Marketing Is The Process by Which Companies Determine What Products or Services May Be of
Marketing Is The Process by Which Companies Determine What Products or Services May Be of
interest to customers, and the strategy to use in sales, communications and business
development.[1] It is an integrated process through which companies create value for customers
and build strong customer relationships in order to capture value from customers in return.[1]
Marketing is used to identify the customer, to keep the customer, and to satisfy the customer.
With the customer as the focus of its activities, it can be concluded that marketing management
is one of the major components of business management. The evolution of marketing was caused
due to mature markets and overcapacities in the last 2-3 centuries.[citation needed] Companies then
shifted the focus from production to the customer in order to stay profitable.[citation needed]
The term marketing concept holds that achieving organizational goals depends on knowing the
needs and wants of target markets and delivering the desired satisfactions.[2] It proposes that in
order to satisfy its organizational objectives, an organization should anticipate the needs and
wants of consumers and satisfy these more effectively than competitors.[2]
Further definitions
Marketing is defined by the American Marketing Association (AMA) 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."[3] The term developed
from the original meaning which referred literally to going to a market to buy or sell goods or
services. Seen from a systems point of view, sales process engineering views marketing as "a set
of processes that are interconnected and interdependent with other functions,[4] whose methods
can be improved using a variety of relatively new approaches."
The Chartered Institute of Marketing defines marketing as "the management process responsible
for identifying, anticipating and satisfying customer requirements profitably."[5] A different
concept is the value-based marketing which states the role of marketing to contribute to
increasing shareholder value.[6] In this context, marketing is defined as "the management process
that seeks to maximise returns to shareholders by developing relationships with valued
customers and creating a competitive advantage."[6]
Marketing practice tended to be seen as a creative industry in the past, which included
advertising, distribution and selling. However, because the academic study of marketing makes
extensive use of social sciences, psychology, sociology, mathematics, economics, anthropology
and neuroscience, the profession is now widely recognized as a science, allowing numerous
universities to offer Master-of-Science (MSc) programmes. The overall process starts with
marketing research and goes through market segmentation, business planning and execution,
ending with pre and post-sales promotional activities. It is also related to many of the creative
arts. The marketing literature is also adept at re-inventing itself and its vocabulary according to
the times and the culture.
Earlier approaches
The marketing orientation evolved from earlier orientations namely the production orientation,
the product orientation and the selling orientation.[7][8]
Western
Profit European
Orientation Description
driver timefram
e
Social marketing[9] Benefit to society 1990s to present day Similar characteristics as marketing
orientation but with the added proviso that there will be a curtailment on any harmful activities to
society, in either product, production, or selling methods
A formal approach to this customer-focused marketing is known as SIVA[11] (Solution,
Information, Value, Access). This system is basically the four Ps renamed and reworded to
provide a customer focus. The SIVA Model provides a demand/customer centric version
alternative to the well-known 4Ps supply side model (product, price, placement, promotion) of
marketing management.
Product → Solution
Promotion → Information
Price → Value
Placement → Access
Marketing research
Main article: Marketing research
Marketing research involves conducting research to support marketing activities, and the
statistical interpretation of data into information. This information is then used by managers to
plan marketing activities, gauge the nature of a firm's marketing environment and attain
information from suppliers. Marketing researchers use statistical methods such as quantitative
research, qualitative research, hypothesis tests, Chi-squared tests, linear regression, correlations,
frequency distributions, poisson distributions, binomial distributions, etc. to interpret their
findings and convert data into information. The marketing research process spans a number of
stages including the definition of a problem, development of a research plan, collecting and
interpretation of data and disseminating information formally in form of a report. The task of
marketing research is to provide management with relevant, accurate, reliable, valid, and current
information.
A distinction should be made between marketing research and market research. Market
research pertains to research in a given market. As an example, a firm may conduct research in a
target market, after selecting a suitable market segment. In contrast, marketing research relates to
all research conducted within marketing. Thus, market research is a subset of marketing research.
Market segmentation
Market segmentation pertains to the division of a market of consumers into persons with similar
needs and wants. As an example, if using Kellogg's cereals in this instance, Frosties are marketed
to children. Crunchy Nut Cornflakes are marketed to adults. Both goods aforementioned denote
two products which are marketed to two distinct groups of persons, both with like needs, traits,
and wants.
The purpose for market segmentation is conducted for two main issues. First, a segmentation
allows a better allocation of a firm's finite resources. A firm only possesses a certain amount of
resources. Accordingly, it must make choices (and appreciate the related costs) in servicing
specific groups of consumers. Furthermore the diversified tastes of the contemporary Western
consumers can be served better. With more diversity in the tastes of modern consumers, firms
are taking noting the benefit of servicing a multiplicity of new markets.
Market segmentation can be defined in terms of the STP acronym, meaning Segment, Target and
Position.
Marketing research, as a sub-set aspect of marketing activities, can be divided into the following
parts:
Primary research (also known as field research), which involves the conduction and compilation
of research for the purpose it was intended.
Secondary research (also referred to as desk research), is initially conducted for one purpose,
but often used to support another purpose or end goal.
By these definitions, an example of primary research would be market research conducted into
health foods, which is used solely to ascertain the needs/wants of the target market for health
foods. Secondary research, again according to the above definition, would be research pertaining
to health foods, but used by a firm wishing to develop an unrelated product.
Primary research is often expensive to prepare, collect and interpret from data to information.
Nonetheless, while secondary research is relatively inexpensive, it often can become outdated
and outmoded, given it is used for a purpose other than for which is was intended. Primary
research can also be broken down into quantitative research and qualitative research, which as
the labels suggest, pertain to numerical and non-numerical research methods, techniques. The
appropriateness of each mode of research depends on whether data can be quantified
(quantitative research), or whether subjective, non-numeric or abstract concepts are required to
be studied (qualitative research).
The area of marketing planning involves forging a plan for a firm's marketing activities. A
marketing plan can also pertain to a specific product, as well as to an organization's overall
marketing strategy. Generally speaking, an organization's marketing planning process is derived
from its overall business strategy. Thus, when top management are devising the firm's strategic
direction or mission, the intended marketing activities are incorporated into this plan. There are
several levels of marketing objectives within an organization. The senior management of a firm
would formulate a general business strategy for a firm. However, this general business strategy
would be interpreted and implemented in different contexts throughout the firm.
The field of marketing strategy encompasses the strategy involved in the management of a given
product.
A given firm may hold numerous products in the marketplace, spanning numerous and
sometimes wholly unrelated industries. Accordingly, a plan is required in order to manage
effectively such products. Evidently, a company needs to weigh up and ascertain how to utilize
effectively its finite resources. As an example, a start-up car manufacturing firm would face little
success, should it attempt to rival immediately Toyota, Ford, Nissan or any other large global car
maker. Moreover, a product may be reaching the end of its life-cycle. Thus, the issue of divest,
or a ceasing of production may be made. With regard to the aforesaid questions, each scenario
requires a unique marketing strategy to be employed. Below are listed some prominent
marketing strategy models, which seek to propose means to answer the preceding questions.
With the rapidly emerging force of globalization, the distinction between marketing within a
firm's home country and marketing within external markets is disappearing very quickly. With
this occurrence in mind, firms need to reorient their marketing strategies to meet the challenges
of the global marketplace, in addition to sustaining their competitiveness within home markets.
[13]
A marketing firm must ascertain the nature of the customers buying behaviour, if it is to market
its product properly. In order to entice and persuade a consumer to buy a product, marketers try
to determine the behavioural process of how a given product is purchased. Buying behaviour is
usually split in two prime strands, whether selling to the consumer, known as business-to-
consumer (B2C) or another business, similarly known as business-to-business (B2B).
c) Marketing is manipulative
analysis
Four Ps
Elements of the marketing mix are often referred to as 'the four Ps':
Market Segmentation
Market segmentation is the identification of portions of the market that are different from one
another. Segmentation allows the firm to better satisfy the needs of its potential customers.
The marketing concept calls for understanding customers and satisfying their needs better than
the competition. But different customers have different needs, and it rarely is possible to satisfy
all customers by treating them alike.
Mass marketing refers to treatment of the market as a homogenous group and offering the same
marketing mix to all customers. Mass marketing allows economies of scale to be realized
through mass production, mass distribution, and mass communication. The drawback of mass
marketing is that customer needs and preferences differ and the same offering is unlikely to be
viewed as optimal by all customers. If firms ignored the differing customer needs, another firm
likely would enter the market with a product that serves a specific group, and the incumbant
firms would lose those customers.
Target marketing on the other hand recognizes the diversity of customers and does not try to
please all of them with the same offering. The first step in target marketing is to identify different
market segments and their needs.
In addition to having different needs, for segments to be practical they should be evaluated
against the following criteria:
Identifiable: the differentiating attributes of the segments must be measurable so that they
can be identified.
Substantial: the segments should be sufficiently large to justify the resources required to
target them.
Unique needs: to justify separate offerings, the segments must respond differently to the
different marketing mixes.
Durable: the segments should be relatively stable to minimize the cost of frequent
changes.
A good market segmentation will result in segment members that are internally homogenous and
externally heterogeneous; that is, as similar as possible within the segment, and as different as
possible between segments.
Geographic
Demographic
Psychographic
Behavioralistic
Geographic Segmentation
The following are some examples of geographic variables often used in segmentation.
Demographic Segmentation
Age
Gender
Family size
Family lifecycle
Generation: baby-boomers, Generation X, etc.
Income
Occupation
Education
Ethnicity
Nationality
Religion
Social class
Many of these variables have standard categories for their values. For example, family lifecycle
often is expressed as bachelor, married with no children (DINKS: Double Income, No Kids),
full-nest, empty-nest, or solitary survivor. Some of these categories have several stages, for
example, full-nest I, II, or III depending on the age of the children.
Psychographic Segmentation
Activities
Interests
Opinions
Attitudes
Values
Behavioralistic Segmentation
Benefits sought
Usage rate
Brand loyalty
User status: potential, first-time, regular, etc.
Readiness to buy
Occasions: holidays and events that stimulate purchases
Behavioral segmentation has the advantage of using variables that are closely related to the
product itself. It is a fairly direct starting point for market segmentation.
In contrast to consumers, industrial customers tend to be fewer in number and purchase larger
quantities. They evaluate offerings in more detail, and the decision process usually involves
more than one person. These characteristics apply to organizations such as manufacturers and
service providers, as well as resellers, governments, and institutions.
Many of the consumer market segmentation variables can be applied to industrial markets.
Industrial markets might be segmented on characteristics such as:
Location
Company type
Behavioral characteristics
Location
In industrial markets, customer location may be important in some cases. Shipping costs may be
a purchase factor for vendor selection for products having a high bulk to value ratio, so distance
from the vendor may be critical. In some industries firms tend to cluster together geographically
and therefore may have similar needs within a region.
Company Type
Company size
Industry
Decision making unit
Purchase Criteria
Behavioral Characteristics
In industrial markets, patterns of purchase behavior can be a basis for segmentation. Such
behavioral characteristics may include:
Usage rate
Buying status: potential, first-time, regular, etc.
Purchase procedure: sealed bids, negotiations, etc.
Direct Marketing is often listed as a the fifth part of the marketing mix .[2][3]
Direct Marketing
The aim of direct marketing is to create one to one relationships with the organisations target
market. Direct marketing can come in the form of post, email, telephone calls and mail order.
The company usually contacts a named person at the address.
Advertising
Advertising can be defined as placing your message in any form of paid media.
To promote
To remind
To support
To compete
To persuade
You have two types of advertising. Above the line advertising is advertising placed in
TV, radio, newspaper and cinema. Below the line advertising is based around
advertising via direct mail, sponsorship and sales promotion.
Sales Promotion
The aim of sales promotion is to increase short term sales and increase instore or web traffic. The
tactics used for this include loyalty cards, coupons, price promotions eg BOGOF, point of sales,
packaging promotion or web coupons.
Public Relations
Managing public relations is very important for the organisation. Image in marketing is
everything.. Having a good image helps the organisation develop a trust and a bond between
themselves and their customers. This good will is invaluble. Public relations activities include,
press releases. company literature, videos, websites and annual reports.
Sponsorship
Sponsorship is about providing money to an event, inturn the product or company is
acknowledged for doing so. For example the Bejing Olympics in 2008 will partly be sponsored
by Panasonic. Sponsorship helps the company improve its image and public relations within the
market and usually the company attempts to sponsor a person or event that mirrors the image
they are trying to aim for. Nike for example have successfully sponsored the golfer Tiger Woods
for many years.
Viral Marketing
Viral marketing occurs when consumers pass on or recommend your product/company/website
to others. This could be via email, or bulletin boards or word of mouth. There have been many
well known online viral marketing campaigns. These include The Blair Witch Project and the
establishment of Hotmail as a leading free email provider.
Organizations that spend money on advertising promoting items other than a consumer product
or service include political parties, interest groups, religious organizations and governmental
agencies. Nonprofit organizations may rely on free modes of persuasion, such as a public service
announcement.
Money spent on advertising has declined in recent years. In 2007, spending on advertising was
estimated at more than $150 billion in the United States[2] and $385 billion worldwide,[3] and the
latter to exceed $450 billion by 2010.[citation needed]
Personal Selling
The pinnacle activity involved in selling products or services in return for money or other
compensation. It is an act of completion of a commercial activity.[1]
A sale is completed by the seller or the owner of the goods. It starts with consent (or agreement)
to an acquisition or appropriation or request followed by the passing of title (property or
ownership) in the item and the application and due settlement of a price, the douche of or any
claim upon the item. The purchaser, though a party to the sale, does not execute the sale, only the
seller does that. To be precise the sale completes prior to the payment and gives rise to the
obligation of payment. If the seller completes the first two above stages (consent and passing
ownership) of the sale prior to settlement of the price, the sale is still valid and gives rise to an
obligation to pay.
Sales promotion
From Wikipedia, the free encyclopedia
Sales promotion is one of the four aspects of promotional mix. (The other
three parts of the promotional mix are advertising, personal selling, and publicity/public
relations.) Media and non-media marketing communication are employed for a pre-determined,
limited time to increase consumer demand, stimulate market demand or improve product
availability. Examples include:
contests
point of purchase displays
rebate (marketing)
free travel, such as free flights
Sales promotions can be directed at either the customer, sales staff, or distribution channel
members (such as retailers). Sales promotions targeted at the consumer are called consumer
sales promotions. Sales promotions targeted at retailers and wholesale are called trade sales
promotions. Some sale promotions, particularly ones with unusual methods, are considered
gimmick by many.
PR can be used to build rapport with employees, customers, investors, voters, or the general
public.[3] Almost any organization that has a stake in how it is portrayed in the public arena
employs some level of public relations. There are a number of related disciplines falling under
the banner of Corporate Communications, such as Analyst Relations, Media Relations, Investor
Relations, Internal Communications and Labor Relations.
There are many areas of public relations, but the most recognized are financial public relations,
product public relations, and crisis public relations.
Financial public relations deal with providing information mainly to business reporters.
Product public relations deal with gaining publicity for a particular product or service
through PR tactics rather than using advertising.
Crisis public relations deal with responding to negative accusations or information.
If the advertisement asks the prospect to take a specific action, for instance call a free phone
number or visit a website, then the effort is considered to be direct response advertising.
Sponsor (commercial)
Sponsorship [1] is a cash and/or in-kind fee paid to a property (typically in sports, arts,
entertainment or causes) in return for access to the exploitable commercial potential associated
with that property. For example, a corporate entity may provide equipment for a famous athlete
or sports team in exchange for brand recognition. The sponsor earns popularity this way while
the sponsored can earn a lot of money. A particular form of specialized brand sponsorship where
a brand sponsors an unusual event or pastime that then becomes synonymous with that brand (to
the point where future brands may be excluded from participation) is known as
'aboutsponsorship'. This provides a strong walled-garden sponsorship relationship between
particular events and the brand.