Product Positioning and Repositioning 380
12-4a Perceptual Mapping 380
12-4b Bases for Positioning 381
12-4c Repositioning 382
12-5 Product Deletion 382
12-6 Organizing to Develop and Manage Products 383
Summary 384
Important Terms 385
Discussion and Review Questions 386
Video Case 12.1 Sriracha Heats Up the Hot Sauce
Market 386
Case 12.2 Quesalupa! Crunchy and All that Cheese from
Taco Bell 387
Chapter 13: Services Marketing 390
Marketing Insights: McDonald’s Markets All-Day Breakfast,
Finally! 391
13-1 The Growth and Importance of Services 392
13-2 Characteristics of Services 393
13-2a Intangibility 393
13-2b Inseparability of Production and
Consumption 394
13-2c Perishability 394
13-2d Heterogeneity 395
Part 6: Distribution Decisions 419
Chapter 14: Marketing Channels and
Supply-Chain Management 420
Marketing Insights: Farmgirl Flowers Speeds Blooms
from Farm to Vase 421
14-1 Foundations of the Supply Chain 422
14-2 The Role of Marketing Channels in
Supply Chains 424
14-2a The Significance of Marketing Channels 425
14-2b Types of Marketing Channels 426
Emerging Trends in Marketing: While Some Tourist Seek
Adventure, Others Want to Go Shopping 428
14-2c Selecting Marketing Channels 431
14-3 Intensity of Market Coverage 433
14-3a Intensive Distribution 433
14-3b Selective Distribution 434
14-3c Exclusive Distribution 435
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Contents xi
13-2e Client-Based Relationships 395
13-2f Customer Contact 396
Emerging Trends in Marketing: How USAA Delivers Services
through Mobile Apps 396
13-3 Developing and Managing Marketing Mixes
for Services 397
13-3a Development of Services 398
13-3b Distribution of Services 399
13-3c Promotion of Services 400
Entrepreneurship in Marketing: Helping Girl Scouts Hone
Entrepreneurial Skills 402
13-3d Pricing of Services 402
Snapshot: Airlines are charging higher add-on fees 403
13-4 Service Quality 403
13-4a Customer Evaluation of Service Quality 404
13-4b Delivering Exceptional Service Quality 406
13-4c Analysis of Customer Expectations 406
13-5 Nonprofit Marketing 408
13-5a How Is Nonprofit Marketing Different? 408
13-5b Nonprofit Marketing Objectives 409
13-5c Developing Nonprofit Marketing
Strategies 409
Summary 411
Important Terms 412
Discussion and Review Questions 412
Video Case 13.1 Mike Boyle’s Services Are Not
for Everyone 413
Case 13.2 American Express Delivers Service with
Calls, Tweets, and Apps 414
Strategic Case 5 Nike Runs the Innovation Race
Every Day 415
14-4 Strategic Issues in Marketing Channels 435
14-4a Competitive Priorities in Marketing
Channels 435
14-4b Channel Leadership, Cooperation,
and Conflict 436
14-4c Channel Integration 439
14-5 Physical Distribution in Supply-Chain
Management 440
14-5a Order Processing 442
14-5b Inventory Management 442
14-5c Materials Handling 443
Snapshot: Greatest Concern about Distribution
Risks 444
14-5d Warehousing 444
14-5e Transportation 445
Marketing Debate: Online Retailing and the
Environment 447
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 xii Contents

14-6 Legal Issues in Channel Management 448 Emerging Trends in Marketing: See It on Social Media? Buy It
14-6a Restricted Sales Territories 449 on Social Media 469
14-6b Tying Agreements 449 Snapshot: How do you use your smartphone when
14-6c Exclusive Dealing 450 you shop? 470
14-6d Refusal to Deal 450 15-3c Retail Positioning 470
Summary 450 15-3d Store Image 470
Important Terms 452 15-3e Category Management 472
Discussion and Review Questions 452 15-4 Direct Marketing, Direct Selling, and Vending 472
Video Case 14.1 Taza Cultivates Channel Relationships 15-4a Direct Marketing 472
with Chocolate 453 15-4b Direct Selling 475
Case 14.2 Procter & Gamble Tunes Up Channels 15-4c Automatic Vending 476
and Transportation 454 15-5 Franchising 476
15-6 Wholesaling 478
Chapter 15: Retailing, Direct 15-6a Services Provided by Wholesalers 479
Entrepreneurship in Marketing: Counter Culture Coffee Brews
Marketing, and Wholesaling 458 up Wholesale Success 479
Marketing Insights: Gulp! 7-Eleven Slurps up Convenience 15-6b Types of Wholesalers 480
Store Business 459
Summary 484
15-1 Retailing 460 Important Terms 486
15-2 Major Types of Retail Stores 461 Discussion and Review Questions 487
15-2a General-Merchandise Retailers 461 Video Case 15.1 L.L.Bean: Open 24/7, Click or Brick 487
15-2b Specialty Retailers 465 Case 15.2 Dick’s Sporting Goods Scores with Stores within
15-3 Strategic Issues in Retailing 466 Stores 488
15-3a Location of Retail Stores 466 Strategic Case 6 IKEA Makes the Most of Its Marketing
15-3b Retail Technology 468 Channels 489

Part 7: Promotion Decisions 495

Chapter 16: Integrated Marketing 16-5 Selecting Promotion Mix Factors 510
Communications 496 16-5a Promotional Resources, Objectives,
and Policies 510
Marketing Insights: Relax and Recline: La-Z-Boy’s
16-5b Characteristics of the Target Market 511
IMC Strategy 497
16-5c Characteristics of the Product 511
16-1 The Nature of Integrated Marketing
16-5d Costs and Availability of Promotional
Communications 498
Methods 512
16-2 Promotion and the Communication Process 499
16-5e Push and Pull Channel Policies 513
16-3 The Role and Objectives of Promotion 501
16-6 The Impact of Word-of-Mouth Communications
16-3a Create Awareness 502
on Promotion 514
16-3b Stimulate Demand 503
Emerging Trends in Marketing: Mattress Direct: Sleep Goes
16-3c Encourage Product Trial 504 Viral 516
16-3d Identify Prospects 504 16-7 Product Placement as Promotion 516
16-3e Retain Loyal Customers 504 16-8 Criticisms and Defenses of Promotion 517
16-3f Facilitate Reseller Support 504 16-8a Is Promotion Deceptive? 517
16-3g Combat Competitive Promotional Efforts 505 16-8b Does Promotion Increase Prices? 517
16-3h Reduce Sales Fluctuations 505 Snapshot: Top Brands Featured in Movies 517
16-4 The Promotion Mix 506 16-8c Does Promotion Create Needs? 518
16-4a Advertising 506 16-8d Does Promotion Encourage Materialism? 518
16-4b Personal Selling 507 16-8e Does Promotion Help Customers without
16-4c Public Relations 508 Costing Too Much? 519
16-4d Sales Promotion 509 16-8f Should Potentially Harmful Products
Entrepreneurship in Marketing: How to Get “Ginned Up”
Be Promoted? 519
at Home 510

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 Contents xiii

Summary 519 18-2e Overcoming Objections 565

Important Terms 520 18-2f Closing the Sale 565
Discussion and Review Questions 521 18-2g Following Up 565
Video Case 16.1 Napoletana: Taking a Bite at WOM 18-3 Types of Salespeople 565
Promotion 521
18-3a Sales Structure 565
Case 16.2 Because You’re Worth It: IMC at L’Oréal 522
18-3b Support Personnel 566
18-4 Team Selling and Relationship Selling 567
Chapter 17: Advertising and Public
18-4a Team Selling 567
Relations 528 18-4b Relationship Selling 567
Marketing Insights: POM Wonderful: Crazy Healthy 529 18-5 Sales Force Management 568
17-1 The Nature and Types of Advertising 530 18-5a Establishing Sales Force Objectives 569
Marketing Debate: Is Native Advertising Trustworthy? 532 Snapshot: Top Challenges for Inside Sales
17-2 Developing an Advertising Campaign 533 Managers 569
17-2a Identifying and Analyzing the Target 18-5b Determining Sales Force Size 570
Audience 534 18-5c Recruiting and Selecting Salespeople 570
17-2b Defining the Advertising Objectives 534 18-5d Training Sales Personnel 571
17-2c Creating the Advertising Platform 535 18-5e Compensating Salespeople 573
17-2d Determining the Advertising 18-5f Motivating Salespeople 575
Appropriation 535 18-5g Managing Sales Territories 576
17-2e Developing the Media Plan 536 18-5h Controlling and Evaluating Sales
Snapshot: Top Ten Advertisers 538 Force Performance 577
17-2f Creating the Advertising Message 540 18-6 Sales Promotion 577
Going Green: Natural Claims for Cigarettes: Blowing
18-7 Consumer Sales Promotion Methods 578
Smoke? 542
18-7a Coupons 578
17-2g Copy 542
18-7b Cents-Off Offers 580
17-2h Artwork 543
18-7c Money Refunds 581
17-2i Executing the Campaign 544
18-7d Rebates 581
17-2j Evaluating Advertising Effectiveness 544
18-7e Shopper, Loyalty, and Frequent-User
17-3 Who Develops the Advertising Campaign? 546
Incentives 581
17-4 Public Relations 547
Marketing Debate: The Advantages of Customer-Loyalty
17-5 Public Relations Tools 548
Programs 582
17-6 Evaluating Public Relations Effectiveness 549
18-7f Point-of-Purchase Materials and
17-6a Dealing with Unfavorable Public
Demonstrations 582
Relations 550
18-7g Free Samples 583
Summary 551 18-7h Premiums 583
Important Terms 552
18-7i Consumer Contests 583
Discussion and Review Questions 552
18-7j Consumer Games 583
Video Case 17.1 Scripps Networks Interactive: An Expert
at Connecting Advertisers with Programming 553 18-7k Sweepstakes 584
Case 17.2 Greenwashing Harms Companies and 18-8 Trade Sales Promotion Methods 584
Consumers 554 18-8a Trade Allowances 584
18-8b Cooperative Advertising and Dealer
Chapter 18: Personal Selling and Sales Listings 585
Promotion 558 18-8c Free Merchandise and Gifts 585
18-8d Premium Money 585
Marketing Insights: Who Knew? The Success of Product
Sampling 559 18-8e Sales Contest 586
18-1 The Nature and Goals of Personal Selling 560 Summary 586
Entrepreneurship in Marketing: Scentsy: The Sweet Smell of Important Terms 587
Success 561 Discussion and Review Questions 587
18-2 Steps of the Personal Selling Process 562 Video Case 18.1 Nederlander Gives Audiences a Reason
18-2a Prospecting 562 for a Standing Ovation 588
Case 18.2 Mistine’s Mystique: Great Promotional
18-2b Preapproach 563
Strategies 589
18-2c Approach 564 Strategic Case 7 Patagonia Climbs into the World
18-2d Making the Presentation 564 of IMC 590

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 xiv Contents
Part 8: Pricing Decisions 595
Chapter 19: Pricing Concepts 596
Marketing Insights: Smells like a Rat: The Gray Market
for Luxury Perfumes 597
19-1 The Importance of Price in Marketing 598
Marketing Debate: Surge Pricing: Is
Uber Expensive? 599
19-2 Price and Nonprice Competition 599
19-2a Price Competition 599
19-2b Nonprice Competition 600
19-3 Demand Curves and Price Elasticity 601
19-3a The Demand Curve 601
19-3b Demand Fluctuations 602
19-3c Assessing Price Elasticity of Demand 602
Snapshot: Family Spending on Gasoline 604
19-4 Demand, Cost, and Profit Relationships 604
19-4a Marginal Analysis 604
19-4b Break-Even Analysis 607
19-5 Factors that Affect Pricing Decisions 608
19-5a Organizational and Marketing
Objectives 609
19-5b Types of Pricing Objectives 609
19-5c Costs 609
19-5dMarketing-Mix Variables 610
19-5e Channel Member Expectations 611
19-5f Customers’ Interpretation and
Response 611
19-5g Competition 613
Emerging Trends in Marketing: Harley-Davidson ‘Light’:
The Econo Model 613
19-5h Legal and Regulatory Issues 615
19-6 Pricing for Business Markets 616
19-6a Price Discounting 616
19-6b Geographic Pricing 617
19-6c Transfer Pricing 618
Summary 618
Important Terms 620
Discussion and Review Questions 620
Video Case 19.1 Louis Vuitton Bags the Value
Shopper 621
Case 19.2 CVS: Continuous Value Strategy 622
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Chapter 20: Setting Prices 626
Marketing Insights: Primark Profits from Low Prices and Fast
Fashion 627
20-1 Development of Pricing Objectives 628
20-1a Survival 629
20-1b Profit 629
20-1c Return on Investment 629
20-1d Market Share 629
20-1e Cash Flow 630
20-1f Status Quo 630
20-1g Product Quality 630
20-2 Assessment of the Target ­Market’s Evaluation
of Price 631
Snapshot: More Money, More Fun at the Magic
Kingdom? 631
20-3 Evaluation of Competitors’ Prices 632
20-4 Selection of a Basis for Pricing 632
20-4a Cost-Based Pricing 633
20-4b Demand-Based Pricing 634
Entrepreneurship in Marketing: On the Clock
at Ziferblat 635
20-4c Competition-Based Pricing 636
20-5 Selection of a Pricing Strategy 636
20-5a Differential Pricing 636
20-5b New-Product Pricing 638
20-5c Product-Line Pricing 639
20-5d Psychological Pricing 640
20-5e Professional Pricing 643
20-5f Promotional Pricing 644
Emerging Trends in Marketing: Millennial Homebuyers:
Are They Looking for Less, for Less? 644
20-6 Determination of a Specific Price 645
Summary 645
Important Terms 647
Discussion and Review Questions 647
Video Case 20.1 Warby Parker Puts Affordable
Eyewear in Focus 647
Case 20.2 Under Armour Uses Pricing in the
Race for Market Share 648
Strategic Case 8 To Rent or to Own? That Is the
Question 649
22/11/16 7:30 pm
 available only online:
Appendix A: Financial Analysis in Marketing
A-1 The Income Statement A-1
A-1a Performance Ratios A-5
A-1b Operating Ratios A-5
A-1c Inventory Turnover Rate A-5
A-1d Return on Investment A-7
A-2 Price Calculations A-7
A-2a Markups A-7
A-2b Markdowns A-9
Appendix B: Sample Marketing Plan B-1
B-1 Executive Summary B-1
B-2 Environmental Analysis B-1
B-2a The Marketing Environment B-1
B-2b Target Market(s) B-2
B-2c Current Marketing Objectives and
Performance B-3
B-3 Swot Analysis B-3
B-3a Strengths B-3
B-3b Weaknesses B-3
B-3c Opportunities B-4
B-3d Threats B-4
B-3e Matching Strengths to Opportunities/
Converting Weaknesses and Threats B-4
B-4 Marketing Objectives B-5
B-5 Marketing Strategies B-5
B-5a Target Market(s) B-5
B-5b Marketing Mix B-6
B-6 Marketing Implementation B-6
B-6a Marketing Organization B-6
B-6b Activities, Responsibilities, and
Timetables for Completion B-6
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B-7 Performance Evaluation B-7
B-7a Performance Standards and Financial
Controls B-7
B-7b Measuring Actual Performance B-8
Appendix C: Careers in Marketing C-1
C-1 Career Choices are Major Life Choices C-1
C-1a Personal Factors Influencing Career
Choices C-1
C-2 Job Search Activities C-2
C-3 Planning and Preparation C-4
C-4 The Résumé C-4
C-4a The Job Interview C-6
Snapshot: Most Common Mistakes at Job Interviews C-6
C-4b After the Interview C-7
C-4c After the Hire C-7
C-5 Types of Marketing Careers C-8
C-5a E-Marketing and Customer Relationship
Management C-8
C-5b Social Media Manager C-9
C-5c Marketing Research C-9
C-5d Sales C-10
C-5e Industrial Buying C-11
C-5f Public Relations C-12
C-5g Distribution Management C-12
C-5h Product Management C-13
C-5i Advertising C-13
C-5j Retail Management C-14
C-5k Direct Marketing C-15
Glossary 654
Name Index 666
Organization Index 668
Subject Index 672
xv
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72896_fm_hr_i-xxxii.indd 16 22/11/16 7:30 pm
 Preface

MARKETING: A KEY TO SUCCESS

This edition of Marketing has been completely revised and updated to reflect dynamic changes
in marketing and its environment. Marketing knowledge is important to every student’s success,
regardless of their career path. There is significant evidence that marketing is becoming a more
important function in organizations, and students will need to be prepared to understand oppor-
tunities and challenges from a marketing perspective. This new edition provides the concepts,
frameworks, and engagement in decision-making experiences that will prepare students for
their careers. It is not enough to learn terminology and memorize concepts. To support success
we provide a portfolio of learning devices to advance learning and critical thinking skills.
Active learning requires a holistic understanding with examples, exercises, and cases facil-
itated by MindTap, our online teaching experience. MindTap provides relevant assignments
that guide students to analyze, apply, and improve thinking, allowing them to measure skills
and outcomes with ease. This means that students using this book should develop respect for
the importance of marketing and understand that the learning of marketing requires in-depth
knowledge and the mastering of essential concepts. We have made the learning experience as
fresh as possible with available research, new examples and boxes, as well as illustrations.
We address how technology is changing the marketing environment. As students prepare
for the new digital world, they will also need to practice developing communication skills,
especially teamwork, that go beyond their personal interaction with digital devices. Digital
media can lower costs, generate awareness, build better relationships with customers, and
achieve improved marketing research. Apps that connect consumers with products are creating
opportunities for closer relationships. Buyers and sellers are entering zones of interdependency
and co-creation of products. The sharing economy, defined as an economic concept harnessing
peer-to-peer power and sharing underutilized resources such as automobiles, boats, and houses
to earn income, is exploding. For example, Airbnb—a website that links people with renters
of lodging accommodations—now has significantly more bookings each evening than Hilton.
We also provide numerous ancillary materials to aid in student comprehension of market-
ing concepts as well as to increase instructor resources for teaching this important material.
Online materials include quizzes, PowerPoint presentations, videos, and flashcards. Our mar-
keting video case series enables students to learn how real-world companies address market-
ing challenges. Our video series has been expanded to include YouTube videos that can bring
engagement and excitement to the classroom. Our Interactive Marketing Plan Worksheets and
video program provide students with practical knowledge of the challenges and the planning
process of launching a new product. Together these revisions and additional materials will
assist students in gaining a full understanding of pertinent marketing practices.
Online social networking has become an increasingly powerful tool for marketers. Most
discussions about marketing today bring up issues such as how digital media can lower costs,
improve communications, provide better customer support, and achieve improved marketing
research. All elements of the marketing mix should be considered when using digital media
and social networking. We discuss how digital media and social networking tools can create
effective digital marketing strategies that can enhance marketing efforts. In addition, the entire
book integrates important digital marketing concepts and examples where appropriate.
xvii

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 xviii Preface

We have paid careful attention to enhancing all key concepts in marketing and have built
this revision to be current and to reflect important changes in marketing. Our book is a market
leader because students find it readable and relevant. Our text reflects the real world of market-
ing and provides the most comprehensive coverage possible of important marketing topics.
Specific details of this extensive revision are available in the transition guide in the
Instructor’s Manual. We have also made efforts to improve all teaching ancillaries and stu-
dent learning tools. PowerPoint presentations continue to be a very popular teaching device,
and a special effort has been made to upgrade the PowerPoint program to enhance classroom
teaching. The Instructor’s Manual continues to be a valuable tool, updated with engaging
in-class activities and projects. The authors and publisher have worked together to provide
a comprehensive teaching package and ancillaries that are unsurpassed in the marketplace.
The authors have maintained a hands-on approach to teaching this material and revising
the text and its ancillaries. This results in an integrated teaching package and approach that is
accurate, sound, and successful in reaching students. The outcome of this involvement fosters
trust and confidence in the teaching package and in student learning outcomes. Student feed-
back regarding this textbook is highly favorable.

WHAT’S NEW TO THIS EDITION?

Our goal is to provide the most up-to-date content—concepts, examples, cases, exercises, and
data—possible. Therefore, in this revision there are significant changes that make learning
more engaging and interesting to the students. The following highlight the types of changes
that were made in this revision.
• Foundational content. Each chapter has been updated
MARkEting inSightS with the latest knowledge available related to frameworks,
Airbnb Facilitates the Sharing Lodging Experience concepts, and academic research. These additions have
been seamlessly integrated into the text. Many examples
are new and a review of footnotes at the ends of chapters
will reveal where new content has been added. Many of
the new examples and content changes have been updated
to 2016.
• Opening vignettes: Marketing Insights. All of the chap-
ter-opening vignettes are new or updated. They are writ-
ten to introduce the theme of each chapter by focusing on
actual entrepreneurial companies and how they deal with
real-world situations.
Letuve/Dreamstime.com

Airbnb has come far in the eight years it
has been in business. The company started
when founders Brian Chesky and Joe Geb-
bia turned their apartment into a bed and
breakfast so they could afford to pay rent.
The founders had identified an unmet cus-
and Airbnb takes 3 percent of the booking
price when the property is rented out.
Despite its immense success, Airbnb
believes it can create more value for more
Top Marketing Challenges
customers. For instance, it began to offer
Business Travel on Airbnb to concentrate 27% 27% 27%
27%
SNAPSHOT

tomer need: the desire to stay in less expen- on corporate clients. Airbnb claims it has
sive but homier lodgings. They launched the signed up 700 businesses including Google
• Boxed features. Each chapter includes two new or
Airbnb website in 2007 to connect travel- and Salesforce.com. It is especially popular 26%
updated boxed features that highlight green marketing,
ers to people in the area willing to rent out among new employees who are being put 26%
their couch or extra room. Like Uber, the car- up by an employer until they find a more
marketing entrepreneurs, emerging trends in marketing,
sharing service, Airbnb embraces the shar- permanent location.
25% 25%
ing economy concept that promotes the Not all stakeholders are happy about 25%
or controversial issues in marketing. The majority of the
renting of underutilized human and physi- Airbnb, however. Some cities and regula-
boxed features are new to this edition; a few have been
cal resources. It sells more rooms per night
than Hilton.
tors believe Airbnb encourages owners
of multiple properties to rent them in the
24%
significantly updated and revised to fit the themes of this
The target market was initially confer- short-term rather than turning them into New Quality Remaining Customer Quantifying Integration
ence attendees but soon expanded to all long-term residences—thus causing a dis- Business of Up-to-Date Acquisition Marketing’s of Marketing
edition.
types of travelers. Today Airbnb connects ruption in urban housing. However, Airbnb Development Leads with Marketing ROI Tools/Systems
travelers to lodgings in 34,000 cities across contends that it is creating customer value Technology
• New Snapshot features. The Snapshot features are new
190 countries. Those who wish to rent an in the form of less-expensive lodging for
n = +5,000 global marketers
and engage students by highlighting interesting, up-to-
extra room or house can set their own prices, travelers and additional income for renters.1

date statistics that link marketing theory to the real world. Source: Salesforce.com, 2015 State of Marketing Survey, p. 6.

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 Preface xix

• New research. Throughout the text we have updated content with the most recent research
that supports the frameworks and best practices for marketing.
• New illustrations and examples. New advertisements from well-known firms are
employed to illustrate chapter topics. Experiences of real-world companies are used to
exemplify marketing concepts and strategies throughout the text. Most examples are new
or updated to include digital marketing concepts as well as several new sustainable mar-
keting illustrations.
• End-of-chapter cases. Each chapter contains two cases, including a video case, profiling
firms to illustrate concrete application of marketing strategies and concepts. Many of our
video cases are new to this edition and are supported by current and engaging videos.

FEATURES OF THE BOOK

As with previous editions, this edition of the text provides a comprehensive and practical
introduction to marketing that is both easy to teach and to learn. Marketing continues to be
one of the most widely adopted introductory textbooks in the world. We appreciate the confi-
dence that adopters have placed in our textbook and continue to work hard to make sure that,
as in previous editions, this edition keeps pace with changes. The entire text is structured to
excite students about the subject and to help them learn completely and
efficiently.
• An organizational model at the beginning of each part provides a “road
map” of the text and a visual tool for understanding the connections
among various components.
• Objectives at the start of each chapter present concrete expectations
about what students are to learn as they read the chapter.
• Every chapter begins with an opening vignette. This feature provides an
example of the real world of marketing that relates to the topics covered
in the chapter. After reading the vignette, the student should be moti-
vated to want to learn more about concepts and strategies that relate to
the varying topics. Students will be introduced to such companies as
Airbnb, Primark, Farmgirl Flowers, and Dressbarn.
• Boxed features—Emerging Trends in Marketing and Going Green—
capture dynamic changes in marketing. These changes are influenc-
ing marketing strategies and customer behavior. Strong feedback from
adopters indicated the need for coverage in these areas.
The Marketing Environment | Chapter 3 67

• The Emerging Trends boxes cover such

EmErging TRENdS IN MARKETING
Making Trade Fair
Fair Trade–certified organizations require factories to
meet different conditions. They must pay their workers a
minimum wage in the country in which they are employed,
with the intention of working toward a “livable wage.”
A livable wage allows workers to afford basic necessi-
ties. Additionally, brands must pay a premium to factory
workers. These premiums are placed in a collective bank
account and are used for bonuses or to address commu-
nity needs.
The Fair Trade trend is gaining traction among fashion
and home furnishings. After the Bangladesh factory col-
lapsed in 2013, many apparel and home furnishing brands
made a commitment to improve factory conditions. Twenty
brands have chosen to become Fair Trade certified.
marketing phenomena as fair trade, market-
ing analytics, and shopping tourism. Fea-
Consumers are embracing Fair Trade apparel and tured companies include Harley-Davidson,
home goods as well. For instance, Bed Bath & Beyond
quickly sold out of back-to-school supplies labeled as Fair
USAA, Marvel, and Netflix.
Trade–certified. This demonstrates consumers’ increased
concern for how goods are manufactured. In particular,
Fair Trade certification focuses on improving the labor
conditions of factory workers.
Although fair trade certification costs brands 1–5
percent of what companies pay to factories, it is clear
that demand is on the rise. Fair trade apparel and home
furnishings have increased fivefold in the past few years,
spurring more factories to work toward achieving certifica-
tion. Marketers monitoring the environment are finding the
costs of Fair Trade well worth the benefits.a

© Stockphoto.com/CTR design LLC

sources such as business, trade, government, and general-interest publications; and marketing
research. The Internet has become a popular scanning tool because it makes data more acces-
sible and allows companies to gather needed information quickly. Environmental scanning
gives companies an edge over competitors in allowing them to take advantage of current trends.
However, simply gathering information about competitors and customers is not enough; com-
panies must know how to use that information in the strategic planning process. Managers must
be careful not to gather so much information that sheer volume makes analysis impossible.
Environmental analysis is the process of assessing and interpreting the information gath-
ered through environmental scanning. A manager evaluates the information for accuracy, tries
to resolve inconsistencies in the data, and, if warranted, assigns significance to the findings.
Evaluating this information should enable the manager to identify potential threats and oppor-
tunities linked to environmental changes. Understanding the current state of the marketing
environment
72896_fm_hr_i-xxxii.indd 19 and recognizing threats and opportunities that might arise from changes within it 22/11/16 7:30 pm
help companies in their strategic planning. A threat could be rising interest rates or commodity
 An Overview of Strategic Marketing | Chapter 1 23

Marketing Offers

BsWei/Shutterstock.com
1-7h
Many Exciting Career
Prospects
xx Preface From 25 to 33 percent of all civilian workers in
the United States perform marketing activities.
Planning, Implementing, and Evaluating MarketingThe marketing
Strategies field2 offers a variety
| Chapter 43 of interesting
and challenging career opportunities throughout
the world, such as personal selling, advertising,
packaging, transportation, storage, marketing • The Marketing Debate marginal feature discusses
Marketing Debate research, product development, social media
management, wholesaling, and retailing. All controversial issues related to drugstores selling
industries have marketing positions, including
ISSUE: Should Drugstores Sell Tobacco Products?
health care, sports, consumer products, nonprof- tobacco products, banning trans fat from food
When CVS announced it would stop selling tobacco prod- its, government,
can do is address the root causes as well
and help smokers as agriculture and com-
quit.” products, facial recognition and privacy, the truth-
ucts in 2014, the company acknowledged that this change Walgreen’s and other drug modities
stores sell such as the
numerous oil and gas industry. When
smoking-
in policy would cost it $2 billion in annual revenues. Still, cessation products, but they unemployment
also tend to displayis high,
packs sales
of positions remain fulness of native advertising, and surge pricing.
CVS wanted to highlight its commitment to helping cus- cigarettes near checkout counters,
among where they can
the most catch
attractive job opportunities.
tomers stay healthy—and, in fact, it renamed the company the eye of shoppers. Marketing positions are among the most secure
CVS Health to spotlight that mission. Some health advo- Even if CVS’s competitors decidebecause
positions to stop selling
of the need to manage customer Marketing Connects People through Technology
cates and state attorneys general praised the move and tobacco products, the change in policy might not makemany individuals work- Consumers can now wear the Internet on the go in the form of smart watches.
relationships. In addition,
called on CVS’s competitors to follow suit by dropping a huge difference in smoking rates because more ciga- Smart watches allow users to make calls, receive notifications, search for
ing for nonbusiness organizations engage in mar- directions, and surf the Internet.
cigarettes, cigars, and other tobacco products. rettes are sold at gas stations and convenience stores
However, Walgreens and other drug retailers have not
keting activities to promote political, educational,
than in drug stores. Still, should stores that specialize
followed CVS’s lead. According to a Walgreen’s statement: in health-related goods andcultural,
services church,
continue civic,
to mar-and charitable activities.
“We believe that if the goal is to truly reduce tobacco use ket tobacco products, which It is
area legal
mistake to believe
but proven to bethat the only way to contribute to society is to work for a nonprofit.
in America, then the most effective thing retail pharmacies unhealthy?a Without businesses the economic system that supports jobs and contributes to a standard of
living would not exist otherwise. Consider that 5 percent of charitable contributions are corpo-
rate donations from companies such as Walmart. Many large companies also form foundations
© Stockphoto.com/CTR design LLCFoundations donate 15 percent of all charitable contributions in
to serve their communities.
from reaching its objectives. Threats must be acted upon to prevent them from limiting the
organization’s capabilities. Opportunities and threats can stem from many sources within the
• The Going Green boxes introduce stu-
environment. When a competitor’s introduction of a new product threatens a company, a firm
may require a defensive strategy. If the company can develop and launch a new product that
dents to such topics as bio-plastics, algae
meets or exceeds the competition’s offering, it can transform the threat into an opportunity. GoinG Green
It is important to use SWOT analysis to explore the internal organization and the marketing
biofuels, and natural claims on cigarette
environment without judgment, focusing on issues that could lead to the greatest possibilities
Lego: Building with Bio-Plastics
of success. This means using some resources for open-minded examination rather than looking
packaging. Featured companies include
for information to confirm current beliefs.18
The Lego Company has announced its most daring move million toward developing the Lego Sustainable Materi-
Campbell’s, Walmart, and 1 Hotel.
2-3b First Mover and Late-Mover Advantage
yet in its sustainability efforts: getting rid of plastic. The als Centre in Denmark. In particular, Lego is looking for
Lego Company makes 60 billion blocks a year using the oil- a substitute for oil-based plastics and believes bio-based
An important factor that marketers must consider when identifying organizational resources based plastic ABS. It is estimated that Lego goes through plastics may be the key.
and opportunities is whether the firm has the resources to cultivate a first-mover advantage, or 6,000 tons of plastic annually. The company has made a Unfortunately, not everyone is confident Lego will
is in a position to choose between developing a first-mover or late-mover advantage. strategic decision toward sustainability in its products. succeed. ABS plastic is easily moldable, and it is an
A first-mover advantage is the ability of an innovative company to achieve long-term competitive Lego has set the strategic goal of eliminating ABS plas- ideal composition for ensuring that each Lego piece fits
advantages by being the first to offer a certain product in the marketplace. Being the first to tics by 2030. The company estimates that about 75 percent together. Early forays into plant-based plastics show that
enter a market helps a company build a reputation as a pioneer and market leader. Amazon and
of its carbon emissions come from extracting and refining this type of bio-plastic has difficulty clicking, sticking, and
eBay were both first-mover start-ups that remain leaders as they grow and innovate ahead of
the competition. For a first mover, the market is, for at least a short period, free of competition
oil for its toys. Eliminating this type of plastic would there- maintaining its shape. However, Lego is confident that its
as potential competitors work to develop a rival product. Because consumers have no choice fore make a significant impact on the firm’s environmental commitment will pay off. It views its goal as customer-
footprint.| Chapter 1 oriented because it©will
Stockphoto.com/CTR design LLC
help create a more sustainable
initially, being a first mover also helps establish customer brand loyaltyAn in Overview
cases when first-mover advantage The 15
switch- Marketing
of Strategic
ing to another brand later may be costly or difficult. The first to develop a new product can also Legoofrealizes
ability it will
an innovative not be easy to completely redesign
company planet for future children.b
protect secrets and technology through patents. itstomost iconic
achieve product.
long-term com- That is why it is committing $150
There are risks, however, of being the first to enter a market. There are usually high cost petitive advantages by being the
first to offer a certain product in • The Entrepreneurship in Marketing feature focuses
Entrepreneurship in Marketing
outlays associated with creating a new product, including market research, product develop-
the marketplace
ment, production, and marketing—or buyer education—costs. Also, early sales growth may
not match predictions if the firm overestimates demand or fails to target marketing efforts cor- late-mover advantage The on the role of entrepreneurship and the need for
ability of later market entrants
Protein
rectly. Bar Restaurant:
The company Satisfying
runs the risk Consumers
that the product will fail due to market uncertainty, or that
the product might not completely meet consumers’ expectations or needs.
to achieve long-term competi- creativity in developing successful marketing
tive advantages by not being
Founder: Matt Matros
A late-mover advantage is the ability of later market entrants to achieve long-term com-
include burritos, salads, breakfast items,
the first rawajuices,
to offer certain strategies by featuring successful entrepreneurial
petitive advantages
Business: Protein by
Bar not being the first to offer a certain product
Restaurant and sideindishes.
a marketplace.
Matros chose product in a these
prices for marketplace
products
Founded: 2009, in Chicago, IL that would be reasonable for on-the-go consumers who companies like Protein Bar, Second City, Instacart,
Success: The Protein Bar restaurant has been featured in did not want to spend time making their own protein
numerous newspapers and has expanded to four cities. shakes. 72896_ch01_hr_001-031.indd 23 Honest Company, Counter Culture Coffee, and 7/29/16 4:53 PM

At 22, entrepreneur Matt Matros decided to drastically

The company has created publicity by recently team-
ing up with Chicago Bears wide receiver Brandon Marshall
Scentsy.
change his life. He lost 50 pounds through a strong regi- to promote a new Protein Bar drink called Crazy Stigma • Key term definitions appear in the margins to help
men
72896_ch02_hr_032-062.indd 43 of exercise and a high-protein diet. Afterward, he Green. For every drink purchased, $1 is donated to the 7/29/16 4:55 PM
decided to start the Chicago-based restaurant Protein Bar. Project 375 Foundation. Protein Bar has also received students build their marketing vocabulary.
To be successful, Matros had to select the right mix coverage in newspapers such as Washington Post and
of product, distribution, promotion, and price. Matros Chicago Tribune. The restaurant has expanded to Wash- • Figures, tables, photographs, advertisements, and
conceived of a casual dining restaurant that would offer ington D.C., Denver, and Boulder, Colorado. Matros has
healthy food options high in protein. Product offerings since become CEO of another company.a Snapshot features increase comprehension and
© Stockphoto.com/CTR design LLC stimulate interest.
1-5a Evolution of the Marketing Concept
• A complete chapter summary reviews the major topics discussed, and the list of important
The marketing concept may seem like an obvious approach to running a business. Yet while sat-
isfied consumers are necessary for business success, historically not all firms were successful
terms provides another end-of-chapter study aid to expand students’ marketing vocabulary.
in implementing this concept. The evolution of marketing has gone through three time periods,
including production, sales, and market orientation. While this is an oversimplification, these
• Discussion and review questions at the end of each chapter encourage further study and
frameworks help to understand marketing over time. There have always been companies that
exploration of chapter content.
embraced the marketing concept and focused on the interests of consumers.

The Production Orientation • Two cases at the end of each chapter help students understand the application of chapter
During the second half of the 19th century, the Industrial Revolution concepts. Oneinof the end-of-chapter cases is related to a video segment. Some examples of
was in full swing
the United States. Electricity, rail transportation, division of labor, assembly lines, and mass
production made it possible to produce goods more efficiently. With companies
new technology and highlighted
new in the cases are Dollar Shave Club, Alibaba, Blue Bell Creameries,
ways of using labor, products poured into the marketplace, where demand for manufactured
goods was strong. Although mass markets were evolving, firms were Mattel,
developingHilton
the abilityWorldwide, Zappos, Theo Chocolate, and CVS.
to produce more products, and competition was becoming more intense.
• A strategic case at the end of each part helps students integrate the diverse concepts that
The Sales Orientation have been discussed within the related chapters. Examples include REI, IKEA, Patagonia,
Sseko Designs, and Eaton. Appendices discuss marketing career opportunities, explore
While sales have always been needed to make a profit, during the first half of the 20th century
competition increased and businesses realized that they would have to focus more on selling
products to many buyers. Businesses viewed sales as the major means financial analysis
of increasing profits, and in marketing, and present a sample marketing plan.
this period came to have a sales orientation. Businesspeople believed that the most important
marketing activities were personal selling, advertising, and •distribution.
A comprehensive
Today, some people glossary defines more than 625 important marketing terms.
incorrectly equate marketing with a sales orientation. On the other hand, some firms still use
a sales orientation.

The Market Orientation

Although marketing history reveals that some firms have always produced products that con-
sumers desired, by the 1950s, both businesses and academics developed new philosophies
and terminology to explain why this approach is necessary for organizational success.22 This

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 Preface xxi

TEXT ORGANIZATION
We have organized the eight parts of Marketing to give students a theoretical and practical
understanding of marketing decision making.

Part 1 Marketing Strategy and Customer Relationships

In Chapter 1, we define marketing and explore several key concepts: cus-
tomers and target markets, the marketing mix, relationship marketing, the
marketing concept, and value-driven marketing. In Chapter 2, we look at an
overview of strategic marketing topics, such as the strategic planning pro-
cess; corporate, business-unit, and marketing strategies; the implementation
of marketing strategies; performance evaluation of marketing strategies; and
the components of the marketing plan.

Part 2 Environmental Forces and Social and Ethical Responsibilities

We examine competitive, economic, political, legal and regulatory, techno-
logical, and sociocultural forces that can have profound effects on marketing
strategies in Chapter 3. In Chapter 4, we explore social responsibility and
ethical issues in marketing decisions.

Part 3 Marketing Research and Target Market Analysis

In Chapter 5, we provide a foundation for analyzing buyers with a look at
marketing information systems and the basic steps in the marketing research
process. We look at elements that affect buying decisions to better analyze
customers’ needs and evaluate how specific marketing strategies can satisfy
those needs. In Chapter 6, we deal with how to select and analyze target mar-
kets—one of the major steps in marketing strategy development.

Part 4 Buying Behavior, Global Marketing, and Digital Marketing

We examine consumer buying decision processes and factors that influence
buying decisions in Chapter 7. In Chapter 8, we explore business markets,
business customers, the buying center, and the business buying decision pro-
cess. Chapter 9 focuses on the actions, involvement, and strategies of mar-
keters that serve international customers. In Chapter 10, we discuss digital
marketing, social media, and social networking.

Part 5 Product Decisions

In Chapter 11, we introduce basic concepts and relationships that must be
understood to make effective product decisions. Also, we discuss a number
of dimensions associated with branding and packaging. We analyze a variety
of topics regarding product management in Chapter 12, including line exten-
sions and product modification, new-product development, and product dele-
tions. Chapter 13 discusses services marketing.

Part 6 Distribution Decisions

In Chapter 14, we look at supply-chain management, marketing channels, and
the decisions and activities associated with the physical distribution of prod-
ucts, such as order processing, materials handling, warehousing, inventory
management, and transportation. Chapter 15 explores retailing and wholesal-
ing, including types of retailers and wholesalers, direct marketing and selling,
and strategic retailing issues.

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 xxii Preface

Part 7 Promotion Decisions

We discuss integrated marketing communications in Chapter 16. The com-
munication process and major promotional methods that can be included in
promotion mixes are described. In Chapter 17, we analyze the major steps in
developing an advertising campaign. We also define public relations and how
it can be used. Chapter 18 deals with personal selling and the role it can play
in a firm’s promotional efforts. We also explore the general characteristics of
sales promotion and describe sales promotion techniques.

Part 8 Pricing Decisions

In Chapter 19, we discuss the importance of price and look at some characteris-
tics of price and nonprice competition. We explore fundamental concepts such as
demand, elasticity, marginal analysis, and break-even analysis. We then examine the
major factors that affect marketers’ pricing decisions. In Chapter 20, we look at the
six major stages of the process marketers use to establish prices.

A COMPREHENSIVE INSTRUCTIONAL
RESOURCE PACKAGE
For instructors, this edition of Marketing includes an exceptionally comprehensive package
of teaching materials.

Instructor’s Manual
The Instructor’s Manual has been revamped to meet the needs of an engaging classroom
environment. It has been updated with diverse and dynamic discussion starters, classroom
activities, and group exercises. It includes such tools as:
• Quick Reference Guides
• Purpose Statements
• Integrated Lecture Outlines
• Discussion Starter recommendations that encourage active exploration of the in-text examples
• Class Exercises and Semester Project Activities
• Suggested Answers to end-of-chapter exercises, cases, and strategic cases
• Guides to teaching Role-Play Team Exercises

Test Bank
The test bank provides more than 4,000 test items, including true/false, multiple choice, and
essay questions. In this edition, you will find several new questions for each learning objec-
tive. Each objective test item is accompanied by the correct answer, appropriate Learning
Objective, level of difficulty, Bloom’s level of thinking, Program Interdisciplinary Learning
Outcomes, and Marketing Disciplinary Learning Outcomes. Cengage Learning Testing pow-
ered by Cognero is a flexible, online system that allows you to:
• Author, edit, and manage test bank content from multiple Cengage Learning solutions
• Create multiple test versions in an instant
• Deliver tests from your LMS, your classroom, or wherever you want

American Marketing Association Professional

Certified Marketer®
The American Marketing Association has recently started offering marketing graduates the
opportunity of adding the AMA PCM® credentials to their undergraduate or MBA degree,
which can serve as a symbol of professional excellence that affirms mastery of marketing
knowledge and commitment to quality in the practice of marketing. Certification, which is

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 Preface xxiii

voluntary, requires passing a rigorous and comprehensive exam and then maintaining the cer-
tification through continuing education. Earning an AMA PCM certification demonstrates to
employers, peers, and clients that the holer:
• Has mastered essential marketing knowledge and practices
• Goes the extra mile to stay current in the marketing field
• Follows the highest professional standards
The AMA recommends Pride and Ferrell’s Marketing as a suggested resource for AMA
PCM students to utilize as they prepare for taking the AMA PCM certification exam, and the
text was used as a source to design the course and as a source for suitable examination questions.
Now, more than ever, you need to stand out in the marketplace. AMA’s Professional Certified
Marketer (PCM®) program is the perfect way to showcase your expertise and set yourself apart.
To learn more about the American Marketing Association and the AMA PCM exam, visit
www.marketingpower.com/Careers/Pages/ ProfessionalCertifiedMarketer.aspx

PowerPoint Slides
PowerPoint continues to be a very popular teach-
ing device, and a special effort has been made
to upgrade the PowerPoint program to enhance
classroom teaching. Premium lecture slides,
containing such content as advertisements, and
unique graphs and data, have been created to pro-
vide instructors with up-to-date, unique content to
increase student application and interest.

Marketing Video Case Series

This series contains videos specifically tied to
the video cases found at the end of the book. The
videos include information about exciting companies such as New Belgium Brewing, Theo
Chocolate, Alibaba, Louis Vuitton, and Luxottica. MindTap video exercises provide students
with opportunities to use the videos to test and expand their knowledge. New to this edition are
YouTube videos that have been selected by the authors specifically to be used in the classroom
to engage students and illustrate marketing concepts.

Online Role-Play Exercises

The eight role-play exercises, available online, highlight key chapter concepts. These exercises
involve team participation where students engage in a discussion of a marketing dilemma and
provide a solution. The class breaks into teams and reaches decisions that relate to the short
term, intermediate term, and long term. Each team member is assigned a role and should take
on that role in team decision making. The case dilemmas are disguised but are based on real-
world marketing situations. All information, including a background section and the roles, are
online. See the Instructor’s Manual for more guidance on these exercises.

MindTap for Marketing

MindTap is a personalized teaching experience with relevant
assignments that guide students to analyze, apply, and improve
thinking, allowing them to measure skills and outcomes with ease.
• Personalized Teaching: Becomes yours with a learning path
that is built with key student objectives. Control what stu-
dents see and when they see it. Use it as-is or match to your
syllabus exactly—hide, rearrange, add, and create your own
content.

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 xxiv Preface

• Guide Students: A unique learning path of relevant readings, multimedia, and activities
that move students up the learning taxonomy from basic knowledge and comprehension
to analysis and application.
• Promote Better Outcomes: Empower instructors and motivate students with analytics and
reports that provide a snapshot of class progress, time in course, and engagement and
completion rates.

Author’s Website
The authors also maintain a website at http://prideferrell.net to provide additional video
resources that can be used as supplements and class exercises. The videos have been developed
as marketing labs with worksheets for students to use after observing the videos. Some of the
videos are accessible through links, and there is also information on where some of the videos
can be obtained. These videos are in addition to the new set of ­YouTube videos described earlier.

Building a
­Marketing Plan
New in this edition, the market-
ing plan has been expanded into
eight parts that walk students
through the steps of building a
marketing plan as they finish rel-
evant content in the book. Online
worksheets guide students
through the steps to build a mar-
keting plan and end with a place
for them to upload their work
on their marketing plan for each
section. Sections of ­
­ Building a
Marketing Plan can be assigned individually or as an entire ongoing project throughout
the course.

SUPPLEMENTS TO MEET STUDENT NEEDS

The complete package available with Marketing includes support materials that facilitate stu-
dent learning. To access additional course materials, please visit www.cengagebrain.com. At
the ­CengageBrain.com home page, search for the ISBN of your textbook (from the back cover
of your book) using the search box at the top of the page. This will take you to the product
page, where the following resources can be found:
• Interactive teaching and
learning tools, including:
• Full-color e-book—
Allows you to high-
light and search for
key terms
• Quizzes
• Flashcards
• Videos
• An Interactive
Marketing Plan
• And more!

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 Preface xxv

YOUR COMMENTS AND SUGGESTIONS

ARE VALUED
As authors, our major focus has been on teaching and preparing learning materials for intro-
ductory marketing students. We have traveled extensively to work with students and to under-
stand the needs of professors of introductory marketing courses. We both teach this marketing
course on a regular basis and test the materials included in the book, test bank, and other
ancillary materials to make sure they are effective in the classroom.
Through the years, professors and students have sent us many helpful suggestions for
improving the text and ancillary components. We invite your comments, questions, and criti-
cisms. We want to do our best to provide materials that enhance the teaching and learning of
marketing concepts and strategies. Your suggestions will be sincerely appreciated. Please write
us, or e-mail us at w-pride@tamu.edu or ocferrell@gmail.com, or call 979-845-5857 (Bill
Pride).

ACKNOWLEDGMENTS
Like most textbooks, this one reflects the ideas of many academicians and practitioners who
have contributed to the development of the marketing discipline. We appreciate the opportu-
nity to present their ideas in this book. A number of individuals have made helpful comments
and recommendations in their reviews of this or earlier editions.
Zafar U. Ahmed Stephen F. Austin State University
Lebanese American University Frank Barber
Thomas Ainscough Cuyahoga Community College
University of South Florida Thomas E. Barry
Sana Akili Southern Methodist University
U.S. Department of Commerce Richard C. Becherer
Katrece Albert University of Tennessee–Chattanooga
Southern University Walter H. Beck, Sr.
Joe F. Alexander Reinhardt College
Belmont University Russell Belk
Mark I. Alpert York University
University of Texas at Austin John Bennett
David M. Ambrose University of Missouri–Columbia
University of Nebraska W. R. Berdine
David Andrus California State Polytechnic Institute
Kansas State University Karen Berger
George Avellano Pace University
Central State University Roger Blackwell
Emin Babakus Blackwell Business Advisors
University of Memphis Peter Bloch
Julie Baker University of Missouri–Columbia
Texas Christian University Nancy Bloom
Siva Balasubramanian Nassau Community College
Illinois Institute of Technology Paul N. Bloom
Joseph Ballenger Duke University

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 xxvi Preface

James P. Boespflug Diablo Valley College

Arapahoe Community College Sally Dibb
Joseph G. Bonnici Open University
Central Connecticut State University Katherine Dillon
Peter Bortolotti Ocean County College
Johnson & Wales University Ralph DiPietro
Chris D. Bottomley Montclair State University
Ocean County College Paul Dishman
Jenell Bramlage Utah Valley University
University of Northwestern Ohio Casey L. Donoho
James Brock Northern Arizona University
Pacific Lutheran University Todd Donovan
John R. Brooks, Jr. Colorado State University
Houston Baptist University Kent Drummond
John Buckley University of Wyoming
Orange County Community College Tinus Van Drunen
Pat J. Calabros University Twente (Netherlands)
University of Texas–Arlington Robert F. Dwyer
Linda Calderone University of Cincinnati
State University of New York College Roland Eyears
of Technology at Farmingdale Central Ohio Technical College
Joseph Cangelosi Cheryl A. Fabrizi
University of Central Arkansas Broome Community College, State
William J. Carner University of New York
University of Texas–Austin Kathleen Ferris-Costa
Nancy M. Carr Bridgewater State University
Community College of Philadelphia James Finch
James C. Carroll University of Wisconsin–La Crosse
University of Central Arkansas Renée Florsheim
Terry M. Chambers Loyola Marymount University
Westminster College Charles W. Ford
Lawrence Chase Arkansas State University
Tompkins Cortland Community College John Fraedrich
Larry Chonko Southern Illinois University, Carbondale
Baylor University Terry Gabel
Ernest F. Cooke Monmouth College
Loyola College–Baltimore Robert Garrity
Robert Copley University of Hawaii
University of Louisville Geoffrey L. Gordon
Robert Corey Northern Illinois University
West Virginia University Sharon F. Gregg
Deborah L. Cowles Middle Tennessee University
Virginia Commonwealth University Charles Gross
William L. Cron University of New Hampshire
Texas Christian University John Hafer
Gary Cutler University of Nebraska at Omaha
Dyersburg State Community College David Hansen
Bernice N. Dandridge Texas Southern University

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 Preface xxvii

Richard C. Hansen San Diego State University

Ferris State University John Krupa, Jr.
Nancy Hanson-Rasmussen Johnson & Wales University
University of Wisconsin–Eau Claire Barbara Lafferty
Robert R. Harmon University of South Florida
Portland State University Patricia Laidler
Michael Hartline Massasoit Community College
Florida State University Bernard LaLonde
Salah S. Hassan Ohio State University
George Washington University Richard A. Lancioni
Manoj Hastak Temple University
American University Irene Lange
Dean Headley California State University–Fullerton
Wichita State University Geoffrey P. Lantos
Esther Headley Stonehill College
Wichita State University Charles L. Lapp
Debbora Heflin-Bullock University of Texas at Dallas
California State Polytechnic Virginia Larson
University–Pomona San Jose State University
Tony Henthorne John Lavin
University of Nevada, Las Vegas Waukesha County Technical Institute
Charles L. Hilton Marilyn Lavin
Eastern Kentucky University University of Wisconsin Whitewater
Elizabeth C. Hirschman Hugh E. Law
Rutgers, State University of New Jersey East Tennessee State University
Deloris James Monle Lee
Howard University Indiana University–South Bend
Ron Johnson Ron Lennon
Colorado Mountain College University of South Florida–Sarasota-Manatee
Theodore F. Jula Richard C. Leventhal
Stonehill College Ashford University
Peter F. Kaminski Marilyn L. Liebrenz-Himes
Northern Illinois University George Washington University
Jerome Katrichis Terry Loe
University of Hartford Kennesaw State University
Garland Keesling Mary Logan
Towson University Global University
James Kellaris Paul Londrigan
University of Cincinnati Mott Community College
Alvin Kelly Anthony Lucas
Florida A&M University Community College of Allegheny
Sylvia Keyes County
Bridgewater State College George Lucas
William M. Kincaid, Jr. U.S. Learning, Inc.
Oklahoma State University William Lundstrom
Hal Koenig Cleveland State University
Oregon State University Rhonda Mack
Kathleen Krentler College of Charleston

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 xxviii Preface

Stan Madden Stetson University

Baylor University Francis L. Notturno, Sr.
Patricia M. Manninen Owens Community College
North Shore Community College Terrence V. O’Brien
Gerald L. Manning Northern Illinois University
Des Moines Area Community College James R. Ogden
Lalita A. Manrai Kutztown University of Pennsylvania
University of Delaware Shannon Ogden
Franklyn Manu Black River Technical College
Morgan State University Lois Bitner Olson
Allen S. Marber San Diego State University
University of Bridgeport Robert S. Owen
Gayle J. Marco Texas A&M University—Texarkana
Robert Morris College David P. Paul, III
Marilyn Martin Melchiorre Monmouth University
College of Idaho Terry Paul
Carolyn A. Massiah Ohio State University
University of Central Florida Teresa Pavia
James McAlexander University of Utah
Oregon State University John Perrachione
Donald McCartney Truman State University
University of Wisconsin–Green Bay Lana Podolak
Jack McNiff Community College of Beaver County
State University of New York College William Presutti
of Technology at Farmington Duquesne University
Lee Meadow Daniel Rajaratnam
Eastern Illinois University University of Texas at Dallas
Jeffrey A. Meier Mohammed Rawwas
Fox Valley Technical College University of Northern Iowa
James Meszaros James D. Reed
County College of Morris Louisiana State
Brian Meyer University–Shreveport
Minnesota State University John Reed
Martin Meyers University of New Mexico
University of Wisconsin–Stevens Point William Rhey
Stephen J. Miller Florida Southern College
Oklahoma State University Glen Riecken
Carol Morris-Calder College of Charleston
Loyola Marymount University Ed Riordan
David Murphy Wayne State University
Madisonville Community College Bruce Robertson
Keith Murray San Francisco State University
Bryant University Robert A. Robicheaux
Sue Ellen Neeley University of Alabama–Birmingham
University of Houston–Clear Lake Linda Rose
Carolyn Y. Nicholson Westwood College Online

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 Preface xxix

Bert Rosenbloom Eric R. Spangenberg

Drexel University University of Mississippi
Robert H. Ross Rosann L. Spiro
Wichita State University Indiana University
Tom Rossi William Staples
Broome Community College University of Houston–Clear Lake
Vicki Rostedt Carmen Sunda
The University of Akron University of New Orleans
Catherine Roster Crina Tarasi
University of New Mexico Central Michigan University
Don Roy Ruth Taylor
Middle Tennessee State University Texas State University
Catherine Ruggieri Steven A. Taylor
St. John’s University Illinois State University
Rob Salamida Ira Teich
SUNY Broome Community College Lander College for Men
Ronald Schill Debbie Thorne
Middlebury Institute of International Texas State University
Studies at Monterey Sharynn Tomlin
Bodo Schlegelmilch Angelo State University
Vienna University of Economics and James Underwood
Business Administration University of Louisiana–Lafayette
Edward Schmitt Barbara Unger
Villanova University Western Washington University
Donald Sciglimpaglia Dale Varble
San Diego State University Indiana State University
Stanley Scott Bronis Verhage
University of Alaska—Anchorage Georgia State University
Beheruz N. Sethna R. “Vish” Viswanathan Iyer
University of West Georgia University of Northern Colorado
Abhay Shah Kirk Wakefield
Colorado State University—Pueblo Baylor University
Morris A. Shapero Harlan Wallingford
Eckerd College Pace University
Mark Siders Jacquelyn Warwick
Southern Oregon University Andrews University
Carolyn F. Siegel James F. Wenthe
Eastern Kentucky University Georgia College
Lyndon Simkin Sumner M. White
University of Reading Massachusetts Bay Community College
Roberta Slater Janice Williams
Cedar Crest College University of Central Oklahoma
Paul J. Solomon Alan R. Wiman
University of South Florida Rider College
Sheldon Somerstein John Withey
City University of New York St. Edwards University

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 xxx Preface

We would like to thank Charlie Hofacker and Michael Hartline, both of Florida State Uni-
versity, for many helpful suggestions and insights in developing the chapter on digital market-
ing and social networking. Michael Hartline also assisted in the development of the marketing
plan outline and provided suggestions throughout the text.
We thank Jennifer Sawayda and Gwyn Walters for their research and editorial assistance
in the revision of the chapters. We appreciate the efforts of Marian Wood for developing and
revising a number of boxed features and cases. We deeply appreciate the assistance of Clar-
issa Means, Megan Story, Fatima Wood, and Marilyn Ayala for providing editorial technical
assistance and support.
We express appreciation for the support and encouragement given to us by our colleagues
at Texas A&M University and Auburn University. We are also grateful for the comments and
suggestions we received from our own students, student focus groups, and student correspon-
dents who provided feedback through the website.
A number of talented professionals at Cengage Learning and SPi Global have c­ ontributed
to the development of this book. We are especially grateful to Heather Mooney, Megan
­Fischer, Megan Guiliani, Allie Janneck, Bethany Casey, and Chandrasekar Subramanian.
Their ­inspiration, patience, support, and friendship are invaluable.
William M. Pride
O. C. Ferrell

ABOUT THE AUTHORS

William M. Pride is Professor of Marketing, Mays Business School, at Texas A&M Univer-
sity. He received his PhD from Louisiana State University. In addition to this text, he is the
coauthor of Cengage Learning’s Business text, a market leader. Dr. Pride teaches principles of
marketing at both undergraduate and graduate levels and constantly solicits student feedback
important to revising a principles of marketing text.
Dr. Pride’s research interests are in advertising, promotion, and distribution channels.
His research articles have appeared in major journals in the fields of marketing, such as the
Journal of Marketing, the Journal of Marketing Research, the Journal of the Academy of
Marketing Science, and the Journal of Advertising.
Dr. Pride is a member of the American Marketing Association, Academy of Marketing
Science, Society for Marketing Advances, and the Marketing Management Association. He
has received the Marketing Fellow Award from the Society for Marketing Advances and the
Marketing Innovation Award from the Marketing Management Association. Both of these are
lifetime achievement awards.

O. C. Ferrell is The James T. Pursell Sr. Eminent Scholar Chair in Ethics and Director of
the Center for Ethical Organizational Cultures at Auburn University’s Raymond Harbert
College of Business. He was previously a University Distinguished Professor of Marketing
at the Anderson School of Management, University of New Mexico. He has also been on
the faculties of Belmont University, the University of Wyoming, Colorado State Univer-
sity, University of Memphis, Texas A&M University, Illinois State University, and Southern
­Illinois University. He received his PhD in marketing from Louisiana State University.

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 Preface xxxi

Dr. Ferrell is president-elect of the Academy of Marketing Science. He is past president

of the Academic Council of the American Marketing Association and chaired the American
Marketing Association Ethics Committee. Under his leadership, the committee developed the
AMA Code of Ethics and the AMA Code of Ethics for Marketing on the Internet. In addi-
tion, he is a former member of the Academy of Marketing Science Board of Governors and
is a Society of Marketing Advances and Southwestern Marketing Association Fellow and an
Academy of Marketing Science Distinguished Fellow. He has served for nine years as the vice
president of publications for the Academy of Marketing Science. In 2010, he received a Life-
time Achievement Award from the Macromarketing Society and a special award for service to
doctoral students from the Southeast Doctoral Consortium. He received, from the Academy
of Marketing Science, the Harold Berkman Lifetime Service Award and, more recently, the
Cutco Vector Distinguished Marketing Educator Award.
Dr. Ferrell is the co-author of 20 books and more than 100 published articles and papers.
His articles have been published in the Journal of Marketing Research, the Journal of Mar-
keting, the Journal of Business Ethics, the Journal of Business Research, the Journal of the
Academy of Marketing Science, AMS Review, and the Journal of Public Policy & Marketing,
as well as other journals.

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72896_fm_hr_i-xxxii.indd 32 22/11/16 7:31 pm
 part 1
Marketing Strategy and
­Customer Relationships
1: An Overview of Strategic Marketing

Todor Tsvetkov/Getty Images

2: 
Planning, Implementing, and Evaluating
Marketing Strategies

PART 1 introduces the field of marketing and offers a broad

perspective from which to explore and analyze various
components of the marketing discipline.

Chapter 1 defines marketing and explores some key

concepts, including customers and target markets, the
marketing mix, relationship marketing, the marketing
concept, and value.

Chapter 2 provides an overview of strategic marketing

issues, such as the effect of organizational resources and
opportunities on the planning process; the role of the mission
statement; corporate, business-unit, and marketing strategies;
and the creation of the marketing plan.

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 redmal/E+/Getty Images

chapter 1 An Overview of Strategic

Marketing

OBJECTIVES
1-1 Define marketing.
1-2 Explain the different variables of the marketing mix.
1-3 Describe how marketing creates value.
1-4 Briefly explore the marketing environment.
1-5 Summarize the marketing concept.
1-6 Identify the importance of building customer relationships.
1-7 Explain why marketing is important to our global economy.

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 Marketing Insights
Airbnb Facilitates the Sharing Lodging Experience
Airbnb has come far in the eight years it
has been in business. The company started
when founders Brian Chesky and Joe Geb-
bia turned their apartment into a bed and
breakfast so they could afford to pay rent.
The founders had identified an unmet cus-
tomer need: the desire to stay in less expen-
sive but homier lodgings. They launched the
Airbnb website in 2007 to connect travel-
ers to people in the area willing to rent out
their couch or extra room. Like Uber, the car-
sharing service, Airbnb embraces the shar-
ing economy concept that promotes the
renting of underutilized human and physi-
cal resources. It sells more rooms per night
than Hilton.
The target market was initially confer-
ence attendees but soon expanded to all
types of travelers. Today Airbnb connects
travelers to lodgings in 34,000 cities across
190 countries. Those who wish to rent an
extra room or house can set their own prices,
72896_ch01_hr_001-031.indd 3
Letuve/Dreamstime.com
and Airbnb takes 3 percent of the booking
price when the property is rented out.
Despite its immense success, Airbnb
believes it can create more value for more
customers. For instance, it began to offer
Business Travel on Airbnb to concentrate
on corporate clients. Airbnb claims it has
signed up 700 businesses including Google
and Salesforce.com. It is especially popular
among new employees who are being put
up by an employer until they find a more
permanent location.
Not all stakeholders are happy about
Airbnb, however. Some cities and regula-
tors believe Airbnb encourages owners
of multiple properties to rent them in the
short-term rather than turning them into
long-term residences—thus causing a dis-
ruption in urban housing. However, Airbnb
contends that it is creating customer value
in the form of less-expensive lodging for
travelers and additional income for renters.1
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 4 Part 1 | Marketing Strategy and C
marketing The process of
creating, distributing, pro-
moting, and pricing goods,
services, and ideas to facilitate
satisfying exchange relation-
ships with customers and to
develop and maintain favorable
relationships with stakeholders
in a dynamic environment
Appealing to Target Markets
Kashi appeals to consumers who desire a nutritious breakfast.
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­ ustomer Relationships
Like all organizations, Airbnb strives to provide products that customers want, communicate
useful information about them to excite interest, make them available when and where cus-
tomers want to buy them, and price them appropriately. Even if an organization does all these
things well, however, competition from marketers of similar products, economic conditions,
and other factors can affect the company’s success. Such factors influence the decisions that
all organizations must make in strategic marketing.
This chapter introduces the strategic marketing concepts and decisions covered throughout
the text. First, we develop a definition of marketing and explore each element of the definition
in detail. Next, we explore the importance of value-driven marketing. We also introduce the
marketing concept and consider several issues associated with its implementation. Addition-
ally, we take a look at the management of customer relationships and relationship marketing.
Finally, we examine the importance of marketing in global society.
1-1 Defining Marketing
If you ask several people what marketing is, you are likely to hear a variety of descriptions.
Although many people think marketing is advertising or selling, marketing is much more com-
plex than most people realize. In this book we define marketing as the process of creating,
distributing, promoting, and pricing goods, ser-
vices, and ideas to facilitate satisfying exchange
Source: Kashi ad
relationships with customers and to develop and
maintain favorable relationships with stakeholders
in a dynamic environment. Our definition is con-
sistent with that of the American Marketing Asso-
ciation (AMA), which defines marketing as “the
activity, set of institutions, and processes for creat-
ing, communicating, delivering, and exchanging
offerings that have value for customers, clients,
partners, and society at large.”2
The essence of marketing is to develop satis-
fying exchanges from which both customers and
marketers benefit. The customer expects to gain a
reward or benefit greater than the costs incurred
in a marketing transaction. The marketer expects
to gain something of value in return, generally the
price charged for the product. Through buyer–seller
interaction, a customer develops expectations about
the seller’s future behavior. To fulfill these expecta-
tions, the marketer must deliver on promises made.
Over time, this interaction results in relationships
between the two parties. Fast-food restaurants
such as Wendy’s and Subway depend on repeat
purchases from satisfied customers—many often
live or work a few miles from these ­restaurants—
whereas customer expectations revolve around
tasty food, value, and dependable service.
The marketing mix variables—which include
product, distribution, promotion, and price—are
often viewed as controllable because they can be
modified. However, there are limits to how much
marketing managers can alter them. Competitive
forces, economic conditions, political forces, laws
and regulations, technology, and sociocultural
forces shape the decision-making environment for
22/11/16 7:23 pm
 An Overview of Strategic Marketing | Chapter 1 5

controllable variables. While some products are tangible goods, services are also products and
represent a significant part of the economy. Entire industries such as health care, entertainment,
sports, and hospitality and tourism provide services.

1-1a Marketing Focuses on Customers

As the purchasers of the products that organizations develop, distribute, promote, and price,
customers are the focal point of all marketing activities (see Figure 1.1). Organizations have
to define their products not as what the companies make or produce but as what they do to
satisfy customers. The Kashi brand, for example, creates products that satisfy customer needs,
especially those who are looking for a nutritious alternative to more traditional cereals. The
Kashi advertisement of a surfer emphasizes how the health benefits of Kashi cereal help active
individuals live life to the fullest.
Organizations generally focus their marketing efforts on a specific group of customers,
called a target market. Marketing managers may define a target market as a vast number of
people or a relatively small group. For instance, marketers are increasingly interested in Hispanic
consumers. Within the last decade, Hispanics made up more than half of the population gains
in the United States. As a result, marketers are developing new ways to reach this demographic.
For instance, Macy’s has increased bilingual signage in its stores and launched a line of clothing
by Mexican singer Thalia Sodi.3 Often companies target multiple markets with different prod-
ucts, distribution systems, promotions, and prices for each one. Others focus on a smaller niche
market. Lehman’s Hardware, for example, originally targeted the Amish community with simple
non-electric products. Today Lehman’s markets “simple products for a simpler life” not only to
Amish customers, but also to environmental advocates, Peace Corps volunteers, and even movie
producers who have used Lehman’s products in movies such as Pirates of the Caribbean.4 Home
Depot, on the other hand, targets a number of markets with thousands of product items. It pro-
vides home improvement products for both household consumers and contractors.

Figure 1.1 Components of Strategic Marketing

customers The purchasers

of organizations’ products;
the focal point of all marketing
activities
target market A specific group
of customers on whom an
organization focuses its
marketing efforts

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 6 Part 1 | Marketing Strategy and C
marketing mix Four marketing
activities—product, pricing,
distribution, and promotion—
that a firm can control to meet
the needs of customers within
its target market
product A good, a service, or
an idea
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­ ustomer Relationships
1-2 Marketing Deals with Products,
Distribution, Promotion, and Price
Marketing is more than simply advertising or selling a product; it involves developing and
managing a product that will satisfy customer needs. It also requires promotion that helps
customers to learn about the product and determine if the product will satisfy their needs. It
focuses on communicating availability in the right place and at the right price. It also requires
communicating information that helps customers determine if the product will satisfy their
needs. These activities are planned, organized, implemented, and controlled to meet the needs
of customers within the target market. Marketers refer to these activities—product, distribution,
promotion, and pricing—as the marketing mix because they decide what type of each variable
to use and how to coordinate the variables. Marketing creates value through the marketing mix.
A primary goal of a marketing manager is to create and maintain the right mix of these vari-
ables to satisfy customers’ needs for a general product type. Apple is well-known for its imple-
mentation of the marketing mix. It routinely engages in research and development to create
new or upgraded products. It promotes these products through advertising, social media, and
media events. Apple distributes the products through its own retail stores, AT&T, and other
service providers, as well as through the Internet. It provides these products at a premium price
to convey their quality and effectiveness. Note in Figure 1.1 that the marketing mix is built
around the customer.
Marketing managers strive to develop a marketing mix that matches the needs of customers
in the target market. Clothing retailer Billabong, for example, targets shoppers with an active
lifestyle with snowboarding, surfing, and skateboarding clothing and accessories. The company
distributes these products through stores in shopping malls at competitive prices and supports
them with promotional activities such as advertising and social media. Additionally, market-
ing managers must constantly monitor the competition and adapt their products, distribution
decisions, promotion, and pricing to foster long-term success.
Before marketers can develop an appropriate marketing mix, they must collect in-depth,
up-to-date information about customer needs. Such information might include data about the
age, income, ethnicity, gender, and educational level of people in the target market, their pref-
erences for product features, their attitudes toward competitors’ products, and the frequency
with which they use the product. Billabong, for example, has to closely monitor fashion trends
and adjust its marketing mix accordingly to continue to satisfy its target market. Armed with
market information, marketing managers are better able to develop a marketing mix that satis-
fies a specific target market.
Let’s look more closely at the decisions and activities related to each marketing mix
variable.
1-2a The Product Variable
Successful marketing efforts result in products that become part of everyday life. Consider the
satisfaction customers have had over the years from Coca-Cola, Levi’s jeans, Visa credit cards,
Tylenol pain relievers, and professional sports such as baseball, basketball, hockey, and foot-
ball. The product variable of the marketing mix deals with researching customers’ needs and
wants and designing a product that satisfies them. A product can be a good, a service, or an
idea. A good is a physical entity you can touch. Oakley sunglasses, Ford F-150 trucks, and
iPhones are all examples of products. A service is the application of human and mechanical
efforts to people or objects to provide intangible benefits to customers. Air travel, education,
insurance, banking, health care, and day care are examples of services. Ideas include concepts,
philosophies, images, and issues. For instance, a marriage counselor, for a fee, gives spouses
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 An Overview of Strategic Marketing | Chapter 1 7

Richard Paul Kane/Shutterstock.com

©Photographee.eu/Shutterstock.com
Types of Products
Sports events are intangible products that provide fans with a fun experience. Furniture represents a tangible good that
consumers use for comfort and relaxation.

ideas to help improve their relationship. Other marketers of ideas include political parties,
churches, and animal protection groups.
The product variable also involves creating or modifying brand names and packaging and
may include decisions regarding warranty and repair services. For example, New Belgium
Brewing introduced aluminum cans because they can be recycled easier than glass bottles and
are safer to use in some environments. The company adapted its product’s packaging to provide
a healthier and “greener” offering.
Product variable decisions and related activities are important because they directly relate
to customers’ needs and wants. Apple continues to upgrade its iPhone using different model
numbers such as 5, 6, and 7 to signal new modifications. To maintain an assortment of products
that helps an organization achieve its goals, marketers must develop new products, modify
existing ones, and eliminate those that no longer satisfy enough buyers or that yield unaccept-
able profits.

1-2b The Distribution Variable

To satisfy customers, products must be available at the right time and in appropriate locations.
Subway, for example, locates its restaurants not only in strip malls but also inside Walmarts,
Home Depots, laundromats, churches, and hospitals, as well as inside Goodwill stores, car
dealerships, and appliance stores. There are 44,489 Subways in 111 different countries, sur-
passing McDonald’s as the world’s largest chain.5
In dealing with the distribution variable, a marketing manager makes products available
in the quantities desired to as many target-market customers as possible, keeping total inven-
tory, transportation, and storage costs as efficient as possible. A marketing manager also may
select and motivate intermediaries (wholesalers and retailers), establish and maintain inventory
control procedures, and develop and manage transportation and storage systems. All compa-
nies must depend on intermediaries to move their final products to the market. The advent of
the Internet and electronic commerce also has dramatically influenced the distribution vari-
able. Consider Amazon’s distribution system that is now integrating its own warehousing and
transportation to deliver products—sometimes the same day they are ordered. Companies now
can make their products available throughout the world without maintaining facilities in each
country. For instance, Pandora and Spotify have benefitted from the ability to stream music
over the Internet. Customers can listen to music for free with commercial interruptions, or they
can pay to upgrade to listen without commercials. Pandora has 80 million active users, while
Spotify has 60 million.6

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 8 Part 1 | Marketing Strategy and C
­ ustomer Relationships

endermasali/Shutterstock.com

Distribution
Spotify uses digital distribution
to allow consumers to stream
videos, podcasts, and music.
For paid premiums, users can
view entertainment uninter-
rupted by commercials.

1-2c The Promotion Variable

The promotion variable relates to activities used to inform and persuade to create a desired
response. Promotion can increase public awareness of the organization and of new or existing
products. It can help create a direct response by including a link to access a website or order
a product. Consider Geico’s television and radio advertising that encourages people to spend
15 minutes “to save 15% or more on car insurance.” Geico’s tagline is meant to elicit a direct
response from consumers, encouraging them to take 15 minutes to make a sales call to a Geico
representative.
Promotional activities can inform customers about product features. The Purina advertise-
ment, for instance, describes how its ONE® cat food is made from real poultry and fish and
that its veterinarian-recommended formula is nutritious for all ages of cats. In addition, promo-
tional activities can urge people to take a particular stance on a political or social issue, such
as smoking or drug abuse. For example, the U.K. nonprofit Women’s Aid released an experi-
ential marketing campaign to draw attention to victims of domestic violence. The organization
used a pro bono agency to install billboards depicting a bruised woman. The billboards were
equipped with facial recognition software so that when people walked by and looked at the
advertisement, the bruises would “heal” to demonstrate that ordinary people can work toward
stopping domestic violence.7
Promotion can also help to sustain interest in established products that have been avail-
able for decades, such as Jell-O or Tide detergent. Many companies are using the Internet to
communicate information about themselves and their products. Trader Joe’s website provides
a diverse array of recipes using ingredients that can be found in its stores.8

1-2d The Price Variable

The price variable relates to decisions and actions associated with pricing objectives and poli-
cies and actual product prices. Price is a critical component of the marketing mix because
customers are concerned about the value obtained in an exchange. Price is often used as a
competitive tool, and intense price competition sometimes leads to price wars. Higher prices
can be used competitively to establish a product’s premium image. Seven 4 All Mankind jeans,

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 An Overview of Strategic Marketing | Chapter 1 9

for example, have an image of high quality

Source: Purina advertisement

and high price that has given them significant
status. Other companies are skilled at provid-
ing products at prices lower than competitors
(consider Walmart’s tagline “Save Money,
Live Better”). Amazon uses its vast network
of partnerships and cost efficiencies to pro-
vide products at low prices. Brick-and-mortar
retailers have not been able to offer compa-
rable products with prices that low, provid-
ing Amazon with a considerable competitive
advantage.
The marketing-mix variables are often
viewed as controllable because they can be
modified. However, there are limits to how
much marketing managers can alter them.
Economic conditions, competitive structure,
and government regulations may prevent a
manager from adjusting prices frequently
or significantly. Making changes in the size,
shape, and design of most tangible goods is
expensive; therefore, such product features
cannot be altered very often. In addition, pro-
motional campaigns and methods used to dis-
tribute products ordinarily cannot be rewritten
or revamped overnight.

1-3 Marketing
Creates Value
Value is an important element of managing
long-term customer relationships and imple-
menting the marketing concept. We view
value as a customer’s subjective assessment of
benefits relative to costs in determining the Promotional Activities
worth of a product (customer value 5 This Purina advertisement informs the audience about how its ONE® formula is full of
­customer benefits – customer costs). Consum- nutritious ingredients for cats.
ers develop a concept of value through the
integration of their perceptions of product quality and financial sacrifice.9 From a company’s
perspective, there is a trade-off between increasing the value offered to a customer and maxi-
mizing the profits from a transaction.10
Customer benefits include anything a buyer receives in an exchange. Hotels and motels,
for example, basically provide a room with a bed and bathroom, but each firm provides a
different level of service, amenities, and atmosphere to satisfy its guests. Motel 6 offers the
minimum services necessary to maintain a quality, efficient, low-price overnight accom-
modation. In contrast, the Ritz-Carlton provides every imaginable service a guest might
desire. The hotel even allows its staff members to spend up to $2,000 to settle customer
value A customer’s subjective
complaints.11 Customers judge which type of accommodation offers the best value according assessment of benefits relative
to the benefits they desire and their willingness and ability to pay for the costs associated to costs in determining the
with the benefits. worth of a product

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 10 Part 1 | Marketing Strategy and C
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Edward Fielding/Shutterstock.com

Value-Driven Marketing
L.L.Bean creates value for cus-
tomers with its product guaran-
tees, liberal return policies, and
strong customer service. The
firm competes with Amazon
.com as the number one cus-
tomer service champion.

Customer costs include anything a buyer must give up to obtain the benefits the product
provides. The most obvious cost is the monetary price of the product, but nonmonetary costs
can be equally important in a customer’s determination of value. Two nonmonetary costs are
the time and effort customers expend to find and purchase desired products. To reduce time and
effort, a company can increase product availability, thereby making it more convenient for buy-
ers to purchase the firm’s products. Another nonmonetary cost is risk, which can be reduced by
offering good basic warranties or extended warranties for an additional charge.12 Another risk-
reduction strategy is the offer of a 100 percent satisfaction guarantee. This strategy is increas-
ingly popular in today’s Internet shopping environment. L.L. Bean, for example, uses such a
guarantee to reduce the risk involved in ordering merchandise from its catalogs and website.
The process people use to determine the value of a product may differ widely. All of us
tend to get a feel for the worth of products based on our own expectations and previous experi-
ence. We can, for example, compare the value of tires, batteries, and computers directly with
the value of competing products. We evaluate movies, sporting events, and performances by
entertainers on the more subjective basis of personal preferences and emotions. For most pur-
chases, we do not consciously try to calculate the associated benefits and costs. It becomes an
instinctive feeling that General Mills’ Cheerios is a good value or that McDonald’s is a good
place to take children for a quick lunch. The purchase of an automobile or a mountain bike
may have emotional components, but more conscious decision making also may figure in the
process of determining value.
In developing marketing activities, it is important to recognize that customers receive ben-
efits based on their experiences. For example, many computer buyers consider services such
as fast delivery, ease of installation, technical advice, and training assistance to be important
elements of the product. Each marketing activity has its own benefits and costs and must be
adapted for its contribution to value.13 For example, Amazon found that two-day delivery adds
value, leading to the development of its Prime Shipping program. Prime now includes addi-
tional services such as streaming instant video, photo storage, music access, and discounts.
Customers also derive benefits from the act of shopping and selecting products. These benefits
can be affected by the atmosphere or environment of a store, such as Red Lobster’s nautical/
seafood theme. Even the ease of navigating a website can have a tremendous impact on per-
ceived value. When the download and streaming music service GhostTunes was developed,
co-owner country singer Garth Brooks had to ensure that the site was user-friendly. The site had
to be easy so users could navigate through it and choose which music to stream or download.

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 An Overview of Strategic Marketing | Chapter 1 11

Unlike iTunes, Brooks wants GhostTunes to allow copyright holders more freedom as to how
their music should be sold on the site.14 Different customers may view different songs or albums
on the site as an exceptional value for their own personal satisfaction.
The marketing mix can be used to enhance perceptions of value. A product that dem-
onstrates value usually has a feature or an enhancement that provides benefits. Promotional
activities can also help to create image and prestige characteristics that customers consider
in their assessment of a product’s value. In some cases value may be perceived simply as the
lowest price. Many customers may not care about the quality of the paper towels they buy;
they simply want the cheapest ones for use in cleaning up spills because they plan to throw
them in the trash anyway. On the other hand, more people are looking for the fastest, most
convenient way to achieve a goal and therefore become insensitive to pricing. For example,
many busy customers are buying more prepared meals in supermarkets to take home and serve
quickly, even though these meals cost considerably more than meals prepared from scratch. In
such cases the products with the greatest convenience may be perceived as having the greatest
value. The availability or distribution of products also can enhance their value. Taco Bell wants
to have its Mexican fast-food products available at any time and any place people are think-
ing about consuming food. It therefore has introduced Taco Bell products into supermarkets,
vending machines, college campuses, and other convenient locations. Thus, the development
of an effective marketing strategy requires understanding the needs and desires of customers
and designing a marketing mix to satisfy them and provide the value they want.

1-3a Marketing Builds Relationships with Customers

and Other Stakeholders
Marketing also creates value through the building of stakeholder relationships. Individuals and
organizations engage in marketing to facilitate exchanges, the provision or transfer of goods,
services, or ideas in return for something of value. Any product (good, service, or even idea)
may be involved in a marketing exchange. We assume only that individuals and organizations
expect to gain a reward in excess of the costs incurred.
exchanges The provision or
For an exchange to take place, four conditions must exist. First, two or more individuals, transfer of goods, services, or
groups, or organizations must participate, and each must possess something of value that the ideas in return for something
other party desires. Second, the exchange should provide a benefit or satisfaction to both of value
Turtix/Shutterstock.com

Satisfying Stakeholder Needs

Google continues to excel at
creating products that satisfy
customers, generate jobs,
create shareholder wealth,
and contribute to greater life
enjoyment.

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 12 Part 1 | Marketing Strategy and C
­ ustomer Relationships

Figure 1.2 Exchange between Buyer and Seller

Something of value

Money, credit, labor, goods

Buyer Seller

Something of value

Goods, services, ideas

parties involved in the transaction. Third, each party must have confidence in the promise of the
“something of value” held by the other. If you go to a Justin Timberlake concert, for example,
you go with the expectation of a great performance. Finally, to build trust, the parties to the
exchange must meet expectations.
Figure 1.2 depicts the exchange process. The arrows indicate that the parties communicate
that each has something of value available to exchange. An exchange will not necessarily
take place just because these conditions exist; marketing activities can occur even without an
actual transaction or sale. You may see an ad for a Sub-Zero refrigerator, for instance, but you
might never buy the luxury appliance. When an exchange occurs, products are traded for other
products or for financial resources.
Marketing activities should attempt to create and maintain satisfying exchange relation-
ships. To maintain an exchange relationship, buyers must be satisfied with the good, service,
or idea obtained, and sellers must be satisfied with the financial reward or something else of
value received. A dissatisfied customer who lacks trust in the relationship often searches for
alternative organizations or products. The customer relationship often endures over an extended
time period, and repeat purchases are critical for the firm.
Marketers are concerned with building and maintaining relationships not only with custom-
ers but also with relevant stakeholders. Stakeholders include those constituents who have a
“stake,” or claim, in some aspect of a company’s products, operations, markets, industry, and
outcomes; these include customers, employees, investors and shareholders, suppliers, govern-
ments, communities, competitors, and many others. While engaging in marketing activities, the
firm should be proactive and responsive to stakeholder concerns. This engagement has been
found to increase financial performance.15 Therefore, developing and maintaining favorable
relations with stakeholders is crucial to the long-term growth of an organization and its products.
For example, employees directly influence customer satisfaction, and suppliers are necessary
to make quality products. Communities can be a positive contributor to the firm’s reputation and
in turn they provide an opportunity to make a social and economic contribution. Customers and
competitors are often considered to be core stakeholders in developing a marketing strategy.16

stakeholders Constituents
who have a “stake,” or claim,
in some aspect of a company’s
products, operations, markets,
1-4 Marketing Occurs in a Dynamic
industry, and outcomes Environment
marketing environment The
competitive, economic, political, Marketing activities do not take place in a vacuum. The marketing environment, which
legal and regulatory, techno-
logical, and sociocultural forces includes competitive, economic, political, legal and regulatory, technological, and sociocultural
that surround the customer and forces, surrounds the customer and affects the marketing mix (see Figure 1.1). The effects of
affect the marketing mix these forces on buyers and sellers can be dramatic and difficult to predict. Their impact on

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 An Overview of Strategic Marketing | Chapter 1 13

value can be extensive as market changes can easily influence how stakeholders perceive cer-
tain products. They can create threats to marketers but also can generate opportunities for new
products and new methods of reaching customers.
The forces of the marketing environment affect a marketer’s ability to facilitate value-
driven marketing exchanges in three general ways. First, they influence customers by affect-
ing their lifestyles, standards of living, and preferences and needs for products. Because a
marketing manager tries to develop and adjust the marketing mix to satisfy customers, effects
of environmental forces on customers also have an indirect impact on marketing-mix com-
ponents. Second, marketing environment forces can determine whether and how a marketing
manager can perform certain marketing activities. Third, environmental forces may shape
a marketing manager’s decisions and actions by influencing buyers’ reactions to the firm’s
marketing mix.
Marketing environment forces can fluctuate quickly and dramatically, which is one reason
why marketing is so interesting and challenging. Because these forces are closely interrelated,
changes in one may cause changes in others. For example, evidence linking children’s con-
sumption of soft drinks and fast foods to health issues has exposed marketers of such products
to negative publicity and generated calls for legislation regulating the sale of soft drinks in
public schools. Some companies have responded to these concerns by voluntarily reformulating
products to make them healthier or even introducing new products. For example, Pepsi refor-
mulated its Diet Pepsi product by replacing the sweetener aspartame with sucralose. Although
the Food and Drug Administration (FDA) has ruled aspartame as safe, many consumers view
aspartame as having health risks. Despite Pepsi’s attempt to appeal to changing consumer
preferences, the initial reaction among Diet Pepsi loyalists after the company reformulated the
product were often negative.17 Changes in the marketing environment produce uncertainty for
marketers and at times hurt marketing efforts, but they also create opportunities. For example,
when oil and gasoline prices increase, consumers shift to potential alternative sources of trans-
portation including bikes, buses, light rail, trains, carpooling, more energy-efficient vehicle
purchases, or telecommuting when possible. When those prices decrease, consumers purchase
more SUVs, drive more, and may have more money for other purchases.
Marketers who are alert to changes in environmental forces not only can adjust to and
influence these changes but can also capitalize on the opportunities such changes provide.
Marketing-mix variables—product, distribution, promotion, and price—are factors over which
an organization has control; the forces of the environment, however, are subject to far less con-
trol. Even though marketers know that they cannot predict changes in the marketing environ-
ment with certainty, they must nevertheless plan for them. Because these environmental forces
have such a profound effect on marketing activities, we explore each of them in considerable
depth in Chapter 3.

1-5 Understanding the Marketing

Concept
Firms frequently fail to attract customers with what they have to offer because they define
their business as “making a product” rather than as “helping potential customers satisfy their
needs and wants.” For example, when digital music became popular, businesses had opportuni-
ties to develop new products to satisfy customers’ needs. Firms such as Apple developed the
iTunes music store and products like the iPod, iPhone, and iPad to satisfy consumers’ desires
for portable, customized music libraries. Even common household devices are changing. For
instance, Nest Labs developed the Nest Learning Thermostat that is able to learn the types of marketing concept
temperatures consumers like. As the advertisement shows, the product adjusts the temperature A managerial philosophy that an
as the seasons and weather change based on the preferences of the household. Companies that organization should try to sat-
isfy customers’ needs through a
do not pursue such opportunities struggle to compete. coordinated set of activities that
According to the marketing concept, an organization should try to provide products that also allows the organization to
satisfy customers’ needs through a coordinated set of activities that also allows the organization achieve its goals

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Another random document with
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"Netsukes" and other ornaments, however, the coral branches are
represented as the booty of dark-skinned, curly-headed fishermen,
"kurombo," and never of Japanese fishermen. The coral used in this
art-work can hardly be distinguished from Mediterranean coral, and
there are some grounds for believing that Japan imported coral from
the far West in very early times. But this does not account for the
"kurombo." The only coast-dwelling people of the type that is so
clearly carved on these ornaments within the area of the Pacific
Ocean at the present time are the Melanesians and Papuans, and
the suggestion occurs that a coral fishery existed at one time in the
Southern Pacific, which has since been lost.[363]

The class Anthozoa is divided into two sub-classes:—I.

Alcyonaria; II. Zoantharia.

In the Alcyonaria the fully developed zooids have always eight

tentacles and eight mesenteries. In the Zoantharia the number of
tentacles and the number of mesenteries in the fully developed
zooids may be six, twelve, twenty-four, or an indefinite number, but
individuals with eight mesenteries and only eight tentacles are not
known to occur.

Sub-Class I. Alcyonaria.
This sub-class includes a large number of genera living in shallow
sea-water and a few genera that extend down into deep water. With
a few doubtful exceptions (Protoalcyonacea) they all form colonies
composed of a large number of zooids. These zooids may be
connected together by basal plates or a network of basal strands
(stolons), or by stolons with additional connecting bars (Clavularia
viridis, Syringopora) or by plates (Tubipora). In the majority of the
genera the individual zooids are for the greater part of their length,
from the base upwards, united together to form a continuous spongy,
colonial mass, which determines the shape of the colony as a whole.

In this last-named group of genera there may be distinguished the

free distal portions of the zooids bearing the mouths and tentacles
(the "anthocodiae") from the common colonial mass perforated by
the coelenteric cavities of the individual zooids. The coelenteric
cavities are separated by a considerable amount of a substance
called the "mesogloea," usually gelatinous in consistency but
chemically more closely related to mucin than to gelatin, which is
traversed by endodermal canals, rods of endoderm cells and a
number of free amoeboid cells. In this substance, moreover, there
are found in nearly all cases numerous spicules of carbonate of lime
formed by the "scleroblasts" (spicule-forming cells) which have
wandered from the superficial ectoderm of the common colonial
mass. This common colonial mesogloea with its spicules, endoderm
cells, and superficial covering of ectoderm is called the
"coenenchym." The form assumed by the colonies is very varied. In
some species of Clavularia they form encrusting plates following the
irregularity of the rock or stones on which they grow, in Alcyonium
they construct lobed masses of irregular form, in Sarcophytum they
are usually shaped like a mushroom, in Juncella they are long whip-
like rods, in most of the Gorgonacea they are branched in all
directions like shrubs or in one plane to form fan-shaped growths,
and in many of the Pennatulacea they assume that graceful feather
form which gives the order its name.

The consistency and texture of the colonies also varies considerably.

In some cases where the spicules are few or very small, the
substance of the colony is soft to the touch, and frequently slimy at
the surface, in other cases the great number of the spicules makes
the colony hard but brittle, whilst in a few genera (Sclerophytum,
Heliopora) the colony is so hard that it can only be broken by the
hand with difficulty. In some genera (Spongodes and the Muriceidae)
projecting spicules cause the surface to be rough or thorny, and in
the Primnoidae the zooids and the surface of the general
coenenchym are protected by a series of overlapping scales or
plates.

In all the Alcyonaria the nematocysts are very minute, and although
they can undoubtedly paralyse minute organisms they are unable to
penetrate the human skin. None of the Alcyonaria have been
described as stinging-corals except the Pennatulid Virgularia
rumphii.

Zooids.—The fully formed zooids of the Alcyonaria exhibit a

remarkable uniformity of structure. They have eight intermesenteric
tentacles containing a cavity continuous with the coelenteron. Each
of these tentacles bears at least two rows of simple pinnules, and
they are therefore said to be "pinnate" tentacles. In some species of
Xenia the tentacles may have three or four rows of pinnules, which
give them a much more feathery appearance than is usually the
case. In the great majority of species a single row of from eight to
fourteen pinnules is found disposed laterally on each side of the
tentacle. The mouth is usually small and slit-like with a slight
rounded gape at the ventral extremity. The stomodaeum is usually
very short, but in Xenia and in the autozooids of some Pennatulids it
is relatively much longer. It is not known how far the stomodaeum is
of importance in the digestion of the food. In Xenia[364] it has
probably some importance, as shown by its unusual length and the
numerous large goblet cells (mucus cells) which it exhibits,
associated with the fact that the mesenteric filaments are relatively
very small. In Alcyonium and other Alcyonaria gland cells also occur
in the stomodaeum, and it is probable that they secrete a fluid
capable of digesting to some extent the food as it passes through.
The most important part of the digestion, however, is performed by
the six "ventral" mesenteric filaments.

Attention has already been drawn to the fact (p. 330) that two
regions of the zooids of the colonial Alcyonaria can be recognised.
At the oral end there is a region, which in the fully expanded
condition consists of a crown of eight tentacles surrounding the
mouth, and a body-wall free from its immediate neighbours. This
region is called the "anthocodia." The anthocodia is continuous with
a region which forms a part of the common colonial mass. Some
genera seem to have very little power of contracting the tentacles or
of withdrawing the anthocodiae. The zooids of Stereosoma, of Xenia,
of Umbellula, and of a few other genera may be described as non-
retractile. In many cases, however, the tentacles can be considerably
contracted, bent over the mouth, and withdrawn into the shelter of
the subjacent body-wall. In such a condition the surface of the colony
exhibits a number of tubular, conical, or convex protuberances,
called "verrucae," and the colony is said to be partially retractile. In
many genera, however, the whole of the anthocodiae can be
withdrawn below the general surface of the coenenchym, so that the
position of the zooids in the colony is indicated only by star-like
holes, or simple key-hole slits in the superficial coenenchym. Such
colonies are said to be completely retractile (Fig. 147).

It is often very difficult to determine whether a particular species is or

is not completely retractile, unless observations can be made upon
the living colony; and there are many instances of confusion in the
work of systematists due to a species being described as partially
retractile in one instance, and completely retractile in another. The
complete retraction of the anthocodiae may be effected very slowly,
and after continuous irritation only. If the colony is killed too quickly,
the anthocodiae remain in a state of partial retraction. An example of
this may be found in the common British Alcyonium digitatum.
Specimens of this species which are put into a bucket of sea water
and allowed to roll about with the movements of a small boat in a
rough sea, undergo complete retraction; but if the same specimens
be allowed to expand in the aquarium, and then plunged into spirit,
or allowed to dry in the sun, they will die in a condition of partial
retraction.
 Fig. 147.—Diagram of a vertical section of a portion of a lobe of Alcyonium to
show the mode of retraction of the anthocodiae. 1, Anthocodia of a zooid
fully expanded; 2, in the first stage of retraction; 3, in the second stage; 4, in
the third stage, leaving a shallow prominence or "verruca" on the surface; 5,
final stage, the verruca flattened down and the coenenchym closed. can,
Canal system; d.m.f, dorsal mesenteric filament of a zooid; si,
siphonoglyph.

The phenomenon of dimorphism occurs in some Alcyonaria. A

certain number of the zooids of a colony are arrested in their
development, and are known as the "siphonozooids." They may be
distinguished from the fully formed zooids, which, in these cases, are
called the "autozooids," by the absence of tentacles, by the absence
of the six ventral and lateral mesenteric filaments, and by the
incomplete development of the muscles on the mesenteries, and of
the mesenteries themselves. They are, moreover, frequently
distinguished by the greater development and extent of the ciliated
groove or siphonoglyph on the ventral side of the stomodaeum.

It is often difficult to distinguish between true siphonozooids and

young autozooids, and consequently dimorphism has been attributed
to some genera in which it almost certainly does not occur. Simple
dimorphism undoubtedly occurs in the genera Heteroxenia,
Sarcophytum, Anthomastus, Lobophytum, Acrophytum, and
Paragorgia. It has also been said to occur in Corallium (Moseley and
Kishinouye), Melitodes (Ridley), and some species of Dasygorgiidae.

The Pennatulacea are trimorphic. The main shaft of these colonies is

the much modified first formed or axial zooid, adapted for the support
of all the other zooids. It usually exhibits no mouth, no tentacles, and
only four of the original eight mesenteries. It has no mesenteric
filaments and no stomodaeum, and bears no sexual cells. The other
zooids of the colony are similar in structure to the autozooids and
siphonozooids of the dimorphic Alcyonaria.

There are eight mesenteric filaments in all Alcyonarian zooids.

They have the appearance of thickenings of the free edges of the
mesenteries. Two of them, called the "dorsal" mesenteric filaments,
are straight when the anthocodia is expanded, and extend from the
edge of the stomodaeum for a long distance down into the
coelenteron of the zooid; the other six, called the "ventral"
mesenteric filaments (i.e. the ventral and ventro-lateral and dorso-
lateral), are usually short and are almost invariably slightly
convoluted. The dorsal filaments are built up of columnar cells
provided with long cilia, and have usually no gland cells, the others
may show a few cilia but are principally composed of non-ciliated
gland cells. When the bolus of food has passed through the
stomodaeum it is seized by these ventral filaments and rapidly
disintegrated by the secretion of its cells. The function of the dorsal
mesenteric filaments is mainly respiratory. During life their cilia
produce a current which flows towards the stomodaeum. On the
ventral side of the stomodaeum itself there is a groove called the
"siphonoglyph" composed of a specialised epithelium bearing long
powerful cilia. But the current produced by the siphonoglyph flows
from the mouth downwards into the coelenteric cavity and is thus in
the opposite direction to that produced by the dorsal mesenteric
filaments. It is very probable that these two currents on the opposite
sides of the zooids maintain the circulation of water in the deep-
seated parts of the colony which is necessary for the respiration of
the tissues.

On each of the eight mesenteries there is a longitudinal ridge due to

the presence of a band of retractor muscles. The position of these
muscles on the ventral surfaces of the mesenteries only is one of the
characteristic features of the sub-class (Fig. 148, and p. 329). They
vary considerably in thickness and extent according to the power of
retractility possessed by the zooids, but they never vary in their
position on the mesenteries.
 Fig. 148.—Diagrammatic transverse sections of an Alcyonarian. A, through the
stomodaeum; B, below the level of the stomodaeum. DD, Dorsal directive;
dlmf, dorso-lateral mesenteric filament; dmf, dorsal mesenteric filament;
gon, gonad; Si, siphonoglyph; V.D, ventral mesentery; V.L, ventro-lateral
mesentery. The upper half of the section in B is taken at a higher level than
the lower half.

The skeleton of Alcyonaria may consist of spicules of calcium

carbonate, of a horny substance frequently impregnated with calcium
carbonate and associated with spicules of the same substance, or in
Heliopora alone, among recent forms, of a continuous crystalline
corallum of calcium carbonate.

The spicules constitute one of the most characteristic features of the

Alcyonaria. They are not found in Cornularia, Stereosoma, in a
recently discovered genus of Gorgoniidae (Malacogorgia), in certain
Pennatulacea and in Heliopora; and it is probable that they may be
absent in some local varieties of certain species of Clavularia.

The spicules of Alcyonaria consist of an organic matrix supporting a

quantity of crystalline calcium carbonate. In some cases (Xenia) the
amount of inorganic salt is so small that the spicule retains its shape
after prolonged immersion in an acid; but generally speaking the
relative amount of calcium carbonate is so great that it is only by the
careful decalcification of the spicules in weak acetic acid that the
delicate fibrous organic matrix can be demonstrated.

The spicules vary in size from minute granules to long spindles 9

mm. in length (Spongodes, sp.). They exhibit so many varieties of
shape that an attempt must be made to place them in groups. The
most prevalent type perhaps is that called the spindle. This is a rod-
shaped spicule with more or less pointed extremities. They are
usually ornamented with short simple or compound wart-like
tubercles (Fig. 149, 5). Spicules belonging to this type are found in
all the principal subdivisions of the group except the Pennatulacea.

In the Pennatulacea a very characteristic form of spicule is a long

rod or needle marked with two or three slightly twisted ridges,
frequently a little knobbed or swollen at the extremities. In the same
group, in Xenia and Heteroxenia among the Alcyonacea, and in the
family Chrysogorgiidae the spicules are in the form of minute discs
or spheres, and in some genera the discs may be united in couples
(twins) or in threes (triplets) by short connecting bars (Fig. 149, 10).
More irregular calcareous corpuscles of minute size are found in
some genera of Pennatulacea.

Other characteristic spicules are the warted clubs of Juncella, the

torch-like spicules of Eunicella (Fig. 149, 3), the clubs with irregular
leaf-like expansions at one extremity ("Blattkeulen") of Eunicea, and
the flat but very irregular scales of the Primnoidae. There are also
many genera exhibiting spicules of quite irregular form (Fig. 149, 8).

In the greater number of cases the spicules lie loosely in the

mesogloea and readily separate when the soft tissues of the colony
decay or are dissolved in a solution of potash. In a few noteworthy
examples the spicules become in their growth tightly wedged
together to form a compact skeleton, which cannot subsequently be
disintegrated into its constituent elements. In the Precious corals
(Coralliidae) the spicules of the axial region fuse together to form a
solid mass of lime almost as hard and compact as the substance of
a pearl.
 Fig. 149.—Spicules of Alcyonaria. 1, Club of Juncella; 2, warted cross of
Plexaurella; 3, torch of Eunicella; 4, needle of Renilla; 5, warted spindle of
Gorgonella; 6, spicule of Pennatula; 7, foliate club of Eunicea; 8, irregular
spicule of Paramuricea; 9, scale of Primnoa; 10, spicules of Trichogorgia. (5
and 10 original, the remainder after Kölliker.)

In Paragorgia and some other closely related genera the spicules of

the axis of the colony also become tightly wedged together, but the
core thus formed is far more porous and brittle than it is in the
Coralliidae. In Tubipora (the organ-pipe coral) and in Telesto rubra
the spicules of the body-walls of the zooids fuse to form perforated
calcareous tubes. In some species of Sclerophytum the large
spicules of the coenenchym become so closely packed that they
form dense stony masses, almost as hard as a Perforate
Madreporarian coral. The horny substance, allied chemically to
keratin, plays an important part in the building up of skeletal
structures in many Alcyonaria. In Clavularia viridis and in
Stereosoma a change in the chemical character of the mesogloea of
the body-walls of the polyps leads to the formation of a horny tube,
which in the former case is built up of interlacing fibres, and in the
latter is formed as a homogeneous sheath. In many of the
Alcyonacea which have a compact axial skeleton the spicules are
cemented together by a horny matrix.
In the Gorgonellidae and some others the hard axis is formed of a
horny substance impregnated with a crystalline form of calcium
carbonate; but in the Gorgoniidae, many of the Pennatulacea and
some other genera very little or no carbonate of lime is found in the
horny axis.

The skeleton of the genus Heliopora differs from that of all the other
Alcyonaria in its development, structure, and form. In the words of
Dr. G. C. Bourne,[365] "the calcareous skeleton of Heliopora is not
formed from spicules developed within cells but is a crystalline
structure formed by crystallisation of carbonate of lime, probably in
the form of aragonite, in an organic matrix produced by the
disintegration of cells which I have described as calicoblasts." It is
further characterised by its blue colour. A peculiar form of the axial
skeleton (Fig. 155), consisting of alternate nodes mainly composed
of keratin, and internodes mainly composed of calcium carbonate, is
seen in the families Isidae and Melitodidae. In the Melitodidae the
nodes contain a considerable number of loose spicules, and the
internodes are mainly composed of spicules in close contact but
firmly cemented together by a sparse horny matrix. In the Isidae the
scanty calcareous substance of the nodes, and the bulk of the
substance of the internodes, is formed of amorphous crystalline
limestone.

The Alcyonaria exhibit a great variety of colour. Very little is known

at present of the chemistry of the various pigments found in the
group, but they may conveniently be arranged in two sections, the
soluble pigments and the insoluble pigments. To the former section
belong various green and brown pigments found in the anthocodiae
and superficial coenenchym of many genera. These are related to
chlorophyll, and may be very largely the product, not of the
Alcyonarians themselves, but of the symbiotic "Algae" (cf. p. 261)
they carry. A diffuse salmon-pink colour soluble in spirit occurs in the
living Primnoa lepadifera of the Norwegian fjords, and a similar but
paler pink colour occurs in some varieties of the common Alcyonium
digitatum. Gilchrist[366] states that when he was preserving
specimens of Alcyonium purpureum from Cape waters a
considerable quantity of a soluble purple pigment escaped.

But the predominant colour of Alcyonarians is usually due to the

insoluble pigments of the calcareous spicules. These may be of
varying shades of purple, red, orange, and yellow. The colours may
be constant for a species or genus, or they may vary in different
specimens of one species, or even in different parts of a single
colony. Thus the skeletons of Tubipora musica from all parts of the
world have a red colour, the species of the genus Anthomastus have
always red spicules. On the other hand, we find in Melitodes
dichotoma red and yellow varieties in the same locality, and in M.
chamaeleon some of the branches of a colony are red and others
yellow. In Chironephthya variabilis the colour of the spicules in any
one specimen varies considerably, but in a collection of several
specimens from a single locality a kaleidoscopic play of colours may
be seen, no two specimens being exactly the same in the
arrangement of their colour pattern. The influences that determine
the colour of the spicules is at present quite unknown, and in view of
the great variability that occurs in this respect, colour must be
regarded as a most uncertain guide for the determination of species.
The blue colour of the genus Heliopora is due to a peculiar pigment
which shows characteristic bands in the spectrum.[367]

Phosphorescence.—A great many Alcyonaria are known to be

phosphorescent. Moseley says that "All the Alcyonarians dredged by
the 'Challenger' in deep water were found to be brilliantly
phosphorescent when brought to the surface." The
phosphorescence of the common British Pennatula phosphorea has
attracted more attention than that of any other species, and has
been well described by Panceri, Forbes, and others. Forbes[368]
says, "The pen is phosphorescent only when irritated by touch; the
phosphorescence appears at the place touched, and proceeds
thence in an undulating wave to the extremity of the rachis, but never
in the opposite direction; it is only the parts at and above the point of
stimulation that show phosphorescence, the light is emitted for a
longer time from the point of stimulation than from the other luminous
parts; detached portions may show phosphorescence. When
plunged in fresh water, the Pennatula scatters sparks about in all
directions—a most beautiful sight."

Panceri was of opinion that the mesenteric filaments were the

organs of phosphorescence, but the whole question of the cause
and localisation of the light in these colonies requires further
investigation.

Food.—Very little is known about the food of Alcyonaria, but it is

very probable that it consists entirely of minute larvae and other
living organisms. When the coelenteric cavities of preserved
Alcyonaria are examined, food is very rarely found in them, although
fragments of Crustacean appendages have occasionally been seen
in the neighbourhood of the mesenteric filaments. Experimenting
upon Alcyonium digitatum, Miss Pratt[369] has found that the zooids
seize and swallow various small organisms of a surface-net
gathering, and that they will also swallow finely minced fragments of
the muscle of fish, but that they reject many kinds of fish ova. In
many tropical and some extra-tropical species the superficial canal
systems and the inter-mesenterial spaces of the zooids contain a
large number of Zooxanthellae, and their presence seems to be
associated in some cases with a decided degeneration of the
digestive organs. It has been suggested that these symbiotic "Algae"
prepare food materials after the manner of plants, and that these are
absorbed by the hosts, but it appears improbable that in any case
this source of food supply is sufficient. It must probably be
supplemented in some degree by food obtained by the mouth, and
digested in the coelenteric cavity.

The question whether the Alcyonaria can form an important part of

the dietary of fish or other carnivorous animals may be economically
important. Fragments of the Pennatulid Virgularia have been found
in the stomachs of cod and other fish, but with this exception there is
no evidence that any genus is systematically or even occasionally
preyed upon by any animal. With a very few exceptions Alcyonaria
show no signs of having been torn, bitten, or wounded by
carnivorous animals. It is improbable that the presence of
nematocysts in the tentacles can account for this immunity, as it is
known that some predaceous animals do feed upon Coelenterates
provided with much larger nematocysts than any Alcyonarian
possesses. All Alcyonaria, however, have a characteristic
disagreeable odour, and it is possible, as in many other cases, that
this is accompanied by an unpleasant taste. But if the Alcyonaria
themselves are immune, it is possible that their large yolk-laden
eggs may form a not unimportant source of food supply. In places
where large colonies flourish, an immense number of eggs or
embryos must be discharged into the water during the spawning
season, and of these only a minute fraction can survive long enough
to found a new colony.

Reproduction.—The formation of colonies by gemmation has

frequently been mentioned above. The young buds of a colony arise
from the endoderm canals in the body-wall of the zooids, in the
general coenenchym, or in the stolon. They never arise from
evagination of the coelenteric cavities of the zooids. There is no
evidence that fission of a colony to form secondary colonies ever
occurs. Gemmation leads to the increase in the number of zooids
forming a colony, but not to an increase in the number of colonies.

Fission of the zooids is of extremely rare occurrence; a single case,

however, has been recorded by Studer in the genus Gersemia.
Sexual reproduction usually occurs once in a year; it is doubtful
whether it ever occurs continuously. The colonies appear to be
nearly always dioecious, only one case of hermaphroditism having
yet been recorded.[370] The ova and sperm sacs are usually formed
and matured on the six ventral mesenteries, rarely on the dorsal pair
of mesenteries (Fig. 148, B) as well. The spawning season varies
with the locality. Alcyonium digitatum spawns at Plymouth at the end
of December, and somewhat later at Port Erin. The Pennatulid
Renilla and the Gorgonid Leptogorgia spawn in the summer months
on the coast of North America. In the Mediterranean Alcyonium
palmatum spawns in September and October (Lo Bianco), Gorgonia
cavolinii in May and June.

It is not known for certain when the fertilisation of the ova is effected,
but in Alcyonium digitatum, and in the majority of the Alcyonarians, it
probably takes place after the discharge of the ova from the zooids.
A few forms are, however, certainly viviparous, the larvae of
Gorgonia capensis being retained within the coelenteric cavity of the
parent zooid until they have grown to a considerable size. The other
viviparous Alcyonarians are Corallium nobile (de Lacaze Duthiers),
the "Clavulaires petricoles," and Sympodium coralloides (Marion and
Kowalevsky), and three species of Nephthya found at depths of 269
to 761 fathoms (Koren and Danielssen). The general features of the
development are very similar in all Alcyonarians that have been
investigated. The egg contains a considerable amount of yolk, and
undergoes a modified form of segmentation. The free-swimming
larva is called a "sterrula." It consists of an outer layer of clear
ciliated ectoderm cells, surrounding a solid endodermic plasmodium
containing the yolk. As the yolk is consumed a cavity appears in the
endoderm, and the larva is then called a "planula" (Fig. 150). The
mouth is subsequently formed by an invagination of the ectoderm at
the anterior pole. The development of the mesenteries has not yet
been fully described.

Fig. 150.—Ciliated "planula" larva of Alcyonium digitatum. Ec, Ectoderm; End,

endoderm.

Classification.—The sub-class Alcyonaria may conveniently be

classified as follows:—
Grade A. Protalcyonacea.
Grade B. Synalcyonacea.
Order 1. Stolonifera.
Order 2. Coenothecalia.
Order 3. Alcyonacea.
Order 4. Gorgonacea.
Order 5. Pennatulacea.

Grade A. Protoalcyonacea.
This Grade includes those genera which, like many sea-anemones,
do not reproduce by continuous gemmation to form colonies.

Several genera have been described, and they have been placed
together in one family called the Haimeidae.

Haimea funebris, M. Edwards, was found off the coast of Algeria; H.

hyalina, Koren and Danielssen, in Norway; Hartea elegans, Wright,
from the Irish coast; Monoxenia darwinii, Haeckel, from the Red Sea,
and a large new species found by the "Siboga" Expedition in deep
water off Ceram. All these species, however, are very rare, and there
is no satisfactory evidence at present that they remain solitary
throughout life.

Grade B. Synalcyonacea.
The sub-division of the Synalcyonacea into orders presents many
difficulties, and several different classifications have been proposed.
Only two orders of the five that are here recognised are clearly
defined, namely, the Coenothecalia, containing the single living
genus Heliopora, and the Pennatulacea or Sea-pens; the others are
connected by so many genera of intermediate characters that the
determination of their limits is a matter of no little difficulty.
 Order I. Stolonifera.
These are colonial Alcyonaria springing from a membranous or
ribbon-like stolon fixed to a stone or some other foreign object. The
body-walls of the individual zooids may be free or connected by a
series of horizontal bars or platforms (autothecalous); never
continuously fused as they are in other orders (coenothecalous).

In the simplest form of this order, Sarcodictyon catenatum Forbes,

the ribbon-like strands of the stolon meander over the surface of
stones, forming a red or yellow network, from the upper surface of
which the clear transparent anthocodiae of the zooids protrude.
When retracted the anthocodiae are drawn down below the surface
of the general coenenchym, and their position is indicated by small
cushion-like pads on the stolon. Sarcodictyon is found in depths of
10 to 22 fathoms in the Irish Sea, off the west coast of Scotland, the
Shetlands, and off the Eddystone Lighthouse, South Devon.

Another very important genus is Tubipora, in which the tubular body-

wall of each zooid is very much longer in proportion to its diameter
than it is in Sarcodictyon, and the anthocodia is retracted not into the
stolon, but into the basal part of the body-wall. The zooids are
connected together by horizontal platforms on which new zooids are
formed by gemmation. Both horizontal platforms and the body-walls
of the zooids are provided with a skeleton of fused spicules of a red
colour.

This genus is the well-known Organ-pipe coral, and is found

sometimes in immense quantities on the coral reefs of both the old
and new world.

It may be seen in pools on the edge of the reefs at low tides in

colonies frequently a foot or more in diameter. The tentacles are
often of a bright emerald green colour, and as the anthocodiae stand
expanded in the clear water they contribute a brilliant patch of colour
to the many beauties of their surroundings. When the coral is
disturbed, or the water shallows and the anthocodiae are retracted,
the dull red colour of the skeleton gradually takes the place of the
bright green of the tentacles.

Fig. 151.—Tubipora musica, a young colony growing on a dead Madrepore

branch (M). Hp, The connecting horizontal platforms; p, p, the skeletal tubes
of the zooids; St, the basal stolon.

It is probable that this order of Alcyonaria was better represented on

the reefs of some of the earlier periods of the world's history than it is
at present. The fossil Syringopora, which is found abundantly in the
carboniferous limestone and other strata, was probably an
Alcyonarian belonging to this order. It resembles Tubipora in its
mode of growth, but in place of the horizontal platforms connecting
the zooids there are rods or bars from which new zooids spring (Fig.
152). Similar connecting bars are found in the recent Clavularia
(Hicksonia, Delage) viridis of the East Indian reefs (Fig. 153). Other
fossil forms belonging to the order are Favosites, a very abundant
coral of the Upper Silurian rocks, and possibly Columnaria.
 Fig. 152.—Syringopora, a fossil, showing autothecalous tubes (th), funnel-
shaped tabulae (tab), and tubular cross-bars (t).

Fig. 153.—Clavularia (Hicksonia) viridis, with creeping stolon and transverse

connecting tubes.

The principal families of the Stolonifera are:—

Fam. 1. Cornulariidae.—Without spicules; Cornularia, Lamarck,

Mediterranean; Stereosoma, Hickson, Celebes.
Fam. 2. Clavulariidae.—Clavularia, Quoy and Gaimard; Sarcodictyon,
Forbes, British; Sympodium, Ehrb.; Syringopora, Goldfuss, fossil.
Fam. 3. Tubiporidae.—Tubipora, Linnaeus, tropical shallow water.
Fam. 4. Favositidae.—Favosites, Lamarck; Syringolites, Hinde; Stenopora,
King.

Order II. Coenothecalia.

This order contains the single genus and species Heliopora coerulea
among recent corals, but was probably represented by a large
number of genera and species in earlier periods.

It is found at the present day in many localities in the warm shallow

waters of the tropical Pacific and Indian Oceans. It usually flourishes
on the inside of the reef, and may form masses of stone five or six
feet in diameter. The coral may easily be recognised, as it is the only
one that exhibits a blue colour. This colour usually penetrates the
whole skeleton, but in some forms is absent from the superficial
layers.

The skeleton consists of a number of parallel tubes with imperforate

walls, which are fused together in honey-comb fashion. On making a
vertical section through a branch of the coral it is found that the
tubes are divided into a series of chambers by transverse partitions
or "tabulae." The soft living tissues of the coral, the zooids and
coenosarc, are confined to the terminal chambers, all the lower parts
being simply dead calcareous skeleton supporting the living
superficial layer. Among the parallel tubes there may be found a
number of larger chambers that seem to have been formed by the
destruction of the adjacent walls of groups of about nineteen tubes.
These chambers are provided with a variable number of pseudo-
septa, and have a remarkable resemblance to the thecae of some
Zoantharian corals. That Heliopora is not a Zoantharian coral was
first definitely proved by Moseley, who showed that each of these
larger chambers contains an Alcyonarian zooid with eight pinnate
tentacles and eight mesenteries. The zooids arise from a sheet of
coenosarc that covers the whole of the living branches of the coral
mass, and this sheet of coenosarc bears a plexus of canals
communicating on the one hand with the zooids, and on the other
with a series of blind sacs, each of which occupies the cavity of one
of the skeletal tubes as far down as the first tabula. The zooids of
Heliopora are very rarely expanded during the day-time, and it has
been found very difficult to get them to expand in an aquarium. The
coral, however, is frequently infested with a tubicolous worm allied to
the genus Leucodora, which freely expands and projects from the
surface. So constant and so numerous are these worms in some
localities that it has actually been suggested that Heliopora should
be regarded as a Polychaete worm and not as an Alcyonarian.
According to Mr. Stanley Gardiner, however, these worms do not
occur in association with the Heliopora found on the reefs of the
Maldive Archipelago.
There is very strong reason to believe that certain fossil corals were
closely related to Heliopora; that Heliopora is in fact the solitary
survivor of a group of Alcyonarian corals that in past times was well
represented on the reefs, both in numbers and in species. The
evidence is not so convincing that other fossil corals are closely
related to Heliopora, and their true zoological position may remain a
matter for surmise. The order may be classified as follows:—

Fam. 1. Heliolitidae.[371]—Coenothecalia with regular, well-

developed septa, generally twelve in number, in each calicle.

Heliolites, Dana, Silurian and Devonian. Cosmiolithus, Lindström,

Upper Silurian. Proheliolites, Klaer, Lower Silurian. Plasmopora,
Edwards and Haime, Upper Silurian. Propora, E. and H., Upper
Silurian. Camptolithus, Lindström, Upper Silurian. Diploëpora,
Quenst, Upper Silurian. Pycnolithus, Lindström, Upper Silurian.

Fam. 2. Helioporidae.[372]—Coenothecalia with small irregularly

arranged coenosarcal caeca, and a variable number of septa or
septal ridges. Heliopora, de Blainville, recent, Eocene and Upper
Cretaceous. Polytremacis, d'Orbigny, Eocene and Upper
Cretaceous. Octotremacis, Gregory, Miocene.

The family Coccoseridae is regarded by Lindström as a sub-family

of the Heliolitidae, and the families Thecidae and Chaetetidae are
probably closely related to the Helioporidae.

Order III. Alcyonacea.

This order contains a large number of genera of great variety of
form. The only characters which unite the different genera are that
the body-walls of some groups of zooids, or of all the zooids, are
fused together to form a common coenenchym penetrated by the
coenosarcal canals, and that the spicules do not fuse to form a solid
calcareous, or horny and calcareous, axial skeletal support.