Capturing, communicating, delivering, and exchanging offerings

marketing grewal levy
EIGHTH EDITION
•
mar.ket.ing
Marketing is the activity, set of institutions, and processes
for creating, capturing, communicating, delivering, and
exchanging offerings that have value for customers, clients,
partners, and society at large.
The definition of marketing, established by the American Marketing Association,
October 2007. Word in italics was added by authors.
ii
Marketing
Eighth Edition
Dhruv Grewal, PhD
Babson College
Michael Levy, PhD
Babson College
MARKETING
Published by McGraw Hill LLC, 1325 Avenue of the Americas, New York, NY 10121. Copyright ©2022 by
McGraw Hill LLC. All rights reserved. Printed in the United States of America. No part of this publication
may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system,
without the prior written consent of McGraw Hill LLC, including, but not limited to, in any network or other
electronic storage or transmission, or broadcast for distance learning.
Some ancillaries, including electronic and print components, may not be available to customers outside the
United States.
This book is printed on acid-free paper.
1 2 3 4 5 6 7 8 9 LWI 24 23 22 21
ISBN 978-1-26059759-2
MHID 1-26059759-8
Cover Images: (background scenery): Getty Images; (water bottle): Shutterstock
All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.
The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website
does not indicate an endorsement by the authors or McGraw Hill LLC, and McGraw Hill LLC does not
guarantee the accuracy of the information presented at these sites.
mheducation.com/highered
To our families for their never-ending support.
To my wife, Diana, my daughter, Lauren, my son-in-law, Chet, and my son, Alex.
—Dhruv Grewal
To my new grandson, Ari Gabe Englander, with lots of love.
—Michael Levy

vii
about the authors
Dhruv Grewal
Dhruv Grewal (PhD, Virginia Tech) is
the Toyota Chair in Commerce and
Electronic Business and a Professor
of Marketing at Babson College. His
research and teaching interests
focus on direct marketing and ecommerce, marketing research, the
broad areas of value-based marketing strategies, services and retailing,
and pricing. He is listed in The World’s Most Influential Scientific
Minds, Thomson Reuters, 2014 (only 8 from the marketing field
and 95 from economics and business are listed). He is a GSBE
Extramural Fellow, Maasterict University and has been an
Honorary Distinguished Visiting Professor of Retailing and
Marketing, Tecnologico de Monterrey, a Global Chair in Marketing at the University of Bath, an Honorary Distinguished Visiting
Professor of Retailing and Marketing, Center for Retailing,
Stockholm School of Economics, and a Visiting Scholar at
Dartmouth. He has also served as a faculty member at the
University of Miami, where he also was a department chair.
Professor Grewal was ranked first in the marketing field in
terms of publications in the top six marketing journals during the
1991–1998 period and again for the 2000–2007 period and
ranked third in terms of publications in the Journal of Marketing
and the Journal of Marketing Research during the 2010–2019
period. He was also ranked first in terms of publications and third
in citations for pricing research for the time period 1980–2010 in
20 marketing and business publications. He has published over
170 journal articles in Journal of Marketing, Journal of Consumer
Research, Journal of Marketing Research, Journal of Retailing,
Journal of Consumer Psychology, Journal of Applied Psychology,
and Journal of the Academy of Marketing Science as well as
many other journals. He has over 60,000 citations based on
Google Scholar. He currently serves on numerous editorial review boards, such as Journal of Marketing (area editor), Journal
of the Academy of Marketing Science (area editor), Journal of
Marketing Research (associate editor), Journal of Interactive
Marketing, Journal of Business Research, and Journal of Public
Policy & Marketing, and the advisory board for Journal of Retailing. He has also served on the boards of Journal of Consumer
Psychology, Academy of Marketing Science Review, and Journal
of World Business. He also received Best Reviewer Awards
(Journal of Retailing 2008, Journal of Marketing 2014), Outstanding Area Editor (Journal of Marketing 2017, Journal of the Academy of Marketing Science 2016), and a Distinguished Service
Award (Journal of Retailing 2009).
Professor Grewal was awarded the 2017 Robert B. Clarke
Outstanding Educator Award (Marketing Edge, formerly DMEF);
2013 university-wide Distinguished Graduate Alumnus from his
alma mater Virginia Tech; the 2012 Lifetime Achievement Award
in Pricing (American Marketing Association Retailing & Pricing
SIG); the 2010 Lifetime Achievement Award in Retailing (American
Marketing Association Retailing SIG); the 2005 Lifetime Achievement in Behavioral Pricing Award (Fordham University, November
2005); and the Academy of Marketing Science Cutco/Vector
Distinguished Educator Award in May 2010. He is a Distinguished Fellow of the Academy of Marketing Science. He has
served as VP Research and Conferences, American Marketing
Association Academic Council (1999–2001) and as VP Development for the Academy of Marketing Science (2000–2002). He
was coeditor of Journal of Retailing (2001–2007). He has won
a number of awards for his research: 2019 Louis W. Stern
Award (American Marketing Association Interorganizational Sig);
2019 William R. Davidson Journal of Retailing Best Paper Award
(for paper published in 2017); 2018 JSR Best Paper Award (for
paper published in 2017); 2018 William R. Davidson Journal of
Retailing Best Paper Award (for paper published in 2016); 2017
Journal of Interactive Marketing Best Paper Award (for paper
published in 2016); 2016 Journal of Marketing Sheth Award;
2016 William R. Davidson Journal of Retailing Best Paper
Award (for paper published in 2014); 2015 Louis W. Stern Award
(American Marketing Association Interorganizational SIG);
Babson College Faculty Scholarship Award (2015); William R.
Davidson Journal of Retailing Best Paper Award 2012 (for paper
published in 2010); 2011 Best Paper Award (La Londe Conference for Marketing Communications and Consumer Behavior);
2011 Louis W. Stern Award (American Marketing Association
Interorganizational SIG); William R. Davidson Journal of Retailing Honorable Mention Award 2011 (for paper published in
2009); Babson College Faculty Scholarship Award (2010);
William R. Davidson Journal of Retailing Best Paper Award 2010
(for paper published in 2008); William R. Davidson Journal of
Retailing Honorable Mention Award 2010 (for paper published
in 2008); 2017 Best Paper Award, Connecting for Good Track,
Winter AMA Conference; Stanley C. Hollander Best Retailing
Paper, Academy of Marketing Science Conference 2002, 2008,
and 2016; M. Wayne DeLozier Best Conference Paper, Academy
of Marketing Science 2002 and 2008; Best Paper, CB Track,
Winter AMA 2009; Best Paper, Technology & e-Business Track,
AMA Summer 2007; Best Paper Award, Pricing Track, Best
Services Paper Award (2002), from the American Marketing
Association Services SIG presented at the Service Frontier Conference, October 2003; Winter American Marketing Association Conference 2001; Best Paper Award, Technology Track,
Summer American Marketing Association Educators’ Conference
2000; and University of Miami School of Business Research
Excellence Award for 1991, 1995, 1996, and 1998. He has also
been a finalist for the 2018 Journal of Marketing Research Paul
Green Award; 2018 Journal of Marketing, the Marketing Science
Institute/H. Paul Root Award; 2014 Journal of Marketing Harold
H. Maynard Award; 2012 Paul D. Converse Award; and 2005
Best Services Paper Award from the Services SIG.
©Morse Photography
viii about the authors
Professor Grewal has coedited a number of special issues
including Journal of Public Policy & Marketing, “Pricing & Public
Policy” (Spring 1999); Journal of the Academy of Marketing
Science, “Serving Customers and Consumers Effectively in the
21st Century: Emerging Issues and Solutions” (Winter 2000);
Journal of Retailing, “Creating and Delivering Value through
Supply-Chain Management” (2000); Journal of Retailing, “Branding and Customer Loyalty” (2004); Journal of Retailing, “Service
Excellence” (2007); Journal of Retailing, “Customer Experience
Management” (2009); Journal of Retailing, “Pricing in a Global
Arena” (2012); Journal of Retailing, “Future of Retailing,” (2017);
and Journal of the Academy of Marketing Science, “The Future
of Technology in Marketing” (2020).
He cochaired the 1993 Academy of Marketing Science
Conference; the 1998 Winter American Marketing Association
Conference “Reflections & Future Directions for Marketing”; the
Marketing Science Institute Conference (December 1998) “Serving Customers and Consumers Effectively in the 21st Century:
Emerging Issues and Solutions”; the 2001 AMA doctoral consortium; the American Marketing Association 2006 Summer Educator’s Conference; the 2008 Customer Experience Management
Conference; the 2010 Pricing Conference; the 2011 DMEF research summit; the 2012 AMA/ACRA First Triennial Retailing
Conference; the 2013 Pricing & Retailing Conferences; the 2014
Shopper Marketing conference at SSE; and the 2015 AMA/
ACRA Second Triennial Retailing Conference.
Professor Grewal has also coauthored Marketing (publisher McGraw-Hill, 1e 2008; 2e 2010—Awarded Revision of the
Year, McGraw-Hill Corporate Achievement Award with ConnectMarketing in the category of Content and Analytical Excellence;
3e 2012; 4e 2014; 5e 2016; 6e 2018, 7e 2020); M Series: Marketing (publisher McGraw-Hill, 1e 2009, 2e 2011, 3e 2013, 4e
2015, 5e 2017, 6e 2019, 7e 2021); Retailing Management (publisher McGraw-Hill, 9e 2014, 10e 2018—is the leading textbook
in the field); and Marketing Research (publisher Houghton
Mifflin Co., 1e 2004, 2e 2007). He was ranked #86 for Books in
Business and Investing by Amazon in 2013.
Professor Grewal has won many awards for his teaching:
2005 Sherwin-Williams Distinguished Teaching Award, Society
for Marketing Advances; 2003 American Marketing Association, Award for Innovative Excellence in Marketing Education;
1999 Academy of Marketing Science Great Teachers in Marketing Award; Executive MBA Teaching Excellence Award (1998);
School of Business Teaching Excellence Awards (1993, 1999);
and Virginia Tech Certificate of Recognition for Outstanding
Teaching (1989).
He has taught executive seminars/courses and/or worked
on research projects with numerous firms such as Dell, ExxonMobil, IRI, RadioShack, Telcordia, Khimetrics Profit-Logic, McKinsey,
Ericsson, Motorola, Nextel, FP&L, Lucent, Sabre, Goodyear Tire
& Rubber Company, Sherwin-Williams, and Asahi. He has delivered seminars in the United States, Europe, Latin America, and
Asia and has served as an expert witness or worked as a consultant on numerous legal cases. Professor Grewal has also
served on the Board of Directors of Babson Global and on the
Board of Trustees of Marketing Edge.
Michael Levy
Michael Levy, PhD (Ohio State University), is the Charles Clarke Reynolds
Professor of Marketing Emeritus at
Babson College and CEO of RetailProf
LLC. He received his PhD in business
administration from The Ohio State
University and his undergraduate and
MS degrees in business administration
from the University of Colorado at
Boulder. He taught at Southern Methodist University before joining the faculty as professor and chair of the marketing department at the University of Miami.
Professor Levy received the inaugural ACRA Academic Lifetime Achievement Award presented at the 2015 AMA/ACRA
(American Marketing Association/American Collegiate Retailing
Association) Triennial Conference and was recognized for
25 years of dedicated service to the editorial review board of
the Journal of Retailing in 2011. He won the McGraw-Hill Corporate Achievement Award for Grewal–Levy Marketing 2e with
Connect in the category of excellence in content and analytics
(2010); Revision of the Year for Marketing 2e (Grewal–Levy)
from McGraw-Hill/Irwin (2010); the 2009 Lifetime Achievement
Award, American Marketing Association, Retailing Special
Interest Group (SIG); the Babson Faculty Scholarship Award
(2009); and the Distinguished Service Award, Journal of Retailing (2009) (at winter AMA).
He was rated as one of the best researchers in marketing
in a survey published in Marketing Educator (Summer 1997).
He has developed a strong stream of research in retailing,
business logistics, financial retailing strategy, pricing, and sales
management. He has published over 50 articles in leading
marketing and logistics journals, including the Journal of Retailing, Journal of Marketing, Journal of the Academy of Marketing Science, and Journal of Marketing Research. He has
served on the editorial review boards of the Journal of Retailing, Journal of the Academy of Marketing Science, International Journal of Physical Distribution and Materials
Management, International Journal of Business Logistics, ECR
Journal, and European Business Review and has been on the
editorial advisory boards of European Retail Research and
the European Business Review. He is coauthor of Retailing
Management, 10e (2019), the best-selling college-level retailing
text in the world. Professor Levy was coeditor of the Journal
of Retailing from 2001 to 2007. He cochaired the 1993 Academy of Marketing Science conference and the 2006 summer
AMA conference.
Professor Levy has worked in retailing and related disciplines throughout his professional life. Prior to his academic career, he worked for several retailers and a housewares
distributor in Colorado. He has performed research projects
with many retailers and retail technology firms, including Accenture, Federated Department Stores, Khimetrics (SAP), Mervyn’s,
Neiman Marcus, ProfitLogic (Oracle), Zale Corporation, and numerous law firms.
Zackary Jormon
ix
New to the Eighth Edition
Some exciting new additions
to the Eighth Edition!
The eighth edition of Marketing sees significant changes. As always, every example, fact, and
key term has been checked, updated, and/or replaced. What follows are major changes in the
text, chapter by chapter.
Chapter 1: Overview of Marketing starts with a discussion of the rising popularity of reusable water bottles and how brands such as Hydroflask are marketing their products, with
an eye toward how these brands have evolved and how the marketing of them adds value.
Examples using these reusable water bottles are placed throughout the chapter. There is
a new Adding Value box on the launch of a lipstick by Hermès, a famous maker of luxury
bags. Also new is a Marketing Analytics box describing how Hertz is using biometrics to
facilitate its car rental service, a new Social & Mobile Marketing box about how individual people are marketing themselves on TikTok, and a new Ethical & Societal Dilemma
box highlighting concerns with Starbucks’s single-use plastic cups. We conclude the
chapter with a case study discussing the marketing strategies used in the reusable water
bottle industry.
Chapter 2: Developing Marketing Strategies and a Marketing Plan includes several revisions,
including updates to the PepsiCo opener and the PepsiCo examples mentioned throughout
the chapter. There are two new Adding Value boxes highlighting how Apple has leveraged
opportunities in the external environment with Apple iPhone SE and how Old Spice is repositioning itself to appeal to a wider audience. A Social & Mobile Marketing box highlights
how Wayfair is leveraging high-tech tools to connect with consumers. A new Ethical & Societal Dilemma box examines how Pepsi’s marketing strategy is responding to the changing
water consumption habits discussed in Chapter 1. A new Marketing Analytics box details
how eye-tracking technology can help brands optimize their mobile marketing strategies. We
have also updated the coffee wars case at the end of the chapter.
Chapter 3: Digital Marketing: Online, Social, and Mobile has seen a line-by-line revision to
reflect the rapid changes in digital marketing. We have added a new section on influencer
marketing that examines the central factors used in picking an influencer partner. This section introduces the 4R framework for influencer marketing: relevance, reach, responses, and
return. The chapter starts by highlighting how Hilton Hotels successfully uses social listening to inform its social media campaigns. There is a new Marketing Analytics box discussing
how some algorithms used by Facebook to place ads have produced unintended consequences. Finally, a new Adding Value box details Facebook’s introduction of the Portal, a
Facebook-branded device to support video chat.
Chapter 4: Conscious Marketing, Corporate Social Responsibility, and Ethics begins with a
discussion of how companies in the clothing resale business, such as thredUP, highlight the
sustainability of buying secondhand clothing in their marketing. There is a new Adding
Value box about Aerie’s marketing campaign featuring real women, including those with
disabilities or living with challenging medical conditions. A new Social & Mobile Marketing
box describes how Facebook collects and uses people’s personal information and how
many people are not aware of how much data Facebook has gathered from them. A new
Ethical & Societal Dilemma box describes how Google is grappling with the privacy and
safety of its young users on YouTube and YouTube Kids. A new Marketing Analytics box
ix
analyzes China’s proposed Social Credit System to track citizens’ behaviors, habits, connections, and comments.
Chapter 5: Analyzing the Marketing Environment opens with an account of how iRobot anticipates consumer preferences in order to develop products that will satisfy customers’ demands. A new Adding Value box highlights CVS’s efforts to showcase realistic beauty in its
stores and advertisements. A new Ethical & Societal Dilemma box describes the emerging
market for sustainable swimwear as consumers become more conscious of water pollution.
There is also a new Marketing Analytics box about how Coca-Cola uses its high-tech vending
machines to allow consumers to mix their own custom beverages.
Chapter 6: Consumer Behavior has a new opener about Sunbasket, a meal delivery kit, and
how it designs its products to appeal to different aspects of consumer behavior. A new Marketing Analytics box explains how Amazon uses customer data and consumer behavior
concepts to promote individualized ads. There are two new Ethical & Societal Dilemma
boxes: One box discusses how fashion lines have created clothing and accessories that appeal to people’s political persuasions. The other box considers the ethics of free games that
offer in-game purchases.
Chapter 7: Business-to-Business Marketing starts with a discussion of Mastercard Track, its
new B2B payment system. A new Ethical & Societal Dilemma box discusses the many
outsourcing firms that provide workers to companies around the world. A new Social &
Mobile Marketing box examines the advertising needs of direct-to-consumer companies.
There is also a new Adding Value box that describes how Wistia has developed a video
hosting platform that fits the needs of businesses who wish to promote their content in a
business-friendly environment. Finally, a new case details how Alibaba is expanding its
successful B2B platform.
Chapter 8: Global Marketing has a new opener highlighting how Airbnb views global marketing from a local lens to make travelers feel at home wherever they are. There are four
new Adding Value boxes: One describes the targeted products that McDonald’s offers in
different markets around the world. The second considers the increase of luxury sales in
airports across the globe. The third is about how companies use International Women’s
Day as inspiration for their marketing campaigns. Finally, the fourth Adding Value box
details Domino’s digital and physical expansion. The chapter also includes two new Ethical
& Societal Dilemma boxes, one about pollution associated with the increased use of disposable sanitary products in India and one about the backlash Dolce & Gabbana faced after
releasing potentially offensive ads in China. The chapter concludes with a case study on
how KFC has grown its brand internationally to become “the world’s most popular chicken
restaurant chain.”
Chapter 9: Segmentation, Targeting, and Positioning opens with how restaurants have positioned their new plant-based meat offerings to appeal to a wide range of customers. A new
Ethical & Societal Dilemma box considers the fate of African American–owned businesses
that target African American customers once they are sold to large conglomerates. There is
a new Social & Mobile Marketing box about the lifestyle magazine published by Outdoor
Voices in order to reach customers to whom its branding appeals. A new Marketing Analytics box describes how data collected by an app-linked thermometer could be used by
brands to geographically target ads for products like cold medicine and disinfectant wipes.
A new Adding Value box examines how Patagonia, in order to protect its brand’s image and
strengthen its appeal to its target market, refuses to personalize merchandise sold to certain
companies. Another new Adding Value box highlights how JCPenney is reorganizing stores
to promote exclusive fashion brands for older consumers and eliminate or scale back purchases of Millennial-centric brands. Finally, a new case dissects the marketing segments
P&G considers when marketing its extensive product lines.
Chapter 10: Marketing Research and Analytics has undergone major revisions and has a new
title reflecting the additions. The chapter includes an extensive new section on big data that
includes a discussion of the 5 Vs of big data (volume, variety, velocity, veracity, and value).
x
The second new section on marketing analytics includes a discussion of the different tools
that can be used in the execution of marketing research. The chapter opens with a discussion
of how Netflix uses data collected from customers to provide personalized recommendations and develop its own content. There is a new Marketing Analytics box that discusses
Amazon’s Prime Day promotion that essentially allows customers to trade access to their
personal information for a discount. There is a new Adding Value about how Booking.com
leveraged marketing research data to determine that its customers are interested in unique
accommodations across the United States. Finally, the chapter ends with an updated case
describing how the YMCA has used data gleaned from extensive market research to expand
its offerings and attract more members.
Chapter 11: Product, Branding, and Packaging Decisions begins with a new opener on
Dunkin Donuts’ branding transition to Dunkin’. There are two new Adding Value boxes:
The first highlights Weight Watchers’ rebrand, and the second considers the expensive—yet
whimsical—luxury watches produced by the JS Watch Company. There is also a new Social
& Mobile Marketing box about how jingles can confer authenticity on a brand. A new case
on Chobani’s recent rebranding campaign concludes the chapter.
Chapter 12: Developing New Products begins with the story of the development of Panera’s
new grain bowls and other healthy (or healthy-seeming) options. There are three new Adding Value boxes: One describes how Bose introduced its sunglass speakers at the Coachella
Music Festival. The second examines how streaming services are entering into the podcast
market. The third considers how companies are developing ways to enhance the capabilities
of wearables, from determining the customer’s heart rhythm to analyzing their sweat. A new
Social & Mobile Marketing box discusses the head-to-head battle between Fortnite and Call
of Duty. Finally, a new case details how Dyson develops its innovative vacuums and vacuumadjacent products.
Chapter 13: Services: The Intangible Product includes an opening vignette that describes
how Apple uses its Apple Pay service to enhance the experience of using Apple products. A
new Ethical & Societal Dilemma box ponders the ethics of a service that provides customers
with an assessment of potential babysitters based on a proprietary analysis of their social
media posts. A new Adding Value box outlines how the mattress brand Casper created a new
service it calls The Dreamery to expose potential consumers to its products. There is a new
Marketing Analytics box highlighting how Aldi addresses customers’ needs by maintaining
low prices while expanding convenience with its home delivery and curbside pickup services.
A new Social & Mobile Marketing box explores how doctors seek novel ways to shrink the
delivery gap, by turning to telemedicine. A new case at the end of the chapter describes how
GrubHub has worked to expand and refine its food delivery service.
Chapter 14: Pricing Concepts for Capturing Value starts with a new opener that describes the
pricing strategies of The New York Times in the age of declining print newspaper sales. A new
Adding Value box discusses Nissan’s fleet sales strategy. Another new Adding Value box
examines the pricing strategy of Air France. A new case highlights the success of T-Mobile’s
“Un-Carrier” marketing campaign.
Chapter 15: Strategic Pricing Methods and Tactics begins with a breakdown of how Disney’s
pricing methods help optimize both profits and park attendance. There are two new Ethical &
Societal Dilemma boxes: one about Target’s dynamic in-app pricing based on location and
one about how prescription drug ads are beginning to include price in them. The case study
at the end of the chapter about the pricing strategies of various pizza chain restaurants has
undergone extensive revisions.
Chapter 16: Supply Chain and Channel Management opens with a new vignette highlighting Nestlé’s supply chain. There are three new Adding Value boxes: The first discusses
how Fanatics adopted a rapid production model to get sports apparel to customers
quickly, while the second examines supply chain disruptions in the global economy and
macroenvironment from the COVID-19 pandemic. The third explores where robots are
succeeding and failing in warehouses. A new Ethical & Societal Dilemma box describes
xi
the methods Amazon uses to monitor its delivery employees. A new case study discusses the burgeoning market of grocery delivery services.
Chapter 17: Retailing and Omnichannel Marketing begins with a discussion of the group
purchasing organization recently formed by Walgreens and Kroger. A new Adding Value
box describes how grocery stores are enhancing their stores by including features such
as event spaces and added services. A new Ethical & Societal Dilemma box considers the
ethics of tracking customers’ movements through their phones. Another new Ethical &
Societal Dilemma box discusses the rise in automated stores including Amazon Go, Bingo
Box, and Hema. A new Social & Mobile Marketing box explores the rising prominence of
mobile and contactless grocery channels.
Chapter 18: Integrated Marketing Communications opens with a description of how BMW
designed an integrated marketing campaign based around the concept of a road trip. A new
Social & Mobile Marketing box highlights how Snapchat is allowing firms to purchase targeted advertisements. There are three new Adding Value boxes: One discusses how Aflac
uses a country music campaign to increase awareness of its services. The second highlights
how podcasts are becoming more interactive through in-home voice assistants. The third
describes DoorDash’s marketing campaign.
Chapter 19: Advertising, Public Relations, and Sales Promotions begins with a new opener
on Smucker’s new advertising strategy. A new Adding Value box features Arby’s recordbreaking advertisement. There are three new Ethical & Societal Dilemma boxes: one that
discusses the controversy surrounding South Dakota’s Meth Awareness ad campaign; the
second one examines how some old advertising campaigns would shock today’s viewers, like
the one that attempts to get mothers to give chewing gum to their toddlers; and the third one
considers whether the claims Chevy makes in its commercials are false or just puffery. The
chapter concludes with a new case highlighting the remarkably lucrative partnership between Lexus and Marvel’s Black Panther.
Chapter 20: Personal Selling and Sales Management includes several new features and updates. The section on the personal selling process has been revised and enhanced to include
the technology available to support the personal selling process at each step. The chapter
opens with a new vignette about how State Farm uses technology to support its personal
selling strategies. A new Adding Value box highlights the lessons that can be learned from
the television show Shark Tank. Another new Adding Value box highlights LinkedIn’s campaign to become a tool that sellers can use to market themselves and their businesses. A new
Social & Mobile Marketing box discusses how WhatsApp is altering sales practices in India.
There is also a new Ethical & Societal Dilemma box that considers the ethics of multilevel
marketing sales.
xii
We are pleased to welcome you to the eighth edition of Marketing! Since the
first edition, we have been committed to emphasizing a basic yet essential
theme: Marketing adds value. This theme comes through not only in our
instructional features but also in our covers. With each edition’s cover,
we have featured a product that, because of marketing, has become more
valuable in the eyes of consumers than it might have otherwise become.
Last edition we featured energy bars; in previous editions we featured
chocolate, coffee, water, and jeans. For this eighth edition, we feature
fashionable yet environmentally friendly water bottles. These are all familiar
products that started out as commodities but became high-value branded
products because of marketing.
This is an exciting time to study marketing! Marketing continues to
change and evolve, featuring new innovative products and services as well
as employing new methods and channels by which we understand and reach
customers. Marketing, 8e reflects this evolution with substantive revisions,
new sections, and new models throughout. Here are just a few of our
favorite updates: In Chapter 3, Digital Marketing: Online, Social and Mobile,
we have added a new section titled “Influencer Marketing” that tackles
the factors used in picking an influencer partner. Chapter 10, now titled
“Marketing Research and Analytics,” contains a new section on big data that
is organized around 5 Vs (volume, variety, velocity, veracity, and value). The
other new section examines the tools that are used in marketing analytics.
Chapter 20, “Personal Selling and Sales Management,” has a significantly
revised section, “The Personal Selling Process,” that includes the technology
that supports the selling process at each step. In addition, 90 percent of the
chapter openers are new, 70 percent of the informational boxes are new,
50 percent of the end-of-chapter cases are new, and the rest of the cases
have been updated.
How We Show That Marketing
Adds Value
As with previous editions of Marketing, we continue to emphasize how marketing has
evolved into its present-day, integral business function of creating value. We also focus on
how firms maintain value and rely on value for establishing lasting relationships with their
customers.
To keep students engaged with this theme, we offer the following features:
• Adding Value—illustrate how companies add value not only in providing products
and services but also in making contributions to society.
a letter from the authors
xiii
• Ethical & Societal Dilemmas—emphasize the role of marketing in society.
• Marketing Analytics—feature companies that rely on sophisticated data
analytics to define and refine their approaches to their customers and their markets.
• Marketing Digitally—illustrate how marketers successfully use digital media in
their marketing campaigns and efforts.
• Social & Mobile Marketing—discuss how social media are used in marketing
products.
How We Teach the Basics of Marketing
We understand that for students to appreciate discussions of how marketing adds value, they
must first develop a basic understanding of key marketing principles and core concepts. In this
effort, we believe students learn best when they see how a subject relates to them. Throughout
this edition and all those prior, we provide numerous examples of how students engage in marketing activities every day of their lives—either as consumers or sellers of a product or service.
In addition to providing the traditional study and reinforcement tools of most principles of
marketing products, we also offer ways to help students think critically about and apply core
concepts:
Chapter-Opening Vignettes focus on some of the marketplace challenges
faced by such well-known companies as Hydro Flask, Hilton, Roomba, Kroger, PepsiCo, and
others.
Marketing Applications encourage students to apply what they have learned to
marketing scenarios that are relevant to their lives.
End-of-Chapter Cases help students develop analytical, critical-thinking, and technology skills.
Progress Checks throughout each chapter give students the opportunity to stop and
consider whether their understanding of key concepts is progressing as it should.
Auto-Graded Exercises in Connect (such as video cases, case analyses,
and click and drags) challenge students to apply marketing concepts to real-life marketing
scenarios, which fosters their critical-thinking skills in lecture and beyond.
xiv
Why We Believe in the Value
of Marketing
Beyond teaching a principles of marketing course and developing a product to be taught, we
also want to impress upon our students why marketing in and of itself is valuable. Marketing
creates enduring and mutually valuable relationships between companies and their consumers.
Marketing identifies what customers value at the local level in order to make it possible for
firms to expand at the global level. Without marketing, it would be difficult for any of us to learn
about new products and services. In fact, an understanding of marketing can help students find
jobs after they finish school. If we can inspire this understanding of the value of marketing in
our students, then we will have succeeded in demonstrating how marketing adds value . . . to
their education, their careers, and their lives.
Dhruv Grewal,
Babson College
Michael Levy,
Babson College
xv
Affordable solutions,
added value
Make technology work for you with
LMS integration for single sign-on access,
mobile access to the digital textbook,
and reports to quickly show you how
each of your students is doing. And with
our Inclusive Access program you can
provide all these tools at a discount to
your students. Ask your McGraw Hill
representative for more information.
65%
Less Time
Grading
Laptop: McGraw Hill; Woman/dog: George Doyle/Getty Images
Padlock: Jobalou/Getty Images Checkmark: Jobalou/Getty Images
Instructors: Student Success Starts with You
Tools to enhance your unique voice
Want to build your own course? No problem. Prefer to use our turnkey,
prebuilt course? Easy. Want to make changes throughout the semester?
Sure. And you’ll save time with Connect’s auto-grading too.
Solutions for
your challenges
A product isn’t a solution. Real
solutions are affordable, reliable,
and come with training and
ongoing support when you need
it and how you want it. Visit www.
supportateverystep.com for videos
and resources both you and your
students can use throughout the
semester.
Study made personal
Incorporate adaptive study resources like
SmartBook® 2.0 into your course and help your
students be better prepared in less time. Learn
more about the powerful personalized learning
experience available in SmartBook 2.0 at
www.mheducation.com/highered/connect/smartbook
Effective tools for efficient studying
Connect is designed to make you more productive with simple, flexible, intuitive tools that maximize
your study time and meet your individual learning needs. Get learning that works for you with Connect.
Everything you need in one place
Your Connect course has everything you need—whether reading on
your digital eBook or completing assignments for class, Connect makes
it easy to get your work done.
“I really liked this
app—it made it easy
to study when you
don’t have your textbook in front of you.”
– Jordan Cunningham,
Eastern Washington University
Study anytime, anywhere
Download the free ReadAnywhere app and access your
online eBook or SmartBook 2.0 assignments when it’s
convenient, even if you’re offline. And since the app
automatically syncs with your eBook and SmartBook 2.0
assignments in Connect, all of your work is available
every time you open it. Find out more at
www.mheducation.com/readanywhere
Top: Jenner Images/Getty Images, Left: Hero Images/Getty Images, Right: Hero Images/Getty Images
Calendar: owattaphotos/Getty Images
Students: Get Learning that Fits You
Learning for everyone
McGraw Hill works directly with Accessibility Services
Departments and faculty to meet the learning needs
of all students. Please contact your Accessibility
Services Office and ask them to email
[email protected], or visit
www.mheducation.com/about/accessibility
for more information.
As a learning science company, we create content that supports higher order thinking skills.
Within McGraw Hill Connect®
, we tag content accordingly so you can filter your search, assign it, and receive
reporting on it. These content asset types can be associated with one or more levels of Bloom’s.
The chart below shows a few of the key assignable marketing assets with Connect aligned with Bloom’s
Taxonomy. Take your students higher by assigning a variety of applications, moving them from simple
memorization to concept application.
We Take Students Higher
Asset Alignment with
Bloom’s Taxonomy
Principles of Marketing
CREATE
SmartBook® 2.0
Marketing
Analytics Toolkits
EVALUATE
ANALYZE
APPLY
UNDERSTAND
REMEMBER
Lower Order
Thinking Skills
Higher Order
Thinking Skills
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
Click & Drags
Video Cases/Case
Analyses
Marketing Plan
Prep Exercises
ApplicationBased Activities
Writing
Assignment Plus
✓
✓
✓
iSeeit!
Video Cases
Click & Drags
These activities help make the connection between theory and application through matching, ranking, or
grouping activities.
SmartBook 2.0
Smartbook 2.0 personalizes learning to individual student needs; continually adapting to pinpoint knowledge
gaps and focus learning on concepts requiring additional study.
iSeeit! Video Cases
Short, contemporary videos provide engaging, animated introductions to key course concepts. Available at the
topic level. Perfect for launching lectures and assigning as pre- or post-lecture.
Video Cases & Case Analyses
Video cases and case analyses, featuring real companies, are assignable with corresponding comprehension
questions that help students analyze and apply key marketing concepts.
Marketing Analytics Toolkits
These auto-graded, marketing analytics activities challenge students to make decisions using metrics commonly
seen across marketing professions. The goal of these activities is to give students practice analyzing and using
marketing data to make decisions.
Writing Assignment Plus
Writing Assignment Plus delivers a learning experience that helps students improve their written communication
skills and conceptual understanding. Faculty can assign, monitor, grade, and provide feedback on writing
projects efficiently. Built-in grammar and writing review helps students improve writing quality while an
originality check helps students correct potential plagiarism before submission. End result? Improved workplace
skills of writing and critical thinking.
Markeing Plan Prep Exercises
These exercises use guided activities and examples to help students understand and differentiate the various
elements of a marketing plan.
Application-Based Activities
Highly interactive, application-based activities immerse students in real-world business environments. Placed
in the role of a Marketing Manager or business professional, students are challenged to make data-informed
decisions and apply multiple concepts while seeing the impact of their decisions immediately.
xx
Throughout the development of this text, several outstanding individuals were integrally
involved and made substantial contributions. First, we thank Elisabeth Nevins and Hannah
Fox for their important assistance in doing research for the book, writing examples, and
preparing the manuscript for publication. Our McGraw Hill editorial and production staff
also deserve recognition for their patient and professional support: notably executive portfolio manager Meredith Fossel; the support, expertise, and occasional coercion from our
product developer, Kelsey Darin; with an eye to detail, lead content project manager
Christine Vaughan; our bridge to corporate intellectual property experts, content licensing
specialist Jacob Sullivan; senior designer Matt Diamond, who always makes our books
look great; executive marketing manager Nicole Young, who helps present our best face
forward to our adopters; our ever-diligent copyeditor, Sharon O’Donnell; our proofreader,
Karin Kipp; our eye-to-the-aesthetic and pedogogy photo editor, David Tietz; and Kelly
Luchtman at Lightfellow for her expertly produced videos.
Ancillary materials have become increasingly more integral to the success of any classroom experience. We are privileged to have had a superb team working with us on 8e:
Kathleen Gruben (Instructor’s Manual); Leroy Robinson (Connect Exercises); Lois Olson
(SmartBook 2.0 review); Holt Wilson, Central Michigan University (input on Chapter 14);
and Ruth Gilleran, Babson College (input on Chapter 3).
Our colleagues in industry have been invaluable in providing us with case, video,
advertising, and photo materials.
Over the years, we have had the opportunity to work with many talented and insightful colleagues. We have benefited from our research and discussions with them. Some of
these colleagues are Anne L. Roggeveen, Victoria Crittenden, Anjali Bal, Lauren
S. Beitelspacher, Krista Hill, Rajendra Sisodia, Bala Iyer, and Ruth Gilleran (Babson
College); Ruth Bolton, Steve Brown, and Terry Bristol (Arizona State University);
Ramon Avila (Ball State University); Joan Lindsey-Mullikin and Norm Borin (Cal Poly,
San Luis Obispo); Larry D. Compeau (Clarkson University); Don Lehmann and Keith
L. Wilcox (Columbia); Praveen Kopalle, Scott Neslin, and Kusum Ailawadi (Dartmouth);
Rajneesh Suri (Drexel); Rajesh Chandrashekaran (Fairleigh Dickinson University);
Gopal Iyer and Tamara Mangleburg (Florida Atlantic University); Anthony Miyazaki
and Walfried Lassar (Florida International University); Martin Mende and Maura Scott
(Florida State University), Hooman Estelami (Fordham University); Anuj Mehrotra
(George Washington University); Ronnie Goodstein (Georgetown); V. Kumar (Indian
School of Business); Scott Motyka (KGI); Ko de Ruyter (King’s College) K. Sivakumar
(Lehigh University); Francisco Villarroel Ordenes (Luiss University) Martin Wetzels and
Dominik Mahr (Maastricht University); Yu Ma (McGill University); Maria Elena
Vazquez Lira (Monterrey Tec); Douglas M. Lambert and Walter Zinn (Ohio State University); Wagner Kamakura (Rice); Thomas Rudolph (St. Gallen University); Zhen Zhu
(Suffolk University); Venkatesh Shankar and Manjit Yadav (Texas A&M); Julie Baker,
Mark Houston, and William Cron (Texas Christian University); Rodney C. Runyan
(Texas State University); Kristy Reynolds (University of Alabama); Merrie Brucks and
Ajith Kumar (University of Arizona); Dinesh Gauri (University of Arkansas); Jens
Nordfält and Nancy M. Puccinelli (University of Bath); David Hardesty (University of
Kentucky); Arun Sharma, A. Parasuraman, R. Krishnan, Howard Marmorstein, and Michael
Tsiros (University of Miami); Cheryl Nakata (University of North Carolina–Greensboro)
A. C. Samli (University of North Florida); Monika Kukar Kinney and Kent Monroe
(University of Richmond); Abhijit Guha (University of South Carolina); Valerie Folkes
(University of Southern California); Stephanie Noble (University of Tennessee); Robert
Peterson (University of Texas at Austin); Carolyn Costley (University of Waikato);
acknowledgments
acknowledgments xxi
Ajay T. Abraham
Seattle University
Kenyatta N. Barber
University of Wisconsin–Whitewater
Marlene Deatherage
Central Michigan University
Thomas Gruen
University of New Hampshire
Stephen He
West Virginia University
Karen Hines
Berkshire Community College
Nancy Abram
University of Iowa
Wendi Achey
Northampton Community College
Praveen Aggarwal
University of Minnesota, Duluth
Ebru Ulusoy Akgun
University of Maine
Christopher Anicich
California State University, Fullerton
Maria Aria
Camden County College
Dennis Arnett
Texas Tech University
Audrey Ashton-Savage
Peter T. Paul College of Business and
Economics, University of New Hampshire
Gerard Athaide
Loyola College of Maryland
Timothy W. Aurand
Northern Illinois University
Laurie Babin
University of Louisiana at Monroe
Nisreen Bahnan
Salem State University
Ainsworth Bailey
University of Toledo
Aysen Bakir
Illinois State University
Joyce Banjac
Myers University
Robert W. Battle
Nassau Community College
Harvey Bauman
Lees McRae College
Oleta Beard
University of Washington
Jacqueline Kuehl
DePaul University
Sampath Kumar
University of Wisconsin–Green Bay
Harini Mittal
Bronx Community College
Mary Judene Nance
Pittsburg State University
Courtney Pham
Missouri State University
Leroy Robinson Jr.
University of Houston–Clear Lake
Sandy Becker
Rutgers Business School
Hannah Bell-Lombardo
Bryant University
Ellen Benowitz
Mercer County Community College
Gary Benton
Western Kentucky University
Joseph Ben-Ur
University of Houston at Victoria
Patricia Bernson
County College of Morris
Harriette Bettis-Outland
University of West Florida
Parimal Bhagat
Indiana University of Pennsylvania
Amit Bhatnagar
University of Wisconsin, Milwaukee
Jan Bingen
Little Priest Tribal College
John Bishop
University of South Alabama—Mobile
Nancy Bloom
Nassau Community College
Claire Bolfing
James Madison University
Karen Bowman
University of California
Tom Boyd
California State University—Fullerton
Nancy Boykin
Tarleton State University
Cathy Brenan
Northland Community and Technical
College
Martin Bressler
Houston Baptist University
Philip Trocchia
University of South Florida
Jefrey R. Woodall
York College of Pennsylvania
Harold Wright
University of Alabama
Gema Vinuales
San Jose State University
Mark Young
Winona State University
Claudia Bridges
California State University
Glen H. Brodowsky
California State University, San Marcos
Greg Broekemier
University of Nebraska Kearney
Gary Brunswick
Northern Michigan University
Alan J. Bush
University of Memphis
John Buzza
Monmouth University
Linda Calderone
SUNY, Farmingdale
Nathaniel Calloway
University of Maryland,
University College
Rae Caloura
Johnson & Wales University
Michaelle Cameron
St. Edwards University
Catherine Campbell
University of Maryland
Carlos Castillo
University of Minnesota, Duluth
Eve Caudill
Winona State University
Carmina Cavazos
University of Saint Thomas
Lindell Chew
Linn University of Missouri
Dorene Ciletti
Duquesne University
Melissa Clark
University of North Alabama
Terry Clark
Southern Illinois University—Carbondale
Rob Palmatier (University of Washington); Abhijit Biswas and Sujay Dutta (Wayne State
University); and M. Joseph Sirgy (Virginia Tech).
We would like to thank the following instructors for providing feedback to shape the
eighth edition. A special thank-you to:
For their contributions to previous editions of Marketing, we gratefully acknowledge:
xxii acknowledgments
Joyce Claterbos
University of Kansas
Gloria Cockerell
Collin County College
Paul Cohen
Florida Atlantic University
Linda Jane Coleman
Salem State University
Mark E. Collins
University of Tennessee
Clare Comm
University of Massachusetts, Lowell
Sherry Cook
Southwest Missouri State University
Stan Cort
Case Western Reserve University
Keith Cox
University of Houston
Ian Cross
Bentley College
Geoffrey Crosslin
Kalamazoo Valley
Community College
Kevin Joseph Cumiskey
Eastern Kentucky University
Brent Cunningham
Jacksonville State University
Clayton L. Daughtrey
Metropolitan State College of
Denver
Charlene Davis
Trinity University
Joseph DeFilippe
Suffolk County Community College
George Deitz
University of Memphis
Kathleen DeNisco
Erie Community College
Tilokie Depoo
Monroe College
Laura Dix
Ferris State University
Monique Doll
Macomb Community College
Kimberly Donahue
Indiana University—Purdue University
at Indianapolis
Jim D’Orazio
Cleveland State University
Michael Dore
University of Oregon
James Downing
University of Illinois—Chicago
Michael Drafke
College of DuPage
Leon Dube
Texas A&M University
Colleen Dunn
Bucks County Community College
John Eaton
Arizona State University—Tempe
Kellie Emrich
Cuyahoga Community College
Nancy Evans
New River Community College
Keith Fabes
Berkeley College
Tina Facca
John Carroll University
Joyce Fairchild
Northern Virginia Community College
David J. Faulds
University of Louisville
Larry Feick
University of Pittsburgh
Karen Flaherty
Oklahoma State University—Stillwater
Leisa Flynn
Florida State University
William Foxx
Auburn University
Alan Friedenthal
Kingsborough Community College
Douglas Friedman
Penn State University
Jerome Gafford
University of North Alabama
Stanley Garfunkel
Queensborough Community College
S. J. Garner
Eastern Kentucky University
David Gerth
Nashville State Community College
Peggy Gilbert
Missouri State University
Kelly Gillerlain
Tidewater Community College
George Goerner
Mohawk Valley Community College
Jana Goodrich
Penn State Behrend
Robin Grambling
University of Texas at El Paso
Kimberly D. Grantham
University of Georgia
James I. Gray
Florida Atlantic University
Kelly Gredone
Bucks County Community College
Tom Greene
Eastern Washington University
Michael Greenwood
Mount Wachusett Community
College
Barbara Gross
California State University—Northridge
David Grossman
Florida Southern College
Hugh Guffey
Auburn University
Reetika Gupta
Lehigh University
John Hafer
University of Nebraska at Omaha
Allan Hall
Western Kentucky University
Joan Hall
Macomb Community College
Daniel E. Hallock
University of North Alabama
Clark Hallpike
Elgin Community College
James E. Hansen
University of Akron
Don Hanson
Bryant University
Jeffrey Harper
Texas Tech University
Dorothy Harpool
Wichita State University
Lynn Harris
Shippensburg University
Dana L. E. Harrison
East Tennessee State University
Reba Heberlein
Madison Area Technical College
Linda Hefferin
Elgin Community College
Charlane Held
Onondaga Community College
Lewis Hershey
Fayetteville State University
Jonathan Hibbard
Boston University
Tom Hickman
Loyola University
Robbie Hillsman
University of Tennessee—Martin
Nathan Himelstein
Essex County College
Adrienne Hinds
Northern Virginia Community College
at Annandale
John Hobbs
University of Oklahoma
Don Hoffer
Miami University
Craig Hollingshead
Texas A&M University, Kingsville
Donna Hope
Nassau Community College
acknowledgments xxiii
Tarique Hossain
California State Polytechnic University
James Gorman Houston
University of Alabama
Ronald Hoverstad
University of the Pacific
Kris Hovespian
Ashland University
James Hunt
University of North Carolina Wilmington
Shane Hunt
Arkansas State University
Julie Huntley
Oral Roberts University
Fred Hurvitz
Pennsylvania State University
Sean Jasso
University of California—Riverside
Carol Johanek
Washington University, St. Louis
Doug Johansen
University of North Florida
Candy Johnson
Holyoke Community College
Maria Johnson
Macomb Community College, Clinton
Township
Keith Jones
North Carolina A&T University
Janice Karlen
CUNY—LaGuardia Community College
Eric J. Karson
Villanova University
Rajiv Kashyap
William Paterson University
Josette Katz
Atlantic Cape Community College
Garland Keesling
Towson University
Mayuresh M. Kelkar
Salem State University
Imran Khan
University of South Alabama—Mobile
Todd Korol
Monroe Community College
Dennis Lee Kovach
Community College of Allegheny County
Kathleen A. Krentler
San Diego State University
Dmitri Kuksov
Washington University—St Louis
Jeff Kulick
George Mason University
Michelle Kunz
Morehead State University
Ann T. Kuzma
Minnesota State University, Mankato
John Kuzma
Minnesota State University at
Mankato
Sandie Lakin
Hesser College
Jamie Lambert
Ohio University
Timothy Landry
University of Oklahoma
Don Larson
Ohio State University
Felicia Lassk
Northeastern University
J. Ford Laumer
Auburn University
Marilyn Lavin
University of Wisconsin, Whitewater
Kenneth Lawrence
New Jersey IT
Freddy Lee
California State University, Los Angeles
Rebecca Legleiter
Tulsa CC Southeast Campus
Hillary Leonard
University of Rhode Island
Natasha Lindsey
University of North Alabama
Guy Lochiatto
Massachusetts Bay Community College
Paul Londrigan
Mott Community College
Terry Lowe
Heartland Community College
Dolly Loyd
University of Southern Mississippi
Harold Lucius
Rowan University
Alicia Lupinacci
Tarrant Community College
Stanley Madden
Baylor University
Lynda Maddox
George Washington University
Moutusi Maity
University of Wisconsin, Whitewater
Cesar Maloles
California State University, East Bay
Karl Mann
Tennessee Tech University
Patricia Marco
Madison College
Cathy Martin
University of Akron
Mary Christene Martin
Fort Hays State University
Melissa Martin
George Mason University
Carolyn Massiah
University of Central Florida
Tamara Masters
Brigham Young University
Erika Matulich
University of Tampa
Bob Mayer
Mesa State College
Nancy McClure
University of Central Oklahoma
Maria McConnell
Lorain County Community College
Dennis Menezes
University of Louisville, Louisville
Mohan Menon
University of South Alabama
Joyce L. Meyer
The University of Alabama
Michelle Meyer
Joliet Junior College
Ivor Mitchell
University of Nevada Reno
Mark Mitchell
University of South Carolina
Steven Moff
Pennsylvania College of Technology
Rex Moody
University of Colorado
Melissa Moore
Mississippi State University
Linda Morable
Richland College
Farrokh Moshiri
University of California—Riverside
Dorothy Mulcahy
Bridgewater State College
James Munch
Wright State University—Dayton
Brian Murray
Jefferson Community College
Suzanne Murray
Piedmont Technical College
James E. Murrow
Drury University
Susan Myrden
University of Maine
Noreen Nackenson
Nassau Community College
Sandra Blake Neis
Borough of Manhattan Community
College
John Newbold
Sam Houston State University
Keith Niedermeier
University of Pennsylvania
Steve Noll
Madison Area Technical College
xxiv acknowledgments
Martin Nunlee
Syracuse University
Hudson Nwakanma
Florida A&M University
Matthew O’Hern
University of Oregon
Lois Olson
San Diego State University
Beng Ong
California State University, Fresno
Daniel Onyeagba
Argosy University, Atlanta
Karen Overton
Houston Community College
Deborah L. Owens
University of Akron
Esther Page-Wood
Western Michigan University
Richard Pascarelli
Adelphi University
Terry Paul
The Ohio State University
Michael Pearson
Loyola University
Jerry Peerbolte
University of Arkansas—
Fort Smith
Lars Perner
University of Southern California
Glenn Perser
Houston Community College
Diane Persky
Yeshiva University
Susan Peters
California State Polytechnic University
at Pomona
Renee Pfeifer-Luckett
University of Wisconsin at Whitewater
Frank Alan Philpot
George Mason University
Gary Pieske
Minnesota State Community and
Technical College
Jeff Podoshen
Temple University
Carmen Powers
Monroe Community College
Mike Preis
University of Illinois—Champaign
Susan Price
California Polytechnic State University
Lori Radulovich
Baldwin-Wallace College
Bruce Ramsey
Franklin University
Rosemary Ramsey
Wright State University
Srikumar Rao
Long Island University
Kristen Regine
Johnson & Wales University
Joseph Reihing
Nassau Community College
Jean Marc Rejaud
Fashion Institute of Technology
William Rice
California State University—Fresno
Patricia Richards
Westchester Community College
Eric Rios
Eastern University
Janet Robinson
Mount St. Mary’s College
Harper Andrew Roehm, Jr.
University of North Carolina—Greensboro
Ann Renee Root
Florida Atlantic University
Tom Rossi
Broome Community College
Heidi Rottier
Bradley University
Juanita Roxas
California State Polytechnic University
Donald Roy
Middle Tennessee State University
Linda Salisbury
Boston College
Nick Sarantakes
Austin Community College
Shikhar Sarin
Boise State University
Carl Saxby
University of Southern Indiana
Diana Scales
Tennessee State University
Dwight Scherban
Central Connecticut State University
James Schindler
Columbia Southern University
Jeffrey Schmidt
University of Oklahoma—Norman
Laura Shallow
St. Xavier University
Donald Shemwell
East Tennessee State University
Dan Sherrell
University of Memphis
Philip Shum
William Paterson University
Lisa Simon
California Polytechnic State University,
San Luis Obispo
Rob Simon
University of Nebraska—Lincoln
Erin Sims
DeVry University at Pomona
Lauren Ruth Skinner
University of Alabama at Birmingham
Karen Smith
Columbia Southern University
Lois J. Smith
University of Wisconsin
Julie Z. Sneath
University of South Alabama
Brent Sorenson
University of Minnesota—Crookston
James Spiers
Arizona State University—Tempe
Geoffrey Stewart
University of Louisiana
John Striebich
Monroe Community College
Randy Stuart
Kennesaw State University
James Swanson
Kishwaukee College
James Swartz
California State Polytechnic University
Robert R. Tangsrud, Jr.
University of North Dakota
Robert Scott Taylor
Moberly Area Community College
Steve Taylor
Illinois State University
Sue Taylor
Southwestern Illinois College
Sharon Thach
Tennessee State University
Mary Tharp
University of Texas at San Antonio
Frank Tobolski
Lake in the Hills
Lisa C. Troy
Texas A&M University
Louis A. Tucci
College of New Jersey
Sue Umashankar
University of Arizona
Deborah Utter
Boston University
Ven Venkatesan
University of Rhode Island
at Kingston
Bronis Verhage
Georgia State University
Deirdre Verne
Westchester Community College
Steve Vitucci
Tarleton University Central Texas
Keith Wade
Webber International University
acknowledgments xxv
Suzanne Walchli
University of the Pacific
Wakiuru Wamwara-Mbugua
Wright State University—Dayton
Bryan Watkins
Dominican University, Priory Campus
Ron Weir
East Tennessee State University
Ludmilla Wells
Florida Gulf Coast University
Thomas Whipple
Cleveland State University
Tom Whitman
Mary Washington College
Kathleen Williamson
University of Houston—Clear Lake
Elizabeth Jane Wilson
Suffolk University
Phillip Wilson
Midwestern State University
Doug Witt
Brigham Young University
Kim Wong
Albuquerque Tech Institute
Letty Workman
Utah Valley University
Courtney Worsham
University of South Carolina
Brent Wren
University of Alabama—Huntsville
Alex Wu
California State University—Long
Beach
Joseph Yasaian
McIntosh College
Poh-Lin Yeoh
Bentley College
Paschalina Ziamou
Bernard M. Baruch College
Paul Fombelle
Northeastern University
John Fraedrich
Southern Illinois University—
Carbondale
Theresa E. Frame
Horry Georgetown Technical College
Sheila Fry
Champlain College
Jerome Gafford
University of North Alabama
Meredith Frank Gander
East Carolina University
Tao (Tony) Gao
Northeastern University
Lance Gentry
Colorado State University—Pueblo
Nabarun Ghose
The University of Findlay
Katie Gilstrap
Virginia Commonwealth University
Connie Golden
Lakeland Community College
Lisa Goolsby
Southern Adventist University
Deborah M. Gray
Central Michigan University
Susan Greer
Horry-Georgetown Technical College
Cynthia Grether
Delta College
Mike Griffith
Lone Star College—Kingwood
Barbara Gross
California State University, Northridge
Chiquan Guo
The University of Texas—Pan American
Jamey Halleck
Marshall University
Ivan Abel
St. John’s University
Wendi Achey
Northampton Community College
Praveen Aggarwal
University of Minnesota, Duluth
Keanon Alderson
California Baptist University
Rosalyn Amaro
Florida State College at Jacksonville
Maria Aria
Camden County College
Jill S. Attaway
Illinois State University
David Bach
Northampton Community College
Michelle Barnhart
Oregon State University
Robert Belenger
Bristol Community College
Tom Bilyeu
Southwestern Illinois College
Mark Blake
York College of Pennsylvania
Maurice Bode
Delgado Community College
Jean M. Brown
University of Alabama in
Huntsville
Cheryl O’Meara Brown
University of West Georgia
Gary Brunswick
Northern Michigan University
Desislava Budeva
Ramapo College of New Jersey
Melissa Burnett
Missouri State University
Susan Carder
Northern Arizona University
Ella Carter
Bowie State University
Debi Cartwright
Truman State University
Haozhe Chen
East Carolina University
Angeline Close
The University of Texas
at Ausin
Canessa Collins
James Madison University
Kevin Coulson
Emporia State University
Brad Cox
Midlands Technical College
Brent Cunningham
Jacksonville State University
Datha Damron-Martinez
Truman State University
Beth Deinert
Southeast Community College
David DiRusso
Millersville University
Michael Dotson
Appalachian State University
Colleen Dunn
Bucks County Community College
Diane Edmondson
Middle Tennessee State University
Burcak Ertimur
Fairleigh Dickinson University
David J. Faulds
University of Louisville
Amy Feest
Tunxis Community College
Kathleen Ferris-Costa
Bridgewater State University
Troy A. Festervand
Middle Tennessee State University
We would like to thank all the professors who were instrumental in guiding our revision of
not only the text but also Connect and other ancillary materials:
xxvi acknowledgments
Richard Hanna
Northeastern University
David Eric Hansen
Texas Southern University
Jeffrey Harper
Texas Tech University
Perry Hidalgo
Gwinnett Technical College
Monica Hodis
St. John Fisher College
Diane Holtzman
Richard Stockton College of New Jersey
Donna Hope
Nassau Community College
Luke Hopkins
Florida State University
Gorman Houston
University of Alabama
Erika Hovland
Temple University
Vince Howe
University of North Carolina, Wilmington
Miriam Huddleston
Harford Community College
James B. Hunt
University of North Carolina, Wilmington
Eva Hyatt
Appalachian State University
Roxanne Jackson
Vance-Granville Community College
Grace Jebakumari Johnson
University of Wisconsin—Milwaukee
Victoria Jones
University of North Carolina, Wilmington
Sungwoo Jung
Columbus State University
Vishal Kashyap
Xavier University
Mark Kay
Montclair State University
Sylvia Keyes
Bridgewater State University
Tina Kiesler
California State University, Northridge
Brian Kinard
University of North Carolina,
Wilmington
John Kinnett
Columbus State University
Peter Knight
University of Wisconsin, Parkside
Michael W. Kroff
Montana State University
Ann T. Kuzma
Minnesota State University, Mankato
Theodore Labay
Bishop State Community College
Myles Landers
Mississippi State University
Donald W. Larson
The Ohio State University
James R. Lashley
Bowie State University
E. Scott Lathrop
Whitman School of Management,
Syracuse University
Debra Laverie
Texas Tech University
Cary LeBlanc
Assumption College
David M. Lee
Sam Houston State University
Andrea Licari
St. John’s University
Junsang Lim
Virginia State University
Bryan D. Little
Marshall University
Guy Lochiatto
MassBay Community College
Ruth Lumb
Minnesota State University, Moorhead
Anne Weidemanis Magi
University of South Florida
David Matthews
SUNY Adirondack (Adirondack Community College)
Fredric Mayerson
Kingsborough Community College
Mike McCardle
University of North Florida
Robert McMillen
James Madison University
Myke McMullen
Long Beach Community College
Rajiv Mehta
New Jersey Institute of Technology
Sanjay S. Mehta
Sam Houston State University
Jeffrey Meier
Fox Valley Technical College
Michael Mejza
University of Nevada, Las Vegas
Robert Meyer
Parkland College
Elizabeth Miller
Boston College
Iris Mohr
St. John’s University
Josefer Montes
Walla Walla University
Dorothy J. Mulcahy
Bridgewater State University
Jay Mulki
Northeastern University—Boston
Benjamin Muller
Portland Community College
Gergana Nenkov
Boston College
John Newbold
Sam Houston State University
Hudson Nwakanma
Florida A&M University
Matt O’Hern
University of Oregon
Richard B. Osborn
York College of Pennsylvania
Rodney Oudan
Worcester State University
Lauren Paisley
Genesee Community College
Mahatapa Palit
Borough of Manhattan Community
College
Janet Parish
Texas A&M University
Raymond A. Parkins, Jr.
Florida State College at Jacksonville
Ed Petkus
Ramapo College of New Jersey
Julie M. Pharr
Tennessee Tech University
Rajani Ganesh Pillai
North Dakota State University
Douglas Quackenbos
University of South Carolina
Sampath Ranganathan
University of Wisconsin—Green Bay
Mohammed Rawwas
University of Northern Iowa
Virginia Reilly
Ocean County College
John E. Robbins
Winthrop University
Barbara Rodriguez
Pensacola State College
Ann R. Root
Florida Atlantic University
Robert Rouwenhorst
University of Iowa
Donald P. Roy
Middle Tennessee State University
Alberto Rubio-Sanchez
University of the Incarnate Word
Catherine Ruggieri
St. John’s University, New York
Doreen Sams
Georgia College & State University
Robin Schallie
Fox Valley Technical College
Douglas Scott
State College of Florida
acknowledgments xxvii
Christine Seel
Delaware Valley College
Daaim Shabazz
Florida A&M University
Abhay Shah
Colorado State University—Pueblo
Rick Shannon
Western Kentucky University
Kenneth Shaw
State University of New York, Oswego
Robert Simon
University of Nebraska—Lincoln
Peter D. Simonson
North Dakota State University
David Smith
Bemidji State University
Dennis Spector
Naugatuck Valley Community College
Vernon R. Stauble
San Bernardino Valley College
Susan Steiz
Norwalk Community College
Geoffrey Stewart
University of Louisiana
Karen L. Stewart
Richard Stockton College of New Jersey
Susan Stone
Shippensburg University of Pennsylvania
Ray Stroup, Jr.
University of Louisiana at Lafayette
James Swenson
Minnesota State University, Moorhead
Brad Taylor
Kennesaw State University
Steven Taylor
Illinois State University
Ramendra Thakur
University of Louisiana—Lafayette
Norman Thiel
Walla Walla University
Dennis Tootelian
California State University, Sacramento
Philip Trocchia
University of South Florida, St. Petersburg
Joe Tungol
College of DuPage
Sven Tuzovic
Pacific Lutheran University
Leo Vasquez
San Bernardino Valley College, San Bernardino
Frank R. Veltri
University of Oregon
Franck Vigneron
California State University Northridge
Matt Watanabe
Folsom Lake College
Doug Wilson
University of Oregon—Lundquist College of Business
Roger Wilson
Fairmont State University
Doug Witt
Brigham Young University
Mike Wittmann
The University of Southern Mississippi
Van R. Wood
Virginia Commonwealth University
Jefrey R. Woodall
York College of Pennsylvania
Kim Wong
Central New Mexico Community College
Ashley Wright
Spartanburg Community College
Elle Wu
Louisiana State University
Charles Wyckoff
Riverside Community College
Doula Zaharopoulos
Phoenix College
Ge Xiao
Wilkes University
Jim Zemanek
East Carolina University
Lin Zhang
Truman State University
Leroy Robinson, Jr.
University of Houston, Clear Lake
John Striebich
Monroe Community College
Lois Olson
San Diego State University
Lauren Spinner Beitelspacher
Babson College University
Barbara Black
University of Miami
Thomas Byrnes
North Carolina State University
Donna Haeger
Monroe Community College
Todd Korol
Monroe Community College
Melissa Martin
George Mason University
We express our thanks to all faculty who have contributed to the development of digital
learning content:
A special thank-you to Steven A. Taylor of Illinois State University, Elizabeth Jane
Wilson of Suffolk University, Kevin Bertotti of iTVk, and Becky and Patrick of We Write
Good for their efforts in authoring and producing the iSeeit! videos in Connect.
We’d also like to thank the team at Hurix—Sumesh Yoganath, Namrata Gunjal, and
Ashwin Srivastav—for their contributions as well as Sue Sullivan of Editors, Inc.
brief contents
SECTION 1: ASSESSING THE MARKETPLACE 1
1 OVERVIEW OF MARKETING 2
2 DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN 28
APPENDIX 2A: WRITING A MARKETING PLAN 63
3 DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE 82
4 CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY,
AND ETHICS 120
APPENDIX 4A: UNDERSTANDING ETHICS USING SCENARIOS 147
5 ANALYZING THE MARKETING ENVIRONMENT 152
SECTION 2: UNDERSTANDING THE MARKETPLACE 185
6 CONSUMER BEHAVIOR 186
7 BUSINESS-TO-BUSINESS MARKETING 222
8 GLOBAL MARKETING 246
SECTION 3: TARGETING THE MARKETPLACE 277
9 SEGMENTATION, TARGETING, AND POSITIONING 278
10 MARKETING RESEARCH AND ANALYTICS 312
APPENDIX 10A: USING SECONDARY DATA TO ASSESS CUSTOMER
LIFETIME VALUE (CLV) 349
SECTION 4: VALUE CREATION 353
11 PRODUCT, BRANDING, AND PACKAGING DECISIONS 354
12 DEVELOPING NEW PRODUCTS 384
13 SERVICES: THE INTANGIBLE PRODUCT 416
SECTION 5: VALUE CAPTURE 445
14 PRICING CONCEPTS FOR CAPTURING VALUE 446
15 STRATEGIC PRICING METHODS AND TACTICS 472
SECTION 6: VALUE DELIVERY: DESIGNING THE CHANNEL
AND SUPPLY CHAIN 499
16 SUPPLY CHAIN AND CHANNEL MANAGEMENT 500
17 RETAILING AND OMNICHANNEL MARKETING 528
SECTION 7: VALUE COMMUNICATION 559
18 INTEGRATED MARKETING COMMUNICATIONS 560
19 ADVERTISING, PUBLIC RELATIONS, AND SALES PROMOTIONS 588
20 PERSONAL SELLING AND SALES MANAGEMENT 622
Glossary 648
Name Index 663
Company Index 670
Subject Index 674
xxviii
xxix
table of contents
SECTION 1 ASSESSING THE MARKETPLACE 1
1 OVERVIEW OF MARKETING 2
WHAT IS MARKETING? 4
Marketing Is about Satisfying Customer Needs and Wants 5
Adding Value 1.1: The Baby Dove Product Line Extension and
Its Context 6
Marketing Entails an Exchange 6
Marketing Creates Value through Product, Price, Place, and
Promotion Decisions 7
Marketing Can Be Performed by Individuals and Organizations 9
Marketing Affects Various Stakeholders 10
Adding Value 1.2: The Kids Are Marketing All Right: Recycling and
Selling on E-Commerce Platforms 11
Ethical & Societal Dilemma 1.1: Making a Family Business More
Valuable by Addressing Gender Inequality in the Coffee Market 13
THE IMPORTANCE OF MARKETING OVER TIME 13
Production-Oriented Era 13
Sales-Oriented Era 14
Market-Oriented Era 14
Value-Based Marketing Era 14
Adding Value 1.3: A Lipstick Option for Those Who Dream of a
Hermès Bag 15
HOW DOES MARKETING CREATE VALUE, AND HOW DO FIRMS
BECOME MORE VALUE DRIVEN? 17
Adding Value 17
Marketing Analytics 17
Adding Value 1.4: Is There Cash Value in No Cash? Amazon
Thinks So 18
Social and Mobile Marketing 18
Marketing Analytics 1.1: Scan Your Face, Drive Away in Less Than
a Minute: Using Biometrics at Hertz Rental Locations 19
Social & Mobile Marketing 1.1: Marketing Your TikTok Account
by . . . Sleeping? 20
Ethical and Societal Dilemma 20
Ethical & Societal Dilemma 1.2: After Axing Straws, Starbucks
Still Faces Criticism for Single-Use Plastic 21
Reviewing Learning Objectives 22
Key Terms 22
Marketing Digitally 23
Marketing Applications 23
Quiz Yourself 23
Chapter Case Study: A Flood of Water Consumption Choices 24
Quiz Yourself Answer Key 27
APN Photography/Shutterstock
xxx table of contents
2 DEVELOPING MARKETING STRATEGIES AND A
MARKETING PLAN 28
WHAT IS A MARKETING STRATEGY? 30
Customer Excellence 31
Operational Excellence 33
Product Excellence 33
Adding Value 2.1: Beautiful Loyalty: Sally Beauty’s Updated Loyalty
Program 34
Locational Excellence 35
Multiple Sources of Advantage 35
THE MARKETING PLAN 35
Step 1: Define the Business Mission and Objectives 37
Step 2: Conduct a Situation Analysis 38
Ethical & Societal Dilemma 2.1: Exchanging a Bottle of Pepsi
for a Can of Water? Finding Packaging Solutions to
Environmental Commitments 40
Step 3: Identify and Evaluate Opportunities Using Segmentation,
Targeting, and Positioning (STP) 40
Adding Value 2.2: The New iPhone SE: What Makes It Different from
Previous Versions? 41
Step 4: Implement Marketing Mix and Allocate Resources 43
Adding Value 2.3: Repositioning Old Spice 44
Step 5: Evaluate Performance Using Marketing Metrics 45
Social & Mobile Marketing 2.1: Making Technology Personal: How
Wayfair Is Leveraging High-Tech Tools to Connect with Consumers 46
Marketing Analytics 2.1: Making a First Impression in Less Than the
First Second: New Evidence about Mobile Marketing 47
Strategic Planning Is Not Sequential 52
GROWTH STRATEGIES 52
Market Penetration 52
Market Development 53
Product Development 53
Diversification 53
Reviewing Learning Objectives 54
Key Terms 56
Marketing Digitally 56
Marketing Applications 56
Quiz Yourself 57
Chapter Case Study: The Coffee Wars 57
Quiz Yourself Answer Key 61
Appendix 2A: Writing a Marketing Plan 63
3 DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE 82
THE 4E FRAMEWORK FOR DIGITAL MARKETING 84
Excite the Customer 85
Educate the Customer 85
Experience the Product or Service 86
Engage the Customer 87
monticello/Shutterstock
Regien Paassen/Shutterstock
table of contents xxxi
ONLINE MARKETING 89
Core Goals 89
Contextual Elements 90
Content 90
Community 91
Communication 93
Commerce 93
Connection 94
THE WHEEL OF SOCIAL MEDIA ENGAGEMENT 95
The Information Effect 95
Marketing Analytics 3.1: Are Algorithms Discriminatory? Questions
about How Facebook Targets Advertising 96
The Connected Effect 96
Adding Value 3.1: The Portal from Facebook with an Assist from Amazon 97
The Network Effect 98
The Dynamic Effect 98
Social & Mobile Marketing 3.1: Just Don’t Eat the Detergent! Who Is
Responsible for Consumers’ Risky Behaviors? 99
The Timeliness Effect 99
GOING MOBILE AND SOCIAL 100
App Pricing Models 102
HOW DO FIRMS ENGAGE THEIR CUSTOMERS? 103
Listen 103
Analyze 104
Do 105
INFLUENCER MARKETING 108
Assessing the Efficacy of Influencers 108
Types of Influencers 110
Ethical Considerations for Influencer Marketing 111
Reviewing Learning Objectives 113
Key Terms 114
Marketing Digitally 114
Marketing Applications 114
Quiz Yourself 115
Chapter Case Study: Images, Sales, Brands: How Red Bull Uses Various Digital
and Social Media Techniques to Achieve All Its Objectives 115
Quiz Yourself Answer Key 119
4 CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY,
AND ETHICS 120
CONSCIOUS MARKETING 123
Adding Value 4.1: Philanthropy with a Dash of Style: The Elbi–David Yurman
Partnership 124
MARKETING’S GREATER PURPOSE: CORPORATE SOCIAL RESPONSIBILITY
AS AN ELEMENT OF CONSCIOUS MARKETING 125
THE STAKEHOLDERS OF CONSCIOUS MARKETING 127
Employees 128
Customers 128
Thomas Niedermueller/Getty Images
xxxii table of contents
Ethical & Societal Dilemma 4.1: To What Extent Is YouTube Responsible
for Protecting Children from Targeting? 129
Marketplace 129
Society 130
Environment 130
Adding Value 4.2: Untouched and Empowering, New Aerie Campaign
Showcases Real Women 131
INTEGRATING CONSCIOUS MARKETING THROUGHOUT THE FIRM:
LEADERSHIP AND CULTURE 131
Planning Phase 132
Implementation Phase 133
Control Phase 133
Social & Mobile Marketing 4.1: Do Users Know What They Are Sharing with
Facebook, and Do They Care? 134
Marketing Analytics 4.1: China’s Social Credit System 135
MARKETING ETHICS AS A CONSCIOUS MARKETING PRINCIPLE 135
The Nature of Ethical and Unethical Marketing Decisions 135
Ethics and Corporate Social Responsibility 136
A Framework for Ethical Decision Making 137
Reviewing Learning Objectives 140
Key Terms 141
Marketing Digitally 142
Marketing Applications 142
Quiz Yourself 142
Chapter Case Study: Daily Table 143
Quiz Yourself Answer Key 146
Appendix 4A: Understanding Ethics Using Scenarios 147
5 ANALYZING THE MARKETING ENVIRONMENT 152
A MARKETING ENVIRONMENT ANALYSIS FRAMEWORK 154
THE IMMEDIATE ENVIRONMENT 155
Company Capabilities 155
Competitors 155
Corporate Partners 155
Physical Environment 156
Ethical & Societal Dilemma 5.1: Microplastics in the Pool: The Unique
Environmental Harms of Swimwear and Efforts to Address Them 158
MACROENVIRONMENTAL FACTORS 159
Culture 159
Demographics 161
Social & Mobile Marketing 5.1: What Can Pokémon Go Do for Marketers? 163
Social Trends 166
Ethical & Societal Dilemma 5.2: Consumers Insist on Healthy
Foods—Until You Mess with the Color of Their Trix 168
Adding Value 5.1: Realistic Beauty at CVS 169
Technological Advances 170
Marketing Analytics 5.1: Vending Drinks, Gathering Big Data: How Coca-Cola
Relies on Cutting-Edge Analytics to Develop New Drink Flavors 171
Dani Metaz/Shutterstock
table of contents xxxiii
Economic Situation 174
Political/Legal Environment 175
Responding to the Environment 177
Reviewing Learning Objectives 177
Key Terms 178
Marketing Digitally 178
Marketing Applications 179
Quiz Yourself 179
Chapter Case Study: The Rise of the Electric Car 179
Quiz Yourself Answer Key 183
SECTION 2 UNDERSTANDING THE MARKETPLACE 185
6 CONSUMER BEHAVIOR 186
THE CONSUMER DECISION PROCESS 188
Need Recognition 188
Ethical & Societal Dilemma 6.1: CVS Makes Changes to Focus on
Customer Health 190
Search for Information 190
Marketing Analytics 6.1: The Best Behavioral Predictor? What People
Buy on Amazon 192
Ethical & Societal Dilemma 6.2: Is Fashion a Statement? Marketing
Clothing as Political Protest 194
Evaluation of Alternatives 195
Adding Value 6.1: How LaCroix Has Entered Consumers’ Evoked Set Using
Social Media That Highlight Its Determinant Attributes 196
Ethical & Societal Dilemma 6.3: The Gems and Skins Might Be
Virtual, but the Money Is Real: In-Game Purchases, Kids,
and Content 198
Purchase and Consumption 199
Postpurchase 199
FACTORS INFLUENCING THE CONSUMER DECISION PROCESS 202
Psychological Factors 203
Social Factors 207
Situational Factors 208
Adding Value 6.2: Meeting Consumers’ Demands for Healthy While
Also Fulfilling Their Cravings for Salty 211
INVOLVEMENT AND CONSUMER BUYING DECISIONS 211
Extended Problem Solving 212
Limited Problem Solving 213
Reviewing Learning Objectives 214
Key Terms 214
Marketing Digitally 215
Marketing Applications 215
Quiz Yourself 216
Chapter Case Study: Battle of the Titans: Amazon Echo versus Google Home
(and Don’t Forget about Apple) 216
Quiz Yourself Answer Key 221
Mark Von Holden/Invision for the
Television Academy/AP Images
xxxiv table of contents
7 BUSINESS-TO-BUSINESS MARKETING 222
B2B MARKETS 225
Manufacturers and Service Providers 226
Resellers 226
Institutions 226
Government 226
Ethical & Societal Dilemma 7.1: Marketing Human Resources:
The Growing Market for Outsourced Workers 227
THE BUSINESS‐TO‐BUSINESS BUYING PROCESS 228
Stage 1: Need Recognition 228
Stage 2: Product Specification 228
Social & Mobile Marketing 7.1: Stimulating Need Recognition When Selling
Directly to Consumers Necessitates Strategic Advertising Campaigns 229
Stage 3: RFP Process 230
Stage 4: Proposal Analysis, Vendor Negotiation, and Selection 230
Stage 5: Order Specification 231
Stage 6: Vendor Performance Assessment Using Metrics 231
THE BUYING CENTER 232
Organizational Culture 233
Building B2B Relationships 234
Adding Value 7.1: Establishing a Platform for Marketing Brands:
The Wistia Way 236
THE BUYING SITUATION 237
Reviewing Learning Objectives 240
Key Terms 240
Marketing Digitally 241
Marketing Applications 241
Quiz Yourself 241
Chapter Case Study: A True Platform for Sellers: How Alibaba Is Trying to
Take Over the World 242
Quiz Yourself Answer Key 245
8 GLOBAL MARKETING 246
ASSESSING GLOBAL MARKETS 249
Economic Analysis Using Metrics 249
Analyzing Infrastructure and Technological Capabilities 252
Analyzing Governmental Actions 252
Social & Mobile Marketing 8.1: Can a Hashtag Save a National Currency?
Using Twitter to Help Nigeria 254
Analyzing Sociocultural Factors 255
Ethical & Societal Dilemma 8.1: Success and the Challenges It Creates:
How Growing Diaper and Pad Consumption Has Left Personal Goods
Firms with a Growing Problem 256
Ethical & Societal Dilemma 8.2: Dolce & Gabbana Faces Public
Scrutiny in China 257
The Appeal of the BRIC Countries 258
CHOOSING A GLOBAL ENTRY STRATEGY 261
Exporting 261
garmoncheg/Shutterstock
Chesnot/Getty Images
table of contents xxxv
Franchising 262
Strategic Alliance 262
Joint Venture 262
Direct Investment 263
CHOOSING A GLOBAL MARKETING STRATEGY 264
Target Market: Segmentation, Targeting, and Positioning 264
Adding Value 8.1: Like Pumpkin and Chocolate Sauce for Your Fries?
McDonald’s Might Be Able to Help with That 266
Adding Value 8.2: Domino’s Growth Plan: Expand Everywhere and Every Way 267
Adding Value 8.3: Forget the Mall, Shoppers Are Buying Gucci at Airports 268
Adding Value 8.4: International Women’s Day as Inspiration for Marketing
Messages 269
Reviewing Learning Objectives 270
Key Terms 271
Marketing Digitally 271
Marketing Applications 271
Quiz Yourself 272
Chapter Case Study: Colonel Sanders Would Be Proud, KFC Is a Global Brand 272
Quiz Yourself Answer Key 276
SECTION 3 TARGETING THE MARKETPLACE 277
9 SEGMENTATION, TARGETING, AND POSITIONING 278
THE SEGMENTATION, TARGETING, AND POSITIONING PROCESS 280
Step 1: Establish the Overall Strategy or Objectives 281
Step 2: Use Segmentation Methods 281
Adding Value 9.1: Dealing with Modern Life by Playing: LEGO Promises
Mindfulness and Meaning for Adults 283
Ethical & Societal Dilemma 9.1: Supporting Black-Owned Businesses
Even after They’re Purchased by Conglomerates 285
Social & Mobile Marketing 9.1: Using Our Outdoor Voices, Literally
and Figuratively 286
Marketing Analytics 9.1: Taking the Temperature of Consumers to
Track Disease and Market Products 289
Step 3: Evaluate Segment Attractiveness 291
Step 4: Select a Target Market 294
Adding Value 9.2: When Your Brand Is Popular among a Non–Target Market:
Patagonia’s Decision to Limit Sales to Maintain Its Value-Based
Image 297
Step 5: Identify and Develop Positioning Strategy 297
Positioning Methods 300
Positioning Using Perceptual Mapping 302
Reviewing Learning Objectives 305
Key Terms 306
Marketing Digitally 306
Marketing Applications 306
Quiz Yourself 307
Chapter Case Study: P&G Segments Its Market along Multiple Dimensions 307
Quiz Yourself Answer Key 311
JUPITERIMAGES/BananaStock/
Alamy Stock Photo
xxxvi table of contents
10 MARKETING RESEARCH AND ANALYTICS 312
THE MARKETING RESEARCH PROCESS 314
Marketing Research Process Step 1: Defining the Objectives and
Research Needs 315
Marketing Research Process Step 2: Designing the Research 316
Marketing Research Process Step 3: Collecting the Data 316
Marketing Research Process Step 4: Analyzing the Data and Developing
Insights 318
Marketing Research Process Step 5: Developing and Implementing an
Action Plan 318
SECONDARY DATA 319
Inexpensive Secondary Data 319
Syndicated Secondary Data 319
PRIMARY DATA COLLECTION TECHNIQUES 321
Marketing Analytics 10.1: The Under Armour Idea of “Connected
Fitness” 322
Observation 323
In‐Depth Interviews 324
Focus Group Interviews 324
Survey Research 325
Adding Value 10.1: How Booking.com Leveraged Marketing Research to Develop
Novel Offerings for Travelers Looking for Something Different 327
Panel‐ and Scanner‐Based Research 327
Experimental Research 328
Advantages and Disadvantages of Primary and Secondary Research 329
BIG DATA 330
Marketing Analytics 10.2: How Much Is Your Search History Worth?
Would $10 Cover It? Amazon’s Prime Day Offer and Strategy 331
Social & Mobile Marketing 10.1: Selfies as Data: Relying on a New Form of
Self-Reporting to Gauge Consumer Behavior 332
MARKETING ANALYTICS 334
Marketing Decisions 334
Tools and Methods 336
Adding Value 10.2: A Big Meal and Some Big Data: The Expanding
Uses of Data Mining and Analytics in the Restaurant Industry 337
THE ETHICS OF USING CUSTOMER INFORMATION 338
Ethical & Societal Dilemma 10.1: Vacuuming Up More Than Dirt:
The Information Collected by Roomba and Its Potential Uses 339
Reviewing Learning Objectives 341
Key Terms 342
Marketing Digitally 342
Marketing Applications 342
Quiz Yourself 343
Chapter Case Study: Swim, Lift, Play—But Also Donate: Using Marketing
Research to Redefine the YMCA 344
Quiz Yourself Answer Key 348
Appendix 10A: Using Secondary Data to Assess Customer Lifetime
Value (CLV) 349
Photo 12/Alamy Stock Photo
table of contents xxxvii
SECTION 4 VALUE CREATION 353
11 PRODUCT, BRANDING, AND PACKAGING DECISIONS 354
COMPLEXITY AND TYPES OF PRODUCTS 356
Complexity of Products 356
Types of Products 357
Adding Value 11.1: Have You Seen the One about JS Watch Company? A Luxury
Marketing and Pricing Strategy That Doesn’t Take Itself Too Seriously 358
PRODUCT MIX AND PRODUCT LINE DECISIONS 359
BRANDING 362
Value of Branding for the Customer 362
Brand Equity for the Owner 364
Social & Mobile Marketing 11.1: From Jingles to Music Videos:
Creating an Authentic Auditory Brand 367
BRANDING STRATEGIES 368
Brand Ownership 368
Naming Brands and Product Lines 369
Brand and Line Extensions 370
Co‐branding 372
Brand Licensing 372
Ethical & Societal Dilemma 11.1: Art and the Fashionable Sock:
A New Era in Licensing Agreements 373
Brand Repositioning 374
Adding Value 11.2: An Abbreviation No More: Weight Watchers
Rebrands as Simply WW 375
PACKAGING 375
Product Labeling 377
Reviewing Learning Objectives 378
Key Terms 378
Marketing Digitally 379
Marketing Applications 379
Quiz Yourself 380
Chapter Case Study: Yogurt Lovers Say, “It’s All Greek to Me” 380
Quiz Yourself Answer Key 383
12 DEVELOPING NEW PRODUCTS 384
WHY DO FIRMS CREATE NEW PRODUCTS? 386
Adding Value 12.1: Finding the Hearables Market by Visiting Coachella 387
Changing Customer Needs 387
Ethical & Societal Dilemma 12.1: “Smart” Toys Raise New Privacy Concerns 388
Market Saturation 389
Managing Risk through Diversity 389
Adding Value 12.2: Adding Podcasts to Their Portfolios: How Streaming
Services Are Expanding Their Product Lines 390
Fashion Cycles 390
Social & Mobile Marketing 12.1: A Battle Royale for Gamers:
Call of Duty versus Fortnite 391
Jean Catuffe/Getty Images
DenPhotos/Shutterstock
xxxviii table of contents
Improving Business Relationships 391
DIFFUSION OF INNOVATION 392
Innovators 393
Early Adopters 394
Early Majority 394
Late Majority 395
Laggards 395
Using the Diffusion of Innovation Theory 395
HOW FIRMS DEVELOP NEW PRODUCTS 397
Idea Generation 397
Concept Testing 401
Product Development 402
Market Testing 402
Product Launch 404
Evaluation of Results 404
THE PRODUCT LIFE CYCLE 405
Introduction Stage 406
Growth Stage 406
Maturity Stage 407
Adding Value 12.3: Wearables That Want Your Sweat to Improve
Your Service Access 408
Decline Stage 408
The Shape of the Product Life Cycle Curve 409
Strategies Based on Product Life Cycle: Some Caveats 409
Reviewing Learning Objectives 410
Key Terms 410
Marketing Digitally 411
Marketing Applications 411
Quiz Yourself 412
Chapter Case Study: Hit or Miss, Dyson Wants to Make Products That
Solve Problems in Different Ways 412
Quiz Yourself Answer Key 415
13 SERVICES: THE INTANGIBLE PRODUCT 416
Adding Value 13.1: Hotels on Wheels: A Service Innovation 420
SERVICES MARKETING DIFFERS FROM PRODUCT MARKETING 420
Intangible 420
Inseparable Production and Consumption 421
Ethical & Societal Dilemma 13.1: Snooping on Babysitters, Even before
Hiring Them: The Predictim Service Promise 422
Heterogeneous 422
Perishable 423
Adding Value 13.2: Casper Mattress Dreams Up a Creative Way to Mix
Business with Marketing 424
PROVIDING GREAT SERVICE: THE SERVICE GAPS MODEL 425
The Knowledge Gap: Understanding Customer Expectations 426
The Standards Gap: Setting Service Standards 430
The Delivery Gap: Delivering Service Quality 431
rblfmr/Shutterstock
table of contents xxxix
Adding Value 13.3: Take a Virtual “Test Drive” before Booking
Your Next Trip 433
Social & Mobile Marketing 13.1: The Doctor Will See You Now,
At Least Virtually 435
The Communication Gap: Communicating the Service Promise 435
Service Quality, Customer Satisfaction, and Loyalty 436
Marketing Analytics 13.1: Do Low-Price Shoppers Want Service Too?
Aldi Says So, and It’s Delivering It to Them 437
SERVICE RECOVERY 438
Listening to Customers and Involving Them in Service Recovery 438
Finding a Fair Solution 439
Resolving Problems Quickly 439
Reviewing Learning Objectives 440
Key Terms 440
Marketing Digitally 440
Marketing Applications 441
Quiz Yourself 441
Chapter Case Study: Understanding GrubHub’s Service Quality 442
Quiz Yourself Answer Key 444
SECTION 5 VALUE CAPTURE 445
14 PRICING CONCEPTS FOR CAPTURING VALUE 446
THE FIVE Cs OF PRICING 449
Company Objectives 449
Adding Value 14.1: The Secret to Nissan’s Success: Fleet Sales 451
Adding Value 14.2: Do Airline Passengers Get What They Pay For?
Air France Thinks So, Which Is Why It Charges More 452
Customers 454
Marketing Analytics 14.1: The Ultimate Outcomes of Dynamic Pricing 458
Costs 459
Break‐Even Analysis and Decision Making 460
Markup and Target Return Pricing 462
Competition 463
Channel Members 465
Reviewing Learning Objectives 466
Key Terms 466
Marketing Digitally 467
Marketing Applications 467
Quiz Yourself 468
Chapter Case Study: T-Mobile’s Pricing Strategy Is a Game Changer 468
Quiz Yourself Answer Key 471
15 STRATEGIC PRICING METHODS AND TACTICS 472
CONSIDERATIONS FOR SETTING PRICE STRATEGIES 474
Cost‐Based Methods 474
Competition‐Based Methods 475
opturadesign/Alamy Stock Photo
Tzido Sun/Shutterstock
xl table of contents
Value‐Based Methods 475
Adding Value 15.1: A Price Cut or a Competitive Marketing Tactic?
Amazon’s Price Drop at Whole Foods Is Both 476
Ethical & Societal Dilemma 15.1: Competitive Pricing across Channels:
Target’s Transparency, or Lack Thereof 478
PRICING STRATEGIES 478
Everyday Low Pricing (EDLP) 478
High/Low Pricing 479
New Product Pricing Strategies 479
Adding Value 15.2: The iPhone SE: The Moment When Apple Finally
Began to Follow Conventional Pricing Models 481
PRICING TACTICS 482
Pricing Tactics Aimed at Consumers 482
Business Pricing Tactics and Discounts 485
LEGAL AND ETHICAL ASPECTS OF PRICING 487
Deceptive or Illegal Price Advertising 487
Predatory Pricing 488
Price Discrimination 489
Price Fixing 489
Ethical & Societal Dilemma 15.2: New Advertising Information
about Prescription Drugs: Their Prices! 490
Reviewing Learning Objectives 491
Key Terms 492
Marketing Digitally 492
Marketing Applications 492
Quiz Yourself 493
Chapter Case Study: Pizza Players, Pizza Prices 493
Quiz Yourself Answer Key 498
SECTION 6 VALUE DELIVERY: DESIGNING THE CHANNEL
AND SUPPLY CHAIN 499
16 SUPPLY CHAIN AND CHANNEL MANAGEMENT 500
THE IMPORTANCE OF MARKETING CHANNEL/SUPPLY CHAIN
MANAGEMENT 502
Marketing Channels Add Value 504
Marketing Channel Management Affects Other Aspects of Marketing 505
Adding Value 16.1: Developing Quick Response Systems for
Unpredictable Sports Outcomes: How Fanatics Gets Gear to
Fans without Delay 506
DESIGNING MARKETING CHANNELS 506
Direct Marketing Channel 507
Indirect Marketing Channel 507
Franchising 508
MANAGING THE MARKETING CHANNEL AND SUPPLY CHAIN 509
Marketing Channel Conflict 509
Power in the Marketing Channel 510
Adding Value 16.2: Milk Is Going Vertical 511
Cover Images/Newscom
table of contents xli
Managing Marketing Channels and Supply Chains through Strategic
Relationships 512
Adding Value 16.3: Ensuring the Cars Run (Off the Production Line)
despite Disruptions 514
MAKING INFORMATION FLOW THROUGH MARKETING CHANNELS 515
MAKING MERCHANDISE FLOW THROUGH MARKETING CHANNELS 516
Distribution Centers versus Direct Store Delivery 517
Getting Merchandise to Customers 518
Adding Value 16.4: Pick It Up and Put It Down: Where Robots Succeed
and Where They Fail 519
Ethical & Societal Dilemma 16.1: Controlling Theft with Dummy
Packages: Amazon’s Effort to Catch Unethical Delivery Drivers 521
Reviewing Learning Objectives 522
Key Terms 522
Marketing Digitally 523
Marketing Applications 523
Quiz Yourself 523
Chapter Case Study: Grocery Delivery 524
Quiz Yourself Answer Key 527
17 RETAILING AND OMNICHANNEL MARKETING 528
Social & Mobile Marketing 17.1: Groceries Are Essential, and in a
Pandemic, So Are Mobile and Contactless Channels to Get Them 531
CHOOSING RETAILING PARTNERS 532
Channel Structure 533
Customer Expectations 533
Channel Member Characteristics 534
Distribution Intensity 534
IDENTIFYING TYPES OF RETAILERS 536
Food Retailers 536
Social & Mobile Marketing 17.2: Can Brick and Mortar Last in an
Online and Mobile Retail World? 537
Adding Value 17.1: When Grocery Shopping Turns into . . . Something Else,
Something Fun 538
General Merchandise Retailers 540
Service Retailers 542
DEVELOPING A RETAIL STRATEGY USING THE SIX Ps 543
Product 543
Price 544
Adding Value 17.2: Expanding the Product Mix: Target’s Extensive
Private-Label Plans 544
Promotion 545
Place 545
Presentation 545
Personnel 546
MANAGING AN OMNICHANNEL STRATEGY 547
Deeper and Broader Selection 547
Personalization 547
Jennifer Chen/Alamy Stock Photo
xlii table of contents
Expanded Market Presence 548
Integrated CRM 548
Brand Image 548
Ethical & Societal Dilemma 17.1: How Retailers and Tech Companies
Collaborate to Create Beacons That Track Shoppers—And What
Shoppers Can Do about It (or Not) 549
Pricing 549
Supply Chain 550
Reviewing Learning Objectives 551
Key Terms 552
Marketing Digitally 552
Marketing Applications 552
Quiz Yourself 553
Chapter Case Study: Ashley Stewart 553
Quiz Yourself Answer Key 558
SECTION 7 VALUE COMMUNICATION 559
18 INTEGRATED MARKETING COMMUNICATIONS 560
COMMUNICATING WITH CONSUMERS 563
The Communication Process 563
Adding Value 18.1: Eleven Loves Eggos; Why Wouldn’t Fans of
Stranger Things Love Them Too? 565
How Consumers Perceive Communication 565
Social & Mobile Marketing 18.1: Messaging App Snaps Up
Advertisers with New Enhancements 566
The AIDA Model 566
Adding Value 18.2: But Can the Duck Belt Out a Hit? Aflac’s Country Music
Marketing Communications to Clarify What Its Products Do 569
CHANNELS USED IN AN INTEGRATED MARKETING COMMUNICATIONS
STRATEGY 570
Adding Value 18.3: Dashing beyond Delivery: How DoorDash
Is Leveraging All Its Marketing Options 571
Advertising 572
Public Relations 572
Sales Promotions 572
Personal Selling 573
Direct Marketing 573
Online Marketing 573
Social & Mobile Marketing 18.2: Tasty: A Revolution in Marketing or
Just the Latest Example of IMC? 575
Adding Value 18.4: Combining Two Popular Trends: Advertising through
In-Home Voice Assistants 576
PLANNING FOR AND MEASURING IMC SUCCESS 577
Goals 577
Setting and Allocating the IMC Budget 577
Measuring Success Using Marketing Metrics 578
Planning, Implementing, and Evaluating IMC Programs—An Illustration of
Google Advertising 580
Source: BMW AG
table of contents xliii
Reviewing Learning Objectives 582
Key Terms 583
Marketing Digitally 583
Marketing Applications 583
Quiz Yourself 584
Chapter Case Study: Taking IMC to the Max: Pepsi Max and Modern
Communications 584
Quiz Yourself Answer Key 587
19 ADVERTISING, PUBLIC RELATIONS, AND SALES PROMOTIONS 588
STEP 1: IDENTIFY TARGET AUDIENCE 592
STEP 2: SET ADVERTISING OBJECTIVES 592
Informative Advertising 593
Persuasive Advertising 593
Adding Value 19.1: Thinking Big and Small: An Arby’s Advertising
Campaign That Breaks World Records 594
Reminder Advertising 595
Focus of Advertisements 595
Ethical & Societal Dilemma 19.1: Effectively Controversial or Just
Plain Cruel? A Public Health Campaign by South Dakota 597
STEP 3: DETERMINE THE ADVERTISING BUDGET 597
STEP 4: CONVEY THE MESSAGE 598
The Message 598
The Appeal 599
STEP 5: EVALUATE AND SELECT MEDIA 601
Mass and Niche Media 602
Choosing the Right Medium 602
Determining the Advertising Schedule 602
Ethical & Societal Dilemma 19.2: It’s Both Cute and Horrifying:
A Historical Ad That Tries to Get Toddlers to Chew More Gum 603
STEP 6: CREATE ADVERTISEMENTS 604
STEP 7: ASSESS IMPACT USING MARKETING METRICS 605
Ethical & Societal Dilemma 19.3: Funny, or a Little Creepy? How
Spotify Uses Highly Specific Data Analysis Results 607
REGULATORY AND ETHICAL ISSUES IN ADVERTISING 608
Ethical & Societal Dilemma 19.4: When Is It Bragging, and When
Is It False Advertising—and Who Decides? Comparative Advertising
by Chevrolet and the Responses by Its Rivals 609
PUBLIC RELATIONS 610
SALES PROMOTION 612
Types of Sales Promotion 612
Using Sales Promotion Tools 615
Reviewing Learning Objectives 616
Key Terms 616
Marketing Digitally 617
Marketing Applications 617
Quiz Yourself 618
Walt Disney Studios Motion Pictures/
Photofest
xliv table of contents
Chapter Case Study: Beyond Product Placement: The Positive Partnership
of Lexus and Black Panther 618
Quiz Yourself Answer Key 621
20 PERSONAL SELLING AND SALES MANAGEMENT 622
THE SCOPE AND NATURE OF PERSONAL SELLING 624
Personal Selling as a Career 624
The Value Added by Personal Selling 625
Social & Mobile Marketing 20.1: Selling through WhatsApp:
How a Digital Tool Is Altering Sales Practices in India 626
THE PERSONAL SELLING PROCESS 627
Step 1: Generate and Qualify Leads 627
Adding Value 20.1: A LinkedIn Advertising Campaign That Focuses
on How People Can Sell 628
Step 2: Preapproach and the Use of CRM Systems 629
Step 3: Sales Presentation and Overcoming Reservations 630
Adding Value 20.2: Selling When the Sharks Are Circling:
The Selling Lessons to Learn from Shark Tank Contestants 632
Step 4: Closing the Sale 632
Step 5: Follow‐Up 633
MANAGING THE SALES FORCE 634
Sales Force Structure 635
Ethical & Societal Dilemma 20.1: Are Multilevel Marketing Sales
a Route to Fabulous Wealth or Really Just a Pyramid Scheme? 636
Recruiting and Selecting Salespeople 637
Sales Training 638
Motivating and Compensating Salespeople 638
ETHICAL AND LEGAL ISSUES IN PERSONAL SELLING 640
The Sales Manager and the Sales Force 641
The Sales Force and Corporate Policy 641
The Salesperson and the Customer 641
Reviewing Learning Objectives 642
Key Terms 642
Marketing Digitally 642
Marketing Applications 643
Quiz Yourself 643
Chapter Case Study: Want to Buy a Robot?: Making the Sale 644
Quiz Yourself Answer Key 647
Glossary 648
Name Index 663
Company Index 670
Subject Index 674
xavierarnau/E+/Getty Images
Section One: Assessing the Marketplace contains five
chapters. Following an introduction to marketing in
Chapter 1, Chapter 2 focuses on how a firm develops its
marketing strategy and a marketing plan. A central theme
of that chapter is how firms can effectively create, capture, deliver, and communicate value to their customers.
Chapter 3 is devoted to understanding how to develop
social and mobile marketing strategies. In Chapter 4,
conscious marketing is introduced, and corporate social
responsibility is woven into the overarching conscious
marketing framework. Then the role of the stakeholders in
conscious marketing, both internal and external to the firm,
is examined. An ethical decision framework is developed
and presented. Finally, Chapter 5 focuses on how marketers
can systematically uncover and evaluate opportunities.
ASSESSING THE
MARKETPLACE
CHAPTER 1
Overview of Marketing
CHAPTER 2
Developing Marketing Strategies and a
Marketing Plan
CHAPTER 3
Digital Marketing: Online, Social, and Mobile
CHAPTER 4
Conscious Marketing, Corporate Social
Responsibility, and Ethics
CHAPTER 5
Analyzing the Marketing Environment
Assessing the Marketplace
Understanding the Marketplace
Targeting the Marketplace
Value Creation
Value Capture
Value Delivery: Designing the
Channel and Supply Chain
Value Communication
SECTION 1
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
LO1-1 Define the role of marketing.
LO1-2 Detail the evolution of marketing over time.
LO1-3 Describe how marketers create value for a product or service.
APN Photography/Shutterstock
CHAPTER 1
OVERVIEW OF
MARKETING
Y
ou’re a modern consumer, a member of the
global society, an educated student aware of
how to stay healthy, and a youthful representative of a hip generation that is deeply invested in the future of the planet, right? So when you
head off to class, you make sure you have your laptop
and notes, but you also stick your personalized, reusable
water bottle in your backpack to help you stay hydrated
throughout the day.
But 50 years ago, college students did not have a
separate pocket for a water bottle in their bags. They simply didn’t carry one. The shift, from people in the past
rarely even carrying water to modern consumers rarely
being without their own bottles, is largely a result of marketing efforts.1
For example, health-related campaigns
have encouraged consumers to drink more water. The
environmentally driven effort to get people to stop using
single-use plastic bottles for their water has been a long
and continuing process, but more responsible uses are
clearly spreading throughout society.
As a result of these broad social marketing efforts,
new markets have emerged, such as the one for reusable
water bottles. That is, once consumers realized that they
could and should start bringing water with them everywhere they went, in bottles they could rinse out and keep
using for years, companies had to start supplying them
with these products to meet their needs. Bulky, bright-red
Thermos options seemed childlike and awkward, so
companies such as Nalgene took the bottles that it had
been supplying mostly to professional sports teams and
created a thinner, more consumer-friendly version.2 They
featured a range of bright colors, such that consumers
could select their preferred appearance, along with volume markers so health-conscious water drinkers could
keep track and ensure they were getting their recommended daily minimum amount.
But Nalgene was made from plastics that contained
BPA, a chemical that leached into the water that people
consumed. Health concerns, including controversial allegations of BPA’s harmful effects for reproductive abilities,3
prompted the company to remove BPA from its production
process, but it also led consumers to seek out alternatives.
Notably, advances in technology and new innovations
meant that they could turn to metal containers for their
water. In particular, the Hydro Flask brand sought to appeal to them with a novel approach; as its former CEO
Scott Allan noted for the company, “It’s not like coming up
with a brand new idea, but seeing a need and improving
on it.”4 Therefore, the company leveraged the existing
vacuum-sealing tactics that Thermos had used in the past
to keep soups hot in kids’ lunchboxes and figured out how
it could apply them to keeping water cold in campers’ and
adventurers’ trail packs.5
The initial target was outdoor enthusiasts, who particularly needed enough water to remain safe on their
treks and adventures but who also wanted it cold and
4
delicious. The company added an innovative honeycomb
design to the lids to keep the bottles securely closed and
retain the water temperature. Then it devised a powdercoated exterior for the steel bottles, which not only helped
keep the contents cold but also protected the bottle from
damage, even if clanged against a rock ledge.6 Furthermore, the coating meant that people’s hands would not
freeze every time they reached for a swig.
But the coating also had a deeply aesthetic appeal, in
that Hydro Flasks could take on a literal rainbow of colors,
which helped consumers express their personal style. In
turn, the retail displays of the bottles would be eye-catching
and attractive. But to get the bottles in stores, the company
first had to convince retailers that its products would be
appealing to consumers. In early marketing efforts, Hydro
Flask used clever promotions, such as shipping samples
filled with ice to retailers throughout the country, with a
note asking them to contact the Oregon-based company
when the ice melted completely.7 By demonstrating the
effectiveness of the cold-maintaining technology while
also giving out free products, Hydro Flask sparked a great
deal of buzz, along with a lot more orders from the retail
partners in its supply chain.
Once they had been convinced, Hydro Flask sought to
enhance and strengthen these partnerships by donating
dozens of its products to the outdoor brand Columbia for
one of its executive retreats. Suddenly, some of the most
influential people in the outdoor industry were all carrying
Hydro Flasks, encouraging others to follow their lead and
purchase the products for themselves.
As its fame spread, the appeal of the product thus
moved beyond the company’s control, and new target markets defined themselves. Initially, it was those consumers
who embraced the idea of an outdoor, adventurous, athletic lifestyle, whether they engaged in these activities or
not. In this sense, Hydro Flasks were like athleisure wear:
People wear leggings and exercise gear and carry sporty
water bottles, even if the only jogging they are doing is
running errands.8 But an even more prominent and notable recent example of its spread comes from the target
segment known popularly as VSCO girls—a Generation Z
cohort renowned for their environmentally conscious
views and seemingly effortless, casual style, featuring hair
scrunchies, beach-oriented bracelets, and Hydro Flasks.
This style trend and the demands of the consumers embracing it align perfectly with the brand and product offerings: They want reusable, environmentally beneficial
products that they can personalize with various colors
and stickers while also maintaining their own easy, healthy
lifestyle.9
This expanded popularity means that Hydro Flask’s
marketing tactics also have moved beyond its own internal
efforts. The bottles are common accessories in young
people’s personal TikTok videos, signaling their identity
and consumption choices. Yet leaving the marketing up to
consumers alone was insufficient, so Hydro Flask also
pursued a new route to reach this market segment by developing a line of Instagram Stories. The stories focus on
exciting new promotional events, such as the release of a
limited-edition line of bottles and new color options, along
with a link to enable ’grammers to purchase immediately.10
As these varied types, forms, efforts, approaches, and
outcomes reveal, marketing performs a wide range of
functions, as it has for decades. It helps create new needs
and then provides solutions to them. It involves exchanges
and partnerships with other firms and with consumers. It
can be performed relatively naturally by individual people
or strategically by firms. And it creates value for all these
actors, reflecting its critical importance—not just in your
class or for this textbook but for people’s daily lives.
WHAT IS MARKETING?
Unlike other subjects you may have studied, marketing already is very familiar to you. You
start your day by agreeing to do the dishes if your roommate will make the coffee. But doing
the dishes makes you late for class, so you dash out the door and make a quick stop to fill up
your car with gas and grab an energy bar for breakfast. You attend a class that you have chosen and paid for. After class, you pick up lunch at the cafeteria, which you eat while reading
LO1-1 Define the role of
marketing.
OVERVIEW OF MARKETING CHAPTER ONE 5
a book on your iPad. Then you leave campus
to have your hair cut and take in a movie. On
your bus ride back to school, you pass the
time by buying a few songs from Apple’s
iTunes. In each case, you have acted as the
buyer and made a decision about whether
you should part with your time and/or
money to receive a particular product or service. If, after you return home, you decide to
sell some clothes on Poshmark that you
don’t wear much anymore, you have become
a seller. In each of these transactions, you
were engaged in marketing.
The American Marketing Association
(AMA) states that marketing is “the activity,
set of institutions, and processes for creating, capturing, communicating, delivering,
and exchanging offerings that have value for
customers, clients, partners, and society at
large.”11 Good marketing is not a random
activity; it requires thoughtful planning with
an emphasis on the ethical implications of
any of those decisions on society in general.
That is, good marketing should mean doing
good for the world at large, while also benefiting the firm and its customers. To achieve
these long-term goals, firms develop a
marketing plan (Chapter 2) that specifies the
marketing activities for a specific period of
time. The marketing plan also is broken
down into various components—how the product or service will be conceived or designed,
how much it should cost, where and how it will be promoted, and how it will get to the consumer. In any exchange, the parties to the transaction should be satisfied. In our previous
example, you should be satisfied or even delighted with the water bottle you selected, and
Hydro Flask or Nalgene should be satisfied with the amount of money it received from you.
Thus, the core aspects of marketing are found in Exhibit 1.1. Let’s see how these core aspects
look in practice.
Marketing Is about Satisfying Customer Needs and Wants
Understanding the marketplace, and especially consumer needs and wants, is fundamental to marketing success. In the broadest terms, the marketplace refers to the world of
trade. More narrowly, however, the marketplace can be segmented or divided into groups
of people who are pertinent to an organization for particular reasons. The entire world
needs to drink water, but to sell reusable water bottles, the makers first need to identify
people who might purchase their products (e.g., they exclude babies). Then they divide
that marketplace into various categories: outdoor enthusiasts who require a large and
durable vessel; health-conscious buyers who seek to avoid any BPA-containing plastics;
young people who want an accessory to show off in their social media posts; and consumers who care only about cost and purchase the least expensive option available. If
you manufacture and sell water bottles, you need to know for which marketplace segments your product is most relevant and then make sure you build a marketing strategy
that targets those groups. If instead you are the maker of Dove beauty products, you
introduce an extended range of products to appeal to more of the various groups, as
Adding Value 1.1 explains.
Marketing
Marketing is about
satisfying customer
needs and wants.
Marketing entails
an exchange.
Marketing
creates value
through product,
price, place, and
promotion
decisions.
Marketing aects
various stakeholders.
Marketing can be
performed by
individuals and
organizations.
EXHIBIT 1.1 Core Aspects of Marketing
6 Section One ASSESSING THE MARKETPLACE
EXHIBIT 1.2 Exchange: The Underpinning of Seller–Buyer Relationships
Goods/services
producers
(sellers) Money and
information
Customers/
consumers (buyers)
Communications
and delivery
Marketing Entails an Exchange
Marketing is about an exchange—the trade of things of value between the buyer and the
seller so that each is better off as a result. As depicted in Exhibit 1.2, sellers provide products
or services and then communicate and facilitate the delivery of their offering to consumers.
Buyers complete the exchange by giving money and information to the seller. Suppose you
learn about the new Takeya Actives Water Bottle from a friend’s tweet or the company’s fitness blog to which you subscribe.12 To learn more, you might visit the company’s website,
where you learn that the bottles are
not widely available in stores yet,
but you can order a box for delivery.
To complete the order, you have to
give the company your billing and
address information, which represents another exchange. If you sense
that you are giving up too much in
the exchange because it takes too
long to fill in all your billing information for every individual site you
visit, you might prefer to search for
another water bottle option on
Amazon, where you place orders all
the time, so you do not have to enter
your credit card number or other
information again. Furthermore,
Adding Value 1.1 The Baby Dove Product Line Extension and Its Contexti
For years, Dove marketed only cleaning and personal care
products for women. A few years ago, it added the Dove
Men+Care line, and today, it is expanding into products for
babies, including wipes, lotions, and baby washes. Although the
extension certainly seems like a reasonable move, it also might
constitute a competitive strategy, designed to take advantage
of the struggles of other big names in the baby care market.
Dove is well known for its moisturizing products, so it argues
that an extension that leverages this expertise for a different
type of consumer is utterly appropriate. In addition, it gained
recent experience with product line extensions when it introduced its lines of products for men. Much of the advertising
Dove already uses (targeting both male and female consumers)
features families too, such that it does not seem like much of a
stretch to focus on the babies that already appear in the ads.
Moreover, the approach Dove is taking when introducing
the new product lines resonates with its long-standing efforts
to support consumers’ sense of self-worth. The marketing
communications used to introduce the new products strongly
emphasize the idea that there is no “perfect parent” and that
there are innumerable, appropriate ways to take care of a
baby. Dove is there to help in all those situations, never to
make parents feel as if they are failing to do their jobs well
enough. Similarly, in advertising to male consumers, Dove
seeks to acknowledge and recognize modern men’s caregiving
roles, so it can link these communications to its baby care
products too.
These discussions and rationales make it seem like the
product line extension is a no-brainer. But history also shows
that many companies struggle to gain a foothold in markets
for baby care products. For example, Huggies has great name
recognition for diapers, but it was unable to get parents to
purchase bath products under that brand. As Dove moves its
baby products into more and more markets, both domestically
and abroad, it hopes that the consistency of its approach will
lead to success instead.
Dove seeks to acknowledge and recognize modern men’s
caregiving roles so it can link these communications to its
baby care products.
Source: Unilever
OVERVIEW OF MARKETING CHAPTER ONE 7
Amazon creates a record of your purchase, which it uses,
together with your other purchase trends, to create personalized recommendations of other convenienceoriented health products or outdoor gear that you might
like. Thus, Amazon uses the valuable information you
provide to facilitate future exchanges and solidify its relationship with you.
Marketing Creates Value through
Product, Price, Place, and
Promotion Decisions
Marketing traditionally has been divided into a set of four
interrelated decisions and consequent actions known as
the marketing mix, or four Ps: product, price, place, and
promotion (as defined in Exhibit 1.3).13 The four Ps are
the controllable set of decisions or activities that the firm
uses to respond to the wants of its target markets. But
what does each of these activities in the marketing mix
entail?
Product: Creating Value The first of the four Ps is
product. Although marketing is a multifaceted function, its
fundamental purpose is to create value by developing a
variety of offerings, including goods, services, and ideas, to
satisfy customer needs. Water bottles have gained traction
in the market because consumers had needs that were not
being met by existing offerings, such as water fountains
and single-use plastic bottles. As we discussed in the
EXHIBIT 1.3 The Marketing Mix
Capturing
value
Delivering
value
Communicating
value
Creating
value
Place
SHOP
SALE
Promotion Product
Price
When you buy a Takeya Actives
Water Bottle, you exchange the
bottle for money and information about yourself.
McGraw-Hill
A watch is a watch is a watch, right? Wrong! All watches are
goods, and they tell the time. But Rolex is marketed as a status
brand.
Casimiro PT/Shutterstock
8 Section One ASSESSING THE MARKETPLACE
opener to this chapter, reusable water bottles have grown
even more popular in recent years due to the combined
influences of environmental concerns, health concerns,
and societal expectations.
Goods are items that you can physically touch. A
Hydro Flask or Nalgene bottle, a Rolex watch, Nike
shoes, Pepsi-Cola, a Frappuccino, Kraft cheese, Tide, an
iPad, and countless other products are examples of
goods. Goods primarily function to fulfill some need,
such as satiating hunger or cleaning clothing. But their
ultimate value stems from what they provide—and how
they are marketed—in terms of their environmental benefits (e.g., reusable water bottles instead of single-use
plastic bottles), status (e.g., Rolex instead of Timex
watch), performance (innovative Nike sneakers), taste,
and so forth.
Unlike goods, services are intangible customer benefits that are produced by people or machines and cannot be separated from the producer. When people buy
tickets—whether for airline travel, a sporting event, or
the theater—they are paying not for the physical ticket
stub but, of course, for the experience they gain. Even some sellers that
mainly offer products might market some services to provide more
value. At some Sephora stores, customers can earn a complimentary
Perk facial if they make purchases worth at least $75. This service
includes an assessment of the customer’s skin type and the treatment
application. Customers who want this personalized service therefore
have incentives to visit the store to experience the facial and obtain
recommendations for their future product purchases.14 Hotels, insurance agencies, airlines, and banks are more traditional examples of sellers that provide services. For example, getting money from your bank,
whether through an ATM or from a teller, constitutes a service. The
cash machines usually add value to the banking experience because they
are conveniently located, fast, and easy to use.
Many offerings in the market combine goods and services. When
you go to an optical center, you get your eyes examined (a service) and
purchase new contact lenses (a good). If you attend an Ariana Grande
concert, you can be enthralled by the world-class performance. To
remember the event, you might want to pick up a shirt or a souvenir
from the concert. With these tangible goods, you can relive and remember the enjoyment of the experience over and over again.
Ideas include thoughts, opinions, and philosophies; intellectual
concepts such as these also can be marketed. Groups promoting bicycle
safety go to schools, give speeches, and sponsor bike helmet poster contests for the members of their primary market—children. Then their secondary target market segment, parents and siblings, gets involved
through their interactions with the young contest participants. The
exchange of value occurs when the children listen to the sponsors’ presentation and wear their helmets while bicycling, which means they
have adopted, or become “purchasers” of, the safety idea that the group
marketed.
Price: Capturing Value The second of the four Ps is price. Everything
has a price, although it doesn’t always have to be monetary. Price, therefore, is everything the buyer gives up—money, time, and/or energy—in
exchange for the product.15 Marketers must determine the price of a
Some sellers, like Sephora, supplement their product offerings
with services to provide more value.
Sarah A. Miller/Tyler Morning Telegraph/AP Images
Marketing creates value by promoting ideas,
such as bicycle safety.
Source: Street Smart, a public safety campaign of Metro, the
District of Columbia, Maryland, and Virginia.
OVERVIEW OF MARKETING CHAPTER ONE 9
product carefully on the basis of the potential buyer’s
belief about its value. For example, Frontier promises
a very low fare to take you from, say, Cedar Rapids to
Denver. But the price you ultimately pay for that service depends on a lot of other factors, such as whether
you want to pick your seat or check a bag as well as
whether you have a tight schedule to meet. If you want
the absolute lowest price, do not mind a middle seat,
and can fit all your belongings for the trip into a small
bag that can fit under the seat in front of you, Frontier might be highly valuable.16 However, Frontier
does not offer the same flights every day, so if you
miss your Saturday flight or it gets canceled due to
weather, you will be stuck in Iowa at least until Monday. Frontier has gained success because enough travelers are willing to trade off carrying extra items or
having the security of many flights each day for a
lower price.17
Place: Delivering the Value Proposition The third P, place, represents all the activities necessary to get the product to the right customer when that customer wants it. For
Starbucks, for example, that means expanding its storefronts constantly and proactively,
so that it is easy for caffeine junkies to find their fix. Creative locations, such as kiosks at
the baggage claim in airports or small booths in grocery stores, represent the chain’s
effort to improve its offering on this dimension of the marketing mix.
Place also deals specifically with retailing and marketing channel management, also
known as supply chain management. Supply chain management is the set of approaches and
techniques that firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and other firms involved in the transaction (e.g., transportation companies) into a seamless value chain in which merchandise is produced and
distributed in the right quantities, to the right locations, and at the right time, while minimizing systemwide costs and satisfying the service levels required by the customers. Many
marketing students initially overlook the importance of marketing channel management
because a lot of these activities are behind the scenes. But without a strong and efficient
marketing channel system, merchandise isn’t available when customers want it. Then customers are disappointed, and sales and profits suffer.
Promotion: Communicating the Value Proposition The fourth P is promotion.
Even the best products and services will go unsold if marketers cannot communicate their
value to customers. Promotion is communication by a marketer that informs, persuades,
and reminds potential buyers about a product or service to influence their opinions and
elicit a response. Promotion generally can enhance a product’s or service’s value. When
Oatly, a Swedish company, sought to enter the U.S. market, it needed to make people
aware oat milk existed and then convince them to choose it over other available alternatives. Oatly first promoted its product by supplying it to baristas at coffee shops and
encouraging them to educate their customers about the superior properties of oat milk in
coffee. Then to garner the interest of supermarket shoppers, it designed packaging that
features bold, fun, attention-grabbing advertising messages that explain why people should
be drinking oat milk.18
Marketing Can Be Performed by Individuals and Organizations
Imagine how complicated the world would be if you had to buy everything you consumed
directly from producers or manufacturers. You would have to go from farm to farm buying
your food and then from manufacturer to manufacturer to purchase the table, plates, and
utensils you need to eat that food. Fortunately, marketing intermediaries such as retailers
accumulate merchandise from producers in large amounts and then sell it to you in smaller
If you don’t mind sitting in a middle seat and putting all your
baggage under your seat, flying on low-cost carriers like
Frontier is a good value.
Kateryna Kukota/Alamy Stock Photo
It isn’t easy to promote oat milk
in the United States, so Oatly
first promoted it to coffee
shops and then designed a fun
package to get attention in
supermarkets.
Tada Images/Shutterstock
10 Section One ASSESSING THE MARKETPLACE
When Keurig sells its machines and coffee to you on its website (left), it is a B2C sale; but when it sells similar items for office
use, it is a B2B transaction (right).
(Left): Source: Keurig Green Mountain, Inc.; (right): Sergi Alexander/Getty Images
B2B B2C C2C
Manufacturer
(makes tablets)
Retailer
(sells tablets & phones) Consumer A Consumer B
EXHIBIT 1.4 Marketing Can Be Performed by Individuals and by Organizations
amounts. The process by which businesses sell to consumers is known as business-toconsumer (B2C) marketing; the process of selling merchandise or services from one business
to another is called business-to-business (B2B) marketing. When Keurig sells its machines
and coffee to you on its website, it is a B2C sale; but when it sells similar items for office use,
it is a B2B transaction. Through various Internet sites such as eBay and Etsy, consumers
market their products and services to other consumers. This third category, in which consumers sell to other consumers, is consumer-to-consumer (C2C) marketing, and the appeal of
this channel continues to grow, as Adding Value 1.2 describes. These marketing transactions
are illustrated in Exhibit 1.4.
Individuals can also undertake activities to market themselves. When you apply for a
job, for instance, the research you do about the firm, the résumé and cover letter you submit
with your application, and the way you dress for and conduct yourself during the interview
are all forms of marketing activities. Accountants, lawyers, financial planners, physicians,
and other professional service providers also constantly market their services one way or
another.
Marketing Affects Various Stakeholders
Most people think of marketing as a way to facilitate the sale of products or services to customers or clients. But marketing can also affect several other stakeholders (e.g., supply
chain partners, society at large). Partners in the supply chain include wholesalers, retailers,
OVERVIEW OF MARKETING CHAPTER ONE 11
Adding Value 1.2 The Kids Are Marketing All Right: Recycling and Selling
on E-Commerce Platformsii
Rather than waiting for retailers
to stock the fashions they want
or for their parents to give them
enough money to purchase the
latest fashion, teenagers have
embraced a recycling economy
in e-commerce settings. Functioning as both sellers and buyers, the young consumers have
prompted the emergence of
retail platforms that reflect
their unique competencies and
needs.
On the Poshmark app, for example, teens can earn credits
for products they sell. They are
not required to provide a credit
card, as is standard on many
other e-commerce sites. Then
they can use the credits to buy
other items available on the site.
Poshmark also offers social networking capabilities and an intuitive process for uploading
photos and descriptions of the
items for sale. To facilitate the
supply chain, it allows sellers to
print out shipping labels ready
to slap onto a box getting mailed
to a buyer.
The consumers on such sites
enjoy the distinctiveness they
can achieve. Rather than going
to the mall to buy the same
things that everyone else is
wearing, they can find one-of-akind items. Accordingly, a recent
survey suggests that more teenaged consumers shop resale
and recycling sites than shop at
once popular retail chains such
as Abercrombie & Fitch.
When these buyers shift to
selling mode, they also obtain
several notable advantages. An
obvious one is the chance to make money. One New York teen
has leveraged his sense of fashion by selling rare sneakers
effectively and frequently enough to earn more than $100,000
a year. He notes his fervent anticipation to purchase a luxury
car—as soon as he is old enough to drive, that is.
Beyond the direct earnings, the young resellers gain valuable experience with sales, marketing, and retailing. Many of
them customize products, such as one savvy seller who buys
out-of-fashion merchandise at a low cost and then cuts, dyes,
and decorates the items to make them more stylish. Thus, a
$10 pair of blue jeans was transformed into an acid-washed
pair of pink denim shorts with frayed hems, which she sold
for $75.
Interviews with some of these entrepreneurs indicate their
growing understanding of the four Ps of marketing: They recommend finding distinctive products that can set apart the
wearer, promoting the offerings using vivid descriptions, pricing them to sell quickly, and uploading new offerings at times
when buyers are most likely to make a purchase (e.g., evening
hours, after school).
Teenagers have embraced a recycling economy by using apps like Poshmark.
Source: Poshmark
12 Section One ASSESSING THE MARKETPLACE
The Great American Milk Drive, run in conjunction with Feeding
America, seeks to ensure that local food banks are sufficiently
stocked with nutritious, frequently requested items.
Source: America’s Milk Companies
Nike is now sold on Amazon.
Amazon gets to sell Nike
in return for policing
nonauthorized Nike sellers.
Source: Amazon.com, Inc.
or other intermediaries such as transportation or warehousing companies. All of these entities are involved in
marketing to one another. Manufacturers sell merchandise to retailers, but the retailers often have to convince
manufacturers to sell to them. After many years of not
being able to purchase products from Nike on Amazon,
the two giants are now trading partners. In return for
being able to sell the much-sought-after brand, Amazon
has agreed to no longer allow unauthorized sellers to sell
Nike products.19
Marketing also can aim to benefit an entire industry or society at large. Ethical & Societal Dilemma 1.1
details how one coffee company is seeking to improve
the lives of women throughout the world. On a broader
level, the dairy industry as a whole targets its “Milk
Life” campaign at different target segments, including
parents, their children, and athletes. Through this
campaign, the allied milk producers have created high
levels of awareness about the benefits of drinking milk,
including the high levels of protein, potassium, and
calcium it provides. The focus is largely on how drinking milk for breakfast fits in with a healthy lifestyle
that helps people maintain their focus, weight, and
muscle mass. Even the industry’s charitable campaigns resonate with this notion: The Great American
Milk Drive, run in conjunction with Feeding America,
seeks to ensure that local food banks are sufficiently
stocked with nutritious, frequently requested items.
Such campaigns benefit the entire dairy industry and
promote the health benefits of drinking milk to society
at large.20
OVERVIEW OF MARKETING CHAPTER ONE 13
THE IMPORTANCE OF MARKETING
OVER TIME
Firms spend billions of dollars in the United States and worldwide on marketing initiatives.
Without such spending, and the marketing jobs associated with it, the global economy
would plummet. Facebook and Google combined generated about $65 billion in ad revenue
in the United States in 2018.21 Ad revenue allows companies to offer free services to consumers. Without those advertisements and the revenues they provide, these search engines
would have to pass on the costs of their operations to customers. Some companies offer
ad-free versions of their service for customers willing to pay for them. For example, YouTube
Premium removes advertising from videos on the platform, but it costs users $12 per month.
Many customers who just watch an occasional funny video on YouTube would rather wait
patiently for a 30-second advertisement to finish than pay $144 a year.22
But marketing didn’t get to its current level of prominence among individuals, corporations, and society at large overnight. To understand how marketing has evolved into its
present-day, integral business function of creating value, let’s look for a moment at some of
the milestones in marketing’s short history (see Exhibit 1.5).
Production-Oriented Era
Around the turn of the 20th century, most firms were production oriented and believed that
a good product would sell itself. Henry Ford, the founder of Ford Motor Company, once
famously remarked, “Customers can have any color they want so long as it’s black.” Manufacturers were concerned with product innovation, not with satisfying the needs of
LO1-2 Detail the evolution of
marketing over time.
Making a Family Business More Valuable by Addressing
Gender Inequality in the Coffee Market Ethical & Societal Dilemma 1.1 iii
Worldwide, the coffee supply chain is dominated by women—
not that most marketing in this industry would indicate that.
Despite the conventional images of a male farmer walking a
burro along rows of coffee beans in fields, the reality is that
women perform approximately 70 percent of the work involved in getting beans to market and into consumers’ cups.
Together with the misleading imagery, gender inequality
throughout the supply chain has meant that in many places,
female farmers are underpaid, excluded from negotiations, or
limited in the competitive moves they are allowed to make.
For one small, family-owned gourmet coffee company in
Minnesota, that situation led to the inspiration for a new way to
market its products. As the second generation of the family took
over the company, Alakef Coffee Roasters, from her parents,
Alyza Bohbot first determined that she did not want simply to
keep doing what her parents had done because she believed
that brand had reached a plateau. It was not growing anymore,
and its marketing and branding had remained the same for years.
Upon taking over, Bohbot decided to attend a conference
of the International Women’s Coffee Alliance. There she heard
a story of a farmer from Colombia who lost her farm after her
husband died because women were not allowed to make decisions about property. With this growing recognition of the
gender inequality that marked her industry, Bohbot realized
that she could turn a negative into a positive. The company
initiated a new brand, City Girl Coffee, dedicated to ensuring
the empowerment and employment of women throughout the
supply chain. It purchases beans only from cooperatives and
farms that are owned or managed by women. In addition, it
donates 5 percent of its profits to nonprofit industry groups
that are committed to supporting women.
In line with these initiatives, City Girl is unapologetically feminine in its marketing. Beyond the brand name, the packaging
is bright pink. The logo depicts a clearly feminine figure on a
scooter, and the mission statement asserts straightforwardly,
“We are bringing awareness and equality to the coffee industry.”
PROGRESS CHECK
1. What is the definition of marketing?
2. Marketing is about satisfying and .
3. What are the four components of the marketing mix?
4. Who can perform marketing?
14 Section One ASSESSING THE MARKETPLACE
1920 1950 1990
Turn of the
century
Turn of the
21st century
Production Sales Marketing Value-based marketing
Photos (left to right): Ryan McVay/Photodisc/Getty Images; Clement Mok/Photodisc/Getty Images; Lawrence Manning/Corbis/Getty Images;
Ryan McVay/Photodisc/Getty Images; Mark Dierker/McGraw-Hill
EXHIBIT 1.5 Marketing Evolution: Production, Sales, Marketing, and Value
individual consumers, and retail stores typically were considered places to hold the merchandise until a consumer wanted it.23
Sales-Oriented Era
Between 1920 and 1950, production and distribution techniques became more sophisticated; at the same time, the Great Depression and World War II conditioned customers to
consume less or manufacture items themselves, so they planted victory gardens instead of
buying produce. As a result, manufacturers had the capacity to produce more than customers really wanted or were able to buy. Firms found an answer to their overproduction in
becoming sales oriented: They depended on heavy doses of personal selling and advertising.
Market-Oriented Era
After World War II, soldiers returned home, got new jobs, and started families. At the same
time, manufacturers turned from focusing on the war effort toward making consumer products. Suburban communities, featuring cars in every garage, sprouted up around the country, and the new suburban fixture, the shopping center, began to replace cities’ central
business districts as the hub of retail activity and a place to just hang out. Some products,
once in limited supply because of World War II, became plentiful. And the United States
entered a buyers’ market—the customer became king! When consumers again had choices,
they were able to make purchasing decisions on the basis of factors such as quality, convenience, and price. Manufacturers and retailers thus began to focus on what consumers
wanted and needed before they designed, made, or attempted to sell their products and services. It was during this period that firms discovered marketing.
Value-Based Marketing Era
Most successful firms today are market oriented.24 That means they generally have transcended a production or selling orientation and attempt to discover and satisfy their customers’ needs and wants. Before the turn of the 21st century, better marketing firms recognized
that there was more to good marketing than simply discovering and providing what consumers wanted and needed; to compete successfully, they would have to give their customers greater value than their competitors did. (The importance of value is appropriately
incorporated into the AMA definition of marketing.)
Value reflects the relationship of benefits to costs, or what you get for what you give.25
In a marketing context, customers seek a fair return in goods and/or services for their
OVERVIEW OF MARKETING CHAPTER ONE 15
Adding Value 1.3 A Lipstick Option for Those Who Dream of a Hermès Bagiv
The ultra-luxury brand Hermès is known primarily for its extremely high-priced handbags and scarves, luxury items that,
by design, few people can afford. But it also claims that it
should be known for quality, regardless of the products that
bear its brand. Thus, when it ventures into a new market,
such as by introducing lipsticks (with the promise of other
cosmetics to follow), it features the same design, production,
and ingredient standards that it would apply to anything it
makes.
Hermès is notable for still relying on traditional production
methods; an estimated 70 percent of the products that bear
its logo are produced in-house, often with handmade processes. This dedication to artisanship has persisted even as
the company has grown, from 2,600 employees in the early
1990s to 14,500 workers today and earning around $6.8 billion in revenues. Such growth strongly depends on its expanding product range. The lipstick is a recent example,
though Hermès also has introduced perfume as well as furniture and tableware to move beyond its traditional leather
bags and silk scarves.
Yet even as it produces a more
diverse range of goods, Hermès
insists on high-quality production
processes. In developing its new
lipstick line, the company underwent two years of dedicated research and development. It hired
a makeup expert who previously
worked for Chanel and other
high-end brands, who then spearheaded a team that included
various existing employees and
Hermès experts: its women’s line
artistic director, the head perfumer,
and the creative director for accessories, for example.
The contributions of these
different expert innovators
guaranteed consistency with
the Hermès image. Consider, for
example, that the matte textured
versions of the lipstick mimic the
company’s fine-grained suede
products, whereas its satin version evokes the calfskin leather
that marks its famously soft
bags. The refillable case is made out of the same brass
that appears on shoes and bags. The 24 shades in
which the lipstick is available all were inspired by the
company’s libraries of fabric swatches and pigmentation
formulas, which it has used for decades to design its
scarves.
In line with these luxury design and production processes,
the lipstick is not inexpensive: $67 for the initial tube, with refills selling for $42. Yet Hermès is unlikely to earn substantial
profits from these sales, compared with a single sale of a
Birkin bag, which can cost hundreds of thousands of dollars.
But the company insists that profits are not its primary driver.
Rather, it wants to establish its reputation and image as a
company that consumers can trust to provide them with the
highest quality, regardless of what they purchase. It wants
people to refill their classically designed lipstick tube repeatedly over the years, secure in their knowledge that they are
getting the very best cosmetics available because Hermès
promises it is so.
Value is the relationship of what you get for what you give. The Hermes lipstick costs
several times the amount of a lipstick purchased at a drug or discount store. But its
customers derive its value based on Hermes exclusivity and reputation.
Source: Hermès
hard-earned money and scarce time. They want products or services that meet their specific needs or wants and that are offered at a price that they believe is a good value. A good
value, however, doesn’t necessarily mean the product or service is inexpensive. If it did,
luxury goods manufacturers would go out of business. The luxury brand Hermès derives
much if its value from its exclusivity and reputation, as explained in Adding Value 1.3.
Customers are willing to pay for all types of goods at virtually any price level because to
16 Section One ASSESSING THE MARKETPLACE
those buyers, what they get in return for what
they pay represents a good value.
A creative way to provide value to customers
is to engage in value cocreation.
26 In this case, customers act as collaborators to create a product or
service that appeals mostly to them, such that it
offers optimal value. When clients work with their
investment advisers, they cocreate their investment portfolios; when Betabrand allows customers to vote on the style and fabric of the items of
clothing it will produce and sell, the process also
represents cocreating.27
During the past couple of decades, as a way
to build value, marketers have used a relational
orientation because they have realized that they
need to think about their customers in terms of
relationships rather than transactions.28 To
build relationships, firms focus on the lifetime
profitability of the relationship, not how much
money is made during each transaction. Thus,
KitchenAid makes its stand mixers in a variety
of eye-catching colors that make it a meaningful
fixture in customers’ kitchens. A variety of compatible attachments, such as pasta rollers, ensure that consumers maintain a long-term relationship with the company even as
their culinary needs might shift or grow.29 This relationship approach uses a process
known as customer relationship management (CRM), a business philosophy and set of
strategies, programs, and systems that focus on identifying and building loyalty among
the firm’s most valued customers. Firms that employ CRM systematically collect information about their customers’ needs and then use that information to target their best
customers with the products, services, and special promotions that appear most important to them.
KitchenAid offers stand mixers in a variety of eye-catching colors
with compatible attachments to build a valuable relationship with its
customers.
Tinxi/Shutterstock
Betabrand engages in value cocreation by allowing customers to vote on the style and fabric
of the items of clothing it will produce and sell.
Source: Betabrand
OVERVIEW OF MARKETING CHAPTER ONE 17
PROGRESS CHECK
1. What are the various eras of marketing?
HOW DOES MARKETING CREATE
VALUE, AND HOW DO FIRMS
BECOME MORE VALUE DRIVEN?
Value stems from four main activities that value-driven marketers undertake. We describe
them in the remainder of this chapter, and these four activities also are reflected in the contents of the boxes that appear throughout this book: Adding Value, Marketing Analytics,
Ethical & Societal Dilemma, and Social & Mobile Marketing. First, to ensure that their
offerings are valuable, firms leverage all the various elements of marketing and work to
build relationships with partners and customers to introduce their product, service, or idea
to the marketplace at just the place and time that customers want it. Second, they gather
vast information about customers and competitors and then analyze and share it across
their own organization and with other partner firms, such as those that provide promotion
and social media services. Third, they strive to balance the benefits and costs of their offerings for not just themselves and their customers, but also their communities and society as
a whole. Fourth, they take advantage of new technologies and connect with their customers
using the latest social media channels.
Adding Value
As we have noted consistently, value is central to marketing. Thus, the first element we
describe appears frequently throughout the book, in boxes that we call Adding Value.
Value-oriented marketers constantly measure the benefits that customers perceive against
the cost of their offerings. They use available customer data to find opportunities to satisfy their customers’ needs better, keep down costs, and develop long-term loyalties. For
example, as Adding Value 1.4 describes, Amazon continually looks for ways to make it
more convenient for shoppers to obtain the products it sells and thus to keep them coming back.
Marketing Analytics
Modern marketers rely on sophisticated data analytics to define and refine their approaches
to their customers and their markets. The growth of big data and the associated challenges
are inescapable, so the Marketing Analytics boxes in this textbook detail their implications
for a wide range of organizations and firms, as well as their customers. In particular, companies such as Starbucks, CVS, Kroger, Netflix, and Amazon collect massive amounts of data
about how, when, why, where, and what people buy and then analyze those data to inform
their choices. Marketing Analytics 1.1 gives an account of how Hertz uses a loyalty program
enhanced with customers’ biometric information (e.g., fingerprints, face scan) to improve
car rental experiences.
LO1-3 Describe how
marketers create
value for a product
or service.
In the next section, we explore the notion of value-based marketing further. Specifically, we look at various options for attracting customers by providing them with better
value than the competition does. Then we discuss how firms compete on the basis of
value. Finally, we examine how firms transform the value concept into their value-driven
activities.
18 Section One ASSESSING THE MARKETPLACE
Social and Mobile Marketing
Marketers have steadily embraced new technologies such as social and mobile media to allow
them to connect better with their customers and thereby serve their needs more effectively.
The Social & Mobile Marketing boxes that crop up in each
chapter aim to provide timely views on some of the most
prominent examples. Businesses take social and mobile
media seriously and include these advanced tools in the
development of their marketing strategies. Social media ad
spending is growing, increasing by 32 percent in 2018
alone.30 That’s largely because approximately 3.26 billion
people link to some social media sites through their
mobile devices.31 Social & Mobile Marketing 1.1 shows
how TikTok attracts young viewers with streams of people sleeping, hoping the viewers will donate virtual coins
to the sleeping people’s accounts.
Yet even with this astounding penetration, less than
30 percent of the world’s population uses Facebook—
which means over 70 percent still has not signed up. The
United States and United Kingdom may be approaching
saturation, but there is still huge growth potential for
social networks.32 Before users can sign up for Facebook,
they need access to high-speed Internet. Other countries
Adding Value 1.4 Is There Cash Value in No Cash? Amazon Thinks Sov
Amazon has determined that consumers rarely use cash
anymore, so it is increasingly seeking technology-supported,
seamless innovations to eliminate it altogether, whether online
or in physical stores—along with most of the human staffers
who previously were required to take the dollar bills and make
change. In Amazon’s technologically advanced, experimental
Go stores, customers can shop for groceries without ever
pulling a payment form out of their pockets or waiting in line.
Customers must download the Amazon Go app to their
phones, and as they enter the store, they scan their phone to
identify themselves. Cameras mounted throughout the store
then track and monitor their movements, including whether
they place particular items in their shopping baskets. After
completing their shopping trip, they simply walk out, and their
account gets charged for the items they have selected.
This sophisticated operation has had to deal with various
challenges, though, which is part of the reason why Amazon
has only recently opened its first full-sized grocery store:
Amazon Go Grocery. For example, the monitors could have
difficulty following individual customers when the store is very
crowded or recording what they eventually add to their cart
after rummaging through the produce section. To solve some
of these issues, Amazon Go stores do not offer products such
as meat and seafood by weights but instead sell them prepacked as a unit or bundle.
For now at least, store personnel are still required for
some functions, such as to check identification when shoppers want to buy age-restricted products like alcohol. But conceivably, such tasks could be performed by advanced
technology in the near future, implying the possibility of daily
shopping experiences totally devoid of human service providers. Such experiences might be far in the future, especially
considering the bugs in the system and shoppers’ continued
appreciation for friendly interactions with human salesclerks.
Still, Amazon has an “unwritten rule” that any new innovation
must offer the promise of being expandable on a vast scale—a
novel idea cannot be just a one-time goof to see if it can be
done. Not only is Amazon increasing the number of Amazon
Go stores around the country, it also has begun to sell its technology to other companies, ensuring that cashierless stores
will continue to multiply.
The Amazon experimental Go store is so high-tech that it
doesn’t even take cash.
Rocky Grimes/Shutterstock
Kroger collects massive amounts of data about how, when, why,
where, and what people buy and then analyzes those data to
better serve its customers.
Daniel Acker/Bloomberg/Getty Images
OVERVIEW OF MARKETING CHAPTER ONE 19
Scan Your Face, Drive Away in Less Than a Minute:
Using Biometrics at Hertz Rental Locationsvi
A modern business traveler arrives at Atlanta’s HartsfieldJackson International Airport, one of the busiest in the world,
tired and ready to get to her meeting or his hotel for the evening. But getting there requires renting a car, and despite the
customer’s long history with and loyal patronage of the rental
company, even the best option demands that the weary traveler spend several minutes filling out paperwork before getting on the road. In the modern era of biometrics, though, such
limits may soon be a thing of the past.
The car rental company Hertz has partnered with a biometrics service provider called Clear to create a function that recognizes loyal customers using facial, iris, or fingerprint scans.
With just a quick scan, the customer can grab her or his desired car and be off the rental lot in just about 30 seconds.
Here’s how the process works: Customers must first register with Clear, which costs about $180 per year (plus $50 for
additional family members). Once they have an account, they
can use it at various sites to speed up their access and ingress into secured areas, such as sports arenas or airport
terminals. The account maintains extensive biometric information about them, so any company affiliated with Clear can
check whether customers are who they say they are by scanning their iris or fingerprint.
With Hertz, the service allows members of the loyalty program to arrive at the lot, choose whichever car they want, and
then pull up to a kiosk that scans their driver’s license and iris.
Having confirmed the match and the customer’s account with
the company, it raises the egress gate and sends the traveler
off down the road.
As a result, a process that took about 2 minutes under
the best conditions can be shortened to about 30 seconds.
Such speed is especially beneficial at busy arrival times,
such as Monday mornings, when the queues to get out of
the rental lot can accumulate quickly. Its success in Atlanta
has encouraged Hertz to announce plans to introduce it to
other busy hubs, including the Los Angeles and JFK International Airports.
Marketing Analytics 1.1
Hertz creates customer value by using biometrics to create
a function that recognizes loyal customers using facial, iris,
or fingerprint scans.
Jeff Martin/AP Images
continue to experience higher Facebook growth rates as they gain greater Internet access
and as Facebook becomes available in more languages (around 140 currently).33 The
global average Internet penetration rate hovers below
60 percent, with massive populations in Africa and
Asia still limited in their access.34
Beyond social media sites, online travel agencies
such as Expedia, Travelocity, Orbitz, Priceline, Booking.com, and Kayak have become the first place that
users go to book travel arrangements. These agencies
account for approximately 39 percent of the digital
travel market, and 52 percent of Millennial customers
prefer their offerings over booking directly with a
hotel.35 In response, hotels are using social media and
mobile applications to lure customers back to their specific brands by engaging in conversations with them on
Facebook and allowing fans of the page to book their
hotel reservations through Facebook. Some hotel
chains have mobile applications that allow customers
to accrue loyalty points, make changes to their reservations, customize their room, and even use their phone
as a room key. The hotels know a lot about their customers because they collect information about their
By using hotels’ Facebook pages or mobile apps to make travel
arrangements, the check-in process is a breeze for guests.
Erik Isakson/Blend Images/Getty Images
20 Section One ASSESSING THE MARKETPLACE
previous visits, including the type of room they stayed in, their preferences (from pillows
to drinks consumed from the minibar), and the type of room service they prefer.36
Several restaurant chains are exploiting location-based social media applications.37 By
using location-based apps on their mobile phones, customers can check in with HappyCow
to find nearby vegetarian restaurants or with Eaten to find specific dishes that are well
rated by users.
In the UK, the app Too Good To Go has partnered with 1,381 food stores to match
hungry customers to restaurants and stores with surplus food that would otherwise go to
waste. The surplus food is offered at a discounted price as long as the user can pick it up at a
designated time. App users can enter their location to see the availability of food options
nearby and the pickup times being offered.38
Ethical and Societal Dilemma
Should marketing focus on factors other than financial profitability, like good corporate
citizenry? Many of America’s best-known corporations seem to think so—they have undertaken various marketing activities such as developing greener products, making healthier
Marketing Your TikTok Account
by . . . Sleeping? Social & Mobile Marketing 1.1 vii
Although a lot of the examples we use throughout this book
refer to companies conducting marketing campaigns for their
products, the modern world also allows a different form of
marketing that promotes people’s individual “brands.” For example, on TikTok, young users seek to establish appealing
streams to attract more followers, who then might donate virtual coins to their accounts.
Most efforts involve entertaining displays of dancing, effective edits and silly cuts, or other exciting and engaging content. But in a new development, TikTokers are finding that they
can expand their reach by streaming a far less active view,
namely, of themselves sleeping. Because the service enables
followers to comment on live streams, which are not archived,
the dark, static background provided in sleep videos creates
an ideal setting for chats. In a sense, the quiet TikTok streams,
unlike the often nearly manic activity in other videos, gives the
consumers a blank screen on which they can achieve their
consumption goals, such as establishing connections with
other consumers.
It isn’t just sleep though; one TikTok account showed a pyramid of Solo cups, along with a note indicating that the account holder was asleep in the next room while the live stream
was playing. Essentially, any static or calming image can work
to provide consumers with the format they desire to meet
their needs to connect with other TikTok users.
In return for establishing this calming, valuable setting, the
posters earn hundreds or thousands of new followers. The
digital coins some viewers donate also might earn them some
payment. Several users report receiving about $10–$50 per
session—not enough to support them maybe, but far more
than they would have accrued if they were just sleeping without sharing it with the TikTok universe.
Other platforms also feature some sleep videos, though
some of them expressly ban this content. For example, Twitch
requires content creators to continue playing the video games
they live stream rather than leaving the feed unattended. However, the difficulty of monitoring such attendance means that
similar videos, of gamers who have fallen asleep at their consoles, also have attracted followers and literally millions of
shared views across other platforms. The modern economy
might be digital; is it also perhaps best described as somnolent?
TikTok attracts young viewers with streams of people sleeping,
hoping the viewers will donate virtual coins to the sleeping
people’s accounts.
Source: TikTok
OVERVIEW OF MARKETING CHAPTER ONE 21
food options and safer products, and improving their supply chains to reduce their carbon footprint. At a more
macro level, firms are making ethically based decisions
that benefit society as a whole, while also considering all
of their stakeholders as the issue in Ethical & Societal
Dilemma 1.2 exemplifies. It highlights a trade-off between
achieving sustainability by reducing single-use straws and
ensuring accessibility for consumers with disabilities,
elderly people, and young children. This revised view of
the responsibilities and roles of marketers reflects a concept we refer to as conscious marketing, which we cover in
more detail in Chapter 4.
Socially responsible firms recognize that including a
strong social orientation in business is a sound strategy that
is in both its own and its customers’ best interest. It shows
the consumer marketplace that the firm will be around for
the long run and can be trusted with the marketplace’s
business. In a volatile market, investors view firms that
After Axing Straws, Starbucks Still Faces Criticism
for Single-Use Plastic Ethical & Societal Dilemma 1.2 viii
Facing substantial pressures—and following its own several
years’ old sustainability commitments—Starbucks is seeking
ways to make substantial changes to its cup designs and eliminate single-use plastic straws that cannot be recycled. The
coffee retailer has developed a new lid that takes the place of
a straw. Straws will continue to be available at the chain by
customer request; however, those straws will be made from
an alternative material such as paper or compostable plastic.
Environmentalists appreciate the consumer and industry
buzz generated by this change, yet many insist that the chain’s
actions are insufficient and, in some ways, have made its environmental impact worse. The new cup lids are made from polypropylene, a type of plastic that has become more difficult to
recycle. Most facilities in the United States cannot recycle this
type of plastic and will instead ship the material overseas for
processing. Historically China was the largest market for polypropylene, but that country recently banned further imports of
the plastic. Instead, polypropylene has been rerouted to facilities
in Thailand, Malaysia, and Vietnam. However, environmentalists
warn that the recycling infrastructure within these countries is
inadequate, and much of the imported recycling material ultimately is being dumped into the ocean instead of being processed for new use. Those damages affect the entire planet, so
it is not as if Starbucks can simply export the problem.
Others retailers in the food service industry have taken
steps to address single-use plastic on a more comprehensive
scale. The food service company Aramark has announced its
commitment to reducing plastic broadly by evaluating its uses
in straws, stirrers, bags, cutlery, bottles, take-out containers,
and packaging from suppliers. As this example shows, the
problem of plastic recycling is far from limited to straws; indeed, the drinking tools account for a relatively small percentage of the overall volume of plastic that pollutes waterways.
In contrast, Starbucks’ plan to eliminate single-use straws by
replacing them with larger lids that cannot easily be recycled
seems inadequate. As public attention continues to focus on
the environmental impact created by single-use plastic, Starbucks will likely need to reevaluate its practices once again to
find ways it can make more meaningful changes.
To help meet its sustainability commitments, Starbucks has
developed a new lid that will take the place of a straw.
Spit Photography/Shutterstock
Too Good To Go is a UK-based app that has partnered with 1,381
food stores to match hungry customers to restaurants and
stores with surplus food that would otherwise go to waste.
Guillaume Payen/SOPA Images/LightRocket/Getty Images
22 Section One ASSESSING THE MARKETPLACE
operate with high levels of corporate responsibility and ethics as safe investments. Similarly,
firms have come to realize that good corporate citizenship through socially responsible
actions should be a priority because it will help their bottom line in the long run.39
PROGRESS CHECK
1. Does providing a good value mean selling at a low price?
2. How are marketers connecting with customers through social and mobile
media?
LO1-1 Define the role of marketing.
According to the American Marketing Association,
formally, marketing is “the activity, set of institutions,
and processes for creating, capturing, communicating,
delivering, and exchanging offerings that have value
for customers, clients, partners, and society at large.”
But marketing has a prominent role in every person’s
daily life, whether he or she is exchanging money for
conventional products, exchanging personal information for services, or exchanging time for a cause that
gives him or her a good feeling. It includes a vast
range of stakeholders, including not just the firm and
the customer but also other members of the supply
chain, communities, and society as a whole. Furthermore, the foundation of all marketing can be summarized in the four Ps, such that marketing defines the
product, price, place, and promotion that firms use to
get their offerings into consumers’ hands.
LO1-2 Detail the evolution of marketing over time.
Marketing has evolved from a production- or salesoriented approach, in which firms told people what
they could and should buy, to a market- and valueoriented perspective. In this more recent view, firms
look to their markets to tell them what they need to
produce and provide, in a way that creates value for
them and their customers.
LO1-3 Describe how marketers create value for a product or
service.
Value stems from at least four main activities that
value-driven marketers undertake and are reinforced
throughout the book:
• Adding value, such that they leverage various elements of marketing and work to build relationships with partners and customers to ensure that
they introduce their product, service, or idea to
the marketplace at just the place and time that customers want it.
• Marketing analytics, which companies use to
gather vast amounts of information about customers and competitors and then analyze it and share
it across their own organization and with partner
firms.
• Social and mobile marketing, to take advantage of
new technologies and connect with customers
using the latest social media channels.
• Ethical and societal dilemmas, such that firms engage in conscious marketing that takes into account the benefits and costs of their actions for all
stakeholders.
Reviewing Learning Objectives bchsu_tt
Key Terms
• business-to-business (B2B)
marketing, 10
• business-to-consumer (B2C)
marketing, 10
• consumer-to-consumer (C2C)
marketing, 10
• customer relationship management
(CRM), 16
• exchange, 6
• four Ps, 7
• goods, 8
• ideas, 8
• marketing, 5
• marketing channel management, 9
• marketing mix, 7
• marketing plan, 5
• relational orientation, 16
• service, 8
• supply chain management, 9
• value, 14
• value cocreation, 16
OVERVIEW OF MARKETING CHAPTER ONE 23
Marketing Digitally
1. Visit the websites for Hydro Flask (www.hydroflask
.com), Yeti (www.yeti.com), and Nalgene (www.nalgene
.com) bottles. What value do these manufacturers provide
customers? How are their value propositions different?
2. Go to Instagram.com and navigate to the “About Us”
section. What is Instagram’s mission? How could marketers use Instagram, and what other social media tools
could they use? What are the drawbacks marketers might
face when using Instagram to communicate with their
customers?
3. Visit the site of any company from which you receive some
free service (e.g., Facebook, Spotify, TikTok, Twitter,
Gmail). Check your settings to see what information you
have given to the company in exchange for the service. Is
the value of the information you have provided equivalent
to the value the company provides you with its service?
1. Which of the following is not a function of marketing’s
value creation process?
a. Capturing value
b. Delivering value
c. Communicating value
d. Exchanging value
e. All of these are part of marketing’s value creation
process.
2. Value creation is the central activity of marketing. Which
is not a benefit to the firm from engaging in value
creation and the ongoing process of identifying valueadding options for consumers?
a. The firm is able to satisfy consumer needs.
b. The firm is able to expand.
c. The firm is able to build brand loyalty.
d. The firm is able to sell fewer products.
e. All of these are benefits to the firm.
(Answers to these two questions can be found in the Quiz
Yourself Answer Key section at the end of the chapter.)
Quiz Yourself
1. Do you know the difference between needs and wants?
When companies that sell coffee develop their marketing
strategy, do they concentrate on satisfying their customers’ needs or wants? What about a utility company, such
as the local power company or a humanitarian agency,
such as Doctors without Borders?
2. People can apply marketing principles to finding a job. If
the person looking for a job is the product, describe the
other three Ps.
3. What is the difference between a good and a service?
When you buy a music subscription on Spotify, are you
buying a good or a service? Would your answer be different if you bought an MP3 album on Amazon?
4. One of your friends was recently watching TV and saw
an advertisement that she liked. She said, “Wow, that
was great marketing!” Was the ad, in fact, marketing?
5. Using the four Ps, discuss how Hydro Flask creates value
for customers with its water bottles.
6. Explain how a $45 Timex watch and a $10,000 Rolex
watch deliver value to respective target markets? Which
factors account for the dramatic difference in watch
prices?
7. Assume you have been hired into the marketing department of a major consumer products manufacturer such
as Nike. You are having lunch with some new colleagues
in other departments—finance, manufacturing, and
logistics. They are arguing that the company could save
millions of dollars if it just got rid of the marketing
department. Develop an argument that would persuade
them otherwise.
8. Why do marketers like those at Apple find it important
to embrace societal needs and ethical business practices?
Provide an example of a societal need or ethical business
practice that Apple is addressing.
Marketing Applications
24 Section One ASSESSING THE MARKETPLACE
A FLOOD OF WATER CONSUMPTION CHOICES
Studying hard can work up quite a thirst. If you’re ready for a sip of water, what options are
you choosing now, especially after having completed this chapter? And what elements inform that choice—whether you are aware of them or not?
Let’s start with you, the consumer. Everyone needs water. But beyond the basic human
need for fluids, you also want a beverage that is convenient to obtain, not too expensive,
readily and regularly accessible, and perhaps cold and refreshing. So that people could meet
their basic survival need for water conveniently and constantly, various companies throughout the years have produced different vessels for carrying it, from goatskins in ancient times
to military canteens for soldiers in historical wars to Thermoses for kids a few decades ago
to highly sophisticated and technical water bottles today.40 But to appeal to their unique
needs, marketers also have gone further.
For example, to appeal to those who need to carry water in tough conditions, like
military battles or hiking the Grand Canyon, marketers have developed and promoted the
toughest containers, with guarantees that they can withstand extreme temperatures, powerful impacts, and so forth.41 By meeting these basic needs (e.g., having sufficient water to
drink, ensuring safety or survival chances in case of an emergency), reusable water containers provide invaluable benefits. People’s needs and wants certainly go well beyond
achieving safety, especially if they do not live in a war zone or pursue extreme sports adventures. Yet the image of such tough consumers is appealing to many groups and target
markets, so canteens also were available to Boy and Girl Scouts on easy camping trips.
Today’s high-tech water bottles are frequently carried by day hikers and attendees at a local exercise class who are never more than a few feet from safety. They also are sported
publicly and purposefully by influential and popular media figures, who humble-brag
about their water consumption in response to questions about how they stay so healthy
and attractive.42 By offering personalization options (e.g., different colors, monogramming capabilities), these trendy bottles also satisfy people’s needs to create a particular
image and express themselves.
The products thus have shifted and expanded to meet consumers’ diverse needs. At
the same time, the pricing structures have changed, often reflecting societal and ethical
norms that prioritize sustainability. Conventional spring water in a single-use plastic bottle
is quite inexpensive.43 As we discuss
in Chapter 2, corporations are taking
great advantage of the availability of
spring water as a natural resource.
Their costs for the water are quite low,
and in turn, they can charge relatively
low prices for the liquid contained in
their equally inexpensive-to-produce
plastic bottles. For some consumers,
that offering meets their needs: a basic commodity product at a low price
without much consideration of other
factors.
But for other consumers, the price
equation is different. Some are willing
to pay $60 to obtain a sustainably produced, reliable, safe water bottle that
they can use for years.44 If they really
want to signal their prestige, they even
could buy a Chanel-branded flask that
comes with its own quilted Chanel
Chapter Case Study ®
What value does this $5,000 Chanel-branded flask with quilted pouch provide to
customers?
Source: CHANEL International B.V.
OVERVIEW OF MARKETING CHAPTER ONE 25
pouch for around $5,000.45 They also might seek water that has been filtered or otherwise
certified safe, which constitutes a growing concern, as we discuss in Chapter 5. And many
people appreciate a variety of product options, like flavored or sparkling versions.46
To produce this variety of products, offered at distinct price points with unique promotions and found in expected places, a wide range of companies compete and collaborate to slake people’s thirst. Water brands like Aquafina (owned by PepsiCo), Dasani
(owned by Coca-Cola), and Evian promise different benefits from drinking their products. They also are innovating with different packaging options, including metal cans for
water.47 One firm even is developing an algae-based, compostable pod that can hold a
single serving of water and then be swallowed or discarded, where it will break down
naturally as plant matter.48
In parallel, Hydro Flask, Thermos, Nalgene, Yeti, and other brands that manufacture
reusable bottles seek to get consumers to avoid those offerings and instead embrace the
idea of water from a tap or fountain. They highlight the distinctive potential associated
with carrying one of their bottles, and they strongly emphasize the inherent sustainability
of their offering, compared with single-use plastics. Another competitive offering is linked
to water refill stations that increasingly appear in public spaces, such as schools and hotels.
At these stations, people with their bottles in hand can get a refill of filtered, cold water;
those who forgot their favorite bottle can grab a simple, $3 refillable bottle to meet their
immediate need.49
So when you take a sip because you are thirsty, what precisely has driven you as a
consumer to make the decision? Consider the case questions and the lessons you’ve
learned in this first chapter to derive your answer.
Questions
1. How does marketing impact the consumption of water, and how has this impact
changed since the mid-20th century?
2. Describe three distinct target markets for drinking water. How does marketing
create value for each of these segments using the four Ps; product price, place, and
promotion?
3. How has changing societal values impacted the ways in which water is purchased
and consumed?
4. How has the manner in which you consume water changed in the last five years?
Endnotes
1. Lauren Cochrane, “How Reusable Water Bottles Became the
New Tote Bag,” The Guardian, August 15, 2017.
2. “This ‘OG’ Water Bottle Has Been on the Market for 70 Years,”
Insider, June 24, 2019, www.insider.com/sc/nalgene-anniversary
-water-bottle-history-2019-6.
3. Jon Hamilton, “Plastic Additive BPA Not Much of a Threat,
Government Study Finds,” NPR, February 23, 2018; Peter Hess,
“BPA: Chemicals Used to Replace Toxic Common Plastics Aren’t
Safe After All,” Inverse, July 25, 2019.
4. Gerry O’Brien, “Hydro Flask: A Model for Marketing Success,”
Herald and News (Oregon), May 26, 2018.
5. Kai Burkhardt, “The Hydro Flask Is a Gen Z Trend We Can Get
Behind,” CNN, October 24, 2019.
6. Tim Newcomb, “Why Are Hydro Flask Bottles Suddenly Everywhere?,” Popular Mechanics, February 23, 2019.
7. Tim Newcomb, “Why Are Hydro Flask Bottles Suddenly Everywhere?,” Popular Mechanics, February 23, 2019; Gerry O’Brien,
“Hydro Flask: A Model for Marketing Success,” Herald and
News (Oregon), May 26, 2018.
8. Lauren Cochrane, “How Reusable Water Bottles Became the
New Tote Bag,” The Guardian, August 15, 2017.
9. Kai Burkhardt, “The Hydro Flask Is a Gen Z Trend We Can Get
Behind,” CNN, October 24, 2019.
10. “Colder. Hotter. Longer,” Instagram Business, https://business
.instagram.com/success/hydro-flask.
11. The American Marketing Association, www.marketingpower
.com.
12. https://takeyausa.com/blogs/fitness-healthy-living.
13. The idea of the four Ps was conceptualized by E. Jerome
McCarthy, Basic Marketing: A Managerial Approach (Homewood, IL: Richard D. Irwin, 1960).
14. Marlen Komer, “How Much Is Sephora’s In-Store Facial? The
Deal Is Too Good to Pass Up,” Bustle.com, May 8, 2018, www
.bustle.com/p/how-much-is-sephoras-in-store-facial-the-deal-is
-too-good-to-pass-up-9020465.
15. Dhruv Grewal, Anne L. Roggeveen, and Lauren S. Beitelspacher, “How Retailing Cues Influence Shopping Perceptions
and Behaviors,” in The Routledge Companion to Consumer
26 Section One ASSESSING THE MARKETPLACE
Behavior, ed. Michael Solomon and Tina Lowrey (New York:
Informa UK Limited, 2017), pp. 291–303.
16. Peter Thornton, “Everything You Need to Know before You Fly
Frontier,” Airfare Watchdog, February 13, 2020.
17. Erin Miller, “Frontier Airlines Baggage Fees & Tips to Cover
the Expenses,” Upgraded Points, August 25, 2019, https://
upgradedpoints.com/frontier-airlines-baggage-fees/.
18. Deena Shanker and Niclas Rolander, “Oatly’s Path to Alt-Milk
World Domination Starts in New Jersey,” Bloomberg Businessweek, July 31, 2019; Oliver Franklin-Wallis, “White Gold: The
Unstoppable Rise of Alternative Milks,” The Guardian, January
29, 2019.
19. Dennis Green, “Nike Is Finally Going to Start Selling on Amazon
for One Simple Reason,” Business Insider, June 29, 2017.
20. https://milklife.com.
21. Kurt Wagner, “Digital Advertising in the US Is Finally Bigger
Than Print and Television,” Vox.com, February 20, 2019.
22. Kris Wouk, “What Is YouTube’s Subscription Streaming Service,
YouTube Premium?,” Digital Trends, April 19, 2019.
23. Henry Ford and Samuel Crowther, My Life and Work (New
York: Knopf Doubleday Publishing Group, 1922), p. 72.
24. George S. Day, “Aligning the Organization with the Market,”
Marketing Science Institute 5, no. 3 (2005), pp. 3–20.
25. Abhijit Guha et al., “Framing the Price Discount Using the
Sale Price as the Referent: Does It Make the Price Discount
More Attractive?,” Journal of Marketing Research 55, no. 3
(2018).
26. Kumar R. Ranjan and Stuart Read, “Value Co-creation: Concept
and Measurement,” Journal of the Academy of Marketing
Science 44, no. 3 (2016), 290–315.
27. Stephan Rabimov, “Betabrand: Who’s Calling the Shots on
Fashion?,” Forbes, March 28, 2018.
28. Lena Steinhoff, Denni Arli, Scott Weaven, and Irina V. Kozlenkova,
“Online Relationship Marketing,” Journal of the Academy of
Marketing Science 47, no. 3 (2019), pp. 369–93; Robert
Palmatier et al., “Relationship Velocity: Towards a Theory of
Relationship Dynamics,” Journal of Marketing 77, no. 1 (2013),
pp. 13–20.
29. Ashlee Clark Thompson, “The KitchenAid Stand Mixer: How
Color, Cake and Nostalgia Made an American Icon,” CNET,
July 23, 2018.
30. Christina Newberry, “130+ Social Media Statistics That Matter
to Marketers in 2019,” Hootsuite, March 5, 2019.
31. Simon Kemp, “Digital 2019: Global Internet Use Accelerates,”
We Are Social, January 30, 2019.
32. “Facebook Users in the World,” Internet World Stats, June 30,
2017.
33. Maggie Fick and Paresh Dave, “Facebook’s Flood of Languages
Leave It Struggling to Monitor Content,” Reuters, April 23,
2019.
34. “Internet Users in the World,” Internet World Stats, June 30,
2017.
35. Eran Feinstein, “OTA’s vs. Direct Hotel Bookings: Which Is the
Leading Trend for 2018?,” Travel Daily News, February 23,
2018.
36. Deanna Ting, “Who’s Really Winning the Direct Booking Wars
between Hotels and Online Travel Agencies,” Skift, March 4,
2019.
37. Pip Sloan, “Six of the Best Food and Drink Apps: From Expert
Restaurant Tips to Free Meals,” The Telegraph, February 20,
2019.
38. Pip Sloan, “Six of the Best Food and Drink Apps: From Expert
Restaurant Tips to Free Meals,” The Telegraph, February 20,
2019.
39. Philip Kotler, “Reinventing Marketing to Manage the Environmental Imperative,” Journal of Marketing 75 (July 2011), pp.
132–35; Katherine White, Rhiannon MacDonnell, and John H.
Ellard, “Belief in a Just World: Consumer Intentions and
Behaviors toward Ethical Products,” Journal of Marketing 76
(January 2012), pp. 103–18.
40. Lauren Cochrane, “How Reusable Water Bottles Became the
New Tote Bag,” The Guardian, August 15, 2017.
41. Kai Burkhardt, “The Hydro Flask Is a Gen Z Trend We Can
Get Behind,” CNN, October 24, 2019; Tim Newcomb, “Why Are
Hydro Flask Bottles Suddenly Everywhere?,” Popular
Mechanics, February 23, 2019.
42. Moriba Cummings, “Fans Spotted This Healthy $3 Drink in
Beyoncé’s Instagram Post and Are Dying to Try It,” Yahoo!,
January 27, 2020; Marina Pasquini, “16 Celebs Who
Swear Their Biggest Beauty Tip Is Water,” Galore,
February 22, 2017.
43. Robert Moss, “How Bottled Water Became America’s Most
Popular Beverage,” Serious Eats, August 10, 2018.
44. Kai Burkhardt, “The Hydro Flask Is a Gen Z Trend We Can Get
Behind,” CNN, October 24, 2019.
45. Kara Kia, “Chanel’s Luxury Water Bottle Comes in Its Own
Quilted Bag and Costs a Crisp $5K,” Popsugar, February 6,
2020.
46. Chase Purdy, “Americans Want to Drink More Water,” Quartz,
January 11, 2019.
47. Jonathan Shieber, “Pepsi Is Going to Start Putting Its Aquafina
Water in Aluminum Cans,” TechCrunch, June 27, 2019.
48. Adele Peters, “This Edible Blob Filled with Water Means
You Don’t Need a Plastic Bottle,” Fast Company, February 18,
2020.
49. Adele Peters, “These Refill Stations Now Sell Reusable
Aluminum Bottles for the Same Price as Single-Use Plastic,”
Fast Company, February 26, 2020.
i. Jack Neff, “Unilever Gives Birth to Baby Dove as Johnson’s
Tries to Bounce Back,” Ad Age, April 5, 2017; Sheila Shayon,
“Unilever’s Baby Dove Woos Imperfect Moms and Mums,”
brandchannel, April 5, 2017; Ellen Thomas, “Baby Dove to
Launch in U.S.,” Women’s Wear Daily, April 5, 2017; “Welcome
to the World of Baby Dove,” www.dove.com.
ii. Khadeeja Safdar, “Young Consumers Tap Online Market for
Recycled Apparel,” The Wall Street Journal, February 16, 2016.
iii. Dan Hyman, “Giving a Family Business a Jolt with a Coffee That
Empowers Women,” The New York Times, December 20, 2017.
See also City Girl Coffee, www.citygirlcoffee.com.
iv. Alexandra Marshall, “Is This the Birkin Bag of Lipstick?,” The
Wall Street Journal, January 16, 2020.
v. Laura Stevens, “Amazon’s Cashierless ‘Go’ Convenience Store
Set to Open,” The Wall Street Journal, January 21, 2018;
George Anderson, “Starbucks and Amazon Go Cashless in
Seattle,” RetailWire, January 25, 2018.
vi. Colin Bertram, “Hertz and Clear Promise to Eliminate Car
Rental Counter Hell,” Bloomberg, December 11, 2018.
vii. Taylor Lorenz, “How to Make Money in Your Sleep,” The New
York Times, March 6, 2020.
viii. Adele Peters, “Why Starbucks’s Plastic Straw Ban Might Not
Help the Environment,” Fast Company, July 26, 2018; Adele
Peters, “Starbucks Generates an Astronomical Amount of
Waste—Can It Stop?,” Fast Company, March 21, 2018.
OVERVIEW OF MARKETING CHAPTER ONE 27
Quiz Yourself Answer Key
1. Which of the following is not a function of marketing’s value
creation process?
Answer: (e) All of these are part of marketing’s value creation
process.
2. Value creation is the central activity of marketing. Which is not a
benefit to the firm from engaging in value creation and the ongoing
process of identifying value-adding options for consumers?
Answer: (d) The firm is able to sell fewer products.
Design elements: Water bottle: CD_works27/Shutterstock; icons for Adding Value, Marketing Analytics, and Social & Mobile Marketing boxes:
Molotovcoketail/Getty Images; icon for Ethical & Societal Dilemma box: McGraw-Hill
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
LO2-1 Define a marketing strategy.
LO2-2 Describe the elements of a marketing plan.
LO2-3 Analyze a marketing situation using SWOT analyses.
LO2-4 Describe how a firm chooses which consumer group(s) to pursue
with its marketing efforts.
LO2-5 Outline the implementation of the marketing mix as a means to
increase customer value.
LO2-6 Summarize portfolio analysis and its use to evaluate marketing
performance.
LO2-7 Describe how firms grow their business.
monticello/Shutterstock
DEVELOPING
MARKETING
STRATEGIES AND
A MARKETING PLAN
CHAPTER 2
T
he corporate name of the company that
produces and sells popular food and beverage
brands such as Gatorade, Frito-Lay, Lipton,
Tropicana, Quaker, and Mountain Dew—
PepsiCo—signals which of the products in its portfolio
have been the most important historically. The company
began by selling carbonated beverages, but today it
earns its revenues across a diverse portfolio of snack
and drink categories. This development reflects PepsiCo’s
careful analysis of the market and efforts to ensure
that it continues to attract a wide range of consumers
by offering many types of products. To do so, PepsiCo
specifically aims to establish the variety, ubiquity, desirability, and value of every product it sells.1
Those aims also resonate with its current corporate
motto: “Performance with Purpose.” It signals PepsiCo’s
goals to improve its products but also the planet and the
well-being of the people who consume them. For example,
noting consumer trends and increasing interest in healthy
options, PepsiCo announced its commitment to providing
healthier options. At the same time, it is determined to
leverage its expertise to get its products into the hands of
consumers by continuing to innovate and expand its creative and competitive initiatives, all while working to retain
its existing market share.2
A key opportunity rests with growing groups of consumers who search for healthy options, even when they
are consuming usually guilt-inducing snacks. PepsiCo’s dedicated portfolio of “guilt-free products” includes both “everyday nutrition products,” offering sufficient daily servings of
grains, proteins, and vegetables, and items with lower levels
of unhealthy ingredients, such as beverages with fewer
than 70 calories or low-sodium snacks. Demand is so great
that the guilt-free category now accounts for 45 percent of
PepsiCo’s total revenue.3 Moreover, it anticipates sales of
everyday nutrition products to experience the highest increases across its offerings in coming years.
Some of the company’s growth, reflecting its efforts to
serve these expanding markets, in turn has come about
through smart acquisitions of new brands. To increase its
healthy snack offerings in particular, PepsiCo recently acquired Bare Foods Company, a brand that sells baked chips
30
WHAT IS A MARKETING STRATEGY?
A marketing strategy identifies (1) a firm’s target market(s), (2) a related marketing mix
(its four Ps), and (3) the bases on which the firm plans to build a sustainable competitive
advantage. A sustainable competitive advantage is an advantage over the competition that is
not easily copied and can be maintained over a long period of time. A competitive advantage acts like a wall that the firm has built around its position in a market. This wall makes
it hard for outside competitors to contact customers inside—otherwise known as the marketer’s target market. Of course, if the marketer has built a wall around an attractive market, competitors will attempt to break down the wall. Over time, advantages will erode
because of these competitive forces, but by building high, thick walls, marketers can sustain
their advantage, minimize competitive pressure, and boost profits for a longer time. Thus,
establishing a sustainable competitive advantage is key to long-term financial performance.
For Pepsi, this wall involves the bricks of a strong brand and a loyal customer base,
which were built on the foundation of its strong innovative capabilities. Customers around
the world know Pepsi and consider it a primary “go-to” brand if they want a refreshing
made from bananas, apples, coconuts, and other simple (and
non-GMO) ingredients. Beyond adding to the list of PepsiCo
snacking options, the integration of Bare Foods Company
enhances the company’s position in the healthy foods category. Notably, Bare Foods’ fruit snacks appear in the produce section of grocery stores rather than the snack aisle,
meaning that PepsiCo products are moving into new sectors
of the store as well as of the consumer market.4
Acquisitions are not sufficient to maintain its massive
presence though, so PepsiCo also invests in research to
develop new, improved products, whether as radically new
introductions or enhanced versions of its current offerings. Continuing with the pursuit of more nutritious snack
foods, it developed a revised version of its well-known tortilla chips, the Simply Tostitos Black Bean Tortilla Chips,
which promise to help consumers get enough protein and
fiber in their diets.5
Whether through acquisitions or innovations, PepsiCo
actively works to break into new markets that previously had
been populated mainly by smaller brands. Noting the rise in
popularity of flavored seltzer water, a market dominated by
brands such as LaCroix and Perrier, PepsiCo created and
launched the new bubly brand, offering a range of flavored
sparkling waters.6 Within about a year of its introduction,
bubly already had gained a 10 percent share of the flavored
sparkling water market.7 Unwilling to rest on these laurels,
PepsiCo has started installing fountain units to dispense
bubly, taking advantage of its strong existing relationships
with various actors in the food service industry to reach
more customers, such as students on college campuses.8
This successful product launch leverages nearly all of
PepsiCo’s vast resources, including its substantial marketing
budget and already wide reach. It also demonstrates the importance of a good portfolio fit: bubly aptly embodies the
“Performance with Purpose” motto by providing a relatively
healthy beverage option with zero calories that the company
also has packaged innovatively, in plastic-free containers.
Of course, PepsiCo is not the only major beverage
company seeking to appeal to consumers. Carbonated
beverages remain an important part of the company’s
product portfolio, and in these segments, Coca-Cola and
Dr Pepper Snapple are actively in pursuit of more market
share. The fast pace of PepsiCo’s adaption to new trends
gives it an edge over the competition though. In particular,
its addition of bubly to its product line helped convince
JetBlue to enter into an agreement to serve only PepsiCo
products on its flights. Coca-Cola formerly held the contract but then proved unable to provide the sparkling
water options that JetBlue customers have started to demand and that the airline is determined to provide.9
For PepsiCo, the challenge of declining soda consumption worldwide cannot be ignored. But by identifying and
recognizing the growing popularity of healthy food and beverage options, and then responding with creative, innovative
products that customers seek,10 PepsiCo has established a
strong marketing strategy. Catering to consumers and adjusting portfolios to reflect trends and market changes represents a recipe for strong growth and corporate longevity.
LO2-1 Define a marketing
strategy.
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 31
drink. This positioning reflects Pepsi’s careful targeting
and marketing mix implementation. In terms of the four
Ps (as we described them in Chapter 1), Pepsi already has
achieved product excellence with its signature colas, Pepsi
and Diet Pepsi. It also is constantly adding new products
to its product line, such as new flavor options like Pepsi
Real Lime and Pepsi Wild Cherry. These items not only
are interesting product innovations but also offer product
benefits, in that they contain real fruit juice.11
Furthermore, the Pepsi brand is owned by a parent
company, PepsiCo, that also owns many of the top snack
brands; other cola lines; and additional products such as
Lay’s, Quaker, Mountain Dew, and Naked—among dozens
of others.12 To market its products, it relies on an extensive
distribution network that places its familiar and appealing
brands in stores in more than 200 countries.13 Its pricing
also is competitive and strategic. For example, customers
can readily access a quick drink from a Pepsi soda fountain
at a higher price by volume, or they can pay a little less per
liter and buy larger, two-liter bottles to store and consume
at home. Central to its promotion efforts are Pepsi’s celebrity endorsements. Pepsi partners with some of the world’s
biggest musicians, including Cardi B and Beyoncé,14 and it
incorporates musicians into various marketing strategies.
For example, Michael Bublé jokes about pronunciation in
advertising that promotes bubly, and a Doritos ad features
both Chance the Rapper and the Backstreet Boys.15 The
inclusion of Now United, a pop group with members from
15 countries, provides a sponsorship designed to signal and
represent Pepsi’s global audience and influence, as also
demonstrated by its own sponsorship of major sports
events, such as the Super Bowl and UEFA Champions
League playoffs.16
There are four macro, or overarching, strategies that
focus on aspects of the marketing mix to create and deliver
value and to develop sustainable competitive advantages,
as we depict in Exhibit 2.1:17
• Customer excellence: Focuses on retaining loyal customers and excellent customer service.
• Operational excellence: Achieved through efficient
operations and excellent supply chain and human
resource management.
• Product excellence: Having products with high perceived value and effective branding and positioning.
• Locational excellence: Having a good physical location and Internet presence.
Customer Excellence
Customer excellence is achieved when a firm develops value-based strategies for retaining
loyal customers and provides outstanding customer service.
Retaining Loyal Customers Sometimes the methods a firm uses to maintain a sustainable competitive advantage help attract and maintain loyal customers. For instance, having
a strong brand, unique merchandise, and superior customer service all help solidify a loyal
customer base. In addition, having loyal customers is, in and of itself, an important method
of sustaining an advantage over competitors.
An important component of Pepsi’s sustainable competitive
advantage is it is constantly adding new products such as Pepsi
Real Lime and Pepsi Wild Cherry.
McGraw Hill
Endorsements of major sports events such as the Union of
European Football Associations (UEFA) Champions League playoffs are central to Pepsi’s promotional strategy.
Tim Clayton/Corbis/Getty Images
32 Section One ASSESSING THE MARKETPLACE
Loyalty is more than simply preferring to purchase from one firm instead
of another.18 It means that customers
are reluctant to patronize competing
firms. Loyal customers drink Pepsi even
if Coca-Cola goes on sale. More and
more firms realize the value of achieving
customer excellence by focusing their
strategy on retaining loyal customers.
PepsiCo doesn’t think in terms of selling a single case of Mountain Dew for
$15; instead, it focuses on satisfying customers who buy various bottles or cans
to keep in their homes all the time,
including Mountain Dew for the kids,
Diet Pepsi for the adults, and Pepsi for
guests. It also considers whether those
consumers might want some salty
snacks to go with their beverages and
how it can help them combine those
desires through the purchase of multiple
PepsiCo products. Even if we just consider cola purchases, it is reasonable
to imagine that a household of cola consumers might buy 50 cases of carbonated beverages every year for something
like 20 years. In this case, the consumer
is not a $15 customer who bought a single case; by combining all purchases for
the family over the years, we determine
that this household represents a $15,000
customer! Viewing customers with a lifetime value perspective rather than on a transactionby-transaction basis is key to modern customer retention programs.19 We will examine how
the lifetime value of a customer is calculated in Chapter 10.
Another method of achieving customer loyalty creates an emotional attachment
through loyalty programs. These loyalty programs, which constitute part of an overall customer relationship management (CRM) program, prevail in many industries, from airlines
to hotels to movie theaters to retail stores. With such programs, firms can identify members
through the loyalty card or membership information the consumer provides when he or she
makes a purchase. Using that purchase information, analysts determine which types of
merchandise certain groups of customers are buying and thereby tailor their offering to better meet the needs of their loyal customers. For instance, by analyzing their databases,
banks develop profiles of customers who have defected in the past and use that information
to identify customers who may defect in the future. Once it identifies these customers, the
firm can implement special retention programs to keep them.
Providing Outstanding Customer Service Marketers also may build sustainable competitive advantage by offering excellent customer service,20 though consistency in this area can
prove difficult. Customer service is provided by employees, and, invariably, humans are less
consistent than machines. Firms that offer good customer service must instill its importance in
their employees over a long period of time so that it becomes part of the organizational culture.
Disney offers excellent examples of how it retains loyal customers and provides outstanding customer service. First, Disney’s My Magic system enables visitors to swipe their
MagicBand wristbands to get on rides, make purchases, and open their hotel room door.
They can also use the mobile app to get dinner reservations or check in for rides throughout
the park and its grounds. The system also enables Disney to collect a remarkable amount of
EXHIBIT 2.1 Macro Strategies for Developing Customer Value
Customer
value
Customer
excellence
Operational
excellence
Product
excellence
Locational
excellence
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 33
information about what each guest is doing at virtually
every moment of his or her visit to its theme parks.21
Second, its customer service is virtually unparalleled. Visitors to Disney parks are greeted by “assertively friendly” staff who have been extensively trained to
find ways to communicate positively with customers and
provide better service. The training includes information about how to recognize the signs that a visitor is
lost, so the Disney employee can offer help locating a
destination. It also highlights the need to communicate
frequently and collaboratively about every aspect of the
park, so a custodian at one end of the Magic Kingdom
likely knows what time a restaurant on the other side
opens.22
Although it may take considerable time and effort to
build such a reputation for customer service, once a
marketer has earned a good service reputation, it can sustain this advantage for a long time because a competitor is
hard-pressed to develop a comparable reputation. Adding
Value 2.1 details how Sally Beauty’s loyalty program helps
retain loyal customers.
Operational Excellence
Firms achieve operational excellence, the second way to achieve a sustainable competitive
advantage, through efficient operations, excellent supply chain management, and strong
relationships with suppliers.
All marketers strive for efficient operations to get their customers the merchandise they
want, when they want it, in the required quantities, and at a delivered cost that is lower than
that of their competitors. By so doing, they ensure good value to their customers, earn profitability for themselves, and satisfy their customers’ needs.
Firms achieve efficiencies by developing sophisticated distribution and information
systems as well as strong relationships with vendors. Like customer relationships, vendor
relations must be developed over the long term and generally cannot be easily offset by a
competitor.23
You are likely aware of, and perhaps have taken
advantage of, Amazon’s Prime shipping program that
offers, for $119 a year, free one-day delivery on all orders.
In certain zip codes, same-day shipping may be available
too. With attractive shipping options like these, how are
other online retailers able to compete? Operational
excellence is required for Amazon to execute this program effectively. Not only does it need to have the technology to coordinate the individual buyers, but it needs
to have an effective human resource hiring program that
selects and trains employees capable of going the extra
mile to please its customers.24
Product Excellence
Product excellence, the third way to achieve a sustainable
competitive advantage, occurs by providing products with
high perceived value and effective branding and positioning. Some firms have difficulty developing a competitive
advantage through their merchandise and service offerings,
especially if competitors can deliver similar products or services easily. However, others have been able to maintain
Disney’s My Magic system enables users to swipe their MagicBand
wristbands to get on rides, make purchases, and open their hotel
room door.
parrysuwanitch/123RF
PepsiCo’s introduction of bubly reinforces its image as a provider
of excellent, refreshing, distinctive beverages.
LunaseeStudios/Shutterstock
34 Section One ASSESSING THE MARKETPLACE
their sustainable competitive advantage by investing in their brand itself; positioning their
product or service using a clear, distinctive brand image; and constantly reinforcing that
image through their merchandise, service, and promotion. For example, with PepsiCo’s new
product introductions, such as bubly, the company clearly is seeking to stake new ground
with a terrific product option in a growing category and thereby reinforce its image as
a provider of excellent, refreshing, distinctive beverages. Top global brands—such as
Apple, Google, Amazon, Microsoft, Coca-Cola, Samsung, Toyota, Mercedes, Facebook,
Adding Value 2.1 Beautiful Loyalty: Sally Beauty’s Updated Loyalty Programi
For the loyalty program at Sally Beauty, everything starts with
an e-mail address. It may end with consistent customer
engagement, sophisticated data analysis, and increased sales,
but the first step in the process is ensuring that it can reach
customers directly and effectively.
Therefore, when customers enter one of the retailer’s
3,000 stores or visit its online sites, they receive an invitation to purchase a $5 membership in the program,
with the promise that they will receive a $5 coupon via
e-mail. Thus, the company learns customers’ e-mail addresses immediately, enabling it to share information about
itself that might engage these shoppers on a more emotional level.
Such tactics represent the retailer’s attempt to counteract some downward sales trends and move beyond price
promotions, to compel more engagement and loyalty from
shoppers. In addition to restructuring the company to find
some cost efficiencies, it hopes to rely more on loyalty, and
less on one-time discounts, to keep shoppers coming back to
its stores. Instead, it promises 15 percent discounts for the
rest of the month, as long as the consumer spends at least
$25 in that month.
Then, with the data it gathers, it takes a careful look at what
the customer buys. As an example, the company’s chief marketing officer (CMO) notes that if a customer purchases hair dye,
that person is likely going to need color-safe conditioner, perhaps a touch-up tool, and then another box of dye in about six
weeks. Therefore, Sally Beauty times special offers and incentives accordingly, sending e-mail messages and coupons at just
the moment the customer is likely to be looking to purchase
those items. It plans to add targeted advertising too, such that
a banner advertisement that pops up when a loyal customer
accesses the website would feature a model whose hair color
matches the color that the customer bought most recently.
Beyond such immediate information, Sally Beauty works to
leverage the data it gathers from its loyalty program to design
new offerings that will appeal to the demographics and preferences exhibited by its loyal customers. In the CMO’s own
words, “We’re at a place where everything is driven by the customer and driven by data.”
Sally Beauty works hard at obtaining and keeping loyal customers by providing a cutting-edge
loyalty program.
Source: Sally Beauty Supply LLC
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 35
McDonald’s, and Intel—are all leaders in their respective
industries, at least in part because they have strong brands
and a clear position in the marketplace.25
Locational Excellence
Locational excellence is particularly important for retailers and service providers. Many say, “The three most
important things in retailing are location, location, location.” For example, most people will not walk or drive
very far when looking to buy a cup of coffee. A competitive advantage based on location is sustainable because it
is not easily duplicated. Starbucks has developed a strong
competitive advantage with its location selection. The
high density of stores it has established in some markets
makes it very difficult for a competitor to enter that market and find good locations. After all, if Starbucks has a
store on the corner of a busy intersection, no other competitor can take that location and will instead have to
settle for a less worthy spot.
Multiple Sources of Advantage
In most cases, a single strategy, such as low prices or excellent service, is not sufficient to
build a sustainable competitive advantage. Firms require multiple approaches to build a
“wall” around their position that stands as high as possible.
Southwest Airlines consistently has positioned itself as a carrier that provides good
service at a good value—customers get to their destinations on time for a reasonable price
without having to pay extra for checked luggage. At the same time, its customers know not
to have extraordinary expectations, unlike those they might develop when they purchase a
ticket from Singapore Airlines. They don’t expect food service or seat assignments. But they
do expect—and even more important, get—on-time flights that are reasonably priced. By
developing its unique capabilities in several areas, Southwest has built a very high wall
around its position as the premier value player in the airline industry, which has resulted in
a huge cadre of loyal customers.
Toyota is a top global brand.
Lyle Setter/Icon Sportswire/Getty Images
PROGRESS CHECK
1. What are the various components of a marketing strategy?
2. List the four macro strategies that can help a firm develop a sustainable
competitive advantage.
THE MARKETING PLAN
Effective marketing doesn’t just happen. Firms like Pepsi carefully plan their marketing strategies to react to changes in the environment, the competition, and their customers by creating a
marketing plan. A marketing plan is a written document composed of an analysis of the current
marketing situation, opportunities and threats for the firm, marketing objectives and strategy
specified in terms of the four Ps, action programs, and projected or pro forma income (and
other financial) statements.26 The three major phases of the marketing plan are planning,
implementation, and control.27
Although most people do not have a written plan that outlines what they are planning
to accomplish in the next year, and how they expect to do it, firms do need such a document.
It is important that everyone involved in implementing the plan knows what the overall
LO2-2 Describe the elements
of a marketing plan.
36 Section One ASSESSING THE MARKETPLACE
objectives for the firm are and how they are going to be met. Other stakeholders, such as
investors and potential investors, also want to know what the firm plans to do. A written
marketing plan provides a reference point for evaluating whether or not the firm has met its
objectives.
A marketing plan entails five steps, depicted in Exhibit 2.2. In Step 1 of the planning
phase, marketing executives, in conjunction with other top managers, define the mission
and/or vision of the business. For the second step, they evaluate the situation by assessing
how various players, both inside and outside the organization, affect the firm’s potential for
success. In the implementation phase, marketing managers
identify and evaluate different opportunities by engaging in
a process known as segmentation, targeting, and positioning (STP) (Step 3). They then are responsible for implementing the marketing mix using the four Ps (Step 4).
Finally, the control phase entails evaluating the performance of the marketing strategy using marketing metrics
and taking any necessary corrective actions (Step 5).
As indicated in Exhibit 2.2, it is not always necessary
to go through the entire process for every evaluation (Step 5).
For instance, a firm could evaluate its performance in
Step 5, then go directly to Step 2 to conduct a situation
analysis without redefining its overall mission.
Control
phase
Implementation
phase
Planning
phase
Step 1: Define business
mission and objectives
Step 2: Conduct a situation
analysis
• SWOT
Step 5: Evaluate performance
using marketing metrics
Step 3: Identify and evaluate opportunities
Segmentation Targeting
Step 4: Implement marketing mix and allocate resources
Promotion
Marketing
strategy
Product Price Place
Positioning
EXHIBIT 2.2 The Marketing Plan
Audi embraces a broad mission statement. It defines its
business as mobility, and its overarching objective is to revolutionize mobility with vehicles like this full-electrical e-tron.
Art Konovalov/Shutterstock
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 37
We first discuss each step involved in developing a marketing plan. Then we consider ways of analyzing a marketing situation, as well as identifying and evaluating marketing opportunities. We also examine some specific strategies marketers use to grow a
business. Finally, we consider how the implementation of the marketing mix increases
customer value.
Step 1: Define the Business Mission and Objectives
The mission statement, a broad description of a firm’s objectives and the scope of activities
it plans to undertake,28 attempts to answer three main questions: What type of business are
we?, What are our objectives?, and What do we need to do to accomplish those objectives?
These fundamental business questions must be answered at the highest corporate levels
before marketing executives can get involved. Most firms’ missions include maximizing
stockholders’ wealth by increasing value of the firms’ stock and paying dividends.29 However, owners of small, privately held firms frequently have mission statements that include
achieving a specific level of income and avoiding risks. Nonprofit organizations such as Pink
Ribbon instead have a nonmonetary mission statement: “Pink Ribbon is organized exclusively for charitable, educational and scientific purposes. We provide information, resources
and support. We promote research into the causes, prevention, treatment and a possible
cure [of breast cancer].”30
Let’s examine the mission statement and objectives of German car manufacturer Audi,
a division of Volkswagen Group.
Audi’s Corporate Mission and Objectives “Three global megatrends will define the
mobility of the future: digitalization, sustainability and urbanization. We have the right
answers to these megatrends. We have a clear strategic plan to defend our Vorsprung durch
Technik (Lead by Technology). We have the potential to revolutionize mobility.”31
Note the broad general nature of Audi’s mission statement. It defines its business as
mobility, and its overarching objective is to revolutionize mobility. It expands on its general
mission with detailed objectives and how those objectives will be achieved.
Objective 1—What? Digitalization It is creating a digital experience that will make mobility
safe, convenient, and individual and striving to make its cars an integral component of its
customers’ digital lives.
How? Digital services will contribute an additional
one billion euros in 2025. It uses the myAudi customer
portal as the central digital access point. It is developing
an integrated service platform across all Volkswagen
Group brands and digitizing all corporate processes.
Objective 2—What? Sustainability It is developing innovative driving technologies and reducing its ecological footprint. It plans to be the number one supplier of electric
vehicles among the premium car manufacturers.
How? In 2025, it plans that a third of its cars will be
electric and plug-in hybrids, one in each of its core models.
All of its manufacturing plants will be CO2
neutral by 2030.
It will launch a small series of cars using fuel-cell technology by the early 2020s.
Objective 3—What? Urbanization It will develop new technologies to improve safety and traffic flows in urban areas
in 2025.
How? In addition to electric autonomous driving
vehicles and car-sharing fleets, it is working with Airbus to
develop the Pop.Up Next driving and flying transport system that will enable vertical individual mobility.
One of Audi’s corporate objectives is to develop new technologies
to improve safety and traffic flows in urban areas. To that end,
it is working with Airbus to develop the Pop.Up Next driving
and flying transport system that will enable vertical individual
mobility.
Antonello Marangi/Shutterstock
38 Section One ASSESSING THE MARKETPLACE
Step 2: Conduct a Situation Analysis
After developing its mission, a firm would perform a
situation analysis using a SWOT analysis that assesses
both the internal environment with regard to its
Strengths and Weaknesses and the external environment in terms of its Opportunities and Threats. In addition, it should assess the opportunities and uncertainties
of the marketplace due to changes in Cultural, Demographic, Social, Technological, Economic, and Political
forces (CDSTEP). These factors are discussed in more
detail in Chapter 5. With this information, firms can
anticipate and interpret change, so they can allocate
appropriate resources.
Consider how PepsiCo might conduct a SWOT analysis, as outlined in Exhibit 2.3. We focus on PepsiCo here,
but we also recognize that its marketing managers might
find it helpful to perform parallel analyses for competitors, such as Coca-Cola.
A company’s strengths (Exhibit 2.3, upper left) refer to the positive internal attributes of the firm. In this example, the strengths we might identify include PepsiCo’s LO2-3 Analyze a marketing
situation using SWOT
analyses.
One of PepsiCo’s strengths is its portfolio of celebrity endorsers
such as the music group Now United.
Source: PepsiCo, Inc.
EXHIBIT 2.3 Examples of Elements in a SWOT Analysis
Environment Evaluation
Positive Negative
Pepsi Internal Strengths Weaknesses
Diverse brand portfolio
Strong celebrity endorsements
Successful marketing campaigns
with music industry
Commitment to social and
environmental charitable causes
Lower brand awareness than
rival Coca-Cola
Less market share than rival
Coca-Cola
Environmentally unfriendly
packaging
External Opportunities Threats
Expanding health food market
Growth in global market share
Acquisition of new brands
Water scarcity
Popularity of reusable water
bottles
Soda taxes
Increasing competition in the
snack food market
Coca-Cola Internal Strengths Weaknesses
High market share
Strong brand
Strong global presence
Excellent customer loyalty
Supply chain
Low diversification
Few healthy beverages
External Opportunities Threats
Emerging countries
Diversifying products
Bottled water
Water scarcity
Potential market saturation
Changes to labeling regulations
Increasing competitors
Sources: Bitesh Bhasin, “SWOT Analysis of Pepsi—PepsiCo SWOT Analysis,” Marketing91, April 3, 2019; Hitesh Bhasin,
“SWOT of Coca-Cola,” Marketing91, 2018.
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 39
An opportunity for PepsiCo is global expansion, such as its acquisition of the African brand
Pioneer Foods.
Source: PepsiCo, Inc.
diversified product portfolio and celebrity endorsements. Pepsi has signed some of the
world’s most recognized musicians and athletes as spokespersons, from Beyoncé to
Cardi B to David Beckham.32 Building on this forte, Pepsi’s marketing campaign “For
the Love of It” features the global music group Now United, which has recorded a Pepsi
jingle.33 In conjunction with this effort, Pepsi is designing and hosting concert experiences and content for fans attending the band’s upcoming world tour. Another of its
strengths comes from its efforts to benefit society, such as the PepsiCo Foundation’s
Global Citizenship Initiatives, which encourage healthy lifestyles, clean water, and waste
reduction, among other positive goals.34
Yet every firm has its weaknesses, and PepsiCo is no exception. Weaknesses
(Exhibit 2.3, upper right) are negative attributes of the firm. In particular, PepsiCo
suffers much lower global brand awareness and market share than its main rival,
Coca-Cola.35 Several of the beverages it sells come in plastic bottles, but as the consumer public has become more concerned about environmental issues, many people are
switching to reusable bottles. The San Francisco Airport even banned the sale of singleuse water bottles. Although PepsiCo is attempting to adapt to these changes, such as
planning to make its Aquafina water brand available in cans, most of its current packaging is still considered to be unsustainable.36 Ethical & Societal Dilemma 2.1 goes into
more detail about how PepsiCo is responding to the potential weakness of environmentally unfriendly packaging.
Opportunities (Exhibit 2.3, lower left) pertain to positive aspects of the external
environment. Among PepsiCo’s opportunities is the rising demand for healthy food and
drink options, as we indicated in the opening vignette. That is, increasing interest in
healthier options gives PepsiCo new opportunities to expand its product lines and introduce innovative, healthier options as well.37 Another notable opportunity comes from
growth in global markets for snacks and beverages. For example, PepsiCo recently
acquired Pioneer Foods, an African brand, and is creating a new operating sector for its
marketing activities in sub-Saharan Africa.38 If these efforts prove successful, PepsiCo
is likely to enjoy substantial growth while also reducing its nearly exclusive reliance on
the U.S. market. Other than expanding into different markets, there are multiple ways to
40 Section One ASSESSING THE MARKETPLACE
take advantage of opportunities, and Adding Value 2.2 describes the ways in which each
new Apple Watch series leverages the opportunities that Apple has identified in its
external environment to provide additional value to customers.
Finally, threats (Exhibit 2.3, lower right) represent the negative aspects of the company’s external environment. Water scarcity is a significant concern for PepsiCo because bottled or canned drinks demand substantial amounts of water.39 In addition, increased
attention to nutrition concerns and the imposition of soda taxes in some countries and cities threaten PepsiCo’s position.40 Competition in the snack food market also continues to
increase, not just among existing players but also from new entrants that are introducing
innovative, alternative snacks to appeal to niche consumers’ specific preferences.41 These
are just some of the threats that PepsiCo is facing.
Step 3: Identify and Evaluate Opportunities Using
Segmentation, Targeting, and Positioning (STP)
After completing the situation analysis, the next step is to identify and evaluate opportunities for increasing sales and profits using segmentation, targeting, and positioning (STP).
With STP, the firm first divides the marketplace into subgroups or segments, determines
LO2-4 Describe how a firm
chooses which
consumer group(s)
to pursue with its
marketing efforts.
Exchanging a Bottle of Pepsi for a Can of Water? Finding
Packaging Solutions to Environmental Commitments Ethical & Societal Dilemma 2.1 ii
When PepsiCo announced its ambitious plans to ensure all of
its packaging material would be recyclable, compostable, or
biodegradable by 2025, it was clear that a lot of changes
would be coming. Its product lines, especially its familiar beverage and snack options, rely heavily and nearly universally on
packaging that features substantial amounts of plastic. How
could consumers get their bottled water if not in a bottle?
At the moment, the answer involves several options. One of
them will be pretty familiar to Pepsi’s existing consumers: Put
more things in cans. That is, consumers have long been accustomed to drinking carbonated soft drinks out of cans. As
we described in the opening vignette, Pepsi similarly is putting
its carbonated, flavored water bubly into cans, with the promise that it will never appear in plastic bottles. It also is moving
Aquafina toward aluminum can containers rather than the familiar clear plastic bottles that have been its most common
type of packaging.
For its LIFEWTR brand, Pepsi instead is experimenting with
a completely recycled and recyclable type of plastic, called
polyethylene terephthalate. While still officially a plastic container, this version avoids releasing the microplastics that research now indicates may be responsible for much of the
environmental and oceanic degradation associated with our
vast use of plastics.
The different solutions also reflect the varied branding
methods that Pepsi applies to each brand. For example, bubly
aims to be something different and distinct by “shaking up” the
sparkling water category. Packaging the fizzy, fun beverage in
cans gives a nearly unavoidable link in customers’ minds with
the idea of being shaken up, in a different context but with a
clear cognitive link. For LIFEWTR, the brand image seeks to be
inspirational, so using recycled plastics in the packaging gives
a nod to the ways in which consumers can be inspired to do
the right thing for the environment.
Whether these moves are sufficient remains a debate.
Some scientists note the issues involved in the production and
disposal of aluminum cans, for example. They assert that the
best option is still to drink tap water from a container that the
consumer reuses over and over. But that option isn’t the best
one for a company determined to sell beverages. Accordingly,
Pepsi is betting that by vastly reducing the amount of virgin
plastic it uses, it can help consumers feel better about its
drinks and thus encourage them to keep buying.
Pepsi is responding to criticisms about its negative impact
on the environment by improving its packaging: Bubly is
in aluminum cans, and LIFEWTR’s bottle is made of a
recyclable type of plastic.
McGraw Hill
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 41
which of those segments it should pursue or target, and finally decides how it should
position its products and services to best meet the needs of those chosen targets. (More
details on the STP process can be found in Chapter 9.)
Segmentation Many types of customers appear in any market, and most firms cannot
satisfy everyone’s needs. For instance, among Internet users, some do research online, some
shop, some look for entertainment, and many do all three. Each of these groups might be a
market segment consisting of consumers who respond similarly to a firm’s marketing efforts.
The process of dividing the market into groups of customers with different needs, wants, or
characteristics—who therefore might appreciate products or services geared especially for
them—is called market segmentation.
Let’s look at Hertz, the car rental company. Exhibit 2.4 reveals some of the segments
that Hertz targets. With the Adrenaline Collection, Hertz offers the Chevrolet Camaro or
Corvette to appeal to thrill seekers and gearheads on vacation. Its Prestige Collection features
various Cadillac and Infiniti models, targeting business customers and families who prefer a
luxurious ride. With its Green Traveler Collection of cars such as the Toyota Prius and Ford
Adding Value 2.2 The New iPhone SE: What Makes It Different
from Previous Versions?iii
When Apple introduces new versions of its innovative, popular
products, it often highlights design improvements as its basis
for adding value. Based on consumer preferences and a need
to offer a phone that competes favorably with lower-priced
competitors, Apple introduced a new iPhone SE in 2020. The
SE is smaller, priced starting at about one-third of the most
expensive iPhone models, but nonetheless possesses the
same computing power as the iPhone 11. Not only does this
give the SE super high-speed performance, but it also ensures
longevity. Apple will continue to support the SE for as long as
the iPhone 11, an estimated four to six years.
Ever since the iPhone first appeared on the market, the
ways that people use it have added value to the next generation products. In particular, consumers have embraced the
camera feature in a way the most could not have imagined a
decade ago. For instance, when was the first time you took a
selfie? While the SE has only two cameras (one in the back
for taking picture, and one in the front for selfies and video
chatting), the 11 has one in the back and three in the front. The
SE camera does have Portrait Mode, Smart HDR, video stabilization, and the ability to shoot 4K videos. Besides its practical
size and price, its design includes a large bezel that provides
more protection for the glass. Its Touch ID fingerprint sensor
works great, it has a true tone display, and it is water resistant
for 30 minutes. Although the SE does not come with the fast
charging capabilities of the more expensive versions, one can
add that feature later, and it does come with wireless charging
capabilities. All things considered, although the iPhone SE
does not contain all the same features as its more expensive
siblings, it provides a lot for the money, which makes it a great
value for a lot of potential customers.
Segment 1 Segment 2 Segment 3 Segment 4 Segment 5
Segments Single thrill seekers and
gearheads on vacation
Business customers and
families who prefer a
luxurious ride
Environmentally
conscious customers
Families Commercial customers
Adrenaline Collection Prestige Collection Green Traveler
Collection
SUV/Minivan/4×4
Collection
Commercial Van/Truck
Collection
Cars Offered Corvette ZHZ Infiniti QX56 Toyota Prius Toyota RAV4 Ford Cargo Van
Chevrolet Camaro Cadillac Escalade Ford Fusion Ford Explorer
EXHIBIT 2.4 Hertz Market Segmentation Illustration
The iPhone SE is smaller, much less expensive, and has fewer
cameras than more expensive iPhones like the iPhone 11.
The SE does, however, possess the same computing power
and other features of its more expensive cousins.
Imaginechina Limited/Alamy Stock Photo
42 Section One ASSESSING THE MARKETPLACE
Fusion and even some electric vehicle options in select locations, Hertz appeals to environmentally conscious customers. It also offers commercial vans for service customers with its
Commercial Van/Truck Collection.42 Thus, Hertz uses a variety of demographics—gender,
age, income, interests—to identify customers who might want the Prestige, Green, and Adrenaline Collections, but it also applies psychological or behavioral factors, such as a need to
move possessions across town, to identify likely consumers of its commercial vans.
Targeting After a firm has identified the various market segments it might pursue, it evaluates each segment’s attractiveness and decides which to pursue using a process known as
target marketing or targeting. For example, Hertz realizes that its primary appeal for the
SUV/Minivan/4×4 collection centers on young families, so most of its marketing efforts for
this business are directed toward that group.
Soft drink manufacturers also divide their massive markets into submarkets or segments. Coca-Cola, for instance, makes several different types of Coke, including regular,
Coke II, and Cherry Coke. Among its diet colas, it targets Coke Zero Sugar to men and
Diet Coke to women because men prefer not to be associated with diets. It also markets
Sprite to those who don’t like dark colas, Vitaminwater and Minute Maid for more
health-conscious consumers, and Dasani bottled water for purists.
Positioning Finally, when the firm decides which segments to pursue, it must determine
how it wants to be positioned within those segments. Market positioning involves the process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with
competing products. Hertz positions itself as a quality car (and truck) rental company that
is the first choice for each of its target segments. In its marketing communications, it
stresses that customers will get peace of mind when they rent from Hertz, the market
leader in the car rental business, and be able to enjoy their journey (e.g., leisure consumers) and reduce travel time (e.g., business consumers).43
To segment the coffee-drinker market, Starbucks uses a variety of methods, including geography (e.g., college campuses versus shopping/business districts) and benefits
(e.g., drinkers of caffeinated versus decaffeinated products). After determining which
of those segments represent effective targets, Starbucks positions itself as a firm that
develops a variety of products that match the wants and needs of the different market
segments—espresso drinks, coffees, teas, bottled drinks, pastries, and cooler foods.
Hertz targets several markets. Its Adrenaline Collection (left) appeals
to single people and couples wanting to have fun, while its Prestige
Collection (right) appeals to its business customers and families who
prefer a luxurious ride.
(Left): Polina MB/Shutterstock; (right): Source: The Hertz Corporation
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 43
After identifying its target segments, a firm must evaluate each of its strategic opportunities. A method of examining which segments to pursue is described in the Growth
Strategies section later in the chapter. Firms typically are most successful when they focus
on opportunities that build on their strengths relative to those of their competition. In
Step 4 of the marketing plan, the firm implements its marketing mix and allocates resources
to different products and services.
Step 4: Implement Marketing Mix and Allocate Resources
When the firm has identified and evaluated different growth opportunities by performing an
STP analysis, the real action begins. It has decided what to do, how to do it, and how many
resources should be allocated to it. In the fourth step of the planning process, marketers
implement the actual marketing mix—product, price, place, and promotion—for each product
and service on the basis of what they believe their target markets will value. At the same
time, marketers make important decisions about how they will allocate their scarce resources
to their various products and services.
Product and Value Creation Products These products include services and constitute
the first of the four Ps. Because the key to the success of any marketing program is the creation of value, firms attempt to develop products and services that customers perceive as
valuable enough to buy. Dyson fans and fan heaters draw in and redirect surrounding air
without potentially dangerous or fast-spinning blades or visible heating elements. Although
more expensive than conventional fans and space heaters, these sculpturally beautiful appliances are perceived by consumers to be a valuable alternative to products that haven’t significantly changed since the early 1900s. Adding Value 2.3 highlights how Old Spice added
new products to its line to support its new positioning.
Price and Value Capture Recall that the second element of the marketing mix is price.
As part of the exchange process, a firm provides a product or a service, or some combination
thereof, and in return, it gets money. Value-based marketing requires that firms charge a
LO2-5 Outline the implementation of the marketing
mix as a means to
increase customer
value.
Dyson creates value with its innovative products (left). It can therefore charge significantly more than the price charged for
conventional fans (right).
(Left): Source: Dyson, Inc.; (right): Stockbyte/Getty Images
44 Section One ASSESSING THE MARKETPLACE
Adding Value 2.3 Repositioning Old Spiceiv
For young customers today, the image of Old Spice is much
different than it was for their parents or grandparents. Once
upon a time, Old Spice was a relatively safe, conventional
brand, with an innocuous scent that was unlikely to offend
anyone. Spouses and children felt safe giving a bottle of the
aftershave to their husband, father, or grandfather each year
around the holidays because there was simply nothing controversial about it. That’s a far cry from the strategy that Old
Spice has been embracing for the past decade or so. Through
diverse scents and a broad range of products, the modern iteration of the brand reflects the company’s dedicated efforts
to appeal to a wide audience while taking risks in its effort to
leverage the opportunities in the increasingly competitive
men’s personal care market.
The shift really started when Old Spice realized that competitors such as Axe were cutting deeply into its market space.
Especially among younger consumers, Axe seemed cooler and
less “dad-like.” After analyzing the environment carefully, Old
Spice decided to change its marketing strategy radically, hiring a new advertising agency and seeking to appeal more
strongly to men in their 20s who could not quite afford a designer cologne.
The initial advertisements were utterly ridiculous spoofs
on the idealistic image often portrayed in marketing for
personal care items. The men featured in the ads, such as
football player Isaiah Mustafa, are extremely physically fit,
and they perform clichéd, seemingly romantic activities, like
appearing shirtless and riding a horse on the beach. But
the scenario is tongue in cheek; Mustafa calls out “Hello
ladies,” repeatedly encourages them to keep looking at
him, and promises that even if
“your man” cannot look the same,
he could smell that way. Thus,
“your man” could be like the
handsome character appearing
in the commercial, offering up
romantic boat rides, handfuls of
diamonds, and “tickets to that
thing you love.”
With this targeting, Old Spice
appealed not just to the men who
might wear its aftershave but
also to the women who might be
buying it for them. Marketing
research shows that women frequently select and buy the personal care products that the men
in their households use. Thus, another series of advertisements
found a way to make Old Spice
cool to both teen boys and their
mothers, by poking gentle fun at
each side. On the company website, it even hosts a “School of
Swagger,” promising to help
moms and their sons get through
the difficulties of adolescence by addressing some of
the most frequently asked but embarrassing questions
about puberty in an upfront yet funny way. In this sense,
it goes beyond providing just products to offer an experiential service that its target customers deeply want
and need.
To expand this reach even further, Old Spice added new
products to its portfolio, including body wash, hairstyling
products, deodorant, and body spray. Across all these
types of products, it also developed various new scents—
some of which it introduced by pitting Mustafa against another physically fit, minimally dressed, handsome man,
actor Terry Crews. In marketing communications, the two
men compete to make their signature scents (Swagger for
Mustafa, Bearglove for Crews) seem more appealing to
both the men who might wear them and the women who
are likely to smell them.
Leveraging this playful image, Old Spice encourages the
spread of its marketing across various channels. To promote
its line of beard care products, for example, it makes four experts, the “Old Spice Bearded Quartet,” available to answer
questions on Twitter. But the four bearded men are dressed
like a barbershop quartet and sing their responses to users’
questions. To introduce another new scent option, Krakengard,
it posted an intricate stunt featuring an animatronic sea squid
on its website.
Thus, today’s Old Spice appears radically different from the
one that appeared on store shelves in the last century.
Grandpa might not like it as much, but his daughters and their
sons are loving it.
As part of its repositioning strategy, Old Spice used football player Isaiah Mustafa in
clichéd, tongue-in-cheek, seemingly romantic or macho activities like playing chess in
a hunting lodge with a stuffed lion.
Source: Procter & Gamble
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 45
price that customers perceive as giving them a good value
for the product they receive. Clearly, it is important for a
firm to have a clear focus in terms of what products to
sell, where to buy them, and what methods to use in selling them. But pricing is the only activity that actually
brings in money and therefore influences revenues. If a
price is set too high, it will not generate much volume. If a
price is set too low, it may result in lower-than-optimal
margins and profits. Therefore, price should be based on
the value that the customer perceives. Dyson fans can
retail for $150 or more; conventional fans retail for around
$25. Customers can decide what they want from their fan
and choose the one at the price they prefer.
Place and Value Delivery For the third P, place, after
it has created value through a product and/or service, the
firm must be able to make the product or service readily
accessible when and where the customer wants it. Dyson
therefore features fans prominently on its website, but also
makes sure to place them on Amazon and in Bed Bath &
Beyond stores. In these locations, consumers previously
found other Dyson products, and they likely would look
for fans there too.
Promotion and Value Communication Integrated
marketing communications (IMC) represents the fourth
P, promotion. It encompasses a variety of communication disciplines—advertising,
personal selling, sales promotion, public relations, direct marketing, and online marketing including social media—in combination to provide clarity, consistency, and maximum communicative impact.44 Using the various disciplines of its IMC program,
marketers communicate a value proposition, which is the unique value that a product or
service provides to its customers and how it is better than and different from those of
competitors.
To increase its exposure, Dyson offers promotions for its products not only on its website but also on promotion websites such as coupons.com and Groupon. That is, it makes a
select number of products available on several promotion channels at a discounted price to
encourage people to try the innovations.45 Wayfair uses high-tech communication tools
to connect with consumers and facilitate sales in a variety of channels, as highlighted in
Social & Mobile Marketing 2.1.
Step 5: Evaluate Performance Using Marketing Metrics
The final step in the planning process includes evaluating the results of the strategy and
implementation program using marketing metrics. A metric is a measuring system that
quantifies a trend, dynamic, or characteristic. Metrics are used to explain why things
happened and also project the future. They make it possible to compare results across
regions, strategic business units (SBUs), product lines, and time periods. The firm can
determine why it achieved or did not achieve its performance goals with the help of these
metrics. Understanding the causes of the performance, regardless of whether that performance exceeded, met, or fell below established goals, enables firms to make appropriate
adjustments. Procter & Gamble has started pressuring social media companies such as
Facebook to provide it with more information so that it can assess the effectiveness of the
ads it pays to place on different platforms. For example, by gathering data about how long
the average consumer views an ad and how often the same person saw multiple ads, Procter
& Gamble is able to make more informed decisions about where to invest its advertising
dollars.46 Further insights about how consumers are affected by advertisements while
Dyson promotes its products on its own website and promotional
websites like Groupon.
dennizn/Shutterstock
46 Section One ASSESSING THE MARKETPLACE
scrolling on their phone or computer (as described in Marketing Analytics 2.1) might provide even more informative decision metrics.
Typically, managers begin by reviewing the implementation programs, and their analysis
may indicate that the strategy (or even the mission statement) needs to be reconsidered.
Problems can arise both when firms successfully implement poor strategies and when they
poorly implement good strategies.
Who Is Accountable for Performance? At each level of an organization, the business
unit and its manager should be held accountable only for the revenues, expenses, and profits
Making Technology Personal:
How Wayfair Is Leveraging High-Tech
Tools to Connect with Consumersv Social & Mobile Marketing 2.1
The furniture retailer Wayfair was among the first e-commerce
sites in its industry, and its first-mover status continues to
inform the ways that it expands its value offerings to appeal
to online shoppers. Rather than play around with augmented
reality or virtual bots just because it can, Wayfair seeks to implement cutting-edge technology to enable its customers to
find value and personalized assistance as they seek ways to
make their residences into true homes.
On its own app, the company offers “virtual concierge” services, by allowing shoppers to play around with available products, moving them on a virtual backdrop to experiment with
how they might look if put together in their own living room. If
they are not quite to the point of picking out particular furniture items, they can select a decorating style to get inspiration.
Or they can upload a picture of a piece they’ve seen elsewhere and loved, and Wayfair will search its inventory to find
something similar.
Beyond its own app, Wayfair maintains a strong presence
on social media and readily facilitates purchases. On Instagram,
for example, it posts appealing arrangements of furniture and
accessories in a room. When browsers click on an item, the
simple move takes them directly to a purchase page. That page
also lists the other, coordinating items at the bottom, so if shoppers want to get the entire look, it is easy for them to do so.
On Facebook, the company’s goal is more focused on expanding its reach, so the videos it posts are often silly and fun.
Rather than conventional lamps or tables, these videos tend to
feature Wayfair’s more innovative furniture offerings, like
Murphy beds and hammocks. Aligning the unconventional furniture with quirky, entertaining videos helps Wayfair establish its
brand image in a way that appeals to many social media users.
These easy-access formats resonate especially with
Wayfair’s intended audience. Because it sells modern furniture at a relatively low price point, its main consumers are
younger shoppers, often seeking to furnish their first homes.
In addition, it does not maintain any physical stores, so it has
to find ways to reach these consumers through channels that
they use regularly.
Wayfair’s “virtual concierge” services on its app allows shoppers to play around with available products, moving them on a
virtual backdrop to experiment with how they might look if put together in their own room. Or they can upload a picture of a
piece they’ve seen elsewhere and loved, and Wayfair will search its inventory to find something similar.
Source: Wayfair LLC
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 47
that they can control. Thus, expenses that affect several levels of the organization (such as
the labor and capital expenses associated with operating a corporate headquarters)
shouldn’t be arbitrarily assigned to lower levels. In the case of a store, for example, it may be
appropriate to evaluate performance objectives based on sales, sales associate productivity,
and energy costs. If the corporate office lowers prices to get rid of merchandise and therefore profits suffer, then it’s not fair to assess a store manager’s performance based on the
resulting decline in store profit.
Performance evaluations are used to pinpoint problem areas. Reasons performance
may be above or below planned levels must be examined. If a manager’s performance is
below planned levels, was it because the sales force didn’t do an adequate job, because the
economy took a downward turn, because competition successfully implemented a new
strategy, or because the managers involved in setting the objectives aren’t very good at
making estimates? The manager should be held accountable only in the case of the inadequate sales force job or setting inappropriate forecasts. When the fault is difficult to
Making a First Impression in Less Than the First
Second: New Evidence about Mobile Marketingvi
We know that the speed of mobile is fast, but recent evidence
reinforces just how quickly it moves when it comes to obtaining and maintaining viewers’ attention to marketing messages.
In a study sponsored by a trade group of mobile marketers,
the results suggest that people see and react to mobile advertising within 400 milliseconds, or less than half a second. The
study used eye-tracking tools and measures of viewers’ reflexive
responses, gauged with electroencephalography (EEG) trackers.
In addition to mobile advertising, it offered comparative analyses
of advertisements viewed on desktop devices, for which reaction times were much longer—approximately 3 seconds.
Another study that relies on cutting-edge eye-tracking technology also specifies how mobile phone usage affects shopping habits. In particular, shoppers who use their phones while
grocery shopping end up spending more time in the store.
They also devote more attention to products on shelves. In
turn, customers who use their mobile phones while shopping
in supermarkets tend to spend more money than customers
who shop without this distraction.
Some of these differences may seem small, but for advertisers, they have massive implications. The first study makes
clear that they have very little time to evoke a positive emotional reaction, meaning that they need to optimize their advertising for mobile channels. A complex picture or graphic
that takes several seconds to load probably is never going to
be seen by mobile users who just click away if the message is
not immediately visible. These findings also appear informative
for social media marketing, in which channels viewers similarly
move quickly, on to other pages, if an image does not catch
their attention immediately.
In turn, advertisers might adopt some proven methods for
evoking rapid responses. For example, advertisements that
highlight human faces, looking straight at the viewer, tend to
stop people from scrolling through multiple messages. In addition, marketers can increase the use of color and contrasting
tones to facilitate longer viewer attention. Finding a way to
signal complex emotions in a split second is likely to evoke
greater attention too. Finally, advertisers need to insist that
their messages are easily viewable, a criterion that usually
means a static advertisement should appear at least halfway
on the screen for at least 1 second.
For retailers, the implications are somewhat different.
Rather than worrying that mobile users are getting distracted
from their shopping task and thus not buying as much, they
can rest assured that expanded uses of mobile devices actually might increase their sales.
Ultimately then, instead of determining whether users
prefer a 30-second or 15-second advertisement, mobile and
social marketers might need to figure out how to develop
less than 1 second advertisements. In the meantime, retailers should be looking for ways to get shoppers to stay on
their phones and in contact with them for their entire shopping trip.
Potential customers spend less than a half second viewing
marketing messages on mobile phones. But grocery shoppers using mobile phones spend more time in the store and
more money than those who don’t. Marketers must therefore get their messages across quickly to accrue the most
benefit from mobile marketing.
FG Trade/E+/Getty Images
Marketing Analytics 2.1
48 Section One ASSESSING THE MARKETPLACE
assign, the company faces a serious challenge, as when Volkswagen was forced to respond
to the scandal it created by falsifying emissions data for the diesel engines in its cars. In
Volkswagen’s case, executives attempted to blame software engineers operating without
the knowledge of senior managers or executives.47 Ultimately, evidence emerged that the
deception was more widespread, and the negative press had notable and negative performance implications. In this case, Volkswagen executives who made the choice to engage
in the unethical behaviors can and should be held responsible for the ultimate damage
done to the firm’s performance.
Even if the fault lies outside the firm, such as due to broader consumer trends, managers still have some options and thus should use performance metrics to define their
responses. The growing ages of the Baby Boomer generation, and the lack of interest in
motorcycles among many Millennials, is not something that Harley-Davidson can control
completely. But when performance metrics predicted a continued decline in motorcycle
sales, both across the industry and for Harley-Davidson in particular, the company got
proactive in its responses. In particular, it leveraged research insights showing that interest in Asia has remained more constant than the fluctuating levels in its traditional U.S.
market, so it moved some motorcycle production operations to Thailand. In so doing, it
eliminated the high cost of tariffs and shipping, making its offerings even more appealing
to receptive Asian markets.48 The company is also introducing an electric motorcycle
in an attempt to recapture some of the market it has lost and attract new, young, ecoconscious customers.49
In remarkable cases such as this, marketing managers must ask themselves several
relevant questions: How quickly were plans adjusted? How rapidly and appropriately
were pricing and promotional policies modified? In short, did I react to salvage an
adverse situation, or did my reactions worsen the situation?
Performance Objectives, Marketing Analytics, and Metrics Many factors contribute to a firm’s overall performance, which makes it hard to find a single metric to evaluate
performance.50 One approach is to compare a firm’s performance over time or to competing
firms, using common financial metrics such as sales and profits. Another method of assessing performance is to view the firm’s products or services as a portfolio. Depending on the
firm’s relative performance, the profits from some products or services are used to fuel
growth for others.
Although Amazon already has multiple metrics in place to reveal both its own performance and that of sellers who rely on it to reach a vast audience, it also continues to
expand the options. The “New-to-Brand” metrics appeal particularly to sellers on the platform that pay for their sponsored posts to appear in the
search results when a shopper seeks out a product they
sell while shopping on Amazon.51 With these new metrics, sellers can identify precisely the number of purchases that each advertisement generated. In turn, they
can calculate the exact cost per customer of each search
engine tactic they apply. To make the process even easier,
Amazon has designed tools that it offers to advertisers to
help them optimize their campaigns according to the
information they have learned from these new, varied
metrics.
Financial Performance Metrics Some commonly
used metrics to assess performance include revenues, or
sales, and profits. For instance, sales are a global measure
of a firm’s activity level. For example, a manager could
easily increase sales by lowering prices, but the profit realized on that merchandise (gross margin) would suffer as a
result. An attempt to maximize one metric may therefore
lower another. Thus, managers must understand how their
Harley-Davidson is introducing an electric motorcycle to recapture
some of the market it has lost and attract new, young, eco-conscious
customers.
MaggioPH/Shutterstock
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 49
actions affect multiple performance metrics. It’s usually unwise to use only one metric
because it rarely tells the whole story.
In addition to assessing the absolute level of sales and profits, a firm may wish to
measure the relative level of sales and profits. For example, a relative metric of sales or
profits is its increase or decrease over the prior year. In addition, a firm may compare its
growth in sales or profits relative to other benchmark companies (e.g., Coke may compare
itself to Pepsi).
The metrics used to evaluate a firm vary depending on (1) the level of the organization
at which the decision is made and (2) the resources the manager controls. For example,
although the top executives of a firm have control over all of the firm’s resources and
resulting expenses, a regional sales manager has control over only the sales and expenses
generated by his or her salespeople.
Let’s look at Pepsi’s sales revenue and profits (after taxes) and compare them with
those of Coca-Cola (Exhibit 2.5).
Portfolio Analysis In portfolio analysis, management evaluates the firm’s various products and businesses—its “portfolio”—and allocates resources according to which products
are expected to be the most profitable for the firm in the future. Portfolio analysis is typically performed at the strategic business unit (SBU) or product line level of the firm, though
managers also can use it to analyze brands or even individual items. An SBU is a division of
the firm itself that can be managed and operated somewhat independently from other divisions and may have a different mission or objectives. For example, Goodyear is one of the
largest tire firms in the world, selling its products on six continents and with sales of approximately $14.7 billion. Its four SBUs are organized by geography: North American; Europe,
Middle East, and African; Latin American; and Asia-Pacific.52
A product line, in contrast, is a group of products that consumers may use together or
perceive as similar in some way. One line of product for Goodyear could be car, van, sportutility vehicle (SUV), and light truck tires; another line could be high-performance tires or
aviation tires.
One of the most popular portfolio analysis methods, developed by the Boston Consulting Group (BCG), requires that firms classify all their products or services into a two-by-two
matrix, as depicted in Exhibit 2.6.
The circles represent brands, and their sizes are in direct proportion to the brands’
annual sales. The horizontal axis represents the relative market share. In general, market share
LO2-6 Summarize portfolio
analysis and its use to
evaluate marketing
performance.
Source: Macrotrends.net
EXHIBIT 2.5 Performance Metrics: Coke vs. Pepsi
Net revenue Net income Net revenue Net income
Coke
34.14
2018 2019 2018 2019 2018 2019 2018 2019
37.266
Pepsi
Dollars (in billions)
0
10
–10
20
30
40
60
50
70
80
8.920 6.434
64.661 67.161
12.515
7.314
50 Section One ASSESSING THE MARKETPLACE
is the percentage of a market accounted for by a specific
entity53 and is used to establish the product’s strength in a
particular market. It is usually discussed in units, revenue,
or sales. A special type of market share metric, relative
market share, is used in this application because it
provides managers with a product’s relative strength compared with that of the largest firm in the industry.54 The
vertical axis is the market growth rate, or the annual rate
of growth of the specific market in which the product competes. Market growth rate thus measures how attractive a
particular market is. Each quadrant has been named on
the basis of the amount of resources it generates for and
requires from the firm.
Stars Stars (upper left quadrant) occur in high-growth
markets and are high market share products. That is, stars
often require a heavy resource investment in such things
as promotions and new production facilities to fuel their
rapid growth. As their market growth slows, stars will
migrate from heavy users of resources to heavy generators
of resources and become cash cows.
Cash Cows Cash cows (lower left quadrant) are in lowgrowth markets but are high market share products.
Because these products have already received heavy investments to develop their high market share, they have excess
resources that can be spun off to those products that need
it. For example, the firm may decide to use the excess
resources generated by Brand C to fund products in the
question mark quadrant.
Question Marks Question marks (upper right quadrant)
appear in high-growth markets but have relatively low market shares; thus, they are often the most managerially
intensive products in that they require significant
resources to maintain and potentially increase their market share. Managers must decide whether to infuse question marks with resources generated
by the cash cows, so that they can become stars, or withdraw resources and eventually phase
out the products. Brand A, for instance, is currently a question mark, but by infusing it with
resources, the firm hopes to turn it into a star.
Dogs Dogs (lower right quadrant) are in low-growth markets and have relatively low market
shares. Although they may generate enough resources to sustain themselves, dogs are not
destined for “stardom” and should be phased out unless they are needed to complement or
boost the sales of another product or for competitive purposes. In the case depicted in
Exhibit 2.6, the company has decided to stop making Brand B.
Now let’s look at Apple and some of its products. The four that we will focus our attention on are the Apple Watch, iPad, iPod, and iPhone. Let’s consider each of these products
and place them into the BCG matrix based on the data.
The Apple Watch is Apple’s emerging star, dominating the growing wearables market.
In the first quarter of 2019, 54 percent of all smartwatches sold were Apple Watches. Many
people around the world already use other Apple products, so the market also is primed for
even more sales.55
Over the years, the iPad has become a cash cow for Apple. Despite a recent dip in
worldwide tablet sales, the iPad continues to dominate, accounting for 38.1 percent of the
global tablet market. Since the iPad was introduced in 2010, Apple has sold 360 million
units, and today, iPad sales are relatively stable, at around 10 million units per quarter. One
factor ensuring the continuing stability of iPad sales, despite a slowing market, is their use
Goodyear, one of the largest tire firms in the world, organizes its
strategic business units by geography. This ad for high-performance
tires, one of Goodyear’s many product lines, was designed for its
North American SBU.
Source: The Goodyear Tire & Rubber Company
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 51
by large companies. Companies purchase the tablets to facilitate customer interactions in
stores, restaurants, and other retail settings—and even for use by airline pilots.56
Once a reliable cash cow, the iPod has now gone the way of the dog. Despite its
dominance in the portable music player market, portable music players no longer appeal
to many consumers because they simply use their phones to listen, and smartphone ownership is widespread. Many iPod styles, such as the Nano and the Shuffle, have been discontinued. In 2014, the last year Apple recorded iPod sales as its own category, they only
made up 1 percent of Apple’s total revenue. A new launch, positioning the iPod Touch as
a product primarily to support games and
other apps that do not require cellular data,
may be a last-ditch attempt to find a sustainable market.57
Finally, we have the iPhone, long the star
of Apple’s line. Debuting in 2007, the iPhone
has defined the growth of Apple as a company—
Apple has sold roughly a trillion dollars’
worth of iPhones. Despite its importance to
the company, iPhone unit sales have been
declining since 2015. Starting in 2018, revenue from these sales also has been declining.
Most consumers already own a smartphone,
and rising prices and competition may be
dissuading people from purchasing a new
iPhone. It thus constitutes the question mark,
prompting us to ask, Where on the BCG
matrix would you classify the iPhone? Can it
In which Boston Consulting Group quadrant do these products fit?
Krisda/Shutterstock
Cash cows Dogs
Stars Question marks
HIGH Relative market share LOW
HIGH
LOW Market growth rate
Photos (top left): DenPhotos/Shutterstock; (top right): Kicking Studio/Shutterstock; (bottom left): Sushiman/
Shutterstock; (bottom right): David Caudery/Tap Magazine/Getty Images
EXHIBIT 2.6 Boston Consulting Group Matrix
52 Section One ASSESSING THE MARKETPLACE
be considered a cash cow despite slowing sales? Is this once bright star in danger of becoming a dog?58
Although quite useful for conceptualizing the relative performance of products or
services and using this information to allocate resources, the BCG approach, and others
like it, is often difficult to implement in practice. In particular, it is difficult to measure
both relative market share and industry growth. Furthermore, other measures easily could
serve as substitutes to represent a product’s competitive position and the market’s relative
attractiveness. Another issue for marketers is the potential self-fulfilling prophecy of placing a product or service into a quadrant. Whether it is classified as a star or a question
mark has profound implications on how it is treated and supported within the firm. Question
marks require more marketing and production support.
Strategic Planning Is Not Sequential
The planning process in Exhibit 2.2 suggests that managers follow a set sequence when
they make strategic decisions. Namely, after they’ve defined the business mission, they
perform the situation analysis, identify strategic opportunities, evaluate alternatives, set
objectives, allocate resources, develop the implementation plan, and, finally, evaluate
their performance and make adjustments. But actual planning processes can move back
and forth among these steps. For example, a situation analysis may uncover a logical alternative that perhaps was not included in the mission statement, which would mean that the
mission statement would need to be revised. The development of the implementation plan
also might reveal that insufficient resources have been allocated to a particular product for
it to achieve its objective. In that case, the firm would need to either change the objective
or increase the resources; alternatively, the marketer might consider not investing in the
product at all.
Now that we have gone through the steps of the marketing plan, let’s look at some
growth strategies that have been responsible for making many marketing firms successful.
PROGRESS CHECK
1. What are the five steps in creating a marketing plan?
2. What tool helps a marketer conduct a situation analysis?
3. What is STP?
4. What do the four quadrants of the portfolio analysis represent?
GROWTH STRATEGIES
Firms consider pursuing various market segments as part of their overall growth strategies,
which may include the four major strategies in Exhibit 2.7. The rows distinguish those
opportunities a firm possesses in its current markets from those it has in new markets,
whereas the columns distinguish between the firm’s current marketing offering and that of a
new opportunity. Let’s consider each of them in detail.
Market Penetration
A market penetration strategy employs the existing marketing mix and focuses the firm’s
efforts on existing customers. Such a growth strategy might be achieved by attracting new
consumers to the firm’s current target market or encouraging current customers to patronize the firm more often or buy more merchandise on each visit. A market penetration strategy generally requires greater marketing efforts, such as increased advertising and additional
sales and promotions, or intensified distribution efforts in geographic areas in which the
product or service already is sold.
LO2-7 Describe how firms
grow their business.
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 53
To further penetrate its current customer base, the
superhero entertainment giant Marvel has expanded
its movie offerings. In collaboration with several production companies, as well as talented directors and
well-known star actors, Marvel has helped bring the
X-Men, Spider-Man, Iron Man, and other popular
characters to the big screen, where they confront some
relevant, modern-day topics such as discrimination,
environmental destruction, and international wars—
before ultimately kicking tail and saving the city. These
films have grossed massive profits.59 Marvel has further increased its market penetration by expanding the
distribution of its films. Today, Marvel movies can be
seen in theaters, accessed on Xfinity, and viewed on
DVDs available in discount stores, grocery stores, and
a host of other stores, including book and comic stores.
Market Development
A market development strategy employs the existing marketing offering to reach new
market segments, whether domestic or international. Marvel pursues such a market
development strategy when it enhances the viewing of its movies by expanding into
more global markets. Thus, the release of Avengers: Endgame proved to be one of the
biggest movies of all time, grossing more than $2 billion worldwide, over half of which
were international sales.60 These phenomenal results highlight the importance of
expanding into new market segments.
Product Development
The third growth strategy option, a product development strategy, offers a new product or
service to a firm’s current target market. For example, Marvel was among the first content
providers to launch dedicated series on Netflix, such as Jessica Jones, The Defenders, Iron Fist,
and Luke Cage.
61 It quickly determined that superhero fans loved the idea that, while waiting
for the next big movie installment, they could binge-watch an entire season in one sitting.
Rather than keeping all those appealing products on Netflix, it thus decided to create a new
channel for getting new offerings to consumers. Marvel is owned by Disney, and the Disney+
channel features movies such as Black Widow (alongside other familiar Disney brand names,
like The Mandalorian, a Star Wars franchise62). Black Widow advances Marvel lore beyond
what is available from the movies and graphic novels, ensuring that consumers who subscribe
to the Disney+ channel get truly new products.63 By developing a series designed for this
format, Marvel can connect with its customers in a new and important way.
Diversification
A diversification strategy, the last of the growth strategies from Exhibit 2.7, introduces a new
product or service to a market segment that currently is not served. Diversification opportunities may be related or unrelated. In a related diversification opportunity, the current target market and/or marketing mix shares something in common with the new opportunity.64 In other
words, the firm might be able to purchase from existing vendors, use the same distribution and/
or management information system, or advertise in the same newspapers to target markets that
are similar to their current consumers. Marvel has pursued related diversification with its home
décor, for example. Collectibles and T-shirts have long been a staple of the comic market, but
Marvel also has diversified its offerings, expanding to include lampshades and throw pillows.65
In contrast, in an unrelated diversification, the new business lacks any common elements
with the present business. Unrelated diversifications do not capitalize on core strengths associated either with markets or with products. Thus, they would be viewed as very risky. For
instance, if Marvel ventured into the child day care service industry, it would be an unrelated
diversification because it is so different from its core business and therefore very risky.
Market penetration
Current
Current
Markets
New
Products and services
Product development
New
Market development Diversification
EXHIBIT 2.7 Markets/Products and Services Strategies
54 Section One ASSESSING THE MARKETPLACE
Marvel pursued a market development strategy by releasing
Avengers: Endgame globally.
Marvel Studios/Everett Collection Inc/Alamy Stock Photo
The movie Black Widow is a product development strategy
that brings a new product to Disney’s current market of
Marvel fans.
BFA/Alamy Stock Photo
PROGRESS CHECK
1. What are the four growth strategies?
2. What type of strategy is growing the business from existing customers?
3. Which strategy is the riskiest?
LO2-1 Define a marketing strategy.
A marketing strategy identifies (1) a firm’s target
market(s), (2) a related marketing mix (four Ps), and
(3) the bases on which the firm plans to build a sustainable competitive advantage. Firms use four macro
strategies to build their sustainable competitive advantage: Customer excellence focuses on retaining loyal
customers and excellent customer service. Operational
excellence is achieved through efficient operations and
excellent supply chain and human resource management. Product excellence entails having products with
high perceived value and effective branding and positioning. Finally, locational excellence entails having a
good physical location and Internet presence.
LO2-2 Describe the elements of a marketing plan.
A marketing plan is composed of an analysis of the
current marketing situation, its objectives, the
strategy for the four Ps, and appropriate financial
statements. A marketing plan represents the output of a three-phase process: planning, implementation, and control. The planning phase requires
Reviewing Learning Objectives bchsu_tt
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 55
that managers define the firm’s mission and vision
and assess the firm’s current situation. It helps answer the questions “What business are we in now,
and what do we intend to be in the future?” In the
second phase, implementation, the firm specifies,
in more operational terms, how it plans to implement its mission and vision. Specifically, to which
customer groups does it wish to direct its marketing efforts, and how does it use its marketing mix
to provide good value? Finally, in the control
phase, the firm must evaluate its performance using appropriate metrics to determine what worked,
what didn’t, and how performance can be improved in the future.
LO2-3 Analyze a marketing situation using SWOT analyses.
SWOT stands for strengths, weaknesses, opportunities, and threats. A SWOT analysis occurs during the
second step in the strategic planning process, the
situation analysis. By analyzing what the firm is
good at (its strengths), where it could improve (its
weaknesses), where in the marketplace it might excel
(its opportunities), and what is happening in the
marketplace that could harm the firm (its threats),
managers can assess their firm’s situation accurately
and plan its strategy accordingly.
LO2-4 Describe how a firm chooses which consumer group(s)
to pursue with its marketing efforts.
Once a firm identifies different marketing opportunities, it must determine which are the best to pursue. To accomplish this task, marketers go through
a segmentation, targeting, and positioning (STP)
process. Firms segment various markets by dividing
the total market into those groups of customers
with different needs, wants, or characteristics who
therefore might appreciate products or services
geared especially toward them. After identifying the
different segments, the firm goes after, or targets,
certain groups on the basis of the firm’s perceived
ability to satisfy the needs of those groups better
than competitors, and do so profitably. To complete the STP process, firms position their products
or services according to the marketing mix variables so that target customers have a clear, distinctive, and desirable understanding of what the
product or service does or represents relative to
competing products or services.
LO2-5 Outline the implementation of the marketing mix as a
means to increase customer value.
The marketing mix consists of the four Ps—product,
price, place, and promotion—and each P contributes
to customer value. To provide value, the firm must
offer a mix of products and services at prices its
target markets will view as indicating good value.
Thus, firms make trade-offs between the first two Ps,
product and price, to give customers the best value.
The third P, place, adds value by getting the appropriate products and services to customers when they
want them and in the quantities they need. The last
P, promotion, informs customers and helps them
form a positive image about the firm and its products and services.
LO2-6 Summarize portfolio analysis and its use to evaluate
marketing performance.
Portfolio analysis is a management tool used to
evaluate the firm’s various products and
businesses—its “portfolio”—and allocate resources
according to which products are expected to be the
most profitable for the firm in the future. A popular portfolio analysis tool developed by the Boston
Consulting Group classifies all products into four
categories. The first, stars, are in high-growth markets and have high market shares. The second, cash
cows, are in low-growth markets but have high market share. These products generate excess resources
that can be spun off to products that need them.
The third category, question marks, are in highgrowth markets but have relatively low market
shares. These products often utilize the excess resources generated by the cash cows. The final category, dogs, are in low-growth markets and have
relatively low market shares. These products are
often phased out.
LO2-7 Describe how firms grow their business.
Firms use four basic growth strategies: market
penetration, market development, product development, and diversification. A market penetration
strategy directs the firm’s efforts toward existing
customers and uses the present marketing mix. In
other words, it attempts to get current customers
to buy more. In a market development strategy,
the firm uses its current marketing mix to appeal
to new market segments, as might occur in international expansion. A product development
growth strategy involves offering a new product or
service to the firm’s current target market. Finally,
a diversification strategy takes place when a firm
introduces a new product or service to a new customer segment. Sometimes a diversification strategy relates to the firm’s current business, such as
when a women’s clothing manufacturer starts
making and selling men’s clothes, but a riskier
strategy is when a firm diversifies into a completely unrelated business.
56 Section One ASSESSING THE MARKETPLACE
Key Terms
• control phase, 36
• customer excellence, 31
• diversification strategy, 53
• implementation phase, 36
• integrated marketing communications
(IMC), 45
• locational excellence, 35
• market development strategy, 52
• market growth rate, 50
• market penetration strategy, 52
• market positioning, 42
• market segment, 41
• market segmentation, 41
• market share, 49
• marketing plan, 35
• marketing strategy, 30
• metric, 45
• mission statement, 37
• operational excellence, 33
• planning phase, 36
• product development
strategy, 53
• product excellence, 33
• product line, 49
• related diversification, 53
• relative market share, 50
• segmentation, targeting, and
positioning (STP), 40
• situation analysis, 38
• strategic business unit
(SBU), 49
• sustainable competitive
advantage, 30
• SWOT analysis, 38
• target marketing/targeting, 42
• unrelated diversification, 53
Marketing Digitally
1. The mission statement for The Estée Lauder Companies
is “‘Bringing the best to everyone we touch’. By ‘The best’,
we mean the best products, the best people and the best
ideas. These three pillars have been the hallmarks of our
Company since it was founded by Mrs. Estée Lauder in
1946. They remain the foundation upon which we continue to build our success today.” Harley-Davidson, Inc.’s
mission statement is more straightforward: “We fulfill
dreams through the experience of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and
services in selected market segments.” (Both statements
were taken from www.missionstatements.com
/fortune_500_mission_statements.html.) These different
perspectives also reflect the quite different positioning
adopted by each company. Visit the websites of each manufacturer and review the descriptions of the company, its
mission, and its values. Do you believe these two disparate mission statements reflect what the firms do and
how they are portrayed in the media? Justify your answer.
2. Price comparison sites such as expedia.com and orbitz
.com have been created for a variety of products and services. These sites allow consumers to see the prices from
a variety of vendors and let them choose the lowest-priced
option without visiting different websites. There are even
metasearch websites such as kayak.com, which aggregates
results from a variety of price comparison sites into one
search. What are the benefits of these sites to travel service providers? What are the benefits to consumers?
3. Black and Decker (www.blackanddecker.com) and
DeWalt (www.dewalt.com) are owned by the same parent
company, and both sell similar products. Visit each of
their websites and identify what markets each brand
targets. Next, discuss how the two companies use the marketing mix differently to target these unique target markets.
1. How have PepsiCo and Coca-Cola created sustainable
competitive advantages for themselves?
2. Using your school library or Google, locate a SWOT
analysis for a brand you currently use. For each section,
list an additional item that was not part of the initial
analysis and discuss why you included this item.
3. How does Coca-Cola segment its market? Describe the
primary target markets for Coca-Cola. How does it position its various offerings so that it appeals to these different target markets?
4. How does your university add value to students through
the implementation of the four Ps?
5. Dyson successfully sells its fans and heaters for $150 to
$400, whereas most conventional fans sell for around
$25. Explain the value it creates and how this affects the
price it can charge.
6. Of the four growth strategies described in the chapter, which
is the riskiest? Which is the easiest to implement? Why?
7. Choose three companies. You believe the first builds customer value through product excellence, the second
through operational excellence, and the third through
customer excellence. Justify your answer.
8. You are in the job market and have received offers from
three very different firms. Develop a marketing plan to
help market yourself to prospective employers.
Marketing Applications
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 57
1. The four fundamental growth strategies help firms identify
growth opportunities in the marketplace. The strategies
are based on two dimensions: new and current markets,
and new and existing products and services. For example,
market penetration is the strategy where the firm attempts
to grow by having its existing market consume more of its
existing products. On the other hand, the growth strategy
that involves the firm attempting to grow by attracting a
new market to its existing products is called what?
a. Product development
b. Market development
c. Diversification
d. Market penetration
e. Product penetration
2. Markets must be segmented for any marketing strategy to
be effective. This is because from the identified segments, the firm will choose one or more target markets.
The choice of target market will then determine how
which of these concepts are designed?
a. Four Ps (product, price, place, promotion)
b. SWOT analysis (strengths, weaknesses,
opportunities, threats)
c. STP (segmentation, targeting, positioning)
d. GM (gross margin)
e. SBU (strategic business unit)
(Answers to these two questions can be found in the Quiz
Yourself Answer Key section.)
Quiz Yourself
THE COFFEE WARS
In the coffee and breakfast foods market, Starbucks vigorously competes with the likes of
Dunkin’ (formerly Dunkin’ Donuts) and, more recently, McDonald’s. Independent coffeehouses and smaller regional chains, seen by many as more hip and less commercial, also
continually nip at Starbucks’s heels. However, the “coffee war” between Starbucks and
Dunkin’ is particularly fierce in the areas in which they compete head-to-head, even though
each chain has its own geographic strongholds—Dunkin’ in the East and Starbucks in the
West.66 Part of the reason for this infamous battle might be the dominance of these two
brands: Together, Starbucks and Dunkin’ control well over half of the coffee shop market,
worth $45.4 billion, in the United States.67 Moreover, halfway through 2019, Dunkin’ shares
had risen 25 percent, while Starbucks shares had risen 29 percent, for the year to date.68
Starbucks’ ubiquitous stores—from long-standing locations in U.S. cities and towns to
international expansion into a vast range of new nations—are easy to locate and visit. A recent count showed that the chain maintains more than 24,000 stores, spanning 75 countries.69
With its familiar siren logo, Starbucks guarantees that for the vast majority of buyers, an
addictive Salted Caramel Mocha or just a great cup of black coffee is convenient to find and
very familiar.
There are plenty of jokes about how Starbucks manages to charge upward of $5 for a
jolt of caffeine, but a quick glance at its marketing methods and strategies helps explain why
it can do so. The products it sells are appealing to customers and fulfill their needs: They
taste good, are available readily and conveniently, and offer the benefit of helping them
wake up to start their day (or stay awake for a long night of studying). Thus, the exchange of
money for coffee—or tea or juice or yogurt or a nice pastry—is a good value for consumers
despite the relatively high cost.
Starbucks also connects with fans through social marketing channels, including its popular My Starbucks Idea site. The site is an innovative approach to developing new products.
Customers share ideas about everything “Starbucks,” from store designs to new drink recipes. They can also join one of the many discussions in the customer forums. The site connects customers to its Twitter and Facebook sites too, and it links users to its mobile apps.
New capabilities available through the apps allow consumers to order their preferred beverage in advance, pay for their drinks or other products, and then pop into the store to grab
their purchases without ever having to wait in line.
Chapter Case Study ®
58 Section One ASSESSING THE MARKETPLACE
When it comes to Starbucks’s competition with Dunkin’, history shows that the two
early morning giants actually had coexisted nicely for many years: Dunkin’ Donuts made the
donuts, and Starbucks brewed the coffee. Starting in 2000, though, Dunkin’ slowly started
encroaching on the upscale coffee market with the Dunkaccino. It also joined the “espresso
revolution” in 2003 before formally declaring in 2006 its explicit intent to enter a head-tohead competition with Starbucks.
Along with expanding its menu to feature specialty espresso drinks, Dunkin’ launched
a smartphone app and rewards program that compete directly with Starbucks’s widely popular version. The Dunkin’ rewards program, DD Perks, has begun to allow consumers to accrue rewards without having to pay through the app, which means it grants more people
access to the loyalty program and increases the chances that they become loyal customers.70
Although Dunkin’ still trails Starbucks as a global company—with only 11,300 stores in
36 countries—it uses this relatively small size and regional feel strategically, leveraging these
attributes to adjust flexibly and integrate itself with local communities.71 Accordingly, it has
ranked tops in the market for customer loyalty since 2007.72
This focus on loyalty also resonates with the company’s chosen sponsorship
efforts. It lends its support to professional sports teams with strong local and national
followings, including all the major league Boston-area teams (Red Sox, Patriots, Celtics,
and Bruins), the Dallas Cowboys, New York’s Yankees and Mets, and the Tampa Bay
Rays. Expanding on the strategy, both abroad and to less famous leagues, Dunkin’ partners with the Liverpool Football Club and the National Women’s Hockey League.
Through these partnerships with sports teams, Dunkin’ encourages consumers to interact more closely with it, such as inviting fans to purchase $1 coffees after their team wins
a big game.73
The competition between these two brands is well established and likely to continue,
especially as Dunkin’ continues to move away from being exclusively a donut shop and
toward becoming a more coffee-centered business. As big new competitors such as
McDonald’s and Taco Bell enter the breakfast, coffee, and espresso markets, both Starbucks
and Dunkin’ are likely to continue coming up with new ways to maintain their existing
customer base, and then expand it in the United States and abroad.74
Julia Ewan/The Washington Post/Getty Images
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 59
Questions
1. Perform a SWOT analysis for Starbucks and Dunkin’. Based on your analysis, in
which company would you invest? Justify your answer.
2. Which growth strategies have been pursued by Starbucks and Dunkin’ in the past?
Which strategies do you believe will be most successful for the two firms in the
future? Why?
3. Which marketing metrics would be most helpful for an executive in charge of
developing new products for a coffee chain?
Endnotes
1. Asit Sharma, “PepsiCo’s Grounded Growth Strategy,” The
Motley Fool, April 14, 2019.
2. “Our Goals,” PepsiCo, www.pepsico.com/sustainability
/performance-with-purpose/our-goals.
3. Trefis Team and Great Speculations, “How PepsiCo Is
Transforming Itself into a ‘Healthier’ Company,” Forbes,
May 19, 2017.
4. Trefis Team and Great Speculations, “Why PepsiCo’s
Acquisition of Bare Snakes Makes Sense,” Forbes,
June 12, 2018.
5. Monica Watrous, “How Frito-Lay Is Making Its Products
Healthier,” Food Business News, November 20, 2017.
6. Rachel Arthur, “Billion Dollar Bubbles: PepsiCo Wants to
Make Bubly Its Next Billion Dollar Brand,” Beverage Daily,
July 18, 2019.
7. Andria Cheng, “LaCroix May Be Going Flat: Parent National
Beverage Reports Another Quarterly Sales Drop,” Forbes,
June 26, 2019.
8. Craig Giammona, “Pepsi Expands LaCroix Fight by Putting
Sparkling Water on Campus,” Bloomberg, November 9, 2018.
9. Ryan Barwick, “The Trendy Reason Why JetBlue Just Switched
from Coke to Pepsi,” Adweek, August 22, 2019.
10. Chase Purdy, “Americans Want to Drink More Water,” Quartz,
January 11, 2019.
11. Beth Newhart, “Pepsi Debuts Three New Flavors for Summer,”
Beverage Daily, April 24, 2019.
12. PepsiCo, “The PepsiCo Advantage,” www.pepsico.com/docs
/album/Investor/barclays_bts_presentation.pdf?sfvrsn=0.
13. PepsiCo, “Who We Are,” www.pepsico.com/Company.
14. Hilary Hughes, “She Will Rock You: Rewinding Beyoncé’s Best
Pepsi Commercials,” Billboard, January 30, 2019.
15. Erica Sweeney, “PepsiCo Zeros in on Music Theme with
Star-Studded Bubly, Doritos Super Bowl Teases,” Marketing
Drive, January 18, 2019.
16. Richard Smirke, “‘We Have Music in Our DNA’: Pepsi’s Music
Director on Growing Sports Sponsorships & Helping Break
Acts Globally,” Billboard, August 6, 2019.
17. Michael Treacy and Fred Wiersema, The Discipline of Market
Leaders (Reading, MA: Addison-Wesley, 1995). Treacy and
Wiersema suggest the first three strategies. We suggest the
fourth—locational excellence.
18. Robert W. Palmatier and Lena Steinhoff, Relationship
Marketing in the Digital Age (New York: Routledge, 2019);
Jonathan Z. Zhang, George F. Watson IV, and Robert W.
Palmatier, “Customer Relationships Evolve—So Must
Your CRM Strategy,” MIT Sloan Management Review,
May 1, 2018.
19. Michael Schrage, “What Most Companies Miss about
Customer Lifetime Value,” Harvard Business Review, April 18,
2017; V. Kumar and Werner Reinartz, “Creating Enduring
Customer Value,” Journal of Marketing 80, no. 6 (2016),
pp. 36–68; Melea Press and Eric J. Arnould, “How Does
Organizational Identification Form? A Consumer Behavior
Perspective,” Journal of Consumer Research 38
(December 2011), pp. 650–66.
20. Valarie A. Zeithaml, Mary Jo Bitner, and Dwayne D. Gremler,
Services Marketing: Integrating Customer Focus across the
Firm, 7th ed. (New York: McGraw-Hill Education, 2017).
21. https://disneyworld.disney.go.com/plan/my-disney-experience
/my-magic-plus/; Brooks Barnes, “At Disney Parks, a Bracelet
Meant to Build Loyalty (and Sales),” The New York Times,
January 7, 2013.
22. Carmine Gallo, “Customer Service the Disney Way,”
Forbes, April 14, 2011; Justyna Polaczyk, “Be Like Disney:
Best Customer Service Training Ideas,” Live Chat,
February 15, 2016; Todd van Luling, “Here’s One Thing
You’ve Never Noticed about Disney Parks,” Huffington
Post, July 13, 2015.
23. Robert W. Palmatier, Eugene Sivadas, Louis W. Stern, and Adel
I. El-Ansary, Marketing Channel Strategy, 9th ed. (New York:
Routledge, 2020).
24. Peter Cohan, “What Amazon’s One-Day Delivery Means for
UPS, FedEx, Walmart, and Target,” Forbes, August 29, 2019.
25. www.interbrand.com/best-brands/best-global-brands/2018
/ranking/#?listFormat=ls.
26. “Marketing Plan,” American Marketing Association Dictionary,
www.marketingpower.com.
27. Robert Palmatier and Shrihari Sridhar, Marketing Strategy:
Based on First Principles and Data Analytics (London:
Palgrave, 2017).
28. E. O. Ekpe, S. I. Eneh, and B. J. Inyang, “Leveraging Organizational Performance through Effective Mission Statement,”
International Business Research 8, no. 9 (2015), pp. 135–41;
Nancy J. Sirianni et al., “Branded Service Encounters: Strategically Aligning Employee Behavior with the Brand Positioning,”
Journal of Marketing 77 (November 2013), pp. 108–23;
Andrew Campbell, “Mission Statements,” Long Range
Planning 30 (1997), pp. 931–33.
29. Gene R. Laczniak and Patrick E. Murphy, “Stakeholder Theory
and Marketing: Moving from a Firm-Centric to a Societal
Perspective,” Journal of Public Policy & Marketing 31 (Fall
2012), pp. 284–92; Alfred Rappaport, Creating Shareholder
Value: The New Standard for Business Performance
(New York: Wiley, 1988).
30. Pink Ribbon International, http://pinkribbon.org/about
/our-organization/.
60 Section One ASSESSING THE MARKETPLACE
31. www.audi.com/en/company/strategy.html.
32. Zach Johnson, “It’s True: Cardi B Will Star in Pepsi’s 2019
Super Bowl Commercial,” E News, January 18, 2019.
33. “Pepsi Launches ‘For the Love of It’ Global Marketing
Campaign,” FoodBev Media, January 9, 2019.
34. www.pepsico.com/sustainability/philanthropy.
35. Molly Fleming, “Pepsi Celebrates ‘Pop and Fizz’ of Cola as It
Shifts Brand Positioning,” Marketing Week, January 8, 2019.
36. David Slotnick, “San Francisco Airport Is Banning Plastic Water
Bottles Starting This Month,” Business Insider, August 2, 2019;
Craig Giammona, “Pepsi to Test Out Selling Water in Cans,”
Bloomberg, June 27, 2019.
37. www.pepsico.com/about/mission-and-vision.
38. www.pepsico.com/news/press-release/pepsico -targets-african
-growth-with-offer-to-acquire-pioneer-foods07192019.
39. www.pepsico.com/sustainability/water.
40. Hamza Ali, “Sugar Taxes Are Changing Tastes, Even If Coke
Classic Is the Same,” Bloomberg, January 2, 2019.
41. Monica Watrous, “Start-Up Concepts Wake Up Baking and
Snack Industries,” Baking Business, August 27, 2019.
42. www.hertz.com/rentacar/productsandservices/
productsandservicesRegions.do.
43. https://images.hertz.com/pdfs/VMVWeb.pdf; www.adweek
.com/aw/content_display/creative /new-campaigns/
e3i21cea1586dd4edf5d50f9a17e7f18bf3.
44. George E. Belch and Michael A Belch, Advertising and
Promotion: An Integrated Marketing Communications
Perspective, 11th ed. (New York: McGraw-Hill Education, 2017);
see also various issues of the Journal of Integrated Marketing
Communications, http://jimc.medill.northwestern.edu.
45. www.groupon.com/coupons/stores/dyson.com; www.coupons
.com/coupon-codes/dyson/.
46. Suzanne Vranica, “P&G Contends Too Much Digital Ad
Spending Is Waste,” The Wall Street Journal, March 1, 2019.
47. Theo Legget, “How VW Tried to Cover Up the Emissions
Scandal,” BBC News, May 5, 2018.
48. Austen Hufford and Micah Maidenberg, “Harley Sales Fall, but
Motorcycle Shipments Exceed Forecast,” The Wall Street
Journal, April 23, 2019.
49. Susan Carpenter, “An Electric Harley Loses the Growl but Still
Aims to Turn Heads,” The New York Times, August 8, 2019.
50. Ofer Mintz and Imran S. Currim, “What Drives Managerial
Use of Marketing and Financial Metrics and Does Metric Use
Affect Performance of Marketing-Mix Activities?,” Journal of
Marketing 77 (March 2013), pp. 17–40.
51. Ameya Dusane, “Amazon Unveils New-to-Brand Metrics for
Better Attribution Insights for Advertisers,” Martech Advisor,
January 28, 2019.
52. Goodyear, “Annual Report 2014.”
53. P. Farris et al., Marketing Metrics: 50+ Metrics Every
Executive Should Master (Upper Saddle River, NJ: Pearson,
2006), p. 17.
54. Relative market share = Brand’s market share ÷ Largest
competitor’s market share. If, for instance, there are only two
products in a market, A and B, and Product B has 90 percent
market share, then A’s relative market share is 10 ÷ 90 =
11.1 percent. If, on the other hand, B only has 50 percent
market share, then A’s relative market share is 10 ÷ 50 =
20 percent. P. Farris et al., Marketing Metrics: 50+ Metrics
Every Executive Should Master (Upper Saddle River, NJ:
Pearson, 2006), p. 19.
55. Don Reisinger, “Apple Watch Series 4 Outsold Every Other
Watch in 2018—in Just One Quarter,” Fortune, June 25, 2019.
56. Malcolm Owen, “Growth of iPad Market Share Defies Shrinking
Tablet Shipments,” AppleInsider, August 6, 2019; Daniel Nations,
“How Many iPads Have Been Sold?,” Lifewire, June 24, 2019;
Mike Murphy, “The iPad Is Back,” Quartz, May 1, 2019.
57. Jeff Dunn, “The Rise and Fall of Apple’s iPod, in One Chart,”
Business Insider, July 28, 2017; Gabriela Barkho, “Apple Just
Announced a New iPod—But Who’s Actually Going to Buy It?,”
Observer, May 29, 2019.
58. Stephen McBride, “Dark Days Are Closing In on Apple,”
Forbes, August 26, 2019; Todd Haselton, “Apple’s iPhone
Sales Miss Estimates, Down 12% versus Last Year,” CNBC,
June 30, 2019.
59. “Marvel Cinematic Universe,” Box Office Mojo, September 4,
2019; Sarah Whitten “Disney Bought Marvel for $4 Billion in
2009: A Decade Later It’s Made More Than $18 Billion at the
Global Box Office,” CNBC, June 21, 2019.
60. Scott Mendelson, “‘Avengers: Endgame’ Played Like ‘Star Wars’
in America and Like ‘Fast & Furious’ Overseas (Box Office),”
Forbes, September 4, 2019.
61. Cooper Hood, “New Seasons of Daredevil, Jessica Jones, &
Luke Cage Set for 2018,” Screenrant, June 4, 2017.
62. Joe Adalian, “Disney Announces a Launch Date and Pricing
Information for Disney+,” Vulture, April 11, 2019.
63. Erin Carson, “The Falcon and the Winter Soldier: Plot, Cast,
Where to Watch, Release Date and More,” CNET, August 26,
2019.
64. A. A. Thompson et al., Crafting and Executing Strategy, 18th
ed. (New York: McGraw-Hill/Irwin, 2012).
65. Marvel, “Home Décor,” http://shop.marvel.com/home-decor/.
66. Rich Duprey, “Can Starbucks Ever Beat Dunkin’ Donuts in
Boston?,” The Motley Fool, May 2, 2018.
67. Beth Newhart, “US Coffee Shop Market Grows to $45.4bn in
2018,” Beverage Daily, November 6, 2018; Liz Wolf, “Growing
Competition from Both National Chains and Neighborhood
Coffee Shops Threatens Starbucks’ Supremacy,” National Real
Estate Investor, July 26, 2018.
68. Anne Sraders, “Coffee Stocks Like Starbucks and Dunkin’ Are
Suddenly Piping Hot,” Fortune, June 25, 2019.
69. www.starbucks.com/business/international-stores.
70. Kelly Tyko, “Dunkin’ Testing a Big Change to DD Perks. Is Your
Location Participating?,” USA Today, April 16, 2019.
71. www.dunkindonuts.com/en/about/about-us.
72. https://news.dunkindonuts.com/blog/blog_custom20190204-6741988, based on research performed by
Brand Keys, a “brand engagement and customer loyalty
research consultancy” that publishes a Customer Loyalty
Engagement Index.
73. Aviva Luttrell, “Dunkin’ Offering $1 Coffee If the New England
Patriots Win the Super Bowl,” MassLive, February 1, 2019.
74. Abigail Abesamis, “I Tried 3 Types of Coffee from Starbucks,
McDonald’s, and Dunkin’—and the Winner Was Clear,”
Business Insider, March 29, 2019.
i. Drew Neisser, “How Sally Beauty Gave Its Loyalty Program a
Stunning Makeover,” Ad Age, April 5, 2017; “Sally Beauty,” www
.sallybeauty.com; Jim Tierney, “Sally Beauty Looks to Ramp Up
Customer Loyalty, Engagement Initiatives,” Loyalty360,
February 3, 2017.
ii. Chris Wack, “PepsiCo to Make Packaging Changes for Beverages,” The Wall Street Journal, June 27, 2019; Ewan Palmer,
“PepsiCo to Sell Water in Aluminum Cans under Plans to
Reduce 8,000 Tons of Virgin Plastic Use,” Newsweek, July 1,
2019; Jonathan Shieber, “Pepsi Is Going to Start Putting Its
Aquafina Water in Aluminum Cans,” TechCrunch,
June 27, 2019.
DEVELOPING MARKETING STRATEGIES AND A MARKETING PLAN CHAPTER TWO 61
iii. Gordon Kelly, “Apple’s New iPhone SE Is 2020’s Smartest
iPhone Buy, Forbes, April 16, 2020; Patrick Holland, “IPhone SE
Has Some of the Best iPhone 11 Features, Including Wireless
Charging, C/NET, April 21, 2020.
iv. Fiona Killackey, “Taking the Plunge—Six Risky Brand Campaigns
That Paid Off,” Marketing, November 12, 2018; Old Spice, “The
Man Your Man Could Smell Like,” www.youtube.com/watch?v
=owGykVbfgUE; David Griner, “Grooming Products Are More
Important Than Life in Old Spice’s Newest Odd Ads,” Adweek,
July 9, 2018; Tim Nudd, “Old Spice Finally Made Some Ridiculous Ads That Both Teen Boys and Their Moms Can Love,”
Adweek, July 7, 2017; Old Spice, “School of Swagger,” https://
oldspice.com/en/manlyfaqs/school-of-swagger; “Marketer’s
Brief: Old Spice Finally Embraces the Beard Biz, and a Warning
about Flamin’ Hot Cheetos,” Ad Age, September 26, 2018.
v. Suman Bhattacharyya, “How Wayfair Is Personalizing How You
Buy Your Furniture Online,” DigiDay, August 2, 2018; Dominique
Jackson, “8 Standout Social Media Marketing Examples from
2018,” Sprout Social, May 29, 2018; “Wayfair Social Media,”
entry for 10th annual Shorty Awards, https://shortyawards.
com/10th/wayfair-social-media.
vi. Nat Ives, “Mobile Ads Do More Work in One Second Than You
Might Think,” The Wall Street Journal, March 6, 2019; ITV,
“Using a Mobile Phone While Shopping Increases Bills by 41%,
Study Finds,” May 23, 2019; Dhruv Grewal, Carl-Philip Ahlbom,
Lauren Beitelspacher, Stephanie M. Noble, and Jen Nordfält,
“In-Store Mobile Phone Use and Customer Shopping Behavior:
Evidence from the Field,” Journal of Marketing, 82, no. 4
(2018), pp. 102–26.
Quiz Yourself Answer Key
1. The growth strategy that involves the firm attempting to grow by
attracting a new market to its existing products is called what?
Answer: (e) Product penetration
2. The choice of target market will determine how which of these
concepts are designed?
Answer: (a) Four Ps (product, price, place, promotion)

WHY WRITE A MARKETING PLAN?1
As a student, you likely plan out much in your
life—where to meet for dinner, how much time
to spend studying for exams, which courses to
take next semester, how to get home for winter break, and so on. Plans enable us to figure out where
we want to go and how we might get there.
For a firm, the goal is not much different. Any company that wants to succeed (which means any firm whatsoever) needs to plan for a variety of contingencies, and
marketing represents one of the most significant. A marketing plan—which we defined in Chapter 2 as a written
document composed of an analysis of the current marketing situation, opportunities and threats for the firm,
marketing objectives and strategy specified in terms of
the four Ps, action programs, and projected or pro forma
income (and other financial) statements—enables marketing personnel and the firm as a whole to understand their
own actions, the market in which they operate, their
future direction, and the means to obtain support for new
initiatives.2
Because these elements—internal activities, external
environments, goals, and forms of support—differ for
every firm, the marketing plan is different for each firm as
well. However, several guidelines apply to marketing plans
in general; this appendix summarizes those points and
offers an annotated example.
WRITING A
MARKETING PLAN
Have a plan. Follow the plan, and you’ll be surprised how
successful you can be. Most people don’t have a plan.
That’s why it’s easy to beat most folks.
—Paul “Bear” Bryant, football coach, University of Alabama
APPENDIX 2A
64 Section One ASSESSING THE MARKETPLACE
MARKETING PLAN VERSUS
BUSINESS PLAN
Of course, firms consider more than marketing when they make plans and therefore commonly develop business plans as well. Yet as this book highlights, marketing constitutes
such an important element of business that business plans and marketing plans coincide in
many ways.3
Marketing plans as well as business plans generally encompass:
1. Executive summary.
2. Company overview.
3. Objectives or goals, usually according to strategic plan and focus.
4. Situation analysis.
5. Customer segmentation, target marketing, and positioning analysis.
6. Marketing strategy.
7. Financial projections.
8. Implementation plan.
9. Evaluation and control metrics.
10. Appendix.
A business plan also includes details about R&D and operations, and both may feature
details about other key topics, depending on the focus of the company and the plan.
STRUCTURE OF A
MARKETING PLAN
This section briefly describes each of the elements of a marketing plan.4
Executive Summary
The executive summary essentially tells the reader why he or she is reading this marketing
plan—what changes require consideration, what new products need discussion, and so forth—
and suggests possible actions to take in response to the information the plan contains.
Company Overview
The company overview provides a brief description of the company, including perhaps its
mission statement, background, and competitive advantages.
Objectives/Goals
The objectives/goals section offers more specifics about why readers are reading the marketing plan. What does the company want to achieve, both overall and with this particular
marketing plan?
Situation Analysis
Recall from the chapter text that a situation analysis generally relies on SWOT considerations; the situation section, then, describes the strengths, weaknesses, opportunities, and
threats facing the company.
STP Analysis
The analysis proceeds by assessing the market in which the company functions, the products it currently offers or plans to offer in the future, and the characteristics of current or
potential customers.
WRITING A MARKETING PLAN CHAPTER TWO APPENDIX 65
Marketing Strategy
The marketing strategy may be very specific, especially if the plan pertains to, for example,
a stable product in a familiar market, or it may be somewhat open to varied possibilities,
such as when the firm plans to enter a new market with an innovative product.
Financial Projections
On the basis of the knowledge already obtained, the marketing plan should provide possible
developments and returns on the marketing investments outlined in the marketing strategy.
Implementation Plan
The implementation plan includes the timing of promotional activities, when monitoring
will take place, and how expansions likely will proceed.
Evaluation and Control Metrics
The firm must have a means of assessing the marketing plan’s recommendations; the marketing plan therefore must indicate the methods for undertaking this assessment, whether
quantitatively or qualitatively.
Appendix
The final section(s) offer(s) additional information that might be of benefit, such as a list of
key personnel; data limitations that may influence the findings; and suggestions of the plan,
relevant legislation, and so forth.
INFORMATION SOURCES5
When writing a marketing plan, you likely can turn to a variety of your firm’s in-house information sources, including annual reports, previous marketing plans, published mission
statements, and so on. In addition, various sources offer suggestions and examples that may
provide you with direction and ideas. A reference librarian can help you find many of these
sources, which likely are available through your university’s library system.
• Knowthis.com—“a knowledge source for marketing,” www.knowthis.com/how-to-write
-a-marketing-plan/marketing-plan-intro/.
• Encyclopedia of American Industries—introduces industry structure; arranged by SIC
and NAICS codes.
• Standard & Poor’s NetAdvantage—surveys of more than 50 industries, with financial
data about companies in each industry.
• Investext Plus—brokerage house reports.
• IBISWorld—marketing research on thousands of industries; classified by NAICS code.
• Statistical Abstract of the United States—a vast variety of statistics on a wealth of topics.
• U.S. Bureau of the Census—detailed statistical data gathered every 10 years on all
aspects of the U.S. population.
• County Business Patterns: U.S. Bureau of the Census—payroll and employee numbers
for most NAICS codes.
• Consumer Expenditure Survey: U.S. Bureau of Labor Statistics—income and expenditures by household, classified by various demographics.
• The LifeStyle Market Analyst—lifestyle information about geographic areas, lifestyle
interest groups, and age and income groups.
• Mediamark Reporter—information about demographics, lifestyles, product and brand
usage, and advertising media preferences.
• Scarborough Arbitron—local market consumer information for various media in
75 local markets for consumer retail shopping behavior, product consumption, media
usage, lifestyle behavior, and demographics.
66 Section One ASSESSING THE MARKETPLACE
• Simmons Study of Media and Markets—products and consumer characteristics; various
media audiences and their characteristics.
• Sourcebook America—demographic data, including population, spending potential
index, income, race, and Tapestry data, presented by state, county, DMA, and zip
code, as well as business data by county and zip code.
• Rand McNally Commercial Atlas and Marketing Guide—maps and tables showing demographic, industrial, transportation, railroad, airline, and hospital data.
• “Survey of Buying Power,” Sales and Marketing Management—current state, county,
city, and town estimates of population by age, retail sales by store group, effective
buying income, and buying power index.
• Annual & 10-K reports from Thomson One Banker, Edgar, and LexisNexis—business
descriptions, product listings, distribution channels, possible impact of regulations
and lawsuits, and discussions of strategic issues.
• MarketResearch.com Academic—marketing research reports on a variety of consumer
products.
• Mintel Reports Database—marketing research reports focusing on consumer products,
lifestyles, retailing, and international travel industry.
LINGUISTIC AND VISUAL
SUGGESTIONS
Again, recall that all marketing plans differ because all firms differ. However, just as rules
exist that dictate what makes for good writing, some rules or guidelines apply to all wellwritten marketing plans.
• Maintain a professional attitude in the writing and presentation.
• Keep descriptions and summaries concise. Get to the point.
• Use standard English in a professional tone.
• Proofread the entire plan multiple times to catch grammatical, spelling, or other such
errors that could dampen the professionalism of the writing.
• Adopt a businesslike tone; avoid flowery or jargon-filled writing.
• Employ active voice rather than passive voice, and present tense rather than past tense
whenever possible (e.g., “We plan to achieve 30 percent growth in two years” rather than
“The plan was that 30 percent growth would be achieved by the firm within two years”).
• Be positive.
• Avoid meaningless adjectives (e.g., “Our goal is tremendous growth”).
• Be specific; use quantitative information whenever possible.
• Insert graphics to convey important concepts succinctly, including photos, graphs,
illustrations, and charts.
• Avoid using so many visual elements that they clutter the plan.
• Lay out the plan clearly and logically.
• Organize sections logically using multiple levels of headings distinguished clearly by
font differences (e.g., bold for first-level heads, italics for second-level heads).
• Consider the use of bullet points or numbered lists to emphasize important points.
• Exploit modern technology (e.g., graphics software, page layout software, laser
printers) to ensure the plan looks professional.
• Adopt an appropriate font to make the text easy to read and visually appealing—avoid
using anything smaller than 10-point font at a minimum.
• Avoid unusual or decorative fonts; stick with a common serif type to make the text
easy to read.
• Consider binding the report with an attractive cover and clear title page.
• Generally, aim for a plan that consists of 15–30 pages.
WRITING A MARKETING PLAN CHAPTER TWO APPENDIX 67
PEOPLEAHEAD MARKETING
PLAN ILLUSTRATION6
PeopleAhead Marketing Plan: Condensed
1. Executive Summary
PeopleAhead focuses on career advancement done right. Instead of making the job search a
one-time event, PeopleAhead provides a platform for people to find, advance, and develop
their careers by sharing career goals, discussing professional development plans, and
socializing with other professionals.
PeopleAhead culminates the career advancement experience with its proprietary
TrueMatch® technology, which identifies synergies between the companies hiring talent
(employers) and PeopleAhead members (job candidates) who wish to be hired. By anonymously presenting only prequalified career opportunities to members, who confirm their
interest and recommend others, PeopleAhead transforms the ineffective online hiring
process into a highly efficient career-matching system. PeopleAhead was founded by Carlos
Larracilla and Tom Chevalier to improve people’s lives by helping them achieve their career
aspirations. The vision for PeopleAhead was conceived of in January 2006, with a notion
that personality alignment is critical to matching the right people with the right career opportunities. Since then, the idea has grown and morphed into a company that matches the right
person with the right career opportunity by aligning personality, competencies, experience,
and interests.
Tom and Carlos combine human resources, system development, and sales experience to
deliver a groundbreaking, TrueMatch®-branded talent matching network that makes it easier for
people to achieve their career aspirations and improves the way companies identify individuals
who will be able to contribute to their long-term success. The organizational chart of PeopleAhead
is available in Appendix A.
Note the personalization of
the company founders, which
may help readers feel
connected to the company.
As this plan does, a marketing
plan should start with a
positive, upbeat assessment
of what the company does
and what it hopes to continue
doing.
Instead of using separate
“Executive Summary” and
“Company Overview” sections,
this marketing plan begins
with a general overview that
includes both aspects and
answers the key questions:
“What type of business are
we?” and “What do we need
to do to accomplish our
objectives?” (see Chapter 2).
Source: Peopleahead, Inc.
68 Section One ASSESSING THE MARKETPLACE
The plan acknowledges both
a general, potential target
market and the ideal targets.
As Chapter 2 suggests, the
plan notes PeopleAhead’s
sustainable competitive
advantage as part of its
overall mission statement.
By referring to another
section, the plan makes
clear where it is heading
and enables readers to crossreference the information.
The paragraph provides a
general outline of the firm’s
objectives; the bulleted list
offers more specific goals,
and the subsequent sections
go into more detail about
the various factors that may
influence these objectives.
2. Strategic Objectives
2.1. Mission
PeopleAhead’s mission is to help individuals with career advancement and improve the
human capital in companies. The site will act as a networking platform for professionals
and career matching as opposed to job and resume-posting searches.
2.2. Goals
• Use brand-matching technology: TrueMatch®
• Build critical mass of users.
• Drive traffic to the Web site through marketing blitzes.
• Utilize word-of-mouth advertising from satisfied users.
2.3. Business Summary
• Business customers: This group provides PeopleAhead’s revenues. Customers purchase
contact information about the Top Ten PROfiles gleaned from the individual member base
that have been sorted and ranked by the TrueMatch® technology. PeopleAhead will focus on
small and medium businesses (see Market Segmentation section) because these entities are
underserved by large competitors in the online recruitment market, and because research
shows that this demographic has a less efficient recruitment process that would benefit most
readily from PeopleAhead’s services. Within this segment, customers include HR managers
who are responsible for the sourcing of candidates, functional area managers who require
new talent for their team, and executives whose business objectives rely on human capital
and efficiency of operations.
• Individual members: This group does not pay for services but is the main source of
data points for PeopleAhead’s TrueMatch® system. PeopleAhead will focus on building a
base of individual members who range from recent graduates to individuals with 5–7 years
of continuous employment. Ideal members are those who are currently employed or will
be graduating within nine months and are “poised” to make a career change. These
individuals can utilize the services to the fullest extent and are valuable candidates
for business customers.
2.4. Competitive Advantage
• TrueMatch® offers a branded technology, marketed to both business customers
and individual candidates for its “black box” value proposition, which establishes
PeopleAhead as the category leader for recruitment-matching software. This technology
provides a point of differentiation from competitors, which may have technically similar
matching software but constantly need to reinforce their marketing messages with
explanations of their value proposition.
• For individual candidates, PeopleAhead will be the favored career advancement platform online,
where individuals enthusiastically create a history and have connections (invited friends,
coworkers, and mentors) in place that will make PeopleAhead a staple among their favorite Web
sites. PeopleAhead delivers TrueMatch® career opportunities, professional development plans
that let people establish a professional record, and valuable career advancement tools,
including automatic position feedback, “recommend-a-friend,” and team-based career networking.
• For business customers, PeopleAhead makes online sourcing and qualification of candidates
quick and efficient by prequalifying potential candidates, seeking recommendations for hard-tofind individuals, and delivering only the Top 10 most highly qualified candidates who have
WRITING A MARKETING PLAN CHAPTER TWO APPENDIX 69
Figures provide a visually
attractive break in the text
and summarize a lot of
information in an easy-toIndividual members segments read format.
24.4 M 3.7 M
7.4 M 1.3 M
134.5 M
Senior college students
Other college students
Graduate program students
Current employees
Unemployed
In discussing both the external
market and the internal
advantages of PeopleAhead,
the plan carefully distinguishes
between individual job
candidates and businesses,
thus differentiating the focus
and objectives according to
this segmentation.
preconfirmed interest in the available position. PeopleAhead will be the most effective
candidate-company matching platform available in the market, delivering prequalified,
preconfirmed candidates.
3. Situation Analysis—Online Recruitment
Online recruitment is the system whereby companies use the Web to locate and qualify
prospective candidates for available positions. The methods employed by online recruitment
service providers to serve this market range from resume aggregation to assessment test
application to linking strategies. However, the common underlying objective is to locate
candidates who would not be found by traditional recruitment methods and use computing
power to qualify candidates quickly and with more accuracy than would be possible
manually.
3.1. Industry Analysis
Large online recruitment Web sites make this a tedious process by requiring companies
to search through many resumes manually to find the right candidate. Other sites solicit
recommendations for positions. However, resumes are often “enhanced,” such that almost
all candidates appear qualified, and information found in the resume or provided through
a recommendation is simply not sufficient to make an educated hiring decision.
Companies need more information and intelligent tools that make this screening
process more accurate.
3.1.1. Market Size
The market size for both member segments in 2005 was as follows:
70 Section One ASSESSING THE MARKETPLACE
Employment by enterprise type
15.4 M
35.1 M
27.3 M
51.7 M
Very small enterprises
Small enterprises
Medium enterprises
Large enterprises
Company members segments
0.11 M 0.10 M
5.27 M
1.33 M
Very small enterprises
Small enterprises
Medium enterprises
Large enterprises
The most critical issue in examining market size is the relationship between the number of companies and the number of workers employed because sales are based on the number of positions
(profiles purchased), not the number of companies that use the service.
The following figure shows the number of people employed by each enterprise market
segment as of January 2006, according to the U.S. Department of Labor. This segment
information will be useful in defining PeopleAhead’s target market.
WRITING A MARKETING PLAN CHAPTER TWO APPENDIX 71
Another visually attractive
graph summarizes complicated information easily. The
use of high-quality color can
add a professional feel to a
marketing plan.
0
2
4
6
8
$10B
Revenue
2004 2005 2006 2007 2008 2009 2010
Recruitment advertisement industry growth
Total recruitment advertisement
Total online recruitment market
Main competitors: Monster,
CareerBuilder, and Yahoo/HotJobs
$1.3B $1.8B $2.4B
$3.3B
$4.4B
$5.9B
$7.6B
3.1.2. Market Growth
PeopleAhead will operate in the online recruitment market. The growth of this industry is subject
to two primary constraints: U.S. economic health and online recruitment advertisement adoption
rates. Understanding these constraints will help identify PeopleAhead’s opportunity. General
indicators suggest the U.S. economy (GDP) will grow at an average annual rate of 4% for the next
decade.7
Online recruitment advertising is expected to grow by 35% per year to reach $7.6 billion
by 2010.8
Not only is the market expanding, but it is exhibiting rapid adoption by new entities, as
the following graph shows.9
3.1.3. Market Needs
• The right person for the right position: The right employee for one company or position is not
the same for all others. Not only must companies locate intelligent individuals with relevant
experience, but they also prefer people who are aligned with the position requirements in
terms of personality, competencies, and fit with the company culture.
• Prescreening qualification tools: Increasing the number of candidates through online recruitment
can be advantageous, but it can also be a hindrance. When sourcing candidates, recruiters
need tools that help them qualify applicants.
• Time savings: Companies need to complete the online sourcing and qualification of candidates
quickly. Leaving positions unfilled can cause critical performance gaps to emerge within the
company.
72 Section One ASSESSING THE MARKETPLACE
Before engaging in a
firm-specific SWOT analysis
(see Chapter 2), this marketing
plan assesses the external
market environment further
and thus establishes a basis
for the subsequent SWOT
analysis.
Using a table and bullet
points, the plan summarizes
a lot of information
succinctly and clearly.
Note that the analysis uses
outside sources to support its
claims.
• Industry best practices: The networking model used by PeopleAhead
draws on the industry accepted best
practices contact protocols drawn
from multiple industries, including online feedback, recruitment,
and social networking and offline
professional networking. TrueMatch®
software aligns business objectives
with appropriate candidates.
• Team expertise: The combined talents of the founders include human
resources, system development, sales,
and marketing.
• Web development expertise:
PeopleAhead has partnered with
an award-winning European
software development provider.
This company provides quality
usually reserved for high-budget
projects, at terms that are favorable
for a start-up company.
• Absence of industry “influentials”:
As a start-up, PeopleAhead does not
currently have resources to attract
influential industry managers.
• Inability to guarantee critical mass:
As is true of many Internet companies, the business must solve the
“chicken and egg” puzzle to build
critical mass.
• Verifying efficiency of matching
capabilities: In theory, the system has
an absolute guarantee of effectivity;
computations make decisions rather
than humans. However, the matching
capabilities must be verified as accurate to gain widespread acceptance.
• Broad target market: Because
PeopleAhead is targeting a wide
range of businesses, the product
being developed has not been
“customized” ideally for each
segment.
External OPPORTUNITIES THREATS • Service gap: Recruiters are not
pleased with current online
recruitment vendors.
• Industry gap: Job turnover is
every 3.5 years per person.
• Demand for productive candidates.
• Online recruitment advertising:
Growing by 35% per year, to reach
$7.6 billion by 2010.10
3.1.4. Market Trends
The methods by which online recruitment service providers deliver candidates has been
undergoing a migration from resume aggregation and search services like Monster and
CareerBuilder to new Web 2.0 methodologies that include passive recruitment, “meta
tagging,” and social networking.
The underlying objective of these Web 2.0 services is to allow individuals to remain on
a few, trusted Web sites while enabling companies to access those individuals for financial
purposes. In parallel, the focus is moving from aggregation of unique visitors toward engaging
existing users more intensively. Internet users are growing familiar with sites that encourage
socializing, collaborating, and distributing private information online to help improve network
benefits and need to be engaged to maintain contact.
3.2. SWOT Analysis
Positive Negative
Internal STRENGTHS WEAKNESSES
• Convergence: Existing competitors
may form strategic alliances and
establish powerful positions before
PeopleAhead can establish itself.
• Inability to protect model: Very little
intellectual property created by Web
sites is protected by law. Although
PeopleAhead will pursue aggressive
(continued)
WRITING A MARKETING PLAN CHAPTER TWO APPENDIX 73
If PeopleAhead chooses to
adopt a competitor-based
pricing strategy (see Chapter
14), detailed information about
how other recruitment firms
work will be mandatory.
Information about competitors’ revenues, customers,
growth, and so forth often is
available publicly through a
variety of sources.
For information that may not
belong in the main text, an
appendix offers an effective
means to provide detail without distracting readers.
This section offers the
“product” component of the
market/product/customer
analysis. Because PeopleAhead’s product is mostly a
service (see Chapter 13), it
focuses on some intangible
features of its offering.
3.3. Competition
Most online recruitment Web sites compete in the active recruitment market, including Monster,
CareerBuilder, and Yahoo/HotJobs. The pervasive segment includes job seekers who actively
look for jobs, post their resumes, and search for jobs on company Web sites. Most active
recruiters offer free services to users and charge companies on a fee basis. Companies can post jobs
and search for candidate resumes in the database (average fee for local searches is $500 and
nationwide is $1,000). In this first-generation online recruitment business model, competitors face
the challenge to make the process more user-friendly and reduce the effort required to make
these sites deliver results.
• Monster: Monster.com is the sixteenth most visited Web site in the United States, with more
than 43 million professionals in its viewer base. Monster earns revenue from job postings,
access to its resume database, and advertisements on Web sites of partner companies.
• Careerbuilder: Careerbuilder.com has experienced 75% growth for the past five years. This
job post/resume search company uses its media ownership to attract passive candidates from
partner Web sites. It achieves growth through affiliate partnerships that host job searches on
affiliated Web pages, such as Google, MSN, AOL, USA Today, Earthlink, BellSouth, and
CNN. Job posting is the primary activity, sold together with or separately from resume
searches.
• Passive recruitment: The second generation of online recruitment locates candidates who
are not necessarily looking for jobs but who could be convinced to move to a new position if
the right opportunity was presented. The most recognized competitors in this category include
Jobster, LinkedIn, and H3 (Appendix B).
3.4. Company Analysis
PeopleAhead’s mission is simple: improve people’s lives through career advancement.
PeopleAhead recognizes that career advancement means many things to many people and
provides a fresh perspective on career networking that is flexible yet powerful:
• Users are not alone: Finding a job is not easy. Why search solo? PeopleAhead unites groups
of friends, coworkers, and mentors to create natural, team-based career discovery.
• Job posting is not natural: People spend countless hours searching job listings and posting
resumes, only to be overlooked because their writing style or resume format does not match
an overburdened recruiter’s preference. Good people, not resumes, make great companies.
PeopleAhead’s TrueMatch technology matches the right people with the right position. No
posting, no applying—just good, quality matches.
IP protection strategies, the model could
be copied or mimicked by competitors.
• Inadequate differentiation: Inability
to explain our differentiation would
relegate PeopleAhead to (unfair)
comparisons with competitors. Without differentiation, PeopleAhead will
not be able to create scale through
network effects.
• Fragmented business models: Online
recruitment is fragmented by recruitment methodology: active (people
who need jobs), passive (people who
are not looking but would move if
enticed), poised (people unsatisfied
with jobs they have), and network
(finding people of interest based on
who or what they know).
External OPPORTUNITIES THREATS
74 Section One ASSESSING THE MARKETPLACE
The last—and some would
say most important—piece
of the analysis puzzle:
customers.
Although the introduction to
this appendix and the plan’s
organization suggest that
analyses of competitors,
products, and customers are
separate, as this plan shows, a
firm usually cannot address
one without considering the
other. Here, in the “customer”
section, the plan notes what
its competitors fail to do and
therefore why it offers a more
valuable service.
Understanding a target
customer is not just about
numbers. PeopleAhead tries
to consider what customers
think and feel when searching
for jobs too.
• Professionals being professionals: There is a place online for social networking, pet networking, and music networking. So why is there no outlet for career networking online—the
activity that consumes the majority of our professional lives? PeopleAhead is a place where
professionals share their experiences, achievements, and objectives with other professionals
that care and can be found by employers who value their professionalism.
3.5. Customer Analysis
PeopleAhead’s R&D efforts show that the impetus to improve recruitment effectivity is pervasive and that unmet needs revolve around a few core issues: the ability to find qualified talent,
establishing a fit between the candidate and the company culture, verifying the candidate’s
career progression, and working quickly and cost effectively. The following customer characteristics represent ideal attributes that align with PeopleAhead’s service offering. This information
might be used in conjunction with the Marketing Strategy.
3.5.1. Business Customer
• Industry: Because companies that value human capital are more likely to take a chance on a
start-up that promotes professional development, the broadly defined professional services
industry, including insurance, banking, and consulting, is the primary focus.
• Functional area: PeopleAhead’s system identifies “people” people, so positions that require
human interaction are more aligned with system capabilities than those with stringent skill
requirements, sets such as programming or accounting.
• Size: Large businesses (>1,000 employees) have high volume requirements and demand
vendors with proven track records; small businesses (<25 employees) hire fewer people and
may not justify acquisition costs. PeopleAhead aligns best with medium-sized customers.
• Hiring need: PeopleAhead serves two types of searches very well: those with too many applicants and those with too few applicants. By drawing applicants that most systems overlook
and delivering only the most qualified applicants, the system assures the right candidate is
identified quickly.
3.5.2. Individual Member
• Background: People who value professional development and are familiar with computer
networking technologies; most are likely college educated, motivated by career success, and
aware of their professional competencies/deficiencies.
• Situation: Members should have a professional development plan to share
with others who can help them achieve their objectives—likely people who are
inquisitive about their professional future and not content with their current
situation. The common industry terminology for this group of people is “poised
candidates.”
• Outlook: Proactive people who research, plan, self-educate, and talk about their career.
Probably the clearest example of proactivity is a student who devotes time, effort, and
financial resources toward career advancement.
WRITING A MARKETING PLAN CHAPTER TWO APPENDIX 75
By already identifying key
markets in the previous
section, the plan provides a
foundation for a more specific
targeting statement in this
section.
The plan continues with the
same segmentation throughout. Here the plan discusses
targeting and what makes
each segment attractive.
The final step in the STP
process: Positioning for the
segmented, targeted market.
Given its own section in this
plan, a discussion of the
marketing mix constitutes a
key element of the strategic
planning process (see
Chapter 2).
PeopleAhead’s mission
According to well-known
marketing concepts, the
marketing mix consists of the
four Ps: product (service here),
price, place (distribution here),
and promotion.
The product (service) offering
must establish the value for
consumers: Why should they
expend effort or resources to
obtain the offering?
4. Marketing Strategy
4.1. Market Segmentation
4.1.1. Business Customers
• Small enterprises. Businesses with 10–99 employees. Companies with fewer than
10 employees are categorized as “Very Small Enterprises” and will not be a primary
target market.
• Medium enterprises. Businesses with 100–1,000 employees.
4.1.2. Individual Members
• Senior college students. Students in the process of searching for a first career.
• Graduate program students. Mid-career candidates searching for new career opportunities,
such as internships, part-time during enrollment, or full-time after graduation.
• Current employees. Persons who are currently employed but are poised to locate better career
opportunities.
• Unemployed. Persons searching for jobs not included in previous segments.
4.2. Target Market
PeopleAhead plans to focus resources on small to medium enterprises (SMEs) in the New
England metro market, including Boston, Providence, Hartford, Stamford, Norwalk, Worcester, and
Springfield. Online recruitment companies compete for national recruitment spending, but most
job seekers are locally based, so market penetration is possible by covering a single geographical
location. By maintaining this focus, PeopleAhead will be better equipped to build a critical mass
of users that represent the job-seeking population and thus improve both users’ and customers’
experience, customer service, and the use of financial resources.
4.3. User Positioning
To the proactive professional, PeopleAhead is career advancement done right—providing a
platform to discover, plan, and advance careers by uniting friends, coworkers, and mentors with
companies searching for the right talent.
5. Marketing Mix
5.1. Products/Services Offered
The first planned offering is group profiling; users self-associate with groups to share
development plans. Access to groupings is permission based and similar to social networking. Members will be able to share professional experiences with people they know. Group
profiling may prompt “voyeur” networking, such that members join to view the profiles of the
people they know.
PeopleAhead will then open group profiling to business customers, who will be granted
access to groups of members to target people they want to hire.
The next added feature will be user feedback on professional development plans.
People-Ahead will track data from successful member profile matches to provide feedback for
members who have not been matched successfully.
76 Section One ASSESSING THE MARKETPLACE
Making the product (service)
available where and when
consumers want it may
seem somewhat easier for
PeopleAhead because of the
vast development of the
Internet; however, the firm
still needs to consider how
it can ensure people know
where and how to access
its offering.
The plan offers a specific
time frame, which recognizes
the potential need to make
changes in the future, as the
market dictates.
5.2. Price
In addition to a basic pricing schedule, PeopleAhead will offer bulk pricing and contract pricing
to business customers to satisfy unique customer needs. The pricing model is expected to remain
constant, but customer feedback will be analyzed to ensure alignment with their requirements.
Continuing the new customer acquisition plan, PeopleAhead will encourage new trials by
offering promotional pricing to new customers.
5.3. Distribution
• PeopleAhead Challenge: The PeopleAhead Challenge will act as a primary user acquisition
strategy. Selection will be focused on successful target segments demanded by customers.
• Direct sales: Direct customer contact is the preferred method of communication during the
first six months. Telesales is the anticipated eventual sales model, due to reduced costs and
quicker customer sales cycle, but it limits intimacy between the customer and PeopleAhead.
During the initial stages, intimacy and excellent customer service are more highly desired
than reduced cost, and direct sales achieves that objective.
• Industry events: Attendance at HR industry and recruitment events will supplement direct
sales efforts.
• Challenge groups: Word-of-mouth distribution by PeopleAhead members.
5.4. Promotion
• Public profiling: When the product is ready, with proper precautions for protecting competitive
advantages, PeopleAhead can increase its Web presence. Strategies include contributing articles
to recruitment publishers, writing op/ed pieces, public profiling of the founders on Web sites like
LinkedIn, Ziggs, and zoominfo, and blogging.
• Blogger community testimonials: Influential users of blogs will be invited to try the system and
be granted “exclusive” access to the inner workings of the site. A subsequent linking blitz will
put opinion pieces in front of recruiters, job seekers, and the investment community.
• Strategic alliances: PeopleAhead offers a product that complements the services offered by
many large organizations. Partner opportunities exist with
a. Universities, colleges, academic institutions
b. Professional associations, clubs, industry affiliation groups
c. Online associations, groups, blogs
d. Professional services firms, outplacement firms, and executive search firms
Strategic alliances serve multiple purposes: They can help PeopleAhead increase
public exposure, increase the user base, expand product offerings, and increase revenue
opportunities. These benefits will be considered and partnerships proposed prior to the
official launch. For strategic purposes, PeopleAhead prefers to focus on product development in the near term (3 months) and then reassess potential alliances after system efficacy
has been proven.
WRITING A MARKETING PLAN CHAPTER TWO APPENDIX 77
Tom Grill/Corbis RF/Getty Images
The marketing plan needs to
identify not only costs but
also potential revenues to
cover those costs.
Certain assumptions or
marketing research form the
basis for its estimation of
start-up costs.
This section contains a lot
of numbers in a small space;
the graphs and tables help
depict those numbers
clearly and visually.
6. Financials
Start-up costs consist primarily of Web site design and development, legal representation (business formation, contract negotiation, and intellectual property protection), and general overhead.
PeopleAhead projects start-up expenditures of $70,000 during inception, of which $30,000 has
been funded by the founding team.
After the Web site launches, the cost structure will consist of sales agent salaries,
general and administrative operating costs, and marketing. In the first year, marketing
expenses are projected to be $6,250 per month. Monthly overhead likely will reach
$24,750 and remain constant.
A.  Projected Income Statement
Pro Forma Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5
Sales $56,453 $2,683,665 $8,170,655 $16,312,843 $30,921,013
Gross Margin $54,194 $2,316,318 $7,383,829 $14,780,329 $28,244,172
Gross Margin % 96.00% 86.31% 90.37% 90.61% 91.34%
Net Profit ($156,906) $717,403 $3,356,768 $7,035,155 $14,180,041
78 Section One ASSESSING THE MARKETPLACE
This plan divides the objectives into three categories:
overall objective, marketing,
and financial. Although this is
a marketing plan, it must also
include other aspects that
influence marketing, such as
financial status.
$56K
($157K)
($2.7M)
($8.2M)
($16.3M)
($31M)
($0.7M) ($3.4M)
($7M)
($14.2M)
–10
0
10
20
30
$40M
Revenue
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue and net income projections
Revenues Net income (profit) Net income (loss)
7. Implementation Plan
The launch of PeopleAhead will use a phased approach, beginning with building brand awareness.
Brand awareness should be developed through the founders’ visible presence at professional events,
online searches, membership in professional associations, networking, and strategic alliances. This
visibility will help gain investment capital.
7.1. Objective—Growth
• During the first six months of commercial availability, the primary objective is to expand both
the user and customer base to maintain a 100:1 user to customer ratio.
• Business customers: Sign 24 regular customers and 72 occasional customers. Execute
117 position matches.
• Individual members: Convert 10,000 people to PeopleAhead members.
7.2. Marketing Objectives—Growth
• PeopleAhead Challenge: Pursue groups that were effective during beta trial and represent a
cohesive set of profiles. Expand and refine the Challenge to reflect lessons learned.
• Increase member networking activity: Increase user numbers through networking initiated by
existing members. Improve user experience to promote networking.
• Increase profile completeness: Increase user engagement with platform.
• Generate traffic.
• Public relations campaign (PR): Increase awareness of PeopleAhead brand through
concentrated PR efforts directed at the target market of customers and users.
WRITING A MARKETING PLAN CHAPTER TWO APPENDIX 79
By offering quantitative, direct
goals, PeopleAhead ensures
that it can measure its
progress toward those goals.
7.3. Financial Objectives
• Efficient marketing expenditures: 9,000 target users (10,000 year-end total – 1,000 during
beta) × $5.00 target acquisition cost = $45,000 budget.
• Revenue: $482.50 per position × 117 positions = $56,452.50 revenue.
7.4. Key Success Factors
• Economical marketing to relevant constituents: PeopleAhead needs to establish communication (distribution) channels that pinpoint relevant constituents in a manner consistent with
mission values. Limited by resources, chosen channels must aggregate many relevant eyes
with free, minimal, or deferred costs involved.
• Crafting of brand identity: The contrast between PeopleAhead and competitors lies not only
in product differentiation but also in the company’s mission statement and delivery.
One-time job search is available from thousands of online recruitment sources. Social
networking has been covered from diverse angles, attracting many different audiences.
The challenge is to associate www.PeopleAhead.com and TrueMatch technology with
“career advancement done right.” The goal is to become the only company that a person
thinks of for long-term career discovery, advancement, and development.
• Efficient value delivery: The base of customers (both individual and business) needs to
receive the proposed value in a timely manner, with consideration given to quality versus
quantity of results, alignment with existing objectives, and overall experience with the
PeopleAhead brand.
• Critical mass of business customers and individual users: The matching process requires
that both customers and users exist in the system from the outset of commercialization. This
need brings to the forefront the “chicken and egg” scenario; establishing either customers or
users requires the other constituent to exist already. The exact number that constitutes
“critical mass” ranges from 100 users per position to 10 users per position, depending on
compatibility between each constituency.
• System effectivity: The ability of PeopleAhead’s TrueMatch software to provide relevant
candidate recommendations is critical. The effectiveness of the software depends on the algorithms that match users with positions and the networking protocol that initiates recommendations between users and the people they know. Proposing an inappropriate match could
jeopardize the credibility of the system.
• Intellectual property (IP) strategy: PeopleAhead is engaged in two primary segments of
online enterprise: online recruitment and social networking. Existing competitors have
made many efforts to protect their methodologies through U.S. patents. However, precedent has not
been established for the legal assertions made by these companies. As a result, PeopleAhead
will assume an offensive IP strategy, consisting of diligent IP infringement review, patent
application where appropriate, and aggressive trade secret protection of best practices.
• Financial support: The founders’ investment is sufficient to form the business core and take
delivery of PeopleAhead’s Web site and software. Financial support will be required to fund
operations, execute the IP strategy, and secure customers and users to meet financial targets.
Without funding, PeopleAhead will not be able to proceed beyond the product development
stage.
• Sales process: PeopleAhead’s business model requires the acquisition of both business
customers who have available positions and users who will be matched with those
80 Section One ASSESSING THE MARKETPLACE
The evaluation section retains
the segmentation scheme
established previously
between business customers
and individual members.
Additional useful information
that might clutter the plan
should appear in an appendix,
but is not included in this
illustration.
positions. These two constituents may be reached through different sales processes
without overlap.
8. Evaluation & Control
PeopleAhead will evaluate user profiles to identify sets of profiles that are valuable to new
business customers, which will aid in the selection of subsequent target market customers.
8.1. Business Customers
Face-to-face meetings, phone conversations, and e-mail survey contacts with people from a range
of industries, company sizes, and functional areas provide a means to (1) build relationships
with prospective customers, (2) understand customer needs, and (3) ensure alignment between
PeopleAhead’s product and customers’ recruitment preferences. A summary of the key findings is
listed here:
• Employee fit: Will the applicant fit our corporate culture? Will the applicant fit with the team
we’re considering? Will the applicants’ competencies fit with the position requirements?
• Pay for performance: Objections to recruitment services focus not on price (though it is a
consideration) but rather on lack of performance.
• Unqualified applicants: Many people who want a job apply, whether they are qualified or not.
Recruiters then must scan resumes and weed out unqualified applicants instead of getting to
know the qualified applicants.
• Hard costs vs. soft costs: Most companies track the recruitment costs of hiring
providers, but few measure the time costs of hiring, opportunity costs of hiring the
wrong employee, or productivity costs of leaving a position unfilled. Recruitment
performance must be easy to measure. Value selling is difficult in the human resources departments.
• Valuable recommendations: Most recruiters use online recruitment as a necessary
but ineffective means of candidate sourcing, secondary to recommendations. Recommendations include the recommender’s judgment of the candidate’s fit with the
available position.
8.2. Individual Members
Periodic surveys of various prospective users of online recruitment services indicate
(1) current services, (2) methods that work well, and (3) biggest problems with online
recruitment providers. The following is a qualitative summary of the key findings:
• Willingness to try: Careers are important to people; they are averse to spending time
uploading resume information to online recruitment Web sites only because of the lack
of perceived value. They will spend time when the career opportunities are perceived as
valuable.
• Frustration: Job seekers are frustrated with available online recruitment providers.
Networking is the favored method for career advancement.
• Lack of differentiation: Regardless of the qualifications a job seeker possesses, it is
difficult to make them evident in a traditional resume.
• Motivation shift over time: Early professionals are motivated by financial rewards.
Mid-career professionals recommend people because it helps the people they know.
Late-career professionals hope to improve their own job search opportunities.
Appendix A. Organizational Chart of PeopleAhead
Appendix B. Competition: Passive Recruiters
WRITING A MARKETING PLAN CHAPTER TWO APPENDIX 81
Endnotes
1. This appendix was written by Tom Chevalier, Britt Hackmann,
and Elisabeth Nevins Caswell, in conjunction with the textbook
authors (Dhruv Grewal and Michael Levy) as the basis of class
discussion, rather than to illustrate either effective or ineffective marketing practice.
2. www.knowthis.com (accessed May 16, 2008); see also
“Marketing Plan Online,” www.quickmba.com (accessed May 16,
2008); “Marketing Plan,” www.businessplans.org (accessed
May 18, 2008).
3. Roger Kerin, Steven Hartley, and William Rudelius, Marketing
(New York: McGraw-Hill/Irwin, 2008), p. 53.
4. Roger A. Kerin, Steven W. Hartley, and William Rudelius,
Marketing, 12th ed. (Burr Ridge, IL: McGraw-Hill Education,
2015); www.knowthis.com (accessed May 16, 2008).
5. This listing of sources largely comes from the Babson College
Library Guide, www3.babson.edu, May 12, 2008 (accessed
May 15, 2008). Special thanks to Nancy Dlott.
6. This marketing plan presents an abbreviated version of the
actual plan for PeopleAhead. Some information has been
changed to maintain confidentiality.
7. Publishers’ and Advertising Directors’ Conference, September
21, 2005.
8. Mintel International Group, “Online Recruitment–US,” January 1,
2005, www.marketresearch.com (accessed September 1, 2005).
9. Corzen Inc., May 1, 2004, www.wantedtech.com (accessed
May 17, 2004).
10. Mintel International Group, “Online Recruitment–US.”
Design elements: Water bottle: CD_works27/Shutterstock; icons for Adding Value, Marketing Analytics, and Social & Mobile Marketing boxes:
Molotovcoketail/Getty Images; icon for Ethical & Societal Dilemma box: McGraw-Hill
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
LO3-1 Describe the 4E framework of digital marketing.
LO3-2 Examine the seven critical elements of online marketing.
LO3-3 Understand the drivers of social media engagement.
LO3-4 Understand various motivations for using mobile applications.
LO3-5 Recognize and understand the components of a digital marketing
strategy.
LO3-6 Understand the central factors in picking an influencer partner.
Regien Paassen/Shutterstock
DIGITAL
MARKETING:
ONLINE, SOCIAL,
AND MOBILE
CHAPTER 3
D
igital marketing and social media have revolutionized how companies communicate with,
listen to, and learn from customers. Modern
listening and analysis tools allow firms to identify salient, pertinent trends and customer input, such that
they can provide personalized assistance to meet customers’ needs. Such techniques are abundantly clear in
the social listening efforts demonstrated by the Hilton
Hotels chain, which in turn inform its marketing, service
provision, and efforts to engage with guests.
The concept of social listening refers to how
firms monitor and track what people are saying about
them on social media. Sometimes those comments are
relatively easy to track because they feature hashtags
or direct references to the brand, so a company can
turn on alerts and be notified anytime its name appears. Hilton works to respond in a timely way to any
mention, positive or negative, on any social media platform.1
In particular, it aims to resolve any complaint
within 12 hours, but it also offers charming, interactive
responses when guests post about a positive experience at one of its properties.2
But in other cases, the reference to Hilton is more indirect. Therefore, in addition to tracking any callouts to the
Hilton brand name, the hotel chain empowers about 200
staff members, who have qualified as local experts, to
search for, find, and respond to general requests for local
insights. For example, when one marathoner asked generally for advice about what to do after finishing an upcoming Chicago Marathon, the official Hilton Suggests Twitter
account suggested a visit to the Magnificent Mile.3
On the basis of its social listening efforts, Hilton then
designs other digital and traditional marketing communications. Its recent “Expect More. Expect Hilton.” campaign
clearly reveals this influence. The central message of the
campaign is that travelers who have been beaten down by
their past experiences and developed minimal expectations
of their hotels should expect something different, which
they can find by visiting Hilton’s website and then staying at
one of its hotels. The marketing campaign started off with
84
THE 4E FRAMEWORK FOR
DIGITAL MARKETING
As we will see throughout this book, digital marketing is becoming integral to every integrated marketing strategy and omnichannel communication tactic. Digital marketing pertains to all online marketing activities, which includes all digital assets, channels, and media,
spanning not just online but also social media and mobile marketing.8
Among the online
marketing activities associated with digital marketing, website design, blogging, and search
engine optimization are prominent.
Subsumed within the domain of digital media, the term social media refers to online and
mobile technologies that create and distribute content to facilitate interpersonal interactions,
with the assistance of various firms that offer platforms, services, and tools to help consumers and firms build their connections. Through these connections, marketers and customers
share information of all forms—from personal assessments and thoughts about products or images, to
uploaded personal pictures, music, and videos.
The changes and advances in online, social
media, and mobile technologies have created a perfect
storm, forcing firms to change how they communicate
with their customers. Traditional ways to market products, using brick-and-mortar stores, traditional mass
media (e.g., print, television, radio), and other sales
promotional vehicles (e.g., mail, telemarketing), are
no longer sufficient for many firms. The presence of
online, social media, and mobile marketing is steadily
expanding relative to these more traditional forms of
integrated marketing channels and communications.
The changing role of traditional media, sales promotions, and retail, coupled with the new online, social
media, and mobile media and technology, has led to a
different way of thinking about the objectives of digital
marketing: the 4E framework (see Exhibit 3.1):
LO3-1 Describe the 4E
framework of digital
marketing.
televised commercials featuring the popular and funny
actor Anna Kendrick. After monitoring people’s responses,
Hilton then expanded the campaign with Snapchat campaigns, Pinterest’s new advertising option, and Instagram
stories as well as Facebook and Twitter posts.4
Throughout the campaign, Kendrick amusingly stalks
guests, mobile phone in hand, to show them how they can
enjoy the free Wi-Fi on hotel properties (to watch her films
while exercising), get the lowest price by booking through the
hotel’s website, and even unlock their rooms with a digital key
downloaded onto their phones.5 In Snapchat stories, she uses
that free Wi-Fi to host a videoconference call for a “puppy
chat” with her dogs while sporting the puppy filter, of course.6
The efforts appear to be working, according to various
metrics. For example, Hilton has noted increases in direct
booking intentions among consumers who usually rely on
third-party sites, new visitors to its site and properties, membership in its loyalty program, and the number of younger
consumers who include Hilton in the set of hotels they
consider and then stay in.7
EXHIBIT 3.1
Digital Media
E x p e ri e n c e
Engagement
Education
Excitement
The 4E Framework for Digital Marketing
• Excite customers with relevant offers.
• Educate them about the offering.
• Help them experience products, whether directly
or indirectly.
• Give them an opportunity to engage with the
firm’s digital marketing activities.
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 85
Excite the Customer
Marketers use many kinds of digital offers to
excite customers, including mobile applications (“apps”) and games to get customers
excited about an idea, product, brand, or company. Firms actively use social networks such
as Facebook, Pinterest, and WhatsApp to communicate deals that are likely to excite consumers, such as when Lush Cosmetics encourages
customers to post pictures of themselves using
its products on social media by promising that
if they use #LushLife, they might find themselves featured on its official page.9
To excite customers, an offer must be relevant to its targeted customer. Relevancy can be
achieved by providing personalized offers,
which are determined through insights and
information obtained from customer relationship management (CRM) and/or loyalty programs. To obtain these insights and information,
the firm might use online analytic tools such as
Google Analytics.
In some cases, location-based software and applications help bring the offer to the
customers when they are in the process of making a purchase decision. For instance,
Staples may provide a loyal customer a relevant coupon, based on previous purchases
through his or her mobile phone, while the customer is in the store—a very relevant and
hopefully exciting experience.
Educate the Customer
An imperative of well-designed digital marketing
offers is that they have a clear call to action to draw
customers through their computers, tablets, and
mobile devices into online websites or traditional
retail stores. When potential customers arrive at the
websites or stores, the marketer has a golden opportunity to educate them about its value proposition and
communicate the offered benefits. Some of this information may be new, but in some cases, education is
all about reminding people what they already know.
Therefore, by engaging in appropriate education, marketers are expanding the overlap of the benefits that
they provide with the benefits that customers require.
Especially for efforts to market ideas, this second
E of the 4E framework can be a means to improve
people’s well-being, along with selling the underlying
concept. For example, in an effort to educate women
about how to perform breast self-exams, the #KnowYourLemons campaign posted pictures of a dozen
lemons to teach people about 12 shapes and lumps
they should be looking for when they check themselves
for cancer each month. It appeared on Facebook, supporting vibrant images that meant that even people
with limited literacy skills could understand the message. From that page, interested visitors could click a
link to a microsite with more detailed and scientific
Lush Cosmetics encourages customers to post pictures of themselves using
its products on social media by promising that if they use #LushLife, they might
find themselves featured on its official page.
Source: Lush Cosmetics/Instagram
Qwertee has created many different ways to win free tees that
include liking the company on Facebook and following it on Pinterest
or Instagram. Users who retweet or share Qwertee’s comments earn
additional chances to win a free tee; in exchange, Qwertee wins the
chance to earn new customers.
Source: Qwertee
86 Section One ASSESSING THE MARKETPLACE
information, but with a simple picture of lemons and some humorous content, the Worldwide Breast Cancer organization was able to market its preventive message effectively by
educating people about a key indicator of women’s health. The nonprofit organization also
garnered massive increases in donations to support its efforts.10
Experience the Product or Service
Although most of the top videos on YouTube are funny, silly, or otherwise entertaining, the
site’s most useful contributions may be the vivid information it provides about a firm’s goods
and services—how they work, how to use them, and where they can be obtained. YouTube and
similar sites can come relatively close to simulating real, rather than virtual, experiences.
Such benefits are very common for products that have long been sold online—so much so that
we might forget that it used to be difficult to assess these products before buying them. But
today, consumers can download a chapter of a new book to their tablet before buying it. They
can try out a software option for a month before buying it. They often view tutorials on everything from how to purchase caviar to how cowboy boots are made. Being able to experience
a product or service before buying it has expanded the market significantly.
For other offerings, such as services, digital marketing again offers experience-based
information that was not previously available unless consumers bought and tried the product or service. Sephora has perfected the art of customer service in-store, online, and in
social media. Customers know they can find beauty advice and makeovers in Sephora
stores. But they can also visit Sephora.com for information. The Community section contains thousands of conversations among Sephora customers, and to facilitate these conversational experiences, Sephora suggests a featured topic each week, asking contributors to
To educate women about how to perform breast self-exams, the #KnowYourLemons campaign posted pictures of a dozen lemons to
teach people about 12 shapes and lumps they should be looking for when they check themselves for cancer each month.
Source: Worldwide Breast Cancer
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 87
indicate their favorite eyebrow products, for example. The How-To section contains video
tutorials by customers who offer testimonials about their experiences, as well as from
beauty professionals who describe how viewers can achieve similar experiences with their
hair, nail, makeup, and skin care beauty tools.11 For customers seeking an experience in
other settings, Sephora also maintains its own YouTube channel featuring not only all the
tutorial videos but also dedicated videos that demonstrate how to use specific products like
bright pink eyeshadow.12
Engage the Customer
In a sense, the first three Es set the stage for the last one:
engaging the customer. With engagement comes action,
the potential for a relationship, and possibly even loyalty
and commitment. Through social media tools such as
blogging and microblogging, customers actively engage
with firms and their own social networks. Such engagement can be positive or negative. Positively engaged consumers tend to be more profitable consumers. When the
International House of Pancakes (IHOP) announced on
Twitter that it would be rebranding as IHOb, it attracted
attention all over social media. The stunt turned out to
be part of a marketing campaign to introduce IHOP’s
new burgers. Thus, the “b” signaled “burgers,” but it also
reflected a flipped “P,” mimicking the very act of flipping, whether pancakes or burgers. Social media users
were both intrigued and amused, and the brand experienced a remarkable 6,477 percent increase in social
media mentions in one day, ensuring substantial awareness of its new menu offerings. A few months later, however, it changed its name back to IHOP.13
Another creative example of customer engagement
comes from the Scandinavian furniture and home store
IKEA. Using its IKEA Place app, customers can select an
item from its catalog and then, by using the camera within
the app, visualize the item in their home or office.14
Sephora maintains its own
YouTube channel with
dedicated videos that
demonstrate how to use
specific products like bright
pink eyeshadow.
Source: Sephora USA, Inc.
When IHOP temporarily rebranded itself as IHOb to introduce
its burgers, it experienced an enormous increase in social
media mentions, ensuring substantial awareness of its new
menu offerings.
Source: IHOP
Restaurants, LLC/Twitter
88 Section One ASSESSING THE MARKETPLACE
But negative engagement has the potential to be even more damaging
than positive engagement is beneficial. Many companies also seek to leverage the viral appeal of hashtag campaigns, sometimes without thinking
through the potential consequences. adidas learned this lesson the hard
way with a UK Twitter campaign designed to promote new gear for the
popular Arsenal soccer team. Relying on advanced artificial intelligence
tools, the company promised to generate depictions of personalized Arsenal jerseys with users’ Twitter handles if they included #DareToCreate in a
tweet, with the photos posted on adidas’s own account. But the Twitter
universe contains a lot of terrible users too, so some of the personalized
pictures put racist, anti-Semitic, offensive, and obscene Twitter handles on
the back of a shirt with the team logo, creating unwanted, unintended,
problematic links for both adidas and Arsenal.15
Furthermore, social media engagement is moving past talking with
companies, as the Wheel of Social Media Engagement that we discuss in a
subsequent section reveals. After years of watching users express their
deep desire to purchase the products highlighted on their sites, the social
media powerhouses Pinterest and Instagram are adopting new initiatives
to facilitate purchase transactions. “Buy buttons” enable users to click on
a featured post or picture to initiate a sales process. On Instagram, the
button is similar in function to the Facebook buy button. Advertisers on
the site can include buy buttons in their ads, and when users click, the button links them to an external website where they can complete their
purchase. The process is a little different on Pinterest. The presence of
“buyable” pins signals to users that they may click on the link to receive
detailed information about available colors, sizes, and other information.
In addition, Pinterest generates a selection of shopping recommendations
for every customer, derived from data generated when they use the platform and pin items they like. Click-throughs from the social media platform
to the retail sites selling the recommended products rose 40 percent
within a few months of the moment Pinterest introduced the recommendations section.16
IKEA engages customers with its “Place”
app that enables customers to select an
item from its catalog and then, by using the
camera within the app, visualize the item in
their home or office.
Source: Inter IKEA Systems B.V.
To engage its customers, Pinterest uses “buyable” pins, which signal users that they may click on the link to receive detailed
information about products.
Source: Pinterest
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 89
ONLINE MARKETING
As a primary element of digital marketing, online marketing might be the most familiar and
well-established. And it continues to grow rapidly, expanding into innovative new marketing
activities in various electronic channels, such as websites and thought-sharing sites, which
are more widely known as blogs. Nearly all manufacturers, retailers, and service providers in
operation today have created and maintain websites, blogs, and a social media presence
(such as on Facebook or Twitter) to enable customers to interact with them over the Internet. Arguably the most powerful and influential online marketer in the United States,
the firm that strives to be “earth’s most customer-centric company; to build a place
where people can come to find and discover anything they might want to buy online” is the
e-commerce giant Amazon.17
Firms use these primary online channels for a variety of goals that reflect the 4Es:
informational websites that educate consumers, entertaining websites that excite them,
transactional e-commerce channels to help them experience the products they sell, culminating in websites that engage with consumers. With regard to e-commerce, online, and
omnichannel retailing, we provide additional details in Chapter 17, when it comes to informational, educational goals, we provide an extended discussion in Chapter 18.
As firms go about developing their online marketing efforts through their websites and
blogs, they can turn to the 7C framework for online marketing (Exhibit 3.2).18 This framework
encompasses seven critical elements that marketers must consider carefully when devising
an online marketing strategy and designing
websites and blogs to target and appeal to
both potential and current customers.
Core Goals
The basis of any marketing strategy is its
goals. In general, the primary goal of any
website is to engage its users by encouraging
them to spend time viewing and interacting
with its content. More specifically, however,
the goal may be to engage the customer in
commerce, as exemplified by Walmart’s site
(www.walmart.com). Alternatively, it may be
to educate the customer (or potential customer) about the product, such as by introducing an offering using appealing, engaging
content, like Hasbro’s Hanazuki line and
related digital content (www.hasbro.com
/en-us/brands/hanazuki).
Specifically, Hasbro has embraced
online marketing to reflect its core goals. To
introduce this brand called Hanazuki, it
developed an entire series, just like it did
when it launched My Little Pony. But
whereas shows featuring the ponies appeared
LO3-2 Examine the seven
critical elements of
online marketing.
PROGRESS CHECK
1. What are the 4Es?
2. What social media elements work best for each of the 4Es?
EXHIBIT 3.2 The 7C Online Marketing Framework
1 Core
goals
The 7C online
marketing
framework
2 Contextual
elements
(design &
navigation)
3 Content
5 Communication 4 Community
6 Commerce
7 Connection
90 Section One ASSESSING THE MARKETPLACE
The Hasbro site (top) is focused
on selling the Hanazuki brand or
experience and thereby driving
sales on a more subconscious
level. Compare this to the
Walmart website (bottom),
which is more traditionally
focused on selling Hanazuki
merchandise with little concern
for the brand itself.
(Top) Source: Hasbro, Inc.; (bottom)
Source: Walmart Stores, Inc.
on television, Hanazuki’s Moonflowers are available on the brand’s own website and
YouTube, anytime that viewers want to watch.19 Then the advertising appearing in conjunction with the online series was matched to its content (as we discuss in the third C of the 7C
framework), rather than reflecting more traditional approaches. With this online marketing
approach, the company also could assess how well it was engaging and connecting with (the
seventh C) customers in real time, so then it also adjusted its communications (the fifth C)
to their preferences, such as adding music at specific points.
Contextual Elements
The second element of website design involves the traditional contextual elements, such as
design (e.g., color, font) and navigation. These contextual elements must be in alignment with
the target market(s). Because Walmart’s core goal is to encourage purchases, its commerceoriented website features a simple look and feel, which help consumers browse and find the
products they want easily—similar to Amazon.com (its primary online competitor). In contrast, the Hanazuki page is filled with animation, movement, and bright colors, encouraging
visitors to take their time exploring the different characters, watching videos, downloading
apps, and perhaps shopping too. Looking closely at the design and color schemes of the websites shown here, notice that Walmart’s home page aligns with its adult target market, while
Hanazuki’s bright, bold colors and large font are in line with its female, preteen target market.
Content
The information content on the site (text, graphic, video, and audio) is critical to being
successful with the 4Es of digital marketing discussed earlier in this chapter. Marketers
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 91
must continually monitor the content they
share digitally to ensure that the information
is relevant to their target market(s) and creates excitement, such that users will be interested in engaging more with both the website
and the firm.20 By providing the right content,
the firm anticipates visitors’ questions and
attempts to answer those questions through
its content. The home page is particularly
important in this regard. When visitors land
on this page, the firm’s purpose must be
clear; if not, visitors will quickly exit the site.
It is critical that the content aligns with
the target market and that content is not
always directly about the firm’s products or
services. For example, nearby is a Facebook
post from Alex and Ani. Notice the nature of
the post. The company is not showcasing its
jewelry per se, but rather providing a motivational quote that resonates with young
females, its primary target market. Likewise,
examine the Fidelity tweet that appeared during April when income taxes are due. Fidelity
is not pushing one of its product offerings,
but instead is providing much desired advice
on how to lower one’s tax bill. While the goal
of e-commerce is to convert website visitors
to paying customers, firms should resist the
temptation to continually and exclusively sell,
sell, sell.
In the modern, online environment,
every online channel helps customers interact
with the firm. Therefore, firms not only have
to present the content to feature rich information, but they also need to devise appropriate
keywords to describe that content. When a
user enters a keyword in a search engine like
Google, an organic search ensues that determines the ranking that appears on the search
engine’s page. These rankings are not based
on money obtained by firms appearing in the
search. The more relevant the key term, the
higher the ranking will be on the search
engine’s page.
But because consumers often consider only the first few entries in a list of search
results, search engine marketing is becoming an important component in any firm’s digital
marketing strategy to improve a key term’s position on the search engine’s page. Search
engine marketing (SEM) is an activity used in online searches to increase the visibility of a
firm by using paid searches to appear higher up in search results. Paid search is similar to
conventional advertising because firms pay to appear higher up in the search results, and
also often pay an additional fee every time a user clicks on their entry.21
Community
Firms also use their websites and blogs actively to allow their customers to interact,
socialize, share information, and create a sense of community by posting comments,
The content of these messages must resonate with its target market but need
not always showcase merchandise or services, as in the Facebook post from
the jewelry firm Alex and Ani (top) and the Fidelity tweet prior to the April
income tax deadline (bottom).
(Top) Source: Alex and Ani, LLC; (bottom) Source: Fidelity Management and Research LLC
92 Section One ASSESSING THE MARKETPLACE
Basketball player Steph Curry may be more influential on
Twitter than the firms he tweets about, like Under Armour.
VCG/Getty Images
reviews, responses, images, videos, and suggestions for new
products or services. Thought-sharing sites are particularly effective for creating a sense of community, whether they take the
form of personal, corporate, professional, or micro blogs. The
different types of blogs have varying degrees of efficacy with
regard to the 4E framework of digital marketing depicted in
Exhibit 3.1.
Whereas they previously might have been confined to a journal or diary, kept hidden in a person’s room, blogs (from “weblog”)
or microblogs (e.g., Twitter) allow people to share their thoughts,
opinions, and feelings with the entire world. Personal blogs are created by and usually for individuals, with relatively few marketing
implications.
But for firms, corporate blogs created by the companies
themselves are central to their digital marketing efforts. These
blogs can educate customers as they discuss their products or
services and create excitement when they promote special
offers. Although they do not have control over customers’
posts, and sometimes the customers’ posts are negative, this
two-way dialog with end users is very engaging. For example,
the American Express OPEN Forum site invites business
experts to share their wisdom in various posts. Because the
information is so engaging and educational, the site draws
many visitors, and though American Express does not create
the content (or, hopefully, have to pay for it), it retains editorial
control.22 Corporate blogs can also post videos that are not
only educational, but also help customers simulate the experience of using the product or service.
Professional blogs instead are written by people with some
particular expertise, who review and give recommendations on
products and services. Marketers often offer free products or
provide modest remuneration to top-rated professional bloggers
in the hopes of getting a good product or service review. Marketers
have less control over professional bloggers than they do their
own corporate blogs. But consumers seem to trust professional
bloggers’ reviews—except when they realize that professional bloggers are being compensated for positive reviews. Similar to corporate blogs, professional blogs can be exciting and educational by exposing customers to
the nuances of different products or services. They are also excellent experience-creating
mechanisms when, for instance, bloggers post videos of themselves or others using
the products or experiencing the service. These factors taken together with customers’
ability to post responses to the blogs make this community development mechanism very
engaging.
Influential bloggers can make all the difference. Steph Curry is great on the basketball
court, but his activities on the web help establish his reputation as a reliable source of
information, leading brands as varied as Under Armour and Brita to seek him out to share
information about their products.23 Under Armour might have almost a million Twitter followers,24 but Steph Curry has 13.7 million.25 As part of his partnership, in his Twitter profile
and cover pictures, Curry sports Under Armour gear. In parallel, Under Armour’s Twitter
cover picture features Curry prominently.26
Another way to build a community is by crowdsourcing, in which users submit ideas for
a new product or service and/or comment and vote on the ideas submitted by others. For
example, Betabrand has built its entire business by crowdsourcing clothing designs. Customers submit design ideas and provide feedback on items before they are manufactured, which
means they become invested in each item the brand brings to market and thus may be more
likely to purchase them.27
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 93
Communication
Digital communities rely on clear, helpful, meaningful content (the third C). The communication vehicles that appear on any website or blog determine how effectively the firm can
interact with, educate, and engage site visitors. Virtually all websites provide a mechanism for
customers to communicate with them through live chat, instant message, telephone, or e-mail.
The various types of blogs described in the previous section also can engage consumers by providing a compelling platform for two-way communications. In particular, Twitter continues to
evolve as the preferred method for many people to interact with firms, to inform them about
concerns or complaints. A thorough discussion of these methods of communicating digitally
with customers is found in Chapter 18.
Commerce28
When it comes to actual purchases, consumers exhibit varying preferences for the types of
digital marketing tools they want to use. Some consumers rely on websites; others want a
mobile app that enables them to shop quickly. Yet despite the predominate use of apps for
checking social media or the weather, desktop usage is greater, and conversion rates are
higher, for online purchases.29 Many people might start searching online but then visit a
physical store in person for their actual purchase. The most loyal customers use multiple
channels. Customers thus demand that firms offer them a range of options, consistently and
constantly, so that they can pick and choose the channel from which to purchase at any
specific time.
Betabrand uses crowdsourcing by having its customers submit clothing design ideas and feedback on items before they are
manufactured.
Source: Betabrand
94 Section One ASSESSING THE MARKETPLACE
Sephora, the specialized beauty product retailer, has
developed innovative methods for capitalizing on this
desire. Although it has long maintained a good reputation
for its interactive website, the company remains in constant pursuit of a strategy that enables it to reach both current and potential new customers through the most
channels at the most frequent times. Its mobile app
encourages customers to sign up for the loyalty program
and create a Beauty Insider account, which grants them a
mobile version of Sephora’s loyalty card. The app provides
an in-store companion tool that allows them to check their
loyalty points at any time, access their past purchase history, receive personalized recommendations, and scan
items while in stores. The close alignment across these
channels provides a seamless experience. Furthermore,
users of the app can leverage Sephora’s Visual Artist to try
on products virtually using their mobile devices. The
Visual Artist analyzes facial features and makes recommendations for applying the products. Finally, to reach
customers through even more channels, Sephora has partnered with Google Home to create the Sephora Skincare Advisor, which issues announcements on skin care advice, tips, and product recommendations.30
Connection
The final E of the 4E framework involves engagement; but it also might be called connection.
A good website or blog engages customers and provides them with a call to action—whether
to buy, post, review, comment, or share. Call-to-action buttons such as Buy Now, Learn
More, or Show Your Support encourage visitors to delve deeper into a website, to explore
other pages and, in general, spend more time on the site. The Warby Parker website includes
four call-to-action buttons that invite visitors to get started, order frames to try on at home,
take a quiz, or shop online.31
These online marketing activities are geared to get customers to interact and engage
with the firm continuously and in a positive manner (e.g., purchase, repurchase, share
positive word of mouth). We discuss engagement and connection strategies, according to
the “listen, analyze, and do” framework, in the last section of this chapter.
Through Sephora’s mobile app, Beauty Insider account
holders can check their loyalty points, access past purchase
behavior, receive personalized recommendations, scan items
while in stores, and much more.
Source: Sephora USA, Inc.
Warby Parker connects customers with four call-to-action
buttons inviting visitors to get started, order frames to try on
at home, take a quiz, and shop online.
Source: Warby Parker
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 95
THE WHEEL OF SOCIAL MEDIA
ENGAGEMENT32
Marketers recognize the importance of engaging customers; social media engagement offers
a profitable way to engage customers by taking into account their current behavior while
also setting the stage for future behavior. The growth of social media and their effects in turn
stem from several related factors.
A unifying framework, the Wheel of Social Media Engagement, comprises these
fundamental drivers of social media engagement as five related effects, as Exhibit 3.3
shows. In the Wheel of Social Media Engagement, we propose that the hub is a repository of past and current social media engagements, and the circles around the wheel are
the five effects that drive social media, as detailed next.
The Information Effect
The information effect is the outcome of digital marketing in which relevant information
is spread by firms or individuals to other members of their social network. Information—
whether because it is funny, cute, instructive, surprising, or interesting—is the key to turning the wheel. But the relevance of the information, and therefore its impact, depends on
its context and the receiver. Marketers work hard to provide information that is somehow
LO3-3 Understand the drivers
of social media
engagement.
EXHIBIT 3.3 The Wheel of Social Media Engagement
Network
Engagement
Dynamic
Timeliness Connected
Information
PROGRESS CHECK
1. Describe the components of the 7C online marketing framework.
2. Differentiate between organic and paid search.
96 Section One ASSESSING THE MARKETPLACE
Are Algorithms Discriminatory? Questions about
How Facebook Targets Advertisingi
The sophisticated algorithms that Facebook and other digital
platforms use to segment consumers are widely touted as
benefits for advertisers and users of their platforms. By using
the vast available information to identify and specify consumers
who are interested in particular ideas, products, or services,
companies can ensure that their marketing goes to an interested audience of likely buyers. But the flip side of this capability is less rosy: If the algorithms can specify a target market,
they also can enable discriminatory practices by advertisers
that seek to exclude certain populations from accessing their
products.
According to a warning issued by the U.S. Department of
Housing and Urban Development (HUD), Facebook’s segmentation capabilities enable unethical housing providers to prevent
their ads from being seen by people whose prior activities on
the social media platform suggest they are disabled or members of protected racial or religious minorities. For example, if
a user has liked posts by service animal organizations or
searched for disability service providers, some rental housing
companies might exclude them to avoid having to provide appropriate access to potential renters with disabilities. Realtors
and renters also might exclude people who signal their racial
or religious identity through their searches. Such modern versions of redlining—the historical practice by which housing
providers have prevented certain protected classes of citizens
from moving into an area, using subtle and difficult-to-prove
methods of discrimination—raise serious concerns. According
to HUD, these forms of discrimination are the responsibility of
the digital platforms to address.
But the government warning and its related demands
create several problems for Facebook and other platforms.
First, they work hard to keep their proprietary algorithms
private and protected from the risk of being stolen by competitors. If HUD ultimately demands that they disclose
those practices to determine if they are discriminatory, the
platforms would have to make some key intellectual property and sources of competitive advantage public and
available to anyone. Second, they note that providing information about how their targeting works also would expose
consumers’ data, creating an array of ethical and privacy
issues.
In some cases, the discrimination appears less intentional
and more a function of how the targeting tactics have developed over time. For example, a study of Facebook advertising
showed that advertisements for jobs in the logging industry
were relayed overwhelmingly to white men, whereas calls for
secretarial jobs were routed mostly toward Black women.
When the test ads featured pictures of people of other races
and genders, the automated algorithms continued to display
the stereotypical targeting. Yet the simple addition of a picture of a football versus a flower led to increased gender-biased targeting of advertising, even if they had nothing to do
with the actual product being advertised. Thus, even if a company is not actively attempting to discriminate against some
class of consumers, the digital platforms might be leading
them into discriminatory behaviors—and limiting any goodfaith efforts to seek out and pursue more diverse pools of
potential employees or purchasers.
Marketing Analytics 3.1
contextually relevant, such as interjecting a humorous advertisement into a social
network of users who like to joke around and share funny pictures.
As we think further about the information effect and the incredible magnitude of information being conveyed through reviews, Facebook posts, tweets, Snaps, and so on, it raises
the question: What can and should marketers do with all of it? The amount of information
available can be overwhelming, even for the best marketers. Even when they know a lot
about potential customers, marketers continue to find it challenging to create appeals that
consumers embrace and to leverage the information they obtain from consumers in ways
that encourage shoppers to purchase from them.
To assist them in this effort, Facebook promises retailers that it can help them achieve
effective advertisement placements and increased sales through its Dynamic Ad option.
This feature allows customers to complete purchases without leaving the Facebook app, but
more pertinently for retailers, it specifically targets advertising to users according to their
previous visits to retail websites or apps. In so doing, it targets customers who already have
indicated some interest in the retailers’ products. Yet this element of the information effect
also raises some questions, in that Facebook has gotten into trouble in the past for allowing
businesses to target their advertising on the basis of Facebook user data. The potentially
negative repercussions of using information gathered from Facebook to target ads are
discussed further in Marketing Analytics 3.1.
The Connected Effect
The connected effect is an outcome of social media that satisfies humans’ innate need to
connect with other people. This connection in social media is bidirectional: People learn
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 97
what their friends are interested in, but they
also broadcast their own interests and opinions to those friends. Humans seek connections to other people, and social media have
provided them with a new, easy, and engaging
way to do so. In particular, people can connect by sharing different types of information, whether their location, the food they
have consumed, exercises they have completed, or a news article that they find interesting. And they achieve this connection by
checking in, posting a picture to Instagram,
uploading a video to YouTube, or sharing a
link to an article they have liked on Facebook.
Social media platforms constantly add features to foster such connections. Facebook
expanded its messenger feature to allow video
chats through its Portal hardware, as discussed
in Adding Value 3.1. Brands like Hallmark
Brands like Hallmark seek to leverage the connected effect. Using #CareEnough,
Hallmark encourages people to reflect on their connections with their loved
ones—as well as to remember to buy them a card.
Source: Hallmark Licensing, LLC
Adding Value 3.1 The Portal from Facebook with an Assist from Amazonii
The Portal and Portal Plus from Facebook are video-enabled
smart speakers that support easy video chats. Designed to
follow users as they move, the wide-angle camera embedded
in the Portal makes people’s digital interactions more fluid and
natural rather than forcing video chatters to sit still or else
adjust the screens manually anytime they move. It also offers
touchscreen functionalities and links seamlessly with Facebook’s Messenger service.
The introduction seemed logical; an estimated 400 million
people already use Messenger to make calls each month. It also
aligns with Facebook’s stated mission of bringing people together, encouraging them to make visual contact with loved
ones far away, even as they go about their daily activities. With
the Portal, people who likely already use Facebook to keep in
touch thus can continue to do so, through an alternative channel that is richer, more personal, and more immediate.
But in other ways, the introduction appears less than logical.
In particular, Facebook is not known for its hardware. Applying
its brand to a physical product, rather than a social media site,
may seem foreign to consumers, and in previous efforts, such
as a Facebook-branded smartphone, the experiments have not
met with great success. Noting this concern, Facebook accordingly entered into a collaboration with an apparent competitor to produce the Portal. That is, the Portal represents an
extended use of Amazon’s Alexa technology, moving from
solely voice-activated to video options. The insights and technical knowledge it gained from this collaboration helped
Facebook innovate in a field in which it has little experience.
Other challenges may require a bit more consideration,
though. In particular, Facebook has been rocked by several recent privacy scandals, making questions about how the Portal
will collect and use people’s personal conversations, appearance, and locations highly salient. To address concerns that it
might listen in without permission, the Portal features a passcode lock, and users can shut down the microphone and video
functions with a single button. Furthermore, Facebook promises
users that all the data from their video chats are encrypted and
never saved. However, such promises may not be very convincing in the modern era of data breaches and hacks.
Still, the appeal of the devices—such as letting two friends
share a Spotify listening session or giving grandparents a
means to read a story to their distant grandchildren—may overcome these concerns. An estimated 16 percent of U.S. shoppers indicate that they plan to purchase a smart speaker
sometime soon, so getting in on this growing market has clear
appeal for Facebook.
Facebook helps connect people via video chats through its
Portal hardware.
Josh Edelson/AFP/Getty Images
98 Section One ASSESSING THE MARKETPLACE
seek to leverage this sense of connection. Using #CareEnough, Hallmark encourages people to
reflect on their connections with their loved ones—as well as to remember to buy them a card.33
The need to connect with others has been a powerful evolutionary force throughout
human history, driving communities as well as civilizations, including our modern technology civilization. Today, humans are less physically connected because they shop online and
have products delivered instead of interacting with the local shopkeeper, and they telecommute instead of working in an office with colleagues. But social media empower them to
connect in novel ways. Some connections involve existing friends and colleagues; others
refer to acquaintances who might not have been connected in an offline world or with firms,
brands, or news outlets that were not available before social media created the link.
This increased connection allows consumers to seek social approval for themselves and
provide social approval to others. For example, consumers click to express their liking of
various posts by members of their social networks. However, the increased forms of connection created by this effect also might threaten to annoy users who start looking at their
smartphones every time they ding. Markets for filters could emerge to help consumers categorize posts and updates in ways that reflect their own preferences.34 Furthermore, whereas
different platforms currently serve distinct purposes (e.g., Facebook for personal and
LinkedIn for business), these social media outlets might seek to grow by encouraging users
to visit their platform exclusively, then sort the various purposes from that point. Facebook
already owns Instagram, which it has used to establish links between social networking and
picture-sharing platforms.35
The Network Effect
The connected effect enhances human interaction on a one-to-one basis and enables the
impact of the interaction to expand exponentially. The network effect is the outcome of
social media engagement in which every time a firm or person posts information, it is transferred to the poster’s vast connections across social media, causing the information to
spread instantaneously. That is, when a person or company posts something on social
media, other people or firms in their network might repost it, as when one “shares” on Facebook. The credibility and influence of the original poster and the network partners that
choose to share the post will determine the ultimate influence of the post. From a marketing
perspective, people who discuss products are more likely to buy them.36
One way companies extend their network effects is by paying celebrities or pseudocelebrities with large followings (i.e., bigger networks), hiring them to write posts about or
upload pictures with their products. CoverGirl may have over 600,000 Twitter followers,37 but
one of its CoverGirls, Katy Perry, has more than 100 million.38 If Katy Perry tweets a closeup of her eyelashes, lengthened using her favorite CoverGirl mascara, CoverGirl will have
instantly reached all her millions of followers. The message
here is clear: By using influencers as brand ambassadors, a
firm can use the power of digital marketing to exponentially spread its message. Influencer marketing is discussed
in greater detail in the last section of this chapter.
The Dynamic Effect
The impact of the dynamic effect of social media engagement
is twofold. First, it describes the way in which information is
exchanged to network participants through back-and-forth
communications in an active and effective manner. This
back-and-forth exchange promotes engagement, which
makes consumers more likely to buy. The dynamic nature of
social media is a very efficient way to get information or to
resolve disputes, and it can provide the firm with insights
into how to best provide a product or service in the future.
Customers can communicate their level of satisfaction with
an issue and suggest further actions to be taken.
If Katy Perry tweets a close-up
of her eyelashes, lengthened
using her favorite CoverGirl
mascara, CoverGirl will have
instantly reached all her
millions of followers.
Harry Durrant/Getty Images
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 99
Second, the dynamic effect expands the impact of the network effect by examining
how people flow in and out of networked communities as their interests change.39
Consider a social network community that is concerned with water bottles. As it evolves
and matures, its members develop varied interests—some want to know where to buy the
best water bottles, while others are concerned about the
water bottles’ ecological benefits. New people join the
community, while others leave; and people’s interests
change, causing them to seek out new and different information. Because the community is dynamic, water bottle
social media sites can specialize to meet the needs of
their varied constituents. From a marketing perspective,
this dynamic effect is powerful. Marketers can provide
very specific information, which should be well received
by the interested parties.
The Timeliness Effect
The timeliness effect of social media engagement is concerned with the firm being able to engage with the customer at the right place and time—that is, 24/7 from any
location. To be effective, firms must, in fact, respond quickly
or the timeliness effect benefit diminishes. Such benefits
can be especially necessary when the marketing involves
ethical issues as Social & Mobile Marketing 3.1 reveals.
Responding in a timely manner can impact customers’
buying intentions: 80 percent of people expect a response
to social media complaints within 24 hours, and 50 percent
Using beacon technology, Coca-Cola is able to engage customers in
a timely manner by offering moviegoers a free Coke at the moment
they walk into a movie theater.
SeongJoon Cho/Bloomberg/Getty Images
Just Don’t Eat the Detergent! Who Is
Responsible for Consumers’ Risky
Behaviors?iii Social & Mobile Marketing 3.1
The Tide Pod challenge may be about the dumbest thing available on social media. But it’s also extremely risky and quite serious, as dozens of teenagers suffered damage to their health
when they intentionally ingested the small packets of detergent,
despite extensive warnings on the packaging to avoid just that
behavior.
Faced with a public relations nightmare, Tide has taken to
social media, which is also the source of inspiration for most of
the people eating the Pods, then uploading videos of themselves
doing so. The company pleads with teens not to eat the detergent. It has also released a public service announcement to highlight the dangers, and it has asked other advocacy groups to
help it discourage the practice. It brought in New England
Patriots’ Rob Gronkowski to issue a skeptical video that it posted
on Twitter, Facebook, and YouTube. Then on various social media
platforms, it has asked the providers to remove content depicting the dangerous behaviors.
But ultimately, there is little that Tide can do if teens, aware of
the risks and dangers, choose to consume a product that clearly
is not designed for human consumption. Most of them appear
driven by a desire for Internet notoriety. This desire is powerful;
whereas in 2017, there were 53 cases of accidental ingestions
of detergent, in just the first month of 2018, poison control centers reported 40 cases, many of which were not accidental.
That figure represents only people who sought help for the ill
effects of eating the detergent; many others simply waited out
the nausea, vomiting, and gastrointestinal suffering at home.
Whose fault is it that people, mostly young people, are eating
detergent pods in the Tide Pod challenge?
JLMcAnally/Shutterstock
100 Section One ASSESSING THE MARKETPLACE
of them will not buy from companies in the future if there is no response. Customers have
grown accustomed to an incredibly fast pace on social media. On average, companies offer
Twitter responses in 1 day, 7 hours, and 12 minutes, and yet 64 percent of users still expect
a response within just 1 hour.40
Many customers enjoy the timely interactions with firms when they engage with them at
the point of purchase. To reach customers at the right time, Coca-Cola relies on beacon
technology—that is, technology that allows companies to detect where customers (who have
enabled the feature) are at each moment through their smartphones.41 Its pilot campaign
offered moviegoers a free Coke at the moment they walked into the theater if they had already
downloaded the appropriate app from the brand.42
As the Wheel of Social Media Engagement shows, intimate connections can arise between
a firm and customers. Firms increasingly are not only investing time and money in creating
engagement, but also in capturing engagement data. Social media posts contain rich information
that a well-equipped company can mine to understand its customers better. As a consequence,
firms are striving to make profitable customers even more profitable through increased engagement. The power of the Internet, mobility, computing, and analytics that harness the power of
social connections all have led to a leapfrog advance in the potential to create meaningful engagement with customers. According to the Wheel of Social Media Engagement, understanding how
to engage effectively with consumers thus is important for marketing managers.
GOING MOBILE AND SOCIAL
In the United States, 81 percent of adults own a smartphone,43 and more than half
of them make purchases on these devices.44 More than 200 billion apps were downloaded globally in 2018,45 and customers are expected to spend $189 billion on
mobile apps by 2020. Although lots of apps are free to download, many have in-app
features for purchase and display ads. Remarkably, 98 percent of the revenue generated from apps is made from these “free” apps.46
McDonald’s sees an opportunity to help cut labor costs, increase its mobile
presence, and boost customer satisfaction all at the same time through a new
mobile application that sends orders directly to the kitchen and shortens wait
times for hungry customers. To help customers develop the new habit of choosing their phone, rather than the person at the counter, to place their orders, the
fast-food giant temporarily offered free fries on Fridays to mobile app users.
McDonald’s hopes that once customers start using the mobile app to fulfill their
meal and snack cravings, the resulting habit will be tough to break. Business
insiders predict that fast-food sales through mobile orders will increase, especially as a result of the COVID-19 pandemic. With more than 20 million registered users of the mobile app already, McDonald’s is a current leader in this
space. Customers can order and pay through the McDonald’s app, then pick up
their order curbside, inside, or via the drive-thru. Or they can use the Uber Eats
app and have it delivered.47
Research has highlighted seven primary needs that apps meet: the needs to
find “me time,” socialize, shop, accomplish, prepare, discover, and self-express.48
• The most popular need is all about entertainment and relaxation—that is, “me
time.” People spend nearly half their time on their smartphones seeking fun,
whether by playing Candy Crush Saga or by watching Stranger Things through
their Netflix app.
LO3-4 Understand various
motivations for using
mobile applications.
PROGRESS CHECK
1. What are the five drivers of social media engagement described in the
Wheel of Social Media Engagement?
With over 20 million users, McDonald’s
mobile app enables customers to order,
pay, and then pick up their order
curbside, inside, or via the drive-thru.
Or they can use the Uber Eats app and
have it delivered.
Ira Berger/Alamy Stock Photo
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 101
• Because apps enable people to stay connected with friends both near and far,
specialized entrants are growing to meet people’s need to socialize. For example,
in China, the social networking app Weixin (pronounced way-SHEEN), known as
WeChat outside China, allows users to shop, read news, share videos, make payments, and more.49 In 2019, WeChat had over 1.16 billion monthly active users,
with over 50 percent of those users between the ages of 25 and 35 years. 19 percent
of the users are between 19 and 24 years old. 45 billion messages are sent on
WeChat daily.50
• Shoppers want to shop anytime they choose. In a process that facilitates 24/7
shopping called ­showrooming, a customer visits a store to touch, feel, and even
discuss a product’s features with a sales associate, and then instantly compares
the prices online to see whether a better deal is available. Using the showrooming
Amazon app, if the Amazon price is better, the customer can buy the product
online with a single click.
• On the flip side of the need for fun, the need to accomplish means that people
seek to manage their finances, improve their health, or become more productive
through apps.51 MyFitnessPal allows users to track their daily exercise, calories,
and weight loss, and its social component enables people to post their successes.
This app also can interact with Fitbit, ­Jawbone UP, and iHealth Wireless
Scales.52
• Calendars, flight trackers, and trip planning apps help consumers meet their need
to prepare.
53 For example, Google Travel helps people plan vacations by storing
and organizing all their travel information, such as flight itineraries and hotel reservations. In addition, it offers customized tours and maps for when you get to your
destination. Google Travel links with your Gmail account to gather your travel
information and stores it offline so you have access to it even if you don’t have
access to Wi-Fi.54
• When people seek information due to their need to discover, they now turn to
weather and news apps. Flipboard produces a full-screen magazine, aggregating multiple news and entertainment sources to provide top stories,
entertainment, local news, and business news personalized to your interests. Its social component also allows readers to send selected stories to
friends.55
• Finally, people have diverse interests and tastes and thus a need for apps
that allow them to express themselves. Tapatalk aggregates tens of thousands
of interest groups into a single app, making it easy to connect aficionados of
just about any interest or hobby.56
As you can see from this discussion, apps can meet several needs at once.
Sharing an interesting story with friends via Flipboard can meet the needs of
discovery and socialization. Consider the person who purchases Chinese food
via GrubHub’s app on her ride home; she’s not only shopping, but she’s also
avoiding making dinner to get some extra “me time.” With this information in
mind, apps (and advertising within those apps) can be designed and targeted
in ways that better apply the 4Es. This is especially true if the app requires a
user to create a profile. At that point, the user moves from obscurity to someone advertisers are willing to pay organizations to reach. For example, IBM,
owner of the Weather Channel app, does not know much about its users since
With more than 3 billion
downloads, Candy Crush
Saga clearly fulfills for many
people an important need for
unproductive “me time.”
Alexat25/Shutterstock
Weixin, known as WeChat outside China, has over 1.16 billion monthly active users.
The app allows users to shop, read news, share videos, make payments, and more.
Source: WeChat
102 Section One ASSESSING THE MARKETPLACE
the app is simply downloaded. On the other hand, Puma knows its users’ gender, birthday, height, weight, and exercise preferences because its Pumatrac workout app captures
this information.
App Pricing Models
A key decision for firms producing apps is what to charge for them. There are four basic
ways of generating revenue from apps—ad-supported apps, freemium apps, paid apps, and
paid apps with in-app purchases.
Ad-supported apps are free to download, but ads appear on the screen. They generate
revenues while users interact with the app. Although there are many of these types of apps,
the majority of app revenue is generated from the remaining three pricing models, discussed
next.
Freemium apps are apps that are free to download but include in-app purchases that
enable the user to enhance an app or game. In Candy Crush Saga, you get five lives to play
in the game. When you lose a life, it takes 30 minutes in real-life time to get that life back.
This is where in-app purchases come in. For just $0.99, you can get all five lives back immediately so you can keep playing.57 Candy Crush Saga is estimated to earn the developer
about $2.5 million a day in revenue from in-app purchases.58
Paid apps charge the customer an up-front price to download the app ($0.99 is the most
common), but offer full functionality once downloaded. Similar to the freemium model,
paid apps with in-app purchases require the consumer to pay initially to download the app
and then offer the ability to buy additional functionality.
Not only does Flipboard aggregate all of the news important
to you in one place, its unique
format also gives the app the
look and feel of a printed
magazine.
Alliance Images/Alamy Stock Photo
PROGRESS CHECK
1. What are the seven types of customer motivations for using mobile apps?
2. What are the four options for pricing mobile apps?
3. What are some of the most popular types of mobile applications?
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 103
HOW DO FIRMS ENGAGE THEIR
CUSTOMERS?
Now that we have an understanding of various digital marketing options at the firm’s disposal, it is important to determine how firms should go about engaging customers through
online, social, and mobile media. The three-stage process found in Exhibit 3.4 involves
listening to what customers have to say, analyzing the information available through various
touchpoints, and implementing (or doing) social media tactics to excite customers.
Listen
From a marketing research point of view, companies can learn a lot about their customers by
listening to (and monitoring) what they say on their social networks, blogs, review sites, and so
on. Similar to being at a party or in class, it is best to listen before engaging in a conversation.
Listening can help marketers determine their digital marketing objectives. If no one is talking
about a product or brand, then stimulating brand awareness or excitement may be required.
If the conversation is negative, firms should respond immediately, possibly using a social
media platform like Twitter, so that customers and the firm can communicate directly and
quickly to resolve an issue. If the conversation is positive, listening will help the firm
understand how to propagate the conversation and where the conversation should take place.
If, for example, potential customers are talking primarily on LinkedIn, the firm should be
there. If they are talking within an online community, perhaps a wine site, then the firm
should be there, with the objective of subtly directing the community to the firm’s website.
Using a technique known as sentiment analysis, marketers can analyze the content
found on sites such as Facebook, Twitter, and online blogs and reviews to assess the favorableness or unfavorableness of the sentiments. Sentiment analysis allows marketers to analyze data from these sources to collect consumer comments about companies and their
products. The data are then analyzed to distill customer attitudes and preferences, including
reactions to specific products and campaigns. Scouring millions of sites with sentiment
analysis techniques provides new insights into what consumers really think. Companies
plugged into this real-time information and these insights can become nimbler, allowing for
numerous quick changes such as a product rollout, a new advertising campaign, or reactions
to customer complaints.
Several companies specialize in monitoring social media. For example, Radian6 from
Salesforce.com offers sentiment analysis that helps its clients such as Farmers Insurance,
Canon, and Toyota engage with their customers.59 Using sentiment analysis techniques, it
processes a constant stream of online consumer opinions from blogs, Facebook, and other
networking sites. The Salesforce.com tools for managing consumer sentiment data allow companies to identify opinion trends that might warrant an online corporate response. It is also
useful for identifying influencers—
pinpointing where they are talking
and which specific content is liked
and shared the most.
Other companies perform
their own analyses, effectively
leveraging their existing capacities
for listening to customers. Zappos
is known for its remarkable customer service; accordingly, it
attracts plenty of buzz about its
offerings from happy customers.
In its social media campaigns, it
takes the information it gathers
from listening to customers to
design strategies that emphasize
what they like most.60
LO3-5 Recognize and understand the components
of a digital marketing
strategy.
EXHIBIT 3.4 Social Media Engagement Process
Systematic monitoring;
utilizing social media
monitoring tools.
Amount of trac:
Who they are they?
Where do they come from?
Use data for personalized oers;
aggregate data to understand trends.
104 Section One ASSESSING THE MARKETPLACE
Analyze
Fortunately, the companies
that help facilitate listening
also provide analytic tools to
assess what customers are saying about the firm and its competitors. There are three main
categories of analysis used for
understanding data collected
from social media.61
First, it is important to
determine the amount of traffic using their sites, visiting
their blogs, or tweeting about
them. A measure used for this
purpose is the number of hits
(i.e., total requests for a page).
More useful, however, is the
number of unique visitors and
page views. If, for instance,
Sam visits a site once, but Sol
visits it five times, there are six
hits, two unique visitors, and
Sam has one page view, while
Sol has five page views—Sol is
potentially a more important
customer than Sam.62
Salesforce.com’s Radian6 website analyzes customer sentiment for its customers, which enables them to identify opinion trends
that might warrant an online corporate response.
Source: Salesforce.com, inc.
Zappos takes the information it gathers from listening to customers to design strategies that
emphasize what they like most.
Source: Zappos.com, Inc
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 105
Second, although knowing how many people are using a firm’s social media is important, it is even more critical to learn who those visitors are, what they are doing, and what
engages and excites them. To analyze these factors, marketers use metrics such as the bounce
rate, which refers to the percentage of times a visitor leaves the site almost immediately,
such as after viewing only one page. The bounce rate is similar to walking into a store, taking a quick look, and leaving. So, the higher the bounce rate, the less effective the site. Analyzing which pages are the most frequent entry and exit locations provides direction on how
to make a website more effective. Similarly, following visitors’ click paths shows how users
proceed through the information—not unlike how grocery stores try to track the way shoppers move through their aisles. A firm can use frequent entry and exit locations and click
paths to improve the way users navigate through the site so they can more quickly find what
they are looking for. One of the most important data analysis tools is the conversion rate, a
measure that indicates what percentage of visitors or potential customers act as the marketer hopes, whether by clicking, buying, or donating. Not only does it measure how well the
site is achieving its goals, it can also signal a serious problem. For instance, a sudden drop
in the conversion rate may signal a navigation problem or even a broken navigation path.
Third, some companies want to analyze data that come from other sites, such as measuring where people have come from to get to the company’s site. Did they search through Google
or Amazon? Did they receive a referral from a friend? Which keywords did they use to find the
firm? As mentioned earlier, firms can use keyword analysis to determine what keywords people
use to search on the Internet for their products and services. With this information, they can
refine their websites by choosing keywords to use on their site that their customers use. These
keywords should be placed on the website pages, in the page titles, and in the website’s URLs.
Then they can assess the return on investment (ROI) made by improving
the site. This would be done by calculating the incremental profit increase
divided by the investment on the site improvement. For digital marketing,
it is more challenging to determine ROI than for more traditional marketing applications because the revenue generated by the digital media is
often not directly related to the expenditure. So, instead of traditional
ROI measures, firms often examine questions such as: Does having more
Twitter followers correlate with having higher sales? Do the company’s
Facebook fans buy more than nonfans do?63
These analyses require well-trained marketing managers, marketing
analytic software, and sometimes help from consulting specialists (e.g.,
IBM, SAS, PricewaterhouseCoopers). But almost everyone seems to be
turning to Google Analytics these days because it offers a sophisticated,
in-depth form of analysis, all for free. For example, by simply signing on to
Google Analytics and embedding the tracking code into a website, a firm
can view the origin of its traffic. In particular, it can view if the origin is
from an Internet search, a social media platform like Instagram or Twitter,
or a third-party site. With these data, it can determine which outlets have
been successful, and provide clues to direct future marketing efforts. A
firm can also determine the physical location of its visitors, which pages
they visited, and how long they stayed on each page. Additionally, the firm
can analyze user demographic and interest data collected from their
browser cookies or from their search activities if they are logged in to a
Google account. Finally, Google Analytics is also highly customizable.64
Do
Even the greatest analysis has little use if firms fail to implement what
they have learned from analyzing their social and mobile media activity.
That is, social media may be all about relationships, but ultimately,
firms need to use their connections to increase their business. They
might launch a new Facebook campaign, actively blog, or provide
mobile offers.
Partnering with Snapchat, Taco Bell created the
ability for users to see their own faces depicted as
a taco and then encouraged them to send their
taco face to their friends, thus creating an excellent
opportunity to build its brand and increase sales.
Source: Yum! Brands, Inc./Snapchat
106 Section One ASSESSING THE MARKETPLACE
Taco Bell uses social media successfully to connect with customers, and then translates
this engagement into viral marketing campaigns. Partnering with Snapchat to create a taco
filter, just in time for Cinco de Mayo, Taco Bell prompted 224 million uses of the filter. That is,
by introducing a fun interaction—and the ability for users to see their own faces depicted as a
taco—Taco Bell also encouraged Snapchatters to send its advertising messages to their friends.
Awareness of its brand thus spread far and wide, especially among its target Millennial market.65 For its 2 million followers on Twitter,66 Taco Bell also has created a sassy persona that
posts funny messages they can retweet, further spreading brand awareness at very little cost to
the company.67 Building on its social media popularity, the fast-food favorite even opened a
branded Taco Bell Hotel for a weekend, a stunt that made the news when rooms sold out in
mere minutes.68 Taco Bell also invited social media influencers to stay for a night, ensuring
brand promotions to millions of followers, even beyond its own pages.69
To illustrate how firms might go about undertaking such campaigns, consider the steps
involved in developing and implementing a digital marketing campaign using Facebook
(Exhibit 3.5).70 These steps are not unlike the steps used in any integrated marketing communications (IMC) program. (See Chapter 18 for more details.) Assume a marketer is developing a Facebook marketing campaign for a new product that his or her firm has designed.
1. Identify strategy and goals. The firm has to determine exactly what it hopes to promote and achieve through its campaign. Does it want to increase awareness of the
product? Is it hoping more potential customers might visit and “like” its Facebook
page? Is its focus mainly on increasing sales of the product? Depending on what the
company aims to achieve, it might focus on developing a Facebook page, creating a
Facebook app, or hosting a Facebook event.
2. Identify target audience. The next step is to determine whom the firm is targeting.
Facebook enables the firm to perform targeting that is based on location, language, education, gender, profession, age, relationship status, likes/dislikes, and friends or connections. The marketers’ aim is to find an audience big enough that they reach all those who
might adopt their product, but not so big that they end up trying to appeal to someone
way outside their target audience, as Exhibit 3.6 illustrates. For firms with multiple target
markets, this analysis should be performed iteratively because both the marketing messages and digital channels likely will be different among and between the segments.
EXHIBIT 3.5 How to Do a Digital Marketing Campaign
1
Identify
strategy &
goals
2
Identify
target
audience
Campaign steps
4
Campaign:
Experiment
& engage
5
Monitor &
change
3
Develop
budget
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 107
3. Develop the budget. Budgeting is key. Facebook allows advertisers to set a daily budget:
Once their costs (usually per click) reach a certain level, the ad disappears for the rest of
the day. Of course, this option can be risky if the firm is getting great feedback and all of
a sudden a compelling ad disappears. Therefore, similar to the campaign content, budgets
demand nearly constant review. For example, if a competitor lowers its price significantly,
it might be necessary to follow suit to avoid being excluded from customers’ consideration sets. In addition to an advertising and content development budget, money should
be allocated for digital marketing—management tools that allow the marketing staff to
post content to multiple platforms and to schedule posts throughout the week. Hootsuite’s
autoscheduling feature is particularly useful in this regard. It posts content based on when
its algorithms have determined the majority of a firm’s target market is online.
4. Develop the campaign: Experiment and engage. Now that the firm knows whom it is targeting, the next step is to develop the communications, including the copy and images.
Here again, the process is not very different from any other IMC campaign. There
should be a call to action that is clear and compelling. Strong, eye-catching images and
designs are important. And the campaign must appeal to the right customers. However,
an aspect that is more critical with social media than with other forms of IMC is that
the images and messages need to be updated almost constantly. Because people expect
changing content online, it would be inappropriate to run the same campaign for several months, as the firm might if it were advertising on television, for example.
5. Monitor and change. The final step is to review the success of the campaign and make
changes as necessary. After analyzing their digital marketing analytics as well as their
website traffic data, firms should make the necessary changes to increase their brand
presence online and improve their digital conversion rate. Too often, companies collect, store, and analyze data but do not make the necessary changes to increase the
ROI from their online activities.
EXHIBIT 3.6 Example Facebook Targeting Choices
Age: (?) – 35
Demographics
24
2. Targeting
Location
Country: (?) New York
Cooking
Age: (?) –
Sex: (?)
Switch to Broad Category Targeting (?)
All Men
Require exact age match
35
Demographics
Interests
Precise interests: (?)
Everywhere
By State/Province (?)
By City (?)
24
Estimated Reach (?)
266,920 people
who live in the United
States
who live within 50 miles of
New York, NY
between the ages of 24 and
35 inclusive
who are in the category
Cooking
Source: Facebook
108 Section One ASSESSING THE MARKETPLACE
EXHIBIT 3.7 Top 10 Influencers on Instagram, Posts, and Followers
Influencer
Number of Followers
(millions)
Number of
Posts
Cost of Sponsored
Post
Cristiano Ronaldo 206 2,744 $ 975,000
Ariana Grande 175 4,512 996,000
Dwayne “The Rock” Johnson 172 4,807 882,000
Selena Gomez 168 1,589 886,000
Kylie Jenner 163 6,334 1,266,000
Kim Kardashian 161 5,044 910,000
Lionel Messi 144 573 648,000
Beyoncé 142 1,869 785,000
Neymar 134 4,678 722,000
Sources: Joshua Boyd, “The Top 20 Most Followed Instagram Accounts,” Brandwatch, February 21, 2020, www.brandwatch
.com/blog/top-most-instagram-followers; Instagram, “Stats,” March 4, 2020, www.instagram.com.
Big-time influencers like Ariana
Grande have millions of followers
and can command almost a million dollars for a sponsored post.
Lev Radin/Shutterstock
PROGRESS CHECK
1. What are the components of a digital marketing strategy?
INFLUENCER MARKETING
Influencer marketing is a marketing strategy that uses opinion leaders, popular on social
media, to drive marketing messages to a targeted audience.71 Firms hire (or encourage)
these well-known names to promote brand messages to their networks of followers. Some
estimates suggest that around 75 percent of marketers have turned to influencer marketing,
and they anticipate doing even more of it in the future.72
Although many influencers originally gained fame in other domains, such as sports and
entertainment (e.g., Ariana Grande, Dwayne “The Rock” Johnson, Neymar), some have
solidified their influence primarily through social and mobile channels (e.g., James Charles,
Murad Osmann). As Exhibit 3.7 demonstrates, the amount of leverage an influencer has
can be measured in several ways, such as the number of followers who voluntarily agree to
receive messages from them or the amount of money they can demand for a sponsored
post. Even if they are not traditional celebrities, influencers like James Charles (19.7 million
followers),73 Murad and Nataly Osmann (4 million followers),74 and Massy Arias (2.7 million
followers)75 can widely promote messages about cosmetics, travel, or fitness on Instagram—
and often earn money for doing so.
Assessing the Efficacy of Influencers
But simply counting followers may not be sufficient to determine the value of an influencer,
especially considering the growing problem of fraud, as when unethical “click farm” service
providers offer to sell followers to social media personalities.76 Therefore, when brands
decide how much to offer influencers to carry their messages, they need a method to predict
the value they will receive. One way to do so is to consider the 4Rs: relevance, reach,
response, and return.
Relevance The notion of relevance encompasses both the focal influencer and her or his
followers (i.e., targeted audience) and how they link with the brand and its message. Influencer marketing is more effective if relevant influencers, with expertise in some related
LO3-6 Understand the central
factors in picking an
influencer partner.
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 109
element, share a pertinent
brand message. Thus, Cristiano
Ronaldo clearly can promote
soccer cleats (or, as he would
call them, football boots) as
well as his current team brand
and various forms of exercise
equipment.77 But influencers
also can have relevance for
much broader messages, especially when they actively seek
to move beyond their original
area of expertise. Cristiano’s
Instagram page also features
his line of cologne, available to
anyone, even consumers who
might never consider getting
on the pitch. In that sense, relevance also depends on who
the followers are. Enthusiastic
fans of Ronaldo and football
(soccer) might be more interested in messages about sports
than in learning which baby
foods his four children prefer.
Reach As we discuss in
Chapter 18, the general concept of reach refers to the percentage of a target population exposed to a specific marketing
communication at least once. For the specific context of influencer marketing, reach
depends on the number of followers, the level of activity by the influencer, and the degree of
engagement between followers and the influencer as well as with others (i.e., friends of followers). Such engagement might result from the appeal of the influencer or the post; for
example, an entertaining, hedonic post likely spreads further than a basic, informational
one.78 Influencers accordingly seek to present exciting messages, even if their underlying
goal is to market a brand. The most liked Instagram post in one recent annual accounting
came from Selena Gomez. The attractive photo of the talented and beautiful singer depicted
her drinking from a bottle of Coca-Cola that was personalized with lyrics from one of her
songs, as she noted in the caption to the post.79 Followers adored the post, liked it on the
app, commented on it, and then shared it with their friends. Therefore, millions of people
were exposed to the message, signaling its impressive reach.
Response Once followers engage with the message, the brand also needs them to go further and respond in ways that benefit it. The measure of the response depends on what the
campaign aims to achieve. For example, if the goal is primarily exposure or awareness (see
Chapter 18), it can assess how many people liked or commented because those actions indicate they likely can identify the brand and its message. However, if the goal is to prompt
sales, the firm needs to determine whether the influencer is the source of a subsequent purchase by one of his or her followers, a measurement that is difficult to accurately obtain.
Exhibit 3.8 depicts how a company can use an influencer to broadcast its message to its
network and ultimately influence the followers’ purchases.
Return While financial returns can be measured using different techniques,80 return on
investment (ROI) is often used. ROI refers to the revenue earned from some action, less the
cost of that action, divided by the cost. So for example, the ROI of an influencer marketing
campaign would equal the revenue earned from it, less the costs of paying the influencer,
divided by those costs. To determine which influencer to collaborate with, firms thus must
Influencers like Selena Gomez can reach millions of potential customers for Coca-Cola with an
Instagram post like this one, which depicts her drinking a Coke with the lyrics from one of her
songs on the bottle.
Source: Selena Gomez/Instagram
110 Section One ASSESSING THE MARKETPLACE
consider the objective of the message and the market it is attempting to reach in addition to
its projected ROI. A high ROI may be achieved if Fiat Chrysler incurred the high cost of
influencer soccer star Cristiano Ronaldo to endorse its Jeep brand because the message
would reach millions of people. Alternatively, a less expensive micro influencer (described
in the next section) like Sydney Loveleigh Nelson may provide an equally high ROI for
endorsing a more targeted market like NUX Active athletic apparel. The message would
reach fewer people, but the people it reached would be more likely to be in its target market.
Determining the ROI of an influencer marketing campaign remains difficult though.81
In particular, it is hard to tell if consumers buy a Coke or new shoes or any other marketed
product because they have seen their favorite influencer use it. The only direct measure is if
the post contains a direct link that would allow followers to purchase. However, such links
can have negative effects because such obvious sales tactics tend to be unpopular. Followers
want to believe the influencer is posting for fun and to engage with fans, not that their favorite source of entertainment is just trying to sell them something.82
Types of Influencers
Influencers are not all the same; they can be classified according to their role and expertise
(e.g., celebrity or specialized influencers), number of followers (e.g., micro-influencers), or
preferred channel (e.g., blog or social media influencers), for example.83 Exhibit 3.9 defines
several familiar types of influencers, the campaigns that marketers likely should pursue with
each type, and a general range of the costs of hiring them.
EXHIBIT 3.8 Influencer Marketing Chain of Events
Brand and its
message
Influencer Influencer’s
followers
Impact
Which influencer is a better investment? Soccer star Cristiano Ronaldo is expensive but reach millions of people.
Sydney Loveleigh Nelson is much less expensive but also has a much smaller following. The answer depends on
the objective of the message and the market it is attempting to reach.
(Left) ph.FAB/Shutterstock; (right) Source: Sydney Loveleigh Nelson/Instagram
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 111
Ethical Considerations for Influencer Marketing
As we noted previously, several ethical situations have arisen with the growth of influencer marketing. These concerns involve not only fraud committed by influencers seeking to falsely represent their reach and relevance but also issues with whether posts are clearly labeled as advertising
and whether the promotions are sincere.
EXHIBIT 3.9 Types of Influencers
Type of Influencer Definition Example Key Channels Average Cost per Post
Celebrity Large following, widely
recognized
Nespresso relies heavily on George Clooney
to promote its products in marketing across
platforms, leveraging his cool image to
enhance its appeal but also his reputation for
environmental sustainability to promote its
own efforts along these lines
Social media, print,
television
$3,000–$500,000
Micro Modest following, niche
interest
NUX Active (athletic clothing brand) worked
with Sydney Loveleigh Nelson, whose health
and fitness posts have earned her about
21,000 followers
Posts on social media
sites, shared promo
codes
$80–$500
Blog Writes for a blog and has
attracted readers and
subscribers with that content
The FaceGym spa sponsored a blog post by
lifestyle blogger Hannah Bronfman to provide
information about its services and treatments
Reviews on blog,
guest blog posts
$400–$5,500
Social media Popular on social platforms
(Instagram, YouTube, Twitter)
among followers in specific
target audiences
LaCroix worked with nutritionist Joy Bauer to
create a Twitter post of a recipe she had
created, using the product
Pictures posted with
the product, shared
hashtags, videos
featuring the product
$100–$500,000
Specialized Key opinion leader or expert
in a specific field
BoxyCharm, a subscription beauty box
service, worked with Kandee Johnson, a
professional makeup artist, to make videos
that explained each product included in a box
Social media, tutorials,
reviews, blog posts,
sponsored print
articles, articles in
academic journals
$500–$5,000
Source: Kristen Baker, “What Will Influencer Marketing Look Like in 2020?,” HubSpot, December 2, 2019, https://blog.hubspot.com/marketing/how-to-work-with-influencers.
Opinion leader and makeup artist Kandee Johnson worked with BoxyCharm, a beauty box
service, to make videos that explained each product included in a box.
Source: Kandee Johnson/Instagram
112 Section One ASSESSING THE MARKETPLACE
Fraudulent Influence An influencer who has 2 million followers, instead of 20,000, can
charge higher rates for each post. This incentive to boost follower numbers accordingly has
led to various unethical behaviors. There are lots of “booster” services that use bots and set
up millions of false accounts. For a small fee, they will program their bots to follow a particular influencer, such that the numbers appear higher. But in reality, there are no actual
consumers behind those follows.84 A brand would thus overpay, anticipating higher reach,
but actually achieve a lower financial return. A bot can’t make a purchase, no matter how
many accounts it follows.
Disclosing Advertising Intent If an influencer is being paid to promote a product,
that information should be clear in the post. Otherwise, consumers may be fooled into
thinking that the endorsement is a natural recommendation, not a paid effort. The FTC
has published guidelines to help influencers engage in ethical marketing and be transparent about their motives. For example, it calls on them to include the hashtag #ad as
the first entry in any listing of various hashtags, which signals to the follower that the
endorsement is a paid advertisement. During livestreams or TikTok videos, the influencer also should repeatedly mention that the endorsement is paid.85 Although the
guidelines are not legally enforceable, it would be wise for both influencers and the
brands that hire them to adopt them now because more legislation seems likely, as influencer marketing continues to grow.86 Some confusion persists, though, regarding what
constitutes a payment. For example, if a brand simply sends free samples of its products
to a blogger and the blogger then talks about them, does it constitute a payment that
requires disclosure? Exhibit 3.10 provides more explicit guidelines about disclosing
advertising intent.
Sincerity Effective influence attempts require followers to believe that the influencer actually likes and appreciates the product. If a beauty blogger claims to use a particular mascara,
to great success, but instead relies on false lashes to get a particular look, the influence
attempt is both unethical and likely ineffective. But for the purposes of understanding and
designing influencer marketing campaigns, the key is to ensure that the influencer actually
EXHIBIT 3.10 The Do’s and Don’ts for Social Media Influencers
Ensure your
sponsorship disclosure
is hard to miss
Treat sponsored tags,
including tags in
pictures, like any
other endorsement
On image-only
platforms like Snapchat,
superimpose
disclosures over the
images
Don’t rely on
disclosures that people
will see only if they
click “More”
Don’t use ambiguous
disclosures like
“Thanks,” #collab,
#sp, #spon,
or #ambassador
Don’t assume
disclosures built into
social media platforms
are sucient
Don’t assume
followers know about
all your brand
relationships
Don’ts
Do’s
(FTC Recommendations) Clearly disclose
when you have a
financial or family
relationship with a
brand
Source: https://blog.hootsuite.com/influencer-marketing/.
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 113
LO3-1 Describe the 4E framework of digital marketing.
The 4E framework recognizes that marketers must
excite customers with relevant offers; educate them
about the offering; help them experience products,
whether directly or indirectly; and give them an
opportunity to engage.
LO3-2 Examine the seven critical elements of online marketing.
Online marketing now has a long history and is fairly
established with marketing activities in various electronic channels, such as websites and blogs. There
are numerous types of blogs, ranging from corporate, professional, personal, and micro.
LO3-3 Understand the drivers of social media engagement.
The Wheel of Social Media Engagement highlights
five factors that focus on the uniqueness of social
media in driving engagement. The five spokes of the
wheel are the information effect, connected effect,
network effect, dynamic effect, and timeliness
effect.
LO3-4 Understand various motivations for using mobile
applications.
As mobile users increase in number and diversity,
the applications developed to appeal to them are
spreading as well. Although there are well over a million apps, they meet seven basic customer motivations: for “me time” and to socialize, shop,
accomplish, prepare, discover, and self-express. By
meeting a multiple of these motivations, companies
can attract large numbers of customers. When choosing how to charge for apps, firms have four options:
ad-supported, freemium, paid apps, and paid apps
with in-app purchases.
LO3-5 Recognize and understand the components of a digital
marketing strategy.
Firms engage with customers through social and
mobile media using a three-step process. First, they listen to the customer using techniques like sentiment
analysis. Second, they analyze the data collected in the
first step using metrics like the bounce rate, click paths,
and conversion rates. Finally, they use this information
to develop tactics to engage their customers in a way
very similar to the process described in Chapter 18.
LO3-6 Understand the central factors in picking an influencer
partner.
Influencer marketing is a marketing strategy that uses
opinion leaders, popular on social media, to drive marketing messages to a targeted audience. Firms can assess how well these people can influence their target
markets by considering the 4Rs; relevance, reach, response, and return. Relevance assesses how well the influencer links with the brand and its message. Reach
refers to the percentage of a target population exposed
to a specific marketing communication at least once.
Response refers to the extent to which those exposed to
the influencer’s message respond in a way that is favorable to the firm. Finally, return measures the financial
impact that the influencer’s message has on the firm.
There are several types of influencers: celebrity, micro,
blog, social media, and specialized. The appropriateness of using each type is dependent on the target market and the objective of the message being conveyed.
Unfortunately, influencer marketing is fraught with serious ethical considerations including fraudulent influencers seeking to falsely represent their reach and
relevance, posts that aren’t clearly labeled as advertising, and promotions or posts that are not sincere.
Reviewing Learning Objectives bchsu_tt
PROGRESS CHECK
1. How should firms choose and assess the efficacy of influencers?
uses the promoted offering and shares an honest, sincere evaluation of it.87 Unfortunately, in
many cases the content of the influencers’ messages appears to be inauthentic. For example,
one micro influencer claimed that a series of posts depicting an international scavenger
hunt organized by her boyfriend, culminating in a romantic proposal, were totally spontaneous. Instead, the couple had designed the entire trip in advance, and then solicited various
brands to participate and fund the trip in return for their products appearing in the posts,
seemingly “naturally.”88
114 Section One ASSESSING THE MARKETPLACE
Marketing Digitally
1. Go to ads.google.com to learn how to build ads and measure performance. What are some of the things that
Google suggests someone consider when creating advertisements? What kinds of analytic tools does Google
offer to its clients?
2. Go to HubSpot.com and check out its top case studies.
How do these case studies provide insights into how listening and analytics can help firms improve their social
media marketing?
3. Learn about Tide’s “#TideAd” social media campaign on
YouTube by searching for advertisements that use the
hashtag. Which of the 4E components does this campaign leverage?
4. A student who graduates with a marketing degree likely
has a good foundation for jobs that utilize social media.
Go to Monster.com and search for jobs in your area using
the keyword “social media.” Would you be interested in
pursuing one or more of these positions? Why or why not?
1. Which component of the 4E framework does Red Bull’s
digital media strategy leverage most frequently?
2. Using the components of the 4E framework, outline how
an entrepreneur marketing low-sugar candy might apply
it to his or her marketing mix efforts.
3. Suppose an herbal tea company introduced a new product called Mint-Enhanced Tea—a mint and lemon herbal
tea. How should it go about creating excitement using
various social and mobile media tools?
4. If you were marketing a new running shoe, what sort of
mobile applications might enhance your marketing efforts?
5. Assume you work for a large consumer packaged-goods
firm that has discovered that its latest line of snack foods
is moving very slowly off store shelves. Recommend a
strategy for listening to what consumers are saying on
blogs, review sites, and the firm’s website. Describe how
your strategy might provide insights into consumers’
sentiments about the new product line.
6. As an intern for Starbucks, you have been asked to
develop a social media campaign for a new latte. The objective of the campaign is to increase awareness and trial
of this new line. Use the listen–analyze–do framework to
outline a new campaign.
7. You were just hired by a company that wants to produce
apps that help people become healthier by exercising,
eating well, and reducing stress. On which customer
motivations would you recommend the company focus?
Describe the app you would design, the customer motivations it meets, and why your app is the right design for
your potential customers.
8. The company loves the idea for the app you suggested in
the previous question, but is concerned about how it will
make money on the app. Suggest a pricing model for the
app and discuss why this model will maximize profits.
Marketing Applications
Key Terms
• ad-supported apps, 102
• beacon technology, 100
• blog (weblog), 92
• bounce rate, 105
• click path, 105
• connected effect, 96
• conversion rate, 105
• corporate blog, 92
• crowdsourcing, 93
• digital marketing, 84
• dynamic effect, 98
• freemium apps, 102
• hit, 104
• in-app purchase, 102
• influencer marketing, 108
• information effect, 95
• keyword, 91
• keyword analysis, 105
• microblog, 92
• network effect, 98
• organic search, 91
• page view, 104
• paid apps, 102
• paid apps with in-app purchase, 102
• paid search, 91
• personal blog, 92
• professional blog, 92
• redlining, 96
• search engine marketing
(SEM), 91
• sentiment analysis, 103
• showrooming, 101
• social listening, 83
• social media, 84
• timeliness effect, 99
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 115
1. Downloading a chapter of a new book before buying it or
listening to a few seconds of a song before purchasing it
are examples of which aspect of the 4E framework?
a. Engage the customer
b. Excite the customer
c. Experience the product
d. Employ the product
e. Educate the customer
2. How is advertising intent guidance provided to influencers?
a. The federal government reviews all posts and prosecutes those who fail to disclose advertising motives.
b. The FTC publishes recommendations to help influencers engage in ethical marketing such as mentioning endorsements or using #ad in their posts.
c. The sponsoring brand reviews the post to ensure that
the advertising intent is unmentioned so it appears
more genuine to the audience.
d. No regulations or guidance are offered to influencers
regarding advertising intent.
e. Consumers host frequent forums to communicate
their advertising preferences to influencers.
(Answers to these two questions can be found in the Quiz
Yourself Answer Key section.)
Quiz Yourself
IMAGES, SALES, BRANDS: HOW RED BULL USES VARIOUS DIGITAL
AND SOCIAL MEDIA TECHNIQUES TO ACHIEVE ALL ITS OBJECTIVES
It isn’t as if the digital social media strategy adopted by Red Bull—the energy drink that
“gives you wings”—is a trade secret. Granted, the private company has a policy that discourages employees from giving interviews. But its overall strategy is clear
from its actions and their outcomes. The success it has accrued from
this strategy therefore isn’t a matter of doing things differently from
anyone else. It’s a function of doing them better.
To begin, Red Bull distinguishes its goals for leveraging contacts.
Is it hoping for more brand exposure, or is it pursuing sales increases?
Depending on its focus, it adopts distinct, appealing methods that are
specific and unique to each digital and social media platform. Then it
implements these tactics consistently and comprehensively to increase
the chances that they will be widely shared and recognized.
Name Recognition
Perhaps one of the most famous Red Bull events was when Felix
Baumgartner (purposefully) fell to Earth from 127,852 feet up, and
broke all sorts of records. His jump was from the highest height ever
achieved by a human. During the 4-minute, 20-second freefall, he also
reached greater speeds—up to Mach 1.25, faster than the speed of
sound—than anyone else ever has. The event was a breakthrough on
various levels. Baumgartner’s pressure suit was the first version to be
able to protect the human body in space but still enable maneuverability. To address the threat of ebullism (i.e., when liquid in the body
evaporates due to high altitudes, causing a person’s blood to literally
boil), Baumgartner and his team derived new medical techniques with
widespread applications. His parachute also adopted a new “reefed”
design to reduce drifting, with clear implications for airdrops of materials and supplies.89
In reporting on all these remarkable feats, Baumgartner’s name was
mentioned frequently—though not as frequently as the project that sponsored his jump and all the technology that went into supporting it: the
Red Bull Stratos project. Every official mention of the event included
Chapter Case Study ®
Sponsored by Red Bull, Felix Baumgartner’s jump
reached speeds of Mach 1.25.
Jay Nemeth/ZUMA Press/Newscom
116 Section One ASSESSING THE MARKETPLACE
the full name, such that Red Bull Stratos often appeared as a single term. It was not just the
Stratos project. It was the Red Bull Stratos project.
And what a project it was, leading to the creation of not just scientific advances but also
a remarkable video. That video, taken from the camera mounted on Baumgartner’s helmet,
features vast, picturesque views of Earth and the sense of plummeting. Red Bull immediately made it available for people to check out at their leisure. But the real targets—the people whom Red Bull hoped would be most engaged by the video and the stunt in general—were
extreme sports fanatics. These folks willingly put their bodies at risk on a regular basis to
perform some cool stunt to cause their friends to marvel. For them, there may be no better
stunt than having some guy fall from space.90 In full awareness of this appeal, Red Bull
made sure that the video was prominent on its website and YouTube channel. On the day of
the jump itself, approximately 8 million viewers streamed the video live and in real time.
Also on that day, the number of subscribers to Red Bull’s YouTube channel increased by a
remarkable 87,801.91
On Twitter, recognizing that 140 characters was not nearly enough to communicate the
awesomeness of the stunt, it simply used hashtags and links to connect followers to the video,
whether through YouTube or on a Red Bull site. Although Red Bull’s main Twitter feed did not
exhibit any notable differences, the dedicated Red Bull Stratos Twitter feed prompted more
than 20,000 mentions in tweets by others on that day.
The Red Bull Stratos Facebook page featured several photos during and after the jump.
Just one shot of a landed Baumgartner, still in his space suit and on his knees beside his
reefed parachute, prompted more than 20,000 comments, more than 50,000 shares, and
nearly half a million likes.92
The example of the Red Bull Stratos project and its attendant coverage through digital
and social media suggests several things Red Bull did well. It knew its audience and its own
goals, and it understood how different channels could help it attain those goals. To ensure that
it appealed to the target audience, it engaged them in an exciting, never-before-tried daredevil
experience. Moreover, it shared the scientific lessons learned through the project to give those
who wanted it an education. But it also spent a lot of money to get Baumgartner to space and
back down again. And that meant it needed to translate some of the brand awareness it developed into sales. Luckily for Red Bull, its social media strategy also has room for that effort.
Performance
Red Bull does not just send athletes to space. It also sponsors them on the pitch, in the form
of the New York Red Bull MLS team, which plays in Red Bull Arena in Harrison, New
Jersey. In one game, the team’s star forward Thierry Henry scored yet another goal. Afterward, he leaned, with his right arm up against the goal post and left hand on his hip. The
pose, caught on camera, almost immediately became a Twitter meme as amateur photo
editors placed him against a variety of backgrounds.93
The team was quick to move on this social media coup. It rapidly posted the photo to
its website and encouraged fans to vote for it as their favorite shot of the season. Immediately above and below the encouragement to engage with the brand also appeared links that
would allow fans to purchase tickets for a full season, half season, or individual games.94
Beyond these fun, consumer-oriented efforts, Red Bull makes sure that it has advanced
capabilities for supporting the retail vendors that sell its products. For example, all its mobile sales representatives are equipped with their own tablet computers, loaded with proprietary mobile software. Thus, on visits to retail sites and vendors, the salespeople can provide
the latest inventory information. They also present detailed analytics to show vendors how
best to position their coolers of Red Bull products and how to line up the cans in the display
case to encourage sales.95
Combining the Uses of Digital and Social Media
When you are as good at engaging and exciting people as Red Bull is, the next step might be
to make digital social media your main focus. In a sense, it has transformed itself into a
media company that just happens to sell energy drinks. Red Bull continues to sponsor
extreme sporting events and stunts; it also has its own record label, which finds, pursues,
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 117
and produces artists who make high-energy music.96 On the dedicated Red Bull Records
YouTube channel, it highlights these artists, then pairs their output with some of its sponsored events. For example, it creates playlists for skydiving events and X-fighters, featuring
not just its own artists but also other popular musicians.97
Furthermore, Red Bull offers a slew of applications for smartphones and tablets, including several gaming apps featuring snowboarding, biking, and car and airplane racing
games, along with a “Mind Gamers” puzzle. At the same time, it provides a radio app and
Red Bull TV;98 the Red Bull TV app can be downloaded on mobile devices or streamed
directly to consumers’ televisions through Apple TV, Chromecast, Xbox, or PlayStation.
The various channels available through this app include not just the expected coverage of
all types of extreme sports but also channels dedicated to music, festivals, and original
films—one of which documents the Red Bull Stratos mission, of course.99
This move toward a greater focus on different media channels is well in line with Red
Bull’s long-standing social media strategy. For example, it maintains a plethora of Facebook
pages and Twitter accounts for various events and locations, yet virtually none of them ever
feature pictures of its drinks. Instead, they offer exciting in-sport shots or humorous images.
Fans can—and do—comment, but Red Bull rarely responds. Its primary goal appears to be
establishing an edgy, entertaining, exciting image as a lifestyle brand, which it feels confident will translate ultimately into product sales.100
Questions
1. What social and mobile media tools is Red Bull using?
2. Evaluate Red Bull’s social media marketing strategy using the 4E framework.
3. How should Red Bull assess the effectiveness of these campaigns? Describe how it
should respond to insights gained by this assessment.
Endnotes
1. For examples of these responses, see https://twitter.com
/HiltonHotels?lang=en.
2. Anna Bredava, “Case Study: How Hilton Uses Social Listening to
Win Customers,” Awario, October 4, 2018.
3. Anna Bredava, “Case Study: How Hilton Uses Social Listening to
Win Customers,” Awario, October 4, 2018.
4. Danni Santana, “Hilton Doubles Down on Direct Booking Ad
Strategy by Targeting Younger Travelers,” Yahoo! Finance,
September 5, 2019.
5. Barry Levine, “Hilton Doubles Down on Successful Celebrity
Campaign,” Marketing Dive, September 6, 2019; “Hilton Builds
on Success of First Celebrity-Driven Campaign, ‘Expect More.
Expect Hilton.’ With Debut of New Creative Work Featuring
Anna Kendrick,” Hilton Newsroom, September 5, 2019.
6. www.youtube.com/watch?time_continue=1&v=DPpf6q-Nm7c.
7. Barry Levine, “Hilton Doubles Down on Successful Celebrity
Campaign,” Marketing Dive, September 6, 2019.
8. HubSpot, Digital Marketing for Beginners, https://offers.
hubspot.com/beginners-guide-to-digital-marketing; Rob Stokes,
E-Marketing: The Essential Guide to Marketing in a Digital
World, 6th ed., 2017, www.redandyellow.co.za/textbook/.
9. www.lushusa.com/lushlife.
10. Digital Marketing Institute, “7 of the Most Impactful Digital Campaigns of 2017 . . . So Far,” https://digitalmarketinginstitute.com
/the-insider/14-06-17-7-of-the-most-impactful-digital-campaigns
-of-2017; www.facebook.com/knowyourlemons.
11. www.sephora.com.
12. https://www.youtube.com/watch?v=Amrgn9OAeMM
13. Dan Hughes, “6 of the Most Bettina Makalintal, “IHOP is Changing Its Name Again and for the Love of God Please Stop,” Vice,
May 28, 2019, www.vice.com/en_us/article/43jqdb/ihop-is
-changing-its-name-again-and-for-the-love-of-god-please-stop.
14. https://www.ikea.com/us/en/customer-service/mobile-apps/
15. Lauren Thomas, “adidas’ Social Media Campaign Backfires,
Sending Out Anti-Semitic Tweets,” CNBC, July 2, 2019, www
.cnbc.com/2019/07/02/adidas-social-media-campaign-backfires
-with-anti-semitic-tweets.html.
16. “Does the Future of Retail Start with Social Media?,”
thunder::tech, February 12, 2019, www.thundertech.com/blog
/February-2019/Does-the-Future-of-Retail-Start-with-Social-Media.
17. Amazon.com, Inc., “Alpha Supply 631,” www.amazon.com;
www.thebalance.com/amazon-mission-statement-4068548.
18. Dhruv Grewal, Joan Lindsey-Mullikin, and Jeanne Munger, “Loyalty
in e-Tailing: A Conceptual Framework,” Journal of Relationship
Marketing 2, no. 3/4 (2003), pp. 31–49; https://arxiv.org/abs
/1801.04829; J. Rayport and B. Jaworski, Introduction to
E-Commerce (McGraw-Hill: New York, 2001).
19. Victor Lee, “Hasbro Shares Its Content Strategy behind
Launching a Brand on YouTube,” Think with Google, June 2017,
www.thinkwithgoogle.com/advertising-channels/video/youtube
-content-strategy-hasbro-hanazuki/.
20. Francisco Ordenes Villarroel, Dhruv Grewal, Stephan Ludwig,
et al., “Cutting through Content Clutter: A Linguistic Approach
to Consumer Message Sharing in Social Media,” Journal of
118 Section One ASSESSING THE MARKETPLACE
Consumer Research 45 (February 2019), pp. 988–1012; Sarah
Steiner, “The Marketer’s SEO Playbook, 2017 Edition,” Marketing
News, February 1, 2017, www.ama.org/marketing-news/themarketers-seo-playbook-2017-edition/; Lucy Alexander, “What
Is Digital Marketing?,” HubSpot, May 3, 2019.
21. Benjamin Edelman and Zhenyu Lai, “Design of Search Engine
Services: Channel Interdependence in Search Engine Results,”
Journal of Marketing Research 53, no. 6 (2016) pp. 881–900.
22. Eric Siu, “30 Companies with the Best Digital Marketing
Campaigns,” Single Grain, www.singlegrain.com/digital
-marketing/best-online-marketing-companies/.
23. Kate Stanford, “The Secret to Successful Influence Marketing?
Letting Go of Control,” Think with Google, August 2017, www
.thinkwithgoogle.com/advertising-channels/video/millennial
-social-influencer-endorsement-marketing/.
24. https://twitter.com/UnderArmour.
25. https://twitter.com/StephenCurry30.
26. https://twitter.com/UnderArmour.
27. Sam Hollis, “How Betabrand Used Crowdsourcing to Build a
$35 Million Business,” Jilt, July 30, 2018, https://jilt.com/blog
/betabrand-crowdsourcing/.
28. Dhruv Grewal, Retail Marketing Management: The 5Es of Retailing Today (Thousand Oaks, CA: Sage, 2018).
29. www.smartinsights.com/mobile-marketing/mobile-marketing
-analytics/mobile-marketing-statistics/ (accessed April 2018).
30. Kristina Stewart, “5 Ways Sephora Creates a Seamless
Customer Experience,” National Retail Federation, July 23,
2018, https://nrf.com/blog/5-ways-sephora-creates-seamless
-customer-experience.
31. www.warbyparker.com/
32. This section draws heavily from Anne L. Roggeveen and
Dhruv Grewal, “Engaging Customers: The Wheel of Social
Media Engagement,” Journal of Consumer Marketing 33,
no. 2 (March 2016).
33. Alexandra Sternlicht, “Meet The Under 30 Leading Hallmark’s
Social Media Strategy This Mother’s Day,” Forbes, May 12, 2018.
34. Natasha Stokes, “How to Control What You See in Your Facebook News Feed,” Techlicious, September 18, 2016.
35. Kurt Wagner, “Here’s Why Facebook’s $1 Billion Instagram Acquisition Is Such a Great Deal,” Vox, April 9, 2017.
36. Dhruv Grewal et al., “Mobile Advertising: A Framework and
Research Agenda,” Journal of Interactive Marketing 34 (May
2016), pp. 3–14; Elizabeth M. Aguirre et al., “Personalizing Online,
Social, and Mobile Communications: Opportunities and Challenges,”
Journal of Consumer Marketing 33, no. 2 (2016), pp. 98–110.
37. https://twitter.com/covergirl.
38. http://twittercounter.com/pages/100?version=1&utm_
expid=102679131-65.MDYnsQdXQwO2AlKoJXVpSQ.1&utm_
referrer=http%3A%2F%2Fwww.google.com%2Furl% 3Fsa%3
Dt%26rct%3Dj%26q%3D%26esrc%3Ds% 26source%3Dweb
%26cd%3D3%26ved%3D0ahUKEwiv9 Pr4ipbKAhUKbj4KHUn
PCkkQFggoMAI%26ur.
39. “Social Media and Dynamic Social Communities,” SAM (Socializing Around Media), http://samproject.net/social-media-anddynamic-social-communities/.
40. Swetha Amaresan, “What Are Your Customers’ Expectations for
Social Media Response Time?,” HubSpot, January 18, 2019,
https://blog.hubspot.com/service/social-media-response-time.
41. H. O. Maycotte, “Beacon Technology: The Where, What, Who,
How and Why,” Forbes, September 1, 2015, www.forbes.com
/sites/homaycotte/2015/09/01/beacon-technology-the-what
-who-how-why-and-where/.
42. Seb Joseph, “Coca-Cola Has Taken a Step Closer to Using
Beacons to Turn Location-Based Marketing on Its Head,” The
Drum, August 13, 2015, www.thedrum.com/news/2015/08/13
/coca-cola-has-taken-step-closer-using-beacons-turn-location
-based-marketing-its-head.
43. “Mobile Fact Sheet,” Pew Research Center: Internet and Technology, June 12, 2019.
44. Alex, “22 Must-Know Mobile Ecommerce Stats for 2019,” Pixel
Union, December 5, 2018.
45. “Number of Mobile App Downloads Worldwide in 2016, 2018
and 2021 (in Billions),” Statista, January 2019, www.statista.com
/statistics/271644/worldwide-free-and-paid-mobile-app-store
-downloads/.
46. Ian Blair, “Mobile App Download and Usage Statistics (2019),”
BuildFire, https://buildfire.com/app-statistics/.
47. Tom Ryan, “McDonald’s Offers Free Fries for Mobile Orders,”
RetailWire, July 23, 2018; Ayana Archie and Jeanne Bonner,
“McDonald’s Is Giving Away Fries for the Rest of the Year . . .
If You Spend $1 on Its App,” CNN, July 20, 2018.
48. How People Really Use Mobile,” Harvard Business Review,
January/February 2013.
49. “Tencent Announces 2019 Fourth Quarter and Annual Results,”
https://www.tencent.com/en-us/media.html#media-con-2
50. Lai Lin Thomala, “WeChat: Distribution of Users 2019, by Age,”
https://www.statista.com/statistics/387658/wechat-china
-user-age/.
51. “Vision Statement: How People Really Use Mobile,” Harvard
Business Review, January/February 2013, https://hbr.org.
52. www.myfitnesspal.com/; Adda Bjarnadottir, “The 5 Best Calorie
Counter Websites and Apps,” Healthline, May 29, 2017, www
.healthline.com/nutrition/5-best-calorie-counters.
53. “Vision Statement: How People Really Use Mobile,” Harvard
Business Review, January/February 2013, https://hbr.org/.
54. https://get.google.com/trips/; Lori Zaino, “5 Best Apps for Planning Your Next Vacation,” The Points Guy, February 1, 2017,
https://thepointsguy.com/2017/02/5-best-vacation-apps/.
55. https://flipboard.com/; Casey Newton, “Flipboard Comes to the
Web, and It’s Beautiful,” The Verge, February 10, 2015, www
.theverge.com/2015/2/10/8008905/flipboard-comes-to-the-web.
56. www.tapatalk.com/; Microsoft + Startups, “Tapatalk Brings Online
Forums Out of the Internet Dark Ages,” Medium, February 28,
2017, https://medium.com/@MicrosoftforStartups/tapatalk-brings
-online-forums-out-of-the-internet-dark-ages-ea6ca239bf9d.
57. https://candycrushsaga.com/en/; “Candy Crush Saga,” iTunes,
https://itunes.apple.com/us/app/candy-crush-saga/id
553834731?mt=8.
58. Eddie Makuch, “Here’s How Much Money Candy Crush Makes
Compared to Fortnite and Pokémon Go on Mobile,” Game Spot,
January 9, 2019.
59. www.salesforce.com.
60. Eric Siu, “30 Companies with the Best Digital Marketing
Campaigns,” Single Grain, www.singlegrain.com/digital-marketing
/best-online-marketing-companies/.
61. Laura S. Quinn and Kyle Andrei, “A Few Good Web Analytics
Tools,” TechSoup, May 19, 2011, www.techsoup.org.
62. Willem van Heerden, “The 6 Most Important Web Metrics to Track for Your Business Website,” Linkedin.com, July 18,
2017.
63. Christina Warren, “How to Measure Social Media ROI,” Mashable,
October 27, 2009, http://mashable.com/2009/10/27/social
-media-roi/.
64. https://marketingplatform.google.com/about/; Aja Frost, “The
Ultimate Guide to Google Analytics in 2019,” HubSpot, updated
August 1, 2019.
65. Lauren Johnson, “Taco Bell’s Cinco de Mayo Snapchat Lens Was
Viewed 224 Million Times,” Adweek, May 11, 2016.
DIGITAL MARKETING: ONLINE, SOCIAL, AND MOBILE CHAPTER THREE 119
66. https://twitter.com/tacobell.
67. Deep Patel, “7 Brands Killing It with Humor on Twitter,” Entrepreneur, June 24, 2019.
68. Joseph Myers, “Rooms at Taco Bell’s Merch-Heavy Promotional
Hotel Sold Out in Minutes,” Promo Marketing Magazine, June 28,
2019.
69. T. L. Stanley, “We Spent a Night at the Taco Hotel, Where
Everything Is Supremely on Brand,” Adweek, August 9, 2019.
70. John Koetsier, “Facebook: Native Video Gets 10X More Shares
Than YouTube,” Forbes, March 13, 2017, www.forbes.com/sites
/johnkoetsier/2017/03/13/facebook-native-video-gets-10x-more
-shares-than-youtube/#679d70da1c66.
71. “Influencer Marketing,” American Marketing Association, www
.ama.org/topics/influencer-marketing/
72. Christian Hughes, Vanitha Swaminathan, and Gillian Brooks,
“How to Drive Better Engagement from Sponsored Blogging,”
AMA.org, August 7, 2019.
73. Robert Williams, “YouTube Readies Beauty Influencer Contest
Series with James Charles,” Mobile Marketer, November 18,
2019.
74. Lauren Johnson, “How a Sweet, Simple Instagram Photo Gave
Rise to a Sweeping Global Travel Brand,” Adweek, July 4, 2016.
75. Billy Niles and Amanda Williams, “Massy Arias Takes Us inside
Her World,” E News, September 27, 2019.
76. Katie Powers, “Fraudulent Influencer Marketing Is Costing
Brands,” Marketing News, July 26, 2019.
77. www.instagram.com/cristiano/.
78. Christian Hughes, Vanitha Swaminathan, and Gillian Brooks,
“Driving Brand Engagement through Online Social Influencers:
An Empirical Investigation of Sponsored Blogging Campaigns,”
Journal of Marketing 83 (September 2019), pp. 78–96.
79. www.instagram.com/selenagomez/?utm_source=ig_embed;
Joshua Boyd, “The Top 20 Most Followed Instagram Accounts,”
Brandwatch, February 21, 2020.
80. An alternative financial analysis tool to return on investment is
the marginal analysis approach which is based on the economic
principle that firms should increase expenditures on investments
like social influencers as long as each additional dollar spent
generates more than a dollar of additional profits. See Michael
Levy, Barton A. Weitz, and Dhruv Grewal, Retailing Management, 10th ed. (New York: McGraw-Hill Education, 2019),
pp. 385–86.
81. “This One Goes to 11: Influencer Marketing and the Myth of ROI,”
Influencer Marketing Hub, May 18, 2019, https://influencer
marketinghub.com/influencer-marketing-and-the-myth-of-roi/.
82. Shane Barker, “How Influencers Can Boost Your Marketing ROI,”
Adespresso, January 22, 2019, https://adespresso.com/blog
/influencers-boost-marketing-roi/.
83. Jana Gross and Florian von Wangenheim, “The Big Four of
Influencer Marketing. A Typology of Influencers,” Marketing
Review St. Gallen 2 (April 2018), pp. 30–38. Available at SSRN:
https://ssrn.com/abstract=3230687; https://blog.hubspot.com
/marketing/how-to-work-with-influencers?__hstc=243653722
.4b26fd529cc23df7c73ea65423544dc0.1579639821777
.1579639821777.1579639821777.1&__hssc=243653722.1
.1579639821778&__hsfp=645916085;
84. Lee Scarratt, “How to Spot a Fake Influencer,” Entrepreneur,
February 6, 2020.
85. Paolo Zialcita, “FTC Issues Rules for Disclosure of Ads by Social
Media Influencers,” NPR, November 5, 2019.
86. Josh Constine, “FTC Votes to Review Influencer Marketing Rules
& Penalties,” TechCrunch, February 12, 2020.
87. Olivia Iurillo, “6 Dangers of Influencer Marketing,” Social Media
Today, July 11, 2019.
88. Kevin Twomey, “Opinion: The Dishonest and Wasteful Practice of
Influencer Marketing,” Ad Age, January 15, 2020.
89. Red Bull Stratos, “Scientific Data Review,” www.redbullstratos.
com.
90. Rick Mulready, “The Secret to Red Bull’s Media Success Is There
Is No Secret,” November 6, 2013, http://rickmulready.com.
91. SocialBakers, “Red Bull Stratos on Social Media,” www
.socialbakers.com.
92. SocialBakers, “Red Bull Stratos on Social Media,” www
.socialbakers.com.
93. Jack Bell, “Red Bulls’ Henry Strikes a Pose, and Starts a Trend,”
The New York Times, September 21, 2013.
94. www.newyorkredbulls.com/.
95. Clint Boulton, “Red Bull Eyes ‘SoLoMo’ Software to Grow
Business,” The Wall Street Journal, April 30, 2012.
96. http://redbullrecords.com/.
97. www.youtube.com/user/redbullrecords.
98. https://itunes.apple.com/us/developer/red-bull/id319400189.
99. https://itunes.apple.com/us/app/red-bull-tv/id364269164?mt=8.
100. David Moth, “How Red Bull Uses Facebook, Twitter, Pinterest,
and Google+,” eConsultancy.com, February 21, 2013, http://
econsultancy.com.
i. John D. McKinnon and Jeff Horwitz, “HUD Action against Facebook Signals Trouble for Other Platforms,” The Wall Street Journal, March 28, 2019; Paresh Dave, “Facebook’s Ad System Leans
on Stereotypes for Housing, Job Ads: Study,” Reuters, April 3,
2019.
ii. Mike Isaac and Brian X. Chen, “Facebook’s New Gadget Is a
Video-Chat Screen with a Camera That Follows You,” The
New York Times, October 8, 2018; Paresh Dave, “Facebook
Debuts Smart Speaker for Messenger Video Calls,” Reuters,
October 8, 2018.
iii. Sharon Terlep, “P&G Trying to Stop ‘Dangerous’ Tide Pods
Challenge, CEO Says,” The Wall Street Journal, January 22,
2018; Imani Moise and Sharon Terlep, “P&G Grapples with
How to Stop a Tide Pods Meme,” The Wall Street Journal,
January 20, 2018.
Quiz Yourself Answer Key
1. Downloading a chapter of a new book before buying it or
listening to a few seconds of a song before purchasing it are
examples of which aspect of the 4E framework?
Answer: (c) Experience the product
2. How is advertising intent guidance provided to influencers?
Answer: (b) The FTC publishes recommendations to help
influencers engage in ethical marketing such as mentioning
endorsements or using #ad in their posts.
Design elements: Water bottle: CD_works27/Shutterstock; icons for Adding Value, Marketing Analytics, and Social & Mobile Marketing boxes:
Molotovcoketail/Getty Images; icon for Ethical & Societal Dilemma box: McGraw-Hill
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
LO4-1 Define conscious marketing.
LO4-2 Describe what constitutes marketing’s greater purpose.
LO4-3 Differentiate between conscious marketing and corporate social
responsibility.
LO4-4 Describe the ways in which conscious marketing helps various
stakeholders.
LO4-5 Explain how conscious leadership can produce a conscious
culture in the firm.
LO4-6 Describe how ethics constitutes an integral part of a firm’s
conscious marketing strategy.
LO4-7 Identify the four steps in ethical decision making.
Sustainable fashion
sells, as evidenced by
the Greenshowroom
& Ethical Fashion
Show in Berlin at
Kraftwerk Mitte.
Thomas Niedermueller/
Getty Images
CHAPTER 4
CONSCIOUS
MARKETING,
CORPORATE SOCIAL
RESPONSIBILITY,
AND ETHICS
You’re a modern consumer and member of
the global community, so you probably already know to recycle your metal and paper,
reuse your plastic bags, and carry a refillable water bottle. But what are you doing about your
clothing?
In what may come as something of a surprise, the
fashion industry is the second-most polluting sector in
the world. When people are finished with a worn, outof-style, or tired piece of clothing, they often toss it in
the trash. Of the approximately 32 billion garments
produced each year, around 65 percent of them end
their lifecycles in landfills.1
Even before being disposed
of, clothing has some serious environmental implications because production processes, such as dyeing,
result in substantial water pollution and wastewater
creation.2
Such concerns have prompted a range of responses from both consumers and fashion brands,
reflecting different approaches to sustainability. For example, a Fashion Pact recently signed by dozens of
companies—including The Gap, Nike, Nordstrom,
Chanel, Gucci, and H&M—sets ambitious environmental
protection goals, including carbon neutrality by 2050
and strict reductions in both single-use plastics and
microplastics by 2030. Although nonbinding, the pact
encourages the suppliers upstream to develop more responsible farming practices for growing raw materials
and the fashion brands to leverage their power to demand improved agricultural conditions with less waste
and pollution.3
Furthermore, the Fashion Pact calls for new ideas
for reusing and recycling used clothing, an effort already exemplified and embraced by retailers such as
122
thredUP and the RealReal as well as brands like
Patagonia, Eileen Fisher, and Levi’s. On the individual
brand level, Patagonia sells used outerwear, reflecting
its long-standing dedication to sustainability. It actively
encourages customers to bring back their used jackets
and gear by offering them a trade-in credit, then refurbishes the items and puts them up for sale as part of a
distinct product line it calls Refurbished. Eileen Fisher
does something similar, through its Renew line, which is
available in 67 stores and at the company website. Levi
Strauss markets its used products as uniquely appealing
because they are vintage and reportedly hires employees to visit yard sales, resale websites, and flea markets
looking for used offerings they can purchase and reinsert into the supply chain.4
More broadly, thredUP has long touted the sustainability benefits of its online secondhand market approach. By encouraging people to send in their
no-longer-wanted garments, it helps keeps them out of
the waste supply chain; by reselling them, it prevents
purchases of ever more stuff. The appeal of this sustainable model also has prompted partnerships with a range
of fashion companies, such that thredUP is helping
both JCPenney and Macy’s insert used clothing options
into their stores.5 In a collaboration with the actor and
director Olivia Wilde, it also has introduced a dedicated
collection of used clothing, which it has reprinted
with slogans and images touting the appeal of wearing
used items.6
Even as they pursue greater sustainability, fashion
companies are being increasingly circumspect about
promoting their efforts. Even thredUP, whose founding
principles and mission statement highlight sustainability,7 tends to focus more on the fun of secondhand
shopping in its communications with consumers.8 But
as consumers grow more aware of and sophisticated in
their demands for sustainable fashion, it also is well
positioned to supply their needs—for cool secondhand
fashion and for feeling good about their clothing
choices.
Which is the more important corporate objective: making a profit or protecting customers,
employees, and the broader needs of society and the environment?9
This question underlies
a primary dilemma that marketers have long faced. At one point, they might have argued
that profit was the primary goal of any firm. But over time, firms—and society as a whole—
came to agree that corporations have social responsibilities to a range of stakeholders that
they must meet.
Doing so can be harder than it sounds, especially because the goals of different
shareholder groups often can be at odds. For example, employees in the coal industry
want to keep their jobs; consumers want cheap energy; society wants clean, sustainable
energy; and shareholders who own stock in a coal company want to earn profits. But
those goals often come in conflict because coal will never be a clean or sustainable
energy, so to satisfy society, shareholders by definition would lose their source of income.
Accordingly, some industries and companies resist the idea that they need to acknowledge the impact of their actions on others. However, in the long term, if customers
believe they can no longer trust a company or that the company is not acting responsibly,
they will no longer support that company by purchasing its products or services or investing in its stock.
Ultimately then, modern firms and their marketing efforts must address these notions.
For corporate leaders, their firm’s ability to balance the needs of various stakeholders—
while building and maintaining consumer trust by conducting ethical, transparent, clear
transactions that have a positive impact on society and the environment—must be of paramount importance. It is the role of the firm’s leadership to weigh the trade-offs among
stakeholders and establish a culture that encourages the company to function in a responsible, ethical way.10 Throughout history, regardless of the objectives they embrace, companies and marketers have needed to be ethical in their actions if they hope to survive.
CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY, AND ETHICS CHAPTER FOUR 123
As these corporate social responsibilities have grown and ideas about how they should
be implemented have expanded, the progression in thinking has moved to encompass the
relatively more recent concept of conscious marketing. This chapter details these developments over time, in an effort to describe and explain what conscious marketing means and
how it depends on ethics and corporate social responsibility. We start by defining conscious
marketing and its four main components (a higher purpose, stakeholders, conscious leadership and culture, and ethics). In particular, we explain why behaving consciously is so
important to successful marketing. We then examine how a firm can balance the sometimes
disparate needs of various stakeholders to create an offering that sustains the company
financially in the long term while also benefiting society and the environment (i.e., the triple
bottom line). Then we turn our attention to the leaders who establish a conscious marketing
culture in the firm. Coming full circle, we describe how conscious marketing can be integrated into a firm’s marketing strategy and marketing plan (from Chapter 2). Finally, we
consider ethics as a crucial component of conscious marketing. To help you make ethical
marketing decisions, we also provide a framework for ethical decision making.
CONSCIOUS MARKETING
Conscious marketing entails a sense of purpose for the firm that is higher than simply making a profit by selling products and services. It encompasses four overriding
principles:11
1. Recognition of marketing’s greater purpose. When the marketing function recognizes
that the purpose of business should be more than just making profits—whether
the purpose is to be more environmentally responsible, as Unilever’s is, or ensure
employment opportunities for local communities or provide goods for the citizens
of poor nations—the actions it undertakes change in focus. The resulting engagement
improves inputs as well as outcomes of marketing actions for everyone involved, as
Adding Value 4.1 demonstrates.
2. Consideration of stakeholders and their interdependence. Conscious marketers
consider how their actions will affect the expansive range of potential stakeholders,
which are the broad set of people who might be affected by a firm’s actions, including not just corporate shareholders and customers but also past, current, and prospective employees and their families; supply chain partners; government agencies;
the physical environment; and members of the communities in which the firm
operates (defined either locally or on a global scale). Marketers increasingly acknowledge that to serve as many stakeholders as possible
and avoid inflicting severe damage on any others,
they must give up their exclusive focus on maximizing profits.12 Rather, they engage in conscious
marketing, such that they attend to the broad
implications of their actions. By considering these
impacts as a foundation for any marketing decisions,
conscious marketers achieve the most benefits for
the largest numbers of stakeholders while also
ensuring that they avoid causing significant harm to
any group. For example, when Walmart issued new
standards for farms that supply it with livestock
products, the effects were felt by the supply chain
partners who might need to adjust their practices,
competitors that might need to adopt similar protections, consumers who can take more assurance that
the animals raised for their food will not have been
fed antibiotics, and animal welfare groups that call
the new standards “a step in the right direction.”13
LO4-1 Define conscious
marketing.
When Walmart issued new
standards for livestock products that were raised on food
without antibiotics or artificial
growth hormones, it considered multiple stakeholder
groups, including the ranchers
who supply the food, its
customers, and animal
welfare groups.
Rudmer Zwerver/Shutterstock
124 Section One ASSESSING THE MARKETPLACE
3. The presence of conscious leadership, creating a corporate culture. A conscious
marketing approach implies that the firm’s leaders are dedicated to the proposition
of being conscious at all levels of the business, throughout its entire culture. For
example, Kip Tindell is cofounder and former chair of The Container Store, a
chain of 90 stores dedicated to selling storage and organization products to save
space and time. Tindell’s goal has always been to adhere to the tenets of conscious
capitalism by considering all its stakeholders including employees, customers,
vendors, the community, and shareholders. As a result, every member of the firm
embodies the ideas of conscious marketing, and every stakeholder affected by that
marketing can recognize the higher principles involved. As a result of these efforts,
The Container Store has made Fortune magazine’s list of “100 Best Companies to
Work For” for almost twenty years.14
Adding Value 4.1 Philanthropy with a Dash of Style: The Elbi–David
Yurman Partnershipi
It isn’t every day that a luxury jeweler is linked to charitable
micro-funding initiatives. But in its efforts to connect with
younger consumers, the high-end jewelry brand David Yurman
has taken a creative new approach and partnered with the
charitable app Elbi—which itself was founded by Natalia
Vodianova, a model who appears in some of David Yurman’s
marketing campaigns. The outcome promises to benefit the
brand, the charity, consumers, and beneficiaries of the charitable efforts.
First, David Yurman can connect better with Millennials in a
new and innovative way, thereby building brand recognition in an
age group that typically lacks enough discretionary income to
purchase fancy jewelry. The resulting, recognizable brand image
also is based in social philanthropy. That is, by introducing itself
to young consumers through its partnership with Elbi, David
Yurman can expand its conscious marketing image. The brand
has selected seven specific causes, all associated with children’s
charities, that it will support in conjunction with this particular
brand partnership.
Second, for Elbi, the connection increases attention and clicks
on its site. The social sharing approach seeks to generate microdonations through clicks, which then go to support three different charities each day. Through the partnership, David Yurman
promises to contribute $1 for each transaction on its website as
well as donating a bracelet that users could win.
Third, with each donation or activity, users earn points
that they can redeem for luxury prizes, including handbags
and electronics, as well as the exciting jewelry. Millennial
shoppers can sense that they are doing good through their
consumption, fulfilling their need to contribute positively to
the world, even if they cannot afford to make a monetary
donation themselves. In turn, the charities associated with
the app receive more support, which goes to their intended
audiences.
To promote this new partnership between Elbi and David
Yurman, the marketing campaign features the model who
also founded the Elbi app. It embraces the conscious marketing notions of togetherness and family, showing both
adults and children playing and enjoying life, adorned with
the brand’s jewelry. With this whimsical approach, the marketing links clearly to the seven causes selected by David
Yurman as recipients of the benefits of the partnership, all
of which have an emphasis on helping children. Finally, by
airing the resulting spots in traditional channels as well as
movie theaters and on the brand’s social media sites, David
Yurman hopes to capture the attention of younger consumers, ensuring that their first impression of this luxury brand
is a positive one.
Luxury jewelry brand David Yurman benefits by partnering
with the charitable app founded by Natalia Vodianova, who
is pictured in this David Yurman ad.
Source: David Yurman
CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY, AND ETHICS CHAPTER FOUR 125
4. The understanding that decisions are ethically based.
Conscious marketers must make decisions that are
based on sound marketing ethics. Business ethics is
concerned with distinguishing between right and
wrong actions and decisions that arise in a business
setting, according to broad and well-established
moral and ethical principles that might arise in a
business setting, and any special duties or obligations
that apply to persons engaged in commerce. Marketing
ethics, in contrast, examines ethical situations that
are specific to the domain of marketing, including
societal, global, or individual consumer issues.
They can involve societal issues such as the sale of
products or services that may damage the environment, global issues such as the use of child labor
(see Chapter 8), or individual consumer issues such
as misrepresenting a product in advertising or
marketing dangerous products.
MARKETING’S GREATER PURPOSE:
CORPORATE SOCIAL RESPONSIBILITY
AS AN ELEMENT OF CONSCIOUS
MARKETING
As we noted previously, the notion of conscious marketing
has evolved over time. At one point, a popular view held
that the only responsibility of a business was to its shareholders, so its only purpose was to make a profit.15 In many
parts of the world, that view has been supplanted with the
idea that companies must consider their responsibilities to
a wider range of stakeholders who make up society.
Although there are many and varied definitions of corporate
social responsibility (CSR),
16 firms generally acknowledge
that, in addition to economic and legal duties, they have
responsibilities to society. These responsibilities are not
mandated by any law or regulation but instead are associated with the demands, expectations, requirements, and
desires of various stakeholders. For example, one definition
describes CSR as context-specific actions and policies, taking stakeholders’ expectations into account, to achieve what
is referred to as the triple bottom line: economic, social, and
environmental performance.17
Today, virtually all large and well-known companies
engage in some form of CSR. The available initiatives are
vast in their spread, from establishing charitable foundations
to supporting and associating with existing nonprofit groups
to supporting the rights of minority groups to adopting
responsible marketing, sales, and production practices.
Exhibit 4.1 provides several illustrations of the CSR programs undertaken by major firms.
Although CSR is an important element of conscious marketing, it is not the same thing. Becoming a conscious marketing
organization is a complex effort, and for some firms, it may
LO4-2 Describe what
constitutes marketing’s
greater purpose.
Kip Tindell, cofounder and former chair of The Container Store, is
dedicated to the principles of conscious capitalism by considering
all the firm’s stakeholders.
Ben Hider/Getty Images
Sampling of Major Companies’
CSR Programs EXHIBIT 4.1
Company Illustration of CSR Program
Amazon.com Developed nonprofit Simple Pay Donation system to
help nonprofits raise money easily
BMW BMW Scholars and BMW Children’s Safety programs
Coca-Cola Coca-Cola Foundation has donated more than
$1 billion to communities worldwide since 1984; its
grants also support the Atlanta Police Foundation’s
Vision Safe Atlanta Campaign
FedEx Transports aid (e.g., water, medicine) to disaster victims
General
Electric
GE Volunteers Foundation
Google Google.org funds pro-profit entrepreneurship in
Africa; Global Fishing Watch
McDonald’s 99 percent of fish come from MSC fisheries;
transitioning to sustainable food and packaging
sources; Ronald McDonald House charities
Procter &
Gamble
Live, Learn, and Thrive improves the lives of children
worldwide; partnership with UNICEF
Southwest
Airlines
Employees donate volunteer hours to Ronald McDonald
Houses throughout the United States
Starbucks Develops ecologically friendly growing practices;
LEED-certified stores
Source: “Fortune’s World’s Most Admired Companies,” fortune.com/worlds
-most-admired-companies/2020/search/?ordering=asc. Individual companies
information taken from its official website.
126 Section One ASSESSING THE MARKETPLACE
prove virtually impossible to achieve. When marketers work in
controversial or polluting industries such as tobacco or fossil
fuels, their central activities largely bar them from becoming
conscious marketers. However, they might engage in CSR in an
effort to mitigate the damage that their products cause, such as
when cigarette companies sponsor public information campaigns or oil companies plant trees to balance out their carbon
footprint.18 In addition, these companies might undertake
efforts in other sectors, such as donating time in local communities or guaranteeing fair wages, because they recognize the
importance of such socially responsible efforts.
Walmart offers an interesting example in this discussion. The retail giant has been widely criticized as one of the
worst-paying companies in the United States.19 Yet it also
engages in extensive CSR programs across the triple bottom
line. It has committed to reducing its carbon footprint (environmental performance), donates more than $1 billion in
cash and in-kind items to charitable causes per year (social
performance), and still earns strong profits (economic
performance).20
Thus, though conscious marketing and CSR have some clear connections, they also
differ in critical ways, as Exhibit 4.2 summarizes.
PROGRESS CHECK
1. What are the criteria for being a conscious marketer?
2. Is Walmart a conscious marketer, or is it a practitioner of CSR?
Walmart employees protest low wages.
Marie Kanger Born/Shutterstock
How Conscious Marketing Differs
from CSR EXHIBIT 4.2 21
Corporate Social Responsibility Conscious Marketing
Independent of corporate
purpose or culture
Incorporates higher purpose and
a caring culture
Reflects a mechanistic view of
business
Takes a holistic, ecosystem view
of business as a complex
adaptive system
Often grafted onto traditional
business model, usually as a
separate department or part
of PR
Puts social responsibility at the
core of the business through the
higher purpose and views the
community and the environment
as stakeholders
Sees limited overlap between
the business and society, and
between business and the planet
Recognizes that business is a
subset of society and that society
is a subset of the planet
LO4-3 Differentiate between
conscious marketing
and corporate social
responsibility.
CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY, AND ETHICS CHAPTER FOUR 127
EXHIBIT 4.3 Key Conscious Marketing Stakeholders
Employees Customers
Marketplace Society
• Community
• Environment
• Employees
• Their families
• Current customers
• Potential customers
• Partners
• Competitors
THE STAKEHOLDERS OF
CONSCIOUS MARKETING
Among the key differences between conscious marketing
and CSR, we can highlight the unique view on shareholders that is absolutely critical to conscious marketing. That
is, when companies embrace conscious marketing, they
appeal not only to their shareholders but also to all of
their key stakeholders (Exhibit 4.3), including their own
employees, consumers, the marketplace, and society at
large. The choices they make with regard to what they produce and how, and then how they seek to sell those offerings, take a broad range of elements into consideration.
A prominent example appears in the supply chain for
processed foods (e.g., cereals, salad dressings). For
decades, most of these foods have contained ingredients
made from plants whose DNA has been manipulated in a
laboratory, for example, to help produce weather frosts
better and produce a greater yield of crops. Such genetically modified organisms, or GMOs, appear in many of
the foods that U.S. consumers eat daily. The U.S. Food
and Drug Administration does not require GMO food
product labeling,22 so legally, food manufacturers do not
have to identify which of their products contain GMOs.
Although there is ample evidence that GMOs aren’t harmful, the demand for such
options is still growing.23 Many consumers express a preference to know GMO information, primarily because they have concerns about their potential negative health effects.
Fearful that GMO labels will hurt sales, many food manufacturers seem to be fighting
GMO labeling. Although removing GMOs may increase production costs, companies
such as General Mills have removed them from many products, and Whole Foods has
committed to ensuring that food sold under its 365 Everyday Value brand contains
no GMOs.24
LO4-4 Describe the ways
in which conscious
marketing helps
various stakeholders.
Whole Foods has committed to issuing labels on all
GMO-containing foods it sells.
Ralph Barrera/MCT/Newscom
128 Section One ASSESSING THE MARKETPLACE
In this example, the stakeholders have contrasting
preferences and demands, and they are diverse—they
include farmers, consumers, manufacturing companies,
shareholders, retailers, and the environment. Let’s consider five stakeholder categories in more depth to understand the meaning and effects of conscious marketing in
the modern marketing arena, as well as how conscious
marketing ultimately can benefit firms that undertake it.
Employees
Perhaps the most basic responsibility of a firm is to employees: to ensure a safe working environment free of threats to
their physical safety, health, or well-being. In some cases,
this basic level of safety seems insufficient to ensure
responsibility to workers. For example, more firms today
realize that happy employee families make happy and productive employees, so they are offering new benefits and
options, such as on-site day care or flextime arrangements.
When REI thought more consciously about its practices, it
determined that living up to its higher purpose—that is, helping people enjoy outdoor
adventures—meant closing its stores on Thanksgiving and the day after, popularly known as
Black Friday. It also started an #OptOutside campaign to encourage people to consider that
choice. Although closing means that REI loses sales on what is often the biggest shopping
day of the year, the conscious culture in the firm emphasizes that employees should be enjoying time outdoors with their families too. Ultimately, since the start of its #OptOutside campaign and ongoing decision to close on the holiday, REI’s sales have grown. The company
explicitly credits its commitment to its core values as key to helping the chain prosper.25
Customers
Especially as changes in the marketing environment emerge, firms must consider the
effects on their current customers as well as future customers they have targeted. Conscious marketing programs must take such
shifts and trends into account and react to
them quickly. Some trends receiving substantial attention in modern times include
respecting and protecting privacy in an
electronic world and ensuring the healthiness of products, especially those aimed at
children. When conscious marketing takes
on such pertinent issues, it often increases
consumer awareness of the firm, which can
lead to better brand equity and sales in the
long run. The Walt Disney Company
appears to be a strong proponent: In one
year, Disney gave more than $400 million
to charity. It has also donated 23.1 million
books and its employees have donated
2.9 million hours of their time through
Disney’s VoluntEARS program since 2012.
Reflecting its higher purpose of ensuring
the happiness and enjoyment of children,
Disney has partnered with Give Kids the
World, and its employees have renovated
88 vacation villas that the charitable organization to the families of children with
REI closes on Black Friday, the day after Thanksgiving, so its
employees can enjoy time outdoors with their families.
Suzi Pratt/Getty Images
Walt Disney’s VoluntEARS program is one of the biggest CSR programs in the world.
Deshakalyan Chowdhury/AFP/Getty Images
CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY, AND ETHICS CHAPTER FOUR 129
life-threatening illnesses, so that they can take life-affirming vacations.26 Ethical & Societal Dilemma 4.1 examines the controversy over YouTube’s handling of privacy issues
involving children.
Marketplace
When one firm in the industry leads the way toward conscious marketing, its partners and
competitors often have no choice but to follow—or run the risk of not doing business or
being left behind. Unilever realized something similar when it conducted a global study and
found that one-third of adults make their purchasing decisions on the basis of companies’
To What Extent Is YouTube Responsible for Protecting
Children from Targeting? Ethical & Societal Dilemma 4.1 ii
YouTube’s official terms of
service state that all users
must be at least 13 years of
age. In establishing that rule,
the company complies with
the letter of the law, namely,
the Children’s Online Privacy
Protection Act (or COPPA),
which demands that companies obtain explicit permission
from parents before collecting
any data about the online
behaviors of children younger
than 13 years.
But as anyone who has
ever interacted with or been
an adolescent knows, it is unlikely that the kids are reading
those terms of service, staying off YouTube, or limiting
themselves to the more childfriendly content on the YouTube Kids app. Google, which
owns YouTube, insists that it is doing all it can by publishing
the age limit and pushing users who admit their young age to
the Kids app. But not everyone agrees.
In particular, several lawmakers and activists have
alleged that the company is failing to protect the privacy and
safety of young users and thus that it is liable for the outcomes. These observers note the extensive content that is
clearly targeted toward children that appears on the main
YouTube site, including toy review sites and ChuChu TV.
Some of these channels rank among the most watched content on YouTube.
This evidence implies that YouTube actively seeks to
attract young viewers, and of course, the company tracks
all users’ viewing activities. Thus, information about minors and their online behaviors is being collected without
their parents’ permission. On YouTube Kids, rules prohibit
any targeted advertising to children, nor does the company
track precise behaviors. But those prohibitions are not in
place on YouTube, even when the content mainly appeals
to young children. Accordingly, those impressionable
viewers likely are receiving precisely targeted advertising
communications—which also means that Google is earning
substantial advertising revenues from its advertisers for
these practices.
Google’s worries also are not limited to YouTube. A lawsuit by the New Mexico attorney general alleges that, in
collaboration with game developers, Google has been
tracking young users’ locations through several gaming
apps that it hosts. The developers then sell these data to
advertisers, which reach the consumers through the same
channels.
Google insists that its policies address the problem by issuing mandates that advertisers avoid targeting children. The
company also might argue that if young users lie about their
age and claim to be old enough not to need their parents’ permission, then Google cannot do much about it. However, the
increasingly vast data that it maintains about every user contradict this claim, and activists thus assert that if it really
wanted to, Google could easily ensure that young users were
limited to YouTube Kids.
Should Google, owner of YouTube, be responsible for limiting the collection of any data on
YouTube about the online behaviors of children younger than 13 years?
Source: ChuChu TV/YouTube
130 Section One ASSESSING THE MARKETPLACE
environmental and social impacts. Moreover, 21 percent of consumers indicated they would actively choose to purchase from a brand that made its sustainability initiatives known through its marketing or packaging.27 Therefore,
Unilever developed a “visionary sustainability plan that has become a model
for the movement,”28 involving stringent sustainability goals for itself and
its products and increased sustainability-focused R&D investments. In particular, it has devised various products that align with its ambitious goals,
including vegan Hellmann’s mayonnaise and Day2, a dry wash spray that
makes it possible for people to wear their clothes multiple times between
washes.29 When confronted with such initiatives, other consumer goods
companies are forced to make a decision: continue as they have been
doing or adopt more responsible goals themselves. In either case, the
initiating firm enjoys an advantage by gaining a reputation for its cuttingedge CSR efforts. Many of these firms accordingly promote their social
and ethical consciousness in their marketing campaigns; one such example is in Adding Value 4.2.
Society
Firms expend considerable time and energy engaging in activities aimed at
improving the overall community and the physical environment, which
suggests their increasing recognition of the importance of a broad range
of varied stakeholders. Broader society, a key stakeholder, demands that
companies act responsibly. Companies cannot afford to ignore this. A firm
that fails to act responsibly causes damage to all the preceding stakeholders
as well as to itself. For example, reports that the artificial sweeteners in diet
sodas might have ill effects, such as long-term weight gain and possible
links to developing cancer, have led customers to alter their buying habits.
Specifically, sales of diet soda have dropped 6.8 percent in a year, more
than three times the decline in regular soda sales. Even though organizations such as the
American Diabetes Association and the U.S. Food and Drug Administration have affirmed
that diet sodas are safe, the broader shift in societal opinions demands that beverage companies seek new options. In particular, many companies offer products containing stevia, a plant
with naturally sweet properties, to replace the artificial versions.30
Environment
A special category that combines considerations of all these stakeholders is sustainability.
According to the U.S. Environmental Protection Agency, “Sustainability is based on a simple principle: Everything that we need for our survival and well-being depends, either
directly or indirectly, on our natural environment.” Therefore, sustainable actions, including
sustainable marketing, create conditions that allow “humans and nature [to] exist in productive harmony, that permit fulfilling the social, economic and other requirements of present
and future generations.”31 When marketing is truly sustainable, it can benefit all stakeholders: employees, customers, the marketplace, and society. We discuss sustainable, or “green,”
marketing further in Chapter 5.
Unilever’s aggressive sustainability plan includes
products like vegan Hellmann’s mayonnaise.
McGraw-Hill
PROGRESS CHECK
1. What is the difference between conscious marketing and corporate social
responsibility?
2. Provide a specific example of a conscious marketing firm that considers the
needs of each of its stakeholders.
CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY, AND ETHICS CHAPTER FOUR 131
INTEGRATING CONSCIOUS
MARKETING THROUGHOUT THE
FIRM: LEADERSHIP AND CULTURE
For new firms founded on conscious marketing principles, their leaders, who are also
their founders, establish the standard from the very start. But even if an existing firm
seeks to move toward a conscious approach to marketing, it can adopt decision rules (as
LO4-5 Explain how conscious
leadership can
produce a conscious
culture in the firm.
Adding Value 4.2 Untouched and Empowering, New Aerie Campaign
Showcases Real Womeniii
The loungewear and intimates retailer Aerie has been hitting
the right notes with its consumers. Its successful, ongoing
#AerieReal campaign features unretouched images of everyday women wearing its clothing. The latest images released by
the campaign go even further in an effort to demonstrate the
brand’s deep commitment to inclusivity and body positivity.
The female models in the campaign all display a visible, difficult medical condition, disease, or disability, while confidently
sporting Aerie’s new releases. For example, a diabetic woman
poses with her insulin pump attached to her bra; another
model prominently displays her ostomy bag; and the Paralympic gymnast Chelsea Werner, who has Down syndrome, is a
celebrity endorser. The message to girls and women is clear:
All bodies are beautiful, and the brand is designed to be worn
by all.
Aerie first announced its policy to stop retouching images
used in its marketing and stores and on its website in January
2014. The response from consumers was widely positive and
supportive, prompting the retailer to expand on its ethical
stance and incorporate inclusiveness in its marketing, not just
professional models.
Among its professional models, though, it also featured Aly
Raisman, the Olympic gymnast who testified about the sexual
abuse she suffered for years by a U.S. Gymnastics doctor.
Raisman appears in a swimsuit with the word Survivor printed
prominently across the front, acknowledging her past but also
embracing her strength.
When the company held an open casting call on its social
media platforms, it found women whose indviduality could be
featured and celebrated. The #AerieReal campaign thus has
allowed the retailer to display its core values and connect
with a broad base of customers, and in so doing, it has
enjoyed the benefits of positive buzz about and interest in its
brand.
Aerie’s advertising campaign features inclusive, unretouched images of women wearing its
products, like Paralympic gymnast Chelsea Werner, who has Down syndrome.
Adam Gray/Barcroft Media/Getty Images
132 Section One ASSESSING THE MARKETPLACE
we discuss in the next section) and norms that encourage consciousness throughout its
entire corporate culture. For example, to ensure that conscious marketing is infused into
all levels of the firm, it can be integrated into each stage of the marketing plan (introduced
in Chapter 2), as we detail here. In their constant pursuit of conscious marketing, firms
can address relevant questions at each stage of the strategic marketing planning process.
For instance, in the planning stage, the firm will decide what level of commitment to its
ethical policies and standards it is willing to declare publicly and how the firm plans to
balance the needs of its various stakeholders. In the implementation stage, the tone of the
questions switches from “can we?” serve the market with the firm’s products or services in
a conscious marketing manner to “should we?” be engaging in particular marketing practices. The key task in the control phase is to ensure that all potential conscious marketing
issues raised during the planning process have been addressed and that all employees of
the firm have acted ethically.
Planning Phase
With strong leadership, marketers can introduce conscious marketing at the beginning of
the planning process by including statements in the firm’s mission or vision statements.
(Recall our discussion of various mission statements in Chapter 2.) For instance, the mission statement for natural skin care company Burt’s Bees is to “create natural, Earthfriendly personal care products formulated to help you maximize your well-being and that
of the world around you,”32 which reflects not only what is good for its customers but for
society in general.
For General Electric, the complexity of its organization and the wealth of ethical issues
it faces necessitated an entire booklet, “The Spirit and the Letter.” This booklet presents not
only a statement of integrity from the CEO and a code of conduct, but also details policies
for dealing with everything from international competition laws to security and crisis management to insider trading.33
Newman’s Own’s mission takes a fairly straightforward perspective: Its simple but
powerful purpose was to sell salad dressing (initially; it expanded later to many other
product lines) and use the proceeds to benefit charities. This simple idea began with the
leadership of Paul Newman, the late actor who whipped up a batch of salad dressing to
give as holiday gifts one year. When he and a friend decided to check with a local grocer
to see if it would be interested in the product, they found they could sell 10,000 bottles
in two weeks. Thus, Newman’s Own Foundation, the nonprofit organization, grew
quickly; today, dozens of products with the Newman’s Own and Newman’s Own Organic
brands are sold in countries around the world, from coffee to popcorn to dog food. Profits from Newman’s Own—more than $550 million since 1982—have been donated to
Since 1982, Newman’s Own has given more than $550 million to charities such as Newman’s Hole in the Wall Gang
camps for children with life-threatening diseases.
(Left): Food Collection/Alamy Stock Photo; (right): Lamperti Francois-Xavier/Abaca/Newscom
CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY, AND ETHICS CHAPTER FOUR 133
thousands of charities, especially Newman’s Hole in the
Wall Gang camps for children
with life-threatening diseases.34
The unique mission of the company and the entrepreneurial flair
of the founders, along with their
conscious leadership, made this
nonprofit a smashing, ongoing
success. Employees of Newman’s
Own have the great satisfaction of
giving back to society, various
charities benefit from the donations, and customers enjoy good
food with a clear conscience.
Implementation Phase
In the implementation phase of
the marketing strategy, when
firms are identifying potential
markets and ways to deliver the
four Ps to them, firms must consider several pertinent issues.
TOMS Shoes, well known as a socially conscious company, started by giving one
pair of shoes to someone in need in poor countries for each pair it sells. The strategy has
been so successful that it has expanded its buy-one-give-one implementation approach
more widely: a pair of eyeglasses or access to ophthalmologic surgery donated for every
pair of glasses sold, a donation to establish safer water resources for every bag of coffee
beans sold, and anti-bullying training for teachers for every backpack sold. In linking
sales of its various product lines to distinct sustainability and charitable campaigns, it
helps buyers understand precisely how their purchases support an ethical approach to
consumption.35
Once the strategy is implemented, controls must be in place to be certain that the firm
has actually done what it has set out to do. These activities take place in the next phase of
the strategic marketing planning process: the control phase.
Control Phase
During the control phase of the strategic marketing planning process, managers must be
evaluated on their actions from a conscious marketing perspective. Systems must be in
place to check whether each conscious marketing issue raised in the planning process was
actually successfully addressed. Systems used in the control phase must also react to
change. The emergence of new technologies and new markets ensures that new potentially troubling issues continually arise. In particular, people expect to be able to move
normally in public spaces without their location being recorded for subsequent use. Yet
marketers regularly collect data on people’s location through purchase transactions and
posts on social and mobile sites such as Facebook, Twitter, Instagram, Pinterest, and
YouTube.36 Social & Mobile Marketing 4.1 further explores the implications of
Facebook’s data collection practices. Additionally, several retailers’ credit card systems
have been violated, resulting in the theft of consumer data of millions of people, the most
egregious of which were the estimated 143 million at Equifax (the credit rating company)
in 2017, 145 million at eBay in 2014, and 110 million at Target in 2013.37 Although most
experts blamed the thefts on U.S.-based credit card companies’ reticence to adopt a more
TOMS Shoes, well known as a socially conscious company, gives one pair of shoes to
someone in need in poor countries for each pair it sells.
Jackie Ellis/Alamy Stock Photo
134 Section One ASSESSING THE MARKETPLACE
secure type of credit card that is used in Europe and elsewhere, the retailers and their
customers suffer the consequences.
China’s government, however, is taking what some consider to be extreme measures
to monitor purchases and other behaviors, which may have a strong impact on controlling its population’s behavior. This Chinese version of the control phase is examined in
Marketing Analytics 4.1, which highlights both key benefits of data aggregation and some
relevant concerns.
Many firms have emergency response plans in place just in case they ever encounter a
crisis that would negatively impact their conscious marketing philosophy. Conscious marketers adopt such contingency plans from the start, reflecting their conscious leadership and
conscious culture. In this sense, conscious marketing remains an ongoing crucial component of the strategic marketing planning process and should be incorporated into all the
firm’s decision making down the road.
Do Users Know What They Are Sharing
with Facebook, and Do They Care? Social & Mobile Marketing 4.1 iv
Despite the widespread media coverage and controversy
surrounding Facebook’s access to and exploitation of users’
data, it appears that most people remain oblivious to exactly
how the social media site gathers and uses their personal
information. According to a recent survey of representative
Facebook users, approximately three-quarters of them did
not know that advertisers could access their personal traits
and preferences by requesting information gathered by
Facebook.
In actuality, Facebook aggregates information across its
various sites, including Instagram and WhatsApp, to develop
profiles of every user. The profiles reflect how each user behaves on these sites, including when and how often they visit,
what they click on or like, and which information they share. It
also integrates nonbehavioral details, such as where they live,
their ages, and who their family members are. From these
data, Facebook creates descriptions of users that indicate not
only which products they might be interested in but also what
their political leanings likely are and which “multicultural affinities” they exhibit.
For advertisers, such information is priceless because it
supports improved personalization and targeting. Knowing
that a Facebooker consistently likes pictures of dogs tells a
pet food seller that ads for treats, balls, and high-quality
food are likely to reap rewards if exposed to this particular
consumer.
But in a more nefarious sense, the resulting profiles could
be (and allegedly have been) used to manipulate people in
ways that matter far more. Reports indicate that unethical
actors gathered political and racial profiles to target some
groups of citizens with influence tactics designed to discourage them from voting. Even Facebook’s own experiments, in
which it sought to determine if showing more positively or
negatively oriented feeds to people altered their behavior,
raise questions about the rights that it has to define and influence users’ behavior.
A contradictory argument holds that the type of experiments Facebook conducts, often referred to as A/B tests
because they involve two main versions of a similar experience (e.g., more positive or more negative news feeds), are
both legitimate and necessary. According to this argument,
marketers engage in such experiments all the time to determine which product display, pricing strategy, or color combination works best to prompt customers to buy. In this sense,
Facebook’s attempt to gather users’ behavioral information is
just one more contributing element to any good marketing
strategy.
Such questions become particularly pertinent in light of
additional information provided by the original survey though.
When shown their profiles, about one-quarter of the people
surveyed indicated that the description of their political leanings was inaccurate. More than one-third protested the incorrectness of their assigned multicultural affinity. Beyond
questions of whether Facebook should develop such profiles
and how it may use them, it thus confronts the issue of
whether it is even able to establish accurate depictions of
users based on their behaviors on its site. If it cannot, then
what’s the point?
PROGRESS CHECK
1. What ethical questions should a marketing manager consider at each stage
of the marketing plan?
CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY, AND ETHICS CHAPTER FOUR 135
MARKETING ETHICS AS A
CONSCIOUS MARKETING PRINCIPLE
Decision making according to conscious marketing might sound easy, but as this chapter
has shown, it is often difficult to balance the needs and preferences of various stakeholders.
A key component for making any conscious marketing decision can be very personal in that
individuals must decide whether their actions are right or wrong based on their moral principles. In other words, are they making ethically correct decisions? As noted earlier in this
chapter, like CSR, marketing ethics is an integral component of a conscious marketing initiative. To begin our discussion, we examine the nature of ethical and unethical marketing
decisions and the difference between marketing ethics and CSR.
The Nature of Ethical and Unethical Marketing Decisions
People are expected to know what is and is not ethical behavior based on their ability to
distinguish right from wrong in a particular culture. Consider product recalls of toys, for
example. How can certain manufacturers engage in such egregious behavior as using lead
paint on toys or including magnets that can be swallowed in toys marketed toward young
LO4-6 Describe how ethics
constitutes an integral
part of a firm’s
conscious marketing
strategy.
China’s Social Credit Systemv
Moving forward with an idea it first introduced a few years
ago, China is experimenting with tracking its citizens’ every
digital move and then issuing them individual scores based on
their behaviors, habits, connections, and comments. The initiative goes beyond the already extensive tracking to which every
mobile and digital user is exposed, with notable implications
for virtually every aspect of people’s lives.
Specifically, the Social Credit System gauges how people
act, including whether they pay their bills on time, how much
time they spend on gaming sites, how many positive comments
they share, and the identity of their friends on social media.
With this information, the system assigns a sort of trust score
to each person, indicating whether she or he is trustworthy
and a good citizen. Rather like Yelp for individual persons, the
scoring system then would allow others to determine whether
they want to interact with that person; a low score might imply
a bad dating risk, whereas a high score suggests the person
can be trusted to rent a car.
The exact methods used to calculate the scores are not
available. Thus far, China’s central government has assigned
the task of figuring out how to measure people to independent
companies, including Alibaba and China Rapid Finance (which
owns WeChat). Although the exact algorithms are confidential,
the Alibaba version assigns scores between 350 and 950 according to five metrics: credit history, contract fulfillment, personal characteristics (e.g., verified mobile phone number),
behavior and preferences, and interpersonal relationships.
The latter two categories are attracting the most attention
and concern. In an example provided by the company, the system would rate someone who plays video games for 10 hours
every day lower than someone who buys diapers frequently.
Thus, it judges someone who appears idle as less trustworthy
than someone who has children. If, however, that parent is
friends on social media with the gamer, the gamer’s low score
reflects on the parent too and lowers her or his score, simply
due to their social connection.
The firms performing the analyses encourage people to
register for assessment by rewarding them with various benefits, similar to a loyalty program. For example, if consumers
earn scores higher than 650 in Alibaba’s system, they can
rent cars without leaving a deposit, and they qualify for loans.
Higher point totals produce benefits even extending to expedited processing of their visa applications. A good score also
improves the person’s social media profile, such that he or she
would move up in the search result listings of the dating site
Baihe, also owned by Alibaba.
China plans to make the national Social Credit System
mandatory, and the results will have vast implications for the
lives of Chinese citizens. Beyond the elements already implemented in the private sector, such as determining their ability
to take out a loan or look good on a dating site, the scores will
define job prospects, schooling options, and living conditions.
People with low scores will not be allowed to take jobs as
journalists or civil servants, nor will they be permitted to enroll
their children in prestigious schools. They will lose the right to
travel abroad, and they will receive slower Internet speeds.
A survey of Chinese citizens shows 80 percent either
somewhat or strongly approve of the social credit system, believing that it is an efficient and effective way to protect them
from bad business practices and promote good behavior. Of
course, those with higher scores are more favorable of the
system. This system may seem bizarrely extreme to Europeans
and Americans, but Chinese citizens are accustomed to their
government collecting lots of data on them.
Marketing Analytics 4.1
136 Section One ASSESSING THE MARKETPLACE
children? What makes people take actions that create so
much harm? Are all the individuals who contributed to
that behavior just plain unethical?
There are no ready answers to such philosophical
questions. But when surveyed, one-quarter of marketers responded that they had been pressured to use
unethical marketing tactics at work.38 In marketing,
managers often face the choice of doing what is beneficial for them and possibly the firm in the short run
versus taking a conscious marketing perspective by
doing what is right and beneficial for the firm and
society in the long run.
For instance, a manager might feel confident that
earnings will increase in the next few months and therefore believe it benefits himself, his branch, his employees,
and his shareholders to exaggerate current earnings just a
little. Another manager might feel considerable pressure
to increase sales in a retail store, so she brings in some
new merchandise, marks it at an artificially high price, and then immediately puts it on sale,
deceiving consumers into thinking they are getting a good deal because they view the initial
price as the real price. These decisions may have been justifiable at the time and to some
stakeholders, but they have serious long-term consequences for the company and are therefore not in concert with a conscious marketing approach.
To avoid such potentially unethical behaviors, conscious marketing seeks to align the
short-term goals of each employee with the long-term, overriding goals of the firm. To align
personal and corporate goals, firms need to have a strong ethical climate exemplified by the
actions of corporate leaders and filtered through an ethically based corporate culture. There
should be explicit rules for governing transactions; these rules should include a code of ethics and a system for rewarding and punishing inappropriate behavior. The American
Marketing Association (AMA) provides a detailed, multipronged “Statement of Ethics” that
can serve as a foundation for marketers, emphasizing that “As marketers . . . we not only
serve our organizations but also act as stewards of society in creating, facilitating and executing the transactions that are part of the greater economy.”39
Ethics and Corporate Social Responsibility
Although both fall under the conscious marketing umbrella, it is important to distinguish
between ethical marketing practices and corporate social responsibility programs. When
a firm embraces conscious marketing, it implements programs that are socially responsible, and its employees act
in an ethically responsible manner. (See Exhibit 4.4,
upper left quadrant.) None of the other quadrants in
Exhibit 4.4 embodies conscious marketing principles.
A firm’s employees may conduct their activities in an
ethically acceptable manner, but it may not be considered
socially responsible because its activities have little or no
impact on anyone other than its closest stakeholders: its
customers, employees, and stockholders. It does not
engage in programs that better society or the environment
as a whole (Exhibit 4.4, upper right quadrant).
Employees at firms that are perceived as socially
responsible can nevertheless take actions that are viewed as
unethical (Exhibit 4.4, lower left quadrant). For instance, a
firm might be considered socially responsible because it
makes generous donations to charities, but if it is simultaneously involved in questionable sales practices it cannot be
What is the “real” price? Did the manager bring the sweatshirts in
at an artificially high level and then immediately mark them down?
Alexander Mazurkevich/Shutterstock
Both ethically and socially
responsible
Socially Responsible
Ethical Unethical
Ethical firm not involved
with the larger
community
Socially Irresponsible
Questionable firm
practices yet donates a
lot to the community
Neither ethically nor
socially responsible
EXHIBIT 4.4 Ethics versus Social Responsibility
CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY, AND ETHICS CHAPTER FOUR 137
seen as ethical. The worst situation, of course, is when firms behave both unethically and in a
socially unacceptable manner (Exhibit 4.4, lower right quadrant).
Customers may be willing to pay more if they can be assured the companies truly are
ethical.40 According to recent studies, 87 percent of Americans will buy products because the
company supported social issues they cared about, and 76 percent will refuse to buy products
from companies that were opposed to issues important to them.41 Ethical consumerism is
also on the rise globally, providing incentives for companies to emphasize environmental and
social responsibility to appeal to customers in growing, underdeveloped markets.42
Embracing conscious marketing is one way to enforce this social contract. However,
even in the most conscious of firms, individual members may face challenges in their efforts
to act ethically. Therefore, a framework for ethical decision making can help move people to
work toward common ethical goals.
A Framework for Ethical Decision Making
Exhibit 4.5 outlines a simple framework for ethical decision making. Let’s consider each of
the steps.
Step 1: Identify Issues The first step is to identify the issue. Imagine the use (or misuse) of
data collected from consumers by a marketing research firm. One of the issues that might arise
is the way the data are collected. For instance, are the respondents told about the real purpose of
the study? Another issue might be whether
the results will be used in a way that might
mislead or even harm the public, such as
selling the information to a firm to use in
soliciting the respondents.
Step 2: Gather Information and
Identify Stakeholders In this step, the
firm focuses on gathering facts that are
important to the ethical issue, including
LO4-7 Identify the four steps
in ethical decision
making.
With its sustainability and transparency efforts, Philips tries to communicate with and consider “anyone with an interest in Philips.”
Source: Koninklijke Philips N.V.
EXHIBIT 4.5 Ethical Decision-Making Framework
Step 1 Step 2 Step 3 Step 4
Gather
information
and identify
stakeholders
Brainstorm
and evaluate
alternatives
Choose a
course of
action
Identify
issues
138 Section One ASSESSING THE MARKETPLACE
all relevant legal information. To get a complete picture, the firm must identify all the individuals and groups that have a stake in how the issue is resolved.
As we detailed previously, stakeholders typically include the firm’s employees, suppliers, the government, customer groups, stockholders, and members of the community in
which the firm operates. Beyond these, many firms now also analyze the needs of the industry and the global community, as well as one-off stakeholders such as future generations and
the natural environment. In describing its sustainability and transparency efforts, for example, the electronics firm Philips notes that it tries to communicate with and consider “anyone with an interest in Philips.”43
Step 3: Brainstorm and Evaluate Alternatives After the marketing firm has identified
the stakeholders and their issues and gathered the available data, all parties relevant to the
decision should come together to brainstorm any alternative courses of action. In our example,
these might include halting the marketing research project, making responses anonymous,
instituting training on the AMA Code of Ethics for all researchers, and so forth. The company
leaders and managers then can review and refine these alternatives, leading to the final step.
Step 4: Choose a Course of Action The objective of this last step is to weigh the
various alternatives and choose a course of action that generates the best solution for the
stakeholders, using ethical practices based on a conscious marketing approach. Management—
ideally, conscious leaders—ranks the alternatives in order of preference, clearly establishing
the advantages and disadvantages of each. It is also crucial to investigate any potential legal
issues associated with each alternative. Of course, any illegal activity should be rejected
immediately.
To choose the appropriate course of action, marketing managers will evaluate each
alternative by using a process something like the sample ethical decision-making metric in
Exhibit 4.6. The conscious marketer’s task here is to ensure that he or she has applied all
The Publicity Test
Would I want to see this action that I’m about to take
described on the front page of the local paper or in a national
magazine?
The Moral Mentor Test
Would the person I admire most engage in this activity?
The Admired Observer Test
Would I want the person I admire most to see me doing this?
The Transparency Test
Could I give a clear explanation for the action I’m contemplating, including an honest and transparent account of
all my motives, that would satisfy a fair and dispassionate
moral judge?
The Person in the Mirror Test
Will I be able to look at myself in the mirror and respect the
person I see there?
The Golden Rule Test
Would I like to be on the receiving end of this action and all
its potential consequences?
Decision
Yes Maybe No
Test 1 2 3 4 5 6 7
EXHIBIT 4.6 Ethical Decision-Making Metric
Source: Adapted from Tom Morris, The Art of Achievement: Mastering the 7 Cs of Business and Life (Kansas City, MO: Andrews McMeel Publishing LLC, 2002).
CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY, AND ETHICS CHAPTER FOUR 139
relevant decision-making criteria and to assess his or her
level of confidence that the decision being made meets
those stated criteria. If the marketer isn’t confident about
the decision, he or she should reexamine the other alternatives. Using Exhibit 4.6, you can gauge your own ethical
response. If your scores tend to be in the “Yes” area (columns 1 and 2), then the situation is not ethically troubling
for you. If, in contrast, your scores tend to be in the “No”
area (columns 6 and 7), it is ethically troubling, and you
know it. If your scores are scattered or are in the “Maybe”
area (columns 3, 4, and 5), you need to step back and
reflect on how you wish to proceed. In using such an ethical metric or framework, decision makers must consider
the relevant ethical issues, evaluate the alternatives, and
then choose a course of action that will help them avoid
serious ethical lapses.
Next, let’s illustrate how the ethical decision-making
metric in Exhibit 4.6 can be used to make ethical business
decisions.
Myra Jansen, the head cook at Lincoln High School
in Anytown, USA, has had enough. Reports showing that
children rarely eat enough vegetables have combined with
studies that indicate school kids have a limited amount of
time to eat their lunches. The combination has led to increasing obesity rates and troublesome reports about the long-term effects. Myra has therefore decided that the tater tots and
hot dogs are out. Vegetables and healthy proteins are in.
The problem, of course, is getting the kids to eat raw vegetables, plant proteins, and
lean meat. For many teenagers, recommending that they eat healthy food at lunch is akin to
calling detention a play date. But Myra has a plan: She’s going to reformulate various menu
items using different ingredients and just never tell the students. Thus, the regular hot dogs
will be replaced with turkey or soy dogs. The tater tots will contain more nutrient-dense
sweet potatoes instead of the vitamin-deficient regular spuds they used to be made out of.
She is convinced she can make such switches for most of the menu items, and none of the
children need to know.
Most of the kitchen staff members are on board with the idea and even have suggested
other possible menu switches that would benefit the students by ensuring that they receive a
well-balanced meal at school. School board members, when apprised of the idea, got very
excited and praised Myra for her innovative thinking. But the community liaison for the
school, Salim Jones, whose job it is to communicate with parents and other members of the
community, is not so sure. Salim is nervous about how students will react when they learn
that they have been deceived. He also has two small children of his own, one of whom has a
severe wheat allergy. Thus, the Joneses are extremely cautious about eating out, always asking for a detailed, specific list of ingredients for anything they order.
Using his training in ethical decision making, Salim sits down to evaluate his alternatives, beginning with identifying possible options available to the school district as well as
the various stakeholders who might be affected by the decision. He comes up with the
following list:
1. Switch out the food without telling students.
2. Leave menus as they are.
3. Switch out the food ingredients but also tell students exactly what is in each item in
the cafeteria.
To make a clear recommendation to the board about what would be the best ethical
choice, Salim decides to evaluate each alternative using a series of questions similar to
those in Exhibit 4.6.
If schools want children to eat more healthy foods, should they
switch to healthier options without telling them or tell them even
though the children might reject the changes?
Asiseeit/E+/Getty Images
140 Section One ASSESSING THE MARKETPLACE
Question 1: Would I want to see this action described on the front page of the local paper?
The school board’s reaction caused Salim to think that the larger community would appreciate the effort to improve students’ health. Thus, option 1 appears best for these stakeholders,
and possibly for society, which may reduce the prevalence of obesity among these students.
However, he shudders to think about how angry students might be if they learned they had
been tricked. They also likely are accustomed to their menu as it is, and therefore, they would
prefer option 2.
Question 2: Would the person I admire most engage in this activity, and would I want him or
her to see me engage in this activity? For most of his life, Salim has held up Mahatma Gandhi
as his ideal for how to act in the world. For Gandhi, truth was an absolute concept, not something that could be changed depending on the situation. Therefore, Salim believes Gandhi
would strongly disapprove of option 1. However, Gandhi also worried about the ethics of eating and avoided food choices that had negative effects on society, so he might reject option
2 as well.
Question 3: Can I give a clear explanation for my action, including an honest account of my
motives? In thinking about his children, Salim realizes that he is prioritizing their needs more
than he is the needs of other children, such as those who struggle with weight issues. That
is, he worries that his daughter might unknowingly be exposed to wheat in a school
cafeteria, so he prefers option 3.
Question 4: Will I be able to look at myself in the mirror and respect what I see? By bringing
up the ethics of this decision, even when it seems as if everyone else has agreed with it,
Salim feels confident that he has taken the right first step. The option chosen is still important, but it is a group decision, and Salim thinks he is doing his part.
Question 5: Would I want to be on the receiving end of this action and its consequences?
Salim struggles most with this question. He remembers the kind of junk foods he chose when
he was in college and the 20 pounds he put on as a result. He wishes now that his parents had
given him rules to follow about what to eat at school. But he also remembers how rebellious
he was and knows that he probably would not have followed those rules. And at the same time,
he hates the idea that someone could give him food to eat with falsified ingredients.
On the basis of this exercise, Salim decides that he wants to recommend option 3 to the
school board. When he does so, Myra Jansen protests loudly: “This is ridiculous! I know
better what kids should be eating, and I know too that some community liaison has no idea
what they are willing to eat. You’ve got to trick them to get them to eat right.”44 Another
school board member agrees, noting, “They’re just kids. They don’t necessarily have the
same rights as adults, so we are allowed to decide what’s best for them. And hiding the
healthy ingredients to get the kids to eat healthy foods is what’s best.”
So what does the school board decide?
LO4-1 Define conscious marketing.
Conscious marketing involves a sense of purpose
for the firm that is more than simply making a
profit by selling products and services. It consists
of four main principles: a greater purpose, consideration of stakeholders, conscious leadership and
culture, and ethics.
LO4-2 Describe what constitutes marketing’s greater
purpose.
Marketers must recognize that the purpose of business is more than making profits. The actual purpose
might vary, such as providing necessary products,
ensuring employment opportunities, or achieving
greener production methods, but in all of these
Reviewing Learning Objectives bchsu_tt
PROGRESS CHECK
1. Identify the steps in the ethical decision-making framework.
CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY, AND ETHICS CHAPTER FOUR 141
cases, the engagement improves the inputs as well as
the outcomes of marketing actions.
LO4-3 Differentiate between conscious marketing and corporate social responsibility.
Although CSR is an important element of conscious
marketing, they are different from one another. CSR
implies a focus on the triple bottom line of good
performance according to economic, environmental, and social criteria. Thus, good CSR can support
and help promote conscious marketing. But conscious marketing goes beyond just CSR to refer to
the overall meaning and purpose of the company
and its marketing.
LO4-4 Describe the ways in which conscious marketing helps
various stakeholders.
To describe the ways, we first have to identify the
various stakeholders of a company—namely, employees, customers, the marketplace, society, and
the environment:
•Employees: A firm committed to conscious marketing treats its employees with decency and respect. For many employees, working for an
irresponsible firm would be antithetical to their
own morals and values.
•Customers: When companies exhibit conscious
marketing principles, customers know that they
can trust the firms to provide healthy, ethically acceptable products and services. Many customers
also feel better about buying from a company that
engages in responsible practices, which provides
them with the additional value of feeling good
about buying from that company.
•Marketplace: An industry improves its practices
and avoids scandals when it ensures that the participating firms act responsibly and appropriately
in all areas.
•Society: This stakeholder is local, national, or
global communities who benefit when conscious
marketers give thought to how their practices
might influence values or connections, such as
providing aid to underprivileged communities.
•Environment: The benefits of conscious marketing
might include cleaner air and water as well as
healthier product options.
LO4-5 Explain how conscious leadership can produce a
conscious culture in the firm.
Conscious marketing should be integrated into the
very foundation of the firm by its leaders, such as in
the firm’s mission statement. Then top management
must follow through and commit to supporting CSR,
a strong ethical climate in the organization, and conscious marketing principles. When considering their
strategy, conscious marketing firms ask not only
“can we implement a certain policy?” but also
“should we do it?” If any action is not ethical or socially responsible, the conscious firm will make
changes to its marketing strategy.
LO4-6 Describe how ethics constitutes an integral part of a
firm’s conscious marketing strategy.
Being a part of an ethically responsible firm should
be important to every employee, but it is particularly
important to marketers because they interact most
directly with customers and suppliers and make decisions about how their products impact society and
the environment. Thus marketing issues present a
multitude of ethical questions and opportunities to
handle.
LO4-7 Identify the four steps in ethical decision making.
First, firms identify the ethical issue in question.
Second, the firm gathers relevant information
about the issue and the individuals and groups that
have a stake in how the issue is resolved. Third, all
parties relevant to the issue brainstorm alternative
courses of action. Finally, the various alternatives
are examined, and the course that generates the
best alternative for the stakeholders is chosen.
Firms can model their ethical policies after a
well-established code of ethics like the one provided by the American Marketing Association. When
making ethically sensitive decisions, firms can utilize a metric such as the ethical decision-making
metric in Exhibit 4.6.
Key Terms
• business ethics, 125
• conscious marketing, 123
• corporate social responsibility
(CSR), 125
• marketing ethics, 125
• stakeholders, 123
• triple bottom line, 125
142 Section One ASSESSING THE MARKETPLACE
Marketing Digitally
1. TOMS’s mission has grown over time as the firm has
grown, from the simple buy-one-give-one proposition to
now including other causes and greater commitments.
Visit www.toms.com/improving-lives and explore how
TOMS’s social entrepreneurship has grown and how it
communicates the message to its customers. How do you
feel these efforts help TOMS build brand loyalty among
its customers? Identify at least two other firms that
have adopted a similar buy-one-give-one model. Do you
believe those firms’ strategies are as effective as TOMS’s?
Why or why not?
2. An increasing number of firms are stating their strong
commitment to corporate social responsibility initiatives. The Corporate Social Responsibility Newswire Service keeps track of these various initiatives and posts
stories on its website about what various corporations
are doing. Go to www.csrwire.com and choose one story.
Write a description of the corporation and the initiative.
1. Distinguish among conscious marketing, CSR, and marketing ethics.
2. Develop an argument for why a cosmetics manufacturer
should build and maintain an ethical climate.
3. A clothing company gives generously to charities and
sponsors donation drives to help lower-income teen
girls get reasonably priced prom dresses. It also locates
its manufacturing plants in countries with few labor
laws, such that it does not know whether children are
working in its factories, and works to prevent union
activity among its employees in the United States.
Evaluate this company from an ethical and social
responsibility perspective.
4. Based on the evaluation you developed for question 3,
provide responses to the ethical decision-making metric
from Exhibit 4.6. Provide a rationale for your score for
each question.
5. Seventh Generation produces a line of cleaning and personal care products that are chemical-free and natural. Explore the Seventh Generation website and identify ways the
firm lives up to the four principles of conscious marketing.
In what ways does the firm go beyond these principles?
6. Amazon’s purchase of Whole Foods Market had many
consumers concerned that being owned by a very large
firm would change the conscious marketing culture at
Whole Foods. Visit www.wholefoods.com to see if the
four principles of conscious marketing are still present.
What impact do you believe Amazon’s purchase of
Whole Foods has had on the firm’s socially responsible
reputation? Do you believe that the concern surrounding
the purchase is warranted? Why or why not?
Marketing Applications
1. In what way does corporate social responsibility differ
from conscious marketing?
a. There is no difference.
b. Conscious marketing is one part of corporate social
responsibility.
c. Corporate social responsibility is one part of
conscious marketing.
d. Corporate social responsibility uses different
elements of the firm.
e. Conscious marketing cannot be measured.
2. If a firm’s sales force pressures potential customers to
purchase services they cannot afford or need, but they
require that sales force to work one week a year for
Habitat for Humanity, that firm is
a. Unethical yet socially responsible.
b. Ethical and socially responsible.
c. Neither ethical nor socially responsible.
d. Ethical but not involved in helping the community.
(Answers to these two questions can be found in the Quiz
Yourself Answer Key section.)
Quiz Yourself
CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY, AND ETHICS CHAPTER FOUR 143
DAILY TABLE
The growing social trends surrounding organic foods and healthy eating have helped companies such as Whole Foods and Trader Joe’s become power players in the grocery market.
But the high price of organic food remains a hurdle to expanding this market, especially to
include lower-income families. Trader Joe’s has positioned itself as a lower-cost option, yet
the prices it charges still keep it out of reach of many working families. In response, the
company’s former president, Doug Rauch, decided to open a new kind of health food store
in 2015. Daily Table, a nonprofit, membership-based grocery store, sells fresh produce
and prepackaged meals at affordable prices.45 It operates one store in Dorchester,
Massachusetts, a moderate- to low-income suburb of Boston, and a second in Roxbury, a
neighborhood within the city of Boston. It has expansion plans sighted for New York, Los
Angeles, Detroit, and San Francisco.46
The innovative approach to groceries seeks to address several elements of the “food
paradox” simultaneously. First, hunger is a major problem worldwide, as well as in the
United States. One in six Americans can be categorized as hungry, and according to the
U.S. Department of Agriculture, nearly 50 million Americans—including 7.9 million
children—are “food insecure.” Yet nearly one-third of the nation’s annual food supply, or
133 billion pounds, goes uneaten. Grocery stores that offer high-quality food tend to cater to
wealthier consumers, and they discard more than $165 billion worth of food annually, often
simply because it has minor aesthetic flaws or blemishes. According to the Environmental
Protection Agency, food waste is the single biggest source of waste in municipal landfills.
Not only are people from low-income sectors at risk of going hungry, but they also lack
reliable access to nutritious and affordable food. In turn, they often suffer health problems
related to their poor diets, including diabetes, heart disease, anemia, and so forth. Some
communities don’t have access to traditional grocery stores; thus, smaller family-owned
stores often fill this gap and may sell overripe produce. However, as the only healthy option
available, those retailers can mark up the prices, such that the food sells at double the price
it would go for in conventional grocery stores. That is, the people who most desperately
need healthy food cannot access it.47
To address all these issues at once, Daily Table works with conventional supermarkets
and restaurants to recover food that otherwise would go to waste. These relationships benefit both parties; the supermarket or restaurant reduces the margins of its losses by up to half,
and Daily Table receives inventory for its shelves. It also visits local farms and fisheries to
source excess produce and fish. For example, when New England enjoyed a bumper crop of
apples in a recent season, Daily Table partnered with the nonprofit Boston Area Gleaners to
obtain more than 10,000 pounds of excess fruit that otherwise would have rotted. The
apples, brought from local farms, sold for $0.49 a pound. The fish wholesaler and distributor John Nagle Co. brings its excess cuts of fresh fish to Daily Table every few weeks. Daily
Table can then sell the swordfish, ahi tuna, and salmon, which can cost as much as $30 a
pound, for as little as $5.99 a pound.48
Such prices certainly are appealing, but they might not be enough to overcome perhaps
the greatest competition Daily Table faces: namely, the fast-food chains that provide fast,
plentiful, easy food service options for lower-income families. To enhance its competitive
standing, Daily Table therefore introduced prepared meals, starting at $1.79, with sides
ranging from $0.50 to $1.00. The grab-and-go, ready-to-eat meals are ideal for some families,
though for others, Daily Table also encourages purchases of convenient, ready-to-cook
meals. Some of the tasty ready-to-cook meals also get prepared in the stores’ kitchens, onsite. Rather than the high-fat, high-sodium choices at fast-food restaurants, these alternatives
give consumers greater access to wider choices of fresh food, rich in nutrients.49
Beyond these choices, Daily Table also works to ensure that it provides its primary
customers with a sense of dignity. Low-income consumers often sense a stigma associated
with visiting food pantries or soup kitchens. Daily Table thus cannot risk leading customers
Chapter Case Study ®
144 Section One ASSESSING THE MARKETPLACE
to feel as if they are receiving charity when they shop there. For example, though its prices
are vastly discounted, it charges for all the food it sells. This strategy has another benefit, in
that it increases the chances that Daily Table can survive as a self-sustaining business. In
another tactic to avoid the stigma of charity, Daily Table’s store environment looks like any
other trendy supermarket, with clean aisles, wooden crates to display the fresh produce, a
friendly vibe, and windows that look into the kitchen area.50
Finally, it identifies its valued customers as members. To ensure it primarily serves the
community in surrounding neighborhoods, Daily Table established membership standards. The
first time customers visit, they must share some basic information to receive their (free) membership. On subsequent visits, they provide their zip code and phone number, which confirms
their membership, without any need for a physical membership card. Checking for whether
customers are from the local neighborhood may raise some privacy concerns, but Daily Table
assures customers that no such information is ever shared with outside institutions.51
Still, Daily Table has faced some challenges, as well as some criticisms. The first introduction of the concept led to concerns that it would sell expired produce that conventional
supermarkets could not sell by law. According to this view, the stores are a sort of dumping
ground for food rejected by the rich and affluent, discarded and left as crumbs for the
poor.52 In response, Daily Table cites a report from the Natural Resources Defense Council
and Harvard Law School that reveals that “sell by” and “best by” dates on food actually
provide little relevant information because the dates are mostly unregulated. Therefore,
Daily Table calls its food “rescued” instead of “expired.”53 Regardless of what it is called,
selling officially expired food creates several legal and regulatory challenges for Daily Table.
By working with regulatory authorities, it acquires the necessary permits, though the backand-forth interactions with bureaucratic institutions often hinder the smooth functioning of
its business model. The retailer also largely depends on grants and donations to keep its
prices low. The resulting financial constraints require Daily Table to rely on word-of-mouth
marketing; many consumers still have not heard of it.
Questions
1. How does Daily Table compare to Whole Foods and the conventional supermarket
where you shop on the four principles of conscious marketing?
2. How does Daily Table address the needs of each of the different stakeholder groups:
employees, customers, marketplace, society, and environment?
Daily Table is a nonprofit,
membership-based grocery
store that sells fresh produce
and prepackaged meals at
affordable prices.
Jessica Rinaldi/The Boston Globe/
Getty Images
CONSCIOUS MARKETING, CORPORATE SOCIAL RESPONSIBILITY, AND ETHICS CHAPTER FOUR 145
Endnotes
1. Suzanne Kapner, “The Rise of Hand-Me-Down Inc.,” The Wall
Street Journal, August 16, 2019; Brittany Nims, “Olivia Wilde’s
Used Clothing Line Is about Our ‘Fashion Waste Crisis,’”
Huffington Post, April 16, 2019.
2. Andria Cheng, “Major Fashion Companies Sign Pact Vowing to
Reduce Industry’s Environmental Impact,” Forbes, August 23,
2019.
3. Andria Cheng, “Major Fashion Companies Sign Pact Vowing to
Reduce Industry’s Environmental Impact,” Forbes, August 23, 2019.
4. Suzanne Kapner, “On Second Thought, Traditional Retailers
Make Room for Used Clothes,” The Wall Street Journal,
August 16, 2019.
5. Suzanne Kapner and Micah Maidenberg, “J.C. Penney Branches
into Used Apparel as Sales Tumble,” The Wall Street Journal,
August 15, 2019.
6. Brittany Nims, “Olivia Wilde’s Used Clothing Line Is about Our
‘Fashion Waste Crisis,’” Huffington Post, April 16, 2019.
7. See, for example, thredUP, “The thredUP Circular Fashion Fund
Supports a Sustainable Future,” November 17, 2018, www
.thredup.com.
8. Mike Hower, “When to Lead with Sustainability in Consumer
Communications, and When Not To,” GreenBiz, September 16,
2019.
9. Theodore Levitt, Marketing Imagination (Detroit, MI: Free
Press, 1983).
10. See John Mackey and Raj Sisodia, Conscious Capitalism:
Liberating the Heroic Spirit of Business (Boston, MA: Harvard
Business Review Press, 2014).
11. The first three principles draw on Raj Sisodia, “Conscious
Capitalism: A Better Way to Win,” California Management
Review 53 (Spring 2011), pp. 98–108.
12. Gene R. Laczniak and Patrick E. Murphy, “Stakeholder Theory
and Marketing: Moving from a Firm-Centric to a Societal Perspective,” Journal of Public Policy & Marketing 31 (Fall 2012),
pp. 284–92.
13. Stephanie Strom, “Walmart Pushes for Improved Animal
Welfare,” The New York Times, May 22, 2015.
14. https://www.consciouscapitalism.org/people/kip-tindell
15. The most famous proponent of this view was Milton Friedman.
See, for example, Capitalism and Freedom (Chicago: University
of Chicago Press, 2002); or Free to Choose: A Personal
Statement (Orlando, FL: Har-court, 1990).
16. For a broad discussion of the range of CSR definitions, see
“Communicating Corporate Social Responsibility,” University
Catholique de Louvain, www.edx.org/course/communicating
-corporate-social-louvainx-louv12x.
17. H. Aguinis, “Organizational Responsibility: Doing Good and
Doing Well,” in APA Handbook of Industrial and Organizational
Psychology, vol. 3, ed. S. Zedeck (Washington, DC: American
Psychological As-sociation, 2011), pp. 855–79.
18. For a collection of articles discussing such challenges, see
the “Special Issue on Corporate Social Responsibility in
Controversial Industry Sectors,” Journal of Business Ethics 110,
no. 4 (November 2012).
19. Thomas C. Frohlich, Michael B. Sauter, and Sam Stebbins,
“Companies Paying Americans the Least,” 247WallSt.com,
September 3, 2015.
20. Thomas C. Frohlich, Michael B. Sauter, and Sam Stebbins,
“Companies Paying Americans the Least,” 247WallSt.com,
September 3, 2015.
21. This table was adapted from John Mackey and Rajendra
Sisodia, Conscious Capitalism: Liberating the Heroic Spirit of
Business (Boston, MA: Harvard Business Review Press, 2014).
22. U.S. Food and Drug Administration, “Guidance for Industry:
Voluntary Labeling Indicating Whether Foods Have or Have
Not Been Derived from Genetically Engineered Plants,”
November 2015, www.fda.gov/food/guidanceregulation
/guidancedocumentsregulatoryinformation/ucm059098.htm.
23. Monica Watrous, “Non-GMO Project Growth ‘Extreme and
Consistent,’” Food Business News, August 22, 2019.
24. Adam Campbell-Schmitt, “Whole Foods Pauses GMO Labeling
Deadline for Suppliers,” Food & Wine, May 22, 2018;
www.generalmills.com/News/Issues/on-biotechnology;
www.wholefoodsmarket.com/gmo-labeling.
25. Kate Taylor, “REI’s CEO Says That the Company’s Decision to
Close on Black Friday Helped the Retailer Survive the Retail
Apocalypse,” Business Insider, October 8, 2018.
26. https://thewaltdisneycompany.com/philanthropy/; www.gktw
.org/help/bio/disney.php; http://disneyparks.disney.go.com/blog
/galleries/2014/01/disney-cast-members-create-an-extreme
-village-makeover-for-give-kids-the-world/#photo-5.
27. Unilever, “Report Shows a Third of Consumers Prefer Sustainable Brands,” May 1, 2017, www.unilever.com/news/press
-releases/2017/report-shows-a-third-of-consumers-prefer
-sustainable-brands.html; Unilever, “Consumers and Sustainability,”
www.unilever.com/sustainable-living/our-strategy/consumers
-and-sustainability/.
28. Jason Wingard, “Sustainability Is the New Green: Making Money
amidst a Climate Crisis,” Fortune, September 27, 2019.
29. Unilever, “Consumers and Sustainability,” www.unilever.com
/sustainable-living/our-strategy/consumers-and-sustainability/.
30. United Press International, “Diet Soda Sales: Flat Would Be
Better,” December 9, 2013, www.upi.com.
31. U.S. Environmental Protection Agency, “What Is Sustainability?,”
www.epa.gov/sustainability/basicinfo.htm.
32. www.burtsbees.com.
33. For the most recent version of “The Spirit and the Letter,” see
www.ge.com/sustainability/sites/default/files/16-0020_GE
_SPIRIT_LETTER-2_r10v3_11x8.5_PRINT_ENGLISH.pdf; more
generally, see www.ge.com/sustainability/integrity.
34. http://newmansownfoundation.org/about-us/total-giving.
35. TOMS, “Improving Lives,” www.toms.com/improving-lives; Katherine
Martinko, “Ethical Shoe Com-pany TOMS Moves beyond the Buy
One/Give One Model,” Treehugger, May 7, 2019.
36. Jennifer Valentino-DeVries, Natasha Singer, Michael H. Keller, and
Aaron Krolik, “Your Apps Know Where You Were Last Night, and
They’re Not Keeping It Secret,” The New York Times, December
10, 2018.
37. Taylor Armerding, “The 16 Biggest Data Breaches of the 21st Century,” CSO, October 11, 2017, www.csoonline.com/article/2130877
/data-breach/the-16-biggest-data-breaches-of-the-21st-century.html.
38. “When Does Marketing Cross an Ethical Line?,” RetailWire,
July 10, 2019.
39. American Marketing Association, “AMA Statement of Ethics,”
www.ama.org/codes-of-conduct/.
40. Nielsen, “Global Customers Are Willing to Put Their Money
Where Their Heart Is When It Comes to Goods and Services
Committed to Social Responsibility,” June 17, 2014, www.nielsen
.com/us/en/press-room/2014/global-consumers-are-willing-to-put
-their-money-where-their-heart-is.html; Michael Connor, “Survey:
146 Section One ASSESSING THE MARKETPLACE
U.S. Consumers Willing to Pay for Corporate Responsibility,”
Business Ethics, March 29, 2010, http://business-ethics.com.
41. www.conecomm.com/research-blog/2017-csr-study.
42. Jada Nagumo, “Purchase over Profit: How Generation Z Is
Redefining Business,” Nikkei Asian Review, September 18, 2019;
Clare Carlile, “The Rise and Rise of the Ethical Consumer: UK
Ethical Markets Worth over 83 Billion Pounds,” Triodos Bank,
December 17, 2018.
43. “2011 World’s Most Ethical Companies,” Ethisphere, http://
ethisphere.com/2011-worlds-most-ethical-companies.
44. Myra Jansen.
45. Daily Table, “About Us,” http://dailytable.org/about-us/our-story/.
46. Daily Table, “About Us,” http://dailytable.org/about-us/our-story/.
47. Ron Mott, “Daily Table Supermarket Specializes in Food Past Its
Prime,” NBC News, June 29, 2015, www.nbcnews.com/nightly
-news/food-past-its-prime-supermarket-specializes expired
-food-n383826; Yvonne Abraham, “Waste Not, Hunger Not,”
Boston Globe, June 13, 2015, www.bostonglobe.com
/metro/2015/06/13/dorchester-daily-table-emporium-cleverly
-reuses-food-waste/bhZZSacW4xqaij5UrkeKbM/story.html.
48. Lindsay Abrams, “‘Expired’ Food Is Good for You: A Supermarket
Exec’s Bold Business Gamble,” Salon, January 20, 2014, www
.salon.com/2014/01/20/expired_food_is_good_for_ you_a
_supermarket_execs_bold_business_gamble/.
49. Taryn Luna, “Nonprofit Grocery Store Set to Open in Dorchester,”
Boston Globe, May 22, 2015, www.bostonglobe.com/business
/2015/05/21/nonprofit-daily-table-grocery-store-set-open
-dorchester/CBzBHC1RsEOVCSgOFa0p9O/story.html.
50. Mark Winne, “The Daily Table: Is This What We Really Need?,”
Beacon Broadside, June 30, 2015, www.beaconbroadside.com
/broadside/2015/06/the-daily-table-is-this-what-we-really need
.html; Ron Mott, “Daily Table Supermarket Specializes in Food Past
Its Prime,” NBC News, June 29, 2015, www.nbcnews.com/nightly
-news/food-past-its-prime-supermarket-specializes expired
-food-n383826.
51. Daily Table, “Membership,” http://dailytable.org/become-a member/;
Steve Holt, “Whether You Call It ‘Rescued’ or ‘Expired,’ Old Food Is
a Tough Sell,” TakePart, June 11, 2015, www. takepart.com
/article/2015/06/11/rescued-food-grocery.
52. Brad Tuttle, “Former Trader Joe’s Exec Opens Super Cheap
Nonprofit Supermarket,” Time Money, June 4, 2015; Steve Holt,
“Did Doug Rauch Just Fix Food Deserts and Food Waste?,” Edible
Boston, www.edibleboston.com/blog/did-doug-rauch just-fix-food
-deserts-and-food-waste?rq=Daily%20Table.
53. Lindsay Abrams, “‘Expired’ Food Is Good for You: A Supermarket
Exec’s Bold Business Gamble,” Salon, January 20, 2014, www
.salon.com/2014/01/20/expired_food_is_good_for_ you_a
_supermarket_execs_bold_business_gamble/; www.businessinsider
.com/trader-joes-exec-launches-daily-table-2015-6.
i. Martha C. White, “Selling Jewelry with a Crowdfunding App and
Dash of Social Sharing,” The New York Times, December 18,
2016; Joy Sewing, “Jewelry Designer David Yurman on Cowboys,
Yoga, and Happiness,” Houston Chronicle, November 29, 2016;
Kristin Tice Studeman, “Natalia Vodianova, Supermodel Supermom,
Can Do It All,” W Magazine, October 13, 2016.
ii. Sapna Maheshwari, “New Pressure on Google and YouTube over
Children’s Data,” The New York Times, September 20, 2018; Sam
Meredith, “YouTube Should Be Fined Billions for Illegally Collecting
Children’s Data, Privacy Groups Claim,” CNBC, April 9, 2018;
Steven Johnson, “The Bargain at the Heart of the Kid Internet,”
The Atlantic, April 12, 2018.
iii. Diana Pearl, “Aerie Continues Its ‘Real’ Streak, Casting Models
with Illnesses and Disabilities,” Adweek, July 12, 2018; Katie
Richards, “What Brands Need to Know to Successfully Market
Feminism in the #MeToo Era,” Adweek, August 6, 2018.
iv. Sapna Maheswari, “Facebook Advertising Profiles Are a Mystery
to Most Users, Survey Says,” The New York Times, January 16,
2019; Hal Conick, “Are A/B Tests Ethical?,” Marketing News,
October 31, 2018.
v. Bernard Marr, “Chinese Social Credit Score: Utopian Big Data
Bliss or Black Mirror on Steroids? Forbes, January 21, 2019;
Rachel Botsman, “Big Data Meets Big Brother as China Moves
to Rate Its Citizens,” Wired, October 21, 2017; “China to Bar
People with Bad ‘Social Credit’ from Planes, Trains,” Reuters,
March 16, 2018.
Quiz Yourself Answer Key
1. In what way does corporate social responsibility differ from
conscious marketing?
Answer: (c) Corporate social responsibility is one part of conscious marketing.
2. If a firm’s salesforce pressures potential customers to purchase
services they cannot afford or need, but they require that salesforce to work one week a year for Habitat for Humanity, that firm is
Answer: (a) Unethical yet socially responsible.
I
n this appendix, we present nine ethical scenarios
designed to assist you in developing your skills at
identifying ethical issues. There is no one right answer to the dilemmas below, just as there will be no
correct answers to many of the ethical situations you
will face throughout your career. Instead, these scenarios can help you develop your ethical reasoning
skills as well as your sensitivity toward ethical issues.
As mentioned throughout the chapter, Exhibit 4.6 provides an ethical decision-making metric to assist you in
evaluating the following and all such ethical dilemmas
you may face.
UNDERSTANDING
ETHICS USING
SCENARIOS
APPENDIX 4A
Scenario 1: R.J. Reynolds: Promotions to the Youth Market
Tobacco giant R.J. Reynolds sent a set of coasters featuring its cigarette brands and recipes for
mixed drinks with high alcohol content to young adults, via direct mail, on their 21st birthdays
(the legal age for alcohol consumption). The alcohol brands in the recipes included Jack
Daniels, Southern Comfort, and Finlandia Vodka. The reverse side of the coaster read, “Go ’til
Daybreak, and Make Sure You’re Sittin’.” The campaign, called “Drinks on Us,” clearly
promoted abusive and excessive drinking. This campaign was eventually stopped because the
cigarette company did not have permission to use the alcohol brands.
The Federal Drug Administration (FDA) has been given the authority to regulate
tobacco, including banning certain products, limiting nicotine, and blocking labels such as
“low tar” and “light” that could wrongly imply certain products are less harmful.1
The law
doesn’t let the FDA ban nicotine or tobacco entirely. A committee has been formed to study
several issues, including dissolvable tobacco products, product changes, and standards, and
report back to the FDA. Of particular interest is the increase in the share of smokers using
menthol cigarettes from 31 percent to almost 34 percent in four years, with more pronounced
increases among young smokers. It also showed that among Black smokers, 82.6 percent
used menthol cigarettes, compared with 32.3 percent for Hispanic smokers and 23.8 percent for white smokers.2
A ban on cigarettes with flavors such as clove, chocolate, or fruit
took effect in 2009 because they are believed to appeal to youth.
148 Section One ASSESSING THE MARKETPLACE
After graduation, you have an offer to work in either marketing or sales at R.J. Reynolds,
the tobacco company that sells many popular brands of cigarettes. The pay and benefits are
very competitive. The job market is tight, and if you don’t get a job right away, you will have
to live with your parents. Should you take the job?
Scenario 2: Car Manufacturer Gives Bribes for Contracts
A car and truck manufacturer just found out that two of its overseas business units have
been engaging in bribery over a 10-year period of time. The company paid $56 million in
bribes to more than 20 countries to gain government contracts for their vehicles.3
The company is now paying millions in criminal and civil charges because of its violation of the
Foreign Corrupt Practices Act (FCPA), and it admits to earning more than $50 million in
profits based on its corrupt transactions. The car company recorded the bribe payments as
commissions, special discounts, or necessary payments. Should the manufacturer discontinue its operations with the countries that were unlawfully bribed to buy its cars? Are financial fines sufficient to repair the problem? How can companies be sure the commissions
they earn are true commissions and not a bribe?
Scenario 3: Retailers Lack Ethical Guidelines
Renata has been working at Peavy’s Bridal for nearly a year now. Her sales figures have
never been competitive with those of her coworkers, and the sales manager has called her in
for several meetings to discuss her inability to close the sale. Things look desperate; in the
last meeting, the sales manager told her that if she did not meet her quota next month, the
company would likely have to fire her.
In considering how she might improve her methods and sales, Renata turned to
Marilyn, the salesperson in the store who had the most experience. Marilyn has been with
Peavy’s for nearly 30 years, and she virtually always gets the sale. But how?
“Let me tell you something sweetie,” Marilyn tells her. “Every bride-to-be wants one
thing: to look beautiful on her wedding day so that everyone gasps when they first see her.
And hey, the husband is going to think she looks great. But let’s be honest here—not everyone is all that beautiful. So you have to convince them that they look great in one, and only
one, dress. And that dress had better be the most expensive one they try, or they won’t
believe you anyway! And then you have to show them how much better they look with a veil.
And some shoes. And a tiara . . . you get the picture! I mean, they need all that stuff anyway,
so why shouldn’t we make them feel good while they’re here and let them buy from us?”
Should she follow Marilyn’s advice and save her job?
Scenario 4: Giving Credit Where Credit Isn’t Due
A catalog retailer that carries home and children’s items, such as children’s furniture, clothing, and toys, was seeking a way to reach a new audience and stop the declining sales and
revenue trends it was suffering. A marketing research firm hired by the retailer identified a
new but potentially risky market: lower-income single parents. The new market seemed
attractive because of the large number of single parents, but most of these homes were
severely constrained in terms of their monetary resources.
The research firm proposed that the retailer offer a generous credit policy that would
allow consumers to purchase up to $500 worth of merchandise on credit without a credit
check, provided they signed up for direct payment of their credit account from a checking
account. Because these were high-risk consumers, the credit accounts would carry extremely
high interest rates. The research firm believed that even with losses, enough accounts would
be paid off to make the venture extremely profitable for the catalog retailer.
Should the retailer pursue this new strategy?
Scenario 5: The Jeweler’s Tarnished Image
Sparkle Gem Jewelers, a family owned and operated costume jewelry manufacturing business, traditionally sold its products only to wholesalers. Recently, however, Sparkle Gem
UNDERSTANDING ETHICS USING SCENARIOS CHAPTER FOUR APPENDIX 149
was approached by the charismatic Barb Stephens, who convinced the owners to begin selling through a network of distributors she had organized. The distributors recruited individuals to host jewelry parties in their homes. Sparkle Gem’s owners, the Billing family, have
been thrilled with the revenue generated by these home parties and started making plans for
the expansion of the distributor network.
However, Mrs. Billing just received a letter from a jewelry party customer, who
expressed sympathy for Mrs. Billing’s loss. Confused, Mrs. Billing contacted the letter
writer, who told her that Barb Stephens had come to the jewelry party at her church and
told the story of Sparkle Gem. According to Stephens’ story, Mrs. Billing was a young
widow struggling to keep her business together after her husband had died on a missionary
trip. The writer had purchased $200 worth of jewelry at the party and told Mrs. Billing that
she hoped it helped. Mrs. Billing was stunned. She and her very-much-alive husband had
just celebrated their 50th wedding anniversary.
What should Mrs. Billing do now?
Source: Copyright Grantland Enterprises; www.grantland.net. All rights reserved. Used with permission.
Scenario 6: No Wonder It’s So Good
Enjoy Cola is a new product produced by ABC Beverage and marketed with the slogan
“Relax with Enjoy.” Unlike other colas on the market, Enjoy does not contain caffeine and
therefore is positioned as the perfect beverage to end the day or for a slow-paced weekend
and as a means to help consumers relax and unwind. The market response has been tremendous, and sales of Enjoy have been growing rapidly, especially among women.
ABC Beverage decided not to list on the ingredients label that Enjoy contains a small
amount of alcohol because it is not required to do so by the government unless the alcohol
content is more than 1 percent.
Mia Rodriguez, the marketing director for Enjoy, only recently learned that Enjoy contains small amounts of alcohol and is troubled about ABC’s failure to disclose this information on the ingredients list. She worries about the impact of this omission on consumers
who have alcohol sensitivities or those who shouldn’t be consuming alcohol, such as pregnant women and recovering alcoholics.
What should Rodriguez do? What would you do in her position?
Scenario 7: Bright Baby’s Bright Idea
Bartok Manufacturing produces a line of infant toys under the Bright Baby brand label. The
Consumer Product Safety Commission (CPSC) recently issued a recall order for the Bright
150 Section One ASSESSING THE MARKETPLACE
Baby car seat gym, a very popular product. According to the CPSC, the gym contains small
parts that present a choking hazard. The CEO of Bartok Manufacturing, Bill Bartok, called
an executive meeting to determine the firm’s strategy in response to the recall.
Mike Henderson, Bartok’s CFO, stated that the recall could cost as much as $1 million
in lost revenue from the Bright Baby line. Noting that there had been no deaths or injuries
from the product, just the potential for injury, Henderson proposed that the remaining
inventory of car seat gyms be sold in regions where the CPSC’s rules do not apply. Sue
Tyler, the marketing director for Bartok, recommended that the product be repackaged and
sold under a different brand name so that the Bright Baby name would not be associated
with the product. Bartok, though a bit leery of the plan, agreed to go along with it to avoid
the monetary losses.
What would you have recommended to the CEO?
Scenario 8: Money from Mailing Lists4
Sports Nostalgia Emporium sells autographed sports memorabilia online. Recently, the
director of marketing, John Mangold, started using a mailing list he had purchased from
Marketing Metrix, a marketing research firm that sells consumer information. Mangold
relies on such purchased mailing lists to grow the company and sends printed catalogs to
thousands of people each month. The mailing lists he gets from Marketing Metrix are much
more effective than other mailing lists and generate almost twice as much revenue.
In a recent conversation with a sales representative from Marketing Metrix, Mangold
discovered the reason its lists were so effective: Marketing Metrix tracks the online behavior
of consumers and uses that information to create targeted lists. The mailing lists that
Mangold has been using consist of consumers who visited the websites of Sports Nostalgia
Emporium’s competitors. Based on what he can discern, Mangold believes that these consumers are not aware that someone is collecting information about their online behavior,
along with their names and addresses, and selling it to other firms.
Should Mangold continue to use the Marketing Metrix mailing list? If so, should he tell
his new customers how he got their names and addresses? Do consumers need to give consent before firms can collect information about their behavior?
Scenario 9: The Blogging CEO5
David Burdick is the CEO of ACME Bubblegum, a successful public company. As one of
the cofounders of the company, Burdick has enjoyed speaking and writing about the success of ACME Bubblegum for several years. Typically, he speaks at conferences or directly
to the press, but recently he has been blogging about his firm anonymously. Specifically, he
Source: Copyright Grantland Enterprises; www.grantland.net. All rights reserved. Used with permission.
UNDERSTANDING ETHICS USING SCENARIOS CHAPTER FOUR APPENDIX 151
defended a recent advertising campaign that was unpopular among consumers and pointedly attacked one of ACME Bubblegum’s competitors. Burdick deeply enjoys his anonymous blogging and believes that none of his readers actually know that he works for ACME
Bubblegum.
Should Burdick be allowed to praise his company’s performance anonymously online?
Should he be allowed to attack his competitors without disclosing his relationship with the
company? How would you feel if the CEO of a company at which you shopped was secretly
writing criticisms of his or her competition? How would you feel if you knew a writer for
your favorite blog was actually closely involved in a company that the blog community
discussed?
Endnotes
1. Michael Felberbaum, “Panel to Examine Menthol Cigarettes’
Impact,” Associated Press, March 29, 2010.
2. Michael Felberbaum, “Panel to Examine Menthol Cigarettes’
Impact,” Associated Press, March 29, 2010. Based on a study
by the Substance Abuse and Mental Health Services Administration in November 2009.
3. Department of Justice, Office of Public Affairs, “Daimler AG and
Three Subsidiaries Resolve Foreign Corrupt Practices Act
Investigation and Agree to Pay $93.6 Million in Criminal
Penalties,” press release, April 1, 2010; Michael Connor,
“Daimler Agrees to Pay $185 Million to Settle Bribery Charges,”
Business Ethics, March 26, 2010, http://businessethics.com.
4. Emily Steel, “How Marketers Hone Their Aim Online,” The Wall
Street Journal, June 19, 2007, p. B6.
5. “Mr. Mackey’s Offense,” The Wall Street Journal, July 16, 2007,
p. A12.
Design elements: Water bottle: CD_works27/Shutterstock; icons for Adding Value, Marketing Analytics, and Social & Mobile Marketing boxes:
Molotovcoketail/Getty Images; icon for Ethical & Societal Dilemma box: McGraw-Hill
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
LO5-1 Outline how customers, the company, competitors, corporate
partners, and the physical environment affect marketing strategy.
LO5-2 Explain why marketers must consider their macroenvironment
when they make decisions.
LO5-3 Identify various social trends that impact marketing.
LO5-4 Examine the technological advances that are influencing marketers.
Charles Krupa/AP Images
ANALYZING
THE MARKETING
ENVIRONMENT
CHAPTER 5
T
he robot army is invading! But the invasion is
less like a Skynet-style threat and more like a
Jetsons-style aid, as exemplified and encouraged by iRobot’s Roomba vacuums and other
household tools. That is, the robots currently spreading
throughout the market are gaining access to people’s
homes because they offer greater convenience, services,
and options. These benefits stem from both how far the
technology has advanced and how consumer trends
have changed in ways that lead people to welcome the
robots with open arms.
Let’s start with the technology. Some cutting-edge artificial intelligence (AI) capabilities are built into Roomba vacuums to enable them to run throughout consumers’ homes
without much effort by those consumers. The earliest versions relied on simple directional algorithms and sensing
technologies to avoid stairs. More recent Roomba models
can make more effective decisions because their advanced
sensors help them climb over different flooring types (e.g.,
from hardwood onto carpets), identify and avoid obstacles (e.g., no more running over dog toys), and learn from
their previous movements to achieve the most efficient
cleaning routes. Such machine learning means that the locations that prompt the most “dirt incidents” get vacuumed
more often, whereas consistently blocked sections are
simply avoided.1
The Roomba’s parent company is not content to stop
there, however, especially considering that advanced communication technologies now can enable multiple robots to
“talk” to one another, again without any interference or effort
by human operators. Thus, it is introducing the Braava mop
robot. Using a communication technology called Imprint Link,
substantial memory capabilities, and sophisticated AI and
processing mechanisms, iRobot promises homeowners that
they can set their Roombas and Braavas to work together.
Roomba runs its rounds, picking up dirt and debris, and then
tells Braava to get started mopping hard floors, address any
sticky spills, and thereby achieve a deeper cleaning.2
Such advances seek to meet consumers’ demands,
which reflect both long-standing preferences and newly
emerging needs. Fundamentally, people have long complained about the annoyance and time demands associated
with chores like keeping their floors clean. By sweeping up
while they were at work or sleeping, even the earliest, most
basic Roombas created a vastly appealing product option.3
Then, as consumers got used to the idea that such convenience was possible, iRobot had to learn ways to meet
their growing demands. It began by ensuring that Roombas
154
A MARKETING ENVIRONMENT
ANALYSIS FRAMEWORK
As the opening vignette illustrates, marketers continue to find changes in what their customers demand or expect and adapt their product and service offerings accordingly. By paying
close attention to customer needs and continuously monitoring the business environment in
which the company operates, a good marketer can identify potential opportunities.
Exhibit 5.1 illustrates factors that affect the marketing environment. The centerpiece, as
always, is consumers. Consumers may be influenced directly by the immediate actions of
the focal company, the company’s competitors, the corporate partners that work with the firm
to make and supply products and services to consumers, and the physical environment. The
firm, and therefore consumers indirectly, is influenced by the macroenvironment, which
includes various impacts of culture; demographics; and social, technological, economic, and
political/legal factors. We discuss each of
these components in detail in this chapter
and suggest how they might interrelate.
Because the consumer is the center of all
marketing efforts, value-based marketing aims
to provide greater value to consumers than
competitors offer. Therefore, the marketing
firm must consider the entire business process, all from a consumer’s point of view.6
Consumers’ needs and wants, as well as their
ability to purchase, depend on a host of factors that change and evolve over time. Firms
use various tools to keep track of competitors’
activities and consumer trends, and they rely
on various methods to communicate with
their corporate partners and understand their
physical environment. Furthermore, they
monitor their macroenvironment to determine how such factors influence consumers
and how they should respond to them.
Sometimes, a firm can even anticipate trends.
LO5-1 Outline how customers,
the company,
competitors, corporate
partners, and the
physical environment
affect marketing
strategy.
could return to their docking stations when their batteries
got low to address consumer complaints that they would
find their vacuums stranded in the middle of the room. People are busy and forgetful too, so the company developed a
smartphone app linked to the devices. Thus, even if consumers forget to program the Roomba before they leave for
work, they can get on the app and tell the vacuum to run
before they get home. Since no one particularly enjoys getting their hands dirty with dust and pet dander, iRobot is designing a Roomba that would empty its own bin.
Furthermore, houses are just getting smarter all around.
Amazon’s Alexa and Google’s Home enable consumers to
call out a command to deal with all sorts of in-home tasks,
and iRobot plans to ride that wave too. With properly
programmed devices, Echo users can call out, “Vacuum the
living room,” and their Roomba goes into action.4
As these developments show, iRobot is considering
consumer demands beyond existing preferences. In particular, changing consumer demographics predict that the market for in-home robots will continue to grow. For example, as
populations grow older and those consumers express their
strong desires to remain in their homes, robots that can perform other household chores, like dusting, mowing the lawn,
picking up items from the floor, or emptying a dishwasher,
are likely to be in great demand. One estimate thus predicts
that 42 million service robots will soon be present in homes,
performing all those tedious chores that today’s consumers
have neither the time nor the inclination to handle.5
EXHIBIT 5.1
Consumers
Culture
Political/legal
environment
Economic
situation
Technological
advances
Corporate
partners
Macroenvironment
Company
capabilities Competitors
Social
trends
Demographics
Physical
environment
Immediate environment
Understanding the Marketing Environment
ANALYZING THE MARKETING ENVIRONMENT CHAPTER FIVE 155
THE IMMEDIATE
ENVIRONMENT
Exhibit 5.2 illustrates the factors that affect consumers’ immediate environment: the company’s capabilities, competitors, corporate partners, and physical
environment.
Company Capabilities
In the immediate environment, the first factor that
affects the consumer is the firm itself. Successful marketing firms focus on satisfying customer needs that match
their core competencies. The primary strength of Corning is its ability to manufacture glass. The company initially made its name by producing the glass enclosure to
encase Thomas Edison’s lightbulb. But by successfully
leveraging its core competency in glass manufacturing
while also recognizing marketplace trends toward mobile
devices, Corning shifted its focus. As a result, Corning is
one of the leading producers of durable, scratch-resistant
glass on the faces of smartphones and tablets. More than 6 billion mobile devices feature its
Gorilla Glass.7
Marketers can use analyses of their external environment, like the SWOT analysis
described in Chapter 2, to categorize any opportunity as attractive or unattractive. If it appears
attractive, they also need to assess it in terms of their existing competencies.
Competitors
Competition also significantly affects consumers in the immediate environment. It is therefore critical that marketers understand their firm’s competitors, including their strengths,
weaknesses, and likely reactions to the marketing activities that their own firm undertakes.
For example, in one of the most competitive markets, the mobile phone market, two of
the current ruling competitors are Apple and Samsung. As Apple works to maintain its
dominance and Samsung seeks to gain market share, they keep targeting each other in their
advertisements too. Since the release of the Galaxy S2 in 2011, Samsung has released a
series of advertisements featuring iPhone users who realize that Samsung phones have the
same or better features than the latest iPhone release.8 In return, Apple’s advertising,
released to coincide with the arrival of Samsung’s Galaxy S9, informed customers of various
advantages of iPhones, such as their zero waste production process, “genius” support, and
greater security compared with Android devices.9
These efforts represent the companies’ recognition of what their closest competitor is
doing. In some cases, though, belittling a competitor can backfire, especially if consumer
trends force the company to adopt its competitor’s popular features. Samsung made hay out
of the lack of a headphone jack when the iPhone 7 came out, but it turned out that customers were willing to give up the jack in exchange for a slimmer phone. Once Samsung introduced the Galaxy Note 10, without a headphone jack, it quietly removed its old advertising
from the Internet.10 Although criticizing the competition is thus a widespread strategy, the
ultimate goal, of course, is to appeal to consumers.
Corporate Partners
Few firms operate in isolation. For example, automobile manufacturers collaborate with
suppliers of sheet metal, tire manufacturers, component part makers, unions, transport
companies, and dealerships to produce and market their automobiles successfully. Parties
that work with the focal firm are its corporate partners.
Consider an example that demonstrates the role these partners play and how they
work with the firm to create a single, efficient manufacturing system. Unlike most outdoor clothing manufacturers that use synthetic, nonrenewable materials, Nau makes
EXHIBIT 5.2
Consumers
Corporate
partners
Company
capabilities Competitors
Physical
environment
Immediate environment
Understanding the Immediate Environment

---

Get Professional Assignment Help Cheaply

Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?

Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.

Why Choose Our Academic Writing Service?

• Plagiarism free papers
• Timely delivery
• Any deadline
• Skilled, Experienced Native English Writers
• Subject-relevant academic writer
• Adherence to paper instructions
• Ability to tackle bulk assignments
• Reasonable prices
• 24/7 Customer Support
• Get superb grades consistently

 

Online Academic Help With Different Subjects

Literature

Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.

Finance

Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.

Computer science

Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!

Psychology

While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.

Engineering

Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.

Nursing

In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.

Sociology

Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.

Business

We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!

Statistics

We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.

Law

Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.

What discipline/subjects do you deal in?

We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.

Are your writers competent enough to handle my paper?

Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.

What if I don’t like the paper?

There is a very low likelihood that you won’t like the paper.

Reasons being:

• When assigning your order, we match the paper’s discipline with the writer’s field/specialization. Since all our writers are graduates, we match the paper’s subject with the field the writer studied. For instance, if it’s a nursing paper, only a nursing graduate and writer will handle it. Furthermore, all our writers have academic writing experience and top-notch research skills.
• We have a quality assurance that reviews the paper before it gets to you. As such, we ensure that you get a paper that meets the required standard and will most definitely make the grade.

In the event that you don’t like your paper:

• The writer will revise the paper up to your pleasing. You have unlimited revisions. You simply need to highlight what specifically you don’t like about the paper, and the writer will make the amendments. The paper will be revised until you are satisfied. Revisions are free of charge
• We will have a different writer write the paper from scratch.
• Last resort, if the above does not work, we will refund your money.

Will the professor find out I didn’t write the paper myself?

Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.

What if the paper is plagiarized?

We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.

When will I get my paper?

You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.

Will anyone find out that I used your services?

We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.

How our Assignment  Help Service Works

1.      Place an order

You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.

2.      Pay for the order

Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.

3.      Track the progress

You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.

4.      Download the paper

The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.

PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!

---