Marketing

“Where’s the beef?” This short little phrase spoken by an 84 year old lady in a 30 second commercial set the tone for an entire marketing campaign for The Wendy’s Company in 1984 (Sayeconomy.com, 2009). The campaign was simple; burgers at Wendy’s have more beef than its competitors. Organizations in an open-market economy must find a need that a client or customer has and attempt to find an answer to that need. Once a company has an answer, then it must let the world know of its product or service. This report will look at three definitions of marketing and show how the slight variations in how an organization views marketing determine its level of success. 

The first definition of marketing is that it is the performance of activities that seek to accomplish an “organization’s objectives” by anticipating customer’s or client’s needs attempting to fulfill that need (Perreault, Cannon, & McCarthy, Jr, 2009).  This definition of marketing lays great value on understanding an organization’s objectives. Wal-mart’s business objective is to sell a large quantity of products at the lowest possible price (Walmart, 2011). So their marketing campaigns drive this idea that if you go to Wal-mart you will find everyday products and the lowest prices around (Walmart, 2011). This has created the global success for Wal-Mart in becoming the highest market capitalized corporation in the world in 2010 (CNNMoney, 2011).

The American Marketing Association offers the next definition of marketing as “an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders (Kotler & Keller, 2009).” This definition lays strong emphasis on the relationship of the organization to the customer. Many organizations seek to market their products and services so that there is a strong pull on brand loyalty. One such company is Starbucks. The success of Starbucks was the success of marketing a culture of coffee into which its customers identified themselves. Starbucks is not just passionate about coffee, but passionate about the entire coffeehouse experience (Starbucks, 2011). This marketing not only helps Starbucks and its customers connect relationally, but it also helps make Starbucks a highly profitable corporation at US$9.8 billion dollars in revenue in 2009 (Starbucks, 2011).

A third definition, from my perspective, of marketing is that it is a value-based means of bringing together a product or service with a client base that could benefit from the product. This definition focuses on the drawing together a product to a consumer. Most businesses provide a product that it has confidence in and that it knows and can represent well. Businesses do not typically find a customer and then try to make a product to match them. A plumbing company would do no good trying to market a television. Marketing allows the producer to find and meet people that their product is compatible with. An example of this type of marketing is E-bay.com. Ebay, Inc., (Ebay) is built around the concept of providing a place where producers and consumers come together (Ebay, 2011). Ebay itself does not provide any products but merely offers a service to those wishing to satisfy a need, whether that need is to sell a product or a need to buy a product. This type of marketing has established Ebay as an online world market and has created profitability and market success. In 2010, Ebay reported net revenues of over US$9.1 billion (Ebay, 2011).

Marketing is vital to an organization’s success. The definition by which is chooses to run its organization is a key as to its values and organizational objectives. Whether you are Walmart and trying to offer the lowest price product, Starbucks and creating a coffeehouse culture or Ebay and offering services for the world to sell its goods, marketing must fit the objectives of the organization. If the marketing of an organization is effective, most likely the organization will be successful for its owners and investors.

References

CNNMoney. (2011, July 25). Global 500. Retrieved from http://money.cnn.com/magazines/fortune/global500/2011/full_list/index.html

Ebay. (2011). Who we are. Retrieved from http://www.ebayinc.com/who

Kotler, P., & Keller, K. L. (2009). Marketing Management (13th ed.). Upper Saddle River, NJ: Prentice-Hall.

Perreault, W. D., Cannon, J. P., & McCarthy, Jr, E. J. (2009). Basic Marketing: A Marketing Strategy Planning Approach (17th ed.). New York, NY: McGraw Hill.

Sayeconomy.com. (2009, Oct). Famous Marketing Campaign – Where is the beef? Retrieved from http://www.sayeconomy.com/famous-marketing-campaign-where-is-the-beef/

Starbucks. (2011). Our Company. Retrieved from http://www.starbucks.com/about-us/company-information

Walmart. (2011). About Walmart. Retrieved from http://www.walmart.com/cp/About-Walmart.com/542412

Payroll Tax Cut Temporarily Extended into 2012

IR-2011-124, Dec. 23, 2011
WASHINGTON — Nearly 160 million workers will benefit from the extension of the reduced payroll tax rate that has been in effect for 2011. The Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid through Feb. 29, 2012. This reduced Social Security withholding will have no effect on employees’ future Social Security benefits.

Employers should implement the new payroll tax rate as soon as possible in 2012 but not later than Jan. 31, 2012. For any Social Security tax over-withheld during January, employers should make an offsetting adjustment in workers’ pay as soon as possible but not later than March 31, 2012.
Employers and payroll companies will handle the withholding changes, so workers should not need to take any additional action.

Under the terms negotiated by Congress, the law also includes a new “recapture” provision, which applies only to those employees who receive more than $18,350 in wages during the two-month period (the Social Security wage base for 2012 is $110,100, and $18,350 represents two months of the full-year amount). This provision imposes an additional income tax on these higher-income employees in an amount equal to 2 percent of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100).

This additional recapture tax is an add-on to income tax liability that the employee would otherwise pay for 2012 and is not subject to reduction by credits or deductions. The recapture tax would be payable in 2013 when the employee files his or her income tax return for the 2012 tax year. With the possibility of a full-year extension of the payroll tax cut being discussed for 2012, the IRS will closely monitor the situation in case future legislation changes the recapture provision.

The IRS will issue additional guidance as needed to implement the provisions of this new two-month extension, including revised employment tax forms and instructions and information for employees who may be subject to the new “recapture” provision. For most employers, the quarterly employment tax return for the quarter ending March 31, 2012, is due April 30, 2012.

Everyday Statistics

Brian Wilson, the closer for the San Francisco Giants, with a 1.81 era and a league leading 70 saves was facing Nelson Cruz of the Texas Rangers who had a slugging percentage of .503 in the bottom of the ninth for the final out of the 2011 World Series (Major League Baseball, 2011).  My beloved Giants went on to win the World Series and the streets of San Francisco were filled with fans of statistics. Well, maybe not statistics exactly, but everywhere one looks in baseball and all other areas of life, statistics plays a key role in helping to summarize what is being experienced. Statistics is the science of conducting studies to collect, organizes, summarize, analyze and draw conclusions from data (Bluman, 2009). Statistics plays a crucial part in my work, family and fun aspects of my life.

I work as an analyst for the Federal Government in searching for criminal activity. Statistics plays a very important part of my job in that I am immersed with large databases of information that must be organized and analyzed for use in catching suspects. One aspect is looking at phone records of suspects. If we are to try and catch the suspect involved in illegal activities then we look at all the times they are on the phone and then we average and find the time of day and which day of the week they are on the phone the most. Then we can try and get information at those times. Statistics helps me to find out the best times to listen in for illegal activity.

For my family it is important for us financially to follow a budget. Our spending creates large amounts of data of our spending. It is only when we organize, summarize and analyze the data that we can understand our spending tendencies and finds areas to either cut back or shift our habits. Taking data from over an entire year can help average out typical monthly spending and give us a budget that will fall below our income. This also allows us to save money when bills are not due for the times they will become due.

Watching baseball is a large part of my fun time during the fall. I take part in fantasy teams where I go online to research the averages and statistics of all the players I am interested in. And when I watch the game I begin to notice decisions that the coaches make based upon tendencies or the statistics of one player again certain traits of another player. Many times coaches spend a majority of their non-game time figuring statistics for game time decisions (QCBaseball.com, 2011). San Francisco’s biggest decision going into the World Series was leaving two of the highest paid players off the roster because their statistics were not good the last month of the regular season (McCauley, 2010).

Statistics plays a very vital role in my work, family and fun. The data is always being created as life goes on, but proper application of statistics help us to organize and analyze the data so that we can make well informed decisions in our life. I am making it a point to follow the San Francisco Giants this year so when we win the pennant I will be able to once again run through the streets shouting the praises of statistics.

References

Bluman, A. G. (2009). Elementary Statistics, A Step by Step Approach (7th ed.). New York, NY: McGraw-Hill Companies, Inc.

Major League Baseball. (2011, April). Player Search. Retrieved from http://mlb.mlb.com/mlb/players/?tcid=nav_mlb_players

McCauley, J. (2010, Oct 8). Giants leave high-priced Zito off playoff roster. Retrieved from http://www.newschief.com/article/20101008/NEWS/10085055

QCBaseball.com. (2011). Charting Pitchers and Hitters. Retrieved from http://www.qcbaseball.com/tools/charting1.aspx

Environmental Factors of Starbucks' Globalization

In 1971, a small coffee shop was opened in Seattle’s historic Pike Place Market and offered some of the world’s finest coffee (Starbucks, 2011). Today with more than 17,000 stores in 57 countries Starbucks is the premier roaster and retailer of specialty coffee in the world (Starbucks, 2011). With the international growth and success of the company come some issues that affect the marketing decisions. A company must understand the international marketing environment of a nation before it decides to operate internationally. Within each global market are economic, political-legal, and cultural factors that affect marketing decisions (Perreault, Cannon, & McCarthy, Jr., 2009). This paper will look at each of the environmental factors individually and show how they relate to Starbucks’ marketing decisions.

Economic Factors

One of the first and often important environmental factors of a company’s decision to operate overseas is the economic factors. In 1947, the World Trade Organization was created to promote world trade by reducing tariffs and other trade barriers (Perreault, Cannon, & McCarthy, Jr., 2009). The General Agreement on Tariffs and Trade (GATT) has helped to lower the average tariffs on manufactured goods from 45% to 5% (Perreault, Cannon, & McCarthy, Jr., 2009). These improvements have helped globalization of economies so that nations can be intertwined by open trade and commerce.

Two economic factors that help a company determine if a country would be a good market is the country’s industrial structure and its income distribution. The country’s industrial structure refers to a country’s subsistence economy, raw material exporting economy, the industrializing economy, and the industrial economy (Perreault, Cannon, & McCarthy, Jr., 2009). These factors shape the product and service needs, income levels, and employment levels (Perreault, Cannon, & McCarthy, Jr., 2009). The income distribution of a country also determines if there will be enough demand from the income of the families to warrant offering the products or services.

The marketing decisions for an economy like the United States with a higher level of disposable income for a broader market will be different than a country with a much narrower market of disposable income. Being a producer of premium and specialty coffees, Starbucks requires a target market group that will be able to sustain a demand for the coffee. This requires significant market research into the demographics and physical infrastructure of the cities that they move into.

Political-Legal Factors

Nations differ greatly in their political-legal environments. Before Starbucks decides to operate a business in a foreign country, the country’s attitude toward international producers, government bureaucracy, political stability, and monetary regulations must be thoroughly considered (Armstrong & Kilter, 2009). One example of political instability that causes Starbucks to reconsider opening a store in the country is the nation of India. India’s government is notoriously unstable. The country has elected 10 new governments in the past 25 years (Perreault, Cannon, & McCarthy, Jr., 2009). This instability makes doing business risky because of the continual change in laws and oversight concerning business and financial matters.

China is another country with a traditionally risky government to invest in. However, with changes that have opened the doors to foreign investors and corporations, many companies like Starbucks have found the risk worth accepting because of the upside of the financial rewards of a population of over 1.3 billion people (Murphy, 2007).

One of the common themes of human nature throughout the world is bribery in order to obtain financial or legal benefit. In 1977, the Foreign Corrupt Practices Act (FCPA) was enacted for the purposes of making it unlawful for individuals and entities, foreign and domestic, to make payments to foreign government officials to assist in obtaining business (Department of Justice, 2011).  This Act was a result of an SEC investigation in the mid-70’s of more than 400 US companies that admitted making in excess of $300 million to foreign government officials, politicians, and political parties. This Act was an attempt to restore public confidence in the integrity of the American business system. Starbucks has attempted to maintain this value of integrity of American businesses by helping to enrich and sustain coffee bean farmers in all the regions that they purchase beans (Davis, 2008). “Starbucks believe the answer to development is not large amounts of foreign aid; it’s getting these countries to engage in the global market, and Starbucks helps that” (Davis, 2008).

Cultural Factors

One of the strongest environmental factors that Starbucks is faced to deal with overseas is the cultural factors.  Starbucks has become an icon for globalization. Starbucks has become a target of anti-globalization protesters fighting against the consumption of the West and exploitation in the Majority World (Davis, 2008). These protests are not just from countries steeped in tradition like Asia. Protests are coming from countries like Australia, France, Germany, and Italy (Davis, 2008) in defense of their authentic culture unaffected by consumerism and materialism.

Businesses must be very careful to understand the ways that consumers think about and use certain products before planning a marketing strategy. Social critics contend that Starbucks and other American businesses aren’t just globalizing their brands, but they are “Americanizing” the world’s cultures. In fact before Starbucks came to China, most people in China rarely drank coffee (Perreault, Cannon, & McCarthy, Jr., 2009). In order to prevent this type of marketing, Starbucks has taken its name off the branding so that internationally, so that its name is not confusing to the customers and that it focuses not only on the coffee but on the tea products as well (Starbucks, 2011).

Conclusion

Starbucks is recognized around the world for specialty coffees and teas. This type of branding is directly tied to the marketing decisions made to limit environmental factors from derailing the coffee giant overseas. Starbucks’ marketing strategy in both its domestic and international markets successfully navigates the economic, political-legal, and cultural factors that make a company successful.

 

References

Armstrong, G., & Kilter, P. (2009). Marketing: An introduction (9th ed.). Upper Saddle River, NJ: Pearson Education.

Davis, R. (2008). The people vs Starbucks. New Internationalist, 410(1), 21.

Department of Justice. (2011). Foreign Corrupt Practices Act. Retrieved from http://www.justice.gov/criminal/fraud/fcpa/

Lyons, J. (2005). Think Seattle, act globally. Cultural Studies, 19(1), 14-34. doi:10.1080/09502380500040464

Murphy, J. (2007). Converting a region of tea drinkers to Starbucks. Media: Asia’ Media & Marketing Newspaper, 16(1), 1.

Perreault, W. D., Cannon, J. P., & McCarthy, Jr., E. J. (2009). Basic marketing: A marketing strategy planning approach (17th ed.). New York, NY: McGraw Hill.

Starbucks. (2011). Our Heritage. Retrieved from http://www.starbucks.com/about-us/our-heritage