Unit B: Marketing Function

In 2005, Turkish immigrant Hamdi Ulukaya bought a yogurt plant from Kraft Foods in Johnston, New York. Ulukaya had a vision of a better product: the thick, rich yogurt he had enjoyed in Turkey but couldn’t find in the United States.

The Target Customer

Chobani started out making private-label regular yogurts for other large companies, but Ulukaya believed he could make a better yogurt than the competition. And, he had a good idea of the customers he wanted to target:

We aimed at people who never liked yogurt. We couldn’t blame them, because what was available was not what the rest of the world was eating.

Further, the company chose not to target only women, a favorite target segment for the U.S. yogurt industry. Ulukaya believed that both men and women would appreciate the fresh ingredients and high protein that Chobani offered.

The Chobani Product

The recipe for Chobani is thicker and creamier than regular yogurt, with twice the protein and none of the preservatives and artificial flavors found in conventional yogurt. What’s in the yogurt—five live and active cultures, including three probiotics—is as important as what’s not, and Chobani turned this competitive advantage into the yogurt’s slogan: “Nothing but Good.” Ulukaya described the philosophy behind the product:

We look at our yogurt as pure, healthy, simple, and something that you enjoy tasting. That is very, very important for us.^[1]

The Chobani Place

Existing Greek yogurt lines were most often sold in expensive specialty stores. Ulukaya hoped to sell his yogurt brand to a wider customer base through mass-distribution channels of grocery store chains. After more than a year developing Chobani’s trademark taste, in October 2007 Chobani’s first shipment included five different flavors—blueberry, peach, strawberry, vanilla, and plain—which were sold to a single Long Island grocery store. From there the company expanded regionally and then nationally to grocery store chains. The demand for broader distribution was fueled by the promotion campaign.

The Chobani Promotion

Chobani worked to develop a two-way dialogue with happy customers.

We’re on all the major social media platforms. The growth of Chobani really started virally, where one person would try it, tell five friends who each told five friends, and it really became a brand people loved to discover on their own and tell other people about. In the online landscape, we just had really great success at being able to talk to our fans. I think one of the great things about our company is our relationship with consumers; it’s really a lot of fun to hear what they have to say and take it to heart.^[2] —Nicki Briggs, a registered dietitian and head of the company’s communications team

Ulakaya also became a darling of the business press, which was persuaded by his philosophy that anything is possible with hard work. He was a frequent guest on national investment news programs and speaker at business conferences.

The company capitalized on the healthy and ambitious aspects of its brand, and in 2012 Chobani became the official yogurt of the U.S. Olympic Team. As a sponsor, Chobani  followed athletes from U.S. Olympic training centers to the London Olympic Games.

Since then Chobani has also visibly committed to supporting local farmers and strengthening economic growth in the communities where it is located, which contributes to its reputation as a healthy brand.

The Chobani Price

When Chobani entered the market, prices for the traditional offerings in the market clustered around 65 cents per cup. Premium Greek yogurt cost $1.34 per cup. ^[3]

Chobani priced its product at roughly $1 per cup. This decision was based on the expectation that the product would be successful. Ulakaya set the price assuming economies of scale—that the company would gain efficiencies as sales increased—instead of trying to recover the early costs. The price factored in the higher cost of premium ingredients, which also supported the product and promotion goals. ^[4]

 

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This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

Step 1: Choose an Organization

Choose an organization that does marketing. Use the guidelines below as you make your selection. Make it easy on yourself and choose an organization you’re interested in, and for which you can observe the marketing efforts.

If you choose a very large organization that markets many different products, focus your paper on one product or product line. For example, if you choose Chevrolet, don’t address trucks but choose a particular model of truck, or Corvettes.

Step 2: Explore the Organization’s Current Marketing Activity

Take a few minutes to research where and how this organization is conducting marketing activities. What marketing tactics and channels is it using? Who is it reaching?

Step 3: Post to the Discussion

Put the following information into your post:

• Company name
• Headquarter location (city, state/province, country)
• Industry
• Web site
• Why you chose this organization
• What marketing efforts you can see the organization doing

Step 4: Respond to Classmates’ Posts

After you have created your own post, look over the discussion posts of your classmates and respond to at least two of them.

Guidelines for Selecting an Organization

Identify an organization working in industry or area that interests you. Choose carefully because during this course, you will create a marketing plan focused on this organization. Think broadly about the type of organization you’d like to focus on. If you choose a very large organization, you’ll need to pick a specific product or service to explore. Small and medium-sized businesses tend to work well.

You’ll need an organization for which plenty of content is available to help you with the analysis you’re trying to do. You may be able to find primary information, or you may need to do research and create informed hypotheses (guesses) based on your research.

The following table lists a number of industries and sample companies you might consider. After this discussion post, you’ll have one week to change your selection if you decide to take a different path for the marketing plan.

COPYRIGHT

This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

• Revision and adaptation. Provided by: Lumen Learning. License: CC BY: Attribution
• Sample Discussion Grading Matrix. Provided by: Lumen Learning. License: CC BY: Attribution

• Discussion: Analyzing Marketing Efforts. Authored by: Larry Chase. Provided by: Tompkins Cortland Community College. Project: Kaleidoscope . License: CC BY: Attribution

During this course, you will learn to develop all the essential elements of a Marketing Plan. The purpose of this assignment is to make sure you are familiar with this course’s Marketing Plan Template. It is a well-designed tool for learning and reference about what a Marketing Plan includes and how to create one.

Student Instructions:

1. Download the Marketing Plan Template:  Open it in MS Word or Google Docs, your choice.
2. Take a moment to look over the Marketing Plan Template and notice the different pieces of information it includes.
3. Add your name to the header or another easily identifiable location in the Marketing Plan Template.
4. Save the template with a new name using this convention: first initial.last name_MKT Plan_v1.
   1. Example: J.Workman_MKT Plan_v1.doc
5. Submit this document as an assignment.

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This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

Using the Marketing Mix

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This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

What you’ll be able to do: describe the marketing mix

The value proposition explains why a consumer should buy a product or use a service and how the product or service will add more value, or better solve a problem, than other similar offerings. Once you get the value proposition right, you still have to actually deliver value to your target customer. The marketing mix describes the tools that marketers use to create value for customers.

Reaching Customers through the Marketing Mix

The value proposition is a simple, powerful statement of value, but it is only the tip of the iceberg. How do marketing professionals ensure that they are reaching and delivering value to the target customer?

Take yourself, as a “target customer.”  Think about your cell phone. What would make you want to buy a new one? How might the following issues affect your purchasing decision? Factors that might influence your decision include the following:

• Features: A company has just released a new phone with amazing features that appeal to you.
• Price: You’re concerned about the price—is this phone a good deal? Too expensive? So cheap that you suspect there’s a “catch”?
• Information: How did you find out about this phone? Did you see an ad? Hear about it from a friend? See pictures and comments about it online?
• Customer service: Is your cell service provider making it easier for you to buy this phone with a new plan or an upgrade?
• Convenience: Could you easily buy it online in a moment of indulgence?

You can see there are multiple factors that might influence your thinking and decision about what to buy—a mix of factors. Taken together, these factors are all part of the “marketing mix.”

Organizations must find the right combination of factors that allow them to gain an advantage over their competitors. This combination—the marketing mix—is the combination of factors that a company controls to provide value to its target customers.

The following video illustrates how the marketing mix changes depending on the target customer:

Evolving Definitions of the Marketing Mix

There are a few different ways the marketing mix is presented. During the 1950s the components of the marketing mix were conceived as the “four Ps” and were defined as follows:

1. Product: the goods and services offered
2. Promotion: communication and information
3. Place: distribution or delivery
4. Price: ensuring fair value in the transaction^[1]

Today, this categorization continues to be useful in understanding the basic activities associated with marketing. The marketing mix represents the way an organization’s broad marketing strategies are translated into marketing programs for action.

Over time, new categories of the marketing mix have been proposed. Most are more consumer oriented and attempt to better fit the movement toward a marketing orientation and a greater emphasis on customer value. One example is the four Cs, proposed by Robert F Lauterborn in 1990:

1. Customer solution: what the customer wants and needs
2. Communication: a two-way dialogue with the customer
3. Convenience: an easy process to act or buy
4. Cost: the customer’s cost to satisfy that want or need^[2]

The four Cs include a greater focus on the customer but align nicely with the older four Ps. They also enable one to think about the marketing mix for services, not just products. While it is difficult to think about hotel accommodations as a distinct product, it is much easier to think about a hotel creating a customer solution. You can see how the four Ps compare with the four Cs in the chart below.

The Four Ps Alignment with the Four Cs

Four Ps	Four Cs	Definition
Product	Consumer solution	A company will only sell what the consumer specifically wants to buy. So, marketers should study consumer wants and needs in order to attract them one by one with something he/she wants to purchase.
Price	Cost	Price is only a part of the total cost to satisfy a want or a need. For example, the total cost might be the cost of time in acquiring a good or a service, along with the cost of conscience in consuming it. It reflects the total cost of ownership. Many factors affect cost, including but not limited to the customer’s cost to change or implement the new product or service and the customer’s cost for not selecting a competitor’s product or service.
Promotion	Communication	Communications can include advertising, public relations, personal selling, viral advertising, and any form of communication between the organization and the consumer.
Place	Convenience	In the era of Internet, catalogs, credit cards, and smartphones, often people don’t have to go to a particular place to satisfy a want or a need, nor are they limited to a few places to satisfy them. Marketers should know how the target market prefers to buy, how to be there and be ubiquitous, in order to provide convenience of buying. With the rise of Internet and hybrid models of purchasing, “place” is becoming less relevant. Convenience takes into account the ease of buying the product, finding the product, finding information about the product, and several other factors.

Whether we reference the four Ps or the four Cs, it is important to recognize that marketing requires attention to a range of different approaches and variables that influence customer behavior. Getting the right mix of activities is essential for marketing success.

Competitors and the Marketing Mix

The challenge of getting the right marketing mix is magnified by the existence of competitors, who exert market pressures using strategies defined by their marketing mix alternatives. Remember, the purpose of the marketing mix is to find the right combination of product, price, promotion, and distribution (place) so that a company can gain and maintain advantage over competitors.

Product

In the marketing mix, the term “product” means the solution that the customer wants and needs. In this context, we focus on the solution rather than only on the physical product. Examples of the product include:

• The Tesla Model S, a premium electric car
• A Stay at a Holiday Inn Express, a low-price national hotel chain
• Doritos Nachos Cheese, a snack food
• Simple, an online banking service

Each of these products has a unique set of features, design, name, and brand that are focused on a target customer. The characteristics of the products are different from competitors’ products.

 

Promotion

In the marketing mix, the term “promotion” refers to the communications that occur between the company and the customer. Promotion includes both the messages sent by the company and messages that customers send to the public about their experience. Examples of promotion include:

• An advertisement in Cooking Light magazine
• A customer’s review of the product on Tumblr
• A newspaper article in the local paper quoting a company employee as an expert
• A test message sent to a list of customers or prospects

Marketing professionals have an increasingly difficult job influencing promotions that cannot be controlled by the company. The company’s formal messages and advertising are only one part of promotions.

Place

In the marketing mix, the term “place” refers to the distribution of the product. Where does the customer buy the product? “Place” might be a traditional brick-and-mortar store, or it could be online. Examples include:

• Distribution through an online retailer such as Amazon.com
• Use of a direct sales force that sells directly to buyers
• Sales through the company’s Web site, such as the shoe purchases at Nike.com
• Sales by a distributor or partner, such as the purchase of a Samsung phone from Best Buy or from a Verizon store

In today’s world, the concept of “place” in the marketing mix rarely refers to a specific physical address. It takes into account the broad range of distribution channels that make it easy for the target customer to buy.

Price

In the marketing mix, the term “price” refers to the cost to the customer. This requires the company to analyze the product’s value for the target customer. Examples of price include:

• The price of a used college textbook in the campus bookstore
• Promotional pricing such as Sonic Drive-In’s half-price cheeseburgers on Tuesdays
• Discounts to trade customers, such as furniture discounts for interior designers

Marketing professionals must analyze what buyers are willing to pay, what competitors are charging, and what the price means to the target customer when calculating the product’s value. Determining price is almost always a complicated analysis that brings together many variables.

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This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

What you’ll learn to do: explain the role of a marketing plan as a guiding document for marketing activities

How do organizations use the marketing mix to achieve results? This requires a clear understanding of the results that the organization hopes to achieve and a plan that brings the activities together.

The following reading gives an overview of the marketing planning process. In a later module we’ll cover the inputs and outputs of this process in much more detail. For now, think about how planning can focus marketing efforts to deliver value to the target customer.

The Marketing Plan

Effective marketing requires a plan—specifically, a marketing plan. Although customers should be at the center of any marketing plan, marketing activities do not operate in a vacuum. Instead, marketing is one function within a larger organization, and it operates within a competitive market environment. To ensure the effectiveness of marketing activities, the marketing plan must take all of these factors into account. Furthermore, once a plan is in place, it serves to guide all the marketing activities that an organization undertakes.

The marketing plan can take a variety of formats. It’s often a formal document that is broadly reviewed to create alignment and support across the organization. It can also be a presentation that explains each of the objectives and strategies. Sometimes the elements of the marketing plan are presented on a company’s internal Web site (or intranet), allowing all employees to access the information and see updates.

The format is less important than the impact. The marketing plan identifies the marketing objectives and explains how marketing activities will help the organization achieve its broader goals and objectives. The marketing plan describes how the company will use the marketing mix—product, promotion, place, and price—to achieve its marketing objectives effectively within the competitive market environment. The marketing plan also focuses the company’s resources on reaching target customers and driving them to act.

Marketing Plan Alignment with Company Goals

The executive leadership of a company is charged with creating the framework that aligns and focuses the work of employees: the company’s mission, objectives, and strategy. The company’s mission describes its purpose and explains why it exists. The executive leadership defines corporate goals and the high-level strategies that marketing activities should support.

Informed by corporate goals and strategies, marketers develop marketing objectives to support the broader company goals. They may cover a variety of areas: company growth, sales, market share, profitability, customer perceptions, market penetration, and so forth. The marketing objectives represent a set of measurable goals, tied to marketing activity, that align with and move the company towards its corporate mission and goals.

For example, Bristol-Myers Squibb is a pharmaceutical company with a mission to discover, develop, and deliver innovative medicines that help patients combat and recover from serious diseases. The company’s business strategy focuses on the manufacturing and distribution of medication, but it’s also engaged in medical research and the discovery of new treatments. Both the mission and strategy inform the marketing plan. The company’s marketing objectives and strategy should reinforce customer perceptions about the company’s biotech innovation and commitment to promising pharmaceutical breakthroughs. 

Marketing Plan Input: Situation Analysis

Beyond the company’s purpose and focus, the marketing plan must take into account a range of internal and external factors that can be very complex. A situation analysis examines both the internal and external factors that might impact the marketing plan.

Internally, the company has both strengths and weaknesses that will influence the plan, such as its products, workforce, market perceptions, and other characteristics that give it advantages or disadvantages in the market. Outside the organization there are a range of opportunities and threats such as competitors, economic forces, government regulations, and other political factors.

The situation analysis helps refine corporate goals and produce a relevant set of marketing objectives. At the corporate level, typical objectives include profitability, cost savings, growth, market share improvement, risk containment, reputation, and so on. These corporate objectives can be translated into specific, measurable marketing objectives. For example, the marketing objective “Introduce three new products” might lead marketers to support corporate goals on profitability, increased market share, and movement into new markets. A corporate goal of “Increase profit margins” might dictate marketing objectives around product innovation, quality of materials, and the price charged.

Translating Marketing Objectives into Strategies and Tactics

Once the organization has conducted a situation analysis and identified its marketing objectives, the next step is to figure out what strategies will be most effective and the tactics that will be used to carry them out. You will learn more about the differences between strategy and tactics later on; for now, think of the strategy as the “big idea,” or approach, and tactics as “the details”—the specific actions that will be taken to make the big idea a reality and help the organization reach its goals. For example, if you’re a chess player, your strategy might be to “keep your opponent on the defensive,” and one of your tactics might be to “take the opponent’s queen as early in the game as possible.” Your goal, or objective, is to win the game.

Obviously, a marketing plan needs to include actual plans, and that’s where strategy and tactics come in. Though it’s crucial for a marketing plan to be aligned with an organization’s mission and mindful of its target customers, its competitors, and so on, it’s just as important to have a plan of action that spells out exactly how the organization’s resources will be used to reach its goals. Strategies and tactics are the key components of that action plan.

Marketing Plan Implementation and Evaluation

Once the plan is in place, the organization begins to implement the strategies. Successful marketing strategies require effective implementation. For example, if the organization has a promotional strategy to launch a social media campaign, then significant work is required to hone the message, manage social media tools, and encourage customers to engage. The strategy cannot achieve results if it is not executed well.

How will you know if it has been executed well? Marketing organizations need to identify what constitutes a successful marketing campaign and then measure the results to determine whether it had the desired impact. Did it reach the desired customers? Was it cost-effective? Did it generate the sales expected? Were the metrics for the specific elements of the campaign successful? Marketing metrics might include the number of customers viewing an advertisement, the number of social media “shares” or “likes,” the number of visits to a Web site, the proportion of new customers vs. existing customers, customer spending levels, etc. The right set of marketing metrics depends on what you are trying to accomplish with the marketing campaign.

Marketers should capture and analyze the appropriate metrics to understand the the success of marketing activities—to improve planning and future results.

COPYRIGHT

This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

COPYRIGHT

This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

COPYRIGHT

This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

Why identify the primary marketing activities of an organization?

It’s springtime. You’ve just graduated from college, and the Instagram photos of you wearing your cap, gown, and huge smile are still fresh. But your mind has quickly turned to other things, or rather, to one major thing: a job.

You have a newly minted degree and a new skill set you’re fired up to use (and possibly a few unpaid loans on your back). Now you just need to get an employer to notice you, pick you out of the crowd, and invite you onto the team. In other words, you need to market yourself.

What does that mean?

You Are the Product

What is the unique combination of skills and capabilities you provide to prospective employers? What can you offer that’s different and better than other candidates? It might be a language you speak, a depth of prior experience you bring, a course of training you completed, a familiarity with the industry, great communication skills, or some combination of characteristics that make you an attractive employee.

Who Is Your Customer?

Who do you want to work for? What type of work do you want to do? Prospective employers are the customers you want to appeal to. Get to know them by researching who they are, who’s hiring, what hiring process they use and what they look for, how they get information about job candidates, and what makes them take a closer look.

How Do You Reach These Customers?

How can you connect with employers? Reaching prospective employers usually involves packaging and promoting yourself through a common set of job-search tools and activities—like job fairs, résumés, cover letters, LinkedIn profiles, networking lunches, meet-ups and other ways to get an “in.” As you find pathways to an employer, how do you make a strong positive impression? Packaging and presentation are essential. You show you’re a good fit by dressing for success, sharing sample work products, showcasing your expertise, and demonstrating interpersonal skills.

What’s Your Price?

When it comes to salary and benefits, what is your negotiating strategy? When discussions get serious—when you get a job offer, say—you’ll want to get as much compensation as you can without pricing yourself out of the opportunity. After all, you’re probably not the only candidate they are considering.

Marketing: A Life Skill

Marketing happens virtually everywhere. Job candidates like yourself have to figure out how to market themselves to employers. Companies market their products and services to customers. Nonprofit organizations market their altruistic missions and impacts to donors. Government agencies market their policies and programs to the general public. Candidates market their ideas to voters. Parents market vegetables to their finicky youngsters.

As you gain a greater understanding of marketing and its primary activities, you will see it at work all around you. You will become more adept at knowing how marketing works, and why. You will learn about marketing tools and techniques you can apply to your advantage personally and professionally. You’ll appreciate the value of good marketing principles in helping you get ahead.

Of course you want to develop a skill that’s so important in modern life!

Learning Outcomes

• Explain why the customer is the cornerstone of marketing
• Briefly explain the concepts of segmentation and targeting
• Describe the marketing mix
• Explain how organizations use the marketing mix (often called the four Ps) to market to their target customers
• Explain the role of a marketing plan as a guiding document for marketing activities

COPYRIGHT

This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com

What you’ll learn to do: explain why the customer is the cornerstone of marketing

As we dive into the mechanics of marketing, we begin by locking our focus on the customer.

“Customers” are the people or organizations with needs or wants that a business aspires to address. The act of obtaining a desired object from someone by offering something of value in return is called the exchange process. Businesses live, thrive, or die based on their ability to offer value to customers through the exchange process. In other words, the customer is the primary reason for a business to exist.

All marketing centers on creating, delivering, and communicating value to the customer.

Who Are Customers, and Why Do They Matter?

Marketing exists to help organizations understand, reach, and deliver value to their customers. For this reason, the customer is considered the cornerstone of marketing.

With this in mind, what is likely to happen when an organization doesn’t understand or pay attention to what its customers want? What if an organization doesn’t even really understand who its customers are?

One of the world’s best-known brands, Coca-Cola, provides a high-profile example of misunderstanding customer “wants.”  In the following video, Roberto Goizueta—in his only on-camera interview on this topic—recounts the disastrous launch of New Coke in 1985 and describes the lessons the company learned. Goizueta was chairman, director, and chief executive officer of the Coca-Cola Company from August 1980 until his death in October 1997.

Focus on Customers: The “Marketing Orientation”

The purpose of marketing is to gain a balance between creating more value for customers against making profits for the organization. To achieve this, many firms have adopted a marketing philosophy or what is generally termed a “marketing orientation.”

A marketing orientation can be defined as focusing the organization on identifying and understanding the customers’ preferences in terms of needs and wants and delivering them more effectively and efficiently than their competitors.

Prior to the adoption of a marketing orientation, many organizations followed what was referred to as the “production philosophy.” This approach focused on improving the efficiency of production and distribution in order to reduce costs and deliver more affordable products—both were considered the source of competitive advantage.

Another philosophy that has been followed historically is the “selling concept.” This approach required organizations to aggressively focus on selling and promotion efforts as a way to stimulate demand and drive sales.

A marketing-driven approach, or marketing orientation, has consistently delivered superior results over these other philosophies. Adopting a marketing orientation is now widely accepted as delivering greater levels of customer satisfaction, profitability, and sustainability.

As an example, Toyota, with its strategy of manufacturing cars for different segments of populations around the world, maintains a balance between customer value and profitability. With the marketing philosophy in mind, it has replaced its original goal of 10% of the world’s market share with being “Number one in customer satisfaction,” as it believes its market share will follow the satisfaction it delivers to its customers.^[1]

The Problem of Misplaced Focus

Both historically and currently, many businesses do not follow the marketing orientation. In the past, companies such as Texas Instruments and Otis Elevator followed a production orientation, maintaining a primary focus on technology, innovation, and low production and distribution costs. Such companies assume that a technically superior or less expensive product sells itself. While this may be true in some cases, over time this approach leaves businesses particularly vulnerable to competitors who outpace them technologically or undercut their pricing. Without a sufficient focus on the customer’s needs and preferences, businesses can lose sight of what matters most in the exchange process.

Other companies, such as Amway, treat sales and marketing as essentially the same thing. This sales orientation assumes that a good salesperson has the capability to generate demand and sell anything regardless of the customer’s needs and the value provided in the exchange process. Often, this focus on selling and the promotion process effectively ignores the customer or views the customer as someone to be manipulated. Organizations with this orientation become vulnerable to competitors that do a better job of understanding and catering to what customers actually want.

Staying Close to the Customer

Insightful businesses acknowledge the importance of production and sales but realize that the following three-step process is most effective:

1. Continuously collect information about customers’ needs and competitors’ capabilities
2. Share the information across departments, including production and sales
3. Use the information to create a competitive advantage by increasing value for customers

Thanks to the Internet and other technological advances, today’s consumers have access to far more and far better information than ever before. They also have many more choices. To succeed in this environment, businesses must provide comparable levels of information to competitors, and they must deal with new competitors that are quicker, smarter, and open 24-7-365.

Organizations that employ marketing correctly know that keeping customers informed is easier if they maintain constant contact with the customer. This does not necessarily mean that they write or call regularly, although it could. Rather, it means a marketing organization knows a great deal about the characteristics, values, interests, and behaviors of its customers. It monitors how these factors change over time. It provides channels of information and communication to meet customers where they are and be accessible at any moment. Although the customer-oriented marketing process is not an exact science, there is sufficient evidence that marketers who do this well tend to succeed.

A prime guideline for marketing success is to establish customer satisfaction as a company’s number-one priority. This forces an organization to measure and pay attention to customers’ experiences purchasing and using its products. The drive to improve customer satisfaction typically results in improvements to products, processes, and relationship building. This approach helps organizations develop a marketing mentality that facilitates information gathering and maintains effective communication with the customers who are critical to growth, profitability, and success.

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This courseware was assembled by Christopher VanOosterhout from a variety of resources copyrighted and openly licensed by multiple individuals and organizations.  See our Copyright and Attribution page for additional details.  For details about permission to use please contact me at c@vanosterhout.com with the phrase  Courseware Usage Inquiry.  If you believe that this courseware violates your copyright, please contact me at c@vanoosterhout.com with the phrase Copyright Inquiry in the subject.  Details about the collector of these resources and Licentia LLC can be found at www.vanoosterhout.com