MARKET-DRIVEN MANAGEMENT

MARKET-DRIVEN MANAGEMENT Strategic and Operational Marketing

Third Edition jean-Jacques Lambin Professor Emeritus, Universite cathoUque de Louvain, Louvain-la-Neuve, Belgium Professore Emerito, Universita degli studi di Milano-Bicocca, Italy

with Isabelle Schuiling Professor, Louvain School of Management Universite cathoUque de Louvain, Louvain-la-Neuve, Belgium

macmillan

Contents List of Figures

xi

List of Tables

xiv

List of Boxes List of Exhibits Preface

xvii •

xix xxi

Acknowledgements

xxiv

About the Authors

xxvii

PART ONE THE CHANGING ROLE OF MARKETING 1

The Marketing Concept 1.1 The marketing concept defined 1.2 Steps in implementing strategic marketing 1.3 More questions about the marketing concept Chapter summary Bibliography

3 12 15 20 20

The Market Orientation Concept

22

2.1 An alternative: the market orientation concept 2.2 The extended model of market orientation 2.3 Actors in the global market 2.4 Three misconceptions in customer orientation 2.5 The costs of a weak market orientation 2.6 The changing marketing organization 2.7 Characteristics of a market-driven organization Chapter summary Appendix 2.1: Market Orientation Questionnaire Bibliography

22 25 28 33 34 36 40 43 44 46

The Impact of Globalization

49

3.1 The development of free trade 3.2 The customization-standardization dilemma

49 52

vi Contents

4

PART TWO

3.3 Questioning the benefits of globalization 3.4 Can marketing alleviate poverty in the world? Chapter summary Bibliography

57 59 65 65

Emerging Values and Issues

67

4.1 The objective of sustainable development 4.2 New eco-sensitive business models 4.3 Affirmation of civil society's power 4.4 The emergence of new values 4.5 Implications for market-driven management 4.6 The impact of Internet technology 4.7 Differential advantages of Internet technology 4.8 The solution approach and the virtual market Chapter summary Notes Bibliography

67 70 74 76 83 83 86 87 94 94 95

UNDERSTANDING CUSTOMER BEHAVIOUR 5

6

7

Customers' Needs Analysis

99

5.1 The notion of generic need 5.2 Motivation of the individual customer 5.3 Structure of the individual customer's needs 5.4 Motivation of the B2B customer Chapter summary Bibliography

99 105 111 116 120 120

The Customer Purchase Behaviour

122

6.1 The different customer roles 6.2 The purchasing process in B2C markets 6.3 The purchasing process in B2B markets 6.4 The product as a bundle of benefits 6.5 Customer relationship management 6.6 Customer postpurchase behaviour 6.7 The satisfaction-loyalty relationship 6.8 Post-recession consumers' behaviour Chapter summary Bibliography

122 124 129 133 135 138 141 144 145 145

,

Measuring Customers'Response

147

7.1 7.2 7.3 7.4 7.5

147 152 156 163 171

Structure of a market information system Marketing research and the scientific method Exploratory research studies Descriptive research studies Causal research studies

Contents vii Chapter summary Bibliography

178 179

PART THREE IMPLEMENTING STRATEGIC MARKETING 8

9

10

11

Needs Analysis Through Market Segmentation

183

8.1 Steps in the strategic segmentation process 8.2 Macro-segmentation analysis 8.3 Development of a macro-segmentation grid 8.4 Micro-segmentation analysis in B2C markets 8.5 Micro-segmentation analysis in B2B markets 8.6 Requirements for effective segmentation 8.7 Emergence of transnational market segments Chapter summary Bibliography

183 184 189 193 204 207 209 210 210

Market Attractiveness Analysis

212

9.1 Basic concepts in demand analysis 9.2 Business opportunity analysis in a virtual market 9.3 Structure of primary demand for consumer goods 9.4 The demand for consumer services 9.5 The demand for industrial goods 9.6 Growth opportunity analysis in existing markets 9.7 The PLC model 9.8 The PLC model as a conceptual framework Chapter summary Bibliography

212 215 218 222 226 228 231 242 244 245

Company Competitiveness Analysis

246

10.1 A growing competitive interdependence 10.2 The notion of competitive advantage 10.3 Forces driving industry competition 10.4 Competitive advantage based on market power 10.5 Competitive advantage based on cost domination 10.6 The international competitive advantage Chapter summary Bibliography

246 248 252 258 268 274 275 276

, •

Market Targeting and Positioning Decisions

278

11.1 Reference market coverage strategies 11.2 The strategic positioning decision 11.3 Positioning response behaviour 11.4 The value chain in differentiation analysis 11.5 Targeting international market segments Chapter summary Bibliography

278 282 284 289 291 295 295

viii

Contents

12

PART FOUR

Formulating a Marketing Strategy

297

12.1 Product portfolio analyses 12.2 The choice of a generic strategy 12.3 Assessing growth opportunities 12.4 Choosing a competitive strategy 12.5 International development strategies Chapter summary Bibliography

297 311 316 324 328 331 332

IMPLEMENTING OPERATIONAL MARKETING 13

14

15

New Product Decisions

335

13.1 The strategic role of innovations 13.2 Organization of the new product development process 13.3 New product idea generation 13.4 New product idea screening 13.5 New product concept development 13.6 Business analysis and marketing programming 13.7 The customer adoption process 13.8 Pricing new products 13.9 Assessing the financial risk Chapter summary Bibliography

335 338 341 345 346 350 353 355 357 359 360

.

Brand Management

362

14.1 Strategic role of branding 14.2 The branded product as a bundle of attributes 14.3 Functions of the brand 14.4 Key brand management concepts 14.5 Building a successful brand 14.6 International branding strategies Chapter summary Bibliography

362 364 367 372 376 382 389 390

Distribution Channel Decisions

391

15.1 The economic role of distribution channels 15.2 Channel design alternatives 15.3 Factors affecting the channel structure 15.4 Vertical marketing systems 15.5 Market coverage strategies 15.6 Communication strategies in the channel 15.7 Distribution cost analysis 15.8 Impact of Internet on channels'decisions Chapter summary Bibliography

391 395 400 402 403 409 411 415 420 420

Contents ix

16

17

18

19

The Battle of the Brands in B2C Markets

422

16.1 Major changes in the retailing sector 16.2 Changes in consumers' retail buying behaviour 16.3 Differentiation strategies of the retailer 16.4 Private label development 16.5 Strategic objectives of distributors 16.6 Strategic options for manufacturers' brands Chapter summary Bibliography

423 424 425 427 428 429 432 432

Pricing Decisions

434

17.1 The customer's perception of price 17.2 Cost-based pricing procedures 17.3 Demand-oriented pricing procedures 17.4 Competition-oriented pricing procedures 17.5 Impact of Internet on pricing decisions Chapter summary Bibliography

434 439 445 459 461 466 466

Marketing Communication Decisions

469

18.1 The role and nature of marketing communication 18.2 The communication process 18.3 Selling or personal communication 18.4 Sales promotion decisions 18.5 Public relations decisions Chapter summary Bibliography •

469 473 476 484 491 495 495

Advertising Offline and Online Decisions

497

19.1 The value of advertising information 19.2 Alternative advertising objectives 19.3 The development of an advertising campaign 19.4 Platforms of advertising communication 19.5 Forms of advertising communication 19.6 Media planning , 19.7 Advertising budget decisions 19.8 Evolution of Internet spending 19.9 Benefits of Internet advertising 19.10 Internet: a customer-dominated medium 19.11 Online communication objectives 19.12 Key online communication tools 19.13 The emergence of social networks and virtual communities Chapter summary . Bibliography

497 498 502 505 506 507 509 517 517 518 519 519 523 531 531

x

Contents

PART FIVE

IMPLEMENTATION OF MARKET-DRIVEN MANAGEMENT 20

21

Index

Measuring Marketing Performance

535

20.1 The challenge of marketing measurement 20.2 The Customer Response Cycle 20.3 Usefulness of marketing models 20.4 Marketing impact of stock market values Chapter summary Bibliography

535 538 543 545 548 548

The Strategic and Operational Marketing Plan

550

21.1 Overview of marketing planning 21.2 Content of a strategic marketing plan 21.3 Objectives and programmes 21.4 Selection of the strategic path 21.5 Design of the marketing programme 21.6 Vulnerability analysis and contingency planning Chapter summary Bibliography

550 553 564 568 570 576 581 581

583