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]
Marketing is used to identify the customer,
satisfy the customer, and keep the customer. With the customer as the focus of
its activities, marketing management is one of the major
components of business management.
Marketing evolved to meet the stasis in developing new markets caused by mature
markets and overcapacities in the last 2-3 centuries.[citation needed] The adoption of marketing
strategies requires businesses to shift their focus fromproduction to the perceived needs and
wants of their customers as the means of staying 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.[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."
Further definitions
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
Main
article: History 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]
[edit]Earlier approaches
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.
|
|
|
Marketing[10]
|
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
Recent approaches in marketing include relationship marketing with focus on the
customer, business marketing or industrial marketing with focus on an
organization or institution and social marketingwith
focus on benefits to society.[11] New forms of marketing
also use the internet and are therefore called internet marketing or more generally e-marketing, online
marketing, search engine marketing,desktop advertising or affiliate marketing. It
attempts to perfect the segmentation strategy used in traditional
marketing. It targets its audience more precisely, and is sometimes called personalized marketing or one-to-one marketing. Internet marketing is sometimes considered to
be broad in scope, because it not only refers to marketing on the Internet, but
also includes marketing done via e-mail and wireless media.
|
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.
|
|
|
Building and keeping
relationships betweenorganizations
|
1980s to present day
|
In this context, marketing takes place between businesses or organizations. The product
focus lies on industrial goods or capital goodsrather than consumer products or end products.
Different forms of marketing activities, such as promotion, advertising and
communication to the customer are used.
|
|
|
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.
[edit]Herd behavior
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.
§
Diffusion of innovations research
explores how and why people adopt new products, services, and ideas.
§
With consumers' eroding attention
span and willingness to give time to advertising messages, marketers are
turning to forms of permission marketing such as branded
content, custom
media andreality marketing.
[edit]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, 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
Main
article: Marketing environment
[edit]Market segmentation
Main
article: 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.
[edit]Marketing planning
Main
article: Marketing plan
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.
[edit]Marketing strategy
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]
[edit]Buying behaviour
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.
[edit]Services marketing
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.
