An Overview Of Marketing
What is marketing?
What do you think of when someone says “marketing?” There are many definitions of the word marketing; from personal selling, to advertising, to arranging and displaying products on shelves and racks in a store. In actuality, marketing includes all of these activities and a whole lot more.
Academically, marketing, like a coin, has two sides. On the first side, marketing is a philosophy. It’s a perspective that stresses customer satisfaction. On the other side, marketing is an organizational function and a set of processes used to implement the marketing philosophy on the other side.
In the real world, most business owners define marketing as a coin as well. On one side, to the business owner who understands marketing, marketing is the life blood of the business. Through marketing, the entrepreneur is able to attract prospects, acquire and retain customers. On the other side of the coin, to the business owner who doesn’t understand marketing, marketing is an expense that at times seems necessary and at others seems worthless.
It could be observed that the difference between the academics view of marketing and the real world realities of marketing are the differences between Fortune 500 companies and small businesses. Typically, the academics focus on loftier philosophical viewpoints that do not have clearly defined strategies. Yet, academic views are essentially correct and deserve to be studied.
Compiled from many sources, we define marketing as:
An organizational function and the process of planning conceptualizing, pricing, promoting, and distributing ideas, goods, and services to create exchanges that deliver value to customers and satisfy or benefit consumers, the business and its stakeholders.
Put yet another way, marketing is:
A process, function and profit center that seeks first to deliver value to consumers by communicating the benefits of a product or service, then seeks to increase the quantity of the goods sold in order to maximize profits for a company*.
*We define company as the legal entity defined as the company itself and then all of the people associated with the company (legal entity): owner, management, employees, stockholders, suppliers, distributors, etc.
One of the most important aspects of understanding marketing is to realize that an “exchange” is taking place. Exchange happens when someone gives up something of value for something they need, or want more.
While there are conditions of exchange that to academics are very important, the only pragmatic conditions are: Do they want what we offer, and are they able to purchase?
The management philosophies of Marketing
There are four academic philosophies, or focuses, of marketing in the marketplace and each one affects the way the organization markets their products or services. The four focuses are: product focus, sales focus, market focus and societal focus.
Product Focus
When an organization is product focused, they are inwardly oriented toward the product or services they offer and they do not focus on the needs or desires of the marketplace. Any new versions, features or offers are created as a result of inward thinking and inward facing competitive analysis.
Companies with a product or service focus ask themselves: “what can we build? How can we make it better? What can we offer?”
This is the classic “field of dreams” orientation – If we build it, they will come.
The weakness of a product focus is that it does not consider if the goods or services the company produces are desired or needed in the marketplace.
Sales focus
An organization that is sales focused believes that consumers will consume more products or services if aggressive sales techniques are used. Organizations that have a sales focus are primarily concerned with making a sale and collecting money and they believe that everyone is their customer.
The weakness of a sales focused organization is similar to that of a product focused organization. They do not understand what the consumer wants or needs.
Market Focus
Companies that are market focused are seeking to understand what products or services consumers would want or need to buy and they believe that their customers fall into small segments of a market.
Academics consider the market focus the holy grail of marketing management philosophies. To them it is void of weaknesses and they may be right.
According to academics, a business should have a social, ethical, and economic reason to exist and the market focus believes that justification of the company’s existence is inherent in its ability to meet the wants and needs of consumers.
While the academics seem high brow in their definitions, the market focus is the true entrepreneurial focus. When a true entrepreneur has an idea, the idea is usually of something that will change the way things are currently done. They have an idea which is different, special and unique. Strategically then, the entrepreneur judges the consumers wants, and the competitions offerings to see how well their idea would be received in the marketplace, and the entrepreneur identifies the key points of differentiation that their product offers to consumers.
A market focus involves obtaining information about competitors, consumers, and the marketplace, then examining that data from a business perspective to determine how to deliver value and achieve success.
Societal Marketing Focus
There are times when consumers want or need a product or service that is not good for society or individuals. In these cases, organizations can choose to adopt a societal marketing focus and tailor their products/services to meet the needs of future generations and be more sustainable.
Examples are removing lead from paint, asbestos from insulation, the levels of mercury in Eveready and Duracell batteries, using green, earth friendly pesticides and herbicides, creating plastic bottles from renewable “green” sources and ensuring there are no CFC’s or chemical vapors being emitted from the bottles.
Which marketing management philosophy do you choose?
Really, there are only two choices when you want to answer this question. Either a sales focus, or a market focus. This is due to the fact that with a product focus, you can be easily blindsided by changes in consumer tastes and changes in the marketplace. Think of Encyclopedia Britannica still trying to sell encyclopedias door to door, when half the population has Internet access. Many companies and industries fall victim to this. While all the competitors in an industry are arranged in a circle and are inward facing, someone comes along from the outside and with a new idea, makes their industry or their product obsolete. When it comes to societal marketing focus, this is primarily a point of differentiation for a company with hazardous products. True, in order to maintain this point of differentiation, the entire management philosophy of the company must change, but it wouldn’t change unless there were economic reasons to do so, regardless of the societal benefits.
While academics are quick to point out that a sales focus is aggressive and also inward facing, there is much to be desired about a sales focus. That said, don’t rule out the benefits of a market focus. The academics are correct to postulate that a market focus is by far the best way to run a company.
However, academics always point out several examples of successful market focused companies. In their examples, they always mention Southwest. Southwest is what I call a hybrid company with both a sales focus and a market focus.
Think of the competition to Southwest. There are different classes of customers and different meals that you can be served depending upon several factors; you can be served drinks at different times during the flight. All of these options create customer service nightmares for airlines and consumers. When you offer people options, they tend to want many different things and successfully producing a myriad of experiences is problematic.
Southwest, instead focused on what the customer wanted: to get there fast and on time (market focus). Southwest then decided that in order to achieve this, they had to focus only on it, and options cause problems. So forget fancy anything, they do it their way and focus on an aggressive selling proposition - lower fares. Notice the inward facing sales orientation disguised as market focus?
So what does Southwest offer? They oversell every flight to insure a profitable flight. Every seat is cattle class. You get 1 bag of peanuts and 1 drink. Don’t ask for more, you won’t get it! But you will get there on time.
Southwest is profitable, not just because they don’t maintain their planes (bad joke?), it’s because they provide customer value, which is the first focus of successful organizations.
The 3 things successful companies have in common when marketing
Successful organizations have three things in common when it comes to their marketing: customer value, customer satisfaction, and building relationships.
Customer Value is defined as the relationship between the benefits received by exchanging money for product and the sacrifice necessary to obtain those benefits.
But realize that customer value is not price dependant. A high priced and a low priced product may not be perceived as a good value. Customers value goods and services that are of the quality they want at a price they are willing to pay.
To provide customer value, your company must offer products that perform, earn trust, avoid unrealistic pricing, give the buyer facts, and offer organization-wide commitment to service and support after the sale.
Customer Satisfaction is defined as a mental judgment by the customer as to whether a product or service has met their needs and expectations.
The objective is obvious, but customer satisfaction is one of the most overlooked aspects of marketing by businesses because most businesses only focus on making the sale and not on retention. This leads us to the final item that successful companies have in common when marketing: building relationships.
Building relationships was almost lost to business when TV became popular. This is an overstatement obviously, but TV changed the face of marketing and ushered in the “era of the brand builders.” Everyone became obsessed with slogans, jingles, and branding instead of building relationships and serving a customer base.
Building relationships is what the merchants of yesteryear did to maintain and grow their business. In fact, this was the primary means of business growth up until the advent of TV.
Today, it has a name. It’s called relationship marketing.
Relationship Marketing is defined as a strategy that focuses on building and maintaining long-term relationships with current customers, in order to retain their business because it minimizes customer acquisition costs.
The important point is that it minimizes customer acquisition costs! When you make a repeat sale, or sell a new product to an existing client, the acquisition cost is spread over the lifetime value of the customer. Therefore, the benefits of building relationships and retaining a customer are innumerable.
In order to build a relationship and retain a customer, successful organizations have realized the need to train their employees to have a customer-oriented focus and empower them to make the decision that will best serve the customer.
The difficulty in this is however, people are too quick to prejudge the needs of others and not listen to the customers wants. This has to be trained out of them.
Conclusion
Marketing is the method of communicating a business’s value to the world, and as such plays an important role. Think about it. It affects business, society, and your everyday life.
The promise of marketing is that it can turn around a failing company as easily as it can stimulate growth in an entrenched market leader. Marketing uses rhetoric and persuasive arguments to achieve its goals. While academics try to shy away from this aspect of marketing and thus look down on the function of sales in an organization, the truth is, marketing is about touching people and changing their minds by using their tendencies against them. This is not an “evil” statement. Marketing is neither evil nor good. Marketing is relative. Your view of it and your use of it determines how you see it, but makes a statement more to who you are than what marketing is. That is why the term “marketing” is so elusive.
