1.4 Themes and Organization of This Book
Learning Objective
Understand and outline the elements of a marketing plan as a planning process.
Marketing’s Role in the Organization
We previously discussed marketing as a set of activities that all organizations 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 personnel. Instead, it flows from the company’s overall strategy. For example, Starbucks has committed to an aggressive growth strategy. Key elements include digital strategies that will reshape the company’s interaction with customers. Those digital strategies will take capital investment into technology, which isn’t marketing, but there will be marketing implications for the company’s strategy. Once a company sets an overall strategy, marketing then creates the marketing plan to support it. 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. Chris Pantoya at Fan Controlled Football plays an integral role in the design of services and fan experiences because she is very concerned with creating a customer experience that makes customers want to return. Her work, though, doesn’t stop when the season starts—she continues to talk with and listen to customers so that she can improve the customer experience on every platform.
Many companies think about potential markets and customers when they first launch their businesses. John Deere, for example, founded his farm equipment company on the principle of serving customers. When admonished for making constant improvements to his products even though farmers would take whatever they could get, Deere reportedly replied, “They haven’t got to take what we make and somebody else will beat us, and we will lose our trade.” He recognized that if his company failed to meet customers’ needs, someone else would. Today the John Deere Company’s strategy, or mission statement, is as follows:
For those who cultivate and harvest the land. For those who transform and enrich the land. For those who build upon the land. John Deere is committed to your success.
John Deere Company started as a plow maker, but now makes many products, all because the company’s founder realized early that his company had to continuously develop new products or other companies would take his customers away.
Source: jjvxphotography/Shutterstock.com
The following are a few mission or value statements from other companies. Note that they all refer to their customers, either directly or by making references to relationships with them. Notice, too, that the statements are written to inspire employees and others who interact with the companies.
IBM
IBM will be driven by these values:
Coca-Cola Company
Our roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions
The Dow Chemical Company
Working closely with our customers we deliver products and solutions that create value and competitive advantage while positively impacting the world we live in. Collectively, our efforts have lasting results, creating higher performance for our customers and reshaping the world around us to build a better future for everyone.
Not all companies create mission statements that reflect a marketing orientation. Steve Jobs, the legendary co-founder of Apple, believed that meeting customers’ needs wasn’t enough because, he contended, they often don’t know what products they want or need until they are made available to them. Instead, Apple’s mission statement initially was product oriented. It was based on the premise that a company’s success is due to great products and that simply supplying them will lead to demand for them.
But how exactly does a company create a “great” product without thinking too much about the customer’s wants and needs? Apple, and for that matter, many other companies, fell prey to thinking that they knew what a great product was without asking their customers. In fact, Apple’s first attempt at a graphic user interface (GUI) was the LISA computer, a dismal failure. Today, Apple’s mission statement is more customer oriented than it was in the past, “bringing the best user experience to its customers through its innovative hardware, software, and services.”
The Marketing Plan
The marketing planA document that is designed to communicate the marketing strategy for an offering. The purpose of the plan is to influence executives, suppliers, distributors, and other important stakeholders of the firm so they will invest money, time, and effort to ensure the plan is a success. is the strategy for implementing the components of marketing: creating, communicating, delivering, and exchanging value. Once a company has decided what business it is in and expressed that in a mission statement, the firm then develops a corporate strategy. Marketing strategists subsequently use the corporate strategy and mission and combine that with an understanding of the market to develop the company’s marketing plan. This is the focus of Chapter 2 “Strategic Planning”. Figure 1.3 shows the steps involved in creating a marketing plan.
Understanding the customer’s wants and needs; how the customer wants to acquire, consume, and dispose of the offering; and what makes up their personal value equation are three important goals. Marketers want to know their customers—who they are and what they like to do—so as to uncover this information. Generally, learning about customers requires marketing researchers to collect sales and other related customer data and analyze it.
Figure 1.3 Steps in Creating a Marketing Plan
Once this information is gathered and digested, the planners can then work to create the right offering. Products and services are developed, bundled together at a price, and then tested in the market. Decisions have to be made as to when to alter the offerings, add new ones, or drop old ones. These decisions are the focus of the next set of chapters and are the second step in marketing planning.
Following the material on offerings, we explore the decisions associated with building the value chain. Once an offering is designed, the company has to be able to make it and then be able to get it to the market. This step, planning for the delivery of value, is the third step in the marketing plan.
The fourth step is creating the plan for communicating value. How does the firm make consumers aware of the value it has to offer? How can it help them recognize that value and decide that they should purchase products? These are important questions for marketing planners.
Once a customer has decided that her personal value equation is likely to be positive, then she will decide to purchase the product. That decision still has to be acted on, however, which is the exchange. The details of the exchange are the focus of the last few chapters of the book. As exchanges occur, marketing planners then refine their plans based on the feedback they receive from their customers, what their competitors are doing, and how market conditions are changing.
The Changing Marketing Environment
At the beginning of this chapter, we mentioned that the view of marketing has changed from a static set of four Ps to a dynamic set of processes that involve marketing professionals as well as many other employees in an organization. The way business is being conducted today is changing, too, and marketing is changing along with it. There are several themes, or important trends, that you will notice throughout this book.
Digital information and big data. If you are like most people, many times a day you check your mobile phone or tablet to look at your email, search the internet, and scan social media. You might also play games with other people online, own a fitness tracker that automatically uploads your exercise statistics to the web, and use a GPS app to find your way around. All of these activities leave a digital trail of information. This information, along with the purchasing and other types of data companies have traditionally collected about consumers, is resulting in an information explosion that is being referred to as big data. Big data is allowing companies to create highly detailed profiles of customers like they never could before. That might sound scary for consumers, but it’s vital for marketers. Being able to figure out who your customers are, where they congregate, what they want, and how to engage them is more important than ever. Why? Because there are so many more different types of media available to consumers today, all of which are competing for their attention. This has made the process of marketing more complex than in the past. In the past, it was much easier for companies to reach consumers through just a handful of media, such as radio, print, and TV ads.
Ethics and social responsibility. Businesses exist only because customers and society allow them to. When businesses begin to fail their customers and society, they can find themselves in peril. 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 responsibilityThe idea that companies should manage their businesses not just to earn profits but to advance the well-being of society. requires that you must actively seek to improve the lot of others, not just in terms of how you market and sell products but in all aspects of what you do as a company, including how you treat your employees and the public, and respond to crises. Today, people are demanding businesses take a proactive stance in terms of social responsibility, and businesses are being held to ever-higher standards of conduct.
SustainabilityEngaging in practices that diminish the earth’s resources to the least extent possible. is an example of social responsibility and involves engaging in practices that diminish the earth’s resources to the least extent possible. 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.
Service-dominant logic. You might have noticed that we use the word offering a lot instead of the term product. That’s because of service-dominant logic, the approach to business that recognizes that consumers want value no matter how it is delivered—whether through a tangible product or through intangible services. That emphasis on value is what drives the functional approach to value that we’ve taken—that is, creating, communicating, delivering, and exchanging value.
Metrics and analytics. Technology has not only increased the amount of information available to decision makers but the number of statistical and other cutting-edge methods available to “crunch” or analyze it. The new technologies, availability of data, and improved analytical tools are allowing firms to develop new metrics, or benchmarks, they can use to fine-tune their marketing practices and ad campaigns, make better decisions, and ultimately improve how well their companies perform. For example, Amazon uses data from consumer transactions and search patterns to determine optimal order of presentation of products when you search for a product.
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, myriad government policies and regulations, the availability of workers with the right skills, 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, or else face some sort of direct competition from companies based in other countries. Every business professional, whether marketing or otherwise, has to have some understanding of the global environment in which companies operate.
Key Takeaway
A company’s marketing plan flows from its strategic plan. Both begin with a focus on customers. The essential components of the plan are understanding customers, creating an offering that delivers value, communicating the value to the customer, exchanging with the customer, and evaluating the firm’s performance. A marketing plan should be influenced by the recurring themes we emphasize in this text: social responsibility, sustainability, service-dominant logic, the increased availability of data and effective metrics and analytics, and the global nature of the business environment.
Review Questions
Why does everything start with customers? Or is it only marketing that starts with customers?
What are the key parts of a marketing plan?
What is the relationship between social responsibility, sustainability, service-dominant logic, and the global business environment? How do digital information, big data, and metrics and analytics fit into this relationship?