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MARKETING

MANAGEMENT
HARPER W. BOYD,JR. Stanford University
W I L L I A M F. MASSY Stanford University

HARCOURT BRACE JOVANOVICH, INC.


New York Chicago San Francisco Atlanta
CONTENTS

Preface
PART I
INTRODUCTION

CHAPTER
1 An Overview of Marketing Management 3
The Significance of the Marketing Concept 3
The Characteristics of Marketing Problems 7
The Decision-Making Process in Marketing 10
Summary and Conclusions 22

2 The Development of Marketing Plans 23


Marketing Planning Within the Context
of the Firm 25
Marketing as a System 28
The Planning Model 29
A Case Study of the Use of Marketing Planning 49

PART II
BEHAVIOR IN THE MARKETPLACE 57

Consumer-Behavior Models 59
Stochastic Models 60
Descriptive Models 65
Some Comments on Descriptive Consumer-Behavior
Models 80
Summary and Conclusions 85

Market Segmentation by Cultural, Demographic, and


Social-Class Groupings 87
Conditions for Optimal Segmentation 89
viii Contents

CHAPTER
Alternative Methods of Segmentation 90
The Adoption Process: Segmentation Over Time 103

Market Segmentation Using Behavioral Measures 109


l&e Behavior 111
Personality Traits 114
Attitudes 115
Combining Attitudes With Use Behavior 127
Allocating Resources to Segments 131
Summary and Conclusions 132

Geographic Market Potentials 135


Market Potential Defined 137
Measurement of Absolute Potential 141
Measurement of Relative Potential 146
Estimation of Potentials by Multiple Regression 154
Summary and Conclusions 160

Conditional Forecasts and Marketing-Simulation Models 161


The Marketing Decision-Making Process 162
Subobjectives and Conditional Sales Forecasts 163
First-Level Determinants of Sales 166
Second-Level Determinants of Sales 173
Marketing-Simulation Models 176
Summary and Conclusions 182

PART III
USING MARKETING RESOURCES 185

The Allocation of Marketing Resources 187


Resource-Allocation Principles 189
The Marginality Principle 192
Optimization in More Than One Market
Segment 193
Optimization of More Than One Controllable
- Variable 200
Average Versus Marginal Responses 203
Contents

CHAPTER
Marginal Analysis Versus Profile Matching 205
Linear Programing 206
The Creative Element in Marketing 211
Summary and Conclusions 217

Uncertainty in Marketing Decisions 218


Probabilities as Measures of Uncertainty 220
Structuring the Decision 226
^Expected Values as Criteria for Decision-Making 228
Values for Comparing Alternatives 232
Summary and Conclusions 242

10 The Collection of Marketing Information 244


The Value of Marketing Information 246
The Bayesian Approach to Evaluating Marketing
Information 247
""^Specifying the Information Required 254
Data Sources 254
Research Design 256
Alternative Ways of Collecting Data 261
Other Steps in the Data-Collection Process 264
Analyses of Marketing-Research Data 267
Summary and Conclusions 269

PART IV
MARKETING STRATEGIES 271
__ __ ___ \

11 / Product Strategy: Idea Generation Through Product


Testing / 274
The Product Program 275
Organization for New Products 277
Developing Product Strategy 279
Searching for New-Product Ideas 284
Screening New-Product Ideas 286
Designing the Product 292
x Contents

CHAPTER
Product Testing 298
Summary and Conclusions 302

12 .-Product Strategy: Test Marketing, Commercialization,


^ aj;.d Monitoring 303
Test Marketing 303
The Adoption Process 316
The Product Life Cycle 317
Some Further Comments About Product Life
Cycle 326
Summary and Conclusions 326

13 Pricing Strategy 329


The Influence of the Market on Pricing Policies 329
Models for Price-Setting 332
Practical Approaches to the Administration
of Prices 340
Strategic Issues in Pricing 346
The Measurement of Price Effects 351
Summary and Conclusions 356

14 Channels Strategy: Defining Objectives and Functions 358


The Relationship of the Firm's Channels Strategy
to Other Strategies 359
Factors Affecting Channels Decisions 366
Starting with the Consumer 371
Summary and Conclusions 375

15 Channels Strategy: Designing and Implementing the


Channels System 377
Determinants of Channels Length 378
Determining the Number and Type of Middlemen
at Each Level 380
Establishing Relationships with Middlemen 384
Administering the Channels System 387
Appraisal and Control 389
Legal Aspects of Channels Relationships 391
Contents xi

CHAPTER
Trends in Distribution 393
Summary and Conclusions 394

16 Personal-Selling Strategy: The Role of the Sales Force 395


Determining the Role of the Sales Force 397
The Sales Organization 402
Allocating the Sales Force 405
Summary and Conclusions 419

17 Personal-Selling Strategy: Managing the Sales Force 421


Recruiting 422
Sales Training 425
Compensation 429
Motivation and Supervision 432
Evaluation and Control 435
Summary and Conclusions 440

18 Advertising Strategy: Objectives and Appeals 442


The Promotional Mix 442
Advertising Objectives 444
The Communication Process 455
,, The Source 458
The Message 461
Summary and Conclusions 472

19 Advertising Strategy: Media Choices and Budgets 473


Advertising Media 473
Models for Media Planning 480
Advertising Budgets 484
Estimating the Response of Sales to Advertising
A Model for Budgeting Advertising 497
Summary and Conclusions 505

PART V
MARKETING ORGANIZATION AND CONTROL 507

20 Physical-Logistics Management 509


The Physical-Logistics Function 509
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CHAPTER
Design Considerations for Distribution Systems 511
Inventory Management 519
The Management of Transportation Flows 525
Warehouse Location Decisions 527
Dynamic Characteristics of the System 535
Summary and Conclusions 539

21 The Marketing Organization 541


Organizational Implications of the Marketing
Environment 542
The Marketing Department as Part of the
Total Organization 544
An Overview of Basic Marketing Organizational
Types 545
Functional Marketing Organizations 546
Product-Manager Organizations 547
Market-Manager Organizations 556
General-Manager Organizations 557
Combined Market-Manager and Product-Manager
Organizations 558
Summary and Conclusions 559

22 i Marketing-Information Systems
| Marketing Research and Marketing-Information
I Systems 565
I Some Uses of Marketing-Information Systems 566
i Building a Marketing-Information System 571
Computer Authority 577
Organizational Problems and Successful Information
Systems 582
Summary and Conclusions 583

23 Marketing Management and the Seventies 585


Consumerism Defined and Elaborated 585
Implications of Environmental Change for
Marketing Strategies 587
Summary and Conclusions 592