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Marketing Strategy
TEXT AND CASES
SEVENTH EDITION

O.C. Ferrell
Belmont University

Michael D. Hartline
Florida State University

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

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 Marketing Strategy: Text and Cases, © 2017, 2014 Cengage Learning
Seventh Edition ALL RIGHTS RESERVED. No part of this work covered by the copyright herein
O.C. Ferrell and Michael D. Hartline may be reproduced or distributed in any form or by any means, except as
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 To my wife, Linda
O.C. Ferrell

To my girls, Marsha, Meghan, Madison, and Mallory

Michael D. Hartline

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 Brief Contents
Preface xiii
About the Authors xvii
1 MARKETING IN TODAY’S ECONOMY 1
2 STRATEGIC MARKETING PLANNING 27
3 COLLECTING AND ANALYZING MARKETING INFORMATION 56
4 DEVELOPING COMPETITIVE ADVANTAGE AND STRATEGIC FOCUS 89
5 CUSTOMERS, SEGMENTATION, AND TARGET MARKETING 119
6 THE MARKETING PROGRAM 153
7 BRANDING AND POSITIONING 203
8 ETHICS AND SOCIAL RESPONSIBILITY IN MARKETING STRATEGY 230
9 MARKETING IMPLEMENTATION AND CONTROL 260
10 DEVELOPING AND MAINTAINING LONG-TERM CUSTOMER RELATIONSHIPS 289

CASES
CASE 1 USA TODAY: INNOVATION IN AN EVOLVING INDUSTRY 318
CASE 2 CONSUMERS TAKE A SHINE TO APPLE, INC. 331
CASE 3 MONSANTO BALANCES THE INTERESTS OF MULTIPLE STAKEHOLDERS 342
CASE 4 NEW BELGIUM BREWING (A): SOCIAL RESPONSIBILITY AS COMPETITIVE ADVANTAGE 355
CASE 5 NEW BELGIUM BREWING (B): DEVELOPING A BRAND PERSONALITY 364
CASE 6 MATTEL CONFRONTS ITS MARKETING CHALLENGES 373
CASE 7 MISTINE: DIRECT SELLING IN THE THAI COSMETICS MARKET 384
CASE 8 BP STRUGGLES TO REPAIR ITS TARNISHED REPUTATION 396
CASE 9 CHEVROLET: A CENTURY OF PRODUCT INNOVATION407
CASE 10 WYNDHAM WORLDWIDE ADOPTS A STAKEHOLDER ORIENTATION MARKETING
STRATEGY 422
CASE 11 NASCAR: CAN’T KEEP A GOOD BRAND DOWN 431

iv

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 Brief Contents v

CASE 12 INDYCAR: SEEKING A RETURN TO MOTORSPORTS’ FAST LANE 443

CASE 13 ZAPPOS: DELIVERING HAPPINESS 454
CASE 14 NETFLIX FIGHTS TO STAY AHEAD OF A RAPIDLY CHANGING MARKET 465
CASE 15 GILLETTE: WHY INNOVATION MAY NOT BE ENOUGH 475
CASE 16 IKEA SLOWLY EXPANDS ITS U.S. MARKET PRESENCE 487
CASE 17 UBER: THE OPPORTUNITIES AND CHALLENGES OF MARKET DISRUPTION 496
CASE 18 SCENTSY, INC.: A SUCCESSFUL DIRECT SELLING BUSINESS MODEL 507
CASE 19 SIGMA MARKETING: STRATEGIC MARKETING ADAPTATION 515
CASE 20 BELLE MEADE PLANTATION: A SOCIAL ENTREPRENEURSHIP MARKETING STRATEGY 525
CASE 21 COCA-COLA: INTEGRATED MARKETING COMMUNICATIONS 534
Index 544

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 Contents
Preface xiii
About the Authors xvii

1 MARKETING IN TODAY’S ECONOMY 1

THE CHALLENGES AND OPPORTUNITIES OF MARKETING IN TODAY’S ECONOMY 2
Power Shift to Customers 3
Massive Increase in Product Selection 4
Audience and Media Fragmentation 4
Changing Value Propositions 4
Shifting Demand Patterns 5
Privacy, Security, and Ethical Concerns 5
Unclear Legal Jurisdiction 6
BASIC MARKETING CONCEPTS 7
What Is a Market? 8
What Is Exchange? 9
What Is a Product? 10
MAJOR MARKETING ACTIVITIES AND DECISIONS 13
Strategic Planning 15
Research and Analysis 15
Developing Competitive Advantage 16
Marketing Strategy Decisions 16
Social Responsibility and Ethics 19
Implementation and Control 20
Developing and Maintaining Customer Relationships 20

vi

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 Contents vii

TAKING ON THE CHALLENGES OF MARKETING STRATEGY 21

LESSONS FROM CHAPTER 1 23
NOTES 24

2 STRATEGIC MARKETING PLANNING 27

THE STRATEGIC PLANNING PROCESS 29
Organizational Mission versus Organizational Vision 30
Corporate or Business-Unit Strategy 34
Functional Goals and Objectives 35
Functional Strategy 36
Implementation 36
Evaluation and Control 36
THE MARKETING PLAN 37
Marketing Plan Structure 37
Using the Marketing Plan Structure 43
Purposes and Significance of the Marketing Plan 44
Organizational Aspects of the Marketing Plan 45
MAINTAINING CUSTOMER FOCUS AND BALANCE IN STRATEGIC PLANNING 46
Customer-Focused Planning 46
Balanced Strategic Planning 49
LESSONS FROM CHAPTER 2 51
NOTES 53

3 COLLECTING AND ANALYZING MARKETING INFORMATION 56

CONDUCTING A SITUATION ANALYSIS 58
Analysis Alone Is Not a Solution 58
Data Are Not the Same as Information 59
The Benefits of Analysis Must Outweigh the Costs 59
Conducting a Situation Analysis Is a Challenging Exercise 59
THE INTERNAL ENVIRONMENT 61
Review of Current Objectives, Strategy, and Performance 61
Availability of Resources 62
Organizational Culture and Structure 63
THE CUSTOMER ENVIRONMENT 63
Who Are Our Current and Potential Customers? 65
What Do Customers Do with Our Products? 65
Where Do Customers Purchase Our Products? 66
When Do Customers Purchase Our Products? 66

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viii Contents

Why (and How) Do Customers Select Our Products? 68

Why Do Potential Customers Not Purchase Our Products? 68
THE EXTERNAL ENVIRONMENT 69
Competition 71
Economic Growth and Stability 73
Political Trends 74
Legal and Regulatory Issues 74
Technological Advancements 75
Sociocultural Trends 76
COLLECTING MARKETING DATA AND INFORMATION 79
Secondary Information Sources 79
Primary Data Collection 82
Overcoming Problems in Data Collection 83
LESSONS FROM CHAPTER 3 84
NOTES 85

4 DEVELOPING COMPETITIVE ADVANTAGE AND STRATEGIC FOCUS 89

MAKING SWOT ANALYSIS PRODUCTIVE 91
Stay Focused 91
Search Extensively for Competitors 93
Collaborate with Other Functional Areas 93
Examine Issues from the Customers’ Perspective 93
Look for Causes, Not Characteristics 95
Separate Internal Issues from External Issues 96
SWOT-DRIVEN STRATEGIC PLANNING 97
Strengths and Weaknesses 97
Opportunities and Threats 97
The SWOT Matrix 99
DEVELOPING AND LEVERAGING COMPETITIVE ADVANTAGES 102
ESTABLISHING A STRATEGIC FOCUS 104
DEVELOPING MARKETING GOALS AND OBJECTIVES 109
Developing Marketing Goals 111
Developing Marketing Objectives 112
Moving beyond Goals and Objectives 115
LESSONS FROM CHAPTER 4 115
NOTES 117

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 Contents ix

5 CUSTOMERS, SEGMENTATION, AND TARGET MARKETING 119

BUYER BEHAVIOR IN CONSUMER MARKETS 121
The Consumer Buying Process 121
Factors that Affect the Consumer Buying Process 127
BUYER BEHAVIOR IN BUSINESS MARKETS 129
Unique Characteristics of Business Markets 130
The Business Buying Process 132
MARKET SEGMENTATION 133
Traditional Market Segmentation Approaches 133
Individualized Segmentation Approaches 136
Criteria for Successful Segmentation 138
IDENTIFYING MARKET SEGMENTS 139
Segmenting Consumer Markets 139
Segmenting Business Markets 144
TARGET MARKETING STRATEGIES 145
LESSONS FROM CHAPTER 5 147
NOTES 151

6 THE MARKETING PROGRAM 153

PRODUCT STRATEGY 155
Strategic Issues in the Product Portfolio 155
The Challenges of Service Products 158
Developing New Products 160
PRICING STRATEGY 162
Key Issues in Pricing Strategy 162
Pricing Service Products 168
Base Pricing Strategies 170
Adjusting the Base Price 171
SUPPLY CHAIN STRATEGY 172
Strategic Supply Chain Issues 173
Trends in Supply Chain Strategy 178
INTEGRATED MARKETING COMMUNICATIONS 182
Strategic Issues in Integrated Marketing Communications 183
Advertising 185
Public Relations 187

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x Contents

Personal Selling and Sales Management 189

Sales Promotion 191
LESSONS FROM CHAPTER 6 195
NOTES 200

7 BRANDING AND POSITIONING 203

STRATEGIC ISSUES IN BRANDING 206
Basic Branding Decisions 206
Strategic Brand Alliances 209
Brand Value 209
Packaging and Labeling 212
DIFFERENTIATION AND POSITIONING 213
Bases for Differentiation 215
Positioning Strategies 217
MANANGING BRANDS OVER TIME 218
Development Stage 220
Introduction Stage 221
Growth Stage 221
Maturity Stage 223
Decline Stage 224
LESSONS FROM CHAPTER 7 226
NOTES 228

8 ETHICS AND SOCIAL RESPONSIBILITY IN MARKETING STRATEGY 230

ETHICS AND SOCIAL RESPONSIBILITY IN MARKETING STRATEGY 231
Dimensions of Social Responsibility 232
Sustainability 235
Marketing Ethics and Strategy 237
The Challenges of Being Ethical and Socially Responsible 239
ETHICAL ISSUES IN THE MARKETING PROGRAM 241
Product-Related Ethical Issues 241
Pricing-Related Ethical Issues 243
Supply Chain–Related Ethical Issues 244
Promotion-Related Ethical Issues 245

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 Contents xi

MANAGING AND CONTROLLING ETHICAL ISSUES 246

Regulating Marketing Ethics 246
Codes of Conduct 248
Ethical Leadership 249
RELATIONSHIP TO MARKETING AND FINANCIAL PERFORMANCE 250
Stakeholder Orientation 250
Marketing Financial Performance 251
INCORPORATING ETHICS AND SOCIAL RESPONSIBILITY
INTO STRATEGIC PLANNING 251
LESSONS FROM CHAPTER 8 252
NOTES 255

9 MARKETING IMPLEMENTATION AND CONTROL 260

STRATEGIC ISSUES IN MARKETING IMPLEMENTATION 262
The Link Between Planning and Implementation 262
The Elements of Marketing Implementation 264
APPROACHES TO MARKETING IMPLEMENTATION 268
Implementation by Command 268
Implementation through Change 270
Implementation through Consensus 271
Implementation as Organizational Culture 271
INTERNAL MARKETING AND MARKETING IMPLEMENTATION 272
The Internal Marketing Approach 272
The Internal Marketing Process 274
EVALUATING AND CONTROLLING MARKETING ACTIVITIES 275
Formal Marketing Controls 276
Informal Marketing Controls 279
Scheduling Marketing Activities 281
LESSONS FROM CHAPTER 9 283
NOTES 286

10 DEVELOPING AND MAINTAINING LONG-TERM CUSTOMER

RELATIONSHIPS 289
MANAGING CUSTOMER RELATIONSHIPS 290
Developing Relationships in Consumer Markets 292
Developing Relationships in Business Markets 294

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xii Contents

QUALITY AND VALUE: THE KEYS TO DEVELOPING CUSTOMER RELATIONSHIPS 296

Understanding the Role of Quality 296
Delivering Superior Quality 298
Understanding the Role of Value 299
Competing on Value 303
CUSTOMER SATISFACTION: THE KEY TO CUSTOMER RETENTION 304
Understanding Customer Expectations 304
Satisfaction versus Quality versus Value 307
Customer Satisfaction and Customer Retention 310
Customer Satisfaction Measurement 312
LESSONS FROM CHAPTER 10 313
NOTES 317

CASES
CASE 1 USA TODAY: INNOVATION IN AN EVOLVING INDUSTRY 318
CASE 2 CONSUMERS TAKE A SHINE TO APPLE, INC.331
CASE 3 MONSANTO BALANCES THE INTERESTS OF MULTIPLE STAKEHOLDERS 342
CASE 4 NEW BELGIUM BREWING (A): SOCIAL RESPONSIBILITY AS COMPETITIVE ADVANTAGE 355
CASE 5 NEW BELGIUM BREWING (B): DEVELOPING A BRAND PERSONALITY 364
CASE 6 MATTEL CONFRONTS ITS MARKETING CHALLENGES 373
CASE 7 MISTINE: DIRECT SELLING IN THE THAI COSMETICS MARKET 384
CASE 8 BP STRUGGLES TO REPAIR ITS TARNISHED REPUTATION 396
CASE 9 CHEVROLET: A CENTURY OF PRODUCT INNOVATION 407
CASE 10 WYNDHAM WORLDWIDE ADOPTS A STAKEHOLDER ORIENTATION MARKETING
STRATEGY 422
CASE 11 NASCAR: CAN’T KEEP A GOOD BRAND DOWN 431
CASE 12 INDYCAR: SEEKING A RETURN TO MOTORSPORTS’ FAST LANE 443
CASE 13 ZAPPOS: DELIVERING HAPPINESS 454
CASE 14 NETFLIX FIGHTS TO STAY AHEAD OF A RAPIDLY CHANGING MARKET 465
CASE 15 GILLETTE: WHY INNOVATION MAY NOT BE ENOUGH 475
CASE 16 IKEA SLOWLY EXPANDS ITS U.S. MARKET PRESENCE 487
CASE 17 UBER: THE OPPORTUNITIES AND CHALLENGES OF MARKET DISRUPTION 496
CASE 18 SCENTSY, INC.: A SUCCESSFUL DIRECT SELLING BUSINESS MODEL 507
CASE 19 SIGMA MARKETING: STRATEGIC MARKETING ADAPTATION 515
CASE 20 BELLE MEADE PLANTATION: A SOCIAL ENTREPRENEURSHIP MARKETING STRATEGY 525
CASE 21 COCA-COLA: INTEGRATED MARKETING COMMUNICATIONS 534

Index 544

Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
Preface
Welcome to one of the most interesting, challenging, and important topics in your
business education. What makes marketing strategy so interesting, challenging, and
important you ask? To begin, marketing strategy is interesting because (1) it is inher-
ently people-driven and (2) it is never stagnant. A distinct blend of both art and sci-
ence, marketing strategy is about people (inside an organization) finding ways to
deliver exceptional value by fulfilling the needs and wants of other people (custo-
mers, shareholders, business partners, society at large), as well as the needs of
the organization itself. Marketing strategy draws from psychology, sociology, and
economics to better understand the basic needs and motivations of these people—
whether they are the organization’s customers (typically considered the most
critical), its employees, or its stakeholders. In short, marketing strategy is about peo-
ple serving people.
For this reason, marketing strategy is interesting because it is never stagnant.
The simple fact is that people change. A strategy that works today might not work
tomorrow. Products that are popular today are forgotten next week. These truisms
are important because truly understanding marketing strategy means accepting the
fact that there are few concrete rules for developing and implementing marketing
activities. Given the constant state of change in the marketing environment, it is vir-
tually impossible to say that given “this customer need” and “these competitors”
and “this level of government regulation” that Product A, Price B, Promotion C, and
Distribution D will produce the best results. Marketing simply doesn’t work that way.
The lack of concrete rules and the ever changing economic, sociocultural, competi-
tive, technological, and political/legal landscapes make marketing strategy a terribly
fascinating subject.
Now that you know why marketing strategy is so interesting, it should be easy
to see why it is also challenging. A perfect marketing strategy that is executed
flawlessly can still fail. Sometimes, organizations are lucky and have success despite
having a terrible strategy and/or execution. The nature of marketing can make mar-
keting planning quite frustrating.
Finally, the importance of marketing strategy is undeniable. No other business
function focuses on developing relationships with customers—the lifeblood of all
organizations (even non-profits). This statement does not diminish the importance
of other business functions, as they all are necessary for an organization to be suc-
cessful. In fact, coordination with other functions is critical to marketing success.
However, without customers, and marketing programs in place to cultivate customer
relationships, no organization can survive.

xiii

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xiv Preface

OUR FOCUS
Given this marketing landscape, Marketing Strategy: Text and Cases, 7th Edition
provides a practical, straightforward approach to analyzing, planning, and imple-
menting marketing strategies. Our focus is based on the creative process involved
in applying the knowledge and concepts of marketing to the development and imple-
mentation of marketing strategy. Our goal is to encourage students of marketing to
think and act like a marketer. By discussing the key concepts and tools of marketing
strategy, our emphasis on critical thinking, both analytical and creative, allows stu-
dents to understand the essence of how marketing decisions fit together to create a
coherent strategy.
Our approach in Marketing Strategy: Text and Cases, 7th Edition is also
grounded in the development and execution of the marketing plan. Throughout the
text, we provide a comprehensive planning framework based on conducting sound
background research, developing market capabilities and competitive advantages,
designing integrated marketing programs, and managing customer relationships for
the long term. We also emphasize the need for integrity in the strategic planning pro-
cess as well as the design of marketing programs that are both ethical and socially
responsible. We also stress the integration and coordination of marketing decisions
with other functional business decisions as the key to achieving an organization’s
overall mission and vision. Throughout the text, we offer examples of successful
planning and implementation to illustrate how firms face the challenges of marketing
strategy in today’s economy.

PURPOSE
We view strategic marketing planning not only as a process for achieving organiza-
tional goals, but also as a means of building long-term relationships with customers.
Creating a customer orientation takes imagination, vision, and courage, especially in
today’s rapidly changing economic and technological environments. To help meet
these challenges, our text approaches marketing strategy from both “traditional” and
“cutting-edge” practices. We cover topics such as segmentation, creating a competi-
tive advantage, marketing program development, and the implementation process
with a solid grounding in traditional marketing, but also with an eye toward emerging
practices. Lessons learned from the rise, fall, and reemergence of the dotcom sector,
recent corporate scandals, and the most recent economic recession illustrate the
importance of balancing the traditional and emerging practices of marketing strat-
egy. Our text never loses sight of this balance.
Although our approach allows for the use of sophisticated research and
decision-making processes, we have employed a practical perspective that permits
marketing managers in any sized organization to develop and implement a marketing
plan. We have avoided esoteric, abstract, and highly academic material that does not
relate to typical marketing strategy decisions in most organizations. The marketing
plan framework that we utilize throughout the text has been used by a number of
organizations to successfully plan their marketing strategies. Many companies report
great success in using our approach partially due to the ease of communicating the
plan to all functional areas of the business.

TARGET AUDIENCE
Our text is relevant for a number of educational environments, including undergrad-
uate, graduate, and corporate training courses. At the undergraduate level, our text
is appropriate for the capstone course or any upper-level integrating course such as

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 Preface xv

“Marketing Management,” “Marketing Strategy,” or “Marketing Policy.” At this level,

the text provides an excellent framework to use with our included text-based cases,
live-client cases, or a computer simulation. At the graduate level, our text is appropri-
ate for courses addressing strategic marketing planning, competitive marketing strat-
egies, or as a supplement for any simulation-based course. A growing segment of the
market, corporate training, can utilize our text when educating business profes-
sionals interested in developing marketing plans of their own, or interpreting and
implementing the plans of others.
Each of the 21 cases included in our text describes the strategic situations of
real-world, identifiable organizations. Because these cases feature real situations,
instructors have the option of using the case material as published, or they may
give students the opportunity to update the cases by conducting research to find
the latest information. Many additional resources for students and instructors can
be found at our text’s companion website, www.cengagebrain.com.

ACKNOWLEDGMENTS
Throughout the development of this text, several extraordinary individuals pro-
vided their talent and expertise to make important contributions. A number of indi-
viduals have made many useful comments and recommendations as reviewers of
this text.
We also deeply appreciate the assistance of several individuals who played a
major role in developing cases or other materials. Specifically, we thank the follow-
ing individuals:
Joe Alexander, Belmont University
Noushin Laila Ansari, University of New Mexico
Timothy W. Aurand, Northern Illinois University
Harper Baird, University of New Mexico
Chandani Bhasin, University of New Mexico
Christin Copeland, Florida State University
Linda Ferrell, Belmont University
John Fraedrich, Southern Illinois University – Carbondale
Bernadette Gallegos, University of New Mexico
Sederick Hood, University of New Mexico
Jennifer Jackson, University of New Mexico
Danielle Jolley, University of New Mexico
Kimberly Judson, Illinois State University
Robert P. Lambert, Belmont University
Cassondra Lopez, University of New Mexico
Julian Mathias, University of New Mexico
Kevin Mihaly, Florida State University
Christian Otto, University of New Mexico
Greg Owsley, New Belgium Brewing Company
Kelsey Reddick, Florida State University

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xvi Preface

Don Roy, Middle Tennessee State University

Mike Sapit, Sigma Marketing
Jennifer Sawayda, University of New Mexico
Beau Shelton, University of New Mexico
Bryan Simpson, New Belgium Brewing Company
Debbie Thorne, Texas State University
Jacqueline Trent, University of New Mexico
Robyn Watson, Florida State University
Lecia Weber, University of New Mexico
Celeste Wood, Florida State University
We greatly appreciate the efforts of Jennifer Sawayda, University of New
Mexico, for coordinating much of the new case development in this edition. The
editorial, production, and marketing staff at Cengage cannot be thanked enough.
With a deep sense of appreciation, we thank Mike Roche and Zach Fleischer.
Finally, we express appreciation for the support and encouragement of
our families and friends, and our colleagues at Belmont University, Florida State
University, and the University of New Mexico.

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About the Authors
O.C. FERRELL, PH.D.
Belmont University
O.C. Ferrell (Ph.D., Louisiana State University) is University Distinguished Chair of
Business Ethics at Belmont University. He recently served 9 years as University Dis-
tinguished Professor of Marketing at the Anderson School of Management, Univer-
sity of New Mexico. He also served at the University of Wyoming and was Chair of
the Marketing Department at Colorado State University. Prior to his arrival at CSU,
Dr. Ferrell was the Distinguished Professor of Marketing and Business Ethics at the
University of Memphis. He has also served as a professor at the University of Tampa,
Texas A&M University, Illinois State University, and Southern Illinois University. His
MBA and BA degrees are from Florida State University.
Dr. Ferrell is past president of the Academic Council of the American Marketing
Association and former chair of the American Marketing Association Ethics Commit-
tee. Under his leadership, the committee developed the AMA Code of Ethics and the
AMA Code of Ethics for Marketing on the Internet. He is a Society for Marketing
Advances Fellow and the Vice President of Publications for the Academy of Market-
ing Science. He is a former member of the Board of Governors as a Distinguished
Fellow for the Academy of Marketing Science. He received the Cutco Vector Distin-
guished Marketing Educator Award from the Academy of Marketing Science. In addi-
tion, he received the first Innovative Educator award from the Marketing
Management Association.
Dr. Ferrell has taught a wide variety of courses, including marketing strategy,
principles of marketing, marketing ethics, international marketing, as well as most
undergraduate courses in marketing. For 16 years he taught a graduate course in
competitive marketing strategies at Thammasat University in Bangkok, Thailand.
He has also been a visiting professor at University of Wisconsin, University of
Michigan–Ann Arbor, and University of Hanover, Germany.
Dr. Ferrell is the co-author of over 20 books and more than 100 articles. His
research is published in the Journal of Marketing Research, the Journal of Market-
ing, the Journal of Business Ethics, the Journal of Business Research, the Journal
of the Academy of Marketing Science, as well as other journals. His Marketing: Con-
cepts and Strategies text, co-authored with Bill Pride, is one of the most widely
adopted principles of marketing texts in the world. Furthermore, his Business
Ethics: Decision Making and Cases is the leading business ethics text.
Dr. Ferrell has served as an expert witness in many high-profile civil litigation
cases related to marketing ethics. More recently he has assisted international cor-
porations and worked with state regulatory agencies in modifying marketing pro-
grams to maintain compliance with both ethical and legal requirements. Currently,

xvii

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xviii About the Authors

he is working with the National Association of State Boards of Accountancy to

develop an ethical leadership certification for students. He has appeared on the
NBC Today show and he has been quoted in national papers such as USA Today.
Dr. Ferrell and his wife Linda (also a faculty member at Belmont University) live
in Nashville, Tennessee. He continues to help coordinate the Daniels Fund Ethics Ini-
tiative at the University of New Mexico. He enjoys golf, skiing, reading, and travel.

MICHAEL D. HARTLINE, PH.D.

Florida State University
Michael D. Hartline (Ph.D., University of Memphis) is Interim Dean and Charles A.
Bruning Professor of Business Administration in the College of Business at Florida
State University. Previously, he served as Associate Dean for Strategic Initiatives
and Chair of the Department of Marketing. Prior to joining the FSU faculty in 2001,
Dr. Hartline served on faculty at the University of Arkansas at Little Rock, Louisiana
State University, and Samford University. His MBA and B.S. degrees are from
Jacksonville State University in Alabama.
Dr. Hartline primarily teaches graduate courses in Marketing Strategy and
undergraduate courses in Services Marketing. He has won many teaching and
research awards and made many presentations to industry and academic audiences.
Dr. Hartline has also served as a consultant to several for-profit and nonprofit orga-
nizations in the areas of marketing plan development, market feasibility analysis,
customer satisfaction measurement, customer service training, and pricing policy.
He currently serves on the Academic Advisory Council of the Direct Selling Educa-
tion Foundation and on the board of the Knight Creative Communities Initiative in
Tallahassee, Florida. He has previously served on the executive committee of the
Academy of Marketing Science, co-chaired two international conferences for the
American Marketing Association, and has served on the editorial review boards of a
number of leading marketing journals.
Dr. Hartline’s research addresses marketing implementation issues in service
firms. Specifically, his work examines the role of customer-contact employees and
workgroups in the effective delivery of quality service to customers. Dr. Hartline’s
research appears in the Journal of Marketing, the Journal of Service Research, the
Journal of Business Research, the Journal of Relationship Marketing, the Journal
of Services Marketing, the Cornell Quarterly, the Journal of Strategic Marketing,
the Journal of Business Ethics, and the Marketing Science Institute Working
Paper Series.
Dr. Hartline and his wife Marsha live in Tallahassee with their three daughters
Meghan, Madison, and Mallory. They have two dogs, Bella and Chief (both Japanese
Chins), and two cats, Snickers and Sammie. Dr. Hartline is a self-professed electron-
ics and gadget enthusiast who enjoys music, reading, computers, travel, college
football (Go Seminoles!), and being a dad.

Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
Marketing in Today’s CHAPTER
Economy
1
INTRODUCTION
As noted in the opening Beyond the Pages 1.1 story, competing in today’s economy
means finding ways to break out of commodity status to meet customers’ needs bet-
ter than competing firms. All organizations—both for-profit and nonprofit—require
effective planning and a sound marketing strategy to do this effectively. Without
these efforts, organizations would not be able to satisfy customers or meet the
needs of other stakeholders. For example, having an effective marketing strategy
allows Apple to develop popular products, such as the iPhone, iPad, iWatch, and its
MacBook line of computers. Further, effective planning and strategy allows Cola-
Cola to continue its leadership in soft drinks, make key acquisitions, and continue
its expansion into the lucrative Chinese market. These and other organizations use
sound marketing strategy to leverage their strengths and capitalize on opportunities
that exist in the market. Every organization—from your favorite local restaurant to
giant multinational corporations; from city, state, and federal governments, to chari-
ties such as Habitat for Humanity and the American Red Cross—develops and imple-
ments marketing strategies.
How organizations plan, develop, and implement marketing strategies is the
focus of this book. To achieve this focus, we provide a systematic process for devel-
oping customer-oriented marketing strategies and marketing plans that match an
organization to its internal and external environments. Our approach focuses on
real-world applications and practical methods of marketing planning, including the
process of developing a marketing plan. The chapters of this book focus on the
steps of this process. Our goal is to give the reader a deeper understanding of mar-
keting planning, the ability to organize the vast amount of information needed to
complete the planning process, and an actual feel for the development of marketing
plans.
In this first chapter, we review some of the major challenges and opportunities
that exist in planning marketing strategy in today’s economy. We also review the
nature and scope of major marketing activities and decisions that occur throughout
the planning process. Finally, we look at some of the major challenges involved in
developing marketing strategy.

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2 Chapter 1 • Marketing in Today’s Economy

BEYOND THE PAGES 1.1

Thriving in Commodity Hell1 industry hard in 2008. To counteract the down-
turn, Southwest expanded routes by acquiring
Have you noticed that regardless of the industry,
rival companies such as AirTran. The company
most goods and services offered by competing
also stands apart from others with its innovative
companies are eerily the same? Most household
“No Bag Fees” policy. Other firms, however,
appliances, such as refrigerators, washing
avoid commodity status through the most basic
machines, and stoves, offer the same basic
of marketing tactics: brand building. Here, firms
features and come in white, beige, black, or stain-
break free from commodity status by developing
less steel. Virtually all Android-based smartphones
a distinctive brand position that separates them
offer the same features at similar prices. Even air-
and their products from the competition. Firms
line flights from New York to Los Angeles are
that come to mind are Apple, Coca-Cola, and
essentially the same. Everywhere you look, most
Chick-fil-A. By offering compelling reasons for
companies offer the same basic products to the
consumers to buy products, brand building
same customer groups at roughly the same prices.
allows firms to increase margins. Apple, in partic-
This situation is referred to as “commodity hell”
ular, enjoys the highest profit margins of any firm
and it’s a tough situation for most companies.
in the technology sector.
Commoditization is everywhere and is the result
Starbucks is another case in point. Starbucks
of mature markets where goods and services lack
clearly sells one of the most commoditized, ubiq-
any real means of differentiation. Unfortunately
uitous products of all time: coffee. Starbucks
for companies, when customers begin to see all
Chairman Howard Schultz, however, does not
competing products as offering roughly the same
accept that his firm is in the coffee business.
benefits, price is the only thing that matters.
Instead, Schultz sees Starbucks as a “third place”
Commoditization is a consequence of mature
to hang out (with home and work being number 1
industries where slowing innovation, extensive
and number 2, respectively). Through this mental-
product assortment, excess supply, and frugal
ity, Starbucks offers its customers much more
consumers force margins to the floor. Since
than coffee, including wireless Internet access,
firms have few competitive differences, they are
music, food, and relaxation. Starbucks has contin-
unable to increase margins. They must also spend
ued its brand-building activities by introducing
a great deal on promotion to attract new custo-
breakfast combos, Via instant coffee, and the con-
mers. This situation makes firms more vulnerable
tinued push of its Seattle’s Best brand into restau-
to the entry of new competitors. Consider the air-
rants, offices, hospitals, and vending machines.
line industry. Notwithstanding a few minor differ-
Getting out of commodity hell is not an easy
ences, most air travelers see all airlines as being
feat. To do so, firms must give consumers a com-
roughly the same. They all get passengers from
pelling reason to buy their products over compet-
Point A to Point B while offering the same basic
ing products. Ultimately, winning the commodity
customer services. This makes price the driving
game is all about innovation. Consider the firms
force in consumer decision-making and allows
that top Fast Company’s list of the World’s Most
discount airlines such as Southwest and Jet Blue
Innovative Companies for 2014 (in order): Goo-
to steal customers away from traditional full-
gle, Bloomberg Philanthropies, Xiaomi, Dropbox,
service carriers. This same precarious situation
Netflix, Airbnb, Nike, and ZipDial. Each of these
exists in a broad range of industries including
companies offers innovative products, processes,
telephone service, hotels, packaged goods, auto-
or experiences that stand apart from the compe-
mobiles, household appliances, and retailing.
tition; yet each competes in mature industries
As you might expect, low price leaders can
known for commoditization. These companies
do quite well in commoditized markets. South-
prove that innovation and good marketing strat-
west, for example, was profitable for over
egy are the antidotes for commodity hell.
33 years until the economic recession hit the

THE CHALLENGES AND OPPORTUNITIES OF MARKETING

IN TODAY’S ECONOMY
Traditional ideas about marketing strategy began to change forever during the mid-
1990s. Advances in computer, communication, and information technology forever

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 Chapter 1 • Marketing in Today’s Economy 3

changed the world and the ways that marketers reach potential customers. The col-
lapse of the dot-com bubble in the late 1990s was followed by a historic collapse of
the worldwide economy in 2008. The powerhouse companies of the past have weak-
ened and lost relevance in an economy marked by constant change and consumer
skepticism. Consider the following fundamental changes to marketing and business
practice, as well as our own personal buying behavior.

Power Shift to Customers

Perhaps the single most important change during the last two decades is the shift in
power from marketers to consumers. Rather than businesses having the ability to
manipulate customers via technology, customers often manipulate businesses
because of their access to information, the ability to comparison shop, and the con-
trol they have over spending. Individual consumers and business customers can
compare prices and product specifications in a matter of minutes. Using a smart-
phone and the Amazon app, customers can walk Target’s aisles, scan bar codes to
check prices on Amazon, and order items for 2-day delivery while in the store. This
fact is the reason that Target, and other retailers like Best Buy, now price matches
Amazon and other online competitors. In other cases, customers are able to set
their own prices, such as purchasing airline tickets at Priceline.com. Customers can
now interact with one another, as merchants such as Amazon and eBay allow custo-
mers to share opinions on product quality and supplier reliability. As power con-
tinues to shift to customers, marketers have little choice but to ensure that their
products are unique and of high quality, thereby giving customers a reason to pur-
chase their products and remain loyal to them.
Daniel Koebe/Fancy/Corbis

Consumers can instantly find competitors’ prices while in the store.

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4 Chapter 1 • Marketing in Today’s Economy

Massive Increase in Product Selection

The variety and assortment of goods and services offered for sale on the Internet and
in traditional stores is staggering. In grocery stores alone, customers are faced with
countless options in most aisles, such as in cereal and soft drinks. The growth in
online retailing now allows customers to purchase a car from CarsDirect, handmade
gifts from over 1.2 million shops on Etsy, or a case of their favorite wine from
Wine.com. Increased transaction efficiency (e.g., 24/7 access, delivery to home or
office even on weekends) allows customers to fulfill their needs more easily and con-
veniently than ever before. Furthermore, the vast amounts of information available
online has changed the way we communicate, read the news, and entertain our-
selves. Customers can now have the news delivered to them automatically via smart-
phone apps, such as Flipboard, that pull from hundreds of sources. This radical
increase in product selection and availability has exposed marketers to inroads by
competitors from every corner of the globe.

Audience and Media Fragmentation

Changes in media usage and the availability of new media outlets have forced mar-
keters to rethink the way they communicate with potential customers. Since the
advent of cable television in the 1970s, mass media audiences have become increas-
ingly fragmented. Television audiences, for example, shifted from the big three net-
works (ABC, CBS, NBC) and began watching programming on ESPN, HGTV,
Nickelodeon, and the Discovery Channel. When the growth of the Internet, satellite
radio, and mobile communication is added to this mix, it becomes increasingly diffi-
cult for marketers to reach a true mass audience. Media audiences have become
fragmented due to (1) the sheer number of media choices we have available today,
and (2) the limited time we have to devote to any one medium. Today, customers
increasingly get information and news from Facebook and Twitter rather than the
New York Times or CBS. They spend a growing amount of time interacting with
handheld devices than they do reading magazines, listening to the radio, or watching
television. As shown in Exhibit 1.1, consumer usage of traditional media is declining,
while the usage of mobile media is on the rise. However, despite the challenge of
reaching mass audiences today, media fragmentation does have a big advantage: It
is easier to reach small, highly targeted audiences who are more receptive to specific
marketing messages.

Changing Value Propositions

Even before “The Great Recession” began in 2008, consumers and business
buyers were already facing increasing costs associated with energy, food, building

EXHIBIT 1.1 Change in Daily Media Usage by U.S. Adults, 2010–2014.

Percent Change (%)

Television 3.7
Desktop Online −13.6
Tablets 676.2
Smartphones 235.0
Radio −15.5
Newspapers −9.4
Magazines −34.9

SOURCE: Statista, “Average Daily Media Use in the United States from 2010 to 2014,” Statista, http://www.statista.com/
statistics/270781/average-daily-media-use-in-the-us/, accessed February 18, 2015.

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 Chapter 1 • Marketing in Today’s Economy 5

materials, and other essentials. Then, as the economy weakened, buyers were forced
to tighten their belts and look for other ways to lower expenses. This trend actually
began after the dot-com collapse as consumers saw for the first time that they could
bypass some types of firms and do things for themselves. For example, travel agents
and real estate agents have been hit hard by e-commerce. Many customers now turn
to Travelocity and Expedia, rather than travel agents, for assistance in booking air-
line tickets, cruises, or hotel stays. A similar change has taken place in the real estate
industry as buyers are moving their house hunting online, while sellers are increas-
ingly taking the “for sale by owner” route. Consequently, many marketers learned a
tough lesson: In situations where customers see goods and services as commodities,
they will turn to the most convenient, least-expensive alternative.
Today, many of these same consumers face pay cuts or losing their jobs in addi-
tion to increased expenses. These and other economic hardships have forced con-
sumer and business buyers to rethink value propositions and focus on the
importance of frugality. The effects on business have been dramatic. For example,
Radio Shack filed for Chapter 11 bankruptcy in early 2015 in the face of a highly
commoditized market and stiff competition from other electronics retailers, particu-
larly Amazon.2 A similar shakeout is happening in the book retailing segment. Bor-
ders, for instance, closed its doors after fierce competition from Barnes & Noble,
Amazon, Walmart, and Target lured its shoppers away. Likewise, e-book readers,
like Amazon’s Kindle, have had a profound impact on traditional book publishing.
Because books have become highly commoditized, consumers typically search for
the lowest prices rather than the fringe benefits offered by traditional bookstores.
E-book readers add to that by being more ecologically advantageous. This is the
essence of being frugal, as customers look for ways to cut spending on unnecessary
parts of their lives.

Shifting Demand Patterns

In some cases, changes in technology have shifted customer demand for certain
product categories. News is one well-known example, where traditional newspapers
are slowly disappearing while online and mobile news continues to grow. Now, many
newspaper companies have folded, some are on the brink of folding, while others
have cut publication to only a few days per week. Another example is the explosive
growth in the digital distribution of music and video. The success of Apple’s iTunes,
YouTube, Spotify, and Netflix, along with the continuing integration of television and
computers, has dramatically shifted demand for the music and movie industries. Hol-
lywood film studios are grappling with soft demand in theaters and the declining
popularity of DVDs as customers increasingly look for online movie options, or for
other forms of entertainment such as video games. This trend ultimately led to the
demise of industry pioneer Blockbuster video in 2011.

Privacy, Security, and Ethical Concerns

Changes in technology have made our society much more open than in the past. As a
result, these changes have forced marketers to address real concerns about security
and privacy, both online and offline. The fallout from the massive data breach at Tar-
get in 2013 is still being felt today. The estimated loss to Target from thieves hacking
into its systems is roughly $148 million, not to mention the losses incurred by Target’s
customers.3 Further, businesses have always collected routine information about their
customers. Now, customers are much more attuned to these efforts and the purposes
for which the information will be used. Though customers appreciate the convenience
of e-commerce and mobile access to information, they want assurances that their
information is safe and confidential. Concerns over privacy and security are especially
acute with respect to online businesses such as Facebook, Google, mobile banking,

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6 Chapter 1 • Marketing in Today’s Economy

EXHIBIT 1.2 The Children’s Online Privacy Protection Act (COPPA).

The Children’s Online Privacy Protection Act applies to operators of commercial websites and
online services that attempt to collect personal information from children under the age of
13. The law explains what must be included in the firm’s privacy policy, when and how to
seek verifiable consent from a parent or guardian, and the firm’s responsibilities to protect
children’s privacy and safety. Firms cannot evade the law’s provisions by claiming that chil-
dren under 13 cannot visit their sites, nor can they make information optional or ask the
visitor’s age.
In implementing the provisions of COPPA, the FTC issued the Children’s Online Privacy
Protection Rule, which is designed to give parents control over the information that is col-
lected from their children. The rule requires website operators to:
1. Determine if their company is a website or online service that collects personal informa-
tion from kids under 13.
2. Post a privacy policy that complies with COPPA.
3. Notify parents directly before collecting personal information from their kids.
4. Get parents’ verifiable consent before collecting information from their kids.
5. Honor parents’ ongoing rights with respect to information collected from their kids.
6. Implement reasonable procedures to protect the security of kids’ personal information.

SOURCE: United States Federal Trade Commission, Bureau of Consumer Protection, http://www.ftc.gov/tips-advice/
business-center/guidance/childrens-online-privacy-protection-rule-six-step-compliance, accessed February 18, 2015.

and mobile devices that can potentially track every move we make, literally. These
same concerns are also keen with respect to children. For example, many well-
known and respected companies, including Mrs. Fields Cookies, Sony BMG, and Her-
shey Foods, have been fined for violating the standards of the Children’s Online Pri-
vacy Protection Act (COPPA). For example, Playdom, Inc., an online gaming
company owned by Disney, paid a $3 million fine to the Federal Trade Commission
for collecting, using, and disclosing personal information from children under the
age of 13 without their parents’ permission. This was the largest civil penalty ever lev-
ied for a violation of COPPA, which is overviewed in Exhibit 1.2.4

Unclear Legal Jurisdiction

When a company does business in more than one country (as many Internet-based
firms do), that company often faces a dilemma with respect to differing legal sys-
tems. Today, this difference is especially keen for firms that do business in both the
United States and China. Google, for example, faces a difficult situation in dealing
with the Chinese government’s censorship demands. Though Google is a U.S. firm,
it must comply with the Chinese request by operating a completely separate search
service that censors information considered sensitive by the Chinese government.5
Doing business in China is also an issue with respect to protection of intellectual
property rights, where Chinese laws do not offer the same protections found in the
United States. For example, the U.S. International Trade Commission estimates that
Chinese piracy costs the U.S. economy in excess of $48 billion each year. Most of this
is in the information sector, with high-tech and manufacturing also showing sizable
losses due to infringements of intellectual property rights by Chinese firms.6
Another important legal issue involves the collection of sales tax for online
transactions. In the early days of e-commerce, most online merchants did not collect
sales taxes for online transactions—giving them a big advantage against store-based
merchants. In fact, a 1992 U.S. Supreme Court decision exempted out-of-state retai-
lers from collecting sales taxes in states where they had no physical presence.
States countered that they were losing millions in yearly tax revenue, but were
poorly organized to mount a collection effort. In 2003, major retailers—including

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 Chapter 1 • Marketing in Today’s Economy 7

Walmart, Target, and Toys “R” Us—in an agreement with a consortium of 38 states
and the District of Columbia, agreed to collect online sales taxes. However, many
online merchants still did not charge sales taxes. Today, states—much more orga-
nized than before—estimate that they lose a collective $23 billion per year in lost
tax revenue. Amazon, for example, still collects sales tax from only 74 percent of
U.S. consumers.7
Although the full effect of these challenges will not be recognized for some time,
circumstances have forced businesses to move ahead by adjusting their marketing
activities at both the strategic and tactical levels. As we review the major marketing
concepts and activities in this chapter, we will look at how today’s challenges have
affected strategic planning in these areas.

BASIC MARKETING CONCEPTS

Marketing is many different things. Many people, especially those not employed in
marketing, see marketing as a function of business. From this perspective, marketing
parallels other business functions such as production/operations, research, manage-
ment, human resources, and accounting. As a business function, the goal of market-
ing is to connect the organization to its customers. Other individuals, particularly
those working in marketing jobs, tend to see marketing as a process of managing
the flow of products from the point of conception to the point of consumption. The
field’s major trade organization, the American Marketing Association, has changed
the definition of marketing over time to reflect changes in the economic and busi-
ness environments. From 1985 until 2005, the AMA defined marketing this way:
Marketing is the process of planning and executing the conception, pric-
ing, promotion, and distribution of ideas, goods, and services to create
exchanges that satisfy individual and organizational objectives.8
Note how this definition focuses on the four Ps, or the marketing mix (product,
price, place, and promotion). In 2005, the AMA changed the definition to better
reflect the realities of competing in the marketplace:
Marketing is an organizational function and a set of processes for creat-
ing, communicating, and delivering value to customers and for manag-
ing customer relationships in ways that benefit the organization and its
stakeholders.9
This definition shifts the focus away from the marketing mix and toward value
creation for customers. In 2007, the AMA changed the definition of marketing again:
Marketing is the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value
for customers, clients, partners, and society at large.10
Notice that the changes in the definition are not merely cosmetic in nature. The
older definitions focused on the process of marketing to deliver value and manage
customer relationships. The most recent definition shifts from “value” to “offerings
that have value.” Also, the notion of stakeholders is made more explicit. Why would
the AMA make these changes? One reason has to do with commoditization as dis-
cussed in Beyond the Pages 1.1. Breaking free from commodity status means finding
ways to differentiate the offering. The new definition recognizes that differentiation
can come from any part of the offering, whereas older conceptualizations of market-
ing placed the burden of differentiation on the product itself. The second reason has
to do with marketing’s broader role in today’s corporation. Firms don’t just sell pro-
ducts; they sell the firm as a whole. Corporate relationships with partners, media,
government, investors, employees, and society are every bit as important as relation-
ships with customers. These types of relationships—which grow and thrive on

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8 Chapter 1 • Marketing in Today’s Economy

exceptional value—are an absolute necessity in the commodity-driven status of

many product markets. While the older definitions of marketing had a decidedly
transactional focus, the new definition emphasizes long-term relationships that pro-
vide value for both the firm and its stakeholders.
A final way to think about marketing relates to meeting human and social needs.
This broad view links marketing with our standard of living, not only in terms of
enhanced consumption and prosperity, but also in terms of society’s well-being.
Through marketing activities, consumers can buy cars from South Korea and wines
from South Africa; and organizations can earn a viable profit, making both employ-
ees and shareholders happy. However, marketing must also bear responsibility for
any negative effects it may generate. This view demands that marketers consider
the social and ethical implications of their actions, and whether they practice good
citizenship by giving back to their communities. As exemplified in the New Belgium
Brewing case associated with this text, firms can successfully meet human and
social needs through socially responsible marketing and business practices.
Let’s take a closer look at several basic marketing concepts. As we will see,
ongoing changes in today’s economy have forever altered our way of thinking about
these foundational aspects of marketing.

What Is a Market?
At its most basic level, a market is a collection of buyers and sellers. We tend to think
of a market as a group of individuals or institutions that have similar needs that can
be met by a particular product. For example, the housing market is a collection of
buyers and sellers of residential real estate, while the automobile market includes
buyers and sellers of automotive transportation. Marketers or sellers tend to use
the word “market” to describe only the buyers. This basic understanding of a market
has not changed in a very long time. What has changed, however, is not so much the
“what” but the “where” of a market; that is, the location of the buyers and sellers. In
both consumer markets (like housing and automobiles) and business markets (like
replacement parts and raw materials), the answer to the “where” question is quickly
becoming “anywhere” as markets become less defined by geography.
Until recently, marketers have considered a market to be a physical location
where buyers and sellers meet to conduct transactions. Although those venues
(e.g., grocery stores, malls, flea markets) still exist, technology mediates some of
the fastest growing markets. Early in the beginning of the dot-com era, the term
marketspace was coined to describe these electronic marketplaces unbound by time
or space.11 Today, we refer to these electronic marketplaces as online markets or
e-commerce. In e-commerce, physical goods, services, and information are
exchanged through the Internet. Some of the largest marketspaces, such as Amazon,
eBay, and Monster, are now household names. In fact, Amazon has become the
e-commerce equivalent of a shopping mall as the company now sells shoes, apparel,
jewelry, beauty aids, and sporting goods in addition to its traditional offerings of
books and electronics. E-commerce also exists in the business-to-business realm.
The shift from physical to electronic marketplaces has significant ramifications for
marketers. The fact that customers can shop, place orders, and exchange informa-
tion 24/7 means that these businesses must be capable of operating in that same
time frame. In effect, online markets never take a break at closing time—they never
close. It also means that firms lose some control over the information that is dissem-
inated about their company or products. Through blogs, discussion forums, or even
Twitter, customers can exchange information about an online merchant outside the
merchant’s own website. Furthermore, the substitution of technology for human
interaction can be both a blessing and a curse. Some sites, like CarsDirect, are suc-
cessful because they eliminate the hassle of dealing with another human in the
buying process. Many customers, however, have been slow to embrace electronic

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 Chapter 1 • Marketing in Today’s Economy 9

EXHIBIT 1.3 Common Metamarkets and Participants.

Metamarkets
Automotive Home Ownership Parenting
Metamediaries www.edmunds.com www.realtor.com www.parenting.com
www.carsdirect.com www.zillow.com www.babycenter.com
www.kbb.com www.bhg.com newparent.com
Metamarket Participants Buyers Homeowners Parents
Manufacturers Builders Doctors
Car dealerships Real estate agents Retailers
Banks Mortgage companies Baby supply manufacturers
Credit unions Insurance companies Insurance firms
Credit reporting services Home inspectors and appraisers Financial planners
Insurance firms Pest control services Educational providers
Rating services Magazines Toy manufacturers
Magazines Television programs Television programs
Television programs Retailers Movies
Aftermarket parts/accessories
Repair services
Car rental firms
Auction houses

markets because they lack the human element. In these cases, the design and imple-
mentation of the online experience is a serious challenge for online firms. Finally,
the wealth of information available through e-commerce not only makes customers
more educated than ever before, but also gives customers increased power through
comparison shopping and price negotiation.
Another interesting shift related to markets is the advent of metamarkets and
metamediaries. A metamarket is a cluster of closely related goods and services that
center around a specific consumption activity. A metamediary provides a single access
point where buyers can locate and contact many different sellers in the metamar-
ket.12 Assume for example that you are engaged to be married. How many different
buying decisions will you and your fiancé have to make in the coming months? How
many newspaper ads, websites, and magazines will you explore? Although the busi-
nesses and decisions are diverse, they all converge on the single theme of wedding
planning. This is the driving principle behind a metamarket. Exhibit 1.3 shows exam-
ples of common metamarkets and metamediaries. Although customers don’t use
these terms, they fully understand the concept of finding information and solutions
in one place. For example, Parenting.com has become the Internet’s preeminent
metamediary for information and advice related to parenting, pregnancy, and chil-
dren. Similarly, Edmunds.com is a popular site devoted to all things related to buying
and owning a vehicle. Metamediaries like these fulfill a vital need by offering quick
access and one-stop shopping to a wide variety of information, goods, and services.

What Is Exchange?
Closely related to the concept of a market, our ideas about exchange have changed
in recent years. Exchange is traditionally defined as the process of obtaining some-
thing of value from someone by offering something in return; this usually entails
obtaining products for money. For exchange to occur, five conditions must be met:

1. There must be at least two parties to the exchange. Although this has
always been the case, the exchange process today can potentially include an
unlimited number of participants. Online auctions provide a good example.
Customers who bid on an item at eBay may be one of many participants to the

Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203
 Another Random Document on
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 “I think it’s a great shame,” said Tommy Smith; “and I think you’re a
wicked bird to do it. You ought to be shot for doing such things, and
when I am grown up, and have a gun”—
“Wait a bit,” said the owl. “Do you know what you would be doing if
you were to shoot me? Why, you would be shooting the most useful
bird in the whole country. You wouldn’t want to do that, I suppose?”
Tommy Smith didn’t quite know what to say to this. “Of course, if
you really are very useful,” he began—
“Well, if you were a farmer,” the owl went on, “I don’t suppose you
would like to have all your corn, and wheat, and hay, and everything
eaten up by rats and mice, would you?”
“Oh no,” said Tommy Smith.
“That is what would happen, though, if it wasn’t for me,” said the
owl. “You see, I eat the rats and mice. They are my proper food,
especially the mice. A full-grown rat is rather large for me—too large to
swallow whole, at anyrate; and I like to swallow things whole if I can.
But the mice and the young rats are just the right size, and you’ve no
idea what a lot of them I eat. I have a very good appetite, I can tell
you, and so have my children. Of course, I have to feed them as well as
myself, so there is plenty of work for me to do. Every night I fly round
the fields and farmyards, and when I see a mouse, or a rat, or a mole,
or a shrew-mouse, down I pounce upon it. Now think how many owls
there are all over the country, and think what thousands and thousands
of rats and mice they must catch every night, and then think what a lot
of good they must do. Or, here is another way. Think how many rats
and mice there are even now, although there are so many owls to catch
them, and think how much harm they do, and think how many more
there would be, and how much more harm they would do if there were
no owls to catch them. That is a lot of thinking is it not? Well, have you
thought of it all?”
“I’ve tried to,” said Tommy Smith.
“It’s difficult, isn’t it?” said the owl. “It’s all very well to say ‘think,’
but the fact is, you can’t think what a useful bird an owl is—and
especially a barn-owl. But, perhaps, you don’t believe me.”
“Oh yes, I do,” said Tommy Smith. “I always thought that owls killed
rats and mice.”
 “You can prove it, if you like,” said the owl, “and I’ll tell you how. I
told you that I liked to swallow animals whole, so, of course, everything
goes down—fur, bones, feathers (if it does happen to be a bird), and
all. But I can’t be expected to digest such things as that, so I have to
get rid of them in some way or other. Well, what do I do? Why, I bring
them all up again in pellets about the size and shape of a potato.”
“Oh, but potatoes are of different sizes and shapes,” said Tommy
Smith.
“I mean a smallish-sized oblong potato,” said the owl. “That is what
my pellets look like, only they are of a greyish sort of colour. Sometimes
they are quite silvery.”
“How funny!” said Tommy Smith.
“How pretty, I suppose you mean,” said the owl. “Yes, they are
pretty. Now, if you look about under the trees in the fields where I have
been sitting, you will see these pretty pellets of mine lying on the grass.
Pick them up and pull them to pieces, and you will find that they are
nothing but the fur, and skulls, and bones of mice, and shrew-mice, and
young rats. Sometimes the skull and beak of a bird will be there, and
then it will almost always be a sparrow’s. Sparrows are a nuisance, you
know, because there are too many of them. But, as for mice, there will
be three or four of them in every pellet (you can count them by the
skulls), and you know what a nuisance they are. Let anyone who is not
quite sure whether I am a useful bird or not look at my pellets. Then
he’ll know, and if he shoots me after that, he must either be very
stupid, or very wicked, or both. Well, do you still mean to shoot me
when you grow up?”
“Oh no,” said Tommy Smith, “I never will, now that I know how
useful you are, and what a lot of good you do.”
The owl looked very pleased at this, so Tommy Smith thought he
would take the opportunity to ask his advice about something which
had been puzzling him a good deal. “Please, Mr. Owl,” he said, “I
promised the rat not to kill him any more. But, if rats and mice do such
a lot of harm, oughtn’t I to kill them whenever I can?”
“Certainly not,” said the owl. “A little boy should be kind to animals,
and not trouble his head about anything else. No, no; be kind to
animals and leave the rats and mice to me.” That was the wise owl’s
advice to Tommy Smith, and I think it was very good advice.
“Where do you live, Mr. Owl?” (that was the next question that
Tommy Smith asked). “I suppose it is in the woods.”
“No,” the owl answered. “Barn-owls do not live in the woods. The
tawny-owls and the wood-owls do. Woods are good enough for them,
but we like to have more comfortable surroundings. We don’t object to
trees, of course. A nice hollow tree is a great comfort, and I, for one,
could not do without it. But it must be within a reasonable distance of a
village, and the closer it is to a church, the better I like it.”
“Do you, Mr. Owl,” said Tommy Smith.
“Yes,” said the owl. “I don’t mind how far I am from a railway
station or even a post office, but the church must be near.”
“I suppose you like to sit in the tower, Mr. Owl,” said Tommy Smith.
“I should think so,” said the owl; “the belfry is there, you know, and
I am so fond of that. It is so nice to sit in one’s belfry and think of one’s
barns, and farms, and haystacks. And then, when the bells ring, you
can’t think what fun that is—especially on the first day of January when
they ring in the New Year. I get quite excited then, and I give a scream,
and throw myself off the old tower, and fly round it, and whoop and
shriek until I seem to be one of the mad bells myself. For they are mad
then, you know. They go mad once every year—on New Year’s day.
People come out to listen sometimes. They look up into the air, and say,
‘Hark! There they go. It is the New Year now. They are ringing it in.’
Then all at once the bells stop ringing, and it is all over; the New Year
has been rung in. But what there is new about it is more than I can
say, wise as I am. It all seems to go on just the same as before, and
sometimes I wonder what all the fuss has been about. I have never
been able to see any difference myself between the last minute of the
thirty-first of December and the first minute of the first of January. On a
cold rainy night especially, they seem very much alike. But, of course,
there must be a difference, or the bells wouldn’t ring as they do.”
“Oh, they ring because it’s the new year, Mr. Owl,” said Tommy
Smith.
“Yes, that’s it,” said the owl; “but I should never have found it out
without them.”
 Tommy Smith began to think that the owl couldn’t be so very wise
after all, or surely he would have known the difference between the old
year and the new year. He was going to explain it to him thoroughly,
but he was getting rather sleepy by this time, and it is difficult to
explain things when one is sleepy.
So he didn’t, and the owl went on with, “Oh yes, we love churches,
we owls do. We have our nests there, you know, and we could not find
a safer place to make them in. Anywhere else we might be disturbed
and rudely treated, for people are not nearly so polite to us as they
ought to be. But we are always safe in a church, for no one would be
so wicked as to annoy us there. Besides, a church is a wonderful place
to hide in. People pass by it, and come into it, and sit down and go out
again, without having any idea that we are there, and have been there
all the time. They never think of that.”
“What part of the church do you build your nest in, Mr. Owl?” said
Tommy Smith.
“Oh, that is in the belfry too,” said the owl. “The belfry is my part of
the church. I think it must have been built for me, it suits me so well. I
am called the belfry-owl sometimes, and that is a very good name for
me too. But now don’t ask me any more questions, because you are
getting sleepy, and I have something to tell you before you go to
sleep.”
And then the owl told all about the grand meeting that the animals
had held in the woods, and all that they had said to each other, and
what they had decided to do to try and make Tommy Smith a better
boy to animals, and how, at first, they had wanted to hurt him (or even
to kill him), because they were so angry with him, until the owl had
persuaded them not to. It was all the wise owl’s doing. He knew that
the best way to make a little boy kind to animals was to teach him
something about them; and who could teach him so well as the animals
themselves?
 CHAPTER XII.
THE LEAVE-TAKING
“All ‘Tommy Smith’s Animals’ take leave with joy,
For they know Tommy Smith is a different boy.”

W
HEN Tommy Smith had gone to sleep, the owl flew away, and
he flew to the same place where he had met the other
animals before, and found them all there again waiting for
him (of course, it had been arranged). Then all the animals
began to tell each other about the conversations they had had with
Tommy Smith, and what a very much better boy he had become. They
were all so glad; and, of course, they all thanked the owl, because it
had been his idea.
Then the owl thanked all the animals for thanking him, and he said
that it was his idea, but that it might just as well have been the idea of
any other animal there, and he wished that it had been, because, then,
he could have called it clever, but now, of course, he couldn’t, for that
would be praising himself,—which would never do. You see, he wanted
to be modest. One ought always to be modest when one makes a
speech. And now (the owl said) he was quite sure that Tommy Smith
would never be unkind to animals any more as long as he lived,
because, just before he flew away, he had asked him to promise that
he wouldn’t. But Tommy Smith had just gone off to sleep then, and so
he had had to promise it in his sleep. “And, you know,” said the owl,
“that when a promise is made in that way, it is always kept.” Then all
the animals clapped their—well, whatever they could clap, and said
“Hurrah!” and the meeting broke up.
 And the owl was right. As Tommy Smith grew older, and became a
big boy, he found that animals did not talk to him any more in the way
they used to do. It seemed as if they only cared to talk to little boys or
girls. But there was one way of having conversations with them, which
he got to like better and better, and that was to go out into the woods
and fields and watch what they were doing. He soon found that that
was quite as interesting as really talking to them. In fact, it was talking
to them in another kind of way, for they kept telling him all about
themselves, only without speaking. And the more Tommy Smith learnt
about them, the more he liked them, until the animals became his very
best friends. Of course, one is never unkind to one’s very best friends,
and, besides, Tommy Smith had given the owl a promise—in his sleep.

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