MKTG 2080 - Test 1.docx

OVERVIEW OF MARKETING ===================== ### Doritos: Snack Favorite According to Fortune Magazine, Doritos is the favorite snack brand among Generation Z consumers.\' Doritos products range from the traditional nacho cheese flavored Cool Ranch to Flamin\' Hot. Doritos has co-branded with Taco Bell to offer fan favorites like the Doritos Locos Tacos and Doritos Crunch Wrap. In 2023, Doritos even partnered with a European distillery to offer a Doritos flavored liquor. There are numerous stories about the origins of Doritos. One story suggests that a Disneyland restaurant called Casa de Fritos invented Doritos in the early 1960s while others claim that Frito-Lay executive Arch West was the inventor. Regardless of how the famous chip came to be, by 1966 they were sold nationwide. In 1972, the nacho cheese flavor was introduced and remains one of the most popular chips in the world. Doritos engages audiences through its unique product offerings and collaborations. Doritos also has an ambitious social and digital media strategy. For example, Doritos uses funny and engaging video content on Tik Tok from celebrity content to Doritos based dance challenges. Doritos launched its Another Level Initiative that allows consumers to use an AR lens in Snapchat called the \"Triangle Tracker.\" This lens will convert triangles in the real world to Doritos in augmented reality.? While Doritos is owned by global giant PepsiCo, it is a powerful brand on its own. By continuing to develop new products and collaborations, and engaging with customers in meaningful ways, Doritos is a brand that appeals to multiple generations of consumers. We will see in later modules how Doritos\' digital marketing activities continue to engage generations of consumers. Overview of Marketing --------------------- Welcome to marketing! Wherever your life and career take you, knowing how to implement marketing principles will be an important part of your professional and personal success. Some of you reading this module will become marketing majors, but most of you will major in another subject, perhaps not even related to business. Either way, your ability to apply marketing principles in your future career or to market yourself will be critical to your success. Because of its importance, you are encouraged to approach this class as more than just a collection of concepts to be forgotten at the end of the semester. Many think that marketing is the advertising that you see online or while streaming content. Some think that marketing is the salesperson who sells you a car or a phone. Marketing is so much more. This module will provide a broad perspective of its function and importance to a firm. Marketing and the Sustainable Development Goals ----------------------------------------------- In 2015, members of the United Nations introduced the 2030 Agenda for Sustainable Development. The foundation for this ambitious goal for the planet includes 17 Sustainable Development Goals (SDGs): https://sdgs.un.org/goals. According to the United Nations, these SDGs are \"an urgent call for action by all countries-developed and developing-in a global partnership.\" Each of the 17 SDGs are equally important. However, if we highlighted all 17 in each module, it would be overwhelming. For each module, we will include several SDGs that may relate to the content of that module. Important SDGs to consider may include: 8 DECENT WORK AND ECONOMIC GROWTH Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. Economic growth can be a positive force for the entire planet, not just developed nations. Marketers can help drive innovation and create value to support sustainable business models. 4 QUALITY EDUCATION Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all. Education is one of the primary drivers of growth and allows each of us to contribute to society. Defining Marketing ------------------ Marketing is a sum of many parts. Doritos uses marketing elements such as advertising and social media, sales, marketing research, promotion, pricing, service quality, and distribution to better serve you, the customer. Doritos (like all good marketers) organizes these elements to best create value for the customer. Defined formally, **marketing** is an organizational function and set of processes for creating, communicating, and delivering value to customers and managing customer relationships in ways that benefit the organization and its employees, customers, investors, and society as a whole. In other words, marketing is all about the creation and promotion of products (goods, services, or ideas) that serve the needs of customers and the sale of those products, which help firms to remain profitable and sustainable, and contribute to society. The Importance of Marketing --------------------------- ### Marketing within Firms Most firms exist because they have the potential to generate profits. However, to earn profits, most firms must successfully make their way through a minefield of competition, societal changes, economic uncertainty, technological disruption, evolving customer demand, and regulation (to name a few factors facing business). These factors are part of the **marketing environment**, which comprises internal and external factors that affect a firm\'s ability to succeed. Because marketing drives sales and revenue, many consider it the most important function of a firm. The argument is that without product sales that result from marketing efforts, firms would have no reason to exist. All internal functions of the firm are important. However, marketing plays a leading role, generating the sales required to make other critical functions, namely accounting, finance, human resources, and operations/technology, necessary. **Accounting** The accounting function of a firm is tasked with accurately and properly keeping track of the firm\'s incomes and expenditures. Accounting also handles important tasks such as tax planning and preparation. [Marketing\'s Importance to Accounting]: Without the efforts of marketing (the correct products, prices, promotion, and place to sell), there would be no inflows to track, cash flow to pay expenses, or taxes to be calculated. **Finance** The finance function of a firm is responsible for accurately forecasting the future financial inflows and outflows of the firm. Finance makes sure that required capital is available for future expansion and growth and that the firm\'s assets are returning value to the firm. [Marketing\'s Importance to Finance]: The role of finance is related to expectations of return on the efforts of marketing. Without successful marketing, there is no need to expand a business or invest in capital expenditures if the firm is not selling products and generating revenues. **Human Resources** Human resources (HR) is a vital part of any firm. HR is responsible for attracting, onboarding, and maintaining employees that work for the firm. HR is also charged with making sure that the workplace is safe and conducive to productivity. [Marketing\'s Importance to HR]: The need for employees and safe work environments is driven by the marketing efforts of the firm that generate sales and revenue. **Operations/Technology** The operations/technology functions work to produce or facilitate a firm\'s products and services. From manufacturing to information technology, a smooth and efficient process management system helps a firm to operate more smoothly. [Marketing\'s Importance to Operations/Technology]: The operations and technology functions work with marketing, but they are also dependent on the efforts of marketing to provide the need for the function-without sales, no products would need to be produced. Each function within a firm is critical; however, marketing is the \"fuel\" that keeps all the functional areas going. If marketing is successful, all functional areas are able to operate effectively. If marketing is failing, all other functions must compensate. Thus, we urge you to take this class seriously, regardless of what area of business interests you. ### Marketing Outside of Firms What if no area of business interests you; why should you care about marketing? Maybe you plan to work for a nonprofit organization. Even nonprofit organizations face environmental factors that impact their success. For example, you may be required to successfully recruit new donors, educate communities, and secure grant funding-in an increasingly competitive nonprofit environment. To do this effectively, you will be wise to focus on marketing principles (value, satisfaction, product, etc.). Not all careers have a direct tie to marketing, but securing a career almost always does. Everything you do to prepare and apply for a job is related to marketing. In almost all cases, you will first develop the required skills and abilities (creating the right product), consider what salary you can expect (setting your price), determine where you want to work (establishing place), and produce a professional résumé for your application and interview (promoting yourself). If all goes well, you will \"sell\" your new employer on you and get the job. In either the profit or nonprofit world, you will need to find some way to differentiate either your firm or yourself from others to demonstrate value to customers or employers. In all settings, marketing principles are important because they will help you to accomplish your goals. Marketing's Role in Organizations --------------------------------- Marketing\'s specific role within an organization is to understand the customers and markets the organization serves, in an effort to develop strategies to sell products or services that produce profit. First, marketers focus on the needs and wants of the firm\'s customers. By developing products that match customers\' needs and wants, marketers create value and improve the chances that customers will purchase their firm\'s products. Marketers are also responsible for scanning the environmental factors within and outside the firm to identify strengths, weaknesses, opportunities, and threats facing the firm. Marketers attempt to position the firm\'s products to capitalize on changing market strengths and opportunities and to minimize weaknesses and threats. Finally, marketers develop strategies that address the price, place, and promotional mix of the firm\'s products to maximize sales revenues. In short, effective marketing drives customer satisfaction and firm profitability. Think about the basics of Doritos\' marketing and how it drives the firm\'s success. The marketers at Doritos start with a focus on the needs of their customers. Upon gaining a good understanding of these needs, marketers develop specific strategies and plans to offer new or improve current rental listings in light of changing customer needs. This is a main function of marketing because when a product or service is correctly matched to what customers need and/or want, it is more likely that customers will purchase it. In addition, properly designed products and services make customers happy, increasing satisfaction, positive reviews, and future purchases. **Meeting Customer Needs** \- Airbnb has two customer markets: guests and hosts. Guests are looking for unique places to stay and hosts aim to monetize their property. \- Airbnb\'s app was designed with the brand message in mind: Make guests feel welcome. \- More than 200 million guests use the platform. **Scanning the Marketing Environment** -Study rental markets including hotels, hostels, and bed and breakfasts to anticipate needs. -Offer unique or \"experience\" stays that cannot be found by the competition. -Continue building a network of hosts to increase the number of rentals available to guests. -Scan the environment for new location opportunities. **Implementing Effective Marketing Strategy** [-Product]: Airbnb\'s products are its website and app that connect customers looking for rental accommodations to individuals wanting to rent their property. [Price]: Airbnb charges a service fee from the hosts. [Place]: The company began in San Francisco and now operates in more than 220 countries. [Promotion]: Airbnb\'s campaigns emphasize that rentals are homes, not just accommodations, highlighting guests interacting with their surroundings. **Achieving Successful Marketing Outcomes** -In the early days, company founders went door-to-door taking professional pictures for listings, resulting in doubled revenue. Homeowners monetize unused space in their homes and renters find price-competitive short-term housing rentals. The Made Possible by Hosts campaign educates people on the experiences that guests receive from hosts. Advertising focuses on the unique experiences that guests have when staying in an Airbnb. The Marketing Strategy ---------------------- If your career is within a marketing department, you will have some role in the firm\'s marketing strategy. A **marketing strategy** is the set of actions taken to accomplish an organization\'s marketing objectives. A successful marketing strategy can lead to higher profits, stronger brand recognition, larger market share, and other desired outcomes for stakeholders of the firm. Many marketing strategies exist, but all should be implemented within a strategic plan. **Strategic planning** is the process of thoughtfully defining a firm\'s objectives and developing a plan for achieving those objectives. Firms must continually undertake the task of strategic planning. Shifting conditions, including changing customer needs and competitive threats, ensure that what worked in the past will not always work in the future, thus requiring firms to frequently modify their strategy. Strategic planning helps ensure that marketers will select and execute the right marketing mix strategies to maximize success. The **marketing mix**, which is the foundation of modern marketing, is a combination of activities related to product, price, place, and promotion (often referred to as the four Ps of marketing) that represent areas a firm can adjust to influence demand for its good, service, or idea. Doritos uses the 4 Ps to create value for its customers. Its unique flavor offerings and collaborations are a critical component of its product strategy. Because Doritos is in a highly competitive category of chip foods, prices are likely dictated by market demands and competitors. However, since Doritos is a leader in the category, customers may still demand the product if there are price changes. Doritos has a far-reaching distribution network. It is sold in vending machines and warehouse clubs and every kind of store in between. To reach all the customers Doritos wants to reach, PepsiCo must rely on its robust infrastructure and supply chain network. Airbb communicates the value proposition of \"Another Level\" through advertisements via augmented reality, digital media, outdoor advertising, and television. The company also engages in public relations by donating to various causes. Marketing strategy makes sense for Doritos, but does marketing strategy apply to your life? Imagine starting college and just randomly taking classes because they are interesting or easy, or your friends are taking them. You take a full load each semester, get good grades, and at the end of four years you have accomplished little, except building student loan debt. Hopefully you have a better strategy and plan. Perhaps you have a checklist of courses required to graduate in your selected field. You developed this plan by selecting a major early and determining the required courses you need. Without the specific objectives of your degree program and a strategy for balancing your classes with the personal and professional demands on your time, you likely will not succeed in achieving your desired result. This example is true of a firm\'s marketing efforts. Without strategy and planning, firms can spend a lot of money with little effect. The Role of the Marketing Manager --------------------------------- The **marketing manager** is responsible for short- and long-term marketing operations and strategy: Operational activities include implementing promotional campaigns, graphic design, social media, and marketing research (to name a few). Strategy activities include developing value propositions, marketing objectives, forecasts, budgets, and monitoring results. In firms that market only a few products and/or operate in only a few markets, one marketing manager may oversee all of the marketing implementation duties of the firm. In firms that manage more complex situations, such as a large product portfolio or diverse markets, multiple marketing managers may be employed, each responsible for a different aspect of the firm\'s overall marketing operations and strategy. Often, a marketing manager may be considered brand manager or segment manager depending on what portion of a firm\'s business they manage. At Doritos, for example, marketing manager positions exist in areas such as growth, internal communications, brand management, consumer engagement, and business development. Responsible Marketing --------------------- ### Airbnb: Is it always best for the Community? Airbnb, as discussed earlier in this module, has transformed the travel industry. With over 7 million listings in 220 countries around the world, Airbnb is ubiquitous.? According to its website, Airbnb hosts can earn significant income on their rentals. Additionally, Airbnb touts that the guests that stay in Airbb locations spend money in local restaurants, shops, and sights, thus bolstering the local economy. However, not everyone is cheering on the growth of Airbnb. For example, homeowners in residential neighborhoods may not enjoy the constant stream of travelers visiting the home right next to them. There are countless examples of complaints from Airbnb neighbors ranging from mild noise complaints to theft and property damage. Currently, many jurisdictions do not require homebuyers to disclose that they are going to use a home as an Airbnb rental property when they purchase, much to the chagrin of neighbors. Additionally, Airbnb does not often pay the same taxes as hotels. In many metropolitan cities, tax revenue generated from hotels is a huge source of local income. However, Airbnb often does not collect lodging taxes, thus allowing them to offer a lower price than hotels and retaining income from local municipalities. Airbnb has no doubt disrupted the traditional travel model and made travel more accessible, and often more comfortable, for many travelers. But does the good always outweigh the bad? You decide. Reflection Questions 1\. What, if any, responsibility does Aironb have to local residents? Should homebuyers and homeowners be required to disclose that the property is a short-term rental? 2\. Should Airbnb pay the same lodging taxes and fees as hotels? What are the implications for the Airbnb host and Airbnb guest? VALUE CREATION ============== ### Kroger: Adding Value Through Groceries and More When someone says the word \"value,\" we often think of something that is valuable or meaningful to us-something we really want or need. Or we might think of something we got on sale, or got a good \"deal\" on. Value is, in effect, \"What you get for what you give.\" In other words, we exchange something we value-money, perhaps-to get something of value in return-something that satisfies our wants and needs. When we consider our basic needs, food and nourishment are among the most important. Most of us in the United States depend on our local grocery stores to provide us with the nutrition we need every day. But as our wants and needs have evolved over the years, so too have grocery stores and supermarkets. Consider Kroger. Based in Cincinnati, Ohio, it is the nation\'s largest retail grocery chain, with more than 2,800 stores in 35 states bearing the Kroger, Fred Meyer, Ralphs, and other brand names. Barney Kroger opened his first store in 1883 \"to serve customers through food freshness, low prices, and innovation.\"? He went on to develop a chain of stores that provided one-stop shopping for more than just groceries. Today, Kroger customers can purchase not just groceries but wine, food for in-store dining, and coffee through national brand coffee shops, among other things. They can also take care of their banking and financial needs in Kroger stores. Add to that its 1,500 + fuel centers and 2,200 + pharmacies, and Kroger adds convenience to its offerings. Kroger also has its own line of competitively priced, quality private-label brands that are distinct to Kroger and offered nowhere else, helping to meet consumers\' needs. Kroger creates, captures, and delivers value through its wide selection of well-priced products and services in locations convenient to where we work and live. Kroger doesn\'t add value just by creating stores for consumers to visit. It also offers the option of bringing the grocery store to you through its delivery and curbside pickup services. Whereas Barney Kroger used to saddle up his horse to deliver groceries locally, today Kroger partners with a variety of technology and delivery-based companies to let you order your food online and get it where you want it, when you want it. Although consumer tastes may change over time, people often have the same or similar needs when it comes to food and associated items, and many customers like getting recommendations based on their purchasing habits. Kroger thus adds additional value to customer relationships by utilizing the services of its own retail data science, insights, and media company, 84.51°. By mining consumer data, the company provides consumers with highly personalized, specific purchase recommendations based on their recent behavior, offering coupons for future purchases and building on customer relationships that create loyalty in the long run. Value Creation -------------- This module focuses on value creation. Creating, communicating, delivering, and capturing value for customers is the ultimate goal of a firm\'s marketing efforts. When customers perceive value in a firm\'s products, they are likely to purchase and repurchase products. Over time, value is what builds a customer\'s loyalty to products and brands. The concept that value leads to long-term success is clear in the case of Kroger. For Kroger, a continued commitment to creating value is evident through its product selection, online ordering and delivery options, and personalized recommendations and incentives. By creating value for consumers, Kroger continues to have phenomenal and sustained growth. Marketing and the Sustainable Development Goals ----------------------------------------------- Every consumer perceives value differently. However, to ensure value for all, and for generations to come, it's important to consider the SDGs. As you review this module, consider the role that SDGs play in creating value. Particularly relevant SDGs are below: 12 RESPONSIBLE CONSUMPTION AND PRODUCTION Ensure sustainable consumption and production patterns. Often it seems like business its just about selling more and more. However, businesses can still grow and thrive while also encouraging sustainable consumption and developing better production methods. This can create long-term value. 3 GOOD HEALTH AND WELL-BEING Ensure healthy lives and promote well-being for all at all ages. Creating value for consumers means meeting and exceeding their needs. By developing products and services that promote health and well-being, marketers are able to deliver on that. Defining Customer Value ----------------------- **Customer value** refers to the perceived benefits, both monetary and nonmonetary, that customers receive from a product (a good, a service, or an idea) compared to the costs (money, effort, and time) associated with obtaining that product. Simply put, value is what customers receive from a product less what they give in order to obtain it. The harder part is understanding value. The term value has many potential meanings. Some think of value in reference to a \"value menu\" of low-price fast-food offerings. Others may think of value in regard to a higher-priced item of very high quality. In this case, value is not associated with \"rock bottom\" pricing, but rather the balance of benefits received from a product versus what is expended to get it. A good example is the Apple iPhone 15, which had an introductory price of \$799 and up. This price doesn\'t seem like a value price (many competitors have lower prices), but Apple customers pay the price because they see value in the phone. Apple\'s customers\' willingness to consistently purchase new iPhone products, despite a relatively high price, indicates that they perceive value in using the product that exceeds the cost of obtaining the product. Value is an equation of benefit minus cost. To calculate value, a customer should subtract the cost of a product from its benefit. But calculating this equation is often anything but easy. First, quantifying the benefits of a product can be difficult. Think about the iPhone. How do you calculate its benefits? In most cases, assigning a solid number to the benefit of a product is nearly impossible. Similarly, the actual cost of a product is often more than just the initial price. Many products have up-front costs and require other spending. A good example is a vacation. The benefits of a vacation may be high-perhaps you need a rest and relaxation break---but what are the costs? You can easily add up the costs of plane tickets, hotel stays, Uber rides, dining, museum fees, and the many expenses associated with travel. But many costs are overlooked. For example, missing work, school, or family all have a cost. Think of other costs associated with a vacation. Do you still see value in the trip? Sometimes the true costs, when thoroughly examined, outweigh the benefits we receive. However, if we believe that the benefits outweigh the costs, then value creation can occur. **Value creation** occurs when consumers use products or services that satisfy their needs and wants. For value creation to occur, exchange must also occur. **Exchange** is when a buyer and seller trade things of value so that each is better off as a result. Firms such as Kroger initiate their part of the exchange of value by creating and offering products-in-store and online-that provide potential value to consumers. Consumers then get to complete the exchange of value by purchasing products and services. But how can marketers orchestrate value for customers? It is clear that products are a part of how value is created because products can be designed and modified to meet customer needs and create value. In addition, marketers have control over the price (how much?), place (where sold?), and promotion (how will consumers know?) of their products. These four elements of marketing, known as the four Ps, are described in the next sections. The Four Ps of the Marketing Mix -------------------------------- The primary way that marketers generate value is through decisions on product, price, place, and promotion. These elements are known as the four Ps of the **marketing mix**. The marketing mix represents everything that a firm can adjust to affect customer perceptions of value and influence demand for its products. Successful marketing managers make strategic decisions focusing on how a specific element of the marketing mix, such as discounting prices or changing the product\'s packaging, will affect value. With more value, firms can gain advantages over competitors and achieve long-term success. ### Product The discussion of the marketing mix typically begins with the product because, without it, a firm has few, if any, decisions to make when it comes to price, place, or promotion. **Product** is a specific combination of goods, services, or ideas that a firm offers to consumers. Services are intangible products. Kroger is a company that provides both products and services, both in-store and online. Its wide range of physical goods allows consumers to select the groceries and other items they want or need on a daily basis. Kroger also offers services, including online ordering, delivery, and a variety of in-store services, all adding value to complement the traditional \"supermarket\" experience. Some other examples of products include: -The Rubik\'s Cube: The Rubik\'s Cube is considered one of the top-selling toys of all time, providing children and adults with hours of entertainment. -Drones: Sales of drones are increasing exponentially as more and more consumers are buying them for a hobby. -Blow-Dry Bars: Beauty and spa treatments are examples of intangible products (services). Blow-dry services appeal to women and men around the world who desire to get their hair styled quickly and conveniently. A product can also be an idea. For examples, for Google, an idea such as wireless and hands-free home can be considered a product. ### Price **Price** is the amount of something-money, time, or effort-that a buyer exchanges with a seller to obtain a product. Pricing is typically the easiest and most common marketing mix element to change, making it a powerful tool for firms looking to quickly adjust their market share or revenue. Setting a price is therefore one of the most important strategic decisions a firm faces because it relates to the customer\'s assessments of value and quality associated with a product. For example, Kroger offers many national and international brands consumers know and trust. But Kroger also offers its own line of private-label store brands that aren\'t offered anywhere else. Looking at price alone, you might think that the national brands are a higher-quality product. But since many Kroger brands are similar to or the same as national manufacturer brands, you might reconsider which brand provides more value to you, the consumer--- is it the lower price for a similar item, or is it the comfort in trusting a well-known national brand? Firms must carefully consider price and walk the fine line between value and quality assessments by consumers. Consider, also, if you are choosing a location for a haircut. The price of the haircut includes the actual cost of the haircut, but also the time it takes you for the appointment. More importantly, the cost of the haircut includes how it makes you feel. Think about the feeling of getting a bad haircut. That is a high cost that many of us are not willing to pay! ### Place **Place** includes the activities a firm undertakes to make its product available to potential consumers. Companies must be able to distribute products to customers where they can buy and consume them without difficulty. Place includes location, distribution, inventory management, and even where to put an item in a store. Place is important because, even with the right product at the right price, if customers can\'t easily purchase the product, they\'ll likely find a substitute. Think about it: If you order a Coke but a restaurant has only Pepsi, will you accept Pepsi as a substitute? (Most people would say yes.) Consider this: You can travel to some of the most remote towns in the world and find a McDonald\'s. This is possible because McDonald\'s focuses heavily on the place element of its marketing mix. With grocery stores like Kroger, we often first think of physical stores in neighborhood shopping centers. But as consumer lifestyles have changed, so too has the definition of \"place.\" Consumers now have the option of shopping virtually-ordering their groceries online, paying online, and arranging a delivery date and time that meets their busy needs. This puts Kroger in competition with companies like Amazon, which offers online ordering through Amazon Fresh or Whole Foods Market. ### Promotion The promotion element of the marketing mix is what most people think of when asked to describe marketing. **Promotion** refers to all the activities that communicate the value of a product and persuade customers to buy it. The different promotional resources that marketers use make up the promotional mix. Four promotional elements are used by marketers: advertising, sales promotion, personal selling, and public relations. Each of these elements benefits from social media and mobile technology that enable faster and more effective delivery of promotional messages. If you\'ve ever seen television commercials, been prompted by a persistent online ad, talked with a salesperson, been pinged by a mobile app while in proximity to a store, or used a coupon (a form of sales promotion), you\'ve been on the receiving end of a promotional activity. As is the case with every element of the marketing mix, successful promotion involves the firm\'s ability to integrate its promotional activities in a way that maximizes the value of each. An integrated approach to promotion, where all promotion elements \"fit\" well together, is important to the success of a promotional strategy. Kroger\'s consistent use of color, naming, and logo schemes for each of its brands successfully creates an integrated approach to promoting its products and services. In recent years, the way a firm executes its promotional activities has evolved. Today, firms of all sizes and from all industries communicate quickly and directly with their customers using a variety of online and digital tools and social media platforms. But how do marketers know the correct mix of the four Ps that will create value? The answer lies in understanding the difference between needs and wants and adjusting the four Ps accordingly based on specific customer variations for different products. Thus, we next explore the difference between consumer needs and wants. Needs versus Wants ------------------ Organizations desire to satisfy the needs and wants of customers. Many of us use these terms interchangeably in casual conversation. Have you ever said \"I really need a new phone\" when your current phone is actually functioning well? What you really meant to say was \"I really want a new phone.\" For marketers, understanding customers\' needs and wants---and the distinction between the two-is important. **Needs** are states of felt deprivation. Consumers feel deprived when they lack food, clothing, shelter, transportation, and safety. Marketers do not create needs; they are a basic part of our human makeup. Regardless of whether you ever see an ad, talk to a salesperson, or receive an email from an online retailer, you will still need food, water, shelter, and transportation. Whereas a need is something that you have to have for survival, a **want** is something that you would like to have. Most of us make decisions beyond fulfilling our basic needs and more in response to fulfilling our wants. Rarely do we see a marketing campaign appealing to our basic needs. We don\'t see food manufacturers suggesting, \"Well, you have to eat to survive; might as well eat this!\" Because most customers behave based on their wants, most marketers create products and services to appeal to those wants. These wants are typically shaped by a customer\'s personality, family, job, background, and previous experiences. For example, if you need a certain book but you want it easily, Google Books will make the purchase of that book easy for you-essentially matching your need with your want. In another example, clearly people need shelter from the weather; a marketer will work to turn that need into a want for a specific home---a tiny house, condo, or mansion. The distinction between needs and wants is important. For example, everyone needs food and water to survive. Many consumers, however, want specialty foods and beverages to satisfy a variety of tastes. The better a firm understands the difference between customers\' needs and wants, the more effectively it can target its message and convince customers to buy its products. This approach, when done well, works for the simple reason that the firm\'s offering will meet its customers\' needs and wants better than the offerings of its competitors. Likewise, effective marketing happens when a firm is able to align the four Ps with its customers\' needs and wants. Let\'s remember that marketing is an organizational function and a set of processes for creating, communicating, delivering, and capturing value for customers-all of which are critical to a firm\'s success. We explore how marketers accomplish each of these goals in the sections that follow, starting with creating value. Creating Value -------------- Marketers are constantly looking for new ways that products can create value for consumers. Recall that a product is the specific combination of goods, services, or ideas that a firm offers to its target market. This product enriches the lives of consumers with designs, features, and functions that they need and want. But how do marketers get consumers to use their goods and services? When marketers successfully match products to consumers\' needs and wants, consumers are more likely to purchase and use those products-and that is where value is created. The simple fact that the phrase \"Google it\" is so common is testament to the fact that Google has been successful at creating value. \"Googling\" can fulfill both needs (e.g., finding a doctor when sick) and wants (e.g., researching a tropical vacation). Matching products with wants and needs may seem simple, but it isn\'t, as demonstrated by the fact that more than 80 percent of all new products fail. If customers perceive that the product is not meeting their needs and wants, they will not buy the product and thus it will not succeed. Consider Orbitz soda, introduced in 1997. Although Orbitz had an appearance that appealed to young kids (it looked like a lava lamp), customers could not get past its taste, which many said was reminiscent of \"Pine-Sol or cough syrup.\" Within a year, Orbitz was removed from retailers\' shelves. Orbitz proved unsuccessful because it seems the company did not conduct taste tests to confirm that the flavors were ones consumers actually wanted and liked, before introducing it to the market.? Even Google has failed at creating value. Have you heard of Google Buzz, for instance? Probably not, because the social networking site did not meet consumer needs and wants. Consumers didn\'t see value in using the product, so it failed within a year of launch. Communicating Value ------------------- Once a company has created a valuable product (designed with customer needs and wants in mind), it must communicate the product\'s potential value to customers. Have you ever been to a new restaurant and found that its food, service, and prices were excellent? Is that restaurant still in business? If not, the restaurant likely failed to communicate the value it offered. Business history is littered with failed companies that designed a valuable product or service but lacked the capability to let customers in the market know about it. Conversely, consider Google, which in recent years launched an exclusively Google-based phone called the Pixel. The Pixel is designed to provide value to customers by incorporating an advanced camera, premium quality construction, and an affordable price. Google is communicating the value the phone provides to users by spending hundreds of millions of dollars on promotion. This communication is designed to let people know why (according to Google) the Pixel offers superior value compared to Samsung and Apple products. Given the level of communication, Google hopes to inform consumers of the value created by the Pixel, and in turn drive sales of the product. Marketers use various promotional media to communicate value, including online, mobile, streaming, print, and outdoor advertising (such as billboards). However, regardless of the communication channel, most communication strategies focus on one or more of the four Ps. Delivering Value ---------------- The value process doesn\'t end at communicating value; marketers must also deliver the value that they communicate. In order to ensure the value is deliverable to customers, the product or service must be physically available or easily accessible to customers. Think about Diet Coke. Isn\'t it remarkable to think that you can buy Diet Coke at a grocery store in Chicago, a mall in San Francisco, a restaurant in Miami, a gas station in rural Arkansas, and practically everywhere in between? Millions of people throughout the world buy and enjoy Diet Coke every day. This phenomenon is made possible by Coca-Cola\'s ability to physically deliver its product to countless places. In this example, Coca-Cola\'s use of a sophisticated delivery network, which is an aspect of the place \"p,\" is a requirement of delivering value. Tech firms like Google have the same delivery complexities as other firms but often do not deliver to a physical store. Instead, they use digital channels. Think about Google\'s products and how their value is delivered to you. Google\'s search engine, Google Drive, Gmail, Google Play apps, and various Google Docs are never physically delivered to your home or business. For example, does a UPS driver deliver your Gmail? Obviously not! Advances in electronic delivery have revolutionized how value is delivered. Now value can be created and realized instantly, as opposed to in the past where you had to wait until a product was delivered (perhaps by UPS), or until you could pick it up. Capturing Value --------------- In addition to creating, communicating, and delivering value, firms must also **capture value**. The purpose of the first three value components is to generate exchange with customers. For firms to capture value they must identify ways in which they can gain in some way through the exchange. Price is the primary way that firms can capture value from customers. In order for marketing to occur, there must be an exchange. An exchange occurs when the buyer trades something of value, usually money, to obtain a product or service. Price is the sacrifice the buyer makes to obtain a product. Usually price is monetary, but it can also include time, information, or effort. Marketers have to be extremely thoughtful about price. Price is often a signal of quality. If an item is priced too low, it might be perceived as low quality. Conversely, if an item is priced too high, consumers might remove it from their consideration set. Marketers must determine the appropriate price that customers are willing to pay in order to best capture value for that product or service. Responsible Marketing --------------------- ### Misleading Language to Inflate Value Brands are supposed to market their products in a responsible way. In many countries, there are rules and regulations that firms must follow in how they communicate their value proposition to customers. For example, in the United States, the FTC (Federal Trade Commission) monitors companies to ensure that their communications are truthful, have evidence to back up their claims, and aren\'t unfair. Yet, brands have to distinguish themselves from the competition, often using inflated language, claiming things like \"this product will change your life\" with the expectation that the consumer realizes that their whole life will not change. However, there is a fine line between distinguishing yourself and engaging in misleading language. While brands want their consumers to understand their value proposition and see their products as superior than their competition, they have to be careful of using misleading, or less-than-truthful, language. Examples of misleading language include: Brands like Reebok and Sketchers, in the early 2010s, launched toning sneakers that claimed to tone your legs better than regular sneakers. These claims went unsupported, and the brands were forced to issue millions of dollars of refunds.° Naked Juice was forced to retract their claims of being \"100 percent fruit\" and \"all natural\" after synthetic sources of fiber and ascorbic acid were found in their products. 10 Similarly, Kashi brand cereal (owned by Kellogg) had to stop using the term \"all natural\" as well. Weight loss product, Sensa, claimed that it enhanced the smell and taste of food, making users feel fuller and more satisfied faster. The FTC said that these claims were unfounded and the company had to pay \$26 million in a settlement.\" Reflection Questions 1\. The above examples provide some very clear-cut cases of misleading language. However, consider the class action lawsuit against Red Bull for the drink\'s claim that Red Bull \"gives you wings.\" While customers didn\'t actually believe that the drink could give them wings, they did think it implied more caffeine or energy than what the drink provided. At what point do you think language extends beyond metaphoric to misleading? 2\. What are other ways that brands can distinguish themselves from their competitors while informing consumers about the value proposition? 3\. How much of the burden of deciphering misleading language should be on the consumer? Sustainable and Ethical Marketing ================================= Marketing with a Conscience --------------------------- When you want to buy something, do you consider how sustainable it is before you make a purchase? According to the National Retail Federation (NRF), almost 50 percent of Gen Zers (those born in the mid-1990s and on) choose brands that they believe to be eco-friendly and socially responsible.\' In addition to being socially responsible, modern consumers want firms to behave in an ethical manner and to adhere to basic ethical standards. Ethical standards are therefore a critical component of a successful marketing strategy. Making ethical choices not only makes good business sense, it can also generate profits, enhance customer loyalty, and foster better relationships with stakeholders. The following examples show a range of ethical issues a firm might encounter. Scenario 1: Many consumers used third-party delivery apps like Uber Eats and Grubhub, which charge restaurants transaction fees, commission fees, delivery fees, and subscription fees. In fact, in many cases, an order through a delivery app can cost a restaurant up to 30 percent of the price of the order. And to appear as if they have a wider variety of options, some delivery apps list restaurants on their apps without the restaurants\' permission. Are these apps behaving in a predatory way? Should consumers use them? Scenario 2: Critics of fast-food restaurants often lament the inclusion of toys with the purchase of kids\' meals. In fact, in 2018, parents in Canada sued McDonald\'s over the inclusion of toys in its Happy Meals, saying that the service violated provincial laws designed to protect children from advertising. The case cited that not only were the toys linked to popular films, they were also displayed at eye level for children, making them more irresistible. Other critics also suggest that the inclusion of toys or other incentives in kids\' meals rewards bad eating behavior and contributes to childhood obesity. What do you think is the fast-food industry\'s responsibility? Scenario 3: A brand is interested in building its client portfolio. In order to reach a new set of customers, the company buys a list of e-mail addresses from a service company. While these people did not give their consent to be contacted, the Federal Trade Commission (FTC) says that the company is legally allowed to e-mail people without their consent. This could potentially hurt the brand\'s image, but it could also help the company reach new customers. If you worked for the brand, what would you do? Scenario 4: In 2017, Burger King launched a television commercial to interact with Google Home Devices. In the television ad, the actor, portraying a BK employee, is seen holding a Whopper and said, \"OK Google, what is the Whopper Burger.\" The intent of this ad was to have consumers\' in-home Google Home Devices respond. While some marketers thought this commercial was clever, critics claimed that it was invasive and blurred privacy Ines. Scenario 5: In 2011, Walmart introduced a line of cosmetics called GeoGirl. The target market for this product was girls as young as 9 years old. Walmart tried to reach this audience, as well as their parents, by promoting the environmentally friendly production of cosmetics. This product and campaign were criticized by audiences for emphasizing the appearance of young girls and greenwashing the marketing efforts (claiming to be green when they actually were not). The products have since been discontinued. What do you think of Walmart\'s tactics? Scenario 6: In 2011, Patagonia launched the \"Don\'t Buy This Jacket\" campaign to highlight the amount of pollution caused by apparel and fashion production. The ad suggested to customers that they shouldn\'t buy clothes if they don\'t need them. However, sales of the jacket soared. Some critics of Patagonia claim that it was a marketing plan designed to drive sales. What do you think? Sustainable and Ethical Marketing --------------------------------- You\'ve just read about a few of the ethical issues marketers face. In this module, we look at a number of issues related to sustainable and ethical marketing. This module also offers a process for making decisions on ethical issues. In addition, we explore marketing\'s role in corporate social responsibility as well as sustainable marketing. Marketing and the Sustainable Development Goals ----------------------------------------------- The UN SDGs encourages businesses and governments to adhere to higher ethical standards and work toward more impactful sustainability goals. While all the SDGs involve marketing ethics, some important SDGs to highlight this module might include: 9 INDUSTRY, INNOVATION AND INFRASTRUCTURE Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation. Sometimes in an effort to cut costs, companies will behave in ways that blur ethical boundaries. In order to foster long-term, viable industrialization, all stakeholders should be considered. 16 PEACE, JUSTICE AND STRONG INSTITUTIONS Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels. Being ethical requires brands to consider the systematic impact of their choices. Ethical Issues in Marketing --------------------------- Ethical decision making should be a key component of all successful businesses. **Ethics** are moral standards expected by society. Marketers should clearly understand the norms and values expected of them and act in a way that reflects their company, their profession, and themselves in a positive, ethical manner. The consequences of not adhering to an ethical code can be serious. Ignoring ethical considerations has destroyed some of the largest companies over the past two decades. Job seekers, especially college graduates, sometimes face a challenging job market due to the unethical behavior of many firms. For example, Arthur Andersen was a leading recruiter of college graduates throughout the 1990s, until a series of unethical decisions by a limited number of employees led to its demise, causing many people, including new graduates, to lose their jobs. Not only do unethical marketing practices hurt customers, but they also hurt employees and society as a whole. Marketers may confront decisions that will boost short-term sales at the expense of the long-term reputation of the company. Employees may have to choose between the short-term benefit of a sale and the potential long-term damage to their personal brand if they don\'t adhere to ethical standards. **Product-Related Ethical Questions** -What safety risks, especially for children and older adults, might a product pose? Should environmentally friendly ingredients and packaging be used even if it costs more? Are we maintaining the highest privacy standards in our website and with our data collection? **Place-Related Ethical Questions** -Should jobs be outsourced to other members of the supply chain? Are we working with other firms that have the same ethical standards we do? What opportunities for personal gain might tempt a firm\'s suppliers? **Price-Related Ethical Questions** -Should the firm charge customers different prices based on their ability to pay? Should the firm increase prices due to a lack of local competition? Should the firm lower prices on unhealthy products to make them more accessible and attract a bigger audience? **Promotion-Related Ethical Questions** -Does the advertising message represent the product\'s benefits honestly? Does the promotional strategy incorporate violence, sex, or profanity that may be inappropriate for some audiences? Does the advertising message attack competing products rather than highlight the benefits of the firm\'s product? Ethics of Artificial Intelligence --------------------------------- Integrating Al into various organizational areas, including marketing, has many positive attributes. While the positive qualities are widely discussed, it is important also to discuss the ethical considerations of using Al in marketing. Marketers must be aware of the need for responsible and ethical use of Al. Most Al technologies rely heavily on large data sets, so data transparency and privacy are critical. Additionally, transparency in how Al systems collect, analyze, and employ consumer data in various marketing areas should be addressed. This can be accomplished through clear communication with stakeholders and customers whom Al may impact. Some Al technologies have been criticized due to actual or perceived bias that exists in data sets and Al algorithms. Al should be designed to ensure that bias based on gender, race, age, or other factors is avoided. Avoiding bias is a continual process that involves frequent monitoring of Al systems and adjusting strategies and algorithms to rectify or prevent the perpetuation of biases. In marketing, the ethical use of Al also covers designing systems to maintain consumer autonomy and avoid manipulative marketing practices. Al systems should be designed to maintain customer autonomy while avoiding deceptive and manipulative marketing practices. Ethical Values in Marketing --------------------------- The American Marketing Association (AMA) is the leading organization for promoting and advancing marketing thought. The AMA has a Statement of Ethics to promote the highest standard of ethics for its community members and the marketing discipline as a whole.? Within this statement of ethics are five core ethical values that the AMA believes are the most important for championing ethics in business and marketing. The five core ethical values are: **Honesty**: Marketers are expected \"to be forthright in dealings with customers and stakeholders.\" This means that marketers are always truthful, stand behind the claims of their products and services, and honor their commitments and promises. **Responsibility**: Ethical marketers \"accept the consequences of our marketing decisions and strategies.\" Responsible marketers serve the needs of their customers and communities. Responsible marketers acknowledge the vulnerable market segments such as children, older adults, and others who may be disadvantaged, and recognize that they have special commitments to these audiences. Responsible marketers always consider the ethical, environmental, and social consequences of their actions. **Equity**: Marketers are expected \"to build a diverse marketing workforce and support inclusive marketing practices by valuing and embracing individual, cultural, and ethnic differences.\" Marketers must also remember to never stereotype or depict any group in a negative way. Marketers must treat all stakeholders respectfully. **Transparency**: Ethical marketers \"create a spirit of openness in marketing operations.\" Transparency involves clear communication with all constituents of an organization. Transparency includes disclosing information and ensuring that there is never a conflict of interest in any of a firm\'s business dealings. **Citizenship**: Marketers are expected \"to fulfill the economic, legal, philanthropic and societal responsibilities that serve stakeholders.\" Marketers are expected to be good citizens, contribute to their communities, protect the environment, engage in charitable activities, and seek supply chain partners that have similar values. Ethical Decision-Making Framework --------------------------------- Despite the positive impact ethical decision making can have on a firm, the ethical choice is not always clear. This section outlines an ethical decision-making framework-shown below-that can help you navigate difficult marketing challenges. You can apply this systematic framework to ethical challenges you may face in your career. **Step 1**: Determine the facts in an unbiased manner. First, determine the factual elements of a specific problem without letting any potential bias influence the decision. Fundamental factors such as an individual\'s history, background, and experience can influence how we review and interpret the facts at hand. We must make a conscious effort to determine the relevant information in an unbiased way. **Step 2**: Identify the ethical issue at hand. It\'s possible to avoid ethical problems if the ethical issue is clearly defined. The rest of the framework is relevant only if the issue itself is clearly defined. **Step 3**: Identify the stakeholders impacted by the decision. Stakeholders can be both external and internal and include the firm\'s employees, customers, suppliers, shareholders, and the community in which the firm operates. Identify and consider each group as part of the ethical decision-making framework. **Step 4**: Consider all available alternatives. After the relevant stakeholders have been identified, all parties should brainstorm alternatives. Different groups often view issues through different perspectives, and brainstorming can lead to creative, ethical, and useful solutions. **Step 5**: Consider how the decision will affect the stakeholders. Managers sometimes refer to this step as \"seeing through a problem to the other side.\" This means that we should consider ahead of time how the decision will affect all stakeholders. For example, makers of Nutella marketed the product as part of a balanced breakfast for children, even though it was loaded with sugar. Ultimately, Nutella was sued for this and made to give \$20 per jar to anyone who purchased Nutella believing it to be a \"healthy breakfast.\" **Step 6**: Discuss the pending decision with the stakeholders. Seek feedback on potential decisions from stakeholders. It is often impossible to fully appreciate all of the dynamics of an ethical decision without getting input from those who will be affected. Many business problems can be avoided if a thoughtful discussion occurs when the decision is still pending. **Step 7**: Make the decision. Once the issue has been discussed with the relevant parties, make a final decision based on the stated criteria. Making decisions that impact others can be a stressful and challenging task, but using this decision-making framework can ensure thoroughness and thoughtfulness in arriving at the decision. **Step 8**: Monitor and assess the quality of the decision. The economy, regulatory environment, and consumer opinions are always changing and developing. It was not that long ago that smoking cigarettes on planes and in offices was considered perfectly ethical. Today, because we have more information about the dangers of secondhand smoke, laws prevent people from smoking in public places. Firms will face many ethical challenges in the years ahead that we cannot even begin to predict now. It will be incumbent upon all business professionals, especially marketers, to monitor and assess whether the decisions they\'ve made still represent the right and ethical choice for the firms, their consumers, and society as a whole. **Minicase** Tanisha works for a sporting goods store called East/West Adventures. Tanisha recently signed up for the newsletter for her competitor, another sporting goods store called North/South Adventures, because she wanted to keep up with what her competition was doing from a promotional perspective. One day, Tanisha receives an e-mail newsletter from North/South Adventures. All of North/South Adventures\' contacts are accidentally included in the e-mail rather than having been blind copied. What should Tanisha do? **Step 1: Determine the facts in an unbiased manner.** [What are the facts?] Tanisha was trying to get information about her competition by signing up for its newsletter. Tanisha inadvertently received the list of customers for her competition. North/South Adventures mistakenly sent out all the e-mail addresses of its customers. **Step 2: Identify the ethical issue at hand.** [What are the ethical issues at hand?] There are two ethical decisions at hand: Should Tanisha use the e-mail contacts of her competition? Should Tanisha alert North/South Adventures of its mistake? **Step 3: Identify the stakeholders impacted by the decision.** [Who are the stakeholders?] The stakeholders in this are: North/South Adventures employees North/South Adventures customers East/West Adventures employees (especially Tanisha) **Step 4: Consider all available alternatives.** [What are the available alternatives?] There are two potential alternatives: Alternative A: Tanisha could use the list to send all of North/South Adventures\' customers a 25 percent off coupon to try East/Coast Adventures. Alternative B: Tanisha could tell North/South Adventures of its mistake, offering it an opportunity to correct it. **Step 5: Consider how the decision will affect the stakeholders.** [How will the decision affect the stakeholders?] Each decision has multiple implications for stakeholders. If Tanisha chooses Alternative A, she might improve sales for East/West Adventures. However, she runs the risk of violating the privacy of North/South Adventures\' customers. She also runs the risk of creating a harmful relationship with her competitors. Alternatively, if she chooses Alternative B, she risks losing market share to North/South Adventures. **Step 6: Discuss the pending decision with the stakeholders.** [With whom should the ultimate decision be discussed?] Tanisha discusses the decisions with some of her colleagues at East/West Adventures. **Step 7: Make the decision.** [What should the decision be?] Tanisha decides on Alternative B. She alerts North/South Adventures of its mistake and decides not to reach out to its customers. **Step 8: Monitor and assess the quality of the decision.** [How will the quality of the decision be monitored and assessed?] Tanisha notices that East/West Adventures does not enjoy an increase in sales. However, its relationship with North/South Adventures is strengthened and the two stores combine efforts to engage in outreach events in their community. DEI in Marketing ---------------- It\'s a small world. On a planet with over 7 billion people, our population continues to grow and spread across our continents, with citizens of different countries moving to other areas of the planet, creating a diverse mix of races, ethnicities, languages, and cultures. With that also comes a spectrum of lifestyles, political beliefs, and socio-economic status, forming one big planet that melds our almost 200 countries together. This diversity offers a richness of learning and collaboration, but often creates a paradox of understanding and embracing cultural differences while holding onto established traditions, values, and lifestyles. In our world, DEI-Diversity, Equity, and Inclusion-is vital to ensure that we not only respect cultural differences but embrace those as ways to learn, grow, and thrive as one small world. The diversity of our races, cultures, ethnicities, and social/economic classes afford an opportunity to learn from others whose experiences and lives are different from our own. Equity provides an opportunity to realize that, despite our differences, we should all deserve equal treatment, with the \#BlackLivesMatter, \#StopAsianHate, and \#MeToo movements empowering people to raise awareness of the need to overcome discrimination, and attitudes toward various societal groups. Inclusion means fostering a community of people where we can break down silos and, instead, develop connections and collaborations that can build successful communities. The American Marketing Association\'s Statement of Ethics emphasizes the values of honesty, responsibility, equity, transparency, and citizenship and encourages marketers to be courageous and proactive in embracing these values in all aspects of business and life for the betterment of society. Corporate Social Responsibility ------------------------------- Consumers are increasingly making purchase decisions in part because of a firm\'s reputation for corporate social responsibility. **Corporate social responsibility (CSR)** refers to an organization\'s obligation to maximize its positive impact and minimize its negative impact on society. Organizations today are forced to confront a new economic reality: it is no longer acceptable to experience economic prosperity in isolation from those stakeholders (customers, communities, employees, etc.) who are impacted by the organization\'s decisions. Today\'s firms must accept responsibility for balancing profitability with social well-being when determining their success. Success begins with the quality of the relationships that a company develops with its customers and other stakeholders. These relationships are at the heart of CSR. The following are some examples of ways that CSR is reshaping the way firms do business: LEGO: LEGO has launched the Sustainable Materials Center. The purpose of this center is to develop and implement sustainable alternatives to existing materials by 2030. LinkedIn: LinkedIn created a nonprofit called LinkedIn for Good. This group works to connect underserved audiences to economic opportunity. Ben & Jerry\'s: Ben & Jerry\'s began the Ben & Jerry\'s Foundation in 1985 to allocate pretax profits to philanthropy. Now, the foundation awards almost \$2 million annually to fund community action, social change, and sustainability initiatives. CSR has been shown to benefit companies in many ways, including employee retention, brand image, and overall success. Within many organizations, the marketing department is often responsible for the ideas and strategies comprising a firm\'s CSR program. However, in order to succeed, CSR must be adopted and enacted by all of the functional areas within a firm. As with ethical decision making, CSR should consider multiple stakeholders. For firms to reach all of the people affected by their business practices, they should consider four dimensions of CSR: economic, legal, ethical, and philanthropic. **Economic dimension**: For-profit firms have an obligation to their stakeholders to be profitable. Without profits, a business cannot survive. A failed business hurts employees, investors, and communities. **Legal dimension**: Firms have a responsibility to understand and obey the laws and regulations of the communities in which they do business. They must follow local, state, and federal laws. Beyond this, U.S. companies are also subject to the laws and regulations of the foreign countries in which they do business. **Ethical dimension**: The ethical challenges facing marketers come from many different places. Inevitably, they involve more gray areas than the legal dimension. Marketers are responsible for a number of choices with an ethical dimension and will be held accountable for making the right decision. Marketers who take the time to identify the ethical issue at hand and consider how their decision will impact each of the firm\'s stakeholders are far more likely to make the right decision and successfully resolve the problem. **Philanthropic dimension**: Marketers understand that giving back to the community is not only the right thing to do but also a great way to get the firm\'s name, product, or promotion out to consumers at a reasonable cost. Corporate philanthropy is the act of organizations voluntarily donating some of their profits or resources to charitable causes. ### LEGO's CSR Dimensions **Economic Dimension** \"The LEGO Group is a privately held company based in Billund, Denmark. The company is still owned by the Kirk Kristiansen family who founded it in 1932. It is the LEGO® philosophy that \'good quality play\' enriches a child\'s life-and lays the foundation for later adult life. We believe that play is a key element in children\'s growth and development and stimulates the imagination and the emergence of ideas and creative expression. All LEGO products are based on this underlying philosophy of learning and development through play.\" Courtesy of the LEGO Group **Legal Dimension** \"Our corporate policy framework introduces high standards that reflect our core values. The LEGO Group is committed to doing business with integrity-the LEGO Way-and in adherence to anti-bribery and anti-corruption laws. As a company, and as individuals, we must never compromise our compliance to high ethical standards.\" Courtesy of the LEGO Group **Ethical Dimension** \"In our daily work we strive to uphold the highest ethical business standards and business practices, with respect for human and labour rights, while doing everything we can to promote and protect our employees\' well-being and safety. We will never sacrifice our values or purpose for the sake of short-term profit.\" Courtesy of the LEGO Group **Philanthropic Dimension** \"Together with UNICEF, we want to strengthen child protection governance in the LEGO Group. We are the first in our industry to establish a global partnership with UNICEF, which is a clear statement of our commitment to promote and implement the Children\'s Rights and Business Principles in our business and to drive awareness of how corporations can generate positive change for children.\" Understanding Sustainable Marketing ----------------------------------- Today more than ever, marketers recognize that, beyond the moral and ethical implications, adopting sustainable strategies has become an essential element of a firm\'s CSR efforts and one that contributes to long-term competitive advantage. **Sustainable marketing** is the process of creating, communicating, and delivering value to customers through the preservation and protection of the natural systems that provide the natural resources upon which our society and economy depend. One of the easiest ways for marketers to engage in sustainable marketing is to seek ways to cut costs using sustainable practices as a guideline. Firms can choose from a wide range of strategies and ideas, from developing different packaging to using less energy. Levi\'s, for example, focuses heavily on sustainability. Marketers at Levi\'s were among the first in the apparel industry to conduct a life-cycle assessment of the firm\'s major products. Between when the cotton was grown in the fields and the end of the product\'s life, Levi\'s found that manufacturing had the least impact on water and energy use. Meanwhile, growing the cotton used a great deal of water. Armed with this information, Levi\'s decided to partner with the Better Cotton Initiative to educate farmers on how to grow cotton with less water. Levi\'s now uses 12 percent of low-water cotton it its jeans.3 In addition to having sustainable initiatives, many companies have sustainability engrained in their ethos. Often sustainability and CSR are aligned because most firms believe that protecting the environment is a big component of CSR. This is particularly true of the Planeterra Foundation. Since it was established in 2003, this nonprofit organization has contributed millions of dollars toward programs that focus on empowering women through education and job training; conserving cultures through such social enterprises as arranging homestays for travelers interested in learning more about indigenous cultures; helping at-risk youth develop the skills they need to create positive life paths; and contributing to organizations that help protect the health of our oceans.4 Consumers are increasingly demanding that firms become more transparent and adhere to higher sustainability and CSR standards. Firms often assume that only the \"younger\" generations care about such things, but in reality there is an increasing demand across all the generations. Consumers are choosing to buy resource-conserving products from the shelves and boycott the products of companies that damage the environment. Environmentalism is a movement of citizens, government agencies, and the business community that advocates the preservation, restoration, and improvement of the environment. Sustainable Marketing Strategies -------------------------------- Sustainable marketing (also called green marketing) activities can be divided into three levels: tactical greening, quasi-strategic greening, and strategic greening. These three categories of marketing activities represent the various degrees to which a firm can adopt an environmental focus. ### Sustainable Marketing Activities 1\. **Tactical greening**: Tactical greening involves implementing limited change within a single area of the organization, such as purchasing or advertising. Tactical activities represent relatively small actions aimed at instituting environmentally friendly practices within an organization. For example, Whole Foods might decide to stop doing business with suppliers that do not meet the company\'s environmental or recycling requirements. 2\. **Quasi-strategic greening**: Quasi-strategic greening usually involves more substantive changes in marketing actions, such as redesigning the firm\'s logo or overhauling a product\'s packaging. Telecommunications provider Sprint engaged in quasi-strategic greening when it began using 100 percent recycled materials in all its branded packaging. In addition, it now uses soy inks and environmentally friendly adhesives and coatings. 3\. **Strategic greening**: Strategic greening requires a holistic approach that integrates and coordinates all the firm\'s activities on environmental issues across every functional area. It represents a fundamental shift in the way the firm markets its products. For example, Nestlé has reformulated certain products to decrease their environmental impact without affecting their taste, nutrition, or consumer appeal. Beyond this, the company has begun training farmers on good environmental stewardship and funding scientific research into producing sustainable cocoa and coffee. These three categories are governed by the overall environmental strategy a company chooses to implement. ### Environmental Marketing Strategies There are five types of environmental marketing strategies marketers can choose to implement, depending on their competitive advantage and the overall marketing strategy they have adopted. **Strategy 1: Eco-Efficiency** Marketers seeking to reduce costs and the environmental impact of their activities typically pursue a strategy of **eco-efficiency**. This strategy involves identifying environmentally friendly practices that also have the effect of creating cost savings and driving efficiencies throughout the organization. **Strategy 2: Beyond Compliance Leadership** Most marketers who adopt a beyond **compliance leadership** strategy focus on communicating to stakeholders the company\'s attempts to adopt environmentally friendly practices. Marketers who select this strategy want to show customers that the company does more than the competition to implement an environmental strategy. Unlike with an eco-efficiency strategy, companies that employ a beyond compliance leadership strategy typically care more about differentiating themselves from competitors than about keeping costs low. **Strategy 3: Eco-Branding** An eco-branding strategy focuses on creating a credible green brand. For this strategy to be effective, consumers must recognize a noticeable benefit from their purchase. The eco-branding strategy tends to succeed in industries in which significant barriers to imitation exist. To achieve differentiation as part of an eco-branding strategy, the environmental improvement, such as the technology involved in developing a desirable electric car, should be difficult to imitate. **Strategy 4: Environmental Cost Leadership** Firms seeking a price premium for their environmentally friendly products often adopt an **environmental cost leadership** strategy. Green products sometimes cost more to produce than traditional products. Thus a leadership strategy that also seeks to lower costs may be the only way for a company to pay for its ecological investments and generate a profit for its other stakeholders. **Strategy 5: Sustainable Value Innovation** A final strategy firms can pursue is **sustainable value innovation**. This strategy entails reshaping the industry through the creation of differential value for consumers and through making contributions to society in the form of both reduced costs and reduced environmental impact. Firms that engage in this strategy do not aim to outperform the competition in an existing industry but to create a new market space. In doing so, they hope to make the competition irrelevant by giving the consumer more value per product at a lower price. The benefits of an environmental marketing strategy extend to virtually all of a firm\'s stakeholders when the strategy is effectively integrated with the firm\'s general marketing plan. With many consumers committed to \"going green,\" environmentally focused organizations often benefit from favorable public opinion and loyal customers. Social Criticisms of Marketing ------------------------------ Consumers may have concerns about how firms serve their interests. The following are some of the major criticisms of marketing that are voiced: **High prices**: Critics suggest that marketers price items higher than they need to be. Often higher prices are blamed on high distribution costs, advertising costs, and excessive markups. **Deceptive prices**: Marketers are often accused of deceptive pricing that encourages customers to believe they are getting a better value than they actually are. Deceptive pricing practices involve falsely advertising sale prices or using other deceptive techniques. **Deceptive packaging**: Some marketers might use packaging to exaggerate the contents of the package, making consumers think they are getting more than they actually are. Some packages might have labels that mislead the customer about the contents. For example, firms giving nutrition information might use a smaller serving size to under represent the fat or calorie content. **Deceptive promotion**: Perhaps one of the biggest criticisms of marketing is deceptive promotion. With this, firms try to amplify a product\'s features and performance. For example, weight loss pills often show dramatic weight loss results to signal to consumers that they could expect similar results. **High-pressure selling**: Sometimes a salesperson\'s compensation might be tied directly to how much he or she sells. This practice causes some salespeople to engage in high-pressure selling that persuades consumers to buy more than they intended. **Shoddy or unsafe products**: For many consumers, quality control is a major concern. Firms that aim to cut costs by reducing quality can damage their brand irreparably. In 2016, the FDA cracked down on Castle Cheese, which makes Parmesan cheese for many national and retailer brands. Castle Cheese had been using an unsafe amount of cellulose (or wood pulp) in its Parmesan cheese. **Planned obsolescence**: In order to create a feeling of excitement and exclusivity, marketers might purposely cause their products to run out before demand is satisfied, referred to as planned obsolescence. This frequently happens with fashion items and newly launched technology products. Target had partnered with Lilly Pulitzer in an exclusive collaboration that instantly sold out. Some loyal Target customers were furious with the retailer over the limited availability of Lilly Pulitzer items. It can also involve limiting the lifespan of a product rather than its availability. **Marketing to children**: Marketers, especially food marketers, often work in an ethical gray area. Young people are a growing audience for marketers as they are increasing in their buying power. Plus, firms are trying to build brand loyalty at a young age. However, children are a vulnerable audience and susceptible to manipulation. **Materialism**: Marketers are frequently blamed for an increased focus on materialism. Materialism encourages consumers to focus on the acquisition and possession of objects and things that they may not need. Materialism also causes many consumers to believe that their worth, and the worth of others, is based only on possessions. Unfortunately, there are some marketers who push the ethical boundaries and operate in a gray area. However, for the most part, many firms and marketers adhere to a strict ethical code and try to minimize the above examples from happening. Consumers also have quite a bit of protection, knowledge, and resources available to them should they run into any marketers they believe to be behaving unethically. Responsible Marketing --------------------- ### DEI Ethics in Marketing You may have heard the acronym DEl. It is short for diversity, equity, and inclusion, and it has become a cornerstone to many recent societal pushes toward change. Consumers are more socially and politically conscious than ever before, and brands understand the need to stand in solidarity with customers to fight against racial and social injustice.\' Many companies are addressing DEI issues both internally within their own ranks and in terms of their messaging to external customers. In fact, in a recent survey, companies reported spending 8.9 percent more on DEl initiatives over the last year, with larger enterprises spending more.\' Yet, movements like \#BlackLivesMatter and \#StopAsianHate may not be areas of expertise for a company\'s marketing team. Thus, identifying and connecting with key stakeholders who can offer a different perspective is essential. Failure to do so can have consequences. Take, for example, Starbucks, which recently learned a DEl ethics lesson. It was reported in June 2020 that Starbucks employees were banned from wearing Black Lives Matter paraphernalia such as t-shirts, pins, or accessories.® The company cited the move as an attempt to thwart violence. The Starbucks brand subsequently faced an eruption of a different kind-angry consumers. The group created a \#BoycottStarbucks hashtag to communicate their concern. As a result, Starbucks quickly reversed its decision and established its own Black Lives Matter apparel line. Ethical best practices in DEl encourage marketers to remain flexible during uncertain times. They are asked to \"walk the walk and not just talk the talk.\"10 Many experts agree that the avoidance of groupthink and engagement with external groups that represent diverse stakeholders is key to creating a more just and inclusive environment. Reflection Questions 1\. In the wake of violence against people of color, many brands are conflicted over the appropriate ways to show support without alienating their customer base. What would be the best approach to creating a win-win scenario? 2\. How should marketers address mistakes made when trying to incorporate ethical DEl best practices?

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