marketing

1. The act or process of buying and selling in a market.
2. The commercial functions involved in transferring goods from producer to consumer.

The activities of a company associated with buying and selling a product or service. It includes advertising, selling and delivering products to people. People who work in marketing departments of companies try to get the attention of target audiences by using slogans, packaging design, celebrity endorsements and general media exposure. The four 'Ps' of marketing are product, place, price and promotion.

Investopedia Says:
Many people believe that marketing is just about advertising or sales. However, marketing is everything a company does to acquire customers and maintain a relationship with them. Even the small tasks like writing thank-you letters, playing golf with a prospective client, returning calls promptly and meeting with a past client for coffee can be thought of as marketing. The ultimate goal of marketing is to match a company's products and services to the people who need and want them, thereby ensure profitability

Related Links:
Predicting sales growth can be something of a black art - unless you ask the right questions. Great Expectations: Forecasting Sales Growth
If used properly, this ratio can give you insight into a company's productivity and financial health. Doing More With Less: The Sales-Per-Employee Ratio

Process associated with promoting for sale goods or services. The classic components of marketing are the Four Ps: product, price, place, and promotion-the selection and development of the product, determination of price, selection and design of distribution channels (place), and all aspects of generating or enhancing demand for the product, including advertising (promotion). See also direct marketing; market; market profile; target market.

Creation of a demand for a company's products, its distribution, and services for customers who purchase that product. Actuarial research and development, underwriting efficiency, and claim payment promptness is of little value if no one is willing to purchase insurance products. Agency and marketing departments are the focus of all sales activity within an insurance company, and touch every aspect of a company by generating (1) premium income for securities, real estate, and mortgage investments; (2) sales for review by the underwriting department and their issuance by policyholder services; (3) need for data storage and retrieval by the company's data processing center; (4) legal analysis and decisions by the law department; and (5) need for corporate planning.

The term market is the root word for the word marketing. Market refers to the location where exchanges between buyers and sellers occur. Marketing pertains to the interactive process that requires developing, pricing, placing, and promoting goods, ideas, or services in order to facilitate exchanges between customers and sellers to satisfy the needs and wants of consumers. Thus, at the very center of the marketing process is satisfying the needs and wants of customers.

Needs and Wants

Needs are the basic items required for human survival. Human needs are an essential concept underlying the marketing process because needs are translated into consumer wants. Human needs are often described as a state of real or perceived deprivation. Basic human needs take one of three forms: physical, social, and individual. Physical needs are basic to survival and include food, clothing, warmth, and safety. Social needs revolve around the desire for belonging and affection. Individual needs include longings for knowledge and self-expression, through items such as clothing choices. Wants are needs that are shaped by both cultural influences and individual preferences. Wants are often described as goods, ideas, and services that fulfill the needs of an individual consumer. The wants of individuals change as both society and technology change. For example, when a computer is released, a consumer may want it simply because it is a new and improved technology. Therefore, the purpose of marketing is to convert these generic needs into wants for specific goods, ideas, or services. Demand is created when wants are supported by an individual consumer's ability to purchase the goods, ideas, or services in question.

Consumers buy products that will best meet their needs, as well as provide the most fulfillment resulting from the exchange process. The first step in the exchange process is to provide a product. Products can take a number of forms such as goods, ideas, and services. All products are produced to satisfy the needs, wants, and demands of individual buyers.

The second step in the satisfaction process is exchange. Exchange occurs when an individual receives a product from a seller in return for something called consideration. Consideration usually takes the form of currency. For an exchange to take place, it must meet a number of conditions. (1) There must be at least two participants in the process. (2) Each party must offer something of value to the other. (3) Both parties must want to deal with each other. (4) Both participants have the right to accept or to reject the offer. (5) Both groups must have the ability to communicate and deliver on the mutual agreement. Thus, the transaction process is a core component of marketing. Whenever there is a trade of values between two parties, a transaction has occurred. A transaction is often considered a unit of measurement in marketing. The earliest form of exchange was known as barter.

Historical Eras of Marketing

Modern marketing began in the early 1900s. In the twentieth century, the marketing process progressed through three distinct eras—production, sales, and marketing. In the 1920s, firms operated under the premise that production was a seller's market. Product choices were nearly nonexistent because firm managers believed that a superior product would sell itself. This philosophy was possible because the demand for products outlasted supply. During this era, firm success was measured totally in terms of production. The second era of marketing, ushered in during 1950s, is known as the sales era. During this era, product supply exceeded demand. Thus, firms assumed that consumers would resist buying goods and services deemed nonessential. To overcome this consumer resistance, sellers had to employ creative advertising and skillful personal selling in order to get consumers to buy. The marketing era emerged after firm managers realized that a better strategy was needed to attract and keep customers because allowing products to sell themselves was not effective. Rather, the marketing concept philosophy was adopted by many firms in an attempt to meet the specific needs of customers. Proponents of the marketing concept argued that in order for firms to achieve their goals, they had to satisfy the needs and wants of consumers.

Marketing in the Overall Business

There are four areas of operation within all firms: accounting, finance, management, and marketing. Each of these four areas performs specific functions. The accounting department is responsible for keeping track of income and expenditures. The primary responsibility of the finance department is maintaining and tracking assets. The management department is responsible for creating and implementing procedural policies of the firm. The marketing department is responsible for generating revenue through the exchange process. As a means of generating revenue, marketing objectives are established in alignment with the overall objectives of the firm.

Aligning the marketing activities with the objectives of the firm is completed through the process of marketing management. The marketing management process involves developing objectives that promote the long-term competitive advantage of a firm. The first step in the marketing management process is to develop the firm's overall strategic plan. The second step is to establish marketing strategies that support the firm's overall strategic objectives. Lastly, a marketing plan is developed for each product. Each product plan contains an executive summary, an explanation of the current marketing situation, a list of threats and opportunities, proposed sales objectives, possible marketing strategies, action programs, and budget proposals.

The marketing management process includes analyzing marketing opportunities, selecting target markets, developing the marketing mix, and managing the marketing effort. In order to analyze marketing opportunities, firms scan current environmental conditions in order to determine potential opportunities. The aim of the marketing effort is to satisfy the needs and wants of consumers. Thus, it is necessary for marketing managers to determine the particular needs and wants of potential customers. Various quantitative and qualitative techniques of marketing research are used to collect data about potential customers, who are then segmented into markets.

Market Segmentation

In order to better manage the marketing effort and to satisfy the needs and wants of customers, many firms place consumers into groups, a process called market segmentation. In this process, potential customers are categorized based on different needs, characteristics, or behaviors. Market segments are evaluated as to their attractiveness or potential for generating revenue for the firm. Four factors are generally reviewed to determine the potential of a particular market segment. Effective segments are measurable, accessible, substantial, and actionable. Measurability is the degree to which a market segment's size and purchasing power can be measured. Accessibility refers to the degree to which a market segment can be reached and served. Substantiality refers to the size of the segment in term of profitability for the firm. Action ability refers to the degree to which a firm can design or develop a product to serve a particular market segment.

Consumer characteristics are used to segment markets into workable groups. Common characteristics used for consumer categorizations include demographic, geographic, psychographic, and behavioral segmentation. Demographic segmentation categorizes consumers based on such characteristics as age, gender, income level, and occupation. It is one of the most popular methods of segmenting potential customers because it makes it relatively easy to identify potential customers. Categorizing consumers according to their locations is called geographic segmentation. Consumers can be segmented geographically according to the nations, states, regions, cities, or neighborhoods in which they live, shop, and/or work. Psychographic segmentation uses consumers' activities, interests, and opinions to sort them into groups. Social class, lifestyle, or personality characteristics are psychographic variables used to categorize consumers into different groups. In behavioral segmentation, marketers divide consumers into groups based on their knowledge, attitudes, uses, or responses to a product.

Once the potential market has been segmented, firms need to station their products relative to similar products of other producers, a process called product positioning. Market positioning is the process of arranging a product so as to engage the minds of target consumers. Firm managers position their products in such a way as to distinguish it from those of competitors in order to gain a competitive advantage in the marketplace. The position of a product in the marketplace must be clear, distinctive, and desirable relative to those of its competitors in order for it to be effective.

Coverage Strategies

There are three basic market-coverage strategies used by marketing managers: undifferentiated, differentiated, and concentrated. An undifferentiated marketing strategy occurs when a firm focuses on the common needs of consumers rather than their different needs. When using this strategy, producers design products to appeal to the largest number of potential buyers. The benefit of an undifferentiated strategy is that it is cost-effective because a narrow product focus results in lower production, inventory, and transportation costs. A firm using a differentiated strategy makes a conscious decision to divide and target several different market segments, with a different product geared to each segment. Thus, a different marketing plan is needed for each segment in order to maximize sales and, as a result, increase firm profits. With a differentiated marketing strategy, firms create more total sales because of broader appeal across market segments and stronger position within each segment. The last market coverage strategy is known as the concentrated marketing strategy. The concentrated strategy, which aims to serve a large share of one or a very few markets, is best suited for firms with limited resources. This approach allows firms to obtain a much stronger position in the segments it targets because of the greater emphasis on these targeted segments. This greater emphasis ultimately leads to a better understanding of the needs of the targeted segments.

Marketing Mix

Once a positioning strategy has been determined, marketing managers seek to control the four basic elements of the marketing mix: product, price, place, and promotion, known as the four P's of marketing. Since these four variables are controllable, the best mix of these elements is determined to reach the selected target market.

Product. The first element in the marketing mix is the product. Products can be either tangible or intangible. Tangible products are products that can be touched; intangible products are those that cannot be touched, such as services. There are three basic levels of a product: core, actual, and augmented. The core product is the most basic level, what consumers really buy in terms of benefits. For example, consumers do not buy food processors, per se; rather, they buy the benefit of being able to process food quickly and efficiently. The next level of the product is the actual product—in the case of the previous example, food processors. Products are typically sorted according to the following five characteristics: quality, features, styling, brand name, and packaging. Finally, the augmented level of a product consists of all the elements that surround both the core and the actual product. The augmented level provides purchasers with additional services and benefits. For example, follow-up technical assistance and warranties and guaranties are augmented product components. When planning new products, firm managers consider a number of issues including product quality, features, options, styles, brand name, packaging, size, service, warranties, and return policies, all in an attempt to meet the needs and wants of consumers.

Price. Price is the cost of the product paid by consumers. This is the only element in the marketing mix that generates revenue for firms. In order to generate revenue, managers must consider factors both internal and external to the organization. Internal factors take the form of marketing objectives, the marketing-mix strategy, and production costs. External factors to consider are the target market, product demand, competition, economic conditions, and government regulations. There are a number of pricing strategies available to marketing managers: skimming, penetration, quantity, and psychological. With a price-skimming strategy, the price is initially set high, allowing firms to generate maximum profits from customers willing to pay the high price. Prices are then gradually lowered until maximum profit is received from each level of consumer. Penetration pricing is used when firms set low prices in order to capture a large share of a market quickly. A quantity-pricing strategy provides lower prices to consumers who purchase larger quantities of a product. Psychological pricing tends to focus on consumer perceptions. For example, odd pricing is a common psychological pricing strategy. With odd pricing, the cost of the product may be a few cents lower than a full-dollar value. Consumers tend to focus on the lower-value full-dollar cost even though it is really priced closer to the next higher full-dollar amount. For example, if a good is priced at $19.95, consumers will focus on $19 rather than $20.

Place. Place refers to where and how the products will be distributed to consumers. There are two basic issues involved in getting the products to consumers: channel management and logistics management. Channel management involves the process of selecting and motivating wholesalers and retailers, sometimes called middlemen, through the use of incentives. Several factors are reviewed by firm management when determining where to sell their products: distribution channels, market-coverage strategy, geographic locations, inventory, and transportation methods. The process of moving products from a manufacturer to the final consumer is often called the channel of distribution.

Promotion. The last variable in the marketing mix is promotion. Various promotional tools are used to communicate messages about products, ideas, or services from firms and their customers. The promotional tools available to managers are advertising, personal selling, sales promotion, and publicity. For the promotional program to be effective, managers use a blend of the four promotional tools that best reaches potential customers. This blending of promotional tools is sometimes referred to as the promotional mix. The goal of this promotional mix is to communicate to potential customers the features and benefits of products.

International Marketing

International business has been practiced for thousands of years. In modern times, advances in technology have improved transportation and communication methods; as a result, more and more firms have set up shop at various locations around the globe. A natural component of international business is international marketing. International marketing occurs when firms plan and conduct transactions across international borders in order to satisfy the objectives of both consumers and the firm. International marketing is simply a strategy used by firms to improve both market share and profits. While firm managers may try to employ the same basic marketing strategies used in the domestic market when promoting products in international locations, those strategies may not be appropriate or effective. Firm managers must adapt their strategies to fit the unique characteristics of each international market. Unique environmental factors that need to be explored by firm managers before going global include trade systems, economic conditions, political-legal, and cultural conditions.

The first factor to consider in the international marketplace is each country's trading system. All countries have their own trade system regulations and restrictions. Common trade system regulations and restrictions include tariffs, quotas, embargoes, exchange controls, and non-tariff trade barriers. The second factor to review is the economic environment. There are two economic factors which reflect how attractive a particular market is in a selected country: industrial structure and income distribution. Industrial structure refers to how well developed a country's infrastructure is while income distributed refers to how income is distributed among its citizens. Political-legal environment is the third factor to investigate. For example, the individual and cultural attitudes regarding purchasing products from foreign countries, political stability, monetary regulations, and government bureaucracy all influence marketing practices and opportunities. Finally, the last factor to be considered before entering a global market is the cultural environment. Since cultural values regarding particular products will vary considerably from one country to another around the world, managers must take into account these differences in the planning process.

Just as with domestic markets, managers must establish their international marketing objectives and policies before going overseas. For example, target countries will need to be identified and evaluated in terms of their potential sales and profits. After selecting a market and establishing marketing objectives, the mode of entry into the market must be determined. There are three major modes of entry into international markets: exporting, joint venture, and direct investment. Exporting is the simplest way to enter an international market. With exporting, firms enter international markets by selling products internationally through the use of middlemen. This use of these middlemen is sometimes called indirect exporting. The second way to enter an international market is by using the joint-venture approach. A joint venture takes place when firms join forces with companies from the international market to produce or market a product. Joint ventures differ from direct investment in that an association is formed between firms and businesses in the international market. Four types of joint venture are licensing, contract manufacturing, management contracting, and joint ownership. Under licensing, firms allow other businesses in the international market to produce products under an agreement called a license. The licensee has the right to use the manufacturing process, trademark, patent, trade secret, or other items of value for a fee or royalty. Firms also use contract manufacturing, which arranges for the manufacture of products to enter international markets. The third type of joint venture is called management contracting. With this approach, the firms supply the capital to the local international firm in exchange for the management know-how. The last category of joint venture is joint ownership. Firms join with the local international investors to establish a local business. Both groups share joint ownership and control of the newly established business. Finally, direct investment is the last mode used by firms to enter international markets. With direct investment, a firm enters the market by establishing its own base in international locations. Direct investment is advantageous because labor and raw materials may be cheaper in some countries. Firms can also improve their images in international markets because of the employment opportunities they create.

Bibliography

Boone, Louise E., and Kurtz, David L. (1992). Contemporary Marketing, 7th ed. New York: Dryden/Harcourt Brace.

Churchill, Gilbert A., and Peter, Paul J. (1995). Marketing: Creating Value for Customers. Boston: Irwin.

Farese, Lois, Kimbrell, Grady, and Woloszyk, Carl (1991). Marketing Essentials. Mission Hills, CA: Glencoe/McGraw-Hill.

Kotler, Philip, and Armstrong, Gary (1993). Marketing, an Introduction, 3rd ed. Englewood Cliffs, NJ: Prentice-Hall.

Semenik, Richard J., and Bamossy, Gary J. (1995). Principles of Marketing: A Global Perspective, 2d ed. Cincinnati, OH: South-Western.

[Article by: ALLEN D. TRUELL]

The set of human activities directed at facilitating and consummating exchanges. The following three elements must be present to define a marketing situation: two or more parties who are potentially interested in exchange; each party possessing things of value to others; and each party capable of communication and delivery.

For more information on marketing, visit Britannica.com.

Marketing is the multifaceted, systematic approach to selling goods, adopted by every business and not for-profit agency and group with a message. It attempts to optimize an organization's ability to make a profit, whether monetary (profits or donations) or electoral.

Marketing encompasses advertising, promotions, product design, positioning, and product development. Marketing tools include elements such as focus groups, gap analysis, concept testing, product testing, perceptual maps, demographics, psychographics (lifestyles), and choice modeling. It is powerfully aided by market research, a science that has become increasingly complex and sophisticated over the past century or more.

Market research embraces qualitative and quantitative methods. Environmental analysis gives companies key information about economic conditions, consumer demographics, consumer lifestyles, industry trends, distribution channels, new technology, employee relations and supply, foreign markets, corporate image, political and regulatory changes, and key players in the business. Sophisticated data collection and analysis investigate market segmentation and target selection, product and advertising positioning, product design, pricing, mass media advertising, direct marketing, promotion, distribution channels, and sales force allocation.

Market research rarely has a direct impact on income, but provides the essential data to prove or disprove client preconceptions, resolve disagreements, expose threats, quantify a population, and qualify an opportunity. The ways that research is used for strategic decision making determines its relationship to profit and market advance. Marketing has existed in every age and culture. In the United States, marketing reached its high level of sophistication as a result of the mass market.

Three overlapping stages have marked the history of our republic. Until roughly the 1880s, the economy was characterized by market fragmentation. Geographical limitations were reinforced by the absence of a transportation and communications infrastructure that spanned the continent. There were hundreds of local markets and very few national brand names. Profit was determined by low sales volume and high prices.

Mass Marketing

Spurred by a communications revolution and the completion of a national railroad network that by 1900 consisted of more miles of track than the rest of the world combined, a national mass market emerged. Technological innovation mushroomed, and a small number of firms realized economies of scale previously undreamed of. Giant corporations (or a small cluster of corporations) dominated single industries. Companies were able to produce goods in high volume at low prices. By 1900, firms followed the logic of mass production as they sought to create a "democracy of desire" by universalizing the availability of products.

Mass production required the development of mass marketing as well as modern management, a process spurred by analysis of the depression of the 1870s, when unsold inventory was blamed in part for the depth of the crisis, and the depression of the 1890s, when the chaos of market competition spurred efforts to make the market more predictable and controllable.

As the mass market emerged, manufacturers and retailers developed a range of instruments to shape and mold the market. National brand names like the Singer Sewing Machine from the 1860s, Coca-Cola from the 1890s, Wrigley's Chewing Gum after 1907, and Maxwell House coffee around the same time heralded the "golden age of brand names." Advertising also came into its own during the early decades of the twentieth century. The first advertising agency was established in 1869 as N. W. Ayer and Son. John Wanamaker placed the first full-page advertisement in a newspaper in 1879. Advertising media were powerfully supplemented by the use of subway cars, electric trolleys, trams, billboards, and the explosion in magazine sales. Further developments came after the 1890s with flashing electric signs, and in 1912 "talking signs" that allowed copy to move swiftly along boards from right to left first appeared on Broadway in New York City. By 1910, photo technology and color lithography revolutionized the capacity to reproduce images of all kinds.

Forward integration into wholesaling also aided mass marketing, beginning in the 1870s and 1880s with meat packers like Gustavus Swift. Franchise agreements with retailers were one key to the success of companies such as Coca-Cola. Another feature in the success of mass marketing was the creation and implementation of sales programs made possible by the spread of modern management structures and the division of corporate functions. In 1911, with the appointment of its first director of commercial research, the Curtis Publishing Company instituted the systematic analysis of carefully collected data. Hart, Shafner, and Marx became the largest manufacturer of men's suits in America by the 1910s through research that suggested producing suits for fourteen different male body types and psychographic appeals in its advertising. During and after the 1920s, as the social sciences matured, sweeping improvements in statistical methodology, behavioral science, and quantitative analysis made market research more important and accurate. Through these means—as well as coherent production and marketing plans—a mass market was created by World War II. However, consumerism as understood in the beginning of the twenty-first century did not triumph until after 1950.

Market Segmentation

The final stage of the twentieth-century market in America has been characterized as "market segmentation." Fully developed in the 1970s and 1980s, firms sought competitive advantage through the use of demographics and psychographics to more accurately pinpoint and persuade consumers of their products. Price was determined not so much by how cheaply something could be sold, but more by the special value a particular market placed upon the goods, independent of production costs.

General Motors (GM) pioneered market segmentation in the 1920s, as it fought and beat Ford for the biggest market share of the booming automobile business. Henry Ford was an exemplar of mass marketing. He had pioneered the marketing of the automobile so that it could be within the reach of almost all Americans. Standardized models were produced quickly, identically, and only in black, which dropped the cost of car buying from $600 in 1905 to $290 by 1924. In nineteen years of production, his Model T sold to 15.5 million customers. By 1924, thanks largely to Ford, the number of cars produced in the United States was greater than 4 million, compared to 180,000 in 1910. Due to his methods, by 1921 Ford sold 55 percent of all new cars in America. In trying to compete with Ford, GM first tried merging with rivals to create a larger market force, but then embraced individuality. It was in the 1920s that annual modifications to automobile models were introduced. GM made not one model to suit all, but a number of different models to suit differing pocketbooks. It looked at the market not as an undifferentiated whole, but as a collection of segments with differing requirements and desires to be satisfied. GM made the ownership of automobiles both a status symbol and stylish. By 1927, Ford's market share had been cut to 25 percent, and Ford was forced to retool and try to catch up with GM.

By the 1960s, as consumer values shifted because of social change, marketers and advertisers sought ways to reach a more segmented society. Generational differences became much more important. Further changes, after 1970, meant that marketers needed to be much more sensitive to the differences between groups of Americans and their values. Serious foreign competition in American markets during the 1970s and 1980s also spurred innovation in market research, product design, and marketing generally. Television's Nielsen ratings offered one instrument, and more sophisticated polling techniques another. The ability to identify who watched what shows according to age, gender, and ethnic background led to more targeted advertising and a leap in TV advertising, from $12 billion in 1960 to $54.5 billion in 1980. By 1985, advertisers had developed eight consumer clusters for women alone, and over forty lifestyle groups.

By the 1990s, children, teens, and seniors were similarly analyzed. In 1997, it was estimated that "kid power" accounted for sales of over $200 billion per year. Age segmentation among children received particular attention, as researchers took into account neurological, social, emotional, and moral development. Testing determined the relative perception of visual and verbal information at different ages and developmental stages. Humor and gender differences were also studied to make marketing more successful. Deregulation of children's programming in the 1980s led to cartoons becoming merchandising vehicles. By 1987, about 60 percent of all toys sold in the United States were based on licensed characters from television, movies, or books.

Market research also determined the kinds of junk mail that went to each individual and how advertising would appear on the Internet or on television. During the 1980s and 1990s, more sophisticated research developed as patterns of credit card spending were analyzed, television was deregulated into cable and satellite channels, and Internet usage was identified.

Despite the end of a long post–World War II economic expansion, after 1970 consumer spending continued to grow, largely the result of consumerism; newer, easier forms of obtaining credit; and segmented marketing; which seized a generation of Americans who were born into the first generalized age of affluence in America. Consumer spending jumped from $70.8 billion in 1940 to $617 billion in 1970. The U.S. Census Bureau reported in 2001 that retail sales just for the fourth quarter accounted for $861 billion, a remarkable figure, given the slowdown in economic growth in the preceding thirty years.

The development of marketing during the twentieth century matched and aided American economic growth and was symbiotic with the triumph of consumerism. The creation of a "democracy of desire" came to characterize American society and its values. It was a distinctive quality that influenced the attitudes of the rest of the world toward the United States, as the strength of marketing smoothed its economic dominance around the planet.

Bibliography

Acuff, Dan S. What Kids Buy and Why: The Psychology of Marketing to Kids. New York: Free Press, 1997.

Beacham, Walton, et al., eds. Beacham's Marketing Reference: Account Executive-Market Segmentation. 2 vols. Washington, D.C.: Research Publishing, 1986.

Burwood, Stephen. "Advertising and Consumerism." In Beacham'sEncyclopedia of Social Change: America in the Twentieth Century. Edited by Veryan B. Khan. Osprey, Fla.: Beacham Publishing, 2001.

Clancy, Kevin J., and Robert S. Shulman. The Marketing Revolution: A Radical Manifesto for Dominating the Marketplace. New York: Harper Business, 1991.

Tedlow, Richard S. New and Improved: The Story of Mass Marketing in America. Boston: Harvard Business School Press, 1996.

Zollo, Peter. Wise Up To Teens: Insights into Marketing and Advertising to Teenagers. 2d ed. Ithaca, N.Y.: New Strategist Publications, 1999.

• Lip-sticking A blog about marketing to women who shop online.

For the magazine, see Marketing (magazine).

This article may require cleanup to meet Wikipedia's quality standards. Please improve this article if you can. (May 2008)

This article needs additional citations for verification. Please help improve this article by adding reliable references. Unsourced material may be challenged and removed. (February 2008)

Marketing
Key concepts
Product / Pricing / Promotion Distribution / Service / Retail Brand management Account-based marketing Marketing ethics Marketing effectiveness Market research Market segmentation Marketing strategy Marketing management Market dominance
Promotional content
Advertising / Branding Direct marketing / Personal Sales Product placement / Publicity Sales promotion / Sex in advertising Underwriting
Promotional media
Printing / Publication / Broadcasting Out-of-home / Internet marketing Point of sale / Novelty items Digital marketing / In-game Word of mouth
This box: view • talk • edit

Marketing is an integrated communications-based process through which individuals and communities discover that existing and newly-identified needs and wants may be satisfied by the products and services of others.

Marketing is defined by the American Marketing Association as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. ^[1] The term developed from the original meaning which referred literally to going to market, as in shopping, or going to a market to buy or sell goods or services.

The Chartered Institute of Marketing, which is the world's largest marketing body, defines marketing as "The management process responsible for identifying, anticipating and satisfying customer requirements profitably."^[2]

Marketing practice tended to be seen as a creative industry in the past, which included advertising, distribution and selling. However, because marketing makes extensive use of social sciences, psychology, sociology, mathematics, economics, anthropology and neuroscience, the profession is now widely recognised a science, allowing numerous universities to offer Master-of-Science (MSc) programmes. The overall process starts with marketing research and goes through market segmentation, business planning and execution, ending with pre and post-sales promotional activities. It is also related to many of the creative arts. The marketing literature is also infamous for re-inventing itself and its vocabulary according to the times and the culture.

Seen from a systems point of view, sales process engineering views marketing as a set of processes that are interconnected and interdependent with other functions^[3], whose methods can be improved using a variety of relatively new approaches.

Contents 1 The marketing concept 2 Marketing orientations 2.1 Product orientation 2.2 Sales orientation 2.3 Production orientation 2.4 Marketing orientation 2.4.1 Customer orientation 2.4.2 Organizational orientation 2.4.3 Mutually beneficial exchange 3 Four Ps 4 Product 4.1 Branding 5 Marketing communications 5.1 Personal sales 5.2 Sales promotion 6 Customer focus 7 Product focus 8 Areas of marketing specialization 9 See also 10 Related lists 11 References 12 External links

The marketing concept

The term marketing concept pertains to the fundamental premise of modern marketing. This can be laid out as recognising consumer needs/wants, and making products that correlate with consumer desires.

Marketing orientations

An orientation, in the marketing context, relates to a perception or attitude a firm holds towards its product or service, essentially concerning consumers and end-users. There exist several common orientations:

Product orientation

A firm employing a product orientation is chiefly concerned with the quality of its own product, and not in necessarily ascertaining consumer desires. A firm would also assume that as long as its product was of a high standard, persons would buy and consume the product.

However, utilising a product orientation has a prime disadvantage of making a firm lose out to competitors, who may produce technologically superior goods that engender higher consumer demand and thus market share. A product orientation may perhaps work best in a monopolistic market form, due to the inherent high barriers to entry within a monopoly.

Sales orientation

A firm using a sales orientation focuses primarily on the selling/promotion of a particular product, and not determining new consumer desires as such. Consequently, this entails simply selling an already existing product, and using promotion techniques to attain the highest sales possible.

Such an orientation may suit scenarios in which a firm holds dead stock, or otherwise sells a good that is in high demand, with little likelihood of changes in consumer tastes diminishing demand.

Production orientation

A firm focusing on a production orientation specialises in producing as much as possible of a given good. Thus, this signifies a firm exploiting economies of scale, until the minimum efficient scale is reached.

A production orientation may be deployed when a high demand for a good exists, coupled with a good certainty that consumer tastes do not rapidly alter (similar to the sales orientation).

Marketing orientation

The marketing orientation is perhaps the most common orientation used in contemporary marketing. It involves a firm essentially basing its marketing plans around the marketing concept, and thus forging products to suit new consumer tastes.

As an example, a firm would employ market research to gauge consumer desires, use R&D to develop a good attuned to the revealed information, and then utilise promotion techniques to ensure persons know the good exists. The marketing orientation often has three prime facets, which are:

Customer orientation

A firm in the market economy survives by producing goods that persons are willing and able to buy. Consequently, ascertaining consumer demand is vital for a firm's future viabilty and even existence as a going concern.

Organizational orientation

All departments of a firm should be geared to satisfying consumer wants/needs.

Mutually beneficial exchange

In a transaction in the market economy, a firm gains revenue, which thus leads to more profits/market share/sales. A consumer on the other hand gains a need/want that is satisfied, utility, reliability and value for money from the purchase of a good. As no one has to buy goods from any one supplier in the market economy, firms must entice consumers to buy goods, and thus seek to satisfy consumers' utility. If an exchange is not mutually beneficial in nature, it is not consistent with contemporary marketing ideals.

Four Ps

Main article: Marketing mix

In the early 1960s, Professor Neil Borden at Harvard Business School identified a number of company performance actions that can influence the consumer decision to purchase goods or services. Borden suggested that all those actions of the company represented a “Marketing Mix”. Professor E. Jerome McCarthy, also at the Harvard Business School in the early 1960s, suggested that the Marketing Mix contained 4 elements: product, price, place and promotion.

• Product: The product aspects of marketing deal with the specifications of the actual goods or services, and how it relates to the end-user's needs and wants. The scope of a product generally includes supporting elements such as warranties, guarantees, and support.
• Pricing: This refers to the process of setting a price for a product, including discounts. The price need not be monetary; it can simply be what is exchanged for the product or services, e.g. time, energy, or attention. Methods of setting prices optimally are in the domain of pricing science.
• Placement (or distribution): refers to how the product gets to the customer; for example, point-of-sale placement or retailing. This third P has also sometimes been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales.
• Promotion: This includes advertising, sales promotion, publicity, and personal selling. Branding refers to the various methods of promoting the product, brand, or company.

These four elements are often referred to as the marketing mix,^[4] which a marketer can use 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), suggests that one of the greatest limitations of the 4 Ps approach "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".

Product

Main article: New Product Development

Branding

Main article: Brand

A brand is a name, term, design, symbol, or other feature that distinguishes products and services from competitive offerings. A brand represents the consumers' experience with an organization, product, or service. A brand is more than a name, design or symbol. Brand reflects personality of the company which is organizational culture.

A brand has also been defined as an identifiable entity that makes a specific value based on promises made and kept either actively or passively.

Branding means creating reference of certain products in mind.

Co-branding involves marketing activity involving two or more products.

Marketing communications

Marketing communications breaks down the strategies involved with marketing messages into categories based on the goals of each message. There are distinct stages in converting strangers to customers that govern the communication medium that should be used.

Personal sales

Oral presentation given by a salesperson who approaches individuals or a group of potential customers:

• Live, interactive relationship
• Personal interest
• Attention and response
• Interesting presentation
• Clear and thorough.

Sales promotion

Short-term incentives to encourage buying of products:

• Instant appeal
• Anxiety to sell

An example is coupons or a sale. People are given an incentive to buy, but this does not build customer loyalty or encourage future repeat buys. A major drawback of sales promotion is that it is easily copied by competition. It cannot be used as a sustainable source of differentiation.

Customer focus

Many companies today have a customer focus (or market orientation). This implies that the company focuses its activities and products on consumer demands. Generally there are three ways of doing this: the customer-driven approach, the sense of identifying market changes 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.^[5]

A formal approach to this customer-focused marketing is known as SIVA^[6] (Solution, Information, Value, Access). This system is basically the four Ps renamed and reworded to provide a customer focus.

The SIVA Model provides a demand/customer centric version alternative to the well-known 4Ps supply side model (product, price, place, promotion) of marketing management.

Product	→	Solution
Promotion	→	Information
Price	→	Value
Placement	→	Access

The four elements of the SIVA model are:

1. Solution: How appropriate is the solution to the customer's problem/need?
2. Information: Does the customer know about the solution? If so, how and from whom do they know enough to let them make a buying decision?
3. Value: Does the customer know the value of the transaction, what it will cost, what are the benefits, what might they have to sacrifice, what will be their reward?
4. Access: Where can the customer find the solution? How easily/locally/remotely can they buy it and take delivery?

This model was proposed by Chekitan Dev and Don Schultz in the Marketing Management Journal of the American Marketing Association, and presented by them in Market Leader, the journal of the Marketing Society in the UK.

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 profitable market segment(s) exist 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. However, marketers can aggressively over-pursue product innovation and try to overcapitalize on a niche. When pursuing a product innovation approach, marketers must ensure that they have a varied and multi-tiered approach to product innovation. 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.

• 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 (employer branding).
• 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, desktop advertising or online marketing. It 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.
• With consumers' eroding attention span and willingness to give time to advertising messages, marketers are turning to forms of permission marketing such as branded content, custom media and reality marketing.
• The use of herd behavior in marketing.

The Economist reported a recent conference in Rome on the subject of the simulation of adaptive human behavior.^[7] It shared mechanisms to increase impulse buying and get people "to buy more by playing on the herd instinct." The basic idea is that people will buy more of products that are seen to be popular, and several feedback mechanisms to get product popularity information to consumers are mentioned, including smart-cart technology and the use of Radio Frequency Identification Tag technology. A "swarm-moves" model was introduced by a Florida Institute of Technology researcher, which is appealing to supermarkets because it can "increase sales without the need to give people discounts."

Marketing is also used to promote business' products and is a great way to promote the business.

Other recent studies on the "power of social influence" include an "artificial music market in which some 14,000 people downloaded previously unknown songs" (Columbia University, New York); a Japanese chain of convenience stores which orders its products based on "sales data from department stores and research companies;" a Massachusetts company exploiting knowledge of social networking to improve sales; and online retailers who are increasingly informing consumers about "which products are popular with like-minded consumers" (e.g., Amazon, eBay).

Areas of marketing specialization

• agricultural marketing
• advertising and branding
• communications
• CRM, Customer Relationship Management
• database marketing
• professional selling
• direct marketing
• event organization
• experiential marketing
• field marketing
• global marketing
• guerilla marketing
• international marketing
• internet marketing
• industrial marketing
• market research
• marketing strategy
• marketing plan
• political marketing
• product marketing
• proximity marketing
• public marketing
• retailing
• search engine marketing
• segmentation
• social media marketing
• sponsorship
• strategic management
• wholesale marketing

See also

Main article: Outline of marketing

Advertising Research AIDA Article marketing Borderless Selling Brand Brand orientation Branded content Cause marketing Copywriting Customer relationship management Customer Segmentation Digital marketing Demand generation Early adopter Engagement marketing Evangelism marketing

Fear, uncertainty, doubt Integrated Marketing Communications LGBT marketing Macromarketing Market Segmentation Marketeer Marketing collateral Marketing co-operation Marketing Mix Marketing effectiveness Merchandising Mobile Marketing Multichannel Marketing Predictive analytics

Product marketing Reality marketing Referral marketing Return on marketing investment Sales techniques SEO Copywriting Services Sex in advertising Senior media creative Technical marketing* Trade marketing Value Visual brand language Wikipedia:Books has a book on: Marketing

Related lists

See List of marketing topics for an extensive list of the marketing articles.

• List of management topics
• List of human resource management topics
• List of economics topics
• List of finance topics
• List of accounting topics
• List of information technology management topics
• List of production topics
• List of business law topics
• List of international trade topics
• List of business ethics, political economy, and philosophy of business topics
• List of business theorists

References

1. ^ Marketing definition approved in October 2007 by the American Marketing Association: [1].
2. ^ Definition of marketing, Chartered Institute of Marketing
3. ^ Paul H. Selden (1997). Sales Process Engineering: A Personal Workshop. Milwaukee, WI: ASQ Quality Press. p. 23. 
4. ^ "The Concept of the Marketing Mix" from the Journal of Advertising Research, June 1964 pp 2-7
5. ^ "Marketing Management: Strategies and Programs", Guiltinan et al., McGraw Hill/Irwin, 1996
6. ^ "In the Mix: A Customer-Focused Approach Can Bring the Current Marketing Mix into the 21st Century". Chekitan S. Dev and Don E. Schultz, Marketing Management v.14 n.1 January/February 2005
7. ^ "Swarming the shelves: How shops can exploit people's herd mentality to increase sales?". The Economist. 2006-11-11. p. 90. 

External links

Look up marketing in Wiktionary, the free dictionary.

Wikiquote has a collection of quotations related to: Marketing

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)

Common misspelling(s) of marketing

• marketting

Dansk (Danish)
n. - marketing, handel, køb, afsætning

Nederlands (Dutch)
marketing, markthandel

Français (French)
n. - marketing, mercatique, service de marketing

Deutsch (German)
n. - Marketing

Ελληνική (Greek)
n. - (οικον.) μάρκετινγκ, αγοραλογία

Italiano (Italian)
marketing

Português (Portuguese)
n. - marketing (m)

Русский (Russian)
маркетинг, торговля, предмет торговли

Español (Spanish)
n. - mercadeo, comercialización

Svenska (Swedish)
n. - marknadsföring, torghandel, marknadsvaror

中文（简体）(Chinese (Simplified))
行销, 买卖

中文（繁體）(Chinese (Traditional))
n. - 行銷, 買賣

한국어 (Korean)
n. - 사고팔기, (제품을 만들고 파는 전과정)마케팅

日本語 (Japanese)
n. - 売買, マーケティング, 市場での売り物, 買物

العربيه (Arabic)
‏(الاسم) تسويق‏

עברית (Hebrew)
n. - ‮שיווק, הפצת סחורה‬

If you are unable to view some languages clearly, click here.

To select your translation preferences click here.