What is Marketing?
Marketing is the process of creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society as a whole. It involves understanding customer needs and desires, developing products and services that meet those needs, promoting and selling those products and services, and building strong relationships with customers to retain their loyalty.
Table of Contents
- 1 What is Marketing?
- 2 What Do We Mean by Marketing?
- 3 What is a Market?
- 4 Types of Offerings
- 5 Marketing Concepts
- 6 Comparison of Marketing Orientation With Other Orientations
- 7 Marketing Mix
- 8 Extended Mix for Services
Marketing is as old as civilization. Though marketing is talked about and discussed in business terms today, its origin goes back to ancient civilizations when man used symbols, signs, and material artifacts to transact and communicate with others.
Modern marketing revolves around concepts, which are age-old. The first signs that man made to communicate with others gave birth to the idea of marketing. The evolution of marketing has made it a structured discipline to study; otherwise, marketing did exist in the ancient past.
Marketing was also used as a synonym for the art of selling in the past. Even today much confusion exists between marketing and selling amongst students of management and practitioners, regarding the two dominant modes of business and exchange.
This chapter is an attempt to clarify the doubts in the student’s mind regarding what marketing is; how different it is from selling and how marketing has evolved over a period of time and has come to be known as modern marketing. The students will also be exposed to the real meaning of customer orientation, customer focus, and similar concepts that allow marketing to score higher than selling.
What Do We Mean by Marketing?
Man is a social animal. Human needs and wants are shaped by the interplay of various social forces. Marketing evolves through this peculiar social system. It involves relationships among members of society. It helps business enterprises to estimate consumer demand and produce for their satisfactory consumption.
It helps in anticipating customer demand and creating satisfied customers through the conception, production, promotion, and physical distribution of goods and services in a socially relevant exchange process. American Marketing Association defines marketing as “the performance of business activities that direct the flow of goods and services from producer to consumer or user”.
This definition seems somewhat narrow because of its emphasis on the flow of products that have already been produced. This definition is more of a physical distribution-oriented idea, which presupposes that there is nothing beyond the smooth flow of quality goods and services to customers.
Pride and Ferrel’s definition says, “We define marketing as the process of creating, distributing, promoting, and pricing goods, services, and ideas to facilitate exchange relationships in a dynamic environment”.
According to Stanton, Etzel, and Walker, “Marketing is a total system of business activities designed to plan, price, promote, and distribute want-satisfying products to target markets to achieve organizational objectives.”
Phillip Kotler defines “Marketing as a societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value to each other”.
Marketing is an ongoing process of discovering and translating consumer needs and desires into products and services, creating demand for these products and services, serving the consumer and his demand through a network of marketing channels, and expanding the market base in the face of competition. From a broader social point of view, the definition of Paul Mazur is more relevant.
Mazur defines marketing as “the creation and delivery of a standard of living to society. This is a much broader approach, which views the firm as an organized behavior system designed to generate outputs of value to consumers”.
Marketing is defined as the “development and distribution of goods and services for chosen consumer segments by which profitability is achieved with a goal of customer satisfaction. Marketing activities begin with new product concepts and designs are analyzed and developed to meet specific consumer needs.
This elaborate definition of marketing includes many other organizational activities other than mere distribution function”. An effective marketing effort is in accordance with ethical business practices and should be effective from both the social and business point of view.
This approach emphasizes the need for efficiency in distribution. The nature, type, and degree of efficiency are largely dependent upon the kind of marketing environment within which the enterprise operates.
The final assumption is that the customer determines the marketing program. The marketer identifies those consumer segments that will be satisfied through the production and marketing activities of the enterprise before actually producing the products and services.
What is a Market?
A student of marketing needs to understand the difference between a market and marketing. We have already defined marketing as a process by which customers’ needs and wants are satisfied through quality products and services offered for customer satisfaction.
In the ancient past, a market was defined as a place where buyers, potential buyers, sellers, resellers, and intermediaries met for the exchange of goods and services. But this definition is no more valid in modern marketing terminology.
As marketing has grown to become a mass social event, the distance between marketer and consumer has increased many a mile and there is hardly any personal interaction between the marketer and consumer in the exchange of goods and services.
Due to this changed scenario, a market is now defined as any one of a variety of different systems, institutions, procedures, social relations, and infrastructures whereby person trade and goods and services are exchanged, forming part of the economy.
It is an arrangement that allows buyers and sellers to exchange things. Markets vary in size, range, geographic scale, location, types, and variety of human communities, as well as the types of goods and services traded.
Some examples include local farmers’ markets held in town squares or parking lots, shopping centers and shopping malls, international currency, and commodity markets, legally created markets such as for pollution permits, and illegal markets such as the market for illicit drugs.
Due to the advent of the Internet and e-commerce technology, it has become a virtual world, and marketing happens more in space than in a geographical place. New forms of infomediaries are augmenting emerging marketing initiatives.
So the market can be defined as a set of consumers, potential consumers, past consumers, sellers, resellers, and intermediaries, who are either involved in the process of exchange or are in the process of getting involved in an exchange process. The network of institutions and systems, combined with buyers and potential or actual sellers, at the extreme ends of the loop constitutes a market.
So a marketplace is a physical place where buyers and sellers meet for an exchange, whereas market space is the virtual world where buyers and sellers meet through the Internet and World Wide Web.
A cluster consisting of marketers, intermediaries, after-sales and service providers, resellers, financiers, and insurers can be called a meta-market. These are a cluster of complementary products and services that are closely related to the mind of the consumer.
Depending on the focus of the marketer, we can classify the markets as consumer markets, industrial markets, nonprofit markets, and international (or global) markets. When the final output of the firm goes for the consumption of individual consumers, we can call this a consumer market.
The demand of end consumers decides the level of production and the marketing effort of a firm. Contrary to this, a business market is defined as a market where the output of one firm goes either as raw material, goods in process, or consumables of another industry.
In this case, the buyer is an organization whose consumption depends on how the end consumer’s demand will change. Hence, in business markets, the demand pattern is that of derived demand.
Demand for steel will depend on the consumption of steel equipment, rods, and other accessories in the building and real estate sectors.
Buyers in business markets are professionals who buy on the basis of rational evaluation of the offer, unlike the consumer markets where people can take a buying decision on the basis of emotion or impulse. Nonprofit organizations also use marketing for generating donations and help greater social causes.
Organizations like Save the Children and Help Age Foundation are examples where they try to attract donors for social causes. Government is also a big buyer, which makes purchases on the basis of tenders, bids, and negotiations. One requires a separate set of skills for marketing to these kinds of organizations.
Today, we are experiencing a spurt of multinational and transnational firms that operate in more than one country. Taking a foreign product to a new country and adapting it to the consumption culture of that country is an uphill task for a global marketing manager.
They need to segment and target the countries properly, redesign an offer to suit each of these markets, and manage prices and distribution channels to suit the tastes of the host country.
Types of Offerings
Modern marketing involves transactions of entities – namely physical goods, intangible services, places, persons, events, corporate organizations, information or knowledge, and ideas.
Given below is the explanation of each of the offerings for your understanding:
Goods are produced to satisfy consumer wants. Therefore the study is done to identify consumer needs and wants. These needs and wants motivates consumers to purchase.
As economies advance, a growing proportion of their activities are focused on the production of services. The U.S. economy today consists of 70–30 services to-goods mix.
Services include airlines, hotels, maintenance and repair people, as well as professionals such as accountants, lawyers, engineers, and doctors. Many market offerings consist of a variable mix of goods and services.
Cities, states, regions, and nations compete to attract tourists, factories, company headquarters, and new residents. Place marketers include economic development specialists, real estate agents, commercial banks, local business associations, and advertising and public relations agencies.
Celebrity marketing has become a major business. Artists, musicians, CEOs, physicians, high-profile lawyers and financiers, and other professionals draw help from celebrity marketers.
Marketers promote time-based events, such as the Olympics, trade shows, sports events, and artistic performances.
Organizations actively work to build a strong, favorable image in the mind of their public. Philips, the Dutch electronics company, advertises with the tagline, “Let’s Make Things Better.” The Body Shop and Ben & Jerry’s also gain attention by promoting social causes.
Universities, museums, and performing arts organizations boost their public images to compete more successfully for audiences and funds.
The production, packaging, and distribution of information are one of society’s major industries. Among the marketers of information are schools and universities; publishers of encyclopedias, nonfiction books, and specialized magazines; makers of CDs; and Internet Web sites.
Every market offering has a basic idea at its core. In essence, products and services are platforms for delivering some idea or benefit to satisfy a core need.
Most of the marketing efforts revolve around physical goods coming out of the manufacturing systems. Indian companies make products from safety pins to rockets and satellites. Physical products manufactured for both consumer and business markets constitute a large percentage of gross domestic product.
As the economy progresses and avenues for consumption increase due to an increase in the standard of living and disposable income, the marketing of services gains importance. Services like airlines, tourism, banking, and hospitality demand more marketing attention compared to erstwhile physical products.
A cross-sectional and longitudinal analysis of the evolution of marketing thought and the subsequent reliance of marketing managers on specific elements of marketing brings us to classify concepts of marketing into the following categories.
- Production Concept
- Product Concept
- Selling Concept
- Marketing Concept
- Societal Marketing Concept
- Relationship Marketing Concept
- Holistic Concept of Marketing
Business enterprises conduct their marketing activity around these five concepts.
The production concept holds that consumers will prefer products that are widely available and inexpensive. The concept is premised on the production orientation of the firm. It is based on the idea that the more we make, the more profitable we become.
So let us go out there and make customers buy our products. The basic proposition is that customers will choose products and services that are widely available and are of low cost. So managers try to achieve higher volume by lowering production costs and following an intensive distribution strategy.
Managers believe that consumers prefer products that are priced low and are widely available. This seems a viable strategy in a developing market where market expansion is the survival strategy for the business. Companies interested to take benefit of scale economies pursue this kind of orientation.
It is natural that companies cannot deliver quality products and suffer from problems arising out of impersonal behavior with the customers. Application of this concept leads to poor quality of service and a higher level of personalization in business.
The product concept has the proposition that consumers will favor those products that offer attributes like quality, performance, and other innovative features. Managers focus on developing superior products and improving the existing product lines over a period.
Innovations in the scientific laboratory are commercialized and consumers get an opportunity to know and use these products. This is called the “Technology Push Model”. The problem with this orientation is that managers forget to read the customer’s mind and launch products based on their own technological research and scientific innovations.
Many times it is observed that innovations enter the market before the market is ready for the product. Innovative products are launched without educating the customers about them and the probable benefit or value that the customer is likely to get by using the new products.
The Golden Eye Technology was brought to the Indian market by the television major Onida but the market could not perceive the benefit of this advantage. Subsequently, as the customers became aware of the various brands and technology related to televisions, LG brought the new technology to the market and achieved marketing success.
The selling concept holds that the consumers and business if left alone, will ordinarily not buy enough of the organization’s products. The organization must, therefore, undertake an aggressive selling and promotion effort.
The selling concept proposes that customers, be they individuals or organizations will not buy enough of the firm’s products unless they are persuaded to do so through the selling effort. So companies should undertake selling and promotion of their products for marketing success.
The consumers typically are inert and they need to be goaded into buying by converting their inert need into a buying motive through persuasion and selling action.
This approach is applicable in the cases of unsought goods like life insurance, vacuum cleaner, and fire fighting equipment including fire extinguishers. These industries are seen as having a strong network of sales force. Firms with high capacity apply this orientation, in which their goal is to sell what they produce than what the customer really wants.
In a modern marketing situation, the buyer has a basket to choose from and is also exposed to a high decibel of advertising. The effectiveness of such an orientation comes down as more and more mass media is used for the purpose of brand communication. The use of this concept breeds the misconception that marketing is all about selling.
The problem with this approach is the assumption that the customer will certainly buy the product after persuasion and if dissatisfied will not complain. In reality, this does not happen and companies pursuing this concept often fail in business.
The marketing concept holds that the key to achieving its organizational goals consists of the company being more effective than the competitors in creating, delivering, and communicating customer value to its chosen target markets.
The concept proposes that the reason for success lies in the company’s ability to create, deliver and communicate a better value proposition through its marketing offer, in comparison to the competitors for its chosen target segment.
According to Theodore Levitt, “Selling focuses on the needs of the seller, and marketing focuses on the buyer. Selling is preoccupied with the seller’s need to convert his product into cash, marketing deals with the idea of satisfying customer needs by offering a quality product and the whole cluster of things associated with creating, delivering, and finally consuming it”.
The marketing concept is an elaborative attempt to explain the phenomenon that rests on four key issues target market, customer need, integrated marketing communication, and profitability.
Companies are interested in increasing their market share, and profitability and expect a higher return on investment. Instead of spending on a mass, undifferentiated market, they prefer looking for specific product markets to which their product will best match and accordingly design a marketing program that suits the taste of this target segment.
The next important act is understanding the need of the customer so that we can design and offer a suitable product or service for higher customer satisfaction. Needs are the inner state of felt deprivation. They can be spelled and unspelt-also. It is difficult to understand the un-spelled need of the customer.
Marketers use various sophisticated techniques of consumer research to understand customer needs. It is important to understand and act upon the need of the customer because the effort to keep a satisfied customer is almost one-fifth of the effort expended to get a new customer. The whole organization has to be integrated into this mantra of customer satisfaction.
So business needs an integrated approach. The integration has to start at the marketing department level where various key marketing functions like product design, distribution channel selection, advertising, sales promotion, customer service, and marketing research need to be integrated with the understanding of common marketing goals.
The success of the marketing concept depends on the enterprise-wide adaptation of marketing culture. If every department thinks about the customers and keeps them at the forefront of their decision-making, then the organization can achieve a complete market-oriented culture. Marketing has both internal and external orientations.
While external marketing targets customers outside the organization, internal marketing targets customers inside the organization who can be trained to serve the end customer better. The ultimate goal of any business house is to earn profit.
Today’s world not only looks at a profit but also tries to benchmark the effort and cost required to achieve this level of profit. In the current situation, the profitability of the enterprise is derived through better customer orientation.
So, profitability is now a by-product that comes out of efforts and strategies followed by firms in creating superior product value and higher customer satisfaction.
Societal Marketing Concept
The societal marketing concept proposes that the enterprise’s task is to determine the needs, wants, and intentions of the target market and to deliver the expected satisfaction more effectively and efficiently than the competitors in a way to preserve or enhances the consumer’s and society’s well-being.
It combines the best elements of marketing to bring social change in an integrated planning and action framework with the utilization of communication technology and marketing techniques. It also expects marketers to instill social and ethical considerations into their marketing decisions.
The goals of profit maximization should match the goals of customer satisfaction and responsible corporate citizenship. Social marketing often termed cause-related marketing, utilizes concepts of market segmentation, consumer research, product concept development, product testing, and brand communication to maximize the target segment response.
With the growing awareness of the social relevance of business, there is an attempt to make marketing more relevant to our society. In a sense, marketing is not a business activity alone but must take into account social needs.
Excessive exploitation of resources, environmental deterioration, and customer exploitation, in particular, has necessitated the recognition of the relevance of marketing to society. Marketing then must be a socially responsible or accountable activity. The societal concept is an extension of the marketing concept to cover society in addition to the consumers.
Relationship Marketing Concept
The relationship-marketing concept posits that marketing, as a business function is affected by the continuity of time and thus entails the need to forge strong relationships with the customer. This approach allows the organization to track and analyze the evolution of a customer’s requirements over time.
In relationship marketing, customer profiles, buying patterns, and history of contacts are maintained in a sales database. An account executive is assigned to one or more major customers to fulfill their needs and maintain the relationship.
It enables an organization to systematize implicit knowledge of customer purchase history, tastes and preferences, amounts billed, and other behavioral aspects of the customer in a database. The database of customers serves as a paradigm for the organization to learn and repeat best practices.
When practiced with the automation of information systems and communication channels it lays the foundation for effective email, social media, and digital marketing. The merit of the concept lies in its ability to organize scattered data and translate the same into a clear marketing strategy.
Holistic Concept of Marketing
The holistic concept of marketing posits that the function of marketing requires a broad canvas with multiple perspectives to embrace the interplay of factors active in the economy, society, and the market.
The concept as defined by Philip Kotler is based on the development, design, and implementation of marketing programs, processes, and activities that recognize the breadth and interdependencies. A marketing strategy developed by thinking about the business as a whole, its place in the broader economy and society, and in the lives of its customers is referred to as holistic marketing.
It attempts to develop and maintain multiple perspectives on the company’s commercial activities. This concept of marketing aligns with the concept of sustainable development that seeks to embrace economic, environmental, and social factors.
Comparison of Marketing Orientation With Other Orientations
The orientation of a company in marketing terminology refers to the beliefs that lead to the creation of a mindset. This mindset shapes not only the product and its production process but also drives the marketing programs of the organization.
There is a broad spectrum of orientations that organizations may be classified into. The major types of orientations include product, cost, capacity, erratic, technology, and marketing.
- Product-oriented companies feel that their product sells in the market because of the quality of the product. While there is general acceptance among practicing managers and marketers that the quality of a product plays a great role in creating customer satisfaction and thus value to the organization, corporate history is replete with examples of high-quality products that have failed.
- Cost-oriented managers believe that the only way to improve profits is to reduce marketing and production costs. Cost discipline is an essential way of exercising control of the organization and allows corrective action to enhance efficiency, but does not always generate value for the customer.
Moreover, rampant cost cutting without consideration of its impact on product quality can take its toll on the brand and consequently the corporate image of the company.
- Capacity-oriented companies believe that the more they make, the more profitable they are, and if they go into the market with more variants, customers will buy them. This school of thought stresses the need for high volumes of production.
The concept holds good for products that require standardization. An assembly line production system that produces in bulk and thus accrues economies of scale leads organizations to produce the product in bulk.
- Erratic-oriented firms believe that no planning is possible for the future because nobody knows what is going to happen in the future. Such orientation is used in times of economic crises and instability. When market conditions do not reflect clear demand patterns, it is impossible to forecast.
Such circumstances are referred to as VUCA-volatile, uncertain, complex, and ambiguous. This orientation enables the organization to combat flux but is not a sustainable value-generating proposition.
- A marketing-oriented company makes a profit by creating opportunities to satisfy more effectively the customer needs within the constraints of its resources and skill limitations. The marketing orientation strives to focus on the customer, the requirements of the customer, and thus solutions that shall create value for the customer.
Marketing orientation is based on a clear understanding of customer needs and wants. An organization with a marketing orientation optimizes its resources to offer the best possible value proposition to its customers.
|1. Companies focus
|Companies focus on developing superior products and improving the existing product lines over a period of time
|Companies focus on the idea that the more we make, the more profitable we become
|Companies focus on manufacturing the product first the then decide to sell it.
|Companies first determine customers’ needs and then decide on how to deliver a product to satisfy these
|2. Management Orientation
|Management is oriented towards technological research and scientific innovations
|Management is oriented towards
number of units
|Management is sales volume
|Management is profit oriented
|Planning is long-term oriented in terms of the 4 P’s – Positioning, Pricing, Packaging, and Placement
|Planning is neither long-term nor short-term as it depends on the company’s philosophy to make the products widely accessible to buyers at low-priced budget
|Planning is short-run oriented, in terms of today’s products and markets
|Planning is long-term oriented in terms of new products, tomorrow’s market, and future growth
|Stresses needs on quality of products
|Stresses needs of own company’s expertise in producing products
|Stresses needs for sellers
|Stresses needs and wants of buyers
|Views business as coming out with new innovations and technological process
|Views business as goods-producing and achieving maximum profitability process
|Views business as a goods-producing process
|Views business as consumer satisfying process
|Emphasis on quality generation and quality retention through innovations and technological efforts for attracting customers
|Emphasis is on mass production and reducing costs.
|Emphasis is on staying with existing technology and reducing costs
|Emphasis is on innovation in every sphere, on providing better value to the customer by adopting superior technology.
|The R&D department works in close liaison with field personnel, value aids from government or private institutions relating to their field
|Production departments work in different factory outlets at different locations
|Different departments work in highly separate water-tight compartments
|All departments of the business operate in an integrated manner, the sole purpose being the generation of customer satisfaction
|Determination of Cost and Price
|Cost determines price
|Price determines cost
|Cost determines price
|The consumer determines price; price
|Customer – eccentric
|Product views customers as the last link in the business as it aligns its innovative quality products to the respective target audience
|Production ignores customers for being prime purpose.
|Selling views customers as the last link in the business
|Marketing views the customer as the very purpose of the business.
A marketing mix is the combination of the elements of marketing and what roles each element plays in promoting your products and services and delivering those products and services to your customers. The term ‘marketing mix’ became popular when Neil H Borden published his 1964 article ‘The Concept of Marketing Mix’.
The 4 P’s of marketing that are the elements of a marketing mix are mentioned below:
The products or services offered to your customer – Their physical attributes what they do, how they differ from your competitors, and what benefits they provide.
How you price your product or service so that your price remains competitive allows you to make a good profit. How price plays a role in your marketing strategy with respect to differentiating your products or services from your competitors.
Place (also referred to as Distribution)
Where your business sells its products or services and how it gets those products or services to your customers may also be used in your marketing strategy to differentiate you from your competition.
The methods used to communicate the features and benefits of your products or services to your target customers.
Extended Mix for Services
In services marketing, we have an extended mix, which has three other elements in addition to the four given above.
- People: An essential ingredient to any service provision is the use of appropriate staff and people. Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organization wants to obtain a form of competitive advantage.
Consumers make judgments and deliver perceptions of the service based on the employees they interact with. Staff should have the appropriate interpersonal skills, aptitude, and service knowledge to provide the service that consumers are paying for.
- Process: It refers to the systems used to assist the organization in delivering the service. Imagine you walk into Burger King and you order a Whopper Meal and you get it delivered within 2 minutes. What was the process that allowed you to obtain an efficient service delivery?
Banks that send out Credit Cards automatically when their customer’s old one has expired again require an efficient process to identify expiry dates and renewal. An efficient service that replaces old credit cards will foster consumer loyalty and confidence in the company.
- Physical Evidence: Where is the service being delivered? Physical Evidence is the element of the service mix that allows the consumer again to make judgments about the organization. If you walk into a restaurant your expectations are of a clean, friendly environment. On an aircraft, if you travel first class you expect enough room to be able to lie down!
Physical evidence is an essential ingredient of the service mix; consumers will make perceptions based on their sight of the service provision which will have an impact on the organization’s perceptual plan of the service.