Marketing

Marketing is currently defined by the American Marketing Association (AMA) 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".[2] However, the definition of marketing has evolved over the years. The AMA reviews this definition and its definition for "marketing research" every three years.[2] The interests of "society at large" were added into the definition in 2008.[15] The development of the definition may be seen by comparing the 2008 definition with the AMA's 1935 version: "Marketing is the performance of business activities that direct the flow of goods, and services from producers to consumers".[16] The newer definition highlights the increased prominence of other stakeholders in the new conception of marketing.

Recent definitions of marketing place more emphasis on the consumer relationship, as opposed to a pure exchange process. For instance, prolific marketing author and educator, Philip Kotler has evolved his definition of marketing. In 1980, he defined marketing as "satisfying needs and wants through an exchange process",[17] and in 2018 defined it as "the process by which companies engage customers, build strong customer relationships, and create customer value in order to capture value from customers in return".[18] A related definition, from the sales process engineering perspective, defines marketing as "a set of processes that are interconnected and interdependent with other functions of a business aimed at achieving customer interest and satisfaction".[19]

Besides, customers some definitions of marketing highlight marketing's ability to produce value to shareholders of the firm as well. 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".[20] For instance, the Chartered Institute of Marketing defines marketing from a customer-centric perspective, focusing on "the management process responsible for identifying, anticipating and satisfying customer requirements profitably".[21]

In the past, marketing practice tended to be seen as a creative industry, which included advertising, distribution and selling, and even today many parts of the marketing process (e.g. product design, art director, brand management, advertising, inbound marketing, copywriting etc.) involve the use of the creative arts.[22] However, because marketing makes extensive use of social sciences, psychology, sociology, mathematics, economics, anthropology and neuroscience, the profession is now widely recognized as a science.[23] Marketing science has developed a concrete process that can be followed to create a marketing plan.[24]

The "marketing concept" proposes that to complete its 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.[25] 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:[26]

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.[27] 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."[28] 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."[29] 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.[30][27] 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.[31]

The two major segments of marketing are business-to-business (B2B) marketing and business-to-consumer (B2C) marketing.[4]

A marketing orientation has been defined as a "philosophy of business management."[5] or "a corporate state of mind"[35] or as an "organisation[al] culture"[36] Although scholars continue to debate the precise nature of specific concepts that inform marketing practice, the most commonly cited orientations are as follows:[37]

• Product concept: mainly concerned with the quality of its product. It has largely been supplanted by the marketing orientation, except for haute couture and arts marketing.[38][39]
• Production concept: specializes in producing as much as possible of a given product or service in order to achieve economies of scale or economies of scope. It dominated marketing practice from the 1860s to the 1930s, yet 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."[40]
• Selling concept: focuses on the selling/promotion of the firm's existing products, rather than developing new products to satisfy unmet needs or wants primarily through promotion and direct sales techniques,[41] largely for "unsought goods"[42] in industrial companies.[43] A 2011 meta analyses[44] found that the factors with the greatest impact on sales performance are a salesperson's sales related knowledge (market segments, presentation skills, conflict resolution, and products), degree of adaptiveness, role clarity, cognitive aptitude, motivation and interest in a sales role).

• Marketing concept: This is the most common concept used in contemporary marketing, and is a customer-centric approach based on products that suit new consumer tastes. These firm engage in extensive market research, use R&D (Research & Development), and then utilize promotion techniques.[45][46] The marketing orientation includes:
  • Customer orientation: A firm in the market economy can survive by producing goods that people 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: The marketing department is of prime importance within the functional level of an organization. Information from the marketing department is used to guide the actions of a company's other departments. 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. The finance department may oppose required capital expenditures since it could undermine a healthy cash flow for the organization.

• Societal marketing concept: Social responsibility that goes beyond satisfying customers and providing superior value embraces societal stakeholders such as employees, customers, and local communities. Companies that adopt this perspective typically practice triple bottom line reporting and publish financial, social and environmental impact reports. Sustainable marketing or green marketing is an extension of societal marketing.[47]

A marketing mix is a foundational tool used to guide decision making in marketing. The marketing mix represents the basic tools that marketers can use to bring their products or services to the market. They are the foundation of managerial marketing and the marketing plan typically devotes a section to the marketing mix.

The 4Ps

The traditional marketing mix refers to four broad levels of marketing decision, namely: product, price, promotion, and place.[6][48]

One version of the marketing mix is the 4Ps method.

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 (Macromarketing), over which a firm holds little control, consists of a variety of external factors that manifest on a large (or macro) scale. These include: economic, social, political and technological factors. 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.[8]
• The micro-environment, over which a firm holds a greater amount (though not necessarily total) control, typically includes: Customers/consumers, Employees, Suppliers and the Media. In contrast to the macro-environment, an organization holds a greater (though not complete) degree of control over these factors.[8]
• The internal environment, which includes the factors inside of the company itself[8] A firm's internal environment consists

of: Labor, Inventory, Company Policy, Logistics, Budget, and Capital Assets.[8]

Marketing research is a systematic process of analyzing data that 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 and to attain information from suppliers. A distinction should be made between marketing research and market research. Market research involves gathering information about a particular target 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. Market research is a subset of marketing research.[9] (Avoiding the word consumer, which shows up in both,[56] market research is about distribution, while marketing research encompasses distribution, advertising effectiveness, and salesforce effectiveness).[57]

Marketing researchers use statistical methods (such as quantitative research, qualitative research, hypothesis tests, Chi-square tests, linear regression, correlation coefficients, frequency distributions, Poisson and binomial distributions, etc.) to interpret their findings and convert data into information.[58]

The stages of research include:

• Define the problem
• Plan research
• Research
• Interpret data
• Implement findings[10]

Market segmentation consists of taking the total heterogeneous market for a product and dividing it into several sub-markets or segments, each of which tends to be homogeneous in all significant aspects.[11] The process is conducted for two main purposes: better allocation of a firm's finite resources and to better serve the more diversified tastes of contemporary consumers. A firm only possesses a certain amount of resources. Thus, it must make choices (and appreciate the related costs) in servicing specific groups of consumers. Moreover, with more diversity in the tastes of modern consumers, firms are noting the benefit of servicing a multiplicity of new markets.

Market segmentation can be defined in terms of the STP acronym, meaning Segment, Target, and Position.

Segmentation involves the initial splitting up of consumers into persons of like needs/wants/tastes. Commonly used criteria include:

• Geographic (such as a country, region, city, town)
• Psychographic (e.g. personality traits or lifestyle traits which influence consumer behaviour)
• Demographic (e.g. age, gender, socio-economic class, education)
• Gender
• Income
• Life-Cycle (e.g. Baby Boomer, Generation X, Millennial, Generation Z)
• Lifestyle (e.g. tech savvy, active)
• Behavioural (e.g. brand loyalty, usage rate)[59]

Once a segment has been identified to target, a firm must ascertain whether the segment is beneficial for them to service. The DAMP acronym is used as criteria to gauge the viability of a target market. The elements of DAMP are:

• Discernable – how a segment can be differentiated from other segments.
• Accessible – how a segment can be accessed via Marketing Communications produced by a firm
• Measurable – can the segment be quantified and its size determined?
• Profitable – can a sufficient return on investment be attained from a segment's servicing?

The next step in the targeting process is the level of differentiation involved in a segment serving. Three modes of differentiation exist, which are commonly applied by firms. These are:

• Undifferentiated – where a company produces a like product for all of a market segment
• Differentiated – in which a firm produced slight modifications of a product within a segment
• Niche – in which an organization forges a product to satisfy a specialized target market

Positioning concerns how to position a product in the minds of consumers and inform what attributes differentiate it from the competitor's products. A firm often performs this by producing a perceptual map, which denotes similar products produced in the same industry according to how consumers perceive their price and quality. From a product's placing on the map, a firm would tailor its marketing communications to meld with the product's perception among consumers and its position among competitors' offering.[60]

The promotional mix outlines how a company will market its product. It consists of five tools: personal selling, sales promotion, public relations, advertising and social media

• Personal selling involves a presentation given by a salesperson to an individual or a group of potential customers. It enables two-way communication and relationship building, and is most commonly seen in business-to-business marketing but can also be found in business-to-consumer marketing (e.g.: selling cars at a dealership).[4]

Personal selling: Young female beer sellers admonish the photographer that he also has to buy some, Tireli market, Mali 1989

• Sales promotion involves short-term incentives to encourage the buying of products. Examples of these incentives include free samples, contests, premiums, trade shows, giveaways, coupons, sweepstakes and games. Depending on the incentive, one or more of the other elements of the promotional mix may be used in conjunction with sales promotion to inform customers of the incentives.[4]
• Public relations is the use of media tools to promote and monitor for a positive view of a company or product in the public's eye. The goal is to either sustain a positive opinion or lessen or change a negative opinion. It can include interviews, speeches/presentations, corporate literature, social media, news releases and special events.[4]
• Advertising occurs when a firm directly pays a media channel, directly via an in-house agency[61] or via an advertising agency or media buying service, to publicize its product, service or message. Common examples of advertising media include:

• Social media is used to facilitate two-way communication between companies and their customers. Outlets such as Facebook, Twitter, Tumblr, Pinterest, Snapchat and YouTube allow brands to start a conversation with regular and prospective customers. Viral marketing can be greatly facilitated by social media and if successful, allows key marketing messages and content in reaching a large number of target audiences within a short time frame. These platforms can also house advertising and public relations content.[4]

The area of marketing planning involves forging a plan for a firm's marketing activities. A marketing plan can also pertain to a specific product, as well as to an organization's overall marketing strategy. An organization's marketing planning process is derived from its overall business strategy. Thus, when top management is devising the firm's strategic direction/mission, the intended marketing activities are incorporated into this plan.

Product lifecycle, with the assumption of four major phases: introduction, growth, maturity, and decline. Curve of sales as a function of the time of the product on the market. After a plateau in sales at product maturity, a steep decline can follow.

The product life cycle (PLC) is a tool used by marketing managers to gauge the progress of a product, especially relating to sales or revenue accrued over time. The PLC is based on a few key assumptions, including:

• A given product would possess introduction, growth, maturity, and decline stage
• No product lasts perpetually on the market
• A firm must employ differing strategies, according to where a product is on the PLC

In the introduction stage, a product is launched onto the market. To stimulate the growth of sales/revenue, use of advertising may be high, in order to heighten awareness of the product in question.

During the growth stage, the product's sales/revenue is increasing, which may stimulate more marketing communications to sustain sales. More entrants enter into the market, to reap the apparent high profits that the industry is producing.

When the product hits maturity, its starts to level off, and an increasing number of entrants to a market produce price falls for the product. Firms may use sales promotions to raise sales.

During decline, demand for a good begins to taper off, and the firm may opt to discontinue the manufacture of the product. This is so, if revenue for the product comes from efficiency savings in production, over actual sales of a good/service. However, if a product services a niche market, or is complementary to another product, it may continue the manufacture of the product, despite a low level of sales/revenue being accrued.[4]

• Bartels, Robert, The History of Marketing Thought, Columbus, Ohio, Grid, (1976) 1988 online
• Christensen, Clayton M. (1997). The innovator's dilemma: when new technologies cause great firms to fail. Boston, Massachusetts, USA: Harvard Business School Press. ISBN 978-0-87584-585-2.
• Church, Roy and Godley, Andrew (eds), The Emergence of Modern Marketing, London, Frank Cass, 2003 online edition
• Hollander, Stanley C., Rassuli, Kathleen M.; Jones, D.G. Brian; Dix and Farlow, L., "Periodization in Marketing History," Journal of Macromarketing, Vol 25, no.1, 2005, pp. 32–41. online
• Tedlow, Richard S., and Jones, Geoffrey G. (eds), The Rise and Fall of Mass Marketing, Routledge, 2014
• Weitz, Barton A. and Robin Wensley (eds). Handbook of Marketing, 2002

Wikimedia Commons has media related to Marketing.

• The dictionary definition of marketing at Wiktionary
• Quotations related to marketing at Wikiquote
• Marketing at Wikibooks