MBA 640 Conduct a Research
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WhatisMarketing_.pdf
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What is Marketing?
What makes a business idea work? Does it only take money? Why are some products a
huge success and similar products a dismal failure? How was Apple, a computer company,
able to create and launch the wildly successful iPod, yet Microsoft's first foray into digital
audio players was a total disaster? If the size of the company and the money behind a
product's launch were the difference, Microsoft would have won. But for Microsoft to
have won, it would have needed something it has not had in a while—good marketing, so it
could produce and sell products that consumers want.
So how does good marketing get done?
Defining Marketing
Marketing is defined by the American Marketing Association as "the activity, set of
institutions, and processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners, and society at large" (American
Marketing Association, n.d.). If you read the definition closely, you see that there are four
activities, or components, of marketing:
creating—the process of collaborating with suppliers and customers to create
offerings that have value
communicating—broadly, describing those offerings, as well as learning from
customers
delivering—getting those offerings to the consumer in a way that optimizes value
exchanging—trading value for those offerings
The traditional way of viewing the components of marketing is via the four Ps:
product—goods and services (creating offerings)
promotion—communication
Learning Resource
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place—getting the product to a point at which the customer can purchase it
(delivering)
price—the monetary amount charged for the product (exchanging)
Introduced in the early 1950s, the four Ps were called the marketing mix, meaning that a
marketing plan is a mix of these four components.
If the four Ps are the same as creating, communicating, delivering, and exchanging, you
might be wondering why there was a change. The answer is that they are not exactly the
same. Product, price, place, and promotion are nouns. As such, these words fail to capture
all the activities of marketing. For example, exchanging requires mechanisms for a
transaction, which consist of more than simply a price or place. Exchanging requires,
among other things, the transfer of ownership. For example, when you buy a car, you sign
documents that transfer the car's title from the seller to you. That's part of the exchange
process.
Even the term product, which seems pretty obvious, is limited. Does the product include
services that come with your new car purchase (such as free maintenance for a certain
period of time on some models)? Or does the product mean only the car itself?
Finally, none of the four Ps describes particularly well what marketing people do.
However, one of the goals of this book is to focus on exactly what marketing professionals
do.
Value
Value is at the center of everything marketers do. What does value mean?
When we use the term value, we mean the benefits buyers receive that meet their needs.
In other words, value is what the customer gets by purchasing and consuming a company's
offering. Although the offering is created by the company, the value is determined by the
customer.
Furthermore, our goal as marketers is to create a profitable exchange for consumers. By
profitable, we mean that the consumer's personal value equation is positive. The personal
value equation is
value = benefits received – [price + hassle].
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Hassle is the time and effort the consumer puts into the shopping process. The equation
reflects personal impressions, because each consumer will judge the benefits of a product
differently, as with the time and effort he or she puts into shopping. Value, then, varies for
each consumer.
One way to think of value is to imagine a meal in a restaurant. If you and three friends go
to a restaurant and order the same dish, each of you will like it more or less depending on
your personal tastes. Yet the dish was exactly the same, priced the same, and served
exactly the same way. Because your tastes varied, the benefits you received varied.
Therefore, the value varied for each of you. That's why we call it a personal value
equation.
Value varies from customer to customer based on each customer's needs. The marketing
concept, a philosophy underlying all that marketers do, requires that marketers seek to
satisfy customer wants and needs. Firms operating with that philosophy are said to be
market oriented. At the same time, market-oriented firms recognize that the exchange
must be profitable for the company to be successful. A marketing orientation is not an
excuse to fail to make profit.
Firms don't always embrace the marketing concept and a market orientation. Beginning
with the Industrial Revolution in the late 1800s, companies were production oriented.
They believed that the best way to compete was by reducing production costs. In other
words, companies thought that good products would sell themselves. Perhaps the best
example of such a product was Henry Ford's Model A automobile, the first product of his
production line innovation. Ford's production line made the automobile cheap and
affordable for many more people. The production era lasted until the 1920s, when
production-capacity growth began to outpace demand growth, and new strategies were
called for. There are, however, companies that still focus on production as the way to
compete.
From the 1920s until after World War II, companies tended to be selling oriented,
meaning they believed it was necessary to push their products by heavily emphasizing
advertising and selling. Consumers during the Great Depression and World War II did not
have as much money, so the competition for their available dollars was stiff. The result
was this push approach during the selling era. Companies like the Fuller Brush Company
and Hoover Vacuum began selling door-to-door, and the vacuum-cleaner salesperson
position was created. Just as with production, some companies still operate with a push
focus.
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In the post–World War II environment, demand for goods increased as the economy
soared. Some products, limited in supply during World War II, were now plentiful to the
point of surplus. Companies believed that to compete, they had to sell different products
than the competition, so many focused on product innovation. This focus on product
innovation is called the product orientation. Companies like Procter & Gamble created
many products that served the same basic function as one another, but with a slight twist
or difference in order to appeal to a different consumer, and as a result products
proliferated. But as consumers had many choices available to them, companies had to find
new ways to compete. Which products were best to create? Why create them? The
answer was to create what customers wanted, leading to the development of the
marketing concept, and from about 1950 to 1990, businesses operated in the marketing
era.
So what era would you say we're in now? Some call it the value era, a time when
companies emphasize creating value for customers. Is that really different from the
marketing era, in which the emphasis was on fulfilling the marketing concept? Maybe not.
Others call today's business environment the one-to-one era, meaning that the way to
compete is to build relationships with customers one at a time and to serve each
customer's needs individually. For example, the longer you are a customer of Amazon, the
more details they gain about your purchasing habits and the better they can target you
with offers of new products. With the advent of social media and the empowerment of
consumers through ubiquitous information from consumer reviews, there is clearly greater
emphasis on meeting customer needs. But is that substantially different from the
marketing concept?
Still others argue that this is the time of service-dominant logic, and that we are in the
service-dominant logic era.
Service-dominant logic is an approach to business that
recognizes that consumers want value no matter how it is
delivered, whether it's via a product, a service, or a
combination of the two.
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Although there is merit in this belief, there is also merit to the value approach and the
one-to-one approach, and all three beliefs are intertwined. Perhaps, then, the name for
this era has yet to be decided.
Whatever era we're in now, most historians would agree that defining and labeling it is
difficult. Value and one-to-one approaches are both natural extensions of the marketing
concept, so we may still be in the marketing era. To make matters more confusing, not all
companies adopt the philosophy of the era. For example, in the 1800s, Singer and
National Cash Register adopted strategies rooted in sales, so they operated in the selling
era forty years before it existed. Some companies are still in the selling era. Recently, many
believed automobile manufacturers had fallen into trouble because they had been working
too hard to sell or push product and not hard enough on delivering value.
Creating Offerings That Have Value
Marketing creates goods and services that the company offers at a price to its customers
or clients. The entire bundle consisting of the tangible good, the intangible service, and
the price is the company's offering. When you compare one car to another, for example,
you can evaluate each of these dimensions—the tangible, the intangible, and the price—
separately. However, you can't buy one manufacturer's car, another manufacturer's
service, and a third manufacturer's price when you actually make a choice. Together, the
three make up a single firm's offer.
Marketing people do not create the offering alone. For example, when the iPad was
created, Apple's engineers were also involved in its design. Apple's financial personnel had
to review the costs of producing the offering and provide input on how it should be
priced. Apple's operations group needed to evaluate the manufacturing requirements the
iPad would need. The company's logistics managers had to evaluate the cost and timing of
getting the offering to retailers and consumers. Apple's dealers also likely provided input
regarding the iPad's service policies and warranty structure. Marketing, however, has the
biggest responsibility because it is their responsibility to ensure that the new product
delivers value.
Communicating Offerings
Communicating is a broad term in marketing that means describing the offering and its
value to your potential and current customers, as well as learning from customers what
they want and like. Sometimes communicating means educating potential customers
about the value of an offering, and sometimes it means simply making customers aware of
where they can find a product. Communicating also means that customers get a chance to
tell the company what they think. Today, companies are finding that to be successful, they
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need a more interactive dialogue with their customers. For example, Comcast customer
service representatives monitor Twitter. When they observe consumers tweeting
problems with Comcast, the customer service reps will post resolutions to their problems.
Similarly, JCPenney has created consumer groups that talk among themselves on
JCPenney-monitored websites. The company might post questions, send samples, or
engage in other activities designed to solicit feedback from customers.
Mobile devices, like iPads and Android smartphones, make mobile marketing possible too.
For example, if consumers check in at a shopping mall on Foursquare or Facebook, stores
in the mall can send coupons and other offers directly to their phones and computers.
Companies use many forms of communication, including advertising on the internet or
television, on billboards or in magazines, through product placements in movies, and
through salespeople. Other forms of communication include attempting to have news
media cover the company's actions (part of public relations), participating in special events
such as the annual International Consumer Electronics Show in which Apple and other
companies introduce their newest gadgets, and sponsoring special events like the Susan G.
Komen Race for the Cure.
Delivering Offerings
Marketing can't just promise value, it also has to deliver value. Delivering an offering that
has value is much more than simply getting the product into the hands of the user; it also
entails making sure the user understands how to get the most out of the product and that
he or she is taken care of if service is required later on. Value is delivered in part through a
company's supply chain. The supply chain includes a number of organizations and
functions that mine, make, assemble, or deliver materials and products from a
manufacturer to consumers. The actual group of organizations can vary greatly from
industry to industry, and include wholesalers, transportation companies, and retailers.
Logistics, or the actual transportation and storage of materials and products, is the
primary component of supply-chain management, but there are other aspects of supply-
chain management that we will discuss later.
Exchanging Offerings
In addition to creating an offering, communicating its benefits to consumers, and
delivering the offering, there is the actual transaction, or exchange, that has to occur. In
most instances, we consider the exchange to be cash for products and services. However,
if you were to fly to Louisville, Kentucky, for the Kentucky Derby, you could pay for your
airline tickets using frequent-flier miles. You could also use Hilton Honors points to pay for
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your hotel, and cash-back points on your Discover card to pay for meals. None of these
transactions would actually require cash. Other exchanges, such as information about your
preferences gathered through surveys, might not involve cash.
When consumers acquire, consume, and dispose of products and services, an exchange
occurs. For example, via Apple's One-to-One program, you can pay a yearly fee in
exchange for additional periodic product training sessions with an Apple professional.
Each time a training session occurs, another transaction takes place. A transaction also
occurs when you are finished with a product. For example, you might sell your old iPhone
to a friend, trade in a car, or ask the Salvation Army to pick up your old refrigerator.
Disposing of products has become an important ecological issue. Batteries and other
components of cell phones, computers, and high-tech appliances can be very harmful to
the environment, and many consumers don't know how to dispose of these products
properly. Some companies, such as Office Depot, have created recycling centers where
customers can take their old electronics.
Apple has a web page where consumers can fill out a form, print it, and ship it to Apple
along with their old cell phones and MP3 players. Apple then pulls out the materials that
are recyclable and properly disposes of those that aren't. By reducing the hassle
associated with disposing products, Office Depot and Apple add value to their product
offerings.
The focus of marketing has changed from emphasizing the product, price,
place, and promotion mix to one that emphasizes creating,
communicating, delivering, and exchanging value. Value is a function of
the benefits an individual receives, and consists of the price the
consumer paid and the time and effort the person expended making the
purchase.
Who Does Marketing?
The short answer to the question of who does marketing is "everybody!" But let's take a
moment and consider in greater detail how different types of organizations engage in
marketing.
Key Points
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For-Profit Companies
The obvious answer to the question, who does marketing? is for-profit companies like
McDonald's, Procter & Gamble (the makers of Tide detergent and Crest toothpaste), and
Walmart. For example, McDonald's creates a new breakfast chicken sandwich for $1.99
(the offering), launches a television campaign (communicating), makes the sandwiches
available on certain dates (delivering), and then sells them in its stores (exchanging). When
Procter & Gamble (P&G) creates a new Crest tartar-control toothpaste, it launches a
direct-mail campaign in which it sends information and samples for dentists to offer to
their patients. P&G then sells the toothpaste through retailers like Walmart, which has a
panel of consumers sample the product and provide feedback through an online
community. These are all examples of marketing activities.
For-profit companies can be defined by the nature of their customers. A business-to-
consumer (B2C) company like P&G sells products to be used by consumers like you, while
a business-to-business (B2B) company sells products to be used within another company's
operations, as well as by government agencies and entities. To be sure, P&G sells
toothpaste to other companies like Walmart (and probably to the army, prisons, and other
government agencies), but the end user is an individual person.
Another way to categorize companies that engage in marketing is by the functions they
fulfill. P&G is a manufacturer, Walmart is a retailer, and Grocery Supply Company is a
wholesaler of grocery items that buys from companies like P&G in order to sell to small
convenience store chains. Though they have different functions, all these types of for-
profit companies engage in marketing activities. Walmart, for example, advertises to
consumers.
Grocery Supply Company salespeople will call on convenience store owners to take orders
and will build in-store displays. P&G might help Walmart or Grocery Supply Company with
templates for advertising or suggest special cartons to use in an in-store display, but all
the companies are using marketing to help sell P&G's toothpaste.
Similarly, all the companies engage in dialogue with their customers to understand what to
sell. For Walmart and Grocery Supply, the dialogue may result in changing what they buy
and sell. For P&G, customer feedback may yield a new product or a change in pricing
strategy.
Nonprofit Organizations
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Nonprofit organizations also engage in marketing. When the American Heart Association
(AHA) created a heart-healthy diet for people with high blood pressure, it bound the diet
into a small book, along with access to a special website that people could use to plan
their meals and record their health-related activities. The AHA then sent copies of the diet
to doctors to give to patients. When does an exchange take place, you might be
wondering? And what does the AHA get out of the transaction?
From a financial standpoint, the AHA does not directly benefit. Nonetheless, the
organization is meeting its mission, or purpose, of getting people to live heart-healthy lives
and considers the campaign a success when doctors give the books to their patients. The
point is that the AHA is engaged in the marketing activities of creating, communicating,
delivering, and exchanging. This won't involve the same kind of exchange as a for-profit
company, but it is still marketing.
When a nonprofit organization engages in marketing
activities, this is called nonprofit marketing.
Some schools offer specific courses in nonprofit marketing, and many marketing majors
begin their careers with nonprofit organizations.
Government entities also engage in marketing activities. For example, when the US Army
advertises to parents of prospective recruits, sends brochures to high schools, or brings a
Bradley Fighting Vehicle to a state fair, the army is engaging in marketing. The US Army
also listens to its constituencies, as evidenced by recent research aimed at understanding
how to serve military families more effectively. One result was advertising aimed at
improving parents' responses to their children's interest in joining the army. Another was a
program aimed at encouraging spouses of military personnel to access counseling services
when their spouse is serving overseas.
Similarly, the Environmental Protection Agency (EPA) runs a number of advertising
campaigns designed to promote environmentally friendly activities. One such campaign
promoted the responsible disposal of motor oil instead of simply pouring it on the ground
or into a storm sewer.
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There is a difference between these two types of activities. When the army is promoting
the benefits of enlisting, it hopes young men and women will join the army. By contrast,
when the EPA runs commercials about how to properly dispose of motor oil, it hopes to
change people's attitudes and behaviors so that social change occurs. Social marketing,
which can be done by government agencies, nonprofit institutions, religious organizations,
and others, is conducted in an effort to achieve certain social objectives. Convincing
people that global warming is a real threat via advertisements and commercials is social
marketing, as is the example regarding the EPA's campaign to promote the responsible
disposal of motor oil.
Individuals
If you create a résumé, are you using marketing to communicate the value you have to
offer prospective employers? If you sell yourself in an interview, is that marketing? When
you work for a wage, you are delivering value in exchange for pay. Is this marketing, too?
Some people argue that these are not marketing activities and that individuals do not
necessarily engage in marketing. (Some people also argue that social marketing really isn't
marketing either.) What do you think? Can individuals market themselves and their ideas?
Marketing can be thought of as a set of business practices that for-profit
organizations, nonprofit organizations, government entities, and
individuals can use. When a nonprofit organization engages in marketing
activities, this is called nonprofit marketing. Marketing conducted in an
effort to achieve certain social objectives is called social marketing.
What types of companies engage in marketing?
What is the difference between nonprofit marketing and social
marketing?
What can individuals do for themselves that would be considered
marketing?
Key Points
Ask Yourself
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Why Study Marketing?
Products don't sell themselves. Generally, the "build it and they will come" philosophy
doesn't work. Good marketing educates customers so that they can find the products they
want, make better choices about those products, and extract the most value from them. In
this way, marketing helps facilitate exchanges between buyers and sellers for the mutual
benefit of both parties. Likewise, good social marketing provides people with information
and helps them make healthier decisions for themselves and others.
Of course, all business students should understand all functional areas of the firm,
including marketing. There is more to marketing, however, than simply understanding its
role in the business. Marketing has a tremendous impact on society.
Marketing Delivers Value
Marketing not only delivers value to customers, it also creates value for the firm as it
develops a reliable customer base and increases its sales and profitability. Franklin D.
Roosevelt, the US president with perhaps the greatest influence on our economic system,
once said, "If I were starting life over again, I am inclined to think that I would go into the
advertising business in preference to almost any other. The general raising of the
standards of modern civilization among all groups of people during the past half century
would have been impossible without the spreading of the knowledge of higher standards
by means of advertising" (Famous Quotes and Authors, n.d.). Roosevelt referred to
advertising, but advertising alone is insufficient for delivering value. Marketing finishes the
job by ensuring that what is delivered is valuable.
Marketing Benefits Society
Marketing benefits society in general by improving people's lives in two ways. First, as we
mentioned, it facilitates trade. As you have learned, or will learn, in economics, being able
to trade makes people's lives better. Because better marketing means more successful
companies, jobs are created. This growth generates wealth for workers, who are then able
to make purchases, which, in turn, creates more jobs.
The second way marketing improves the quality of life is through the function of the
value-delivery approach in creating choices for consumers. When you add all the
marketers together who are trying to deliver offerings of greater value to consumers and
are effectively communicating that value, consumers are able to make more informed
decisions about a wider array of choices. From an economic perspective, more choices and
smarter consumers are indicative of a higher quality of life.
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Marketing Costs Money
Marketing can sometimes be the largest expense associated with producing a product. In
the soft drink business, marketing expenses account for about one-third of a product's
price—about the same as the ingredients used to make the soft drink itself.
Some people argue that society does not benefit from marketing when it represents such
a huge chunk of a product's final price. In some cases, that argument is justified. Yet when
marketing results in more informed consumers receiving a greater amount of value, the
cost is justified.
Marketing Offers People Career Opportunities
Marketing is the interface between producers and consumers, shouldering the
responsibility for both making money for the company and delivering satisfaction to
customers. In addition, because marketing can be such an expensive part of a business and
is so critical to its success, companies actively seek strong marketing employees. There are
a variety of jobs available in the marketing profession. The following positions represent
only a few of the opportunities available in the field.
marketing research—Personnel in marketing research are responsible for studying
markets and customers in order to understand what strategies or tactics might work
best for firms.
merchandising—In retailing, merchandisers are responsible for developing strategies
regarding what products wholesalers should carry to sell to retailers such as Target
and Walmart.
sales—Salespeople meet with customers, determine their needs, propose offerings,
and make sure that the customer is satisfied. Sales departments can also include
sales support teams who work on creating the offering.
advertising—Whether it's for an advertising agency or inside a company, some
marketing personnel work on advertising. Television commercials and print ads are
only part of the advertising mix. Many people who work in advertising spend all their
time creating advertising for electronic media, such as websites and their pop-up
ads, podcasts, etc.
product development—People in product development are responsible for
identifying and creating features that meet the needs of a firm's customers. They
often work with engineers or other technical personnel to ensure that value is
created.
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direct marketing—Professionals in direct marketing communicate directly with
customers about a company's product offerings via channels such as e-mail, chat
lines, telephone, or direct mail.
digital media—Digital media professionals combine advertising, direct marketing, and
other areas of marketing to communicate directly with customers via social media,
the web, and mobile media (including texts). They also work with statisticians in
order to determine which consumers receive which message, and with IT
professionals to create the right look and feel of digital media.
event marketing—Some marketing personnel plan special events, orchestrating face-
to-face conversations with potential and current customers in a special setting.
nonprofit marketing—Nonprofit marketers often don't get to do everything listed
previously, as nonprofits typically have smaller budgets. But their work is always
very important as they try to change behaviors without having a product to sell.
A career in marketing can begin in a variety of ways. Entry-level positions for new college
graduates are available in many of the roles previously mentioned.
A growing number of CEOs are people with marketing backgrounds. Some legendary
CEOs, like Ross Perot and Mary Kay Ash, got their start in marketing. More recently, CEOs
like Mark Hurd, CEO of Oracle, and Jeffrey Immelt at GE, are showing how marketing
careers can lead to the highest position of an organization.
Criticisms of Marketing
Marketing is not without its critics. We already mentioned that one reason to study
marketing is because it is costly, and business leaders need to understand the cost/benefit
ratio of marketing in order to make wise investments. Yet that cost is precisely why some
criticize marketing. Some allege that if that money could be put into research and
development of new products, perhaps the consumers would be better satisfied. Or, some
critics argue, prices could be lowered. But marketing executives do not intentionally waste
money on marketing, and are always on the lookout for less expensive ways to have the
same performance.
Another criticism is that marketing creates wants among consumers for products and
services that aren't really needed. For example, fashion marketing creates demand for
high-dollar jeans when much less expensive jeans can fulfill the same basic function. Taken
to the extreme, consumers may take on significant credit card debt to satisfy wants
created by marketing, with serious negative consequences. When marketers target their
messages carefully so an audience that can afford such products is the only group
reached, such extreme consequences can be avoided.
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By facilitating transactions, marketing delivers value to both consumers
and firms. At the broader level, this process creates jobs and improves
the quality of life in a society. Marketing can be costly, so firms need to
hire strong employees to manage their marketing activities. Being
responsible for both making money for your company and delivering
satisfaction to your customers makes marketing a great career.
Why study marketing?
How does marketing provide value?
Why does marketing cost so much? Is marketing worth it?
What is the main cost of marketing?
Themes in Marketing
We previously discussed marketing as a set of activities that anyone can do. Marketing is
also a functional area in companies, just like operations and accounting. Within a company,
marketing might be the title of a department, but some marketing functions, such as sales,
might be handled by another department. Marketing activities do not occur separately
from the rest of the company, however.
As we have explained, pricing an offering, for example, will involve a company's finance
and accounting departments in addition to the marketing team. Similarly, a marketing
strategy is not created solely by a firm's marketing personnel. Instead, it flows from the
company's overall strategy.
Everything Starts with Customers
Most organizations start with an idea of how to serve customers better. Apple's engineers
began working on the iPod by looking at the available technology and thinking about how
customers would like to improve the availability and affordability of their music, through
Key Points
Ask Yourself
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downloading.
Many companies think about potential markets and customers when they start. John
Deere, for example, founded his company on the principle of serving customers. When
admonished for making constant improvements to his products even though farmers
would take whatever they could get, Deere reportedly replied, "They haven't got to take
what we make and somebody else will beat us, and we will lose our trade" (John Deere,
n.d.). He recognized that if his company failed to meet customers' evolving needs,
someone else would.
Here are a few mission statements from other companies. Note that they all refer to their
customers, directly or indirectly. Note also how these are written to inspire employees and
others who interact with the company.
Company Mission Statements
IBM
IBM will be driven by these values:
Dedication to every client's success.
Innovation that matters, for our company and
for the world.
Trust and personal responsibility in all
relationships. (IBM, n.d.)
Coca-Cola
Everything we do is inspired by our enduring mission:
To refresh the world in body, mind, and spirit.
To inspire moments of optimism through our
brands and our actions.
To create value and make a difference
everywhere we engage. (Coca-Cola Company,
n.d.)
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Not all companies create mission statements that reflect a marketing orientation. Note
Apple's mission statement: "Apple ignited the personal computer revolution in the 1970s
with the Apple II and reinvented the personal computer in the 1980s with the Macintosh.
Today, Apple continues to lead the industry in innovation with its award-winning
computers, OS X operating system and iLife and professional applications. Apple is also
spearheading the digital media revolution with its iPod portable music and video players
and iTunes online store, and has entered the mobile phone market with its revolutionary
iPhone" (Apple, Inc, 2009). This mission statement reflects a product orientation, or an
operating philosophy based on the premise that Apple's success is due to great products
and that simply supplying them will lead to demand for them. Apple, and for that matter,
many other companies, have fallen prey to thinking that they knew what a great product
was without asking their customers. In fact, Apple's first attempt at a graphic user
interface (GUI) was the LISA, a dismal failure.
The Marketing Plan
The marketing plan is the strategy for implementing the components of marketing:
creating, communicating, delivering, and exchanging value. Once a company has decided
what business it is in and expressed that in a mission statement, the firm then develops a
corporate strategy. Marketing strategists subsequently use the corporate strategy and
mission and combine that with an understanding of the market to develop the company's
marketing plan.
McDonald’s
To be our customers' favorite place and way to eat
(McDonald's, n.d.).
Merck
To provide innovative and distinctive products and
services that save and improve lives and satisfy
customer needs, to be recognized as a great place to
work, and to provide investors with a superior rate of
return (Merck & Co., n.d.).
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Marketers also want to know their customers—who they are and what they like to do—so
as to uncover this information. Generally, this requires marketing researchers to collect
sales and other related customer data and analyze it. In this pursuit, there are three
important goals: understanding the customer's wants and needs, understanding how the
customer wants to acquire, consume, and dispose of the offering, and determining what
makes up their personal value equation.
Once this information is gathered and digested, the planners can work to create the right
offering. Products and services are developed, bundled together at a price, and then
tested in the market. Decisions have to be made about when to alter the offerings, add
new ones, or drop old ones. These decisions are the focus of the next set of chapters and
are the second step in marketing planning.
Following the material on offerings, we explore the decisions associated with building the
value chain. Once an offering is designed, the company has to be able to make it and then
be able to get it to the market. This step, planning for the delivery of value, is the third
step in the marketing plan.
The fourth step is creating the plan for communicating value. How does the firm make
consumers aware of the value it has to offer? How can it help them recognize that value
and decide that they should purchase products? These are important questions for
marketing planners.
Once a customer has decided that her personal value equation is likely to be positive, she
will decide to purchase the product. That decision still has to be acted on, however, which
is the exchange. As exchanges occur, marketing planners then refine their plans based on
the feedback they receive from their customers, as well as what their competitors are
doing and how market conditions are changing.
The Changing Marketing Environment
We previously mentioned that the view of marketing has changed from a static set of four
Ps to a dynamic set of processes that involve marketing professionals as well as many
other employees in an organization. The way business is being conducted today is
changing, too, and marketing is changing along with it. There are several themes that
underscore these changes.
ethics and social responsibility—Businesses exist only because society allows them
to. When businesses begin to fail society, society will punish them or revoke their
license. The crackdown on companies in the subprime mortgage–lending industry is
one example. These companies created and sold loans (products) that could only be
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paid back under ideal circumstances, and when consumers couldn't pay these loans
back, the entire economy suffered greatly. Scandals such as these illustrate how
society responds to unethical business practices. However, whereas ethics require
only that you do no harm, the concept of social responsibility requires that you
actively seek to improve the lives of others. Today, people are demanding businesses
take a proactive stance in terms of social responsibility, and companies are being
held to ever-higher standards of conduct.
sustainability—An example of social responsibility, sustainability involves engaging in
practices that do not diminish the earth's resources. Coca-Cola, for example, is
working with governments in Africa to ensure clean water availability, not just for
manufacturing Coke products but for all consumers in that region. Further, the
company seeks to engage the participation of American by offering opportunities to
contribute to clean-water programs. Right now, companies do not have to engage in
these practices, but because firms represent the people behind them (their owners
and employees), forward-thinking executives are seeking ways to reduce the impact
their companies are having on the planet.
service-dominant logic—You might have noticed that we use the word offering a lot
instead of the term product. That's because of service-dominant logic, the approach
to business that recognizes that consumers want value no matter how it is delivered
—whether through a tangible product or through intangible services. This emphasis
on value drives the functional approach to value that we've taken—that is, creating,
communicating, delivering, and exchanging value.
metrics—Technology has increased the amount of information available to decision
makers. As such, the amount and quality of data for evaluating a firm's performance
is increasing. Earlier in our discussion of the marketing plan, we explained that
customers communicate via transactions. Although this sounds both simple and
obvious, better information technology has given us a much more complete picture
of each exchange. Cabela's, for example, combines data from Web browsing activity
with purchase history in order to determine the likely next-best offer. Using data
from many sources, we can build more-effective metrics that can then be used to
create better offerings, better communication plans, and so forth.
a global environment—Every business is influenced by global issues. The price of oil,
for example, is a global concern that affects everyone's prices and even the
availability of some offerings. We already mentioned Coke's concern for clean water.
But Coke also has to be concerned with distribution systems in areas with poor or
nonexistent roads, a myriad of government policies and regulations, workforce
availability, and many more issues associated with selling and delivering Coke around
the world. Even companies with smaller markets source some or all their offerings
from companies in other countries or else face some sort of direct competition from
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companies based in other countries. Every business professional, whether working in
marketing or elsewhere, needs some understanding of the global environment in
which companies operate.
A company's marketing plan flows from its strategic plan. Both begin with
a focus on customers. The essential components of the plan are
understanding customers, creating an offering that delivers value,
communicating the value to the customer, exchanging with the customer,
and evaluating the firm's performance. A marketing plan is influenced by
environmental trends such as social responsibility, sustainability, service-
dominant logic, the increased availability of data and effective metrics,
and the global nature of the business environment.
Why does everything start with customers? Or is it only marketing
that starts with customers?
What are the key parts of a marketing plan?
What is the relationship between social responsibility, sustainability,
service-dominant logic, and the global business environment? How
does the concept of metrics fit?
References
American Marketing Association. (n.d.). Definition of marketing. Retrieved from
http://www.marketingpower.com/AboutAMA/Pages/DefinitionofMarketing.aspx?
sq=definition+of+marketing
Apple, Inc. (2009). Apple's app store downloads top 1.5 billion in first year. Retrieved from
http://www.apple.com/hk/en/pr/library/ 2009/07/14apps.html
Coca-Cola Company. (n.d.). Mission, vision & values. Retrieved from http://www.thecoca-
colacompany.com/ourcompany/mission_vision_values.html
Key Points
Ask Yourself
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Famous Quotes and Authors. (n.d.). Franklin D. Roosevelt quotes and quotations.
Retrieved from
http://www.famousquotesandauthors.com/authors/franklin_d__roosevelt_quotes.html
IBM. (n.d.). About IBM. Retrieved from http://www.ibm.com/ibm/us/en
John Deere (n.d.). John Deere: A biography. Retrieved from
http://www.deere.com/en_US/compinfo/history/johndeere2.html
McDonald's. (n.d.). Our company. Retrieved from
http://aboutmcdonalds.com/mcd/our_company/mcd_faq/student_research.html#1
Merck & Co. (n.d.). The new Merck. Retrieved from
http://www.merck.com/about/Merck%20Vision%20Mission.pdf
Licenses and Attributions
Chapter 1: What Is Marketing? (https://2012books.lardbucket.org/books/marketing-
principles-v2.0/s04-what-is-marketing.html) from Marketing Principles is available
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