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Current, Streamlined Coverage

Chapter 1 – Marketing: Customer Value, Satisfaction, Customer Relationships, and Customer Experiences• This chapter features a new opening

vignette on Stratus Vineyards, a sus-tainable, innovative winery located in the heart of Niagara wine country. Stratus Vineyards is used as an exam-ple throughout Chapter 1 as well as in the Video Case. There is new material on green marketing, social marketing, high-tech marketing, and interactive marketing, as well as customer experi-ence marketing (CEM).

Chapter 2 – Developing Successful Marketing Strategies• The chapter opener on Bombardier

has been updated and a new Video Case on YouTube has been included. There is also new material on market–product strategies featuring Canadian companies.

Chapter 3 – Scanning the Marketing Environment• Chapter 3 includes a new chapter

opener on “trysumers” as a continua-tion of customer experience manage-ment. New environmental scanning examples have been included using the Canadian beverage industry. The latest demographic statistics on the

Canadian marketplace, including pop-ulation growth, ethnic diversity, and income, along with a new discussion of multicultural marketing are also discussed. New material on ethnic-ity in Canada, changing attitudes and values, eco-consciousness and ecopre-neurs, and experiential Canadians has been added to the chapter.

Chapter 4 – Ethics and Social Responsibility in Marketing• Chapter 4 has been revised to discuss

hybrid cars and environmental issues. It also features Canadian research on business ethics and the inclusion of the Canadian Marketing Association’s code of ethics. Additions to content have been made regarding corpo-rate and consumer ethics and social responsibility, green behaviour and greenwashing, and examples of Cana-dian companies going green.

Chapter 5 – Consumer Behaviour• The chapter opener on car buying

by females has been updated. Mate-rial on consumers using the Internet as a search tool has been added and coverage of psychographics, word-of-mouth, buzz marketing, and viral marketing has been updated. In addi-tion, new and updated material on the Chinese Canadian and French

Canadian markets has been included. In keeping with our new experiential learning efforts, a question has been added to the Video Case on consumer behaviour asking students to do their own retail observation research fol-lowed by a report.

Chapter 6 – Organizational Markets and Buyer Behaviour• New statistics on business markets

have been incorporated into this chap-ter. There is also new material on the forthcoming North American Product Classification system; eBay’s expansion into online business-to-business trad-ing—eBayBusiness.ca; and coverage of Canada’s other new e-marketplaces.

Chapter 7 – Reaching Global Markets• Chapter 7 provides updated trade

statistics and a new Figure 7–1, as well as new material on Canada’s hottest export markets, trade groups, and e-commerce in global markets. The chapter opener features Inniskillin Wines of Ontario, ADI International Inc., and Research In Motion, among others, as examples of Canadian com-panies that have successfully entered the global marketplace.

The Seventh Canadian Edition of Marketing is substantially revised, updated, and packed with new examples of marketing in Canada

and around the world. You asked for new material, and we listened! In addition to new or expanded coverage of such topics as green

marketing, interactive marketing, customer experience management, “trysumers,” eco-consciousness, neuromarketing, lifestyle centres,

and new technologies (for example, ICTs and online focus groups), we have overhauled our examples and cases. Over 30 percent of all

pedagogical features are either new or updated in this edition, including 8 new opening vignettes, 11 new Marketing NewsNet boxes, and

9 new Video Cases.

DETAILED LIST OF CHANGES

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16

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Chapter 8 – Marketing Research: From Information to Action• Chapter 8 includes a new chapter

opener about the effect of the Inter-net on marketing research methods, using organizations such as McCain, Labatt Breweries, and Canadian Blood Services as examples. Updated infor-mation on secondary data and a new figure are provided in addition to new material about online focus groups, online and other survey methods, “neuromarketing,” and respondent rights. A new Video Case on mystery shopping closes the chapter.

Chapter 9 – Market Segmentation, Targeting, and Positioning• Chapter 9 begins with a new chapter

opener on bed pillows to demonstrate segmentation and follows through to the market–product grid. The chapter content provides new and extended content on segmentation, targeting, and positioning. Online survey tools such as Zoomerang and Survey Mon-key are used as examples.

Chapter 10 – Developing New Products and Services• Chapter 10 includes new content on

services innovation classification, customer and employee suggestions, online concept testing, and virtual reality market testing. Stage one of the new product process has been revised to include lead users. A new failed product example is discussed, Molson’s A Marca Bavara, and a new application question has been included for the Video Case.

Chapter 11 – Managing Products and Brands• Chapter 11 provides an updated

vignette on Clearly Canadian Bever-ages and its approach to brand man-agement. New examples are included on product modification and finding new users. New material is also offered on the importance of branding, emo-tional branding, brand equity, and

co-branding, using a new Canadian study by the Canadian Marketing Association. A new Video Case focuses on branding Manitoba.

Chapter 12 – Managing Services• Chapter 12 provides an update on the

Hard Rock Cafe chapter opener and a discussion on new locations in Canada. There’s extended coverage on customer experience management, including an emphasis on services as experiences, and new examples are included, such as one that references Cirque du Soleil. The chapter concludes with a Video Case on the Canadian Football League.

Chapter 13 – Pricing Products and Services• Chapter 13 contains new material on

consumers’ perceptions of low prices in a new low-cost economy. New examples in this chapter include the Canadian pharmaceutical industry and the Yellow Pages’ new variable pricing policy. A new application question on the psychology of pricing has been added to the end-of-chapter material.

Chapter 14 – Managing Marketing Channels and Supply Chains• The chapter opener about Apple dis-

cusses creating the Apple “experience” through channels. Chapter 14 also has a new example examining Canada’s Ice Road and how it helped the new diamond industry. The wholesaling section has been streamlined to make it more accessible.

Chapter 15 – Retailing• Chapter 15 provides a revised open-

ing vignette on Tim Hortons’ strategy for growth. There is also new material on top global and Canadian retailers, online retailing (e-tailing), power and lifestyle centres, going green, technol-ogy, experience marketing, and Zellers’ repositioning in the Canadian retail marketplace. The chapter concludes with a new Video Case featuring the West Edmonton Mall.

Chapter 16 – Integrated Marketing Communications and Direct Marketing• Chapter 16 offers a new chapter

opener on ckIN2U, a fragrance for 18- to 24-year-olds, covering the integra-tion of traditional and online media. Other examples throughout the chap-ter enhance and expand this coverage. The direct marketing section has been updated to include information related to mobile marketing, such as text and short codes.

Chapter 17 – Advertising, Sales Promotion, and Public Relations• This chapter provides an example of

one of Canada’s most unique advertis-ing and marketing communications firms—AdFarm. It also presents new examples of target audience, ad objec-tives, and humour in ads. New mate-rial added on media options, Internet advertising, consumer-generated media, special ad agencies, online contests, and product placement. The public rela-tions section has also been expanded, and the Olympics and VANCO are used to illustrate concepts of sponsorship marketing.

Chapter 18 – Personal Selling and Sales Management• Chapter 18 includes a new open-

ing vignette featuring a profile of a successful salesperson. New and expanded topics include the effect of technology on sales and sales man-agement functions.

Chapter 19 – Pulling It All Together: The Strategic Marketing Process• Chapter 19 features an updated open-

ing vignette on WestJet and its market-ing strategy. It also presents content on value-based strategies, good citizen-ship, and sustainable business practices and environmental sensitivity. It con-cludes with a Video Case on WestJet.

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“[This text is] enjoyable to read, [and has] good Canadian content, very good graphs and charts, [and is] very current and relevant.”

—Steve Janisse, St. Clair College

“[Crane is] succinctly written and presented, [has] effective use of Canadian and global examples, [and] effective end-of-chapter exercises.”

—Sarah Holding, Malaspina University College

“The book makes sense . . . the definitions are presented but they are balanced with practical examples. Many [texts] I find are not. In addition, the instructor’s resource materials and test bank are excellent. I have recently come back to teaching from this book and I must say . . . could not wait!”

—Barb Watts, Georgian College

Marketing has developed an excellent reputation among Canadian instructors and stu-dents as a text that delivers key concepts in a student-friendly style without watering down the material. Our Seventh Canadian Edition continues to be characterized by:

• A High-Engagement Style. An easy-to-read, high-involvement, interactive writ-ing style that engages students through active learning techniques, timely and interesting examples, and challenging applications.

• Personalized Marketing. A vivid and accurate description of businesses, mar-keting professionals, and entrepreneurs—through cases, exercises, and testimo-nials—that allow students to personalize marketing and identify possible career interests and role models.

• Emphasis on Marketing Decision Making. The use of extended examples, cases, and videos involving people making marketing decisions, which students can easily relate to text concepts.

• A Strong Pedagogical Framework. A rigorous pedagogical framework in the text, based on the use of learning objectives, concept checks, key terms, boxed applications, and Chapter in Review summaries, along with supportive student supplements, appeal to a wide range of learning styles.

Student-Friendly approaCh

PrefaCe xxiii

Chapter Opening Vignettes introduce students to the chapter concepts ahead, using an exciting company example (eight vignettes are new to the Seventh Canadian Edition). For instance, in Chapter 1, the vignette focuses on Stratus Vineyards, a sustainable, innovative winery located in the heart of Niagara wine country. The chapter-opening discussions are often integrated into narrative, exhibits, and boxed features throughout the chapter.

1Chapter

Marketing:Customer Value, Satisfaction,CustomerRelationships,and Customer Experiences

STRATUS VINEYARDS: AN ECO-WINEMAKING SUCCESS STORY

Canadians have been making wine for over two centuries.

But modern-day success in the production and marketing of

wines goes back only a quarter of a century. Today, Canada’s

emerging wine industry is characterized by new investments

in world-class wineries in both Ontario and British Columbia, aggressive

new plantings of vinifera varietals, diversified wine offerings, new tech-

nology, expanding exports, and greater recognition of the industry’s abil-

ity to produce fine wines at competitive prices.

There are close to 500 wineries in Canada that provide jobs, preserve

valuable agricultural land, and create tourist destinations. The sale of just

one litre of Canadian wine provides over $4 in added economic value to the

Canadian economy. Wine sales in Canada are approaching $5 billion annu-

ally, and 40 percent of this total comes from Canadian brands. Per capita

consumption of wine is also on the rise, averaging over 14 litres per capita.

At the same time, within the Canadian wine industry, there is a growing rec-

ognition of the need for environmentally sustainable winemaking practices.

One company achieving success with its eco-winery philosophy

is Stratus Vineyards. Established in 2000, Stratus is a sustain-

able, innovative winery located in the heart of the Niagara

wine country in the historic town of Niagara-on-the-

Lake. Its goal is to make limited quantities of premium

wine with as minimal a footprint as possible. The

winery is a marvel of efficiency, sustainability, and

flexibility. The fruit is handpicked, and then it travels

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

1 Define marketing.

2 Know the basic requirements forsuccessful marketing to occur.

3 Understand the breadth anddepth of marketing.

4 Explain how marketingdiscovers and satisfies consumerneeds and wants.

5 Distinguish betweenmarketing mix elements andenvironmental forces.

6 Describe how a marketorientation focuses on creatingcustomer value, satisfaction,and customer relationships.

7 Explain why some organizationshave transitioned from themarket orientation era tothe customer experiencemanagement era.

8 Understand the meaning of ethicsand social responsibility andhow they relate to the individual,organizations, and society.

Learning Objectives open each chapter to help students preview chapter content and study effectively.

CHAPTER 1 Marketing: Customer Value, Satisfaction, Customer Relationships, and Customer Experiences 11

3rd pass

The importance of discovering and satisfying consumer needs is so critical to under-standing marketing that we look at each of these two steps in detail next.

Discovering Consumer Needs

The first objective in marketing is discovering the needs of prospective customers. Sound simple? Well, it is not. In the abstract, discovering needs looks easy, but when you get down to the specifics of marketing, things can be difficult, and things can go wrong. For one thing, consumers may not always know or be able to describe what they need and want. And, as we will see later, in the case of high-technology, or new-to-world products, consumers may have no idea about how they might benefit from such products. So, even listening to customers to discover their needs does not ensure marketing successs. In fact, new product development experts estimate up to 94 percent of the more than 30,000 new consumable products (food, beverage, health, beauty, and other household and pet products) introduced in North America annu-ally do not succeed in the long run. Robert M. McMath, who has studied over 70,000 of these new-product launches, has two key suggestions to marketers: (1) focus on what the customer benefit is, and (2) learn from the past.6

The solution to preventing new product failures does seem embarrassingly obvi-ous. First, find out what consumers need and want. Second, produce what they need and want, and do not produce what they do not need or want. This is far more dif-ficult than it sounds. For example, let us look at why Kimberly-Clark’s Avert Virucidal tissues failed. First, the name confused consumers who could not quite understand what benefit a “virucidal” tissue provided. (It contained vitamin C derivatives that

were supposed to keep germs from spreading when you blew into it.) Second, according to McMath, names that end in “cidal”—such as homicidal or suicidal—do not put people in a buying mood. Ultimately, prospective customers were simply too con-fused and scared to risk putting their noses into Avert Virucidals.7

So, today, firms spend billions of dollars annually on marketing and technical research that significantly reduces—but does not eliminate—new-product failure.

Consumer Needs and Consumer Wants Should marketing try to satisfy consumer needs or consumer wants? The answer is both! Heated debates rage over this question, with regard to the definitions of needs and wants and the amount of freedom given to prospective customers to make their own buying decisions.

1. What is marketing?

2. Marketing focuses on ____________________ and_________________ prospectivecustomers’ needs and wants.

3. What four factors are needed for marketing to occur?

ConCeptCheCk

Why did Kimberly-Clark’s Avert Virucidal tissues fail? See the section “Discovering Consumer Needs.”

HOW MARKETING DISCOVERS AND SATISFIES CONSUMER NEEDS

ously provide the lowest-priced and highest-quality products to customers and pay the highest prices to suppliers, highest wages to employees, and maximum dividends to shareholders.

Concept Checks are checkpoints found at the end of each major chapter section, offering critical thinking and memory recall questions. These questions help students to reflect on the text and test their com-prehension of the material before moving on.

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Student-Friendly approaCh

Marketing NewsNet boxes provide engag-ing, current examples of marketing applications in action. Eleven Marketing NewsNets are new to the Seventh Canadian Edition, including boxes on the challenges of customer experience management, neuromarketing, and life-style centres.

Ethics and Social Responsibility Alert boxes increase awareness and assessment of cur-rent topics of ethical and social concern. New boxes in the Seventh Canadian Edition cover topics such as marketing to children, respondent rights, and sustainable development.

WebLink boxes encour-age students to explore digital strategies that innovative companies and organizations are employ-ing online. New WebLink topics include marketing research and deceptive pricing practices.

Initiating the Marketing Process PART ONE20

Social Responsibility  While many ethical issues involve only the buyer and seller,others involve society as a whole. For example, suppose you change the oil in your oldChevy yourself and dump the used oil on a corner of your backyard. Is this just atransaction between you and the oil manufacturer? Not quite! The used oil may con-taminate the soil, and so society will bear a portion of the cost of your behaviour.This example illustrates the issue of social responsibility. Social responsibility meansthat individuals and organizations are part of a larger society and are accountable tothat society for their actions (also see Chapter 4). In fact, some marketing expertsstress the societal marketing concept, the view that an organization should discoverand satisfy the needs of its consumers in a way that also provides for society’s well-being.25 Many organizations, such as Stratus Vineyards, have recognized they are anintegral part of society and have committed to socially responsible behaviour, includ-ing sustainable business practices and green marketing.

The societal marketing concept is directly related to macromarketing, which looksat the aggregate flow of a nation’s goods and services to benefit society.26 Macromar-keting addresses such broad issues as whether marketing costs too much, whetheradvertising is wasteful, and what resource scarcities and pollution side-effects resultfrom the marketing system. Macromarketing issues are addressed in this book, butthe main focus is on how an individual organization directs its marketing activitiesand allocates its resources to benefit its customers, referred to as micromarketing. Anoverview of this approach appears in Chapter 2. Because of the importance of ethicaland social responsibility issues in marketing today, Chapter 4 focuses on these topics,while they are also highlighted throughout the book.

social responsibilityIndividuals and organizations are part of a larger society and are accountable to that society for their actions.

societal marketing conceptThe view that an organization should discover and satisfy the needs of its consumers in a way that also provides for society’s well-being.

macromarketingThe aggregate flow of a nation’s goods and services to benefit society.

micromarketingHow an individual organization directs its marketing activities and allocates its resources to benefit its customers.

social responsibilityIndividuals and organizations are part of a larger society and are accountable to that society for their actions.

societal marketing conceptThe view that an organization should discover and satisfy the needs of its consumers in a way that also provides for society’s well-being.

macromarketingThe aggregate flow of a nation’s goods and services to benefit society.

micromarketingHow an individual organization directs its marketing activities and allocates its resources to benefit its customers.

The Canadian marketplace has undergone tremendous change, especially with the advent of new technologies, more empowered consumers, and greater product and brand choices. But Canada’s best marketers have anticipated and responded to such changes. They have understood that conventional marketing practices cannot sustain enterprise growth in the new economy. Therefore, they have created new strategies and best practices to better meet their cus-tomers’ needs and to outpace their competitors. One of these strategies is customer experience management.

For example, Canadian Tire has a strong product line, resides in convenient locations, and focuses on customer ser-vice. But in order to improve the customer’s experience with the company, it now offers better in-store design and better training for employees to ensure the customer enjoys a good shopping experience, especially female shoppers. Sony Can-ada is a company that believes in product innovation. But it also focuses on fulfilling the customer’s need for a satisfying experience. Sony doesn’t just sell electronics—it sells trust, and a good customer experience with the brand. And Sony’s effort is paying off. Canada is the most Sony-loyal country in the world, more loyal than Japan. Sears Canada offers

Canadians its famous “satisfaction guaranteed or your money back” promise, but it also focuses on offering the customer a safe and comfortable place to shop, as well as salespeople who know their products and who want cus-tomers to have an enjoyable shopping experience.

But even small entrepreneurial companies are engaged in customer experience management. For example, inde-pendent grocers like Pete’s Frootique in Halifax; The Village Grocer in Unionville, Ontario; Belbin’s Grocery in St. John’s; and Strong’s Market and Caper’s Community Markets in Vancouver are all in the CEM business. At Pete’s Froot-ique, for instance, customers experience a piano player in the store, personal greetings, complimentary boxes of rai-sins, and even individual, fresh-cut sunflowers. Owner Pete Luckett says, “People do not go to Pete’s just to buy food, they go for the experience! It’s theatre, it’s entertainment, it is about making people feel good.” Pete says that mar-keting today is about getting to the customers’ hearts, not their pocketbooks. He doesn’t sell food commodities, he sells excitement, choice, highly personalized service, and a delightful customer experience that keeps shoppers coming back.

How Some Canadian Companies Are Creating and Managing Customer Experiences

marketing newsnet

Targeting Marketing Opportunities PART THREE216

3rd pass

The Marketing Research and Intelligence Association (MRIA), Canada’s national association for professional mar-keting researchers, has developed the world’s first Char-ter of Respondent Rights. The MRIA states that Canadians who participate in research by providing their opinions to researchers should be respected in terms of their time and their privacy The Charter sets out nine rights of respon-dents, and all MRIA members must adhere to this Charter and its nine article components. The MRIA believes this Charter will help protect the relationship between research-ers and the general public.

Charter of Respondent RightsYour participation in legitimate marketing, social, and pub-lic opinion research is very important to us. We value your honest feedback and your time. Your opinions help compa-nies develop new products, make existing ones better, and improve customer service. Your views also assist govern-ment and nonprofit organizations in advancing laws and policies that are in the public interest. Our relationship with you is based on respect, trust, and goodwill. When you par-ticipate in research conducted by our firm, or by any other corporate member of the Marketing Research and Intel-ligence Association (MRIA), you can be assured that:Article 1 You will always be told the first name of the person contracting you, the research company’s name and the nature of the study.

Article 2 You can verify that the research you have been invited to participate in is legitimate in one of two ways.

You can either obtain a registration number and the MRIA’s toll-free telephone number for any research registered with MRIA’s Research Registration System or you can obtain the contact information of the research director who is con-ducting the study.

Article 3 You will not be sold anything or asked for money.

Article 4 Your privacy and the privacy of your answers will be respected and strictly preserved in accordance with the organization’s privacy policy and applicable federal and provincial laws.

Article 5 You will be contacted at reasonable times, but it the time is inconvenient, you may ask to be re-contacted at a more convenient time.

Article 6 You are entitled to know the approximate dura-tion of the interview.

Article 7 Your decision to participate in a study, answer specific questions, or discontinue your participation will be respected without question.

Article 8 You will be informed in advance if the interview will be recorded and the intended use of the recording. You may choose not to proceed with the interview of you do not want it to be recorded.

Article 9 You are assured that the highest standards of professional conduct will be upheld throughout all stages of the study.

A New Charter of Respondent Rights

Ethics and Social Responsibility Alert

when consumers go online, and sometimes these data are used for marketing pur-poses without the knowledge and consent of the consumer. The MRIA has developed formal ethical standards, guidelines, and policies for all its members to adhere to with regard to all aspects of marketing research. An example of the organization’s efforts to respect respondent’s time and privacy, and to honour their societal contribution by providing feedback to marketing researchers, is the world’s first charter of respondent rights as outlined in the Ethics and Social Responsibility Alert box, “A New Charter of Respondent Rights.”17

USING A MARKETING INFORMATION SYSTEM TO TRIGGER MARKETING ACTIONS

Today’s marketing managers can be drowned in such an ocean of data that they need to adopt strategies for dealing with complex, changing views of the competition, the market, and the consumer. The Internet and the PC power of today provide a gateway to exhaustive data sources that vary from well organized and correct to disorganized and incorrect.

CHAPTER 13 Pricing Products and Services 351

2nd pass

1. Why would a seller choose a flexible-price policy over a one-price policy?

2. Which pricing practices are covered by the Competition Act?ConCept

CheCk

to all buyers distributing the seller’s products. In general, this rule of reason is applied frequently in price discrimination cases and is often applied to cases involving flexible pricing policies of firms. It is not easy to prove price discrimination has actually taken place, especially when firms practise flexible-price policies.

Under the Competition Act, the legislation requires that there be a “practice” of price discrimination, implying more than one instance, or even two or three instances. However, some suggest that the use of flexible pricing may create the potential for some firms to engage in price discrimination. Even if the practice cannot be proven legally as price discrimination, there may be some ethical issues involved.

Deceptive Pricing Price deals that mislead consumers fall into the category of deceptive pricing. Deceptive pricing is outlawed by the Competition Act. The five most common deceptive pricing practices are described in Figure 13–9. Over the past few years, companies from Newfoundland to British Columbia have been found guilty and fined for deceptive pricing practices. However, as you examine Figure 13–9, you should remember that it is often difficult for the government to police and enforce all of these laws. It is essential to rely on the ethical standards of those making and publicizing pric-ing decisions. To determine how the Competition Bureau deals with deceptive pricing practices check the accompanying WebLink box, “Deceptive Pricing Practices and the Competition Bureau.”

Predatory Pricing Two types of predatory pricing are defined within the Competi-tion Act. The first is called geographic predatory pricing. Sellers are prohibited from engaging in a policy of selling products or services in one region in Canada at a price lower than in another region with the intent or effect of lessening competition or of eliminating a competitior.

The second type of predatory pricing offence is committed when a business engages in a policy of selling products or services at “unreasonably low” prices in an attempt to substantially lessen competition. In many cases, the very low prices are designed to drive competitors out of business. Once competitors have been driven out, the firm raises its prices.

Delivered Pricing Delivered pricing is the practice of refusing a customer delivery of an article on the same trade terms as other customers in the same location. It is a noncriminal offence, but the Competition Tribunal can prohibit suppliers from engaging in such a practice.

The Competition Bureau is the federal agency charged

with the responsibility of protecting consumers against

deceptive pricing practices. Go to its Web site, www.

competitionbureau.gc.ca. Click on “For Consumers,” and

then click on “Marketing practices” on the left-side menu.

Scroll down and click on “Price-related representations”

and read about how the bureau deals with false or decep-

tive pricing practices in Canada.

Deceptive Pricing Practices and the Competition Bureau

weblink http://www.mcgrawhill.ca/olc/crane

PrefaCe xxv

Chapter in Review sec-tions are summaries that group chapter content recaps by learning objec-tive. Chapter in Review is followed by a list of Key Terms and Discussion and Application Questions.

Going Online is an exer-cise at the end of each chapter that asks students to go online and think critically about a specific company’s use of the Inter-net, helping them apply knowledge of key chapter concepts, terms, and top-ics, as well as evaluate the success or failure of the company’s efforts.

Each chapter concludes with a Video Case that provides an up-close look at a company example, rein-forcing the chapter content while bringing the material to life. The video segments are available for viewing on the Online Learning Centre at www.mcgrawhill.ca/olc/crane. Stratus Vineyards, Buzz Marketing, Mystery Shoppers, West Edmonton Mall, and the Canadian Football League are just a few of the exciting new Video Cases available with the Seventh Canadian Edition.

CHAPTER 1 Marketing: Customer Value, Satisfaction, Customer Relationships, and Customer Experiences 21

3rd pass

1 Define marketing. Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to custom-ers and for managing customer relationships in ways that ben-efit the organization and its stakeholders.2 Know the basic requirements for successful marketing to occur.For marketing to occur, it is necessary to have (a) two or more parties with unmet needs, (b) a desire and ability to satisfy them, (c) communication between the parties, and (d) some-thing to exchange.3 Understand the breadth and depth of marketing. Marketing affects every person and organization. Both for-profit and nonprofit organizations perform marketing activ-ities. They market products, services, and ideas that benefit consumers, organizations, and countries.4 Explain how marketing discovers and satisfies consumer needs and wants. The first objective in marketing is discovering the needs of prospective consumers. The second objective in marketing is satisfying the needs of targeted consumers. Because an organiza-tion cannot satisfy all consumer needs, it must concentrate its efforts on certain needs of a specific group of potential consum-ers or target market—one or more specific groups of potential consumers toward which an organization directs its marketing program. Having selected its target market, the organization then takes action to satisfy the customers’ needs by developing a unique marketing program to appeal to that market.5 Distinguish between marketing mix elements and environ-mental factors. Four elements in a marketing program designed to satisfy cus-tomer needs are product, price, promotion, and place. These elements are called the marketing mix—the four Ps—or the controllable variables because they are under the general con-trol of the marketing department within an organization. Environmental forces, also called uncontrollable variables, are largely beyond the organization’s control. These include social, technological, economic, competitive, and regulatory forces.6 Describe how a market orientation focuses on creating cus-tomer value, satisfaction, and customer relationships.Organizations with a market orientation focus their efforts on (1) continuously collecting information about customers’ needs and competitors’ capabilities, (2) sharing this information throughout the organization, and (3) using the information to

create value, ensure customer satisfaction, and develop customer relationships. Organizations with a market orientation engage in customer relationship management (CRM)—the process of building and developing long-term relationships with custom-ers by delivering customer value and satisfaction. Organizations engaging CRM understand the importance of the customer life-time value (CLV)—the profits generated by the customer’s pur-chase of an organization’s product or service over the customer’s lifetime. The concept of eCRM—a Web-centric, personalized approach to managing long-term customer relationships elec-tronically, which includes interactive marketing—is changing the way buyers and sellers interact. Interactive marketing tech-nology now allows for a level of customer interaction, individu-alization, and customer relationship management process to be carried out on a scale never before available. 7 Explain why some organizations have transitioned from the market orientation era to the customer experience management era.Companies have found that CRM is necessary but not suf-ficient in building effective relationships with customers. Accordingly, many companies have transitioned from the mar-ket orientation era to the customer experience management (CEM) era—managing the customers’ interactions with the organization at all levels and at all touchpoints so that the cus-tomer has a positive impression of the organization, is satisfied with the experience, and will remain loyal to the organization. This shift also requires a new type of organization called a customer-centric marketing organization (CCMO), and some Canadian companies have already made this transition and are enjoying marketing success.8 Understand the meaning of ethics and social responsibility and how they relate to the individual, organizations, and society.Marketing managers must balance consumer, organizational, and societal interests. This involves issues of ethics and social responsibility. Ethics are the moral principles and values that govern the actions and decisions of an individual or group. Ethics serve as guidelines on how to act correctly and justly. Social responsibility means that individuals and organizations are part of a larger society and are accountable to that society for their actions. Some marketing experts stress the societal marketing concept, the view that an organization should dis-cover and satisfy the needs of its consumers in a way that also provides for society’s well-being which includes sustainable business practices and green marketing.

1. The match between customer expectations of the product and the product’sactual performance is called ______________________.

2. The process of building and developing long-term relationships with customers bydelivering customer value and satisfaction is called ______________________ .

3. Some Canadian companies are now transitioning from the market orientation erato the _______________era.

ConCeptCheCk

CHAPTER IN REVIEW

Initiating the Marketing Process PART ONE22

3rd pass

1  What value does the consumer receive by purchasing thefollowing products or services? (a) Carnation Instant Break-fast, (b) Adidas running shoes, (c) Hertz Rent-A-Car, and (d)television home shopping programs.2  Each of the four products, services, or programs in ques-tion 1 has substitutes. Respective examples are (a) a ham andegg breakfast, (b) regular tennis shoes, (c) taking a bus, and (d)a department store. What consumer value might these substi-tutes deliver instead of those mentioned in question 1?3  What are the characteristics (e.g., age, income, education)of the target market customers for the following products orservices? (a) National Geographic magazine, (b) Wired maga-zine, (c) Toronto Blue Jays baseball team, and (d) the CanadianOpen golf tournament.4  A university in a metropolitan area wishes to increase itsevening-school offerings of business-related courses, such asmarketing, accounting, finance, and management. Who are thetarget market customers (students) for these courses?5  What actions involving the four marketing mix elementsmight be used to reach the target market in question 4?

6  What environmental forces (uncontrollable variables) mustthe university in question 4 consider in designing its marketingprogram?7  Stratus Vineyards believes it can grow by taking the busi-ness globally. What are the advantages and disadvantages oftrying to reach new global markets?8  Calculate the annual value of a specific purchase you makeon a regular basis, for example, gasoline for your car. Whatwould be the purchase value over a 10-year period? What doesthis tell you about the customer lifetime value concept?9  Provide a recent example of a shopping experience whereyou were very satisfied and one where you were very dissatis-fied with your purchase. Do you think the company was prac-ticing customer experience management? Why or not why?Explain why you were satisfied or dissatisfied with the experi-ence. What impact will this experience have on your futurepurchases from that organization?

DISCUSSION AND APPLICATION QUESTIONS

Understanding Marketing: Terms and Concepts

GoinG online

Marketing uses a number of terms and concepts thatare often difficult to remember. But the AmericanMarketing Association (AMA), a professional bodythat represents thousands of marketers in Canada,the United States, and around the world, is a valu-able source of information on marketing. In fact, onits Web site, the AMA actually has a comprehensivedictionary containing over 4,000 marketing terms andconcepts.

Go to www.marketingpower.com (the AMA’s offi-cial Web site) and check out the Dictionary of Market-ing Terms. Search for key terms and concepts that areof interest to you. This exercise should prove invaluableto you as you attempt to gain a better understandingof the marketing discipline. There are also numerousprovincial chapters of the AMA in Canada. You mayalso wish to check out their Web sites for the latestmarketing news in Canada.

customer experience management (CEM) p. 19customer lifetime value (CLV) p. 18customer relationship management (CRM) p. 18customer satisfaction p. 17customer value p. 17eCRM p. 18environmental forces p. 14ethics p. 19green marketing p. 6interactive marketing p. 18macromarketing p. 20market p. 8

market orientation p. 17marketing p. 7marketing concept p. 17marketing mix p. 13marketing program p. 14micromarketing p. 20organizational buyers p. 9social marketing p. 9social responsibility p. 20societal marketing concept p. 20target market p. 12ultimate consumers p. 9

FOCUSING ON KEY TERMS

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Satisfying Marketing Opportunities PART FOUR420

2nd pass

VIDEO CASE 15 West Edmonton Mall

IntroductIonWest Edmonton Mall is considered the world’s larg-est shopping and entertainment complex, and Alber-ta’s number one tourist attraction. It features over 800 stores and services, over 110 eating establishments, plus several major attractions including Galaxyland, the larg-est indoor amusement park. West Edmonton Mall is often called the “8th Wonder of the World” and spans the equivalent of 48 city blocks in the west end of the City of Edmonton. With a world-class hotel, a variety of one-of-a-kind stores, attractions, games, entertainment, and restaurants, West Edmonton Mall was designed to offer consumers a one-stop shopping and entertain-ment experience all within a climate-controlled indoor environment. In fact, the developers’ vision for the mall was to create “The Greatest Indoor Show on Earth.”

HIstory and developmentWest Edmonton Mall has evolved over four phases as its developers, Triple Five Group of Companies, assembled ideas on retail and entertainment from other projects and tourist attractions, creating a distinct and unique project. In Phase I (1981), a 25-hectare site (62 acres) was developed. The original mall size was more than 1.1 million square feet, and there were three major depart-ment store anchors—Eaton’s, Sears, and The Bay, along with 220 other retail stores and services. The cost of Phase I was $200 million.

In Phase II (1983), the site was expanded to 32 hectares (79 acres) and the mall was expanded by an additional 1.1 million square feet. Another 240 stores and services, including Zellers, were added. Recreation and entertainment facilities were also added, including Galaxyland Amusement Park and the Ice Palace skating rink. The estimated costs for Phase II were $250 million.

In 1985, Phase III expanded the mall site to 48 hect-ares (119 acres), and new major retailers, including The Brick and London Drugs, were added. More enter-tainment facilities were also added, including World Waterpark, Deep Sea Adventure, Dolphin Lagoon, Sea Life Caverns, and Professor Wem’s Adventure Golf. New retail theme streets were also introduced, includ-ing Bourbon Street and Europa Boulevard. This phase cost over $1 billion to complete. Finally, Phase IV (1998) expanded the mall site to 49 hectares (121 acres) and

added new retail goods and services such as Chapters, Starbucks, HMV, Famous Players, and IMAX 3-D.

a sHoppIng and entertaInment meccaThe West Edmonton Mall attracts over 22 million visi-tors annually. And to accommodate these visitors, the mall has the world’s largest parking lot. But the mall is not designed simply for shopping. The developers want visitors to stay at the mall, even vacation there. In short, they want shoppers to have a personal and memorable experience. Accordingly, they offer world-class accommo-dations, including the Fantasyland Hotel; dinner theatres; casinos; movie theatres; and other activities designed to entertain the entire family. Some of the malls key attrac-tions are Galaxyland Amusement Park, the world’s largest indoor amusement park equipped with a rollercoaster and other rides; World Waterpark, a 2-hectare (5-acre) indoor facility that includes watersliders and even bungee jump-ing; Deep Sea Derby, where visitors can ride boats on an indoor lake; Sea Lions’ Rock, where real sea lions entertain visitors; Sea Life Caverns, which houses over 200 species of fish, sharks, and even penguins; Ice Palace which offers public skating and shinny hockey; and Professor Wem’s Adventure Golf, an 18-hole miniature golf course.

The West Edmonton Mall also offers its visitors a themed street concept such as Bourbon Street, with din-ing rooms, lounges, and bars, in an open, airy atmo-sphere with a starry sky, complete with mannequins that depict street people of New Orleans. There is also Europa Boulevard, fashioned after various European city streets, with exclusive fashion boutiques and designer stores. The mall even has its own Chinatown, an offer-ing designed to reflect a traditional Chinese market-place, anchored by T&T Supermarket.

There are also numerous other design features through-out the mall such as water fountains, aquariums, a crown jewels display, Chinese vases from the Ching Dynasty, and numerous statues. A key design element is the Mall’s sky ceiling, which provides an atmosphere of a never-end-ing sky, and one that actually changes from dawn to day to dusk to dark. And to make sure its visitors can stay in touch with home or the office, the West Edmonton Mall also offers WEMiSphere, a WIFI service that provides high-speed wireless Internet access. The system is available throughout the Fantasyland Hotel, as well as in the mall food court and waterpark and throughout the mall.

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1st pass

Student Support

istudyMarketing

Available 24/7: Instant feedback so you can study when you want, how you want, and where you want: www.mcgrawhill.ca/olc/crane.This online iStudy space was devel-oped to help you master the concepts and achieve better grades with all of the learn-ing tools you’ve come to expect (i.e., multiple-choice and true/false quizzes) plus learning objects, marketing plan resources, flashcards, videos, and added quizzes, including chapter-by-chapter diagnostic assessments that point you to the concepts you need to focus on to improve your grades. Pick and choose from all of these fea-tures to develop your own personalized study plan. iStudy offers the best, most con-venient way to Interact, Learn, and Succeed.

iStudyMarketing can be purchased through the Online Learning Centre or by pur-chasing a PIN code card through the campus bookstore or as a package option with the text.

Instructors: Please contact your iLearning Sales Specialist for more information on how to make iStudyMarketing part of your students’ success.

student online Learning Centre

The Online Learning Centre (www.mcgrawhill.ca/olc/crane) provides chapter quizzes, Web links, a link to iStudyMarketing, and other study tools.

e-stat

E-STAT is an educational resource designed by Statistics Canada and made available to Canadian educational institutions. Using 450,000 current CANSIM (Canadian Socio-economic Information Management System) Time Series and the most recent—as well as historical—census data, E-STAT lets you bring data to life in colourful graphs and maps. Access to E-STAT is made available to purchasers of this book, via the Crane Online Learning Centre, by special agreement between McGraw-Hill Ryerson and Statistics Canada. The Online Learning Centre provides additional information.

inStruCtor SupplementS

Marketing, Seventh Canadian Edition, offers a complete, integrated supplements package for instructors to address all your needs.

Instructor’s CD-roM

This supplement contains the Instructor’s Manual, Test Bank in rich text format, Computerized Test Bank, and Microsoft® PowerPoint® slides:

• Instructor’s Manual. The Instructor’s Manual contains lecture notes, sum-maries of all boxed features, and answers to concept checks, going online, and discussion questions.

• Test Bank in rich text format. The Test Bank contains an extensive array of multiple choice and essay items categorized by level of learning (definition, conceptual, application) and learning objective.

• Computerized Test Bank. This flexible and easy-to-use electronic testing program allows instructors to create tests from book-specific items. It accom-modates a wide range of question types, and instructors may add their own questions. Multiple versions of the test can be created and printed.

• Microsoft® PowerPoint® Slides. These robust presentations offer high-quality visuals to bring key marketing concepts to life.

Instructor’s online Learning Centre (oLC)

The OLC at www.mcgrawhill.ca/olc/crane includes a password-protected Web site for instructors. The site offers downloadable supplements, including an Instructor’s Manual, Microsoft® PowerPoint® slides, Alternate Cases, streaming Video Cases, and Case Teaching Notes, as well as access to the Integrator, Marketing Magazine, and PageOut, the McGraw-Hill Ryerson Web site development centre.

Enhanced PowerPoint® Presentations are available in a separate CD-ROM pack-age, enriching the ICD version of the PowerPoints with video clips.

new Canadian Instructor’s survival Kit (IsK): In-Class activities and Product Props in a Box!

The ISK box contains an In-Class Activities Guide and product props for use in the class-room to illustrate marketing concepts and encourage student participation and collabo-ration. Today’s students are more likely to learn and be motivated by active, participative experiences than by classic classroom lecture and discussion. The Instructor’s Survival Kit contains these specific elements to enhance classroom interaction:

In-Class Activities: These in-class activities have received extremely positive feed-back from our customers, both instructors and students. In-class activities may relate to a specific Video Case or example from the text.

Sample Products: Marketing, Seventh Canadian Edition, utilizes examples of offer-ings from both large and small firms that will interest today’s students.

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Video Case studies

A unique series of 19 contemporary marketing cases are available on DVD, as well as for download from the Online Learning Centre. Each Video Case corresponds with chapter-specific topics and the end-of-chapter case in the text. Marketing, Seventh Canadian Edition, includes brand new videos including Stratus Vineyards, Buzz Marketing, Mystery Shoppers, West Edmonton Mall, the Canadian Football League, and more! Several additional Video Cases are available exclusively on the Online Learning Centre.

alternate Cases

An additional 22 alternate cases can be found in Appendix D on the Online Learn-ing Centre, providing even more opportunities to bring the course content to life for students.

Video Case and alternate Case teaching notes

This manual, available for download from the Online Learning Centre, includes help-ful teaching suggestions for the Video Cases and alternate cases.

the Integrator

Keyed to the chapters and learning objectives of Marketing, Seventh Canadian Edi-tion, the Integrator ties together all of the elements in your resource package, guiding you to where you’ll find corresponding coverage in each of the related support pack-age components—be it the Instructor’s Manual, Computerized Test Bank, Power-Point® slides, Case Studies, or Online Learning Centre. Link to the Integrator via the Online Learning Centre at www.mcgrawhill.ca/olc/crane.

superior service

Your Integrated iLearning Sales Specialist is a McGraw-Hill Ryerson representative who has the experience, product knowledge, training, and support to help you assess and integrate all of the Marketing supplements, technology, and services into your course for optimum teaching and learning performance. Whether it’s using our test bank software, helping your students improve their grades, or putting your entire course online, your iLearning Sales Specialist is there to help you do it. Contact your local iLearning Sales Specialist today to learn how to maximize all of McGraw-Hill Ryerson’s resources!

inStruCtor SupplementS

PrefaCe xxix

iLearning services Program

McGraw-Hill Ryerson offers a unique iServices package designed for Canadian fac-ulty. Our mission is to equip providers of higher education with superior tools and resources required for excellence in teaching. For additional information, visit www.mcgrawhill.ca/highereducation/iservices.

teaching, technology & Learning Conference series

The educational environment has changed tremendously in recent years, and McGraw-Hill Ryerson continues to be committed to helping you acquire the skills you need to succeed in this new milieu. Our innovative Teaching, Technology & Learning Conference Series brings faculty together from across Canada with 3M Teaching Excellence award winners to share teaching and learning best practices in a collaborative and stimulating environment. Pre-conference workshops on general topics, such as teaching large classes and technology integration, are also offered. We will also work with you at your own institution to customize workshops that best suit the needs of your faculty at your institution.

Course Management

Visit www.mhhe.com/pageout to create a Web page for your course using our resources. PageOut is the McGraw-Hill Ryerson Web site development centre. This Web page-generation software is free to adopters and is designed to help faculty cre-ate an online course, complete with assignments, quizzes, links to relevant Web sites, and more—all in a matter of minutes.

In addition, content cartridges are available for the course management systems WebCT and Blackboard. These platforms provide instructors with user-friendly, flexible teaching tools. Please contact your local McGraw-Hill Ryerson iLearning Sales Specialist for details.

TM

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Development of the text and Package

To ensure continuous improvement of our product we have utilized an extensive review and development process for each of our editions. Building on that history, the Seventh Canadian Edition development process included several phases of evalu-ation by a broad panel of instructors.

Reviewers who were vital in helping us develop this edition include:

Victor Bilodeau, Grant MacEwan CollegeBrian Broadway, Seneca CollegePeter Burgess, George Brown CollegeNan Clory, Dalhousie UniversityWilliam Clymer, Durham CollegeJohn Dickason, Humber CollegeDwight Dyson, Ryerson UniversityBonnie Elliot, University of LethbridgeKora Ferguson, Red Deer CollegeMary Foster, Ryerson UniversityBill Garbarino, Algonquin CollegeE. Stephen Grant, University of New BrunswickAllan Green, Red River CollegeKent E. M. Groves, Acadia UniversityMarion Hill, SAIT PolytechnicSarah Holding, Malaspina University CollegeSteve Janisse, St. Clair CollegeMelanie Lang, University of GuelphDonna Lazdowski, Mount Royal CollegeMelissa MacEachern, University of Prince Edward IslandPeter Mombourquette, Mount Saint Vincent UniversityNaheed K. Nenshi, Mount Royal CollegeBeth Pett, Niagara CollegeDonna Sears, University of New BrunswickPeter Stasiuk, Durham CollegeBarb Watts, Georgian College

The preceding list demonstrates the amount of feedback and developmental input that went into the project, and we are deeply grateful to the numerous people who have shared their ideas with us. Reviewing a book or supplement takes an incredible amount of energy and attention. We are glad that so many of our colleagues took the time to do it. Their comments inspired us to do our best in developing this new edition.

aCknowledgmentS

PrefaCe xxxi

Thanks are due to faculty members who contributed to the text and supplements including Sherry Finney, University of Cape Breton (Cybersurf Video Case) and John Shepherd, Northwest Community College, with Trina O’Connor (Appendix A).

Many businesspeople and organizations also provided substantial assistance in making available information that appears in the text and supplements, much of it for the first time in university or college materials. Thanks to many companies and individuals, including Kim McConnell of AdFarm, Sean Durfy of WestJet, Jamie Nishino of the CFL, Donne Flanagan of the Government of Manitoba, Charles Baker of Stratus Wines, Jason Finney of Cybersurf, Kimberly Evans of West Edmonton Mall, Clearly Canadian, and Strait Cross Bridge Ltd.

Finally, we acknowledge the professional efforts of the McGraw-Hill Ryerson Higher Education Group staff. Completion of our book and its many supplements required the attention and commitment of many editorial, production, marketing, and research personnel. Thanks to Leanna MacLean, Executive Sponsoring Editor; Marcia Luke, Developmental Editor; Joy Armitage Taylor, Senior Marketing Manager; Anne Nellis, Senior Supervising Editor; Paula Brown, Senior Production Coordina-tor; Mike Kelly, Copy Editor; and Alison Derry, Photo and Permissions Researcher.

I am responsible for the Canadianization of this text, so any questions or concerns about the book should be directed to me. I would like to thank my co-authors for their input, encouragement, and continued support.

I am dedicating this edition of the text to my wife Doreen, and my daughters Erinn, Jacquelyn, and Brenna. Thank you for your support and sacrifice. You are all so precious to me and you make me very proud. Your love has always sustained me.

I am also dedicating this book to my loyal companions, Ceilidh and Dex, who love me unconditionally. You patiently napped at my feet on so many occasions over the past year while I completed this text. You are such great dogs and you are my true best friends! I believe humans can look to you as examples of what selfless pure love is all about. I also want to thank my parents for their love and support.

Frederick G. Crane