What is marketing?
Category: Marketing
«Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating and exchanging products and value with others».
To help understand this definition, we will look at seven core concepts related to it; needs, wants, demands, products, exchange, transactions and markets.
Needs: — A human need is a state of felt deprivation in a person. Humans have many complex needs inherent in their psychological and genetic makeup, including basic physical needs for food, clothing, warmth and safety; socially mediated needs for belonging and affection; and individual needs for knowledge and self-expression.
Wants: — Human wants are the form human needs take as shaped by culture and individual personality. As societies evolve, the wants of its members expand and develop.
It is interesting to note here that marketing practitioners often confuse wants and needs. Black and Decker for example might think that its drill bit customers need drill bits. However drill bits are merely what these customers want, as conditioned by the confines of our present technology and culture. What these customers actually need, are holes.
The above example illustrates a phenomenon which led Levitt (1960, 1975) to coin the phrase «marketing myopia». This is a serious, but curable, condition of marketing short-sightedness, in which sellers are so engrossed in their existing products that they focus only on the existing wants of customers and lose sight of the more important, more basic, underlying customer needs. They forget that an existing physical product is only wanted because it solves an underlying need-problem for the consumer. These sellers have trouble if a new product comes along which solves the need-problem better than existing products. The customer will have the same felt need, but will have a new want-focus to satisfy his or her need more effectively, i.e.: the new product.
As a classical example, the operators of transatlantic cruise liners were so engrossed m their want-satisfying ships that they failed to be innovative m addressing their customers’ underlying needs, which were for quick, comfortable, competitively-priced transatlantic travel. Rather than capitalise on the advent of air transport by investing in aircraft as a new means of satisfying customer needs, the cruise line operators continued to be myopic (engrossed in their existing products) until other aircraft operators took their markets away.
The moral of the above anecdote is that had the cruise liner operators understood the concepts of customer needs and wants, they would have developed new product offerings (air travel) to satisfy their customers.
Demands: — People have almost unlimited wants, but normally limited resources They therefore choose products that produce the most satisfaction for their money. When wants are backed by buying power, and therefore become exchange realities, wants become demands.
This material has been developed by the EU Expert Jeffrey Lamont of the BC Berlin/NI -CO Consortium 3.
Products:- Human needs, wants and demands (in a proper market economy) stimulate the production and supply of products to satisfy them A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need or want.
For marketers, the concept of product is not limited to physical objects. Anything, any entity, capable of satisfying a need or a want can be called a product. In addition to goods and services, products include persons (e.g. «Madonna marketing»), places (tourism marketing), organisations (Oxfam), activities (sports) and ideas (socialism).
Consumers regularly exchange things of value for the above range of products
Exchange: — Marketing occurs when people decide to satisfy needs and wants through the process of exchange.
For an exchange to take place, several conditions must be satisfied, there must be at least two parties, each party must have something of value to offer the other, each party must want to deal with the other party, each must be free to accept or reject the other’s offer, and finally each party must be able to communicate and deliver
Transactions:- Exchange is the core concept of marketing; a transaction is its unit of measurement A transaction consists of a trade of values between two parties In a transaction A gives X to B and gets Y in return For example, you pay Prentice Hall £20 for a marketing text book. This is a classic monetary transaction But not all transactions involve money In a barter transaction you might give your Prentice Hall textbook to a colleague in return for a second hand television set. Such barter transactions can also involve services instead of goods, e.g.: «you do my marketing essay for me (since you are better at marketing) and I (being an econometrics whizz kid) will do your economics report for you.» A transaction, then, involves at least two things of value, conditions that are agreed to, a time of agreement, and a place of agreement
Market: — The concept of transaction leads us to the concept of a market. A market is the set of actual and potential persons and organisations willing to enter into an exchange process by transacting an entity of value m return for the offered product, m order to satisfy wants and needs.
Thus we return to our definition of marketing as a process by which individuals and groups obtain what they need and want through entering into transactions to exchange products and value with others. Having defined marketing and explored the underlying social and theoretical constructs of the subject, we will now look at marketing management.
This material has been developed by the EU Expert Jeffrey Lamont of the BC Berlin/NI -CO Consortium 4 General Electric pioneered the development of the marketing concept in business, in the post — second world war period in America One of General Electric’s executives who was a driving force in developing the concept and methods of what we now know as marketing management, was the above- mentioned J B McKitterick. In his 1957 article «What Is The Marketing Management Concept», McKitterick states:
«The principal task of the marketing function in a management context is not so much to be skilful in making the customer do what suits the interests of the business as to be skilful in conceiving and then making the business do what suits the interests of the customer».
People uninitiated to marketing tend to suppose that marketing management must simply be about finding enough customers for the company’s output. But, as Mckitterick (1957) perceived at an early date, this is too limited a view. Any organisation will have a desired level of demand for its products. At any point in time, and depending upon customer characteristics and behaviour, there may be no demand, adequate demand, irregular demand or too much demand. Marketing management’s job is to find ways to deal with different states of demand.
As Kotler and Armstrong put it «Marketing Management Is Demand Management». These writers provide a useful definition of marketing management as follows: «Marketing management is the analysis, planning, implementation and control of programmes designed to create, build and maintain beneficial exchanges with target buyers for the purpose of achieving organisational objectives».
Thus, marketing management is concerned with affecting the level, timing and nature of demand in a way that will help the organisation achieve its objectives.
Indeed marketing management is faced with a wide spectrum of demand states, ranging from negative demand through to overfull demand Each demand state requires a different marketing management response Let us examine some of these demand states, and typical marketing management tasks associated with each:
Negative Demand: — A major part of the market dislikes the product and may even pay to avoid it. Examples are vaccinations, dental work and seat belts. Marketing management must analyse why the market dislikes the product, and decide whether product re design, lower prices or more positive promotion can change consumer attitudes.
No Demand: — Target consumers may be uninterested in the product. Thus farmers may not care about a new farming method (e.g.: organics), and students may be uninterested in taking foreign language courses. Marketing Management’s task is to find ways to connect the product’s benefits to the market’s needs and interests .
Latent Demand: — Here, consumers have a need that is not satisfied by any existing product or service. For example there is a strong latent demand for non-harmful cigarettes The task facing marketing management in this situation is to measure the size of the potential market and develop effective goods and services that will satisfy the demand. This material has been developed by the EU Expert Jeffrey Lamont of the BC Berlin/NI -CO Consortium 5 Falling Demand:- Sooner or later, every organisation faces falling demand for its products. Marketing management’s aim is to diagnose the cause of the market decline and then restimulate demand by finding new markets, changing product features, or creating more effective distribution, pricing and communication strategies.
Irregular Demand:- Demand can vary on a seasonal, daily or even hourly basis, causing problems of idle or overworked capacity. For example, museums are undervisited during weekdays and overcrowded during weekends Marketing management must find strategies to change the time pattern of demand through flexible pricing, promotion and other incentives.
Full Demand: — When an organisation has just the amount of demand it wants and can handle, marketing management’s task is to maintain the current level of demand in the face of changing consumer preferences and increasing competition.
Overfull Demand:- Here, demand is higher than the company can or wants to handle For example when Wilkinson Sword introduced the first disposable razor, and used what is called penetration pricing, demand was stimulated to such an extent that Wilkinson could not handle it This allowed Gillette to launch a similar product, and to soak up the extra demand. The marketing task facing marketing management here is to use «demarketing» strategies to reduce demand temporarily or permanently. Demarketing involves such strategies as raising prices and reducing promotion and service levels.
Although it is agreed that marketing management is essentially about demand management, through the carrying out of tasks to achieve desired exchanges with target markets, there are several competing marketing management philosophies utilised by different organisations. In fact there are five competing concepts under which organisations conduct their marketing management activities, the production, product, selling, marketing and societal marketing concepts
Let us explore the nature and validity of each of these five concepts in achieving good marketing practice.
The Production Concept holds that consumers will favour products that are available and highly affordable, and therefore marketing management should focus on improving production and distribution efficiency This is one of the oldest philosophies guiding sellers, and originates in the period of the early industrial revolution, when there was often a «sellers market» due to rapidly increasing population and a shortage of goods and services. However, with a slow down in population growth, and generally highly competitive markets offering an abundance of goods and services, this Production Concept only has limited utility today. It is useful m two types of situation. Firstly, when the demand for a product is bigger than the supply Here management should This material has been developed by the EU Expert Jeffrey Lamont of the BC Berlin/NI -CO Consortium 6 look for ways to increase production efficiency. The second situation is when production costs are extremely high and improved productivity is needed to bring them down to an acceptable level .
For example Texas Instruments (TI) follows the Production Concept of increased production and lower costs in order to bring prices down, and it has won a major share of the American pocket-calculator market by using this marketing management philosophy. However, when TI used the same philosophy and strategy in the digital watch and home computers market, it failed In its drive to bring down prices through production efficiency, TI lost sight of what its customers wanted The Product Concept of marketing management holds that consumers will favour products that offer most quality, performance and features, and therefore this philosophy advocates that marketing management should concentrate upon making continuous product improvements. However, as discussed earlier, such a product-centred philosophy of marketing management leads to marketing myopia. Organisations become so engrossed with their own products, and what they perceive to be continual product improvements, that they lose sight of customer needs.
The Selling Concept holds that consumers will not buy enough of the organisation’s products unless the organisation undertakes a large selling and promotional effort.
The Marketing Concept holds that achieving organisational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors.
Levitt (1960, 1975) in his «Marketing Myopia» article, neatly contrasts the selling and marketing concepts, and demonstrates clearly the superiority of the marketing concept in creating and maintaining satisfying exchange relationships.
«Selling focuses on the needs of the seller, marketing on the needs of the buyer. Selling is preoccupied with the seller’s need to convert his product into cash, marketing with the idea of satisfying the needs of the consumer by means of the product, and the whole cluster of things associated with creating, delivering and finally consuming it» (Levitt «Marketing Myopia», 1960).
What Levitt so neatly points out is that the selling concept takes an inside-out perspective. It starts with the factory or organisation, focuses on the existing products, and calls for heavy selling and promotion as a means of achieving profitable sales volume. The marketing concept, by contrast, takes an outside-in perspective. It starts with a well-defined target market, focuses on customer needs, co- ordinates all the marketing activities that affect customers, and produces profits by creating customer satisfaction.
This material has been developed by the EU Expert Jeffrey Lamont of the BC Berlin/NI -CO Consortium 7.
Under the marketing concept, organisations «make what they know they can sell». Under the selling concept organisations push hard to try and «sell what they know they can make».
The Societal Marketing Concept holds that organisations should determine the needs, wants and interests of target markets and deliver the desired satisfactions more effectively and efficiently than competitors in a way that maintains or improves the consumer’s and the society’s well-being. This is the newest of the five marketing management philosophies, and it questions whether the pure marketing concept is adequate in an age of environmental problems, resource shortages, world hunger and poverty, and drug abuse.
It can be argued that the pure marketing concept overlooks possible conflicts between short-term consumer satisfaction and longer-term consumer, societal, and global welfare.
The societal marketing concept calls for balancing three major considerations when designing marketing management programmes — company profits, consumer needs and wants, and society’s interests.
Taking the previous concept of «Societal Marketing» a stage further, it is pertinent to ask just what the overall goals of marketing might be.
In seeking to clarify just what society might want from its marketing practitioners, Kotler and Armstrong (1990) have presented four major options, maximizing consumption, maximising consumer satisfaction, maximising choice and maximising life quality.
The assumption behind maximising consumption is largely that the more people buy and consume, the happier they will be. Yet there is ample evidence to the contrary. Increased material wealth often leads to unhappiness rather than happiness.
Maximising consumer satisfaction is probably a more laudable aim than maximising consumption. However, m practice such a proposition has major problems. Firstly, it is not possible to measure the total satisfaction created by a particular product or marketing activity. Secondly, the satisfactions which one set of consumers get from consuming a product must somehow be offset by the damage caused to other consumers through environmental degradation, exploitation, etc. Thirdly, the satisfaction people get from consuming certain goods («conspicuous consumption» goods), depends on few other people having these goods.
Thus it is difficult to evaluate the marketing system in terms of maximised consumer satisfaction.
Maximising choice is argued by some to be the raison d’être of marketing systems. Maximising consumer choice, however, comes at a cost. Firstly, goods and services will be more expensive, since maximising varietal choice will increase production and inventory costs. Higher prices will then erode consumers’ real spending power. Secondly, maximising choice can lead to consumers facing false (or at very best cosmetic) choice between very similar brands. Thirdly, maximum product variety would not necessarily be welcomed by consumers, as it increases search effort required per purchase and can also cause confusion and frustration.
Maximising Life Quality is arguably the most laudable of aims for marketing systems. Quality of life includes the quality, quantity, availability and cost of goods; the quality of the physical environment, and the quality of the cultural environment Marketing systems should indeed be judged not just by the amount of direct consumer satisfaction or consumption which occurs, but also by the impact of marketing on the overall quality of the physical and cultural environment. The difficulty with this laudable aim is that it is not easy to measure quality of life, and that it means widely differing things to different people.
Marketing a coherent set of analyses and actions
