JKVknowmoreaboutmarketing

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 1900's. Prior to this time most issues that are now commonly associated with marketing were either assumed to fall within basic concepts of economics (e.g., price setting was viewed as a simple supply/demand issue), advertising (well developed by 1900), or in most cases, simply not yet explored (e.g., customer purchase behavior, importance of distribution partners).

   Led by marketing scholars from several major universities, the development of marketing was in large part motivated by the need to dissect in greater detail relationships and behaviors that existed between sellers and buyers. In particular, the study of marketing led sellers to recognize that adopting certain strategies and tactics could significantly benefit the seller/buyer relationship. In the old days of marketing (before the 1950s) this often meant identifying strategies and tactics for simply selling more products and services with little regard for what customers really wanted. Often this meant companies embraced a “sell-as-much-as-we-can” philosophy with little concern for building relationships for the long term.

   But starting in the 1950's, companies began to see that old ways of selling were wearing thin with customers. As competition grew stiffer across most industries, organizations looked to the buyer side of the transaction for ways to improve. What they found was an emerging philosophy suggesting that the key factor in successful marketing is understanding the needs of customers. This now famous Marketing Concept suggests marketing decisions should flow from FIRST knowing the customer and what they want. Only then should an organization initiate the process of developing and marketing products and services.

   The marketing concept continues to be at the root of most marketing efforts, though the concept does have its own problems (e.g., doesn't help much with marketing new technologies) a discussion of which is beyond the scope of this tutorial. But overall, marketers have learned they can no longer limit their marketing effort to just getting customers to purchase more. They must have an in-depth understanding of who their customers are and what they want.

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 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.

Identify

   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.

Create

   Competition forces marketers to be creative people. When marketers begin new ventures, such as building 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, the cycle of creating something new never ends.

Maintain

   Today’s marketers work hard to ensure their customers return to purchase from them again and again. Long gone (see our discussion of 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.

Satisfying Relationships

   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

   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 regarding:

• Target Markets – markets consist of customers identified as possessing needs the marketer believes can be addressed by its marketing efforts
• Products – consists of tangible (e.g., goods) or intangible (e.g., services) solution to the market’s needs
• Promotion – a means for communicating information about the marketing organization’s products to the market
• Distribution – the methods used by the marketer that enable the market to obtain products
• Pricing – ways for the marketer to set and adjust the cost paid by the market to obtain products
• Supporting Services – additional options that enhance a product’s value

   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.

   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 in 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.

The Role of Marketing

   As we've seen the key objective of an organization’s marketing efforts is to develop satisfying relationships with customers 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 have the ability to convey messages that change societal behavior in a positive way (e.g., anti-smoking advertising)

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.

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 who sell products to the company (e.g., supplier of raw material for product production) and those who 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 or produce cause-related advertising.

   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.

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 the company and others 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.

Technology Savvy

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, GPS navigation services 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 firmly understand 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 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.

Information Seeker

   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.