MRKT 310 Principles of Marketing

Strategic Marketing & Value for the Customer

Please use the service offering below;

• Lyft
• PRODUCT CHOICE & CONTENT
• Your focus will be on the domestic, or U.S. marketing of this product only.If the product is also marketing in other countries you do not need to concern yourself with the global operations.
• You are not expected to be an expert on the product or service, and you will have large gaps in your knowledge due to proprietary information.You are not expected to purchase any sources that may have the information you need.You are expected to form well-reasoned conclusions based on what you do know or have found through research, or can reasonably assume.Respond comprehensively.Give examples when appropriate.Be sure to provide your own perspective on each of the questions.
• See below Supporting Conclusions with Your Ideas and Reasoning.
• Directions

• Step One: Research your product or service offering through the Internet (your references will need to be mostly academic sources.) and your own outside research.Do not limit yourself to searching solely on the product or service name.Look up the industry it is in (Hoovers.com is a good source) and search on that industry as well.Look up the direct competitors.Check industry journals and the trade press.You may want to visit a retailer to compare the products on the shelves or visit all of the websites.Keep all your research as you will need it for future writing assignments.
• [Optional] Think about the customers with whom the company regularly communicates, offers special deals, etc.These are the Most Valuable Customers (MVC) of the product or service. You may want to find an MVC if you are not one yourself.What is the evidence of an MVC of your product or service?It isn't just that the customer regularly buys the product or service.It means that the customer is treated differently -- better -- than other customers.The MVC represents about 20% of the company's revenues.
• [Optional] To truly understand the MVC for your product You may want to calculate the lifetime value of a most valuable customer.See the discussion of the lifetime value calculation in the week's reading, and calculate the LTV using this simple equation:LTV = (Price - cost to produce the product) * number of annual purchases * number of years expected to purchase - initial acquisition costs.For simplicity sake, you can assume your customer will have a relationship with you for ten years and you can make an educated guess as to how much the initial acquisition costs were to get him as a customer in terms of advertising or other types of promotion efforts.If you are not an MVC yourself, make and share your assumptions about your calculation. If you are not an MVC, you might want to find someone who is and ask them why they are loyal to the product or service and what they feel the company does for them that is special that they don't do for other customers.

• Step Two:The assignment begins with a heading and the name of your product or service.Then answer each of the following questions (two in part 1 and two in part 2) in order and number the beginning of your response to each question.Although youdo not need to repeat the question, each section should have a heading.
• Part 1 - Customer Value & Role in Mission

1.Creating Value for Customers.Consider the customers you believe currently use your product orservice and the definition of marketing offered in the course content.Discuss how you think the company creates value for its customers based on the concepts in this week's readings.

2.Role of the Customer in the Company's Mission.The readings indicate that the best marketing begins with the customer and that commitment to the customer begins with including the customer in the company's mission statement.Find your company's mission statement.Copy, paste and cite the company mission statement (or attach as an exhibit if it is too long). Comment on its effectiveness in demonstrating the company's commitment to having a customer focus.Could the mission statement have more focus on the customer?How would you recommend it be modified?Is it supported with value statements or other evidence of a customer focus?

Part 2 - Company Analysis

1.SWOT analysis.Identify at least one element of each of the SWOT categories (a strength, a weakness, an opportunity, and a threat).Explain your choice using a citation if needed.Then identify possible implications for each of the four elements. You can use aTable in which these elements are posted.For example, if a strength is a strong national brand name, the implication is that the company may be able to launch other related products under the positive umbrella of the same brand name.Conversely, if a major weakness is the company is carrying a lot of debt, the implication is that the company not be able to achieve significant growth, but may have to consider retrenchment strategies.

2.Competitive Analysis.Identify at least two major competitors or those two products that are trying to sell essentially identical products to the same type of consumer.Then, identify at least three criteria that are important to those consumers when they are making their decision as to which of the three competing offers to buy (e.g. price, specific benefit, service, warranty, convenience, specific feature, etc.).Make a chart with the three criteria along the left-hand side and the competitor products (including your own product) across the top.Rank each of the products on a scale from 1= low to 5= high on each performs on each of the three criteria.Add down each column.Which product ranked highest overall based on the sum of the columns?Then, look at the highest score in each of the criteria boxes. Explain the following...Which products ranked the highest on each of the three criteria? Was it the same product, was it three different products?What do these results tell you about the competitive environment of your product category.Which product is the leader?Which product is the follower, challenger and nicher, if those categories apply?Include your chart in your text

Supporting Conclusions with Your Ideas and Reasoning

All MRKT courses require you to integrate the course readings and case scenario facts (if applicable) into all discussion posts and major assignment answers to demonstrate you have read, understand and can apply the class material. This is done by supporting the conclusions drawn in the answer or post with ideas and reasoning substantiated by the class material. If the conclusions are not drawn by using the class material or facts they are nothing more than your opinion and therefore show no evidence that the class material is read and understood well enough to be applied successfully.

In this class, you are expected to approach every assignment with the understanding that all conclusions you present are to be validated with ideas and reasoning that is reinforced by the class material, case study facts or outside research, if appropriate.

Below are acceptable methods of supporting your ideas, reasoning and thus the conclusions you have drawn. You may find that there are circumstances that require you to use one or more of these methods simultaneously.

1.Literature

Most of the support for the conclusions will be provided by the classroom literature. This literature is derived from expert opinion and research in the field. You must rely upon the literature to add validity to your own perspective, claim, conclusion, choice, or argument. The eBook(s) and other resources in the class have been selected because of the credibility of the information and expert authors presented. The expectation is that you will use this information to support the ideas and reasoning that led to conclusions drawn in your posts and answers. The greater the degree of support for the ideas and reasoning that provides the underpinning of the conclusion, the greater correlation to the degree of critical thinking demonstrated (and the higher the grade).

Example:

You are asked to determine the best organizational structure for Charlie's Crab House by the Sea. In answering, you will identify the structure in one sentence: The best structure for Charlie's Crab House is a functional organizational structure. Then, in a separate sentence support why the best structure is a functional one. The functional organizational is the best structure because the structure improves efficiencies through job specialization, presents a clear chain of command, allows for better control for employee promotion, cultivates a learning organization and makes training easier (Accounting Tools, 2017, para. ).

In this answer, you will have drawn a conclusion as to the best structure, defined the structure, and given a reason for the conclusion, all of which you were asked to do to answer the question. Notice that the use of in-text citation shows how the conclusion was drawn by using the class material to support its validity. To provide support, you have to give an in-text citation with an associated reference to support the idea of what why a functional structure is best for this situation. Finally, to provide an outstanding response, defining and describing other organizational structures and why they would not be appropriate, again supported by the class material and case study facts provides a stronger more in-depth answer. Notice the response explains the "why and how" of an answer rather than merely making a statement. This type of answer would return an A grade versus a C- for providing an answer that omits the support of the course material.

Reference:

Accounting Tools (2017, May 13). Functional Organizational Structure. Retrieved from https://www.accountingtools.com/articles/2017/5/13/functional-organizational-structure

2.Use of Statistics

Presenting data is one way to provide convincing support for conclusions when used with an explanation of why or how the numbers are significant. However, be careful that the statistics presented are presented in the correct context, otherwise the information is not credible. When using any type of statistics, you need to cite and reference the source document.

Example:

If you are asked if small businesses contribute significantly to employment in the United States, a good start to providing an answer could be:

Small businesses contribute significantly to the employment of US workers. Small businesses are 28.8 million strong and employ 56.8 million workers (Schwinn, 2016, p. 1).

Reference:

Schwinn, R. (2016, March-April). 2016 state small business profiles released with fresh design. The Small Business Advocate, 35(3), 1-8. Retrieved from https://www.highbeam.com/doc/1P3-4061763191.html

3.Educated Examples

Examples can bring your writing alive, capture your audience's attention and support the conclusions drawn!

Example:

If you are asked how as a manager you can help employees accomplish his or her career goals, then you can use an example combined with the course readings to draw a conclusion from the example.

A manager can use several tactics to help an employee reach his or her career goals. First, it is critical for a manager to engage an employee in a conversation to gain an understanding of an employee's goals (Lighthouse, 2017, para. 7). For example, since starting work at Gee-Whiz, Inc. two years ago, my immediate supervisor, Jack meets with me every three months to discuss my career goals. When a manager has an understanding of a worker's goals, then it is possible to tap into what motivates the worker (para. 2). According to Lighthouse (2017) a manager needs to develop a rapport with the people he or she supervises, let a worker know that his or her success matters, and share his or her own goals to get the worker to share theirs (Lighthouse, 2017, para. 8). For example, my manager takes a sincere interest in my growth at Gee-Whiz and provides specific feedback on different tasks that I perform. For instance, I led a team on a project that involved five different workers who collaborated to review and recommend changes to current operating procedures for the department.......

Reference:

Lighthouse (2017). How to help your team achieve their goals. Retrieved from https://getlighthouse.com/blog/how-team-achieve-goals/

WEEK'S READING

Week 1 What Is Strategic Marketing?

What makes a business idea work? Does it only take money? Why are some products a huge success and similar products a dismal failure? How was Apple, a computer company, able to create and launch the wildly successful iPod, yet Microsoft's first foray into MP3 players was a total disaster? If the size of the company and the money behind a product's launch were the difference, Microsoft would have won. But for Microsoft to have won, it would have needed something it's not had in a whilegood marketing so it can produce and sell products that consumers want.

In the first week of the course, we will focus first on understanding what marketing means as a discipline, and how it integrates within an organization. Once we have an understanding of what marketing is and does, we will get more specific as to how marketing activities are planned and implemented. Also, if you are interested in a marketing career, we outline some of the potential marketing positions most commonly considered the main marketing jobs. We will begin our discussion on marketing ethics and sustainability, two themes you will see frequently throughout the course.

1.1 Defining Marketing

LEARNING OBJECTIVES

1. Define marketing. 2. Outline the four components of marketing: creating, communicating, delivering, and exchanging value.

Marketing is defined by the American Marketing Association as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large" (AMA, 2009). If you read the definition closely, you see that there are four activities, or components, of marketing:

Creating. The process of collaborating with suppliers and customers to create offerings that have value. Communicating. Broadly, describing those offerings, as well as learning from customers. Delivering. Getting those offerings to the consumer in a way that optimizes value.

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Exchanging. Trading value for those offerings.

The traditional way of viewing the components of marketing is via the four Ps:

1. Product. Goods and services (creating offerings). 2. Promotion. Communication. 3. Place. Getting the product to a point at which the customer can purchase it (delivering). 4. Price. The monetary amount charged for the product (exchange).

Introduced in the early 1950s, the four Ps were called the marketing mix, meaning that a marketing plan is a mix of these four components.

If the four Ps are the same as creating, communicating, delivering, and exchanging, you might be wondering why there was a change. The answer is that they are not exactly the same. Product, price, place, and promotion are nouns. As such, these words fail to capture all the activities of marketing. For example, exchanging requires transaction mechanisms, which consist of more than simply a price or place. Exchanging requires, among other things, the transfer of ownership. For example, when you buy a car, you sign documents that transfer the car's title from the seller to you. That's part of the exchange process.

Even the term product, which seems pretty obvious, is limited. Does the product include services that come with your new car purchase (such as free maintenance for a certain period of time on some models)? Or does the product mean only the car itself? In this course, we will more commonly refer to products as offerings, which captures the full gamut of tangible product, intangible service, augmented benefits like warranties, and all other components that go into a consumer's decision to buy.

Finally, none of the four Ps describes particularly well what marketing people do. However, one of the goals of this book is to focus on exactly what it is that marketing professionals do.

Value Creating value for customers is at the center of everything marketing does (Figure 1.1). What does value mean?

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Figure 1.1

Marketing is composed of four activities centered on customer value: creating, communicating, delivering, and exchanging value.

When we use the term value, we mean the benefits buyers receive that meet their needs. In other words, value is what the customer gets by purchasing and consuming a company's offering. So, although the offering is created by the company, the value is determined by the customer.

Furthermore, our goal as marketers is to get a profitable exchange for consumers. By profitable, we mean that the consumer's personal value equation is positive.

The personal value equation is

value = benefits received - [price + hassle]

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Hassle is the time and effort the consumer puts into the shopping process. The equation is a personal one because how each consumer judges the benefits of a product will vary, as will the time and effort he or she puts into shopping. Value, then, varies for each consumer.

One way to think of value is to think of a meal in a restaurant. If you and three friends go to a restaurant and order the same dish, each of you will like it more or less depending on your own tastes. Yet the dish was exactly the same, priced the same, and served the same way. Because your tastes varied, the benefits you received varied. Therefore, the value varied for each of you. That's why we call it a personal value equation.

Creating Offerings That Have Value Marketing creates those goods and services that the company offers at a price to its customers or clients. That entire bundle consisting of the tangible good, the intangible service, and the price is the company's offering. When you compare one car to another, for example, you can evaluate each of these dimensionsthe tangible, the intangible, and the priceseparately. However, you can't buy one manufacturer's car, another manufacturer's service, and a third manufacturer's price when you actually make a choice. Together, the three make up a single firm's offer.

Marketing people do not create the offering alone. For example, when the iPhone was created, Apple's engineers were also involved in its design. Apple's financial personnel had to review the costs of producing the offering and provide input on how it should be priced. Apple's operations group needed to evaluate the manufacturing requirements the iPhone would need. The company's logistics managers had to evaluate the cost and timing of getting the offering to retailers and consumers. Apple's dealers also likely provided input regarding the iPhone's service policies and warranty structure. Marketing, however, has the biggest responsibility because it is marketing's responsibility to ensure that the new phone delivers value. Creating and managing offerings will be the focus of Week 3, "Market Segmenting, Targeting, and Positioning," and Week 5, "Creating Offerings," in this book.

Communicating Offerings Communicating is a broad term in marketing that means describing the offering and its value to your potential and current customers, as well as learning from customers what it is they want and like. Sometimes communicating means educating potential customers about the value of an offering, and sometimes it means simply making customers aware of where they can find a product. Communicating also means that customers get a chance to tell the company what they think. Today, companies are finding that to be successful, they need a more interactive dialogue

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with their customers. For example, Comcast customer service representatives will watch consumer websites such as Twitter. When they observe consumers "tweeting" (posting) problems with Comcast, the customer service reps will post resolutions to their problems. Similarly, JCPenney has created consumer groups that talk among themselves on JCPenney-monitored websites. The company might post questions, send samples, or engage in other activities designed to solicit feedback from customers.

Figure 1.2

A Porsche Boxster can cost three times as much as a Pontiac Solstice, but why is it worth more? What makes up the complete offering?

Source: (Left) Thomas Doerfer. (2008). Wikimedia Commons. Used under the terms of the Creative Commons Attribution-ShareAlike 3.0 Unported license. (Right) IFCAR. (2007). Wikimedia Commons. In the public domain.

Companies use many forms of communication, including advertising on the web or television, on billboards or in magazines, through product placements in movies, and through salespeople. Other forms of communication include attempting to have news media cover the company's actions (part of public relations), participating in special events such as the annual International Consumer Electronics Show in which Apple and other companies introduce their newest gadgets, and sponsoring special events such as the Susan G. Komen Race for the Cure.

Delivering Offerings Marketing can't just promise valueit also has to deliver value. Delivering an offering that has value is much more than simply getting the product into the hands of the user; it is also making sure that the user understands how to get the most out of the product and is taken care of if he or she requires service later. Value is delivered in part through a company's supply chain. The supply chain includes a number of organizations and functions that mine, make, assemble, or deliver materials and products from a manufacturer to consumers. The actual group of organizations can vary greatly from industry to industry, and include wholesalers, transportation companies, and retailers. Logistics, or the actual transportation and storage of materials and

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products, is the primary component of supply chain management, but there are other aspects of supply chain management that we will discuss during Week 6.

Exchanging Offerings In addition to creating an offering, communicating its benefits to consumers, and delivering the offering, there is the actual transaction, or exchange, that has to occur. In most instances, we consider the exchange to be cash for products and services. However, if you were to fly to Louisville, Kentucky, for the Kentucky Derby, you could "pay" for your airline tickets using frequent-flier miles. You could also use Hilton Honors points to "pay" for your hotel, and cash- back points on your Discover card to pay for meals. None of these transactions would actually require cash. Other exchanges, such as information about your preferences gathered through surveys, might not involve cash.

When consumers acquire, consume (use), and dispose of products and services, exchange occurs, including during the consumption phase. For example, via Apple's "One-to-One" program, you can pay a yearly fee in exchange for additional periodic product training sessions with an Apple professional. So, each time a training session occurs, another transaction takes place. A transaction also occurs when you are finished with a product. For example, you might sell your old iPhone to a friend, trade in a car, or ask the Salvation Army to pick up your old refrigerator.

Disposing of products has become an important ecological issue. Batteries and other components of cell phones, computers, and high-tech appliances can be harmful to the environment, and many consumers don't know how to dispose of these products properly. Some companies, such as Office Depot, have created recycling centers to which customers can take their old electronics.

Apple has a web page where consumers can fill out a form, print it, and ship it along with their old cell phones and MP3 players to Apple. Apple then pulls out the materials that are recyclable and properly disposes of those that aren't. By lessening the hassle associated with disposing of products, Office Depot and Apple add value to their product offerings. Other companies such as Cycling Solutions or PCDisposal.com have actually created offerings for proper and environmentally safe disposal of electronic products. This is a need for which many companies and individuals are willing to pay a fee.

1.1 KEY TAKEAWAY

The focus of marketing has changed from emphasizing the product, price, place, and promotion mix to one that emphasizes creating, communicating, delivering, and exchanging value. Value is a function of the benefits an individual receives and consists of the price the consumer paid and the time and effort the person expended making the purchase.

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1.2 Who Does Marketing?

LEARNING OBJECTIVE

1. Describe how all types of organizationsfor profit, nonprofit, governments, and individualsengage in marketing.

The short answer to the question of who does marketing is "everybody!" But that answer is a bit glib and not too useful. Let's take a moment and consider how different types of organizations engage in marketing.

For-Profit Companies The obvious answer to the question, "Who does marketing?" is for-profit companies like McDonald's, Procter & Gamble (the makers of Tide detergent and Crest toothpaste), and Walmart. For example, McDonald's creates a new breakfast chicken sandwich for $1.99 (the offering), launches a television campaign (communicating), makes the sandwiches available on certain dates (delivering), and then sells them in its stores (exchanging). When Procter & Gamble (or P&G for short) creates a new Crest tartar control toothpaste, it launches a direct mail campaign in which it sends information and samples to dentists to offer to their patients. P&G then sells the toothpaste through retailers like Walmart, which has a panel of consumers sample the product and provide feedback through an online community. These are all examples of marketing activities.

Nonprofit Organizations Nonprofit organizations also engage in marketing. When the American Heart Association (AHA) created a heart-healthy diet for people with high blood pressure, it bound the diet into a small book, along with access to a special website that people can use to plan their meals and record their health-related activities. The AHA then sent copies of the diet to doctors to give to patients. When does an exchange take place, you might wonder? And what does the AHA get out of it?

From a monetary standpoint, the AHA does not directly benefit, unless it finds a direct correlation with an increase in AHA awareness and donations. Nonetheless, the organization is meeting its mission, or purpose, of getting people to live heart-healthy lives and considers the campaign a success when doctors give the books to their patients. The point is that the AHA is engaged in the

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marketing activities of creating, communicating, delivering, and exchanging. This won't involve the same kind of exchange as a for-profit company, but it is marketing. When a nonprofit organization engages in marketing activities, this is called nonprofit marketing. Some schools offer specific courses in nonprofit marketing, and many marketing majors begin their careers with nonprofit organizations.

Government entities also engage in marketing activities. For example, when the US Army advertises to parents of prospective recruits, sends brochures to high schools, maintains a Facebook page, or brings a Bradley Fighting Vehicle to a state fair, the Army is engaging in marketing. The Army also listens to its constituencies, as evidenced by research aimed at understanding how to serve military families more effectively. One result was advertising aimed at parents and improving their response to their children's interest in joining the Army; another was a program aimed at encouraging spouses of military personnel to access counseling services when their spouses are serving overseas.

Similarly, the Environmental Protection Agency (EPA) runs a number of advertising campaigns designed to promote environmentally friendly activities. One such campaign promoted the responsible disposal of motor oil instead of simply pouring it on the ground or into a storm sewer. The objective of such a campaign is to communicate the idea that the EPA is doing good things.

There is a difference between these two types of activities. When the Army is promoting the benefits of enlisting, it hopes young men and women will join the Army. By contrast, when the EPA runs commercials about how to properly dispose of motor oil, it hopes to change people's attitudes and behaviors so that social change occurs. Marketing conducted in an effort to achieve certain social objectives can be done by government agencies, nonprofit institutions, religious organizations, and others and is called social marketing. Convincing people that global warming is a real threat via advertisements and commercials is social marketing, as is the example regarding the EPA's campaign to promote responsible disposal of motor oil.

Individuals If you get a rsum, are you using marketing to communicate the value you have to offer prospective employers? If you sell yourself in an interview, is that marketing? When you work for a wage, you are delivering value in exchange for pay. Is this marketing, too?

Some people argue that these are not marketing activities and that individuals do not necessarily engage in marketing. (Some people also argue that social marketing really isn't marketing, either.) Can individuals market themselves and their ideas?

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What about politicians in an election campaign? Aren't they really trying to "sell" you on the idea that they are the best person for the position? Aren't they using many of the marketing communications techniques of advertising, social media, public relations or personal selling?

If, as a result of completing this course, you can learn how to more effectively create value, communicate and deliver that value to the receiver, and receive something in exchange, then we've achieved our purpose. That may come in handy next time you apply for a job. 1.2 KEY TAKEAWAY

Marketing can be thought of as a set of business practices that for-profit organizations, nonprofit organizations, government entities, and individuals can use. When a nonprofit organization engages in marketing activities, this is called nonprofit marketing. Marketing conducted in an effort to achieve certain social objectives is called social marketing.

1.3 Why Study Marketing?

LEARNING OBJECTIVE

1. Explain the role marketing plays throughout an individual firm and society as a whole.

Marketing Enables Profitable Transactions to Occur Products don't, contrary to popular belief, sell themselves. Generally, the "build it and they will come" philosophy doesn't work. Good marketing educates customers so that they can find the products they want, make better choices about those products, and extract the most value from them. In this way, marketing helps facilitate exchanges between buyers and sellers for the mutual benefit of both parties. Likewise, good social marketing provides people with information and helps them make healthier decisions for themselves and for others.

Of course, all business students should understand all functional areas of the firm, including marketing. There is more to marketing, however, than simply understanding its role in the business. Marketing has tremendous impact on society.

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Marketing Delivers Value Not only does marketing deliver value to customers, but also that value translates into the value of the firm as it develops a reliable customer base and increases its sales and profitability. So when we say that marketing delivers value, marketing delivers value to both the customer and the company. Franklin D. Roosevelt, the US president with perhaps the greatest influence on our economic system, once said, "If I were starting life over again, I am inclined to think that I would go into the advertising business in preference to almost any other. The general raising of the standards of modern civilization among all groups of people during the past half century would have been impossible without the spreading of the knowledge of higher standards by means of advertising" (Famous Quotes & Authors, 2009). Roosevelt referred to advertising, but advertising alone is insufficient for delivering value. Marketing finishes the job by ensuring that what is delivered is valuable.

Marketing Benefits Society Marketing benefits society in general by improving people's lives in two ways. First, as we mentioned, it facilitates trade. As you have learned, or will learn, in economics, being able to trade makes people's lives better. Otherwise, people wouldn't do it. (Imagine what an awful life you would lead if you had to live a Robinson Crusoe-like existence as did Tom Hanks's character in the movie Cast Away.) In addition, because better marketing means more successful companies, jobs are created. This generates wealth for people, who are then able to make purchases, which, in turn, creates more jobs.

The second way in which marketing improves the quality of life is based on the value delivery function of marketing, but in a broader sense. When you add together all the marketers who are trying to deliver offerings of greater value to consumers and are effectively communicating that value, consumers are able to make more informed decisions about a wider array of choices. From an economic perspective, more choices and smarter consumers are indicative of a higher quality of life.

Marketing Costs Money Marketing can sometimes be the largest expense associated with producing a product. In the soft drink business, marketing expenses account for about one-third of a product's priceabout the same as the ingredients used to make the soft drink itself. At the bottling and retailing level, the expenses involved in marketing a drink to consumers make up the largest cost of the product.

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Some people argue that society does not benefit from marketing when it represents such a huge chunk of a product's final price. In some cases, that argument is justified. Yet, when marketing results in more informed consumers receiving a greater amount of value, then the cost is justified.

Marketing Offers People Career Opportunities Marketing is the interface between producers and consumers. In other words, it is the one function in the organization in which the entire business comes together. Being responsible for both making money for your company and delivering satisfaction to your customers makes marketing a great career. In addition, because marketing can be such an expensive part of a business and is so critical to its success, companies actively seek good marketing people. There's a great variety of jobs available in the marketing profession. These positions represent only a few of the opportunities available in marketing.

Marketing research. Personnel in marketing research are responsible for studying markets and customers in order to understand what strategies or tactics might work best for firms. Merchandising. In retailing, merchandisers are responsible for developing strategies regarding what products wholesalers should carry to sell to retailers such as Target and Walmart. Sales. Salespeople meet with customers, determine their needs, propose offerings, and make sure that the customer is satisfied. Sales departments can also include sales support teams who work on creating the offering. Marketing communications. Whether it's for an advertising agency, a web marketing agency, a PR agency, a brand management agency, or inside a company, some marketing personnel work on marketing communications. Television commercials and print ads, the communications with which we are most familiar, are only part of the advertising mix. Many people who work in marketing communications spend all their time creating advertising for electronic media, such as websites and their pop-up ads, podcasts, and the like. Others plan trade shows, buzz campaigns, contests, generate positive press for the company, or engage in crisis public relations management. Product development. People in product development are responsible for identifying and creating features that meet the needs of a firm's customers. They often work with engineers or other technical personnel to ensure that value is created. Direct marketing. Professionals in direct marketing communicate directly with customers about a company's product offerings via channels such as e-mail, chat lines, blogs, social media, telephone, or direct mail.

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Event marketing. Some marketing personnel plan special events, orchestrating face-toface conversations with potential and current customers in a special setting.

A career in marketing can begin in a number of different ways. Entry-level positions for college graduates are available in many of the positions mentioned above. A growing number of CEOs are people with marketing backgrounds. Some legendary CEOs like Ross Perot and Mary Kay Ash got their start in marketing. CEOs such as Mark Hurd, who runs Oracle Corporation, and Jeffrey Immelt at GE are showing how marketing careers can lead to the highest pinnacles of the organization. 1.3 KEY TAKEAWAY

By facilitating transactions, marketing delivers value to both consumers and firms. At the broader level, this process creates jobs and improves the quality of life in a society. Marketing can be costly, so firms need to hire good people to manage their marketing activities. Being responsible for both making money for your company and delivering satisfaction to your customers makes marketing a great career. 1.4 How Is Marketing Done?

LEARNING OBJECTIVES

1. Understand that marketing is both a firm-wide activity and a functional-level department. 2. Identify the strategic planning elements that are included in a corporate strategic plan and how functional plans such as marketing flow from the corporate strategic plan. 3. Appreciate the changes in the marketing environment.

Marketing's Role in the Organization We previously discussed marketing as a set of activities that can affect an entire organization. Marketing is also a functional area in companies, just like operations and accounting. Within a company, marketing might be the title of a department, but some marketing functions, such as sales, might be handled by another department. Marketing activities do not occur separately from the rest of the company, however.

As previously 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.

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Everything Starts with Customers Most organizations start with an idea of how to serve customers better. Apple's engineers began working on the iPod by looking at the available technology and thinking about how customers would like to have their music more available, as well as more affordable, through downloading MP3 files or live streaming services such as iTunes Radio. Many companies think about potential markets and customers when they start. John Deere, for example, founded his company on the principle of serving customers. When admonished for making constant improvements to his products even though farmers would take whatever they could get, Deere reportedly replied, "They haven't got to take what we make and somebody else will beat us, and we will lose our trade" (John Deere [a.],2009).He recognized that if his company failed to meet customers' needs, someone else would. The mission of the company then became the following (John Deere [b.], 2009):

We aspire to distinctively serve customersthose linked to the landthrough a great business, a business as great as our products. To achieve this aspiration, our strategy is: Exceptional operating performance Disciplined SVA growth Aligned high-performance teamwork

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. Note also how these are written to inspire employees and others who interact with the company and may read the mission statement.

IBM IBM will be driven by these values: Dedication to every client's success. Innovation that matters, for our company and for the world. Trust and personal responsibility in all relationships (IBM, 2009).

Coca-Cola Everything we do is inspired by our enduring mission: To refresh the world...in body, mind, and spirit. To inspire moments of optimism...through our brands and our actions. To create value and make a difference...everywhere we engage (Coca-Cola Company, 2009).

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McDonald's To be our customers' favorite place and way to eat (McDonald's, 2009).

Merck To provide innovative and distinctive products and services that save and improve lives and satisfy customer needs, to be recognized as a great place to work, and to provide investors with a superior rate of return (Merck & Co., 2009).

Not all companies create mission statements that reflect a marketing orientation. Apple, for example, does not publish a mission statement, yet most consumers recognize Apple as a need- fulfilling company. Apple's mission statement used to be: "Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system, and iLife and professional applications. Apple is also heading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its revolutionary iPhone" (Apple, Inc.). This antiquated mission statement reflects a production orientation, or an operating philosophy based on the premise that Apple's success is due to great products and that simply supplying them will lead to demand for them. The challenge, of course, is how to create a "great" product without thinking too much about the customer's wants and needs. Apple, and for that matter, many other companies, have fallen prey to thinking that they knew what a great product was without asking their customers. In fact, Apple's first attempt at a graphic user interface (GUI) was the LISA, a dismal failure. Clearly, the old mission statement needed to go.

The Marketing Plan

The marketing plan is the strategy for implementing the components of marketing: creating, communicating, delivering, and exchanging value. Once a company has decided what business it is in and expressed that in a mission statement, the firm then develops a corporate strategy. This is the first level of strategic planning. 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 third level of strategic planning. (We'll cover the second level a little bit later.)

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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 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.

Have you ever wondered how an organization decides which products and services to develop, price, promote, and sell? Organizations typically develop plans and strategies that outline how they want to go about this process. Such a plan must take into account a company's current internal conditions, such as its resources, capabilities, and technology. The plan must also account for conditions in the external environment, such as the economy, competitors, and government regulations that could affect what the firm wants to do. Just as your personal planssuch as what you plan to major in or where you want to find a job are likely to change, organizations also have contingency plans. Individuals and organizations both must develop long-term (longer than a year) strategic plans, match their strengths and resources to available opportunities, and adjust their plans to changing circumstances.

The Changing Marketing Environment At the beginning of this week, 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,

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and marketing is changing along with it. We will incorporate many of these changes throughout the course in the coming weeks.

Some of these changes include ethics and social responsibility. Businesses exist only because society allows them to. When businesses begin to fail society, society will punish them or revoke their license. The crackdown on companies in the subprime mortgage-lending industry is one example. The collapse of Enron and the jailing of its executives is another. 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.

Sustainability is an example of social responsibility and involves engaging in practices that do not diminish the earth's resources. SC Johnson, the company that makes Pledge and Windex, was among the first companies to engage in manufacturing practices that reduced or eliminated pollution. 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.

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. That emphasis on value is what drives the functional approach to valuethat is, creating, communicating, delivering, and exchanging value.

Finally, 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. Using this data, we can build more effective marketing metrics that can then be used to create better offerings and better communication plans. 1.4 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 is influenced by environmental trends such as social responsibility, sustainability, service-dominant logic, the increased availability of data, and effective metrics.

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1.5 The Value Proposition

LEARNING OBJECTIVES

1. Explain the concept of a company's or product's value proposition. 2. Understand why a company may develop different value propositions for different target markets.

What Is a Value Proposition? Individual buyers and organizational buyers both evaluate products and services to see if they provide desired benefits. For example, when you're exploring your vacation options, you want to know the benefits of each destination and the value you will get by going to each place. Before you (or a firm) can develop a strategy or, you first have to develop a value proposition. A value proposition is a 30-second "elevator speech" stating the specific benefits a product or service offering provides a buyer. It shows why the product or service is superior to competing offers.

The following is an example of a value proposition developed by a sales consulting firm: "Our clients grow their business, large or small, typically by a minimum of 30-50% over the previous year. They accomplish this without working 80-hour weeks and sacrificing their personal lives" (Lake, 2009).

Note that although a value proposition will hopefully lead to profits for a firm, when the firm presents its value proposition to its customers, it doesn't mention its own profits. That's because the goal is to focus on the external market, or what customers want.

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Figure 1.4

Like any other company, Beaches, an all-inclusive chain of resorts for families, must explain what its value proposition is to customers. In other words, why does a Beaches resort provide more value to vacationing families than do other resorts?

Source: Photo by Matt H. Wade (UpstateNYer) (2006). Wikimedia Commons. Used under the terms of the Creative Commons Attribution-ShareAlike 3.0 Unported license.

Firms typically identify different target markets, or groups of customers, they want to reach when they are developing their value propositions. Target markets will be discussed in more detail in Week 4, "Market Segmenting, Targeting, and Positioning." For now, be aware that companies sometimes develop different value propositions for different target markets. The value proposition tells each group of customers why they should buy a product or service, vacation to a particular destination, or donate to an organization.

Once the benefits of a product or service are clear, the firm must develop strategies that support the value proposition. The value proposition serves as a guide for this process. In the case of our sales consulting firm, the strategies it develops must help clients improve their sales by 30 percent-50 percent. Likewise, if a company's value proposition states that the firm is the largest retailer in the region with the most stores and best product selection, opening stores or increasing the firm's inventory might be a key part of the company's strategy. 1.5 KEY TAKEAWAY

A value proposition is a 30-second "elevator speech" stating the specific value a product or service provides to a target market. Firms may develop different value propositions for different groups of customers. The value proposition shows why the product or service is superior to competing offers and why the customer should buy it.

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1.6 Where Strategic Planning Occurs Within Firms

LEARNING OBJECTIVES

1. Identify the different levels at which strategic planning may occur within firms. 2. Understand how strategic planning that occurs at multiple levels in an organization helps a company achieve its overall corporate objectives.

Strategic planning is a process that helps an organization allocate its resources to capitalize on opportunities in the marketplace. Typically, it is a long-term process. So how and where does strategic planning occur within organizations? In large organizations, strategic planning is likely to occur at a number of different levels. For example, top executives will develop strategic plans for the corporation as a whole. These are corporate level plans. In addition, many large firms have different divisions, or businesses, called strategic business units.

A strategic business unit (SBU) is a business or product line within an organization that has its own competitors, customers, and profit center for accounting purposes. A firm's SBUs may also have their own mission statements (purpose) and will generally develop strategic plans for themselves. These are called business level plans.The different departments, or functions (accounting, finance, marketing, and so forth) within a company or SBU might also develop strategic plans. For example, a company may develop a marketing plan or a financial plan. They are functional level plans.

Figure 1.5

Many consumers recognize the Goodyear blimp. Goodyear's strategic business units are North American Tire; Latin American Tire; Asia Pacific Tire; and Europe, Middle East, and Africa Tire. Goodyear's SBUs are set up to satisfy customers' needs in different worldwide markets (Goodyear Tire and Rubber Company).

Source: Photo by Regular Daddy. (2009). Wikimedia Commons. Used under the terms of the Creative Commons Attribution-ShareAlike 3.0 Unported license.

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Figure 1.6, "Strategic Planning Levels in an Organization," shows an example of different strategic planning levels that can exist within an organization's structure. The number of levels can vary, depending on the size and structure of an organization. Not every organization will have every level or have every type of plan.

Figure 1.6 Strategic Planning Levels in an Organization

The strategies and actions implemented at the functional (department) level must be consistent with and help an organization achieve its objectives at both the business and corporate levels and vice versa. The SBUs at the business level must also be consistent with and help an organization achieve its corporate-level objectives. For example, if a company wants to increase its profits at the corporate level and owns multiple business units, each unit might develop strategic plans to increase its own profits and thereby the firm's profits as a whole. At the functional level, a firm's marketing department might develop strategic plans to increase sales and the market share of the firm's most profitable products, which will increase profits at the business level and help the corporation's profitability. Both business level and functional plans should help the firm increase its profits, so that the company's corporate-level strategic objectives can be met.

For example, take PepsiCo, which has committed itself to achieving business and financial success while leaving a positive imprint on society. PepsiCo identifies its three divisions (business units) as (1) PepsiCo Americas Beverages, which is responsible for Pepsi soft drinks, Aquafina waters,

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Tropicana juices, and Gatorade products; (2) PepsiCo Americas Foods, which is responsible for Frito-Lay and Quaker Oats products; and (3) PepsiCo International, which consists of PepsiCo's businesses in Asia, Africa, Europe, and Australia (PepsiCo [a.], 2009). To support PepsiCo's overall corporate strategy, all three business units must develop strategic plans to profitably produce offerings while demonstrating that they are committed to society and the environment.

Figure 1.7

The new Aquafina bottle uses less plastic and has a smaller label, reducing waste and helping the environment.

Source: Wikipedia.

At the functional (marketing) level, to increase PepsiCo's profits, employees responsible for different products or product categories such as beverages or foods might focus on developing healthier products and making their packaging more environmentally friendly so the company captures more market share. For example, the new Aquafina bottle uses less plastic and has a smaller label, which helps the environment by reducing the amount of waste.

Organizations can use multiple methods and strategies at different levels in the corporation to accomplish their various goals just as you may use different strategies to accomplish your goals. However, the basic components of the strategic planning process are the same at each of the different levels. Next, we'll take a closer look at the components of the strategic planning process.

1.6 KEY TAKEAWAY

Strategic planning can occur at different levels (corporate, business, and functional) in an organization. The number of levels may vary. However, if a company has multiple planning levels, the plans must be consistent, and all must help achieve the overall goals of the corporation. The best strategic plans are customer-focused.

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1.7 Components of the Strategic Planning Process

LEARNING OBJECTIVES

1. Explain how a mission statement helps a company with its strategic planning. 2. Describe how a firm analyzes its internal environment. 3. Describe the external environment a firm may face and how it is analyzed.

The strategic planning process includes conducting a situation analysis and developing the organization's mission statement, objectives, value proposition, and strategies. Figure 1.8, "The Strategic Planning Process," shows the components of strategic planning. Let's now look at each of these components.

Figure 1.8 The Strategic Planning Process

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Conducting a Situation Analysis As part of the strategic planning process, a situation analysis must be conducted before a company can decide on specific actions. A situation analysis involves analyzing both the external (outside the organization) and the internal (company) environments, as Figure 1.8, "The Strategic Planning Process," shows. The firm's internal environmentsuch as its financial resources, technological resources, and the capabilities of its personnel and their performancehas to be examined. It is also critical to examine the external environment the firm faces, such as the economy and its competitors. The external environment significantly affects the decisions a firm makes, and thus must be continuously evaluated. For example, during the economic downturn in 2008-2009, businesses found that many competitors cut the prices of their products drastically. Other companies reduced package sizes or the amount of product in packages. Firms also offered customers incentives (free shipping, free gift cards with purchase, rebates, etc.) to purchase their goods and services online, which allowed businesses to cut back on the personnel needed to staff their brick-and-mortar stores. While a business cannot control what competitors do, it must decide what actions to take to be proactive to changes in the internal and external environments and remain competitive.

Week 1 What Is Strategic Marketing?

What makes a business idea work? Does it only take money? Why are some products a huge success and similar products a dismal failure? How was Apple, a computer company, able to create and launch the wildly successful iPod, yet Microsoft