Unit E.03 – Ethical Marketing Issues

What you’ll learn to do: describe the types of ethical and social responsibility issues that marketing must address

We will begin by introducing definitions to clarify ethical terms and then turn to the issues that marketing professionals most often encounter.

If you’ve taken other business courses, you’ve probably studied business ethics and have some familiarity with examples of corporate malfeasance (which is a fancy term for unethical behavior).  These cases typically involve financial fraud. (Read about investor Bernie Madoff, the man responsible for the largest financial fraud in U.S. history). Financial fraud is certainly an example of unethical (and, often, illegal) behavior, but it isn’t directly related to marketing. Despite the presence of financial scandals in the news, you might be surprised to learn that the ethical issues U.S. businesses worry about the most are related to marketing.[1] Take a look at their “top eight” list of ethical concerns, below:

  1. Gifts, gratuities, bribes (marketing and sales)
  2. Price discrimination and unfair pricing (marketing and sales)
  3. Dishonest advertising (marketing and sales)
  4. Miscellaneous unfair competitive practices
  5. Cheating customers, unfair credit practices, and overselling (marketing and sales)
  6. Price collusion by competitors or price fixing (marketing and sales)
  7. Dishonesty in making or keeping a contract
  8. Unfairness to employees and prejudice in hiring

You will notice that five of the eight ethical issues cited are governed by the marketing function, and the other three can certainly affect or involve marketing. In this section, you’ll learn more about these issues and the challenges in overcoming them. As with ethics in general, the line between ethical behavior and unethical behavior can be very fine indeed.

The specific things you’ll learn in this section include:

  • Define ethics in the context of marketing
  • Identify common ethical issues and their impact on individuals and organizations
  • Identify ethical issues introduced through new marketing channels
  • Explain the role of social responsibility in marketing

Ethics is the set of moral principles or values that guides behavior. There is a general recognition that many, if not most, business decisions involve some ethical judgment.

Bright pink laminated paper thumbtacked to a cork board. The pink sign contains the word ETHICS in black; to the right of the word is a black arrow pointing up.

Each party in a marketing transaction brings a set of expectations regarding how the business relationship will exist and how transactions should be conducted. For example, when you as a consumer wish to purchase something from a retailer, you bring the following expectations about the transaction: (a) you want to be treated fairly by the salesperson, (b) you want to pay a reasonable price, (c) you want the product to be available as advertised and in the indicated condition, and (d) you want it to perform as promised. Unfortunately, your expectations might not be in agreement with those of the retailer. The retail salesperson may not “have time for you,” or the retailer’s notion of a “reasonable” price may be higher than yours, or the advertising for the product may be misleading. These differences in expectations can lead to ethical questions that are sometimes difficult to analyze.

To create greater clarity for marketing professionals, the American Marketing Association has created the American Marketing Association Statement of Ethics. It’s helpful to review this short document in order to understand the scope of issues that marketing professionals face. The preamble of the document defines a number of key terms and explains why ethics are of particular importance to marketers:

The American Marketing Association commits itself to promoting the highest standard of professional ethical norms and values for its members (practitioners, academics, and students). Norms are established standards of conduct that are expected and maintained by society and/or professional organizations. Values represent the collective conception of what communities find desirable, important, and morally proper. Values also serve as the criteria for evaluating our own personal actions and the actions of others. As marketers, we recognize that we not only serve our organizations but also act as stewards of society in creating, facilitating, and executing the transactions that are part of the greater economy. In this role, marketers are expected to embrace the highest professional ethical norms and the ethical values implied by our responsibility toward multiple stakeholders (e.g., customers, employees, investors, peers, channel members, regulators and the host community).[Emphasis added][2]

The exchange process between an organization and a customer is based on a relationship of trust. The Statement of Ethics aims to protect that trust.

Let’s start by taking at look at a hypothetical business situation:


Photo of point-of-sale system for a restaurant. Display monitor shown on counter.

You’re a member of the marketing team for a B2B company that sells software to restaurants. Your product is a point-of-sale system that manages orders, menus, and staff scheduling. While it generally works well, there are sometimes glitches that cause it to drop orders, and the system goes down more often than you would like. You are marketing the system to a major restaurant chain, and they’ve asked for a list of references from current customers. The marketing and sales teams sit around a table reviewing the current customer list trying to decide which references to provide. First, the team screens out those who have complained most vocally about the glitches with the product. There is one customer who told his account manager, “These thing happen with all systems,” so the team thinks he would be a good reference. There’s also a new customer who started using the system recently and hasn’t yet experienced the system down time that other customers have. The team selects that restaurant, as well, and prepares to send the two names to the sales prospect.


Is that ethical? Is it fair and honest to cherry-pick the customer references, selecting only the ones that are unlikely to share negative experiences about your product? To be sure, there’s a range of customer feedback, and not all of it is positive. Are you expected to give a full picture of customers’ experience—warts and all—so the restaurant chain will know exactly what it’s buying?


In general, when prospective customers request customer references, they expect to receive favorable ones, and doing so is not a violation of their trust. It’s a lot like a prospective employer’s request for a job candidate’s work references. When you’re marketing yourself for a new job, you name the references who are most likely to report your talents and strengths—you don’t include a crabby boss who never had good things to say about anyone.

The question becomes more challenging when the customer relationship is more complicated. In every case—even the simplest—it’s a judgment call. Suppose your company compensates customers for providing references. A company might give some small thank-you gift to acknowledge that taking reference calls requires time, and that the company appreciates the client’s support. Is that unethical? Possibly. On one hand, it’s reasonable and desirable to express your appreciation to the customer, since part of maintaining the customer relationship is letting customers know that you value them and their time. On the other hand, there’s a risk, especially if the gift is large, that the customer might be influenced or even induced to give your company or product a favorable review. There is a point where the compensation begins to distort the customer dialogue and relationship, and then it’s clearly unethical—and if you’re inducing a customer to alter their behavior in exchange for a gift, it’s bribery.

Marketing professionals face regularly face questions of this kind. Where the organization appreciates a close partnership with a client, a thank-you gift may well be appropriate.  The challenge is to choose one of the right size that expresses appreciation but doesn’t compromise the integrity of the client or the marketing organization.

Below is a list that shows how marketing professionals responded to a survey on the most difficult ethical issues they face.[3]

Most Difficult Ethical Issues Marketing Professionals Face

  • 15% of marketing professionals say bribery is the most difficult ethical issue
    • Gifts from outside vendors, payment of questionable commissions, “money under the table”
  • 14% of marketing professionals say fairness is the most difficult ethical issue
    • Unfairly placing company interests over family obligations, taking credit for the work of others, inducing customers to use services not needed, manipulation of others
  • 12% of marketing professionals say honesty is the most difficult ethical issue
    • Lying to customers to obtain orders, misrepresenting services and capabilities
  • 12% of marketing professionals say price is the most difficult ethical issue
    • Differential pricing, charging higher prices than firms with similar products while claiming superiority
  • 11% of marketing professionals say product is the most difficult ethical issue
    • Product safety, product and brand infringement, exaggerated performance claims, products that do not benefit consumers
  • 10% of marketing professionals say personnel is the most difficult ethical issue
    • Firing, hiring, employee evaluation
  • 5% of marketing professionals say confidentiality is the most difficult ethical issue
    • Temptations to use or obtain classified, secret, or competitive information
  • 4% of marketing professionals say advertising is the most difficult ethical issue
    • Crossing the line between exaggeration and misrepresentation, misleading customers
  • 4% of marketing professionals say manipulation of data is the most difficult ethical issue
    • Falsifying figures or misusing statistics or information, distortion

Notice that many of the responses include watchwords like “questionable,” “exaggerated,” “distortion,” and “crossing the line.” In marketing, the greatest challenge is to influence the behavior of the target customer (by getting them to buy) without violating the customer’s trust or acting unethically. With the rise of social media, customers are in a much better position to share frank evaluations of products and services publicly, and this gives marketers a new means of capturing unbiased customer feedback. (It also opens the door to the problem of “fake customer reviews,” but that’s another issue.)

New marketing channels create opportunities for new tactics, but sometimes these developments bring new ethical challenges. Eventually society may establish what is acceptable behavior and what is not, but that process takes time.

In the following blog post, marketer Augie Ray explains growing sensitivities around the appropriate uses of social media, and shares his guidance to marketers who are seeking to create a trusted relationship with their customers and prospects.

Social Media Ethics on Display (or Not) During Week of Boston Marathon Tragedy

Instead of considering this in the abstract, let’s examine two brands’ actions last week, during the frightening events in Boston. NBC Bay Area posted a photo of a young bombing victim and implored people to “‘Like’ this to wish him a continued speedy recovery.”  This desperate attempt to trade on people’s feelings for a young victim of the bombing in order to receive a bit of EdgeRank-building engagement is horrifyingly unethical, in my book. (And if you do not agree, then please tell me how “liking” an NBC post lends support to or otherwise helps this poor hospitalized child.)

Ford, a brand I praised for authenticity in my last blog post, waded into dubious water with a Facebook status update following the capture of the second bombing suspect. The brand said, “To the first responders of Boston: Thank you. You are true American heroes.” Nothing wrong with that—in fact, I love that a brand like Ford feels it can express sincere appreciation for the sacrifices of those who serve. The problem was that Ford didn’t post that as text but included it within a beauty shot of their products, complete with the Ford logo and tagline.

Not everyone will agree, but I feel that Ford’s use of brand imagery not only reduced the sincerity of the message but demonstrated questionable ethics. Before you disagree, I would ask you to view the two status updates below—one Ford could have posted and the other it actually did—and consider three questions:

  1. Which is a more authentic expression of appreciation to people who sacrificed their safety to protect us?
  2. What does the product and brand imagery of the post on the right add (if anything) to the sincerity of the gratitude compared to the simple text version?
  3. Which version more clearly puts the focus on the heroes in Boston?
What is the difference between the post on the left (which was not made) and the one on the right (which was)? On the left is an image formatted like a Twitter tweet from Ford Motor Company that reads To the first responders of Boston: Thank you. You are true American heroes. On the right is an image of two police cars with their lights on and a helicopter flying above them. The cars are on a road with dramatic lighting and are viewed from a dramatic angle. Text over the photo says To the first responders of Boston: Thank you. You are true American heroes. Sincerely, Ford Motor Company.
The version on the left imagines what Ford could have posted as text while the one on the right is what Ford actually posted following the capture of the second bombing suspect in Watertown, MA.

Issues of ethics are difficult to discuss. They often are not clear cut, and while it is easy to see when a company crosses the line with both feet (as did NBC Bay Area), it can tough to discern as brands toe the gray line (as did Ford, in my opinion).

It is even tougher to see when you yourself cross ethical lines. If your boss wants to know why your brand has half a million customers but only 25,000 fans on Facebook, a sweepstakes to accumulate fans may not seem unethical. Your perspective may change, however, if you put yourself on the other side of this equation; if you do not want to see your friends becoming shills for brands in return for freebies and giveaways, then your brand should not follow this path. It is unethical to treat your own customers in a way you would not appreciate from the brands you buy or the people you know. (Fifty years ago, David Ogilvy, the father of modern advertising, expressed the same sentiment when he said, “Never write an advertisement which you wouldn’t want your family to read. You wouldn’t tell lies to your own wife. Don’t tell them to mine.”)

We are roughly ten years into the social media era, and I think perhaps it is time to reset our moral compasses, not to save our souls but to improve business results. Study after study demonstrate that consumers want something more from brands than silly images and memes; they want ethical behaviors and communications.[4] The 2012 Edelman Trust Barometer Study found that customers increasingly expect brands to “place customers ahead of profits and have ethical business practices,” and Interbrand’s 2018 brand study noted that successful businesses are those who are willing “to simultaneously look through a microscope and a telescope, to have the courage to intercept the future, not just flow with it, and, to take decisive action that makes a real impact.”

I’d like to believe this is always the case in every business situation, but when it comes to social media marketing, the ethical path also happens to be the best one for enhancing brands and business results.

Before you click “submit” to your next social media post, don’t simply ask whether it will achieve its goal, fit best practices, or suit the brand. Ask yourself if it is honest, transparent, and ethical. That is a much higher standard, but higher standards are what consumers want and what brands increasingly wish to deliver, aren’t they?

So far we have focused on ethical dilemmas in terms of risk. If a company acts unethically, it risks damaging its reputation and its customers’ trust—worse, it can face lawsuits and criminal prosecution. In this section we’ll discuss one of the ways in which companies attempt to get out in front of such risks by taking a proactive stance on ethics, instead.  As you saw with Tesla, companies that place “doing the right thing” at the center of their corporate mission and strategy often see a competitive advantage. Increasingly, they’re finding that good corporate citizenship not only benefits customers and communities but is good business, too.

Corporate social responsibility is the ethical behavior of a company toward society. It means acting responsibly toward the stakeholders—not just the shareholders—who have a legitimate interest in the business.

Shareholders own a portion or “share” of a business. Stakeholders do not own the business, but they have some stake or interest in it because they are affected by the business’s strategies and tactics.  Examples of stakeholders are employees, suppliers, business partners, and the community in which the business operates.[5]

Below are a few examples of businesses behaving ethically in ways that have a positive impact on their stakeholders.

Xeros Supports Employee Volunteerism

Xerox is one of many companies that creates opportunities for its employees to contribute to their local communities. In 1974 Xerox launched the Xerox Community Involvement Program, which supports employee involvement in community-focused causes. Since that time more than half a million Xerox employees have participated in the program.  , as the name suggests, . In its most current reporting on the impact of the program Xerox has announced spending $1.3 million for 13,000 of its employees to participate in 800 community projects. Xerox benefits from the program through community recognition, but also in supporting its employees make contributions that are important to them increasing their loyalty to their employer. [6]

Anheuser-Busch Wants Customers to Drink Responsibly

In January 2014, Anheuser-Busch ran the following Super Bowl ad featuring a cute puppy and the famous Budweiser Clydesdale horses. The ad plays on romance and nostalgia to remind viewers of the brand’s history (and to sell more beer).

In September 2014, the company brought back the puppy, this time to promote responsible drinking:

On its Web site, Anheiser-Busch lists a number of programs it has launched to reduce drunk driving. These are marketing programs that were developed to reduce the risk for consumers using the company’s products.

Anheuser-Busch is opposed to drunk driving and we believe it is 100 percent preventable. According to the U.S. Department of Transportation, drunk-driving fatalities have decreased 53 percent since 1982 to record lows, but we recognize there is still work to be done.  As part of our effort to prevent drunk driving, we have key initiatives like the Budweiser Designate a Driver campaign and Bud Light safe ride home programs, including Bud Light Alert Cab and Bud Light Tow to Go.

The company is actively promoting safety for its customers and their communities.

Target Invests in Communities

Photo of sheep and lambs at Zephyros Farm and Garden.

Target places an emphasis on being a “good corporate citizen” in the communities it serves. Each year the company publishes a corporate responsibility report that shares its goals and progress in a number of areas including the environment, team member well-being, education, and volunteerism.

Target shows that it is committed to protecting the environment by increasing the number of organic foods it offers and by putting in place measures to reduce waste and greenhouse gasses.

The company also makes significant contributions to education by paying for employees’ education, and by contributing to schools in its local communities. In 2014 Target donated $31,722,837 to more than 84,000 schools in all fifty states and the District of Columbia.

Haagen-Dazs Cares about Its Tiniest Suppliers

Honey bee atop a pink clover flower.

Recently, the ice-cream company Haagen-Daz initiated a campaign to raise awareness about the threats to honey bees, which are rapidly disappearing and are vital to the global food chain (and many of the ingredients in flavored ice cream). The company started a honeybee microsite and is donating a portion of the proceeds from its honeybee brand to bee research. In November 2014, it raised an additional $7,000 for research during a two-day Twitter campaign (#HelpHoneyBees hashtag).[7]

  1. Brenner, S. N, Molander, E. A. “Is the Ethics of Business Changing” Harvard Business Review 55: 57-71 (1977). 
  2. https://archive.ama.org/archive/AboutAMA/Pages/Statement%20of%20Ethics.aspx 
  3. Lawrence B. Chonko and Shelby D. Hunt, “Ethics and Marketing Management: An Empirical Examination,” Journal of Business Research, Vol. 13, 1985, pp. 339–359. 
  4. “Miracle on Social Media Street.” Experience: The Blog. December 27, 2012. Accessed September 10, 2019. http://www.experiencetheblog.com/2012/12/miracle-on-social-media-street.html 
  5. http://www.wbcsd.org/work-program/business-role/previous-work/corporate-social-responsibility.aspx 
  6. http://www.xerox.com/corporate-citizenship/2014/community-involvement/volunteer-programs/enus.html 
  7. http://www.socialbrite.org/2010/04/22/4-examples-of-corporate-social-responsibility-done-right/ 


Unit D.00 – Why It Matters: Marketing Strategy

Why explain how a marketing strategy supports an organization’s corporate strategy?

Photograph of a person holding a tablet. On the tablet screen are the words Inbound Marketing Strategy, followed by five labelled icons. The first is a purple target labelled strategy. The second is a red mouse icon with the word visitors under it. The third is an orange icon of an envelope with the word leads under it. The fourth is a green icon of three people with the word customers under it. The fifth, and final, icon is a blue icon of a megaphone with the word promoters under it.

In this module you’ll learn about the important role that marketing strategy plays in supporting corporate strategy. When a company has a mission and a set of corporate-level objectives, the marketing strategy must support those goals, which is perhaps the most important lesson that the following companies—and many others like them—failed to learn:

10 Lessons I Learned From Burning Through $50,000 on a Hardware Project That Bombed

With Kolos, we did a lot of things right, but it was useless because we ignored the single most important aspect every startup should focus on first: the right product.

VoterTide Postmortem

We didn’t spend enough time talking with customers and were rolling out features that I thought were great, but we didn’t gather enough input from clients. We didn’t realize it until it was too late. It’s easy to get tricked into thinking your thing is cool. You have to pay attention to your customers and adapt to their needs.

My Startup’s Dead! 5 Things I Learned

What I didn’t understand wasyou charge not for how much work it is for you. You charge how much the service is worth.

As these companies attest, a lot of things can go wrong in the startup world, and learning the hard way can mean going out of business. Take a look at the following list, which reveals the major reasons startups fail:


Note: You may notice that the percentages in this equal far greater than 100%. This is because there are often multiple reasons a startup failed.

  1. No Market Need (42%)
  2. Ran Out of Cash (29%)
  3. Not the Right Team (23%)
  4. Get Outcompeted (19%)
  5. Pricing/Cost Issues (18%)
  6. Poor Product (17%)
  7. Need/Lack Business Model (17%)
  8. Poor Marketing (14%)
  9. Ignore Customers (14%)
  10. Product Mis-Timed (13%)
  11. Lose Focus (13%)
  12. Disharmony on Team/Investors (13%)
  13. Pivot gone bad (10%)
  14. Lack Passion (9%)
  15. Bad Location (9%)
  16. No Financing/Investor Interest (8%)
  17. Legal Challenges (8%)
  18. Don’t Use Network/Advisors (8%)
  19. Burn Out (8%)
  20. Failure to Pivot (7%)

Many businesses go under because their products are inferior or don’t match a need, because of poor pricing strategy, poor marketing, or because of other issues related to product, price, promotion, or distribution. In essence, they fail to have a good plan that supports the goals of the company.

It is exceptionally difficult to get marketing strategy right. It is easy to get busy doing the work of the company, rather than planning the work that will ensure the company’s survival and success. Successful companies have a good corporate strategy that is supported by an effective marketing strategy. In this module you’ll begin to understand why that’s so important.

Learning Outcomes

  • Evaluate how marketing strategies align with corporate strategies
  • Explain the inputs and components of a marketing strategy
  • Show how common analytic tools are used to inform the organization’s strategy
  • Give examples of corporate strategies
  • Explain how the development and maintenance of customer relationships are an essential part of an organization’s marketing strategy


Unit D.05 – Marketing Strategy Mechanics

What you’ll learn to do: explain the inputs and components of a marketing strategy

The company strategy and objectives provide direction for the whole company, but they don’t specify how the company will get the most benefit from marketing resources and capabilities. That is the role of the marketing strategy. The marketing strategy defines how the company shapes its product, promotion, pricing, and distribution to provide unique value to its customers and to support the broader company goals.

Throughout this course we will delve more deeply into the strategies, tools, and processes that a marketer uses, but this module emphasizes the planning process itself. How does the marketing function create an effective plan and execute it successfully? That planning process is the focus of this module.

The specific things you’ll learn in this section include:

  • Identify the inputs to the marketing strategy
  • Describe how a marketing strategy optimizes the marketing mix
  • Discuss the role of budget, implementation, and evaluation in the marketing strategy

Inputs That Inform Marketing Strategy

To a great extent, developing the marketing strategy follows the same sequence of activities used to define the corporate strategy. The chief difference is that the marketing strategy is directly affected by the corporate strategy, as well as by the other functions within the organization. As a result, the marketing strategy must always involve monitoring and reacting to changes in the corporate strategy and objectives.

In order to be effective, a marketing strategy must capitalize on the resources at its disposal within the company, but also take advantage of the market forces that are outside the company. One way to assess these different factors, or inputs, is by conducting a situation analysis (also called a SWOT analysis). A SWOT analysis includes a review of the company’s internal strengths and weaknesses and any external opportunities and threats that it faces. We will discuss the SWOT analysis and other strategic planning frameworks in more detail later in this module.

Centering on the Target Customer

The marketing strategy defines how the marketing mix can best be used to achieve the corporate strategy and objectives. The centerpiece of the marketing strategy is the target customer. While the corporate strategy may have elements that focus on internal operations or seek to influence external forces, each component of the marketing strategy is focused on the target customer.

Recall the following steps of determining who your target customer is:

  1. Identify the business need you will address, which will be driven by the corporate strategies and objectives;
  2. Segment your total market, breaking down the market and identifying the subgroup you will target;
  3. Profile your target customer, so that you understand how to provide unique value;
  4. Research and validate your market opportunity.

Focusing the marketing strategy on the target customer seems like a no-brainer, but often organizations get wrapped up in their own strategies, initiatives, and products and forget to focus on the target customer. When this happens the customer loses faith in the product or the company and turns to alternative solutions.

The Market Planning Process: vertical Flowchart with 7 layers. From top, Layer 1 “Corporate Mission” [highlighted in gold] points to Layer 2 “Situational Analysis” [blue], points Layer 3 “Internal Factors: Strengths & Weaknesses” and “External Factors: Opportunities & Threats” [blue], points to Layer 4 “Corporate Strategy: Objectives & Tactics” [blue]. Layers 2-4 are connected with gray lines, as one sub-unit. This points to Layer 5 “Marketing Strategy: Objectives & Tactics” [blue], to Layer 6, a graphic showing “Target Market” as the central piece of the 4 Ps surrounding it: Product, Price, Promotion, Place [all blue]. The final layer is “Implementation & Evaluation” [blue]. Layers 5-7 are connected with gray lines, as a second sub-unit.

Aligning Corporate and Marketing Strategies

As we discussed before, objectives can create alignment between the corporate and marketing strategies. If the corporate objectives are clearly defined and communicated, then they become a calibration tool for every step of the marketing planning process.

How would good corporate-level objectives inform the marketing strategy and objectives? Consider the following examples:

  1. Imagine completing a market segmentation process. You find a target market that will find unique value in your offering. The decision to pursue that target market will depend on whether that segment is large enough to support the corporate objectives for market growth.
  2. How many new products should the company launch this year? The answer should be informed by the corporate objectives for growth and profitability.
  3. The marketing function has identified a customer relationship management campaign that would create greater customer loyalty. Does the cost of the campaign and its expected returns align with the company objectives?

As you can see, company objectives provide important guidance to the marketing planning process. Likewise, marketing objectives ensure that the goals of the marketing strategy are defined, communicated, and measured.

Photo of a lone traveler pulling her suitcase, walking through brightly colored O'Hare Airport

With a clear understanding of the corporate objectives, marketers must decide which strategies and tactics will best align with and support them.

This is rarely a simple decision. Markets are constantly changing, and buyer behavior is very complex. The marketer must evaluate all aspects of the marketing mix and determine which combination of product, price, promotion, and distribution will be most effective.

Decisions about the marketing-mix variables are interrelated. Each of the marketing-mix variables must be coordinated with the other elements of the marketing program. Consider, for a moment, a situation in which a firm has two product alternatives (deluxe and economy), two price alternatives ($6 and $3), two promotion alternatives (advertising and coupons), and two distribution alternatives (department stores and specialty stores). Taken together, the firm has a total of sixteen possible marketing-mix combinations. Naturally, some of them will be incompatible, such as the “deluxe” product and low price combination. Nevertheless, the organization must consider many of the possible alternative marketing programs. The problem is magnified by the existence of competitors. The organization must find the right combination of product, price, promotion, and distribution so that it can gain a differential advantage over its competitors. (All of the marketing mix elements will be discussed in more detail in other modules of the course.)

Recall that Southwest Airlines created a company strategy to expand its target market to include business travelers. One of its objectives was to grow revenue and market share to achieve specific targets by expanding into the business traveler market.

Which marketing strategies are needed to support such a corporate strategy? To answer that, Southwest had to investigate the four Ps:

  • Do we need new products that appeal to business travelers? (Product)
  • Are business travelers willing to pay a higher price point? (Price)
  • How will we communicate our offerings to business travelers? (Promotion)
  • How do business travelers book their travel? Are new distribution points needed? (Place)

As you can see, these questions about the four Ps are nicely aligned with Southwest’s corporate strategy and objectives, but they’re also connected to questions about the target customer: Who is the business traveler and how does he or she define value? The optimal marketing strategy will need to include a deep understanding of the target customer and specify how it offers unique value to that customer. Southwest did that in the ways described below:

Product Strategy

Created a series of programs that offer time savings and convenience for business travelers, who value those benefits above price.

Pricing Strategy

Created add-on services that provide business travelers with time savings and convenience at a total price that is higher than what leisure travelers pay for no-frills services, but is at or slightly below competitors’ prices for business fares.

In each case, the marketing strategy supports the corporate strategy, focuses on providing unique value to the target customer, and incorporates the elements of the marketing mix that can be leveraged to deliver that value.


Photo of Times Square in New York City. At center are two large, lighted billboards advertising Panasonic and Yahoo.Even a well-designed marketing program that has been through a thorough evaluation of alternatives will fail if it’s poorly implemented. Implementation involves the tactics used to execute the strategy. It might include such things as determining where to promote the product, getting the product to the consumer, and setting a commission rate for the salespeople.

The implementation process emphasizes the timely completion of tasks. Often marketing organizations have a project- or program-planning function that tracks the tasks that will be completed, the individual or team that will complete the tasks, the budget spent, and the results achieved. If the organization manages each element of the plan carefully, it can intervene if progress is falling behind, rather than waiting until it affects the objectives or strategy.

Today, the process for implementing, measuring, and adjusting marketing tactics is much faster and more quantitative than it has ever been. Take the following comparison: a store decides on a promotional tactic to hang a billboard on the freeway near the exit ramp to the store. The billboard company can provide estimates on the number of cars that will pass the billboard, but how many people will actually look at the billboard? How many will be within the target market? How many will take the exit? How many will continue driving, but remember and come back to the store at a later date? It is almost impossible to answer any of these questions with certainty.

If, on the other hand, the same store launches a promotional campaign on Facebook, it will gain much more visibility into who sees the ad and whether the ad is effective.  It can track who clicks on the ad, who buys after clicking, how often they come back, and what they buy in the future.

Developments like this have improved marketing tactics immensely by making it easier to measure impact and make adjustments that can be used a day, hours, or even minutes later.


Marketing-mix components must be evaluated as part of an overall marketing strategy. Therefore, the organization must establish a marketing budget based on the marketing effort needed to influence consumers. The marketing budget represents a plan to allocate expenditures to each of the components of the marketing mix. For example, the firm must establish an advertising budget as part of the overall marketing budget and allocate expenditures to various types of advertising media—television, newspapers, and magazines, e.g. A sales promotion budget should also be determined, allocating money for coupons, product samples, and trade promotions. Similarly, budgets are required for personal selling, distribution, and product development.

How much should be spent to promote the sale of a company’s products? The answer hinges on the following: “What are we really trying to accomplish? What are our goals?” Subsequent discussion should focus on finding the best path around any obstacles, toward those identified goals. In other words, product promotion is just one aspect of the larger picture.

Too often, when marketers ask whether their budgets are adequate, the question is driven by how much their competitors are spending. Knowing how much others in the same industry are spending can be useful to a company whose performance lags behind the competition or to a company that suspects its expenditures are higher than they need to be. In general, though, knowing what others spend can lead to a counterproductive “keeping-up-with-the-Joneses” mentality. It also assumes that others know what they are doing.

Photo of a colorful lemonade stand set up in a cemetery. The discourage young woman running the stand is shown with her head in her hands.

No marketing program is planned and implemented perfectly. Marketing managers will tell you that they experience many surprises during the course of their activities. In an effort to ensure that performance goes according to plans, marketing managers establish controls that help them evaluate results and identify needed modifications. Surprises occur, but marketing managers who have established sound control procedures can react to unexpected results quickly and effectively.

Marketing control involves a number of decisions—one is simply deciding which function to monitor. Some organizations monitor their entire marketing program, while others choose to monitor only a part of it, such as their sales force or their advertising program. A second set of decisions concerns the establishment of performance standards—for example, market share, profitability, or sales. A third set of decisions concerns how to collect information for making comparisons between actual performance and standards. Finally, to the extent that discrepancies exist between actual and planned performance, adjustments in the marketing program or the strategic plan must be made.

Once a plan is put into action, a marketing manager must still gather information on the effectiveness of the plan’s implementation. Information on sales, profits, consumer reactions, and competitor reactions must be collected and analyzed so that a marketing manager can identify new problems and opportunities.

Return on the Marketing Investment

Increasingly, the single most important evaluation measure is the return on the marketing investment (or marketing ROI). Earlier in this module we learned that strategies define how an organization can best use its resources to achieve the mission. Measuring return on the marketing investment helps marketers understand whether their use of resources is yielding the most effective results.

Let’s look at an example of marketing ROI.


A retail store launches a campaign to increase online sales. The firm tracks the cost of setting up the online campaign, promotion costs, costs of the images and designs for the promotion, and staff time used to implement the campaign. These are the investments. Let’s say the total marketing spending on the campaign is $10,000.

Next, the store tracks a range of metrics, including how many people view online promotions (page views), how many people click on promotions (click-throughs), and ultimately the number of resulting sales. Thanks to the campaign, the company sees an additional $100,000 in sales.

The marketing ROI can be calculated by taking the revenue generated ($100,000) and dividing it by the cost of the marketing budget invested ($10,000). In this case, the marketing ROI for the retail store’s online campaign is 10.

Marketing ROI does not only focus on sales generated. Marketers may talk about spending per new customer acquired, increases in the lifetime value of the customer, increases in market share, or other metrics that are important to the strategy.

Why has marketing ROI become an important metric? Many marketing leaders have realized that they are better able to secure appropriate marketing budgets when they can point to tangible results. Managers who found themselves constantly responding to the question “What do we get from our marketing budget?” have learned that marketing ROI can provide a definitive answer.

In addition to the marketing ROI, there are many new technology-based marketing programs and tools that give marketers an enhanced ability to capture data and evaluate results in quantitative terms.


The video below provides an excellent example of the evaluation of a marketing campaign:

Think about the following questions regarding the ad campaign in the video you just watched:

  • What were the goals of the campaign?
  • How did the target customer influence the campaign and the goals?
  • Was it successful?
  • What metrics were used to determine the success of the campaign?


Unit D.07 – Strategic Planning Tools

What you’ll learn to do: show how common analytic tools are used to inform the organization’s strategy

When a company is developing its strategy, it is faced with a vast array of considerations and choices. It needs to take into account its resources and capabilities, the strength of existing customer relationships, the competitive landscape, the economic and legal environments, important societal trends—the list of inputs goes on and goes on. Then, based on that information, it must devise a plan—a strategy—that contains the best options for addressing the inputs. But which inputs are most important, and which options should be included in the strategy? To answer these questions, businesses have at their disposal a number of strategic planning tools that help to simplify, organize, and focus both the inputs and the possible strategy options. In this section you’ll learn about three: the SWOT analysis, the Boston Consulting Group matrix, and the strategic growth matrix.

The specific things you’ll learn in this section include:

  • Conduct a SWOT analysis and describe how it informs the organization’s marketing strategy
  • Explain how businesses use the Boston Consulting Group matrix to inform growth strategies
  • Explain how businesses use the strategic growth matrix to inform growth strategies

A situation analysis is often referred to by the acronym SWOT, which stands for strengthsweaknessesopportunities, and threats.

SWOT Analysis is made of external and internal factors. External factors are opportunities and threats. They include technology, competition, economic, political, legal, social trends. Internal factors are strengths and weaknesses. They include financial, technical, competition position, human resources, product line.

Essentially, a SWOT analysis is an examination of the internal and external factors that impact the organization and its strategies. The internal factors are strengths and weaknesses; the external factors are opportunities and threats. A SWOT analysis gives an organization a clear picture of the “situation” in which it operates and helps it identify which strategies to pursue.

Internal Factors

Strengths and weaknesses include the resources and capabilities within the organization now. Since the company has the most control over internal factors, it can craft strategies and objectives to exploit strengths and address weaknesses. Examples of internal factors include the following:

  • Financial resources
  • Technical resources and capabilities
  • Human resources
  • Product lines

All of these are controlled by the organization. Competitive positioning can also be a strength or a weakness. While competitors’ strategies and tactics are external to the company, the company’s position relative to the competitors is something that it can control.

External Factors

External factors include opportunities and threats that are outside of the organization. These are factors that the company may be able influence—or at least anticipate—but not fully control. Examples of external factors include the following:

  • Technology innovations and changes
  • Competition
  • Economic trends
  • Government policies and legislation
  • Legal judgments
  • Social trends

While a company can control how it positions itself relative to the competition, it can’t control competitors’ actions or strategies.

Benefits of a SWOT Analysis

A SWOT analysis benefits organizations in two key ways:

The SWOT Analysis Encourages Realistic Planning

Imagine a growing company that is able to attract new customers more easily than the competition because it has a strong reputation and visible leader. These strengths should be considered and exploited in the strategy. Now imagine that the company also has a poor history of delivering on customer commitments. If this weakness is not addressed, it will not only make it difficult to retain customers but also likely damage the reputation of the company and its leader—which would eliminate key strengths. By conducting a situation analysis, the company is more likely to consider both of these factors in its planning.

The SWOT Analysis Improves Ability to Forecast Future Events

What’s the worst thing that could happen to your business? Most organizations can answer this question because they have assessed the environment in which they operate.  For instance, perhaps they know of pending legislation that might adversely affect them.  Or perhaps they recognize legal risks, or unique challenges from past economic cycles. By considering threats and “worst-case scenarios” during the planning process, organizations can take steps to avoid them, or minimize the impact if they do they occur.

SWOT Analysis Example

A situation analysis can benefit any organization. The example below shows the SWOT analysis for a fictional college.

SWOT Analysis 2 for SWOT College. Under External Factors, opportunities include Expand online programs, Create custom programs for local employers, Credit for prior learning. Under External Factors, threats include Reduced state funding, economic recovery, aggressive marketing by for-profit competitor. Under internal factors, strengths include Bright, committed faculty, strong and trusted leaders, student completion rates, student advising initiative, community partners. Under Internal factors, weaknesses include Aging technology infrastructure, training for part-time faculty, nursing program under capacity, inefficient transfer process.

Even this rudimentary analysis highlights some strategic issues, discussed below, which the college needs to consider.


The college has a number of strengths. Committed faculty and trusted leaders have collaborated to build academic programs that are showing high completion rates among students. The student advising program is also contributing to that success. Also, the college has excellent relationships with businesses in the community.

Among the weaknesses, the technology infrastructure is outdated. The college also employs a large number of part-time faculty members, but doesn’t provide them with adequate training or support. Nursing, one of the more expensive programs at the college, is not attracting enough students to keep it full. Also, the college has learned from some of its recent graduates that students are not receiving transfer credit at the local university for all of their courses taken at the college. The students wonder if the college faculty and advisers really understand their academic goals or the requirements of the four-year degree programs at the university.

By completing a SWOT analysis, the college can shape its strategies and objectives to align with both the internal resources and capabilities it has, as well as the external factors it faces.


Photo of a college campus, students walking to and from class.The college leadership is feeling pulled by conflicting economic factors. The region has been through an economic downturn, which resulted in cuts to state funding. At the same time, an economic recovery has just begun. During the previous economic recovery, college enrollment dropped when students who were pursuing additional education returned to the workforce. How might the timing of those two funding issues work out? The college is also being affected by a local institution that is aggressively marketing to its students— especially students in the nursing program.

Still, there are opportunities. Students have expressed interest in more online courses and programs. That might also slow the local competitor, though it would also require the college to address its aging technology infrastructure. The college has identified a number of innovative programs that would enable students to earn degrees more quickly and at the same time expand its partnership and collaboration with local businesses.


When a company has many different products or even many different lines of business, strategy becomes more complex. The company not only needs to complete a situation analysis for each business, but also needs to determine which businesses warrant focus and investment. The BCG matrix (sometimes called the Growth-Share matrix) was created in 1970 by Bruce Henderson and the Boston Consulting Group to help companies with many businesses or products determine their investment priorities.

The BCG matrix considers two different aspects of a business unit or product:

  1. What is the current market share?
  2. What is the market’s growth potential?

Market Share

Market share is the percentage of a market (defined in terms of units sold or revenue) accounted for by a specific product or entity. For instance, if you run a neighborhood lemonade stand that sells 200 glasses of lemonade each summer, and there are two other competing lemonade stands that sell 50 glasses and 150 glasses, respectively, then you have 50 percent market share. Out of 400 glass sold, you sell 200 glasses, or 50 percent of the total.

Companies track market share data closely. For example, what is the market share for different types of cell phones in the U.S.? The International Data Corporation reports these numbers quarterly. As the following table shows, Android phones have had the dominant market share over the past several years.

Smartphone Market Share 2017–2019[1]
Period Android iOS Others
2017 85.1% 14.7% 0.2%
2018 85.1% 14.9% 0.0%
2019 86.7% 13.3% 0.0%

Market-Growth Potential

The market-growth potential is more difficult to quantify, but it’s the other important factor in the BCG matrix. Let’s use some of the products in Proctor & Gamble’s portfolio to identify markets with different growth potential. How about bathroom tissue—is that a high-growth market? Probably not. Data shows that, in the U.S. anyway, bathroom tissue use tracks closely with population numbers, which have declined 0.7 percent since 1992. How about the market for high-end skin-care products? Generally, markets for products that serve Americans born between 1946 and 1964—the baby boomers—are growing rapidly. The reason is that this large generation is aging with more income and a longer life expectancy that any previous generation.

Market-growth potential generally includes analysis of similar markets, as well as analysis of the underlying drivers for marketing growth. It can be thought of as a “best guess” at what the future value of a market will be.

Applying the BCG Matrix

BCG Growth-Share Matrix showing high and low market growth and market share. A star represents high growth potential because of high market growth and high market share. The question mark represents high growth potential because of high market growth and low market share. A dog represents low growth potential because of low market share and low market growth. A cow with a dollar sign on its forehead represents low growth potential because of low market growth and high market share.

The BCG Matrix is comprised of four quadrants that show high and low market share and high and low growth potential. Each quadrant has a name and specific characteristics.


A product or business with low market share in a mature industry is a dog. There is no room for growth, which suggests that no new funds should be invested in it.

Cash Cow

A cash cow is a product or business that has high market share and is in a slow-growing industry. It’s bringing in more money than is being invested in it, but it doesn’t have much growth potential. The profits from a cash cow can be used to fund high-growth investments, but the cash cow itself warrants low investment.

Question Mark

A question mark is a product or business that has low market share currently, but in a growing industry. This case is trickier: the product/business is consuming financing and creating a low rate of return for now, but its direction isn’t clear. A question mark has the potential to become either a star or a dog, so close monitoring is needed to determine its growth potential.


A star has high market share in a fast-growing industry. This kind of product or business is poised to bring strong return on the funds invested. It also has the potential to become a cash cow at the end of the product life cycle, which can fund future investments.

According to the logic of the BCG matrix, as an industry grows, all investments become cows or dogs. The intent of the matrix is to help companies make good portfolio-management decisions, focusing investment in the areas that are likely to provide returns and fund future growth.

The last strategic framework that we will consider is the strategic opportunity matrix (sometimes called the Ansoff matrix, named after its creator, Igor Ansoff). Whereas the SWOT analysis can help organizations identify new market and new product opportunities (it’s the “O” in SWOT), the strategic opportunity matrix focuses on different growth strategies for markets and products. The matrix examines the following:

  1. New vs. existing markets
  2. New vs. existing products
Strategic Opportunity Matrix diagram. There are four growth strategies, each representing current and/or new products and markets. Current markets and current products is a market penetration strategy. New products and current markets is a product development strategy. Current products and new markets is a market development strategy. New products and new markets is a diversification strategy.

As the diagram shows, each quadrant represents a different growth strategy:

  1. Market penetration: focus on current products and current markets with the goal of increasing market share
  2. Market development: use existing products to capture new markets
  3. Product development: create new products that can be sold in existing markets
  4. Diversification: create completely new opportunities by developing new products that will be introduced in new markets

Each strategy entails a different level of risk. Market penetration has the lowest risk since it emphasizes known markets and existing products. Diversification has the highest risk because it involves the development of new products and taking them to new markets. The company must consider whether it can achieve the desired returns without risking a move into new markets or introducing new products. Often, though, higher risk leads to a higher return.

Which strategy should the company pursue? The answer can be informed by a SWOT analysis, which takes into account the strengths and weakness of a company’s existing products, as well as the opportunities and threats in the competitive market.

  1. “Smartphone Market Share – OS.” IDC. Accessed September 25, 2019. https://www.idc.com/promo/smartphone-market-share/os


Unit D.09 – Examples of Corporate Strategies

What you’ll learn to do: give some examples of corporate strategies

It can be challenging to get a handle on an abstract concept like “corporate strategy” unless you can see what it means in the context of a real business. The goal of this section is to deepen your understanding of corporate strategies—particularly the ones described by the strategic growth matrix—by doing just that.

Under Armour

Photo of baseball player Bryce Harper

Under Armour promotes its products through sponsorship agreements with celebrity athletes, professional teams, and college athletic teams.

Market penetration: focus on current products and current markets in order to increase market share

Market penetration requires strong execution in pricing, promotion, and distribution in order to grow market share.

Under Armour is a good example of a company that has demonstrated successful market penetration. The company sells performance apparel, and in recent years it has surpassed Adidas to become the number-two athletic-wear provider in the U.S. The company has persistently focused on selling athletic footwear, clothing, and accessories, and was able to capture a leadership position in the market with that strategy.

Throughout 2014, Under Armour fueled its growth by focusing largely on promotion, distribution, and consistent product. As a result the company could claim major success—especially relative to major competitors Nike and Adidas—in the fight for its share of the fitness apparel market.

Like Nike, Under Armour’s has been very effective at developing inspiring advertisements that feature well-known male and female athletes. The following video ads are examples:

Poached Jobs

Market development: use existing products to capture new markets

Together, the hospitality industry, restaurants, and hotels account for 14 million jobs across the U.S., but the industry has a crushing 65 percent job-turnover rate. That means that, in a single year, there will be 8 million job openings in the industry. Most restaurant and hotel managers post jobs on Craigslist.com and have a terrible time sorting through hundreds of applicants who lack necessary qualifications or experience.

Poached Jobs is a young company that addresses this problem by providing an industry-based dedicated jobs platform that allows managers to find qualified applicants and manage the hiring process.

Screen shot of Poached website

The company has chosen a market development strategy that’s based on geography. When Poached enters a new market, it wants to own that market and become the hiring solution for every restaurant and hotel in the region. The company used its initial markets, Seattle and Portland, to refine a market-entry strategy for its product and then took on larger markets such as San Francisco and Chicago. With each subsequent market the company incorporated new approaches that sped the adoption process. In late 2014, Poached entered the enormous New York City market. Most of 2015 was spent focusing on growth and success in that single market in order to build credibility that would enable it to move into other geographic regions.

The market development strategy allows a small company like Poached to stage its growth, perfect its existing product, and capture new markets one at a time.

Nissan Motors

Product development: create new products that can be sold in existing markets

Showroom photo of the Nissan Leaf.

Nissan was the first major automaker to commit to the mass production of an electric vehicle (EV). In 2008, it made good on its promise with the launch of the Nissan Leaf. Industry analysts immediately recognized the significance of this major move. The Economist had this to say:

Within the industry, the adjective most often used to describe Mr. Ghosn’s plan to make the Renault-Nissan alliance the first big manufacturer of zero-emission vehicles is “bold”—in other words, somewhere between very risky and certifiably mad.[1]

In 2011, industry watchers reported the following:

When announced in 2008, Nissan’s EV [electric vehicle] program was lauded by environmentalists and derided by the auto industry in equal measure. Nearly three years on . . . it has precipitated a seismic shift towards EVs in the auto industry, with all the other automakers now following suit. But will Nissan’s heavy EV investment program deliver the environmental benefits and market share that it hopes for? It is too early to tell, but it is undeniably exciting.[2]

Eight years after the Nissan Leaf was introduced, it’s fair to say that the company’s gamble paid off. Nissan saw two unmet needs in the market that it sought to address. It recognized that the zero-emissions Leaf would appeal to the environmentally minded consumer concerned about climate change. With oil prices on the rise, Nissan saw that their electric vehicle would also appeal to the cost-conscious consumer who wants to save on fuel expenses.

Today, the Nissan Leaf is the world’s top-selling, highway-legal, plug-in electric car, reaching global sales of nearly 200,000 vehicles in September 2015.[3] The company’s product development strategy enabled it to move into a leadership position among EV manufacturers, while successfully fulfilling unmet needs in its existing markets.


Diversification: create new opportunities by creating new products that will be introduced in new markets

Photo of Disneyland Toontown.

Disneyland Toontown

When you hear the word Disney, what comes to mind? Many people think of Disney movies such as Cinderella and Beauty and the Beast or theme parks like Disneyland and Disney World. Disney’s product portfolio also includes Marvel Comics, television network ABC, and cable sports channel ESPN. The company has pursued a diversification strategy, which means purchasing other companies that enable it to bring new products into new markets while remaining true to Disney’s origins.

Today, 54% of Disney’s revenues—but only 32% of its profits—come from movies and parks.[4] Its most profitable growth comes from new products in new markets.

Strategic Business Unity Percent of 2014 revenue Percent of 2014 profits
Studio entertainmentFilms in theater, home and TV 18% 12%
Parks and resortsTheme parks, cruises 36% 20%
Media networksTV stations and advertising 51% 56%
Consumer productsLicensing characters for products 10% 10%
InteractiveGame platforms and games 3% 1%

An industry analyst explains:

This wide diversification is what has allowed Disney to be so successful recently; Disney owns some of the biggest names in the entertainment world: ESPN, ABC, Disney theme parks, Disney cruise lines, and Pixar, just to name a few. Unlike many entertainment companies, Disney does not solely rely on films, TV, or parks; it is well diversified and relies on its wide reach to create one of the most recognized and popular brands in the world.[5]

Disney’s diversification identifies new products and markets that are close enough to its core business that the company can leverage its internal strengths to create business growth. Following the acquisition of ABC, Barry Diller, the former head of QVC Inc. and the man credited with creating the Fox network, said, “Taking nothing away from the senior management at the other networks, this will be the only one where the senior executive is trained true in the creative process.”[6]

  1. Mr Ghosn bets the company. The Economist, October 17, 2009. http://www.economist.com/node/14678942 
  2. http://www.thecrowd.me/sites/default/files/NissanCaseStudy.pdf 
  3. Jeff Cobb (2015-09-16). “One Million Global Plug-In Sales Milestone Reached.” HybridCars.com. Retrieved 2015-09-16. Cumulative global sales totaled about 1,004,000 highway legal plug-in electric passenger cars and light-duty vehicles by mid-September 2015. 
  4. http://cdn.media.ir.thewaltdisneycompany.com/2014/annual/10k-wrap-2014.pdf 
  5. http://seekingalpha.com/article/912781-disneys-diversification-is-key-to-growth 
  6. http://www.nytimes.com/1995/08/01/business/media-business-merger-walt-disney-acquire-abc-19-billion-deal-build-giant-for.html 


Unit D.11 – Customer Relationships

What you’ll learn to do: explain how the development and maintenance of customer relationships are an essential part of an organization’s marketing strategy

If you are getting the impression that an organization’s planning around marketing strategy, tactics, and objectives is very complex, you are perceptive. There are a lot of variables for companies to consider, align, and track, and occasionally an important part of the planning process gets overlooked: the customer.  In this last section, we’ll return to the customer and explain why customer relationships are such a crucial part of the marketing strategy and plan.

Let’s pause for a moment and put the customer into our discussion of market growth opportunities. We discussed the market for high-end skin-care products for older Americans. Imagine the woman who might buy a Proctor & Gamble antiwrinkle cream. She is standing in front of a shelf of products and chooses Proctor & Gamble’s cream. Who is she? Why is she there? What is her story? Our customer is hoping to stop the aging process and it is a personal, vulnerable moment. She doesn’t care about the SWOT analysis or the size of the market. She wants to find a product that “understands” what she needs and helps her.

In this section you’ll see how marketers address such issues and keep the customer at the center of the planning process in a very personal way.

The specific things you’ll learn in this section include:

  • Describe how businesses use buyer personas to better understand the target customer
  • Define customer relationship management
Mosaic illustration of the Facebook "LIKE" button. Shows the iconic "thumbs-up" graphic.

A situation analysis can reveal whether a company’s relationship with customers is a strength to be exploited or a weakness that needs to be addressed. In many cases it’s a bit of both. For instance, a company might have loyal customers in one demographic but fail to hold the attention of customers in another demographic.

The question, then, is how do companies evaluate the quality of their customer relationships, and what approaches do they use to develop and maintain strong customer relationships? We will explore the answers to these questions in greater depth throughout this course. For now, we’ll touch on an approach that companies use to incorporate their customers in strategic planning and some of the tools they use to connect with them.

Buyer Personas

The basis for a strong relationship is getting to know and understand someone well enough to form a connection. The same is true for company relationships with customers. The trouble is that companies rarely have a chance to personally connect with individual customers—much less with all of their target customers.

Marketers use something called “buyer personas” to get a more accurate picture of the customers they’re trying to connect with and also to help them think of customers as real people. Buyer personas are fictional, generalized representations of a company’s ideal, or typical, customer. They help the marketer understand current and potential customers better. As a marketer, knowing whom you’re trying to reach and attract makes it easier to tailor your content, messages, product development, and services to the specific needs, behaviors, and concerns of different groups. For example, instead of sending the same email message to all potential customers, marketers will create a unique message for different buyer personas that aligns better with their personal interests and values.

Example of buyer persona write-up: Kyle Fisher: Potential Drake Motors Small SuV Buyer. Includes photo of smiling middle-aged man with the caption "I want a vehicle with outstanding fuel economy, smart features, and enough space for me and my family." Personal profile: Kyle is a 42-year-old and owner of a late-model Ford Escape. He's an active father of two, still plays team sports and is always connected to friends and the family through the internet and his mobile phone. Kyle is looking for a vehicle that offers outstanding fuel economy since he commutes approximately 90 miles round trip each day. He's also considering the Ford Escape Hybrid, Toyota Highlander, the Honda CR-V and the Ford Flex He uses a variety of review and third-party print research sites in addition to dealer catalogs. Kyle's product-content needs: information supporting fuel economy; photos and video that highlight vehicle's technology and stylish features; guidance, education, and reassurance that the brand can be trusted; competitive comparisons to his current vehicle; ability to gather and share information easily. Background: 42-year-old Caucasian male; father of two; plays drop-in hockey 3 mornings a week; uses vehicle daily for commuting, picking up kids from sports, weekend coaching and vacations; drives long distances and puts 20,000 miles on vehicle every year. Attributes: upper-middle class; smartphone and laptop user; influenced by online reviews, heavy user of print; iPod and Smartphone user; spends time reading in social media researching, but less time contributing.

Figure 1: Buyer Persona

Typically, a buyer persona will have a name and a story, as in Figure 1, above. The story will include information about how the persona spends her time and details about her interests, her concerns or fears, and her goals. Often, the write-up will explain what the persona wants from the company and its products to help marketers to use the information consistently. Each of these details helps the marketer focus on developing relationships with real people, and that results in a more personalized marketing plan.[1]

The strongest buyer personas are based on market research—both the information that is broadly available and information the company gathers through surveys, interviews, and observations of customer behavior.

Harley Davidson Customer Relationships

Once a company understands its buyer personas, how can it match those to real people who will buy its products or services? Today, companies use significant amounts of data and complex technology systems to create the right match in what it offers to individuals and groups of buyers.

The American Marketing Association defines customer relationship management in the following way:

A discipline in marketing combining database and computer technology with customer service and marketing communications. Customer relationship management seeks to create more meaningful one-on-one communications with the customer by applying customer data (demographic, industry, buying history, etc.) to every communications vehicle. At the simplest level, this would include personalizing e-mail or other communications with customer names. At a more complex level, customer relationship management enables a company to produce a consistent, personalized marketing communication whether the customer sees an ad, visits a Web site, or calls customer service.[2]

Customer relationship management brings data and technology together with the marketing mix to increase the personal connection with the customer. Let’s look at an example. Harley Davidson has a famously strong brand. This video provides a glimpse into the relationship that customers have with the brand and shows how a new technology is assisting the company in expanding its connection with customers.

What are some elements of the Harley Davidson buyer persona?

How is technology being used for customer relationship management?

Key Terms

Buyer persona. Fictional, generalized representations of an ideal customer that help a marketer understand current and potential customers better.

Customer relationships management.  A discipline in marketing combining database and computer technology with customer service and marketing communications. Customer relationship management seeks to create more meaningful one-on-one communications with the customer by applying customer data (demographic, industry, buying history, etc.) to every communications vehicle.



Unit C.15 – Simulation: Segmenting the Ice Cream Market

Try It

We’ve been talking a lot about segmentation and targeting and discussing how they both work in real-life marketing. Now it’s time for you to give it a try.

Remember the ice cream shop you ran in a simulation earlier in the course? We’re going back to that scenario: you are an entrepreneur working to building your house-made ice cream business. This time you’ll explore how to use segmentation, targeting, and the marketing mix to grow the business.

Try the simulation a few times to see how different choices lead to different outcomes. In a simulation you should take the opportunity to try out choices you think are right and some you suspect are wrong, since you can learn from both. All simulations allow unlimited attempts so you can gain experience exploring and applying the concepts.

Good luck!


  • Simulation: Segmentation Sandbox. Provided by: Clark Aldridge for Lumen Learning. LicenseCC BY: Attribution

Unit C.17 – Putting It Together: Segmentation and Targeting

Putting It Together: Segmentation and Targeting

Remember Chumber, your new employer from the beginning of this module?

Now that you’ve learned something about segmentation and targeting strategy, let’s return to the request your boss made for recommendations about whom Chumber ought to target and why.

Remember that Chumber’s product is an automated, fully online system for checking the references of job candidates. Chumber’s customers are other companies. After learning about market segmentation, you know that “all companies” is too broad to be a useful target market. Even on your first day of work, you can guess that marketing to every company you can find isn’t going to be a smart strategy.

Instead, you do a little research. It stands to reason that Chumber will be most valuable to companies that do a lot of hiring. A Google search for “employment by industry” brings up U.S. Bureau of Labor statistics data to help you identify which industries are expected to post the biggest gains in employment in the coming years.

Table 1: Employment by major industry sector
Industry Sector Thousands of Jobs Change Percent Distribution Compound Annual Rate of Change
2008 2018 2028 2008–2018 2018–2028 2008 2018 2028 2008–2018 2018–2028
Total[1][2] 149,276.0 161,037.7 169,435.9 11,761.7 8,398.2 100.0 100.0 100.0 0.8 0.5
Nonagriculture wage and salary[3] 137,991.0 149,803.7 157,662.0 11,812.7 7,858.3 92.4 93.0 93.1 0.8 0.5
Goods-producing, excluding agriculture 21,277.9 20,661.3 20,872.7 −616.6 211.4 14.3 12.8 12.3 −0.3 0.1
Mining 709.9 683.3 727.9 −26.6 44.6 0.5 0.4 0.4 −0.4 0.6
Construction 7,162.5 7,289.3 8,096.8 126.8 807.5 4.8 4.5 4.8 0.2 1.1
Manufacturing 13,405.5 12,688.7 12,048.0 −716.8 −640.7 9.0 7.9 7.1 −0.5 −0.5
Services-providing excluding special industries 116,713.1 129,142.4 136,789.3 12,429.3 7,646.9 78.2 80.2 80.7 1.0 0.6
Utilities 558.8 554.6 537.2 −4.2 −17.4 0.4 0.3 0.3 −0.1 −0.3
Wholesale trade 5,875.0 5,852.5 5,754.0 −22.5 −98.5 3.9 3.6 3.4 0.0 -0.2
Retail trade 15,289.1 15,833.1 15,679.4 544.0 −153.7 10.2 9.8 9.3 0.4 -0.1
Transportation and warehousing 4,513.6 5,419.1 5,741.4 905.5 322.3 3.0 3.4 3.4 1.8 0.6
Information 2,983.8 2,828.1 2,833.7 −155.7 5.6 2.0 1.8 1.7 −0.5 0.0
Financial activities 8,206.1 8,568.8 8,849.4 362.7 280.6 5.5 5.3 5.2 0.4 0.3
Professional and business services 17,792.3 20,999.5 22,661.9 3,207.2 1,662.4 11.9 13.0 13.4 1.7 0.8
Educational services 3,039.8 3,727.5 4,201.0 687.7 473.5 2.0 2.3 2.5 2.1 1.2
Health care and social assistance 16,188.6 19,939.3 23,335.4 3,750.7 3,396.1 10.8 12.4 13.8 2.1 1.6
Leisure and hospitality 13,436.2 16,348.5 17,904.9 2,912.3 1,556.4 9.0 10.2 10.6 2.0 0.9
Other services 6,320.5 6,622.4 6,716.7 301.9 94.3 4.2 4.1 4.0 0.5 0.1
Federal government 2,762.0 2,796.0 2,670.2 34.0 −125.8 1.9 1.7 1.6 0.1 -0.5
State and local government 19,747.3 19,653.0 19,904.0 −94.3 251.0 13.2 12.2 11.7 0.0 0.1
Agriculture, forestry, fishing, and hunting[4] 2,071.4 2,310.0 2,320.6 238.6 10.6 1.4 1.4 1.4 1.1 0.0
Agriculture wage and salary 1,208.6 1,547.2 1,587.2 338.6 40.0 0.8 1.0 0.9 2.5 0.3
Agriculture self-employed 862.8 762.8 733.4 −100.0 −29.4 0.6 0.5 0.4 −1.2 −0.4
Nonagriculture self-employed 9,213.6 8,924.0 9,453.4 −289.6 529.4 6.2 5.5 5.6 −0.3 0.6

Segmenting by industry makes a lot of sense in this case because some industries clearly do more hiring than others. You decide that Chumber should focus on industries with the highest projected hiring increases in the next decade: health care; professional and business services; construction; leisure and hospitality; and retail. Companies in growth industries will definitely get the most value from Chumber.

Next you want to understand more about which decision makers in these companies will be the best targets for Chumber. Having just come through the hiring process, you know who is interested in reference checking: human resources professionals, job recruiters, and hiring managers. You email Ken, the Chumber HR person who handled your hiring process, to see if he can answer a few questions about how decisions are made in HR departments.

Photograph of a man looking into the camera and smiling. He is standing with relaxed posture and his hands in his pockets.Ken is very helpful. Prior to Chumber, he worked in HR for a health care company and a consulting firm. He confirms that an HR manager or director of recruiting oversees the reference-checking process for new hires. This person would also be the primary decision maker for a product like Chumber.

Ken explains that the requirements for reference checking differ by industry. In health care, for instance, where people routinely handle life-and-death situations, reference checks are essential and thorough. Ken mentions a couple of features Chumber could add to fit the specific requirements of the health care industry. You take notes about product improvements that could be part of the marketing mix for this segment.

When you’re back at your desk, Ken sends you a list of Web sites, publications, and conferences where many HR recruiters go for professional information. This will be really useful when your boss wants to talk about promotion and place!

You invite Ken out for lunch to thank him for his valuable input.

You still have a lot to learn about Chumber and product marketing. But applying your knowledge about segmentation and targeting is giving you a good feel for how you might help the company succeed.

  1. Employment data for wage and salary workers are from the BLS Current Employment Statistics survey, which counts jobs, whereas self-employed and agriculture, forestry, fishing, and hunting are from the Current Population Survey (household survey), which counts workers. 
  2. ndividual sectors do not necessarily add to major sectors due to rounding. 
  3. Includes wage and salary data from the Current Employment Statistics survey, except private households, which is from the Current Populations Survey. Logging workers are excluded. 
  4. Includes agriculture, forestry, fishing, and hunting data from the Current Population Survey, except logging, which is from Current Employment Statistics survey. Government wage and salary workers are excluded. 


Unit C.00 – Why It Matters: Segmentation and Targeting

Why determine market segments and target customers?

Suppose you have just accepted a product marketing job with a technology company called Chumber. You’re excited about the company and the team you’ll be working with. Chumber’s main product is an automated, fully online system for checking the references of job candidates and getting feedback from coworkers about their professional skills.

After a morning orientation session and a product demonstration on the first day, your boss gives you your first assignment: spend a half day doing research. Then come back to her with recommendations about whom Chumber should be targeting in its sales and marketing activities, and why.

After you give your boss a puzzled look, she adds, “Don’t look so worried. I already know who I think we should be targeting. But with you coming in fresh, I’d like to hear what you think. We can probably learn something from each other!”

As you sit down at your new desk, the wheels start turning in your head.

Q: What problem is Chumber’s product solving?

A: The hassle of checking references for job candidates and finding out who is really a good fit.

Q: Who has this problem?

A: Companies that hire people.

You recognize that this is a business-to-business marketing challenge, not a business-to-consumer issue. But “companies that hire people” covers a lot of ground. How effective will Chumber be if you try marketing and selling to every company in the world? And within any given company, which people would be most interested in using this product?

The question of whom to target is a foundational part of any marketing activity. Marketers use the tools of segmentation and targeting to answer this question. Segmentation helps you understand your market and divide it into groups that share common needs and characteristics. Targeting helps you figure out which of these groups to focus on in your sales and marketing activities.

As you work through this module, you will learn about segmentation, targeting, and how they work. You will also learn how these tools help you shape the marketing mix to reach your target audiences effectively.

Learning Outcomes

  • Explain the purpose of segmentation and targeting in marketing
  • Describe common segmentation approaches
  • Explain the process of selecting an appropriate segmentation approach and deciding which customer segments to target for marketing activities
  • Explain how targeting influences each element of the marketing mix


Unit E.00 – Why It Matters: Ethics and Social Responsibility

Why learn about ethics and social responsibility?

Generally speaking, students believe that there are two primary reasons to act ethically:

  1. Acting ethically is the right thing to do from a moral perspective;
  2. If you act unethically, then you might get caught and be punished.

Neither of these is a bad reason to apply principles of ethics and social responsibility, but it is worth considering another reason, as well. In most cases strong ethical behavior leads to strong business results. Behaving ethically is actually good business. Let’s look at two different auto companies whose track records on ethical behavior have had very different outcomes.

Tesla and Social Responsibility

Photo of Tesla Model S being driven on a country road.

Tesla, Inc. was founded in 2003 by a group of engineers who wanted to prove that electric cars could be better than gasoline-powered cars. They hoped to build cars that wouldn’t require the tradeoffs in power and comfort of electric cars in the past. The founders pledged that each new generation of cars would be increasingly affordable, helping the company work toward its mission: “to accelerate the world’s transition to sustainable energy.”[1]

In order to design and build luxury electric cars, Tesla invented a number of new technologies that it patented in order to protect its competitive advantage. In June 2014 the company announced that it was releasing access to all of its patents, making its technological advances open to competitors and inventors. In the announcement, company CEO Elon Musk said, “Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual-property land mines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”[2]

Tesla has a mission with an emphasis on social responsibility; it strives to develop products that have both a societal and economic benefit. Industry analysts and consumers alike see this as a distinct advantage in the marketplace. Investment analyst Seeking Alpha explains:

Companies like Toyota Motor and Honda are already pushing for gas-less cars and more and more efficiency from their cars. Tesla is not single-handedly pushing this, but it is part of the overall push to improve one of the most important aspects of our country—how we envision the car. Yet, the company extends beyond this—challenging how we vision luxury, how we understand how to build a car, and what the future electric grid could look like.[3]

Volkswagen and Ethical Behavior

Volkswagon Jetta parked in the desert.

The car company Volkswagen (which is part of the larger Volkswagen Group) does not have a formal mission statement, but its goal is “to offer attractive, safe, and environmentally sound vehicles that can compete in an increasingly tough market and set world standards in their respective class.”[4]

In September 2015, the Environmental Protection Agency announced that Volkswagen had installed special software in its cars to manipulate emissions levels (making it appear that the cars are less polluting than they are). A week later Volkswagen disclosed that 11 million diesel vehicles contained the devices, and CEO Martin Winterkorn resigned. The price of Volkswagen stock plunged—losing 30 percent of its value overnight—and the company scrambled to understand what had happened and control the damage to its reputation.

In the months following the discovery of the deceptive devices, investigators identified a team of Volkswagen employees who had hatched the plan and implemented it over a number of years. An internal evaluation identified a “culture of tolerance” for rule breaking at the company. It also came to light that Volkswagen’s emphasis on “results at any cost” had contributed to the breach in ethical standards. Industry experts believe that the company’s violation of consumers’ trust will be will be exceedingly difficult to repair and that it may take years to rebuild the Volkswagen brand.

  1. “About Tesla,” Tesla, accessed September 23, 2019, https://www.tesla.com/about 
  2. Musk, Elon. “All Our Patent Are Belong To You,” Tesla, June 12, 2014, https://www.tesla.com/blog/all-our-patent-are-belong-you
  3. “Tesla: Social Responsibility Scorecard Shows Strengths And Weaknesses,” Seeking Alpha, Jan 6, 2015, https://seekingalpha.com/article/2801365-tesla-social-responsibility-scorecard-shows-strengths-and-weaknesses
  4. Jurevicius, Ovidijus. “Mission statement of Volkswagen,” Strategic Management Insight. September 14, 2013, https://www.strategicmanagementinsight.com/mission-statements/volkswagen-mission-statement.html