Many people incorrectly believe that marketing and advertising are one and the same. In reality, advertising is just one of many tools used in marketing, the process by which firms determine which products to offer, how to price those products, and to whom they should be made available.
What is Marketing?
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. The four activities, or components, of marketing –
- Creating. The process of collaborating with suppliers and customers to create offerings that have value.
- Communicating. Broadly, describing those offerings, as well as learning from customers.
- Delivering. Getting those offerings to the consumer in a way that optimizes value.
- Exchanging. Trading value for those offerings.
Principles of Marketing
Once a company identifies its customer and product, marketers must then determine the best way to capture the customer’s attention. Capturing the customer’s attention may entail undercutting competitors on price, aggressively marketing a product with promotions and advertising (as with “As Seen on TV” ads), or specifically targeting ideal customers.
The strategy a marketing firm chooses for a particular product is vital to the success of the product. The idea that “great products sell themselves” is simply not true. Marketers use the marketing mix to determine the proper strategy for a product.
Companies focus on sales and advertising only after all other factors of marketing have been determined. The 7Ps are also known as the marketing mix.
For example, if an inventor comes to you with a new touchscreen technology, how do you sell it? You might first find a product in which the touchscreen would be useful, such as a phone, then determine a target price to maximize sales, identify the best place to sell it (e.g. online or in a store), and finally decide how to promote it. Applying the 7Ps in this situation could give you the next iPhone.
Segmenting, Targeting, and Positioning
The concept of segmenting, targeting, and positioning (STP), known as the strategic marketing formula that helps marketers identify and segment their audience, target their market, and posture their products to cultivate their desired brand position.
Target and position define whom we are trying to reach with our marketing campaign, and what message (or position) we will use to connect.
Customers and Marketing Research
Marketing is all about the customer. But who is the customer?
If you are a car manufacturer, you have multiple types of customers. You might have governments and rental agencies that wish to buy fleet vehicles. We call these customers business-to-business (B2B). You would also have dealerships to whom you want to sell your cars; this is also B2B. Then, there are the end users or dealer’s customers. Though the dealer owns the car when it is sold, the manufacturer almost always plays a crucial role in the marketing of that car. Identifying your target customer can be difficult, but with the proper definitions and the right research, marketers will know their customers better than they know themselves.
Life Cycles, Offers, Supply Chains, and Pricing
Products do not last forever. New products typically cost more than existing products due to the high costs associated with production and development- this is best illustrated by technology products. The fact that initial customers will be early adopters of a new product affects the marketing strategy.
As the product grows and matures, the strategy again changes; over time, marketers lower the price. When a product is in the declining stage, most competitors leave the market and prices are very low. At each stage, the marketing of the product is different.When a new product is developed and offered, a company must consider what will develop the product’s value to the customer, whether the customer is a consumer or another business. Marketers must always ask where a new product will fit in their current lineup and how the new product will serve as an extension of an existing brand.
(Take the car manufacturer BMW. They make sporty luxury vehicles aimed at the upper-middle and wealthy classes.Developing an inexpensive and lower-quality vehicle to compete with cars in another class may dilute the brand and hurt sales. However, if BMW were to market the vehicle under a different brand, they could diversify their product portfolio, avoid the risk of diluting the BMW brand and be able to reach new customers all at the same time.)
Some firms go to great lengths to disassociate their brands from one another, while others embrace a family of brands model. Appropriate decisions vary by industry and strategy. Equally important in delivering value to the customer through an offering is how a company sources the goods and services necessary for production and delivers the end product for customers to purchase – otherwise known as the supply chain.
Distribution and Promotion
Once marketers have identified the right product and determined appropriate pricing, they must decide how to effectively raise awareness and distribute the product. This unit will focus on these decisions. You will learn that distribution is a complex process that involves taking a product through the manufacturing process, shipping to warehouses, distributing to sellers and customers, and taking returned products. Marketers must work with supply chain managers to determine the best method to route products. If marketers expect that sales will be heavier in the northeast than in the west, additional resources will need to be allocated there to meet demand. There are a number of strategies for moving a product through various distribution channels. These vary based on anticipated demand, actual demand, and the competition.
Marketers must have a proactive strategy: They cannot sit on inventory and wait for orders because inventory storage is expensive and a lack of sales is disruptive. The final and arguably most vital aspect of marketing is the actual promotion of the product. This can take for the form of giveaways, competitions, advertising, sales, and anything else a creative manager can think of. Marketers must take a number of aspects into consideration, however. If you employ a sales staff to promote the product, how do you compensate them? If you pay a commission, how much commission will be paid per unit? Will the sales staff be given discretion on price, or do you want to send a uniform message that the price is locked in? If a new company has limited funds available for advertising campaigns, might they use public relations tactics to gain free media coverage? These are just a few considerations that marketers must consider.
Launching a Marketing Campaign
Marketing is not just a matter of internal strategies and customer analysis. There are factors outside of the company that must be taken into consideration with any marketing strategy. Though marketers can control how they might respond to customer needs and expectations, they face the often-unpredictable reactions of customers to them.
Maintaining customer satisfaction is essential to sustainable success. Marketers need to be sensitive to the regulatory and ethical constraints that may be placed upon them by a wide range of domestic and international industry standards and the expectations of society. Companies must also face social forces that challenge their success.
For example, marketers must be aware of the social and cultural aspects of each region in which they choose to market a product.
Even a worldwide brand such as Coca-Cola must adjust its marketing strategy for every region it enters. An awareness of the cultural factors affecting a marketing strategy can make the marketing message much more effective. Quite often marketers will address social issues especially relevant to lives of their audiences or the larger society with social marketing campaigns.