1.8: Summary and Review Questions
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This introductory chapter described marketing as one of the major strategic tools available to the business organization. It began with a basic definition and expanded to a set of propositions of marketing. Simply, marketing is based on the mission statement of the organization; is dependent on the effective management of other functional areas; contains a functional area guided by its own philosophy; is the functional area that is concerned with market exchanges; and is likely to be successful when the philosophy, tasks, and manner of implementing available technology are coordinated and complimentary.
The chapter also discussed several characteristics shared by organizations that correctly implement marketing. Referred to as the Cs of marketing, they include consumer contact, company capabilities, communication, cross-functional contact, and community contact. Companies share these characteristics; the following factors divide marketing into specific types: macromarketing and micromarketing; services and goods marketing; for-profit and nonprofit marketing; mass and direct marketing; local, regional, national, and international marketing; and consumer goods and business-to-business marketing.
The chapter concluded with a discussion of the four levels of strategic management with considerations applicable to marketing: corporate functional, marketing, and marketing mix.
Marketing The process of planning and executing the conception, pricing, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.
Consumer/customers Individuals who have needs/wants that can be satisfied by the marketer's product or service.
Transaction An exchange between the person with the need and the organization selling the need-satisfying thing, inherently economic-based.
Internal marketing Attempting to ensure that all employees are positive ambassadors of the organization.
Competitive advantage Convince buyers (potential customers) that what you have to offer them comes closest to meeting their particular want or need at that point in time.
Marketing concept Understanding the consumer and working from the customer back rather than factory forward.
➢ Some marketers believe the Internet will become the most effective avenue for marketing products to consumers. Do you agree or disagree?
➢ Recently, the effectiveness of online marketing efforts has been questioned. What can marketers do to measure the success of online marketing?
➢ What advantages does receiving the Wall Street Journal online provide for users? Specifically, marketers?
➢ How would you have defined marketing before you read this chapter? How does that definition differ from the definition provided?
➢ Can you think of another organization that demonstrates the propositions of marketing as well as L.L. Bean? Provide a similar discussion using that organization.
➢ What are the factors to consider in maintaining consumer contact? Community contact?
➢ Why is it so important to understand your competition? Company functions?
➢ Contrast macro- and micromarketing. Contrast services and goods marketing.
➢ Demonstrate how the corporate mission can directly influence marketing.
➢ What is the difference between the internal and external environment? Provide five examples of each.2
➢ What is a competitive advantage? How does marketing contribute to the creation of a competitive advantage?
➢ Discuss the reasons for studying marketing.
➢ Give examples of how marketing communication differs from personal communication.
➢ Identify the ways in which Harley-Davidson exhibits the propositions discussed in this chapter.
➢ Would you consider Harley to be a marketing organization? Why or why not?
Survey 10 nonbusiness students and ask them to provide a definition of marketing. Analyze these answers with respect to how they differ and why people differed in their understanding of this topic. Write a five page report explaining.
The hog is alive and well
After making a remarkable comeback in the 1980s, motorcycle manufacturer Harley-Davidson had two-year-long waiting lists all over the country. But the success placed the company in a familiar quandary. Should Harley expand and risk a market downturn or should it stay the course, content with its good position in the industry?
“To invest or not to invest, that was the question", notes Frank Cimermancic, Harley's Director of Business Planning. "Dealers were begging us to build more motorcycles. But you have to understand our history. One of the things that caused past problems was lack of quality, and that was the result of a too-rigid expansion. We did not want to relive that situation.”
In 1989, the reputation of Harley-Davidson was excellent. Harley shipped 30,000 motorcycles in 1985; just four years later it shipped 44,000. Harley's market share in the heavyweight bike category went from 27 per cent to 57 per cent during the same time period. It was regularly turning a profit—USD 53 million in 1989.
At the same time, however, the market for heavyweight bikes was shrinking. Harley-Davidson needed to know whether its growth could continue. "We were doing fine, but look at the market", said Cirnermancic. "Maybe, we thought, we could reverse these trends and become an industry leader, something we had not been for years."
A new kind of customer seemed to hold the key to market growth. White-collar motorcycle enthusiasts, or "Rubbies" (rich urban bikers), started to shore up Harley sales in the mid-1980s, adding to the company's success and image. But whether these people were reliable, long-term customers was another question. Harley also needed to know if it should market its product differently to different audiences. A core clientèle of traditional "bikers" had kept Harley afloat during its leanest years, and they could not be alienated.
From their research, Harley identified seven core customer types: the Adventure-Loving Traditionalist, the Sensitive Pragmatist, the Stylish Status-Seeker, the Laid-Back Camper, the Classy Capitalist, the Cool-Headed Loner, and the Cocky Misfit. All of them appreciated Harley-Davidson for the same reasons: independence, freedom, and power constituted the universal Harley appeal. Also, owners were very loyal.
Loyalty meant the company could build and sell more motorcycles without having to overextend itself. In 1990, Harley expanded to build 62,800 bikes; in 2000, it built more than 180,000. Based on research and the still-expanding waiting lists, Harley expects its phenomenal growth to continue. In addition, Harley is expanding its product line. In early 2000, the company introduced a USD 4,400 bike called the Blast, aimed at first-time riders and women.
1. Sources: Ian P. Murphy, "Aided by Research, Harley Goes Whole Hog," The Marketing News, December 2, 1996, p. 16; Richard A. Melcher, "Tune-up Time for Harley," Business Week, April 8, 1996, pp. 90. 94; Kelly Barron, "HogWild," Forbes, May 15, 2000, pp. 68—70.