What is Marketing? How is it defined? Many businesspeople assume they know what marketing is because we use the word “marketing” so frequently. Just a few examples of the way marketing is frequently referenced in business include:
Our marketing strategy is completely focused on digital.
Now that we have a product, we just need to market it to bring in customers.
Customer relationship management (CRM) is the central focus for our marketing.
Our marketing strategies are social, SEO, PPC and content marketing.
Marketing defines our target customers.
Marketing is expensive but gets customers to buy our products.
Marketing is image and message for our brand.
And from the consumer perspective:
Marketing makes me buy stuff I don’t need.
This week we examine past and current definitions of marketing and the role the discipline plays within an organization. While marketing may incorporate some of the above concepts and assumptions, marketing strategy is more complex and offers more value for an organization. And, while many companies still use marketing only to develop messages or create brand images, leading organizations are expanding opportunities and results by changing the role and responsibility of strategic marketing. These changes have become increasingly necessary as the business environment becomes more complex and challenging.
In order to understand how marketing plays a strategic role in achieving organization goals it is important to understand different definitions of marketing and how it is practiced We will then examine how a new definition of marketing can help create long-term value for an organization, its customers and society.
Weekly Outcomes
Upon completion of this week, you should be able to:
Examine how marketing is currently defined and utilized in business.
Defend changes in marketing strategy with research and rationale.
Define what value creation means within an organization.
Explain how marketing can be defined to create value for an organization, customers, and society.
Readings and Research
Sheth, J. N., & Uslay, C. (2007). Implications of the Revised Definition of Marketing: From Exchange to Value Creation. Journal of Public Policy & Marketing, 26(2), 302-307. doi:10.1509/jppm.26.2.302. Once logged into the library system: https://web-a-ebscohost-com.dml.regis.edu/ehost/detail/detail?vid=11&sid=1c9978ca-4c86-48ed-a14c-0c30511c30d9sdc-v-sessmgr01&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT1zaXRl#AN=27150531&db=bth
Goedhart, M., & Koller, T. (2020, June 16). The Value of Value Creation, McKinsey Quarterly. 1-9. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-value-of-value-creation
Irwin, L., & Schneider, A. (2020, May 19). Defining Sustained Value Marketing. Retrieved from http://www.seecommgroup.com/communications.htm
Kotler, P. (2011). Reinventing Marketing to Manage the Environmental Imperative. Journal of Marketing, 75(4), 132-135. doi:10.1509/jmkg.75.4.132. Once logged into lilbrary system: https://web-a-ebscohost-com.dml.regis.edu/ehost/pdfviewer/pdfviewer?vid=14&sid=1c9978ca-4c86-48ed-a14c-0c30511c30d9sdc-v-sessmgr01
Building Knowledge
Changing Marketing Paradigms
In the 1950’s, management expert, Peter Drucker, offered his view of the purpose of marketing:
“Marketing is … the process through which economy is integrated into society to serve human needs.”1 (1958, p. 252)
In the 1960’s, E. Jerome McCarthy introduced the 4P’s of marketing (Product, Place, Price, Promotion) and the model was expanded into corporate practice by Phillip Kotler.
Readings for this week trace the evolution of marketing definitions and practices through the one-to-one and customer-centric marketing models. In 2011, Philip Kotler, a recognized marketing expert for decades, wrote that marketing needed to be reinvented to be sustained in a world facing environmental and other crises (2011, Kotler) .2
As cited in many articles and books, leading businesses and academic experts are demonstrating that marketing must focus on creating value for the company, customers, and society. The challenge is that defining “value” is imprecise. And it gets more complicated when an organization attempts to create value for multiple stakeholders.
For this course we will use the definition of marketing to be:
Marketing is planning and implementing solutions to problems that create sustained value for customers, business, and society.
Why Change Marketing?
Problem resolution
Marketing is the interface between company and customer. Customers are people and people have problems and want solutions. But our planet will not sustain serving every want when resources are finite and increased consumption is unsupported. Therefore, marketing that is based on solving valid and necessary problems rather than pushing consumption of more and more unsustainable products is a change that businesses need for their own survival.
A scan of just a few significant problems and trends that create opportunities for business include:
Climate change and global warming is reducing crop production and food supply and fresh water supply. Global temperature increases cause more deaths from ozone, nutrition, and disease.3
Energy sources are rapidly changing from fossil fuels to renewables with 24% of electricity generation coming from renewable energy sources in 2016.4
Income inequality has exploded since the 1970’s so that by 2016 the household share of wealth for the top 1% increased 261% and the bottom 90% household wealth fell to 23%.5
Customers Want Change
There is only one boss. The customer.
And he can fire everybody in the company, from the chairman on down, simply by spending his money elsewhere
Sam Walton, founder of WalMart, once said “There is only one boss: the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” In today’s competitive environment, customers have many choices and high expectations from organizations they choose to do business with. Customers may or may not want or need more “stuff.” They may expect environmental responsibility from companies they buy from. They may expect transparency and truth about their business sources and products. They may expect the organization contributes to its society or at least does no harm. They may expect the company to treat its employees fairly and pay livable wages. They may expect collaborative solution development.
They don’t want to be bombarded with intrusive promotion every moment of their life. They don’t want to be seen or treated as a “target” where companies push products on them based on assumptions about age, income, lifestyle, or other attributes. They don’t want to be lied to about how the organization is behaving or how they produce their goods or services.
As the business’ connection to customers, marketing must ensure that it understands who the customer is, what those customers expect from the organization, and whether the company is capable of solving their problems.
Businesses Benefit from Change
You may be wondering if changing the company approach to customers and marketing will be worth it. Sam Walton, Peter Drucker, and others have long stated that it is the only way to success.
New surveys report additional reasons to change to a sustainable, customer problem-solving, value-creation approach to marketing include:
The Business and Sustainable Development Commission calculated that there is a $12 trillion opportunity for businesses implementing the UN Sustainable Development Goals.
The longest running survey on corporate sustainability, the SustainAbility Climate Survey6, predicts significant risks for companies who fail to act on climate change, specifically relating to their reputation with customers and investors, and actual impact on their business operations due to climate change.
Businesses that fixate on short-term performance puts stakeholder interests at risk.
Value-creating companies create more jobs, increase employee retention and boost operating margins7.
The bottom-line value of changing the marketing paradigm is not just speculation. Many leading organizations have saved expenses and increased revenue by focusing on necessary and sustainable marketing practices. A study of business leaders conducted over 20 years shows that top organizations include Unilever, Interface, IKEA, Patagonia, and more8.
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