Creating Customer Relationships and Value Through Marketing

Creating Customer Chapter Relationships and Value through Marketing 1 LEARNING OBJECTIVES After reading this chapter you should be able to: LO 1-1 Define marketing and identify the diverse factors that influence marketing actions. LO 1-2 Explain how marketing discovers and satisfies consumer needs. LO 1-3 Distinguish between marketing mix factors and environmental forces. LO 1-4 Explain how organizations build strong customer relationships and customer value through marketing. LO 1-5 Describe the characteristics of a market orientation. Bombas Is Solving Social Problems with Great Socks and Great Marketing! Randy Goldberg and David Heath are on a mission—a social mission—to give away millions of socks to homeless shelters. You may know the company they founded, Bombas, for its comfortable socks. And if you’ve purchased a pair you also helped them achieve their mission because for every pair of socks purchased at Bombas, they donate a pair to someone affected by homelessness! Their story started when Goldberg and Heath were co-workers at another company and learned that socks are the most requested item at homeless shelters. They decided to build a company that could solve the problem using the buy-one-give-one model. Today Bombas has annual sales of more than $250 million and has donated more than 50 million clothing items.1 What is the secret to Bombas’s success? Read on to hear the rest of the story! Creating Better Socks Once they decided on the mission, the two entrepreneurs began to research the sock market. They discovered that most consumers were in “replenishment mode”—simply buying socks to replace old ones.2 In addition, socks were not viewed as being very comfortable. Goldberg and Heath concluded that better socks would attract more consumers and allow them to donate more socks, so they began the process of designing “the most comfortable socks in the history of feet.” They spent several years conducting research and testing prototypes with features they thought made better socks. The result was a sock with a seamless toe, a cushioned foot bed, an arch support system, elastic construction to keep the socks up, and blister tabs on the backs of ankle socks. The donated socks, specifically designed for people experiencing homelessness are dark-colored, reinforced, and antimicrobial-treated.3 Building a Brand with a Purpose The combination of their social mission and their exceptional product was an important platform for starting their company. From there the co-founders used many elements of marketing to build their brand. First, the name Bombas comes from the Latin word for “bumblebee,” and is significant because bees live in a hive and work together to make their world a better place. They added a bee as their logo and adopted “Bee Better” as their motto to describe a mantra or a way of approaching every day. All of these elements were designed to communicate that the brand is driven by more than profits. 3 The new company raised money on crowdfunding site Indiegogo, created a direct-toconsumer website to sell its socks, and relied heavily on word of mouth to reach customers. Then Bombas received additional funding through a television appearance on Shark Tank and needed a marketing program that could reach a national audience and also communicate its messages of social impact and product quality. Podcasts and video ads were logical communication tools because they could attract attention with audio and visual messages and they provided enough time to explain the social cause and the details of the product quality. Bombas also began using advertising on Facebook, Instagram, and YouTube. You may have seen some of Bombas’s TV ads for its “The Greatest Sock Never Sold” campaign. The Bombas website features a video titled “Most Important Socks in the World” with more than 4 million views!4 Bombas Today David Heath and Randy Goldberg started Bombas to help solve a social problem: Socks are the most requested item at homeless shelters. Their buy-one-give-one model has allowed them to donate millions of pairs of socks! Courtesy of Bombas The Bombas web page says “We’re Bombas. We believe that a more comfortable world is a better world. That everyone, no matter their circumstances, deserves to put on clean clothes that make them feel good.” Bombas has certainly succeeded at this goal and it continues to grow. The company recently expanded its distribution through retail partners such as Nordstrom, Dick’s Sporting Goods, Scheels, and Athleta stores. The company also expanded its product line to include T-shirts, underwear, and is looking at other possible products to offer. According to Heath, “I think when we look to the future, we could easily be a billion-dollar brand in revenue in the next 5 to 10 years.” The company’s commitment to responsible growth is also emphasized by its B-Corp certification which is given to Bombas for meeting the highest standards of social and environmental performance, transparency, and accountability to balance profit and purpose.5 Bombas, Marketing, and You Will Randy Goldberg and David Heath continue their success story—particularly with the appearance of many other sock competitors and many new companies building altruism into their business models? For Bombas, one key factor will be how well it understands and uses marketing—the subject of this book. Bombas is also the subject of Video Case 1 at the end of this chapter! WHAT IS MARKETING? The good news is that you are already a marketing expert! You perform many marketing activities and make marketing-related decisions every day. For example, would you sell more Samsung 110-inch MicroLED “The Wall” TVs at $100,000 or $24,999? You answered $24,999, right? So your experience in shopping gives you some expertise in marketing. As a consumer, you’ve been involved in thousands of marketing decisions, mostly on the buying and not the selling side. But to test your expertise, answer the “marketing expert” questions posed in Figure 1–1. You’ll find the answers within the next several pages. Are you a marketing expert? If so, what would you pay for this cutting-edge TV? Source: Samsung Answer the questions below. The correct answers are given later in the chapter. 1. What is the name of the zero-calorie, sugar-free, gluten-free, vegan soft drink that is sweetened with natural ingredient stevia? (a) Coca-Cola, (b) Coca-Cola Zero Sugar, (c) Pepsi Zero Sugar, (d) Zevia. 2. True or False: The 65-year lifetime value of a loyal auto repair center customer is $147,000. 3. To be socially responsible Patagonia encourages its customers to do which of the following with its products? (a) repair, (b) trade, (c) recycle, (d) all three. The bad news is that good marketing isn’t always easy. That’s why every year thousands of new products fail in the marketplace and then quietly slide into oblivion. Marketing and Your Career Marketing affects all individuals, all organizations, all industries, and all countries. This book seeks to teach you marketing concepts, often by having you actually “do marketing”—by putting you in the shoes of a marketing manager facing actual marketing decisions. The book also shows marketing’s many applications and how it affects our lives. This knowledge should make you a better consumer and enable you to be a more informed citizen, Elon Musk, the chief executive officer of Tesla and and it may even help you in your career planning. SpaceX, began building businesses shortly after Perhaps your future will involve doing sales and marketing for graduating from college. a large organization. Working for a well-known company—Apple, Ford, Facebook, or General Mills—can be personally satisfying and financially rewarding, and you may gain special respect from your friends. Start-ups and small businesses also offer marketing careers. Small businesses are the source of the majority of new U.S. jobs. So you might become your own boss by being an entrepreneur and starting your own business. Shortly after leaving Stanford, Elon Musk, for example, started and sold a web software company called Zip2. With the proceeds from that business he started another business that merged with another and became PayPal. When PayPal was purchased by eBay, Musk founded another venture called SpaceX, which develops and manufactures space launch vehicles and hopes to send a mission to Mars “well before 2030.” Since those initial business start-ups, Musk also started the electric car company Tesla and a solar power company called SolarCity. In addition, he has started a design competition for a high-speed transportation system called Hyperloop, a nonprofit artificial intelligence company called OpenAI, a neurotechnology company called Neuralink, and a tunnel construction firm called The Boring Company. Perhaps your interest in marketing will lead to new business successes like Musk’s!6 Marketing: Delivering Value to Customers LO 1-1 Define marketing and identify the diverse factors that influence marketing actions. The American Marketing Association represents individuals and organizations involved in the development and practice of marketing worldwide. It defines marketing as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.7 This definition shows that marketing is far more than simply advertising or personal selling. It stresses the need to deliver genuine value in the offerings of goods, services, and ideas marketed to customers. Also, notice that an organization’s marketing activities should also create value for its partners and for society.