What is Marketing? Tutorial
In the first section of our highly detailed Principles of Marketing Tutorials we lay the groundwork for our study of the field of marketing with a close look at marketing’s key concepts and the important tasks marketers perform. We will see that marketing encompasses a wide array of business decisions that are essential to the success of nearly all organizations.
Coverage in this part of the tutorial includes a close examination of the definition of marketing. A dissection of the key terms in the definition will show that marketing’s primary focus is to identify and satisfy customers in a way that helps build a solid and, hopefully, sustained relationship that encourages customers to continue doing business with the marketer.
We also will spend a short time on the history of marketing and see how it has evolved from a process centered on simply getting as many people as possible to purchase a product to today’s highly complex efforts designed to build long-term customer relationships. Additionally, we will see that marketing is not only important to individual organizations it also carries both positive and negative influences at a broader societal level. Finally, we look at the key characteristics that define successful marketers.
Welcome to Marketing
Welcome to the world of marketing and the Principles of Marketing Tutorials from KnowThis.com. The main intention of this tutorial is to offer a straightforward examination of an important, exciting, and challenging business discipline crucial to virtually all organizations and all industries.
The Principles of Marketing Tutorials are ideal for anyone who is new to marketing as it covers all essential marketing areas. By spending time with this tutorial the marketing novice will quickly gain the foundation needed to appreciate what marketers do and understand the full scope of marketing decision making. For some, reading this tutorial may also offer insight into career options that exist in the marketing field.
Experienced marketers may also find this tutorial useful. Often seasoned marketers tend to focus on just a few areas of marketing as part of their day-to-day activities and this tutorial may serve as a good refresher for areas of marketing for which they have not recently spent much time.
Before we get started we should mention that most of what we discuss applies to all types of businesses including those whose objective is to make money (i.e., for-profit businesses) as well as those not driven by a profit-making motive (i.e., not-for-profit organizations). However, the reader should be aware that we often use the terms organization, company, corporation, and firm interchangeably. While the later three terms are often associated with profit-making businesses, the reader should understand the use of one of these terms does not necessarily limit the context of the discussion to for-profit businesses but may apply across all types of marketing situations including not-for-profits.
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Definition of Marketing
Our starting point for learning about marketing is to begin with the basics and that starts with defining marketing. Since marketing has been an important part of business for a long time we could consult one of the many hundreds of books written on the subject to locate a definition. Or, as is more the custom today, we could search the internet to see how marketing is defined. Whether we search print or electronic form we will find that marketing is defined in many different ways.
Some definitions focus on marketing in terms of what it means to an organization, such as being the key functional area for generating revenue, while other definitions lean more toward defining marketing in terms of its most visible tasks, such as advertising and creating new products.
There probably is no one best way to define marketing; however, whatever definition is used should have an orientation that focuses on the key to marketing success – customers.
For the purpose of this tutorial, we will define marketing as follows:
Marketing consists of the strategies and tactics used to identify, create, and maintain satisfying relationships with customers resulting in value for both the customer and the marketer.
Marketing Definition Dissected
Let’s examine our definition of marketing in a little more detail by looking at the key terms.
Strategies and Tactics
Strategies are best explained as the direction the marketing effort takes over some period of time while tactics are actionable steps or decisions made in order to follow the strategies that have been established. For instance, if a company’s strategy is to begin selling its products in a new country, the tactics may involve the marketing decisions made to carry this out. Performing strategic and tactical planning activities in advance of taking action is considered critical for long-term marketing success.
Arguably the most important marketing function involves efforts needed to gain knowledge of customers, competitors, and markets (i.e., where marketers do business). We will see throughout this tutorial how marketing research is utilized in all decision areas.
Competition forces marketers to be creative people. When marketers begin a new ventures, such as starting a new company, it is often based around something that is new (e.g., a new product, a new way of getting products to customers, a new advertising approach, etc.). But once something new is launched innovation does not end. Competitive pressure is continually felt by the marketer, who must respond by again devising new strategies and tactics that help the organization remain successful. For marketers, no matter how successful, the cycle of continuous innovation never stops.
Today’s marketers work hard to ensure their customers return to purchase from them again and again. Long gone (see our discussion of the History of Marketing below) are the days when success for a marketer was measured simply in how many sales they made each day. Now, in most marketing situations, marketing success is evaluated not only in terms of sales figures but also by how long a marketer retains good customers. Consequently, marketers’ efforts to attract customers do not end when a customer makes a purchase. It continues in various ways for, hopefully, a long time after the initial purchase.
A key objective of marketing is to provide products and services that customers really want AND to make customers feel their contact with the marketer is helping build a good relationship between the two. In this way the customer becomes a partner in the transaction, not just a source of revenue for the marketer.
Value for Both Customer and Marketer
Value refers to the perception of benefits received for what someone must give up. For customers, value is most often measured by how much benefit they feel they are getting for their money, though the value one customer feels may differ from what another customer feels even though they purchase the same product. On the other side of the transaction, the marketer for a for-profit organization may measure value in terms of how much profit they make for the marketing efforts and resources expended. For a successful marketing effort to take place both the customer and the marketer must feel they are receiving something worth while in return for their efforts. Without a strong perception of value it is unlikely a strong relationship can be built. Throughout this tutorial we will emphasize value and show ways marketers build value into the products they offer.
What Marketers Do and the Marketing Mix
In order to reach the goal of creating a relationship that holds value for customers and for the organization, marketers use a diverse Toolkit that includes (but is not limited to) making decisions shown in the table below. While these decisions are shown with a number, the order of decision-making does not necessarily follow this sequence. However, as we will discuss, in almost all cases marketers should first identify target markets (#1) prior to making decisions #2 through #6 (commonly called the Marketing Mix) since these decisions are going to be directed toward satisfying the desired target markets.
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Each option within the Marketer’s Toolkit is tightly integrated with all other options so that a decision in one area could, and often does, impact decisions in other areas. For instance, a change to one Marketing Mix decision, such as the price of a product (e.g., lowering the price), could impact the distribution area (e.g., requires increased product shipments to retail stores).
Additionally, options within the Toolkit are affected by factors that are not controlled by the marketer. These factors include economic conditions, legal issues, technological developments, social/cultural changes, and many more. While not managed in the way marketers control their Toolkit, these external factors must be monitored and dealt with since these can cause considerable harm to the organization. Ignoring outside elements also can lead to missed opportunities in the market especially if competitors are the first to take advantage of the opportunities. As part of the strategic and tactical planning process discussed above it is wise for marketers to pay close attention to the environment outside the organization.
Finally, as noted earlier, research plays a significant role in all marketing decisions areas. As we will see in the Marketing Research Tutorial, marketing decisions should not be made without first committing time and resources to obtaining needed information.
History of Marketing
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 long-term customer relationships.
But starting in the 1950s, companies began to see that old ways of selling products 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 decisions made by marketers should flow from FIRST knowing their customers and what they want. Only then should an organization initiate the process of developing and marketing goods and services.
Today, 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 Role of Marketing
As we’ve seen the key objective of an organization’s marketing efforts is to develop satisfying relationships that benefit both the customer and the organization. These efforts lead marketing to serve an important role within most organizations and within society.
At the organizational level, marketing is a vital business function that is necessary in nearly all industries whether the organization operates as a for-profit or as a not-for-profit. For the for-profit organization, marketing is responsible for most tasks that bring revenue and, hopefully, profits to an organization. For the not-for-profit organization, marketing is responsible for attracting customers needed to support the not-for-profit’s mission, such as raising donations or supporting a cause. For both types of organizations, it is unlikely they can survive without a strong marketing effort.
Marketing is also the organizational business area that interacts most frequently with the public and, consequently, what the public knows about an organization is determined by their interactions with marketers. For example, customers may believe a company is dynamic and creative based on its advertising message.
At a broader level marketing offers significant benefits to society. These benefits include:
- Developing products that satisfy needs, including products that enhance society’s quality of life.
- Creating a competitive environment that helps lower product prices.
- Developing product distribution systems that offer access to products to a large number of customers and many geographic regions.
- Building demand for products that require organizations to expand their labor force.
- Offering techniques that possess the ability to convey messages that influence societal behavior in a positive ways (e.g., autism awareness).
Criticisms of Marketing
While marketing is viewed as offering significant benefits to organizations and to society, the fact that marketing is a business function operating in close contact with the public opens this functional area to extensive criticism. Among the issues cited by those who criticize marketing are:
Marketing Encourages People to Purchase What They Do Not Need
Possibly the criticism most frequently made about marketing is that marketers are only concerned with getting customers to buy whether they want the product or not. The root of this argument stems from the belief that marketers are only out to satisfy their own needs and really do not care about the needs of their customers.
As we will discuss, while many marketers are guilty of manipulating customers into making unwanted purchases, the vast majority understand that undertaking such tactics will not lead to loyal customers, and therefore is unlikely to lead to long-term success.
Marketers Embellish Product Claims
Marketers are often criticized for exaggerating the benefits offered by their products. This is especially the case with the part of marketing that engages in customer communication, such as advertising and salespeople. The most serious problems arise when product claims are seen as misleading customers into believing a product can offer a certain level of value that, in fact, it cannot.
But sometimes there is a fine line between what a rational person should accept as a “reasonable exaggeration” and what is considered downright misleading. Fortunately, many countries offer customers some level of protection from misleading claims since such business practices may subject the marketer to legal action. Of course, using such tactics is also likely to lead to marketing failure as customers will not be satisfied with their experience and will not return.
Marketing Discriminates in Customer Selection
We will see later that a key to marketing success is to engage in a deliberate process that is intended to identify customers who offer marketers the best chance for satisfying organizational objectives. This method, called target marketing, often drives most marketing decisions, including product development and price setting. But some argue that target marketing leads marketers to focus their efforts primarily on customers who have the financial means to make more expensive purchases. They contend that doing so intentionally discriminates against others, especially lower income customers who cannot afford to purchase higher priced products. This group ends ups being targeted with lower quality (and in some cases less safe) products or for some groups, no product options.
While this criticism is often valid, it is worth noting that while many “lower quality” products are inferior to current high-end products, comparison of these “lower quality” products to similar products from just a few years ago often shows there has been significant improvement. For instance, low-cost consumer electronic equipment, such as big screen LED televisions, offer more features compared to low-cost televisions of just a few years ago. Thus, while certain customer groups may not be the target market for certain new product offerings they may eventually benefit from higher-end products.
Marketing Contributes to Environmental Waste
In recent years one of the loudest complaints voiced against marketing concerns its impact on the environment. Those critical of marketing’s effect on the environment point to such issues as:
- the use of excessive, non-biodegradable packaging (e.g., use of plastics, placing small products in large packages, etc.)
- the continual development of resource consuming products (e.g., construction of new buildings, shopping centers, etc.)
- the proliferation of unsightly and wasteful methods of promotions (e.g., outdoor billboards, direct mail, etc.).
Marketers have begun to respond to these concerns by introducing “green marketing” campaigns that are not only intended to appease critics but also take advantage of potential business opportunities. For example, auto makers see opportunity by creating new fuel efficient hybrid vehicles, the demand for which has accelerated in the last few years. Also, awareness of environmental issues can be seen in other marketing and business decisions, such as those that focus on reducing an organization’s carbon footprint. It is expected that, as environmental activism gains political clout and more consumer support, marketers will see even more opportunity to market environmentally-friendly products.
Marketing Encroaches on Customers’ Right to Privacy
As we will see later in our discussion of Marketing Research, gathering and analyzing information on the market in which marketers conduct business is a vital step in making good marketing decisions. Often the most valuable information deals with customers’ buying behavior and especially determining which factors influence how customers make purchase decisions.
But to some consumer advocates, digging deep into customer buying behavior crosses the line of what they consider to be private information. Of most concern to privacy advocates is marketers’ use of methods that track user activity. In particular, they are critical of the growing use of advanced technologies that allow marketers to gain access to customer shopping and informations’ gathering habits. For instance, one type of tracking software, called adware, allows marketers to monitor the website browsing activity of unsuspecting users and use this information to deliver advertisements based on users’ internet habits. There are also rising concerns with potential tracking that may occur with other connected digital device such as television set-top boxes, voice-activated assistants (e.g., Amazon Echo), digital thermostats, and other so-called “smart devices.”
Privacy issues are not limited to concerns with online tracking; marketers also use techniques to track customers’ offline purchase activity. One example of offline tracking occurs when retail stores match sales transactions to individual shoppers. This is easy to do when customers use purchase cards (a.k.a. loyalty cards, discount cards, club cards, etc.) as part of the buying process.
Privacy issues are not restricted to marketing research. Other areas of marketing have also experienced problems. For instance, incidences, involving mishandled credit card payment information, where a breach in customer privacy has placed customers at risk.
The issue of customer privacy is likely to become one of the most contentious issues marketers face in the coming years. If this continues marketers may soon face greater legal limits on how they conduct business.
Ethics in Marketing
In addition to problems cited above, some critics also argue that the money-making motive of some marketers has encouraged many to cross the line in terms of ethical business behavior. Ethics is concerned with what is right and what is wrong. Many people assume that only actions that violate laws are considered unethical. While it is true that illegal activity is also unethical, a business activity can be unethical even though no laws are violated. For instance, some consider it unethical for marketing companies to aggressively promote unhealthy foods to children though such promotional practices are generally not viewed as illegal.
Sometimes the line between what is considered ethical and unethical is difficult to distinguish since what is right and wrong differs depending on such factors as nationality, culture, and even industry. For example, many websites offer users access at no monetary charge to their content (e.g., articles, videos, audio clips, etc.) but do so only if users register and provide contact information including email addresses. Some of these sites then automatically add registrants to promotional email mailing lists. Some view the practice of automatic “opt-in” to a mailing list as being unethical since customers do not request it and are forced to take additional action to be removed from the list (“opt-out”). However, many marketers see no ethical issue with this practice and simply view adding registered users to an email list as part of the “cost” to customers for accessing material.
Marketing Code of Ethics
The call for marketers to become more responsible for their actions has led to the development of a marketing code of ethics by many companies and professional organizations. A company marketing code of ethics includes extensive coverage of how business is conducted by members of an organization. For instance, Google’s code of ethics, titled Code of Conduct and posted on their parent company’s website, lays out an extensive list of what is expected of their employees. Among the issues covered are:
Offering Gifts – “We want to avoid the possibility that the gift, entertainment, or other business courtesy could be perceived as a bribe, so it’s always best to provide such business courtesies infrequently and, when we do, to keep their value moderate.”
Receiving Gifts – “Google’s Non-Government Related Gifts & Client Entertainment Policy provides specific guidance on when it is appropriate for Googlers to accept gifts, entertainment, or any other business courtesy (including discounts or benefits that are not made available to all Googlers) from any of our competitors or business partners.”
Competitor Information – “If an opportunity arises to take advantage of a competitor’s or former employer’s confidential information, don’t do it.”
Friends and Relatives – “Don’t tell your significant other or family members anything confidential, and don’t solicit confidential information from them about their company.”
Marketers often join professional organizations for the purpose of associating with others who share similar interests. These organizations include industry associations, whose membership is mostly limited to those who work within a particular industry, and professional services associations, whose membership consists of those who share similar job responsibilities. Marketers joining these organizations often find that a code of ethics has been developed that is intended to be followed by all organization members. For example, the Canadian Marketing Association lays out rules for its membership, which includes marketers from many for-profits and not-for-profit organizations, in its Code of Ethics and Standards and Practices. The Code discusses such issues as:
Accuracy of Representation – “Marketers must not misrepresent a product, service, marketing program or make any other misleading representation, even if not directly related to the product or service, and must not mislead by statement or manner of demonstration or comparison.”
Support of Claims – “Marketers must be able to substantiate the basis for any performance, efficacy or length of life claim or comparison and must not imply a scientific, factual or statistical basis where none exists.”
Use the Word “Free” – “Products or services offered without cost or obligation on the part of the consumer or business may be described as “free”, or similar.”
Comparative Advertising – “Comparisons included in marketing communications must be factual, verifiable and not misleading. They must compare similar aspects of the products or services being assessed.”
Social Responsibility in Marketing
Most marketing organizations do not intentionally work in isolation from the rest of society. Instead they find that greater opportunity exists if the organization is visibly accessible and involved with the public. As we’ve seen, because marketing often operates as the “public face” of an organization, when issues arise between the public and the organization marketing is often at the center. In recent years the number and variety of issues raised by the public has increased. One reason for the increase is the growing perception that marketing organizations are not just sellers of product but also have an inherent responsibility to be more socially responsible, including being more responsible for its actions and more responsive in addressing social concerns.
Being socially responsible means an organization shows concern for the people and environment in which it transacts business. It also means that these values are communicated and enforced by everyone in the organization and, in some cases, with business partners, such as those that sell products to the company (e.g., supplier of raw material for product production) and those that help the company distribute and sell to other customers (e.g., retail stores).
In addition to insuring these values exist within the organization and its business partners, social responsibility may also manifest itself in the support of social causes that help society. For instance, marketers may sponsor charity events, produce cause-related advertising, or create new products that are specifically intended to serve as fundraisers.
Marketers who are pursuing a socially responsible agenda should bear in mind that such efforts do not automatically translate into increased revenue or even an improved public image. However, organizations that consistently exhibit socially responsible tendencies may eventually gain a strong reputation that could pay dividends in the form of increased customer loyalty.
Characteristics of Modern Marketers
As we’ve seen, marketing is a critical business function that operates in an environment that is highly scrutinized and continually changing. Today’s marketers undertake a variety of tasks as they attempt to build customer relationships. And the knowledge and skill sets needed to perform these tasks successfully are also varied.
So what does it take to be a successful marketer? Obviously, at the center of a successful marketing career is an understanding of the important concepts that are discussed in the Principles of Marketing Tutorials. But basic marketing knowledge is just the beginning, for today’s marketers must possess much more. Among the most important knowledge and skills needed to be successful are:
Basic Business Skills
Marketers are first and foremost business people who must perform necessary tasks required of all successful business people. These basic skills include problem analysis and decision-making, oral and written communication, basic quantitative skills, and working well with others.
Understanding Marketing’s Impact
Marketers must know how their decisions will impact other areas of an organization and their business partners. They must realize that marketing decisions are not made in isolation and that decisions made by the marketing team could lead to problems for others. For example, making a decision to run a special sale that significantly lowers the price of a product could present supply problems if the production area is not informed well in advance of the sale.
Today’s marketers must have a strong understanding of technology on two fronts. First, marketers must be skilled in using technology as part of their everyday activities. Not only must they understand how basic computer software is used to build spreadsheets or create slide presentations, but in a world where information overload is a problem marketers must investigate additional technologies that can improve their effectiveness and efficiency, such as multifunction smartphones, multi-participant video conferencing, and web-based productivity applications. Second, marketers must understand emerging technology and applications in order to spot potential business opportunities as well as potential threats. For instance, the rapid growth of social media requires marketers to fully grasp this critical applications in order to see how these fit within an overall marketing strategy.
The Need for a Global Perspective
Thanks in large part to the Internet, nearly any company can conduct business on a global scale. Yet, just having a website or social media account that is accessible to hundreds of millions of people worldwide does not guarantee success. Marketers selling internationally must understand the nuances of international trade and cultural differences that exist between markets.
The field of marketing is dynamic. Changes occur continually and often quickly. Marketers must maintain close contact with these changes through a steady diet of information. As we discuss in our tutorials, information can be obtained through formal marketing research methods involving extensive planning that includes the use of a variety of information gather techniques. However, marketers also must be in tune with day-to-day developments by paying close attention to news that occurs in their industry, in the markets they serve, and among their potential customers.
Flexible to Changing Market Conditions
Through continual information seeking marketers often will find that unanticipated market changes will require they quickly adjust their marketing strategy. This may occur for several reasons such as competitors launching an unexpected new product, rapid changes happening in the economic environment, the marketer’s product is suddenly in great demand due to influential reviews and discussion on social media, and many more. Successful marketers respond to market changes by quickly gathering information and ideas from both inside (e.g., members of other departments) and outside (e.g., customers, business partners) the organization.
In the remaining parts of the Principles of Marketing Tutorials we explore in further detail the key concepts and strategies that are consistent across nearly all industries and marketing jobs. While reading the tutorial will not guarantee marketing success, it will certainly offer the foundation needed to be a Modern Marketer.