For the purposes of this course, we will rely on the definition of marketing established by the American Marketing Association: “Marketing is 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.”
Other well-known definitions include those of Philip Kotler of Northwestern University—”Marketing is human activity directed at satisfying needs and wants through exchange processes” and of University of Michigan professor Randall G. Chapman “Marketing means solving clients’ problems profitably.”
Marketing includes outreach to current and potential customers. It includes advertising, social media, web experiences, branding, community management, and public relations, as well as gathering data on the behavior, needs, and buying preferences of customers.
Marketing is customer-focused. The marketing concept is predicated on determining the needs and wants of a target market (selected customers) and then satisfying those needs better than the competition and enjoying profit through the exchange. Those adopting the marketing concept approach will have a market focus and a customer orientation, and they will coordinate their marketing to seek profitability.
What can be marketed? You can market products and services, information and ideas, properties and places, experiences and events, people and organizations, social causes and agendas, and political parties and candidates. If an exchange of value can happen, marketing can help make it happen.
The marketing concept replaced earlier views of the organization’s relationship with customers and markets.
Organizations evolved from a production orientation to sales and finally to a marketing focus. Some experts, such as marketing professors Louis E. Boone and David L. Kurtz, now believe that marketers have moved into a new phase—[?]relationship marketing.[/?]
They define relationship marketing as the “development and maintenance of long-term, cost-effective relationships with individual customers, suppliers, employers, and other partners for mutual benefit.” In this model, marketing becomes a two-way relationship in which the customer defines the value and terms of the relationship just as much as the company does. Customers drive the conversation about the product, and companies respond with speed to the needs of the marketplace.
You can trace the emergence of marketing by viewing the slideshow below.
Time Period: Prior to 1920s
Approach: During this era, organizations produced quality products first and then looked for customers to sell them to.
United Cereal Mills advertisement for Corn Flakes, circa 1910.
Time Period: 1920s to 1950s
Approach: During this era, organizations began to emphasize the role of sales and advertising in moving products.
1938 Buick Construction and Specifications Sales Manual
Time Period: 1950s to 1990s
Approach: During this era, organizations marketed to influence consumer orientation in addition to just producing and selling the product.
1950s Coca Cola advertisement
Concept: Relationship Marketing
Time Period: Since 1990s
Approach: Since the 1990s, organizations have emphasized relationships and the value that they add to customers’ lives.
The Marketing Process
The marketing process is the systematic application of marketing principles to satisfy customer needs. It begins with analyzing marketing opportunities, selecting target markets, developing the marketing mix, and managing the marketing effort. It is one of the foundations of marketing management.
Those organizations that embrace the marketing concept and employ the marketing process find that they become customer-focused throughout the entire value chain.
Many companies pursue marketing strategies that emphasize delivery of superior value versus expected value. The process of identifying which of a company’s offerings (products and/or services) their customers find most valuable and creating the systems and operations to support and maintain those value levels is called value creation.
Value creation has two steps illustrated below:
Marketing and the Value Chain
There are several ways to look at how marketing is involved in the value chain (or value creation chain).
A basic premise is that marketing is involved in every step of the value chain process, as can been seen in the image below.
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The Marketing Process in Practice
The marketing process in practice involves analyzing marketing opportunities, selecting target markets, developing the marketing mix, and managing the marketing effort
A successful marketing effort includes four distinct and essential steps; each part of the process builds upon information gleaned from earlier stages.
An analysis of market opportunities
Before pursuing any opportunity, company managers must understand key factors related to the opportunity. There are many ways to obtain information on an opportunity – companies can purchase existing topical market research from third-party research firms, they can hold customer focus groups and hear first-hand reactions to an opportunity, or they can perform first-hand investigation by speaking directly with industry executives.
At the very least, a thorough marketing analysis should provide answers to the following questions for each potential opportunity:
- What is the expected growth rate for the market in 1 year? 5 years? 20 years?
- What are the greatest threats to each opportunity? Are these controllable?
- What groups constitute the value chain?
- What are the dynamics within the value chain? Are there multiple suppliers and distributors?
- Who are the competitors and what are their strengths, weaknesses, and plans for growth?
- What do customers think of the opportunity?
- How many different customer segments (groups of customers) exist?
- How profitable is the opportunity for the company?
- What investments would be required to pursue the opportunity?
Identification and selection of target markets
In general, a product or service may appeal to several different types of consumers. These groups of customers—or market segments—offer varying degrees of profitability and may require distinct marketing strategies and plans. When deciding which target markets to pursue, a company should evaluate not only customer profitability but also the strength of their existing brand within the target market and any competitive threats.
As an example, consider the cosmetics industry. A cosmetics company manufactures products that can be used by young teenagers, elderly women, and every generation in between. Yet each of these market segments responds differently to messaging, advertising, pricing, and packaging strategies. The most successful cosmetics companies identify their target market segments, then craft and execute focused marketing strategies designed to extract maximum profitability from the target market.
Development of the marketing mix (Four P’s)
Once a company defines their target markets, they evaluate and analyze options in four areas, commonly referred to as “The Four P’s”:
|Quality, branding, packaging, service
|Consumer price, wholesale price, bundled price
|Message development, advertising campaign design, media plan, public relations
|In-store, online, partner channels
Marketers must consider all of these elements when crafting a marketing mix. For example, a company that decides to pursue a low-cost strategy must create pricing strategies that result in low prices. Communications and advertising should also reinforce the company’s competitive price points, and the outlets where the product is sold should attract bargain shoppers (think Wal-Mart vs. an upscale boutique).
Campaign implementation, management, and refinement
The aforementioned three strategic steps—market analysis, target market selection, and marketing mix development—are essential parts of the marketing process. However, these processes are meaningless without implementation.
After completing its strategic analyses, the marketing department sets very specific marketing-related goals and outlines them, along with implementation details (required resources, advertising budgets etc.), in a marketing plan. The marketing plan is typically shared with senior management as well as product, finance, technology, sales and research departments (sometimes many more).
Marketing is dynamic—changing consumer tastes, new competition, and evolving technology can impact an industry and positively or negatively affect a product or service at any time. To affect control in this fluid environment, marketers continually set goals, measure results against goals, evaluate the causes behind unpredicted results, refine original goals, and/or set new ones. This process occurs both from an operational perspective as well as a strategic perspective.
Example: A company is not receiving its anticipated response rates from women in the 25-34 age range.
|Reallocate media plan so that majority of advertising dollars are spent on direct emails, which have received the greatest response rates from this demographic.
|Consider embracing a different market—women on either side of this age bracket?
Elements of the marketing process are inextricably linked to each other. At a very high level, all marketing activities fall into one of the following four categories:
It is quite possible that while focusing on one of these areas, new information is discovered that impacts plans and goals determined in other areas.
|A market analysis for a popular tennis shoe indicates that the shoe is considered a must-have fashion accessory and is currently popular with fashion-forward twenty-somethings, a customer segment that was previously outside the scope of the marketing plan. This discovery warrants a revision of the marketing plan (new strategic and operational goals that address the new customer group), adjusted implementation plans (for example, media plans changed from sports-focus to sports/fashion-focus), and updated progress measurements to match the new goals.