Essentials of marketing 3rd

THIRD EDITION
JIM BLYTHE
“Essentials of Marketing is an engaging introductory text for students new to the study of
marketing.The third edition brings the latest issues within marketing theory and practice
to life in an authoritative but very readable fashion. Jim Blythe has carefully considered
the needs of his readers through useful learning aids and an extensive glossary.”

Dr. Matthew Higgins, Lecturer in Marketing and Consumption, University of Leicester
Looking for a concise, clear, jargon-free book on marketing? Go no further. Jim Blythe’s
Essentials of Marketing, third edition, is an ideal text for students new to marketing, students
on a short introductory marketing course, overseas students needing a plain-English guide,
or to anyone who needs a quick grasp of the subject.

● NEW! Completely new, relevant and up-to-date case studies.
● NEW! A fully rewritten Chapter 12, covering relationship marketing, Internet
marketing, marketing ethics, and the changing conceptual position of marketing
in the 21st century.
● NEW! Extended coverage of global marketing theory.
● Self-test questions designed to aid student learning.
● Up-to-date and full referencing for the more academic student.
● Recommended further reading for each chapter.
“This new edition provides students with an ideal platform from which to discover the
fundamental principles of marketing. The book offers an easy to follow and jargon-free
source of core theories and concepts together with helpful illustrative examples from
around the world.”

Dr. Phil Megicks, Head of Marketing Group, University of Plymouth, Senior Examiner
for the Chartered Institute of Marketing’s Professional Certificate in Marketing
Fundamentals module
Jim Blythe is Senior Lecturer in the Business School at University of Glamorgan,UK.
He has numerous articles and publications in the field of marketing.

ESSENTIALS OF
MARKETING
THIRD EDITION

JIM BLYTHE

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JIM BLYTHE
ESSENTIALS OF MARKETING THIRD
EDITION

ESSENTIALS OF
MARKETING

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Essentials of Marketing


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Jim Blythe
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Essentials of
Marketing
Third Edition


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ISBN 0 273 69358 1
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Blythe, Jim.
Essentials of marketing / Jim Blythe.--3rd ed.
p. cm.
Includes index.
ISBN 0-273-69358-1 (alk.paper)
1. Marketing. I. Title.
HF5415.B58 2004

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To Sue, with love, and to my
daughters Sarah and Rhiannon,
to whom the future belongs.


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Brief Contents
1

What do marketers do?

1

2

The marketing environment

22

3

Consumer and buyer behaviour

44

4

Segmentation, targeting and positioning

74

5

Market research

99

6

Products, branding and packaging

125

7

Pricing strategies

168

8

Distribution

189

9

Marketing communications and promotional tools

212

10 Marketing planning, implementation and control

261

11 International marketing

284

12 21st century marketing

308


1


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000

Contents

List of tables

xiv

List of figures

xvi

Preface
Acknowledgements

1

2

What do marketers do?

xviii

xx

1

Objectives
Introduction
About marketing
The development of the marketing concept
Marketing and other business disciplines
Marketing on a day-to-day basis
Marketing jobs
Definitions of some marketing terms
Meeting marketing resistance
Quotations about marketing
Case study 1: Tesco
Summary
Chapter questions
Multi-choice questions
Further reading
Glossary
References

1
2
2
3
7
7
9
11

12
14
14
17
17
18
19
19
20

The marketing environment

22

Objectives
Introduction
The marketing environment
The external environment
The internal environment
Case study 2: The Australian telecommunications market
Summary
Chapter questions
Multi-choice questions

22
23
23
23
36
37

39
40
41


x

Contents

3

4

5

Glossary
References

42
43

Consumer and buyer behaviour

44

Objectives
Introduction
Consumer behaviour
Perception
Influences on the buying decision

Impulse buying
Industrial buyer behaviour
Case study 3: Buying aircraft carriers
Summary
Chapter questions
Multi-choice questions
Further reading
Glossary
References

44
45
45
51
53
59
60
63
65
66
66
68
68
71

Segmentation, targeting and positioning

74

Objectives

Introduction
Reasons for segmenting markets
Segmentation variables
Segmenting industrial markets
Segmentation effectiveness
Targeting
Positioning
Sales forecasting
Case study 4: The holiday business
Summary
Chapter questions
Multi-choice questions
Further reading
Glossary
References

74
75
75
77
81
82
83
87
89
91
93
94
94
95

96
97

Market research

99

Objectives
Introduction
The need for market research
The research process
Approaching respondents
Analysing the results
Case study 5: Reclassifying the census

99
100
100
102
103
111
116


Contents

6

7

8

xi

Summary
Chapter questions
Multi-choice questions
Further reading
Glossary
References

118
119
119
120
121
123

Products, branding and packaging

125

Objectives
Introduction
Defining products
Classifying products
Managing the product range
Services marketing
Developing better products
Diffusion of innovation

Branding
Strategic issues in branding
Extending the brand
Retailers’ own-brands
Packaging
Case study 6: J.D. Wetherspoon
Summary
Chapter questions
Multi-choice questions
Further reading
Glossary
References

125
126
126
127
130
135
139
145
147
151
155
156
157
158
160
160
161

162
163
165

Pricing strategies

168

Introduction
Objectives
Economic theories of pricing and value
Pricing and market orientation
Setting prices
Case study 7: Low-cost airlines
Summary
Chapter questions
Multi-choice questions
Further reading
Glossary
References

168
169
169
172
180
181
183
184
184

186
186
187

Distribution

189

Objectives
Introduction

189
190


xii

Contents

9

Logistics v distribution
Wholesalers
Retailers
Managing distribution channels
Efficient consumer response
Case study 8: Avon Cosmetics
Summary
Chapter questions
Multi-choice questions

Further reading
Glossary
References

190
195
197
200
202
204
206
207
207
208
209
211

Marketing communications and promotional tools

212

Objectives
Introduction
Marketing communications theory
Signs and meaning
Developing communications
The promotional mix
Managing advertising
Sales promotion
Managing personal selling

Managing the salesforce
Managing PR
Integrating the promotional mix
Planning the campaign
Putting it all together
Case study 9: Selfridges department store
Summary
Chapter questions
Multi-choice questions
Further reading
Glossary
References

212
213
213
215
218
219
220
226
231
232
236
248
250
250
252
253
254

254
256
256
259

10 Marketing planning, implementation and control
Objectives
Introduction
The marketing planning process
The marketing audit
Corporate objectives
Tactical planning
Organisational alternatives
Promotional strategies
Setting the budget

261
261
262
262
263
264
268
270
270
273


Contents

Monitoring and evaluating the marketing performance
Feedback systems
Case study 10: Legoland
Summary
Chapter questions
Multi-choice questions
Further reading
Glossary
References

11 International marketing
Objectives
Introduction
World trade initiatives
Reasons for internationalising
Barriers to internationalisation
Global segmentation
International market entry strategies
Globalisation
Case study 11: Manchester United Football Club
Summary
Chapter questions
Multi-choice questions
Further reading
Glossary
References

12 21st century marketing

xiii

273
277
277
279
280
280
281
282
283

284
284
285
285
287
291
293
295
298
300
302
302
303
304
304
306

308

Objectives
Introduction
Relationship v traditional marketing
People with whom business is done
Developing a relationship marketing approach
Internet marketing
Marketing ethics
Marketing strategy revisited
The 21st century marketplace
Case study 12: Egg credit card
Summary
Chapter questions
Multi-choice questions
Further reading
Glossary
References

308
309
309
315
317
323
328
329
330
332
334
334
335

336
337
338

Index

341


List of tables

1.1
1.2

Marketing job titles and descriptions
Reasons not to adopt a marketing philosophy

10
13

2.1
2.2
2.3
2.4

SWOT analysis
Current environmental changes
Competitive structures
Examples of legislation affecting marketing

24
25
29
34

3.1
3.2
3.3
3.4
3.5

Habitual v non-habitual purchase behaviour
Personal factors in the buying decision
Psychological factors in the buying decision
Reference group influences
Industrial buyers’ methods

52
54
55
57
61

4.1
4.2
4.3
4.4
4.5

Advantages of segmentation

Resourcing and degree of differentiation
Targeting decisions
Market coverage strategies
Time-series analysis

77
84
85
86
91

5.1
5.2
5.3
5.4
5.5

Qualitative methods
Survey techniques
Sampling methods
Analysis tools for qualitative data
Common statistical methods

105
106
109
112
115

6.1

6.2
6.3
6.4
6.5
6.6

Classification of consumer products
Categorisation of industrial products
Factors distinguishing services
New product clusters
Success rates of new products
Strategic functions of brands

127
128
136
142
143
153

7.1
7.2
7.3

Cost-plus pricing
Mark-up v margin
Demand pricing

172
173

175


List of tables

xv

7.4
7.5
7.6

Costings for demand pricing
Profitability at different price bands
Eight stages of price setting

175
176
180

8.1
8.2
8.3
8.4
8.5

Choosing a transportation method
Functions of channel members
Categories of channel members
Sources of channel power
Channel management techniques

191
193
194
201
203

9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
9.9
9.10
9.11
9.12
9.13
9.14

Categorising signs
Silent communications
Advertising decision-making checklist
Advertising planning functions
Advertising effectiveness
Sales promotion techniques
Factors relating to length of training of sales staff
Trade-offs in salespeople’s pay packages

Examples of company slogans
Criteria for successful press relations
Ways to encourage positive word-of-mouth
Characteristics of influentials
Reasons for sponsorship
Example of a promotional calendar

215
217
222
224
227
228
233
234
239
240
245
245
246
251

10.1
10.2
10.3
10.4
10.5
10.6
10.7

Comparison of strategic and tactical decisions
The marketing audit
Strategic alternatives
Growth strategies
Organisational alternatives
Promotional budgeting methods
Methods of sales analysis

263
265
267
268
271
274
275

11.1
11.2
11.3
11.4
11.5
11.6
11.7

World trade initiatives
Rationale for international marketing
Political factors in international marketing
International Internet marketing
Internationalisation and the 7-P framework
International market entry strategies

Stages in globalisation

286
288
290
292
294
295
299

12.1
12.2
12.3
12.4

Transaction v relationship marketing
Five stages for service benchmarking
Characteristics of the Internet as a marketing tool
Stages of integration of marketing communications

311
320
325
331


List of figures

1.1
1.2

Societal classification of new products
Evolution of marketing’s role

2.1

Micro- and macro-environmental forces

27

3.1

Consumer decision-making

45

4.1
4.2

Segmentation trade-offs
Perceptual mapping

82
88

5.1
5.2
5.3

The market research process

Tree taxonomy for eating out
Statistical methods chart: PERT, program evaluation and
review technique; CPM, critical path method

102
113

129
130
132
133
135

6.7
6.8

Three levels of product
Product life cycle
Revised product life cycle
Boston Consulting Group matrix
Expanded Boston Consulting Group matrix
Service purchasing sequence compared with physical
product purchasing sequence
Commodity products v branded products
Brands as a contact point

138
148
152

7.1
7.2

Supply and demand
Price elasticity of demand

169
171

8.1

Channels of distribution

192

9.1
9.2
9.3
9.4
9.5
9.6

Model of the communication process
Redundancy in communication
The promotional mix
Factual advertisement for a surfboard
Simpler advertisement for a surfboard
The hierarchy of communications effects

214

214
219
225
225
248

6.1
6.2
6.3
6.4
6.5
6.6

5
8

114


List of figures

xvii

10.1

The marketing planning process

262

12.1

12.2
12.3

Relationship marketing, quality and service
Pressures to adapt in developing relationships
Service quality model

310
313
319


Preface
Essentials of Marketing has provided a clear outline of the principle theories of
marketing in clear, jargon-free language for almost eight years now. The book is
intended to provide an overview of marketing thought and practice for students
new to marketing, for students on short introductory marketing courses, for overseas students who need a plain-English guide, and to anyone who needs a quick
grasp of the subject.
The book seeks to avoid a UK-centred viewpoint, and examples are used from
throughout the world: where specific technical terms are used, they are explained
in the glossary, in direct and straightforward language.
Specific features of this edition are:
• Relevant and up-to-date case studies, all of which are new for this edition.
• Self-test questions designed to aid student learning.
• Up-to-date and full referencing for the more academic student.
• Recommended further reading for each chapter.
• Extended coverage of global marketing theory.
• A fully-rewritten Chapter 12, covering relationship marketing, Internet marketing, marketing ethics, and the changing conceptual position of marketing in
the 21st century.
Overall, the book is intended to offer an insight into what marketing is all about:

it is written by an enthusiast, a believer in the marketing ethos. Marketing is
about facilitating exchange, it is about allowing people the choices to be able to
live the kind of lives they would wish for themselves and their families, and it
delivers a standard of living, but above all marketing is about ensuring that business meets the needs of its customers.
Sadly, despite more than fifty years of marketing thought, many companies
still measure their success in financial terms (instead of in customer satisfaction
terms), still calculate the profitability of products (rather than the profitability of
groups of customers), and still often act as if customers have no choice about
where they spend their money. This book is intended to go some way towards
showing why (and how) this can be changed.
No book is the work of one person, and I would like to acknowledge the
people who have helped me write this one. First of all, my wife Sue, who has


Preface

xix

provided many of the examples I have used, and who knows not to disturb me
when I am ‘on a roll’. Secondly, my friends and colleagues at the University of
Glamorgan who have pointed me towards references, argued with me about concepts, and also have told me when I am on the right lines. Thirdly, my students
past and present, who have asked me difficult questions and made me look up
the answers or rethink my position. Fourthly, everyone at Pearson: Jane Powell,
who worked with me on the first edition, Thomas Sigel who has worked with me
on this edition, Peter Hooper for his timely (and polite) reminders about deadlines, and Aylene Rogers and the other production people who have turned my
words into a book. Finally, my former colleagues in industry, who showed me
that the marketing concept is not obvious to everyone, and that marketers also
need to understand the viewpoint of other professionals.
Any errors and omissions are, of course, mine.
Jim Blythe

July 2004


Acknowledgements

We are grateful to the following for permission to reproduce copyright material:
Figure 1.1 from Principles of Marketing, Kotler, P., Armstrong, G., Saunders, J. and
Wong, V., Pearson Education Limited © 2001; Figure 1.2 and Table 10.2 from
Kotler, Philip, Marketing Management, 11th Edition, © 2003. Reprinted by permission of Pearson Education, Inc., Upper Saddle River, NJ; Figure 5.3 reprinted from
The Marketing Book, Meidan A., Quantitative methods in marketing, © 1987, with
permission from Elsevier; Figure 6.1 and Figure 8.1 from Dibb, Sally, Lyndon
Simkin, William Pride and O.C. Ferrell, Marketing: Concepts and Strategies, Third
European Edition. Copyright © 1997 by Houghton Mifflin Company. Used with
permission; Figure 6.3 reprinted from Business Horizons, June, Enis, LaGarce and
Prell, Extending the product life cycle, © 1977, with permission from Elsevier;
Figure 6.4 reprinted from The Product Portfolio Matrix, © 1970, The Boston
Consulting Group; Figure 6.5 reprinted from Long range planning, 15 (6),
Barksdale, H.C. and Harris, C.E., Portfolio analysis and the PLC, pp. 74-83, ©
1982, with permission from Elsevier; Table 6.5 from New product scenarios;
prospects for success in Journal of Marketing, 45, Spring, American Marketing
Association (Calentone, R. and Cooper, R.G. 1981); Table 7.6 from Dibb, Sally,
Lyndon Simkin, William Pride, and O.C. Ferrell, MARKETING: CONCEPTS
AND STRATEGIES, European Second Edition. Copyright © 1994 by Houghton
Mifflin Company. Used with permission; Table 8.1 from THE MANAGEMENT
OF BUSINESS LOGISTICS FOURTH EDITION 4th edition by Coyle / Bardi /
Langley. © 1988. Reprinted with permission of South-Western, a division of
Thomson Learning: www.thomsonrights.com. Fax 800 730-2215.; Table 11.2 from
Principles of Marketing, Brassington, F. and Pettitt, S., Pearson Education Limited
© 1997; Figure 12.1, Table 12.1 and Table 12.2 reprinted from Relationship
Marketing, Ballantyne, D., Christopher, M. and Payne, A. © 1991, with permission

from Elsevier; Figure 12.3 from A conceptual model of service quality and its
implications for future research in Journal of Marketing, 49, Autumn, American
Marketing Association (Parasuraman, A., Zeithaml, V.A. and Berry, L.L. 1985)
In some instances we have been unable to trace the owners of copyright material,
and we would appreciate any information that would enable us to do so.


Last A Head on Spread

1

What do marketers do?
Objectives
After reading this chapter you should be able to:
• describe the main roles marketers have;
• explain the responsibilities of various types of marketing manager;
• explain the core concepts of marketing;
• explain how marketing activities fit in with other business disciplines;
• describe the development of the marketing concept.

1


2

Chapter 1 • What do marketers do?

INTRODUCTION
This chapter is an introduction to the basic concepts of marketing, seen in terms
of the roles that marketers carry out in their day-to-day jobs. Although marketers

have many different job titles, what they have in common is the same orientation
towards running the organisation; marketing is concerned with ensuring the
closest possible fit between what the organisation does and what its customers
need and want.

ABOUT MARKETING
Marketing is the term given to those activities which occur at the interface
between the organisation and its customers. It comes from the original concept of
a marketplace, where buyers and sellers would come together to conduct transactions (or exchanges) for their mutual benefit. The aim of marketing as a
discipline is to ensure that customers will conduct exchanges with the marketer’s
organisation, rather than with the other ‘stallholders’. To do this effectively, marketers must provide those customers with what they want to buy, at prices which
represent value for money.
The two most widely used definitions of marketing are these:
Marketing is the management process which identifies, anticipates, and
supplies customer requirements efficiently and profitably.
(UK Chartered Institute of Marketing)
Marketing is the process of planning and executing the conception, pricing,
promotion and distribution of ideas, goods and services to create exchange
and satisfy individual and organisational objectives.
(American Marketing Association)
Both of these definitions have been criticised. The Chartered Institute of
Marketing (CIM) definition has been criticised because it takes profit as being the
only outcome of marketing, whereas marketing approaches and techniques are
widely used by organisations such as charities and government departments
which do not have profit as their goal. The American Marketing Association
(AMA) definition has also been criticised for failing to take account of the
increasing role of marketing in a broader social context, and for appearing to
regard consumers as being passive in the process. The same criticism could
equally be applied to the CIM definition.
To the non-marketer, marketing often carries negative connotations; there is a

popular view that marketing is about persuading people to buy things they do
not want, or about cheating people. In fact, marketing practitioners have the
responsibility for ensuring that the customer has to come first in the firm’s think-


The development of the marketing concept

3

ing, whereas other professionals might be more concerned with getting the balance sheet to look right or getting the production line running smoothly.
Marketers are well aware that the average customer will not keep coming back to
a firm that does not provide good products at an acceptable price, and without
customers there is no business.
Competition in many markets is fierce. If there is room for four companies in a
given market, there will be five companies in there, each trying to maximise their
market share; the customer is king in that situation, and the firms that ignore the
customer’s needs will go to the wall. Marketers therefore focus their attention
entirely on the customer, and put the customer at the centre of the business.

THE DEVELOPMENT OF THE MARKETING CONCEPT
The marketing concept is a fairly recent one, and has been preceded by other
business philosophies.

Production orientation
During the nineteenth century it was often thought that people would buy anything, provided it was cheap enough. This belief had some truth in it, since the
invention of the steam engine allowed very much cheaper mass-produced items
to be made. If an item was on sale at around one-tenth the price of the hand-made
equivalent, most customers were prepared to accept poorer quality or an article
that didn’t exactly fit their needs. The prevailing attitude among manufacturers
was that getting production right was all that mattered; this is called production

orientation. This paradigm usually prevails in market conditions under which
demand greatly exceeds supply, and is therefore still found in some Third World
and Eastern European countries.
With rising affluence people are not prepared to accept standardised products,
and as markets grow manufacturers are able to reap the benefits of mass production despite providing more specialised products: therefore the extra cost of
having something that fits one’s needs more exactly is not high enough to make
much difference.

Product orientation
For this reason, manufacturers began to look more closely at what they were producing. This led to the view that an ideal product could be made, one that all (or
most) customers would want. Engineers and designers developed comprehensively equipped products, with more and ‘better’ features, in an attempt to please
everybody. This philosophy is known as product orientation.


4

Chapter 1 • What do marketers do?

Product orientation tends to lead to ever more complex products at everincreasing prices; customers are being asked to pay for features which they may
not need, or which may even be regarded as drawbacks. The problem with this
approach is that it does not allow for differences in tastes and needs between different customers and consumers.

Sales orientation
As manufacturing capacity increases, supply will tend to outstrip demand.
During the 1920s and 1930s in Europe and the USA manufacturers began to take
the view that a ‘born salesman’ could sell anything to anybody and therefore
enough salesmen could get rid of the surplus products. This is called sales orientation, and relies on the premise that the customer can be fooled, the customer
will not mind being fooled and will let you do it again later, and that if there are
problems with the product these can be glossed over by a fast-talking sales representative. Up until the early 1950s, therefore, personal selling and advertising
were regarded as the most important (often the only) marketing activities.

Sales orientation takes the view that customers will not ordinarily buy enough
of the firm’s products to meet the firm’s needs, and therefore they will need to be
persuaded to buy more. Sales orientation is therefore concerned with the needs of
the seller, not with the needs of the buyer.1
Essentially, what businesses were trying to do during this time (sometimes known
as the sales era) was to produce a product with given characteristics, then change the
consumers to fit it. This is, of course, extremely difficult to do in practice.
It should be noted that selling orientation and the practice of selling are two
different things – modern salespeople are usually concerned to establish longterm relationships with customers who will come back and buy more.

Consumer orientation
Modern marketers take the view that the customers are intelligent enough to
know what they need, can recognise value for money when they see it, and will
not buy again from the firm if they do not get value for money. This is the basis of
the marketing concept.
Putting the customer at the centre of all the organisation’s activities is easier said
than done. The marketing concept affects all areas of the business, from production
(where the engineers and designers have to produce items that meet customers’
needs) through to after-sales services (where customer complaints need to be taken
seriously). The marketing concept is hard to implement because, unlike the sales
orientation approach which seeks to change the mass of customers to fit the organisation’s aims, the marketing concept seeks to change the organisation’s aims to fit
one or more specific groups of customers who have similar needs. This means that
marketers often meet resistance from within their own organisations.