Ninth Edition David W. Cravens Nigel F. Piercy

Ninth EditionDavid W. CravensM.j. Neeley School of BusinessTexas Christian UniversityNigel F. PiercyWarwick Business SchoolThe University of WarwickMcGraw-frSiBIirwinBoston Burr Ridge, IL Dubuque, IA New York San Francisco St. LouisBangkok Bogota Caracas Kuala Lumpur. Lisbon London Madrid Mexico CityMilan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto

Table of ContentsPART ONESTRATEGIC MARKETING1Chapter 1Imperatives for Market-DrivenStrategy 2Market-Driven Strategy 3Characteristics of Market-Driven Strategies 4Determining Distinctive Capabilities 5Classifying Capabilities 6Creating Value for Customers 7Becoming Market Driven 7Corporate, Business, and Marketing Strategy 8Corporate, Business, and Marketing Strategy 10Components of Corporate Strategy 10Corporate Strategy Framework 10Business and Marketing Strategy 12The Marketing Strategy Process 13Challenges of a New Era for Strategic MarketingEscalating Globalization 18Technology Diversity and Uncertainty 19The Web 2.0 20Ethical Behavior and Corporate SocialResponsiveness 20Summary 23Appendix 1AStrategic Marketing Planning 27Cases for Part One 30Case 1-1 Audi 30Case 1 -2 The New York Times 34Case 1-3 Coca-Cola Co. (A) 40PART TWOMARKETS, SEGMENTS,AND CUSTOMER VALUE 47Chapter 2Markets and Competitive Space 48Markets and Strategies 49Markets and Strategies Are Interlinked 49Thinking Outside the Competitive Box 50An Array of Challenges 5018Matching Needs with Product Benefits 52Defining and Analyzing Product-Markets 53Forming Product-Markets 55Illustrative Product-Market Structure 57Describing and Analyzing End-Users 57Identifying and Describing Buyers 58How Buyers Make Choices 59Environmental Influences 60Building Customer Profiles 60Analyzing Competition 61Defining the Competitive Arena 61Key Competitor Analysis 64Anticipating Competitors 'Actions 66Market Size Estimation 67Market Potential 67Sales Forecast 68Market Share 68Evaluating Market Opportunity 68Developing a Strategic Vision About the FuturePhases of Competition 70Anticipating the Future 70Summary 71Appendix 2AFinancial Analysis for MarketingPlanning and Control 74Chapter 3Strategic Marketing Segmentation83Levels and Types of Market Segmentation 84Market-Driven Strategy and Segmentation 86Market Segmentation, Value Opportunities, andNew-Market Space 86Market Targeting and Strategic Positioning 87Activities and Decisions in MarketSegmentation 89Defining the Market to Be Segmented 89Identifying Market Segments 90Segmentation Variables 90Characteristics of People and Organizations 90Product Use Situation Segmentation 91Buyers 'Needs and Preferences 93Purchase Behavior 94Forming Market Segments 96Requirements for Segmentation 96Approaches to Segment Identification 9870

ContentsCustomer Group Identification 99Forming Groups Based on Response Differences 102Finer Segmentation Strategies 104Logic of Finer Segments 104Finer Segmentation Strategies 105Selecting the Segmentation Strategy 106Deciding How to Segment 106Strategic Analysis of Market Segments 106Summary 109Chapter 4Strategic Customer RelationshipManagement 113Pivotal Role of Customer RelationshipManagement 114CRM in Perspective 114CRM and Database Marketing 114Customer Lifetime Value 115Developing a CRM Strategy 116CRM Levels 116CRM Strategy Development 118CRM Implementation 119Value Creation Process" 121Customer Value 121Value Received by the Organization 122CRM and Value Chain Strategy 123CRM and Strategic Marketing 123Implementation 123Performance Metrics 124Short-Term Versus Long-Term Value 124Competitive Differentiation 124Summary 126Chapter 5Capabilities for Learning About Customersand Markets 129Market-Driven Strategy, Market Sensing,and Learning Processes 130Market Sensing Processes 131Learning Organization 131Marketing Information and Knowledge Resources 134Scanning Processes 136Specific Market Research Studies 138Internal and External Marketing InformationResources 138Existing Marketing Information Sources 141Creating New Marketing Information 143Marketing and Management Information Systems 146Marketing Intelligence and KnowledgeManagement 147Marketing Intelligence 147Knowledge Management 148Role of the Chief Knowledge Officer 148Leveraging Customer Knowledge 148Ethical Issues in Collecting and UsingInformation 149Invasion of Customer Privacy 149Information and Ethics 150Summary 151Cases for Part Two 156Case 2-1 Pfizer, Inc. 156Case 2-2 Ikea 162Case 2-3 China and India: Opportunitiesand Challenges 168Case 2-4 Johnson & Johnson 177PART THREEDESIGNING MARKET-DRIVENSTRATEGIES 183Chapter 6Market Targeting and StrategicPositioning 184Market Targeting Strategy 185Targeting Alternatives 185Factors Influencing Targeting Decisions 186Targeting in Different MarketingEnvironments 187Emerging Markets 188Growth Markets 189Mature Markets 190Global Markets 192Positioning Strategy 193Selecting the Positioning Concept 195Developing the Positioning Strategy 196Scope of Positioning Strategy 197Marketing Program Decisions 197Determining Positioning Effectiveness 199Customer and Competitor Research 200Test Marketing 200Analytical Positioning Techniques 201Determining Positioning Effectiveness 201Positioning and Targeting Strategies 202Summary 202xi

xiiContentsChapter 7Strategic Relationships 206The Rationale for InterorganizationalRelationships 207Opportunities to Enhance Value 208Environmental Complexity 209Competitive Strategy 209Skills and Resource Gaps 209Evaluating the Potential for Collaboration 213Forms of Organizational Relationships 214Supplier Relationships 215Intermediate Customer Relationships 216End-User Customer Relationships 217Strategic Customers 217Strategic Alliances 219Joint Ventures 221Internal Partnering 221Managing Interorganizational Relationships 223Objective of the Relationship 223Relationship Management 224Partnering Capabilities 225Control and Evaluation 226Exiting from Alliance 226Global Relationships Among Organizations 227The Strategic Role ofGovernment 228Summary 231Chapter 8Innovation and New Product Strategy 236Innovation as a Customer-Driven Process 238Types of Innovations 239Finding Customer Value Opportunities 239Finding New Product Opportunities 239Initiatives of Successful Innovators 242Recognizing the Realities of ProductCannibalization 244New-Product Planning 244Developing a Culture and Strategy for Innovation 245Developing Effective New-Product PlanningProcesses 247Responsibility for New-Product Planning 248Idea Generation 249Sources of Ideas 249Methods of Generating Ideas 251Screening, Evaluating, and Business Analysis 253Screening 253Concept Evaluation 254Business Analysis 255Product and Process Development 257Product Development Process 25 7Marketing Strategy and Market Testing 260Market Strategy Decisions 260Market Testing 260Commercialization 263Th e Marketing Plan 2 63Monitoring and Control 263Variations in the Generic New ProductPlanning Process 264Summary 265Cases for Part Three 269CaseCaseCaseCase3-1 Walt Disney Co. 2693-2 Intel Corp. 2743-3 McDonald's Corp. 2813-4 Tesco Pic. 285PART FOURMARKET-DRIVEN PROGRAMDEVELOPMENT 289Chapter 9Strategic Brand Management 290Strategic Brand Management 291The Strategic Role of Brands 291Brand Management Challenges 292Brand Management Responsibility 296Strategic Brand Management 296'Strategic Brand Analysis 298Tracking Brand Performance 299Product Life Cycle Analysis 300Product Performance Analysis 300Brand Positioning Analysis 301Brand Equity Measurement and Management 301Measuring Brand Equity 301Brand Health Reports 301Brand Identity Strategy 302A Iternatives for Brand Identification 302Brand Focus 303Identity Implementation 304Managing Brand Strategy 304Strategies for Improving Product Performance 304Managing the Brand Portfolio 306Determining Roles of Brands 307Strategies for Brand Strength 307Strategic Brand Vulnerabilities 308

ContentsBrand Leveraging Strategy 310Line Extension 310Stretching the Brand Vertically 310Brand Extension 311Co-Branding 311Licensing 311Global Branding 311Internet Brands 312Brand Theft 313Summary 314Chapter 10Value Chain Strategy 318Strategic Role of Value Chain 319Distribution Functions 319Channels for Services 321Direct Distribution by Manufacturers 321Channel Strategy 323Types of Channels 324Distribution Intensity 327Channel Configuration 328Channel Maps ' 329Selecting the Channel Strategy 330Changing Channel Strategy 331Managing the Channel 333Channel Leadership 334Management Structure and Systems 334Physical Distribution Management 334Channel Relationships 336Channel Globalization 336Multichanneling 33 7Conflict Resolution 337Channel Performance 338Legal and Ethical Considerations 338International Channels 340Examining International Distribution Patterns 341Factors Affecting Global Channel Selection 342Global Issues Regarding Multichannel Strategies 342Summary 343Chapter 11Pricing Strategy 347Strategic Role of Price 348Price in the Positioning StrategyPricing Situations 350Roles of Pricing 350Pricing Strategy 351Pricing Objectives 352349xiiiAnalyzing the Pricing Situation 353Customer Price Sensitivity 353Cost Analysis 356Competitor Analysis 357Pricing Objectives 359Selecting the Pricing Strategy 360How Much Flexibility Exists? 360Price Positioning and Visibility 362Illustrative Pricing Strategies 362Legal and Ethical Considerations 363Determining Specific Prices and Policies 365Determining Specific Prices 365Establishing Pricing Policy and Structure 367Pricing Management 367Summary 369Chapter 12Promotion, Advertising, and SalesPromotion Strategies 372Promotion Strategy 373The Composition of Promotion Strategy 373Designing Promotion Strategy 375Communication Objectives 376Deciding the Role of the Promotion Components 378Determining the Promotion Budget 378Promotion Component Strategies 380Integrating and Implementing the Promotion Strategy 380Effectiveness of Promotion Strategy 381Advertising Strategy 3 81Setting Advertising Objectives and Budgeting 382Creative Strategy 384Media/Scheduling Decisions 384Role of the Advertising Agency 386Implementing the Advertising Strategy andMeasuring Its Effectiveness 388Sales Promotion Strategy 389Nature and Scope of Sales Promotion 389Sales Promotion Activities 390Advantages and Limitations of Sales Promotion 392Sales Promotion Strategy 393Summary 393Chapter 13Sales Force, Internet, and DirectMarketing Strategies 396Sales Force Strategy 397The Role of Selling in Promotion StrategyTypes of Sales Jobs 399398