Marketing Management / Edition 3

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This volume reflects the dynamic environment inhabited by today's marketers, helping readers understand the marketplace and the impact of technology on making strategic marketing decisions. Its modern, integrated presentation and strategy-based approach covers critical, fundamental topics required to succeed in professional work.

Subjects include marketing philosophy and strategy such as market research, customer behavior and market structure, and marketing decision-making and analysis, including product decisions, advertising strategy, pricing and customer relationship management.

For marketing professionals, product and brand managers.

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Product Details

  • ISBN-13: 9780131963344
  • Publisher: Prentice Hall
  • Publication date: 6/9/2006
  • Edition description: REV
  • Edition number: 3
  • Pages: 544
  • Product dimensions: 8.66 (w) x 11.20 (h) x 1.05 (d)

Table of Contents

1 Marketing and the job of the marketing manager 3
2 A strategic marketing framework 35
3 Marketing research 61
4 Analyzing consumer behavior 87
5 Organizational buying behavior 123
6 Market structure and competitor analysis 147
7 Product decisions 173
8 New product development 203
9 Pricing 237
10 Communications and advertising strategy 267
11 Sales promotion 301
12 Channels of distribution 327
13 Direct channels of distribution : personal selling and direct marketing 359
14 Customer relationship management 389
15 Special topic : strategies for service markets 421
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Overview: Levi Strauss

Until the 1990s, American visitors to the Soviet Union and Eastern Europe could be almost certain that they would be approached by young people asking whether they had any extra pairs of Levi's jeans they were willing to sell. Such was the strength of Levi's as a worldwide brand. Since the 1990s, however, something has changed. Levi's made up 31 percent of the jeans sold in the U.S. market in 1990, a market share that had shrunk to 16.9 percent by 1998 and to 12.1% by 2002. Today's young people do not want to be seen in the same jeans that their parents wore. Levi's advertising campaigns now receive one star out of four in Advertising Age. What happened in so short a time? How could a world-renowned brand from a world-renowned company have stumbled so badly? In order to recover, in 2002 Levi's decided to supply Wal-Mart, the largest company in the United States, with a low-end brand, called Signature, and created two new brands-the high-end Red and more classic Type 1 and Blue. Can this multiple-brand strategy revive the value of Levi's products and lead the company back to the status it had prior to the 1990s?

Marketing Management: A Strategic Perspective

To understand fully what happened to Levi's and to give prospective marketing managers guidelines for how to be effective in their jobs, we need a marketing management textbook that goes beyond an explanation of basic concepts—it must present a strategic, integrative perspective. After teaching a core marketing management course for more than 20 years, I wrote Marketing Management because I came to understand how important the strategic perspective is and Iobserved that no textbook provided it. Readers of this book will find a strategic framework set up in Chapter 2 which is used throughout the rest of the text. Using strategy as a framework for the entire course is the chief distinguishing feature of this book.

The strategic framework in this second edition of Marketing Management promotes understanding of the second distinguishing feature of this text: its emphasis on the rapid changes thrust upon marketing managers by information technology in general, and the Internet in particular. Today every marketing textbook includes numerous references to the Internet, and despite the crash in Internet company stocks, it remains the most fundamental change in marketing in the last decade. The Internet is a place where products and services are sold, it is a communications and information medium, it facilitates customer service, and it provides other benefits and opportunities to marketing managers and customers. The fundamental nature of this new, information-intensive technology is interactivity, the ability of customers to be active participants in the exchange between consumers and companies (for more than money for goods). This book also discusses at length the many ways that companies' investments in information technology have changed the marketing manager's job, in areas such as information gathering, communications, pricing, and product development.

While looking at the transformations that information technology has brought, this second edition of Marketing Management also integrates the issues involved with marketing technology-based goods and services. What led me to include material on this topic was not only the 14 years I spent near Silicon Valley teaching at the University of California at Berkeley. In discussions with business students at a variety of schools, I have found that many are interested in careers in computer software, biotechnology, semiconductors, and other technology-based industries. While the basics of marketing are the same across all industries, there are some features of high-technology markets (for example, short product life cycles) that make being a marketing manager for high-tech companies a somewhat different experience than being a brand manager for, say, Procter & Gamble's Crest toothpaste.

I have also included illustrations of global contexts by weaving foreign examples throughout the text to convey to the reader that thinking about global markets is a natural part of the job for many marketing managers. In many companies, developing a global marketing strategy is no longer a separate activity from developing a U.S. strategy since an important task is to develop a unified, global brand image.

Another unique feature of the book is the chapter on customer relationship management (Chapter 14). No other marketing management book covers this topical and vita11y important area of marketing in this depth. Few aspects have received as much attention in recent years as the question of how to maintain and enhance long-term relationships with customers. Considerable research has shown that it is less expensive and more profitable to retain customers than it is to try to get customers to switch from competitors. A good example of this recent emphasis on customer retention is the proliferation of loyalty programs. I discuss these programs in Chapter 14 and also provide several examples. It is also covered in Chapter 11 in the context of direct marketing.

Changes from the First Edition

In developing this second edition, I have been careful to retain the best-liked aspects off the first edition—the easy-to-follow writing style, the integration of information technology into the appropriate topics, and the coverage of new and important areas of marketing like customer relationship management. But I have also listened to adopters, students, and reviewers in working to make this second edition an even more effective teaching and learning tool. Major changes include:

  1. An entirely revamped look and feel. Marketing is a visual discipline, so along with updated text, advertisements, photos, and graphics, the book has a decidedly, twenty-first century appearance.
  2. As would be expected, many of the illustrations have also been updated.
  3. There has been a major reorganization of the chapters:
    • Chapters 1 and 2 from the first edition ("The Concept of Marketing" and "The Marketing Manager's Job") have been combined into Chapter 1 of the second edition ("Marketing and the job of the Marketing Manager") and the running example used in the first edition (personal computers) has been eliminated.
    • Chapters 15 and 16 from the first edition ("Strategies for Technology-Based Markets" and "Global Marketing Strategies") have been eliminated and the material woven into the rest of the book. Feedback indicated that these topics are an integral part of marketing today and should be discussed where appropriate throughout the entire book.
    • A new chapter—Chapter 7, "Product Decisions"—was added. This chapter answers the request-for more material on branding and product positioning as well as for more discussion about product line decisions.
    • Chapter 17 from the first edition, "New Product Development," is now Chapter 8, "New Product Development and Marketing," and follows "Product Decisions." This was to better integrate all decisions related to the product into two consecutive chapters. The material on marketing programs for launching new products is also expanded.
    • The material on channels of distribution formerly covered in one chapter (Chapter 9, "Channels of Distribution") is now divided into general channel strategy and the management of indirect channel systems ("Managing Channels of Distribution," Chapter 10) and issues related to direct channels of distribution (Chapter 11, "Managing Direct Channels: Sales Management and Direct Marketing"). This change was made to consolidate the material on direct channels in one chapter.
  4. Chapter 14 on Customer Relationship Management has been re-focused around a general framework for CRM. This framework provides an action guide for the marketing manager about how to develop a CRM system from scratch.

Organization of the Book

This book is divided into three parts, the contents of which follow this sequence: (1) introduction to the philosophy of marketing, the marketing manager's job, and the complete marketing strategy that forms the backbone of the book, (2) analyses that marketing managers must perform to develop a strategy, and (3) marketing-mix decision making.

The key benefit of this sequence is that it shows very clearly that strategic decisions must be made before tactical decisions. The marketing strategy chapter appears early in the book (Chapter 2) because I do not believe that a discussion about pricing, for example, can take place before students are given a sense of how price must fit into the product's positioning and value proposition or be suitable for the particular market segment being pursued. In other words, marketing managers cannot make pricing decisions without clear direction from the strategy. This is an important feature of the book and distinguishes it clearly from comparable texts. In addition, chapters 3 through 13 repeat the figure (Figure 2-1) describing the overall strategic structure with indications of "where we are" in the development of a complete marketing strategy. This approach continually reinforces the strategic perspective.

Part 1: Marketing Philosophy and Strategy. These two chapters provide a general overview of marketing and the "behind-the-scenes" work that marketing managers do in framing the specific decisions that are ultimately made, such as what price to charge. In addition, the elements of a complete marketing strategy are described. This is a unique aspect of the book since, as noted previously, I cover this material earlier in the discussion than other textbooks.

Chapter 1, "Marketing and the Job of the Marketing Manager," covers the basics of marketing: what it is, why it is important, the importance of a customer/competitor orientation, and the controversy over being led by the customer versus leading the customer. In addition, this chapter covers topics such as marketing organizations, the marketing plan, and how technology is changing marketing management and the marketing manager's job. Key benefit: This chapter gives students an understanding of the importance of being customer oriented as well as an understanding of the organizational environment within which marketing decisions are made.

Chapter 2, "Developing a Marketing Strategy," introduces a basic strategic framework that ties together the rest of the book. Topics include the development of a complete marketing strategy, differentiation, product positioning, developing a value proposition, the product life cycle, and product line management. I have put much of the traditional material on one of the "four Ps"—product—in this chapter to show that my emphasis in the book is on how product decisions must fit within an overall strategic framework. Key benefit: This chapter provides readers with the backbone of the book, a practical guide to the development of marketing strategy that is a key takeaway from reading this chapter.

Part 2: Analysis for Marketing Decisions. Behind the development of every marketing strategy is a set of analyses that form the basis for decision making. Chapters 3 through 6 are used to show the reader what kind of information is necessary to develop a marketing strategy and how to organize this information.

Chapter 3, "Marketing Research," shows how market research is fundamental to the development of a marketing strategy. This chapter covers primary and secondary data collection, electronic sources of information, forecasting, and methods of estimating market potential. Key benefit: This chapter introduces students both to the general point that research is critical to the marketing management function and to some specific pointers about how to conduct a marketing research study.

Chapter 4, "Analyzing Consumer Behavior," covers the basics of understanding how and why consumers (individuals) make purchasing decisions. I discuss market segmentation and special attention is given to secondary sources of information that are useful for developing segmentation strategies. Key benefit: An understanding of consumer behavior is crucial to the development of a marketing strategy.

Chapter 5, "Organizational Buying Behavior," highlights the differences between consumer and organizational (business-to-business) buying behavior. Key benefit: This chapter provides the background for developing marketing strategies targeting business customers.

Chapter 6, "Market Structure and Competitor Analysis," covers competitor definition (against whom are you competing?), competitor analysis, and where information about competitors can be obtained. I also introduce a game-theoretic approach to competitive strategy. Key benefit: Students will obtain a "hands on" approach and concrete methods for determining competitors and analyzing their strengths and weaknesses The simple game-theoretic illustrations are generally not included in other texts.

Part 3: Marketing Decision-Making. These chapters cover the actual decisions marketing managers have to make. This is the section instructors would consider to be the four Ps, although, as noted earlier, some aspects of "product" are integrated into the strategy discussion in Chapter 2. In addition, I consider decisions related to customer relationship management to be an integral part of the marketing "mix" today.

Chapter 7, "Product Decisions," covers major decisions related to the product. Theses include developing and maintaining brand equity, product positioning, product line management, and some issues in packaging and product design. In addition, I place these topics in both technology and global contexts. Key benefit: Students will gain knowledge about two key strategic parts of the marketing manager's job, branding and product positioning.

Chapter 8, "New Product Development and Marketing," discusses various approaches; to new product development; for example, the classical linear process versus the) "rugby," inter-functional approach versus target costing. New product forecasting and issues such as how to decrease time to market receive special attention. The chapter, logically follows Chapter 7 to show that new product policy should be integrated with an overall product strategy. Key benefit: New products are the lifeline of any business; students will better appreciate the complexities of developing and introducing new products.

Chapter 9, "Integrated Marketing Communications and Advertising Strategy," covers the basic communications model and the importance of integrating all communications activities to deliver a uniform message and image to customers. In addition, I emphasize how managing communications and making communications decisions have changed due to the Internet and the Web. After reviewing the elements of the communications mix, the chapter covers advertising decision making, including new approaches to advertising on the Internet. Key benefit: Students will have a better understanding of integrated marketing communications (IMC) and advertising's role in the communications mix.

Chapter 10, "Managing Channels of Distribution," covers channel structure and management with an emphasis on managing indirect channels, that is, independent channel members. In addition, I discuss using the Internet as a channel, multilevel marketing, and current issues in supermarket retailing. Key benefit: Students will better appreciate the wide variety of channel options that exist today as well as some of the management problems involved with channels.

Chapter 11, "Managing Direct Channels: Sales Management and Direct Marketing," introduces personal selling as a mixture of communications and distribution. I position personal selling as a channel—that is, a way for customers to gain access to the company's products and services. I discuss the basics of sales management, with an emphasis on the impact of information technology on the salesperson's job. Key benefit: Readers will gain an understanding how personal selling fits into the marketing mix.

Chapter 12, "Pricing," focuses on how to measure customer value and how to use it to make pricing decisions. I also cover specific pricing issues such as EDLP (everyday low pricing) and private label competition. Key benefit: Students should understand that pricing decisions can be made systematically versus the ad hoc approaches that are commonly used in practice.

Chapter 13, "Sales Promotion," covers the essentials of sales promotion (different types, objectives, trade vs. retailer promotions) as well as budgeting and Internet applications. Key benefit: Students will better appreciate how sales promotion complements other elements of the communications mix.

Chapter 14, "Customer Relationship Management," is a unique part of the book in that other marketing management texts do not cover it extensively. I introduce a conceptual approach to developing CRM programs that can be used to establish such programs in organizations. This chapter covers various topics in customer retention including loyalty programs, mass customization, and information technology used to create customer databases. Key benefit: The reader will understand how to develop a CRM program for his or her company and the various issues involved with implementation.

Chapter 15, "Strategies for Service Markets," discusses what makes services marketing different from marketing manufactured goods. Topics covered include the service quality model, strategic and tactical issues, and the impact of technology on service markets with special attention paid to financial services. Key benefit: Given that about 80 percent of the U.S. economy is service based, students must understand how marketing services is different from marketing physical goods.

Flexibility In and Out of the Classroom

The book you hold in your hand is shorter than the standard marketing management text, yet it covers all of the critical concepts. This provides flexibility for the instructor to either use the text as a stand-alone resource or to supplement it with cases and perhaps a reader with articles from business publications. In other words, instructors can customize course resources to fit their needs. It is also attractive to the student who finds overly long texts difficult to read and comprehend.

Key Pedagogical Features

A variety of pedagogical features appear throughout this text to enhance the learning experience.

Chapter Briefs. Each chapter in this text begins with a roadmap of the chapter, titled "Chapter Brief." This feature outlines what material will be covered and provides the reader with an overview of the content of the chapter.

Chapter-Opening Case. A chapter-opening case and accompanying visual provides the reader with an interesting, contemporary, real-world company situation. It also offers a context where the reader can apply the chapter's material to the marketing decision-making process. To accomplish this, the reader is referred back to the chapter-opening case several times in each chapter.

Examples of Real Companies and Real Strategies. In all of the chapters, I use examples from real companies liberally. Some of these examples highlight how an actual company has applied a specific marketing strategy or program.

Executive Summaries. At the end of each chapter, the "Executive Summary" recaps the chapter's main points.

End-of-Chapter Questions. Following the "Executive Summary," a series of chapter questions permits students to review and apply the material they have learned in the chapter. Alternatively, the questions can be used by the instructor as the basis for class assignments.

New Video Shorts. Short vignettes and discussion questions appear at the end of every chapter, to be used with brand new 3- to 4-minute videos that accompany this edition.

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