Marketing is defined by the 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." [1]
It can also be defined as "the
process by which companies create value for customers and build strong customer
relationships, in order to capture value from customers in return".
This replaces the previous
definition, which still appears in the AMA's dictionary: "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."[2] It generates the strategy that underlies sales
techniques, business communication, and business developments.[3] It is an integrated process through which companies build
strong customer relationships and create value for their customers and for themselves.[3]
The term marketing concept holds that achieving organizational goals depends on
knowing the needs and wants of target
markets and delivering the desired
satisfactions.[4] 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.[4]
The term developed from an 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 marketing is "a set of processes that are
interconnected and interdependent with other functions,[5] 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."[6] A different concept is the value-based marketing which states the role of marketing to contribute to
increasing shareholder
value.[7] In this context, marketing is defined as "the management process that seeks to maximize
returns to shareholders by developing relationships with valued customers and
creating a competitive advantage."[7]
Marketing practice tended to be seen
as a creative industry in the past, which included advertising, distribution and selling,Merchandise support. 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.
Browne (2010) reveals that
supermarkets spend millions of dollars intensively researching and studying consumer behaviour. Their aim is to make sure that
shoppers leave their stores spending much more than they originally planned.
‘Choice’ examined the theory of trolleyology finding that many shoppers
instinctively look to the right when they’re in the supermarket.
Supermarkets move products around to confuse shoppers, the entry point is another marketing tactic.
Consumer psychologist Dr. Paul Harrison (cited in Browne, 2010) states that
supermarkets are constantly using different methodologies of selling. One
method is performing regular overhauls changing the locations of products all
around to break habitual shopping, and break your budget. Harrison also
contends that people who are shopping in a counter clockwise direction are
likely to spend more money than people shopping in a clockwise direction.
Consumer psychologists (cited in Browne, 2010) reported that most people write
with their right hand, thus it is a biological trait that people have the
tendency of veering to the right when shopping, it is understood that
supermarkets capitalize on this fact. Found on the capturing right-hand side
are usually appealing products that a shopper might impulsively buy e.g. an
umbrella when the weather is dull.[8]
[edit]Evolution of
marketing
An orientation, in the marketing
context, related to a perception or attitude a firm holds towards its product
or service, essentially concerning consumers and end-users. Throughout history,
marketing has changed considerably in conjunction with consumer tastes.[9]
The marketing orientation evolved
from earlier orientations, namely, the production orientation, the product
orientation and the selling orientation.[9][10]
|
Orientation
|
Profit driver
|
Western European timeframe
|
Description
|
|
|
Production methods
|
until the 1950s
|
A firm focusing on a production orientation specializes
in producing as much as possible of a given product or service. 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 product or service
exists, coupled with a good certainty that consumer tastes will not rapidly
alter (similar to the sales orientation).
|
|
|
Quality of the product
|
until the 1960s
|
A firm employing a product orientation is chiefly
concerned with the quality of its own product. A firm would also assume that
as long as its product was of a high standard, people would buy and consume
the product.
|
|
|
Selling methods
|
1950s and 1960s
|
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 product that
is in high demand, with little likelihood of changes in consumer tastes that
would diminish demand.
|
|
|
Needs and wants of customers
|
1970 to present day
|
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 supplying 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 product attuned to the revealed
information, and then utilize promotion techniques to ensure persons know the
product exists.
|
[edit]Contemporary
approaches
|
Orientation
|
Profit driver
|
Western European timeframe
|
Description
|
|
|
Building and keeping good customer
relations
|
1960s to present day
|
Emphasis is placed on the whole relationship between
suppliers and customers. The aim is to provide the best possible customer
service and build customer loyalty.
|
|
|
|
1980s to present day
|
|
|
|
Benefit to society
|
1990s to present day
|
Similar characteristics as marketing orientation but
with the added proviso that there will be a curtailment of any harmful
activities to society, in either product, production, or selling methods.
|
|
|
Brand value
|
1980s to present day
|
In this context, "branding" is the main
company philosophy and marketing is considered an instrument of branding
philosophy.
|
[edit]Customer orientation
Constructive criticism helps marketers adapt offerings to meet changing
customer needs.
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. 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 market change identification approach and the product innovation approach[citation needed].
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 reason to spend 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.[12]
A formal approach to this
customer-focused marketing is known as SIVA[13] (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 alternative to the well-known 4Ps
supply side model (product, price, placement, promotion) of marketing
management.
|
Product
|
→
|
Solution
|
|
Promotion
|
→
|
Information
|
|
Price
|
→
|
Value
|
|
Place
|
→
|
Access
|
If any of the 4Ps were problematic or
were not in the marketing factor of the business, the business could be in
trouble and so other companies may appear in the surroundings of the company,
so the consumer demand on its products will decrease. However, in recent years
service marketing has widened the domains to be considered, contributing to the 7P's of marketing in total. The other 3P's of service marketing are:
process, physical environment and people.
Some qualifications or caveats for customer focus exist. They do not invalidate or
contradict the principle of customer focus; rather, they simply add extra
dimensions of awareness and caution to it.
The work of Christensen and colleagues[14] on disruptive technology has produced a theoretical framework that explains the
failure of firms not because they were technologically inept (often quite the
opposite), but because the value networks in which they profitably operated
included customers who could not value a disruptive innovation at the time and
capability state of its emergence and thus actively dissuaded the firms from
developing it. The lessons drawn from this work include:
§ Taking customer focus with a grain of salt, treating it as only a subset of one's corporate
strategy rather than the sole driving factor. This means looking beyond
current-state customer focus to predict what customers will be demanding some
years in the future, even if they themselves discount the prediction.
§ Pursuing new markets (thus new value networks) when they
are still in a commercially inferior or unattractive state, simply because
their potential to grow and intersect with established markets and value
networks looks like a likely bet. This may involve buying stakes in the stock
of smaller firms, acquiring them outright, or incubating small, financially
distinct units within one's organization to compete against them.
Other caveats of customer focus are:
§ The extent to which what customers say they want does not match their
purchasing decisions. Thus surveys of customers might claim that 70% of a
restaurant's customers want healthier choices on the menu, but only 10% of them
actually buy the new items once they are offered. This might be acceptable
except for the extent to which those items are money-losing propositions for
the business, bleeding red ink. A lesson from this type of situation is to be
smarter about the true test validity of instruments like surveys. A
corollary argument is that "truly understanding customers sometimes means
understanding them better than they understand themselves." Thus one could
argue that the principle of customer focus, or being close to the customers, is
not violated here—just expanded upon.
§ The extent to which customers are currently ignorant of
what one might argue they should want—which is dicey because whether
it can be acted upon affordably depends on whether or how soon the customers
will learn, or be convinced, otherwise. IT hardware and software capabilities
and automobile features are examples. Customers who in 1997 said that they
would not place any value on internet browsing capability on a mobile phone, or
6% better fuel efficiency in their vehicle, might say something
different today, because the value proposition of those opportunities has
changed.
[edit]Organizational
orientation
In this sense, a firm's marketing
department is often seen as of prime importance within the functional level of
an organization. Information from an organization's marketing department would
be used to guide the actions of other departments within the firm. As an
example, a marketing department could ascertain (via marketing research) that consumers
desired a new type of product, or a new usage for an existing product. With
this in mind, the marketing department would inform the R&D department to
create a prototype of a product/service based on consumers' new desires.
The production department would then
start to manufacture the product, while the marketing department would focus on
the promotion, distribution, pricing, etc. of the product. Additionally, a
firm's finance department would be consulted, with respect to securing
appropriate funding for the development, production and promotion of the
product. Inter-departmental conflicts may occur, should a firm adhere to the
marketing orientation. Production may oppose the installation, support and
servicing of new capital stock, which may be needed to manufacture a new
product. Finance may oppose the required capital expenditure, since it could
undermine a healthy cash flow for the organization.
Herd
behavior in marketing is used to explain the
dependencies of customers' mutual behavior. The Economist reported a recent conference in Rome on the subject of the simulation of adaptive human
behavior.[15] 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
card technology and the use of Radio
Frequency Identification Tagtechnology. 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." Other recent studies on the "power of social
influence" include an "artificial music market in which some 19,000
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]Further orientations
§ An emerging area of study and practice concerns internal marketing, or how employees are trained and
managed to deliver the brand in a way that positively impacts the acquisition
and retention of customers, see also employer branding.
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, collection and interpretation of data and disseminating
information formally in the 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.
[edit]Marketing
environment
[edit]Market segmentation
Market segmentation pertains to the
division of a market of consumers into persons with similar needs and wants.
For instance, Kellogg's
cereals, Frosties are marketed to children. Crunchy Nut Cornflakes are marketed to adults. Both goods denote two products
which are marketed to two distinct groups of persons, both with similar needs,
traits, and wants.
Market segmentation allows for a
better allocation of a firm's finite resources. A firm only possesses a certain
amount of resources. Accordingly, it must make choices (and incur the related
costs) in servicing specific groups of consumers. In this way, the diversified
tastes of contemporary Western consumers can be served better. With growing
diversity in the tastes of modern consumers, firms are taking note of 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.[citation needed]
[edit]Types of Market
Research
Market 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 a specific purpose.
§ Secondary research (also referred to as desk research),
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 in this case 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. Nevertheless, while
secondary research is relatively inexpensive, it often can become outdated and
outmoded, given that it is used for a purpose other than the one for which it
was intended. Primary research can also be broken down into quantitative
research and qualitative research, which, as the terms suggest, pertain to
numerical and non-numerical research methods and techniques, respectively. 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).
There also exist additional modes of
marketing research, which are:
§ Exploratory research, pertaining to research that
investigates an assumption.
§ Descriptive research, which, as the term suggests,
describes "what is".
§ Predictive research, meaning research conducted to
predict a future occurrence.
§ Conclusive research, for the purpose of deriving a
conclusion via a research process.
The marketing planning process 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 effectively manage such
products. Evidently, a company needs to weigh up and ascertain how to utilize
its finite resources. For example, a start-up car manufacturing firm would face
little success should it attempt to rival Toyota, Ford, Nissan, Chevrolet, 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. Each scenario requires a unique marketing strategy. Listed below are
some prominent marketing strategy models.
[edit]Marketing
specializations
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
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.[16]
A marketing firm must ascertain the
nature of customers' buying behavior 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 behavioral process of how a given product is purchased. Buying
behavior is usually split into two prime strands, whether selling to the
consumer, known as business-to-consumer (B2C), or to another business, known as business-to-business (B2B).
[edit]B2C buying behaviour
This mode of behaviour concerns
consumers and their purchase of a given product. For example, if one imagines a
pair of sneakers, the desire for a pair of sneakers would be followed by an
information search on available types/brands. This may include perusing media
outlets, but most commonly consists of information gathered from family and
friends. If the information search is insufficient, the consumer may search for
alternative means to satisfy the need/want. In this case, this may mean buying
leather shoes, sandals, etc. The purchase decision is then made, in which the
consumer actually buys the product. Following this stage, a post-purchase
evaluation is often conducted, comprising an appraisal of the value/utility
brought by the purchase of the sneakers. If the value/utility is high, then a
repeat purchase may be made. This could then develop into consumer loyalty to
the firm producing the sneakers.
[edit]B2B buying behaviour
Relates to organizational/industrial
buying behavior.[17] Business buy either wholesale from other businesses or
directly from the manufacturer in contracts or agreements. B2B marketing
involves one business marketing a product or service to another business. B2C
and B2B behavior are not precise terms, as similarities and differences exist,
with some key differences listed below:
In a straight re-buy, the fourth,
fifth and sixth stages are omitted. In a modified re-buy scenario, the fifth
and sixth stages are precluded. In a new buy, all stages are conducted.
[edit]Use of technologies
Marketing management can also rely on various technologies within the scope of
its marketing efforts. Computer-based information systems can be employed, aiding in better processing and storage
of data. Marketing researchers can use such systems to devise better methods of
converting data into information, and for the creation of enhanced data
gathering methods. Information technology can aid in enhancing an MKIS' software and hardware components,
and improve a company's marketing decision-making process.
In recent years, the notebook
personal computer has gained significant market
share among laptops, largely due to its
more user-friendly size and portability. Information technology typically
progresses at a fast rate, leading to marketing managers being cognizant of the
latest technological developments. Moreover, the launch of smartphones into the cellphone market is commonly derived from a demand among consumers
for more technologically advanced products. A firm can lose out to competitors
should it ignore technological innovations in its industry.
Technological advancements can lessen
barriers between countries and regions. Using the World Wide Web, firms can
quickly dispatch information from one country to another without much
restriction. Prior to the mass usage of the Internet, such transfers of
information would have taken longer to send, especially if done via snail mail, telex, etc.
Recently, there has been a large
emphasis on data analytics. Data can be mined from various sources such as
online forms, mobile phone applications and more recently, social media.
Services marketing relates to the marketing of services, as opposed to
tangible products. A service (as opposed to a good) is typically defined as
follows:
§ The use of it is inseparable from its purchase (i.e., a
service is used and consumed simultaneously)
§ It does not possess material form, and thus cannot be
touched, seen, heard, tasted, or smelled.
§ The use of a service is inherently subjective, meaning
that several persons experiencing a service would each experience it uniquely.
For example, a train ride can be
deemed a service. If one buys a train ticket, the use of the train is typically
experienced concurrently with the purchase of the ticket. Although the train is
a physical object, one is not paying for the permanent ownership of the tangible
components of the train.
Services (compared with goods) can
also be viewed as a spectrum. Not all products are pure goods, nor are all pure
services. An example would be a restaurant, where a waiter's service is
intangible, but the food is tangible.
CONCLUSION :
Marketing is the process of interesting
potential customers and clients in your products and/or services. the core of in this marketing definition is
"process", marketing involves researching, promoting, selling, and
distributing your products or services.
