MARI(ETING: THEORY AND PRACTICE

Other books by Michael J. Baker include

MARKETING STRATEGY AND MANAGEMENT (2nd edn) MARKETING: AN INTRODUCTORY TEXT (5th edn)

RESEARCH FOR MARKETING

MARI(ETING THEORY AND PRACTICE

Third Edition

Edited by

Michael J. Baker with Olivier Badot, Ken Bernard, Stephen Brown,

Douglas Brownlie, Sara Carter, K. C. Chan, Bernard Cova, Keith Crosier, Adamantios Diamantopoulos, Bill Donaldson, Sean Ennis, Pervez Ghauri, Susan J. Hart, Peter Leeflang, Dale

Littler, Michael C. McDermott, Lyn McGregor, Shan Rajagopal, Daniel Tixier, John Webb

~ MACMILLAN Business

Selection, editorial matter Chapters 1,2 and 9 © Michael J. Baker 1976, 1983; 1995

Individual chapters (in order) © Stephen Brown, Lyn McGregor, Shan Rajagopal, Dale Littler, John Webb, Peter Leeflang, Susan J. Hart, Adamantios Diamantopoulos, Sean Ennis, Keith Crosier, Douglas Brownlie, Ken Bernard, Sara Carter, Bill Donaldson, Daniel Tixier, Michael C. McDermott and K. C. Chan, Pervez Ghauri, K. C. Chan and Michael C. McDermott, Bernard Cova and Olivier Badot 1995

All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission.

No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 9HE.

Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages.

First edition 1976 Reprinted 1979 (twice, 1981) Second edition 1983 Reprinted 1987, 1988, 1990 (twice), 1993, 1994 Third edition 1995

Published by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world

A catalogue record for this book is available from the British Library.

10 9 8 7 6 5 4 3 2 1 04 03 02 01 00 99 98 97 96 95

ISBN 978-0-333-64182-8 ISBN 978-1-349-24260-3 (eBook) DOI 10.1007/978-1-349-24260-3

Contents

List of Tables Vll

List of Figures IX

Preface Xl

1 Evolution of the Marketing Concept 1 10 New Product Development 171 Michael J. Baker (University of Susan J. Hart (Heriot- Watt University) Strathclyde)

11 Pricing 182 2 The Need for Theory in Marketing 10 Adamantios Diamantopoulos

Michael J. Baker (University of Wales - Swansea)

3 Sources and Status of Marketing 12 Channel Management 198 Theory 23 Sean Ennis (University of Stephen Brown (University of Stra th clyde) Ulster)

13 Marketing Communications 216 4 Consumer Behaviour 40 Keith Crosier (University of

Lyn McGregor (University of Strathclyde) Strathclyde)

14 Analytical Frameworks for Strategic 5 Organisational Buying Behaviour 59 Marketing Planning 250

Shan Rajagopal (University of Douglas Brownlie (University of Stra th clyde) Stirling)

6 Market Segmentation 90 15 Business to Business Marketing 292 Dale Littler (UMIST) Ken Bernard (University of

Strathclyde) 7 Marketing Research 104

John Webb (University of 16 Retailing 320 Stra th clyde) Sara Carter (University of

Strathclyde) 8 Modelling Markets 125

Peter Leeflang (University of 17 Customer Care 330 Groningen) Bill Donaldson (University of

Strathclyde) 9 Diffusion Theory and Marketing 160

Michael J. Baker (University of 18 Consumerism 346 Strathclyde) Daniel Tixier (ESSEC)

v

VI Contents

19 International Marketing: It's a Mad, Mad, Mad, Mad World 359 Michael C. McDermott (University of Strathclyde) and K. C. Chan (Huskey Injection Molding Systems)

20 Marketing to Eastern Europe 379 Pervez Ghauri

21 Beyond Relationship Marketing: Flexible and Intelligent Relationship Management Strategy (FIRMS) 390 K. C. Chan (Huskey Injection Molding Systems) and Michael C. McDermott (University of Strathclyde)

22 Marketing Theory and Practice in a Postmodern Era 416 Bernard Cova and Olivier Badot (EAP, European School of Management)

Index 433

List of Tables

3.1 Literature and consumption 10.2 Organisation of the new product behaviour: an example 28 process 179

3.2 Positivist and post-positivist 11.1 A taxonomy of pricing objectives 185 paradigms: key features 31 11.2 Pricing methods 190

4.1 Combining public-private and 12.1 Channel objectives 206 luxury-necessity dimensions with 12.2 Criteria for assessing prospective product and brand decisions 54 partners 207

5.1 Buying centre roles defined 66 12.3 The weighted average method 208 5.2 The buying decision process by 12.4 MSS ten-point plan for

classes 68 intermediaries 211 5.3 Characteristics of the business 12.5 Training of distributors 212

buying process for different buy 12.6 Main motivators used by class 71 companies 212

5.4 Seller's strategic responses to 13.1 Hierarchical models of differing buying situations 81 advertising effect 226

5.5 Purchasing strategy and the 13.2 The hierarchies as a family of buying situation 84 models 227

6.1 Major segmentation variables 94 13.3 A consolidated hierarchical 6.2 Major ACORN groups 95 model of advertising effect 228 6.3 Occupation and social class 13.4 Relationship between information-

categories 97 processing theory and the 6.4 Consumer clusters for mobile hierarchy of effects 243

communications 98 14.1 Indicators of PLC stage 262 8.1 Developments of scanning in 14.2 Processes driving evolution 262

food-stores 144 14.3 Sources of the experience effect 268 8.2 Parameter estimates and statistics 14.4 Growth-share matrix guidelines 273

of relation 149 14.5 The imbalanced portfolio 273 8.3 Parameter estimates of market 14.6 Strategy requirements dictated by

share models 150 the competitive environment 276 8.4 Average values of parameter 14.7 Measures used in the BAA by

estimates of the SCAN*PRO- General Electric 278 model 151 14.8 Shell's DPM criteria 279

8.5 Statistically significant effects in 14.9 Some characteristics of the three market share response functions 154 main business postures of the BAA 281

9.1 Features for effective selling in 16.1 Number of UK retail businesses, machine-tool markets 168 1981-1989 321

10.1 Financial and non-financial 16.2 Total retail trade by broad kind of measures of new product success 172 business, 1987 321

Vll

Vlll List of Tables

16.3 Market share by sector, 20.5 Large international business 1981-1991 322 investments in Czechoslovakia,

16.4 Retail sales volume, 1990 323 Hungary and Poland, 1989-1991 383 16.5 Weekly household expenditure by 20.6 Number of cars per 1000 people 383

socio-economic group, 1991 324 21.1 The marketing excellence review: 16.6 Attributes of a good shop, best practices 391

April 1990 and April 1992 325 21.2 Comparison of seller and buyer 16.7 Annual press and television retail reactions when the sale is first

advertising expenditure 328 made 392 19.1 A review of the innovation-related 21.3 Contrasting transactional and

internationalisation models 362 relationship marketing 393 19.2 Simple country screening process 21.4 Time, account behaviour and

for Scottish manufacturer of marketing approach 394 environmentally friendly 21.5 Relationship marketing and the personal soaps 363 account behaviour

19.3 Four strong market forces that spectrum: advice on using the create change 366 spectrum 396

19.4 Some common dualities in today's 21.6 Levels of corporate-customer complex organisations 367 relationship 397

19.5 Advertising growth: top ten 21.7 Where relationship marketing countries, 1993-1996 371 belongs 398

19.6 Elements of an international 21.8 The route to business goal of manager 376 profit/market share 402

20.1 The countries of Eastern Europe 379 21.9 A comparison of the traditional 20.2 Comparative progress in approach to corporate

Poland, Hungary and management and the new the Czech Republic 380 approach for FIRMS 407

20.3 Western retailers in Eastern 21.10 The properties of FIRMS 410 Europe by country of origin 381 21.11 The five levels of Flexible

20.4 Registered joint ventures in Intelligent Relationship selected countries, March 1992 382 Management Strategy 411

List of Figures

2.1 Bartels's summary of marketing 8.1 Diagram of Urban III (version of theory 19 SPRINTER Mod III) 132

3.1 Theory-in-use development cycle 26 8.2 The steps in the model building 3.2 The Engel, Kollat and Blackwell process 137

model of consumer behaviour 30 8.3 Points in the marketing channel 3.3 Philosophical discord in marketing: where measures are taken 142

epistemology and ontology 32 8.4 Sales in units and advertising 3.4 The wheel of marketing thought 34 expenditures 146 4.1 Information processing model 46 9.1 Adopter categories 164 4.2 The three-memory system 49 9.2 The product life-cycle 165 4.3 Process model of attitude- 9.3 Features of a machine-tool

behaviour relations 50 considered one of the three most 4.4 Movement of meaning 55 important 169 5.1 Dimensions of OBB knowledge and 10.1 Analysis of the NPD process based

buyer/seller strategy development 60 on Booz, Allen and Hamilton 5.2 Factors influencing organisational (1982) 174

buying behaviour 61 10.2 Horizontal and vertical iteration 5.3 Economic and non-economic in the early stages of the NPD

motives influencing business buyer 67 process 175 5.4 The buying process consideration 69 10.3 Crawford's new product 5.5 Comparison of buying classes 70 development process 176 5.6 The continuum of industrial 10.4 An example of the early stages of

buying situations 72 the multiple convergent process 177 5.7 The Sheth model of business 12.1 The channel as a system of

buyer behaviour 75 relationships 199 5.8 The Webster and Wind model of 12.2 Custom choices at National

organisational buyer behaviour 76 Panasonic Bicycle 202 5.9 Major elements of organisational 12.3 Channel design 205

buying behaviour of Choffray and 13.1 A simplification of the classic Lilien Model 77 models of consumer behaviour 219

5.10 A dyadic model of buyer 13.2 Marketing communications behaviour 79 practitioners' behaviour 220

5.11 The interaction model 80 13.3 The marketing communications 5.12 The role of purchasing 83 'synapse' 221 6.1 General approaches to market 13.4 The marketing communications

segmentation 93 transaction 225 6.2 Segmenting the newspaper market 94 13.5 Information-processing behaviour 230

lX

x List of Figures

13.6 Coping with information overload: 15.9 Exchange processes in business-to-'ladders in the mind' 240 business marketing 309

14.1 The idealised product life-cycle 16.1 Locational categories for curve 256 hypermarkets, superstores and

14.2 Taxonomy of market evolution 261 retail warehouses 326 14.3 Industry experience curve using 16.2 Benefits of effective retail

logllog scales 268 merchandising policy 327 14.4 The business portfolio and 17.1 Type of exchange 331

associated cash flow 271 19.1 A formal approach to 14.5 Sequences of product-market country/market screening 361

strategies 272 19.2 Current issues in international 14.6 A portfolio of Caterpillar's marketing 377

construction equipment products 274 21.1 The marketing strategy continuum 395 14.7 Strategic environments matrix 275 21.2 From transactions to relationship 14.8 The business assessment array marketing 397

and 'business postures' 277 21.3 Win-win relationships for the 14.9 The directional policy matrix 278 business goal of profit/market 14.10 A product-market evolution share 398

portfolio matrix 282 21.4 The tree of total quality business 15.1 An orientation matrix 294 philosophy 399 15.2 Upstream and downstream 21.5 Total systems diagram for FIRMS 400

activities 295 21.6 Systems diagram for the five 15.3 The value cycle 295 goals of FIRMS 401 15.4 A summary of effects of business 21.7 The logic of profit and market

market characteristics 299 share (virtuous circles) 403 15.5 The central role of sales forecasts 21.8 Fishbone diagram of total quality

in corporate planning and customer service (TQCS) 404 operations 302 21.9 Three levels of strategy: the case

15.6 Advantages and disadvantages of of Okuma Corporation 406 different types of interviews 305 21.10 Synergy in FIRMS 408

15.7 Preferred data collection methods 22.1 The return of community 420 under different survey 22.2 Marketing shifts of object 423 conditions 306 22.3 Marketing shifts of relation 424

15.8 Bonoma and Shapiro's nested 22.4 Marketing shifts of context 425 approach to segmentation 307 22.5 Postmodern marketing? 426

Preface to the Third Edition

As the publishing history reveals Marketing: Theory & Practice first appeared in 1976 with a second edition following in 1983. During this period the book has been continuously available and reprinted on numerous occasions. For the Editor this performance is itself an interesting example of the inextricable link between theory and practice as well as a salutary reminder that in the domain of marketing the unexpected is often the norm. Normally, in the face of very much in­creased competition and rapid development in a product category, one would anticipate that a product would rapidly become obsolescent and move into the decline phase of its life-cycle. But, for Marketing: Theory & Practice this has not been the case.

Given such a track record it goes without saying that one should be very clear about one's objectives before considering tinkering with a tried and tested formula. Equally, it is clear that given the extensive and dynamic growth which has occurred over the past decade or so some reappraisal of both the market and the product is called for. As can be seen from the Prefaces to the earlier editions the original intention was to provide a synoptic but authoritative overview of both theory and practice on the major marketing topics a student (or practitioner) would be likely to encounter on first acquaintance with the subject. No particular assumptions were, or are, made about the age or experience of the pro­spective reader simply that they were either coming completely new to the subject or, perhaps, wished to remind themselves of prin­ciples or practices which they had not considered or used for some time. So it is with the Third Edition - this book is both an introduction to the subject of marketing as well as a work of refer-

Xl

ence to which the reader may return for revision or reminder about key concepts and issues which underpin successful marketing practice.

However, while the objectives remain the same the growth of the subject itself, as well as the enormous expansion of the number of students pursuing both broadly based and specialised courses, calls for both revision and extension of the earlier editions. Accordingly, in discussions with the publishers it was decided that this third edition would be even more comprehensive than its predecessors and that, given the creation of an enlarged European Union, the recruitment of authors would be extended to include experts from other centres of marketing excellence. The results are readily apparent from a comparison of the contents of the second and third editions. The second edition comprised 13 Chapters and con­tained 426 pages; this edition comprises 22 Chapters and 442 pages - a major development of the earlier editions.

Of the original authors only three remain -Baker (Chapters 1, 2 and 9), Brownlie (Chapter 14), and Crosier (Chapter 13). Six of the remaining seventeen chapters cover the same sub­jects as in the second edition but are by new authors:

Chapter 3 Sources and Status Stephen Brown of Marketing Theory

Chapter 4 Consumer Lyn McGregor Behaviour

Chapter 5 Organisational Shan Rajagopal Buyer Behaviour

Chapter 10 New Product Susan J. Hart Development

Chapter 12 Channel Management Sean Ennis

XlI Preface to the Third Edition

Chapter 16 Retailing Sara Carter (in place of the chapter 'The Distributive Trades')

It follows that eleven chapters (50%) are completely new. These are:

Chapter 6 Market Segmentation Chapter 7 Marketing Research Chapter 8 Modelling Markets Chapter 11 Pricing

Dale Littler John Webb

Peter Leeflang Adamantios

Chapter 15 Business to Business Marketing

Chapter 17 Customer Care Chapter 18 Consumerism Chapter 19 International

Marketing

Chapter 20 Marketing to Eastern Europe

Chapter 21 Beyond Relationship Marketing

Chapter 22 Marketing Theory and Practice in a Postmodern Era

Diamantopolous Ken Bernard

Bill Donaldson Daniel Tixier

Michael C. McDermott and

K.c. Chan Pervez Ghauri

K.c. Chan and Michael C.

McDermott Bernard Cova

and Olivier Badot

While all the authors worked to the same brief there are, inevitably, differences in the way in which they interpreted this. That said, it is the Editor's view that the contributing authors have provided authoritative overviews of their areas of expertise and so achieved the primary objective of creating a work of reference which will be of value to both newcomers and those wishing to up-date themselves on current thinking. We hope it meets with your approval.

MICHAEL J. BAKER