MARKETING MANAGEMENT Third Edition MARKETING MANAGEMENT A RELATIONSHIP APPROACH Svend Hollensen Pearson Education Limited Edinburgh Gate Harlow CM20 2JE United Kingdom Tel: +44 (0)1279 623623 Web: www.pearson.com/uk First published 2003 (print) Second edition published 2010 (print) Third edition published 2015 (print and electronic) © Pearson Education Limited 2003, 2010 (print) © Pearson Education Limited 2015 (print and electronic) The right of Svend Hollensen to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. The print publication is protected by copyright. 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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. The screenshots in this book are reprinted by permission of Microsoft Corporation. Pearson Education is not responsible for the content of third-party Internet sites. ISBN: 978-0-273-77885-1 (print) 978-0-273-77888-2 (PDF) 978-0-273-79485-1 (eText) British Library Cataloguing-in-Publication Data A catalogue record for the print edition is available from the British Library Library of Congress Cataloging-in-Publication Data Hollensen, Svend. Marketing management : a relationship approach / Svend Hollensen. – Third edition. pages cm ISBN 978-0-273-77885-1 1. Relationship marketing. 2. Marketing–Management. 3. Relationship marketing–Case studies. I. Title. HF5415.55.H65 2015 658.8–dc23 2014020019 10 9 8 7 6 5 4 3 2 1 16 15 14 13 12 Front cover image: © Getty Images Print edition typeset in 10pt Minion Pro by 73 Print edition printed and bound in Malaysia NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION BRIEF CONTENTS Guided tour xvi Preface xxi About the author xxviii Author’s acknowledgements xxix Publisher’s acknowledgements xxx 1 Introduction 1 PART I ASSESSING THE COMPETITIVENESS OF THE FIRM (INTERNAL) 23 2 Identification of the firm’s core competences 29 3 Development of the firm’s competitive advantage 69 PART II ASSESSING THE EXTERNAL MARKETING SITUATION 111 4 Customer behaviour 115 5 Competitor analysis and intelligence 161 6 Analysing relationships in the value chain 192 PART III DEVELOPING MARKETING STRATEGIES 239 7 SWOT analysis, strategic marketing planning and portfolio analysis 245 8 Segmentation, targeting, positioning and competitive strategies 288 9 CSR strategy and the sustainable global value chain 329 PART IV DEVELOPING MARKETING PROGRAMMES 357 10 Establishing, developing and managing buyer–seller relationships 362 11 Product and service decisions 396 12 Pricing decisions 440 13 Distribution decisions 471 14 Communication decisions 503 PART V ORGANISING, IMPLEMENTING AND CONTROLLING THE MARKETING EFFORT 547 15 Organising and implementing the marketing plan 552 16 Budgeting and controlling 583 Appendix: Market research and decision support system 616 Glossary 648 Index 660 This page intentionally left blank CONTENTS Guided tour xvi Preface xxi About the author xxviii Author’s acknowledgements xxix Publisher’s acknowledgements xxx 1 Introduction 1 Learning objectives 1 1.1 Introduction 2 1.2 The marketing management process 2 1.3 The traditional (transactional) marketing (TM) concept versus the relationship marketing (RM) concept 8 1.4 Balancing the transactional and relationship concepts throughout the book 13 1.5 How the RM concept influences the traditional marketing concept 13 1.6 Different organisational forms of RM 16 1.7 Summary 17 Case study 1.1: Hunter Boot Ltd: the iconic British brand is moving into exclusive fashions 18 Questions for discussion 20 References 20 ParT I ASSESSING THE COMPETITIVENESS OF THE FIRM (INTERNAL) 23 Part I Video case study: Tata Nano - competitiveness of the world’s cheapest car 24 Introduction to Part I 28 2 Identification of the firm’s core competences 29 Learning objectives 29 2.1 Introduction 30 2.2 Roots of competitive advantage 30 2.3 The resource-based view (RBV) 31 Exhibit 2.1: Honda’s competences in small engines 33 2.4 Market orientation view (MOV) compared to the resource-based view 35 2.5 The value chain-based view (VBV) 38 Exhibit 2.2: Nike’s value chain 40 Exhibit 2.3: The value chain of Acme Axles, Inc. 45 2.6 Value shop and the ‘service value chain’ 47 2.7 Internationalising the value chain 51 2.8 The virtual value chain 53 2.9 Experiential marketing 55 Exhibit 2.4: IkEA’s use of AR 57 2.10 Summary 58 viii CONTENTS Case study 2.1: Zalando: how can the online apparel retailer turn financial losses into positive profits? 59 Questions for discussion 66 References 66 3 Development of the firm’s competitive advantage 69 Learning objectives 69 3.1 Introduction 70 3.2 General sources of competitive advantage 70 3.3 Introduction of a holistic model of competitiveness: from macro to micro level 73 3.4 Analysis of national competitiveness (the Porter diamond) 76 3.5 Competition analysis in an industry 80 3.6 Value chain analysis 84 3.7 Blue ocean strategy and value innovation 91 Exhibit 3.1: Value innovation at hotel chain Formule 1 93 3.8 Outsourcing – a strategic decision framework based on customers’ evaluation 95 Exhibit 3.2: Sony, an outsourcing company 98 3.9 Summary 100 Case study 3.1: Nintendo Wii: Nintendo’s Wii took first place on the world market – but it didn’t last 102 Questions for discussion 107 References 107 ParT II ASSESSING THE EXTERNAL MARkETING SITUATION 111 Part II Video case study: Müller - Müller yogurts are penetrating the US market 112 Introduction to Part II 113 4 Customer behaviour 115 Learning objectives 115 4.1 Introduction 116 4.2 Consumer B2C decision making 119 4.3 Influences on consumers’ decision making 124 Exhibit 4.1: Example of loyalty: store loyalty versus brand loyalty 129 Exhibit 4.2: Brand-switching strategy in times of recession – the case of Skoda Superb 131 4.4 Organisational B2B decision making 131 4.5 Influences on the buying process 141 4.6 Customer-perceived value and customer satisfaction 145 4.7 Customisation – tailoring the offer to the individual customer 148 4.8 Summary 151 Case study 4.1: Spotify: the online music-streaming company is expanding globally 153 Questions for discussion 159 References 159 5 Competitor analysis and intelligence 161 Learning objectives 161 5.1 Introduction 162 5.2 Who are our competitors? 165 CONTENTS ix 5.3 How are the competitors interacting? 167 Exhibit 5.1: McDonald’s and Burger king in an asymmetric interaction 168 5.4 How do we learn about our competitors? 169 5.5 What are the strengths and weaknesses of our competitors? 171 5.6 Market commonality and resource commonality 173 5.7 What are the objectives and strategies of our competitors? 174 5.8 What are the response patterns of our competitors? 176 Exhibit 5.2: Role play in CI as a predictor of competitive behaviour 177 5.9 Six steps to competitor analysis 178 5.10 How can we set up an organisation for competitor analysis and CI? 180 Exhibit 5.3: Counterintelligence done by Johnson Controls against Honeywell 181 5.11 Summary 182 Case study 5.1: Cereal Partners Worldwide (CPW): The no. 2 world player is challenging the no. 1 – Kellogg 183 Questions for discussion 190 References 190 6 analysing relationships in the value chain 192 Learning objectives 192 6.1 Introduction 193 Exhibit 6.1: Value chain of Braun (Oral-B) electric toothbrush 194 6.2 The value net 196 Exhibit 6.2: Value net of Braun (Oral-B) electric toothbrush 197 6.3 Relationships with customers 198 Exhibit 6.3: Speedo’s relations with its retailers 209 6.4 Relationships with suppliers 215 6.5 Relationships with complementors/partners 218 Exhibit 6.4: Irn-Bru’s distributor alliance (Y coalition) with Pepsi Bottling Group (PBG) in Russia 219 6.6 Relationships with competitors 223 Exhibit 6.5: Value net – cooperation/coopetition between competitors within each airline alliance. The three alliances are competing against each other 225 6.7 Internal marketing (IM) relationships 226 6.8 Summary 227 Case study 6.1: arM: challenging Intel in the world market of computer chips 229 Questions for discussion 233 References 233 ParT III DEVELOPING MARkETING STRATEGIES 239 Part III Video case study: Nivea: segmentation of the sun-care market 240 Introduction to Part III 243 7 SWOT analysis, strategic marketing planning and portfolio analysis 245 Learning objectives 245 7.1 Introduction 246 7.2 Corporate mission 246 7.3 SWOT analysis 246 7.4 Corporate objectives 252 7.5 Corporate growth strategy 254