52 PART 1 | Understanding Marketing Management
ing concept, the marketing concept, and the holistic components of holistic marketing are relationship mar-
marketing concept. The first three are of limited use keting, integrated marketing, internal marketing, and
today. performance marketing.
6. The holistic marketing concept is based on the devel- 7. The set of tasks necessary for successful marketing
opment, design, and implementation of marketing pro- management includes developing marketing strategies
grams, processes, and activities that recognize their and plans, capturing marketing insights, connecting
breadth and interdependencies. Holistic marketing rec- with customers, building strong brands, creating, deliv-
ognizes that everything matters in marketing and that a ering, and communicating value, and creating long-term
broad, integrated perspective is often necessary. Four growth.
MyMarketingLab
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as well as for additional Assisted-graded writing questions.
Applications
Marketing Debate Marketing Discussion
Does Marketing Create or Satisfy Shifts in Marketing
Needs? Consider the three key forces driving the new marketing
Marketing has often been defined in terms of satisfying realities. How are they likely to change in the future? What
customers’ needs and wants. Critics, however, maintain other major trends or forces might affect marketing?
that marketing goes beyond that and creates needs and
wants that did not exist before. They feel marketers encour-
age consumers to spend more money than they should on
goods and services they do not really need.
Take a position: Marketing shapes consumer needs
and wants versus Marketing merely reflects the needs
and wants of consumers.
Marketing Excellence the company’s first spokesperson, had an irreverent
attitude that matched Nike’s spirit.
In 1985, Nike signed up then-rookie guard Michael
>> Nike Jordan as a spokesperson. Jordan was still an up-and-
Nike hit the ground running in 1962. Originally known as comer, but he personified superior performance. Nike’s
Blue Ribbon Sports, the company focused on providing bet paid off—the Air Jordan line of basketball shoes flew
high-quality running shoes designed for athletes by ath- off the shelves and revenues hit more than $100 mil-
letes. Founder Philip Knight believed high-tech shoes lion in the first year alone. As one reporter stated, “Few
for runners could be manufactured at c ompetitive prices marketers have so reliably been able to identify and
if imported from abroad. Nike’s commitment to design- sign athletes who transcend their sports to such great
ing innovative footwear for serious athletes helped build effect.”
a cult following among U.S. consumers. In 1988, Nike aired the first ads in its $20 million “Just
Nike believed in a “pyramid of influence” where the Do It” ad campaign. The campaign, which ultimately fea-
preferences of a small percentage of top athletes influ- tured 12 TV spots in all, subtly challenged a generation of
enced the product and brand choices of others. Nike’s athletic enthusiasts to chase their goals. It was a natural
marketing campaigns have always featured accom- manifestation of Nike’s attitude of self-empowerment
plished athletes. For example, runner Steve Prefontaine, through sports.
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Defining Marketing for the New Realities | chapter 1 53
As Nike began expanding overseas, the com- play today. Tiger’s powerful influence on the game and
pany learned that its U.S.-style ads were seen as his Nike-emblazoned style has turned the greens at the
too aggressive in Europe, Asia, and South America. majors into “golf’s fashion runway.”
Nike realized it had to “authenticate” its brand in other Nike is the biggest sponsor of athletes in the world
countries, so it focused on soccer (called football
and plans to spend more than $3 billion in athletic
outside the United States) and became active as a endorsements between 2012 and 2017. The com-
sponsor of youth leagues, local clubs, and national pany also has a history of standing by its athletes,
teams. However, for Nike to build authenticity among the such as Tiger Woods and Kobe Bryant, even as they
soccer audience, consumers had to see professional ath- struggle with personal problems. It severed its rela-
letes using its product, especially athletes who won. tionship with Lance Armstrong in 2012, however, after
Nike’s big break came in 1994 when the Brazilian strong evidence showed that the cyclist doped during
team (the only national team for which Nike had any real his time as an athlete and while competing during all
sponsorship) won the World Cup. That victory transformed Tour de Frances. Nike released a statement explain-
Nike’s international image from a sneaker company into a ing, “Nike does not condone the use of illegal perfor-
brand that represented emotion, allegiance, and identifi- mance enhancing drugs in any manner.” Prior to the
cation. Nike’s new alliance with soccer helped propel the scandal, the company had helped develop Armstrong’s
brand’s growth internationally. In 2003, overseas revenues LIVESTRONG campaign to raise funds for cancer. It
surpassed U.S. revenues for the first time, and in 2007, designed, manufactured, and sold more than 80 million
Nike acquired Umbro, a British maker of soccer-related yellow LIVESTRONG bracelets, netting $500 million for
footwear, apparel, and equipment. The acquisition made the Lance Armstrong Foundation.
Nike the sole supplier to more than 100 professional soc- While Nike’s athletic endorsements help inspire
cer teams around the world and boosted Nike’s interna- and reach consumers, its most recent innovations in
tional presence and authenticity in soccer. The company technology have resulted in more loyal and emotion-
sold Umbro in 2012 for $225 million. ally connected consumers. For example, Nike’s lead in
In recent years, Nike’s international efforts have been the running category has grown to 60 percent market
focused on emerging markets. During the 2008 Summer share thanks to its revolutionary running application and
Olympics in Beijing, Nike honed in on China and devel- community called Nike+ (plus). Nike+ allows runners
oped an aggressive marketing strategy that countered to engage in the ultimate running experience by seeing
Adidas’s sponsorship of the Olympic Games. Nike re- their real-time pace, distance, and route and by giv-
ceived special permission from the International Olympic ing them coaching tips and online sharing capabilities.
Committee to run Nike ads featuring Olympic athletes Nike expanded Nike+ to focus on key growth areas like
during the games. In addition, Nike sponsored several basketball and exercise and recently launched Nike+
teams and athletes, including most of the Chinese teams. Basketball, Nike+ Kinect, and Nike+Fuelband, a bracelet/
This aggressive sponsorship strategy helped ignite sales app that tracks daily activities.
in the Asian region by 15 percent. Like many companies, Nike is trying to make its com-
In addition to expanding overseas, Nike has success- pany and products more eco-friendly. However, u nlike
fully expanded its brand into many sports and athletic many companies, it does not promote these efforts. One
categories, including footwear, apparel, and equipment. brand consultant explained, “Nike has always been about
Nike continues to partner with high-profile and influential winning. How is sustainability relevant to its brand?” Nike
athletes, coaches, teams, and leagues to build credibility executives agree that promoting an eco-friendly message
in these categories. For example, Nike aligned with tennis would distract from its slick high-tech image, so efforts
stars Maria Sharapova, Roger Federer, and Rafael Nadal like recycling old shoes into new shoes are kept quiet.
to push its line of tennis clothing and gear. Some called the As a result of its successful expansion across geo-
famous 2008 Wimbledon match between Roger Federer graphic markets and product categories, Nike is the top
and Rafael Nadal—both dressed in swooshes from head to athletic apparel and footwear manufacturer in the world. In
toe—a five-hour Nike commercial valued at $10.6 million. 2014, revenues exceeded $27 billion, and Nike dominated
To promote its line of basketball shoes and apparel, the athletic footwear market with 31 percent market share
Nike has partnered with basketball superstars such as globally and 50 percent market share in the United States.
Kobe Bryant and LeBron James. In golf, Nike’s swoosh Swooshes abound on everything from wristwatches to
appears on many golfers but most famously on Tiger skateboards to swimming caps. The firm’s long-term strat-
Woods. In the years since Nike first partnered with egy, however, is focused on running, basketball, foot-
Woods, Nike Golf has grown into a $523 million busi- ball/soccer, men’s training, women’s training, and action
ness and literally changed the way golfers dress and sports.
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54 PART 1 | Understanding Marketing Management
Questions 2004, p. 1; Barbara Lippert, “Game Changers: Inside the Three Greatest Ad Campaigns of the Past
Three Decades,” Adweek, November 17, 2008; “10 Top Nontraditional Campaigns,” Advertising
1. What are the pros, cons, and risks associated with Age, December 22, 2003, p. 24; Chris Zook and James Allen, “Growth Outside the Core,” Harvard
Business Review, December 2003, p. 66; Jeremy Mullman, “NIKE; What Slowdown? Swoosh
Nike’s core marketing strategy? Rides Games to New High,” Advertising Age, October 20, 2008, p. 34; Allison Kaplan, “Look Just
2. If you were Adidas, how would you compete with Nike? Like Tiger (until You Swing),” America’s Intelligence Wire, August 9, 2009; Reena Jana and Burt
Helm, “Nike Goes Green, Very Quietly,” BusinessWeek, June 22, 2009; Emily Jane Fox and Chris
Isidore, “Nike Ends Contracts with Armstrong,” [Link], October 17, 2012; Nike Annual
Sources: Justin Ewers and Tim Smart, “A Designer Swooshes In,” U.S. News & World Report, Report 2012.
January 26, 2004, p. 12; “Corporate Media Executive of the Year,” Delaney Report, January 12,
Marketing Excellence With its ability to deploy data that enable up-to-
the-minute improvements in a Web marketing program,
Google supports a style of marketing in which the adver-
>> Google tising resources and budget can be constantly monitored
In 1998, two Stanford University PhD students, Larry and optimized. Google calls this approach “marketing
Page and Sergey Brin, founded a search engine com- asset management,” implying that advertising should
pany and named it Google. The name plays on the be managed like assets in a portfolio depending on the
number googol—1 followed by 100 zeroes—and refers market conditions. Rather than following a marketing plan
to the massive quantity of data available online that the developed months in advance, companies use the real-
company helps users find. Google’s corporate mission time data collected on their campaigns to optimize the
is “To organize the world’s information and make it uni- campaign’s effectiveness and be more responsive to the
versally accessible and useful.” As such, the company market.
focuses first and foremost on creating the perfect search Since its launch, Google has expanded far beyond
engine. Google search works because it uses the mil- its search capabilities with numerous other products,
lions of links on other Web sites to help determine which applications, and tools that benefit both consumers and
sites offer the most valuable content. The company has businesses. The goal behind each product was to help
become the worldwide market leader for search engines users find information they need and to help them get
through its strategic business focus and constant prod- things done better, faster, and easier than before. Today,
uct innovation. Google’s wide range of products and services fall into the
Google creates and distributes its products for free, following categories: Web (Web Search, iGoogle, Google
which in turn has attracted a host of online advertisers Chrome), Mobile (Mobile, Search for Mobile, Maps for
seeking targeted advertising space. About 96 percent of Mobile), Media (Picasa, Google Play, [Link],
its revenues come from online advertising, which means which Google acquired in 2006 for $1.65 billion), Geo
that creating new advertising space is critical to the (Earth, Maps), Home & Office (Docs, Gmail, Calendar),
company’s growth. Google sells advertising space on its Social (Google+, Blogger), Specialized Search (Patents,
search pages through a program called AdWords, which Finance, Scholarly Papers), and Innovation.
is linked to specific keywords. Hundreds of thousands As the world becomes more mobile, Google is bet-
of companies use AdWords by buying “search ads,” ting big in the mobile category. In 2008, Google launched
little text-based boxes shown alongside relevant search Android, a mobile operating system that went head
results that advertisers pay for only when users click on to head with Apple’s iPhone. The biggest differentia-
them. Google also runs an advertising program called tion between the two was that Android was free, open
AdSense, which allows any Web site to display targeted sourced, and backed by a multimillion-dollar investment.
Google ads relevant to the content of its site. Web site That meant Google wanted its partners to help build and
publishers earn money every time their visitors click on design Android over the years. The investment paid off,
these ads. and by 2010, Android became the number-one mobile
In addition to offering prime online real estate for operating system in the market.
advertisers, Google adds value by providing tools so As Google expanded into mobile technology, it quickly
businesses can better target their ads and understand became the leader in mobile advertising with 75 percent
the effectiveness of their marketing. Google Analytics, for market share for search ads and approximately 50 percent
example, is free to Google’s advertisers and provides a market share for all mobile ads. In 2012, Google entered
custom report detailing how Internet users found the site, the mobile device category when it purchased Motorola
what ads they saw and/or clicked on, how they behaved and launched the Nexus 7, a sleek tablet that competed
on the site, and how much traffic was generated. directly with the iPad and Kindle. As Google looks toward
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