Organizations must deal with a number of activities and decisions in marketing their products to customers. These activities vary in both complexity and scope.
Organizations must deal with a number of activities and decisions in marketing their products to customers. These activities vary in both complexity and scope. Whether the issue is a local restaurant’s change in copy for a newspaper ad, or a large multinational firm launching a new product in a foreign market, all marketing activities have one thing in common: They aim to give customers a reason to buy the organization’s product. In this section, we briefly introduce the activities and decisions that will be the focus of the remaining chapters of this book.
If an organization is to have any chance of reaching its goals and objectives, it must have a game plan or road map for getting there. A strategy, in effect, outlines the organization’s game plan for success. Effective marketing requires sound strategic planning at a number of levels in an organization. At the top levels of the organization, planners concern themselves with macro issues such as the corporate mission, management of the mix of strategic business units, resource acquisition and assignments, and corporate policy decisions.
Planners at the middle levels, typically a division or strategic business unit, concern themselves with similar issues, but focus on those that pertain to their particular product/market. Strategic planning at the lower levels of an organization is much more tactical in nature. Here, planners concern themselves with the development of marketing plans—more specific game plans for connecting products and markets in ways that satisfy both organizational and customer objectives. Although this book is essentially about strategic planning, it focuses on tactical planning and the development of the marketing plan. Tactical planning concerns itself with specific markets or market segments and the development of marketing programs that will fulfill the needs of customers in those markets. The marketing plan provides the outline for how the organization will combine product, pricing, distribution, and promotion decisions to create an offering that customers will find attractive. The marketing plan also concerns itself with the implementation, control, and refinement of these decisions.
To stand a reasonable chance for success, marketing plans should be developed with a keen appreciation of how they fit into the strategic plans of the middle- and upper-levels of the firm. In Chapter 2, we discuss the connection among corporate, business-unit, and marketing planning, as well as how marketing plans must be integrated with the plans of other functions in the organization (financial plans, production plans, etc.). We also discuss the structure of the marketing plan and some of the challenges involved in creating one.
Social Responsibility and Ethics
The role of social responsibility and ethics in marketing strategy has come to the forefront of important business issues in today’s economy. Our society still reverberates from the effects of corporate scandals at Enron, WorldCom, and ImClone, among others. Although these scandals make for interesting reading, many innocent individuals have suffered the consequences from these companies’ unethical behavior. Social responsibility refers to an organization’s obligation to maximize its positive impact on society while minimizing its negative impact. In terms of marketing strategy, social responsibility addresses the total effect of an organization’s marketing activities on society.
A major part of this responsibility is marketing ethics, or the principles and standards that define acceptable conduct in marketing activities. Ethical marketing can build trust and commitment and is a crucial ingredient in building long-term relationships with all stakeholders. Another major component of any firm’s impact on society is the degree to which it engages in philanthropic activities. Many firms now make philanthropy a key strategic activity. In Chapter 3, we discuss the economic, legal, ethical, and philanthropic dimensions of social responsibility, along with the strategic management of corporate integrity in the marketing planning process.
Although there are occasional lapses, most firms understand their economic and legal responsibilities. However, social and ethical responsibilities, by their nature, are not so clearly understood. Many firms see social responsibility not only as a way to be a good corporate citizen, but also as a good way to build their brands. For example, the Red brand—created by Bono in 2006—has been marketed successfully by firms such as Gap, Apple, Motorola, Armani, Converse, and American Express. These and other companies market Red brand versions of their products, with the aim to donate 50 percent of their profits to the Global Fund to fight AIDS in Africa.
Research and Analysis
Strategic planning depends heavily on the availability and interpretation of information. Without this lifeblood, strategic planning would be a mindless exercise and a waste of time. Thankfully, today’s planners are blessed with an abundance of information due to improving technology and the Internet. However, the challenge of finding and analyzing the right information remains. As many marketing planners have found, having the right information is just as important as having the right product. Marketers are accustomed to conducting and analyzing research, particularly with respect to the needs, opinions, and attitudes of their customers.
Although customer analysis is vital to the success of the marketing plan, the organization must also have access to three other types of information and analysis: internal analysis, competitive analysis, and environmental analysis. Internal analysis involves the objective review of internal information pertaining to the firm’s current strategy and performance, as well as the current and future availability of resources. Analysis of the competitive environment, increasingly known as competitive intelligence, involves analyzing the capabilities, vulnerabilities, and intentions of competing businesses.20 Analysis of the external environment, also known as environmental scanning, involves the analysis of economic, political, legal, technological, and cultural events and trends that may affect the future of the organization and its marketing efforts. Some marketing planners use the term situation analysis to refer to the overall process of collecting and interpreting internal, competitive, and environmental information. The development of a sound marketing plan requires the analysis of information on all fronts.
In Chapter 4, we address the collection and analysis of internal, customer, competitive, and environmental information. We also discuss the challenges involved in finding the right information from an overwhelming supply of available information. The uncertainty and continual change in the external environment also create challenges for marketers (as the Internet boom and bust have shown us). As we will see, this type of research and analysis is perhaps the most difficult aspect of developing a marketing plan.
Developing Competitive Advantage
To be successful, a firm must possess one or more competitive advantages that it can leverage in the market in order to meet its objectives. A competitive advantage is something that the firm does better than its competitors that gives it an edge in serving customers’ needs and/or maintaining mutually satisfying relationships with important stakeholders. Competitive advantages are critical because they set the tone, or strategic focus, of the entire marketing program. When these advantages are tied to market opportunities, the firm can offer customers a compelling reason to buy their products. Without a competitive advantage, the firm and its products are likely to be just one more offering among a sea of commoditized products.
Apple, for example, has been quite successful in leveraging innovation and the customer experience to maintain a sizable competitive advantage in computers, portable music players, and music and movie distribution. A typical Mac computer costs substantially more than a comparable PC running Windows. However, Apple bundles multimedia software and a top-rated user experience into the mix. As a result, Apple computers continue to command a price premium, where most PC manufacturers engage in price wars.
In Chapter 5, we discuss the process of developing competitive advantages and establishing a strategic focus for the marketing program. We also address the role of SWOT analysis as a means of tying the firm’s strengths or internal capabilities to market opportunities. Further, we discuss the importance of developing goals and objectives. Having good goals and objectives is vital because these become the basis for measuring the success of the entire marketing program. For example, Hampton Inn has a goal of 100 percent customer satisfaction. Customers do not have to pay for their stay if they are not completely satisfied.22 Goals like these are not only useful in setting milestones for evaluating marketing performance; they also motivate managers and employees. This can be especially true when marketing goals or objectives help to drive employee evaluation and compensation programs.
Marketing Strategy Decisions
An organization’s marketing strategy describes how the firm will fulfill the needs and wants of its customers. It can also include activities associated with maintaining relationships with other stakeholders, such as employees or supply chain partners. Stated another way, marketing strategy is a plan for how the organization will use its strengths and capabilities to match the needs and requirements of the market. A marketing strategy can be composed of one or more marketing programs; each program consists of two elements—a target market or markets and a marketing mix (sometimes known as the four Ps of product, price, place, and promotion). To develop a marketing strategy, an organization must select the right combination of target market(s) and marketing mix(es) in order to create distinct competitive advantages over its rivals.