Chapter 1 – What is Marketing?
Marketing’s Role in the Organization
We previously discussed marketing as a set of activities that anyone can do. Marketing is also a functional area in companies, just like operations and accounting are. Within a company, marketing might be the title of a department, but some marketing functions, such as sales, might be handled by another department. Marketing activities do not occur separately from the rest of the company, however.
As we have explained, pricing an offering, for example, will involve a company’s finance and accounting departments in addition to the marketing department. Similarly, a marketing strategy is not created solely by a firm’s marketing group. Instead, it flows from the company’s overall strategy. We’ll discuss strategy much more completely in Chapter 2 “Strategic Planning”.
Everything Starts with Customers
Most organizations start with an idea of how to serve customers better. In the 1990s Apple’s engineers began working on the iPod by looking at the available technology and thinking about how customers would like to have their music more available, as well as more affordable, through downloading.
Many companies think about potential markets and customers when they start. Here are a few mission statements from other companies. Note that they all refer to their customers, either directly or by making references to relationships with them. Examine how these are written to inspire employees and others who interact with the company and may read the mission statement.
IBM (July 2019)
IBM’s corporate mission is “to lead in the creation, development and manufacture of the industry’s most advanced information technologies, including computer systems, software, networking systems, storage devices and microelectronics. And our worldwide network of IBM solutions and services professionals translates these advanced technologies into business value for our customers. We translate these advanced technologies into value for our customers through our professional solutions, services and consulting businesses worldwide” (Mission Statement Academy, n.d.).‡
Coca Cola’s “mission declares our purpose as a company and serves as the standard against which we weigh our actions and decisions. To refresh the world…To inspire moments of optimism and happiness…To create value and make a difference” (Coca Cola, 2020). ‡
Pfizer Pharmaceuticals (2020)
“We innovate every day to make the world a healthier place. From scientific discovery to breakthrough products to our essential partnerships around the world, we’re committed to quality healthcare for everyone. Because every individual matters”(Pfizer, 2019). ‡
Some companies go beyond their own customers and seek to inspire with a mission that will have impact on a global issues, climate change‡
Interface Carpet and Flooring Products (2020)
“Our mission is to overcome the biggest challenge facing humanity and reverse global warming. It’s no longer enough to limit the damage we do, but to think about reversing it. We want to restore our planet and leave a positive impact.” (Interface, n.d.)‡
Not all companies create mission statements that reflect a marketing orientation. Note Apple’s mission statement: “Apple’s corporate mission is “to bring the best personal computing products and support to students, educators, designers, scientists, engineers, businesspersons and consumers in over 140 countries around the world” (Apple, n.d.).
This mission statement reflects a product orientation, or an operating philosophy based on the premise that Apple’s success is due to creating the best products and that simply supplying them will lead to demand for them. The challenge is how to create the “best” product without considering the customer’s wants and needs. Apple Watch has struggled to achieve the expected sales results due to limited customer demand.
The Changing Marketing Environment
Criticisms of Marketing
Marketing is not without its critics. One major criticism is that marketing creates wants among consumers for products and services that aren’t always needed. For example, fashion marketing creates demand for high-dollar jeans when much less expensive jeans can fulfill the same basic function. Consumers are encouraged to buy the next generation of phone when their existing phone is still functional, and even if they want to repair an older phone, many companies restrict the availability of parts so that the consumer is unable to do so. The continued pressure on the consumer can lead to other consequences. Individual consumers may take on significant financial debt to satisfy the wants shaped by marketing. Marketers met the need for healthier beverages by selling bottled water but created a global problem of how to dispose of the individual plastic bottles. ‡
Sustainability is an example of social responsibility and involves engaging in practices that do not diminish the earth’s resources. Coca-Cola, for example, is working with governments in Africa to ensure clean water availability, not just for manufacturing Coke products but for all consumers in that region. Further, the company seeks to engage American consumers in participating by offering opportunities to contribute to clean water programs. Right now, companies do not have to engage in these practices, but because firms really represent the people behind them (their owners and employees), forward-thinking executives are seeking ways to reduce the impact their companies are having on the planet while ensuring the financial viability of the company.
One aspect of sustainability is handling the end of life and disposal of products. Batteries and other components of cell phones, computers, and high-tech appliances are harmful to the environment, and many consumers don’t know how to dispose of these products properly. Other than a few examples, the cost of recycling programs is paid by government and taxpayers and the planet. Companies such as Office Depot have created recycling centers to which customers can take their old electronics, but that is not the end of the process. Recycling is a limited solution to a world-wide garbage crisis. ‡
Companies must undertake the difficult and long-term job of reducing the resources used at every step of the manufacturing and production process. A server farm is a collection of computer servers and is the backbone of Cloud services and the internet. Often consisting of thousands of computers they require a large amount of power to run and to keep cool (Vennam, 2020). ‡
Ethics and social responsibility
Businesses exist only because society allows them to. When businesses begin to fail society, society will punish them or revoke their license. In 2008, the crackdown on companies in the subprime mortgage-lending industry is one example. These companies created and sold loans (products) that could only be paid back under ideal circumstances, and when consumers couldn’t pay these loans back, the entire economy suffered greatly. Scandals such as these illustrate how society responds to unethical business practices. However, whereas ethics require that you only do no harm, the concept of social responsibility requires that you must actively seek to improve the lot of others. Today, people are demanding businesses take a proactive stance in terms of social responsibility, and they are being held to ever-higher standards of conduct. ‡
You might have noticed that we use the word offering a lot instead of the term product. That’s because of service-dominant logic, the approach to business that recognizes that consumers want value no matter how it is delivered, whether through a tangible product or intangible services. That emphasis on value is what drives the functional approach to value that we’ve taken, that is, creating, communicating, delivering, and exchanging value.
Technology has increased the amount of information available to decision makers. As such, the amount and quality of data for evaluating a firm’s performance is increasing. Earlier in our discussion of the marketing plan, we explained that customers communicate via transactions. Although this sounds both simple and obvious, better information technology has given us a much more complete picture of each exchange. Amazon, for example, combines data from its browsing and streaming activity with purchase history in order to determine what the next best offer is likely to be. In addition, it uses the data to create its own cheaper private label products. Using data from many sources, we have more metrics that can then be used to create better offerings, better communication plans, and to better satisfy customers.
A global environment
Every business is influenced by global issues. The price of oil, for example, is a global concern that affects everyone’s prices and even the availability of some offerings. We already mentioned Coke’s concern for clean water. But Coke also has to be concerned with distribution systems in areas with poor or nonexistent roads, myriads of government policies and regulations, workforce availability, and so many different issues in trying to sell and deliver Coke around the world. Even companies with smaller markets source some or all their offerings from companies in other countries, face direct competition from companies based in other countries or a different ethical structure from their home country. Every business professional, whether marketing or otherwise, has to have some understanding of the global environment in which they operate and the societal impact they have on the countries in which they operate.
The COVID pandemic made citizens of the world aware of how interconnected we are. Product shortages in grocery stores revealed the weaknesses of just-in-time delivery in the supply chains. The unequal distribution of the COVID vaccine to countries who had manufacturing capabilities and/or purchasing power versus those who did not, will cause governments and organizations to consider what to off-shore and what should be produced in country. The rise in ‘made in country’ nationalism will create challenges and opportunities for companies.