Marketing management Chapter 22 pptx

IN THIS CHAPTER, WE WILL
ADDRESS THE FOLLOWING
QUESTIONS:
1.
What are important trends in
marketing practices?
2.
What are the keys to effective
internal marketing?
3. How can companies be
responsible social marketers?
4.
How can a company improve its
marketing implementation skills?
5. What tools are available to help
companies monitor and improve
their marketing activities?
CHAPTER 22 MANAGING A HOLISTIC
MARKETING
ORGANIZATION
An ad
for
L'Oreal
Paris.
Healthy long-term growth for a brand requires that the marketing
organization be managed properly. Holistic marketers must
embrace the complexity of marketing by engaging in a host of care-
fully planned, interconnected marketing activities.
1
Consider
L'Oreal.

•MB
695
'Oreal, the world's most successful cosmetic company, has experi-
enced almost two decades of double-digit profit growth. The
century-old $15.3 billion company has leveraged its cultural her-
itage and Parisian origins to sell products that make its customers feel spe-
cial.
Higher-than-average R&D expenditures have led to numerous break-
throughs and a strong technological reputation. Innovative products and sexy
endorsers such as supermodel Claudia
Schiffer,
singer Beyonce Knowies, and
actress Heather Locklear have enabled L'Oreal to sustain a premium pricing
strategy and justify the enticing slogan, "Because You're Worth It." Although
French actress Catherine Deneuve is one of the official company faces,
L'Oreal does not offer just one type of beauty in its marketing. The company
has skillfully acquired local cosmetics brands, such as Maybelline and Soft
Sheen-Carson, and given them a facelift before exporting them around the
world. CEO Lindsay Owen-Jones notes: "It's a very carefully crafted portfolio
each brand is positioned on a very precise market segment which
over-
laps as little as possible with others."
2
696
PART 8
CREATING SUCCESSFUL LONG-TERM GROWTH
Successful holistic marketing requires effective relationship marketing, inte-
grated marketing, internal marketing, and socially responsible marketing.
Previous chapters addressed the first two topics and the strategy and tactics of
marketing.

3
In this chapter, we consider internal and socially responsible mar-
keting and how marketing should be administered and conducted responsibly.
In our discussion, we look at how firms organize, implement, evaluate, and
con-
trol marketing activities. We also discuss the increased importance of social
responsibility. We begin by examining changes in how companies conduct mar-
keting today.
Trends in Marketing Practices
Chapters 1 and 3 describe some important changes in the marketing macroenvironment,
such as globalization, deregulation, technological advances, customer empowerment, and
market fragmentation. In response to this rapidly changing environment, companies have
restructured their business and marketing practices in some of the following ways:
s Reengineering. Appointing teams to manage customer-value-building processes and
break down walls between departments.
u Outsourcing. Greater willingness to buy more goods and services from outside domestic
or foreign vendors.
m Benchmarking. Studying "best practice companies" to improve performance.
a Supplier partnering. Increased partnering with fewer but better value-adding suppliers.
B
Customer partnering. Working more closely with customers to add value to their
operations.
a Merging. Acquiring or merging with firms in the same or complementary industries to
gain economies of scale and scope.
a Globalizing. Increased effort to "think global" and "act local."
a Flattening. Reducing the number of organizational levels to get closer to the customer.
a Focusing. Determining the most profitable businesses and customers and focusing on
them.
m Accelerating. Designing the organization and setting up processes to respond more
quickly to changes in the environment.

m Empowering. Encouraging and empowering personnel to produce more ideas and take
more initiative.
The role of marketing in the organization is also changing.
4
Traditionally, marketers have
played the roles of middlemen, charged with understanding customer needs and transmit-
ting the voice of the customer to various functional areas in the organization. In a networked
enterprise, every functional area can interact directly with customers. Marketing no longer
has sole ownership of customer interactions; rather, marketing needs to integrate all the
customer-facing processes so that customers see a single face and hear a single voice when
they interact with the firm.
CISCO
Founded in 1984 by two Stanford University computer scientists, Cisco initially built its business on routers and
switches to provide end-to-end network solutions. Throughout the 1990s, Cisco fully embraced the Web in its
business strategy, going so far as to include the company vision on all employee badges: "The Internet changes
the way we work, live, play, and learn." By the end of the decade, however, the company found that placing all
MANAGING A HOLISTIC MARKETING ORGANIZATION CHAPTER 22 697
its internal and external business operations online was unwieldy and counterproductive. To ensure harmony in
its sprawling Web-based strategy, Cisco applied newly introduced Web technology to ensure a unified Internet,
• intranet, and
extranet.
The
company's goals: "One site many views into the company"
5
::: Internal Marketing
Internal marketing requires that everyone in the organization buy into the concepts and
goals of marketing and engage in choosing, providing, and communicating customer value.
Over the years, marketing has evolved as it has grown from work done by the sales depart-
ment into a complex group of activities spread through the organization.
6

Because simple
sales departments were unable to conduct important functions such as marketing research,
new-product development, advertising, sales promotion, and customer service, firms began
to create marketing departments. When conflict arose between marketing and sales depart-
ments, many firms merged the two.
A
company can have an excellent marketing department, however, and yet fail at market-
ing. Much depends on how other company departments view customers. If they point to the
marketing department and
say,
"They do the marketing," the company has not implemented
effective marketing. Only when all employees realize that their jobs are to create, serve, and
satisfy customers does the company become an effective marketer.
7
"Marketing Memo:
Characteristics of Company Departments That Are Truly Customer-Driven" presents a mea-
surement tool that can be used to evaluate which company departments have fully
embraced the importance of being customer-driven.
8
Many companies are now focusing on key processes rather than departments because
departmental organization is viewed as a barrier to the smooth performance of fundamen-
tal business processes. To achieve customer-related outcomes, companies appoint process
leaders who manage cross-disciplinary teams. Marketing and sales people spend an increas-
ing percentage of their time as process team members.
As
a result, marketing personnel may
have a solid-line responsibility to their teams and a dotted-line responsibility to the market-
ing department. The marketing department is also responsible for training marketing per-
sonnel, assigning them to new teams, and evaluating their overall performance.
Let's look at how marketing departments are being organized, how they can work effec-

tively with other departments, and how firms can foster a creative marketing culture within
the entire organization.
Organizing the Marketing Department
Modern marketing departments may be organized in a number of different, sometimes
overlapping ways:
9
functionally, geographically, by product or brand, by market, in a matrix,
by corporate/division.
FUNCTIONAL ORGANIZATION The most common form of marketing organization con-
sists of functional specialists reporting to a marketing vice president, who coordinates their
activities. Figure
22.1
shows five specialists. Additional specialists might include a customer
service manager, a marketing planning manager, a market logistics manager, a direct mar-
keting manager, and an Internet marketing manager.
The main advantage of a functional marketing organization is its administrative simplic-
ity. It can be quite a challenge to develop smooth working relations, however, within the
marketing department.
10
This form also can lose its effectiveness as products and markets
increase.
A
functional organization often leads to inadequate planning for specific products
FIG.
22.1 j
Functional Organization
Marketing
administration
manager
Marketing

vice president
J Advertising and
sales promotion
manager
Sales
manager
Marketing
research
manager
New-products
manager
698 PART 8 CREATING SUCCESSFUL LONG-TERM GROWTH
and markets. Products that are not favored by anyone are neglected. Then, each functional
group competes with others for budget and status. The marketing vice president constantly
has to weigh the claims of competing functional specialists and faces a difficult coordination
problem.
GEOGRAPHIC ORGANIZATION
A
company selling in a national market often organizes its
sales force (and sometimes other functions, including marketing) along geographic lines.
The national sales manager may supervise four regional sales managers, who each supervise
six zone managers, who in turn supervise eight district sales managers, who supervise ten
salespeople.
Several companies are now adding area market specialists (regional or local marketing
managers) to support the sales efforts in high-volume markets. One such market might be
MARKETING MEMO
CHARACTERISTICS OF COMPANY DEPARTMENTS
THAT ARE TRULY CUSTOMER-DRIVEN
R&D
Purchasing

Manufacturing
Marketing
Sales
Logistics
Accounting
Finance
Public Relations
Other Customer
Contact Personnel
They spend time meeting customers and listening to their problems.
They welcome the involvement of marketing, manufacturing, and other departments on each new project.
They benchmark competitors' products and seek "best of class" solutions.
They solicit customer reactions and suggestions as the project progresses.
They continuously improve and refine the product on the basis of market feedback.
They proactively search for the best suppliers rather than choose only from those who solicit their business.
They build long-term relations with fewer but more reliable high-quality suppliers.
They do not compromise quality for price savings.
They invite customers to visit and tour their plants.
They visit customer factories to see how customers use the company's products.
They willingly work overtime when it is important to meet promised delivery schedules.
They continuously search for ways to produce goods faster and/or at lower costs.
They continuously improve product quality, aiming for zero defects.
They meet customer requirements for "customization" where this can be done profitably.
They study customer needs and wants in well-defined market segments.
They allocate marketing effort in relation to the long-run profit potential of the targeted segments.
They develop winning offerings for each target segment.
They measure company image and customer satisfaction on a continuous basis.
They continuously gather and evaluate ideas for new products, product improvements, and services to meet
customers' needs.
They influence all company departments and employees to be customer-centered in their thinking and

practice.
They have specialized knowledge of the customer's industry.
They strive to give the customer "the best solution."
They make only promises that they can keep.
They feed back customers' needs and ideas to those in charge of product development.
They serve the same customers for a long period of time.
They set a high standard for service delivery time and they meet this standard consistently.
They operate a knowledgeable and friendly customer service department that can answer questions, handle
complaints, and resolve problems in a satisfactory and timely manner.
They prepare periodic "profitability" reports by product, market segment, geographic areas (regions, sales
territories), order sizes, and individual customers.
They prepare invoices tailored to customer needs and answer customer queries courteously and quickly.
They understand and support marketing expenditures
(e.g.,
image advertising) that represent marketing
investments that produce long-term customer preference and loyalty.
They tailor the financial package to the customers' financial requirements.
They make quick decisions on customer creditworthiness.
They disseminate favorable news about the company and they "damage control" unfavorable news.
They act as an internal customer and public advocate for better company policies and practices.
They are competent, courteous, cheerful, credible, reliable, and responsive.
MANAGING A HOLISTIC MARKETING ORGANIZATION CHAPTER 22 699
Miami, Florida, where 46 percent of the households are Latino. The Miami specialist would
know Miami's customer and trade makeup, help marketing managers at headquarters adjust
their marketing mix for Miami, and prepare local annual and long-range plans for selling all
the company's products in Miami.
Improved information and marketing research technologies have spurred regionaliza-
tion. Data from retail-store scanners allow instant tracking of product
sales,
helping compa-

nies pinpoint local problems and opportunities. Retailers themselves strongly prefer local
programs aimed at consumers in their cities and neighborhoods. To keep retailers happy,
manufacturers now create more local marketing plans.
Companies that have shifted to a greater regional marketing emphasis are McDonald's,
which now spends about 50 percent of its total advertising budget regionally; American
Airlines, which realized that the travel needs of Chicagoans and Southwesterners are very
different in the winter months; and Anheuser-Busch, which has subdivided its regional mar-
kets into ethnic and demographic segments, with different ad campaigns for each. Some
companies have to develop different marketing programs in different parts of the country
out of necessity because their brand development varies so much.
PACE
In 1947, a young Texan named David Pace had a passion for producing the freshest-tasting picante sauce.
Experimenting with ingredients and bottling techniques, the final product he produced—a special blend of toma-
toes,
onions, and jalapenos and a unique production process—became Pace Picante Sauce. Over
time,
the com-
pany launched Pace salsa before being acquired by the Campbell Soup Company in 1994. Pace's historical
strength,
however, is west of the Mississippi. The brand registers only single digits in market share in the
Northeast. The vast disparity in regional strengths has led to tailored marketing programs in different parts of the
country. Pace's trailgating tour, blending cowboy-style chuckwagon cooking and tailgate barbecuing, coincides
with its rodeo event sponsorship and appeals to the core customer base; New England promotions are designed
for trial and market penetration.
11
5RAND-MANAGEMENT ORGANIZATION Companies producing a variety
of products and brands often establish a product- (or brand-) management organization.
The product-management organization does not replace the functional organization, but
serves as another layer of management. A product manager supervises product category
managers, who in turn supervise specific product and brand managers.

A product-management organization makes sense if the company's products are quite
different, or if the sheer number of products is beyond the ability of a functional organiza-
tion to handle. Kraft has used a product-management organization in its Post division, with
separate product category managers in charge of cereals, pet food, and beverages. Within
the cereal-product group, Kraft has had separate subcategory managers for nutritional cere-
als,
children's presweetened cereals, family cereals, and miscellaneous cereals.
Product and brand management is sometimes characterized as a hub-and-spoke sys-
tem. The brand or product manager is figuratively at the center with spokes emanating out
to various departments (see Figure
22.2).
Some of the tasks that product or brand managers
may perform include:
• Developing a long-range and competitive strategy for the product.
• Preparing an annual marketing plan and sales forecast.
• Working with advertising and merchandising agencies to develop copy, programs, and
campaigns.
• Increasing support of the product among the sales force and distributors.
E
Gathering continuous intelligence on the product's performance, customer and dealer
attitudes, and new problems and opportunities.
a Initiating product improvements to meet changing market needs.
The product-management organization has several advantages. The product manager
can concentrate on developing a cost-effective marketing mix for the product; he or she can
react more quickly to new products in the marketplace; the company's smaller brands have
a product advocate. However, this organization has some disadvantages too:
700 PART 8 CREATING SUCCESSFUL LONG-TERM GROWTH
I FIG. 22.2
The Product Manager's Interactions
(a) Vertical Product Team

(b) Triangular Product Team
(c) Horizontal Product Team
PM
=
product manager
AP
=
associate product manager
PA
=
product assistant
R
=
market researcher
C
=
communication specialist
S
=
sales manager
D
=
distribution specialist
F
=
finance/accounting specialist
E
=
engineer
FIG.

22.3
I
Three Types of Product Teams
a Product managers
and
specifically brand managers
are not
given enough authority
to
carry
out
their responsibilities. They have
to
rely
on
persuasion
to get
the cooperation of
other departments.
m Product and brand managers become experts in their product area but rarely achieve func-
tional expertise. They vacillate between acting as experts and having to defer to real experts.
a The product management system often turns out to be costly. One person is appointed to
manage each major product or brand and soon managers are appointed
to
manage even
minor products and brands.
a Brand managers normally manage
a
brand for only a short time. Short-term involvement
leads to short-term planning and plays havoc with building long-term strengths.

s The fragmentation
of
markets makes
it
harder to develop
a
national strategy from head-
quarters. Brand managers must increasingly please regional and local sales groups, resulting
in
a
transfer
of
power from marketing to sales.
E Product
and
brand managers cause
the
company
to
focus
on
building market share
rather than building the customer
relationship.
Yet
the customer relationship, not the brand,
may be the primary lever for value creation.
A
second alternative with
a

product-management organization is to switch from product
managers to product
teams.
There are three types of potential product-team structures: verti-
cal product team, triangular product team, and the horizontal product team (see Figure
22.3).
The triangular and horizontal product-team approaches are favored by those who advo-
cate brand-asset management. They believe that each major brand should
be run by a
brand-asset management team
(BAMT)
consisting
of
key representatives from major func-
tions affecting the brand's performance. The company is comprised of several BAMTs which
periodically report to
a
BAMT Directors Committee, which itself reports to
a
Chief Branding
Officer. This is quite different from the way brands have traditionally been handled.
A third alternative
for
product-management organization
is to
eliminate product man-
ager positions for minor products and assign two
or
more products to each remaining man-
ager. This is feasible where two

or
more products appeal
to a
similar set
of
needs.
A
cosmet-
ics company does not need separate product managers for each product because cosmetics
serve one major need—beauty.
A
toiletries company needs different managers for headache
remedies, toothpaste, soap, and shampoo, because these products differ in use and appeal.
A
fourth alternative for product-management organization is to introduce
category
man-
agement, in which
a
company focuses on product categories to manage its brands. Procter
&
Gamble, pioneers of the brand-management system, and several other top firms have made
a significant shift in recent years
to
category management.
12,13,14
MANAGING A HOLISTIC MARKETING ORGANIZATION CHAPTER 22 701
A print ad spells out the services Dow
Corning can provide
for

customers. Dow
Corning uses
a
horizontal product team
organization. Teams consist
of
from five
to eight people, and each team manages
a specific product, market, and process.
P&G cites a number of advantages to a category-management structure. By fostering
internal competition among brand managers, the traditional brand-management system
created strong incentives to excel, but also much internal competition for resources and a
lack of coordination. Whereas a smaller share category might have become relatively
neglected before (e.g., in product categories such as "hard surface cleaners"), the new scheme
was designed to ensure that all categories would be able to receive adequate resources.
Another rationale for category management is the increasing power of the trade. Because
the retail trade has tended to think in terms of product categories and the profitability
derived from different departments and sections of their stores, P&G felt it only made sense
for it to deal with the trade along similar lines. Retailers such as Wal-Mart and regional gro-
cery chains such as Dominick's have embraced category management themselves as a
means to define a particular product category's strategic role within the store and to address
such operating issues as logistics, the role of private-label products, and the trade-offs
between offering product variety and avoiding inefficient duplication.
Category management is not a panacea. It is still a product-driven system. Colgate has
moved from brand management (Colgate toothpaste) to category management (toothpaste
category) to a new stage called "customer-need management" (mouth care). This last step
finally focuses the organization on a basic customer need.
15
MARKET-MANAGEMENT ORGANIZATION Many companies sell their products to differ-
ent markets. Canon sells its fax machines to consumer, business, and government markets.

U.S.
Steel sells its steel to the railroad, construction, and public utility industries. When cus-
tomers fall into different user groups with distinct buying preferences and practices, a
market-management organization is desirable.
A
market manager supervises several mar-
ket managers (also called market-development managers, market specialists, or industry
specialists). The market managers draw on functional services as needed. Market managers
of important markets might even have functional specialists reporting to them.
702 PART 8 CREATING SUCCESSFUL LONG-TERM GROWTH «
Market Managers
Home Industrial
Menswear Women's wear furnishings markets
Rayon
Acetate
Product
Managers
N
V
lon
Orion
Dacron
Market managers are staff (not line) people, with duties similar to those of product man-
agers.
Market managers develop long-range and annual plans for their markets. Their perfor-
mance is judged by their market's growth and profitability. This system carries many of the
same advantages and disadvantages of product-management systems. Its strongest advantage
is that the marketing activity
is
organized to meet the needs of distinct customer groups rather

than being focused on marketing functions, regions, or products. Many companies are reor-
ganizing along market lines and becoming market-centered organizations. Xerox has con-
verted from geographic selling to selling by industry, as have IBM and Hewlett-Packard.
In a customer-management organization, companies can organize themselves to under-
stand and deal with individual customers rather than with the mass market or even market
segments.
MATRIX-MANAGEMENT ORGANIZATION Companies that produce many products flow-
ing into many markets may adopt a matrix organization. DuPont was a pioneer in develop-
ing the matrix structure (see Figure 22.4).
r~ DUPONT
Before being spun off, DuPont's textile fibers department consisted of separate product managers for rayon,
acetate, nylon, orlon, and dacron; and separate market managers for menswear, women's wear, home furnish-
ings,
and industrial markets. The product managers planned the sales and profits for their respective
fibers.
They
asked market managers to estimate how much of their fiber they could sell in each market at a proposed price.
Market managers, however, were generally more interested in meeting their market's needs than pushing a par-
ticular fiber. In preparing their market plans, they asked each product manager about the fiber's planned prices
and availabilities. The final sales forecast of the market managers and the product managers should have added
• up to the same grand
total.
Companies like DuPont can go one step further and view the market managers as the
main marketers, and their product managers as suppliers. The menswear market manager,
for example, would be empowered to buy textile fibers from DuPont's product managers or,
if DuPont's price is too high, from outside suppliers. This system would force Dupont prod-
uct managers to become more efficient. If a DuPont product manager could not match the
"arm's-length pricing" levels of competitive suppliers, then perhaps Dupont should not con-
tinue to produce that fiber.
A matrix organization would seem desirable in a multiproduct, multimarket company.

The rub is that this system is costly and often creates conflicts. There is the cost of support-
ing all the managers. There are also questions about where authority and responsibility
should reside.
Matrix management gained advocates because companies provide the context in which
a matrix can thrive—flat, lean team organizations focused around business processes that
cut horizontally across functions.
16
CORPORATE-DIVISIONAL ORGANIZATION As multiproduct, multimarket companies
grow, they often convert their larger product or market groups into separate divisions. The
divisions set up their own departments and services. This raises the question of what mar-
FIG.
22.4 |
Product- /Market-Management Matrix
System
MANAGING A HOLISTIC MARKETING ORGANIZATION
CHAPTER 22 703
keting services and activities should be retained at company headquarters. Divisionalized
companies have reached different answers to this question:
s No Corporate Marketing. Some companies lack a corporate marketing
staff.
They do not
see any useful function for marketing at the corporate level. Each division has its own mar-
keting department.
a Moderate Corporate Marketing. Some companies have a small corporate marketing staff
that performs a few functions, primarily (1) assisting top management with overall opportu-
nity evaluation, (2) providing divisions with consulting assistance on request, (3) helping
divisions that have little or no marketing, and (4) promoting the marketing concept through-
out the company.
B
Strong Corporate Marketing. Some companies have a corporate marketing staff that, in

addition to the preceding activities, also provides various marketing services to the divi-
sions,
such as specialized advertising services, sales promotion services, marketing research
services, and sales administration services.
Regardless of how formalized corporate marketing
is,
certain activities must occur within
the organization in a "top-down" fashion. Webster sees the role of marketing at the corporate
level as:
17
1.
To promote a culture of customer orientation and to be an advocate for the customer in
the deliberations of top-management strategy formulators.
2.
To assess market attractiveness by analyzing customer needs and wants and competitive
offerings.
3.
To develop the firm's overall value proposition, the vision and articulation of how it pro-
poses to deliver superior value to customers.
Relations with Other Departments
In principle, all business functions should interact harmoniously to pursue the firm's overall
objectives. In practice, however, interdepartmental relations are often characterized by deep
rivalries and distrust. Some conflict stems from differences of opinion as to what is in the
company's best interests, some from real trade-offs between departmental well-being and
company well-being, and some from unfortunate stereotypes and prejudices.
In the typical organization, each business function has a potential impact on customer
satisfaction. Under the marketing concept, all departments need to "think customer" and
work together to satisfy customer needs and expectations. The marketing department must
drive this point home. The marketing vice president, or CMO, has two tasks: (1) to coordi-
nate the company's internal marketing activities and (2) to coordinate marketing with

finance, operations, and other company functions to serve the customer.
Yet, there is little agreement on how much influence and authority marketing should
have over other departments. Typically, the marketing vice president must work through
persuasion rather than authority. Other departments often resist changing their ways of
working to fulfill the customer's interests. Inevitably, departments define company prob-
lems and goals from their viewpoint, so conflicts of interest are unavoidable. Breakdowns in
communication further exacerbate the problem. Consider the following potential negative
reactions that marketing can receive from different functional groups.
B
Engineering comes into conflict with marketing executives when the latter want several
models produced, often with product features requiring custom components. Engineers
often think of marketing people as inept technically, as continually changing priorities, and
as not fully credible or trustworthy.
a Purchasing Executives see marketing executives pushing for several models in a product
line,
which requires purchasing small quantities of many items rather than large quantities
of few items. They think that marketing insists on too high a quality for materials and com-
ponents. They also dislike marketing's forecasting inaccuracy, which causes them to place
rush orders at unfavorable prices or to carry excessive inventories.
a Financial Executives suspect that marketing forecasts are self-serving. They think mar-
keters are too quick to slash prices to win orders, instead of pricing to make a profit. They
claim that marketers "know the value of everything and cost of nothing."
m Accountants see marketing people as lax in providing sales reports on time. They dislike
the special deals salespeople make with customers because these require special accounting
704
PART 8 CREATING SUCCESSFUL LONG-TERM GROWTH
procedures. Credit officers evaluate potential customers' credit standing and deny or limit
credit to the more doubtful ones. They think marketers will sell to anyone, including those
from whom payment is doubtful.
Companies need to develop a balanced orientation in which marketing and other func-

tions jointly determine what is in the company's best interests. Solutions include joint sem-
inars to understand each others' viewpoints, joint committees and liaison personnel, per-
sonnel exchange programs, and analytical methods to determine the most profitable course
of action.
18
Perhaps the best solution is for marketing to periodically propose & function-to-function
meeting with departments where greater understanding and collaboration is warranted.
Even if each function indulges in stereotypical charges and complaints about the other, such
a meeting can lead to a clearing of the air and a basis for a more constructive collaboration.
Each department needs to understand the operating logic of the other departments. When
departments work together toward common goals, marketing
is
more effective.
r- PROCTER & GAMBLE
With 19 of their 20 largest brands gaining share and a stock price that doubled, Procter & Gamble was clearly
on a roll during 2002-2004. Organic growth in core businesses provided much of the impetus. P&G's new
prod-
uct hit rate, defined in terms of when returns exceeded the cost of capital, was 70 percent to 90 percent.
Although this extraordinary performance was due to many factors, close interactions between marketing and
7,500 R&D personnel worldwide was critical. To facilitate interaction, problems and solutions are posted on an
internal Web site and "communities of practice" dedicated to particular expertise
(e.g.,
"whiteners") meet
fre-
quently. Joint collaboration between different units of P&G has produced such diverse products as Crest
Whitestrips teeth whiteners, lams Dental Defense tartar-fighting pet
food,
and Olay Daily facials cleansing cloths.
Mr. Clean AutoDry carwash system was designed with input from R&D experts who worked on the Pur water
B

purification and Cascade automatic dishwasher powder brands.
19
Building a Creative Marketing Organization
Many companies are beginning to realize that they are not really market- and customer-
driven—they are product-and-sales driven. Companies such as Baxter, General Motors,
Shell, and J.R Morgan are attempting to transform themselves into true market-driven com-
panies. This will require:
1.
Developing a company-wide passion for customers.
2.
Organizing around customer segments instead of around products.
3.
Developing a deep understanding of customers through qualitative and quantitative
research.
The payoffs are considerable. Two researchers recently concluded: "We found that the
more aggressive a company's customer-focused strategy, the higher its productivity. Those
with a customer focus were almost 7 percent more productive than their competitors."
20
The task is not easy. It will not happen as a result of the CEO making speeches and urging
every employee to "think customer." The change will require a change in job and depart-
ment definitions, responsibilities, incentives, and relationships. See "Marketing
Insight:
The
Marketing CEO" for actions a CEO can take to improve marketing capabilities.
Although it is necessary in a hypercompetitive economy that an organization be
customer-oriented, it is not enough. The organization must also be creative. Companies
today copy each others' advantages and strategies with increasing speed. Differentiation
gets harder to achieve, let alone maintain. Margins fall when firms become more alike. The
only answer is for the firm to build a capability in strategic innovation and imagination (see
"Marketing Insight: Fueling Strategic Innovation"). This capability comes from assembling

tools,
processes, skills, and measures that will enable the firm to generate more and better
new ideas than its competitors.
21
Companies must watch trends and be ready to capitalize on them. Motorola was
18 months late in moving from analog to digital cellular phones, giving Nokia and
Ericsson a big lead. Barnes
Si
Noble was late in recognizing online ordering of books and
music, giving Amazon the lead. Nestle was late in recognizing the trend toward coffee-
houses such as Starbucks. Coca-Cola was slow in recognizing beverage trends toward
fruit-flavored drinks such as Snapple, energy drinks such as Gatorade, and designer water
MANAGING A HOLISTIC MARKETING ORGANIZATION CHAPTER 22 705
MARKETING INSIGHT
THE MARKETING CEO
What steps can a CEO take to create a market- and customer-
focused company?
1.
Convince Senior Management of the Need to Become
Customer-Focused: The CEO personally exemplifies strong
customer commitment and rewards those in the organization
who do likewise. For example, former CEOs Jack Welch of GE
and Lou Gerstner of IBM are said to have spent 100 days a year
visiting with customers, in spite of their many strategic, financial,
and administrative burdens; and IBM's top 470 executives are
personally responsible for more than 1,300 customer accounts.
2.
Appoint a Senior Marketing Officer and Marketing Task
Force: The marketing task force should include the CEO; the
vice presidents of sales, R&D, purchasing, manufacturing,

finance, and human resources; and other key individuals.
3. Get
Outside
Help and
Guidance:
Consulting firms have
con-
siderable experience in helping companies move toward a mar-
keting orientation.
4.
Change
the
Company's
Reward Measurement and
System:
As long as purchasing and manufacturing are rewarded for
keeping costs low, they will resist accepting some costs required
to serve customers better. As long as finance focuses on short-
term profit, it will oppose major investments designed to build
satisfied,
loyal customers.
5. Hire Strong Marketing
Talent:
The company needs a strong
marketing vice president who not only manages the marketing
department but also gains respect from and influence with the
other vice presidents. A multidivisional company would benefit
from establishing a strong corporate marketing department.
10.
Develop

Strong In-house Marketing
Training Programs:
The
company should design well-crafted marketing training pro-
grams for corporate management, divisional general managers,
marketing and sales personnel, manufacturing personnel, R&D
personnel,
and others. GE, Motorola, and Accenture run these
programs.
Install a Modern Marketing Planning System: The planning
format will require managers to think about the marketing
envi-
ronment, opportunities, competitive trends, and other forces.
These managers then prepare strategies and sales-and-profit
forecasts for specific products and segments and are account-
able for performance.
Establish an Annual Marketing Excellence Recognition
Program:
Business units that believe they have developed exem-
plary marketing plans should submit a description of their plans
and results. The winning teams would be rewarded at a special
ceremony. The plans would be disseminated to the other
busi-
ness units as "models of marketing thinking." Such programs are
carried on by
Accenture,
Becton-Dickenson, and DuPont.
Shift from a Department Focus to a Process-Outcome
Focus:
After defining the fundamental business processes that

determine its success, the company should appoint process
leaders and cross-disciplinary teams to reengineer and imple-
ment these processes.
Empower the Employees:
Progressive companies encourage and
reward their employees for coming up with new ideas. They also
empower them to settle customer complaints in order to save the
customer's business.
IBM,
for example, lets its frontline employees
spend up to $5,000 to solve a customer problem on the spot.
brands. The company is now fiercely playing catch-up, using innovation to challenge
these category leaders with Fruitopia noncarbonated fruit beverage, POWERade energy
drink, and Dasani water.
POWERADE
Challenging leader Gatorade in the energy drink market has been a tough task. After introducing several
innovations subsequent to its launch in 1990, such as sports cap packaging and offbeat flavors, Coca-Cola
found its POWERade brand was stagnating by the end of the decade. Relaunched in 2001, the brand was
positioned on the basis of active consumer lifestyles as "Fuel for Life" to distinguish it from sports-focused
Gatorade. The logo was completely revamped to feature a snake-like "P," and the product was reformulated
with B vitamins. Ads themed "Very Real Power" showed athletes doing seemingly impossible feats by virtue
of realistic special effects. Innovation has continued to drive a turnaround in sales. In the summer of 2003,
the company introduced special edition Martix Reloaded POWERade with a custom-shaped package and
new flavor to create a tie-in with the blockbuster movie franchise. Other special editions tied to the
Olympics, NASCAR, and NHRA followed. September 2004 saw the launch of sourberry-flavored POWERade
FLAVA23, backed by an integrated marketing program that featured a DC Comics depiction of NBA star and
POWERade spokesman LeBron James.
22
Market leaders tend to miss trends when they are risk-averse, obsessed about protect-
ing their existing markets and physical resources, and more interested in efficiency than

innovation.
706
PART
8
CREATING SUCCESSFUL LONG-TERM GROWTH
::: Socially Responsible Marketing
Effective internal marketing must be matched by a strong sense of social responsibility.
23
Companies need to evaluate whether they are truly practicing ethical and socially responsi-
ble marketing. Several forces are driving companies to practice a higher level of corporate
social responsibility: rising customer expectations, changing employee expectations, gov-
ernment legislation and pressure, investor interest in social criteria, and changing business
procurement practices.
24
Business success and continually satisfying the customer and other stakeholders are
closely tied to adoption and implementation of high standards of business and marketing
conduct. The most admired companies in the world abide by a code of serving people's
interests, not only their own.
Business practices are often under attack because business situations routinely pose
tough ethical dilemmas. The issues are complicated: It is not easy to draw a clear line
between normal marketing practice and unethical behavior. At the same time, certain busi-
ness practices are clearly unethical or illegal. These include bribery or stealing trade secrets;
false and deceptive advertising; exclusive dealing and tying agreements; quality or safety
defects; false warranties; inaccurate labeling; price-fixing or undue discrimination; and bar-
riers to entry and predatory competition.
FUELING STRATEGIC INNOVATION
Professor Stephen Brown
of
Ulster University has challenged
a

num-
ber
of
fundamental assumptions underlying
the
marketing concept.
He thinks that marketers make
too
much
of
researching and satisfy-
ing consumers, and as
a
result, risk losing marketing imagination
and
significant consumer impact. Here
are his
criticisms:
1.
If
marketers pay too much attention
to
what consumers say they
need or
want,
marketers will simply make products similar to those
that already exist. Consumers normally start from what they know,
not from what might be possible. For example, they might say they
want
a

smaller cellular phone
but
would
not ask for one
that
includes
a
Palm Pilot or voice recognition.
It
is the marketer's job
to
go beyond what customers say they want.
2.
The
marketing concept assumes that consumers have clear
goals and pursue them rationally. But consumers are buffeted
by
all kinds
of
forces. Many respond
to
hyped products and stories.
Therefore marketers need skills beyond APIC—analysis,
plan-
ning,
implementation, and control. Marketers need
to be
able
to
create dramas,

new
realities, artificial scarcities, celebrations,
and
the
like.
3. The marketing concept implies that marketers must be submissive
to customers, and
go all out to
please them. Any suggestion that
marketers might "play" with
the
customer, even manipulate
the
public,
is
taboo.
Yet
some
of the
greatest marketers
of the
past,
such
as P.T
Barnum, teased
the
public, overdramatized offerings,
and
yet
the public loved it. Why should

the
customer
be
dominant
and the marketer always be submissive?
How can companies build
a
capability
for
strategic innovation? Here
are some approaches:
Hire some marketers who
are
unusually creative
to
counterbal-
ance
the
majority who
do
marketing
by the
textbook. These peo-
ple may
be
more unconventional, more rule-breaking, more risk-
taking,
and even more argumentative,
but
their ideas will

at
least
present
a
challenge.
Train your employees
in the use of
creativity techniques, includ-
ing group techniques (brainstorming, synectics)
and
individual
techniques (visualization, attribute listing, forced relationships,
morphological analysis, mind-mapping).
List observable trends such as longer working hours, single parents,
and new life styles, and tease
out
their implications for your
firm.
List unmet needs and imagine
new
offerings
or
solutions: how
to
help people lose weight, stop smoking, relieve stress, meet
oth-
ers,
and so on.
Set
up

rewards and prizes
for
new ideas. Run
a
"best idea" com-
petition once
a
month. Give
a
cash reward, extra vacation time,
or
travel awards
to
those who come
up
with
the
best ideas.
Senior managers should take small sets
of
employees out
to
lunch
or dinner once
a
week
to
discuss ideas they might have on improv-
ing the business. Sometimes take them into new
settings,

such as
a
wrestling match,
a
drug rehabilitation center,
a
poor neighborhood.
Set
up
groups
of
employees
to
critique
the
company's and com-
petitors' products and
services.
Also have them critique the com-
pany's cherished beliefs and consider turning them upside down.
Occasionally hire creative resources from outside
the
firm.
Many
large advertising agencies, such
as Leo
Burnett,
run a
creativity
service

for
clients.
Sources:
For more on Brown's
views,
see Stephen
Brown,
Marketing—The Retro Revolution
(Thousand
Oaks,
CA:
Sage Publications, 2001). For more on
creativity, see Michael Michalko,
Cracking
Creativity:
The
Secrets
of
Creative Genius
(Berkeley, CA: Ten Speed Press, 1998); James M. Higgins, 101
Creative Problem Solving Techniques
(New
York:
New Management Publishing Company, 1994); and all of the books by Edward DeBono.
MARKETING INSIGHT
MANAGING A HOLISTIC MARKETING ORGANIZATION CHAPTER 22 707
Today companies that do not perform ethically or well are at greater risk of being exposed,
thanks to the Internet. In the past, a disgruntled customer might bad-mouth a manufacturer
or merchant to
12

other
people;
today he or she can reach thousands of people on the Internet.
Microsoft, for example, has attracted scores of anti-Microsoft sites, including Hate Microsoft
and Boycott Microsoft. Well-managed PR campaigns can also have an effect. The Rainforest
Action Network launched a punishing PR campaign in 1997 to stop The Home Depot from
selling old-growth lumber. After two years of bad publicity and resistance to new store loca-
tions,
The Home Depot agreed to have its suppliers work with environmental and forestry
groups to certify that its wood products are not from endangered areas.
25
Corporate Social Responsibility
Raising the level of socially responsible marketing calls for a three-pronged attack that relies
on proper legal, ethical, and social responsibility behavior.
LEGAL BEHAVIOR Society must use the law to define, as clearly as possible, those practices
that are illegal, antisocial, or anticompetitive. Organizations must ensure that every employee
knows and observes any relevant laws. For example, sales managers can check that sales rep-
resentatives know and observe the law, such as the fact that it is illegal for salespeople to lie to
consumers or mislead them about the advantages of buying a product. Under
U.S.
law, sales-
people's statements must match advertising claims. In selling to businesses, salespeople may
not offer bribes to purchasing agents or others influencing a sale. They may not obtain or use
competitors' technical or trade secrets through bribery or industrial espionage. Finally, sales-
people must not disparage competitors or competing products by suggesting things that are
not true. Every sales representative must understand these laws and act accordingly.
26
ETHICAL BEHAVIOR Companies must adopt and disseminate a written code of
ethics,
build

a company tradition of ethical behavior, and hold its people fully responsible for observing eth-
ical and legal guidelines.
27
A
1999 poll by Environics International, a public opinion research
firm, found that 67 percent of North Americans are willing to buy or boycott products on ethi-
cal grounds. In response to heightened consumer sensitivity on the topic, KPMG's 1999 survey
of 1,100 global companies found that 24 percent produce annual "sustainability" reports.
28
)CIAL RESPONSIBILITY BEHAVIOR Individual marketers must practice a "social con-
science" in specific dealings with customers and stakeholders.
29
Increasingly, people say
that they want information about a company's record on social and environmental respon-
sibility to help decide which companies to buy from, invest in, and work for.
30
Table
22.1
lists
1
Johnson
&
Johnson
2
Coca-Cola
3
Wal-Mart
4
Anheuser-Busch
5

Hewlett-Packard
6
Walt Disney
7
Microsoft
8 IBM
9
McDonald's
10 3M
11
UPS
12
FedEx
13
Target
14
The Home Depot
15
General Electric
TABLE
22.1 |
Top-Rated Companies
for
Social
Responsibility
708 PART 8 CREATING SUCCESSFUL LONG-TERM GROWTH «
This Fetzer ad reinforces the company's
commitment to social responsibility.
David Breashears is an author, filmmaker,
and world-renowned climber who has

ascended Everest several times.
companies who receive high marks for social responsibility. Fetzer Vineyards is one com-
pany that has fully embraced social responsibility.
FETZER VIN EYARDS
The sixth-largest winery in the United States and winner of many product-quality awards, Fetzer has transformed its
business according to the triple bottom line—measuring corporate success by social and environmental impact as
well as profit and loss. Every one of the
2,000
acres owned by Fetzer is certified as organic and the vineyards are
designated a "zero waste" business by the state of California. Its philosophy even extends to product
packaging.
To
spare
trees,
labels are made from a plant fiber known as kenaf
and
printed with soy-based inks; the corks aren't
san-
itized with chlorine; and the cases are made from recycled
cardboard.
The
winery uses alternative solar
and
biodiesel
energy sources, and broke with convention by providing extensive programs and benefits for part-time workers as
well as full-time employees. Even though it belongs to the highly competitive wine industry, Fetzer believes that
busi-
ness and social progress should go hand-in-hand. Its financial and marketing success has led the Wine Institute, a
trade group for the California wine industry, to introduce the first statewide sustainable wine-growing practices.
31

Deciding how
to
communicate corporate attitudes and behaviors toward social responsibil-
ity can be difficult. Corporate philanthropy, for example, poses problems.
32
Merck, DuPont,
Wal-Mart, and Bank of America are examples of firms that have donated $100 million or more
to charities in
a
year.
Although companies can be credited for good deeds, the deeds can be eas-
ily overlooked if not publicized and easily resented if the company
is
seen as being exploitative
or fails to live up to a "good guys" image.
33
Philip Morris Company's $250 million ad campaign
touting its charitable activities was met with skepticism because of its negative corporate image.
MANAGING A HOLISTIC MARKETING ORGANIZATION CHAPTER 22 709
Socially Responsible Business Models
The future holds a wealth of opportunities for companies.
34
Technological advances in solar
energy, online networks, cable and satellite television, biotechnology, and telecommunica-
tions promise to change the world as we know it. At the same time, forces in the socioeco-
nomic, cultural, and natural environments will impose new limits on marketing and busi-
ness practices. Companies that are able to innovate new solutions and values in a socially
responsible way are the most likely to succeed.
35
Many companies such as The Body Shop, Stonyfield Farms, and Smith and Hawken are

giving social responsibility a more prominent role. Actor Paul Newman's homemade salad
dressing has grown to a huge business.
36
The Newman's Own brand is on additional prod-
ucts such as pasta sauce, salsa, popcorn, and lemonade, and is sold in eight countries. The
company has given away all its profits—$150 million—to educational and charitable pro-
grams such as the Hole in the Wall Gang camps Newman created for children with serious
illnesses. Another example of
a
company with social responsibility at the core of
its
business
model
is
Working Assets.
WORKING ASSETS
Working Assets was established in 1985 to help people support causes through everyday activities like talking
on the phone. Every time a customer uses one of Working Assets' donation-linked services (Long Distance,
Local,
Wireless, Credit
Card,
or Online), the company donates a portion of the customer's bill to nonprofit groups.
Working Assets donates at least
1
percent of annual revenues to charity and lets customers vote on which
non-
profit groups receive money. To date, $40 million has been raised by the company for causes including
Greenpeace, Oxfam America, Rainforest Action Network, Human Rights Watch, Planned Parenthood, Stand for
Children,
and Doctors Without Borders, among many others. The customers addressed in the company's clever

tagline "We make your voice heard" are people who identify themselves as supporters of progressive causes.
Working Assets' corporate idealism has had a favorable effect on the bottom line. Revenue shot up from $2
mil-
lion in 1991 to roughly $300 million in 2003.
37
Cause-Related Marketing
Many firms are blending their corporate social responsibility initiatives with their marketing
activities.
38
Cause-related marketing is marketing that links the firm's contributions to a
designated cause to customers' engaging directly or indirectly in revenue-producing trans-
actions with the firm.
39
Cause marketing has also been called a part of corporate societal
marketing
(CSM)
which Drumwright and Murphy define as marketing efforts "that have at
least one non-economic objective related to social welfare and use the resources of the com-
pany and/or of its partners."
40
They also include other activities such as traditional and
strategic philanthropy and volunteerism as part of CSM.
Cause-related marketing began in earnest in the 1980s. Many observers credit
American Express with raising awareness of the mutual benefits of cause-related market-
ing through its 1983 campaign to help restore the Statue of Liberty. By donating a penny
for every credit card transaction and a dollar for each new card issued, American Express
gave $1.7 million to the Statue of Liberty—Ellis Island Foundation. In the process, trans-
actions for American Express rose 30 percent, and new cards issued increased by 15 per-
cent during this period.
Cause-related marketing comes in many forms. Tesco, a leading U.K. retailer, has

created a "Computers for Schools" program: Customers receive vouchers for every
10 pounds spent, which can be donated to the school of their choice; the school can
then exchange the vouchers for new computer equipment. Dawn, the top dishwashing
liquid in the United States, launched a campaign highlighting the fact that the product's
grease-cleaning power had an unusual side benefit—it could be used to clean birds
caught in oil spills.
A Web
site, www.saveaduck.com, outlines its financial donations and
educational program. Nike is the title sponsor of the Nike 26.2 Women's Marathon in San
Francisco, whose proceeds go to the Leukemia and Lymphoma Society. In addition, Nike
works with more than 60 Indian tribes to help combat Type 2 diabetes by giving sneak-
ers to patients who have their blood tested for diabetes. British Airways has a particu-
larly successful and highly visible program.
710 PART 8 CREATING SUCCESSFUL LONG-TERM GROWTH «
- BRITISH AIRWAYS
British Airways partnered with UNICEF and developed a cause-marketing campaign called Change for Good.
Passengers on British Airways flights are encouraged to donate leftover foreign currency from their travels. The
scheme is simple: Passengers deposit their surplus currency in envelopes provided by British Airways, which
collects the deposits and donates them directly to UNICEF. British Airways advertises its program during an in-
flight video, on the backs of seat cards, and with in-flight announcements. The company also developed a tele-
vision ad that featured a child thanking British Airways for its contribution to UNICEF. Because Change for Good
can be directly targeted to passengers and can produce immediate results, it does not require extensive adver-
tising or promotion and is highly cost-efficient. Since 1994, almost $40 million has been raised and distributed
around the world.
41
CAUSE MARKETING BENEFITS AND COSTS
A
successful cause marketing program can
produce a number of benefits: improving social welfare; creating differentiated brand posi-
tioning; building strong consumer bonds; enhancing the company's public image with gov-

ernment officials and other decision makers; creating a reservoir of goodwill; boosting inter-
nal morale and galvanizing employees; and driving sales.
42
By humanizing the firm, consumers may develop a strong, unique bond with the firm
that transcends normal marketplace transactions.
43
Some of the specific means by which
cause marketing programs can build brand equity with consumers include: (1) building
brand awareness, (2) enhancing brand image, (3) establishing brand credibility, (4) evoking
brand feelings, (5) creating a sense of brand community, and (6) eliciting brand engage-
ment.
44
Liz Claiborne has exhibited strong commitment to its cause.
-LIZ CLAIBORNE
In
1991,
at a time when domestic violence was often a taboo or "hot potato" issue, Liz Claiborne developed its
Women's Work
program against domestic
violence,
now
dubbed,
"Love Is
Not
Abuse."
Prior
to
starting the campaign,
the company had conducted research which revealed that 96 percent of its customers believed domestic violence
was a problem and

91
percent of those same customers would have a positive opinion of
a
company that started an
awareness campaign about the
issue.
The
major fund-raising event is an annual charity shopping day every October
at Liz Claiborne stores across
the
United
States.
The
company donates 10 percent of sales to local domestic violence
organizations. Liz Claiborne also contributes proceeds from the sale of
T-shirts,
jewelry, and other products related
to the campaign. Additionally, the company pays for public service campaigns that appear on television, radio,
bill-
boards, and bus shelters and distributes awareness posters, brochures, and mailings. Over the years, Liz Claiborne
has also sponsored workshops, surveys, celebrity-endorsed awareness campaigns, and other events.
45
The danger, however, is that the promotional efforts behind a cause-related marketing
program could backfire if cynical consumers question the link between the product and the
cause and see the firm as being self-serving and exploitative.
46
For example, Bristol-Meyers
Squibb (BMS) supports the Tour de Cure, which funds diabetes research and prevention.
On the official Web page of the tour, the BMS logo includes the statement that BMS is "A
leader in

Type 2
Diabetes
Care."
This potentially profitable connection between the sponsor
and the event may lead some consumers to view BMS's support for the Tour de Cure as
opportunistic.
47
A number of decisions must be made in designing and implementing a cause market-
ing program, such as how many and which cause(s) to choose and how to brand the cause
program.
)SING A CAUSE Some experts believe that the positive impact on a brand from
cause-related marketing may be lessened by sporadic involvement with numerous causes.
For example, Cathy Chizauskas, Gillette's director of civic affairs, states: "When you're
spreading out your giving in fifty-dollar to one-thousand-dollar increments, no one knows
what you are doing It doesn't make much of a splash."
48
Many companies choose to focus on one or a few main causes to simplify execution and
maximize impact. One of the more focused cause marketers is McDonald's. Ronald
McDonald Houses in more than 20 countries offer more than
5,000
rooms each night to
MANAGING A HOLISTIC MARKETING ORGANIZATION CHAPTER 22 711
families needing support while their child is in
the hospital. Ronald McDonald House program
has provided a "home away from home" for
nearly 4 million family members since its
beginning in 1974.
Limiting support to a single cause, however,
may limit the pool of consumers or other stake-
holders who could transfer positive feelings

from the cause to the firm. In addition, many
popular causes already have numerous corpo-
rate sponsors. Reportedly, over 300 companies,
including
Avon,
Ford, Estee Lauder, Revlon, Lee
Jeans,
Polo Ralph Lauren, Yoplait, Saks, BMW,
and American Express, currently associate
themselves with breast cancer as a cause in
some way.
49
As a consequence, the brand may
find itself "lost in the shuffle," overlooked in a
sea of symbolic pink ribbons.
Opportunities can potentially be greater with
"orphan causes"—causes such as diseases that
afflict less than 200,000 people.
50
Another option
is overlooked diseases, such as pancreatic can-
cer, which is the fourth-deadliest form of cancer
behind skin, lung, and breast and yet has
received little or no corporate support.
Most firms tend to choose causes that fit their corporate or brand image and matter to
their employees and shareholders. LensCrafters' Give the Gift of Sight program is a family of
charitable vision care programs that has provided free vision screenings, eye exams, and
glasses to more than 3 million needy people throughout North America and in developing
countries around the world. All stores are empowered to deliver free glasses in their com-
munities. In addition, Give the Gift of Sight sponsors two traveling Vision

Vans
targeting chil-
dren in North America as well as monthly two-week optical missions overseas.
The LensCrafters Give the Gift of Sight program in action.
BRANDING THE CAUSE MARKETING PROGRAM There are three potential options for
branding a cause marketing program:
1.
Self-branded: Create Own Cause Program. The firm takes ownership of a cause and
develops an entirely new organization to deliver benefits associated with the cause. The
newly created self-branded cause could be branded with the parent brand or an individ-
ual product brand. The Ronald McDonald House Charities and the Avon Breast Cancer
Crusade are classic examples of self-branded cause entities.
2.
Co-branded: Link to Existing Cause Program. The firm partners with an existing cause.
Typically, the identification of the brand affiliation with the cause is only in the form of
its designation as a sponsor or supporter—the actual involvement is not branded as a
program in anyway. Currently, co-branding relationships with causes are the most pop-
ular type of activity. An example is Sealy's sponsorship of NASCAR's Victory Junction
Gang Camp, which involves the donation of beds to an auto-racing-themed camp for
children with life-threatening illnesses.
3.
Jointly Branded: Link to Existing
Cause
Program. In this hybrid approach, firms partner
with an existing cause but explicitly brand the program that links to the cause. An example
of this is The Rocky Mountain Challenge, an organized three-day benefit bike
ride,
which is
sponsored by the bike retailer Colorado Cyclist to provide funds for the Tyler Hamilton
Foundation for

MS,
a charity established by the Tour de France cyclist (and University of
Colorado graduate).
Co-branding with an existing cause is a means for firms to complement their existing brand
image with specific associations that are "borrowed" or "transferred" from a cause.
Self-
branding can be useful when a firm is trying to augment existing consumer associations via
emotional and imagery appeals. Joint branding may permit the best of both worlds by estab-
lishing a strong connection with an existing cause but maintaining a distinct identity at the
same time.
712 PART 8
CREATING SUCCESSFUL LONG-TERM GROWTH
Co-branding: NASCAR racer Kyle Petty and his wife Pattie created the Victory Junction Gang Camp
in Randelman
NC
for special kids. Here they receive a check from Nextel for
$1
million.
"Marketing Memo: Making
A
Difference"
provides some tips from a top cause market-
ing firm.
Social Marketing
Some marketing is conducted to directly
address a social problem or cause. Cause-
related marketing is done by a company to
support a cause. Social marketing is done by a
nonprofit or government organization to fur-
ther a cause, such as "say no to drugs" or "exer-

cise more and eat better."
51
The need for social
marketing is evident: Consider the following
recent facts and figures from 2002.
• An estimated 1 million teens became preg-
nant.
• 5-10 million adolescent girls and women
struggled with eating disorders.
u More than 16,000 people were killed in
alcohol-related crashes.
n More than 3,000 children and teens died
from gunshot wounds.
More than
5,000
people on waiting lists for organ transplants died.
Social marketing is a global phenomenon that goes back for years. In the 1950s, India
started family planning campaigns. In the 1970s, Sweden started social marketing cam-
paigns to turn the country into a nation of nonsmokers and nondrinkers. In the 1970s, the
Australian government ran "Wear Your Seat Belt Campaigns." In the late 1970s, the Canadian
government launched campaigns to "Say No to Drugs," "Stop Smoking," and "Exercise for
Health." In the 1980s, the World Bank, World Health Organization, and Centers for Disease
Control and Prevention started to use the term and promote interest in social marketing.
Some notable global social marketing successes include these:
& Oral rehydration therapy in Honduras significantly decreased deaths from diarrhea in
small children under the age of 5.
• Social marketers created booths in marketplaces where Ugandan midwives sold contra-
ceptives at affordable prices.
m Population Communication Services created and promoted two extremely popular songs
in Latin America, "Stop" and "When

We
Are Together," to help young women "say no."
• The National Heart, Lung, and Blood Institute successfully raised awareness about cho-
lesterol and high blood pressure, which helped to significantly reduce deaths.
A number of different types of organizations conduct social marketing in the United
States. Government agencies include the Centers for Disease Control and Prevention,
Departments of Health, Social and Human Services, Department of Transportation, and the
U.S.
Environmental Protection Agency. Literally hundreds of nonprofit organizations are
involved with social marketing, including the American Red Cross, the World Wildlife Fund,
and the American Cancer Society.
BOYS & GIRLS CLUB OF AMERICA
Known as "the positive after-school place for kids," the Boys & Girls Club of America serves more than
6 million youngsters annually in 3,400 club locations. The children's time in the program is spent on such
activities as sports, recreation, and fitness, as well as on schoolwork, and even on programs centered on
character development, leadership, and life skills. Distinguished alumni of the Boys & Girls Club include Bill
Cosby, Brad Pitt, and Denzel Washington. In a little over a decade, the organization built a roster of corpo-
rate partners to help provide programs and services for its members. The Crest Cavity Free Zone improves
MANAGING A HOLISTIC MARKETING ORGANIZATION CHAPTER 22 713
dental health
of
underserved children; Club Tech uses
a
$100 million cash
and
in-kind grant from Microsoft
to place computers and software
in
clubs;
and

Blockbuster's support
of the
Boys
&
Girls Clubs' National Kids
Day promotion
has
generated millions
in
funding.
52
Choosing the right goal or objective for a social marketing program is critical. Should a
family planning campaign focus on abstinence or birth control? Should a campaign to fight
air pollution focus on ride-sharing or mass transit? Social marketing campaigns may have
objectives related to changing people's cognitions, values, actions, or behaviors. The follow-
ing examples illustrate the range of possible objectives.
Cognitive campaigns
• Explain the nutritional value of different foods.
B
Explain the importance of conservation.
IARKETING MEMO
MAKING A DIFFERENCE
One
of the
most accomplished cause marketing consulting firms
is
Boston's Cone, Inc.
It
offers the following perspectives on the current
state

of
cause marketing and
how it
should best
be
practiced:
With
new
vigor, consumers, customers, employees, investors
and communities are closely watching how companies behave
in relation
to
them
and to
society. Influential groups such
as
Business
for
Social Responsibility, Dow Jones Sustainability
Index, Fortune magazine
and
others
are
judging companies
based on
a
complex series
of
global standards. Business prac-
tices such

as
governance, philanthropy, sourcing,
the
environ-
ment, employee relations and community relations have moved
from behind
the
scenes
to
center stage.
For
executives today,
appropriately defining, executing and communicating corporate
social responsibility (CSR) has never been more important.
To help execute and communicate CSR more effectively, Cone offers
the following considerations:
Define
CSR
for your company. Make sure that your senior exec-
utives are all talking about the same thing. CSR includes
a
broad
range
of
complex internal
and
external business practices.
Although they
are
vital components

of the
CSR
mix,
corporate
philanthropy and community relations don't define CSR alone.
Build
a
diverse team.
The
development
and
execution
of
CSR
strategies require
a
collaborative, concerted team effort. Create
a
decision-making task force that integrates and brings together
a
range
of
expertise
and
resources, including marketing, public
affairs, community relations,
legal,
human resources, manufac-
turing and others. Put
a

formal process
in
place
to
approach CSR
strategy development, ongoing implementation
and
continuous
improvement.
Analyze your current CSR-related activities
and
revamp
them if necessary. Do your due diligence
at
the outset
to
under-
stand CSR gaps
and
risks specific
to
your company. Research
industry examples and cull best practices from leading case
stud-
ies.
Make sure
to
consider global trends,
as
Europe

is far
advanced
of the U.S.
Forge
and
strengthen NGO relationships.
The
more than
300,000 non-governmental organizations
(NGO)
around
the
world
are a
powerful force
on
corporate policies
and
behavior,
serving
as
both advocates
and
loud critics. Forge sincere part-
nerships with organizations that can offer you independent,
unbi-
ased insight into
and
evaluation
of

your CSR activities; provide
expertise
on
social issues
and
developing global markets;
and
offer access
to key
influentials.
Develop
a
cause branding initiative. Create
a
public face
for
your citizenship activities through
a
signature Cause Branding
ini-
tiative that integrates philanthropy, community relations, market-
ing
and
human resources assets. ConAgra Foods, Feeding
Children Better program,
for
example,
is a
multi-year initiative cre-
ated

to
feed millions
of
hungry children through innovative part-
nerships, grant-making, employee volunteerism
and
education
and awareness. This program recently earned ConAgra Foods
the
U.S. Chamber
of
Commerce's Corporate Citizenship Award.
Walk your
talk.
Critics often assert that companies exploit CSR
as
a PR
smokescreen
to
conceal
or
divert attention from corpo-
rate misdeeds
and
blemishes. Before introducing
any new
CSR
initiative
or
drawing attention

to
good corporate behavior, make
sure that your company
is
addressing stakeholder expectations
of
CSR
at the
most basic
level.
Don't
be
silent.
Not
only
do
Americans expect businesses
to
behave socially,
the
majority want companies
to
tell them
how
they are doing so. An overwhelming majority also say they prefer
to find
out
about CSR activities from
a
third-party source, partic-

ularly
the
media.
Beware. Greater public awareness
for
your corporate citizenship
record
can be
double-edged. Claims
of
socially responsible
behavior, even sincere ones, often invite public scrutiny.
Be
pre-
pared.
Even
if
your company
is not
ready
to
proactively commu-
nicate about your CSR activities,
be
ready
to
respond
to
public
inquiries immediately. Don't

let the
threat
of
public scrutiny keep
you mute, though. More often than
not,
silence regarding
CSR
issues
is
translated
as
indifference,
or
worse, inaction.
Sources: Cone Buzz, April 2004. See also, Carol
L.
Cone, Mark A. Feldman, and Alison T. DaSilva, "Cause and Effects," Harvard Business Review (July
2003):
95-101.
714 PART 8 CREATING SUCCESSFUL LONG-TERM GROWTH
Action campaigns
a Attract people for mass immunization.
B
Motivate people to vote
"yes"
on a certain issue.
B
Motivate people to donate blood.
B

Motivate women to take a pap test.
Behavioral campaigns
a Demotivate cigarette smoking.
B
Demotivate hard-drug usage.
m Demotivate excessive consumption of alcohol.
Value campaigns
B
Alter ideas about abortion.
B
Change attitudes of bigoted people.
Social marketing may employ a number of different tactics to achieve its goals.
53
The
social marketing planning process follows many of the same steps as the process for tradi-
tional products and services (see Table 22.2). Some key success factors in developing and
implementing a social marketing program include:
B Study the literature and previous campaigns.
a Choose target markets that are most ready to respond.
B
Promote a single, doable behavior in clear, simple terms.
B
Explain the benefits in compelling terms.
a Make it easy to adopt the behavior.
B
Develop attention-grabbing messages and media.
• Consider an education-entertainment approach
Given the complexity and challenges of the issues involved with social marketing, it is
important to take a long-run view. Social marketing programs take time and may involve a
TABLE

22.2 [
Social Marketing Planning Process
Where Are We?
n Determine program focus.
a Identify campaign purpose.
B
Conduct
an
analysis
of
Strengths, Weaknesses, Opportunities, and Threats (SWOT).
B
Review past and similar efforts.
Where Do We Want
to Go?
a Select target audiences.
m
Set
objectives and goals.
E
Analyze target audiences and
the
competition.
How Will
We
Get There?
a Product: Design
the
market offering.
H

Price: Manage costs
of
behavior change.
a Distribution: Make
the
product available.
•
Communications: Create messages and choose media.
How Will We Stay
on
Course?
B
Develop
a
plan
for
evaluation and monitoring.
•
Establish budgets and find funding sources.
•
Complete
an
implementation
plan.
MANAGING A HOLISTIC MARKETING ORGANIZATION CHAPTER 22 715
series of phased programs or actions. For example, take the sequence of actions that have
been involved in discouraging smoking: cancer reports, labeling of
cigarettes,
banning ciga-
rette advertising, education about secondary smoke effects, no smoking in homes, no smok-

ing in restaurants, no smoking on planes, raising taxes on cigarettes to pay for antismoking
campaigns, states suing cigarette companies.
The actual success of the social marketing program must be evaluated in terms of the
program objectives. Criteria might include the following: high incidence of adoption, high
speed of adoption, high continuance of adoption, low cost per unit of adoption, and no
major counterproductive consequences.
'
I'.
Marketing Implementation
Table 22.3 summarizes the characteristics of
a
great marketing company.
A
marketing com-
pany is great not by "what it is," but by "what it does."
54
Marketing implementation is the
process that turns marketing plans into action assignments and ensures that such assign-
ments are executed in a manner that accomplishes the plan's stated objectives.
55
A brilliant strategic marketing plan counts for little if it is not implemented properly.
Consider the following example:
A
chemical company learned that the customers were not getting good service from
any of the competitors. The company decided to make customer service its strate-
gic thrust. When this strategy failed, a postmortem revealed a number of imple-
mentation failures. The customer service department continued to be held in low
regard by top management; it was understaffed; and it was used as a clumping
ground for weak managers. Furthermore, the company's reward system continued
to focus on cost containment and current profitability. The company had failed to

make the changes required to carry out its strategy.
Strategy addresses the what and why of marketing activities; implementation addresses
the who, where, when, and how. Strategy and implementation are closely related: One layer
of strategy implies certain tactical implementation assignments at a lower level. For exam-
ple,
top management's strategic decision to "harvest" a product must be translated into spe-
cific actions and assignments.
Thomas Bonoma identified four sets of
skills
for implementing marketing programs:
1.
Diagnostic skills -When marketing programs do not fulfill expectations, was it the result
of poor strategy or poor implementation? If implementation, what went wrong?
2.
Identification of company level - Implementation problems can occur in three levels:
the marketing function, the marketing program, and the marketing policy level.
3.
Implementation skills -
To
implement programs successfully, marketers need other
skills:
allocating skills for budgeting resources, organizing skills to develop an effective
organization, and interaction skills to motivate others to get things done.
4.
Evaluation skills - Marketers also need monitoring skills to track and evaluate market-
ing actions.
56
• The company selects target markets in which it enjoys superior advantages, and exits or avoids markets
where it is intrinsically weak.
• Virtually all the company's employees and departments are customer- and market-minded.

• There is a good working relationship between marketing,
R&D,
and manufacturing.
• There is a good working relationship between marketing, sales, and customer service.
• The company has installed incentives designed to lead to the right behaviors.
a The company continuously builds and tracks customer satisfaction and loyalty.
a The company manages a value-delivery system in partnership with strong suppliers and distributors.
• The company is skilled in building its brand name(s) and image.
• The company is flexible in meeting customers' varying requirements.
| TABLE 22.3 |
Characteristics of a Great Marketing
Company
716 PART 8 CREATING SUCCESSFUL LONG-TERM GROWTH
Companies today are striving to make their marketing operations more efficient and their
return on marketing investment more measurable (see Chapter 4). Marketing costs can
amount to 20 to 40 percent of a company's total operating budget. Companies recognize the
high amount of waste in many practices: too many meetings lasting too long, undue time
spent in looking for documents, delays in receiving approvals, and difficulties in coordinat-
ing vendor partners.
Most marketing departments use a limited number of unconnected technology tools
such as e-mail, spreadsheets, project management software, and customer databases. But
unconnected tools cannot deal with the increasingly complex nature of business, the
increased number of collaborators, and the global scope of operations. Companies use
information technology to improve the management of their marketing resources. They
need better templates for marketing processes, better management of marketing assets, and
better allocation of marketing resources. Certain repetitive processes can be automated.
This drive is going under such names as marketing
resource
management
(MRM),

enterprise
marketing management
(EMM),
and marketing automation systems
(MAS).
57
Several software companies now offer software packages to help companies better man-
age their marketing processes, assets, and resources. The packages are customized so differ-
ent marketing managers—vice president of marketing, product and brand managers, field
sales managers, marketing communications managers—can do their planning, implemen-
tation, and control.
Marketing resource management (MRM) software provides a set of Web-based applica-
tions that automate and integrate such activities as project management, campaign man-
agement, budget management, asset management, brand management, customer relation-
ship management, and knowledge management. The knowledge management component
consists of process templates, how-to wizards, and best practices.
The software packages are Web-hosted and available to users with passwords. They add
up to what some have called desktop marketing in that marketers can find whatever infor-
mation and decision structures they need on their computers. The computer will host a
dashboard on which marketers can manage their activities. In the next few
years,
MRM soft-
ware will enable marketers to greatly improve spending and investment decisions, bring
new products to market more quickly, and reduce decision time and costs.
111 Evaluation and Control
In spite of the need to monitor and control marketing activities, many companies have inad-
equate control procedures.
A
study of
75

companies turned up these findings:
a Smaller companies do a poorer job of setting clear objectives and establishing systems to
measure performance.
a Less than half the companies studied knew their individual products' profitability. About
one-third had no regular review procedures for spotting and deleting weak products.
m Almost half of the companies failed to compare their prices with those of the competi-
tion, to analyze their warehousing and distribution costs, to analyze the causes of returned
merchandise, to conduct formal evaluations of advertising effectiveness, and to review their
sales forces' call reports.
@ Many companies take four to eight weeks to develop control reports, which are occasion-
ally inaccurate.
Table 22.4 lists four types of marketing control needed by companies: annual-plan
control, profitability control, efficiency control, and strategic control. Chapter 4
described how companies can use marketing metrics to analyze marketing plans and
their profitability. Annual-plan control aims to ensure that the company achieves the
sales,
profits, and other goals established in its annual plan. The heart of annual-plan
control is management by objectives. Four steps are involved (see Figure 22.5). First,
management sets monthly or quarterly goals. Second, management monitors its perfor-
mance in the marketplace. Third, management determines the causes of serious perfor-
mance deviations. Fourth, management takes corrective action to close the gaps between
goals and performance.
This control model applies to all levels of the organization. Top management sets annual
sales and profit goals that become specific goals for lower levels of management. Each prod-
MANAGING A HOLISTIC MARKETING ORGANIZATION CHAPTER 22 717
TA B L E
22.4 I
Types
of
Marketing Control

Type
of
Control Prime Responsibility Purpose
of
Control Approaches
I. Annual-plan control Top management To examine whether the planned
•
Sales analysis
Middle management results are being achieved
•
Market share analysis
a Sales-to-expense ratios
•
Financial analysis
•
Market-based scorecard
analysis
II.
Profitability control Marketing controller To examine where the company
is
Profitability by:
making and losing money
•
product
a territory
B
customer
•
segment
n trade channel

•
order size
III.
Efficiency control Line and staff management To evaluate and improve the Efficiency
of:
Marketing controller spending efficiency and impact
•
sales force
of marketing expenditures
a
advertising
•
sales promotion
•
distribution
IV. Strategic control Top management To examine whether the company
•
Marketing-effectiveness
Marketing auditor
is
pursuing
its
best opportunities rating instrument
with respect
to
markets, products,
•
Marketing audit
and channels
a

Marketing excellence review
a Company ethical and social
responsibility review
uct manager is committed to attaining specified levels of sales and costs; each regional dis-
trict and sales manager and each sales representative is also committed to specific goals.
Each period, top management reviews and interprets the results.
Efficiency Control
Suppose a profitability analysis reveals that the company is earning poor profits in cer-
tain products, territories, or markets. Are there more efficient ways to manage the sales
force, advertising, sales promotion, and distribution in connection with these marketing
entities?
Some companies have established a marketing
controller
position to improve marketing
efficiency. Marketing controllers work out of the controller's office but specialize in the mar-
keting side of the business. At companies such as General Foods, DuPont, and Johnson &
Johnson, they perform a sophisticated financial analysis of marketing expenditures and
results. They examine adherence to profit plans, help prepare brand managers' budgets,
measure the efficiency of promotions, analyze media production costs, evaluate customer
and geographic profitability, and educate marketing personnel on the financial implications
of marketing decisions.
58
SALES FORCE EFFICIENCY Sales managers need to monitor the following key indicators
of efficiency in their territories:
a Average number of calls per salesperson per day.
a Average sales call time per contact.
a Average revenue per sales call.
a Average cost per sales call.
a Entertainment cost per sales call.
Goal Setting

Performance
Measurement
Performance
Diagnosis
Corrective
Action
FIG.
22.5
The Control Process
718 PART 8 CREATING SUCCESSFUL LONG-TERM GROWTH
n Percentage of orders per 100 sales calls.
• Number of new customers per period.
E3 Number of lost customers per period.
ES
Sales force cost as a percentage of total sales.
When a company starts investigating sales force efficiency, it often finds areas for improve-
ment. General Electric reduced the size of one of its divisional sales forces after discovering
that its salespeople were calling on customers too often. When a large airline found that its
salespeople were both selling and servicing, they transferred the servicing function to lower-
paid clerks. Another company conducted time-and-duty studies and found ways to reduce
the ratio of idle-to-productive time.
ADVERTISING EFFICIENCY Many managers believe it is almost impossible to measure
what they are getting for their advertising dollars; but they should try to keep track of at least
the following statistics:
a Advertising cost per thousand target buyers reached by media vehicle.
a Percentage of audience who noted, saw, or associated and read most of each print ad.
• Consumer opinions on the ad's content and effectiveness.
E
Before and after measures of attitude toward the product,
a Number of inquiries stimulated by the ad.

a Cost per inquiry.
Management can take a number of steps to improve advertising efficiency, including doing
a better job of positioning the product, defining objectives, pretesting messages, using com-
puter technology to guide the selection of media, looking for better media buys, and doing
posttesting.
SALES PROMOTION EFFICIENCY Sales promotion includes dozens of devices for stimu-
lating buyer interest and product trial. To improve sales promotion efficiency, management
should record the costs and sales impact of each promotion. Management should watch the
following statistics:
• Percentage of sales sold on deal.
a Display costs per sales dollar.
H
Percentage of coupons redeemed.
• Number of inquiries resulting from a demonstration.
A
sales promotion manager can analyze the results of different promotions and advise prod-
uct managers on the most cost-effective promotions to use.
DISTRIBUTION EFFICIENCY Management needs to search for distribution economies in
inventory control, warehouse locations, and transportation modes. It should track such
measures as:
• Logistics costs as a percentage of sales.
• Percentage of orders filled correctly.
H
Percentage of on-time deliveries.
• Number of billing errors.
Management should strive to reduce inventory while at the same time speeding up the order-
to-delivery
cycle.
That both can be done simultaneously is shown by Dell Computer.
.— DELL

A customer-customized computer that is ordered from Dell's Web site at 9:00
A.M.
on Wednesday can be on the
delivery truck by 9:00
P.M.
Thursday. In that short period, Dell electronically orders the computer components
from its suppliers' warehouses. Equally impressive, Dell gets paid electronically within 24 hours while Compaq,
• supplying its computers to retailers, receives payment days later.