From Wikipedia, the free encyclopedia
Marketing is an integrated communications-based process through which individuals and communities discover that existing and newly-identified needs and wants may be
satisfied by the products and services of others.
Marketing is defined by the American Marketing Association 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. [1] The term developed from the original meaning which referred literally to
going to market, as in shopping, or going to a market to buy or sell goods or services.
The Chartered Institute of Marketing, which is the world's largest marketing
body[citation needed], defines marketing as "The management process responsible for
identifying, anticipating and satisfying customer requirements profitably."[2]
Marketing practice tended to be seen as a creative industry in the past, which included advertising, distribution and selling. However, because marketing makes
extensive use of social sciences, psychology, sociology, mathematics, economics, anthropology and neuroscience,
the profession is now widely recognised 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
infamous for re-inventing itself and its vocabulary according to the times and the culture.
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[3], whose methods can be improved using a variety of relatively new approaches.
[edit] The marketing concept
The term marketing concept pertains to the fundamental premise of modern marketing. This can be laid out as recognising consumer needs/wants, and making products
that correlate with consumer desires.
[edit] Marketing orientations
An orientation, in the marketing context, relates to a perception or attitude a firm holds towards its product or service, essentially concerning consumers and end-users. There
exist several common orientations:
[edit] Product orientation
A firm employing a product orientation is chiefly concerned with the quality of its own product, and not in necessarily ascertaining consumer desires. A firm would also assume that as long as its product was of a high standard, people would buy and consume the product.
However, utilising a product orientation has a prime disadvantage of making a firm lose out to competitors, who may produce technologically superior goods that engender
higher consumer demand and thus market share. A product orientation may perhaps work best in a monopolistic market form, due to the inherent high barriers to entry within a monopoly.
[edit] Sales orientation
A firm using a sales orientation focuses primarily on the selling/promotion of a particular product, and not determining new consumer desires as such. Consequently, this entails
simply selling an already existing product, and using promotion techniques to attain the highest sales possible.
Such an orientation may suit scenarios in which a firm holds dead stock, or otherwise sells a good that is in high demand, with little likelihood of changes in consumer tastes
diminishing demand.
[edit] Production orientation
A firm focusing on a production orientation specialises in producing as much as possible of a given good. Thus, this signifies a firm exploiting economies of scale, until the minimum efficient scale
is reached.
A production orientation may be deployed when a high demand for a good exists, coupled with a good certainty that consumer tastes do not rapidly alter (similar to the sales
orientation).
[edit] Marketing orientation
The marketing orientation is perhaps the most common orientation used in contemporary marketing. It involves a firm essentially basing its marketing plans around the
marketing concept, and thus forging products to suit new consumer tastes.
As an example, a firm would employ market research to gauge consumer desires, use R&D to develop a good attuned to the revealed information, and then utilise
promotion techniques to ensure persons know the good exists. The marketing orientation often has three prime facets, which are:
[edit] Customer orientation
A firm in the market economy survives by producing goods that persons
are willing and able to buy. Consequently, ascertaining consumer demand is vital for a firm's future viability and even existence as a going concern.
[edit] Organizational orientation
All departments of a firm should be geared to satisfying consumer wants/needs.
[edit]
Mutually beneficial exchange
In a transaction in the market economy, a firm gains revenue, which thus leads to more profits/market share/sales. A consumer on the other hand gains a need/want that is
satisfied, utility, reliability and value for money from the purchase of a good. As no one has to buy goods from any one supplier in the market economy, firms must entice consumers
to buy goods, and thus seek to satisfy consumers' utility. If an exchange is not mutually beneficial in nature, it is not consistent with contemporary marketing ideals.
[edit] The Four Ps
Main article:
Marketing mix
In the early 1960s, Professor Neil Borden at Harvard Business School identified a number of
company performance actions that can influence the consumer decision to purchase goods or services. Borden suggested that all those actions of the company represented a “Marketing Mix”. Professor E. Jerome
McCarthy, at the Michigan State University in the early 1960s, suggested that the Marketing
Mix contained 4 elements: product, price, place and promotion.
- Product: The product aspects of marketing deal with the specifications of the actual goods or services,
and how it relates to the end-user's needs and wants. The scope of a product generally includes supporting elements such as
warranties, guarantees, and support.
- Pricing: This refers to the process of setting a price for a product, including discounts.
The price need not be monetary; it can simply be what is exchanged for the product or services, e.g. time, energy, or attention. Methods of setting prices optimally are in the domain
of pricing science.
- Placement (or distribution): refers to how the product gets to the customer; for example,
point-of-sale placement or retailing. This third P has also sometimes been called Place, referring to the
channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also
referring to how the environment in which the product is sold in can affect sales.
- Promotion: This includes advertising, sales promotion, including promotional education, publicity, and personal selling. Branding refers to the various methods of promoting the product, brand, or company.
These four elements are often referred to as the marketing mix,[4] which a marketer can use to craft a marketing
plan.
The four Ps model is most useful when marketing low value consumer products. Industrial products, services, high value consumer products require adjustments to this model.
Services marketing must account for the unique nature of services.
Industrial or B2B marketing must account for the long term contractual agreements that are typical in supply chain transactions. Relationship marketing attempts to do this by looking
at marketing from a long term relationship perspective rather than individual transactions.
As a counter to this, Morgan, in Riding the Waves of Change (Jossey-Bass, 1988), suggests that one of the greatest limitations of the 4 Ps approach "is that it
unconsciously emphasizes the inside–out view (looking from the company outwards), whereas the essence of marketing should be the outside–in approach".
[edit]
The marketing environment
The term "marketing environment" relates to all of the factors (whether internal, external, direct or indirect) that affects a firm's marketing decision-making/planning. A firm's
marketing environment consists of three main areas, which are:
- The macro-environment, over which a firm holds little control
- The micro-environment, over which a firm holds a greater amount (though not necessarily total) control
- The internal environment
[edit] The macro-environment
A firm's marketing macro-environment consists of factors that manifest on a large or macro scale. These are typically economic, social or political phenomena. A common
means of assessing a firm's macro-environment is via a PEST (,i.e. Political, Economic, Social and Technological) analysis. Within a PEST analysis, a firm would analyse national
political issues, culture and climate, key macroeconomic conditions, health and indicators (such as economic growth, inflation, unemployment, etc.), social trends/attitudes, and the
nature of technology's impact on its society and the business processes within the society.
[edit] Product
[edit] Branding
A brand is a name, term, design, symbol, or other feature that distinguishes products and services from competitive offerings. A brand represents the consumers' experience
with an organization, product, or service. A brand is more than a name, design or symbol. Brand reflects personality of the company which is organizational culture.
A brand has also been defined as an identifiable entity that makes a specific value based on promises made and kept either actively or passively.
Branding means creating reference of certain products in mind.
Co-branding involves marketing activity involving two or more products.
[edit]
Marketing communications
Marketing communications breaks down the strategies involved with marketing messages into categories based on the goals of each message. There are distinct stages in
converting strangers to customers that govern the communication medium that should be used.
[edit] Personal sales
Oral presentation given by a salesperson who approaches individuals or a group of potential customers:
- Live, interactive relationship
- Personal interest
- Attention and response
- Interesting presentation
- Clear and thorough.
[edit] Sales promotion
Short-term incentives to encourage buying of products:
- Instant appeal
- Anxiety to sell
An example is coupons or a sale. People are given an incentive to buy, but this does not build customer loyalty or encourage future repeat buys. A major drawback of sales
promotion is that it is easily copied by competition. It cannot be used as a sustainable source of differentiation.
[edit] Customer focus
Many companies today have a customer focus (or market orientation). This implies that the company focuses its activities and products on consumer demands. Generally there
are three ways of doing this: the customer-driven approach, the sense of identifying market changes and the product innovation approach.
In the consumer-driven approach, consumer wants are the drivers of all strategic marketing decisions. No strategy is pursued until it passes the test of consumer research. Every
aspect of a market offering, including the nature of the product itself, is driven by the needs of potential consumers. The starting point is always the consumer. The rationale for this
approach is that there is no point spending R&D funds developing products that people will not buy. History attests to many products that were commercial failures in spite of
being technological breakthroughs.[5]
A formal approach to this customer-focused marketing is known as SIVA[6] (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, place, promotion) of marketing
management.
| Product |
→ |
Solution |
| Promotion |
→ |
Information |
| Price |
→ |
Value |
| Placement |
→ |
Access |
The four elements of the SIVA model are:
- Solution: How appropriate is the solution to the customer's problem/need?
- Information: Does the customer know about the solution? If so, how and from whom do they know enough to let them make a buying decision?
- Value: Does the customer know the value of the transaction, what it will cost, what are the benefits, what might they have to sacrifice, what will be their reward?
- Access: Where can the customer find the solution? How easily/locally/remotely can they buy it and take delivery?
This model was proposed by Chekitan Dev and Don Schultz in the Marketing Management Journal of the American Marketing Association, and presented by them in Market
Leader, the journal of the Marketing Society in the UK.
[edit] Product focus
In a product innovation approach, the company pursues product innovation, then tries to develop a market for the product.
Product innovation drives the process and marketing research is conducted primarily to ensure that profitable market segment(s) exist for the innovation. The rationale is that
customers may not know what options will be available to them in the future so we should not expect them to tell us what they will buy in the future. However, marketers can
aggressively over-pursue product innovation and try to overcapitalize on a niche. When pursuing a product innovation approach, marketers must ensure that they have a varied and
multi-tiered approach to product innovation. It is claimed that if Thomas Edison depended on marketing research he
would have produced larger candles rather than inventing light bulbs. Many firms, such as research and development focused companies, successfully focus on product innovation.
Many purists doubt whether this is really a form of marketing orientation at all, because of the ex post status of consumer research. Some even question whether it is marketing.
- The Economist reported a recent conference in Rome on the subject
of the simulation of adaptive human behavior.[7] It shared mechanisms to
increase impulse buying and get people "to buy more by playing on the herd instinct." The basic idea is that people will buy more of products that are seen to be popular, and
several feedback mechanisms to get product popularity information to consumers are mentioned, including smart-cart technology and the use of Radio Frequency Identification Tag technology. A "swarm-moves" model was introduced by a Florida Institute of Technology
researcher, which is appealing to supermarkets because it can "increase sales without the need to give people discounts."
Marketing is also used to promote business' products and is a great way to promote the business.
- Other recent studies on the "power of social influence" include an "artificial music market in which some 14,000 people downloaded previously unknown songs" (Columbia University, New York); a Japanese chain of convenience stores
which orders its products based on "sales data from department stores and research companies;" a Massachusetts
company exploiting knowledge of social networking to improve sales; and online retailers who are increasingly informing consumers about "which products are popular with
like-minded consumers" (e.g., Amazon, eBay).
[edit]
Areas of marketing specialization
[edit] See also
[edit] Related lists
- See List of marketing topics for an extensive list of the marketing articles.
[edit] References
- ^ Marketing definition approved in October 2007 by the American Marketing Association: [1].
- ^ Definition of marketing, Chartered Institute of Marketing
- ^ Paul H.
Selden (1997). Sales Process Engineering: A Personal Workshop. Milwaukee, WI: ASQ Quality Press. p. 23.
- ^ "The Concept of the Marketing Mix" from the Journal of Advertising Research, June 1964 pp 2-7
- ^ "Marketing Management: Strategies and Programs", Guiltinan et al., McGraw Hill/Irwin, 1996
- ^ "In the Mix: A Customer-Focused Approach Can Bring the Current Marketing Mix into the 21st Century". Chekitan S. Dev
and Don E. Schultz, Marketing Management v.14 n.1 January/February 2005
- ^ "Swarming the shelves: How shops can exploit people's herd mentality to
increase sales?". The Economist. 2006-11-11. p. 90.
[edit] External links