Marketing

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Consumer psychology

Key concepts

Advertising Brand names Brand preferences Brand loyalty Consumer attitudes Consumer behavior Buyer decision making Consumer education Consumer protection Consumer research Consumer satisfaction Consumer surveys Consumer theory Customer service Customer relationship management Family and consumer science Market research Marketing strategy Marketing management Product design Product Price Promotion Retail Market research Quality of services

other aspects

Advertising Behavioral finance Branding Direct marketing Electronic commerce Shopping centres Product placement Public relations Publicity Personal Sales Sales promotion Supply and demand

Marketing is the process of promoting, selling, and distributing a product or service.

Definitions

Marketing, as suggested by the American Marketing Association, is "an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders".[1]

Another definition, perhaps simpler and more universal, is this: "Marketing is the ongoing process of moving people closer to making a decision to purchase, use, follow...or conform to someone else's products, services or values. Simply, if it doesn't facilitate a "sale" then it's not marketing."[2]

Philip Kotler in his earlier books defines as: "Marketing is human activity directed at satisfying needs and wants through exchange processes". Add to Kotler's and Norris' definitions, a response from the Chartered Institute of Marketing (CIM) [3]. The association's definition claims marketing to be the "management process of anticipating, identifying and satisfying customer requirements profitably". Thus, operative marketing involves the processes of market research, new product development, product life cycle management, pricing, channel management as well as promotion.

Another definition of Marketing, is the art of selling products.

Introduction

Prior to the advent of market research, most companies were product-focused, employing teams of salespeople to push their products into or onto the market, regardless of market desire. A market-focused, or customer-focused, organization instead first determines what its potential customers desire, and then builds the product or service. Marketing theory and practice is justified on the belief that customers use a product/service because they have a need, or because a product/service has a perceived benefit.

Two major aspects of marketing are the recruitment of new customers (acquisition) and the retention and expansion of relationships with existing customers (base management).

Once a marketer has converted the prospective buyer, base management marketing takes over. The process for base management shifts the marketer to building a relationship, nurturing the links, enhancing the benefits that sold the buyer in the first place, and improving the product/service continuously to protect her business from competitive encroachments.

Marketing methods are informed by many of the social sciences, particularly psychology, sociology, and economics. Anthropology is also a small, but growing, influence. Market research underpins these activities.

For a marketing plan to be successful, the mix of the four "Ps" must reflect the wants and desires of the consumers in the target market. Trying to convince a market segment to buy something they don't want is extremely expensive and seldom successful. Marketers depend on marketing research, both formal and informal, to determine what consumers want and what they are willing to pay for. Marketers hope that this process will give them a sustainable competitive advantage. Marketing management is the practical application of this process. The offer is also an important addition to the 4P's theory.

Four Ps (marketing mix)

In popular usage, "marketing" is the promotion of products, especially advertising and branding. However, in professional usage the term has a wider meaning that recognizes that marketing is customer centered. Products are often developed to meet the desires of groups of customers or even, in some cases, for specific customers. McCarthy divided marketing into four general sets of activities. His typology has become so universally recognized that his four activity sets, the Four Ps, have passed into the language.

The four Ps are:

• Product: The Product management and Product marketing aspects of marketing deal with the specifications of the actual good or service, and how it relates to the end-user's needs and wants.
• Pricing: This refers to the process of setting a price for a product, including discounts.
• Promotion: This includes advertising, sales promotion, publicity, and personal selling, and refers to the various methods of promoting the product, brand, or company.
• Placement or distribution refers to how the product gets to the customer; for example, point of sale placement or retailing. This fourth P has also sometimes been called Place, referring to “where” a product or service is sold, e.g. in which geographic region or industry, to which segment (young adults, families, business people, women, men, etc.).

These four elements are often referred to as the marketing mix. A marketer can use these variables to craft a marketing plan. The four Ps model is most useful when marketing low value consumer products. Industrial products, services, high value consumer products require adjustments to this model. Services marketing must account for the unique nature of services. Industrial or B2B marketing must 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.

As a counter to this, Morgan, in Riding the Waves of Change (Jossey-Bass, 1988), adds "Perhaps the most significant criticism of the 4 Ps approach, which you should be aware of, 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". Even so, having made this important caveat, the 4 Ps offer a memorable and quite workable guide to the major categories of marketing activity, as well as a framework within which these can be used. [4].

Seven Ps

As well as the standard four Ps (Product, Pricing, Promotion and Placement), there are also sometimes considered an extra three, totalling seven and known together as the extended marketing mix. These are:

• People: Any person coming into contact with customers can have an impact on overall satisfaction. Whether as part of a supporting service to a product or involved in a total service, people are particularly important because, in the customers' eyes, they are generally inseparable from the total service. As a result of this, they must be appropriately trained, well motivated and the right type of person.
• Process: This is the processes involved in providing a service and the behaviour of people, which can be crucial to customer satisfaction.
• Physical evidence: Unlike a product, a service cannot be experienced before it is delivered, which makes it intangible. This therefore means that potential customers perceive greater risk when deciding whether or not to use a service. To reduce the feeling of risk, thus improving success, it is often vital to offer potential customers the chance to see what a service would be like. This is done by providing physical evidence, such as case studies, or testimonials.

Customer focus

The next big thing in marketing: pedapod arrives in Sydney, Australia

Most companies today have a customer orientation (also called customer focus). This implies that the company focuses its activities and products on customer needs. Generally there are two ways of doing this: the customer-driven approach 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.

The next big thing is a concept in marketing that refers to a product or idea that will allow for a high amount of sales for that product and related products. Marketers believe that by finding or creating the next big thing they will spark a cultural revolution that results in this sales increase.

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 a profitable market segment(s) exists 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. 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.

Other aspects

• An emerging area of study and practice concerns internal marketing, or how employees are trained and managed to deliver the brand in a way that positively impacts the acquisition and retention of customers.

• Diffusion of innovations research explores how and why people adopt new products, services and ideas.

• A relatively new form of marketing uses the Internet and is called internet marketing or more generally e-marketing, affiliate marketing or online marketing. It typically tries to perfect the segmentation strategy used in traditional marketing. It targets its audience more precisely, and is sometimes called personalized marketing or one-to-one marketing.

Advertising and promotions

Businesses need to advertise for the following four main reasons:

• To raise customer awareness.
• To remind customers about existing facilities.
• To persuade customers to switch from rival businesses.
• To improve and maintain the image of the business.

The ultimate aim of these points is to attract more customers. The places our business will advertise from depends on three things:

• Its audience.
• The size of their market.
• The size of their advertising budget.

Forms of Advertising and their advantages and disadvantages:

Print

Newspapers and Magazines

• Advantages - A lot of information is known about the people who read certain papers
• Disadvantages - Often not in color and are static and silent

Posters and Billboards

• Advantages - High visual impact for a long time and will be seen by a lot of different people
• Disadvantages - Are only seen for a few seconds by drivers and are vulnerable to weather and graffiti

Yellow Pages

• Advantages - Anyone looking in the Yellow Pages wants to buy
• Disadvantages - A lot of your competitors are on the same page you are

Media

Television

• Advantages - Can reach millions of people all over the country
• Disadvantages - Very expensive

radio

• Advantages - Cheaper than T.V, can be used to reach certain listeners
• Disadvantages - Sound only, smaller audiences

Cinemas

• Advantages - Very high visual and sound effect, captive audience
• Disadvantages - Are relatively expensive

Communications

Leaflets and junk mail

• Advantages - Cheap to produce and distribute
• Disadvantages - Are easy to ignore

Telephone

• Advantages - Direct to customer, interactive, receive instant feed back.
• Disadvantages - makes some customer feel their privacy has been violated, sometimes has negative results.

Websites

• Advantages - High visual impact, interactive and can link directly to buying the product, is relatively cheap
• Disadvantages - There is a lot of competition so getting people's attention may be difficult, needs to be continually updated, can become expensive

Criticism of marketing

Some aspects of marketing, especially promotion, are the subject of criticism. It is especially problematic in classical economic theory, which is based on the assumption that supply and demand are independent. However, product promotion is an attempt coming from the supply side to influence demand. In this way producer market power is attained as measured by profits that would not be realized under a free market. Then the argument follows that non-free markets are imperfect and lead to production and consumption of suboptimal amounts of the product.

To some critics, the ability of marketers to alter consumer behavior is powerful and frightening^{[citation needed]}.

Critics acknowledge that marketing has legitimate uses in connecting goods and services to the consumers who want them. Critics also point out that marketing techniques have been used to achieve morally dubious ends by businesses, governments and criminals. Critics see a systemic social evil inherent in marketing (see No Logo, Bill Hicks, Marxism or Commercial Alert). Marketing is accused of creating ruthless exploitation of both consumers and workers by treating people as commodities whose purpose is to consume.

Most marketers believe that marketing, like any other technology, is amoral. It can be used for good or evil purposes, but the technique itself is ethically neutral.

See also

• Brand names
• Brand preferences
• Consumer research
• Management planning
• Mass customization
• Product design
• Quality of services
• Retailing
• Social norms marketing
• Viral marketing

External links

• KnowThis.com - Marketing Virtual Library - extensive reference site
• Marketing and Psychology Blog
  
• NLP and Marketing