Download What is marketing?

What is marketing?
There are many different definitions of marketing. Consider some of the following alternative
definitions:
“The all-embracing function that links the business with customer needs and wants in order to get the
right product to the right place at the right time”
“The achievement of corporate goals through meeting and exceeding customer needs better than the
competition”
“The management process that identifies, anticipates and supplies customer requirements efficiently
and profitably”
“Marketing may be defined as a set of human activities directed at facilitating and consummating
exchanges”
Which definition is right? In short, they all are. They all try to embody the essence of marketing:
• Marketing is about meeting the needs and wants of customers;
• Marketing is a business-wide function – it is not something that operates alone from other business
activities;
• Marketing is about understanding customers and finding ways to provide products or services which
customers demand
Marketing as an Exchange Process
At the beginning of any marketing course or programme it is important to appreciate how exchange
processes work. An exchange process is simply when an individual or an organisation decides to satisfy a
need or want by offering some money or goods or services in exchange. It's that simple, and you enter
into exchange relationships all the time.
Exchange is the act of obtaining a desired object from someone by offering something in return.
(Armstrong et al 2009)
For example you go into a restaurant and order your favourite meal. You eat the food and then you pay
for it with your credit card. That's a basic exchange relationship.
You use your Android or iPhone to download an app and you pay for it using PayPal. Again you have
gone through and completed an exchange process.
You see a newspaper advertisement asking you to donate blood and you return a coupon to become a
blood donor.
You watch the news on TV and listen to the views of a political candidate, and on polling day you vote
for that person.
Can you think of any more examples of marketing as an exchange process? Write down three more
examples in addition to those above.
Marketing managers attempt to engender a response from a marketing stimulus. This is the exchange
process as it begins. Let's remember that marketing extends further than goods or services. It could be
that a government is trying to persuade its population to stop smoking, or speeding. So marketing is a
series of actions and plans that are designed to recruit, retain and extend goods and services to a target
audience. This is the basic exchange process in marketing.
The exchange process extends into relationship marketing. With relationship marketing we purposefully
look at the long-term relationship with our target audience, and aim to grow our business. By delivering
value to our customers we consistently nurture the relationship with customers. Later in your studies
you will come across relationship marketing and customer relationship management, which encompass
the traits of a basic marketing exchange process and take it much further.
History of Marketing (NOT IN SYLLABI)
It is hard for many to believe, but when compared to economics, production and operations, accounting
and other business areas, marketing is a relatively young discipline having emerged in the early 1900s.
Prior to this time most issues that are now commonly associated with marketing were either assumed to
fall within basic concepts of economics (e.g., price setting was viewed as a simple supply/demand issue),
advertising (well developed by 1900), or in most cases, simply not yet explored (e.g., customer purchase
behavior, importance of distribution partners).
Led by marketing scholars from several major universities, the development of marketing was in large
part motivated by the need to dissect in greater detail relationships and behaviors that existed between
sellers and buyers. In particular, the study of marketing led sellers to recognize that adopting certain
strategies and tactics could significantly benefit the seller/buyer relationship. In the old days of
marketing (before the 1950s) this often meant identifying strategies and tactics for simply selling more
products and services with little regard for what customers really wanted. Often this meant companies
embraced a “sell-as-much-as-we-can” philosophy with little concern for building relationships for the
long term.
But starting in the 1950s, companies began to see that old ways of selling were wearing thin with
customers. As competition grew stiffer across most industries, organizations looked to the buyer side of
the transaction for ways to improve. What they found was an emerging philosophy suggesting that the
key factor in successful marketing is understanding the needs of customers. This now famous Marketing
Concept suggests marketing decisions should flow from FIRST knowing the customer and what they
want. Only then should an organization initiate the process of developing and marketing products and
services.
The marketing concept continues to be at the root of most marketing efforts, though the concept does
have its own problems (e.g., doesn’t help much with marketing new technologies) a discussion of which
is beyond the scope of this tutorial. But overall, marketers have learned they can no longer limit their
marketing effort to just getting customers to purchase more. They must have an in-depth understanding
of who their customers are and what they want.
The Marketing Management Philosophies
Marketing management can be described as carrying out the tasks that achieve desired exchanges,
between the corporation, and its customers.
There are a number a different philosophies that guide a marketing effort.
Production Concept Demand for a product is greater than supply.
To increase profit, focus on production efficiencies knowing all output can be sold. Also useful concept
when increasing production raises economies of scale etc. to reduce price. Henry Ford, "Doesn't matter
what color car you want, as long as it is black."...A typical quote during the production era.
Dominant era: From mid C19th to early C20th, industrial revolution etc.
Selling Concept Demand for a product is equal to supply.
Emphasis is needed to sell the product to increase profits. Focus on advertising.
Useful for unsought goods, i.e., encyclopedias, funeral plots. Political candidates, selling important, not
post consumer satisfaction.
Dominant era: 1920's to Mid 1930's WWII to early 1950's
Marketing Concept Supply for a product is greater than demand, creating intense competition among
suppliers.
Company first determines what the consumer wants, then produces what the consumer wants, then
sells the consumer what it wants.
Dominant era: 1930's to WWII 1950's to present.
LL Bean 1912, founded on the marketing concept, in his first circular:
"I do not consider a sale complete until goods are worn out and the customer still satisfied. We will
thank anyone to return goods that are not perfectly satisfactory...Above all things we wish to avoid
having a dissatisfied customer."
To illustrate the marketing era/concept Peter Drucker, in 1954 said:
"if we want to know what business is we must first start with its purpose...There is only one valid
definition of business purpose: to create a customer. What business thinks it produces is not of first
importance-especially not to the future of the business or to its success. What the customer thinks
he/she is buying, what he/she considers "value" is decisive-it determines what a business is, what it
produces, and whether it will prosper."
-Peter Drucker, The Practice of Management, 1954, P.37
John B McKitterick, President of General Electric, 1957, addressing the AMA said:
"It is customer oriented, integrated, profit oriented philosophy of business."
Still need to make a profit "meeting needs profitably"
Handout...`Do Call Us': More companies...
Example of using the marketing concept...1-800 #s listen to your customers, test product ideas on them
etc.
Improvements in technology have enabled marketers to become more consumer oriented, helping
develop Relationship marketing 1:1 marketing
For the launch of Windows 95, Microsoft has contracted five additional companies (including Unisys and
DEC) to handle the anticipated overlaod in demand for the 1-800 #. They had the capacity available to
handle 40,000 phone calls in the first day (twice their usual capacity), but still left customers waiting for
service.
Societal Marketing Concept: Focus on other stakeholders, as well as the business and its customers.
Need to balance 3 items
Company profits
Customer wants
Society's interests
The difference between short term consumer wants and long term consumer welfare.
An example of a company adopting the Societal concept:
Starkist...Dolphin Safe Tuna Actually more expensive than regular tuna, but is more appealing due to
society's concerns.
Handout...Hooters Tries to Do Good Work..
An example of the societal marketing concept...although the ethics of accepting monies from Hooters
may be questioned (i.e. exploitation of women??)
For another example of Societal Marketing Concept...Visit the Body Shop and pick up some of their
leaflets.
What era are we in now?
We are still essentially in the marketing era, since that is the dominant concept, but increasing pressure
is being put on to companies to adopt the societal concept.
Return to Contents List
Importance of the marketing concept.
According to the Customer Service Institute, it costs as much as five times as much to acquire a new
customer than it does to service an existing one.
Customers tell twice as many people about a bad experience over a good one.
According to the American Marketing Association (AMA), for an average company, 65% of its business
comes from its presently satisfied customers.