Read the pages and make a brief summary of them with your own words

Principles Of Marketing
17th Edition
ISBN:9780134492513
Author:Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:Kotler, Philip, Armstrong, Gary (gary M.)
Chapter1: Marketing: Creating Customer Value And Engagement
Section: Chapter Questions
Problem 1.1DQ
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Read the pages and make a brief summary of them with your own words, please. It is what you understand. Don't make copy-paste, please. 

before you proceed on a larger scale. After the methodol-
ogy has been appropriately refined, gather information in a
timely manner.
the ethical use of information obtained electronically. These
guidelines should also specify the types of information that will
be pursued electronically and how to respond when offered
customer data that might have been obtained unethically.
Function Deployment
All of the market research in the world won't spare the
entrepreneur the anxiety of dealing with the inescapable ele-
ment of risk. However, having taken the risk to produce a
product, communicating with customers about that prod-
uct can ensure that it gets the best possible reception in the
marketplace and that it changes as the needs of customers
change.
and Design
Quality
Improvements It is important to know that a product will
meet the needs of customers before you put it into production.
This is the main reason for conducting the research necessary
to identify customer needs and for communicating with in-
ternal and external customers. Quality function deployment
(QFD) was developed with this in mind.
QFD is an integrated approach to product development
and quality in all preproduction activities. It was introduced
in the United States by Professor Y. Akao of the University of
Tamagawa as part of a paper he presented at a quality confer-
ence in Chicago. QFD is actually a model for incorporating
customer input and feedback into product development. In
effect, it establishes an operational structure for the concept
of building in quality. The philosophy underlying QFD is
that even a perfectly manufactured product may not satisfy
the customer because it may be nothing more than a perfect
example of what the customer doesn't want.
QFD allows for the systematic incorporation of cus-
tomer needs, production capabilities and capacity, and all
other relevant parameters into product development. QFD
consists of the following basic activities:
QUALITY TIP
Customers Frequently Cause Their Own Problems
tis often said that "the customer is always right." Philosophi-
cally, this is a commendable attitude, but practically it presents
some problems. On a practical level not only are customers
not always right, they are trequently wrong Often when they
complain, customers are the source of their own problems. In-
correct use of the product, failure to follow instructions, and
unnealistic expectations are often the source of customer com-
plaints. Consequently, a better motto for companies that are
committed to world-class customer service might be: Custom-
ers may not always be right, but they should always be treated
right. In this context, "treated right" means treated with respect
and an appropriate level of urgency to solve their problem re
gardiess of its cause.
IDENTIFYING EXTERNAL
CUSTOMER NEEDS
Analyze the Results
Identifying Internal Customer Needs
Historically, customers were excluded from the product
development process. When this approach is used, the or-
ganization producing the product is taking a chance that it
will satisfy the customer. In a competitive marketplace that
is global in scope, such an approach can be disastrous. Ina
total quality setting, customer needs are identified clearly
as a normal part of product development. Peter Scholtes,
Barbara Streibel, and Brian Joiner recommend the six-step
strategy for identifying customer needs that is described in
the following subsections. The authors of this text recom-
mend a seventh step involving Internet research.
Results should be analyzed carefully and objectively. Do
they match the speculated results from the first step? How
do they agree and disagree? What problems did customers
identify? What strong points? Were there trends? How many
customers complained of the same problem? What changes
in the product or services relating to it were suggested?
Identifying the needs of internal customers is a matter of
ensuring that employees who depend on one another as individ-
uals, as well as departments that depend on each other as units,
communicate their needs to one another continually. However,
one should not assume that communication will just happen.
As important as it is, communication rarely just happens in any
setting. Rather, it must be encouraged and facilitated.
Quality circles, self-managed teams, cross-departmental
teams, and improvement teams are all examples of mecha-
nisms for improving communication and, in turn, quality.
These mechanisms facilitate communication among internal
customers and suppliers. However, they are not
mechanisms available. Communication that occurs over a cup
of coffee in the break room or during lunch can be equally
effective. Training that promotes communication and helps these can help a supplier improve customer satisfaction. The
improve communication skills is also important (this is dis-
cussed in greater depth in Chapter 11). Teamwork and how it
can improve communication is discussed in Chapter 10
Know Your Customer's Operations
As a supplier to other companies (customers), it is important
to know their operations. The more that is known about a
customer's operations, the easier it will be to provide prod-
ucts that meet its needs.
Check the Validity of Conclusions
Having drawn conclusions based on the information gath-
ered, the next step is to check the validity of those conclu-
sions. Customers can be a valuable source of help. Select
What does the customer do with our product? How is
it used? Is our product part of a larger assembly? Does the
customer use our product in the way we expect or in some
different way? Does the customer modify our product in
any way? What processes does the customer use in working
with our product? Knowing the answers to questions such as
several customers and share the conclusions with them. Do
only
plan so that information is collected in face-to-face inter-
views. When personal visits are not possible, use the tele-
phone. Written surveys sent out through the mail cannot
produce a level of feedback equal to that gained from the
nonverbal messages, impressions, and follow-up questions
that are a part of person-to-person interviews.
Figure 7.3 is an example of an information-gathering Take Action
plan. Notice that it is structured for collecting information Based on the final conclusions, what changes need to be
either face to face or by telephone interviews.
Speculate About Results
they agree with the conclusions? Also share the conclusions
with other people in the organization and get their feedback.
Adjust your conclusions as needed based on this external
and internal feedback.
Before gathering information about customer needs, it is a
good idea to spend some time speculating about what might
be learned. Write down what you think customers will say so
that you can compare your expectations with what is actually
said. The purpose of this step is to help representatives of the
organization determine whether they are in touch with cus-
tomer needs.
answers to these types of questions can lead to such benefits
as the following:
Deployment of customer requirements (quality needs)
• Product enhancements. By knowing a customer's op-
erations, suppliers might be able to modify their products
to fit in better with the customer's operations. They might
also be able to add attributes that will make the product
Deployment of measurable quality characteristics
Determination of the correlation between quality needs
and characteristics
made? Which of these changes are short term in nature, and
which are long term? Which can be made immediately, and
which will require a longer time? Take any corrective action
that can be made immediately, and lay out a plan for com-
COMMUNICATING WITH
CUSTOMERS
Develop an Information-Gathering Plan
Gather the Information
Assignment of numerical values to each quality characteristic
even more attractive to the customer.
Continual communication with customers is essential in
Integration of quality characteristics into the product
Information gathering should be systematically undertaken
and well organized. Before gathering information, develop a
plan. Decide what types of information are needed and who
will be asked to provide it. Whenever possible, structure the
Before implementing the entire information-gathering plan,
it is a good idea to conduct a smaller pilot study involving Pleting any that is long term in nature. Meet with customers
just a few customers. This will identify problems with the in-
formation-gathering methodology that should be corrected sure that changes are made, to the extent possible, in the
a competitive marketplace. Establishing effective mecha-
nisms for facilitating communication and using them are
critical strategies in establishing a customer focus. One of
the main reasons continual communication is required is
that customer needs change, and at times, they can change
rapidly.
Communication with customers must extend to both
- Improved productivity. By knowing a customer's oper-
ations, suppliers might be able to propose process modifi-
cations that will improve its productivity.
. Internal improvements. By knowing a customer's op-
erations, suppliers might learn facts that lead to internal
improvements in quality, productivity, and design in their
own organizations.
and let them know what is going to be done and when. Make
• Detailed design, production, and quality control of the
product
QFD is discussed in greater detail in Chapter 17. It is
introduced here only to show that it can have a positive
role to play in making sure customer needs are satisfied or
exceeded.
same order of priority as that dictated by customer needs.
Obtain Customer Information
from the Internet
Power Pac Panels of Florida
19 Industrial Parkway, West
Fort Walton Beach, Florida 32548
external and internal customers. What applies on the outside
also applies within the organization.
Communication with customers is sometinmes misun-
Customers don't always use a product in the way a sup-
plier assumes. By getting to know customers and their op-
erations, suppliers have not just made process and product
improvements; some have actually started new product
lines. In any case, the better suppliers know their custom-
ers' operations, the better they can serve them. The better
suppliers serve their customers, the greater the likelihood of
satisfied, long-term customers.
Affinity Diagrams and Design Improvements
Feedback from customers comes in many forms, and depend-
ing on the size of the organization, there can be vast amounts
of it to deal with. However, if customer feedback can be col-
lected, organized, and analyzed to identify patterns and trends,
it can be an invaluable resource for making continual improve-
ments in product design and the manufacturing process.
The affinity diagram is a useful tool for making sense
out of large amounts of customer feedback that might come
to an organization in any number of forms (e.g., customer
complaints, surveys, feedback or comment cards, focus
groups, and telephone discussions). The steps in developing
an affinity diagram are as follows:
1. Form a cross-functional team that includes representa-
tives from all of the key functional areas in the organi-
zation (eg., engineering, marketing, accounting, and
customer service).
Obtaining customer information has become much easier
with the advent of the World Wide Web. Most businesses
• Customers to Be Contacted
Twenty manufacturers of low-voltage power supplies make up 90% of our
business. These customers are located in five southeastem states. Feedback wll
be collected from all twenty of these customers.
derstood as one of the basic strategies used in a total qual-
ity setting. It does not mean asking customers what new
products should be invented. Customers will not tell an or
ganization what product to produce, but they will tell the
organization what they think of its products.
now have extensive Web sites containing volumes of infor-
mation about themselves. This information can be obtained
• What Information Will Be Sought?
Each customer will be asked the following questions
1. Rate the performance of our product from 1 to 10, with 10 representing a
perfect score.
2. What specific problems do you have with our product?
3. What can we do to our product that would raise its perftormance score to a 102
4. What is the priority ranking of your suggested improvements?
by going online and accessing the Web site of the company
in question. Careful scrutiny of a customer's Web site can re-
veal useful information about what is important to that cus-
tomer. It can also reveal who the key players are, who is in
charge of what, and who the best contact might be in a given
situation.
A word of caution is in order, however. There are ethi-
Using Customer Feedback to Make Design
Improvements
QUALITY TIP
Employees Treat Customers as Management Treats
Them
cal issues to be considered when using the Internet to obtain
customer information. Only information available for public
consumption from the customer's Web site should be used. In
the age of technology, Web surfers and computer hackers are
sometimes able to access data about customers that is not in-
It is important for organizations that compete in the global
arena to collect customer input and feedback and use it to
make continual improvements to the design of their prod-
ucts. Quality function deployment is an effective system for
collecting customer input and factoring that input into the
design process. Building affinity diagrams is an effective
method for organizing customer feedback data so that it can
be used to make ongoing design improvements.
• Information-Collection Method
Half of the customens will be contacted in person and half by telephone.
It never ceases to amaze me. A company will have signs and
banners promoting customer satisfaction. Management will lec
ture employees at length on the subject. But employees are
perceptive. They watch managers. They know how the manag-
ers treat customers, and that is how they, the employees, will
treat customers. Managers who want good customer service
must set the example first and lecture second.
• Information Analysis
Information collected will be analyzed by a team with representatives from the
following departments: design, production, quality, marketing, and accounting.
tended to be public. This type of information has value for the
hackers if they can sell it or use it in any other way for personal
gain. Before deciding to use the Internet as a source for cus-
tomer knowledge, organizations should develop guidelines for
2. Ask the team to investigate the following question: What
do our customers dislike the most about our product?
FIGURE 7.3 Information-Gathering Plan.
3. Study the data from all of the various customer feedback
sources and identify categories of complaints, com-
ments, concerns, and issues expressed by customers.
4. Write all of the feedback categories identified on a flip-
chart and post them on a wall where everyone on the
7. Using the header cards, draw an affinity diagram. The
affinity diagram is simply a table consisting of cach
header, with the corresponding frequently given cus-
tomer feedback for that header listed under it. For ex-
ample, assume the product is a piece of home exercise
equipment. Using the first header from above, one part
of the affinity diagram might look like this:
team
easily view them.
5. Sort all of the categories into related groups so that there
are no duplicate categories.
6. Develop header cards for each of the categories remain-
ing on the wall charts. Each card is headed by a sentence
that accurately and succinctly describes the type of
problems for that category. Examples of possible head-
ers are as follows:
Product is too difficult to assemble:
a. Assembly instructions are confusing.
b. Fasteners require a special tool that is not provided.
c. It takes at least three people to install the pulleys.
a. Product is too difficult to assemble.
b. Product does not provide sufficient operating
information.
c. Product wears out too quickly.
Under each header, the most frequently given feedback
that corresponds with that header is listed. With the cus-
tomer feedback data organized, patterns and trends become
obvious. Given this information in this type of format, de-
sign personnel know specifically what they need to do to
improve the design of the product. They can also see imme-
diately if changes in the manufacturing process, packaging
process, or other key processes are needed.
Transcribed Image Text:before you proceed on a larger scale. After the methodol- ogy has been appropriately refined, gather information in a timely manner. the ethical use of information obtained electronically. These guidelines should also specify the types of information that will be pursued electronically and how to respond when offered customer data that might have been obtained unethically. Function Deployment All of the market research in the world won't spare the entrepreneur the anxiety of dealing with the inescapable ele- ment of risk. However, having taken the risk to produce a product, communicating with customers about that prod- uct can ensure that it gets the best possible reception in the marketplace and that it changes as the needs of customers change. and Design Quality Improvements It is important to know that a product will meet the needs of customers before you put it into production. This is the main reason for conducting the research necessary to identify customer needs and for communicating with in- ternal and external customers. Quality function deployment (QFD) was developed with this in mind. QFD is an integrated approach to product development and quality in all preproduction activities. It was introduced in the United States by Professor Y. Akao of the University of Tamagawa as part of a paper he presented at a quality confer- ence in Chicago. QFD is actually a model for incorporating customer input and feedback into product development. In effect, it establishes an operational structure for the concept of building in quality. The philosophy underlying QFD is that even a perfectly manufactured product may not satisfy the customer because it may be nothing more than a perfect example of what the customer doesn't want. QFD allows for the systematic incorporation of cus- tomer needs, production capabilities and capacity, and all other relevant parameters into product development. QFD consists of the following basic activities: QUALITY TIP Customers Frequently Cause Their Own Problems tis often said that "the customer is always right." Philosophi- cally, this is a commendable attitude, but practically it presents some problems. On a practical level not only are customers not always right, they are trequently wrong Often when they complain, customers are the source of their own problems. In- correct use of the product, failure to follow instructions, and unnealistic expectations are often the source of customer com- plaints. Consequently, a better motto for companies that are committed to world-class customer service might be: Custom- ers may not always be right, but they should always be treated right. In this context, "treated right" means treated with respect and an appropriate level of urgency to solve their problem re gardiess of its cause. IDENTIFYING EXTERNAL CUSTOMER NEEDS Analyze the Results Identifying Internal Customer Needs Historically, customers were excluded from the product development process. When this approach is used, the or- ganization producing the product is taking a chance that it will satisfy the customer. In a competitive marketplace that is global in scope, such an approach can be disastrous. Ina total quality setting, customer needs are identified clearly as a normal part of product development. Peter Scholtes, Barbara Streibel, and Brian Joiner recommend the six-step strategy for identifying customer needs that is described in the following subsections. The authors of this text recom- mend a seventh step involving Internet research. Results should be analyzed carefully and objectively. Do they match the speculated results from the first step? How do they agree and disagree? What problems did customers identify? What strong points? Were there trends? How many customers complained of the same problem? What changes in the product or services relating to it were suggested? Identifying the needs of internal customers is a matter of ensuring that employees who depend on one another as individ- uals, as well as departments that depend on each other as units, communicate their needs to one another continually. However, one should not assume that communication will just happen. As important as it is, communication rarely just happens in any setting. Rather, it must be encouraged and facilitated. Quality circles, self-managed teams, cross-departmental teams, and improvement teams are all examples of mecha- nisms for improving communication and, in turn, quality. These mechanisms facilitate communication among internal customers and suppliers. However, they are not mechanisms available. Communication that occurs over a cup of coffee in the break room or during lunch can be equally effective. Training that promotes communication and helps these can help a supplier improve customer satisfaction. The improve communication skills is also important (this is dis- cussed in greater depth in Chapter 11). Teamwork and how it can improve communication is discussed in Chapter 10 Know Your Customer's Operations As a supplier to other companies (customers), it is important to know their operations. The more that is known about a customer's operations, the easier it will be to provide prod- ucts that meet its needs. Check the Validity of Conclusions Having drawn conclusions based on the information gath- ered, the next step is to check the validity of those conclu- sions. Customers can be a valuable source of help. Select What does the customer do with our product? How is it used? Is our product part of a larger assembly? Does the customer use our product in the way we expect or in some different way? Does the customer modify our product in any way? What processes does the customer use in working with our product? Knowing the answers to questions such as several customers and share the conclusions with them. Do only plan so that information is collected in face-to-face inter- views. When personal visits are not possible, use the tele- phone. Written surveys sent out through the mail cannot produce a level of feedback equal to that gained from the nonverbal messages, impressions, and follow-up questions that are a part of person-to-person interviews. Figure 7.3 is an example of an information-gathering Take Action plan. Notice that it is structured for collecting information Based on the final conclusions, what changes need to be either face to face or by telephone interviews. Speculate About Results they agree with the conclusions? Also share the conclusions with other people in the organization and get their feedback. Adjust your conclusions as needed based on this external and internal feedback. Before gathering information about customer needs, it is a good idea to spend some time speculating about what might be learned. Write down what you think customers will say so that you can compare your expectations with what is actually said. The purpose of this step is to help representatives of the organization determine whether they are in touch with cus- tomer needs. answers to these types of questions can lead to such benefits as the following: Deployment of customer requirements (quality needs) • Product enhancements. By knowing a customer's op- erations, suppliers might be able to modify their products to fit in better with the customer's operations. They might also be able to add attributes that will make the product Deployment of measurable quality characteristics Determination of the correlation between quality needs and characteristics made? Which of these changes are short term in nature, and which are long term? Which can be made immediately, and which will require a longer time? Take any corrective action that can be made immediately, and lay out a plan for com- COMMUNICATING WITH CUSTOMERS Develop an Information-Gathering Plan Gather the Information Assignment of numerical values to each quality characteristic even more attractive to the customer. Continual communication with customers is essential in Integration of quality characteristics into the product Information gathering should be systematically undertaken and well organized. Before gathering information, develop a plan. Decide what types of information are needed and who will be asked to provide it. Whenever possible, structure the Before implementing the entire information-gathering plan, it is a good idea to conduct a smaller pilot study involving Pleting any that is long term in nature. Meet with customers just a few customers. This will identify problems with the in- formation-gathering methodology that should be corrected sure that changes are made, to the extent possible, in the a competitive marketplace. Establishing effective mecha- nisms for facilitating communication and using them are critical strategies in establishing a customer focus. One of the main reasons continual communication is required is that customer needs change, and at times, they can change rapidly. Communication with customers must extend to both - Improved productivity. By knowing a customer's oper- ations, suppliers might be able to propose process modifi- cations that will improve its productivity. . Internal improvements. By knowing a customer's op- erations, suppliers might learn facts that lead to internal improvements in quality, productivity, and design in their own organizations. and let them know what is going to be done and when. Make • Detailed design, production, and quality control of the product QFD is discussed in greater detail in Chapter 17. It is introduced here only to show that it can have a positive role to play in making sure customer needs are satisfied or exceeded. same order of priority as that dictated by customer needs. Obtain Customer Information from the Internet Power Pac Panels of Florida 19 Industrial Parkway, West Fort Walton Beach, Florida 32548 external and internal customers. What applies on the outside also applies within the organization. Communication with customers is sometinmes misun- Customers don't always use a product in the way a sup- plier assumes. By getting to know customers and their op- erations, suppliers have not just made process and product improvements; some have actually started new product lines. In any case, the better suppliers know their custom- ers' operations, the better they can serve them. The better suppliers serve their customers, the greater the likelihood of satisfied, long-term customers. Affinity Diagrams and Design Improvements Feedback from customers comes in many forms, and depend- ing on the size of the organization, there can be vast amounts of it to deal with. However, if customer feedback can be col- lected, organized, and analyzed to identify patterns and trends, it can be an invaluable resource for making continual improve- ments in product design and the manufacturing process. The affinity diagram is a useful tool for making sense out of large amounts of customer feedback that might come to an organization in any number of forms (e.g., customer complaints, surveys, feedback or comment cards, focus groups, and telephone discussions). The steps in developing an affinity diagram are as follows: 1. Form a cross-functional team that includes representa- tives from all of the key functional areas in the organi- zation (eg., engineering, marketing, accounting, and customer service). Obtaining customer information has become much easier with the advent of the World Wide Web. Most businesses • Customers to Be Contacted Twenty manufacturers of low-voltage power supplies make up 90% of our business. These customers are located in five southeastem states. Feedback wll be collected from all twenty of these customers. derstood as one of the basic strategies used in a total qual- ity setting. It does not mean asking customers what new products should be invented. Customers will not tell an or ganization what product to produce, but they will tell the organization what they think of its products. now have extensive Web sites containing volumes of infor- mation about themselves. This information can be obtained • What Information Will Be Sought? Each customer will be asked the following questions 1. Rate the performance of our product from 1 to 10, with 10 representing a perfect score. 2. What specific problems do you have with our product? 3. What can we do to our product that would raise its perftormance score to a 102 4. What is the priority ranking of your suggested improvements? by going online and accessing the Web site of the company in question. Careful scrutiny of a customer's Web site can re- veal useful information about what is important to that cus- tomer. It can also reveal who the key players are, who is in charge of what, and who the best contact might be in a given situation. A word of caution is in order, however. There are ethi- Using Customer Feedback to Make Design Improvements QUALITY TIP Employees Treat Customers as Management Treats Them cal issues to be considered when using the Internet to obtain customer information. Only information available for public consumption from the customer's Web site should be used. In the age of technology, Web surfers and computer hackers are sometimes able to access data about customers that is not in- It is important for organizations that compete in the global arena to collect customer input and feedback and use it to make continual improvements to the design of their prod- ucts. Quality function deployment is an effective system for collecting customer input and factoring that input into the design process. Building affinity diagrams is an effective method for organizing customer feedback data so that it can be used to make ongoing design improvements. • Information-Collection Method Half of the customens will be contacted in person and half by telephone. It never ceases to amaze me. A company will have signs and banners promoting customer satisfaction. Management will lec ture employees at length on the subject. But employees are perceptive. They watch managers. They know how the manag- ers treat customers, and that is how they, the employees, will treat customers. Managers who want good customer service must set the example first and lecture second. • Information Analysis Information collected will be analyzed by a team with representatives from the following departments: design, production, quality, marketing, and accounting. tended to be public. This type of information has value for the hackers if they can sell it or use it in any other way for personal gain. Before deciding to use the Internet as a source for cus- tomer knowledge, organizations should develop guidelines for 2. Ask the team to investigate the following question: What do our customers dislike the most about our product? FIGURE 7.3 Information-Gathering Plan. 3. Study the data from all of the various customer feedback sources and identify categories of complaints, com- ments, concerns, and issues expressed by customers. 4. Write all of the feedback categories identified on a flip- chart and post them on a wall where everyone on the 7. Using the header cards, draw an affinity diagram. The affinity diagram is simply a table consisting of cach header, with the corresponding frequently given cus- tomer feedback for that header listed under it. For ex- ample, assume the product is a piece of home exercise equipment. Using the first header from above, one part of the affinity diagram might look like this: team easily view them. 5. Sort all of the categories into related groups so that there are no duplicate categories. 6. Develop header cards for each of the categories remain- ing on the wall charts. Each card is headed by a sentence that accurately and succinctly describes the type of problems for that category. Examples of possible head- ers are as follows: Product is too difficult to assemble: a. Assembly instructions are confusing. b. Fasteners require a special tool that is not provided. c. It takes at least three people to install the pulleys. a. Product is too difficult to assemble. b. Product does not provide sufficient operating information. c. Product wears out too quickly. Under each header, the most frequently given feedback that corresponds with that header is listed. With the cus- tomer feedback data organized, patterns and trends become obvious. Given this information in this type of format, de- sign personnel know specifically what they need to do to improve the design of the product. They can also see imme- diately if changes in the manufacturing process, packaging process, or other key processes are needed.
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