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Marketing

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A set of business practices designed to plan for and present an organization's products or services in ways that build effective customer relationships. We can also think of marketing, more simply, as the activities buyers and sellers perform to facilitate mutually satisfying exchanges.

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The future of marketing is doing everything you can to help the buyer buy.

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The easier a marketer makes the purchase decision process, the more that marketer will sell.

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There are five different marketing eras in the history of North American business.

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(1) production, (2) sales, (3) marketing concept, (4) market orientation, and (5) social media marketing. What marketers do at any particular time depends on what they need to do to fill customers' needs and wants, which continually change. Let's take a brief look at how these changes have influenced the evolution of marketing.

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The production era

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"Produce as much as you can because there is a limitless market for it." Given the limited production capability and the vast demand for products in those days, that production philosophy was both logical and profitable, as demand exceeded supply. Business owners were mostly farmers, carpenters, and trade workers. They needed to produce more and more, so their goals centred on production.

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The marketing concept era

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The postwar years launched the sudden increase in the birth rate that we now call the baby boom, and also a boom in consumer spending. Competition for the customers' dollar was fierce. Businesses recognized that they needed to be responsive to customers if they wanted to get their business, and a philosophy called the marketing concept emerged in the 1950s.

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The marketing concept had three parts:

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1. A customer orientation. Find out what customers want and provide it for them. (Note the emphasis on meeting customer needs rather than on promotion or sales.) 2. A service orientation. Make sure that everyone in the organization has the same objective: customer satisfaction. This should be a total and integrated organizational effort. That is, everyone from the president of the firm to the delivery people should be customer oriented. 3. A profit orientation. Focus on those goods and services that will earn the most profit and enable the organization to survive and expand to serve more customers' wants and needs.

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Marketing concept

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A three-part business philosophy: (1) a customer orientation, (2) a service orientation, and (3) a profit orientation.

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The market orientation era

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Focusing efforts on (1) continuously collecting information about customers' needs and competitors' capabilities, (2) sharing this information throughout the organization, and (3) using the information to create value, ensure customer satisfaction, and develop customer relationships.

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Customer-relationship management (CRM)

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The process of building long-term relationships with customers by delivering customer value and satisfaction. Retaining customers over time, or managing the entire customer life cycle, is a cost-effective way for firms to grow in competitive markets. The idea is to enhance customer satisfaction and stimulate long-term customer loyalty.

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Social media

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The term commonly given to websites and online tools that allow users to interact with each other in some way-by sharing information, opinions, knowledge, and interests.

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Social media marketing

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Consumer-generated online-marketing efforts to promote brands and companies for which they are fans (or conversely, negatively promoting brands and companies for which they are non-fans), and the use by marketers of online tools and platforms to promote their brands or organizations.

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Non-Profit Organizations Prosper from Marketing

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Even though the marketing concept emphasizes a profit orientation, marketing is a crucial part of all organizations, including non-profits. Charities use marketing to raise funds to combat world hunger, for instance, or to obtain other resources. Canadian Blood Services uses promotion to encourage people to donate blood when local or national supplies run low. Organizations use marketing, in fact, to promote everything from environmentalism and crime prevention ("Take A Bite Out of Crime") to social issues ("Don't Drink and Drive").

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We can divide much of what marketers do into four factors called the four Ps to make them easy to remember and implement. They are:

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1. Product 2. Price 3. Place 4. Promotion

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Marketing mix

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The ingredients that go into a marketing program: product, price, place, and promotion. Managing the controllable parts of the marketing process, then, involves (1) designing a want-satisfying product, (2) setting a price for the product, (3) getting the product in a place where people will buy it, and (4) promoting the product.

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Applying the marketing process

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The four Ps are a convenient way to remember the basics of marketing, but they do not include everything that goes into the marketing process for all products. One of the best ways to understand the entire marketing process is to take a product and follow the process that led to its development and sale.

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The marketing process with the four Ps

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Find opportunities --> Conduct research --> Identify a target market --> Design a product to meet the need based on research (Product) --> Do concept testing that includes determining a brand name, design, and package --> Set a price (Price) --> Select a distribution system (Place) --> Design a promotional program (Promotion) --> Build a relationship with customers

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Product

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Any physical good, service, or idea that satisfies a want or need.

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Test marketing

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The process of testing products among potential users.

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Brand name

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A word, letter, or group of words or letters that differentiates one seller's goods or services from those of competitors. Brand name of vegetarian meals include Tofurky, Mori-Nu, and Yves Veggie Cuisine.

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Price

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The money or other consideration (including other goods and services) exchanged for the ownership or use of a good or service. You also have to consider the costs of producing, distributing, and promoting the product, which all influence your price.

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Such intermediaries are the middle links in a series of organizations that distribute goods from producers to consumers.

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The more traditional word for them is middlemen.

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Promotion

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All of the techniques sellers use to motivate customers to buy their products. They include advertising, personal selling, public relations, direct marketing, and sales promotion (such as coupons, rebates, and samples). Promotion often includes relationship building with customers.

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Marketing research

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The analysis of markets to determine opportunities and challenges, and to find the information needed to make good decisions.

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The marketing research process

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A simplified marketing research process consists of at least four key steps: 1. Defining the question (the problem or opportunity) and determining the present situation; 2. Collecting research data; 3. Analyzing the research data; and 4. Choosing the best solution and implementing it.

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Secondary data

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Information that has already been compiled by others and published in journals and books or made available online. Despite its name, secondary data is what marketers should gather first to avoid incurring unnecessary costs.

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Primary data

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Data that you gather yourself (not from secondary sources such as books, journals, and newspapers). Often, secondary data do not provide all of the information managers need to make important decisions. To gather additional, in-depth information, marketers must do their own research. Four sources of primary data are surveys (also known as questionnaires), personal interviews, focus groups, and observation.

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Focus group

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A small group of people who meet under the direction of a discussion leader to communicate their opinions about an organization, its products, or other issues.

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Observation

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Involves watching, either mechanically or in person, how people behave.

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Environmental scanning

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The process of identifying the factors that can affect marketing success.

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The marketing environment

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Global environment, technological environment, social environment, competitive environment, economic environment, and legal environment.

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Two Different Markets: Consumer and Business-to-Business

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Marketers must know as much as possible about the market they wish to serve. There are two major markets in business: the consumer market and the business-to-business market.

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Consumer market

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All individuals or households that want goods and services for personal consumption or use.

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Cause marketing

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Occurs when the charitable contributions of a firm are tied directly to the consumer revenues produced through the promotion of one of its products.

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Business-to-business (B2B) market

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All individuals and organizations that want goods and services to use in producing other goods and services or to sell, rent, or supply goods to others. So, businesses selling to other businesses. Traditionally, they have been known as industrial goods and services because they are used in industry. The B2B market is larger than the consumer market because items are often sold and resold several times in the B2B process before they are sold to the final consumer.

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Consider factors that make B2B marketing different from consumer marketing:

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1. Customers in the B2B market is relatively few. 2. Business customers are relatively large. 3. B2B markets tend to be geographically concentrated. Companies tend to locate close to their suppliers and customers. 4. Business buyers are generally more rational and less emotional than ultimate consumers. 5. B2B sales tend to be direct, but not always. 6. There is much more emphasis on personal selling in B2B markets. The important thing to remember is that the buyer's reason for buying-that is, the end use of the product-determines whether a product is considered a consumer product or a B2B product.

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Before marketers develop a 4P marketing mix for each product, they need to know the details of their customers and how the product being sold will meet these customers' needs.

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Market Segmentation: Segmenting the Consumer Market

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Market segmentation

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The process of dividing the total market into groups with similar characteristics

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Geographic segmentation

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Dividing the market by geographic area

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Demographic segmentation

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Dividing the market by age, income, and education level. Demographics are the most widely used segmentation variable.

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Psychographic segmentation

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Dividing the market using the group's values, attitudes, and interests. You may want your ads to portray a target group's lifestyle.

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Behavioural segmentation

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Dividing the market based on behaviour with or toward a product.

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Target marketing

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Marketing directed toward those groups (market segments) an organization decides it can serve profitably. The issue is finding the right target market-the most profitable segment-to serve.

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Mass marketing

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Developing products and promotions to please large groups of people. Mass marketing means developing products and promotions to please large groups of people resulting in little market segmentation. The mass marketer tries to sell products to as many people as possible, using mass media, such as TV, radio, and newspapers to reach them.

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Niche marketing

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The process of finding small but profitable market segments and designing or finding products for them.

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One-to-one marketing (micromarketing)

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Developing a unique mix of goods and services for each individual customer. (Basically giving them the freedom to customize products tailored to their personal preferences.)

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Product positioning

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The place an offering occupies in customers' minds on important attributes relative to competitive products.

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Positioning statement

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Expresses how a company wants to be perceived by customers.

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Relationship marketing

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Marketing strategy with the goal of keeping individual customers over time by offering them products that exactly meet their requirements. Relationship marketing tends to lead away from mass production and toward custom-made goods and services.

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Consumer behaviour

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When marketing researchers investigate consumer thought processes and behaviour at each stage in a purchase to determine the best way to help the buyer buy.

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Central to studying consumer behaviour is understanding the five steps of the decision-making process.

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Problem recognition, information search, evaluate alternatives, purchase decision, postpurchase evaluation.

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Cognitive dissonance

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Cognitive dissonance is a type of psychological conflict that can occur after a purchase. Consumers who make a major purchase (e.g., washing machines) may have doubts (i.e., cognitive dissonance) about whether they got the best product at the best price. Marketers must reassure such consumers after the sale that they made a good decision.

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There are many influences on consumers as they decide which goods and services to buy. Consider some of these factors:

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- Learning creates changes in an individual's behaviour resulting from previous experiences and information. - Reference group is the group an individual uses as a reference point in forming beliefs, attitudes, values, or behaviour. - Culture is the set of values, attitudes, and ways of doing things transmitted from one generation to another in a given society. - Subculture is the set of values, attitudes, and ways of doing things that results from belonging to a certain ethnic group, religious group, or other group with which one closely identifies (e.g., teenagers). Subculture also considers generational cohorts.

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Green marketing

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The process of selling products and/or services based on their environmental benefits.

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Greenwashing

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When businesses try to make themselves or their products or services look green or socially responsible without the action to back it up.

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Ethnic marketing

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Combinations of the marketing mix that reflect the unique attitudes, race or ancestry, communication preferences, and lifestyles of ethnic Canadians.

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