Professional Documents
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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".[4] The term developed from the original meaning
which referred literally to going to market with goods for sale. From a sales process
engineering perspective, marketing is "a set of processes that are interconnected and
interdependent with other functions" of a business aimed at achieving customer interest and
satisfaction".[5]
Philip Kotler defines marketing as "Satisfying needs and wants through an exchange process".[6]
The Chartered Institute of Marketing defines marketing as "the management process responsible for
identifying, anticipating and satisfying customer requirements profitably".[7] A similar concept is
the value-based marketing which states the role of marketing to contribute to increasing shareholder
value.[8] In this context, marketing can be defined as "the management process that seeks to
maximise returns to shareholders by developing relationships with valued customers and creating a
competitive advantage".[8]
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,[9] allowing numerous universities to offer Master-
of-Science (MSc) programs.[10]
The process of marketing is that of bringing a product to market, which includes these steps: broad
market research; market targeting and market segmentation; determining distribution, pricing and
promotion strategies; developing a communications strategy; budgeting; and visioning long-term
market development goals.[11] Many parts of the marketing process (e.g. product design, art
director, brand management, advertising, copywriting etc.) involve use of the creative arts.[citation needed]
Concept[edit]
The 'marketing concept' proposes that in order to complete the organizational objectives, an
organization should anticipate the needs and wants of potential consumers and satisfy them more
effectively than its competitors. This concept originated from Adam Smith's book The Wealth of
Nations, but would not become widely used until nearly 200 years later.[12] Marketing and Marketing
Concepts are directly related.
Given the centrality of customer needs and wants in marketing, a rich understanding of these
concepts is essential:[13]
Needs: Something necessary for people to live a healthy, stable and safe life. When needs
remain unfulfilled, there is a clear adverse outcome: a dysfunction or death. Needs can be
objective and physical, such as the need for food, water, and shelter; or subjective and
psychological, such as the need to belong to a family or social group and the need for self-
esteem.
Wants: Something that is desired, wished for or aspired to. Wants are not essential for basic
survival and are often shaped by culture or peer-groups.
Demands: When needs and wants are backed by the ability to pay, they have the potential to
become economic demands.
Marketing research, conducted for the purpose of new product development or product
improvement, is often concerned with identifying the consumer's unmet
needs.[14] Customer needs are central to market segmentation which is concerned with
dividing markets into distinct groups of buyers on the basis of "distinct needs,
characteristics, or behaviors who might require separate products or marketing
mixes." [15]Needs-based segmentation (also known as benefit segmentation) "places the
customers' desires at the forefront of how a company designs and markets products or
services." [16] Although needs-based segmentation is difficult to do in practice, it has
been proved to be one of the most effective ways to segment a market.[17][14][18] In
addition, a great deal of advertising and promotion is designed to show how a given
product's benefits meet the customer's needs, wants or expectations in a unique way.[19]
Orientations[edit]
Main article: History of marketing § Orientations or philosophies that inform marketing
practice
A marketing orientation has been defined as a "philosophy of business
management." [20] or "a corporate state of mind" [21] or as an "organisation[al]
culture" [22] Although scholars continue to debate the precise nature of specific
orientations that inform marketing practice, the most commonly cited orientations are as
follows:[23]
Product[edit]
A firm employing a product orientation is mainly concerned with the quality of its own
product. A product orientation is based on the assumption that, all things being equal,
consumers will purchase products of a superior quality. The approach is most effective
when the firm has deep insights into customers and their needs and desires derived
from research and (or) intuition and understands consumers' quality expectations and
price they are willing to pay. For example, Sony Walkman and Apple iPod were
innovative product designs that addressed consumers' unmet needs. Although the
product orientation has largely been supplanted by the marketing orientation, firms
practicing a product orientation can still be found in haute couture and in arts
marketing.[24][25]
Sales[edit]
Further information: History of marketing § Selling orientation
A firm using a sales orientation focuses primarily on the selling/promotion of the firm's
existing products, rather than determining new or unmet consumer needs or desires.
Consequently, this entails simply selling existing products, using promotion and direct
sales techniques to attain the highest sales possible.[26] The sales orientation "is typically
practiced with unsought goods." [27] One study found that industrial companies are more
likely to hold a sales orientation than consumer goods companies.[28] The approach may
also 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 diminishing demand.
A 2011 meta analyses[29] has found that the factors with the greatest impact on sales
performance are a salesperson's sales related knowledge (knowledge of market
segments, sales presentation skills, conflict resolution, and products), degree of
adaptiveness (changing behavior based on the aforementioned knowledge), role clarity
(salesperson's role is to expressly to sell), cognitive aptitude (intelligence) and work
engagement (motivation and interest in a sales role).
Production[edit]
Further information: History of marketing § Production orientation
A firm focusing on a production orientation specializes in producing as much as possible
of a given product or service in order to achieve economies of scale or economies of
scope. A production orientation may be deployed when a high demand for a product or
service exists, coupled with certainty that consumer tastes and preferences remain
relatively constant (similar to the sales orientation). The so-called production era is
thought to have dominated marketing practice from the 1860s to the 1930s, but other
theorists argue that evidence of the production orientation can still be found in some
companies or industries. Specifically Kotler and Armstrong note that the production
philosophy is "one of the oldest philosophies that guides sellers... [and] is still useful in
some situations." [30]
Marketing[edit]
Further information: Market orientation
The marketing orientation is perhaps the most common orientation used in
contemporary marketing. It is a customer-centric approach that involves a firm basing its
marketing program around products that suit new consumer tastes. Firms adopting a
marketing orientation typically engage in extensive 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 consumers are aware of the product's existence
and the benefits it can deliver.[31] Scales designed to measure a firm's overall market
orientation have been developed and found to be relatively robust in a variety of
contexts.[32]
The marketing orientation often has three prime facets, which are:
Customer orientation: A firm in the market economy can survive 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.
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
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 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.
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 the
satisfaction of a need/want, utility, reliability and value for money from the purchase of a
product or service. 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.
Societal marketing[edit]
Main article: Societal marketing
A number of scholars and practitioners have argued that marketers
have a greater social responsibility than simply satisfying customers
and providing them with superior value. Instead, marketing activities
should strive to benefit society's overall well-being. Marketing
organisations that have embraced the societal marketing concept
typically identify key stakeholder groups such as employees,
customers, and local communities. They should consider the impact of
their activities on all stakeholders. Companies that adopt a societal
marketing perspective typically practice triple bottom line reporting
whereby they publish social impact and environmental impact reports
alongside financial performance reports. Sustainable marketing
or green marketing is an extension of societal marketing.[33]
Origins[edit]
During the 1940s, the discipline of marketing was in transition. Interest
in the functional school of thought, which was primarily concerned with
mapping the functions of marketing was waning while the managerial
school of thought, which focussed on the problems and challenges
confronting marketers was gaining ground.[35] The concept of marketers
as "mixers of ingredients," was first introduced by James Culliton, a
Professor at Harvard Business School.[36] At this time theorists began to
develop checklists of the elements that made up the marketing mix,
however, there was little agreement as to what should be included in
the list. Many scholars and practitioners relied on lengthy classifications
of factors that needed to be considered to understand consumer
responses.[37] Neil Borden developed a complicated model in the late
1940s, based upon at least twelve different factors.[38]
Brief outline[edit]
The traditional marketing mix refers to four broad levels of marketing
decision, namely: product, price, promotion, and place.[44][45]
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 product element consists of
product design, new product innovation, branding, packaging, labeling. The scope of a
product generally includes supporting elements such as warranties, guarantees, and
support. Branding, a key aspect of the product management, refers to the various methods
of communicating a brand identity for the product, brand, or company.
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 or any sacrifices consumers make in order to acquire a product or
service. The price is the cost that a consumer pays for a product—monetary or not. Methods
of setting prices are in the domain of pricing science.
Place (or distribution)
This refers to how the product gets to the customer; the distribution channels and
intermediaries such as wholesalers and retailers who enable customers to access products
or services in a convenient manner. This third P has also sometimes been
called Place or Placement, 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 all aspects of marketing communications; advertising, sales promotion,
including promotional education, public relations, personal selling, product
placement, branded entertainment, event marketing, trade shows and exhibitions. This fourth
P is focused on providing a message to get a response from consumers that is designed to
persuade or tell a story to create awareness.
Criticisms[edit]
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". An inside-out approach is
the traditional planning approach where the
organisation identifies its desired goals and objectives
which are often based around what has always been
done. Marketing's task then becomes one of "selling"
the organisation's products and messages to the
"outside" or external stakeholders.[46] In contrast,
an outside-in approach first seeks to understand the
needs and wants of the consumer.[47]
From a model-building perspective, the 4 Ps has
attracted a number of criticisms. Well-designed models
should exhibit clearly defined categories that are
mutually exclusive, with no overlap. Yet, the 4 Ps
model has extensive overlapping problems. Some of
the Ps are only defined in vague terms. Several
authors stress the hybrid nature of the fourth P,
mentioning the presence of two important dimensions,
"communication" (general and informative
communications such as public relations and corporate
communications) and "promotion" (persuasive
communications such as advertising and direct selling).
Certain marketing activities, such as personal selling,
may be classified as either promotion or as part of the
place (i.e. distribution) element.[48] Some pricing tactics
such as promotional pricing can be classified as price
variables or promotional variables and therefore also
exhibit some overlap.
Other important criticisms include that the marketing
mix lacks a strategic framework and is therefore unfit to
be a planning instrument, particularly when
uncontrollable, external elements are an important
aspect of the marketing environment.[49]
Retail marketing needs to account for the unique facets of retail stores. A number of
authors have argued for the inclusion of two new Ps,
namely, Personnel and Presentation since these contribute to the customer's unique
retail experience and are the principal basis for retail differentiation. Some scholars also
recommend adding Retail Format (i.e. retail formula) since it contributes to customer
expectations.[53] The modified retail marketing mix is often called the 6 Ps of retailing.[54][55]
Internet marketing presents both marketing practitioners and scholars with special
challenges including: customer empowerment, new communication modes, real-time
interactivity, access to global markets, high levels of market transparency and difficulty
maintaining competitive advantages. While some scholars argue for an expanded
marketing mix for internet marketing, most argue that entirely new models are
required.[56]
Some authors cite a further P – Packaging – this is thought by many to be part
of Product, but in certain markets (Japan, China for example) and with certain products
(perfume, cosmetics) the packaging of a product has a greater importance – maybe
even than the product itself.
Environment[edit]
Main article: Market environment
The term "marketing environment" relates to
all of the factors (whether internal, external,
direct or indirect) that affect 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, which includes
the factors inside of the company itself [57]
Macro[edit]
Main article: Macromarketing
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 analyze 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.
Micro[edit]
A firm's micro-environment comprises factors
pertinent to the firm itself, or stakeholders
closely connected with the firm or company.
A firm's micro-environment typically spans:
Customers/consumers
Employees
Suppliers
The Media
By contrast to the macro-environment, an
organization holds a greater degree of control
over these factors.
Internal[edit]
A firms internal environment consists of factors
inside of the actual company. These are
factors controlled by the firm and they affect
the relationship that a firm has with its
customers. These include factors such as:
Labor
Inventory
Company Policy
Logistics
Budget
Capital Assets