Marketing

Marketing is the study and management of exchange relationships.[1][2] Marketing is the business process of creating relationships with and satisfying customers. With its focus on the customer, marketing is one of the premier components of business management.[3]

Definition

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.

Concept

The 'marketing concept' proposes that in order to satisfy 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

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

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

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

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

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

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]

The marketing mix (the 4 Ps)

As a mnemonic for 'product', 'price', 'place' and 'promotion', the four Ps are often referred to as the marketing mix or the marketing program,[34] represent the basic tools which marketers can use to bring their products or services to market. They are the foundation of managerial marketing and the marketing plan typically devotes a section to each of these Ps.

Origins

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]

4Ps
The original marketing mix or the 4Ps

Inspired by the idea of marketers as mixers of ingredients, Neil Borden one of Culliton's colleagues at Harvard, coined the phrase the marketing mix and used it wherever possible. According to Borden's own account, he used the term, 'marketing mix' consistently from the late 1940s.[39] For instance, he is on record as having used the term, 'marketing mix,' in his presidential address given to the American Marketing Association in 1953.[40] In the mid-1960s, Borden published a retrospective article detailing the early history of the marketing mix in which he claims that he was inspired by Culliton's idea of 'mixers', and credits himself with coining the term, 'marketing mix'.[41] Borden's continued and consistent use of the phrase, "marketing mix," contributed to the process of popularising the concept throughout the 1940s and 50s.

The "marketing mix" gained widespread acceptance with the publication, in 1960, of E. Jerome McCarthy's text, Basic Marketing: A Managerial Approach which outlined the ingredients in the mix as the memorable 4 Ps, namely product, price, place and promotion.[42] The marketing mix is based upon four controllable variables that a company manages in its effort to satisfy the corporation's objectives as well as the needs and wants of a target market.[38] Once there is understanding of the target market's interests, marketers develop tactics, using the 4Ps, to encourage buyers to purchase product. The successful use of the model is predicated upon the degree to which the target market's needs and wants have been understood, and the extent to which marketers have developed and correctly deployed the tactics. Today, the marketing mix or marketing program is understood to refer to the "set of marketing tools that the firm uses to pursue its marketing objectives in the target market".[43]

Brief outline

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

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]

Modifications and extensions

To overcome the deficiencies of the 4 P model, some authors have suggested extensions or modifications to the original model. Extensions of the four P's include "people", "process", and "physical evidence" and are often applied in the case of services marketing[50] Other extensions have been found necessary in retail marketing, industrial marketing and internet marketing:

  • Industrial marketing or B2B marketing needs to 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.[51]
  • Services marketing needs to account for the unique characteristics of services (i.e. intangibility, perishability, heterogeneity and the inseparability of production and consumption). In order to recognize the special challenges involved in selling services, as opposed to goods, some authors advocate extending the model to 7 Ps for service industries by adding; Process – the way in which orders are handled, customers are satisfied and the service is delivered; Physical Evidence – is tangible evidence with which customers interact and with the potential to impact on the customer's service experience; People – service personnel and other customers with whom customers interact and form part of the overall service experience.[52]
The 6 Ps of Retailing
Expanded marketing mix for retail
  • 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

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

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

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:

By contrast to the macro-environment, an organization holds a greater degree of control over these factors.

Internal

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

Research

Marketing research is a systematic process of analyzing data which 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 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. Market research is a subset of marketing research.

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]

Research process

Marketing research spans a number of stages, including:

  • Define the problem
  • Develop a research plan
  • Collect the data
  • Interpret data into information
  • Disseminate information formally in the form of a report

Segmentation

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.[59]

Purposes

Market segmentation is conducted for two main purposes, including:

  • A better allocation of a firm's finite resources
  • To better serve the more diversified tastes of contemporary consumers

A firm only possesses a certain amount of resources. Accordingly, 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.

Overview

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

Segment

Segmentation involves the initial splitting up of consumers into persons of like needs/wants/tastes.

Four commonly used criteria are used for segmentation, which include:

  • Geographical (a country, region, city, town, etc.)
  • Psychographic (e.g. personality traits or lifestyle traits which influence consumer behaviour)
  • Demographic (e.g. age, gender, socio-economic class, education, etc.)
  • Behavioural (e.g. brand loyalty, usage rate, etc.)

Target

Once a segment has been identified, a firm must ascertain whether the segment is beneficial for them to service.

The DAMP acronym (meaning Discernable, Accessible, Measurable and Profitable) are 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 organisation forges a product to satisfy a specialised target market

Position

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 suit meld with the product's perception among consumers, and its position among competitors' offering.

Communications

Marketing communications is an audience-centered activity designed to engage audiences and promote responses. It is defined by actions a firm takes to communicate with end-users, consumers, and external parties.

Marketing communications encompass four distinct subsets, which are:

Personal sales

ASC Leiden - W.E.A. van Beek Collection - Dogon markets 21 - Women selling their beer warn the photographer that he also has to buy some, Tireli, Mali 1989
Female beer sellers warn the photographer that he also has to buy some, Tireli market, Mali 1989

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.

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.

Public relations

Public relations (or PR, as an acronym) is the use of media tools in order to promote goodwill from a business or organization to a target market segment, or other consumers of a firm's good/service. PR stems from the fact that a firm cannot seek to antagonize or inflame its market base, due to incurring a lessened demand for its good/service. Organizations undertake PR in order to assure consumers, and to forestall negative perceptions towards it.

PR can span:

  • Interviews
  • Speeches/Presentations
  • Content
  • Corporate literature, such as financial statements, brochures, etc.

Publicity

Publicity involves attaining space in media, without having to pay directly for such coverage. As an example, an organization may have the launch of a new product covered by a newspaper or TV news segment. This benefits the firm in question since it is making consumers aware of its product, without necessarily paying a newspaper or television station to cover the event.

Advertising

Advertising occurs when a firm directly pays a media channel to publicize its product. Common examples of this include TV and radio adverts, billboards, branding, sponsorship, etc.

Mix

Marketing communications mix is used to reach, engage, provoke audience-centered conversations. It consists of 5 tools, which are 1)Advertising, 2)Sales & Promotion, 3)Public Relations, 4)Direct Marketing and 5)Personal Selling. The types of messages that are enhanced can be 1)Informational, 2)Emotional, 3)User-generated, or/and 4)Brand content. The last main component of MC mix is Media, which corresponds to the channel used to send the message. Media is divided into 3 categories, and these are media by 1) Form, 2) Source and 3) Functionality.

Planning

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 organisation's overall marketing strategy.

Generally speaking, an organisation's marketing planning process is derived from its overall business strategy. Thus, when top management are devising the firm's strategic direction/mission, the intended marketing activities are incorporated into this plan.

Process

Within the overall strategic marketing plan, the stages of the process are listed as thus:

  • Mission Statement
  • Corporate Objectives
  • Marketing Audit
  • SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis
  • Assumptions arising from the Audit and SWOT analysis
  • Marketing objectives derived from the assumptions
  • An estimation of the expected results of the objectives
  • Identification of alternative plans/mixes
  • Budgeting for the marketing plan
  • A first-year implementation program.

Levels of marketing objectives within an organization

As stated previously, the senior management of a firm would formulate a general business strategy for a firm. However, this general business strategy would be interpreted and implemented in different contexts throughout the firm.

Corporate

Corporate marketing objectives are typically broad-based in nature, and pertain to the general vision of the firm in the short, medium or long-term.

As an example, if one pictures a group of companies (or a conglomerate), top management may state that sales for the group should increase by 25% over a ten-year period.

Strategic business unit

A strategic business unit (SBU) is a subsidiary within a firm, which participates within a given market/industry. The SBU would embrace the corporate strategy, and attune it to its own particular industry. For instance, an SBU may partake in the sports goods industry. It thus would ascertain how it would attain additional sales of sports goods, in order to satisfy the overall business strategy.

Functional

The functional level relates to departments within the SBUs, such as marketing, finance, HR, production, etc. The functional level would adopt the SBU's strategy and determine how to accomplish the SBU's own objectives in its market.

To use the example of the sports goods industry again, the marketing department would draw up marketing plans, strategies and communications to help the SBU achieve its marketing aims.

Product life cycle

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

Introduction

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

Growth

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.

Maturity

A product's sales start 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.

Decline

Demand for a good begins to taper off, and the firm may opt to discontinue 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 manufacture of the product, despite a low level of sales/revenue being accrued.

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.[60]

A formal approach to this customer-focused marketing is known as SIVA[61] (Solution, Information, Value, Access). This system is basically the four Ps renamed and reworded to provide a customer focus.

The SIVA Model provides a demand/customer centric version alternative to the well-known 4Ps supply side model (product, price, place, promotion) of marketing management.

Product Solution
Promotion Information
Price Value
Placement Access

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.

The Economist reported a recent conference in Rome on the subject of the simulation of adaptive human behavior.[62] 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).

See also

Types of marketing

Marketing orientations or philosophies

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External links

Advertising

Advertising is a marketing communication that employs an openly sponsored, non-personal message to promote or sell a product, service or idea. Sponsors of advertising are typically businesses wishing to promote their products or services. Advertising is differentiated from public relations in that an advertiser pays for and has control over the message. It differs from personal selling in that the message is non-personal, i.e., not directed to a particular individual.

Advertising is communicated through various mass media, including traditional media such as newspapers, magazines, television, radio, outdoor advertising or direct mail; and new media such as search results, blogs, social media, websites or text messages. The actual presentation of the message in a medium is referred to as an advertisement, or "ad" or advert for short.

Commercial ads often seek to generate increased consumption of their products or services through "branding", which associates a product name or image with certain qualities in the minds of consumers. On the other hand, ads that intend to elicit an immediate sale are known as direct-response advertising. Non-commercial entities that advertise more than consumer products or services include political parties, interest groups, religious organizations and governmental agencies. Non-profit organizations may use free modes of persuasion, such as a public service announcement. Advertising may also help to reassure employees or shareholders that a company is viable or successful.

Modern advertising originated with the techniques introduced with tobacco advertising in the 1920s, most significantly with the campaigns of Edward Bernays, considered the founder of modern, "Madison Avenue" advertising.Worldwide spending on advertising in 2015 amounted to an estimated US$529.43 billion. Advertising's projected distribution for 2017 was 40.4% on TV, 33.3% on digital, 9% on newspapers, 6.9% on magazines, 5.8% on outdoor and 4.3% on radio. Internationally, the largest ("Big Five") advertising-agency groups are Dentsu, Interpublic, Omnicom, Publicis, and WPP.In Latin, advertere means "to turn towards".

Affiliate marketing

Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate's own marketing efforts.

Alexa Internet

Alexa Internet, Inc. is an American web traffic analysis company based in San Francisco. It is a subsidiary of Amazon.

Alexa was founded as an independent company in 1996 and acquired by Amazon in 1999. Its toolbar collects data on Internet browsing behavior and transmits them to the Alexa website, where they are stored and analyzed. This is the basis for the company's web traffic reporting, including its Alexa Rank. According to its website, Alexa provides web traffic data, global rankings, and other information on 30 million websites. As of 2018, its website is visited by over 3 million people every month.

Brand

A brand is an overall experience of a customer that distinguishes an organization or product from its rivals in the eyes of the customer. Brands are used in business, marketing, and advertising. Name brands are sometimes distinguished from generic or store brands.

The practice of branding is thought to have begun with the ancient Egyptians, who were known to have engaged in livestock branding as early as 2,700 BCE. Branding was used to differentiate one person’s cattle from another's by means of a distinctive symbol burned into the animal’s skin with a hot branding iron. If a person stole any of the cattle, anyone else who saw the symbol could deduce the actual owner. However, the term has been extended to mean a strategic personality for a product or company, so that ‘brand’ now suggests the values and promises that a consumer may perceive and buy into. Over time, the practice of branding objects extended to a broader range of packaging and goods offered for sale including oil, wine, cosmetics and fish sauce. Branding in terms of painting a cow with symbols or colours at flea markets was considered to be one of the oldest forms of the practice.

Branding is a set of marketing and communication methods that help to distinguish a company or products from competitors, aiming to create a lasting impression in the minds of customers. The key components that form a brand's toolbox include a brand’s identity, brand communication (such as by logos and trademarks), brand awareness, brand loyalty, and various branding (brand management) strategies. Many companies believe that there is often little to differentiate between several types of products in the 21st century, and therefore branding is one of a few remaining forms of product differentiation.Brand equity is the measurable totality of a brand's worth and is validated by assessing the effectiveness of these branding components. As markets become increasingly dynamic and fluctuating, brand equity is a marketing technique to increase customer satisfaction and customer loyalty, with side effects like reduced price sensitivity. A brand is, in essence, a promise to its customers of what they can expect from products and may include emotional as well as functional benefits. When a customer is familiar with a brand, or favours it incomparably to its competitors, this is when a corporation has reached a high level of brand equity. Special accounting standards have been devised to assess brand equity. In accounting, a brand defined as an intangible asset, is often the most valuable asset on a corporation’s balance sheet. Brand owners manage their brands carefully to create shareholder value, and brand valuation is an important management technique that ascribes a monetary value to a brand, and allows marketing investment to be managed (e.g.: prioritized across a portfolio of brands) to maximize shareholder value. Although only acquired brands appear on a company's balance sheet, the notion of putting a value on a brand forces marketing leaders to be focused on long term stewardship of the brand and managing for value.

The word ‘brand’ is often used as a metonym referring to the company that is strongly identified with a brand. Marque or make are often used to denote a brand of motor vehicle, which may be distinguished from a car model. A concept brand is a brand that is associated with an abstract concept, like breast cancer awareness or environmentalism, rather than a specific product, service, or business. A commodity brand is a brand associated with a commodity.

Customer-relationship management

Customer-relationship management (CRM) is an approach to manage a company's interaction with current and potential customers. It uses data analysis about customers' history with a company to improve business relationships with customers, specifically focusing on customer retention and ultimately driving sales growth.One important aspect of the CRM approach is the systems of CRM that compile data from a range of different communication channels, including a company's website, telephone, email, live chat, marketing materials and more recently, social media. Through the CRM approach and the systems used to facilitate it, businesses learn more about their target audiences and how to best cater to their needs.

Digital marketing

Digital marketing is the marketing of products or services using digital technologies, mainly on the Internet, but also including mobile phones, display advertising, and any other digital medium.Digital marketing's development since the 1990s and 2000s has changed the way brands and businesses use technology for marketing. As digital platforms are increasingly incorporated into marketing plans and everyday life, and as people use digital devices instead of visiting physical shops, digital marketing campaigns are becoming more prevalent and efficient.

Digital marketing methods such as search engine optimization (SEO), search engine marketing (SEM), content marketing, influencer marketing, content automation, campaign marketing, data-driven marketing, e-commerce marketing, social media marketing, social media optimization, e-mail direct marketing, display advertising, e–books, and optical disks and games are becoming more common in our advancing technology. In fact, digital marketing now extends to non-Internet channels that provide digital media, such as mobile phones (SMS and MMS), callback, and on-hold mobile ring tones. In essence, this extension to non-Internet channels helps to differentiate digital marketing from online marketing, another catch-all term for the marketing methods mentioned above, which strictly occur online.

Distribution (marketing)

Distribution (or place) is one of the four elements of the marketing mix. Distribution is the process of making a product or service available for the consumer or business user who needs it. This can be done directly by the producer or service provider, or using indirect channels with distributors or intermediaries. The other three elements of the marketing mix are product, pricing, and promotion.

Decisions about distribution need to be taken in line with a company's overall strategic vision and mission. Developing a coherent distribution plan is a central component of strategic planning. At the strategic level, there are three broad approaches to distribution, namely mass, selective or exclusive distribution. The number and type of intermediaries selected largely depends on the strategic approach. The overall distribution channel should add value to the consumer.

Marketing management

Marketing management is the process of developing strategies and planning for product or services, advertising, promotions, sales to reach desired customer segment.

Marketing research

Marketing research is "the process or set of processes that links the producers, customers, and end users to the marketer through information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process.

Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications."It is the systematic gathering, recording, and analysis of qualitative and quantitative data about issues relating to marketing products and services. The goal of marketing research is to identify and assess how changing elements of the marketing mix impacts customer behavior. The term is commonly interchanged with market research; however, expert practitioners may wish to draw a distinction, in that market research is concerned specifically with markets, while marketing research is concerned specifically about marketing processes.

Marketing strategy

Marketing strategy is a long-term, forward-looking approach to planning with the fundamental goal of achieving a sustainable competitive advantage. Strategic planning involves an analysis of the company's strategic initial situation prior to the formulation, evaluation and selection of market-oriented competitive position that contributes to the company's goals and marketing objectives.Strategic marketing, as a distinct field of study emerged in the 1970s, and built on strategic management that preceded it. Marketing strategy highlights the role of marketing as a link between the organization and its customers.

Multi-level marketing

Multi-level marketing (MLM), also called pyramid selling, network marketing, and referral marketing, is a marketing strategy for the sale of products or services where the revenue of the MLM company is derived from a non-salaried workforce selling the company's products/services, while the earnings of the participants are derived from a pyramid-shaped or binary compensation commission system.

Although each MLM company dictates its own specific financial compensation plan for the payout of any earnings to their respective participants, the common feature that is found across all MLMs is that the compensation plans theoretically pay out to participants only from two potential revenue streams. The first is paid out from commissions of sales made by the participants directly to their own retail customers. The second is paid out from commissions based upon the wholesale purchases made by other distributors below the participant who have recruited those other participants into the MLM; in the organizational hierarchy of MLMs, these participants are referred to as one's down line distributors.MLM salespeople are, therefore, expected to sell products directly to end-user retail consumers by means of relationship referrals and word of mouth marketing, but most importantly they are incentivized to recruit others to join the company's distribution chain as fellow salespeople so that these can become down line distributors. According to a report that studied the business models of 350 MLMs, published on the Federal Trade Commission's website, at least 99% of people who join MLM companies lose money. Nonetheless, MLMs function because downline participants are encouraged to hold onto the belief that they can achieve large returns, while the statistical improbability of this is de-emphasised. MLMs have been made illegal or otherwise strictly regulated in some jurisdictions as a mere variation of the traditional pyramid scheme, including in mainland China.

Online advertising

Online advertising, also called online marketing or Internet advertising or web advertising, is a form of marketing and advertising which uses the Internet to deliver promotional marketing messages to consumers. Many consumers find online advertising disruptive and have increasingly turned to ad blocking for a variety of reasons. When software is used to do the purchasing, it is known as programmatic advertising.

It includes email marketing, search engine marketing (SEM), social media marketing, many types of display advertising (including web banner advertising), and mobile advertising. Like other advertising media, online advertising frequently involves both a publisher, who integrates advertisements into its online content, and an advertiser, who provides the advertisements to be displayed on the publisher's content. Other potential participants include advertising agencies who help generate and place the ad copy, an ad server which technologically delivers the ad and tracks statistics, and advertising affiliates who do independent promotional work for the advertiser.

In 2016, Internet advertising revenues in the United States surpassed those of cable television and broadcast television. In 2017, Internet advertising revenues in the United States totaled $83.0 billion, a 14% increase over the $72.50 billion in revenues in 2016.Many common online advertising practices are controversial and increasingly subject to regulation. Online ad revenues may not adequately replace other publishers' revenue streams. Declining ad revenue has led some publishers to place their content behind paywalls.

Promotion (marketing)

In marketing, promotion refers to any type of marketing communication used to inform or persuade target audiences of the relative merits of a product, service, brand or issue. The aim of promotion is to increase awareness, create interest, generate sales or create brand loyalty. It is one of the basic elements of the market mix, which includes the four Ps, i.e., product, price, place, and promotion.Promotion is also one of the elements in the promotional mix or promotional plan. These are personal selling, advertising, sales promotion, direct marketing publicity and may also include event marketing, exhibitions and trade shows. A promotional plan specifies how much attention to pay to each of the elements in the promotional mix, and what proportion of the budget should be allocated to each element.

Promotion covers the methods of communication that a marketer uses to provide information about its product. Information can be both verbal and visual.

Pyramid scheme

A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal.

Pyramid schemes have existed for at least a century in different guises. Some multi-level marketing plans have been classified as pyramid schemes.

Retail

Retail is the process of selling consumer goods or services to customers through multiple channels of distribution to earn a profit. Retailers satisfy demand identified through a supply chain. The term "retailer" is typically applied where a service provider fills the small orders of a large number of individuals, who are end-users, rather than large orders of a small number of wholesale, corporate or government clientele. Shopping generally refers to the act of buying products. Sometimes this is done to obtain final goods, including necessities such as food and clothing; sometimes it takes place as a recreational activity. Recreational shopping often involves window shopping and browsing: it does not always result in a purchase.

Retail markets and shops have a very ancient history, dating back to antiquity. Some of the earliest retailers were itinerant peddlers. Over the centuries, retail shops were transformed from little more than "rude booths" to the sophisticated shopping malls of the modern era.

Most modern retailers typically make a variety of strategic level decisions including the type of store, the market to be served, the optimal product assortment, customer service, supporting services and the store's overall market positioning. Once the strategic retail plan is in place, retailers devise the retail mix which includes product, price, place, promotion, personnel and presentation. In the digital age, an increasing number of retailers are seeking to reach broader markets by selling through multiple channels, including both bricks and mortar and online retailing. Digital technologies are also changing the way that consumers pay for goods and services. Retailing support services may also include the provision of credit, delivery services, advisory services, stylist services and a range of other supporting services.

Retail shops occur in a diverse range of types and in many different contexts – from strip shopping centres in residential streets through to large, indoor shopping malls. Shopping streets may restrict traffic to pedestrians only. Sometimes a shopping street has a partial or full roof to create a more comfortable shopping environment – protecting customers from various types of weather conditions such as extreme temperatures, winds or precipitation. Forms of non-shop retailing include online retailing (a type of electronic-commerce used for business-to-consumer (B2C) transactions) and mail order.

Sales

Sales are activities related to selling or the number of goods or services sold in a given time period.

The seller, or the provider of the goods or services, completes a sale in response to an acquisition, appropriation, requisition or a direct interaction with the buyer at the point of sale. There is a passing of title (property or ownership) of the item, and the settlement of a price, in which agreement is reached on a price for which transfer of ownership of the item will occur. The seller, not the purchaser typically executes the sale and it may be completed prior to the obligation of payment. In the case of indirect interaction, a person who sells goods or service on behalf of the owner is known as a salesman or saleswoman or salesperson, but this often refers to someone selling goods in a store/shop, in which case other terms are also common, including salesclerk, shop assistant, and retail clerk.

In common law countries, sales are governed generally by the common law and commercial codes. In the United States, the laws governing sales of goods are somewhat uniform to the extent that most jurisdictions have adopted Article 2 of the Uniform Commercial Code, albeit with some non-uniform variations.

Search engine optimization

Search engine optimization (SEO) is the process of increasing the visibility of a website or a web page to users of a web search engine. The term excludes the purchase of paid placement, referring only to the improvement of unpaid results (known as as "natural" or "organic" results).

SEO is performed because a website will receive more visitors from a search engine the higher the website appears in the search results page. These visitors can then be converted into customers. SEO may target different kinds of search, including image search, video search, academic search, news search, and industry-specific vertical search engines. SEO differs from local search engine optimization in that the latter is focused on optimizing a business' online presence so that its web pages will be displayed by search engines when a user enters a local search for its products or services. The former instead is more focused on national or international searches.

As an Internet marketing strategy, SEO considers how search engines work, the computer programmed algorithms which dictate search engine behavior, what people search for, the actual search terms or keywords typed into search engines, and which search engines are preferred by their targeted audience. Optimizing a website may involve editing its content, adding content, doing HTML, and associated coding to both increase its relevance to specific keywords and to remove barriers to the indexing activities of search engines. Promoting a site to increase the number of backlinks, or inbound links, is another SEO tactic. By May 2015, mobile search had surpassed desktop search. In 2015, it was reported that Google is developing and promoting mobile search as a key feature within future products. In response, many brands are beginning to take a different approach to their Internet marketing strategies.

Social media marketing

Social media marketing is the use of social media platforms and websites to promote a product or service. Although the terms e-marketing and digital marketing are still dominant in academia, social media marketing is becoming more popular for both practitioners and researchers. Most social media platforms have built-in data analytics tools, which enable companies to track the progress, success, and engagement of ad campaigns. Companies address a range of stakeholders through social media marketing, including current and potential customers, current and potential employees, journalists, bloggers, and the general public. On a strategic level, social media marketing includes the management of a marketing campaign, governance, setting the scope (e.g. more active or passive use) and the establishment of a firm's desired social media "culture" and "tone."

When using social media marketing, firms can allow customers and Internet users to post user-generated content (e.g., online comments, product reviews, etc.), also known as "earned media," rather than use marketer-prepared advertising copy.

Viral marketing

Viral marketing or viral advertising is a business strategy that uses existing social networks to promote a product. Its name refers to how consumers spread information about a product with other people in their social networks, much in the same way that a virus spreads from one person to another. It can be delivered by word of mouth or enhanced by the network effects of the Internet and mobile networks.The concept is often misused or misunderstood, as people apply it to any successful enough story without taking into account the word "viral".Viral advertising is personal and, while coming from an identified sponsor, it does not mean businesses pay for its distribution. Most of the well-known viral ads circulating online are ads paid by a sponsor company, launched either on their own platform (company webpage or social media profile) or on social media websites such as YouTube. Consumers receive the page link from a social media network or copy the entire ad from a website and pass it along through e-mail or posting it on a blog, webpage or social media profile. Viral marketing may take the form of video clips, interactive Flash games, advergames, ebooks, brandable software, images, text messages, email messages, or web pages. The most commonly utilized transmission vehicles for viral messages include: pass-along based, incentive based, trendy based, and undercover based. However, the creative nature of viral marketing enables an "endless amount of potential forms and vehicles the messages can utilize for transmission", including mobile devices.The ultimate goal of marketers interested in creating successful viral marketing programs is to create viral messages that appeal to individuals with high social networking potential (SNP) and that have a high probability of being presented and spread by these individuals and their competitors in their communications with others in a short period of time.The term "viral marketing" has also been used pejoratively to refer to stealth marketing campaigns—marketing strategies that advertise a product to people without them knowing they are being marketed to.

Context
Activism
Advertising
Hoaxing
Marketing
News media
Political campaigning
Propaganda
Psychological warfare
Public relations
Sales
Related

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