Professional Documents
Culture Documents
Jue 25 de ene
CHAPTER
ronment,elfective marketing today is both increasingly vital and radically new. Consider the rapid
market success ofthe start-up Bir.
start s, such as Lime and Spin,Bir's business modelhas constnty evalved. ' inraduced Bird
Delvenysenvce, wtich enabls cansumerstorequest a B lo be delveed o heirhome or business
earlyin the moming o ensure that they have guaranted transportaton throught the da. o speed
u adoption, B ls ntoduced BirdPltiom, a sut o products and senices Inat ies entrpre-
neurs the apportuniy tobecome independent operators and manage a let of hared e-scocters in
thei comunity. dependent operaors have theoptin o add their ow ogo 0 i scoters and
re given logístical suoporto charge, maintain, and distribute the e-scooters each day'
To be a successful marketer,one must have a clear understanding ofihe essence of marketing, what
can be marketed, and how marketing works. Wediscuss these three aspects of marketing next.
AWHAT-IS-MARKETING?.
Marketing isabor
When Google recognized that people neededto more effctively and
elficently accessinformation on theinernet, i reated a poverful search engine that organizedand
priortized queries. When IKEA notied that pcople wanted good furnishings at substantaly lower
price, l crated knockdown furniture. These owo firms demonstrated marketing savey and turned
a privat or social need into a profiable business opportunity.?
The American Marketing Assosiation offers the following formal defntion: Marktingsthe ac
e
‘Coping with these exchange processescall for a
considerable amount of woriand skil.Marketing management takes place whenat least one partyto-
a porential exchange thinks about the means of achieving desied responses from other parties.Thus
seting.
We can also distnguish berween social and managerial definition of marketing, A social dfini-
tion of marketing shows the role masketing playsin society;for example, one marketer has said that
marketing'srole sto”delvera higher standardofliving” Our socialdefínition of marketing: Marketing
sa socitlprocesby which individual and grups obtain what hey "ecd and an tough creting, offering, and
fieyexchanging productsandsevices fvalue ithathers. Co-creation f value among consumers and with
businesses, and the importance of value erearion and sharing, have become important themes i the
development of modern marketing thought.*
Managers sometimes think of marketing as "the art o selling products.”and many people are
ey hear that sellng s ot the most important part of marketing, Seling is only the
tip of the marketing iceberg.Peter Drucker, famed management theorist, puttthis way:
of marketng is o
my superfluous. The aint of marketing s o know and understand the customer
so well tha the product or service Fs him and sels tself, eally, marketing should result
n a customer who s ready (o buy. A That should be needed then isto make the product or
service available
‘When Nintendo released itsWii game system, when Apple launched isiPad tablet computer.and
when Toyota introduced itsPrius hybrid automobile,these manufacturers were swamped with orders
Their success cannotbe atributed merely 1o the great selling skl of retailers. Rather, theie runaway
suecess stemmed from the fct tharthey had designed theright product,based on careful marketing
homework about consumers, competitlon, and al the exteralfctorsthataffet cost and demand.
WHAT-1S MARKETED?-
Marketing is ubiquitous—ir permeates all aspects o the society. Speciically, marketing typically
involves 10different domains: goods,services, event, experiences, persons, places,propertis, orga-
nizations, information, and ideas,Let's take a quick look at these categories.
* Goods. Physical goods consitute thebulk ofmostcountries' production and mareting efors.
Eachyear US.companies market billors offresh,canned, bagged.and frozen food productsand
millins of car,refrigerator, tvisions, machines, and other mainstays ofa modern economy.
Services. As economies advance,a growing proportion of heiractívits focus o the produc
tionofservices.The US. economy today produces a services-t0-goods mixofroughiy rwo-hirds
1o onesthird. Services include theoerings ofirines, horel,carrental firms, barbers and beauti-
cians, maintenance and repir peopleaccoumtants, bankers, awyers, engincers,doctor,software
programmers, and management consultants.Many masket oferings míx goods nd servics,such
asafast-food meal
Events. Marketers promote time-based event, including major rade shows, artístic perfor-
mances, ad company anniversaris. Global sporting events suchas the Olympicsand the World
Cupare promoted aggressivelyto companiesand fans.Localeventsineludecraffirs, bookstore
readings,and farmers” markets
Experiences. By orchestrating several ervices and goods, a firm can create, stage,and market
experiences. Walt Disney Workl's Magic Kingdom lts customers visit a iy kingdom. a pirate
ship,ora haunted house. Customized experiences include a week.ara baseball campwith retred
baschll greacs, a four-dayrock-and-roll fantasy camp,and a climbup Mount Everes.
Persons. Artists. musicans. CEOs, physicans, high-profile lawers and financier, and other
professionalsoien ge help from marketers.* Many thleresand emertainershave donea master-
ful job of marketing themselves—former NFL quarterback Peyton Manning, talk show veteran
Oprah Winfrey, and rock and-roll legends The Rolling Stones, Management consultant Tor
Peters,himselfa masterat self-branding, has advised each person to become a “brand-
Places, Cities staes,regions, and whole nations compete toattracttouriss, rsidents, fcto
ries, and company headquariers? Place marketers include economic development specialiss
realestateagents, commercial banks, localbusiness asociatons, and advertiing and public ela-
tions agencies. The Las Vegas Convention & Visitors Authoriy has met with much successwith
it provocative ad campaign *What Happens Here, Stays Here”portraying Las Vegasas “an adult
playground.”
Properties. Propertiesivolve intangible rights of ownership ocither el property(realetate)
or financialproperty (stocks and bonds). They arebought and sold.and these exchanges require
marketing Realstateagents work for property ownersand sellrs,orthey buy and sll residential
and commercal ral estate.Investment companies and banks market securities to both institu-
tional andindividual investors.
Organizations. Muscums, perflrming-artsorganizations,corporations, and nonprofitsalluse
marketing to boost their public image and compete or audiences and funds. Some univer
6:40p.m. J
& www-ebooks7-24-com.ezproxy.uniandes.edu.co
Ebooks7-24
Marketing management
have created chief marketing offcer (CMO) positions o beuter manage their school identity and
image, encompassing everything from admission brochures and Twiterfceds o brand stratgy.
Information. Information s disseminated knowledge. I i produced, marketed,and distributed
by TV and radio news,nevspapers,the interner, hink tanks, government and business entiis, and
schoolsand universiis. Firms malebusinessdecisons usinginformation sup liedbyorganizarions.
suchas Nieben, R Donnelly & Sons,comscore, Gartner,.D. Powerand Assocites, G, and psos
Ideas. Social marketers promote such ideas as “Friends Dont Let Friends Drive Drunk” and
“A Mind I 3 Terible Thing to Waste.” Poltcal parties promote social causes such as gun con.
trol,tax rform. and affordable healh care. As partoftheir corporate social responsibiliyactiv-
ties, many organizations promote causes focused on ssues such as poverty,limate change, vl
righs, social justice, acial discrimination, gender inequaliy, health careavailability, and child:
hood obesiy.
THE MARKETING EXCHANGE
A marketeris somcone who secks a response—atrention, a purchase, a vote, a donation—from
another party. Marketersare skilled atstimulating demand or their products; however, that's alim-
ed view of what theydo. They also seck to influcnce the level,timing, and composítion of demand
0 meetthe organization' ojectves.
Traditionally,a “marker” was a physicalplace where buyers and selles gathered to buy and sell
goods. Economistsdescribe a market a a colletion of buyers and selers who negotiate ransactions
thatinvolve a partcular product o product cass (such as the housing market o the graín marke).
There arefive basic markere: resource markets, manufacturer markets,consurmer markets, nter-
mediary markets, and government markets. The five basic markets and their connecting flows of
goods, ervices, and money areshown n Figure 1., Manufacturersgo to rsource markets (raw matc-
rial markers, labor markets, money markers) buy resources and turn them into goods and services,
an sell Finished produets to intermediaries,who sll them o consumers. Consumerssell their labor
and recelve money with which they pay for the goods and services they purchase. The government
collcts tax revenues o buy goods from resource, manufacturer, and intermediary marketsand uses
these goods and serviceo provide publi services. Every naton's economy, and the lobal economy
isel, all consist of nteractng sets of markets inked through exchange processes.
Marketers view indusiry asa group of selers and use the term market o describe customer groups.
There are need markets (e dictseeking marke), product markets (the shoe market), demographic
markets the "Millennium” youth marked), and geographic markets (the Chinese market), as well as
voter markets, labor markets, and donor markets,
Figure 1.2 shows how sellers and buyers are connected by four flows. Sellers send goods and
services and communications such as ads and direct mailto the market;in retuen, thy receive money
andiinformation such as data on customer atitudes and sales The inner loop shows an exchange of
money for goods and services; the outer loop shows an exchange of information.
FIGURE 1.1
Structure of Goods,
Services, and Money
Flows in a Modern
Exchange Economy
6:40p. m. Jue 25 de ene
& www-ebooks7-24-com.ezproxy.uniandes.edu.co
1) Ebooks7-24
Marketing management
FIGURE 1.2
A Simple Marketing System
ndusty
(acolecion r sa
My
al
Finance, operations, accounting, and other businessfunctions won' really mater without sufi-
cient demand for products andservices thatenablea firm to mulie profit. n rbir words, Lhere must
be an eectve op line forthereto be a healthy bortom line. Thus, nancial success oien depends
‘on marketing abilty. Marketing'svalue extends to socieyas a vhole. l has helped introduce new o
enhanced products hat eascor enrich peoples es.Succssful marketing builds demand for products
andservices, which n turn,creates obs. By contributng o the bottomline, successful markctingalso
allows firms to more fully engage in sociallyresponsible activities.
Tn an online-and mobilefucledenvironment where consumers competiion, technology an eco-
momicforceschangerapidy and corseguences quickly muluply.marketers mutchoose features,prces,
and markets and decide ow much o spend on advetsng, sales, an oine and mobile marketing
“There i le marginforerorin marketingJusta short e ago, MySpace, Yahoo!,Blockbus
and Barnes& Noble wereadmired lcaders n their industies Whatadiffrence a few yearscan make!
Allofihesebrands have been complealy overtken by pstrtchalengers-—Facebook,Google, Nedi.
and Amazon.respectvely—and they now sruggle.sometimes unsuccessfully,or mere survival Firms
mustconstantly move forward. A geates rskarethose comparies hat il o carefully monitortheir
customersand compettors and thus il o continually improve their value oerings and marketing
stategis, inthe process satisying their employees,sockhalders,suppliers,and channel partners
Innovation in marketing i critical. Iaginatveideas on strategy xis in many places within a
‘company. Senior management should dentify and encourage reshidcasfrom three generally under-
represented groups: employtes with youthful or diverse perspectves, cmployeesfar removed from
‘company headquarters, and employees new (0 the industry.Eachgroup can challenge company ortho
doxy and stimulate newideas.
British-based RI(formerly eckit Benckiser) hasbeen an innovatorimhestad household aning
productsindustry by generating 35 percentofales from productsunder threeyears old. ls mulnatonal.
staffis encouraged 0 dig decplyInto consumer habítsandiswell rewarded for excllem performance:
The New Marketing Realities
The marketplace is dramatically dilferent from even 10 years ago, with new marketing behaviors,
‘opportunities, and challenges emerging? The new marke realites can be divided into three main
categories: the market forces that shape the relationships among the diferent market enttes,the
market outcomes tha sem from the intrplay of these forces,and the emergence of holistic market-
g asan esscntial approach to sueceeding i the rapidly evolving market,
Figure 1.3 summarizes the four major markerforces, three key market outcomes, and fourfun-
damentsl pillars of holstic marketing that hel 10 capture the ncw markeing realiies. With these
concepts n place, we can identify a specifc set of tasks that make up successful marketing manage.
mentand marketing Ieadership,
THE FOUR MAJOR MARKET FORCES
The business environment today has bcen profoundly influenced by four main forces: technology,
elobalization,the physical environment,and socia responsibility. We discussthese fourtransforma-
tive forcesiin more detal next
Technology. The pace o change and the scale f technological achievement can be saggering,
The rapid sc ofe-commerce,online and mobile communicaton, and artficialinelligence hasoffered
marketes increasing capabiiies, Massive amounts o information and data aboutalmost everything
are now avllable o both consumers and marketers
6:41p.m. Jue 25 de ene
& www-ebooks7-24-com.ezproxy.uniandes.edu.co
1) Ebooks7-24
Marketing management
Technological developments have given bitth to new business models tha ake advantage of the
new capabiltes stemming from these technologies. Companies like Netfix, Amazon, Airbnb, and
Uberthat have embraced the new technologies have disrupted markets and become major players in
the industries n which they compete
Advances n data analytics, machine learning, and arifcialinelligence have enabled companies
ot anly o betrer understand their customers but also to tailor heir offerings o consumere"needs
ExponentiallyIncreasing computing power—coupled with complex data analysis algorithms that
include natural language processing. object recognition, and affective computing—have provided
marketerswith unprecedented knowledge abowt their customersand enabled ther to intract with
these customersonaone +0-one basis. The growth of daa anslyticsand artiical inteligence plaforms
have democraized these technologíes by making them available to smaller companies thattypically
‘would not have had the resources o implement these techrologieson their own.
Even traditional marketing activties have been profoundly affected by technology. To improve
sales force effectiveness, drug maker Roche issucd iPads to ts entire cales team. Though the com-
pany had previously used a sophisicated customer rlationship managemen software sysiem, it sl
depended on sales reps to iput data accurately andina timely fashion, which, unfortunately,d nor
always happen. With Pads, however,salesteams can do realime data entry, improving the quality of
the data entered whilefreeíng uptime for othertadks
Globalization. The world has become a level playing field that offers competitors across the
globe an equal opportunity 10 sueceed, Geographic and political barriers have been eroded as
advanced telecommunication technologíes and workflow platforms that enable ll types of comy
ersto work together contínue tocreatealmost Limitlss opportunities for communication, cllabora-
tion, and data míning, The notion thatthe world has become a smallerplace connecting businesses
and customers across the globe s wellcaptured by the phase “The World I Flar" coined by Thomas
Friedman in his book ofthat name.1?
Friedman ilustrates the impactof globalization with thefollowing example: The person taking
your orderat a MeDonald'sin Missouri might be working at callcenter 900 miles away n Colorado
Springs. Shethen zaps your rder back to the MeDonald's o thari's ady minutes lateras you drive o
the pickup window. Friedman warns ofthe consequences of gnoring the rapid pace ofglobal advances
thatwill necessitate changes inthe way companies dobusines, including theloss o American jobs o
skilled employees who will work fr les. I order o succeed in this “latened world,the US. work-
force must continually updste s specialized kills and create superior products.
CGlabalization has made countris increasingly multicultural.US. minoritis have expandingoco-
nomicclout, with their buying power growing faserthan that of the general population. Demographic
trends favor developing markets with populations whose median sge s below 25 n terms of growth
of the middl class, the vast majority ofthe next bilion people who oin the middle las re ikelyto-
be Asian !
6:41p.m. Jue 25de
& www-ebooks7-24-com.ezproxy.uniandes.edu.co
Ebooks7-24
Marketing management
Toyota Prius - some auto experts acoffed when Toyota predicted sales of 300,000 cars
wtin fe yearsol launching lts gas-and-electric Prus hybrid sedan in 2001. But by 2004,
the Prus had a sbcmonith waiting lis. Toyota's winning formula consists of a powerful electic
motor and the abillyto quickly switch power sources —resuling n 55 miles per gallon for iy
and highway divng. l also offers the roominess and power of a family sedan and an eco-
friendyy design and look a a staring price o a le more than $20,000. Some consumers also
appreciate that the Prius'sdistinctive design allows them lo make a vsilestalement about their
comnitment to the environment. The lessan? Functonally successful products that consumers
08 as also being good forthe environment can ofer enticing options.'5
Now more than ever, marketers must think holístically and craf creative win-win solutions to
balance conflcting demands. They must develop flly itegrated marketing programsand meaningful
relationships with a range of constituents.1 Besides doing al the right things inside their company,
they need 1o consider the broader consequencesin the marketplace, topies we turn to next
THE THREE KEY MARKETING OUTCOMES
The four major forces shaping today's markets—technology, globalization,the physical environ-
ment, and social responsibilty—are fundamentally changing the ways consumers and companies
interact with cach other. These forces provide both consumers and companies with new capabi tes,
whileat the same time promoting a compettive market environment. We discuss thesethree
market
outcomes in more detail next
New Consumer Capabilities. Consumerstoday have more powerat heirfingetips an they
have ever had inthe past. Expanded information. communicaion, and mobility enable customers o
make beterchoices and shar their prefrences and opinions with othrs around the world. The new
consumer capabiliis imvolve several key aspect:
+ Consumers can usc online resources asa powerful information and purchasingaid. From
home, offce, or mobile phone, they can compare product prices and features, consult user
reviews, and order goods online from anywhereinthe world 24 hours a day even days a week.
bypassing limited local offrings andrealizingsignificant price savings. They canalso engage n
“shonrooming”: comparing productsn stores but buying online. Because consumery and other
6:41p.m. Jue 25de
& www-ebooks7-24-com.ezproxy.uniandes.edu.co
Ebooks7-24
Marketing management
constituents can facttrack down virtally any kind of company Informacion, frms now realize
that transparency n corporate words and actions s of paramount importance.
Consumers can use mobile conneciivity ro search, communicate, and purchase on the
0. Consumers increasingly integrate smart phones and tablesinto their daily lives. Smart device
‘owners use their mobile phones and tablers to research products,shop for everything from gro-
ceries o gifts, contribute to social causes and dsasterrllef, xplore insurance options, send and
recebve money viaonline banking plaforms, and conduct virtual consultations between doctors
and parientsand among health care teams n fa-flung locarions. There s one cell phone for every
two people on the planet—and cach day10 times more cel phones are produced globally than
babies are born, Telecommunicationsis one of the worlds trillon-dollar industries, along with
tourism, miltry. food, and automobiles
Consumers can tap into social media to share opinions and express loyalty. Social media
isanexplosive worldwide phienomenon that has changed the way people conductthcireveryday
Tives. Consumers use social media such as Facebook, Twilter, Snapchat,and Linkedin to keep in
touchwith family friends, and business colleagues: tout products and services:andeven engagein
polits. Personal connections and usergenerated content thrive on socil media suchas Faccbook
Instagram Wikipedia, and YouTube. Siteslike Dogster for dog lovers, TripAdvisor for trael
ers,and Moterus for bikersbring together consumers with a common interest. AtBimmerfes,
Bimmerpost, and BMW Links, auto enthusiasts talk about chrome rims, the ltest BMW model,
and where to find a great local mechanic.
Consumers can actively interact with companies. Consumers s thei favorite companies
as workshops from whichto draw out the offrings they want. By opting o be put on ls, they
can receive markeringand sales-related communications, discounts, coupons,and other special
deals. Wih smart phones,they can scan barcodesand QR codes 0 access a brand's website and
other iformation. Many companies have developed apps that allow them to ineract with cus-
tomers more eflctively
Consumers can reject marketing they find inappropriate or annoying. Some customers
today may see fewer product ifferences and frel lss brand loyalty. Others may become more
price-and qualty-sensiivein their search for value, Almost two-thirds o consumers n one sur-
vey reported that they dislied advertising, Forthese and other reasons, consumers can be less
tolerant of undesired marketing. They can choose to screen out online messages, skip commer-
cals,and avoid marketing appeals through the mailor ovr the phone.
Consumers can extract more value from whatthey already own. Consumers share bikes,
lothes, couches, apartments,tools, and skils. As one sharing -rlated entrepreneur noted,
re moving froma world where we'e organized around ownership0 one organized around
accesslo assets” Ina sharing economy, someone can be both a consumer and a producer,reap-
ing the benefis ofboth roles.”
New Company Capabilities. Inacdiiono enabling consumers.globalizaton,socialrespon-
sibiliy nd technology have also generateda ev et of capabilie o hlp companics reatevalue for
thei customers,collaborators, and sakeholders. The key company capsbiliesar s follow:
+ Companies can use (he internet as a powerful information and sales channel, including
for individually diferentiated goods. A websitecan st products and services, histor); bust
ness philosophy. job opportunities, and othes information ofinerest 10 consumers warldwide,
Solo Cup marketersnote hatliking the company' sorefronts o s website and Facebook page
makes i casir for consumers to buy Solo paper cups and plates whik engaging withthe brand
online.'* Thanks to advances in factory customization. computer technology. and database
marketing software,companies can llow customers 0 buy MM candiesbearing their names,
Wiheaties boxes orJones soda cans with their pictures 0r the front, and Heinz ketchup bonles
with customized messages.
Companies can collect fuller and richer information about markets, customers, pros-
pects,and competitors. Markcterscan conductfresh marketing rescarch by ing the internet
10 arrange focus groups,send out questionnaires, and gather primary data n several other ways.
They can ssemble nformation about individual customer purchases,preferences, demographics
andprofiabilty. Many rtalerssuchas CVS, Tanget,and Alberisons useloyaly-card data o better
understand what consumers purchase, he frequency ofstoreviits,and other buying prferences.
Recommendation engines help marketers develop purchase suggestionstailored to a user's past
6:41p.m. Jue 25de
& www-ebooks7-24-com.ezproxy.uniandes.edu.co
Ebooks7-24
Marketing management
online behavior. Companies ike Netfliz, Amazon, Alibaba, and Google have created fiective
algorithms based on purchase and viewing data, search terms, producr feedbach, and locatlon 10
Fuelheir recommendation engines or ndividual customers.A large share of Amazon purchases
1s derived from product recommendations.
Companies can reach consumers quickly and efficiently via social media and mobile
marketing, sending targeted ads, coupons, and information. GPS technology can pin-
point consumers'exact locaton, lemting marketers send them messages at the mall with wish-
list reminders and coupons or ofers good onlythat day.Location-based advertising s atractive
because e reaches consumersclosertothe point o sale. Socal media and buzz arealso pouerfl.
For cxample, a word-of-mouth marketing ageney recruits consumers who voluntarily join pro-
motionel programs for products and services they deem worth talking about
Companies canimprove purchasing, recruiting, training, and internal and external com
munications. Firmscan recruitnewemployees online, and many have internet raining products
fortheir employees, deaers, andagents.Blogging has waned as companies embrace social media.
“We want to be where our customers are said Bank of America after dropping it blog in favor
of Facebook and Twiter? FarmersInsurance uses specializcd software to help s agents naion-
vwide mainain their own Facebook pages. Viaintranets and databases, employees can query one
another; eek advice, and exchange informaton. Popular hybrid Twiter-and Facebooktype prod-
s designed especially for business emplayees have been introduced by Salesforce.com, IBM,
and numerous start-ups. The Houston Zoo uses the “T want o” button on its ntranet o quickly
accomplish mundane tacks such s ordering business cards and uniforms or communicaing with
the T department, leaving employees more time for animal care. The Team Sites tsb on Maxxam
Analytics”intranerallows tcam members in diferent locations to exchange ideas for improving
effciency and customer service, which serves to advance both team and company gols.
Companies can improve their cost efficieney. Corporate buyers can achicve substantisl
savings by using the internet o compare sellers' prices and purchase materials at auction or by
posting dicir own terms [n reverse auctions. Compantes can improve logitics and operations
10 reap substantial cost savings while improving accuracy and service qualit. Smallbusinesses
can especially unleash the power of the interner Physicians maintaining a small practce can
s Facebookelke srvices such as Doximity to conect with refrring physicians and specialsts.
New Competitive Environment. The new market orces have not only changed consumer
and company capabilities:they have also dramatiallychanged the dynamics of the compettion and
the natureofthe competiive landscape. Some ofthe key changes.nthe comperlive environmentare
as fllows
+ Deregulation. Many counties have deregulated industriesto create greater compecition and
growth opportunitie. In the United Stats,laws rstricting financialservices, telecomenunica
tions,and electicutlitieshaveall been loosened n thespirit of reater competiion.
Privatization. Many countrics have converted public companics o private ownership and man-
agement o ncrease thei ffcieney. The telecommunications industry has scen much privatiza-
tionin countriessuch as Ausraia, rance, Germany, ly, Turkey,and Japan.
Retail transformation. Storc-basedreaiersface compeiton from catalog houses:dirct-mail
fires; newspaper, magazine, and TV direct-1o-customer ads; home-shopping TV networks: and
e-commerce. I response, customer-centic companies such as Amazon, BestBuy: andTargetare
building entrtainment ntotheirstres with cofee bar, demonstations,and performances—
maketingan “experience” rather than a product assortment.
Disintermediation. Early dot-coms such as Amazon.com and E*TRADE successfullycreated
disermediaion i the deivery of products and services by intervening inthetraditonal flow of
‘goods.Inesponse. raditional companies engagedin inermedaton and became“brickand-<lick”
retaier,adding online ervices o thir offerings. Some wit pleniful resources and established
brand names became stronger contendersthan pure-clckfirms.
Private labels. Brand manufacturersare funher bufeted by powerful eaiers that market ther
e store brands, increasinglyinditinguishablefrom any other type of brand.
Mega-brands, Many strong brands have become mega-brands and xtendedinto rlated product
categorie, ncluding new opportuniies a thentersection of twoor more industies. Computing.
telecommunications, and consumer electronics ae converging. with Apple and Samsung rulas-
ingastream of stat-ofehe-art mobilephones, tblet. and wearable dvices
6:41p.m.
& www-ebooks7-24-com.ezproxy.uniandes.edu.co
Ebooks7-24
Marketing management
strong customer loyaly: They estimate individual customers"fetime value and design their market
offrings and prices to make a profitoverthislfetime.
The Marriottchain providesan excellent example of cultivaing customer loyalty: Frequent guests
atits hotels and resorts can climb a iered rewards ladder rom the basic Marriott Rewards member
rung 10 acerue an increasing number of perks and bonus points with Lifetime Silver Lfeime Gold
andithree Lifetime Platínum level. After Lifetime satus s achieved. i an never be revoked or expir,
ensuring that commmitted customers receivethe benefitsof Silvr, Gold,or Platínum status with cach
Marketing must skllfully manage not only customer relatonships but partner relationshipsas
wl Companies are decpening their partnering arrangements with key suppliers and ditributors,
regarding them as allcs in delivering value o end customers so that everybody benefits. IBM has
Iearned the vluc of trong customer bonds.
IBM Established over a century ago,in 1911, IBM s a remarkable survivor that has maintained
market positon for decades in the challenging technology Industry. The company has managed
1 evoive and seamiessly update the focus of s products and semvies numerous times in ts
hisory —rom mainrames 1o PCs to s current emphasis on cloud compung, “Big Data-" and
IT senvices. Part ol the rason s that ¡BM's salesforce and service organtzation offe ral value.
10 customers by staying close 1o them i order to understand theirrequirementa. IBM often even
‘o-creates products with customers —for example, working wihthestate of New York 10 develop
.a methos for detocting tax evasion hat reportedy saved taxpayers more than $1 5 bilon over
3 seven-ear period. As famed Harvard Business School professor Rosabeth Moss Kanter has
oted, “IBM i not a technology company but a company solving problems using technology:**
Integrated Marketing. Integrated marketing coordinatesall marketing actvitiesand market-
ing programs and directs them toward creating, communicating. and delivering consistent value and
a consistent message for consumers, such that “the whole is reater than the sum of s parts” This
requiresthat marketersdesigr and implement each marketing actvity with ll otheractvities n mind.
When a hospitalbuys an MRI machine from Gen ral Electrie's Medical Systems divison, for instance,
itexpects good instllation, maintenance, and training srvices to go withthe purchase
Anintegrated channelstrategy should assess cach channel optin for s direct ffect on product
salesand brand equity,as well s isndirect efectoninteractions with otherchanneloptions. Allom-
pany communications also must be integrated to reinforce and complement one another. A marketer
<<IBM has managed
10 re 10 tho challenges
Inthetechnology fl
by pivoting s sategie
Tocus lo adoress the
needa f the changng
emvronment and by
careuly itening to and
working ciosey with ts
customers
6:41p. m. Jue 25 de ene
might selectively employ television, radio, and print advertsing, public relations events, and
PR and
website communications so that each contributes on its own andimproves the ffectiveness.ofthe oth-
ers. Each mustalso delivera consisent brand message at every contactConsiderthis award-winning
campaign forIceland.
Iceland - Aready resling from some of the biggestlosses n the gobal inancil crisis of
2008, celand faced more mstortune when domant voicano Eyjafalaiokul unexpectedy
eruptectin April 2010. ls enormous plumes of ash created the largest air-travel disruption since
Workd Warresuting In a wave of negative press and bad feséngs throughout Europe and
elsewhero. With tourism generating around 20 percentofthe country'sforign exchange, and with
bookings plummeting. govemment and tourism officials decde to launch “Inspired by celand ™
This campaign was based on the insight that 80 percent of visitorstoIceland recommend the
destination 1o friends and famil. The country's own ctizens were recuted to el heir stories
and encourage othersto jon i via a website or Twitlr, Facebook, and Vimeo. Celebrites such
a5 Yoko Ono and Eric Clapton shared the experiences, and Ive concerts generated positive
PA Real-time Webcarms across the country showed that 1 was not ast-Covered but green.
The campaign was wikl successful—over22 milion stories were created by people all over the
world—and ensuing bookings were dramaticaly above forecasts ?*
s mat relegated
onlytothe marketing department: very employec has an
impact on the customer, Marketers now mustproperly manage al possble touch poínts: re layouts
package designs, product functions, employee training, and shipping and logíses. Creating
a strong
marketing organization means that marketers mustthink like exccutivesin other departments, and
executivesin otherdepartments mustthink more like marketers. Inerdepartmentalteamwork that
includes marketers is necessary to manage key processeslike production innovation, new-busíness
development, customer acquisiton and retention, and order fulfillment
Internal Marketing. Internal marketing an lement o holsic marketing.isthe taskofhiring
trainin. and moivating able employees who want 0 serve customers wellSmart marketersrecog-
mize that marketing actvites within the company can be as important as—or even more important
than—those directed outside the company.lt makes no sense to promise excellentservice unlessthe
company's staffisready to provide .
Marketing succeeds only when all departments work together to achieve customer goale: when
engincering designsthe right products, inance furmishes theright amountoffunding,purchasing buys
the sight materials, production makesthe right products inthe right time horizon,
measures profitabiliy in the ight ways. Such interdepartmental harmony c
ever, only when senior managementclearly communicates a vision of how the company's marketing
arientation and philosophy serve customers. The following hypotheticl exsmple highlights some of
the potentúalchallengesin integrating masketin.
“The marketing vice president of a major European ailine wants to increase the aleline’s traff
share Herstrategy i 1o buid customer satsfactionby providing beter food,cleaner cabins, beter-
traincdcabinrews,and lower fares, yetshe has no authorin these marters. The catering department
chooses food that keeps food costs down: the maintenance department uses inexpensive cleaning.
services: the human resources department hires people without regard to whetherthey are naturally
friendly and serviceoriented: the finance department setshe fares. Because these departments gener-
allytake a cost or production point of vewthe vicepresident of marketingís stymied in hi elforts 0
create an integrated marketing program.
Internal marketing requiresvertical alignment with senior managementand horizontalalignment
with other departments so everyone understands, appreciates, and supports the marketing.ffort. For
example, the frustrated sirine marketing VP mightfirstenlíst the help of senior management and
department heads by ¡Nstrating how mountinga coordinated company effort to enhance the com.
pany'simagewill make a difference inits battom line. This might be accomplished by making data on
competitorsavaiable,as well as by compiling customer reviews oftheirexperiences
with he airlne.
Managementis engagement willbe centralinthis integrated marketing effort, which mustinvolve
and motivate all employces—from reservations clerks and maintenance workers to catering depart-
ment employeesand cabin crews—by engaging themin a teameffort o einvigoratetheaíline's mis-
sionto provide excellent servic. In addiion to ongolng employee taining that emphasizes custoer
service regular internal communications to keep everyone abreastof the company's actions andsingle
out employees who provide outstanding ideas or service can be part of the effortto get the entire
company involved.
Performance Marketing. Performance marketing requires understanding the financial and
nonfinancia revurnsto businessand socieryfrom marketing ativites and programs, As noted previ
ously, top marketers increasingly go beyond sals rvenue to examine the marketing scorecard and
inerpret what s happening with market share, customer los rate,customer stsfaction, product
qualicy. and other measures, They arealso considering thelegal, cthical, social and environmental
electsof marketing activices and programs.
‘When they founded Ben 8 Jerry's.Ben Cohen and Jerry Greenfield embraced the performance
marketing concept by dividingthe aditionalfinancial bottom íne into a *double bottom line"that
also measured the environmental impact oftheir products and processes. That later expandedinto a
“uriple bortom line"o rpresent the social impact negtive and positive,ofthefirm's entre range of
business actviis.
Patagonia — As one of a smal number of beneft () comorations n the Unted States that
must each year explan how theirmission s benefiing both staleholders and society, Patagonia
alms 12 combine environmental conscicusness wth maimizing shareholder retur. True o s
mission and comorate cuture, Patagonía not oy helped develop a natural rubber mateial for
5 wetuits (l replace petroleum-based neoprene) but also encouraged other companies 0 use
this bi-mubber product for wetauit and olher products such as yoga mats and snealcers?? The
company scems to have found a winning combinaton. According o cimber, surer.sel-taught
tlackemith, and Palagonía founder Yon Chouinard, every decision he's made that was right for
the environment has in the long run mado the company money.
Many firms have aied 10 e up 19 their leal and ethical responstbiles, and consumers are
demanding more responsibie behavior * One research study reported that at least onethird of con-
sumers around the world believe that banks, insurance providers, and packaged-food companies
should be subject 10 striter regulation. ™ Given the new marketing realtes, organizations are chal-
lenging their marketerstofind thebest balance ofol and new and to provide demonstrable evidence
ofisuccess
6:41p. m. Jue 25 de ene =10
EJ < & www-ebooks7-24-com.ezproxy.uniandes.educo — C) b+ 0
o E Ebooks7-24 o
Marketing management
FIGURE 1.5
6:42p.m. Jue 25 de ene
& www-ebooks7-24-com.ezproxy.uniandes.edu.co
1) Ebooks7-24
Marketing management
FIGURE 1.6
Market managersare staff (not line) people, with dutis like those of product managers. They
develop long-range and annual plans for their markets and are judged by their marker's growth and
profitabiliy. Becausethis system organizes marketing activityto meet the needs ofdistinet customer
sgroups, it shares many of the advantages and disadvantages of product-management systems. Mt
companiesare reorganizing along marketlnes and becorming market.centered organizations. Xerox
convertedfrom geographic velling 1o seling by industry, as d 1BM and Hewleu-Packard.
Whena close relationships advantageous, such as when customers have diverse and complex
requirements and buy an Integratedbundie of products and services, a customer-management orga-
nization thatdeals with individual customers,raher than wih the mass market oreven marketseg-
ments,should prevail ?? One study showed that companies organized by customer groups reported
much higher accountabilty for the overall quality o relationships and greater employee freedom
1o take actions to satsfy individual customers.
Matrix Organization. Companiesthot produce many productsfor many markets may adopta
marrixstructure employing both product and market managers. The rub i thatthischoiceis costy.
and ofien ereates conflcs. There's he costof supportingallihe managers and the isuc o rsolving
questions about where authority and resporsibily for marketing activites hul reside—at head-
quarter orin the division. ™ Some corporate marketing groups asssttop management wih oveall
oppertunity evaluation, providedivisions with consultng assistance on request, help divisions that
have líl or no marketing, and promotethe marketing concepr throughout the company.
Many companies hae renginered hr work fovs and have bui ross functonalteamsthat
are responsible for cach process "* ATAT, LexisNexis,and Pratt & Whitney have reorganized th
employeesintocross-functionaltcams. Cros-functional ears operatin nonprofit and government
organizations as well
One of the key disadvantages of the matrix structure s the potential lack of cear focus and
accountabiliy
MANAGING THE MARKETING DEPARTMENT
As David Packard of Hewlett-Packard observed, "Marketingis fr (00 important o leae to the mar-
keting department ... Ina truly great marketing organizatlon, you can' rel who's in the marketing
department, Everyone in the organization has to make decisions based on the impact on the cus-
tomer” Although marketing actvies should not be rlegated c0 a single department, many enter-
prises can benefitfrom having an organizational unit that i in charge of ll company marketing
actives and manages day-1o-day operations.
The Role of the CEO and CMO. Oriyaselet group of companies have hitorcallytood out
asmaster marketers. These companies focus on thecustomerandare organizedto respond efectivey
1o changing needs. They all have wellsaffed marketing departments, and thir other departments
accepr thatthe customer s king, They alo often have strong marketing Icadership in the form ofa
successful CEO and CMO,
CEOs recognizethat marketing bulds strong brands anda lyal customer base, intangibleassets
that contributeheavily 0 the valueof firm. Many firms, including serviceand nonprofitfrms, now
havea chief marketing of certo put marketing on a more cqual footing with other Clevel executives
suchas the chiefinancialoffce ande chiefinformation offcer”
Wihar tps can a CEO take 1 create market and customer focused company? To create a true
marketing organization, the CEO mustconvince senior management of the importance of being cus-
tomer focused. i lso importanttha the CEO bcabletohiresrong marketin talcat. Most compa-
mies needa skild chief marketing offcer who not only managesthe marketing department but also
hasthe rspect o, and influence with,theother Cleve executives.
Giventhe rapiiy evolving natur oftoday's markets,the CEO mustfaciitate the creaton ofstrong
in-house marketing training programs o sharpen the company's marketing skills. Many comparics,
suchas McDonald', Unileverand Accenture, havecentralized training acilitesto runsuch programs.
The CEO shouldalso ensurethat he company s reward sytem s aligned withitssateie gonl fcreat
ing market vluc by developingasaisficdloyalcustomer base. The CEO should personallyexemplfy
strong customer commitment and reward thos i the organization who do likewise.
Amajor esponsibilty o the CEO isto appoint a chief marketing offcer who sulimatelyrespon-
siblefor marketing activities n the organizaton. The CMO is a member of he Csuite and typically
6:42p. m.
& www-ebooks7-24-com.ezproxy.uniandes.edu.co
Ebooks7-24
Marketing management
reports to the CEO. The senfor marketing managers responsible for various parts of the marketing
sirategy wypicallyreport to the CMO. The CMO leads all marketing functions in the organizarion,
including product development, brand managerent, communication, market research and data ana-
Iytcs, sales, promotion, distribution management, pricing. and customer service.
n the 21st century, the advancement of digial, online, and mobile marketing has changed the
role ofthe CMO, To elfecively manage the marketing functions of the arganization,the CMO must
also be able o handle digitltechnologies, The challenge CMOS face i that success actors are many
and varied. CMOs must have strong quanttative and qualitrive skll they must have an independent.
entreprencurial atitude bur work cosely with other departments and they mus: capture the “voice”
of consumersyet havea keen bowom-ne understanding of how marketing creates value. Two-thirds
of top CMOsthink return on marketing investment willbe the primary measure of their elfectiveness
imthe next decade.
Marketing experts George Day and Robert Malcolm believe thatthre driving forces will change
theroleofthe CMO inthe coming years: () predictable marketplace trends, () the changing role ofthe
Csuite,and (3) uncertainty about the economyand organtzational design. They identiy fve prioriies
for any successful CMO: at as thevisionary for thefuture ofthe company, buildadaptive marketing
capabilitis,win the war or marketing talent, ighten thealignment with sals,and take sccountabilty
for rewurns on marketing spending.”*
Perhaps the most importantrole for any CMO is to nfuse a customer perspective in business
declslons affecting any customer ouchpont (where a customer dirctiyor indirecily iteractswih the
company). Increasingly.these customer insights must hav a global focus. As the leader of one top
executive search firm has said,“Tomorrows CMO will have 0 have global and international experi-
ence.Youcandoitwithout viag abrd....ut yo havet gerexposure 1 hose markts.1t opens
your ees to new ways of doing business, increases culturalsenstivity and increases flexibilty:
Relationships with Other Departments. The firn's success depends not anly r huw
el each department performs e work,butalso 0n how wl the company coordinates departmen-
talactiviesto conduc core businessprocesses. Under the marketing concept ll departments need
to think customer” and work together o satisfy customer nceds and expectations. Yt departments
define company problems and gouls from their own viewpoints, 5o conflcs of interest and com-
munication problems are unavoidable. The marketingvice president orthe CMO must usually work
ahrough persuasion, ather than through authoriy, o coordinatethe company's interal marketing.
ativitesand coordinate marketing with finance, operatons,and other company functions toserve
thecustomer!
Many companies now focuso key processesrather than on departments because departmenta!
organization can be a barrerto smooth performance. They appoint process Icaders who manage
cross-disciplinary tcams thatnclude marketing and salespeople. Marketersthus may havea solid-line
responsibilty o their teams and a doxte -ie responsibilit tothe marketing department-2
Given the goaluf proviing positive customer eaperiences from start o fnish, al are
organization need to work effectivelytogether.In particular,because of the grovin
understanding the necds ofindividual customers, marketers must work closely
insights and data analtics teams. Furthermore, o be abl to reach consumers
costefficient manner, marketers must work closely withdiferent communication agencies—from
traditionaladverising agencies o social media,publciy.andevent-managemnent companies.Finll
10 be able o deliver the company's offrings o the right place a the right time, marketers must
work closely with a company's channelpartners, borh in the brick-and-mortar space and n the
e-commence space.
Ebooks7-24
Marketing management
Companies must e alert to rends and stand ready to capitalize on them. Nesté was late secing
the trend toward coffechouses, which paved the way for chains such as Starbucks. Coca-Cola was
slowto pick up on beverage trends toward frut-lavored drinks such as Snapple. energy drinks such
as Gatorade, and designer water brands. Market Icaders can misstrends when they are risk averse
obsessed about provecting theirexisting markets and physical resources, and more nterested in f-
ciency and profit than innovation *
7 marketing
INSIGHT The 10 Deadly Marketing Sins
Focused on theirday-1o-day activiles, many marketers ‘Solutions: Conduct more soptisticaled consumer
ignore the big picture: designing, communicating, and research, use more analyticaltechriques, establs cus-
delvering oferings tha create superior market value tomer and dealer panels, use customer rlationstip soft-
forther customers, colaborators, and stakeholders. ware, and engage indata mining.
Exhibiing a number of“deaciysins”signals that the mar- Deadiy Sin 43: The company needs to better define
etng programis in rouble. Here are 10 deady sins, the and monitor its competitors.
Heltlesigns, and some solutons.
Signs: The company focuses on near competiors, misses
Desdly sin 44: The company is nat suficienty market distant competiors and dsruptive technologies, and
focused and customer driven. as 10 system for gathering and distiouting competiive
Signs: There s evidenes ol poor identifcaton and poor intoligenco.
priortzation of market segmenta. There are no market ‘Solutons: Estabish an offce 1o colect compettve Intol-
segment managers. no employees who Ihinkct i the ob ‘gence, hire competitrs" employees, watch for lechnology
of marketing and salesto serve customers, no training that might affect the company. and prepare oferngs lke
program to create a customer culura, and no incentves lo those of competiors.
treat the customer especialy we.
‘Soltions: Use moro advancos segmentaton tochniques, Doadiy Sin #4: The company does not properly
prioxitze segmonto, speciallz i sales forceo serve manage relationships with stakeholders.
each market segment, dovelop a clearslatament of com- Signs: Employees, dealers, and investors re not happy,
pary values, foster more “customer consciousness”in ‘and good suppiier are reluctantto partrer with the
employeesand company agenta, make i easy for cus- company.
tomers to reach the company. and respond quickly to any ‘Solutons: Mows from 2ero-sum thinking 1o posiive-sum
customer commurication. thinking, and do a beter fob of managing employees,
Deadly Sin #2: The company does not tuly suppierrlations, distibutors, dedlers, and investors.
understand s target customers. Deadiy Sin 45: The companyis not good at finding
Signs: The laest study of customers s three years o, new opportunities.
customers are not buying your product ke they once dd, Signe: The companyhas not identiied any excitig now
competitors'productsare seling berter, and there s a ‘opportunies for yeara,and the new ideas the company
_n lve a cusomer reumsand compiaint. as launched have largey faled.
(contrued)
6:42p. m.
& www-ebooks7-24-com.ezproxy. niandes.edu.co ¢
Ebooks7-24
Marketing management
summary
1. Marketing isan organizarional function and a set ofpro- sccktheright balance oftried-and-true methods and
cessesforcreating, communicating,and delivering value breakibrough new approaches o achieve marketing
o customers and for managing customer relatonships excellence
n ways that benefit the company,its customers, and . Four major market forces—technology, globalizaton,
its collaborators, Marketing management s the art and the physical environment, and social responsibiliry—
sclence of choosing target markersand getmg keeping. have forged new consumer and company capabilities
and have dramatically alered the competiive landscape.
and commenicatig superiorcustomervalue. These changes require companics (0 re-evaluat their
Companies sim o eratevale by marketng goods. ser current business modelsand adapt the vay they create
vices,evens, xperiences,persons, places, poperties, masketvalue to the newcnvironment.
organizations, informaion,and ideas. They also operate ‘The holístc marketing conceptis based on the devel
in five basic markets: esource markets, manufcturer opment, deign, andimplementation of marketing
markets consumer marketsinermediar market,and programs, processes, andactivitisthat are based on
government markets breadih and interdependencies.Holstc marketing rec-
Today's marketpace i fundamentalydfírentas a ognizes thatcverything matter n marketing and that
resultof major masket forces. ln particular. technology, a broad, ntegrated perspectiveisoften necessary. Four
lobalizaton, and social responsibiity havecreated components ofholístc marketing ar reationship
mew opportunites and challenges and have signif - keting,integrated marketing, inernal marketing,and
cantly changed marketing management. Companies performance marketing.
6:42p. m.
& www-ebooks7-24-com. ezproxy.uniandes.edu.co
Ebool -24
Marketing management
6. There arefive competing concepts under which organiza- 8. Marketing is ot conducted by the marketing depart-
ions can choose to conduct their businessthe produc- ment lone. Tocreate a strong marketing organizaton,
tion concept, the product concep,the seling concept.the marketers must think lke executives in other depart-
marketing concept. and the market-value concept. The ments,and executivesin other departments must think
more sophistcated a company's understanding o the more ike marketers.
market the more likely that i will adopt the market-value A customer-centric company must be market driven
conceptasan overarching philosophy of doing business. rather than product drven, it must aim to caterto indi-
7. Companies usediffrent approaches to organize the vidual customer needs ratherthan mass market needs,
marketing department: functional, geographic, product/ and it must strive to make the competiton irrelevant
brand, market, and a matrix structure. The choice ofa. rather than merelyreacting to competitors"actions. To
particular approach depends on the market in whicha succeed, a company should focus on delivering superior
company operates,its organizational structure, and its value o target customers n a way that benefits the com-
strategicgoals. pany and iscollaborators.
marketing
SPOTLIGHT
consumers clamored for the Ar Jordan Ine o basketbal shoss.
Wihthe distinctve Nike swoosh. As one reporter stated, “Few
marketers have 5o relably been able 10 ently and sign ah-