The explosive growth in digital technology has fundamentally changed the way we live—how we communicate, share information, access entertainment, and shop. Welcome to the age of the Internet of Things (IoT), a global environment where everything and everyone is digitally connected to everything and everyone else. More than 3.3 billion people—46 percent of the world’s population—are now online; 64 percent of all American adults own smartphones. These numbers will only grow as digital technology rockets into the future.28

Most consumers are totally smitten with all things digital. For example, according to one study, 71 percent of Americans keep their mobile phone next to them when they sleep; 3 percent sleep with phone in hand. In just the past few years, people in the United States averaged more time per day with digital media (5.25 hours) than viewing traditional TV (4.5 hours).29

The consumer love affair with digital and mobile technology makes it fertile ground for marketers trying to engage customers. So it’s no surprise that the internet and rapid advances in digital and social media have taken the marketing world by storm. Digital and social media marketing involves using digital marketing tools such as websites, social media, mobile ads and apps, online video, email, blogs, and other digital platforms to engage consumers anywhere, anytime via their computers, smartphones, tablets, internet-ready TVs, and other digital devices. These days, it seems that every company is reaching out to customers with multiple websites, newsy tweets and Facebook pages, viral ads and videos posted on YouTube, rich-media emails, and mobile apps that solve consumer problems and help them shop.

At the most basic level, marketers set up company and brand websites that provide information and promote the company’s products. Many companies also set up branded community sites, where customers can congregate and exchange brand-related interests and information. For example, Petco’s Community site is a place “where pet lovers can connect, share, and learn” via a blog and discussion boards dedicated to dogs (“the bark”), cats (“the purr”), fish (“the splash”), birds (“the chirp”), reptiles (“the hiss”), and other types of pets. And Sony’s PlayStation Forums site serves as a social hub for PlayStation PS4 game enthusiasts. It’s a place where fans can follow social media posts about PS4, watch the latest PS4 videos, discover which PS4 games are trending on social networks, share content, and interact with other fans—all in real time.30

Beyond brand websites, most companies are also integrating social and mobile media into their marketing mixes.

Social Media Marketing

It’s hard to find a brand website, or even a traditional media ad, that doesn’t feature links to the brand’s Facebook, Instagram, Twitter, Google+, YouTube, Snapchat, Pinterest, LinkedIn, or other social media sites. Social media provide exciting opportunities to extend customer engagement and get people talking about a brand.

Some social media are huge—Facebook has more than 1.59 billion active monthly members. Instagram has more than 400 million active monthly users, Twitter has more than 315 million monthly users, Google+ racks up 300 million active monthly visitors, and Pinterest draws in more than 100 million users. Reddit, the online social news community, has 234 million unique visitors each month from 185 countries. But smaller, more focused social media sites are also thriving, such as CafeMom, an online community of 20 million moms who exchange advice, entertainment, and commiseration at the community’s online, Facebook, Twitter, Pinterest, YouTube, Google+, and mobile sites. Even tiny sites can attract active audiences, such as Birdpost.com for avid birdwatchers or Ravelry.com for knitters and crocheters.

Online social media provide a digital home where people can connect and share important information and moments in their lives. As a result, they offer an ideal platform for real-time marketing, by which marketers can engage consumers in the moment by linking brands to important trending topics, real-world events, causes, personal occasions, or other important happenings in consumers’ lives (see Real Marketing 1.2).

Using social media might involve something as simple as a contest or promotion to garner Facebook Likes, tweets, or YouTube postings. But more often these days, large organizations of all kinds use a wide range of carefully integrated social media. For example, space agency NASA uses a broad mix of social media to educate the next generation of space explorers on its mission to “boldly go where no man has gone before.” In all, NASA has more than 480 social media accounts spanning various topics and digital platforms. The agency has more than 14 million Facebook fans, 14.5 million Twitter followers, 8.8 million Instagram followers, and 76,000 YouTube subscribers. One of NASA’s largest-ever social media campaigns supported the recent test launch of the Orion spacecraft, which will eventually carry humans to deep space destinations, such as Mars or an asteroid:31

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The extensive campaign included a dozen or more YouTube “I’m On Board” videos starring actors from classic science-fiction TV shows, such as Star Trek and The Incredible Hulk. Even Sesame Street’s Elmo added his support, proudly displaying his “I’m On Board” boarding pass, chatting up astronauts, and relaying facts and launch information on the Sesame Street Twitter feed and other digital platforms. The campaign offered social media users a chance to put their names on a microchip aboard the space vehicle—more than a million people signed on. During the flight, NASA’s social media team briefed the public through Twitter, Facebook, and Instagram posts. In all, it’s a new NASA. People once followed NASA events from afar by gathering around their TV sets. Not anymore. Now, the space agency engages fans directly through interactive social media. “You can ask an astronaut a question,” says NASA’s social media manager. “You can . . . really be part of the experience in a much different way than ever before. It’s not your father and grandfather’s space agency anymore.”

Mobile Marketing

Mobile marketing is perhaps the fastest-growing digital marketing platform. Smartphones are ever present, always on, finely targeted, and highly personal. This makes them ideal for engaging customers anytime, anywhere as they move through the buying process. For example, Starbucks customers can use their mobile devices for everything from finding the nearest Starbucks and learning about new products to placing and paying for orders.

Four out of five smartphone users use their phones to shop—browsing product information through apps or the mobile web, making in-store price comparisons, reading online product reviews, finding and redeeming coupons, and more. Almost 30 percent of all online purchases are now made from mobile devices, and mobile online sales are growing 2.6 times faster than total online sales. During this past holiday season, mobile shoppers made up more than 70 percent of traffic to Walmart.com, accounting for almost half the site’s orders over the Black Friday weekend.32

Marketers use mobile channels to stimulate immediate buying, make shopping easier, enrich the brand experience, or all of these. Consider Redbox:33

Redbox DVD rental kiosks are unmanned, so the company has to find innovative ways to engage customers and personalize its service—most of which it does through its website and mobile app, text messaging, and email. Customers can use the Redbox mobile app to locate Redbox kiosks, check availability of movies and games, and reserve rentals for quick pickup. Mobile customers can also join the Redbox Text Club to receive texts about the latest Redbox news, releases, and members-only deals.

Text Club members are Redbox’s most valuable customers, so the company launched a 10-day-long mobile marketing campaign to increase membership. Using large call-to-action stickers on kiosks, a blast of email, and posts on its Facebook and other social media pages, Redbox offered discounts of between 10 cents and $1.50 on the next DVD rental to customers who texted the word “DEALS” to 727272. The campaign—called “The 10 Days of Deals”—generated nearly 1.5 million text messages from some 400,000 customers, resulting in more than 200,000 new Text Club members. “Mobile is like having a kiosk in your hand,” explains Redbox’s chief marketer. “It’s an incredibly important part of our [marketing] strategy.”

Although online, social media, and mobile marketing offer huge potential, most marketers are still learning how to use them effectively. The key is to blend the new digital approaches with traditional marketing to create a smoothly integrated marketing strategy and mix. We will examine digital, mobile, and social media marketing throughout the text—they touch almost every area of marketing strategy and tactics. Then, after we’ve covered the marketing basics, we’ll look more deeply into digital and direct marketing in Chapter 17.

The Great Recession of 2008 to 2009 and its aftermath hit American consumers hard. After two decades of overspending, new economic realities forced consumers to bring their consumption back in line with their incomes and rethink their buying priorities.

In today’s post-recession era, consumer incomes and spending are again on the rise. However, even as the economy has strengthened, rather than reverting to their old free-spending ways, Americans are now showing a new enthusiasm for frugality. Sensible consumption has made a comeback, and it appears to be here to stay. The new consumer spending values emphasize simpler living and more value for the dollar. Despite their rebounding means, consumers continue to buy less, clip more coupons, swipe their credit cards less, and put more in the bank.

Many consumers are reconsidering their very definition of the good life. “People are finding happiness in old-fashioned virtues—thrift, savings, do-it-yourself projects, self-improvement, hard work, faith, and community,” says one consumer behavior expert. “We are moving from mindless to mindful consumption.”34 The new, more frugal spending values don’t mean that people have resigned themselves to lives of deprivation. As the economy has improved, consumers are again indulging in luxuries and bigger-ticket purchases, just more sensibly.

In response, companies in all industries—from discounters such as Target to luxury brands such as Lexus—have realigned their marketing strategies with the new economic realities. More than ever, marketers are emphasizing the value in their value propositions. They are focusing on value for the money, practicality, and durability in their product offerings and marketing pitches.

For example, for years discount retailer Target focused increasingly on the “Expect More” side of its “Expect More. Pay Less.” value proposition. Its carefully cultivated “upscale-discounter” image successfully differentiated it from Walmart’s more hard-nosed “lowest-price” position. But when the economy soured, many consumers worried that Target’s trendier assortments and hip marketing also meant higher prices. So Target has shifted its balance more toward the “Pay Less” half of the slogan, making certain that its prices are in line with Walmart’s and that customers know it. Although still trendy, Target’s marketing now emphasizes more practical price and savings appeals. Offering “more for your money” holds a prominent place in the Target mission. “We think a lot about your budget and how to give you the best value every time you shop with us,” says the company.35

In adjusting to the new economy, companies may be tempted to cut their marketing budgets and slash prices in an effort to coax customers into opening their wallets. However, although cutting costs and offering selected discounts can be important marketing tactics, smart marketers understand that making cuts in the wrong places can damage long-term brand images and customer relationships. The challenge is to balance the brand’s value proposition with the current times while also enhancing its long-term equity. Thus, rather than slashing prices in uncertain economic times, many marketers hold the line on prices and instead explain why their brands are worth it.

In recent years, marketing has also become a major part of the strategies of many not-for-profit organizations, such as colleges, hospitals, museums, zoos, symphony orchestras, foundations, and even churches. The nation’s not-for-profits face stiff competition for support and membership. Sound marketing can help them attract membership, funds, and support.

For example, not-for-profit St. Jude Children’s Research Hospital has a special mission: “Finding cures. Saving children.” It directly serves some 7,800 patients each year plus countless thousands more through its affiliations and clinical trials in places across the country and around the world. Families never receive a bill from St. Jude, for treatment, travel, housing, or food. To accomplish this mission, St. Jude raises the funds for its $2.4 million daily operating budget through powerhouse marketing.36 Fundraising efforts include everything from public service announcements, celebrity endorsements, corporate partnerships, and an extensive online presence to events such as Trike-a-thons, ­Math-a-thons, an Up ’Til Dawn student challenge, and the St. Jude Dream Home Giveaway. St. Jude’s works with more than 70 ­corporate partners such as Target, Domino’s, Williams-Sonoma, Regal Cinemas, and Expedia that participate in its annual Thanks and Giving campaign, which asks consumers to “give thanks for the healthy kids in your life, and give to those who are not.” The result is a pervasive brand that brings in more than $1 billion each year from private donors—from preschoolers and professionals to eighth-graders and 80-year-olds.

Another example is the World Wildlife Fund (WWF), a global not-for-profit conservation organization whose mission is to conserve nature and protect the world’s wildlife. WWF operates in 100 countries under funding from government grants, foundations, corporations, and individuals—1.2 million members in the United States and nearly 5 million members worldwide. WWF uses sophisticated marketing to raise the considerable resources it needs to accomplish its sweeping mission. Just one example is the WWF’s recent cost-efficient but effective #LastSelfie Snapchat campaign:

The idea behind the WWF #Last Selfie campaign is that the world’s endangered wildlife species are disappearing from the earth as quickly as a Snapchat. To make the point, WWF sent nine-second Snapchat pictures of endangered animals to WWF followers worldwide with the message “Don’t let this be my #LastSelfie,” urging recipients to take a screenshot. Within only eight hours, the campaign generated 5,000 tweets viewed on 6 million timelines. Within only a week, there were 40,000 tweets reaching 120 million users. In all, the #LastSelfie campaign reached more than half of all Twitter users. It also helped WWF to meet its monthly donation target in just three days and led to a record number of animal adoptions through WWF’s website. More broadly, thanks to such marketing efforts and despite its limited marketing budget, WWF raised nearly $290 million in funds last year, more than a third of it from individual donors.

Government agencies have also shown an increased interest in marketing. For example, the U.S. military has a marketing plan to attract recruits to its different services, and various government agencies are now designing social marketing campaigns to encourage energy conservation and concern for the environment or discourage smoking, illegal drug use, and obesity. Even the once-stodgy U.S. Postal Service has developed innovative marketing to sell commemorative stamps, promote its Priority Mail services, and lift its image as a contemporary and competitive organization. In all, the U.S. government is the nation’s 39th largest advertiser, with an annual advertising budget of more than $980 million.37

As they are redefining their customer relationships, marketers are also taking a fresh look at the ways in which they relate with the broader world around them. Today, almost every company, large or small, is touched in some way by global competition. A neighborhood florist buys its flowers from Mexican nurseries, and a large U.S. electronics manufacturer competes in its home markets with giant Korean rivals. A fledgling internet retailer finds itself receiving orders from all over the world at the same time that an American consumer goods producer introduces new products into emerging markets abroad.

American firms have been challenged at home by the skillful marketing of European and Asian multinationals. Companies such as Toyota, Nestlé, and Samsung have often outperformed their U.S. competitors in American markets. Similarly, U.S. companies in a wide range of industries have developed truly global operations, making and selling their products worldwide. Quintessentially American McDonald’s now serves 70 million customers daily in more than 36,000 local restaurants in more than 100 countries worldwide—68 percent of its corporate revenues come from outside the United States. Similarly, Nike markets in 190 countries, with non-U.S. sales accounting for 52 percent of its worldwide sales.38 Today, companies are not just selling more of their locally produced goods in international markets; they are also sourcing more supplies and components abroad and developing new products for specific markets around the world.

Thus, managers in countries around the world are increasingly taking a global, not just local, view of the company’s industry, competitors, and opportunities. They are asking: What is global marketing? How does it differ from domestic marketing? How do global competitors and forces affect our business? To what extent should we “go global”? We will discuss the global marketplace in more detail in Chapter 19.

Marketers are reexamining their relationships with social values and responsibilities and with the very earth that sustains us. As the worldwide consumerism and environmentalism movements mature, today’s marketers are being called on to develop sustainable marketing practices. Corporate ethics and social responsibility have become hot topics for almost every business. And few companies can ignore the renewed and very demanding environmental movement. Every company action can affect customer relationships. Today’s customers expect companies to deliver value in a socially and environmentally responsible way.

The social responsibility and environmental movements will place even stricter demands on companies in the future. Some companies resist these movements, budging only when forced by legislation or organized consumer outcries. Forward-looking companies, however, readily accept their responsibilities to the world around them. They view sustainable marketing as an opportunity to do well by doing good. They seek ways to profit by serving immediate needs and the best long-run interests of their customers and communities.

Some companies, such as Patagonia, Timberland, Method, Ben & Jerry’s, and others, practice caring capitalism, setting themselves apart by being civic minded and responsible. They build social and ­environmental responsibility into their company value and mission statements. For example, Ben & Jerry’s, a division of Unilever, has long prided itself on being a “values-led business,” one that creates “linked prosperity” for everyone connected to the brand—from suppliers to employees to customers and communities:39

Under its three-part mission, Ben & Jerry’s wants to make fantastic ice cream (product mission), manage the company for sustainable financial growth ­(economic mission), and use the company “in innovative ways to make the world a better place” (social mission). Ben & Jerry’s backs its mission with actions. For example, the company is committed to using wholesome, natural, non-GMO, fair-trade-certified ingredients and buys from local farms. It employs business practices “that respect the earth and the environment,” investing in wind energy, solar usage, travel offsets, and carbon neutrality. Its Caring Dairy program helps farmers develop more sustainable practices on the farm (“Caring Dairy means happy cows, happy farmers, and a happy planet”). The Ben & Jerry’s Foundation awards nearly $2 million annually in grassroots grants to community service organizations and projects in communities across the nation. Ben & Jerry’s also operates 14 PartnerShops, scoop shops that are independently owned and operated by community-based not-for-profit organizations. The company waives standard franchise fees for these shops.

Sustainable marketing presents both opportunities and challenges for marketers. We will revisit the topic of sustainable marketing in greater detail in Chapter 20.

At the start of this chapter, Figure 1.1 presented a simple model of the marketing process. Now that we’ve discussed all the steps in the process, Figure 1.6 presents an expanded model that will help you pull it all together. What is marketing? Simply put, marketing is the process of engaging customers and building profitable customer relationships by creating value for customers and capturing value in return.

Figure 1.6

An Expanded Model of the Marketing Process

The first four steps of the marketing process focus on creating value for customers. The company first gains a full understanding of the marketplace by researching customer needs and managing marketing information. It then designs a customer-driven marketing strategy based on the answers to two simple questions. The first question is “What consumers will we serve?” (market segmentation and targeting). Good marketing companies know that they cannot serve all customers in every way. Instead, they need to focus their resources on the customers they can serve best and most profitably. The second marketing strategy question is “How can we best serve targeted customers?” (differentiation and positioning). Here, the marketer outlines a value proposition that spells out what values the company will deliver to win target customers.

With its marketing strategy chosen, the company now constructs an integrated marketing program—consisting of a blend of the four marketing mix elements, the four Ps—that transforms the marketing strategy into real value for customers. The company develops product offers and creates strong brand identities for them. It prices these offers to create real customer value and distributes the offers to make them available to target consumers. Finally, the company designs promotion programs that engage target customers, communicate the value proposition, and persuade customers to act on the market offering.

Perhaps the most important step in the marketing process involves building value-laden, profitable relationships with target customers. Throughout the process, marketers practice customer relationship management to create customer satisfaction and delight. They engage customers in the process of creating brand conversations, experiences, and community. In creating customer value and relationships, however, the company cannot go it alone. It must work closely with marketing partners both inside the company and throughout its marketing system. Thus, beyond practicing good customer relationship management and customer-engagement marketing, firms must also practice good partner relationship management.

The first four steps in the marketing process create value for customers. In the final step, the company reaps the rewards of its strong customer relationships by capturing value from customers. Delivering superior customer value creates highly satisfied customers who will buy more and buy again. This helps the company capture customer lifetime value and greater share of customer. The result is increased long-term customer equity for the firm.

Finally, in the face of today’s changing marketing landscape, companies must take into account three additional factors. In building customer and partner relationships, they must harness marketing technologies in the new digital age, take advantage of global opportunities, and ensure that they act sustainably in an environmentally and socially responsible way.

Figure 1.6 provides a good road map to future chapters of this text. Chapters 1 and 2 introduce the marketing process, with a focus on building customer relationships and capturing value from customers. Chapters 3 through 6 address the first step of the marketing process—understanding the marketing environment, managing marketing information, and understanding consumer and business buyer behavior. In Chapter 7, we look more deeply into the two major marketing strategy decisions: selecting which customers to serve (segmentation and targeting) and determining a value proposition (differentiation and positioning). Chapters 8 through 17 discuss the marketing mix variables one by one. Chapter 18 sums up customer-driven marketing strategy and creating competitive advantage in the marketplace. The final two chapters examine special marketing considerations: global marketing and sustainable marketing.