Think about a good or bad service experience that you have had. Briefly describe the experience. What factors contributed to this experience? What changes could have been made to make this an even better service experience? Why is service marketing important? 
 Your initial response to the discussion question should be 250-300 words. You must have at least one course (our text) and one non-course scholarly/peer reviewed source in your initial posting.  Sources require in-text citations and must be incorporated into the body of the post in addition to a full APA citation at the end of the post.
A Preface
to Marketing
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A Preface
to Marketing
Fourteenth Edition
J. Paul Peter
University of Wisconsin–Madison
James H. Donnelly Jr.
Gatton College of Business and
Economics University of Kentucky
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Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2015 by McGraw-Hill
Education. All rights reserved. Printed in the United States of America. Previous editions © 20 13, 2011, and
2008. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a
database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not
limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.
Some ancillaries, including electronic and print components, may not be available to customers outside the
United States.
This book is printed on acid-free paper.
1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4
ISBN 978-0-07-786106-3
MHID 0-07-786106-X
Senior Vice President, Products & Markets: Kurt L. Strand
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All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.
Library of Congress Cataloging-in-Publication Data
Peter, J. Paul.
A preface to marketing management / J. Paul Peter, University of Wisconsin-Madison, James H. Donnelly,
Jr., Gatton College of Business and Economics, University of Kentucky.–Fourteenth edition.
pages cm
ISBN 978-0-07-786106-3 (alk. paper)
1. Marketing–Management. I. Donnelly, James H. II. Title.
HF5415.13.P388 2013
The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does
not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not
guarantee the accuracy of the information presented at these sites.
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To Rose and Angie
J. Paul Peter
To Gayla
Jim Donnelly
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About the Authors
J. Paul Peter
has been a faculty member at the University of Wisconsin since 1981. He was a member
of the faculty at Indiana State, Ohio State, and Washington University before joining the
Wisconsin faculty. While at Ohio State, he was named Outstanding Marketing Professor
by the students and has won the John R. Larson Teaching Award at Wisconsin. He has
taught a variety of courses including Marketing Management, Marketing Strategy, Con-
sumer Behavior, Marketing Research, and Marketing Theory, among others.
Professor Peter’s research has appeared in the Journal of Marketing, the Journal of
Marketing Research, the Journal of Consumer Research, the Journal of Retailing, and the
Academy of Management Journal, among others. His article on construct validity won the
prestigious William O’Dell Award from the Journal of Marketing Research, and he was a
finalist for this award on two other occasions. Recently, he was the recipient of the Churchill
Award for Lifetime Achievement in Marketing Research, given by the American Marketing
Association and the Gaumnitz Distinguished Faculty Award from the School of Business,
University of Wisconsin–Madison. He is an author or editor of over 30 books, including A
Preface to Marketing Management, Fourteenth edition; Marketing Management: Knowledge
and Skills, ninth edition; Consumer Behavior and Marketing Strategy, ninth edition; Strategic
Management: Concepts and Applications, third edition; and Marketing: Creating Value for
Customers, second edition. He is one of the most cited authors in the marketing literature.
Professor Peter has served on the review boards of the Journal of Marketing, Jour-
nal of Marketing Research, Journal of Consumer Research, and Journal of Business
Research and was measurement editor for JMR and professional publications editor for the
American Marketing Association. He has taught in a variety of executive programs and
consulted for several corporations as well as the Federal Trade Commission.
James H. Donnelly Jr.
has spent his academic career in the Gatton College of Business and Economics at the
University of Kentucky. In 1990 he received the first Chancellor’s Award for Outstanding
Teaching given at the university. Previously, he had twice received the UK Alumni Associa-
tion’s Great Teacher Award, an award one can only be eligible to receive every 10 years. He
has also received two Outstanding Teacher awards from Beta Gamma Sigma, national busi-
ness honorary. In 1992 he received an Acorn Award recognizing “those who shape the future”
from the Kentucky Advocates for Higher Education. In 2001 and 2002 he was selected as
“Best University of Kentucky Professor.” In 1995 he became one of six charter members
elected to the American Bankers Association’s Bank Marketing Hall of Fame. He has also
received a “Distinguished Doctoral Graduate Award” from the University of Maryland.
During his career he has published in the Journal of Marketing Research, Journal of
Marketing, Journal of Retailing, Administrative Science Quarterly, Academy of Man-
agement Journal, Journal of Applied Psychology, Personnel Psychology, Journal of
Business Research, and Operations Research among others. He has served on the edito-
rial review board of the Journal of Marketing. He is the author of more than  a dozen
books, which include widely adopted academic texts as well as professional books.
Professor Donnelly is very active in the banking industry where he has served on the board
of directors of the Institute of Certified Bankers and the ABA’s Marketing Network. He has
also served as academic dean of the ABA’s School of Bank Marketing and Management.
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We are proud to introduce the fourteenth edition of A Preface to Marketing Management.
Our plan has always been to deliver a clear and concise presentation of the basic princi-
ples of marketing in such a way that the core concepts and ideas are covered in sufficient
depth to ensure in-depth understanding. By offering an engaging, clear, and conceptu-
ally sound text, our book has been able to maintain its position as a leading marketing
management text.
Throughout the history of the book, feedback from both students and instructors has
suggested that our plan is a good one. Our book has been used in a wide variety of set-
tings and is the best-selling book of its kind. We introduce the fourteenth edition knowing
that our book and its eight foreign translations have been used around the world whenever
courses require an overview of the critical aspects of marketing management.
With this edition, we seek to more effectively implement our plan by building on a
strong foundation, maintaining the attributes and elements of the book that make it a very
teachable text, updating existing content, adding new content, and focusing the presenta-
tion. We seek to emphasize quality content and examples and avoid excess verbiage, pic-
tures, and description.
As usual, each time we revise the book there is an emphasis on responding to feedback
from students and instructors. These two constituencies plus our own intuitions drive each
revision. Marketing is an exciting and dynamic field of study. We want to capture the
sense of excitement and at the same time respect its history.
Our book has become known simply as the Preface. We want to believe a major reason
it has endured is that because marketing is figuring out how to do a superior job of satisfy-
ing customers, we simply try to practice what we preach. Welcome to the Preface.
Every element of content in our book is designed with one thought in mind: to assist stu-
dents in analyzing marketing problems and cases and developing and writing marketing
plans. Section I of the book consists of 13 concise chapters that cover the essentials of mar-
keting management. We think of it as the “must know” content of the field. It is divided
into four parts that focus on strategic planning and marketing planning, understanding tar-
get markets, the marketing mix, and marketing in special fields. These 13 chapters should
provide students a clear understanding of the terminology, techniques, tools, and strategies
for effective marketing management and marketing strategy development.
In addition to revising and updating the text chapters, this edition contains new content as
well. There are discussions of internal and external secondary data sources, the use of social
media monitoring, alternative search in consumer behavior, key characteristics of organiza-
tional buyers, e-procurement, global virtual teams, brand equity, using distinctive compe-
tencies in new product development, consumer databases, business-to-business databases,
mobile marketing, online retailing and multichannel marketing, franchising, the effects of
the Internet on pricing, global account managers, and learning about different cultures.
In the twelfth edition, we altered two of the text elements. The changes have been well
received by instructors and students. First, “Marketing Insights” are included to assist students
as they solve marketing problems, analyze marketing cases, and develop marketing plans.
Second, we know that our book is often used with case problems, writing assignments,
and constructing marketing plans. Accordingly, there is an “Additional Resources” section
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viii Preface
at the end of each chapter. Our purpose is to highlight current resources that students can
use in writing assignments and oral presentations. The resources have been selected with
students in mind. They include resources accessible to students at various stages of mar-
keting education given the wide spectrum of courses in which the book is utilized.
Chapter 1: Strategic Planning and The Marketing Management
• Revised basic questions that must be asked when developing a mission statement.
• Marketing Insight 1-3 now contains five actual mission statements for firms of varying
sizes and industries. It provides students with a better mix of alternatives when com-
pleting the exercise in Marketing Insight 1-4.
• Updated additional resources.
Chapter 2: Marketing Research: Process and Systems for Decision
• Revised section on secondary data to include both internal and external sources
• Added new figure “Common Types of Information Available in a Secondary Data
• Added a new Marketing Insight, “Social Media Monitoring for Marketing Insights”
• Updated additional resources
Chapter 3: Consumer Behavior
• Updated discussion of consumer and marketer reactions to recession
• Revised and updated discussion of Alternative Search
• Updated additional resources
Chapter 4: Business, Government, and Institutional Buying
• Revised Marketing Insight on “Key Characteristics of Organizational Buying Behavior”
• New Marketing Insight, “Organizational Buying on the Internet: E-Procurement”
• Revised Discussion of “Organizational Needs”
• Updated additional resources
Chapter 5: Market Segmentation
• New Marketing Insight, “Segmenting the Mobile Phone Market”
• Revised and updated discussion of VALS
Chapter 6: Product and Brand Strategy
• Marketing Insight 6-3 now contains the latest information on the value of the top twenty
brands in the world
• Contains a new section on branding and brand equity
• Revised and updated Marketing Insight 6-6
• Added a new section on global virtual teams
• New key terms and concepts
• Updated additional resources
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Preface ix
Chapter 7: New Product Planning and Development
• New Marketing Insight 7-4 which focuses on utilizing corporate strengths in the new
product development process. It includes eight firms with strengths in either technol-
ogy or markets
• Updated additional resources
Chapter 8: Integrated Marketing Communications
• Revised Marketing Insight 8-1 which presents up-to-date information on the top ten
websites in Brazil, Portugal and South Korea
• Revised section on direct marketing as part of the promotion mix
• Revised Marketing Insight 8-6
• New section on direct marketing
• New Marketing Insight 8-7 on the contents of a comprehensive database included are
both consumer and business-to-business databases
• Added new Key Terms and Concepts
• Updated additional resources
Chapter 9: Personal Selling, Relationship Building, and Sales
• New Marketing Insight 9-1 which focuses on what a salesperson actually does
• A new discussion of an increasingly important customer organization structure, the
global account manager
• Added new Key Terms and Concepts
• Updated additional resources
Chapter 10: Distribution Strategy
• Added New Marketing Insight, “Advantages and Disadvantages of Franchising”
• New section on “Online and Mobile Retailing”
• Updated additional resources
• New “Key Terms and Concepts”: online retailing, mobile retailing, multichannel marketing
Chapter 11: Pricing Strategy
• Added a new discussion of the Internet as an external influence on pricing decisions
• A new Marketing Insight, “Ten Tips for Managing Pricing Strategy”
Chapter 12: The Marketing of Services
• The chapter has been significantly revised and has been shortened for this edition
• A new section on the importance of all the elements of the marketing mix in the market-
ing of services has been added
• Updated additional resources
Chapter 13: Global Marketing
• Marketing Insight 13-1 has been updated with the latest data on selected U.S. companies
and their international sales
• The section on cultural misunderstanding as a problem in foreign markets has been
replaced with an entirely new section
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x Preface
• Marketing Insight 13-3 has been replaced with a new Marketing Insight which focuses
on ways to learn about new cultures
• Updated additional resources
Section II: Analyzing Marketing Problems and Cases
• New Marketing Insight, “Objectives of Case Analysis”
• Revised and updated discussion of SWOT analysis
• Updated additional resources
Section III: Financial Analysis for Marketing Decisions
• Updated dates and additional resources
Section IV: Developing Marketing Plans
• Updated dates and additional resources
Knowing that our book is used for a variety of course levels, programs, and students, we
have assembled several elements that we believe will support students for whatever pur-
pose they use our book.
Key Terms and Concepts
New to the previous edition, we decided to add a section of key terms and concepts at the
conclusion of each chapter. There was much debate as to where they should be placed in
the book. We decided to place them at the end of the chapter in which they appear. In this
way, they are more visible to students than as an appendix at the end of the book. More
than a glossary, it also presents key concepts covered in the chapter.
Analyzing Marketing P roblems and Cases
Section II presents a very practical and comprehensive framework for analyzing, prepar-
ing, and presenting case analyses. It includes discussions of what a case is, preparing for
the class discussion and written analysis, pitfalls to avoid in case analysis, and preparing
to do an oral presentation. It has been praised by both instructors and students.
For courses utilizing marketing problems and cases, we encourage students to read this
guide before discussing a problem or case. Thus, it could have been placed at the begin-
ning of the book, but because it is often referred to throughout the semester, we have
placed it after the text chapters. And for those courses that do not utilize cases, the book
may be used without reference to this section.
Financial Analysis for Marketing Decisions
It is absolutely critical for marketing students to understand and appreciate the fact that
the ultimate objectives of marketing are usually expressed in financial terms. Section III
enables students to assess a company’s financial position. It presents important financial
calculations that are useful in evaluating the financial position of a firm and the financial
impact of various decisions and strategies. Included are discussions of breakeven analysis,
net present value, and ratio analysis.
Developing Marketing Plans
Given the purpose of this book and the needs of users, Section IV enables students to
develop practical planning skills so they are able to construct a quality marketing plan for
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Preface xi
any product or service. It provides a complete format for structuring and presenting one,
including specific questions to ask in competitive analysis, the development of well-stated
objectives, analyzing customers, and implementation and control. As with Section II, we
know that this section has become a valuable take-away resource for many students long
after their course has been completed.
A Value-Added Website
We encourage students to view the student section of the Online Learning Center (OLC)
at website, which contains a number of useful aids for
facilitating learning and supporting student achievement. We believe you will find it a
useful resource.
The Preface has been used as a resource in college courses and professional development
programs that require an overview of the critical “need-to-know” aspects of marketing
management and marketing strategy development. It has been used:
• As the primary introductory text at the undergraduate level.
• At both the undergraduate and MBA level, where several AACSB core curriculum
courses are team-taught as one multidisciplinary 9- to 12-hour course.
• At the advanced undergraduate and MBA level where it is used as the content founda-
tion in courses that utilize marketing cases.
• In short courses and executive development programs.
The instructor section of includes an instructor’s
manual and other support material. It includes two expanded supplements. They were
developed in response to instructors’ requests. We offer a test bank of nearly 1,300
multiple-choice, true-false, and brief essay questions. It is available in both print and
EZ Test Online. We also offer Power Point slides that highlight key text material. Your
McGraw-Hill representative can also assist in the delivery of any additional instructor
support material.
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Our book is based on the works of many academic researchers and marketing practitioners.
We want to thank those individuals who contributed their ideas to develop the field of mar-
keting throughout the years. Indeed, our book would not be possible without their contri-
butions. We would also like to thank our teachers, colleagues, and students for their many
contributions to our education. We would also like to publicly acknowledge those individu-
als who served as reviewers of this and previous editions. We appreciate their advice and
counsel and have done our best to reflect their insightful comments.
Roger D. Absmire
Sam Houston State University
Anna Andriasova
University of Maryland University College
Catherine Axinn
Syracuse University
Mike Ballif
University of Utah
Andrew Bergstein
Pennsylvania State University
Edward Bond
Bradley University
Donald Brady
Millersville University
Tim Carlson
Judson University
Glenn Chappell
Meridith College
Newell Chiesl
Indiana State University
Reid P. Claxton
East Carolina University
Larry Crowson
University of Central Florida
Mike Dailey
University of Texas, Arlington
Linda M. Delene
Western Michigan University
Gerard DiBartolo
Salisbury University
Casey Donoho
Northern Arizona University
James A. Eckert
Western Michigan University
Matthew Elbeck
Troy University Dothan
Karen A. Evans
Herkimer County Community College
R. E. Evans
University of Oklahoma
Lawrence Feick
University of Pittsburgh
Robert Finney
California State University, Hayward
Stephen Goldberg
Fordham University
David Good
Grand Valley State University
David Griffith
University of Oklahoma
Perry Haan
Tiffin University
Lawrence Hamer
DePaul University
Harry Harmon
Central Missouri
Jack Healey
Golden State University
Betty Jean Hebel
Madonna University
Catherine Holderness
University of North Carolina–Greensboro
JoAnne S. Hooper
Western Carolina University
David Horne
Wayne State University
Nasim Z. Hosein
Northwood University
Nicole Howatt
Fred Hughes
Faulkner University
Anupam Jaju
Chris Joiner
George Mason University
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Benoy Joseph
Cleveland State University
Sol Klein
Northeastern University
Robert Brock Lawes
Chaminade University of Honolulu
Eunkyu Lee
Syracuse University
Tina Lowrey
University of Texas at San Antonio
Franklyn Manu
Morgan State University
Edward J. Mayo
Western Michigan University
Edward M. Mazze
University of Rhode Island
Donald J. Messmer
College of William & Mary
Albert Milhomme
Texas State University
Chip Miller
Drake University
David L. Moore
LeMoyne College
Johannah Jones Nolan
University of Alabama, Birmingham
R. Stephen Parker
Southwest Missouri State University
Joan Phillips
University of Notre Dame
Thomas Powers
University of Alabama at Birmingham
Debu Purohit
Duke University
John Rayburn
University of Tennessee
Martha Reeves
Gary K. Rhoads
Brigham Young University
Lee Richardson
University of Baltimore
Henry Rodkin
DePaul University
Ritesh Saini
George Mason University
Matthew H. Sauber
Eastern Michigan University
Alan Sawyer
University of Florida
Ronald L. Schill
Brigham Young University
Mark Spriggs
University of St. Thomas
Vernon R. Stauble
California State Polytechnic University
David X. Swenson
College of St. Scholastica
Ann Marie Thompson
Northern Illinois University
John R. Thompson
Memphis State University
Gordon Urquhart
Cornell College
Sean Valentine
University of Wyoming
Ana Valenzuela
Baruch College, CUNY
Stacy Vollmers
University of St. Thomas
Jacquelyn Warwick
Andrews University
Kevin Webb
Drexel University
Kathleen R. Whitney
Central Michigan University
J. B. Wilkinson
University of Akron
Dale Wilson
Michigan State University
It is always easy to work with professionals. That is why working with the profession-
als at McGraw-Hill is always enjoyable for us. Sankha Basu, publisher, and Jane Mohr,
project manager, support what we do and we are very grateful. Thank you Heather Darr,
development editor, and welcome to our team. We also wish to acknowledge Francois
Ortalo-Magne, dean of the School of Business at the University of Wisconsin, and David
Blackwell, dean of the Gatton College of Business and Economics at the University of
Kentucky, who support what we do.
J. Paul Peter
James H. Donnelly, Jr.
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Chapter 1
Strategic Planning and the Marketing Man-
agement Process 4
The Marketing Concept 4
What Is Marketing? 5
What Is Strategic Planning? 6
Strategic Planning and Marketing Management 6
The Strategic Planning Process 7
The Complete Strategic Plan 16
The Marketing Management Process 16
Situation Analysis 16
Marketing Planning 19
Implementation and Control of the Marketing Plan 20
Marketing Information Systems and Marketing
Research 21
The Strategic Plan, the Marketing Plan, and
Other Functional Area Plans 21
Marketing’s Role in Cross-Functional Strategic
Planning 21
Summary 22
Portfolio Models 27
Chapter 2
Marketing Research: Process and Systems
for Decision Making 32
The Role of Marketing Research 32
The Marketing Research Process 33
Purpose of the Research 33
Plan of the Research 34
Performance of the Research 37
Processing of Research Data 39
Preparation of the Research Report 40
Limitations of the Research Process 40
Marketing Information Systems 42
Summary 43
Chapter 3
Consumer Behavior 45
Social Influences on Consumer Decision
Making 46
Culture and Subculture 46
Social Class 47
Reference Groups and Families 48
Marketing Influences on Consumer Decision
Making 48
Product Influences 48
Price Influences 48
Promotion Influences 49
Place Influences 49
Situational Influences on Consumer Decision
Making 51
Psychological Influences on Consumer Decision
Making 51
Product Knowledge 51
Product Involvement 52
Consumer Decision Making 52
Need Recognition 53
Alternative Search 54
Alternative Evaluation 55
Purchase Decision 55
Postpurchase Evaluation 56
Summary 58
Chapter 4
Business, Government, and Institutional
Buying 60
Categories of Organizational Buyers 60
Producers 60
Intermediaries 61
Government Agencies 61
Other Institutions 61
The Organizational Buying Process 61
Purchase-Type Influences on Organizational
Buying 62
Straight Rebuy 62
Modified Rebuy 62
New Task Purchase 62
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Contents xv
Structural Influences on Organizational Buying 63
Purchasing Roles 63
Organization-Specific Factors 64
Purchasing Policies and Procedures 65
Behavioral Influences on Organizational Buying 65
Personal Motivations 65
Role Perceptions 66
Stages in the Organizational Buying
Process 68
Organizational Need 68
Vendor Analysis 68
Purchase Activities 69
Postpurchase Evaluation 70
Summary 70
Chapter 5
Market Segmentation 72
Delineate the Firm’s Current
Situation 72
Determine Consumer Needs
and Wants 73
Divide Markets on Relevant Dimensions 73
A Priori versus Post Hoc Segmentation 74
Relevance of Segmentation Dimensions 75
Bases for Segmentation 75
Develop Product Positioning 81
Decide Segmentation Strategy 82
Design Marketing Mix Strategy 84
Summary 84
Chapter 6
Product and Brand Strategy 86
Basic Issues in Product Management 86
Product Definition 86
Product Classification 87
Product Quality and Value 88
Product Mix and Product Line 89
Branding and Brand Equity 90
Packaging 96
Product Life Cycle 97
Product Adoption and Diffusion 99
The Product Audit 100
Deletions 100
Product Improvement 101
Organizing for Product Management 101
Summary 103
Chapter 7
New Product Planning and
Development 105
New Product Strategy 106
New Product Planning and Development
Process 108
Idea Generation 108
Idea Screening 110
Project Planning 111
Product Development 112
Test Marketing 112
Commercialization 113
The Importance of Time 113
Some Important New Product Decisions 114
Quality Level 114
Product Features 115
Product Design 116
Product Safety 116
Causes of New …

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