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WHAT IS MARKETING?
Marketing is a branch of commerce concerned with examining products
and markets, studying customers' requirements and taking any relevant
commercial steps so as to have the right product to reach the right market
at the right price. It comprises such features as:
1. gathering information on all aspects of the business
2. devising a marketing plan in terms of aims, resources and strategies to
follow
3. applying to services of management consultancy
4. running a market research and finding out the market potential
5. pondering upon the problems connected with production
6. devising relevant advertising campaigns
7. availing of computer bureau services which process customers' data
8. considering the opportunity of allowing special discounts
9. arranging product demonstrations at local supermarkets
10.
sending circular letters
Marketing does not only mean selling products or services. It requires the
application of a wide number of disciplines and areas of expertise in order
to satisfy the tastes and meet the needs of potential customers. The main
factors to consider are concerned with product conception and design,
brand name, packaging, price, sales promotion, methods of advertising,
discovering new customers, determining customers' needs, organizing
sales strategies, determining sales areas, planning delivery service,
examining expenses, etc.
Marketing organization has to cover all these aspects.
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Example of Marketing Organization
MAR KET IN G D IR ECT OR
Product
R e se a rch
a nd
D e ve lopme nt
Sa le s Promotion
a nd Adve rtising
Ma rke t
R e se a rch
T ra nsport Se rvice
Ana lysis of Costs
a nd e xpe nse s
Custome r Se rvice
a nd R e la tions
Companies have a considerable number of experts and designers involved
in the production and design of new products suitable to meet the needs of
the market. The creation of a new product is subject to an evaluation
process designed to improve the original idea before launching the product
on the market. The main points to consider are reflected in the following
questions:
 Do customers really need this new product?
 What features are likely to meet customers' requirements?
 On the base of our existing resources and abilities, are we really able to
make it?
 What kind of costs ( production, distribution, advertising, etc.) do we
have to cope with?
 Is our present capital availability sufficient to support such production
project?
 What will be the effective return in terms of profit?
 What is the business forecast for the first period of one or two years?
 What do our competitors offer?
These and similar questions are deeply investigated by teams of skilled
and exsperienced executives and researchers. They analyse reports from
the various sections, sales projections, technical difficulties, competition
pressure, suggestions, etc. and decide upon starting the new production
project or not.
The main sections regarding the organization of a production project are
the following: Market Research, Test Marketing, Sales Promotion,
Advertising and Distribution.
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Market research
The aim of market research is gathering information about the people who
buy in order to examine the possible sales of a company's product or
services. Researchers ask questions about consumers' purchasing habits,
the market trend, the products of competitor firms and interview trade
operators and prospective buyers.. They contact wholesalers, distributors,
retailers and market operators or mail questionnaires to sample
participants.
Test marketing
It is a less expensive method of finding out if a new product, which has
been launched only in a small geographical area, sells well or not. This
method reduces the risks and expense involved in launching the new
product all over the country.
Sales promotion
Sales promotion is concerned with a variety of methods used to promote
the sale of a product or service. The most common method of promoting
sales is the advertising through the mass media: television, radio, press,
cinema, billboard. Other types of sales promotion include consumer
leaflets, display posters in retail outlets, permanent signs, display stands,
display windows, distribution of samples, coupons and vouchers, etc.
Distribution
Distribution is concerned with the channels through which goods reach
consumers. A farmer carries his agricultural produce to a wholesale market
where they are sold to retailers, hotels , restaurants, supermarkets, etc. A
manufacturer reaches consumers through wholesaler-retailer channel or
through multiple stores.
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Today's successful companies are the ones that have learned how to get
their strategy right. They understand and build on their strengths, they
know with whom they wish to compete, and they have effective
mechanisms for establishing their priorities. They act to create strategic
advantage.
The Competitive
Environment
Strategic Market
Planning
Strategic
Analysis of
Industry Structure
Human Resources
Advantage
Information
Management
Business Portfolio
Capital
Investment
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DISTRIBUTION CIRCUITS
Ma nufa cture r
W hole sa le r's W a re house
R e ta ile r
Importe r
Consume r
R e ta il outle ts
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In advanced economies where most of the population is engaged in
specialized production of goods of which they themselves can use only a
small part, marketing is a key activity. The modern farmer as well the
manufacturer could not manage without it. The marketing system makes
possible sales for cash. The farmer can then buy improved seed, fertilizers,
pesticides and machinery, and so obtain higher yields per man and per
acre. The manufacturer can purchase materials from a wide range of
sources. Both farmer and manufacturer can pay their workers in cash
instead of in kind.
Consumers concentrated in urban centres, where they produce no food
themselves, depend on marketing for survival; food must be brought to
them. If the marketing channels were interrupted - as seemed likely for
some cities during World War II - then many millions of people would be
without food. Thus specialization, industrialization and urban concentration
are associated with organized marketing, and rapid economic development
is conditional upon a comparable growth of marketing functions and
services. (From Encyclopaedia Britannica)
A Farmer
buys
produces and sells
se e ds
fe rtilize rs
fruit a nd ve ge ta ble s
e ggs
pe sticide s
milk
ma chine ry
tools
che e se
A Manufacturer
buys
makes and sells
ra w ma te ria ls
ma nufa cture d products
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An aspect of marketing considers the opportunity to have the right product
to reach the right market. This implies having to solve any problems
concerning with assembly, distribution, transportation, storage, grading,
packaging, exchange, finance and risk.
Assembly
The assembly of produce of differing type and quality from a number of
sources is usually the first step in marketing. Concentration at convenient
points attracts buyers who could not spare the time to visit scattered
producers; it permits transport, storage, grading, packing and processing
on a larger scale and with more specialized techniques. Most products
undergo substantial changes before they are ready for the final purchaser.
For example grain is ground into flour and baked into bread; milk is
converted into butter and cheese.
Distribution
Distribution systems develop to match available supplies to consumer
demand. Supplies flowing into assembly points and warehouses fluctuate
in type, quantity and quality. Consumer demand may also vary according
to season, climate, local customs, religious teaching and many other
factors. Distributors adapt the flow of supplies to such variations in demand
by using their experience and market intercommunication.
Transportation
Movement of products between places is an essential part of marketing.
Transport to railheads, ports or processing plants may be provided by
either the original producer or the first buyer. Longer-distance movement
by road, rail or sea is often furnished by specialized transport firms. Many
of the disadvantages and much of the strength of different marketing
systems have their origin in transport methods. If deliveries are slow, and
equipment is inadequate, products deteriorate before reaching their
market, and contracts cannot be met. Careless handling and delays can
result in serious damage and loss, and impose heavy costs on that part of
the load which does reach the market in sound condition.
Storage
Storage facilities are needed at various stages of the marketing sequence.
Most traders who take possession of produce also control storage facilities
in order to have freedom of choice as to the time of resale. At ports and
other transshipment centres, and near important commodity markets,
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storage is provided by specialized enterprises and made available for a
fee. Wholesalers and retailers also maintain storage to hold stocks from
which they can satisfy clients' requests promptly.
Grading
Grading products according to recognized uniform standards enables
buyers to purchase more precisely what they want and are willing to pay
for; to this extent it increases their satisfaction and makes the marketing
system more efficient. Where buyer and seller are separated by long
distances and personal inspection is impracticable, then detailed standard
quality specifications established by governments are effective.
Packaging
Most food and manufactured products must be enclosed in some kind of
container if they are to be marketed widely and efficiently. These
containers afford a convenient way of handling, help to prevent physical
deterioration, make theft, adulteration and substitution more difficult,
ensure cleanliness and facilitate measurement, labelling and the
attachment of sales instructions and descriptions. They may also promote
sales because of their attractive appearance. Specialized equipment and
enterprises have been developed to pack goods in wood, metal,
paperboard or plastic containers adapted to a wide range of requirements.
Exchange
An essential part of marketing is the facilitation of exchange. Two phases
are involved: the contacting of possible buyers and sellers of particular
products at a given time, and the negotiation of the terms of exchange. In
many countries the town market square is the scene of a steady flow of
direct transactions between producers and consumers. In larger markets,
and where producers and consumers are separated by distance, time and
processing requirements, the negotiation of sales may be undertaken in
return for a fee by specialized commission agents, brokers and auctioneers
who, perhaps, neither take possession of nor handle the goods sold.
Accurate information on the character and quality of a product, its
suitability for various purposes and its price in alternative markets is
important for persons engaged in buying and selling. Special reporting
services designed to supplement such information and help consumers
buy to the best advantage had acquired great influence in the United
States and Britain by the 1960s.
Finance and Risk
All marketing requires finance. The owner of goods at any stage must
either sacrifice the opportunity to use his own capital elsewhere or borrow
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the necessary capital from some other source. Farmers, wholesalers,
manufacturers and retailers need capital or credit for the time during which
they are in possession of products and are awaiting sale and payment.
Wholesalers, for example, must finance their packing, processing and
storage plants, transport equipment and display premises. Retailers must
also finance their sales premises, that part of their stock which wholesalers
do not carry and, in trades like that for consumer durables, a large
proportion of their customers' purchases. Risk bearing is also involved in
marketing and must be covered by an equivalent expectation of profit. One
of the major risks is that of a fall in price. Price variations are greater for
agricultural products, which are subject to the impact of drought, rain and
frost, than for many other traded commodities. The risks of such changes
for individual traders are often minimized by resort to organized commodity
exchanges, where "futures" may be bought and sold as a hedge against
cash transactions. Risks of quality deterioration are very important in the
case of perishable products such as milk and some fruits and vegetables.
(From Encyclopaedia Britannica).
NOTE:
Processing is carrying out a series of actions aimed at changing the chemical features of liquids,
powder, grains into finished or partly finished form before they are used or sold. Examples of process
industries are the oil industry, the sugar industry, the cement industry, the paper industry, etc.
Grading consists in separating something (wool, grain) into different lots by quality or size.
Futures (Forward purchasing sales)are commodities or securities which are bought or sold at a certain
price now for delivery at some agreed time in the future.
Oral Test
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What is marketing?
What are the main features of marketing?
What factors are considered when conceiving a new product?
What kind of problems does the creation of a new product arise?
What are the main sections regarding the organization of a production project?
What is the aim of market research?
What is test marketing?
What methods are used to promote sales?
What is distribution concerned with?
What advantages does a farmer get from marketing?
What does marketing mean to consumers?
What are the advantages of assembling produce in a concentration point?
What is the function of distribution?
How does transportation affect marketing?
What is the function of storage?
What is the advantage of grading?
What is the function of packaging?
Who are the operators who facilitate sales in large markets?
Why is capital necessary to marketing?
What risks may occur in marketing?
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Advertising is a fundamental branch of commerce and one of the major
aspects of marketing. 'It is the activity of telling people about products,
services, events or job vacancies, and making people want to buy the
products or services, go to the events, or apply for the jobs'. From a
commercial point of view, it is a means of communication aiming at
promoting sales of consumer goods or at making consumers aware of the
existence of a new product or service so as to arouse their interest and
persuade them to buy.
ADVERTISING MEDIA
Advertising is associated with the following advertising media:
1.
Newspapers and magazines
2.
Specialised trade journals
3.
TV commercials
4.
Trade fairs
5.
Exhibition and conference facilities
6.
Posters displayed in public places or means of transport
7.
Point-of-sale displays
8.
Billboards placed along motorways
9.
Catalogues
10. Pattern books or sets of samples
11. Electric signs affixed to buildings
12. Screen ads
13. Shop signs
14. Advertising illustrative literature
15. Descriptive brochures
16. Stickers
The choice of a medium
Among the main features which affect the choice of a medium are:
1. the quality of the product or service offered,
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2. the kind of people to whom the medium applies,
3. the area covered by the medium,
4. the cost of the medium.
Advantages of advertising. The main advantages of advertising are:
1. since it helps to sell more goods, it keeps more people employed;
2. it increases producers' profits;
3. it keeps consumers informed about the products available on the
market;
4. it contributes to keep the cost of newspapers and magazines low;
Disadvantages of advertising. The main disadvantages of advertising
are:
1. it persuades consumers to buy what they do not need or what they
cannot afford;
2. it affects the cost of production cinsiderably;
3. it arouses questions of ethics and creates false symbols especially on
the young;
ADVERTISING EXPENDITURES
Advertising expenditure rose by 10.6 per cent in 1989 to £7,555 million.
The press accounted for nearly 64 per cent of the total, television for 30
per cent, posters for nearly 4 per cent, and commercial radio and cinema
for the rest.
These proportions have remained roughly constant since 1983. By product
category, the largest advertising expenditure is on food, retail and mail
order services, financial services, motor cars and leisure equipment.
Campaigns are planned mainly by advertising agencies, of which there are
several hundred in Britain; in some cases they also provide marketing,
consumer research and other services. (From Britain 1991)
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Adve rtising inve stme nt
pe r product ca te gory
Adve rtising Inve stme nts in me dia
70
60
50
40
30
20
10
0
70
60
50
40
30
20
10
0
Pre ss
Poste rs
T e le vision
Othe r me dia
Food
R e ta il se rvice s
Fina ncia l se rvice s
Le isure e quipme nt
motor
ca rs
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READING PASSAGE
ADVERTISING AS A CONSUMER AID
The alert consumer has a number of resources at his or her command
when choosing goods and services. Some of them are:
Advertising
Merchants inform consumers of products, their uses and prices through
advertisements they place in the media. Advertising is especially important
in today's large scale national market because "word-of-mouth" knowledge
about products is impractical. Businesses find advertising useful because it
enables them to differentiate their products from those of their competitors.
In 1979, businesses in the United States spent almost $50,000 million on
advertising. Advertising is considered a normal business expense, not
unlike research and development, or product safety.
Although advertising performs some useful functions, critics argue that
consumers are often enticed into buying things they do not want or need.
They note that ads are prepared by experts who appeal to psychological
desires and uncoscious needs of prospective consumers. They also claim
that the familiarity of the public with a brand name, or the amount of money
a particular company spends to advertise its products, may be significant in
terms of sales but is not necessarily reflected in the quality of the product
advertised.
Consumer Testing Organizations
Several private organizations test thousand of products and publish the
results. They explain usually how tests were made, list brand names, and
present relevant and comparative information. Products are usually
classed according to which have the best quality, which are acceptable,
and which are to be avoided. Individuals can subscribe to these services
for modest annual fees.
Labels
A shrewd consumer makes a practice of reading labels on products.
Federal regulations require an accurate description of the contents of
products and a statement of how to use them. Misleading statements are
prohibited.
(From An Outline of American Economics - United States Information Agency)
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NEWSPAPER AND MAGAZINE ADVERTISING
1. People and planning stages required in making an advert
A newspaper or magazine advertisement is a very common means of
communication as well as a product. As a product it implies administrative
and presentation skills and is the result of a working group of people. The
following is a list showing businesses and people usually engaged in
making an advert:
Advertising agency
A company which provides the
services of designing and making
adverts, placing them in suitable
advertising media, and carrying out
research.
Advertiser or his/her
representative
The person or company representative
who needs to advertise a product or a
service.
Advertising manager
A person in charge of planning and
overseeing a company's advertising
department
Advertisement or business
manager
The person in charge of the selling of
advertising on behalf of a company
(Advertising agency)
Copywriter (=redattore)
The person who takes charge of the
layout of an advert transforming the
idea into suitable words.
Artist
A person who makes drawings and
pictures to match the basic idea or
purpose of the advertising message.
Photographer
A person who takes photos to support
the aim of the advertising message.
Engraver
A person who makes engravings of the
final drawings or illustrations combined
with the worded message.
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The person who actually prints the
advert on the page of the publication.
Printer
The main stages in making an advert are:
1. Planning the advert according to the basic underlying idea so as to work
up a general layout in terms of contents and costs (Advertiser, Business
manager and Advertising manager)
2. Designing the advert into words and pictures (Copywriter and
Artist/Photographer)
3. Preparing both words and illustration according to the layout previously
agreed
4. Making engravings or electronic recordings to be used in the printing
stage
5. Printing the advert on the newspaper or magazine page
Glossary
Advertiser
An advertiser is a person or company that has a product, or a service, or an event, or a job vacancy to
advertise and to this end he applies to and pays an advertising agency to perform this service.
Advertising agency
An advertising agency is a company which provides the services of designing and making
advertisements, placing them in suitable advertising media, and carrying out research. (From
Business English Dictionary by M.Wallace and P.J.Flynn - Collins)
Advertising media
They are the channels of communication ( newspapers, magazines, television, radio, cinema, posters,
etc.) by which a company or a manufacturing concern informs people of its goods or services.
to advertise
means to inform, to give/to publish a notice of, to give conspicuous information of a product, a service,
an event, a job vacancy to the public through such media as newspapers, magazines, periodical
publications, radio, television, posters, etc.
Examples: We advertise goods for sale, The Manager advertised for a secretary, This product has
been advertised on television, This is a brochure advertisingthe rangeof our services, We should
advertise for someone to take care of our children.
Advertisement
An advertisement (shortened "ad" or "advert") is an announcement in a newspaper, on television, or on
a poster about something such as a product on sale, a service offered, an event to occur, a room to
let, an agency to entrust, or a job vacancy to fill. Examples: to publish/to release an advertisement, an
advertisement for Arbor shoes, we have read your advert for an accountant.
TYPES OF ADVERTISEMENTS
There are two types of adverts:
1. Classified adverts which are so called because they are selected and
sorted into different classes according to their contents features. They
are generally arranged in colums headed as follows: family
announcements
(births,
deaths,
engagements,
marriages,
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acknowledgement, in memoriam, wedding anniversaries), situations
vacant, situations wanted, entertainments, personal, professional &
executive, representatives & agents, part time, miscellaneous wanted,
miscellaneous for sale, property wanted, property for sale,
accomodation wanted, Flat & House rentals, notices, business services,
business opportunities, travel & leisure, articles for sale, education &
tuition, what's on, etc.
2. Display adverts which are usually illustrated and are placed in different
advertising spaces. A display advert generally contains one or more
headlines, a logo, text and illustration.
Oral Test
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What is advertising?
What are the main advertising media?
What features affect the choice of a medium?
What are the advantages of advertising?
What are the disadvantages of advertising?
How does advertising affect business?
What is the function of testing?
Who are the people engaged in making an advertisement?
What is an advertising agency?
What are the main stages in making an advert?
How many kinds of adverts do you know?
What are classified adverts?
What are display adverts?