Definition of Marketing

Marketing
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 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 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 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.

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, then designing products and services 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. A firm would also assume that as long as its product was of a high standard, people would buy and consume the product.
This works most effectively when the firm has good insights about customers and their needs and desires, as for example in the case of Sony Walkman or Apple iPod, whether these derive from intuitions or research.

[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 specializes 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. In this sense, a firm's marketing department is often seen as of prime importance within the functional level of an organisation.
Information from an organisation's marketing department would be used to guide the actions of other department's 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 good/service based on consumers' new desires.
The production department would then start to manufacture the good, 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 are possible to 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 organisation.

[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 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 a variety of external factors that manifest on a large (or macro) scale. These are typically economic, social, political or technological phenomena. A common method of assessing a firm's macro-environment is via a PESTLE (Political, Economic, Social, Technological, Legal, Ecological) analysis. Within a PESTLE 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] The micro-environment
A firm's micro-environment comprises factors pertinent to the firm itself, or stakeholders closely connected with the firm.

[edit] 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, attain information from suppliers, etc.
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.
Marketing researchers use statistical methods (such as quantitative research, qualitative research, hypothesis tests, Chi-squared tests, linear regression, correlation co-efficients, frequency distributions, Poisson and Binomial distributions, etc.) to interpret their findings and convert data into information.

[edit] Product
Main article: New Product Development

[edit] Branding
Main article: Brand
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.

[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.
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 (employer branding).
Diffusion of innovations research explores how and why people adopt new products, services and ideas.

A relatively new form of marketing uses the Internet and is called Internet marketing or more generally e-marketing, affiliate marketing, desktop advertising or online marketing. It tries 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.
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 and reality marketing.

The use of herd behavior in 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).