Marketing is the science of meeting the needs of a customer by providing valuable products to customers by utilizing the expertise of the organization, at same time, to achieve organizational goals. According to The American Marketing Association :
Marketing is 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.
With this definition, it is important to realize that the customer can be an individual user, a company, or several people who contribute to the purchasing decision. The product can be a hard good, a service, or even an idea – anything that would provide some value to the person who provides an exchange. An exchange is most often thought of as money, but could also be a donation of time or effort, or even a specific action. A producer is often a company, but could be an individual or non-profit organization.
Classical marketing is often described in terms of the four “P’s, which are:
- Product – what goods or services are offered to customers
- Promotion – how the producer communicates the value of its products
- Price – the value of the exchange between the customer and producer
- Placement – how the product is delivered to the customer.
A complete analysis of these categories is often called the Marketing Mix. More detail on these categories can be found in the later entry on the Marketing Plan.
Marketing has both inbound and outbound activities. Inbound activities largely center on discovering the needs and wants of the potential customers. The collective group of all potential customers is called a market. Categorizing these needs into groups is called segmentation. Organizing markets into segments allows a producer to more logically decide how to best provide value to that group of potential customers. The analysis of market segment needs; analysis of existing sales and profitability; the descriptions, design and introduction of new products; and the analysis of competitor offerings are also inbound activities that are important but not often seen by the public.
Outbound activities include all aspects of informing the market that a product is available, delivering that product, and encouraging the purchase decision. These activities include advertising, promotion, supply chain, sales support, product training, and customer support.
To the public, the most common interaction with marketing is where it touches the discipline of sales in the form of advertising. This interaction leads to a common misconception that marketing is only this aspect of promotion. Instead, it is useful in understanding that:
The good marketer will develop the data necessary to define the customer’s needs, develop a good product based on the available resources, deliver the product in an effective manner to the consumer at a price that reflects the customer value and the profit desired by the producer.
When the producer is a commercial entity and the end user makes the purchasing decision, the model used to describe this transaction is often called a Business to Consumer (B2C) model. When the producer is a commercial entity and a second commercial entity makes the purchasing decision but provides the product to their customer, then the model is often called a Business to Business (B2B) model. The difference in these models affects how the marketer constructs his or her marketing analysis and marketing mix.
Aspects of Marketing
Marketing has many aspects or sub-disciplines within the broad discipline of marketing. They include:
• Customer relationship management (CRM).
• Direct marketing.
• Event planning.
• Graphic design.
• Internet Marketing.
• Loyalty marketing.
• Market research.
• Marketing communications.
• Media relations.
• New product development.
• Product management.
• Public relations.
• Sales management and support.
• Search engine optimization (SEO).
• Social media optimization.
• Strategic planning.
• Supply chain management.
Marketing functions in all of these areas. A marketer can do many of these functions within an organization or specialize in one or more.
The market consists of all prospective customers for a given product, service, or idea. Customers can be purchasers who intend to resell the product or end users who intend to use or consume the product. The market can be categorized into separate groups called segments. When a producer appeals to a market or market segment, the producer must take into account the distinction between the end user or consumer and the purchaser or decision maker(s). This is especially true in B2B (Business to Business) models. The market may be individuals or organizations who are able to purchase the organization’s product. Each entity in the delivery chain will have different needs, so a complete market needs analysis must include all potential segments and all entities within each segment.
Products that can be marketed include all goods, services, and ideas that are sold or traded. Products can be either tangible, as in the case of physical goods, or intangibles, such as those associated with service benefits or ideas (intellectual property), or any combination of the three. The producer is the entity that offers the product to the market. The producer can be the manufacturer, the wholesaler, the retailer, the service provider, or a combination of these. For services, it is sometimes easier to use the term provider instead of producer.
Goods are a physical product capable of being delivered to a purchaser and involves the transfer of ownership from seller to customer.
A service is a non-material action resulting in a measurable change of state for the purchaser caused by the provider.
Ideas (Intellectual Property)
Intellectual Property is any creation of the intellect that has commercial value, but is sold or traded only as an idea, and not a resulting service or good. This includes copyrighted property such as literary or artistic works, and ideational property, such as patents, appellations of origin, business methods, and industrial processes.
Once an organization has its product to sell, it must then determine the appropriate price to sell it at. The price is set by balancing many factors including supply-and-demand, cost, desired profit, competition, perceived value, and market behavior. Ultimately, the final price is determined by what the market is willing to exchange for the product. Pricing theory can be quite complex because so many factors influence what the purchaser decides is a fair value.
It also should be noted that, in addition to monetary exchange, price can be the exchange of goods or services as in a barter agreement, or an exchange of specific behavior, such as a vote in a political campaign.
Once an organization has learned the market needs, produced or procured a product, and priced it, it then needs to promote the product by letting the market know that it exists, and how it can be purchased.
Promotion involves providing information about a product, product line, brand, or company. There are many ways to promote including:
- Personal selling
- Sales discounts
- Public Relations/Publicity
- Word of mouth, including electronic endorsements
- Product placement
Once an organization has produced or procured, priced, and promoted a product, it then needs to deliver that product to the purchaser. Some distribution examples:
- Direct sale to the customer from the producer
- Wholesale distribution where the producer sells in large quantities only to an intermediary, not the end user
- Retail sales where a retailer will buy large quantities, but sell smaller quantities to individual customers
- Value added resale (VARs) where an organization purchases a product from a producer and, in turn, resells it to a consumer after adding additional products, services, or expertise.