The overall Organizational Objective that sets the bounds for our Marketing Objective is a key element of organizational strategy. One of the first questions to be answered with regard to organizational strategy is "what business are we in?" Theodore Leavitt explains the importance of this concept in the class HBR article Marketing Myopia. In this article, the author highlights the difference between being in the transportation business versus the railroad business, or the information business versus the newspaper business. This comparison illustrates the crucial difference between an organization that defines its business by focusing on customer benefit as opposed to product function. By considering this distinction, the organization does more than simply pay lip-service to the consumer. A clear understanding of the true business of the organization, satisfying a customer need, provides a blueprint for future product development and enables more efficient decision making at all levels of the organization.
Consider the case of McDonald's, a market leader in the fast food category. In the late 1970's McDonald's discovered that in 70% of the family away from home dining decisions, children drove the decision result. To a child, the choice is not of "the best fast-food restaurant," but rather, "the most fun place to go for dinner." McDonald's realized they were not in the fast food business, but in the family fun business, and this core business definition drove product development. Happy Meals and McDonald's Playland illustrate the company's clear understanding of this fact.