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is the Crist W. Blackwell Distinguished Professor of Undergraduate Education in the Kenan-Flagler Business School at the University of North Carolina
at Chapel Hill. He holds undergraduate and master’s degrees in business from Wayne State University in Detroit, and he received his PhD in marketing from Northwestern University. Professor Armstrong has contributed numerous articles to leading business journals. As a consul-tant and researcher, he has worked with many companies on marketing research, sales manage-ment, and marketing strategy.
But Professor Armstrong’s first love has always been teaching. His Blackwell Distinguished Professorship is the only permanent endowed professorship for distinguished undergraduate teaching at the University of North Carolina at Chapel Hill. He has been very active in the teach-ing and administration of Kenan-Flagler’s undergraduate program. His administrative posts have included Chair of Marketing, Associate Director of the Undergraduate Business Program, Director of the Business Honors Program, and many others. He has worked closely with business student groups and has received several campuswide and Business School teaching awards. He is the only repeat recipient of the school’s highly regarded Award for Excellence in Undergraduate Teaching, which he has received three times. Most recently, Professor Armstrong received the UNC Board of Governors Award for Excellence in Teaching, the highest teaching honor bestowed by the 16-campus University of North Carolina system.
About the Authors
is the S. C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management, Northwestern University. He received his master’s degree at the University of Chicago and his PhD at MIT, both in economics. Professor Kotler is
the author of Marketing Management (Pearson Prentice Hall), now in its thirteenth edition and the most widely used marketing text book in graduate business schools worldwide. He has authored dozens of other successful books and has written more than 100 articles in leading journals. He is the only three-time winner of the coveted Alpha Kappa Psi award for the best annual article in the Journal of Marketing .
Professor Kotler was named the first recipient of two major awards: the Distinguished Marketing Educator of the Year Award , given by the American Marketing Association and the Philip Kotler Award for Excellence in Health Care Marketing , presented by the Academy for Health Care Services Marketing. His numerous other major honors include the Sales and Marketing Executives International Marketing Educator of the Year Award; the European Association of Marketing Consultants and Trainers Marketing Excellence Award ; the Charles Coolidge Parlin Marketing Research Award ; and the Paul D. Converse Award , given by the American Marketing Association to honor “outstanding contributions to science in marketing.” In a recent Financial Times poll of 1,000 senior executives across the world, Professor Kotler was ranked as the fourth “most influential business writer/guru” of the twenty-first century.
Professor Kotler has served as chairman of the College on Marketing of the Institute of Management Sciences, a director of the American Marketing Association, and a trustee of the Marketing Science Institute. He has consulted with many major U.S. and international compa-nies in the areas of marketing strategy and planning, marketing organization, and international marketing. He has traveled extensively throughout Europe, Asia, and South America, advising companies and governments about global marketing practices and opportunities.
Gary
Armstrong
As a team, Philip Kotler and Gary Armstrong provide a blend of skills uniquely suited to writing an introductory marketing text. Professor Kotler is one of the world’s leading authorities on mar-keting. Professor Armstrong is an award-winning teacher of undergraduate business students. Together they make the complex world of marketing practical, approachable, and enjoyable.
Philip
Kotler
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vi About the Authors
is Assistant Professor of Marketing in the School of Business at the American University in Cairo. He is also Director of El-Khazindar Business Research and Case
Center (KCC), which is the first center in the MENA region to focus on developing world-class refereed case studies. He was awarded his PhD from the George Washington University in 2006, and his MBA & BSc from the American University in Cairo in 1997 and 2001 respectively. His professional experience includes four years at Procter & Gamble Egypt; he also worked as a mar-keting consultant for several local firms.
His research focuses on brand equity, nation branding, branding strategies, and social market-ing. His work has been published and presented in leading academic journals, such as the Journal of Product and Brand Management , the Journal of Technology Marketing, the International Journal of Marketing Studies, and the Journal of International Business and Cultural Studies, and presented at conferences for the American Marketing Association (AMA), the Academy of Marketing Science (AMS), the Society for Marketing Advances, the Academy of Management (SMA), the Thought Leaders International Conference on Brand Management, Frontiers in Services Conference, and the Association for Global Business, among others.
is a faculty member at the Dubai Women’s College, Higher Colleges of Technology in United Arab Emirates. He holds an MBA from the University of Dhaka, Bangladesh,
and is currently completing his DBA at the Business School Laussane, Switzerland. He has been teaching marketing since 2006.
Anwar Habib has 20 years of practical marketing experience working for Unilever, Ciba-Geigy and Johnson & Johnson, in South Asia, Australia and the Middle East. He started out as a brand manager at Unilever, and gradually progressed through senior roles in marketing and sales. His last role before teaching was General Manager of Johnson & Johnson Vision Care for the Middle East and North Africa region.
Ahmed
Tolba
Anwar
Habib
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Brief Contents Features matrix xiv
Foreword xvii
Preface xviii
Acknowledgments xxiii
Part 1 Defining Marketing and the Marketing Process 1
1 Marketing: Creating and Capturing Customer Value 2
2 Company and Marketing Strategy: Partnering to Build Customer Relationships 36
Part 2 Understanding the Marketplace and Consumers 65
3 Analyzing the Marketing Environment 66
4 Marketing Research 94
5 Consumer Behavior 124
6 Business Markets and Business Buyer Behavior 152
Part 3 Designing a Customer-Driven Strategy and Mix 175
7 Customer-Driven Marketing Strategy: Segmentation, Targeting & Positioning 176
8 Products, Services, and Brands: Building Customer Value 202
9 New-Product Development and Product Life-Cycle Strategies 238
10 Pricing 266
11 Communicating Customer Value: Integrated Marketing Communications Strategy 300
12 Promotion Mix Strategies: Advertising and Public Relations 326
13 Direct and Online Marketing: Building Direct Customer Relationships 368
14 Managing Marketing Channels 400
Part 4 Extending Marketing 439
15 Creating Competitive Advantage 440
16 The Global Marketplace 466
17 Sustainable Marketing: Social Responsibility and Ethics 494
Appendix 1 Marketing Plan A1
Appendix 2 Marketing by the Numbers A11
Appendix 3 Careers in Marketing A29
References R1
English-Arabic Glossary G1
Index I1
Credits C1
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Contents Part 1 Defining Marketing and the Marketing
Process 1
Chapter 1 Marketing: Creating and Capturing
Customer Value 2
Chapter Preview 2 Objective Outline 4 What Is Marketing? 4
Marketing Defined 5 | The Marketing Process 5
Understanding the Marketplace and Customer Needs 6
Customer Needs, Wants, and Demands 6 | Market Offerings—
Products, Services, and Experiences 7 |
Customer Value and Satisfaction 7 | Exchanges and
Relationships 8 | Markets 8
Designing a Customer-Driven Marketing Strategy 9 Selecting Customers to Serve 9 | Choosing a Value
Proposition 10 | Marketing Management Orientations 10
Preparing an Integrated Marketing Plan and Program 13 Building Customer Relationships 13
Customer Relationship Management 14
Real Marketing 1.1 Etisalat: Delighting Customers 15
The Changing Nature of Customer Relationships 16
Real Marketing 1.2 Media and Direct Communication
Trends in the Arab World 19
Partner Relationship Management 20
Capturing Value from Customers 21 Creating Customer Loyalty and Retention 21 | Growing
Share of Customer 22 | Building Customer Equity 22
The Changing Marketing Landscape 24 The Digital Age 24 | Rapid Globalization 26 | The Call
for More Ethics and Social Responsibility 27 | The Growth
of Not-for-Profit Marketing 27
So, What is Marketing? Pulling It All Together 28 Reviewing Objectives and Key Terms 30 | Key Terms 31 |
Discussing & Applying the Concepts 32 | Focus on
Technology 32 | Focus on Ethics 32 | Marketing
by the Numbers 33
Video Case: Harley-Davidson 33
Company Case Diwan: A Tale of Heart Over Matter 33
Chapter 2 Company and Marketing Strategy:
Partnering to Build Customer
Relationships 36
Chapter Preview 36 Objective Outline 38
Companywide Strategic Planning: Defining Marketing’s Role 37
Defining a Market-Oriented Mission 39 | Setting Company
Objectives and Goals 39
Designing the Business Portfolio 41 Analyzing the Current Business Portfolio 41 | Developing
Strategies for Growth and Downsizing 43
Real Marketing 2.1 Mo’men Sandwich: A Recipe for Success 44
Planning Marketing: Partnering to Build Customer Relationships 46
Partnering with Other Company Departments 46 |
Partnering with Others in the Marketing System 47
Marketing Strategy and the Marketing Mix 48 Customer-Driven Marketing Strategy 49
Real Marketing 2.2 Niching Voluntourism, A New Way to See
the World 51
Developing an Integrated Marketing Mix 52
Managing the Marketing Effort 53 Marketing Analysis 54 | Marketing Planning 54 | Marketing
Implementation 56 | Marketing Department Organization 56 |
Marketing Control 57
Measuring and Managing Return on Marketing Investment 58
Reviewing Objectives and Key Terms 60 | Key Terms 61 |
Discussing and Applying the Concepts 61 | Focus on
Technology 61 | Focus on Ethics 62 | Marketing by the
Numbers 62
Video Case: Live Nation 62
Company Case Bahrain Bay: Building Customer
Relations for the Future 63
Part 2 Understanding the Marketplace and Consumers 65
Chapter 3 Analyzing the Marketing
Environment 66
Chapter Preview 66 Objective Outline 68 The Company’s Microenvironment 68
The Company 69 | Suppliers 69 | Marketing Inter-
mediaries 69 | Competitors 70 | Publics 70 | Customers 71
The Company’s Macroenvironment 71 Demographic Environment 72
Changing Age Structure of the Population 73 | The Changing
Arab Family 75
Real Marketing 3.1 Niching: ‘On the Run’ in Egypt 76
Geographic Shifts in Population 77 | Education and
Employment 77 | Increasing Diversity 78
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Real Marketing 5.1 How McDonald’s Markets to the Arab
Consumers 129
Social Factors 131 | Personal Factors 134 | Psychological
Factors 136
Types of Buying Decision Behavior 139 Complex Buying Behavior 139 | Dissonance-Reducing
Buying Behavior 140 | Habitual Buying Behavior 140 |
Variety-Seeking Buying Behavior 140
The Buyer Decision Process 141 Need Recognition 141 | Information Search 141 | Evaluation
of Alternatives 142 | Purchase Decision 142 | Postpurchase
Behavior 143
The Buyer Decision Process for New Products 143 Real Marketing 5.2 Lexus: Delighting Customers After the Sale
to Keep Them Coming Back 144
Stages in the Adoption Process 145 | Individual Differences
in Innovativeness 145
Influence of Product Characteristics on Rate of Adoption 146 Reviewing Objectives and Key Terms 147 | Key Terms 148 |
Discussing & Applying the Concepts 148 | Focus on
Technology 148 | Focus on Ethics 149 | Marketing by
the Numbers 149
Video Case: Wild Planet 149
Company Case Arabic BlackBerry: Adapting to the
Language of the Market 150
Chapter 6 Business Markets and Business
Buyer Behavior 152
Chapter Preview 152 Objective Outline 154 Business Markets 154
Market Structure and Demand 154 | Nature of the
Buying Unit 155 | Types of Decisions and the Decision
Process 156
Real Marketing 6.1 Aramex Partners with Business
Customers 157
Business Buyer Behavior 162 Major Types of Buying Situations 158 | Participants in the
Business Buying Process 159 | Major Influences on Business
Buyers 161
The Business Buying Process 162 Problem Recognition 162 | General Need
Description 163 | Product Specification 163 | Supplier
Search 163 | Proposal Solicitation 163 | Supplier
Selection 163
Real Marketing 6.2 International Marketing Manners:
When in Rome, Do as the Romans Do 164
Order-Routine Specification 164 | Performance Review 165
E-Procurement: Buying on the Internet 166 Institutional and Government Markets 167
Institutional Markets 167 | Government Markets 168
Reviewing Objectives and Key Terms 170 | Key Terms
171 | Discussing & Applying the Concepts 171 | Focus on
Technology 171 | Focus on Ethics 172 | Marketing by the
Numbers 172
Video Case: Eaton 172
Company Case Boeing: Selling a Dream(liner) 173
Economic Environment 79 Changes in Income 79 | Changing Consumer Spending
Patterns 80
Natural Environment 80 Technological Environment 82 Political and Social Environment 83
Legislation Regulating Business 83 | Increased Emphasis
on Ethics and Socially Responsible Actions 84
Cultural Environment 85 Persistence of Cultural Values 85 | Shifts in Secondary Cultural
Values 86
Responding to the Marketing Environment 88 Real Marketing 3.2 First National Bank: Now You Can
Be a Movie Star 89
Reviewing Objectives and Key Terms 90 | Key
Terms 90 | Discussing and Applying the Concepts 91 | Focus
on Technology 91 | Focus on Ethics 91 | Marketing by the
Numbers 92
Video Case: TOMS Shoes 92
Company Case Al Jazirah: The Genius Inventor 92
Chapter 4 Marketing Research 94
Chapter Preview 94 Objective Outline 96 Marketing Information and Customer Insights 95 Assessing Marketing Information Needs 97 Developing Marketing Information 98
Internal Data 98 | Marketing Intelligence 99
Marketing Research 100 Defining the Problem and Research Objectives 100 |
Developing the Research Plan 101 | Gathering Secondary
Data 101 | Primary Data Collection 103
Real Marketing 4.1 Collecting Brand Information
in the Arab World 109
Implementing the Research Plan 111 | Interpreting and
Reporting the Findings 111
Analyzing and Using Marketing Information 112 Customer Relationship Management (CRM) 112 | Distributing
and Using Marketing Information 113
Other Marketing Information Considerations 114 Marketing Research in Small Businesses and Nonprofit
Organizations 114 | International Marketing Research 115 |
Public Policy and Ethics in Marketing Research 116
Real Marketing 4.2 Luxury Brands in the UAE 117
Reviewing Objectives and Key Terms 119 | Key
Terms 120 | Discussing & Applying the Concepts 120 |
Focus on Technology 120 | Focus on Ethics 121
Marketing by the Numbers 121
Company Case Ariel in Egypt: The Value
of Consumer Insight 121
Chapter 5 Consumer Behavior 124
Chapter Preview 124 Objective Outline 126 Model of Consumer Behavior 126 Characteristics Affecting Consumer Behavior 127
Cultural Factors 127
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Video Case: Swiss Army Brands 235
Company Case Alshaya: The House of Brands 235
Chapter 9 New-Product Development and
Product Life-Cycle Strategies 238
Chapter Preview 238 Objective Outline 240 New-Product Development Strategy 240 The New-Product Development Process 241
Idea Generation 242 | Idea Screening 243 | Concept
Development and Testing 244 | Concept Testing 244 |
Marketing Strategy Development 245 | Business
Analysis 246 | Product Development 246 | Test Marketing
247 | Commercialization 249
Managing New-Product Development 250 Customer-Centered New-Product Development 250 |
Team-Based New-Product Development 251 |
Systematic New-Product Development 251
Real Marketing 9.1 Nasamat Al Riyadh: TMG’s New Product in
the Kingdom of Saudi Arabia 252
Product Life-cycle Strategies 253 Introduction Stage 255 | Growth Stage 255 | Maturity Stage 256
Real Marketing 9.2 Etisalat Challenges Different Stages of the
Product Life Cycle 257
Decline Stage 258
Additional Product and Service Considerations 258
Product Decisions and Social Responsibility 258 | International
Product and Services Marketing 259
Reviewing Objectives and Key Terms 261 | Key Terms 262 |
Discussing & Applying the Concepts 262 | Focus on
Technology 263 | Focus on Ethics 263 | Marketing by the
Numbers 263
Video Case: Electrolux 264
Company Case Activia in Egypt 264
Chapter 10 Pricing 266
Chapter Preview 266 Objective Outline 268 What is a Price? 267
Factors to Consider When Setting Prices 269
Customer Perceptions of Value 269 Value-Based Pricing 269
Company and Product Costs 271 Types of Costs 271
Real Marketing 10.1 Cheap Chinese Products Flood into
Arab Markets 272
Costs at Different Levels of Production 272 | Costs as
a Function of Production Experience 273 | Cost-Plus
Pricing 274 | Break-Even Analysis and Target Profit Pricing 274
Other Internal and External Considerations Affecting Price Decisions 276
Overall Marketing Strategy, Objectives, and
Mix 276 | Organizational Considerations 277 | The Market
and Demand 277
Real Marketing 10.2 The World Wonder, Dubai 278
Other External Factors 282
Part 3 Designing a Customer-Driven Strategy and Mix 175
Chapter 7 Customer-Driven Marketing
Strategy: Segmentation, Targeting,
and Positioning 176
Chapter Preview 176 Objective Outline 178 Market Segmentation 178
Segmenting Consumer Markets 178
Real Marketing 7.1 Ramadan Spirit in the Arab World 183
Segmenting Business Markets 184 | Segmenting International
Markets 184 | Requirements for Effective Segmentation 185
Market Targeting 186 Evaluating Market Segments 186 | Selecting Target Market
Segments 187
Real Marketing 7.2 Islamic Banking 189
Socially Responsible Target Marketing 191
Differentiation and Positioning 192 Positioning Maps 193 | Choosing a Differentiation and
Positioning Strategy 193 | Communicating and Delivering the
Chosen Position 197
Reviewing Objectives and Key Terms 198 | Key Terms 199 |
Discussing & Applying the Concepts 199 | Focus on
Technology 199 | Focus on Ethics 200 | Marketing by the
Numbers 200
Video Case: Meredith 200
Company Case The Arab Online World—Microsoft Maren 200
Chapter 8 Products, Services, and Brands:
Building Customer Value 202
Chapter Preview 202 Objective Outline 204 What is a Product? 204
Products, Services, and Experiences 204 | Levels of Product
and Services 205 | Product and Service Classifications 206
Product and Service Decisions 209 Individual Product and Service Decisions 209 | Product Line
Decisions 213 | Product Mix Decisions 214
Branding Strategy: Building Strong Brands 215 Brand Equity 215
Real Marketing 8.1 Breakaway Brands: Connecting with
Customers 217
Building Strong Brands 218 | Managing
Brands 223 | International and Regional Branding
Decisions 224
Services Marketing 224 Real Marketing 8.2 Fayrouz: An International Brand Built in
the Region 225
Nature and Characteristics of a Service 225 | Marketing
Strategies for Service Firms 227
Real Marketing 8.3 Service Marketing 230
Reviewing Objectives and Key Terms 232 | Key
Terms 233 | Discussing & Applying the Concepts 233 |
Focus on Technology 233 | Focus on Ethics 234 |
Marketing by the Numbers 234
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Chapter 12 Promotion Mix Strategies:
Advertising and Public
Relations 326
Chapter Preview 326 Objective Outline 328 Advertising 328
Setting Advertising Objectives 329 | Setting the Advertising
Budget 330 | Developing Advertising Strategy 331
Evaluating Advertising Effectiveness and Return on Advertising
Investment 338 | Other Advertising Considerations 338
Real Marketing 12.1 Dove: Championing Real Beauty in the
Arab World 340
Public Relations 341 The Role and Impact of Public Relations 342 | Major Public
Relations Tools 343
Personal Selling 345 The Role of the Sales Force 346
Managing the Sales Force 347 Designing Sales Force Strategy and Structure 348 | Recruiting
and Selecting Salespeople 350 | Training
Salespeople 351 | Compensating Salespeople 352 | Supervising
and Motivating Salespeople 352 | Evaluating Salespeople and
Sales-Force Performance 355
The Personal Selling Process 355 Steps in the Selling Process 355 | Personal Selling and
Managing Customer Relationships 357
Sales Promotion 358 Rapid Growth of Sales Promotion 358
Real Marketing 12.2 Qatar Automobiles Company 359
Sales Promotion Objectives 359 | Major Sales Promotion
Tools 360 | Developing the Sales Promotion Program 362
Reviewing Objectives and Key Terms 363 | Key
Terms 365 | Discussing & Applying the Concepts 365 | Focus
on Technology 365 | Focus on Ethics 365 | Marketing by the
Numbers 366
Video Case: The Principal Financial Group 366
Company Case Coca-Cola: Advertising Hits 366
Chapter 13 Direct and Online Marketing:
Building Direct Customer
Relationships 368
Chapter Preview 368 Objective Outline 370 The New Direct Marketing Model 370 Growth and Benefits of Direct Marketing 371
Benefits to Buyers 371 | Benefits to Sellers 372
Customer Databases and Direct Marketing 373 Forms of Direct Marketing 373
Direct-Mail Marketing 374 | Telephone Marketing 375 | Direct-
Response Television Marketing 375 | Kiosk
Marketing 376 | New Digital Direct Marketing Technologies 377
Online Marketing 379 Marketing and the Internet 379 | Online Marketing Domains 380
Real Marketing 13.1 Online Business in the Arab World 381
Setting Up An Online Marketing Presence 384 Creating a Website 384 | Placing Ads and Promotions
Online 386 | Creating or Participating in Online Social
Networks 387
New-Product Pricing Strategies 283 Market-Skimming Pricing 283 | Market-Penetration
Pricing 283
Product Mix Pricing Strategies 284 Product Line Pricing 284 | Optional-Product
Pricing 285 | Captive-Product Pricing 285 | By-Product
Pricing 285 | Product Bundle Pricing 286
Price-Adjustment Strategies 286 Discount and Allowance Pricing 286 | Segmented
Pricing 287 | Psychological Pricing 287 | Promotional
Pricing 288 | Geographical Pricing 289 | Dynamic
Pricing 290 | International Pricing 291
Price Changes 292 Initiating Price Changes 292 | Responding to Price
Changes 293
Reviewing Objectives and Key Terms 295 | Key
Terms 296 | Discussing & Applying the Concepts 296 |
Focus on Technology 297 | Focus on Ethics 297 | Marketing
by the Numbers 297
Video Case: Ikea 298
Company Case Flydubai Pricing Strategy: Flydubai Enters the Airline Market 298
Chapter 11 Communicating Customer
Value: Integrated Marketing
Communications Strategy 300
Chapter Preview 300 Objective Outline 302 The Promotion Mix 301 Integrated Marketing Communications 303
The New Marketing Communications Landscape 303 |
The Shifting Marketing Communications Model 303
The Need for Integrated Marketing Communications 304
Real Marketing 11.1 Economic Slowdown and the
Digital Advertising Boom in the Arab World 305
A View of the Communications Process 307 Steps in Developing Effective Marketing Communications 308
Identifying the Target Audienc 308 | Determining
the Communication Objectives 308 | Designing a
Message 309 | Choosing Media 311 | Selecting the
Message Source 313 | Collecting Feedback 313
Setting the Total Promotion Budget and Mix 314
Setting the Total Promotion Budget 314
Real Marketing 11.2 Qatar Airways 315
Shaping the Overall Promotion Mix 316
Integrating the Promotion Mix 319
Socially Responsible Marketing Communication 319
Advertising and Sales Promotion 319 | Personal
Selling 320
Reviewing Objectives and Key Terms 320 | Key
Terms 321 | Discussing & Applying the Concepts 321 |
Focus on Technology 322 | Focus on Ethics 322 | Marketing
by the Numbers 322
Video Case: Crispin Porter + Bogusky 323
Company Case Burger King: Promoting a Food Fight 323
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Real Marketing 13.2 Social Networks in the Arab World 388
Using Email 389
The Promise and Challenges of Online Marketing 390 Public Policy Issues in Direct Marketing 390
Irritation, Unfairness, Deception, and Fraud 390 | Invasion of
Privacy 391
Reviewing Objectives and Key Terms 392 | Key
Terms 393 | Discussing & Applying the Concepts 394 | Focus
on Technology 394 | Focus on Ethics 394 | Marketing by the
Numbers 395
Video Case: Google 395
Company Case Elsou2.com: The First Online Supermarket
in the Arab World 395
Chapter 14 Managing Marketing
Channels 400
Chapter Preview 400 Objective Outline 402 Supply Chains and the Value Delivery Network 401 The Nature and Importance of Marketing Channels 403
How Channel Members Add Value 403 | Number of Channel
Levels 404
Channel Behavior and Organization 405 Channel Behavior 406 | Vertical Marketing
Systems 407 | Horizontal Marketing Systems 409 | Multichannel
Distribution Systems 409 | Changing Channel Organization 410
Channel Design Decisions 411 Analyzing Consumer Needs 411 | Setting
Channel Objectives 412 | Identifying Major
Alternatives 412 | Evaluating the Major
Alternatives 414 | Designing International Distribution
Channels 414
Channel Management Decisions 415 Selecting Channel Members 415 | Managing and Motivating
Channel Members 415
Real Marketing 14.1 Toys “R” Us 416
Public Policy and Distribution Decisions 417
Marketing Logistics and Supply Chain Management 417
Nature and Importance of Marketing Logistics 417 | Goals
of the Logistics System 419 | Major Logistics
Functions 419 | Integrated Logistics Management 421
Retailing 423 Types of Retailers 424
Retailer Marketing Decisions 427 Segmentation, Targeting, Differentiation, and Positioning
Decisions 427 | Product Assortment and Services Division 428
Real Marketing 14.2 Orchestrating the Retail Experience 429
Price Decision 430 | Promotion Decision 430 | Place
Decision 430
Wholesaling 431 Agents and Distributors 431
Reviewing Objectives and Key Terms 433 | Key
Terms 434 | Discussing & Applying the Concepts 435 | Focus
on Technology 435 | Focus on Ethics 435 | Marketing by the
Numbers 436
Video Case: Progressive 436
Company Case Zara: The Technology Giant of the Fashion
World 436
Part 4 Extending Marketing 439
Chapter 15 Creating Competitive
Advantage 440
Chapter Preview 440 Objective Outline 442 Competitor Analysis 442
Identifying Competitors 442 | Assessing Competitors 443 |
Selecting Competitors to Attack and Avoid 445
Real Marketing 15.1 Middle Eastern Airlines Filling
the Market Gaps 448
Designing a Competitive Intelligence System 448
Competitive Strategies 449 Approaches to Marketing Strategy 449 | Basic Competitive
Strategies 451 | Competitive Positions 452
Real Marketing 15.2 Ritz-Carlton: Creating Customer
Intimacy 453
Market Leader Strategies 454 | Market Challenger
Strategies 456 | Market Follower Strategies 458 | Market
Nicher Strategies 458
Balancing Customer and Competitor Orientations 459
Reviewing Objectives and Key Terms 460 | Key Terms 461 |
Discussing & Applying the Concepts 461 | Focus on
Technology 461 | Focus on Ethics 462 | Marketing
by the Numbers 462
Video Case: Umpqua Bank 462
Company Case Bose: Competing by Being Truly Different 463
Chapter 16 The Global Marketplace 466
Chapter Preview 466 Objective Outline 468 Global Marketing Today 468 Looking at the Global Marketing Environment 470
The International Trade System 470 | Economic
Environment 472 | Political-Legal
Environment 473 | Cultural Environment 474
Deciding Whether to Go Global 477 Deciding Which Markets to Enter 478 Deciding How to Enter the Market 479
Exporting 480 | Joint Venturing 480 | Direct Investment 481
Deciding on the Global Marketing Program 482 Real Marketing 16.1 Oreos and Milk, Chinese Style 483
Product 484
Real Marketing 16.2 Desserts in Ramadan 485
Promotion 485 | Price 486 | Distribution Channels 487
Deciding on the Global Marketing Organization 488
Reviewing Objectives and Key Terms 489 | Key Terms 490 |
Discussing & Applying the Concepts 490 | Focus on
Technology 490 | Focus on Ethics 491 | Marketing
by the Numbers 491
Video Case: Nivea 491
Company Case B-Tech: A Successful Regional Brand 492
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Chapter 17 Sustainable Marketing: Social
Responsibility and Ethics 494
Chapter Preview 494 Objective Outline 496 Sustainable Marketing 496 Social Criticisms of Marketing 498
Marketing’s Impact on Individual
Consumers 498 | Marketing’s Impact on Society as a
Whole 503 | Marketing’s Impact on Other Businesses 505
Consumer Actions to Promote Sustainable Marketing 506
Consumerism 506
Real Marketing 17.1 Improving Society Via Cultural and
Islamic Virtues 507
Environmentalism 508 | Public Actions to Regulate
Marketing 512
Business Actions Toward Sustainable Marketing 513
Sustainable Marketing Principles 513
Real Marketing 17.2 Takaful: A True Customer-Driven
Product 514
Marketing Ethics 517 The Sustainable Company 519
Reviewing Objectives and Key Terms 521 | Key
Terms 522 | Discussing & Applying the Concepts 522 | Focus
on Technology 523 | Focus on Ethics 523 | Marketing by the
Numbers 523
Video Case: Land Rover 524
Company Case ExxonMobil: Social Responsibility in a
Commodity Market 524
Appendix 1 Marketing Plan A1 Appendix 2 Marketing by the Numbers A11 Appendix 3 Careers in Marketing A29 References R1 English-Arabic Glossary G1 Index I1 Credits C1
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Feature matrix
Chapter 1 Chapter opening case BBK, formerly known as The Bank of Bahrain and Kuwait B.S.C.
Regional
Real Marketing 1.1 Etisalat: Delighting Customers Regional
Real Marketing 1.2 Media and Direct Communication Trends in the Arab World
Regional
Company Case Diwan: A Tale of Heart Over Matter Egypt
Chapter 2 Chapter opening case The London Olympics United Kingdom
Real Marketing 2.1 Mo’men Sandwich: A Recipe for Success Egypt
Real Marketing 2.2 Niching: Voluntourism, A New Way to See the World Regional
Company Case Bahrain Bay: Building Customer Relations for the Future
Bahrain
Chapter 3 Chapter opening case The Dubai property market UAE
Real Marketing 3.1 Niching: ‘On the Run’ in Egypt Egypt
Real Marketing 3.2 First National Bank: Now You Can Be a Movie Star Lebanon
Company Case Al Jazirah: The Genius Inventor Saudi Arabia
Chapter 4 Chapter opening case Maktoob Research’s ‘Arab Eye’ website Regional
Real Marketing 4.1 Collecting Brand Information in the Arab World Regional
Real Marketing 4.2 Luxury Brands in the UAE UAE
Company Case Ariel in Egypt: The Value of Consumer Insight Egypt
Chapter 5 Chapter opening case Al-Ahli and Zamalek football teams Egypt
Real Marketing 5.1 How McDonald’s Markets to the Arab Consumers Regional
Real Marketing 5.2 Lexus: Delighting Customers After the Sale to Keep Them Coming Back
UAE
Company Case Arabic BlackBerry: Adapting to the Language of the Market
Regional
Chapter 6 Chapter opening case Advanced Electronics Company Saudi Arabia
Real Marketing 6.1 Aramex Partners with Business Customers Regional
Real Marketing 6.2 International Marketing Manners: When in Rome, Do as the Romans Do
Global
Company Case Boeing: Selling a Dream(Liner) United States
Chapter 7 Chapter opening Case Damas Group Regional
Real Marketing 7.1 Ramadan Spirit in the Arab World Regional
Real Marketing 7.2 Islamic Banking Regional
Company Case The Arab Online World—Microsoft Maren Regional
Chapter 8 Chapter opening case Bahrain Islamic Bank Bahrain
Real Marketing 8.1 Breakaway Brands: Connecting with Customers Global
Real Marketing 8.2 Fayrouz: An International Brand Built in the Region Egypt
Real Marketing 8.3 Service Marketing Global
Company Case Alshaya: The House of Brands Regional
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Chapter 9 Chapter opening Case Apple Global
Real Marketing 9.1 Nasamat Al Riyadh: TMG’s New Product in the Kingdom of Saudi Arabia
Saudi Arabia
Real Marketing 9.2 Etisalat Challenges Different Stages of the Product Life Cycle
Regional
Company Case Activia in Egypt Egypt
Chapter 10 Chapter opening case Carrefour Regional
Real Marketing 10.1 Cheap Chinese Products Flood into Arab Markets Regional
Real Marketing 10.2 The World Wonder, Dubai UAE
Company Case Flydubai Pricing Strategy UAE
Chapter 11 Chapter opening case Unilever Arabia Regional
Real Marketing 11.1 Economic Slowdown and the Digital Advertising Boom in the Arab World
Regional
Real Marketing 11.2 Qatar Airways Qatar
Company Case Burger King: Promoting a Food Fight Global
Chapter 12 Chapter opening case TBWA\RAAD UAE
Real Marketing 12.1 Dove: Championing Real Beauty in the Arab World Regional
Real Marketing 12.2 Qatar Automobiles Company Qatar
Company Case Coca-Cola: Advertising Hits Regional
Chapter 13 Chapter opening case Amazon.com Global
Real Marketing 13.1 Online Business in the Arab World Regional
Real Marketing 13.2 Social Networks in the Arab World Regional
Company Case Elsou2.com: The First Online Supermarket in the Arab World
Egypt
Chapter 14 Chapter opening case Al Zaytoun Palestine
Real Marketing 14.1 Toys “R” Us Regional
Real Marketing 14.2 Orchestrating the Retail Experience Global
Company Case Zara: The Technology Giant of the Fashion World Global
Chapter 15 Chapter opening case Bahrain Polytechnic Bahrain
Real Marketing 15.1 Middle Eastern Airlines Filling the Market Gaps Regional
Real Marketing 15.2 Ritz-Carlton: Creating Customer Intimacy Global
Company Case Bose: Competing by Being Truly Different Global
Chapter 16 Chapter opening case McDonald’s Global
Real Marketing 16.1 Oreos and Milk, Chinese Style China
Real Marketing 16.2 Ramadan Desserts Regional
Company Case B-Tech: A Successful Regional Brand Egypt
Chapter 17 Chapter opening case
CSR Middle East Regional
Real Marketing 17.1 Improving Society Via Cultural and Islamic Virtues Regional
Real Marketing 17.2 Takaful: A True Customer-Driven Product Regional
Company Case ExxonMobil: Social Responsibility in a Commodity Market
United States
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Foreword We are very pleased to see the Arab World Edition of Principles of Marketing. The text was first published for the North America region and has been successfully adopted by hundreds of uni-versities in the Middle East and in other parts of the world. This great edition for the Arab world demonstrates that this textbook, in its scope and depth, effectively meets the demands of educa-tors for a book that offers a comprehensive focus on marketing as a tool for creating valuable customer experiences in various and changing cultural settings.
The Arab World Edition brings to the readers the local marketing scenario, perspectives, and practices through case studies and examples.
The book provides local insights into the exciting world of marketing in a region that has become a competing arena for increasing numbers of national and multinational corporations.
While maintaining the essence of the original U.S. edition, this Arab world version provides students with concepts, approaches, and examples relevant to the Arab culture and its business environment.
We are thrilled to see it available for educators and students in the Arab world and hope that they find it useful.
Philip Kotler
Gary Armstrong
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Preface
The New Arab World Edition! Creating More Value for You! The goal of every marketer is to create more value for customers. So it makes sense that our goal for the new Arab World Edition of Kotler & Armstrong’s Principles of Marketing is to continue creating more value for you— our customer. Our goal is to introduce you to the fascinating world of modern marketing in an innovative yet practical and enjoyable way, incorporating relevant examples from across the Arab region and across the globe. In this way, the Arab World Edition has the advantage of offering the best of both the regional, as well as the global, worlds of marketing.
This Arab World Edition aims to help students in the region to understand and apply the concepts and practices of modern marketing, by relating marketing strategies and theory to students’ experiences in daily life. We have tried to bring to life global marketing concepts by showcasing and analyzing regional marketing initiatives and practices from all over the Arab world. Of course, we have also retained global examples which demonstrate marketing theory and practice in an international context. In this way, the Arab World Edition has the advantage of offering the best of both the regional, as well as the global, worlds of marketing.
Marketing: Creating Customer Value and Relationships A recent survey of top marketers showed that they all share a common goal: putting the consumer at the heart of marketing. Today’s marketing is all about creating customer value and building profitable customer relationships. It starts with understanding consumer needs and wants, decid-ing which target markets the organization can serve best, and developing a compelling value proposition by which the organization can attract, keep, and grow targeted consumers. If the organization does these things well, it will reap the rewards in terms of market share, profits, and customer equity.
Five Major Value Themes From beginning to end, the Arab World Edition of Principles of Marketing develops an innovative customer-value and customer-relationships framework that captures the essence of today’s mar-keting. It builds on five major value themes:
1. Creating value for customers in order to capture value from customers in return . Today’s mar-keters must be good at creating customer value and managing customer relationships. Outstanding marketing companies understand the marketplace and customer needs, design value-creating marketing strategies, develop integrated marketing programs that deliver customer value and delight, and build strong customer relationships. In return, they capture value from customers in the form of sales, profits, and customer loyalty.
This innovative customer-value framework is introduced at the start of Chapter 1 in a five-step marketing process model, which details how marketing creates customer value and cap-tures value in return. The framework is carefully explained in the first two chapters and then fully integrated throughout the remainder of the text.
2. Building and managing strong, value-creating brands. Well-positioned brands with strong brand equity provide the basis upon which to build customer value and profitable customer relationships. Today’s marketers must position their brands powerfully and manage them well. They must build close brand relationships and experiences with customers.
3. Measuring and managing return on marketing. Marketing managers must ensure that their marketing budgets are being spent wisely. In the past, many marketers spent freely on big, expensive marketing programs, often without thinking carefully about the finan-cial returns on their spending. But that has all been changing in recent years. ‘Marketing
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Preface xix
accountability’—measuring and managing return on marketing investments—has now become an important part of strategic marketing decision making. This emphasis on mar-keting accountability is addressed throughout this book.
4. Harnessing new marketing technologies. New digital and other high-tech marketing develop-ments are dramatically changing how consumers and marketers relate to one another. The Arab World Edition thoroughly explores the new technologies impacting marketing, from ‘Web 2.0’ in Chapter 1 to new-age digital marketing and online technologies in Chapters 12 and 13 to the exploding use of online social networks and customer-generated marketing in Chapters 1 , 5 , 11 , 13 , and elsewhere.
5. Sustainable marketing around the globe. As technological developments make the world an increasingly smaller and more fragile place, marketers must be good at marketing their brands globally and in responsible and ethical ways. Material and examples throughout the Arab World Edition emphasize the concept of sustainable marketing—meeting the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs.
Adapted for Students in the Arab World We’ve thoroughly adapted Principles of Marketing to meet the needs of students in the Arab region, by including examples which reflect the marketing environment and experience of businesses operating in the Arab region, while still retaining a global perspective overall. We have also included cultural and social insights which will be more familiar and relevant to our audience. We retain Kotler & Armstrong’s successful formula: a sharp focus on how to create, communicate and deliver value to customers, and we discuss the major trends and forces impacting marketing in this era of customer value and relationships. Here are just some of the ways in which we’ve adapted the book to be ideal for students in the Arab world.
• Throughout each chapter, Arab businesses and familiar cultural examples are integrated into the text, making the whole book more relevant for our readers.
• In-depth case studies in each chapter show marketing principles and concepts in practice, at the Chapter Openers, the in-chapter “Real Marketing” boxes, and end-of-chapter Company Cases. These now feature a well-balanced spread of global examples alongside compa-nies and examples from across the Arab region including Saudi Arabia, the United Arab Emirates, Egypt, Jordan, Palestine, Lebanon, Qatar, Bahrain, Kuwait, Northern Africa, and elsewhere.
• An English-Arabic Glossary has been added at the end of the book, providing a translation of the key terms found in each chapter.
• Each chapter has been carefully edited to adapt the English vocabulary to be sympathetic to students whose first language is not English. We have ensured that over-complicated words, sayings or idioms are replaced with straightforward language so that students can focus their energy on understanding the concepts.
• The book has been reduced in length to 17 focused chapters, to meet the demand for a resource which is easier to handle and cover in the time available.
Real Value Through Real Marketing Principles of Marketing features in-depth, real-world examples and stories that show concepts in action and reveal the drama of modern marketing. In the Arab World Edition, every Chapter Opening case study, “Real Marketing” box and end-of-chapter Company Case has been reviewed for its relevance to you, our Arab world audience. We have replaced many of these case studies throughout the book with examples from the Arab region which will provide familiar, fresh and relevant insights into real marketing practices. We have deliberately retained many other exam-ples from across the world to emphasize the global nature of modern day marketing. A selection of these examples include the following:
• BBK Bank (formerly The Bank of Bahrain and Kuwait) has grown to become a leading commercial bank in its markets, by focusing on client-driven customer service, employee development and brand building. ( Chapter 1 )
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xx Preface
• The ‘voluntourism’ movement has sprung up to meet the needs of a particular niche – we explore voluntourism programmes operating in Jordan, Syria, Lebanon and elsewhere. ( Chapter 2 )
• Saudi Arabian company Al Jazirah has capitalized on environmental factors in successfully developing and marketing its evaporative coolers. ( Chapter 3 )
• Proctor & Gamble launched its Ariel product into Egypt, based on rigorous market research and a solid understanding of the current habits and needs of potential customers. ( Chapter 4 )
• The devoted and divided fan bases of the Egyptian football teams Al-Ahly and Zamalek show the importance of social and cultural interests such as football in shaping consumer behavior. ( Chapter 5 )
• Advanced Electronics Company (AEC), the Saudi-based company, has developed an interna-tional client base including Boeing, Lockheed Martin, Rockwell International, Saudi Ministry of Water & Electricity, Aramco, Siemens, Nokia. It has built an approach to business-to-business marketing based on deep relationships with clients, to become a strategic, problem-solving partner. ( Chapter 6 )
• Damas Group, the jewelry and watch retailer operating across the Arab world and beyond, uses segmentation wisely to target different customer groups. ( Chapter 7 )
• Microsoft developed its Maren product, which represented a leap forward in addressing the problem of using Arabic language online and with a QWERTY keyboard, by working to understand customer needs and responses in depth. ( Chapter 7 )
• Alshaya understands the importance of brands, and uses this knowledge to operate franchises of many international brands in the Arab world. ( Chapter 8 )
• Apple founder Steve Jobs used dazzling customer-driven innovation to first start the company and then to remake it again 20 years later. ( Chapter 9 )
• Flydubai used pricing strategy to meet the demand for low cost flights and launch as a new airline in the UAE. ( Chapter 10 )
• Coca-Cola combines music and advertising to appeal to its customers, with recent campaigns in the Middle East including Nancy Ajram to raise profile. ( Chapter 12 )
• Amazon.com has developed industry-leading expertise in using the internet as a tool for delivering customer value. ( Chapter 13 )
• Bahrain Polytechnic has created a clear competitive advantage for its target students by dis-tinctly differentiating itself from its competitors. ( Chapter 15 )
• McDonald’s, the quintessential all-American company, now sells more burgers and fries out-side the United States than within. We explore its journey into the Russian market. ( Chapter 16 )
• CSR Middle East promotes corporate social responsibility across the region by working closely with a range of businesses, organizations and NGOs. ( Chapter 17 )
Each chapter is packed with countless real, relevant, and timely examples that reinforce key concepts and bring marketing to life.
Valuable Learning Aids The Arab World Edition continues the hallmark approach to text design crafted in Principles of Marketing , to inspire students and present everything as clearly as possible. A wealth of chapter-opening, in-chapter, and end-of-chapter learning devices help students to learn, link, and apply major concepts:
• Chapter Preview. As part of an active and integrative chapter-opening design, a brief section at the beginning of each chapter previews chapter concepts, links them with previous chapter concepts, and introduces the chapter-opening story.
• Chapter-opening marketing stories. Each chapter begins with an engaging, deeply developed, illustrated, and annotated marketing story that introduces the chapter material and sparks student interest. Many relevant and inspiring examples from the Arab world have been added.
• Objective outline. This chapter-opening feature provides a helpful preview outline of chapter contents and learning objectives.
• Author comments and figure annotations. Throughout the chapter, author comments ease and enhance student learning by introducing and explaining major chapter sections. There are also comment bubbles on the figures to help explain concepts to students.
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Preface xxi
• Real Marketing boxes. Each chapter contains two boxed case study features that provide an in-depth look at real marketing practices of large and small companies, including a wide range of new examples from the Arab world.
• Reviewing the Objectives and Key Terms. A summary at the end of each chapter reviews major chapter concepts, chapter objectives, and key terms.
• Discussing and Applying the Concepts. Each chapter contains a set of discussion questions and application exercises covering major chapter concepts.
• Focus on Technology. Application exercises at the end of each chapter provide discussion of important and emerging marketing technologies in this digital age.
• Focus on Ethics. Situation descriptions and questions highlight important issues in marketing ethics at the end of each chapter.
• Marketing by the Numbers. An exercise at the end of each chapter lets students apply analyti-cal and financial thinking to relevant chapter concepts and links the chapter to Appendix 2 : Marketing by the Numbers.
• Company Cases. Company cases for class or written discussion are provided at the end of each chapter—many of these are now developed specifically for the Arab World Edition. These cases challenge students to apply marketing principles to real companies in real situations.
• Video Cases. Short cases and discussion questions appear at the end of every chapter, to be used with the set of 4- to 6-minute videos that accompany this edition.
• Marketing Plan appendix. Appendix 1 contains a sample marketing plan that helps students to apply important marketing planning concepts.
• Marketing by the Numbers appendix. An innovative Appendix 2 provides students with a com-prehensive introduction to the marketing financial analysis that helps to guide, assess, and support marketing decisions.
More than ever before, the Arab World Edition of Principles of Marketing creates value for you—it gives you all you need to know about marketing in an effective and enjoyable total learn-ing package!
A Valuable Learning Package A successful marketing course requires more than a well-written book. A total package of resources extends this edition’s emphasis on creating value for you. The following aids support Principles of Marketing.
Videos The video library features exciting segments for this edition. All segments are available in mymar-ketinglab. Here are just a few of the videos offered:
Live Nation’s Customer Relationships
TOMS Shoes’ Marketing Environment
E*TRADE’s Advertising and PR Strategies
Principle Financial Group’s Personal Selling
Umpqua Bank’s Competitive Advantage
mymarketinglab ( www.pearsoned.co.uk/kotler ) gives you the opportunity to test yourself on key concepts and skills, track your own progress through the course, and use the personalized study plan activities—all to help you achieve success in the classroom. Features include:
• Personalized study plans —Pre- and post-tests with remediation activities directed to help you understand and apply the concepts where you need the most help.
• Self-assessments —Prebuilt self-assessments allow you to test yourself.
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xxii Preface
• Interactive elements —A wealth of hands-on activities and exercises let you experience and learn firsthand. Whether it is with the online e-book where you can search for specific keywords or page numbers, highlight specific sections, enter notes right on the e-book page, and print reading assignments with notes for later review or with other materials including “Real People Real Choices Video Cases,” online end-of-chapter activities, “Active Flashcards,” and much more.
• iQuizzes —Study anytime, anywhere—iQuizzes work on any color-screen iPod and are comprised of a sequence of quiz questions, specifically created for the iPod screen.
Find out more at www.pearsoned.co.uk/kotler .
No book is the work only of its authors. We greatly appreciate the valuable contribu-tions of several people who helped make this new edition possible.
Anwar Habib: I would like to acknowledge the continuous inspiration and support of my wife Fahmida in writing this text. I would also like to thank Nada Yaghi, my ex-student, for her valuable research and support in selecting appropriate regional examples for the text. Finally I would like to thank all the regional organizations, like MAF group, Unilever, Masafi, and Al Islami Foods, who have supported me with case study materials and other information. I’d also like to extend a special thanks to Sarah Wightman for her excellent editorial support.
Ahmed Tolba: I would like to dedicate this edition to my wife Nayla and my kids Ismail and Amina. I would also like thank Ahmed El Banhawy for his significant contribution to the completion of this textbook, and my teaching assistants Laila Yassin and Ali El Gendy for their remarkable efforts in finding appropriate regional case studies. Finally, I would like to thank everyone at Pearson for their significant efforts and professional support.
Anwar Habib
Ahmed Tolba
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Acknowledgments We would like to thank the following reviewers for their thoughtful comments and suggestions for this new Arab World Edition:
Dr Saleh AlShebil, King Fahd University of Petroleum & Minerals, Saudi Arabia
Dr Ibrahim Hegazy, American University of Cairo, Egypt
Professor Peter Mason, American University of Sharjah, UAE
Dr Ahmad Zamil, King Saud University, Saudi Arabia
Dr Abdullah Sultan, Kuwait University, Kuwait
Professor Hassan Naja, Lebanese American University, Lebanon
Dr Imad Baalbaki, American University of Beirut, Lebanon
Dr Jean Boisvert, American University of Sharjah, UAE
Dr Samaa Attia, British University in Egypt, Egypt
Professor Mariam Abou-Youssef, German University in Cairo, Egypt
Professor Abbas Abu Altimen, University of Sharjah, UAE
Dr Ahmed Ghoneim, Cairo University, Egypt
Dr Hani Al-Dmour, University of Jordan, Jordan
Dr Rania Hussein, Cairo University, Egypt
Dr Khaled Hanafy, Arab Academy for Science, Technology & Maritime Transport, Egypt
Dr Mohamed A. Radwan, American University in Cairo, Egypt
We would also like to thank contributors Dr. Mohamed A. Radwan, Adjunct Faculty at American University in Cairo and Managing Director of Platinum Partners, Mike Lewicki, Marketing Instructor at the University College of Bahrain, and Owen Davies, who provided additional material for this text. Their excellent work has added real value to this edition.
Many reviewers and contributors have provided valuable comments and suggestions for previous editions of Principles of Marketing. We’d like to thank them all for their insights, which have informed our work on this adaptation.
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PART 3
Designing a Customer-Driven Strategy and Mix
CHAPTER 7 Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning
CHAPTER 8 Products, Services, and Brands: Building Customer Value
CHAPTER 9 New-Product Development and Product Life-Cycle Strategies
CHAPTER 10 Pricing
CHAPTER 11 Communicating Customer Value: Integrated Marketing Communications Strategy
CHAPTER 12 Promotion Mix Strategies: Advertising and Public Relations
CHAPTER 13 Direct and Online Marketing: Building Direct Customer Relationships
CHAPTER 14 Managing Marketing Channels
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176
jewelry and watch markets brought from all over the world. The list
ranges from standard brands to modish celebrated worldwide brand
names, such as Carrera y Carrera and Mikimoto; world-renowned
Italian jewelry brands such as Roberto Coin, Marco Bicego, Fope,
Luca Carati, and Leo Pizzo; famous Spanish brand Magerit; in addi-
tion to a wide collection of watches crafted by legendary watch
brands, including Chronoswiss, Parmigiani, Perrelet, Roger Dubuis,
and Sarcar.
Tamjid Abdullah, deputy managing
director, Damas, says: “In keeping with
the growing international profile of Dubai,
Damas has always sought to bring customers
a versatile array of brands acknowledged for
their style definition and creative exuberance.
And I am happy to say that it is their enthu-
siastic appreciation and
support of our efforts
that has provided us the
incentive to forge ahead
as true pioneers. During
the Damas Luxury Week,
shoppers will be treated
to a thrilling selection of
the most exclusive dia-
mond, gold and pearl
jewelry collections, by
the world’s leading jew-
elry and watch brands.
Such events also provide
brilliant testimony to the
tremendous trust Damas
enjoys with its interna-
tional partners.” 2
Segmentation, Targeting, and Positioning
So far, you’ve learned what marketing is and about the importance of understanding con-sumers and the marketplace environment. With
that as background, you’re now ready to delve deeper into mar-keting strategy and tactics. This chapter looks further into key customer-driven marketing strategy decisions—how to divide up
markets into meaningful customer groups ( segmentation ), choose which customer groups to serve ( targeting ), create market offer-ings that best serve targeted customers ( differentiation ), and posi-tion the offerings in the minds of consumers ( positioning ). Then, the chapters that follow explore the tactical marketing tools—the Four Ps—by which marketers bring these strategies to life. A good example of segmentation in the Arab world is Damas, as discussed in the example here.
Chapter 7
Damas Group is a jewelry and watch retailer that has
expanded into 18 countries around the world with about
450 stores. The group is the most widespread jewelry and
watch retailer in the Arab world, in terms of number of stores. The
group has subsidiaries mainly in the Arab world, India, and Italy. It
also has jointly controlled entities and associates in the Arab world,
Europe, North Africa, and other locations. Damas sells its own brands,
and it also sells other top international and Arab world brands.
It might be perceived that Damas focuses merely on the high-end
consumer, yet this is not absolutely correct. Essentially, Damas targets
three types of consumers through selling its brands in three types of
stores: Les Exclusives stores, Semi-Exclusive stores, and Damas 22K
stores. The Les Exclusives stores mainly serve “high net worth con-
sumers,” and offer highly extravagant worldwide brands in addition
to Damas’ own products. Semi-Exclusive stores target “upper-middle
income consumers” with products that are relatively less unique,
but appeal to a broader spectrum of consumers, such as tourists and
expatriates, professionals, and office workers. These stores sell inter-
national brands, along with Damas’ products. Thirdly, Damas 22K
stores target “middle income and working class immigrant popula-
tions,” and sell Damas’ products along with some regional brands.
While the above are the main stores, Damas targets other segments by
selling in other stores, such as Damas Kids for youngsters and fami-
lies, and Mono-stores specializing in certain global brands, including
Tiffany & Co, Paspaley, Graff, Parmigiani, Stefan Hafner, Links of
London, Roberto Coin, Roberta Porrati and Folli Follie. 1
Let’s take a closer look at Damas’ A-segment in its Les
Exclusives Boutiques. In Dubai, Damas holds the Luxury Week
event, which displays the extravagant and up-to-date jewelry and
watch collections at the city’s renowned shopping site. Shoppers at
that event are treated with gifts with every purchase they make. The
occasion, which is attended by journalists and VIPs, gives A-class
buyers the chance to purchase the latest fashionable brands in the
Chapter
PRE VIEW
Customer-Driven Marketing
Strategy
Damas has its own designs, targeting
different segments from different age ranges and differ-ent income levels.
Part 1 Defining Marketing and the Marketing Process (Chapters 1, 2)Part 2 Understanding the Marketplace and Consumers (Chapters 3, 4, 5, 6)Part 3 Designing a Customer-Driven Strategy and Mix (Chapters 7, 8, 9, 10, 11, 12, 13, 14)Part 4 Extending Marketing (Chapters 15, 16, 17)
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Chapter 7 | Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning 177
Recently, Les Exclusives Boutiques in the UAE have added a new
collection of the leading Italian design house, Roberto Coin. Roberto
Coin is featured by its best-selling Cento Collection, which is based
on the artistic designs of the luxurious 100-facet Cento diamonds. In
Les Exclusives shops, Roberto Coin offers the latest of its collections.
Tawhid Abdullah, managing director of Damas, added: “The exten-
sive Roberto Coin collection has been launched to create [a] distinct
modern look for contemporary woman and set a different trend this
festive season. Thus on one side it captures the hearts of discerning
followers of fashion and on the other complement[s] the personality
of the wearer. Roberto Coin’s vibrant creations blend color and an eye
for detail that has helped the brand carve a niche in the highly com-
petitive Middle East market and Mr Coin’s recent visit to Dubai is
proof of his close affinity to jewelry lovers in this part of the globe.” 3
Roberto Coin, CEO of the brand, commented: “You must
understand that Roberto Coin is a niche jewelry brand which
unwaveringly upholds and perfects its standards to stay at the top
by constant innovation and creativity. We use some of the world’s
finest jewels and our treatment of the most precious metals and
stones have given new meaning to the words ’top-class.’ Thus I cre-
ate jewelry for a woman who has her own personal style, is intelli-
gent, witty and has grace. So it is natural that my inspiration comes
from the elegance of femininity.” 4
Around the world, Roberto Coin’s name appeals to the
A-segment; this includes famous Hollywood stars and VIPs in all
fields in Europe. Roberto Coin now is positioned among the most
famous jewelry brands in
the United States, and is
the leading Italian jewelry
brand. Roberto Coin finds
his target niche in the Arab
world as well. Coin said,
“The Middle East is a very
important market for us and the growth
potential for Italian jewelry is enormous. I
am extremely happy to know that Roberto
Coin has found a loyal following driven by
a huge demand from the style conscious of
the region.” 5
The Arab world has become a
promising region for the most luxurious
brands, local and global. In fact, the region
displays a wide array of demographic
segmentation from highly
rich to low-income buyers.
This makes it easy for mar-
keters to find their target;
however, it is a tougher job
to convey sound product
positioning.
Damas Les Exclusives in Dubai holds the Luxury Week event, which displays the extravagant and up-to-date jewelry and watch collections at the city’s renowned shopping site.
When Damas decided to target and position itself in the market, it created a variety of store brands targeting the different segments not only by income but also according to age and ethnicity.
Companies today recognize that they cannot appeal to all buyers in the marketplace, or at
least not to all buyers in the same way. Buyers are too numerous, too widely scattered, and too
varied in their needs and buying practices. Moreover, the companies themselves vary widely
in their abilities to serve different segments of the market. Instead, a company must identify
the parts of the market that it can serve best and most profitably. It must design customer-
driven marketing strategies that build the right relationships with the right customers.
Thus, most companies have moved away from mass marketing and toward target marketing —identifying market segments, selecting one or more of them, and developing prod-
ucts and marketing programs tailored to each. Instead of scattering their marketing efforts,
firms are focusing on the buyers who have greater interest in the values they create best.
Figure 7.1 shows the four major steps in designing a customer-driven marketing
strategy. In the first two steps, the company selects the customers that it will serve. Market segmentation involves dividing a market into smaller groups of buyers with distinct
needs, characteristics, or behaviors that might require separate marketing strategies or
mixes. The company identifies different ways to segment the market and develops profiles
of the resulting market segments. Market targeting (or targeting ) consists of evaluating
each market segment’s attractiveness and selecting one or more market segments to enter.
In the final two steps, the company decides on a value proposition—on how it will cre-
ate value for target customers. Differentiation involves actually differentiating the firm’s
market offering to create superior customer value. Positioning consists of arranging for
a market offering to occupy a clear, distinctive, and desirable place relative to competing
products in the minds of target consumers. We discuss each of these steps in turn.
Market segmentation Dividing a market into smaller groups with distinct needs, characteristics, or behavior that might require separate mar-keting strategies or mixes.
Market targeting (targeting) The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.
Differentiation Actually differentiating the market offer-ing to create superior customer value.
Positioning Arranging for a market offering to occupy a clear, distinctive, and desirable place rel-ative to competing products in the minds of target consumers.
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178
Market segmentation addresses the first simple-
sounding marketing question: What customers will we serve? The answer will be different for each company. For example, The Four Seasons targets the top 5 percent of corporate and leisure travelers. Holiday Inn targets middle-class people traveling on a budget.
Author Comment
Objective Outline OBJECTIVE 1 Define the major steps in designing a customer-driven marketing
strategy: market segmentation, targeting, differentiation, and positioning.
Customer-Driven Marketing Strategy 177
OBJECTIVE 2 List and discuss the major bases for segmenting consumer and business markets.
Market Segmentation 178–186
OBJECTIVE 3 Explain how companies identify attractive market segments and choose a market-targeting strategy.
Market Targeting 186–192
OBJECTIVE 4 Discuss how companies differentiate and position their products for maximum competitive advantage in the marketplace.
Differentiation and Positioning 192–198
Market Segmentation (pp 178–186) Buyers in any market differ in their wants, resources, locations, buying attitudes, and buying
practices. Through market segmentation, companies divide large, heterogeneous markets
into smaller segments that can be reached more efficiently and effectively with products and
services that match their unique needs. In this section, we discuss four important segmenta-
tion topics: segmenting consumer markets, segmenting business markets, segmenting inter-
national markets, and requirements for effective segmentation.
Segmenting Consumer Markets There is no single way to segment a market. A marketer has to try different segmentation
variables, alone and in combination, to find the best way to view the market structure.
Table 7.1 outlines the major variables that might be used in segmenting consumer
markets. Here we look at the major geographic , demographic , psychographic , and behavioral variables.
Geographic Segmentation Geographic segmentation calls for dividing the market into different geographical units
such as nations, regions, provinces, parishes, cities, or even neighborhoods. A company
Geographic segmentation Dividing a market into different geo-graphical units such as nations, provinces, regions, cities, or neighborhoods.
Decide on a value propositionSelect customers to serve
Create valuefor targetedcustomers
SegmentationDivide the total market into
smaller segments
TargetingSelect the segment or
segments to enter
DifferentiationDifferentiate the market offering
to create superior customer value
PositioningPosition the market offering inthe minds of target customers
In concept, marketing boils down totwo questions: (1) Which customerswill we serve? and (2) How will weserve them? Of course, the toughpart is coming up with good answersto these simple-sounding but difficultquestions. The goal is to create morevalue for the customers we servethan competitors do.
FIGURE | 7.1 Designing a Customer-Driven Marketing Strategy
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Chapter 7 | Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning 179
may decide to operate in one or a few geographical areas, or to operate in all areas but pay
attention to geographical differences in needs and wants.
Many companies today are localizing their products, advertising, promotion, and
sales efforts to fit the needs of individual regions, cities, and even neighborhoods. For
example, one consumer-products company ships additional cases of its ‘power bar’
(protein bars) to stores in neighborhoods near Gold’s Gym centers. Citibank offers differ-
ent mixes of branch banking services depending on neighborhood demographics. And the
ice-cream maker Baskin Robbins practices what it calls ‘three-mile marketing,’ emphasiz-
ing local events and promotions close to its local store locations. On a global scale, video
TABLE | 7.1 Major Segmentation Variables for Consumer Markets
Geographic Examples
World region or country Western Europe, Arab world, Pacific Rim, China, India, Canada, Mexico, North America
Country region North Africa, The Gulf, Near East
City or metro size Under 5,000; 5,000–20,000; 20,000–50,000; 50,000–100,000; 100,000–250,000; 250,000–500,000; 500,000–1,000,000; 1,000,000–4,000,000; over 4,000,000
Density Urban, suburban, ex-urban, rural
Climate Northern, southern
Demographic Examples
Age Under 6, 6–11, 12–19, 20–34, 35–49, 50–64, 65+
Gender Male, female
Family size 1–2, 3–4, 5+
Family life cycle Young, single; married, no children; married with children; widowed; older, married, no children under 18; older, single; other
Income Under US$20,000; $20,000–$30,000; $30,000–$50,000; $50,000–$100,000; $100,000–$250,000; $250,000 and over
Occupation Professional and technical; managers, officials, and proprietors; clerical; sales; craftspeople; supervisors; farmers; retired; students; homemakers; unemployed
Education Primary school or less; some secondary school; secondary school graduate; some college; college graduate
Religion Muslim, Christian, Jewish, other
Nationality Egyptian, Saudi, Syrian, Lebanese, American, British, French, Indian
Psychographic Examples
Social class Lower lowers, upper lowers, working class, middle class, upper middles, lower uppers, upper uppers
Lifestyle Achievers, strivers, survivors
Personality Compulsive, gregarious, authoritarian, ambitious
Behavioral Examples
Occasions Regular occasion; special occasion; holiday; seasonal
Benefits Quality, service, economy, convenience, speed
User status Nonuser, ex-user, potential user, first-time user, regular user
User rates Light user, medium user, heavy user
Loyalty status None, medium, strong, absolute
Readiness stage Unaware, aware, informed, interested, desirous, intending to buy
Attitude toward product Enthusiastic, positive, indifferent, negative, hostile
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180 Part Three | Designing a Customer-Driven Strategy and Mix
game companies create different versions of their games depending on the world region
in which the game is sold.
For example, Protrac Online is an Egyptian company that specializes in providing the lat-
est technologies in geo-marketing research and services by employing researchers, data
analysts, and geo-professionals, and a large scale of data maps and tools. Protrac refers
to geo-marketing as a sophisticated marketing science that uses geographical informa-
tion for analyzing distribution channels of products. Protrac provides insight into the
competition and target segments surrounding a specific distribution point. Hence, this
allows companies to understand the specific changes needed in terms of distributing
products so as to better serve the targeted consumers. This is based on the assump-
tion that people buy products or use services based on the product’s or the service’s
proximity. Geo-marketing allows Protrac’s clients to see the map of their outlets and
their competitors’ outlets as well. This also allows clients to understand where to go to
pursue their target. Accordingly, geo-marketing
can be of highly effective benefit to all kinds of
marketing applications.
Protrac offers three types of products:
Geographical Digital Maps, Socio-Demographic
Data, and Trade Channels Census and Survey
Data. Hossam Ragheb, CEO of Protrac, said that
using digital maps for marketing purposes is
crucial, especially for Fast-Moving Consumer
Goods companies (FMCGs), such as Coca-Cola,
Proctor & Gamble, and Unilever. Ragheb added
that “[for suppliers] to know where to sell the
products ... and where this outlet is, not only
in terms of address, but the [demographics]
of the area—[for example] how many people
above 15 years [of age] are living in this area—
gives them a sort of direction to know which
products should go where.” 6
Some companies are seeking to cultivate
as-yet-untapped geographic territory. For example, some large companies are fleeing the
fiercely competitive major cities and suburbs to set up shops in small towns. Meanwhile
others are developing new store concepts that will give them access to higher-density urban
areas. Metro Group has done a mix of both. It opened a chain of wholesale retail shops,
Makro, which run using a subscription-only access. Not only is Makro different from any
other wholesale retail model but also the shops are located outside of the main cities but in
low-income areas close to them.
Demographic Segmentation Demographic segmentation divides the market into groups based on variables such as
age, gender, family size, family life cycle, income, occupation, education, religion, race, gen-
eration, and nationality. Demographic factors are the most popular bases for segmenting cus-
tomer groups. One reason is that consumer needs, wants, and usage rates often vary closely
with demographic variables. Another is that demographic variables are easier to measure
than most other types of variables. Even when marketers first define segments using other
bases, such as benefits sought or behavior, they must know segment demographic character-
istics in order to assess the size of the target market and to reach it efficiently.
Age and Life-Cycle Stage. Consumer needs and wants change with age. Some com-
panies use age and life-cycle segmentation , offering different products or using dif-
ferent marketing approaches for different age and life-cycle groups. For example, whereas
Demographic segmentation Dividing the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality.
Age and life-cycle segmentation Dividing a market into different age and life-cycle groups.
Geographic information systems are used for marketing purposes, in defining the location of the target market, distribution channels, and socio-demographic data.
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Chapter 7 | Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning 181
HP targets adult buyers with its “The Computer Is Personal Again” campaign, along with
ads featuring price and value, it developed a special “Society for Parental Mind Control”
campaign targeting teenagers. Research shows that although parents are the predominant
buyers of computers, teens are key recommenders. “It’s such an old story, but kids are the
arbiters of cool,” says one analyst. 7
Marketers must be careful to guard against stereotypes when using age and life-cycle
segmentation. Although some 80-year-olds fit the weary stereotypes, others play tennis.
Similarly, whereas some 40-year-old couples are sending their children off to college, others
are just beginning new families. Thus, age is often a poor predictor of a person’s life cycle,
health, work or family status, needs, and buying power. Companies marketing to mature
consumers usually employ positive images and appeals.
Gender. Gender segmentation has long been used in clothing, cosmetics, toiletries,
and magazines. For example, Heineken decided to target men for its non-alcoholic beer
Birell, and developed a campaign called “Be a Man”. On the other hand, Galaxy targeted
women with its chocolate and emphasized that in its advertising campaigns.
Income. The marketers of products and services such as automobiles, clothing, cosmet-
ics, financial services, and travel have long used income segmentation . Many companies
target affluent consumers with luxury goods and convenience services.
However, not all companies that use income segmentation target
the affluent. For example, many retailers—such as pound and dol-
lar stores—successfully target low- and middle-income groups. The
core market for such stores is families with incomes under US$30,000.
When real-estate experts scout locations for new pound and dollar
stores, they look for lower-middle-class neighborhoods where people
wear less-expensive shoes and drive old cars that drip a lot of oil.
With their low-income strategies, stores such as these have
become fast-growing retailers. They have been so successful that
giant discounters are taking notice. An example of income segmenta-
tion in the Arab world is mobile phone service providers targeting
low-income populations. Companies such as Zain, Qtel, STC, and
Etisalat earn most of their revenues from countries where the popula-
tions are large with low income, as in Sub-Saharan Africa and South
Asia. The main challenge for those companies is the low generated
revenues per mobile phone user, which comes as a result of competi-
tive and price-cutting measures taken by companies in the field. 8
Psychographic Segmentation Psychographic segmentation divides buyers into different groups based on social class,
lifestyle, or personality characteristics. People in the same demographic group can have
very different psychographic characteristics.
In Chapter 5 , we discussed how the products people buy reflect their lifestyles. As a
result, marketers often segment their markets by consumer lifestyles and base their mar-
keting strategies on lifestyle appeals. Marketers also use personality variables to segment
markets. For example, Sprite launched a new campaign called “This is who I am…,” target-
ing teenagers who are rebellious and independent. This is considered a very unique and
emerging segment in the Arab world.
Behavioral Segmentation Behavioral segmentation divides buyers into groups based on their knowledge, atti-
tudes, uses, or responses to a product. Many marketers believe that behavior variables are
the best starting point for building market segments.
Occasions. Buyers can be grouped according to occasions when they get the idea to buy,
actually make their purchase, or use the purchased item. Occasion segmentation can
Gender segmentation Dividing a market into different groups based on gender.
Income segmentation Dividing a market into different income groups.
Psychographic segmentation Dividing a market into different groups based on social class, lifestyle, or person-ality characteristics.
Behavioral segmentation Dividing a market into groups based on consumer knowledge, attitudes, uses, or responses to a product.
Occasion segmentation Dividing the market into groups according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item.
Luxury yachts can easily cost over US$1 million, and are targeted at the most affluent section of society.
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182 Part Three | Designing a Customer-Driven Strategy and Mix
help firms build up product usage. For example, many marketers prepare special offers
and ads for holiday occasions. Ramadan and the two Islamic Feasts are the most critical
times in the Arab world, where offers and advertisements intensify as a result of increased
viewership driven from family and group gatherings. Real Marketing 7.1 discusses how
consumers behave during the holy month of Ramadan.
Benefits Sought. A powerful form of segmentation is to group buyers according to the
different benefits that they seek from the product. Benefit segmentation requires finding
the major benefits people look for in the product class, the kinds of people who look for
each benefit, and the major brands that deliver each benefit.
Champion athletic wear segments its markets according to benefits that different
consumers seek from its activewear. For example, ‘Fit and Polish’ consumers seek a bal-
ance between function and style—they exercise for results but want to look good doing
it. ‘Serious Sports Competitors’ exercise heavily and live in and love their activewear—
they seek performance and function. By contrast, ‘Value-Seeking Parents’ have low sports
interest and low activewear involvement—they buy for the family and seek durability and
value. Thus, each segment seeks a different mix of benefits. Champion must target the
benefit segment or segments that it can serve best and most profitably, using appeals that
match each segment’s benefit preferences.
User Status. Markets can be segmented into nonusers, ex-users,
potential users, first-time users, and regular users of a product.
Marketers want to reinforce and retain regular users, attract targeted
nonusers, and revive relationships with ex-users.
Included in the potential users group are consumers facing life-
stage changes—such as newlyweds and new parents—who can be
turned into heavy users.
Usage Rate. Markets can also be segmented into light, medium,
and heavy product users. Heavy users are often a small percentage
of the market but account for a high percentage of total consump-
tion. For example, Burger King targets what it calls ‘Super Fans,’
young (age 18 to 34), burger-eating males who make up 18 percent
of the chain’s customers but account for almost half of all customer
visits. They eat at Burger King an average of 16 times a month. 9
Burger King targets these Super Fans openly with ads that exalt
huge burgers containing meat, cheese, and more meat and cheese.
Loyalty Status. A market can also be segmented by con-
sumer loyalty. Consumers can be loyal to brands (Apple), stores
(Carrefour), and companies (Toyota). Buyers can be divided into
groups according to their degree of loyalty. Some consumers are
completely loyal—they buy one brand all the time. For example,
Apple Computer has an almost cultlike following of loyal users: 10
There are Mac folks who happen to own a Mac and use it for
emailing, blogging, browsing, buying, and social networking.
Then there are the Apple diehards—the Mac fanatics who buy
Apple products and accessories that maximize their Mac lives.
Some of these fans buy two iPhones—one for themselves and
the other just to take apart, to see what it looks like on the inside,
and maybe, just to marvel at Apple’s ingenious ability to cram
so much into a tight little elegant package. These Mac fanatics
(also called MacHeads or Macolytes) see Apple founder and
CEO Steve Jobs as a wizard of technology. Say the word ‘Apple’
Benefit segmentation Dividing the market into groups according to the different benefits that consumers seek from the product.
Consumer loyalty: ‘Mac fanatics’—fanatically loyal Apple Computer users—helped keep Apple afloat during the lean years, and they are now at the forefront of Apple’s burgeoning empire.
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Chapter 7 | Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning 183
Real Marketing 7.1
Ramadan Spirit in the Arab World An example of occasional targeting in the Arab world is the holy month of Ramadan. According to a study conducted by Maktoob Research regarding Ramadan in the region, 71 percent of respondents believe that the month enables them to experience a feeling of “solidarity and brotherhood with fellow Muslims.” The study has found out that 67 percent perceive Ramadan to be a commer-cial occasion for many companies. The study gathered the opinions of 6,128 Muslims from around the Arab world, just ahead of the holy month in 2008.
Discussing the results, Tamara Deprez, director of Maktoob Research, added: “The survey’s findings show that despite the pace of modern life and the changes in people’s lifestyle, the Arab world retains its spiritual essence and remains largely tradition-bound where matters of faith are concerned—more so during the Holy Month of Ramadan.” It was discovered that most of the respon-dents enjoyed having Iftar (breaking their fast) with their families at home compared with the significant portion, but not a major-ity, who said that they liked to have Iftar in restaurants.
Ramadan is also characterized by the sense of charity. During Ramadan, in many countries in the Arab world, just before the dusk prayer (the time for fast breaking), people hurry to one another in streets to give little snacks, saying, “Ramadan Kareem, Iftar Shahy” (“Hearty Iftar”). People are there always to provide each other with dates and drinks, ensuring that people have their Iftar on time. Also, rich Muslim people rush to make Mawa’ed Rahaman (free public eat-eries), where poor people are offered free food at Iftar time. Accordingly, it is a good chance for businesses to show their support in corporate social responsibility (CSR) and to promote the Ramadan spirit. For instance, in 2008, Saudi Telecom (STC) set up a food tent to cater for more than 7,000 people daily in Ramadan in more than 80 different locations all around Jeddah. McDonald’s provided Iftar, incorporating entertainment activities for orphans in one of the malls. There is also the Food Bank, sponsored by Olympic Group and Elsewedy Cables, which delivered food to low-income people during
the month. Further, some food and beverage companies offer free products on streets at Iftar time, primarily aiming to promote those products. In addition, Ramadan is consid-ered an optimal time to reach the consumer through televi-sion advertisements. In Egypt, both the finance and trans-port ministries broadcast their advertisements throughout the month.
In countries such as the UAE, companies market their products in line with the Ramadan theme of family gathering. For example, du, the mobile services provider, made special Ramadan offers in 2009 to enable families to keep in touch with each other even if they are in dis-tant locations. The Ramadan promotional offer entailed 1 fils credit (0.3 US cents) for each second of night-time worldwide calls, and users can double their call time using the Pay as You Go services. “du’s desire to help its valued customers strengthen their social bonds and communicate more easily with loved ones during the Holy Month is the foundation of all our Ramadan offers,” said Farid Faraidooni, executive vice presi-dent, Commercial, du. “As a telecom pro-vider with strong local roots, we know the high value all residents place on staying in touch. Our unique offers give customers the peace of mind that comes with afford-ability, plus the flexibility and convenience of exceptional calling benefits during a very special time of year.” du’s main offer during the night time aims to serve customers who have been fasting during the day, through exclusive price cuts during the month of Ramadan. Customers get 1 fils free credit for every international call made during the night time. No matter how far away family members are, du provides the same price deductions on calls.
Another interesting consumer behavior during the holy month of Ramadan is the special types of foods that are demanded during that time. For example, stores selling Eastern desserts, such as Konafa , Basbousa ,
and the like experience a substantial increase in demand during Ramadan, and they face the challenge of satisfying the large number of customers queuing in lines, particularly right before Iftar time. Of course, the price of television ads skyrockets during the month as a result of family gatherings in front of the television after Iftar, to watch programs and soap operas. As a result, companies inten-sify their advertising campaigns during the month, in anticipation of increased demand and viewership.
Sources: “Ramadan Continues to Inspire the Faithful Throughout the Arab World,” Maktoob Research, 2008, www.maktoob-research.com/PR-Maktoob%20Research-Ramadan-English-FINAL.pdf ; “Special Ramadan Offers from du,” BI-ME , August 18, 2009, www.bi-me.com/main.php?id=39691&t=1 ; Safaa Abdoun, “The Spirit of Giving During Ramadan,” The Daily News Egypt, September 19, 2008, www.thedailynewsegypt.com ; Amira Howeidy, “Made to Measure,” Al Ahram Weekly, September 10–16, 2009, Issue No. 964, http://weekly.ahram.org.eg/2009/964/eg5.htm .
Often charity work and social activities increase during the holy month of Ramadan, which affects the demand and supply of nutrition products.
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184 Part Three | Designing a Customer-Driven Strategy and Mix
in front of Mac fans and they’ll go into ecstasy about the superiority of the brand. Put
two MacHeads together and you’ll never shut them up. “The Mac [comes] not just as a
machine in a box, it [comes] with a whole community,” notes one observer. Such fanati-
cally loyal users helped keep Apple afloat during the lean years, and they are now at the
forefront of Apple’s rapidly growing empire. 11
Other consumers are somewhat loyal—they are loyal to two or three brands of a given
product or favor one brand while sometimes buying others. Still other buyers show no
loyalty to any brand. They either want something different each time they buy or they buy
whatever’s on sale.
A company can learn a lot by analyzing loyalty patterns in its market. It should start by
studying its own loyal customers. For example, by studying Mac fanatics, Apple can better
pinpoint its target market and develop marketing appeals. By studying its less-loyal buyers, the
company can detect which brands are most competitive with its own. By looking at customers
who are shifting away from its brand, the company can learn about its marketing weaknesses.
Using Multiple Segmentation Bases Marketers rarely limit their segmentation analysis to only one or a few variables. Rather,
they often use multiple segmentation bases in an effort to identify smaller, better-defined
target groups. Thus, a bank may not only identify a group of wealthy retired adults but
also, within that group, distinguish several segments based on their current income, assets,
savings and risk preferences, housing, and lifestyles.
Such segmentation provides a powerful tool for marketers of all kinds. It can help
companies to identify and better understand key customer segments, target them more
efficiently, and tailor market offerings and messages to their specific needs.
Segmenting Business Markets Consumer and business marketers use many of the same variables to segment their mar-
kets. Business buyers can be segmented geographically, demographically (industry, com-
pany size), or by benefits sought, user status, usage rate, and loyalty status. Yet, business
marketers also use some additional variables, such as customer operating characteristics , pur-chasing approaches , situational factors , and personal characteristics . By going after segments
instead of the whole market, companies can deliver just the right value proposition to each
segment served and capture more value in return.
Almost every company serves at least some business markets. For example, Visa tar-
gets businesses in one of the four merchant levels based on Visa transaction volumes over
a 12-month period. Level one are merchants processing over six million Visa transactions
annually, level two are merchants channel-processing one to six million Visa transactions per
year, level three are merchants processing 20,000 to one million Visa e-commerce transactions
per year, and so on, for every level of merchant. The overall business offering is variable: the
higher the level, the more privileges are offered, and the lower rates the merchant pays. 12
Many companies set up separate systems for dealing with larger or multiple-location
customers. For example, IBM first segments customers into main industries, including bank-
ing, and aviation. Next, company salespeople work with independent partners to handle
smaller, local, or regional customers in each segment. But many national, multiple-location
customers have special needs that may reach beyond the scope of individual partners. So
IBM uses national account managers to help its dealer networks handle its national accounts.
Within a given target industry and customer size, the company can segment by pur-
chase approaches and criteria. As in consumer segmentation, many marketers believe that
buying behavior and benefits provide the best basis for segmenting business markets. 13
Segmenting International Markets Few companies have either the resources or the will to operate in all, or even most, of the
countries that dot the globe. Although some large companies, such as Coca-Cola or Sony,
sell products in more than 200 countries, most international firms focus on a smaller set.
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Chapter 7 | Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning 185
Operating in many countries presents new challenges. Different countries, even those that
are close together, can vary greatly in their economic, cultural, and political makeup. Thus,
just as they do within their domestic markets, international firms need to group their world
markets into segments with distinct buying needs and behaviors.
Companies can segment international markets using one or a combination of several vari-
ables. They can segment by geographic location , grouping countries by regions such as Western
Europe, the Pacific Rim, the Arab world, or Africa. Geographic segmentation assumes that
nations close to one another will have many common traits and behaviors. Although this is
often the case, there are many exceptions. For example, companies in the Arab world face the
challenge of classifying customers across the region, and they need to effectively segment the
market in a way that allows them to satisfy varied customers’ needs. It does not make sense
to group countries such as Qatar (with small population and high income) with a country
such as Sudan (with large population and low income). Also, it would be strange to group
countries in North Africa (Tunisia, Algeria, and Morocco) with Gulf countries given the dif-
ferences in language and culture.
World markets can also be segmented on the basis of economic factors . For example,
countries might be grouped by population income levels or by their overall level of eco-
nomic development. A country’s economic structure shapes its population’s product and
service needs and, therefore, the marketing opportunities it offers. Countries can be seg-
mented by political and legal factors such as the type and stability of government, receptiv-
ity to foreign firms, monetary regulations, and amount of bureaucracy. Cultural factors can
also be used, grouping markets according to common languages, religions, values and atti-
tudes, customs, and behavioral patterns.
An important aspect in the Arab world is the availability of media channels that are
being watched by consumers through satellite broadcasting. Companies targeting consum-
ers of different countries in the region benefit from that; yet they face the challenge of send-
ing consistent messages to all countries. As a result, they attempt to find attractive regional
intermarket segments.
Segmenting international markets based on geographic, economic, political, cultural,
and other factors assumes that segments should consist of clusters of countries. However, as
new communications technologies, such as satellite television and the Internet, connect con-
sumers around the world, marketers can define and reach segments of like-minded consum-
ers no matter where in the world they are. Using intermarket segmentation (also called
cross-market segmentation ), they form segments of consumers who have similar needs and
buying behaviors even though they are located in different countries. For example, Coca-
Cola creates special programs to target teens, core consumers of its soft drinks the world over.
Coca-Cola wants to relate to the world’s teens. To accomplish that, the global soft
drinks marketer needed to figure out what the majority of teens finds appealing.
The answer: music. So, throughout the world, Coca-Cola links itself with the local
pop music scene. For example, in the United States, Coke is the official sponsor of
American Idol , the country’s number-one television show and a teen magnet. In the
Arab world, Coca-Cola commercials feature Arab pop stars, such as Nancy Ajram—
Coca-Cola even sponsors her world tour. In Europe, Coke has created the Coca-Cola
Music Network, which features signed and unsigned musicians online at CokeMusic.
com, on stage, and in podcasts. And in Uganda, Coca-Cola sponsored the search for
a new MTV VJ. The winner, Carol Mugasha, became host of the weekly music chart
show MTV Coca-Cola Chart Express . 14
Requirements for Effective Segmentation Clearly, there are many ways to segment a market, but not all segmentations are effective.
For example, buyers of table salt could be divided into blond and brunette customers. But
hair color obviously does not affect the purchase of salt. Furthermore, if all salt buyers
bought the same amount of salt each month, believed that all salt is the same, and wanted
to pay the same price, the company would not benefit from segmenting this market.
Intermarket segmentation Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries.
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186 Part Three | Designing a Customer-Driven Strategy and Mix
To be useful, market segments must be:
• Measurable: The size, purchasing power, and profiles of the
segments can be measured. Certain segmentation variables
are difficult to measure. For example, there are many left-
handed people in the world. Yet few products are targeted
toward this left-handed segment. The major problem may be
that the segment is hard to identify and measure. There is little
data on the demographics of ‘lefties.’ Private data companies
keep reams of statistics on other demographic segments but
not on left-handers.
• Accessible: The market segments can be effectively reached
and served. Suppose a fragrance company finds that heavy
users of its brand are single men and women who stay out late
and socialize a lot. Unless this group lives or shops at certain
places and is exposed to certain media, its members will be
difficult to reach.
• Substantial: The market segments are large or profitable enough to serve. A segment
should be the largest possible homogeneous group worth pursuing with a tailored
marketing program. It would not pay, for example, for an automobile manufacturer
to develop cars especially for people whose height is greater than two meters.
• Differentiable: The segments are conceptually distinguishable and respond differently
to different marketing mix elements and programs. If married and unmarried women
respond similarly to a sale on perfume, they do not constitute separate segments.
• Actionable: Effective programs can be designed for attracting and serving the segments.
For example, although one small airline identified seven market segments, its staff was
too small to develop separate marketing programs for each segment.
Market Targeting (pp 186–192) Market segmentation reveals the firm’s market segment opportunities. The firm now has to
evaluate the various segments and decide how many and which segments it can serve best.
We now look at how companies evaluate and select target segments.
Evaluating Market Segments In evaluating different market segments, a firm must look at three factors: segment size
and growth, segment structural attractiveness, and company objectives and resources. The
company must first collect and analyze data on current segment sales, growth rates, and
expected profitability for various segments. It will be interested in segments that have the
right size and growth characteristics.
But ‘right size and growth’ is a relative matter. The largest, fastest-growing segments
are not always the most attractive ones for every company. Smaller companies may lack the
skills and resources needed to serve the larger segments. Or they may find these segments
too competitive. Such companies may target segments that are smaller and less attractive,
in an absolute sense, but that are potentially more profitable for them.
The company also needs to examine major structural factors that affect long-run seg-
ment attractiveness. 15 For example, a segment is less attractive if it already contains many
strong and aggressive competitors . The existence of many actual or potential substitute prod-ucts may limit prices and the profits that can be earned in a segment. The relative power of buyers also affects segment attractiveness. Buyers with strong bargaining power relative to
sellers will try to force prices down, demand more services, and set competitors against one
another—all at the expense of seller profitability. Finally, a segment may be less attractive
The ‘Leftie’ segment can be hard to identify and measure. As a result, few companies tailor their offers to left-handers. However, some nichers such as Anything Left-Handedin the United Kingdom target this segment.
Now that we’ve divided the market into segments,
it’s time to answer that first seemingly simple marketing strategy question we raised in Figure 7.1 : Which customers will the company serve?
Author Comment
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Chapter 7 | Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning 187
if it contains powerful suppliers who can control prices or reduce the quality or quantity of
ordered goods and services.
Even if a segment has the right size and growth and is structurally attractive, the com-
pany must consider its own objectives and resources. Some attractive segments can be dis-
missed quickly because they do not mesh with the company’s long-run objectives. Or the
company may lack the skills and resources needed to succeed in an attractive segment. For
example, given current economic conditions, the economy segment of the automobile market
is large and growing. But given its objectives and resources, it would make little sense for
luxury-performance carmaker BMW to enter this segment. A company should enter only seg-
ments in which it can create superior customer value and gain advantages over competitors.
Selecting Target Market Segments After evaluating different segments, the company must decide which and how many seg-
ments it will target. A target market consists of a set of buyers who share common needs
or characteristics that the company decides to serve. Market targeting can be carried out
at several different levels. Figure 7.2 shows that companies can target very broadly
(undifferentiated marketing), very narrowly (micromarketing), or somewhere in between
(differentiated or concentrated marketing).
Undifferentiated Marketing Using an undifferentiated marketing (or mass-marketing ) strategy, a firm might
decide to ignore market segment differences and target the whole market with one offer.
This mass-marketing strategy focuses on what is common in the needs of consumers rather
than on what is different . The company designs a product and a marketing program that
will appeal to the largest number of buyers.
As noted earlier in the chapter, most modern marketers have strong doubts about this
strategy. Difficulties arise in developing a product or brand that will satisfy all consumers.
Moreover, mass marketers often have trouble com-
peting with more focused firms that do a better job of
satisfying the needs of specific segments and niches.
Differentiated Marketing Using a differentiated marketing (or segmented marketing ) strategy, a firm decides to target sev-
eral market segments and designs separate offers
for each. General Motors tries to produce a car for
every “purse, purpose, and personality.” Procter
& Gamble markets six different laundry detergent
brands, which compete with each other on super-
market shelves.
By offering product and marketing variations
to segments, companies hope for higher sales and
a stronger position within each market segment.
Developing a stronger position within several seg-
ments creates more total sales than undifferentiated
marketing across all segments.
But differentiated marketing also increases the
costs of doing business. A firm usually finds it more
Target market A set of buyers sharing common needs or characteristics that the company decides to serve.
Undifferentiated (mass) marketing A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.
Differentiated (segmented) marketing A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.
Undifferentiated(mass) marketing
Differentiated(segmented)
marketing
Concentrated(niche)
marketing
Micromarketing(local or individual
marketing)
Targetingbroadly
Targetingnarrowly
This figure covers a pretty broad range oftargeting strategies, from mass marketing(virtually no targeting) to individualmarketing (customizing products andprograms to individual customers). Anexample of individual marketing: AtmyMMs.com you can order a batch ofM&Ms with your face and personalmessage printed on each little candy.
FIGURE | 7.2 Marketing Targeting Strategies
Differentiated marketing: Procter & Gamble markets six different laundry detergents, including Tide—each with multiple forms and formulations—that compete with each other on store shelves.
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188 Part Three | Designing a Customer-Driven Strategy and Mix
expensive to develop and produce, say, 10 units of 10 different products than 100 units of
one product. Developing separate marketing plans for the separate segments requires extra
marketing research, forecasting, sales analysis, promotion planning, and channel manage-
ment. And trying to reach different market segments with different advertising campaigns
increases promotion costs. Thus, the company must weigh increased sales against increased
costs when deciding on a differentiated marketing strategy.
Concentrated Marketing Using a concentrated marketing (or niche marketing ) strategy, instead of going after a
small share of a large market, the firm goes after a large share of one or a few smaller seg-
ments or niches. For example, Bindawood, a local supermarket chain in the Kingdom of
Saudi Arabia, has many stores in different areas in Mecca and Madinah that target mainly
the visitors of the holy sites.
Through concentrated marketing, the firm achieves a strong market position because
of its greater knowledge of consumer needs in the niches it serves and the special reputation
it acquires. It can market more effectively by fine-tuning its products, prices, and programs
to the needs of carefully defined segments. It can also market more efficiently , targeting its
products or services, channels, and communications programs toward only consumers that
it can serve best and most profitably.
Whereas segments are fairly large and normally attract several competitors, niches
are smaller and may attract only one or a few competitors. Niching lets smaller companies
focus their limited resources on serving niches that may be unimportant to or overlooked
by larger competitors. Many companies start as nichers to get a foothold against larger,
more resourceful competitors and then grow into broader competitors. Aramex offers new
services such as “Shop and Ship” for the customers in the Arab world willing to buy prod-
ucts from online shops in the United States and Europe, in order to differentiate itself from
large competitors such as DHL, UPS, and FedEx.
In contrast, as markets change, some megamarketers develop niche markets to create
sales growth. For example, in recent years, Pepsi has introduced several niche products, such
as Seven-Up with Lemon, Pepsi Twist, and Miranda Tangerine. Today, the low cost of setting
up shop on the Internet makes it even more profitable to serve seemingly miniscule niches.
Small businesses, in particular, are realizing riches from serving small niches on the web.
Concentrated marketing can be highly profitable. At the same time, it involves higher-than-
normal risks. Companies that rely on one or a few segments for all of their business will suffer
greatly if the segment turns sour. Or larger competitors may decide to enter the same segment
with greater resources. For these reasons, many companies prefer to diversify in several market
segments. In the Arab world, there is a clear need for Islamic banking services. As a result, a variety
of banks, led by HSBC, introduced Islamic banking initiatives in the region. Real Marketing 7.2
highlights the concept of Islamic banking and its application in the Arab world.
Micromarketing Differentiated and concentrated marketers tailor their offers and marketing programs to
meet the needs of various market segments and niches. At the same time, however, they do
not customize their offers to each individual customer. Micromarketing is the practice of
tailoring products and marketing programs to suit the tastes of specific individuals and loca-
tions. Rather than seeing a customer in every individual, micromarketers see the individual
in every customer. Micromarketing includes local marketing and individual marketing .
Local Marketing. Local marketing involves tailoring brands and promotions to the
needs and wants of local customer groups—cities, neighborhoods, and even specific stores.
For example, McDonald’s introduced a new sandwich, McArabia, which suited the local
culture in the Arab world.
Advances in communications technology have given rise to a new high-tech version
of location-based marketing. By coupling mobile phone services with GPS devices, many
marketers are now targeting customers wherever they are with what they want. 16
Concentrated (niche) marketing A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches.
Micromarketing The practice of tailoring products and marketing programs to the needs and wants of specific individuals and local cus-tomer groups—includes local marketing and individual marketing.
Local marketing Tailoring brands and promotions to the needs and wants of local customer groups—cities, neighborhoods, and even specific stores.
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Chapter 7 | Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning 189
Real Marketing 7.2
Islamic Banking A significant type of behavioral targeting tak-ing place in the Arab world is Islamic banking. A recent report by Morgan Stanley analyzing Dubai Islamic Bank and Kuwait Finance House has concluded that Islamic assets will have increased to 18 percent of total assets in the GCC’S banking system by 2012. Currently, there are 22 Islamic banks that possess more than US$300 billion of sharia-compliant assets. An analyst at Morgan Stanley says: “There are a number of reasons why the sector is growing, and will continue to grow, strongly. A buoyant macro-economic backdrop and increased infrastructure spending, and contin-ued diversification from oil economies are driv-ing the banking sector generally . . . In terms of factors behind the growth in Islamic finance, a greater focus on Islamic identity, government backing for the development and promotion of Islamic banking, low penetration, and com-petition among conventional banks makes Islamic banking more attractive, and more favorable industry dynamics are all likely to fuel the growth.”
Despite the expected growth in that behavioral segment, which fosters the Islamic identity, there are some obstacles to the con-cept. The main difficulty remains that the product is not a regular one that can easily be identified. As such, Islamic banks are subject to more than one regulatory body, such as the local Central Banks as well as the Shari’a Supervisory Board (SSB), which must be established by the banks to advise them and ensure that all their activities are compliant with Shari’a Islamic rules principles, in order to formulate Islamic services. Another issue is the fact that people tend to be less familiar with how the system works compared with the regular banking systems. There are also some aspects in Islamic banking that are not welcomed by other financial institutions and customers, such as not allowing hedging (fixing currency value for long periods in the currency exchange market). A 2008 Morgan Stanley report, however, suggests an exponen-tial growth for the sector.
Islamic banking mainly targets ‘devout Muslims’ in Muslim communities and Muslim minorities in non-Muslim coun-tries. In addition, it attracts non-Muslim individuals and societies that demand ethical financial solutions. Islamic financial institutions were established in the 1960s and 1970s. Since that time Islamic bank-
Islamic banking has gained a strong reputation in the past few years, especially after the financial crisis in 2008 which revealed many of the defects in international banking systems.
to HSBC’s mission, “Amanah is committed to improving the lives of our customers world-wide by providing them with the highest qual-ity Islamic banking solutions.” Accordingly, there is commitment to Shari’a to the great-est extent. HSBC Islamic banking services are present in several GCC countries, includ-ing Bahrain, UAE, Saudi Arabia, Qatar, and other non-Arab Muslim countries, including Bangladesh, Brunei, Indonesia, Malaysia, and other countries as well.
HSBC Amanah is supervised by the Global Shari’a Advisory Board (GSAB) and Regional Shari’a Committees (RSC). Moreover, HBSC has a team of professionals who are there to guarantee that Shari’a are applied in ‘letter’ and ‘spirit.’ GSAB pursues continu-ous updating of the Islamic financial services. The board consists of delegate scholars from all RSC of HSBC Amanah and other Shari’a scholars from all around the world. HSBC depends on known scholars from different origins to ensure the convention of all schol-ars on its Islamic financial matters.
Amanah has different Islamic services all using the same principles, yet they are based on the needs of the various types of custom-ers. There are three common Islamic financial instruments, which are:
• Mudaraba: An investment part-nership, whereby an agreement takes place between an investor (or financer) and an entrepreneur or investment manager, called the Mudarib. They both divide risks
ing has sprawled in several Islamic coun-tries primarily in the Arab world, South and Southeast Asia, and in the West where Muslim minorities live. Now Bahrain is the most flourishing country in the Islamic finance field; other non-Arab cities enjoyed growth in the field, including Kuala Lumpur and London. Islamic banks are available in different formats, including “commercial banks, investment banks, investment and finance companies, insurance (Takaful) companies, and financial service com-panies.” However, they pursue distinct banking models: private organizations in a traditional economy (in the GCC and the West), national banking institutions (such as those in Sudan, Iran, and Pakistan), and dual banking systems (such as in Malaysia and the UAE). Moreover, they are present in different models: fully Islamic institu-tions, Islamic subsidiaries of traditional banking groups, and Islamic banking ‘win-dows’ inside traditional banks.
Islamic banking services range from com-mercial banking to syndicated transactions and equities, and have recently moved into debt issuance and structured products. The growth in the segment is attributed to the growing economy of oil-producing countries. Thus, this made the Islamic financial services highly demanded by a large number of people.
Let’s take a look at an example of an international bank that has adapted to the needs of the Islamic segment. HSBC Amanah—Islamic Financial Solutions was “established to serve the particular financial needs of Muslim communities.” According Continued on next page
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190 Part Three | Designing a Customer-Driven Strategy and Mix
Real Marketing 7.2 Continued
and profits. When there are profits, they earn their agreed-upon shares. When there are losses, the investor incurs a loss of capital, whereas the Mudarib loses time and effort.
• Ijara, which means an Islamic lease. The financial institution buys an asset and leases it to a customer in return for a set monthly fee. The
from a third party and sells it to a client at a set profit on a deferred payment system. Murabaha ensures that the client buys something without taking interest on a loan.
lessee has the choice to purchase the asset at the end of the lease.
• Murabaha, which is a sale at an agreed-upon profit. In this trans-action, the bank buys something
Sources: Justin Smith, “Morgan Stanley Initiates Coverage on Islamic Banking Stocks,” BI-ME , February 19, 2008, www.bi-me.com/main.php?id=17576&t=1&c=34&cg= ; “Our Vision,” “The Industry,” “Shariah Supervision,” and “Financial Instruments,” HSBC Amanah, www.hsbcamanah.com/amanah/about-amanah/islamic-banking .
Location. Location. Location. This is the mantra of the real-estate business.
But it may not be long before marketers quote it, too. “Location-based tech-
nology allows [marketers] to reach people when they’re mobile, near their
stores, looking to make a decision,” says one marketing expert. “When
customers get information—even advertising information—linked to their
location, research shows that’s often perceived as value-added informa-
tion, not as an advertisement.” For example, Starbucks recently launched
a store locator service for mobile devices, which allows people to use their
phones and in-car GPS systems to search for the nearest Starbucks shop. A
consumer sends a text message to “MYSBUX” (697289) including his or her
postal code. Within 10 seconds, Starbucks replies with up to three nearby
store locations. Starbucks plans to expand the service to include a wider
range of text-messaging conversations with local customers that will “show-
case Starbucks as a brand that truly listens.” Such location-based marketing
will grow astronomically as the sales of GPS devices skyrocket.
Local marketing has some drawbacks. It can drive up manufacturing and
marketing costs by reducing economies of scale. It can also create logistics prob-
lems as companies try to meet the varied requirements of different regional and
local markets. Further, a brand’s overall image might be diluted if the product
and message vary too much in different localities.
Still, as companies face increasingly fragmented markets, and as new support-
ing technologies develop, the advantages of local marketing often outweigh the
drawbacks. Local marketing helps a company to market more effectively in the
face of pronounced regional and local differences in demographics and lifestyles.
It also meets the needs of the company’s first-line customers—retailers—who prefer more
finely tuned product assortments for their neighborhoods.
Individual Marketing. In the extreme, micromarketing becomes individual marketing —
tailoring products and marketing programs to the needs and preferences of individual cus-
tomers. Individual marketing has also been labeled one-to-one marketing , mass customization, and markets-of-one marketing .
The widespread use of mass marketing has obscured the fact that for centuries consumers
were served as individuals: The tailor custom-made the suit, the cobbler designed shoes for
the individual, the cabinetmaker made furniture to order. Today, however, new technologies
are permitting many companies to return to customized marketing. More powerful comput-
ers, detailed databases, robotic production and flexible manufacturing, and interactive com-
munication media such as cellphones and the Internet—all have combined to foster ‘mass
customization.’ Mass customization is the process through which firms interact one-to-one with
masses of customers to design products and services tailor-made to individual needs.
Dell creates custom-configured computers. Visitors to Nike’s NikeID website can per-
sonalize their sneakers by choosing from hundreds of colors.
Marketers are also finding new ways to personalize promotional messages. Service
providers such as Vodafone have been sending customers personalized office stationery,
Individual marketing Tailoring products and marketing pro-grams to the needs and preferences of individual customers—also labeled ‘one-to-one marketing,’ ‘customized market-ing,’ and ‘markets-of-one marketing.’
Local marketing: By coupling mobile phone services with GPS devices, marketers such as Starbucks are now targeting customers wherever they are with what they want.
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Chapter 7 | Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning 191
calendars, and giveaways showing their names and titles. Newsletters
from different providers have mapped customer interests to make
their material more relevant and personal.
Business-to-business marketers are also finding new ways to cus-
tomize their offerings. For example, John Deere manufactures seeding
equipment that can be configured in more than two million versions
to individual customer specifications. The seeders are produced one
at a time, in any sequence, on a single production line. Mass custom-
ization provides a way to stand out against competitors.
Unlike mass production, which eliminates the need for human
interaction, one-to-one marketing has made relationships with
customers more important than ever. Just as mass production was
the marketing principle of the past century, interactive marketing
is becoming a marketing principle for the twenty-first century. The
world appears to be coming full circle—from the good old days
when customers were treated as individuals, to mass marketing
when nobody knew your name, and back again.
The move toward individual marketing mirrors the trend in con-
sumer self-marketing . Increasingly, individual customers are taking more
responsibility for shaping both the products they buy and the buying experience. Consider two
business buyers with two different purchasing styles. The first sees several salespeople, each
trying to persuade him to buy his or her product. The second sees no salespeople but rather
logs on to the web. She searches for information on available products; interacts online with
various suppliers, users, and product analysts; and then decides which offer is best. The second
purchasing agent has taken more responsibility for the buying process, and the marketer has
had less influence over the buying decision.
As the trend toward more interactive dialogue and less marketing monologue contin-
ues, marketers will need to influence the buying process in new ways. They will need to
involve customers more in all phases of the product development and buying processes,
increasing opportunities for buyers to practice self-marketing.
Choosing a Targeting Strategy Companies need to consider many factors when choosing a market-targeting strategy. Which
strategy is best depends on company resources . When the firm’s resources are limited, concen-
trated marketing makes the most sense. The best strategy also depends on the degree of product variability . Undifferentiated marketing is more suited for uniform products such as grapefruit
or steel. Products that can vary in design, such as cameras and automobiles, are more suited to
differentiation or concentration. The product’s life-cycle stage also must be considered. When a
firm introduces a new product, it may be practical to launch only one version, and undifferen-
tiated marketing or concentrated marketing may make the most sense. In the mature stage of
the product life cycle, however, differentiated marketing begins to make more sense.
Another factor is market variability . If most buyers have the same tastes, buy the same
amounts, and react the same way to marketing efforts, undifferentiated marketing is appro-
priate. Finally, competitors’ marketing strategies are important. When competitors use differenti-
ated or concentrated marketing, undifferentiated marketing can be suicidal. Conversely, when
competitors use undifferentiated marketing, a firm can gain an advantage by using differenti-
ated or concentrated marketing, focusing on the needs of buyers in specific segments.
Socially Responsible Target Marketing Smart targeting helps companies to be more efficient and effective by focusing on the segments
that they can satisfy best and most profitably. Targeting also benefits consumers—companies
serve specific groups of consumers with offers carefully tailored to their needs. However, target
marketing sometimes generates controversy and concern. The biggest issues usually involve
the targeting of vulnerable or disadvantaged consumers with controversial or potentially
harmful products.
John Deere manufactures a wide range of seeding equipment and other planting equipment that matches the various needs of customers’ specifications.
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192 Part Three | Designing a Customer-Driven Strategy and Mix
For example, over the years, marketers in a wide
range of industries—from cereal and toys to fast food and
fashion—have been heavily criticized for their marketing
efforts directed toward children. Critics worry that premium
offers and high-powered advertising appeals presented
through the mouths of lovable animated characters will
overwhelm children’s defenses. Other problems arise when
the marketing of adult products spills over into the child
segment—intentionally or unintentionally. Some critics have
even called for a complete ban on advertising to children.
The growth of the Internet and other carefully targeted
direct media has raised fresh concerns about potential targeting
abuses. The Internet allows increasing refinement of audiences
and, in turn, more precise targeting. This might help makers of
questionable products or deceptive advertisers to more readily
victimize the most vulnerable audiences. Unprincipled market-
ers can now send tailor-made deceptive messages directly to
the computers of millions of unsuspecting consumers. 17
Not all attempts to target children, minorities, or other
special segments draw such criticism. In fact, most provide benefits to targeted consum-
ers. For example, Pantene markets Relaxed and Natural hair products to women of color.
Samsung markets the Jitterbug phone directly to seniors who need a simpler cellphone
that is bigger and has a louder speaker. And Colgate makes a large selection of toothbrush
shapes and toothpaste flavors for children. Such products help make tooth brushing more
fun and get children to brush longer and more often.
Thus, in target marketing, the issue is not really who is targeted but rather how and
for what . Controversies arise when marketers attempt to profit at the expense of targeted
segments—when they unfairly target vulnerable segments or target them with question-
able products or tactics. Socially responsible marketing calls for segmentation and targeting
that serve not just the interests of the company but also the interests of those targeted.
Differentiation and Positioning (pp 192–198) Beyond deciding which segments of the market it will target, the company must decide
on a value proposition —on how it will create differentiated value for targeted segments and
what positions it wants to occupy in those segments. A product’s position is the way the
product is defined by consumers on important attributes—the place the product occupies in
consumers’ minds relative to competing products. “Products are created in the factory, but
brands are created in the mind,” says a positioning expert. 18
Tide is positioned as a powerful, all-purpose family detergent. At Subway restaurants,
you “Eat Fresh.” In the automobile market, Mercedes and Cadillac are positioned on lux-
ury, and Porsche and BMW on performance. Volvo positions powerfully on safety. And
Toyota positions its fuel-efficient, hybrid Prius as a high-tech solution to the energy short-
age. “How far will you go to save the planet?” it asks.
Consumers are overloaded with information about products and services. They
cannot reevaluate products every time they make a buying decision. To simplify the
buying process, consumers organize products, services, and companies into categories
and ‘position’ them in their minds. A product’s position is the complex set of percep-
tions, impressions, and feelings that consumers have for the product compared with
competing products.
Consumers position products with or without the help of marketers. But marketers
do not want to leave their products’ positions to chance. They must plan positions that will
give their products the greatest advantage in selected target markets, and they must design
marketing mixes to create these planned positions.
Not only does Colgate offer a wide selection of products targeting chil-dren, but also it holds many campaigns for children in the Arab world to increase awareness about the importance of brushing their teeth.
At the same time that it’s answering the first sim-
ple-sounding question (Which custom-ers will we serve?), the company must be asking the second question (How will we serve them?). For example, Ritz-Carlton serves the top 5 percent of corporate and leisure travelers. Its value proposition is ‘The Ritz-Carlton Experience’—one that “enlivens the senses, instills a sense of well-being, and fulfills even the unexpressed wishes and needs of our guests.”
Author Comment
Product position The way the product is defined by con-sumers on important attributes—the place the product occupies in consumers’ minds relative to competing products.
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Chapter 7 | Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning 193
Positioning Maps In planning their differentiation and positioning strategies, marketers often prepare percep-tual positioning maps, which show consumer perceptions of their brands versus competing
products on important buying dimensions. Figure 7.3 shows a positioning map for the
U.S. large luxury sport utility vehicle market. 19
Choosing a Differentiation and Positioning Strategy Some firms find it easy to choose a differentiation and positioning strategy. For example, a
firm well known for quality in certain segments will go for this position in a new segment if
there are enough buyers seeking quality. But in many cases, two or more firms will go after
the same position. Then, each will have to find other ways to set itself apart. Each firm must
differentiate its offer by building a unique bundle of benefits that appeals to a substantial
group within the segment.
Above all else, a brand’s positioning must serve the needs and preferences of well-
defined target markets. For example, Mobinil is positioning itself in the Egyptian market
as the competent local service provider, and builds its communication campaigns on the
concept of patriotism. On the other hand, Vodafone is positioning itself as an international
and professional brand.
The differentiation and positioning task consists of three steps: identifying a set of dif-
ferentiating competitive advantages upon which to build a position, choosing the right
competitive advantages, and selecting an overall positioning strategy. The company must
then effectively communicate and deliver the chosen position to the market.
Identifying Possible Value Differences and Competitive Advantages To build profitable relationships with target customers, marketers must understand cus-
tomer needs better than competitors do and deliver more customer value. To the extent
that a company can differentiate and position itself as providing superior customer value,
it gains competitive advantage .
But solid positions cannot be built on empty promises. If a company positions its prod-
uct as offering the best quality and service, it must actually differentiate the product so
Competitive advantage An advantage over competitors gained by offering greater customer value, either through lower prices or by providing more benefits that justify higher prices.
160
120
80
40
Luxury Performance
Escalade
Escalade ESV
Hummer H1
Hummer H2
Infiniti QX56
Range Rover
Lexus LX470
Navigator
Land Cruiser
Pri
ce
(th
ou
san
ds
of
$)
The location of each circle shows where consumers positiona brand on two dimensions: price and luxury-performanceorientation. The size of each circle indicates the brand’srelative market share in the segment. Thus, Toyota's LandCruiser is a niche brand that is perceived to be relativelyaffordable and more performance oriented.Orientation
FIGURE | 7.3 Positioning Map: Large Luxury Sport Utility Vehicles
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194 Part Three | Designing a Customer-Driven Strategy and Mix
that it delivers the promised quality and service. Companies must do much
more than simply shout out their positions in ad slogans and taglines. They
must first live the slogan.
To find points of differentiation, marketers must think through the customer’s
entire experience with the company’s product or service. An alert company can find
ways to differentiate itself at every customer-contact point. In what specific ways
can a company differentiate itself or its market offer? It can differentiate along the
lines of product , services , channels, people , or image . Through product differentiation brands can be differentiated on features, per-
formance, or style and design. Thus, Panasonic positions its Toughbook PCs,
designed to stand up to rugged use on the road or in the field. The Toughbook
website offers “Tough Stories,” complete with pictures of battered and abused
Toughbooks still functioning well.
Beyond differentiating its physical product, a firm can also differenti-
ate the services that accompany the product. Some companies gain services differentiation through speedy, convenient, or careful delivery. For example,
Al-Baraka Bank has positioned itself as “the commercial Islamic Bank”—it
offers retail, corporate and investment banking, and treasury services which
should abide by the principles of Islamic Shari’a. 20 Others differentiate their
service based on high-quality customer care. Lexus makes fine cars but is
perhaps even better known for the quality service that creates outstanding
ownership experiences for Lexus owners.
Firms that practice channel differentiation gain competitive advantage through
the way they design their channel’s coverage, expertise, and performance. Amazon.
com and GEICO set themselves apart with their smooth-functioning direct chan-
nels. Companies can also gain a strong competitive advantage through people differentiation —hiring and training better people than their competitors do. And Singapore
Airlines enjoys an excellent reputation, largely because of the grace of its flight attendants.
People differentiation requires that a company select its customer-contact people carefully and
train them well. For example, the entertainment company Disney trains its theme park people
thoroughly to ensure that they are competent, polite, and friendly—from the hotel check-in
agents, to the monorail drivers, to the ride attendants, to the people who sweep its parks. Each
employee is carefully trained to understand customers and to “make people happy.”
Even when competing offers look the same, buyers may perceive a difference based on
company or brand image differentiation . A company or brand image should convey the prod-
uct’s distinctive benefits and positioning. Developing a strong and distinctive image calls
for creativity and hard work. A company cannot develop an image in the public’s mind
overnight using only a few advertisements. If Ritz-Carlton means quality, this image must
be supported by everything the company says and does.
Symbols—such as the McDonald’s golden arches, the Nike swoosh, or Google’s color-
ful logo—can provide strong company or brand recognition and image differentiation. The
company might build a brand around a famous person, as Nike did with its Air Jordan bas-
ketball shoes and Tiger Woods golfing products. Some companies even become associated
with colors, such as IBM (blue), UPS (brown), or Coca-Cola (red). The chosen symbols, char-
acters, and other image elements must be communicated through advertising that conveys
the company’s or brand’s personality.
Choosing the Right Competitive Advantages Suppose a company is fortunate enough to discover several potential differentiations that
provide competitive advantages. It now must choose the ones on which it will build its
positioning strategy. It must decide how many differences to promote and which ones .
How Many Differences to Promote. Many marketers think that companies should aggres-
sively promote only one benefit to the target market. Ad man Rosser Reeves, for example, said
a company should develop a unique selling proposition (USP) for each brand and stick to it. Each
Toughbook is positioned as the durable, reliable, wireless notebook that can protect the customer’s work even in the toughest environments.
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Chapter 7 | Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning 195
brand should pick an attribute and tout itself as ‘number one’ on that attribute. Buyers tend to
remember number one better, especially in this overcommunicated society. Thus, Wal-Mart pro-
motes its always low prices and Burger King promotes personal choice—“have it your way.”
Other marketers think that companies should position themselves on more than one
differentiator. This may be necessary if two or more firms are claiming to be best on the same
attribute. Today, in a time when the mass market is fragmenting into many small segments,
companies are trying to broaden their positioning strategies to appeal to more segments.
For example, S.C. Johnson recently introduced a new Pledge multi-surface cleaner. Known
mainly as a brand for cleaning and dusting wood furniture, the new Pledge is positioned as a
cleaner that works on wood, electronics, glass, marble, stainless steel, and other surfaces. Says
its website, “No need to keep switching products—this multi-surface cleaner is perfect for a
quick and easy cleanup of the whole room!” Clearly, many buyers want these multiple ben-
efits. The challenge was to convince them that one brand can do it all. However, as companies
increase the number of claims for their brands, they risk disbelief and a loss of clear positioning.
Which Differences to Promote. Not all brand differences are meaningful or worth-
while; not every difference makes a good differentiator. Each difference has the potential to
create company costs as well as customer benefits. A difference is worth establishing to the
extent that it satisfies the following criteria:
• Important: The difference delivers a highly valued benefit to target buyers.
• Distinctive: Competitors do not offer the difference, or the company can offer it in a
more distinctive way.
• Superior: The difference is superior to other ways that customers might obtain the
same benefit.
• Communicable: The difference is communicable and visible to buyers.
• Preemptive: Competitors cannot easily copy the difference.
• Affordable: Buyers can afford to pay for the difference.
• Profitable: The company can introduce the difference profitably.
Many companies have introduced differentiations that failed one or more of these
tests. When the Westin Stamford Hotel in Singapore once advertised that it is the world’s
tallest hotel, it was a distinction that was not important to most tourists—in fact, it turned
many off. Thus, choosing competitive advantages upon which to position a product or ser-
vice can be difficult, yet such choices may be crucial to success.
Selecting an Overall Positioning Strategy The full positioning of a brand is called the brand’s value proposition —the full mix of
benefits upon which the brand is differentiated and positioned. It is the answer to the
customer’s question “Why should I buy your brand?” Volvo’s value proposition hinges on
safety but also includes reliability, roominess, and styling, all for a price that is higher than
average but seems fair for this mix of benefits.
Figure 7.4 shows possible value propositions upon which a company might posi-
tion its products. In the figure, the five green cells represent winning value propositions—
differentiation and positioning that gives the company competitive advantage. The red
cells, however, represent losing value propositions. The center yellow cell represents at
best a marginal proposition. In the following sections, we discuss the five winning value
propositions upon which companies can position their products: more for more, more for
the same, the same for less, less for much less, and more for less.
More for More. ‘More-for-more’ positioning involves providing the most upscale prod-
uct or service and charging a higher price to cover the higher costs. Ritz-Carlton Hotels,
Mont Blanc writing instruments, Mercedes automobiles—each claims superior quality,
craftsmanship, durability, performance, or style and charges a price to match. Not only is the
market offering high in quality, it also gives prestige to the buyer. It symbolizes status and a
loftier lifestyle. Often, the price difference exceeds the actual increment in quality.
Value proposition The full positioning of a brand—the full mix of benefits upon which it is positioned.
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196 Part Three | Designing a Customer-Driven Strategy and Mix
Sellers offering ‘only the best’ can be found in every product and service category,
from hotels, restaurants, food, and fashion to cars and household appliances. Consumers
are sometimes surprised, even delighted, when a new competitor enters a category with
an unusually high-priced brand. Starbucks coffee entered as a very expensive brand in a
largely commodity category. When Apple premiered its iPhone, it offered higher-quality
features than a traditional cellphone, with a hefty price tag to match.
In general, companies should be on the lookout for opportunities to introduce a ‘more-
for-more’ brand in any underdeveloped product or service category. Yet ‘more-for-more’
brands can be vulnerable. They often invite imitators who claim the same quality but at a
lower price. Luxury goods that sell well during good times may be at risk during economic
downturns when buyers become more cautious in their spending.
More for the Same. Companies can attack a competitor’s more-for-more positioning by
introducing a brand offering comparable quality but at a lower price. For example, Toyota
introduced its Lexus line with a ‘more-for-the-same’ value proposition versus Mercedes and
BMW. Its first ad headline read: “Perhaps the first time in history that trading a $72,000 car
for a $36,000 car could be considered trading up.” It communicated the high quality of its
new Lexus through rave reviews in car magazines and through a widely distributed video-
tape showing side-by-side comparisons of Lexus and Mercedes automobiles. It published
surveys showing that Lexus dealers were providing customers with better sales and service
experiences than were Mercedes dealerships. Many Mercedes owners switched to Lexus,
and the Lexus repurchase rate has been 60 percent, twice the industry average.
The Same for Less. Offering ‘the same for less’ can be a powerful value proposition—
everyone likes a good deal. Hypermarkets, such as Carrefour, also use this positioning.
They don’t claim to offer different or better products. Instead, they offer many of the same
brands as department stores and specialty stores but at deep discounts based on supe-
rior purchasing power and lower-cost operations. Other companies develop imitative but
lower-priced brands in an effort to lure customers away from the market leader. For exam-
ple, AMD makes less-expensive versions of Intel’s market-leading microprocessor chips.
Less for Much Less. A market almost always exists for products that offer less and there-
fore cost less. Few people need, want, or can afford ‘the very best’ in everything they buy. In
many cases, consumers will gladly settle for less than optimal performance or give up some
of the extra features in exchange for a lower price. For example, Nokia has a series of mobile
phones with limited features for lower prices targeting consumers who are not willing to pay
for features they will not use.
‘Less-for-much-less’ positioning involves meeting consumers’ lower performance or
quality requirements at a much lower price. For example, Chinese products have invaded
the Arab world markets with relatively low quality products, but at very low prices, which
have attracted a large number of consumers.
More
The same
Less
More The same Less
Morefor
more
Morefor thesame
Morefor
less
The samefor
less
Less formuchless
Be
ne
fits
Price
These are winningvalue propositions.
These are losers.
FIGURE | 7.4 Possible Value Propositions
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Chapter 7 | Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning 197
More for Less. Of course, the winning value proposition would be to offer
‘more for less.’ Many companies claim to do this. And, in the short run, some
companies can actually achieve it. Several mobile operators have built con-
sumption segments where the more minutes a user consumes talking on the
phone, the cheaper each minute becomes. For example, Zain, a mobile opera-
tor in Kuwait, offers unlimited communication at a fixed price based on the
duration of users’ subscription. For a one-day unlimited usage, the user pays
US$5.4 per day; if the user subscribes for a week, they pay US$3.6 per day,
and if the user subscribes for 30 days, they pay US$2.8 per day. 21
Yet in the long run, companies will find it very difficult to sustain
such best-of-both positioning. Offering more usually costs more, making it
difficult to deliver on the ‘for-less’ promise. Companies that try to deliver
both may lose out to more focused competitors.
All said, each brand must adopt a positioning strategy designed to
serve the needs and wants of its target markets. ‘More for more’ will draw
one target market, ‘less for much less’ will draw another, and so on. Thus,
in any market, there is usually room for many different companies, each
successfully occupying different positions. The important thing is that
each company must develop its own winning positioning strategy, one
that makes it special to its target consumers.
Developing a Positioning Statement Company and brand positioning should be summed up in a positioning statement . The statement should follow the form: To (target segment and need) our (brand) is (concept) that (point-of-difference). 22 For example: “To
busy, mobile professionals who need to always be in the loop, BlackBerry
is a wireless connectivity solution that gives you an easier, more reliable
way to stay connected to data, people, and resources while on the go.” 23
Note that the positioning first states the product’s membership in a
category (wireless connectivity solution) and then shows its point-of-dif-
ference from other members of the category (easier, more reliable connec-
tions to data, people, and resources). Placing a brand in a specific category
suggests similarities that it might share with other products in the category. But the case for
the brand’s superiority is made on its points of difference.
Sometimes marketers put a brand in a surprisingly different category before indicating
the points of difference. Nestlé’s Nescafé brand has several products in the instant coffee
market, including Nescafé Gold, positioned as better instant coffee, and Nescafé Espresso,
positioned as the Italian instant coffee (instant coffee that looks better and tastes like
espresso). The positioning of Nescafé Espresso as gourmet coffee puts it in a completely
different category versus the other instant coffee products in the market.
Communicating and Delivering the Chosen Position Once it has chosen a position, the company must take strong steps to deliver and commu-
nicate the desired position to target consumers. All the company’s marketing mix efforts
must support the positioning strategy.
Positioning the company calls for concrete action, not just talk. If the company decides to
build a position on better quality and service, it must first deliver that position. Designing the mar-
keting mix—product, price, place, and promotion—involves working out the tactical details of
the positioning strategy. Thus, a firm that seizes on a more-for-more position knows that it must
produce high-quality products, charge a high price, distribute through high-quality dealers, and
advertise in high-quality media. It must hire and train more service people, find retailers who
have a good reputation for service, and develop sales and advertising messages that broadcast its
superior service. This is the only way to build a consistent and believable more-for-more position.
Positioning statement A statement that summarizes company or brand positioning—it takes this form: To (target segment and need) our (brand) is (concept) that (point-of-difference).
Home Centre in Egypt was one of the first movers in the direction of ‘more for less’ offers after the revolution in January 2011.
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198 Part Three | Designing a Customer-Driven Strategy and Mix
Companies often find it easier to come up with a good positioning strategy than to
implement it. Establishing a position or changing one usually takes a long time. In contrast,
positions that have taken years to build can quickly be lost. Once a company has built the
desired position, it must take care to maintain the position through consistent performance
and communication. It must closely monitor and adapt the position over time to match
changes in consumer needs and competitors’ strategies. However, the company should
avoid abrupt changes that might confuse consumers. Instead, a product’s position should
evolve gradually as it adapts to the ever-changing marketing environment.
REVIEWING Objectives AND KEY Terms
In this chapter, you’ve learned about the major elements of a customer-driven marketing strategy: segmentation, targeting, differentiation, and positioning. Marketers know that they can-not appeal to all buyers in their markets, or at least not to all buyers in the same way. Buyers are too numerous, too widely scattered, and too varied in their needs and buying practices. Therefore, most companies today practice target marketing —identifying market segments, selecting one or more of them, and developing products and marketing mixes tailored to each.
OBJECTIVE 1 Define the major steps in designing a customer-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. (p 177)
Customer-driven marketing strategy begins with selecting which customers to serve and deciding on a value proposition that best serves them. It consists of four steps. Market segmenta-tion is the act of dividing a market into distinct groups of buy-ers with different needs, characteristics, or behaviors who might require separate products or marketing mixes. Once the groups have been identified, market targeting evaluates each market segment’s attractiveness and selects one or more segments to serve. Market targeting consists of designing strategies to build the right relationships with the right customers. Differentiation involves actually differentiating the market offering to create superior customer value. Positioning consists of positioning the market offering in the minds of target customers.
OBJECTIVE 2 List and discuss the major bases for seg-menting consumer and business markets. (pp 178–186)
There is no single way to segment a market. Therefore, the marketer tries different variables to see which give the best segmentation opportunities. For consumer marketing, the major segmentation variables are geographic, demographic, psychographic, and behav-ioral. In geographic segmentation, the market is divided into differ-ent geographical units such as nations, regions, provinces, parishes, cities, or neighborhoods. In demographic segmentation, the market is divided into groups based on demographic variables, including age, gender, family size, family life cycle, income, occupation, edu-cation, religion, race, generation, and nationality. In psychographic segmentation, the market is divided into different groups based on social class, lifestyle, or personality characteristics. In behavioral seg-mentation, the market is divided into groups based on consumers’ knowledge, attitudes, uses, or responses to a product.
Business marketers use many of the same variables to seg-ment their markets. But business markets also can be segmented
by business consumer demographics (industry, company size), operating characteristics, purchasing approaches, situational fac-tors, and personal characteristics . The effectiveness of segmenta-tion analysis depends on finding segments that are measurable , accessible , substantial , differentiable, and actionable .
OBJECTIVE 3 Explain how companies identify attractive market segments and choose a market-targeting strategy. (pp 186–192)
To target the best market segments, the company first evaluates each segment’s size and growth characteristics, structural attrac-tiveness, and compatibility with company objectives and resources. It then chooses one of four market-targeting strategies—ranging from very broad to very narrow targeting. The seller can ignore seg-ment differences and target broadly using undifferentiated (or mass) marketing. This involves mass producing, mass distributing, and mass promoting about the same product in about the same way to all consumers. Or the seller can adopt differentiated marketing —developing different market offers for several segments. Concentrated marketing (or niche marketing) involves focusing on only one or a few market segments. Finally, micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Micromarketing includes local marketing and individual marketing . Which targeting strategy is best depends on company resources, product variability, product life-cycle stage, market variability, and competitive marketing strategies.
OBJECTIVE 4 Discuss how companies differentiate and position their products for maximum competitive advan-tage in the marketplace. (pp 192–198)
Once a company has decided which segments to enter, it must decide on its differentiation and positioning strategy. The differ-entiation and positioning task consists of three steps: identifying a set of possible differentiations that create competitive advantage, choosing advantages upon which to build a position, and select-ing an overall positioning strategy. The brand’s full positioning is called its value proposition —the full mix of benefits upon which the brand is positioned. In general, companies can choose from one of five winning value propositions upon which to position their products: more for more, more for the same, the same for less, less for much less, or more for less. Company and brand posi-tioning are summarized in positioning statements that state the target segment and need, positioning concept, and specific points of difference. The company must then effectively communicate and deliver the chosen position to the market.
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Chapter 7 | Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning 199
KEY Terms
OBJECTIVE 1
Market segmentation (p 177 ) Market targeting (targeting) (p 177 ) Differentiation (p 177 ) Positioning (p 177 )
OBJECTIVE 2
Geographic segmentation (p 178 ) Demographic segmentation (p 180 ) Age and life-cycle segmentation (p 180 ) Gender segmentation (p 181 ) Income segmentation (p 181 )
Concentrated (niche) marketing (p 188 ) Micromarketing (p 188 ) Local marketing (p 188 ) Individual marketing (p 190 )
OBJECTIVE 4
Product position (p 192 ) Competitive advantage (p 193 ) Value proposition (p 195 ) Positioning statement (p 197 )
Psychographic segmentation (p 181 ) Behavioral segmentation (p 181 ) Occasion segmentation (p 181 ) Benefit segmentation (p 182 ) Intermarket segmentation (p 185 )
OBJECTIVE 3
Target market (p 187 ) Undifferentiated (mass) marketing (p 187 ) Differentiated (segmented) marketing (p 187 )
DISCUSSING & APPLYING THE Concepts
Discussing the Concepts
1. Briefly describe the four major steps in designing a customer-driven marketing strategy.
2. Name and describe the four major sets of variables that might be used in segmenting consumer markets. Which segmenting variable(s) do you think Starbucks is using?
3. Explain how marketers can segment international markets.
4. Compare and contrast undifferentiated, differentiated, con-centrated, and micromarketing targeting strategies. Which strategy is best?
5. What is a product’s ‘position’ and how do marketers know what it is?
6. Name and define the five winning value propositions described in the chapter. Which value proposition describes Wal-Mart? Explain your answer.
Applying the Concepts
1. The chapter described psychographics as one major variable used by marketers when segmenting consumer markets. SRI Consulting has developed a typology of consumers based
on their values and lifestyles; specifically it places U.S. adult consumers into one of eight segments. Go to the website ( www.sric-bi.com ), and click on the VALS survey in the right side of the page. Take the test. How accurately do the VALS types describe you? What amendments to the survey would you need to make in order for it to be more appropriate to your country’s adult consumers. How would the survey results be affected if your changes were made?
2. Assume you work at a regional university in your country. The traditional market for the university is post-secondary school students in your region who have attained sufficiently high qualifications. However, the university’s target market is shrinking. In addition, it will decrease by around 5 percent over the course of the next 10 years. Recommend other potential market segments the university could pursue, and discuss the criteria it should consider to ensure that the segments you identified are effectively targeted.
3. Form a small group and create an idea for a new reality television show. Using the format provided in the chapter, develop a positioning statement for this television show. What competitive advantage does the show have over existing shows? How many and which differences would you promote?
FOCUS ON Technology Have you noticed that ads on websites seem to reflect your inter-ests? Do you ever wonder if someone is watching your Internet behavior? Well, someone (that is, a computer) probably is watching and tracking you. Marketers use such tracking information to send targeted ads to consumers —it’s called behavioral targeting. You’ve no doubt heard of ‘cookies,’ the files deposited on your computer when you visit a website. If you’ve ever given personally identify-ing information at a site, it remembers you when you return—it’s all stored in the cookie file. But even if you don’t give personally identifying information on a website, Internet protocol addresses (IP addresses) can be tracked to follow where you go and where you’ve been on the Internet. This tracking lets marketers tailor web pages, information, offers, and prices to individuals based on their
behavioral characteristics. Behavioral targeting is coveted because it allows marketers to implement micromarketing strategies.
1. TACODA is a behavioral targeting ad network. Visit www.tacoda.com to learn more about this company. Explore this website to learn how it lets marketers send Internet ads to targeted consumers. Then, write a brief report explaining behavioral targeting and how marketers are using it.
2. Many individuals are concerned that Internet behavioral tracking violates their privacy. Most websites have access to users’ IP addresses. Do IP addresses alone qualify as ‘user identifiable’ information? Learn more about this issue and write a brief report about it.
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FOCUS ON Ethics The increasing number of infomercials and advertisements in the Arab world for weight control pills has started to trigger reactions in society. People have been bombarded with advertisements featur-ing beautiful bodies in revealing clothing, sitting lazily and ingest-ing multiple food supplements, and ending up looking like movie stars. The vast majority of these supplements are not approved by any formal authority or regulated by any government. There is no authority that places standards on what should or could be shown to the masses and what message it should communicate.
Many of these products turn out to be a scam, with no actual value. The organizations offering these products are able to adver-tise them on television to the majority of the Arab world because of the lack of regulatory authority. Critics argue that the ads are misleading the customers about what could be a health-damaging product, and also that the resulting aspiration for achieving the
perfect body through instant, non-effective, and non-healthy means requires some supervision and management.
The channels showing these ads have also been criticized for their role in promoting them. Some channels have taken the initia-tive of managing the material being advertised. That has resulted in new satellite channels which use a business model of plugging in the infomercials into entertainment programs to overcome the limitations of the television channels and also to save the cost of their advertisement.
1. Do you think the channels that show the infomercials have any form of liability?
2. Give an example of an organization or a governmental authority that has taken the responsibility of managing the honesty of a television advertisement.
MARKETING BY THE Numbers China’s fast-paced economic growth and the Chinese’s increas-ing levels of disposable income have had a major impact on the pet industry. The latest research suggests that pet ownership is on the rise in China. The demand for pet food products in the country is also growing. Although the pet food market in China is still small by Western standards, it offers high growth potential.
1. Refer to Appendix 2 : Marketing by the Numbers. Carry out research to estimate what the potential market for dog food in China might be.
2. What big, overseas pet food companies are already doing business in China?
3. How does the Mexican market for pet food compare with China’s pet food market?
VIDEO Case
Meredith The Meredith Corporation has developed an expertise in build-ing customer relationships through segmentation, targeting, and positioning. Amazingly, however, it has done this by focus-ing on only half of the population—the female half. Meredith has developed the largest database of any U.S. media company and uses that database to meet the specific needs and desires of women.
Meredith is known for leading titles such as Better Homes and Gardens , Family Circle , and Ladies’ Home Journal . But that list has grown to a portfolio of 14 magazines and more than 200 special interest publications. Through these magazines alone, Meredith regularly reaches about 30 million readers. By focusing on core categories of home, family, and personal development, Meredith
has developed a product mix designed to meet various needs of women. This creates multiple touch points as individual women engage with more than one magazine, as well as with specialty books and websites.
After viewing the video featuring Meredith, answer the fol-lowing questions about segmenting, targeting, and positioning:
1. On what main variables has Meredith focused in segmenting its markets?
2. Which target marketing strategy best describes Meredith’s efforts? Support your choice.
3. How does Meredith use its variety of products to build rela-tionships with the right customers?
COMPANY Case
The Arab Online World—Microsoft Maren The Arab world has become more and more lucrative for the international market over the years. It is one of the largest
growing regions in the world and provides many organiza-tions with huge growth potential. The Arab world alone has 63,240,946 Internet users as of 2010, out of a total popula-tion of 212,336,924. That means that more than 29 percent of the population are Internet users. The North Africa region has 40,356,400 Internet users as of 2010, out of a total population
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Chapter 7 | Customer-Driven Marketing Strategy: Segmentation, Targeting, and Positioning 201
of 205,716,142, equivalent to 19 percent of the population. Over the last 10 years, Internet usage in the Arab world has shown growth of around 1,825 percent compared with 432 percent for the rest of the world.
The Arabic language is the seventh most spoken language worldwide. It is estimated that 18 percent of Arabic speakers are Internet users. Between 2000 and 2010 the amount of online content in the Arabic language grew by 2,501 percent, far out-stripping the rest of the world and making the potential for mar-keting in the region huge.
The Internet has become the life blood of many organiza-tions. Companies such as Microsoft, Google, Yahoo!, Amazon, and Facebook make their living when more people are online, and it is not a modest living by any means. As a result of the nature and the culture of the region, the product offering to the Arab world has to be customized to meet their lifestyle and expectations.
BARRIERS One of the barriers to increasing Internet usage in the Arab world is language. The rich culture of the Arab world is not yet matched by the content and usage online. Many companies have started building Arabic versions of their products, which are strictly tar-geted at the lucrative, growing region.
With all these companies being in the interactive business, they faced problems communicating with the users in their lan-guage. Even where the products were in Arabic, the user had several challenges in using them.
Microsoft launched its Arabic language support in the early 1990s, allowing users to type in their native language within the Microsoft products and online. The language plug-in was highly appreciated, but left the customer with much to desire. Keyboards did not have Arabic support, and the users were unac-customed to the letter layout.
The users were so familiar with the QWERTY keyboard that learning a new keyboard layout was very challenging for many of them. The first attempt to break that barrier was with typing teachers. Many were published, downloaded, and used. But typing teachers were insufficient and required a great deal of effort on the part of the user. Another approach was the virtual keyboard, in the Arabic alphabet, but this required continuous switching between applications to produce the Arabic text the user desired.
THE MOVEMENT OF THE PEOPLE Independently, the users resorted to transliteration: this involves using Roman characters to spell out Arabic words phonetically. This approach creates what is known as Arabish (also known as ‘Aralish,’ ‘Franco-Arabic, or Arabizi’). This character encoding of Arabic to the Roman alphabet and the Hindu-Arabic numerals is also known as Arabic Chat Alphabet because it is most commonly used to communicate on online chat services. Some users have also developed special nota-tions to use in place of letters that don’t exist in the Roman alphabet. For example:
The user types: ana raye7 el gam3a el sa3a 3 el 3asr.
Meaning: “ انا رايح الجامعه الساعه 3 العصر ”
English translation: “I’m going to college at 3pm.”
The user types: kif sa7tak, chou 3am ta3mil?.
Saying: “ كيف صحتك، شو عمتعمل؟ ”
English translation: “How is your health, what are you doing?”
As soon as organizations became aware of the massive trend of Arabish, wanting to tap into this market, they started adver-tising and communicating in this language form. Ads using the Arabish language began to appear online, on television, on prod-ucts and even in movie posters.
ARABISH IS NOT ENOUGH After capitalizing on the Arabish language, and as Internet usage grew tremendously, controversy started. There was a backlash against Arabish, with some believing it was changing the heritage of the Arab world. Reacting to this controversy, by knowing their customers well, companies such as Microsoft began to offer actual Arabic text in order to assure the maxi-mum reach, acceptance, and adoption of their products by all sectors of society.
A team at Microsoft’s Innovation Lab, led by Mostafa Ashour, started to build a product that translated Arabish into Arabic. Microsoft Maren, though not the first of its kind, was the most impressive. Microsoft Maren seamlessly integrated into Windows and allowed users to capitalize on their familiarity with the QWERTY keyboard, and still produce Arabic text. For example, if a user typed “saba7 el kheir” meaning “good morning”, صباح الخير would appear on the screen.
The advantage Maren had over rival products was that it was built into the users’ system, and logging in to websites, typing, copying, and pasting were no longer required.
The product was welcomed by online users. Now the users’ chat, blogs, posts, and comments were perfectly accessible to all their target audience. There were more than 250,000 down-loads of Maren from Microsoft pages alone, in addition to those downloaded from other sources. Mostafa Ashour, program manager at Microsoft, says, “This is a real life scenario where communicating in your own language makes all the difference. Expressing your intense feelings of joy or sorrow is better served using your native tongue. Maren helps you communicate effi-ciently in Arabic if you lack access to an Arabic keyboard or you are not familiar with one.”
The evolution of products for the Arab world is very interest-ing to observe, by knowing the market, not least because compa-nies can trap into the huge potential for sales in the region.
Questions for Discussion
1. Using www.internetworldstats.com select one country in the Arab world and analyze the market demographics, then select a lucrative market segment and explain your choice.
2. For that segment propose a product offering based on Internet usage that delivers value to the customer.
3. Define the positioning that you will offer to your customers based on what you know about the behavior of the selected segment.
4. How does the launch of Maren affect the business of Microsoft in the Arab world?
Sources: “Internet World Stats: Usage and Population Statistics,” 2011, www.internetworldstats.com ; “Your Maren Story,” Miscrosoft Maren (MSDN Blogs), July 22, 2009, http://blogs.msdn.com/b/maren/archive/2009/07/22/your-maren-story.aspx; “Arabic chat albhabet,” wikipedia, http://en.wikipedia.org/wiki/Arabic_chat_alphabet.
This case was provided by Mohamed Radwan, adjunct faculty member at the American University in Cairo and managing director for Platinum Partners.
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G1
Glossary Benchmarking | المقارنة المرجعية The process of comparing the company’s products and processes
to those of competitors or leading firms in other industries to
identify “best practices” and find ways to improve quality and
performance.
Benefit segmentation | تقسيم السوق وفقا للفائدة التى يسعى إليها المستهلك Dividing the market into groups according to the different benefits
that consumers seek from the product.
Brand equity |
تقسيم السوق وفقا للفائدة التى يسعى إليها المستهلك The differential effect that knowing the brand name has on customer
response to the product or its marketing.
Brand extension | توسيع استخدام العالمة التجارية Extending an existing brand name to new product categories.
Brand personality | سمات العالمة التجارية The specific mix of human traits that may be attributed to a particular
brand.
Brand | العالمة التجارية A name, term, sign, symbol, design, or a combination of these that
identifies the products or services of one seller or group of sellers and
differentiates them from those of competitors.
Break-even pricing (target profit pricing) |
التسعير على أساس نقطة التعادل (التسعير على أساس الربح المستهدف) Analysis to determine the unit volume and dollar sales needed to be
profitable given a particular price and cost structure.
Business analysis | تحليل األنشطة التجارية A review of the sales, costs, and profit projections for a new
product to find out whether these factors satisfy the company’s
objectives.
Business buyer behaviour |
سلوك مشتري منتجات أو خدمات األنشطة التجارية The buying behavior of the organizations that buy goods and services
for use in the production of other products and services or to resell or
rent them to others at a profit.
Business buying process | عملية شراء الخدمات والسلع التجارية The decision process by which business buyers determine which
products and services their organizations need to purchase, and
then find, evaluate, and choose among alternative suppliers and
brands.
Business portfolio |
مجموع االعمال التجارية و المنتجات التي تتكون منها و تقدمها الشركة The collection of businesses and products that make up the company.
Business promotions | العروض الترويجية للنشاط التجاري Sales promotion tools used to generate business leads, stimulate
purchases, reward customers, and motivate salespeople.
Business-to business (BB) online marketing |
التسويق اإللكتروني فيما بين المؤسسات التجارية Businesses using B2B Web sites, e-mail, online catalogs, online
trading networks, and other online resources to reach new business
customers, serve current customers more effectively, and obtain
buying efficiencies and better prices.
Business-to-consumer (BC) online marketing |
التسويق اإللكتروني بين الشركات والعمالء Businesses selling goods and services online to final consumers.
Adapted global marketing | التسويق العالمي المعدل حسب كل سوق An international marketing strategy for adjusting the marketing
strategy and mix elements to each international target market, bearing
more costs but hoping for a larger market share and return.
Administered VMS | نظام التسويق الرأسي المحكم A vertical marketing system that coordinates successive stages of
production and distribution, not through common ownership or
contractual ties, but through the size and power of one of the parties.
Adoption process | عملية تبني فكرة جديدة The mental process through which an individual passes from first
hearing about an innovation to final adoption.
Advertising | الدعاية Any paid form of nonpersonal presentation and promotion of ideas,
goods, or services by an identified sponsor.
Advertising agency | وكالة إعالنات A marketing services firm that assists companies in planning,
preparing, implementing, and evaluating all or portions of their
advertising programs.
Advertising budget | ميزانية الدعاية The dollars and other resources allocated to a product or company
advertising program.
Advertising media | وسائل اإلعالن The vehicles through which advertising messages are delivered to
their intended audiences.
Advertising objective | الهدف اإلعالني A specific communication task to be accomplished with a specific target audience during a specific period of time .
Advertising strategy | استراتيجية الدعاية The strategy by which the company accomplishes its advertising
objectives. It consists of two major elements: creating advertising
messages and selecting advertising media.
Affordable method | ميزانية دعاية يمكن تحملها Setting the promotion budget at the level management thinks the
company can afford.
Age and life-cycle segmentation |
التقسيم وفقا للفئة العمرية والدورة الحياتية Dividing a market into different age and life-cycle groups.
Alternative evaluation | التقييم البديل The stage of the buyer decision process in which the consumer uses
information to evaluate alternative brands in the choice set.
Approach | (في عملية البيع) المقابلة األولى The step in the selling process in which the salesperson meets the
customer for the first time.
Attitude | موقف A person’s consistently favorable or unfavorable evaluations, feelings,
and tendencies toward an object or idea.
Baby boomers | 1964 مواليد ما بعد الحرب العالمية الثانية وحتى عام The 78 million people born during the baby boom following World
War II and lasting until 1964.
Behavioural segmentation | التقسيم على أساس السلوك Dividing a market into groups based on consumer knowledge,
attitudes, uses, or responses to a product.
Belief | االعتقاد A descriptive thought that a person holds about something.
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G2 Glossary
Competitive marketing strategies | استراتيجيات التسويق التنافسية Strategies that strongly position the company against competitors
and that give the company the strongest possible strategic
advantage.
Competitive-parity method | طريقة التماثل التنافسية Setting the promotion budget to match competitors’ outlays.
Competitor analysis | تحليل الجهة المنافسة The process of identifying key competitors; assessing their objectives,
strategies, strengths and weaknesses, and reaction patterns; and
selecting which competitors to attack or avoid.
Competitor-centered company | شركة تركز على المنافس A company whose moves are mainly based on competitors’ actions
and reactions.
Complex buying behaviour | سلوك الشراء المعقد Consumer buying behavior in situations characterized by high
consumer involvement in a purchase and significant perceived
differences among brands.
Concentrated (niche) marketing | (متخصص) التسويق المركز A market coverage strategy in which a firm goes after a large share of
one or a few segments or niches.
Concept testing | اختبار المفاهيم Testing new-product concepts with a group of target consumers to
find out if the concepts have strong consumer appeal.
Consumer buyer behaviour | سلوك المستهلك الشرائي The buying behavior of final consumers—individuals and households
that buy goods and services for personal consumption.
Consumer market | سوق المستهلك All the individuals and households who buy or acquire goods and
services for personal consumption.
Consumer product | منتج االستهالكي A product bought by final consumer for personal consumption.
Consumer promotions | العروض الترويجية للعميل Sales promotion tools used to boost short-term customer buying and
involvement or to enhance longterm customer relationships.
Consumer-generated marketing | تسويق يقوم به المستهلك للسلعة Marketing messages, ads, and other brand exchanges created by
consumers themselves—both invited and uninvited.
Consumerism | حماية المستهلك An organized movement of citizens and government agencies to
improve the rights and power of buyers in relation to sellers.
Consumer-oriented marketing | التسويق الموجه للمستهلك The philosophy of sustainable marketing that holds that the company
should view and organize its marketing activities from the consumer’s
point of view.
Consumer-to-business (CB) online marketing |
التسويق اإللكتروني فيما بين المستهلكين والمؤسسات التجارية Online exchanges in which consumers search out sellers, learn about their
offers, and initiate purchases, sometimes even driving transaction terms.
Consumer-to-consumer (CC) online marketing |
التسويق اإللكتروني فيما بين المستهلكين Online exchanges of goods and information between final consumers.
Contract manufacturing | التسويق اإللكتروني فيما بين المستهلكين A joint venture in which a company contracts with manufacturers in a
foreign market to produce the product or provide its service.
Contractual VMS | نظام التسويق الرأسي التعاقدي A vertical marketing system in which independent firms at different
levels of production and distribution join together through contracts to
obtain more economies or sales impact than they could achieve alone.
Convenience product | (ميسر) منتج سهل المنال A consumer product that customers usually buy frequently,
immediately, and with a minimum of comparison and buying effort.
Buyer-readiness stages |
المراحل التي يمر خاللها المستهلك قبل عملية إتخاذ قرار الشراء The stages consumers normally pass through on their way to
purchase, including awareness, knowledge, liking, preference,
conviction, and purchase.
Buyers | المشترين The people in the organization’s buying center who make an actual
purchase.
Buying center | مركز الشراء All the individuals and units that play a role in the purchase decision
making process.
Buzz marketing | التسويق بلفت االنتباه Cultivating opinion leaders and getting them to spread information
about a product or service to others in their communities.
By-product pricing | تسعير المنتجات الفرعية Setting a price for by-products in order to make the main product’s
price more competitive.
Captive-product pricing | تسعير المنتجات المساندة Setting a price for products that must be used along with a main
product, such as blades for a razor and film for a camera.
Causal research |
البحث التسويقي االعتيادي الذى يختبر الفرضيات حول العالقة بين السبب والتأثير Marketing research to test hypotheses about cause-and-effect
relationships.
Chain stores | (سلسلة متاجر) متاجر متعددة الفروع Two or more outlets that are commonly owned and controlled.
Channel conflict | الصراع بين القنوات التسويقية Disagreement among marketing channel members on goals and
roles—who should do what and for what rewards.
Channel level | مستوى التوزيع A layer of intermediaries that performs some work in bringing the
product and its ownership closer to the final buyer
Click-and-mortar companies |
شركات تقوم بتسويق منتجاتها بالطرق التقليدية باإلضافة إلى اإلنترنت Traditional brick-and-mortar companies that have added online
marketing to their operations.
Click-only companies | شركات تقوم بتسويق منتجاتها عبر اإلنترنت فقط The so-called dotcoms, which operate only online without any brick-
and-mortar market presence.
Closing | اتمام عملية البيع The step in the selling process in which the salesperson asks the
customer for an order.
Co-branding | عالمة تجارية مشتركة The practice of using the established brand names of two different
companies on the same product.
Cognitive dissonance | الشعور بعدم الرضا بعد شراء المنتج Buyer discomfort caused by postpurchase conflict.
Commercial online databases | قواعد البيانات التجارية على اإلنترنت Computerized collections of information available from online
commercial sources or via the Internet.
Commercialization | تقديم منتج جديد للسوق Introducing a new product into the market.
Communication adaptation |
موائمة اإلعالنات التجارية لالسواق المحلية المختلفة A global communication strategy of fully adapting advertising
messages to local markets.
Competitive advantage | الميزة التنافسية An advantage over competitors gained by offering greater customer
value, either through lower prices or by providing more benefits that
justify higher prices.
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Glossary G3
Customer-centered company | شركة تركز على العميل A company that pays balanced attention to both customers and
competitors in designing its marketing strategies.
Customer-centered new-product development |
تطوير المنتجات الجديدة المستهفة للعمالء New-product development that focuses on finding new ways to solve
customer problems and create more customer satisfying experiences.
Customer-perceived value | القيمة المدركة للمستهلك The customer’s evaluation of the difference between all the benefits and
all the costs of a marketing offer relative to those of competing offers.
Customer relationship management (CRM) |
ادارة عالقات المستهلكين Managing detailed information about individual customers and
carefully managing customer ‘touch points’ in order to maximize
customer loyalty.
Customer-value marketing | قيمة المستهلك التسويقية A principle of sustainable marketing that holds that a company should
put most of its resources into customer value-building marketing
investments.
Deciders | أصحاب القرار People in the organization’s buying center who have formal or
informal power to select or approve the final suppliers.
Decline stage | مرحلة التدهور The product life-cycle stage in which a product’s sales decline.
Deficient products | المنتجات المعيبة Products that have neither immediate appeal nor long-run benefits
Demand curve | منحنى الطلب A curve that shows the number of units the market will buy in a given
time period, at different prices that might be charged.
Demands | المتطلبات Human wants that are backed by buying power.
Demographic segmentation | التقسيم الديموغرافي Dividing the market into groups based on variables such as age,
gender, family size, family life cycle, income, occupation, education,
religion, race, generation, and nationality.
Demography | (علم دراسة السكان) الديمغرافيا The study of human populations in terms of size, density, location,
age, gender, race, occupation, and other statistics.
Department store | متاجر كبرى A retail organization that carries a wide variety of product lines—
each line is operated as a separate department managed by specialist
buyers or merchandisers.
Derived demand | الطلب االشتقاقي Business demand that ultimately comes from (derives from) the
demand for consumer goods.
Descriptive research | البحث الوصفي Marketing research to better describe marketing problems, situations,
or markets, such as the market potential for a product or the
demographics and attitudes of consumers.
Desirable products | المنتجات المرغوبة Products that give both high immediate satisfaction and high longrun
benefits.
Differentiated (segmented) marketing | (المجزأ) التسويق المتنوع A market-coverage strategy in which a firm decides to target several
market segments and designs separate offers for each.
Differentiation | المفاضلة Actually differentiating the market offering to create superior
customer value.
Differentiation | المفاضلة Actually differentiating the market offering to create superior
customer value.
Convenience store | متاجر صغيرة A small store, located near a residential area, that is open long
hours seven days a week and carries a limited line of high-turnover
convenience goods.
Conventional distribution channel | قنوات التوزيع التقليدية A channel consisting of one or more independent producers,
wholesalers, and retailers, each a separate business seeking to maximize
its own profits even at the expense of profits for the system as a whole.
Corporate (or brand) website |
الموقع اإللكتروني للشركة (أو العالمة التجارية) A website designed to build customer goodwill, collect customer
feedback, and supplement other sales channels, rather than to sell the
company’s products directly.
Corporate VMS | نظام التسويق الرأسي للشركات A vertical marketing system that combines successive stages of
production and distribution under single ownership—channel
leadership is established through common ownership.
Cost-based pricing | التسعير القائم على التكلفة Setting prices based on the costs for producing, distributing, and
selling the product plus a fair rate of return for effort and risk.
Cost-plus pricing | التسعير على أساس اجمالي التكلفة والربح Adding a standard markup to the cost of the product.
Countertrade | (المقايضة) التجارة عن طريق تبادل السلع بدال من المال International trade involving the direct or indirect exchange of goods
for other goods instead of cash.
Creative concept | مفهوم اإلبداع The compelling “big idea” that will bring the advertising message
strategy to life in a distinctive and memorable way.
Cultural environment | البيئة الثقافية Institutions and other forces that affect society’s basic values,
perceptions, preferences, and behaviors.
Culture | الثقافة The set of basic values, perceptions, wants, and behaviors learned by a
member of society from family and other important institutions.
Customer database | قواعد بيانات العمالء An organized collection of comprehensive data about individual
customers or prospects, including geographic, demographic,
psychographic, and behavioral data.
Customer equity | قيمة العميل The total combined customer lifetime values of all of the company’s
customers.
Customer insights | رؤى العمالء Fresh understandings of customers and the marketplace derived from
marketing information that become the basis for creating customer
value and relationships.
Customer lifetime value | القيمة الدائمة للعميل The value of the entire stream of purchases that the Customer would
make over a lifetime of patronage.
Customer relationship management | إدارة عالقات العمالء Managing detailed information about individual customers and
carefully managing customer “touch points” in order to maximize
customer loyalty.
Customer sales force structure | هيكل قوى البيع للعمالء A sales force organization under which salespeople specialize in
selling only to certain customers or industries.
Customer satisfaction | رضا المستهلك The extent to which a product’s perceived performance matches a
buyer’s expectations.
Customer value analysis | تحليل الفوائد التى يعتبرها العميل قيمة Analysis conducted to determine what benefits target customers value
and how they rate the relative value of various competitors’ offers.
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G4 Glossary
Environmentalism | حماية البيئة An organized movement of concerned citizens and government
agencies to protect and improve people’s current and future living
environment.
E-procurement | الشراء اإللكتروني Purchasing through electronic connections between buyers and
sellers—usually online.
Ethnographic research | البحث اإلثنوغرافي A form of observational research that involves Sending trained
observers to watch and interact with consumers in their “natural
habitat.”
Event marketing | تسويق الحدث Creating a brand marketing event or serving as a sole or participating
sponsor of events created by others.
Exchange | تبادل The act of obtaining a desired object from someone by offering
something in return.
Exclusive distribution | التوزيع الحصري Giving a limited number of dealers the exclusive right to distribute the
company’s products in their territories.
Exclusive distributor | الموزع الحصريA representative who buys, stocks, and sells the products ofaforeign
company to a retailer and wholesaler in his or her territory.
Execution style | أسلوب التنفيذ The approach, style, tone, words, and format used for executing an
advertising message.
Experience curve (learning curve) | (منحنى التعلم) منحنى الخبرة The drop in the average per-unit production cost that comes with
accumulated production experience.
Experimental research | البحث التجريبي Gathering primary data by selecting matched groups of subjects,
giving them different treatments, controlling related factors, and
checking for differences in group responses.
Exploratory research | البحث االستكشافي Marketing research to gather preliminary information that will help
define problems and suggest hypotheses.
Exporting | التصدير Entering a foreign market by selling goods produced in the company’s
home country, often with little modification.
Factory outlet | منافذ بيع المصنع An off-price retailing operation that is owned and operated by a
manufacturer and that normally carries the manufacturer’s surplus,
discontinued, or irregular goods.
Fad | زيادة مؤقتة فى المبيعات نتيجة لشهرة منتج أو عالمة تجارية ما A temporary period of unusually high sales driven by consumer
enthusiasm and immediate product or brand popularity.
Fashion | موضة A currently accepted or popular style in a given field.
Fixed costs (overhead) | (المباشرة) التكاليف الثابتة Costs that do not vary with production or sales level.
FOB-origin pricing | التسعير على أساس مكان التسليم A geographical pricing strategy in which goods are placed free on
board a carrier; the customer pays the freight from the factory to the
destination.
Focus group interviewing |
مقابلة تضم مجموعة من األفراد تركز على موضوع ما بشكل معمق Personal interviewing that involves inviting six to ten people to
gather for a few hours with a trained interviewer to talk about a
product, service, or organization. The interviewer “focuses” the group
discussion on important issues.
Direct investment | استثمار مباشر Entering a foreign market by developing foreign-based assembly or
manufacturing facilities.
Direct marketing | التسويق المباشر Direct connections with carefully targeted individual consumers to
both obtain an immediate response and cultivate lasting customer
relationships—the use of direct mail, the telephone, direct response
television, e-mail, the Internet, and other tools to communicate
directly with specific consumers.
Direct marketing channel | قنوات التسويق المباشر A marketing channel that has no intermediary levels.
Direct-mail marketing | التسويق المباشر عبر البريد Direct marketing by sending an offer, announcement, reminder, or
other item to a person at a particular physical or virtual address.
Direct-response television marketing |
التسويق باالستجابة المباشرة عبر التليفزيون Direct marketing via television, including direct-response television advertising (or infomercials ) and home shopping channels .
Discount | الخصم A straight reduction in price on purchases during a stated period of time.
Discount store | معرض للسلع المخفضة A retail operation that sells standard merchandise at lower prices by
accepting lower margins and selling at higher volume.
Disintermediation | حذف الوسطاء The cutting out of marketing channel intermediaries by product or
service producers, or the displacement of traditional resellers by
radical new types of intermediaries.
Dissonance-reducing buying behavior |
سلوك المشتري عند شراء منتج باهظ الثمن مع وجود بضعة اختالفات بين الماركات
Consumer buying behaviour in situations characterized by high
involvement but few perceived differences among brands.
Distribution center | مركز توزيع A large, highly automated warehouse designed to receive goods from
various plants and suppliers, take orders, fill them efficiently, and
deliver goods to customers as quickly as possible.
Diversification | التنويع A strategy for company growth through starting up or acquiring
businesses outside the company’s current products and markets.
Downsizing | التقليص Reducing the business portfolio by eliminating products of business units
that are not profitable or that no longer fit the company’s overall strategy.
Dynamic pricing | التسعير الديناميكي Adjusting prices continually to meet the characteristics and needs of
individual customers and situations.
Economic community | المجتمع االقتصادي A group of nations organized to work toward common goals in the
regulation of international trade.
Economic environment | المناخ االقتصادي Factors that affect consumer buying power and spending patterns.
Engel’s laws | قوانين انجل Differences noted over a century ago by Ernst Engel in how
people shift their spending across food, housing, transportation,
health care, and other goods and services categories as family
income rises.
Environmental sustainability | االستدامة البيئية A management approach that involves developing strategies that both
sustain the environment and produce profits for the company.
Environmental sustainability | االستدامة البيئية A management approach that involves developing strategies that both
sustain the environment and produce profits for the company.
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Glossary G5
Hypermarket | محل تجارى ضخم Very large stores traditionally aimed at meeting consumers’ total
needs for routinely purchased food and nonfood items. Includes
combined supermarket and discount stores, and category killers ,
which carry a deep assortment in a particular category and have a
knowledgeable staff.
Idea generation | توليد األفكار The systematic search for new-product ideas.
Idea screening | تصفية األفكار Screening new-product ideas in order to spot good ideas and drop
poor ones as soon as possible.
Income segmentation | تقسيم الدخل Dividing a market into different income groups.
Independent off-price retailer | بائع تجزئة مستقل للسلع المخفضة An off-price retailer that is either independently owned and run or is a
division of a larger retail corporation.
Indirect marketing channel | قنوات التسويق غير المباشرة Channel containing one or more intermediary levels.
Individual marketing | التسويق الفردي Tailoring products and marketing programs to the needs and
preferences of individual customers—also labeled “one-to-one
marketing,” “customized marketing,” and “markets-of-one marketing.”
Industrial product | منتج صناعي A product bought by individuals and organizations for further
processing or for use in conducting a business.
Influencers | أصحاب التأثير People in an organization’s buying center who affect the buying
decision; they often help define specifications and also provide
information for evaluating alternatives.
Information search | البحث عن المعلومات The stage of the buyer decision process in which the consumer is
aroused to search for more information; the consumer may simply have
heightened attention or may go into an active information search.
Innovative marketing | التسويق المبتكر A principle of sustainable marketing that requires that a company seek
real product and marketing improvements.
Inside sales force | قوى البيع الداخلية Inside salespeople who conduct business from their offices via
telephone, the Internet, or visits from prospective buyers.
Institutional market | السوق المؤسسي Schools, hospitals, nursing homes, prisons, and other institutions that
provide goods and services to people in their care.
Integrated logistics management | اإلدارة المتكاملة لإلمدادات The logistics concept that emphasizes teamwork, both inside the
company and among all the marketing channel organizations, to
maximize the performance of the entire distribution system.
Integrated marketing communications (IMC) |
االتصاالت التسويقية المتكاملة Carefully integrating and coordinating the company’s many
communications channels to deliver a clear, consistent, and
compelling message about the organization and its products.
Intensive distribution | التوزيع المكتف Stocking the product in as many outlets as possible.
Interactive marketing | التسويق التفاعلي Training service employees in the fine art of interacting with
customers to satisfy their needs.
Intermarket segmentation |
تقسيم المستهلكين طبقا لتشابه متطلباتهم الشرائية رغم اختالف بالدهم Forming segments of consumers who have similar needs and buying
behavior even though they are located in different countries.
Follow-up | المتابعة The last step in the selling process in which the salesperson follows up
after the sale to ensure customer satisfaction and repeat business.
Franchise | االمتياز A contractual association between a manufacturer, wholesaler, or
service organization (a franchiser) and independent businesspeople
(franchisees) who buy the right to own and operate one or more units
in the franchise system.
Franchise organization | منظمة االمتياز A contractual vertical marketing system in which a channel member, called
a franchiser, links several stages in the production-distribution process.
Freight-absorption pricing | التسعير على أساس تحمل قيمة الشحن A geographical pricing strategy in which the seller absorbs all or part
of the freight charges in order to get the desired business.
Gatekeepers | منسقي تداول المعلومات People in the organization’s buying center who control the flow of
information to others.
Gender segmentation | التجزئة على أساس الجنس Dividing a market into different groups based on gender.
General need description | الوصف العام للحاجات The stage in the business buying process in which the company
describes the general characteristics and quantity of a needed item.
Generation X | جيل إكس The 45 million people born between 1965 and 1976 in the “birth
dearth” following the baby boom.
Geographic pricing | التسعير الجغرافي Setting prices for customers located in different parts of the country or
world.
Geographic segmentation | التجزئة الجغرافية Dividing a market into different geographical units such as nations,
states, regions, counties, cities, or neighborhoods.
Global firm | شركة دولية A firm that, by operating in more than one country, gains R&D,
production, marketing, and financial advantages in its costs and
reputation that are not available to purely domestic competitors.
Good-value pricing | التسعير المبني على قيمة المنتج Offering just the right combination of quality and good service at a
fair price.
Government market | السوق الحكومي Governmental units— federal, state, and local—that purchase or rent
goods and services for carrying out the main functions of government.
Group | فئة Two or more people who interact to accomplish individual or mutual
goals.
Growth stage | مرحلة النمو The product life-cycle stage in which a product’s sales start climbing
quickly.
Growth-share matrix | مصفوفة حصة النمو A portfolio-planning method that evaluates a company’s strategic
business units in terms of its market growth rate and relative market
share. SBUs are classified as stars, cash cows, question marks, or dogs.
Habitual buying behavior | السلوك المعتاد في الشراء Consumer buying behavior in situations characterized by low-consumer
involvement and few significantly perceived brand differences.
Handling objections | معالجة االعتراض على الشراء The step in the selling process in which the salesperson seeks out,
clarifies, and overcomes customer objections to buying.
Horizontal marketing system | نظام التسويق األفقي A channel arrangement in which two or more companies at one level
join together to follow a new marketing opportunity.
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G6 Glossary
Market leader | شركة رائدة في السوق The firm in an industry with the largest market share.
Market nicher | شركة متخصصة تعمل في سوق ال يتنافس فيه الكثير A firm that serves small segments that the other firms in an industry
overlook or ignore.
Market offering | الطرح في األسواق Some combination of products, services, information, or experiences
offered to a market to satisfy a need or want.
Market penetration | النفاذ إلى األسواق A strategy for company growth by increasing sales of current products
to current market segments without changing the product.
Market segment | الشريحة السوقية A group of consumers who respond in a similar way to a given set of
marketing efforts.
Market segmentation | تجزئة السوق Dividing a market into distinct groups of buyers who have different
needs, characteristics, or behaviors, and who might require separate
products or marketing programs.
Market targeting (targeting) | (أو االستهداف) استهداف السوق The process of evaluating each market segment’s attractiveness and
selecting one or more segments to enter.
Market-centered company |
الشركة التي تعين اهتماما متساويا لعمالئها ومنافسيها A company that pays balanced attention to both customers and
competitors in designing its marketing strategies.
Marketing | التسويق The process by which companies create value for customers and
build strong customer relationships in order to capture value from
customers in return.
Marketing channel (distribution channel) |
قناة التسويق (قتاة التوزيع) A set of interdependent organizations that help make a product or service
available for use or consumption by the consumer or business user.
Marketing channel design | تصميم قناة تسويقية Designing effective marketing channels by analyzing consumer needs,
setting channel objectives, identifying major channel alternatives, and
evaluating them.
Marketing channel management | إدارة قنوات التسويق Selecting, managing, and motivating individual channel members and
evaluating their performance over time.
Marketing concept | مفهوم التسويق The marketing management philosophy that holds that achieving
organizational goals depends on knowing the needs and wants of
target markets and delivering the desired satisfactions better than
competitors do.
Marketing control | الرقابة التسويقية The process of measuring and evaluating the results of marketing
strategies and plans and taking corrective action to ensure that
objectives are achieved.
Marketing environment | المناخ التسويقي The actors and forces outside marketing that affect marketing
management’s ability to build and maintain successful relationships
with target customers.
Marketing implementation | التنفيذ التسويقي The process that turns marketing strategies and plans into
marketing actions in order to accomplish strategic marketing
objectives.
Marketing information system (MIS) | نظام المعلومات التسويقية People and procedures for assessing information needs, developing the
needed information, and helping decision makers to use the information
to generate and validate actionable customer and market insights.
Intermodal transportation | النقل متعدد الوسائط Combining two or more modes of transportation.
Internal databases | قواعد البيانات الداخلية Electronic collections of consumer and market information obtained
from data sources within the company network.
Internal marketing | التسويق الداخلي Orienting and motivating customer-contact employees and
supporting service people to work as a team to provide customer
satisfaction.
Introduction stage | مرحلة تقديم المنتج إلى السوق The product life-cycle stage in which the new product is first
distributed and made available for purchase.
Joint ownership | ملكية مشتركة A joint venture in which a company joins investors in a foreign market
to create a local business in which the company shares joint ownership
and control.
Joint venturing | المشروع المشترك Entering foreign markets by joining with foreign companies to
produce or market a product or service.
Learning | التعلم Changes in an individual’s behavior arising from experience.
Licensing | الترخيص A method of entering a foreign market in which the company enters
into an agreement with a licensee in the foreign market, offering the
right to use a manufacturing process, trademark, patent, trade secret,
or other item of value for a fee or royalty.
Lifestyle | نمط المعيشة A person’s pattern of living as expressed in his or her activities,
interests, and opinions.
Line extension | توسيع خط اإلنتاج Extending an existing brand name to new forms, colors, sizes,
ingredients, or flavors of an existing product category.
Local agents | وكالء محليين Act as brokers between the local buyer and the foreign company
Local marketing | التسويق المحلي Tailoring brands and promotions to the needs and wants of local
customer groups—cities, neighborhoods, and even specific stores.
Macroenvironment | البيئة الكلية The larger societal forces that affect the microenvironment—
demographic, economic, natural, technological, political, and cultural
forces.
Madison & Vine | ماديسون وفين A term that has come to represent the merging of advertising and
entertainment in an effort to break through the clutter and create new
avenues for reaching consumers with more engaging messages.
Management contracting | التعاقد اإلداري A joint venture in which the domestic firm supplies the management
knowhow to a foreign company that supplies the capital; the domestic
firm exports management services rather than products.
Market | السوق The set of all actual and potential buyers of a product or service.
Market challenger | منافس قوي فى السوق A runner-up firm that is fighting hard to increase its market share in
an industry.
Market development | تنمية األسواق A strategy for company growth by identifying and developing new
market segments for current company products.
Market follower | شركة تابعة في السوق A runner-up firm that wants to hold its share in an industry without
rocking the boat.
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Glossary G7
Mission statement | مهمة الشركة A statement of the organization’s purpose—what it wants to
accomplish in the larger environment.
Modified rebuy | إعادة الشراء بعد تعديل المنتج A business buying situation in which the buyer wants to modify
product specifications, prices, terms, or suppliers.
Motive (drive) | (دافع) حافز A need that is sufficiently pressing to direct the person to seek
satisfaction of the need.
Multichannel distribution system | نظام التوزيع متعدد القنوات A distribution system in which a single firm sets up two or more
marketing channels to reach one or more customer segments.
Natural environment | العوامل الطبيعية Natural resources that are needed as inputs by marketers or that are
affected by marketing activities.
Need recognition | الشعور بالحاجة The first stage of the buyer decision process, in which the consumer
recognizes a problem or need.
Needs | االحتياجات States of felt deprivation
New product | منتج جديد A good, service, or idea that is perceived by some potential customers
as new.
New task | مهمة جديدة A business buying situation in which the buyer purchases a product or
service for the first time.
New-product development | تطوير المنتج الجديد The development of original products, product improvements,
product modifications, and new brands through the firm’s own
product development efforts.
Nonpersonal communication channels | قنوات االتصال غير الشخصية Media that carry messages without personal contact or feedback,
including major media, atmospheres, and events.
Objective-and-task method | طريقة الهدف والمهمة Developing the promotion budget by (1) defining specific
objectives; (2) determining the tasks that must be performed to
achieve these objectives; and (3) estimating the costs of performing
these tasks. The sum of these costs is the proposed promotion
budget.
Observational research | البحث القائم على المالحظة Gathering primary data by observing relevant people, actions, and
situations.
Occasion segmentation | التجزئة على أساس المناسبات Dividing the market into groups according to occasions when buyers
get the idea to buy, actually make their purchase, or use the
Online advertising | اإلعالن على اإلنترنت Advertising that appears while consumers are surfing the Web,
including display ads, search-related ads, online classifieds, and other
forms.
Online focus groups | إعداد مجموعات نقاش مركزة على اإلنترنت Gathering a small group of people online with a trained moderator
to chat about a product, service, or organization and gain qualitative
insights about consumer attitudes and behavior.
Online marketing | التسويق اإللكتروني Company efforts to market products and services and build customer
relationships over the Internet.
Online marketing research | بحث التسويق عبر اإلنترنت Collecting primary data online through Internet surveys, online
focus groups, Web-based experiments, or tracking consumers’ online
behavior.
Marketing intelligence | االستخبارات التسويقية The systematic collection and analysis of publicly available
information about consumers, competitors, and developments in the
marketing environment.
Marketing intermediaries | الوسطاء التسويقيين Firms that help the company to promote, sell, and distribute its goods
to final buyers.
Marketing logistics (physical distribution) |
اإلمدادات التسويقية-التوزيع المادي Planning, implementing, and controlling the physical flow of
materials, final goods, and related information from points of origin to
points of consumption to meet customer requirements at a profit.
Marketing management | إدارة التسويق The art and science of choosing target markets and building profitable
relationships with them.
Marketing mix | المزيج التسويقي The set of controllable tactical marketing tools—product, price, place,
and promotion—that the firm blends to produce the response it wants
in the target market.
Marketing myopia | قصر النظر التسويقي The mistake of paying more attention to the specific products a
company offers than to the benefits and experiences produced by
these products.
Marketing research | البحث التسويقي The systematic design, collection, analysis, and reporting of data
relevant to a specific marketing situation facing an organization.
Marketing strategy | استراتيجيه التسويق The marketing logic by which the business unit hopes to create
customer value and achieve profitable customer relationships.
Marketing strategy development | تطوير استراتيجيات التسويق Designing an initial marketing strategy for a new product based on
the product concept.
Marketing Web site | موقع الكتروني للتسويق A website that engages consumers in interactions that will move them
closer to a direct purchase or other marketing outcome.
Market-penetration pricing |
وضع سعر منخفض لمنتج جديد بغية جذب عدد كبير من المشتركين و الحصول على حصة كبيرة من السوق Setting a low price for a new product in order to attract a large
number of buyers and a large market share.
Market-skimming pricing |
وضع سعر أعلى لزبائن معيينين يرغبون بدفع قيمة أعلى مقابل الحصول على امتياز الحصول على المنتج أوال Setting a high price for a new product to skim maximum revenues
layer by layer from the segments willing to pay the high price; the
company makes fewer but more profitable sales.
Maturity stage | مرحلة النضوج The product life-cycle stage in which sales growth slows or
levels off.
Microenvironment | البيئة التسويقية الجزئية The actors close to the company that affect its ability to serve its
customers—the company, suppliers, marketing intermediaries,
customer markets, competitors, and publics.
Micromarketing | التسويق الجزئي - تسويق ضيق النطاق The practice of tailoring products and marketing programs to the
needs and wants of specific individuals and local customer groups—
includes local marketing and individual marketing .
Millennials (Generation Y) | (جيل واي) جيل األلفية The 83 million children of the baby boomers, born between 1977 and
2000.
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G8 Glossary
Positioning statement | بيان التمركز A statement that summarizes company or brand positioning— it takes
this form: To (target segment and need) our (brand) is (concept) that (point-of-difference) .
Postpurchase behaviour | سلوك ما بعد الشراء The stage of the buyer decision process in which the consumers
take further action after purchase, based on their satisfaction or
dissatisfaction.
Pre approach | التحضير المسبق The step in the selling process in which the salesperson or company
identifies qualified potential customers.
Presentation | عرض المنتج The step in the selling process in which the salesperson tells the “value
story” to the buyer, showing how the company’s offer solves the
customer’s problems.
Price | السعر The amount of money charged for a product or service, or the sum of
the values that customers exchange for the benefits of having or using
the product or service.
Price elasticity | المرونة السعرية A measure of the sensitivity of demand to changes in price.
Primary data | بيانات أولية Information collected for the specific purpose at hand.
Problem recognition | إدراك المشكلة The first stage of the business buying process in which someone in the
company recognizes a problem or need that can be met by acquiring a
good or a service.
Product | المنتج Anything that can be offered to a market for attention, acquisition,
use, or consumption that might satisfy a want or need.
Product adaptation | موائمة المنتج Adapting a product to meet local conditions or wants in foreign
markets.
Product bundle pricing | التسعير على أساس حزم المنتجات Combining several products and offering the bundle at a reduced
price.
Product concept | مفهوم المنتج A detailed version of the new-product idea stated in meaningful
consumer terms.
Product development | تطوير المنتج من فكرة إلى منتج فعلي Developing the product concept into a physical product in order to
ensure that the product idea can be turned into a workable market
offering.
Product development (p 44) | تطوير منتجات الشركة لتساهم فى نموهاA strategy for company growth by offering modified or new products
to current market segments.
Product invention | اختراع المنتج Creating new products or services for foreign markets.
Product life cycle | دورة حياة المنتج The course of a product’s sales and profits over its lifetime. It involves
five distinct stages: product development, introduction, growth,
maturity, and decline.
Product line pricing | تسعير خط اإلنتاج Setting the price steps between various products in a product line
based on cost differences between the products, customer evaluations
of different features, and competitors’ prices.
Product line | خط اإلنتاج A group of products that are closely related because they function
in a similar manner, are sold to the same customer groups, are
Online social networks | الربط اإلجتماعي عبر اإلنترنت Online social communities—blogs, social networking Web sites, or
even virtual worlds—where people socialize or exchange information
and opinions.
Opinion leader | قادة الرأي Person within a reference group who, because of special skills, knowledge,
personality, or other characteristics, exerts social influence on others.
Optional-product pricing | تسعير المنتجات غير الضرورية The pricing of optional or accessory products along with a main
product.
Order-routine specification | المواصفات الروتينية للطلبيات The stage of the business buying process in which the buyer writes
the final order with the chosen supplier(s), listing the technical
specifications, quantity needed, expected time of delivery, return
policies, and warranties.
Outside sales force ( field sales force ) |
قوى البيع الخارجية ( موظفو البيع الميدانيين) Outside salespeople who travel to call on customers in the field.
Packaging | التعبئة والتغليف The activities of designing and producing the container or wrapper for
a product.
Partner relationship management | إدارة العالقات مع الشركاء Working closely with partners in other company departments and
outside the company to jointly bring greater value to customers.
Percent-of-sales method |
تحديد ميزانية الدعاية على أساس نسبة معينة من المبيعات Setting the promotion budget at a certain percentage of current or
forecasted sales or as a percentage of the unit sales price.
Perception | اإلدارك The process by which people select, organize, and interpret
information to form a meaningful picture of the world.
Performance review | مراجعة األداء The stage of the business buying process in which the buyer assesses
the performance of the supplier and decides to continue, modify, or
drop the arrangement.
Personal communication channels | قنوات االتصال الشخصي Channels through which two or more people communicate directly
with each other, including face to face, on the phone, through mail or
e-mail, or even through an Internet “chat.”
Personal selling | البيع الشخصي Personal interactions between a customers and the firm’s sales
force for the purpose of making sales and building customer
relationships.
Personality | الشخصية The unique psychological characteristics that lead to relatively
consistent and lasting responses to one’s own environment.
Pleasing products | المنتجات الممتعة Products that give high immediate satisfaction but may hurt
consumers in the long run.
Political environment | البيئة السياسية Laws, government agencies, and pressure groups that influence and
limit various organizations and individuals in a given society.
Portfolio analysis | (العمل المؤسسي) تحليل الحقيبة االستثمارية The process by which management evaluates the products and
businesses that make up the company.
Positioning | التمركز Arranging for a product to occupy a clear, distinctive, and desirable
place relative to competing products in the minds of target
consumers.
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Glossary G9
creating a demand vacuum that “pulls” the product through the
channel.
Purchase decision | قرار الشراء The buyer’s decision about which brand to purchase.
Push strategy | استراتيجيه الدفع A promotion strategy that calls for using the sales force and trade
promotion to push the product through channels. The producer
promotes the product to channel members who in turn promote it to
final consumers.
Reference prices | األسعار المرجعية Prices that buyers carry in their minds and refer to when they look at
a given product.
Retailer | بائع التجزئة A business whose sales come primarily from retailing.
Retailing | البيع بالتجزئة All activities involved in selling goods or services directly to final
consumers for their personal, non-business use.
Return on advertising investment | العائد من االستثمار اإلعالني The net return on advertising investment divided by the costs of the
advertising investment.
Return on marketing investment | عائد استثمار التسويق The net return from a marketing investment divided by the costs of
the marketing investment.
Sales force management | إدارة قوى البيع The analysis, planning, implementation, and control of sales force
activities. It includes designing sales force strategy and structure
and recruiting, selecting, training, supervising, compensating, and
evaluating the firm’s salespeople.
Sales promotion | الترويج للمبيعات Short-term incentives to encourage the purchase or sale of a product
or service.
Sales quota | حصة المبيعات A standard that states the amount a salesperson should sell and how
sales should be divided among the company’s products.
Salesperson | مندوب مبيعات An individual representing a company to customers by
performing one or more of the following activities: prospecting,
communicating, selling, servicing, information gathering, and
relationship building.
Salutary products |
المنتجات المفيدة (منتجات ضئيله الجاذبية بالنسبة للعمالء , ولكنها مفيدة لهم على المدى البعيد) Products that have low appeal but may benefit consumers in the long
run.
Sample | عينة A segment of the population selected for marketing research to
represent the population as a whole.
Secondary data | بيانات ثانوية Information that already exists somewhere, having been collected for
another purpose.
Segmented pricing | التسعير المجزئ Selling a product or service at two or more prices, where the difference
in prices is not based on differences in costs.
Selective distribution | التوزيع االنتقائي The use of more than one, but fewer than all, of the intermediaries
who are willing to carry the company’s products.
Selling concept | مفهوم البيع The idea that that consumers will not buy enough of the firm’s
products unless it undertakes a large-scale selling and promotion
effort.
marketed through the same types of outlets, or fall within given
price ranges.
Product mix (product portfolio) |
المنتجات المتنوعة المعروضة للبيع (قائمة المنتجات) The set of all product lines and items that a particular seller offers for sale.
Product position | مركز المنتج The way the product is defined by consumers on important
attributes—the place the product occupies in consumers’ minds
relative to competing products.
Product quality | جودة المنتج The characteristics of a product or service that bear on its ability to
satisfy stated or implied customer needs.
Product sales force structure |
هيكل قوى بيع جزء من منتجات الشركة للعمالء A sales force organization under which salespeople specialize in
selling only a portion of the company’s products or lines
Product specification | مواصفات المنتج The stage of the business buying process in which the buying
organization decides on and specifies the best technical product
characteristics for a needed item.
Product/market expansion grid | شبكة توسيع حجم المنتج/السوق A portfolio-planning tool for identifying company growth
opportunities through market penetration, market development,
product development, or diversification.
Production concept | مفهوم اإلنتاج The idea that consumers will favor products that are available and
highly affordable and that the organization should therefore focus on
improving production and distribution efficiency.
Promotion mix (marketing communications mix) |
مزيج ترويجي (مزيج االتصاالت التسويقية) The specific blend of advertising, sales promotion, public relations,
personal selling, and direct-marketing tools that the company uses
to persuasively communicate customer value and build customer
relationships.
Promotional pricing | التسعير الترويجي Temporarily pricing products below the list price, and sometimes even
below cost, to increase short-run sales.
Proposal solicitation | طلب العروض The stage of the business buying process in which the buyer invites
qualified suppliers to submit proposals.
Prospecting | البحث عن العمالء The step in the selling process in which the salesperson or company
identifies qualified potential customers.
Psychographic segmentation | التجزئة السيكوغرافية Dividing a market into different groups based on social class, lifestyle,
or personality characteristics.
Psychological pricing | التسعير السيكولوجي A pricing approach that considers the psychology of prices and not
simply the economics; the price is used to say something about the
product.
Public | الجمهور Any group that has an actual or potential interest in or impact on an
organization’s ability to achieve its objectives.
Public relations | العالقات العامة Building good relations with the company’s various publics by
obtaining favorable publicity, building up a good corporate image,
and handling or heading off unfavorable rumors, stories, and events.
Pull strategy | استراتيجيه السحب A promotion strategy that calls for spending a lot on advertising and
consumer promotion to induce final consumers to buy the product,
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G10 Glossary
Specialty store | متجر الصناعات المتخصصة A retail store that carries a narrow product line with a deep assortment
within that line.
Standardized global marketing | التسويق العالمي الموحد An international marketing strategy for using basically the same
marketing strategy and mix in all the company’s international
markets.
Store brand (private brand) |
عالمة تجارية مملوكة لتاجر(عالمة تجارية خاصة)
A brand created and owned by a reseller of a product or service
Straight product extension |
توسيع نطاق تسويق المنتج دون إحداث اي تغيير فيه Marketing a product in a foreign market without any change.
Straight rebuy | إعادة الشراء المباشر A business buying situation in which the buyer routinely reorders
something without any modifications.
Strategic group | المجموعة اإلستراتيجية A group of firms in an industry following the same or a similar strategy.
Strategic planning | التخطيط االستراتيجي The process of developing and maintaining a strategic fit between
the organization’s goals and capabilities and its changing marketing
opportunities.
Style | نمط A basic and distinctive mode of expression.
Subculture | الجماعة الفرعية A group of people with shared value systems based on common life
experiences and situations.
Supermarket | السوبر ماركت A large, low-cost, low-margin, high-volume, self-service store that
carries a wide variety of grocery and household products.
Supplier development | تطوير أداء الموردين Systematic development of networks of supplier partners to ensure an
appropriate and dependable supply of products and materials for use
in making products or reselling them to others.
Supplier search | د البحث عن مور The stage of the business buying process in which the buyer tries to
find the best vendors.
Supplier selection | اختيار المورد The stage of the business buying process in which the buyer reviews
proposals and selects a supplier or suppliers.
Supply chain management | إدارة سلسلة اإلمداد Managing upstream and downstream value-added flows of materials,
final goods, and related information among suppliers, the company,
resellers, and final consumers.
Survey research | البحث المسحي Gathering primary data by asking people questions about their
knowledge, attitudes, preferences, and buying behavior.
Sustainable marketing | التسويق المستدام A principle of sustainable marketing that holds that a company should
make marketing decisions by considering consumers’ wants, the
company’s requirements, consumers’ longrun interests, and society’s
long-run interests.
SWOT analysis | (نقاط القوة والضعف والفرص والتهديدات) تحليل سوت An overall evaluation of the company’s strengths (S), weaknesses (W),
opportunities (O), and threats (T).
Systems selling (solutions selling) | (بيع الحلول) بيع األنظمة Buying a packaged solution to a problem from a single seller, thus
avoiding all the separate decisions involved in a complex buying situation.
Target costing | التكاليف المستهدفة Pricing that starts with an ideal selling price, then targets costs that
will ensure that the price is met.
Selling process | عملية البيع The steps that the salesperson follows when selling, which include
prospecting and qualifying, preapproach, approach, presentation and
demonstration, handling objections, closing, and follow-up.
Sense-of-mission marketing | التسويق على أساس اإلحساس بالمسئولية A principle of sustainable marketing that holds that a company should
define its mission in broad social terms rather than narrow product
terms.
Service | الخدمات Any activity or benefit that one party can offer to another that is
essentially intangible and does not result in the ownership of anything.
Service inseparability | تالزم الخدمات A major characteristic of services—they are produced and consumed
at the same time and cannot be separated from their providers.
Service intangibility | الخدمات غير الملموسة A major characteristic of services—they cannot be seen, tasted, felt,
heard, or smelled before they are bought.
Service perishability | عدم قابلية تخزين الخدمة A major characteristic of services—they cannot be stored for later sale
or use.
Service retailer | (خدمات) بائع تجزئة A retailer whose product line is actually a service, including hotels,
airlines, banks, colleges, and many others.
Service variability | تنوع الخدمات A major characteristic of services—their quality may vary greatly,
depending on who provides them and when, where, and how.
Service-profit chain | سلسلة ربحية الخدمة The chain that links service firm profits with employee and customer
satisfaction.
Share of customer | حصة العميل The portion of the customer’s purchasing that a company gets in its
product categories.
Shopping center | مركز تسوق A group of retail businesses planned, developed, owned, and
managed as a unit.
Shopping product | منتج شرائي A consumer product that the customer, in the process of selection and
purchase, usually compares on such bases as suitability, quality, price,
and style.
Social class | طبقة إجتماعية Relatively permanent and ordered divisions in a society whose
members share similar values, interests, and behaviors.
Social marketing | التسويق االجتماعي The use of commercial marketing concepts and tools in programs
designed to influence individuals’ behavior to improve their well-
being and that of society.
Societal marketing | التسويق المجتمعي A principle of sustainable marketing that holds that a company should
make marketing decisions by considering consumers’ wants, the
company’s requirements, consumers’ longrun interests, and society’s
long-run interests.
Societal marketing concept | مفهوم التسويق المجتمعي The idea that a company’s marketing decisions should consider
consumers’ wants, the company’s requirements, consumers’ long-run
interests, and society’s long-run interests.
Spam | البريد غير المرغوب Unsolicited, unwanted commercial e-mail messages
Specialty product | منتج خاص A consumer product with unique characteristics or brand
identification for which a significant group of buyers is willing to
make a special purchase effort.
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Glossary G11
Value chain | سلسلة اإلمدادات؛ سلسلة األنشطة المضيفة للقيمة The series of departments that carry out value-creating activities to
design, produce, market, deliver, and support a firm’s products.
Value delivery network | شبكة توفير القيمة The network made up of the company, suppliers, distributors,
and ultimately customers who “partner” with each other to
improve the performance of the entire system in delivering
customer value.
Value proposition | قيمة المنتج The full positioning of a brand—the full mix of benefits upon which it
is positioned.
Value-added pricing | التسعير القائم على القيمة المضافة Attaching value added features and services to differentiate a
company’s offers and charging higher prices.
Value-based pricing | التسعير المبني على القيمة Setting price based on buyers’ perceptions of value rather than on the
seller’s cost.
Variable costs | التكاليف المتغيرة Costs that vary directly with the level of production.
Variety-seeking buying behaviour | سلوك الشراء المتسم بالتنوع Consumer buying behavior in situations characterized by low
consumer involvement but significant perceived brand differences.
Vertical marketing system (VMS) | نظام التسويق الرأسي A distribution channel structure in which producers, wholesalers, and
retailers act as a unified system. One channel member owns the others,
has contracts with them, or has so much power that they all cooperate
Viral marketing | التسويق عبر التنتاقل اإللكتروني The Internet version of word-of-mouth marketing—Web sites, videos,
e-mail messages, or other marketing events that are so infectious that
customers will want to pass them along to friends.
Wants | الرغبات The form human needs take as shaped by culture and individual
personality.
Whole-channel view | المنظور الكامل لقنوات التسويق Designing international channels that take into account the entire
global supply chain and marketing channel, forging and effective
global value delivery network.
Wholesaler | تاجر الجملة A firm engaged primarily in wholesaling activities.
Wholesaling | البيع بالجملة All activities involved in selling goods and services to those buying
for resale or business use.
Word-of-mouth influence | تأثير الكلمة المنطوقة Personal communication about a product between target buyers and
neighbors, friends, family members, and associates.
Zone pricing | التسعير حسب المناطق A geographical pricing strategy in which the company sets up two or
more zones. All customers within a zone pay the same total price; the
more distant the zone, the higher the price.
Target market | السوق المستهدفة A set of buyers sharing common needs or characteristics that the
company decides to serve.
Team selling | البيع بواسطة الفرق Using teams of people from sales, marketing, engineering, finance,
technical support, and even upper management to service large,
complex accounts.
Team-based new-product development |
تطوير منتج جديد باالعتماد على فريق العمل An approach to developing new products in which various company
departments work closely together, overlapping the steps in the
product development process to save time and increase effectiveness.
Technological environment | البيئة التكنولوجية Forces that create new technologies, creating new product and market
opportunities.
Telephone marketing | التسويق عن طريق التليفون Using the telephone to sell directly to customers.
Territorial sales force structure |
الهيكل التنظيمي لمندوبي المبيعات في مناطق جغرافية مختلفة A sales force organization that assigns each salesperson to an exclusive
geographic territory in which that salesperson sells the company’s full
line.
Test marketing | اإلختبار التسويقي The stage of new-product development in which the product and
marketing program are tested in realistic market settings.
Third-party logistics (PL) provider | مقدم الخدمات اللوجستية المستقل An independent logistics provider that performs any or all of the
functions required to get its client’s product to market.
Total costs | التكاليف اإلجمالية The sum of the fixed and variable costs for any given level of
production.
Trade promotions | العروض الترويجية التجارية Sales promotion tools used to persuade resellers to carry a brand,
give it shelf space, promote it in advertising, and push it to
consumers.
Undifferentiated (mass) marketing | (الموسع) التسويق المفتوح A market-coverage strategy in which a firm decides to ignore
market segment differences and go after the whole market with
one offer.
Uniform-delivered pricing | التسعيرة الموحدة للتوصيل A geographical pricing strategy in which the company charges
the same price plus freight to all customers, regardless of their
location.
Unsought product | منتج غير مطلوب A consumer product that the consumer either does not know about or
knows about but does not normally think of buying.
Users | المستخدمون Members of the buying organization who will actually use the
purchased product or service.
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The essential marketing textbook for the Arab region and beyond.
Discover what makes a marketing campaign successful in this rapidly developing region through the Arab edition of this widely acclaimed textbook. Kotler and Armstrong’s hugely successful approach has been adapted specifically for the Arab world, using Arab-world business examples, case studies and statistics as well as cultural and demographic insights. Emphasis is placed on making marketing ideas and concepts come alive by encouraging readers to apply established marketing principles to real companies in real situations.
Philip Kotle
Gary A
rmstrong
Ahm
ed Tolba A
nwar H
abib
Arab W
orld Edition
Princ
iples of
Ma
rketing
PRINCIPLES OF MARKETING
Philip Kotler
Gary Armstrong
Ahmed Tolba
Anwar Habib