Marketing An Introduction 12th Edition PDF Free Download Philip Kotler

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Published on June 7, 2016

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slide 2: Download Marketing An Introduction 12th Edition by Armstrong and Kotler PDF Ebook for Free Download for free: http://bit.ly/MarkInt12thPDFFree Tags: introduction to marketing kotler marketing pdf marketing an introduction 11th edition marketing an introduction 12th edition Marketing An Introduction ebook marketing an introduction pdf Marketing An Introduction pdf download marketing textbook philip kotler marketing slide 3: 149127 Cust: Pearson Au: Armstrong Pg. No. 7 Title: Marketing: An Introduction 12/e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARlISlE Publishing Services Brief Contents PArt 1 DeFInInG mArKetInG AnD the mArKetInG ProCess 30 1 Marketing: Creating and Capturing Customer Value 30 2 Company and Marketing Strategy: Partnering to Build Customer Value and Relationships 64 PArt 2 UnDerst AnDInG the mArKetPlACe AnD CUstomer VAlUe 92 3 Analyzing the Marketing Environment 92 4 Managing Marketing Information to Gain Customer Insights 124 5 Understanding Consumer and Business Buyer Behavior 158 PArt 3 DesIGnInG A CUstomer VAlUe–DrIVen strA teGy AnD mIX 196 6 Customer-Driven Marketing Strategy: Creating Value for Target Customers 196 7 Products Services and Brands: Building Customer Value 228 8 New Product Development and Product Life-Cycle Strategies 264 9 Pricing: Understanding and Capturing Customer Value 292 10 Marketing Channels: Delivering Customer Value 330 11 Retailing and Wholesaling 362 12 Engaging Consumers and Communicating Customer Value: Advertising and Public Relations 394 13 Personal Selling and Sales Promotion 430 14 Direct Online Social Media and Mobile Marketing 462 PArt 4 eXtenDInG mArKetInG 494 15 The Global Marketplace 494 16 Sustainable Marketing: Social Responsibility and Ethics 522 APPenDIX 1 Company Cases 551 APPenDIX 2 Marketing Plan 585 APPenDIX 3 Marketing by the Numbers 597 Glossary 615 References 625 Index 651 7 A01_ARMS1276_12_SE_FM.indd 7 11/04/14 2:39 PM slide 4: 149127 Cust: Pearson Au: Armstrong Pg. No. 30 Title: Marketing: An Introduction 12/e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARlISlE Publishing Services Over 10 million students improved their results using the Pearson MyLabs. Visit www.pearsonglobaleditions.com/mymarketinglab for simulations tutorials and end-of-chapter problems. 1 Marketing Creating and Capturing Customer Value Part 1: Defining Marketing anD the Marketing ProCess ChaPters 1–2 Part 2: Understanding the MarketPlace and cUstoMer ValUe chaPters 3–5 Part 3: designing a cUstoMer ValUe–driVen strategy and Mix chaPters 6–14 Part 4: extending Marketing chaPters 15–16 ChaPter roaD MaP objective outline objeCtiVe 4 Discuss customer relationship management and identify strategies for creating value for customers and capturing value from customers in return. Building Customer Relationships 41–49 Capturing Value from Customers 49–52 objeCtiVe 5 Describe the major trends and forces that are changing the marketing landscape in this age of relationships. The Changing Marketing Landscape 52–57 objeCtiVe 1 Define marketing and outline the steps in the marketing process. What Is Marketing 32–34 objeCtiVe 2 explain the importance of understanding the marketplace and customers and identify the five core marketplace concepts. Understanding the Marketplace and Customer Needs 34–36 objeCtiVe 3 identify the key elements of a customer- driven marketing strategy and discuss the marketing management orientations that guide marketing strategy. Designing a Customer-Driven Marketing Strategy 37–40 Preparing an Integrated Marketing Plan and Program 40–41 Previewing the Concepts this chapter introduces you to the basic concepts of marketing. We start with the question: What is marketing simply put marketing is managing profitable cus- tomer relationships. the aim of marketing is to create value for customers in order to capture value from customers in return. next we discuss the five steps in the marketing process—from understanding customer needs to designing customer- driven marketing strategies and integrated marketing programs to building cus- tomer relationships and capturing value for the firm. Finally we discuss the major trends and forces affecting marketing in this new age of digital mobile and social media. Understanding these basic concepts and forming your own ideas about what they really mean to you will provide a solid foundation for all that follows. let’s start with a good story about marketing in action at amazon.com by far the world’s leading online and digital marketer. the secret to amazon’s success it’s really no secret at all. amazon is flat-out customer obsessed. it has a deep-down passion for creating customer value and relationships. in return customers reward amazon with their buying dollars and loyalty. you’ll see this theme of creating customer value in order to capture value in return repeated throughout this chapter and the remainder of the text. MyMarketingLab ™ Improve Y our Grade M01_ARMS6788_12_SE_CH01.indd 30 04/04/14 2:18 PM slide 5: 149127 Cust: Pearson Au: Armstrong Pg. No. 31 Title: Marketing: An Introduction 12/e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARlISlE Publishing Services 31 first stop amazon.com: Obsessed with Creating Customer Value and Relationships When you think of shopping online chances are good that you think first of Amazon. The online pioneer first opened its virtual doors in 1995 selling books out of founder Jeff Bezos’s garage in suburban Seattle. Amazon still sells books—lots and lots of books. But it now sells just about everything else as well from music elec- tronics tools housewares apparel and groceries to fashions loose diamonds and Maine lobsters. From the start Amazon has grown explosively. Its annual sales have rocketed from a mod- est 150 million in 1997 to more than 61 billion today. During the past five years despite a shaky economy Amazon’s revenues have grown by an amazing 35 percent annually. This past holiday season Amazon.com sold more than 26.5 million items to its 188 million active customers worldwide—that’s 306 items per second. Analysts predict that by 2015 Amazon will become the youngest company in history to hit 100 billion in revenues it took Walmart 34 years. That would make it the nation’s second-largest retailer trailing only Walmart. What has made Amazon such an amazing success story Founder and CEO Bezos puts it in three simple words: “Obsess over customers.” To its core the company is relentlessly customer driven. “The thing that drives everything is creating genuine value for customers” says Bezos. Amazon believes that if it does what’s good for customers profits will follow. So the company starts with the customer and works back- ward. Rather than asking what it can do with its current capa- bilities Amazon first asks: Who are our customers What do they need Then it develops whatever capabilities are required to meet those customer needs. At Amazon every decision is made with an eye toward improving the Amazon.com customer experi- ence. In fact at many Amazon meetings the most influential figure in the room is “the empty chair”— literally an empty chair at the table that represents the all- important customer. At times the empty chair isn’t empty but is occupied by a “Customer Experience Bar Raiser” an employee who is specially trained to rep- resent customers’ interests. To give the empty chair a loud clear voice Amazon relentlessly tracks performance against nearly 400 measurable customer-related goals. Amazon’s obsession with serving the needs of its customers drives the company to take risks and innovate in ways that other companies don’t. For example when it noted that its book-buying customers needed better access to e-books and other digital content Amazon developed the Kindle e-reader its first-ever original product. The Kindle took more than four years and a whole new set of skills to develop. But Amazon’s start-with-the-customer thinking paid off handsomely. The Kindle is now the company’s number-one selling product and Amazon.com now sells more e-books than hardcovers and paperbacks combined. What’s more the company’s new Kindle Fire tablet now leads the market for low-priced tablet computers. Thus what started as an effort to improve the customer experience now gives Amazon a powerful presence in the burgeon- ing world of digital and social media. Not only does the Kindle allow access to e-books music videos and apps sold by Amazon it makes interacting with the online giant easier than ever. Customers use their Kindles to shop Amazon.com and interact with the company on its blogs and social media pages. “We see our customers as invited guests to a party and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little better.” – Jeff Bezos amazon.com does much more than just sell goods online. it creates satisfying online customer experiences. “the thing that drives everything is creating genuine value for customers” says amazon founder and Ceo bezos shown here. Contour by Getty Images. amazon.com’s deep-down passion for creating customer value and relationships has made it the world’s leading online retailer. amazon has become the model for companies that are obsessively and successfully focused on delivering customer value. M01_ARMS6788_12_SE_CH01.indd 31 04/04/14 2:19 PM slide 6: 149127 Cust: Pearson Au: Armstrong Pg. No. 32 Title: Marketing: An Introduction 12/e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARlISlE Publishing Services Perhaps more important than what Amazon sells is how it sells. Amazon wants to deliver a special experience to every customer. Most Amazon.com regulars feel a surprisingly strong relationship with the company especially given the almost complete lack of actual human interaction. Amazon obsesses over making each customer’s experience uniquely personal. For example the Amazon.com site greets customers with their very own personalized home pages and its “Recommenda- tions for You” feature offers personalized product recommendations. Amazon was the first company to sift through each customer’ s past pur- chases and the purchasing patterns of customers with similar profiles to come up with personalized site content. Amazon wants to personalize the shopping experience for each individual customer. If it has 188 mil- lion customers it reasons it should have 188 million stores. Visitors to Amazon.com receive a unique blend of benefits: huge selection good value low prices and convenience. But it’s the “discovery” factor that makes the buying experience really special. Once on the Amazon.com site you’re compelled to stay for a while— looking learning and discovering. Amazon.com has become a kind of online community in which customers can browse for products research purchase alternatives share opinions and reviews with other visitors and chat online with authors and experts. In this way Amazon does much more than just sell goods online. It creates direct personalized customer relationships and satisfying online experi- ences. Year after year Amazon places at or near the top of almost every customer satisfaction ranking regardless of industry. Based on its powerful growth many analysts have speculated that Amazon.com will become the Walmart of the Web. In fact some argue it already is. Although Walmart’s total sales of 469 billion dwarf Ama- zon’ s 61 billion in sales Amazon’ s Internet sales are more than 15 times greater than Walmart’s. So it’s Walmart that’s chasing Amazon on the Web. Put another way Walmart wants to become the Amazon.com of the Web not the other way around. However despite its mammoth pro- portions to catch Amazon online Walmart will have to match the superb Amazon customer experience and that won’t be easy. Whatever the eventual outcome Amazon has become the poster child for companies that are obsessively and successfully focused on delivering customer value. Jeff Bezos has known from the very start that if Amazon creates superior value for customers it will earn their business and loyalty and success will follow in terms of company profits and returns. As Bezos puts it “When things get complicated we simplify them by asking ‘What’s best for the customer’ We be- lieve that if we do that things will work out in the long term.” 1 oday’s successful companies have one thing in common: Like Amazon they are strongly customer focused and heavily committed to marketing. These companies share a passion for understanding and satisfying customer needs in well-defined target markets. They motivate everyone in the organization to help build lasting customer relationships based on creating value. Customer relationships and value are especially important today. Facing dramatic technological advances and deep economic social and environmental challenges today’s customers are relating digitally with companies and each other spending more carefully and reassessing their relationships with brands. The new digital mobile and social media developments have revolutionized how consumers shop and interact in turn calling for new marketing strategies and tactics. In these fast-changing times it’s now more important than ever to build strong customer relationships based on real and enduring customer value. We’ll discuss the exciting new challenges facing both customers and marketers later in the chapter. But first let’s introduce the basics of marketing. What is Marketing Marketing more than any other business function deals with customers. Although we will soon explore more-detailed definitions of marketing perhaps the simplest definition is this one: Marketing is managing profitable customer relationships. The twofold goal of marketing is to attract new customers by promising superior value and to keep and grow current customers by delivering satisfaction. For example McDonald’s fulfills its “i’m lovin’ it” motto by being “our customers’ favorite place and way to eat” the world over giving it nearly as much market share as its nearest four competitors combined. Walmart has become the world’s largest retailer—and the world’s second-largest company—by delivering on its promise “Save Money. Live Better.” Facebook has attracted more than a billion active Web and mobile users worldwide by helping them to “connect and share” with the people in their lives.” 2 Sound marketing is critical to the success of every organization. Large for-profit firms such as Google Target Procter Gamble Toyota and Microsoft use marketing. But so do not-for-profit organizations such as colleges hospitals museums symphony orches- tras and even churches. t author Comment P ause here and think about how you’d answer this question before studying marketing. Then see how your answer changes as you read the chapter. 32 M01_ARMS6788_12_SE_CH01.indd 32 04/04/14 2:19 PM slide 7: Chapter 1: Marketing: creating and capturing customer Value 33 149127 Cust: Pearson Au: Armstrong Pg. No. 33 Title: Marketing: An Introduction 12/e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARlISlE Publishing Services You already know a lot about marketing—it’s all around you. Marketing comes to you in the good-old traditional forms: You see it in the abundance of products at your nearby shopping mall and the ads that fill your TV screen spice up your magazines or stuff your mailbox. But in recent years market- ers have assembled a host of new marketing approaches ev- erything from imaginative Web sites and mobile phone apps to blogs online videos and social media. These new approaches do more than just blast out messages to the masses. They reach you directly personally and interactively. Today’s market- ers want to become a part of your life and enrich your experi- ences with their brands—to help you live their brands. At home at school where you work and where you play you see marketing in almost everything you do. Yet there is much more to marketing than meets the consumer’s casual eye. Behind it all is a massive network of people and activities competing for your attention and purchases. This book will give you a complete introduction to the basic con- cepts and practices of today’s marketing. In this chapter we begin by defining marketing and the marketing process. Marketing Defined What is marketing Many people think of marketing as only selling and advertising. We are bombarded every day with TV commercials catalogs spiels from salespeople and online pitches. However selling and advertising are only the tip of the marketing iceberg. Today marketing must be understood not in the old sense of making a sale—“telling and selling”—but in the new sense of satisfying customer needs. If the marketer engages consumers effectively understands their needs develops products that provide superior customer value and prices distributes and promotes them well these products will sell easily. In fact accord- ing to management guru Peter Drucker “The aim of marketing is to make selling unneces- sary.” 3 Selling and advertising are only part of a larger marketing mix—a set of marketing tools that work together to satisfy customer needs and build customer relationships. Broadly defined marketing is a social and managerial process by which individuals and organizations obtain what they need and want through creating and exchanging value with others. In a narrower business context marketing involves building profitable value- laden exchange relationships with customers. Hence we define marketing as the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. 4 the Marketing Process figure 1.1 presents a simple five-step model of the marketing process for creating and cap- turing customer value. In the first four steps companies work to understand consumers create customer value and build strong customer relationships. In the final step companies reap the rewards of creating superior customer value. By creating value for consumers they in turn capture value from consumers in the form of sales profits and long-term customer equity. Marketing is all around you in good-old traditional forms and in a host of new forms from Web sites and mobile phone apps to videos and online social media. Justin Lewis. Marketing The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. Create value for customers and build customer relationships Capture value from customers in return Capture value from customers to create profits and customer equity Build profitable relationships and create customer delight Construct an integrated marketing program that delivers superior value Design a customer-driven marketing strategy Understand the marketplace and customer needs and wants This important figure shows marketing in a nutshell. By creating value for customers marketers capture value from customers in return. This five-step process forms the marketing framework for the rest of the chapter and the remainder of the text. figure 1.1 the Marketing Process: creating and capturing customer Value M01_ARMS6788_12_SE_CH01.indd 33 04/04/14 2:19 PM slide 8: 34 Part 1: defning Marketing and the Marketing Process 149127 Cust: Pearson Au: Armstrong Pg. No. 34 Title: Marketing: An Introduction 12/e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARlISlE Publishing Services In this chapter and the next we will examine the steps of this simple model of mar- keting. In this chapter we review each step but focus more on the customer relationship steps—understanding customers building customer relationships and capturing value from customers. In Chapter 2 we look more deeply into the second and third steps— designing value-creating marketing strategies and constructing marketing programs. Understanding the Marketplace and Customer needs As a first step marketers need to understand customer needs and wants and the market- place in which they operate. We examine five core customer and marketplace concepts: 1 needs wants and demands 2 market offerings products services and experiences 3 value and satisfaction 4 exchanges and relationships and 5 markets. Customer needs Wants and Demands The most basic concept underlying marketing is that of human needs. Human needs are states of felt deprivation. They include basic physical needs for food clothing warmth and safety social needs for belonging and affection and individual needs for knowledge and self- expression. Marketers did not create these needs they are a basic part of the human makeup. Wants are the form human needs take as they are shaped by culture and individual personality. An American needs food but wants a Big Mac french fries and a soft drink. A person in Papua New Guinea needs food but wants taro rice yams and pork. Wants are shaped by one’s society and are described in terms of objects that will satisfy those needs. When backed by buying power wants become demands. Given their wants and resources people demand products and services with benefits that add up to the most value and satisfaction. Outstanding marketing companies go to great lengths to learn about and understand their customers’ needs wants and demands. They conduct consumer research analyze mountains of customer data and observe customers as they shop and interact offline and online. People at all levels of the company—including top management—stay close to customers. For example Kroger chairman and CEO David Dillon regularly dons blue jeans and roams the aisles of local Kroger supermarkets blending in with and talking to other shoppers. Similarly Walmart president and CEO Michael Duke and his entire executive team make regular store and in-home visits with customers to get to know them and un- derstand their needs. Top McDonald’s marketers hold frequent Twitter chats connecting directly with McDonald’s Twitter followers both fans and critics to learn their thoughts about topics ranging from nutrition and sustainability to products and brand promotions. 5 Market offerings—Products services and experiences Consumers’ needs and wants are fulfilled through market offerings—some combination of products services information or experiences offered to a market to satisfy a need or a want. Market offerings are not limited to physical products. They also include services—activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything. Examples include banking airline hotel retailing and home repair services. More broadly market offerings also include other entities such as persons places organizations information and ideas. For example the “Pure Michigan” campaign mar- kets the state of Michigan as a tourism destination that “lets unspoiled nature and authentic character revive your spirits.” The Ad Council and the National Highway Traffic Safety Administration created a “Stop the Texts. Stop the Wrecks.” campaign that markets the idea of eliminating texting while driving. The campaign points out that a texting driver is 23 times more likely to get into a crash that a non-texting driver. And the “Let’s Move” public service campaign jointly sponsored by the U.S. Department of Agriculture and the U.S. Department of Health and Human Services markets the idea of reducing childhood author Comment Marketing is all about creating value for customers. So as the first step in the marketing process the company must fully understand consumers and the marketplace in which it operates. needs States of felt deprivation. Wants The form human needs take as they are shaped by culture and individual personality. Demands Human wants that are backed by buying power. Market offerings Some combination of products services information or experiences offered to a market to satisfy a need or want. M01_ARMS6788_12_SE_CH01.indd 34 04/04/14 2:19 PM slide 9: 149127 Cust: Pearson Au: Armstrong Pg. No. 522 Title: Marketing: An Introduction 12/e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARlISlE Publishing Services Over 10 million students improved their results using the Pearson MyLabs. Visit www.pearsonglobaleditions.com/mymarketinglab for simulations tutorials and end-of-chapter problems. MyMarketingLab ™ Improve Y our Grade OBJECTIVE 4 Describe the principles of sustainable marketing. Business Actions toward Sustainable Marketing 539–544 OBJECTIVE 5 Explain the role of ethics in marketing. Marketing Ethics 544–546 The Sustainable Company 547 OBJECTIVE 1 Define sustainable marketing and discuss its importance. Sustainable Marketing 524–526 OBJECTIVE 2 Identify the major social criticisms of marketing. Social Criticisms of Marketing 526–533 OBJECTIVE 3 Define consumerism and environmentalism and explain how they affect marketing strategies. Consumer Actions to Promote Sustainable Marketing 533–539 16 Sustainable Marketing Social Responsibility and Ethics Part 1: Defining Marketing anD the Marketing Process chaPters 1–2 Part 2: UnDerstanDing the MarketPlace anD cUstoMer ValUe chaPters 3–5 Part 3: Designing a cUstoMer ValUe–DriVen strategy anD Mix chaPters 6–14 PaRT 4: ExTEnDIng MaRkETIng ChaPTERS 15–16 Previewing the Concepts in this final chapter we’ll examine the concepts of sustainable marketing meeting the needs of consumers businesses and society—now and in the future—through socially and environmentally responsible marketing actions. We’ll start by defining sustainable marketing and then look at some common criticisms of marketing as it impacts individual consumers as well as public actions that promote sustain- able marketing. finally we’ll see how companies themselves can benefit from proactively pursuing sustainable marketing practices that bring value to not only individual customers but also society as a whole. sustainable marketing actions are more than just the right thing to do they’re also good for business. first let’s look at an example of a sustainable business at work. siemens—the world’s largest provider of environmental technologies—gets more than one-third of its total revenue from green products and solutions. in the Middle east siemens uses green marketing a relatively new way to connect with consumers to leverage eco-consciousness to gain a dominant market position. Making its official debut in January 2014 the company’s leeD Platinum headquarters in Masdar city Uae has already won over 15 awards and could well be a new standard for sustainable building practices in the region. Objective Outline ChaPTER ROaD MaP M16_ARMS6788_12_SE_CH16.indd 522 04/04/14 8:02 PM slide 10: 149127 Cust: Pearson Au: Armstrong Pg. No. 523 Title: Marketing: An Introduction 12/e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARlISlE Publishing Services 523 First Stop Siemens: Shaping a Sustainable Future in the Middle East Siemens AG one of the largest German conglomerates in Europe is an international company operating in electronics and electrical engineering. It was established more than 150 years ago and is well known for its core values of technological excellence innova- tion and responsibility. The company’s vision has from the start been to “achieve excellence to capture leading positions in the markets of tomorrow and to develop innovative technologies that help ensure the future viability of modern civilization.” To achieve its goal of shaping a sustainable feature Siemens has developed a well- defined Sustainability Program. The company focuses its sustainability efforts on three strategic fields of Business Oppor- tunities Walk the Talk and Stakeholder Engagement. Business Opportunities include growing the company’s environment portfo- lio and enhancing sustainability in business inputs Walk the Talk involves efforts toward ensuring resource efficiency and engaging leadership and employees glob- ally and Stakeholder Engagement includes engaging in constructive dialog with key stakeholders and driving value-creating projects with leading organizations. The company is the world’s largest provider of environmental technologies. It invests about €2 billion annually in research and develop- ment and has over 30000 environmental technology patents making it a force to reckon with in its efforts to tackle climate change. More than one-third of its total revenue comes from green products and solutions. In the Middle East Siemens has offices throughout Libya Egypt Gulf Cooperation Council GCC Jordan and Iraq. Siemens works in the energy and health-care sectors where the company has a clear signature on many levels. For instance it helps the surrounding communities and always aims to provide eco-friendly power generation and water purification plants. One approach that Siemens Middle East uses is green market- ing a relatively new way to connect with consumers. Siemens launched a range of eco-friendly cordless phones and hired Raee Public Relations a consulting firm to drive eco- consciousness messages to both believers and nonbe- lievers to spearhead a green campaign to key target audiences and to leverage eco-consciousness to gain a dominant market position. Siemens wants to distin- guish itself in the market not only through high-quality and distinctive features but by adopting a green plat- form. Since climate change and global warming are becoming major concerns worldwide businesses that wish to sustain their profits are discovering new ways to sell eco-friendly products. Raee Public Relations designed an opinion survey on eco-consciousness in the United Arab Emirates UAE as part of the launch program for Siemens’ new range of products in 2008. This was a crucial preliminary step in the campaign since the drive to position green products was still in its early stages in the Middle East and the concept had not spread across the region as a whole. The campaign was introduced for the launch of the ECO DECT and ECO Broadband phones by Siemens Home and Office Communication Devices SHC. These products which had a special logo were designed to be energy efficient and to have numerous functions that enable the vari- able reduction of transmission power. This move was part of SHC’s environmental program a concept that is implemented not just in Siemens’s products but throughout the company. Masdar City the self-proclaimed global center of future energy is a special economic zone in Abu-Dhabi UAE that aims to be a global center for innovation research product develop- ment and light manufacturing in the fields of renewable energy and sustainable technologies. Established in 2006 the city operates through 5 integrated units including a research-driven The ability to read while talking on the phone is one of the luxuries of a comfortable hand-held mobile phone and a standard Siemens takes very seriously. © Ibrahim Ajlan/Fotolia.com. Seimens has been active in green advocacy initiatives unveiling a range of eco-friendly products and investing in smart grids smart buildings and carbon capture and storage systems as a greenprint for the company’s continuing environmental program implemented not just in its products but throughout the company. M16_ARMS6788_12_SE_CH16.indd 523 04/04/14 8:02 PM slide 11: 524 149127 Cust: Pearson Au: Armstrong Pg. No. 524 Title: Marketing: An Introduction 12/e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARlISlE Publishing Services graduate university. The forte of this commercially driven enterprise is its architecture which makes it a model for sustainable urban development. The International Renewable Energy Agency IRENA will base its headquarters in the city. In addition several multina- tionals numerous small- and medium-sized enterprises and a variety of entrepreneurial startups will locate their RD labs marketing offices and headquarters in the city. A “greenprint” for how people will live and work in the future is the main goal of establishing this city. Even the name Masdar means “the source” in Arabic. Masdar is a wholly-owed subsidiary of the Mubadala Development Company which is being used by the Abu Dhabi government to spur economic development. At Masdar City Siemens broke ground with its Middle East headquarters building. Making its official debut in January 2014 the LEED Platinum building currently accommodates 800 Siemens employees. This building was designed by David Ardill partner and design director at Sheppard Robson to use 45 percent less energy and 50 percent less water than other buildings of the same size. The building has reduced the use of construction material by about 60 percent making its structure very flexible for reorganization in the future. As Masdar City’s anchor tenant Siemens was expected to ensure that the building achieved an Estidama rating of at least three pearls. Estidama means “sustainability” in Arabic. The Pearl Rating System is a key component of Estidama that deals specifically with the built environment and its performance in relation to economic environmental cultural and social aspects. A Pearl represents the Pearl Rating System levels—1 Pearl is the entry level and 5 Pearls is the highest level of achievement. The 130000 square-feet space is equipped with several sus- tainable design features and the whole system is automated using Siemens technology. This building has among other awards received the first prize for the Sustainable Project of the Year category at the Middle East Architects Award 2012. As part of its partnership with the Masdar Institute Siemens is committed to a long-term RD pro- gram for smart grids smart buildings and carbon capture and storage systems in the region. The Siemens Building Technologies Division is working to identify and develop new applications that can allow buildings to autonomously implement control strategies in response to the grid that includes conventional and renewable energy sources. Siemens will provide integrated building automation technologies for smart buildings and jointly develop a smart grid solution including demand– response applications that will optimize energy consump- tion and reduce emissions. Finally Masdar City integrates innovation alongside proven technologies and showcases energy-efficient solutions that can be applied to other cities globally. Siemens believes in being a green infrastructure pioneer and wants to further enhance its collabora- tion with Masdar City. Siemens and other technology leaders in cooperation with Masdar City aim to contribute to the creation of a knowledge-based clean energy sector in the UAE. 1 esponsible marketers discover what consumers want and respond with market offer- ings that create value for buyers and capture value in return. The marketing concept is a philosophy of customer value and mutual gain. Its practice leads the economy by an invisible hand to satisfy the many and changing needs of millions of consumers. Not all marketers follow the marketing concept however. In fact some companies use questionable marketing practices that serve their own rather than consumers’ inter- ests. Moreover even well-intentioned marketing actions that meet the current needs of some consumers may cause immediate or future harm to other consumers or the larger society. Responsible marketers must consider whether their actions are sustainable in the longer run. This chapter examines sustainable marketing and the social and environmental effects of private marketing practices. First we address the question: What is sustainable market- ing and why is it important Sustainable Marketing Sustainable marketing calls for socially and environmentally responsible actions that meet the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. Figure 16.1 compares the sustain- able marketing concept with marketing concepts we studied in earlier chapters. The marketing concept recognizes that organizations thrive from day to day by deter- mining the current needs and wants of target customers and fulfilling those needs and wants more effectively and efficiently than competitors do. It focuses on meeting the company’s R author Comment Marketers must think beyond immediate customer satisfaction and business performance toward strategies that preserve the world for future generations. Sustainable marketing Socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. M16_ARMS6788_12_SE_CH16.indd 524 04/04/14 8:02 PM slide 12: Chapter 16: sustainable Marketing: social responsibility and ethics 525 149127 Cust: Pearson Au: Armstrong Pg. No. 525 Title: Marketing: An Introduction 12/e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARlISlE Publishing Services short-term sales growth and profit needs by engaging customers and giving customers what they want now. However satisfying consumers’ immediate needs and desires doesn’t always serve the future best interests of either customers or the business. For example McDonald’s early decisions to market tasty but fat- and salt-laden fast foods created immediate satisfaction for customers as well as sales and profits for the company. However critics assert that McDonald’s and other fast-food chains contributed to a longer-term national obesity epidemic damaging consumer health and burdening the national health system. In turn many consumers began looking for healthier eating options causing a slump in the sales and profits of the fast-food industry. Beyond issues of ethical behavior and social welfare McDonald’s was also criticized for the sizable environmental footprint of its vast global operations everything from wasteful packaging and solid waste creation to inefficient energy use in its stores. Thus McDonald’s strategy was not sustain- able in terms of either consumer or company benefit. Whereas the societal marketing concept identified in Figure 16.1 considers the future welfare of consumers and the strategic planning concept considers future company needs the sustainable marketing concept considers both. Sustainable marketing calls for socially and environmentally responsible actions that meet both the immediate and future needs of customers and the company. For example McDonald’s has responded to these challenges in recent years with a more sustainable “Plan to Win” strategy of diversifying into salads fruits grilled chicken low-fat milk and other healthy fare. The company also launched a major multifaceted education campaign—called “it’s what i eat and what i do . . . i’m lovin’ it”—to help consumers better understand the keys to living balanced active lifestyles. And recently McDonald’s began a “favorites under 400 calories” campaign in which 400-and-fewer-calorie items are fea- tured in its advertising and on menu boards in its restaurant. The chain points out that 80 per- cent of its national menu is under 400 calories and that it wants to help customers feel better about the items they are choosing. 2 The McDonald’s “Plan to Win” strategy also addresses environmental issues. For ex- ample it calls for food-supply sustainabil- ity reduced and environmentally sustainable packaging reuse and recycling and more responsible store designs. McDonald’s has even developed an environmental scorecard that rates its suppliers’ performance in areas such as water use energy use and solid waste management. McDonald’s more sustainable strategy is benefiting the company as well as its cus- tomers. Since announcing its “Plan to Win” strategy McDonald’s sales have increased by almost 60 percent and profits have more than tripled. Thus McDonald’s is well positioned for a sustainably profitable future. 3 Now Marketing concept Now Needs of Consumers Needs of Business Future Future Societal marketing concept Strategic planning concept Sustainable marketing means meeting current needs in a way that preserves the rights and options of future generations of consumers and businesses. The marketing concept means meeting the current needs of both customers and the company. But that can sometimes mean compromising the future of both. Sustainable marketing concept Figure 16.1 sustainable Marketing Sustainable marketing: Under its “Plan to Win” strategy McDonald’s has created sustainable value for both customers and the company. now 80 percent of the chain’s menu is under 400 calories including this Egg White Delight McMuffin which weighs in with 8 grams of whole grain against only 250 calories and 5 grams of fat. © Michael Neelonmisc/Alamy. M16_ARMS6788_12_SE_CH16.indd 525 04/04/14 8:03 PM slide 13: 526 Part 4: extending Marketing 149127 Cust: Pearson Au: Armstrong Pg. No. 526 Title: Marketing: An Introduction 12/e Server: C/M/Y/K Short / Normal DESIGN SERVICES OF S4CARlISlE Publishing Services Truly sustainable marketing requires a smooth-functioning marketing system in which consumers companies public policy makers and others work together to en- sure socially and environmentally responsible marketing actions. Unfortunately how- ever the marketing system doesn’t always work smoothly. The following sections examine several sustainability questions: What are the most frequent social criticisms of marketing What steps have private citizens taken to curb marketing ills What steps have legislators and government agencies taken to promote sustainable market- ing What steps have enlightened companies taken to carry out socially responsible and ethical marketing that creates sustainable value for both individual customers and society as a whole Social Criticisms of Marketing Marketing receives much criticism. Some of this criticism is justified much is not. Social critics claim that certain marketing practices hurt individual consumers society as a whole and other business firms. Marketing’s Impact on Individual Consumers Consumers have many concerns about how well the American marketing system serves their interests. Surveys usually show that consumers hold mixed or even slightly unfavor- able attitudes toward marketing practices. Consumer advocates government agencies and other critics have accused marketing of harming consumers through high prices decep- tive practices high-pressure selling shoddy or unsafe products planned obsolescence and poor service to disadvantaged consumers. Such questionable marketing practices are not sustainable in terms of long-term consumer or business welfare. high Prices Many critics charge that the American marketing system causes prices to be higher than they would be under more “sensible” systems. Such high prices are hard to swallow especially when the economy is tight. Critics point to three factors—high costs of distribu- tion high advertising and promotion costs and excessive markups. high Costs of Distribution. A long-standing charge is that greedy marketing channel members mark up prices beyond the value of their services. Critics charge that there are too many intermediaries that intermediaries are inefficient or that they provide unnecessary or duplicate services. As a result distribution costs too much and consumers pay for these excessive costs in the form of higher prices. How do resellers answer these charges They argue that intermediaries do work that would otherwise have to be done by manufacturers or consumers. Markups reflect services that consumers themselves want—more convenience larger stores and assortments more service longer store hours return privileges and others. In fact they argue retail compe- tition is so intense that margins are actually quite low. If some resellers try to charge too much relative to the value they add other resellers will step in with lower prices. Low-price stores such as Walmart Costco and other discounters pressure their competitors to operate efficiently and keep their prices down. In fact in the wake of the recent recession only the most efficient retailers have survived profitably. high advertising and Promotion Costs. Modern marketing is also accused of pushing up prices to finance heavy advertising and sales promotion. For example a heavily promoted national brand sells for much more than a virtually identical non-branded or store-branded product. Differentiated products—cosmetics detergents toiletries—include promotion and packaging costs that can amount to 40 percent or more of the manufacturer’s price to the retailer. Critics charge that much of this packaging and promotion adds only psychological not functional value to the product. author Comment In most ways we all benefit greatly from marketing activities. However like most other human endeavors marketing has its flaws. Here we present both sides of some of the most common criticisms of marketing. M16_ARMS6788_12_SE_CH16.indd 526 04/04/14 8:03 PM

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