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For Principles of Marketing courses that require a comprehensive text.

Help students learn how to create value through customer connections and engagement

In a fast-changing, increasingly digital and social marketplace, it's more vital than ever for marketers to develop meaningful connections with their customers. Principles of Marketing helps students master today's key marketing challenge: to create vibrant, interactive communities of consumers who make products and brands an integral part of their daily lives. To help students understand how to create value and build customer relationships, Kotler and Armstrong present fundamental marketing information within an innovative customer-value framework.

Thoroughly revised to reflect the major trends impacting contemporary marketing, the 17th Edition is packed with stories illustrating how companies use new digital technologies to maximize customer engagement and shape brand conversations, experiences, and communities.

MyLabTM Marketing not included. Students, if MyLab is a recommended/mandatory component of the course, please ask your instructor for the correct ISBN and course ID. MyLab should only be purchased when required by an instructor. Instructors, contact your Pearson rep for more information.

MyLab is an online homework, tutorial, and assessment product designed to personalize learning and improve results. With a wide range of interactive, engaging, and assignable activities, students are encouraged to actively learn and retain tough course concepts.
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Principles of


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Principles of

gLOBaL eDitiOn

Philip Kotler
Northwestern University

Gary Armstrong
University of North Carolina


Marc Oliver Opresnik
St. Gallen Management Institute

Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney • Dubai • Singapore • Hong Kong
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Pearson Education Limited
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The rights of Philip Kotler and Gary Armstrong to be identified as the authors of this work have been asserted by them in
accordance with the Copyright, Designs and Patents Act 1988.
Authorized adaptation from the United States edition, entitled Principles of Marketing, 17th edition, ISBN 978-0-13-449251-3, by
Philip Kotler and Gary Armstrong, published by Pearson Education © 2018.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form
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All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest
in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply
any affiliation with or endorsement of this book by such owners.
ISBN 10: 1-292-22017-1
ISBN 13: 978-1-292-22017-8
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A catalogue record for this book is available from the British Library.
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Typeset in Times LT Pro-Roman by Integra Software Services.
Printed and bound by Lego, Italy.

To Kathy, Betty, Mandy, Matt, KC, Keri, Delaney, Molly, Macy, and Ben;
and Nancy, Amy, Melissa, and Jessica

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about the authors
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 marketing. 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 is 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 Ph.D. at M.I.T., both
in economics. Dr. Kotler is the author of Marketing Management
(Pearson), now in its fifteenth edition and the most widely used
marketing textbook in graduate schools of business worldwide.
He has authored more than 50 other successful books and has
published more than 150 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 four
major awards: the Distinguished Marketing Educator of the Year
Award and the William L. Wilkie “Marketing for a Better World”
Award, both given by the American Marketing Association;
the Philip Kotler Award for Excellence in Health Care Marketing
presented by the Academy for Health Care Services Marketing; and the Sheth Foundation Medal for Exceptional Contribution
to Marketing Scholarship and Practice. He is a charter member
of the Marketing Hall of Fame, was voted the first Leader in
Marketing Thought by the American Marketing Association,
and was named the Founder of Modern Marketing Management in the Handbook of Management Thinking. 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.” A recent Forbes survey ranks Professor
Kotler in the top 10 of the world’s most influential business
thinkers. And 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 twentyfirst century.
Dr. 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 companies in the areas of marketing strategy and
planning, marketing organization, and international marketing.
He has traveled and lectured extensively throughout
Europe, Asia, and South America, advising companies and governments about global marketing practices and opportunities.

Gary Armstrong is Crist W. Blackwell Distinguished
Professor Emeritus of Undergraduate Education in the KenanFlagler 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 Ph.D. in marketing from Northwestern University.
Dr. Armstrong has contributed numerous articles to leading business journals. As a consultant and researcher, he has

worked with many companies on marketing research, sales
management, and marketing strategy.
But Professor Armstrong’s first love has always been teaching. His long-held 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 teaching 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. Through the
years, he has worked closely with business student groups and
has received several UNC 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 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 sixteen-campus University of North Carolina system.

Marc Oliver Opresnik is Professor of Marketing and Management and Member of the Board of Directors at SGMI St.
Gallen Management Institute, a leading international business
school. In addition, he is Professor of Business Administration
at Luebeck University of Applied Sciences as well as a visiting
professor to international universities such as the European
Business School in London and East China University of Science and Technology in Shanghai. He has 10 years of experience working in senior management and marketing positions
for Shell International Petroleum Co. Ltd. and is the author of
numerous articles and books. Along with Kevin Keller and Phil
Kotler, he is co-author of the German edition of Marketing Management. In addition, he is a co-editor and member of the editorial board of several international journals such as Transnational
Marketing, Journal of World Marketing Summit Group, and International Journal of New Technologies in Science and Engineering. He
was also appointed Chief Research Officer at Kotler Impact Inc.,
Philip Kotler’s international company. His responsibilities include the global development, planning, implementation, and
management of university courses and executive training as
well as global research initiatives and cooperations.
As president of his consulting firm Opresnik Management
Consulting, Professor Opresnik works as a coach, keynote
speaker, and consultant for numerous institutions, governments, and international corporations, including Google,
Coca-Cola, McDonald’s, Dräger, RWE, SAP, Porsche, Audi,
Volkswagen, Shell International Petroleum Co. Ltd., Procter
& Gamble, Unilever, L’Oréal, Bayer, BASF, and Adidas. More
than 100,000 people have benefited professionally and personally from his work as a coach in seminars on marketing, sales,
and negotiation and as a speaker at conferences all over the
world, including locations like St. Gallen, Davos, St. Moritz,
Berlin, Houston, Moscow, London, Paris, Dubai, and Tokyo.


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Brief Contents
Preface 17
Acknowledgments 23

Part 1

Part 2

Part 3

Part 4
Appendix 1
Appendix 2
Appendix 3

Defining Marketing and the Marketing Process


Marketing: Creating Customer Value and Engagement 26
Company and Marketing Strategy: Partnering to Build Customer Engagement,
Value, and Relationships 62

Understanding the Marketplace and Consumer Value


Analyzing the Marketing Environment 90
Managing Marketing Information to Gain Customer Insights 122
Consumer Markets and Buyer Behavior 156
Business Markets and Business Buyer Behavior 186

Designing a Customer Value–Driven Strategy and Mix


Customer Value–Driven Marketing Strategy: Creating Value for Target Customers 210
Products, Services, and Brands: Building Customer Value 242
Developing New Products and Managing the Product Life Cycle 278
Pricing: Understanding and Capturing Customer Value 306
Pricing Strategies: Additional Considerations 330
Marketing Channels: Delivering Customer Value 356
Retailing and Wholesaling 390
Engaging Consumers and Communicating Customer Value: Integrated Marketing
Communication Strategy 422
Advertising and Public Relations 450
Personal Selling and Sales Promotion 478
Direct, Online, Social Media, and Mobile Marketing 510

Extending Marketing


Creating Competitive Advantage 540
The Global Marketplace 566
Sustainable Marketing: Social Responsibility and Ethics 596
Marketing Plan 627
Marketing by the Numbers 637
Careers in Marketing 655
Glossary 667
References 675
Index 705


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Preface 17
Acknowledgments 23

Part 1: Defining Marketing and the Marketing
Process 26


Company and Marketing Strategy:
partnering to Build Customer engagement, Value,
and relationships 62

Company-Wide Strategic Planning: Defining Marketing’s Role 64
Defining a Market-Oriented Mission 64 | Setting Company


Marketing: Creating Customer Value and
engagement 26

Objectives and Goals 66

Designing the Business Portfolio 66
Analyzing the Current Business Portfolio 67 | The Boston
Consulting Group Approach 67 | Developing Strategies for

What Is Marketing? 28
Marketing Defined 29 | The Marketing Process 29

Understanding the Marketplace and Customer
Needs 30
Customer Needs, Wants, and Demands 30 | Market
Offerings—Products, Services, and Experiences 31 |
Customer Value and Satisfaction 31 | Exchanges and
Relationships 33 | Markets 33

Designing a Customer Value–Driven Marketing Strategy
and Plan 34

Growth and Downsizing 70

Planning Marketing: Partnering to Build Customer
Relationships 72
Partnering with Other Company Departments 72 | Partnering
with Others in the Marketing System 73

Marketing Strategy and the Marketing Mix 74
Customer Value–Driven Marketing Strategy 74 | Developing an
Integrated Marketing Mix 77

Managing the Marketing Effort and Marketing Return on
Investment 79

Customer Value–Driven Marketing Strategy 34 | Preparing an

Managing the Marketing Effort 79 | Measuring and Managing

Integrated Marketing Plan and Program 38

Marketing Return on Investment 83

Managing Customer Relationships and Capturing Customer
Value 38

REVIEW AND KEY TERMS 84 | Objectives Review 84 | Key

Engaging Customers and Managing Customer


Relationships 38 | Capturing Value from Customers 44

Questions 86 | Critical Thinking Exercises 86 | APPLICATIONS AND

The Changing Marketing Landscape 46

CASES 86 | Online, Mobile, and Social Media Marketing: Google’s

The Digital Age: Online, Mobile, and Social Media

(Alphabet’s) Mission 86 | Marketing Ethics: Predicting the

Marketing 46 | The Changing Economic Environment 50 |

Future 87 | Marketing by the Numbers: Apple vs. Microsoft 87 |

The Growth of Not-for-Profit Marketing 51 | Rapid

Video Case: Konica 87 | Company Case: Facebook: Making the

Globalization 52 | Sustainable Marketing—The Call for More

World More Open and Connected 88

Environmental and Social Responsibility 53 | So, What Is
Marketing? Pulling It All Together 53

Part 2: Understanding the Marketplace and Consumer
Value 90

Review 55 | Key Terms 56 | DISCuSSION AND CRITICAL
THINKING 57 | Discussion Questions 57 | Critical Thinking
Exercises 57 | APPLICATIONS AND CASES 57 | Online,
Mobile, and Social Media Marketing: The ALS Ice
Bucket Challenge 57 | Marketing Ethics: Exaggeration and High
Pressure 58 | Marketing by the Numbers: Be on the
First Page 58 | Video Case: Eskimo joe’s 58 | Company Case:
Argos: Creating Customer Value amid Change and
Turbulence 59



analyzing the Marketing environment 90

The Microenvironment and Macroenvironment 92
The Microenvironment 92 | The Macroenvironment 96

The Demographic and Economic Environments 96
The Demographic Environment 96 | The Economic Environment 103

The Natural and Technological Environments 104
The Natural Environment 104 | The Technological Environment 106




The Political–Social and Cultural Environments 108
The Political and Social Environment 108 | The Cultural
Environment 111

Responding to the Marketing Environment 114

Buying Decision Behavior and the Buyer Decision
Process 174
Types of Buying Decision Behavior 174 | The Buyer Decision
Process 175

The Buyer Decision Process for New Products 178

REVIEW AND KEY TERMS 117 | Objectives Review 117 | Key

Stages in the Adoption Process 178 | Individual Differences in


Innovativeness 179 | Influence of Product Characteristics on

Discussion Questions 118 | Critical Thinking Exercises 118 |

Rate of Adoption 179

APPLICATIONS AND CASES 118 | Online, Mobile, and Social


Media Marketing: Sharing Economy 118 | Marketing Ethics: Your


Insurance Renewal Notice Could Be a Trap 118 | Marketing by the

Review 180 | Key Terms 181 | DISCuSSION AND CRITICAL

Numbers: Demographic Trends 119 | Video Case: Burger King 119 |

THINKING 182 | Discussion Questions 182 | Critical

Company Case: Fitbit: Riding the Fitness Wave to Glory 119

Thinking Exercises 182 | APPLICATIONS AND CASES 182 |


Online, Mobile, and Social Media Marketing: Blogvertorials 182 |

Managing Marketing Information to Gain
Customer Insights 122

Marketing Ethics: Make Yourself Feel Good 183 | Marketing

Marketing Information and Customer Insights 124

upstream against Consumer Perceptions 184


by the Numbers: Evaluating Alternatives 183 | Video Case:
IMG Worldwide 183 | Company Case: GoldieBlox: Swimming

Marketing Information and Today’s “Big Data” 125 | Managing
Marketing Information 125

Assessing Information Needs and Developing Data 126
Assessing Marketing Information Needs 126 | Developing
Marketing Information 126

Marketing Research 130
Defining the Problem and Research Objectives 130 | Developing
the Research Plan 131 | Gathering Secondary Data 132 |
Primary Data Collection 133 | Implementing the Research
Plan 140 | Interpreting and Reporting the Findings 140

Analyzing and Using Marketing Information 140
Customer Relationship Management (CRM) 141 | Big
Data and Marketing Analytics 141 | Distributing and using
Marketing Information 144

Other Marketing Information Considerations 144
Marketing Research in Small Businesses and Nonprofit
Organizations 144 | International Marketing Research 145 |
Public Policy and Ethics in Marketing Research 147
Review 149 | Key Terms 150 | DISCuSSION AND CRITICAL
THINKING 150 | Discussion Questions 150 | Critical Thinking
Exercises 151 | APPLICATIONS AND CASES 151 | Online, Mobile,
and Social Media Marketing: Online Snooping 151 | Marketing
Ethics: Metadata 151 | Marketing by the Numbers: What’s
Your Sample? 151 | Video Case: Nielsen 152 | Company Case:
Campbell Soup Company: Watching What You Eat 152


Consumer Markets and Buyer
Behavior 156


Business Markets and Business Buyer
Behavior 186

Business Markets 188
Market Structure and Demand 189 | Nature of the Buying
unit 189 | Types of Decisions and the Decision
Process 189

Business Buyer Behavior 190
Major Types of Buying Situations 191 | Participants in the
Business Buying Process 192 | Major Influences on Business
Buyers 192

The Business Buyer Decision Process 195
Problem Recognition 195 | General Need Description 196 |
Product Specification 196 | Supplier Search 196 | Proposal
Solicitation 196 | Supplier Selection 197 | Order-Routine
Specification 197 | Performance Review 197

Engaging Business Buyers with Digital and Social
Marketing 197
E-procurement and Online Purchasing 197 | Businessto-Business Digital and Social Media Marketing 198

Institutional and Government Markets 199
Institutional Markets 199 | Government Markets 201
Review 203 | Key Terms 204 | DISCuSSION AND CRITICAL
THINKING 204 | Discussion Questions 204 | Critical Thinking
Exercises 205 | APPLICATIONS AND CASES 205 | Online,
Mobile, and Social Media Marketing: E-procurement and
Mobile Procurement 205 | Marketing Ethics: Innocent: Proven

Model of Consumer Behavior 158
Characteristics Affecting Consumer Behavior 159
Cultural Factors 159 | Social Factors 162 | Personal
Factors 167 | Psychological Factors 169

Guilty? 205 | Marketing by the Numbers: NAICS 206 | Video
Case: Eaton 206 | Company Case: Procter & Gamble: Treating
Business Customers as Strategic Partners 206


Part 3: Designing a Customer Value–Driven Strategy
and Mix 210


Customer Value–Driven Marketing
Strategy: Creating Value for target Customers 210

Marketing Strategy 212
Market Segmentation 213
Segmenting Consumer Markets 213 | Segmenting Business

Video Case: Plymouth Rock Assurance 275 | Company Case:
Airbnb: Making Hospitality Authentic 275


Developing New products and Managing the
product Life Cycle 278

New Product Development Strategy 280
The New Product Development Process 281

Markets 219 | Segmenting International Markets 220 |

Idea Generation 281 | Idea Screening 283 | Concept

Requirements for Effective Segmentation 221

Development and Testing 283 | Marketing Strategy

Market Targeting 221

Development 284 | Business Analysis 285 |

Evaluating Market Segments 221 | Selecting Target Market

Product Development 286 | Test Marketing 286 |

Segments 222

Commercialization 287 | Managing New Product

Differentiation and Positioning 228
Positioning Maps 229 | Choosing a Differentiation and
Positioning Strategy 230 | Communicating and Delivering the
Chosen Position 235
Review 236 | Key Terms 237 | DISCuSSION AND CRITICAL


Development 287

Product Life-Cycle Strategies 289
Introduction Stage 294 | Growth Stage 294 | Maturity
Stage 295 | Decline Stage 296

Additional Product and Service Considerations 297
Product Decisions and Social Responsibility 297 |
International Product and Services Marketing 298

THINKING 237 | Discussion Questions 237 | Critical Thinking


Exercises 238 | APPLICATIONS AND CASES 238 | Online,


Mobile, and Social Media Marketing: Get Your Groupon 238 |

Review 299 | Key Terms 300 | DISCuSSION AND CRITICAL

Marketing Ethics: Targeting Teens 238 | Marketing by the

THINKING 300 | Discussion Questions 300 | Critical Thinking

Numbers: uSAA 238 | Video Case: Sprout 239 | Company Case:

Exercises 301 | APPLICATIONS AND CASES 301 | Online,

Virgin America: Flight Service for the Tech Savvy 239

Mobile, and Social Media Marketing: Telemedicine 301 |
Marketing Ethics: The Sustainable Tourist? 301 | Marketing by


products, Services, and Brands: Building
Customer Value 242

What Is a Product? 244
Products, Services, and Experiences 244 | Levels of Product
and Services 245 | Product and Service Classifications 246

the Numbers: Dental House Calls 302 | Video Case: Day2Night
Convertible Heels 302 | Company Case: Bose: Better Products
through Research 302


pricing: Understanding and Capturing
Customer Value 306

Product and Service Decisions 249
Individual Product and Service Decisions 249 | Product Line
Decisions 256 | Product Mix Decisions 256

Services Marketing 258
The Nature and Characteristics of a Service 258 | Marketing
Strategies for Service Firms 259 | The Service Profit Chain 259

Branding Strategy: Building Strong Brands 264

What Is a Price? 308
Major Pricing Strategies 309
Customer Value–Based Pricing 309 | Cost-Based
Pricing 313 | Competition-Based Pricing 317

Other Internal and External Considerations Affecting Price
Decisions 317

Brand Equity and Brand Value 264 | Building Strong

Overall Marketing Strategy, Objectives, and Mix 318 |

Brands 265 | Managing Brands 272

Organizational Considerations 321 | The Market and


Demand 321 | The Economy 323 | Other External
Factors 323

Review 272 | Key Terms 273 | DISCuSSION AND CRITICAL


THINKING 274 | Discussion Questions 274 | Critical Thinking


Exercises 274 | APPLICATIONS AND CASES 274 | Online,

Review 324 | Key Terms 325 | DISCuSSION AND CRITICAL

Mobile, and Social Media Marketing: Feeding Pets from Your

THINKING 325 | Discussion Questions 325 | Critical Thinking

Smartphone 274 | Marketing Ethics: Cutthroat Prices 274 |

Exercises 325 | APPLICATIONS AND CASES 325 | Online,

Marketing by the Numbers: Pop-Tarts Gone Nutty! 275 |

Mobile, and Social Media Marketing: Sold Out 325 |



Marketing Ethics: The Cost of a Life 326 | Marketing

Channel Management Decisions 372

by the Numbers: Pricey Sheets 326 | Video Case:

Selecting Channel Members 372 | Managing and

Fast-Food Discount Wars 327 | Company Case: MSC

Motivating Channel Members 373 | Evaluating Channel

Cruises: From One Second-Hand Ship to a Major World

Members 375 | Public Policy and Distribution

Player 327

Decisions 375

Marketing Logistics and Supply Chain Management 376


pricing Strategies: additional
Considerations 330

New Product Pricing Strategies 332
Market-Skimming Pricing 332 | Market-Penetration
Pricing 333

Product Mix Pricing Strategies 333
Product Line Pricing 334 | Optional-Product Pricing 334 |
Captive-Product Pricing 334 | By-Product Pricing 335 |
Product Bundle Pricing 335

Price Adjustment Strategies 335
Discount and Allowance Pricing 335 | Segmented Pricing 336 |
Psychological Pricing 337 | Promotional Pricing 338 |
Geographical Pricing 339 | Dynamic and Online Pricing 340 |
International Pricing 342

Nature and Importance of Marketing Logistics 376 |
Sustainable Supply Chains 377 | Goals of the Logistics
System 378 | Major Logistics Functions 378 | Integrated
Logistics Management 381
Review 383 | Key Terms 384 | DISCuSSION AND
CRITICAL THINKING 385 | Discussion Questions 385 |
Critical Thinking Exercises 385 | APPLICATIONS AND
CASES 385 | Online, Mobile, and Social Media Marketing:
Fabletics Changing Channels 385 | Marketing Ethics: Ethical
Sourcing 386 | Marketing by the Numbers: Tyson
Expanding Distribution 386 | Video Case: Progressive 386 |
Company Case: Apple Pay: Taking Mobile Payments
Mainstream 387

Price Changes 344
Initiating Price Changes 344 | Responding to Price
Changes 345

Public Policy and Pricing 346
Pricing within Channel Levels 349 | Pricing across Channel
Review 350 | Key Terms 351 | DISCuSSION AND CRITICAL
THINKING 351 | Discussion Questions 351 | Critical Thinking
Exercises 352 | APPLICATIONS AND CASES 352 | Online,
Mobile, and Social Media Marketing: Krazy Coupon Lady 352 |
Marketing Ethics: Less Bang for Your Buck 352 | Marketing by
the Numbers: Louis Vuitton Price Increase 352 | Video Case:
Hammerpress 353 | Company Case: Lululemon: Indulging
Customers at a Premium Price 353



retailing and Wholesaling 390

Retailing 392
Retailing: Connecting Brands with Consumers 392 | Types of

Levels 349



Marketing Channels: Delivering Customer

Value 356
Supply Chains and the Value Delivery Network 358
The Nature and Importance of Marketing Channels 359

Channel Behavior and Organization 362

Retailers 393

Retailer Marketing Decisions 400
Segmentation, Targeting, Differentiation, and Positioning
Decisions 400 | Product Assortment and Services
Decision 401 | Price Decision 403 | Promotion Decision 403 |
Place Decision 404

Retailing Trends and Developments 405
Tighter Consumer Spending 405 | New Retail Forms,
Shortening Retail Life Cycles, and Retail Convergence 406 |
The Rise of Megaretailers 406 | Growth of Direct, Online,
Mobile, and Social Media Retailing 407 | The Need for
Omni-Channel Retailing 407 | Growing Importance of Retail
Technology 409 | Green Retailing 410 | Global Expansion of
Major Retailers 411

Wholesaling 411
Types of Wholesalers 412 | Trends in Wholesaling 416

Channel Behavior 362 | Vertical Marketing Systems 363 |

Review 417 | Key Terms 418 | DISCuSSION AND CRITICAL

Horizontal Marketing Systems 365 | Multichannel Distribution

THINKING 418 | Discussion Questions 418 | Critical Thinking

Systems 365 | Changing Channel Organization 366

Exercises 418 | APPLICATIONS AND CASES 418 | Online,

Channel Design Decisions 368

Mobile, and Social Media Marketing: Skipping the Checkout

Analyzing Consumer Needs 369 | Setting Channel

Line 418 | Marketing Ethics: Footloose and Tax-Free 419 |

Objectives 369 | Identifying Major Alternatives 370 |

Marketing by the Numbers: Inventory Management 419 | Video

Evaluating the Major Alternatives 371 | Designing International

Case: Kmart 419 | Company Case: Bass Pro Shops: Creating

Distribution Channels 371

Nature’s Theme Park for People Who Hate to Shop 420



engaging Consumers and Communicating
Customer Value: Integrated Marketing
Communication Strategy 422

The Promotion Mix 424
Integrated Marketing Communications 425
The New Marketing Communications Model 425 | The Need
for Integrated Marketing Communications 427

Developing Effective Marketing Communication 430
A View of the Communication Process 430 | Steps in
Developing Effective Marketing Communication 432

Setting the Total Promotion Budget and Mix 437
Setting the Total Promotion Budget 437 | Shaping the Overall


Managing the Sales Force 482
Designing the Sales Force Strategy and Structure 482 |
Recruiting and Selecting Salespeople 485 | Training
Salespeople 486 | Compensating Salespeople 487 |
Supervising and Motivating Salespeople 488 | Evaluating
Salespeople and Sales Force Performance 489 | Social
Selling: Online, Mobile, and Social Media Tools 490

The Personal Selling Process 493
Steps in the Selling Process 493 | Personal Selling and
Managing Customer Relationships 495

Sales Promotion 496
The Rapid Growth of Sales Promotion 496 | Sales Promotion
Objectives 497 | Major Sales Promotion Tools 498 |
Developing the Sales Promotion Program 502

Promotion Mix 439 | Integrating the Promotion Mix 441 |


Socially Responsible Marketing Communication 441



Review 503 | Key Terms 504 | DISCuSSION AND CRITICAL


THINKING 505 | Discussion Questions 505 | Critical Thinking

Review 444 | Key Terms 445 | DISCuSSION AND CRITICAL

Exercises 505 | APPLICATIONS AND CASES 505 | Online,

THINKING 446 | Discussion Questions 446 | Critical Thinking

Mobile, and Social Media Marketing: Snap It and Redeem It! 505 |

Exercises 446 | APPLICATIONS AND CASES 446 | Online,

Marketing Ethics: Walking the Customer 506 | Marketing by

Mobile, and Social Media Marketing: Spot the Difference 446 |

the Numbers: Sales Force Analysis 506 | Video Case: First

Marketing Ethics: Western Stereotypes 447 | Marketing by

Flavor 506 | Company Case: SunGard: Building Sustained

the Numbers: Advertising-to-Sales Ratios 447 | Video Case:

Growth by Selling the SunGard Way 506

OxO 447 | Company Case: Volvo Trucks: Integrated Marketing
Communications of Epic Proportions 447


advertising and public relations 450

Advertising 452
Major Advertising Decisions 453


Direct, Online, Social Media, and Mobile
Marketing 510

Direct and Digital Marketing 512
The New Direct Marketing Model 512 | Rapid Growth of Direct

Setting Advertising Objectives 453 | Setting the Advertising

and Digital Marketing 513 | Benefits of Direct and Digital

Budget 456 | Evaluating Advertising Effectiveness and the

Marketing to Buyers and Sellers 514

Return on Advertising Investment 468 | Other Advertising
Considerations 468

Public Relations 470
The Role and Impact of PR 471

Major Public Relations Tools 472

Forms of Direct and Digital Marketing 514
Marketing, the Internet, and the Digital Age 515
Online Marketing 516

Social Media and Mobile Marketing 521
Social Media Marketing 521 | Mobile Marketing 525

Traditional Direct Marketing Forms 528

REVIEW AND KEY TERMS 473 | Objectives Review 473 | Key

Direct-Mail Marketing 528 | Catalog Marketing 529 |


Telemarketing 529 | Direct-Response Television

Discussion Questions 474 | Critical Thinking Exercises 474 |

Marketing 530 | Kiosk Marketing 531 | Public Policy Issues in

APPLICATIONS AND CASES 474 | Online, Mobile, and Social Media

Direct and Digital Marketing 531

Marketing: Facebook Audience Network 474 | Marketing Ethics:


Lie to Me 474 | Marketing by the Numbers: Dubai City Guide 475 |


Video Case: Kmart 475 | Company Case: Allstate: Bringing Mayhem

Review 534 | Key Terms 536 | DISCuSSION AND CRITICAL

to the Auto Insurance Advertising Wars 475

THINKING 536 | Discussion Questions 536 | Critical Thinking



personal Selling and Sales promotion 478

Personal Selling 480

Exercises 536 | APPLICATIONS AND CASES 536 | Online,
Mobile, and Social Media Marketing: On the Move 536 |
Marketing Ethics: #Fail 537 | Marketing by the Numbers: Field
Sales versus Telemarketing 537 | Video Case: Nutrisystem 537 |

The Nature of Personal Selling 480 | The Role of the Sales

Company Case: Alibaba: The World’s Largest E-tailer Is Not

Force 481

Amazon 538



Part 4: Extending Marketing 540


Creating Competitive advantage 540

Competitor Analysis 542
Identifying Competitors 542 | Assessing Competitors 545 |

Discussion Questions 592 | Critical Thinking Exercises 592 |
APPLICATIONS AND CASES 592 | Online, Mobile, and Social Media
Marketing: China’s Great Firewall 592 | Marketing Ethics: Cleaning up
the Chinese Pharmaceutical Market 593 | Marketing by the Numbers:
Attracting Alternative Markets 593 | Video Case: Monster 593 |
Company Case: L’Oréal: The united Nations of Beauty 593

Selecting Competitors to Attack and Avoid 547 | Designing a
Competitive Intelligence System 549

Competitive Strategies 549
Approaches to Marketing Strategy 549 | Basic Competitive


Sustainable Marketing: Social
responsibility and ethics 596

Strategies 550 | Competitive Positions 553 | Market Leader
Strategies 554 | Market Challenger Strategies 557 | Market
Follower Strategies 558 | Market Nicher Strategies 558

Sustainable Marketing 598
Social Criticisms of Marketing 600

Balancing Customer and Competitor Orientations 559

Marketing’s Impact on Individual Consumers 600 |


Marketing’s Impact on Society as a Whole 604 | Marketing’s

Review 560 | Key Terms 561 | DISCuSSION AND CRITICAL

Impact on Other Businesses 606

Consumer Actions to Promote Sustainable Marketing 607

THINKING 561 | Discussion Questions 561 | Critical Thinking

Consumerism 607 | Environmentalism 608 | Public Actions to

Exercises 562 | APPLICATIONS AND CASES 562 | Online,

Regulate Marketing 612

Mobile, and Social Media Marketing: I’ll Eat My Hat 562 |
Marketing Ethics: Creating Competitive Advantage…to What
End? 562 | Marketing by the Numbers: Market Share 562 | Video
Case: umpqua Bank 563 | Company Case: YouTube: Google’s
Quest for Video Dominance 563

Business Actions Toward Sustainable Marketing 613
Sustainable Marketing Principles 613

Marketing Ethics and the Sustainable Company 617
Marketing Ethics 617 | The Sustainable Company 620



Review 620 | Key Terms 621 | DISCuSSION AND CRITICAL

the Global Marketplace 566

Global Marketing Today 568
Elements of the Global Marketing Environment 570 | Deciding
Whether to Go Global 578 | Deciding Which Markets to
Enter 578

Deciding How to Enter the Market 580
Exporting 580 | joint Venturing 581 | Direct Investment 582

Deciding on the Global Marketing Program 583
Product 585 | Promotion 586 | Price 588 | Distribution
Channels 589

Deciding on the Global Marketing Organization 590
REVIEW AND KEY TERMS 591 | Objectives Review 591 |

THINKING 621 | Discussion Questions 621 | Critical
Thinking Exercises 622 | APPLICATIONS AND CASES 622 |
Online, Mobile, and Social Media Marketing: Teens and
Social Media 622 | Marketing Ethics: Milking the International
Market 622 | Marketing by the Numbers: The Cost of
Sustainability 622 | Video Case: Honest Tea 623 | Company
Case: adidas: Athletic Apparel with Purpose 623

Appendix 1: Marketing Plan 627
Appendix 2: Marketing by the Numbers 637
Appendix 3: Careers in Marketing 655
Glossary 667
References 675
Index 705

The Seventeenth Edition of Kotler/Armstrong’s
Principles of Marketing! Setting the World Standard
in Marketing Education
These are exciting times in marketing. Recent surges in digital technologies have created a
new, more engaging, more connected marketing world. Beyond traditional tried-and-true
marketing concepts and practices, today’s marketers have added a host of new-age tools
for engaging consumers, building brands, and creating customer value and relationships.
In these digital times, sweeping advances in “the Internet of Things”—from social and mobile media, connected digital devices, and the new consumer empowerment to “big data”
and new marketing analytics—have profoundly affected both marketers and the consumers they serve.
All around the world—across five continents, more than 40 countries, and 24
languages—students, professors, and business professionals have long relied on Kotler/
Armstrong’s Principles of Marketing as the most-trusted source for teaching and learning
about the latest developments in basic marketing concepts and practices. More than ever,
the seventeenth edition introduces new marketing students to the fascinating world of
modern marketing in a complete and authoritative yet fresh, practical, and engaging way.
Once again, we’ve added substantial new content and poured over every page, table,
figure, fact, and example in order to make this the best text from which to learn about and
teach marketing. Enhanced by MyMarketingLab, our online homework and personalized
study tool, the seventeenth edition of Principles of Marketing remains the world standard in
introductory marketing education.

Marketing: Creating Customer Value and Engagement
in the Digital and Social Age
Top marketers share a common goal: putting the consumer at the heart of marketing. Today’s marketing is all about creating customer value and engagement in a fast-changing,
increasingly digital and social marketplace.
Marketing starts with understanding consumer needs and wants, determining which
target markets the organization can serve best, and developing a compelling value proposition by which the organization can attract and grow valued consumers. Then, more than
just making a sale, today’s marketers want to engage customers and build deep customer
relationships that make their brands a meaningful part of consumers’ conversations and
In this digital age, to go along with their tried-and-true traditional marketing methods,
marketers have a dazzling set of new online, mobile, and social media tools for engaging
customers anytime, anyplace to jointly shape brand conversations, experiences, and community. If marketers do these things well, they will reap the rewards in terms of market share,
profits, and customer equity. In the seventeenth edition of Principles of Marketing, you’ll learn
how customer value and customer engagement drive every good marketing strategy.

What’s New in the Seventeenth Edition?
We’ve thoroughly revised the seventeenth edition of Principles of Marketing to reflect the
major trends and forces that affect marketing in this digital age of customer value, engagement, and relationships. Here are just some of the major and continuing changes you’ll find
in this edition.



• The seventeenth edition adds fresh coverage in both traditional marketing areas and
on fast-changing and trending topics such as customer engagement marketing, mobile
and social media, big data and the new marketing analytics, the Internet of Things,
omni-channel marketing and retailing, customer co-creation and empowerment, realtime customer listening and marketing, building brand community, marketing content
creation and native advertising, B-to-B social media and social selling, monetizing
social media, tiered and dynamic pricing, consumer privacy, sustainability, global
marketing, and much more.
• This new edition continues to build on its customer engagement framework—creating
direct and continuous customer involvement in shaping brands, brand conversations,
brand experiences, and brand community. New coverage and fresh examples throughout the text address the latest customer engagement tools, practices, and developments. See especially Chapter 1 (refreshed sections on Customer Engagement and Today’s
Digital and Social Media and Consumer-Generated Marketing); Chapter 4 (big data and
real-time research to gain deeper customer insights); Chapter 5 (creating social influence and customer community through digital and social media marketing); Chapter
9 (customer co-creation and customer-driven new-product development); Chapter 13
(omni-channel retailing); Chapters 14 and 15 (marketing content curation and native
advertising); Chapter 16 (sales force social selling); and Chapter 17 (direct digital, online, social media, and mobile marketing).
• No area of marketing is changing faster than online, mobile, social media, and other
digital marketing technologies. Keeping up with digital concepts, technologies, and
practices has become a top priority and major challenge for today’s marketers. The
seventeenth edition of Principles of Marketing provides thoroughly refreshed, up-todate coverage of these explosive developments in every chapter—from online, mobile,
and social media engagement technologies discussed in Chapters 1, 5, 14, 15, and 17
to “real-time listening” and “big data” research tools in Chapter 4, real-time dynamic
pricing in Chapter 11, omni-channel retailing in Chapter 13, and social selling in
Chapter 16. A Chapter 1 section on The Digital Age: Online, Mobile, and Social Media
Marketing introduces the exciting new developments in digital and social media marketing. Then a Chapter 17 section on Direct, Online, Social Media, and Mobile Marketing
digs more deeply into digital marketing tools such as online sites, social media, mobile
ads and apps, online video, email, blogs, and other digital platforms that engage consumers anywhere, anytime via their computers, smartphones, tablets, internet-ready
TVs, and other digital devices.
• The seventeenth edition continues to track fast-changing developments in marketing
communications and the creation of marketing content. Marketers are no longer simply creating integrated marketing communications programs; they are joining with
customers and media to curate customer-driven marketing content in paid, owned,
earned, and shared media. You won’t find fresher coverage of these important topics
in any other marketing text.
• The seventeenth edition of Principles of Marketing continues to improve on its innovative learning design. The text’s active and integrative presentation includes learning
enhancements such as annotated chapter-opening stories, a chapter-opening objective
outline, explanatory author comments on major chapter sections and figures, and Real
Marketing highlights that provide in-depth examples of marketing concepts and practices at work. The chapter-opening layout helps to preview and position the chapter
and its key concepts. Figures annotated with author comments help students to simplify and organize chapter material. New and substantially revised end-of-chapter features help to summarize important chapter concepts and highlight important themes,
such as marketing ethics, financial marketing analysis, and online, mobile, and social
media marketing. This innovative learning design facilitates student understanding
and eases learning.
• The seventeenth edition provides 18 new end-of-chapter company cases by which students can apply what they learn to actual company situations. It also features 16 new
video cases, with brief end-of-chapter summaries and discussion questions. Finally, all
of the chapter-opening stories, Real Marketing highlights, and end-of-chapter features
in the seventeenth edition are either new or revised.
• New material throughout the seventeenth edition highlights the increasing importance
of sustainable marketing. The discussion begins in Chapter 1 and ends in Chapter 20,



which pulls marketing together under a sustainable marketing framework. In between, frequent discussions and examples show how sustainable marketing calls for
socially and environmentally responsible actions that meet both the immediate and
the future needs of customers, companies, and society as a whole.
• The seventeenth edition provides new discussions and examples of the growth in
global marketing. As the world becomes a smaller, more competitive place, marketers
face new global marketing challenges and opportunities, especially in fast-growing
emerging markets such as China, India, Brazil, Africa, and others. You’ll find much
new coverage of global marketing throughout the text, starting in Chapter 1 and discussed fully in Chapter 19.

Five Major Customer Value and Engagement Themes
The seventeenth edition of Principles of Marketing builds on five major customer value and
engagement themes:
1. Creating value for customers in order to capture value from customers in return.
Today’s marketers must be good at creating customer value, engaging customers, and managing customer relationships. Outstanding marketing companies understand the marketplace
and customer needs, design value-creating marketing strategies, develop integrated
marketing programs that engage customers and deliver value and satisfaction, and build
strong customer relationships and brand community. In return, they capture value from
customers in the form of sales, profits, and customer equity.
This innovative customer-value and engagement framework is introduced at the
start of Chapter 1 in a five-step marketing process model, which details how marketing creates customer value and captures value in return. The framework is carefully developed in the first two chapters and then fully integrated throughout the
remainder of the text.
2. Customer Engagement and Today’s Digital and Social Media. New digital and social media have taken today’s marketing by storm, dramatically changing how companies and brands engage consumers and how consumers connect and influence
each other’s brand behaviors. The seventeenth edition introduces and thoroughly
explores the contemporary concept of customer engagement marketing and the exciting new digital and social media technologies that help brands to engage customers
more deeply and interactively. It starts with two major Chapter 1 sections: Customer
Engagement and Today’s Digital and Social Media and The Digital Age: Online, Mobile,
and Social Media. A refreshed Chapter 17 on Direct, Online, Social Media, and Mobile
Marketing summarizes the latest developments in digital engagement and relationship-building tools. Everywhere in between, you’ll find revised and expanded coverage of the exploding use of digital and social tools to create customer engagement
and build brand community.
3. 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 to create valued brand experiences. The seventeenth edition
provides a deep focus on brands, anchored by a Chapter 8 section on Branding Strategy:
Building Strong Brands.
4. Measuring and managing return on marketing. Especially in uneven economic
times, marketing managers must ensure that their marketing dollars are being well
spent. In the past, many marketers spent freely on big, expensive marketing programs, often without thinking carefully about the financial returns on their spending. But all that has changed rapidly. “Marketing accountability”—measuring and
managing marketing return on investment—has now become an important part of
strategic marketing decision making. This emphasis on marketing accountability is
addressed in Chapter 2, in Appendix 2 (Marketing by the Numbers), and throughout
the seventeenth edition.
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 sustainable ways. New material throughout the


seventeenth edition emphasizes the concepts of global marketing and sustainable
marketing—meeting the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs. The seventeenth
edition integrates global marketing and sustainability topics throughout the text. It
then provides focused coverage on each topic in Chapters 19 and 20, respectively.

An Emphasis on Real Marketing and Bringing
Marketing to Life
Principles of Marketing, seventeenth edition, takes a practical marketing-management approach, providing countless in-depth, real-life examples and stories that engage students
with marketing concepts and bring modern marketing to life. In the seventeenth edition,
every chapter has an engaging opening story plus Real Marketing highlights that provide
fresh insights into real marketing practices. Learn how:
• Samsung’s passion for creating superb online customer experiences has made it a
poster child for direct and digital marketing.
• Nestlé has set up a customer-driven new product development process for finding
and growing new market offerings while living up to its vision to make its products
tastier and healthier.
• Apple’s outstanding success has never been about prices; it’s always been about creating “life-feels-good” user experiences that make its products fly off the shelves despite
their premium prices.
• Emirates became a lifestyle brand by changing the way it reached out to customers.
It framed itself as connecting peoples and cultures, creating meaningful experiences.
• Lenovo’s global success is rooted in its deep and sound understanding of customers
and its ability to build profitable relationships. Its business model is thus built on customer satisfaction, innovation, and operational efficiency.
• Philips has realized that assessing multiple factors for change is vital to the understanding of current and probable future shifts in a marketing environment that is
continuously shifting.
• Ferrero successfully analyzes and uses marketing information and customer insights
to better tailor its offerings to the local market.
• Zara’s control of the entire distribution chain, from design and production to its
own worldwide distribution network, has turned the brand into the world’s fastestgrowing retailer.
• App-based car sharing service Uber is radically reshaping urban transportation channels in cities around the globe, but it is now facing stiff competition from local rivals
like Careem.
• Industrial giant GE has unleashed a remarkable array of digital and social media content that connects the brand with its business customers and positions the
130-year-old company as a youthful, contemporary technology leader in the new
digital industrial era.
• High-flying Mountain Dew is “Doin’ the Dew” with brand superfans to build a passionately loyal and engaged brand community. It doesn’t just market to customers; it
makes them partners in building the brand.
Beyond such features, each chapter is packed with countless real, engaging, and timely examples that reinforce key concepts. No other text brings marketing to life like the seventeenth
edition of Principles of Marketing.



Learning Aids That Create Value and Engagement
A wealth of chapter-opening, within-chapter, and end-of-chapter learning devices help students to learn, link, and apply major concepts:
• Integrated chapter-opening preview sections. The active and integrative chapter-opening
spread in each chapter starts with a Chapter Preview, which briefly previews chapter
concepts, links them with previous chapter concepts, and introduces the chapteropening story. This leads to a chapter-opening vignette—an engaging, deeply developed, illustrated, and annotated marketing story that introduces the chapter material
and sparks student interest. Finally, an Objective Outline provides a helpful preview of
chapter contents and learning objectives, complete with page numbers.
• Real Marketing highlights. Each chapter contains two carefully developed highlight
features that provide an in-depth look at real marketing practices of large and small
• Author comments and figure annotations. Each figure contains author comments that ease
student understanding and help organize major text sections.
• Reviewing and Extending the Concepts. Sections at the end of each chapter summarize
key chapter concepts and provide questions and exercises by which students can
review and apply what they’ve learned. The Objectives Review and Key Terms section
reviews major chapter concepts and links them to chapter objectives. It also provides
a helpful listing of chapter key terms by order of appearance with page numbers that
facilitate easy reference. A Discussion and Critical Thinking section provides discussion
questions and critical thinking exercises that help students to keep track of and apply
what they’ve learned in the chapter.
• Applications and Cases. Brief Online, Mobile, and Social Media Marketing; Marketing Ethics;
and Marketing by the Numbers sections at the end of each chapter provide short applications cases that facilitate discussion of current issues and company situations in
areas such as mobile and social marketing, ethics, and financial marketing analysis. A
Video Case section contains short vignettes with discussion questions to be used with
a set four- to seven-minute videos that accompanied the seventeenth edition. End-ofchapter Company Case sections provide all-new or revised company cases that help
students to apply major marketing concepts to real company and brand situations.
• 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 comprehensive introduction to the marketing financial analysis that helps to guide,
assess, and support marketing decisions. An exercise at the end of each chapter lets
students apply analytical and financial thinking to relevant chapter concepts and links
the chapter to the Marketing by the Numbers appendix.
More than ever before, the seventeenth edition of Principles of Marketing creates value
and engagement for you—it gives you all you need to know about marketing in an effective
and enjoyable total learning package!

A Total Teaching and Learning Package
A successful marketing course requires more than a well-written book. Today’s classroom
requires a dedicated teacher, well-prepared students, and a fully integrated teaching system. A total package of teaching and learning supplements extends this edition’s emphasis
on creating value and engagement for both the student and instructor. The following aids
support Principles of Marketing, seventeenth edition.



Instructor resources
At the Instructor Resource Center,, instructors can
easily register to gain access to a variety of instructor resources available with this text in
downloadable format. If assistance is needed, a dedicated technical support team is ready
to help with the media supplements that accompany the text. Visit http://support.pearson
.com/getsupport for answers to frequently asked questions and toll-free user support phone
The following supplements are available with this text:

Instructor’s Resource Manual
Test Bank
TestGen® Computerized Test Bank
PowerPoint Presentation

No book is the work only of its authors. We greatly appreciate the valuable contributions of
several people who helped make this new edition possible. As always, we owe extra-special
thanks to Keri Jean Miksza for her dedicated and valuable contributions to all phases of
the project and to her husband Pete and daughters Lucy and Mary for all the support they
provide Keri during this very absorbing project.
We owe substantial thanks to Andy Norman of Drake University for his skillful help in
developing chapter vignettes and highlights, company and video cases, PowerPoint presentations, and the marketing plan appendix. This and many previous editions have benefited
greatly from Andy’s assistance. We also thank Colette Wolfson of the Ivy Tech Community
College School of Business for her dedicated efforts in preparing end-of-chapter materials.
Additional thanks go to Carol Davis at California State University Monterey Bay for her
work in updating the Instructor’s Manual and Test Item File. Finally, we’d like to thank the
professors who assisted with our work on MyMarketingLab: Arlene Green, Indian River
State College; Mahmood Khan, Virginia Tech; Todd Korol, Monroe Community College;
Susan Schanne, Eastern Michigan University; and Sarah Shepler, Ivy Tech Community College. All of these contributors are greatly appreciated in making the seventeenth edition of
Principles of Marketing a robust teaching and learning system.
Many reviewers at other colleges and universities provided valuable comments and
suggestions for this and previous editions. We are indebted to the following colleagues for
their thoughtful input:

Sucheta Ahlawat, Kean University
Darrell E. Bartholomew, Rider University
Leta Beard, University of Washington
Greg Black, Metropolitan State University of Denver
Christopher P. Blocker, Colorado State University
Kathryn Boys, Virginia Tech
Rod Carveth, Naugatuck Valley Community College
Anindja Chatterjee, Slippery Rock University of Pennsylvania
Christina Chung, Ramapo College of New Jersey
Ed Chung, Elizabethtown College
Marianne Collins, Winona State University
Mary Conran, Temple University
Eloise Coupey, Virginia Tech
Deborah L. Cowles, Virginia Commonwealth University
Alan Dick, University of Buffalo
Patti Diggin, West Chester University of Pennsylvania
Frank Franzak, Virginia Commonwealth University
George J. Gannage Jr., Embry Riddle Aeronautical University
David A. Gilliam, University of Arkansas at Little Rock
Karen Gore, Ivy Tech Community College, Evansville Campus
Deborah M. Gray, Central Michigan University
Amy Handlin, Monmouth University
James Heyman, University of St. Thomas
Ken Knox, Eastern Gateway Community College
Ann T. Kuzma, Minnesota State University, Mankato
Geoffrey P. Lantos, Stonehill College

Charles Lee, Chestnut Hill College
Yun Jung Lee, Adelphi University
Carolyn A. Massiah, University of Central Florida
Samuel McNeely, Murray State University
Chip Miller, Drake University
Linda Morable, Richland College
Randy Moser, Elon University
David Murphy, Madisonville Community College
Esther Page-Wood, Western Michigan University
Ed Petkus Jr., Ramapo College of New Jersey
Tim Reisenwitz, Valdosta State University
Mary Ellen Rosetti, Hudson Valley Community College
William Ryan, University of Connecticut
James Sawhill, Washington University–Missouri
Mid Semple, SUNY Broome
Roberta Schultz, Western Michigan University
Shweta Singh, Kean University
Michaeline Skiba, Monmouth University
Joseph G. Slifko Jr., Pennsylvania Highlands Community
J. Alexander Smith, Oklahoma City University
Deb Utter, Boston University
Donna Waldron, Manchester Community College
Wendel Weaver, Oklahoma Wesleyan University
Susan D. Williams, New Jersey City University
Douglas Witt, Brigham Young University
Poh-Lin Yeoh, Bentley University



We also owe a great deal to the people at Pearson Education who helped develop this book.
Portfolio Manager Dan Tylman provided resources and support during the revision. Editorial Coordinator Linda Albelli and Project Manager Karin Williams provided valuable
assistance and advice in guiding this complex revision project through development, design, and production. We’d also like to thank Director of Portfolio Management Stephanie
Wall for her strong guidance and support along the way as well as the expertise of Managing Producer Ashley Santora, Director of Production Jeff Holcomb, and Product Marketer
Becky Brown. We are proud to be associated with the fine professionals at Pearson. We
also owe a mighty debt of gratitude to Senior Project Manager Charles Fisher, Associate
Managing Editor Allison Campbell, Design Manager Emily Friel, and the rest of the team at
Integra for their fine work on this edition.
Finally, we owe many thanks to our families for all of their support and encouragement—Kathy, Betty, Mandy, Matt, KC, Keri, Delaney, Molly, Macy, and Ben from the
Armstrong clan and Nancy, Amy, Melissa, and Jessica from the Kotler family. To them, we
dedicate this book.
Gary Armstrong
Philip Kotler

Global Edition Acknowledgements
Pearson would like to thank the following people for their work on the Global Edition:

Jan Charbonneau, University of Tasmania
Geoff Fripp, The University of Sydney
Ayantunji Gbadamosi, University of East
London, United Kingdom
Alice Cheah Wai Kuan, Taylor’s University,
Marc Opresnik, SGMI St. Gallen
Management Institute
Abdul Rauf, Wittenborg University
Muneeza Shoaib, Middlesex University

Diane Sutherland
Jon Sutherland
Nguyen Hai Anh Tran, University
of East Anglia
Nina von Arx-Steiner, University of
Applied Sciences and Arts,
Northwestern Switzerland FHNW
Sophie Hsiao-Pei Yang, Coventry

Lailani Alcantara, Ritsumeikan Asia Pacific
Maggie Au, Temasek Polytechnic
Adele Berndt, Jönköping University
Michael Grund, HWZ University
of Applied Sciences in Business
Administration Zurich
Michael Korchia, Kedge Business School
Ronan de Kervenoael, ESC Rennes,

Jie Liu, Manchester Metropolitan
Christina Neylan, Lucerne University
of Applied Sciences and Arts
Milena S. Nikolova, American University
in Bulgaria
Stephen Tustain, Glion Institute of Higher
Jimmy Wong Shiang Yang, Singapore
University of Social Sciences

Principles of




Part 1: Defining Marketing and the Marketing Process (Chapters 1–2)
Part 2: Understanding the Marketplace and Consumer Value (Chapters 3–6)
Part 3: Designing a Customer Value–Driven Strategy and Mix (Chapters 7–17)
Part 4: Extending Marketing (Chapters 18–20)

Creating Customer Value and Engagement

This first chapter introduces you to the basic concepts
of marketing. We start with the question: What is marketing? Simply put, marketing is engaging customers
and managing profitable customer relationships. The
aim of marketing is to create value for customers in
order to capture value from customers in return. Next we discuss
the five steps in the marketing process—from understanding customer needs, to designing customer value–driven marketing strategies and integrated marketing programs, to building customer
relationships and capturing value for the firm. Finally, we discuss
the major trends and forces affecting marketing in this new age of

digital, mobile, and social media. Understanding these basic concepts and forming your own ideas about what they really mean to
you will provide a solid foundation for all that follows.
Let’s start with a good story about marketing in action at
Emirates, the largest international airline in the world and one of
the best-known brands on the planet. Emirate’s success results
from much more than just offering a way to connect people from
point A to point B. It’s based on a customer-focused marketing
strategy by which Emirates creates customer value through deep
brand–customer engagement and close brand community with
and among its customers.

EmiratEs’ CUstOmEr VaLUE—DriVEN markEtiNg: Engaging Customers
and Building a Brand Community


he Emirates Group operates across six continents
customer needs of surfing the Internet, emailing, or simply
and 150 cities with a 95,000-strong team comprised
calling a land line while in the airplane, as well as exclusive
of over 160 nationalities. The Emirates airline, headlounges for its clientele. These offerings have allowed Emirates
quartered in Dubai, UAE, was founded in 1985. The
to deliver its value proposition to its customers and support its
financial year ending March 31, 2016, saw the Group achieve
mission statement of committing to high standards.
its 28th consecutive year of profit in a financial year. The
The Skywards Program, the airlines’ frequent traveler loycompany successfully capitalized on its location—a small cityalty program, also plays a key role in helping Emirates build
state strategically located to reach three-fourths of the world
strong customer relationships. In an industry-leading innovation,
population in a flight of less than eight hours—to build a fastmembers now earn miles by zone instead of actual miles flown. A
growing and profitable hub-based business model, making it
“miles accelerator feature” offers bonus miles on specific flights
the largest international airline in the world.
and is designed to boost turnover on flights with less full flights.
Emirates set out to be an inFacing increased and fierce
novative, modern, and customercompetition, Emirates has launched
Emirates is not just offering a way to
oriented provider of high-quality
a range of customer service initiaconnect people from point A to point B
air travel services. Through the
tives that support differentiation,
years, Emirates has successfully
including Dubai Connect, an incenbut is the catalyst to connect people’s
and continuously created a custive for premium-class passengers
dreams, hopes, and aspirations.
tomer-focused value proposition
offering free luxury hotel accomby offering a combination of prodmodation, including meals, ground
ucts, services, information, and experiences customized for
transportation, and visa costs in Dubai. Another differentiating elits market demographics for each of its destinations. This apement of its customer service is Chauffeur-drive, a service offered
proach had led to an array of product offerings such as its onto customers flying first-class or business-class. Emirates chaufboard Information, Communication, and Entertainment (ICE)
feurs collect customers from their doorstep or will be present to
system, an all-in-one communications device accommodating
take them to their final destination when they land. This could

ChAptEr 1

| Marketing: Creating Customer Value and Engagement


be straight to the customer’s hotel, their next meeting, their
favorite restaurant, or even to the course for a round of golf.
This service is available in over 70 cities worldwide.
As competitors continued to discount air fares close
to loss levels, Emirates maintained fares while managing healthy yields supported by excellent load factors.
The company was capable of doing this because of its
customer value–driven marketing approach and its service proposition, for which customers continue to be
willing to pay a premium. Whereas competitors emphasized low prices or well-maintained aircraft, Emirates
built customer engagement and relationships. Beyond
the functional benefit of air travel, Emirates marketed its
services as “The Emirates Experience,” a genuine passion Emirates’ success is due in part to its diverse product offerings.
for comfort and attention to detail. Customers didn’t just Antony Nettle/Alamy Stock Photo
fly Emirates; they experienced it.
company is connecting people and cultures, creating relevant
Connecting with customers once required simply outand meaningful experiences that are shaping the world.
spending competitors on big media ads and celebrity endorsers
The campaign launch featured print, TV, and digital adverthat talk at customers. In these digital times, however, Emirates
tising, including some iconic billboards in New York’s Times
is forging a new kind of customer relationship, a deeper, more
Square and Milan’s central train station. Launched in over
personal, more engaging one. Emirates still invests in tradi80 markets across the world, the new brand platform pretional advertising, but the brand now spends an increasing
sented Emirates’ new mindset through communication and
amount of its marketing budget on cutting-edge digital and
engagement that celebrates global travel, conveying Emirates’
social media marketing that interacts with customers to build
commitment to connect with people and help them realize
brand engagement and community.
their potential through travel. Reflecting an effort to target a
Emirates uses online, mobile, and social media marketing
younger audience, the “Hello Tomorrow” campaign debuted
to connect with their customers. Emirates also creates brand
with vignettes of the TV spots on Emirates’ Facebook channel.
“tribes”—large groups of highly engaged users—with the help
Moreover, Emirates collaborated with the BBC to develop a
of social media platforms such as Facebook, Twitter, Instagram,
new series called “Collaboration Culture,” which followed 14
YouTube, and Pinterest. For example, the main Emirates Facebook
leading personalities who collaborated across their respective
page has more than 6.5 million likes. The Emirates Twitter page
fields in music, food, fashion, and art. With CNN, Emirates
adds another 822,000; the Emirates Instagram page has 1.9 million
created “Fusion Journeys,” a concept that took artists to join
subscribers, making it the largest in the industry; and the compafellow artists across the world to learn, teach, and even perform
ny’s LinkedIn page has 667,000 followers, also no. 1 in the airline
with them in their own country. Finally, Emirates’ created the
business. Emirates’ social media presence engages customers at
“Inspired Culture” channel on Yahoo! Globally, where globalisa high level, gets them talking with each other about the brand,
tas can access recommendations, videos, and content, engaging
and weaves the brand into their daily lives through cross-media
with other people and being inspired by their creations.
campaigns that integrate digital media with traditional tools to
The new global culture reached 43 million viewers across
connect with customers. A compelling example is the company’s
85 countries through the BBC, CNN, and Yahoo! Emirates’
“Hello Tomorrow” campaign, which was launched in 2012 and
consideration jumped from 38 percent to 69 percent among
positioned the global airline as the enabler of global connectivity
viewers and an impressive 84 percent of viewers exposed to the
and meaningful experiences. Emirates wanted to be perceived as
content reportedly believe Emirates was a brand that sought to
a lifestyle choice and to ensure that more people than ever will
connect the world and create a “brighter future.”
fly Emirates. The target audience was “globalistas”—people who
Emirates has become the world’s most valuable airline
live to experience new cultures. Emirates was looking for a big
brand, with an estimated value of $7.7 billion, according to the
idea that would build virtual bridges between globalistas and dif2016 Brand Finance Global 500 report. It came out 47 places
ferent cultures worldwide; inspire conversations on food, fashion,
above the next closest airline brand. As a result of its customerart, and music; and break the mold for a travel brand to engage
centric approach and integrated marketing campaigns (such
with its audience and inspire discussions like never before.
as the Hello Tomorrow initiative), Emirates has demonstrated
Sir Maurice Flanagan, the founding CEO of Emirates and
commitment, authenticity, relevance, and differentiation outside
the former executive vice-chairman of The Emirates Group,
the travel industry. Emirates has successfully changed the way
emphasized that Emirates is not just offering a way to connect
it reaches out to its customers by moving away from the prodpeople from point A to point B but is the catalyst to connect
uct and creating a discourse of global customer engagement.1
people’s dreams, hopes, and aspirations. He also stated that the



pArt 1 Defining Marketing and the Marketing Process

Objectives Outline
Objective 1-1

Define marketing and outline the steps in the marketing process.

What Is Marketing?
Objective 1-2

(pp 28–30)

Explain the importance of understanding the marketplace and customers and identify the five
core marketplace concepts.

Understanding the Marketplace and Customer Needs
Objective 1-3

(pp 30–34)

Identify the key elements of a customer value–driven marketing strategy and discuss the
marketing management orientations that guide marketing strategy.

Designing a Customer Value–Driven Marketing Strategy and Plan
Objective 1-4

Discuss customer relationship management and identify strategies for creating value for
customers and capturing value from customers in return.

Managing Customer Relationships and Capturing Customer Value
Objective 1-5

(pp 34–38)

(pp 38–46)

Describe the major trends and forces that are changing the marketing landscape in this age
of relationships.

The Changing Marketing Landscape

(pp 46–55)

Today’s successful companies have one thing in common: Like Emirates, they are
strongly customer focused and heavily committed to marketing. These companies
share a passion for satisfying customer needs in well-defined target markets. They motivate everyone in the organization to help build lasting customer relationships based
on creating value.
Customer relationships and value are especially important today. Facing dramatic
technological advances and deep economic, social, and environmental challenges, today’s
customers are reassessing how they engage with brands. New digital, mobile, and social
media developments have revolutionized how consumers shop and interact, in turn calling for new marketing strategies and tactics. It’s now more important than ever to build
strong customer engagement, relationships, and advocacy based on real and enduring
customer value.
We’ll discuss the exciting new challenges facing both customers and marketers later in
the chapter. But first, let’s introduce the basics of marketing.

Author Pause here and think about
Comment how you’d answer this
question before studying marketing.
Then see how your answer changes as
you read the chapter.

What Is Marketing?
Marketing, more than any other business function, deals with customers. Although we will
soon explore more-detailed definitions of marketing, perhaps the simplest definition is this
one: Marketing is engaging customers and managing profitable customer relationships. The twofold goal of marketing is to attract new customers by promising superior value and to keep
and grow current customers by delivering value and satisfaction.
For example, Nike leaves its competitors in the dust by delivering on its promise to
inspire and help everyday athletes to “Just do it.” Amazon dominants the online marketplace by creating a world-class online buying experience that helps customers to “find
and discover anything they might want to buy online.” Facebook has attracted more than
1.5 billion active web and mobile users worldwide by helping them to “connect and share
with the people in their lives.” And Coca-Cola has earned an impressive 49 percent global
share of the carbonated beverage market—more than twice Pepsi’s share—by fulfilling its

ChAptEr 1

| Marketing: Creating Customer Value and Engagement


“Taste the Feeling” motto with products that provide “a simple pleasure that makes everyday moments more special.”2
Sound marketing is critical to the success of every organization. Large for-profit firms
such as Google, Target, Procter & Gamble, Coca-Cola, and Microsoft use marketing. But so
do not-for-profit organizations, such as colleges, hospitals, museums, symphony orchestras, and even churches.
You already know a lot about marketing—it’s all
around you. Marketing comes to you in the good old
traditional forms: You see it in the abundance of products at your nearby shopping mall and the ads that
fill your TV screen, spice up your magazines, or stuff
But in recent years, marketers have
your mailbox.
assembled a host of new marketing approaches, everything from imaginative websites and smartphone
apps to blogs, online videos, and social media. These
new approaches do more than just blast out messages
to the masses. They reach you directly, personally,
and interactively. Today’s marketers want to become
a part of your life and enrich your experiences with
their brands. They want to help you live their brands.
At home, at school, where you work, and where
you play, you see marketing in almost everything you
do. Yet there is much more to marketing than meets the
consumer’s casual eye. Behind it all is a massive network of people, technologies, and activities competing
for your attention and purchases. This book will give
Marketing is all around you, in good old traditional forms and in a host
you a complete introduction to the basic concepts and
of new forms, from websites and mobile phone apps to videos and online
social media.
practices of today’s marketing. In this chapter, we beWestend61/Getty Images
gin by defining marketing and the marketing process.

Marketing Defined

The process by which companies engage
customers, build strong customer
relationships, and create customer value
in order to capture value from customers
in return.

What is marketing? Many people think of marketing as only selling and advertising. We
are bombarded every day with TV commercials, catalogs, spiels from salespeople, and
online pitches. However, selling and advertising are only the tip of the marketing iceberg.
Today, marketing must be understood not in the old sense of making a sale—“telling
and selling”—but in the new sense of satisfying customer needs. If the marketer engages
consumers effectively, understands their needs, develops products that provide superior
customer value, and prices, distributes, and promotes them well, these products will sell
easily. In fact, according to management guru Peter Drucker, “The aim of marketing is
to make selling unnecessary.”3 Selling and advertising are only part of a larger marketing
mix—a set of marketing tools that work together to engage customers, satisfy customer
needs, and build customer relationships.
Broadly defined, marketing is a social and managerial process by which individuals
and organizations obtain what they need and want through creating and exchanging value
with others. In a narrower business context, marketing involves building profitable, valueladen exchange relationships with customers. Hence, we define marketing as the process
by which companies engage customers, build strong customer relationships, and create
customer value in order to capture value from customers in return.4

The Marketing Process
Figure 1.1 presents a simple, five-step model of the marketing process for creating
and capturing customer value. In the first four steps, companies work to understand
consumers, create customer value, and build strong customer relationships. In the final
step, companies reap the rewards of creating superior customer value. By creating value
for consumers, they in turn capture value from consumers in the form of sales, profits, and
long-term customer equity.
In this chapter and the next, we will examine the steps of this simple model of marketing. In this chapter, we review each step but focus more on the customer relationship



pArt 1 Defining Marketing and the Marketing Process

FIgurE | 1.1
The Marketing Process: Creating and Capturing Customer Value
Create value for customers and
build customer relationships
Understand the
marketplace and
customer needs
and wants

Design a
customer value–
driven marketing

This important figure shows marketing in
a nutshell. By creating value for customers,
marketers capture value from customers in
return. This five-step process forms the
marketing framework for the rest of the
chapter and the remainder of the text.

Author Marketing is all about
Comment creating value for
customers. So, as the first step in the
marketing process, the company must
fully understand customers and the

States of felt deprivation.

The form human needs take as they
are shaped by culture and individual

Human wants that are backed by
buying power.

Construct an
marketing program
that delivers
superior value

Engage customers,
build profitable
relationships, and
create customer

Capture value
from customers to
create profits and
customer equity

steps—understanding customers, engaging and building relationships with customers,
and capturing value from customers. In Chapter 2, we look more deeply into the second
and third steps—designing value-creating marketing strategies and constructing marketing programs.

Understanding the Marketplace and Customer Needs
As a first step, marketers need to understand customer needs and wants and the
marketplace in which they operate. We examine five core customer and marketplace concepts: (1) needs, wants, and demands; (2) market offerings (products, services, and experiences);
(3) value and satisfaction; (4) exchanges and relationships; and (5) markets.

Customer Needs, Wants, and Demands
The most basic concept underlying marketing is that of human needs. Human needs are
states of felt deprivation. They include basic physical needs for food, clothing, warmth, and
safety; social needs for belonging and affection; and individual needs for knowledge and
self-expression. Marketers did not create these needs; they are a basic part of the human
Wants are the form human needs take as they are shaped by culture and individual
personality. An American needs food but wants a Big Mac, fries, and a soft drink. A person in
Papua, New Guinea, needs food but wants taro, rice, yams, and pork. Wants are shaped by
one’s society and are described in terms of objects that will satisfy those needs. When backed
by buying power, wants become demands. Given their
wants and resources, people demand products and services
with benefits that add up to the most value and satisfaction.
Companies go to great lengths to learn about and
understand customer needs, wants, and demands. They
conduct consumer research, analyze mountains of customer
data, and observe customers as they shop and interact,
offline and online. People at all levels of the company—
including top management—stay close to customers:5

Staying close to customers: Energetic target CEO Brian Cornell
makes regular unannounced visits to target stores, accompanied by
local moms and loyal target shoppers.
Ackerman + Gruber

Capture value from
customers in return

Target’s energetic CEO, Brian Cornell, makes regular unannounced visits to Target stores, accompanied by local moms
and loyal Target shoppers.
Cornell likes nosing around
stores and getting a real feel for what’s going on. It gives him
“great, genuine feedback.” He and other Target executives
even visit customers in their homes, opening closet doors
and poking around in cupboards to understand their product
choices and buying habits. Similarly, Boston Market CEO
George Michel makes frequent visits to company restaurants,
working in the dining room and engaging customers to learn
about “the good, the bad, and the ugly.” He also stays connected by reading customer messages on the Boston Market
website and has even cold-called customers for insights.
“Being close to the customer is critically important,” says
Michel. “I get to learn what they value, what they appreciate.”

ChAptEr 1

| Marketing: Creating Customer Value and Engagement


Market Offerings—Products, Services, and Experiences
Market offerings
Some combination of products, services,
information, or experiences offered to a
market to satisfy a need or want.

Marketing myopia
The mistake of paying more attention to
the specific products a company offers
than to the benefits and experiences
produced by these products.

Consumers’ needs and wants are fulfilled through market offerings—some combination
of products, services, information, or experiences offered to a market to satisfy a need or
a want. Market offerings are not limited to physical products. They also include services—
activities or benefits offered for sale that are essentially intangible and do not result in
the ownership of anything. Examples include banking, airline, hotel, retailing, and home
repair services.
More broadly, market offerings also include other entities, such as persons, places, organizations, information, and ideas. For example, San Diego runs a “Happiness Is Calling”
advertising campaign that invites visitors to come and enjoy the city’s great weather and
good times—everything from its bays and beaches to its downtown nightlife and urban
scenes. And the Ad Council and the National Highway Traffic Safety Administration created a “Stop the Texts. Stop the Wrecks.” campaign that markets the idea of eliminating
texting while driving. The campaign points out that a texting driver is 23 times more likely
to get into a crash than a non-texting driver.6
Many sellers make the mistake of paying more attention to the specific products they
offer than to the benefits and experiences produced by these products. These sellers suffer
from marketing myopia. They are so taken with their products that they focus only on
existing wants and lose sight of underlying customer needs.7 They forget that a product
is only a tool to solve a consumer problem. A manufacturer of quarter-inch drill bits may
think that the customer needs a drill bit. But what the customer really needs is a quarterinch hole. These sellers will have trouble if a new product comes along that serves the
customer’s need better or less expensively. The customer will have the same need but will
want the new product.
Smart marketers look beyond the attributes of the products and services they sell. By
orchestrating several services and products, they create brand experiences for consumers.
For example, you don’t just visit Walt Disney World Resort; you immerse yourself and
your family in a world of wonder, a world where dreams come true and things still work
the way they should. And your local Buffalo Wild Wings restaurant doesn’t just serve up
wings and beer; it gives customers the ultimate “Wings. Beer. Sports.” fan experience (see
Real Marketing 1.1).
Similarly, Mattel’s American Girl does much more than just make and sell
high-end dolls. It creates special experiences between the dolls and the girls who adore
To put more smiles on the faces of the girls who love their American Girl dolls, the
company operates huge American Girl experiential stores in 20 major cities around the
country. Each store carries an amazing selection of dolls plus every imaginable outfit
and accessory. But more than just places to shop, American Girl stores are exciting destinations unto themselves, offering wonderfully engaging experiences for girls, mothers,
grandmothers, and even dads or grandpas. There’s an in-store restaurant where girls,
their dolls, and grown-ups can sit down together for brunch, lunch, afternoon tea, or dinner. There’s even a doll hair salon where a stylist can give a doll a new hairdo. American
Girl also offers “perfect parties” to celebrate a birthday or any day as well as a full slate of
special events, from crafts and activities to excursions. Much more than a store that sells
dolls, says the company, “it’s the place where imaginations can soar.” A visit to American
Girl creates “Fun today. Memories forever.”

Customer Value and Satisfaction

Marketing experiences: american Girl
does more than just make and sell high-end
dolls. It creates special experiences between
the dolls and the girls who adore them.
Image courtesy of American Girl, Inc. All rights reserved.

Consumers usually face a broad array of products and services that might satisfy a
given need. How do they choose among these many market offerings? Customers
form expectations about the value and satisfaction that various market offerings will
deliver and buy accordingly. Satisfied customers buy again and tell others about
their good experiences. Dissatisfied customers often switch to competitors and disparage the product to others.
Marketers must be careful to set the right level of expectations. If they set expectations too low, they may satisfy those who buy but fail to attract enough buyers. If
they set expectations too high, buyers will be disappointed. Customer value and customer satisfaction are key building blocks for developing and managing customer
relationships. We will revisit these core concepts later in the chapter.

Real Marketing



pArt 1 Defining Marketing and the Marketing Process

1.1 Buffalo Wild Wings: Fueling the Sports

Fan Experience

“Wings. Beer. Sports.” That’s the
long-standing motto for the fastgrowing Buffalo Wild Wings restaurant chain. “B-Dubs”—as it’s
known to avid regulars—focuses on
food and sports and “everything in
There’s no doubt about it. Buffalo Wild
Wings more than lives up to the “wings”
and “beer” parts of the equation. It serves
up wings in an abundant variety: boned or
boneless, with five dry seasonings and 17
signature sauces ranging on the heat scale
from Sweet BBQ (traditional BBQ sauce: satisfyingly sweet with no heat) to Desert Heat
(smoky, sweet, and chili pepper seasoning)
to Reformulated Blazin’ (so good, it’s scary—
made with the unrelenting heat of the ghost
pepper). To wash it all down, each B-Dubs
restaurant pours as many as 30 different
draft beers, with a full selection of domestic,
import, and craft beer brands. You won’t go
hungry or thirsty at B-Dubs.
However, the Buffalo Wild Wings recipe for
success goes much deeper than just selling
wings and beer for profit. What really packs
’em in and keeps ’em coming back is the
B-Dubs customer experience. Customers do
gobble up the wings—more than 11 million
wings chain-wide on last Super Bowl Sunday
alone. But even more important, they come to
B-Dubs to watch sports, trash talk, cheer on
their sports teams, and meet old friends and
make new ones—that is, a total eating and
social experience. “We realize that we’re not
just in the business of selling wings,” says the
company. “We’re something much bigger.
We’re in the business of fueling the sports fan
experience. Our mission is to WOW people
every day!”
Everything about B-Dubs is designed to
deliver the ultimate sports experience, for
any fan of any sport. The WOW begins the
minute you step into any of Buffalo Wild
Wings’s 1,100 restaurants. This is not your
average dark-and-dank sports bar. Instead,
a B-Dubs is like a miniature stadium, with
high ceilings, ample natural light, and brightly
colored furnishings and wall coverings. The
newest Buffalo Wild Wings “Stadia” restaurants are divided into barrier-free zones—
including a bar area and a separate dining
area. And every B-Dubs has 60 to 70 really
big flat-screen TVs lining the walls, over the
bar, and about everywhere else, ensuring that
every table has the best seat in the house

no matter what your team or sport, including
live streaming of local college and even high
school events. B-Dubs creates an exciting
environment that makes it the next best thing
to being at the game—or something even
better. “We consider ourselves to have 1,100
stadiums,” says the chain’s vice president for
guest experience and innovation.
There’s an experience for everyone at
Buffalo Wild Wings. The chain appeals to a
wide range of customers, from pub-loving
sports nuts to families looking for an affordable evening out. Singles and couples
gravitate to the bar area; families stick to the
carpeted areas with booths. In addition to
streaming sports events of all kinds on the
big screens, B-Dubs supplies tableside tablets upon which customers can play poker
or trivia games. A social jukebox feature lets
guests control the music that plays on the
restaurant’s sound system.
It seems like there’s always something
happening in a B-Dubs to engage customers and enhance the experience. Take the
chain’s infamous Blazin’ Wing Challenge—
which promises a trophy-style T-shirt and
a place on the Wall of Fame to any customer who can down a dozen wings with
the chain’s hottest signature sauce in no
more than six minutes. That’s no easy
feat considering that the Blazin’ sauce

is 60 times hotter than typical jalapeño
sauce. During the six-minute binge, challengers are not allowed to use napkins or
utensils, touch their faces, or eat or drink
anything other than the wings (no dipping
sauces, please). The menu boasts plenty of
warnings, and servers advise most people
not to even attempt the challenge. And
before taking the plunge, each challenger
signs a waiver agreeing that he or she “voluntarily assumes all risk of loss, damage,
injury, illness, or death that may be sustained by him or her as a result.” As you can
imagine, when a challenge is announced
over the PA, it usually draws a crowd.
Buffalo Wild Wings never rushes its guests.
Whereas many other casual-dining restaurants
have a “turn-and-burn” philosophy—cycling as
many paying guests as possible through each
table—at B-Dubs it’s just the opposite. Buffalo
Wild Wings encourages people to linger longer,
enjoy the food, and soak up the ambiance.
To help make that happen, the chain has
created a new staff position at each restaurant. In addition to the usual waitstaff,
each table has a “Guest Experience Captain.”
According to B-Dubs’s chief marketer, the
captain is “like a host at any party,” moving
from table to table, chatting with guests,
personalizing their experiences, and making
sure their needs are met. Want a special

Customer-focused mission: the Buffalo Wild Wings mission is to provide a total
eating and social environment that “fuels the sports fan experience” through
in-store and online engagement.
Reprinted with permission of Buffalo Wild Wings, Inc.

ChAptEr 1
game on one screen with another game on
the screen next to it? Your Guest Experience
Captain sees to it. Need help with a tablet?
Your captain lends a hand. Want to try some
new sauces? Your captain will make suggestions and even bring out samples of different
sauces with complimentary fries for dipping.
Adding Guest Experience Captains is a major expense, especially when multiplied across
shifts in all 1,100 stores. But Buffalo Wild
Wings reasons that the captains will more than
pay for themselves by enhancing the all-important guest experience, keeping customers
around longer, and bringing them back more
often. Buffalo Wild Wings restaurants with captains are achieving record levels of customer
satisfaction and loyalty compared with those
that have not yet brought captains on board.
“It’s just an opportunity for us to go a little
deeper with the community than our competitors,” says the B-Dubs marketing chief.
True to its “ultimate sports experience”
mission, Buffalo Wild Wings actively engages
its customers digitally and socially outside
its restaurants as well as inside. In fact, the
company brags that it’s the number-one

| Marketing: Creating Customer Value and Engagement

brand in its industry for digital fan engagement. B-Dubs’s very active website draws
3 million visitors per month. The brand has
more than 12 million Facebook fans, 660,000
Twitter followers, and very active YouTube
and Instagram pages. It recently launched
GameBreak, an app for fantasy football and
other games that can be played inside or
outside its restaurants. According to the
company’s customer experience executive,
GameBreak players visit more often, stay
longer, and tend to “buy that second or third
beer or maybe one more basket of wings.” In
all, Buffalo Wild Wings creates a host of both
in-store and online promotions that inspire
camaraderie. “It’s about giving [customers]


tools to not just be spectators but advocates
of the brand,” says the chain.
Catering to the customer experience has
paid big dividends for Buffalo Wild Wings.
B-Dubs is now the nation’s number-one seller
of chicken wings and largest pourer of draft
beer. Over the past five years, as other casualdining restaurants have struggled with fierce
competition and slow growth, B-Dubs’s sales
have more than tripled and profits are up 250
percent. The chain’s “hottest wing coating
available comes with a warning to B-Dubs’
customers: ‘keep away from eyes, pets, and
children.’ The sauce is called ‘Blazin’,’ says one
analyst. ‘That term also happens to be a good
description of the stock’s performance lately.’”

Sources: Demitrios Kalogeropoulos, “Why Buffalo Wild Wings Is Spending More on Its Employees,” The Motley
Fool, June 24, 2015,; Demitrios Kalogeropoulos, “3 Reasons Buffalo Wild Wings Can Keep Soaring in 2015,” The Motley
Fool, January 9, 2015,; Bryan Gruley, “The Sloppy Empire: How Buffalo Wild Wings Turned the Sports Bar into a $1.5 Billion
Juggernaut,” Bloomberg Businessweek, April 13–19, 2015, pp. 62-65; Tanya Dua, “The Buffalo Wild Wings Recipe
for the ‘Ultimate Sports Experience,’” August 4, 2015,; and and,
accessed September 2016.

Exchanges and Relationships
The act of obtaining a desired object from
someone by offering something in return.

Marketing occurs when people decide to satisfy their needs and wants through exchange
relationships. Exchange is the act of obtaining a desired object from someone by offering
something in return. In the broadest sense, the marketer tries to bring about a response to
some market offering. The response may be more than simply buying or trading products and
services. A political candidate, for instance, wants votes; a church wants membership and participation; an orchestra wants an audience; and a social action group wants idea acceptance.
Marketing consists of actions taken to create, maintain, and grow desirable exchange
relationships with target audiences involving a product, service, idea, or other object.
Companies want to build strong relationships by consistently delivering superior customer value. We will expand on the important concept of managing customer relationships
later in the chapter.

The set of all actual and potential buyers
of a product or service.

The concepts of exchange and relationships lead to the concept of a market. A market is
the set of actual and potential buyers of a product or service. These buyers share a particular need or want that can be satisfied through exchange relationships.
Marketing means managing markets to bring about profitable customer relationships.
However, creating these relationships takes work. Sellers must search for and engage buyers, identify their needs, design good market offerings, set prices for them, promote them,
and store and deliver them. Activities such as consumer research, product development,
communication, distribution, pricing, and service are core marketing activities.
Although we normally think of marketing as being carried out by sellers, buyers also
carry out marketing. Consumers market when they search for products, interact with
companies to obtain information, and make their purchases. In fact, today’s digital technologies, from online sites and smartphone apps to the explosion of social media, have
empowered consumers and made marketing a truly two-way affair. Thus, in addition to
customer relationship management, today’s marketers must also deal effectively with
customer-managed relationships. Marketers are no longer asking only “How can we influence
our customers?” but also “How can our customers influence us?” and even “How can our
customers influence each other?”



pArt 1 Defining Marketing and the Marketing Process

FIgurE | 1.2
A Modern Marketing System


Each party in the system adds value.
Walmart cannot fulfill its promise of low
prices unless its suppliers provide low
costs. Ford cannot deliver a high-quality
car-ownership experience unless its
dealers provide outstanding service.



Major environmental forces
Arrows represent relationships that
must be developed and managed to
create customer value and profitable
customer relationships.

Figure 1.2 shows the main elements in a marketing
system. Marketing involves serving a market of final consumers in the face of competitors. The company and competitors
research the market and interact with consumers to understand their needs. Then they
create and exchange market offerings, messages, and other marketing content with consumers, either directly or through marketing intermediaries. Each party in the system is
affected by major environmental forces (demographic, economic, natural, technological,
political, and social/cultural).
Each party in the system adds value for the next level. The arrows represent relationships
that must be developed and managed. Thus, a company’s success at engaging customers and
building profitable relationships depends not only on its own actions but also on how well the
entire system serves the needs of final consumers. Walmart cannot fulfill its prom