Marketing
Updated: July 01, 2010
Definition: Marketing is one of the terms in academia that does not have one commonly agreed upon definition. Even after a better part of a century the debate continues. In a nutshell it consists of the social and managerial processes by which products, services and value are exchanged in order to fulfill individual's or group's needs and wants
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"Because the purpose of business is to create a customer, the business enterprise has two--and only two--basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business."
By Peter Drucker
If marketing is the distinguishing function of the business, then what is marketing and how is it achieved?
1. "...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. "Human activity directed at satisfying needs and wants through exchange processes." Philip Kotler
3. "...the ongoing process of moving people closer to making a decision to purchase, use, follow, refer, upload, download,
obey, reject, conform, become complacent to someone else's products, services or values. Simply, if it doesn't facilitate a
"sale" then it's not marketing."
4. "...the thing process of anticipating, identifying and satisfying customer requirements profitably" Chartered Institute of Marketing
5. "...find a limited market and seek to dominate it totally." Bill Good Marketing
Transactional Marketing
First assumption
 There are a large number of potential customers
Second assumption
Customers and their needs are fairly homogenous
Third assumption
It is rather easy to replace lost customers with new ones
Two Levels of Marketing
Marketing is understanding that marketing operates on 2 different levels.
1. Strategic Marketing
Strategic Marketing attempts to determine how an organization competes against its competition in a market place. In particular, it aims at generating a competitive advantage relative to its competition. When Jack Trout says that marketing is 'the war between competitors' and 'the conflict between companies' what he is really doing is defining marketing at the business level.
Strategic marketing process
Step 1: Develop a vision, mission and set objectives: Top management needs to determine what type of business to run and where the business wants to be in 15 - 20 years time.
Step 2: To enable management to make well informed decisions, information needs to be gathered from the environment. The environment is divided into three main parts namely the micro environment (This represents the business itself and is also known as the internal environment), the market environment (this represents part of the external environment and engages those participants that closely interact with the business) and the macro environment (this represents political (policies & license),economical and social environment of the region). This is also part of the external environment but there is limited direct interaction with the business. An assessment of all three environments are known as a situation analysis. All data gathered during the situation analysis must be processed into a usable format so that the managers can use it (known as information). An aid in analyzing the information to support management in decision making is using a SWOT grid. A SWOT grid is a summary of the findings of the situation analysis in Strengths, Weaknesses (both from the internal environment) and Opportunites and Threats (both from the external environment).
Step 3: Decision making. Once the marketing managers are in possession of suitable information, they embark on a process of decision making. The combined result of the decisions forms the marketing strategy. First the marketing manager will (in conjunction with the top management of the business) participate in determining the main strategic direction of the business. Based on the information available, they decide whether it is appropriate to grow the business, keep it as it is, turn it around or even get out of the market (divest). After this decision has been made, the marketing manager must decide what competitive advantages a business possesses. A decision on segmentation follows, and from these segments a business can decide which and how many segments to select as target markets. Following the selection of target markets, a positioning sub strategy should be created for each and every target market selected to serve. Positioning consists of two steps. First, the positioning instruments (marketing mix variables) are employed to create in the mind of a consumer a favorable picture of the business when compared to rivals. Secondly, the position should be communicated to the targeted consumers by using one of the positioning instruments, namely marketing communication. Marketing communication consists of the communication mix (instruments), such as personal selling, advertising, publicity, public relations and sales promotion.
Step 4: Implementation. Once all the decisions are made it is said that the strategy is created. It can be the best strategy ever, but if it stays on paper nothing will happen. Implementation is a two part process. The first is the development of the marketing plan. The second is the development of an action plan. A simplified example of an action plan: (Flowcharting can help here) Action i.e. Budget Responsible person Starting date Completion date
Many influences exert pressure on the environment. Some of these include your own and your competitors' business decisions and the government. These pressures causes the environment to change, thus forcing businesses to revisit their visions, missions and objectives and the whole strategic process repeats itself.
2. Operational Marketing
Operational Marketing executes marketing functions to attract and keep customers and to maximize the value derived from them. Also to satisfy the customer with prompt services & meeting the customer expectations.
This includes the determination of the marketing mix, advertising execution etc..
Customer focus
Many companies today have a customer focus (or customer 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.
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 a profitable market segment(s) exists 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.
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