Chapter One – What is marketing and how does it differ from sales, advertising, and promotion?

Marketing is one of the most misunderstood and confusing terms used in business.  How would you define it? Think about what you believe marketing is and write your definition down now:

Marketing is: ”_________________________________________________

_____________________________________________________________”.

Save this definition to compare it to other definitions of marketing we cover later on.

Why is the term “marketing” surrounded by confusion?

First, the word ‘marketing’ means very different things to different people in different industries.  For example, a coal producer in Kentucky just needs to understand what price the local buyer will be paying for the product and s/he can then plan to ‘market’ (or just sell) the coal produced to the local buyer.  Second, think about how much different the above situation is from another case in which ‘marketing’ must be done.  Let’s say that you are a product-marketing engineer at Agilent Technologies and your Product Marketing Manager has informed you that you will be responsible for ‘marketing’ a new product that has been conceptualized by engineers in the Research and Development (R&D) Department.  Finally, assume a good friend of yours who has invented a new way for people to wash their car.  She has asked you  ‘to market’ her product for her.  In all three of these situations, the product has already been conceptualized and produced.  It won’t help the individual marketer at all to consider how the market will react to the product.  In situation one, the coal miner must just extract the coal from the ground and deliver it to a local coal broker for sale.  In situation two, the product manager at Agilent must first figure out what the new product will be good for and who might want to buy it.  Finally, in situation three, your friend has already invented the product; it just remains for you to figure out who the people are who wash their own car and how to reach them.  In all three situations, the marketer is faced with coming up with a way to sell what has already been produced.  This definition of marketing, unfortunately, is how most people would define marketing, that is, “Marketing is how an organization or individual sells its product or service.”  Thus in this definition, marketing is relegated to finding and exploiting a market of buyers for the product or service.

But is that how marketing practitioners and people who teach marketing define it?  Let’s review some alternate definitions of marketing from the business literature.

The American Marketing Association’s definition.  The American Marketing Association (AMA) is the leading organization in the U.S. representing the academic side of marketing.  The organization is comprised of and primarily impacted by people who teach marketing at the college level.  In 1948, the AMA defined marketing as follows:

“The performance of business activities directed toward, and incident to, the flow of goods and services from producer to consumer or user.”
(AMA, 1948).  

Note that the definition above focuses on the DISTRIBUTION aspect of marketing and doesn’t really include the ‘Four P’s’: Product, price, promotion, place (distribution).

In 1985, the AMA definition was changed to “the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.” (AMA 1985)

 

Compare these two definitions:  How are they similar and how do they differ?
Why do you think the AMA made the change in the definition of marketing?

Now, compare the above discussion to YOUR definition of marketing.  How do the definitions differ from yours?  How are they similar?

Speaking of confusion, type in the key word “marketing” into your favorite search engine on the internet and see what you find.

The Seven Steps in the Marketing Process

It is natural that people in different situations define marketing differently.  However, we will approach the definition of marketing by first learning about the seven steps in the process of marketing.  While this process is not always followed, it is important that any student of marketing understand what steps must be taken to be successful in a marketing effort.  The marketing process can be described in the following seven steps:

1. Understand the market wants/needs of interest
2. Based on relative size and needs of the market, select certain segments of the market that are of the most interest to you and your organization
3. Thoroughly describe these segments based on their individual needs
4. Create a product or service that will meet the specific needs identified
5. Communicate the concept of the product or service to the targeted customer in a way that makes sense to the customer
6. Deliver the product or service to the targeted customer in a way that will be convenient to the customer
7. Solicit feedback from the customer about how your product or service could be improved to meet the customers’ needs even better

 

This process is applicable to most situations encountered by those wanting to market a product or service.  The process of marketing can be divided into ‘upstream’ and ‘downstream’ activities. That is, steps A through D are all ‘upstream’ activities that should be performed before a product actually exists.  Surely, there are many readers who will say, “Wait, this won’t work for me, I am like those people who you described at first, I already HAVE a product to sell, I just need to find somebody to BUY IT!”  As marketers, we understand that many sellers don’t have the option or input to create a new product or service.  However, this e-book is designed for people who want to do marketing the right way.   If you must pick up the process after steps A, B, and C have already been performed, realize that some steps have already been done, and you should check to see if they have been done correctly.

Also note that marketing research plays an integral role in each of these stages.  That is, the organization that is truly focused on customer needs must be driven by an active research effort.

Definition of marketing we will use in this book

 

 Based on the seven-step approach to marketing, we will define marketing as:

“The conceptualization and delivery of customer satisfaction” – the first part of this definition would be covered in steps A through D in the marketing process above and the final aspect ‘delivery’ would be represented by steps E, F, and G.  Of course, in order to deliver ‘customer satisfaction,’ one must do customer research, thus step G will provide feedback into the continuation of the seven-step marketing process over time.

Upstream and Downstream Marketing Activities in the Marketing Process

 

What marketing activities are performed and how they are performed will have a lot to do with how many choices you have in managing the steps marketing process and the focus of the organization’s marketing effort.  The organization will view the marketing function’s responsibilities based on the history of the organization and its orientation to doing business.  For example, there are several different orientations that organizations use to approach doing business or serving their customers.  Usually, the firm does not specifically state this orientation.  For example, if a firm defined its product policy as “research leading to creation of the most sophisticated, highest quality products and services in the world” then it has decided to use a “Product or Production Orientation.”  That is, the organization has decided for itself what customers want (sophisticated, highest quality products) and has ignored the first three steps in the marketing process we described above. 

 

As a consumer, do all customers want the most sophisticated, highest quality products and services? Do you as a consumer always seek out the most sophisticated, highest quality products and services?

 

Write your answer to this question in the following line:

……………………………………………………………………………………………..

Another approach or orientation to managing the marketing function can be called “Sales (or Promotion) orientation”.  In this approach, marketing is seen as serving the same function as with personal selling and advertising, and marketing’s primary job in the organization is to ‘sell, sell, sell.’  In this approach, steps A through C of the marketing process are largely ignored and marketing resources are instead placed on generating more sales.

There is an approach to marketing called the “Customer as Monarch (or Marketing) Concept” and while it has been around under different names for many decades, it is still a good guide to managing marketing activities.  It can be described by the slogans ‘we do it all for you,’  ‘have it your way’ a former Burger King slogan, or just by the simple saying which perhaps you have already heard, “find a need and fill it”.  The Marketing Concept would rephrase this saying a bit, and be represented by an approach of “find a need, and fill it profitably and more effectively than the competition,” Yes, this is a demanding task, but in these times, we exist in an extremely competitive world.  Note that this competition includes organizations in both the for-profit sector and the not-for-profit sector, with the latter being as competitive as the former.

The ‘Customer as Monarch’ and the ‘Marketing Concept’ are related to the Seven Step Marketing Process

 

 The marketing concept can be thought of as having four parts as follows:

Part I – Understand and meet customers needs, said another way, provide satisfying products and services to your target customers
Part II – Meet organizational goals – this is applicable for both for-profit and not-for-profit organizations.  For-profit organizations should have goals other than profit, a for-profit goal being ‘make a fifteen percent return on investment’.  A longer-term goal that is ultimately tied to profits but immediately is tied to customer satisfaction might be: “Be a recognized leader in customer satisfaction in our industry.” Not-for-profit organizations have goals non-financial performance such as ‘provide thirty hours of client services per week consistent with our organizational mission.’
Part III – Integrate marketing activities – this part can be the most complex, but also the most critical.  That is, when the organization has agreed on a marketing strategy, it must execute the strategy in an efficient and effective way. For example, “fifty-percent-off” coupons appearing in the Sunday newspaper will not reach the goal of inducing new product trial if the product is not available in stores due to a problem with product distribution and if sale catalogs are printed by a central office without coordination with local business outlets, there will be regular inventory understocks or overstocks.
Part IV – Satisfy customers better than the competition.  A indicated above, EVERY ORGANIZATION has competition. If there are not similar product solutions that provide similar benefits available then there will be competing uses for expenditure of the customer’s income.

Like the Seven Step Marketing Process, the Marketing Concept serves as a guide for applying organizational resources directed at marketing.

Chapter One Glossary

Marketing - “The conceptualization and delivery of customer satisfaction”
Upstream marketing activities – understanding, selecting, describing target markets, and creating a product or service to meet the needs of those target markets
Downstream marketing activities – communicating a product or service concept to the chosen target market and providing customer satisfaction in the process by delivering that product or service
Customer as Monarch, or marketing concept – a philosophy of doing business in which the organization places utmost importance on delivering customer satisfaction, meeting organizational goals, and outperforming the competition while integrating all marketing activities.
Chapter Two – What is Marketing Management and what do product managers and marketing managers do?

The Meaning of the terms Marketing Manager and Marketing Management

Traditionally if a person had the title of “manager,” it meant that s/he had responsibility for helping guide the activities of at least some number of employees.  While this terminology has changed over the years, we still consider someone who has the title of ‘manager’ to be responsible for overseeing the allocation of resources for the organization.  For example, as an ‘individual contributor’ I might have the responsibility of performing certain work (for example, writing marketing literature for the firm’s products), but not be responsible for the activities of anyone other than myself.  In high technology industries, the word manager is often replaced with “Director” to indicate that a person has primary responsibility for a certain organizational function.  For example, the ‘marketing director’ may be responsible for all marketing activities in the firm.  At other firms, the term ‘marketing manager’ would be used to describe the same thing.  In some organizations, the Vice-President of Marketing may perform the same functions.  The term Product Manager is often used in high technology industries to assign responsibility to a specific individual or group for the successful supervision of all marketing activities related to a specific product or service.  Sometimes the product manager’s responsibility is defined in terms of the product s/he is overseeing and sometimes the responsibility is defined in terms of a specific technology. For example, one high-tech firm might use the title of Product Manager-Digital Systems to describe the job of the person who is responsible for digital versus analog customer solutions.  This brings up still another consideration. The use of titles varies across industries and size of organizations.  We will discuss how different firms organize the marketing function in a later chapter.  

What is marketing management?

We will use the following definition of marketing management:  “Marketing management is the process allocating the resources of the organization toward marketing activities.”  Thus, a marketing manager is someone who is responsible for directing expenditures of marketing funds.  Related to the term ‘management’ is the term ‘strategy.’  Many words in the vocabulary of business management were taken from the field of military science.  For example, the word ‘strategy’ has been used in the military for many decades to indicate a long-term commitment of resources toward accomplishing a certain goal.  Thus it is often said that management is responsible for conceptualizing strategies, and other employees are responsible for implementing those strategies.  The time-honored Management-by-Objectives programs in which a supervisor will formulate strategies and other employees will choose the method of reaching those objectives is an example of this relationship in action.  As the reader can see, a discussion of ‘strategy, objectives, and goals’ can very quickly develop into a miasma of terms and confusion. Thus, we will use the following definitions.  First, we will consider goals and objectives to be identical terms. Second, we will use the term ‘objective’ to refer to a broad-based design of where the organization would like to be at some point in the future.  For example, as an objective, the organization might decide to be the ‘leader in product quality as judged by customer surveys of our organization and our five leading competitors.’  We will define the term ‘strategy’ as a method used to reach an objective.  For example, to reach our product quality objective, our organization might decide to enroll in a ‘total quality program’ offered by most large consulting firms.  Thus, strategy will have two meanings.  First, it is the overall orientation an organization choosing to allocate its resources, and second, strategy is a specific action used to implement plans. Thus, there is a two-tiered nature to strategy.  One at the top, as a broad guide to preferred action, and one below helping to implement objectives.  Use ‘strategy’ as a keyword search on the internet and see what you find. 

In marketing, we often use the ‘four P’s’ to designate the areas of control a marketing manager has at his/her command.  The ‘four P’s’ as you probably already know are:  Product, Price, Promotion, and Place.  The ‘four P’s’ represents a convenient way to summarize the main factors involved in any ‘marketing strategy.’  However, seen in a contemporary sense, the four P’s may mistakenly be limited to downstream marketing activities only and as Chapter One indicates, there are also upstream marketing activities that are related to the marketing mix.  If this does not make sense to you, please go back and review the terms used in Chapter One.

The Marketing Management Cycle

 

The planning cycle is composed of five basic steps.  First, Planning is the process of examining and understanding the surroundings within which the organization functions.  For example, “environmental scanning” is the process of studying and making sense of all the things that might impact the firm’s operation that is external to the firm.  This would include studying and gaining an understanding of such things as: competition, legislation and regulation, social and cultural trends, and technology.  Both present and developing trends in each of these areas must be identified and monitored.

Second, Implementation is the process of putting plans that have been made into action. It is the transition from expected reality to existing reality. 

Third, Monitoring is the process of tracking plans and identifying how plans map to changes that take place during program operation when more information is acquired.  Correction is the stage in which we take action to return our plan to the desired state based on feedback obtained in the monitoring stage.  If we find that return to the planned state is not practicable, we may adjust our planning outcomes. Thus, Monitoring and Correction may be considered two stages because after plans are put into action, one must continually monitor performance and make adjustments to the plan based on the feedback gathered through these monitoring activities.  In summary, the marketing management cycle composed of planning, implementing, monitoring, and correcting.  We use the use the term ‘PIMC’ as a device to remember the stages. 

An example of the marketing management cycle in action:

Let’s Get It Together Family Organization Services

 

The organizational mission of this service firm is: “We provide families with means to improve their peace of mind and quality of life.”  Representatives of the firm meet with families, question them to understand how the family operates at present, do an on-site ‘activities audit’ that models patterns of daily life for the family, and then offer suggestions about how the family can be better organized and more efficient in its use of time.  Let’s Get It Together is owned and operated by a mother of three children.  After conducting several informal focus groups, she decided to start this business because she realized that her family and most other families she observed lived in a state of chaos.  After attending a seminar on creativity and innovation, she decided that there was a real need in the marketplace for a not-for-profit educational institution to pass along all of the knowledge families have about how to manage their household activities more effectively.

After she came up with the idea, the owner realized that she must get organized herself, thus based on the “Five W’s and H Technique” (Who, What, Where, When, Why, and How) she composed the following questions:

What will the customer satisfaction entail, that is, what are the needs I am trying to meet?
Who will receive customer satisfaction?
Why will my organization deliver this particular customer satisfaction?
Who will deliver customer satisfaction?
Where will I deliver customer satisfaction?
When will I deliver customer satisfaction?
How will I deliver customer satisfaction?

The owner then modeled the marketing management cycle as follows:

Planning:  First answer the seven questions I have formulated.

Answers to questions:

Question # 1: What will the customer satisfaction entail, that is, what are the needs I am trying to meet?
Answer: Provide easy-to-follow guidance on improving family organization

Question # 2:  Who will receive customer satisfaction?
Answer: Families who perceive a need for being better organized.

Question # 3: Why will my organization deliver customer satisfaction?
Answer: First, there is an already perceived need to be better organized.  Second, there are ways to fulfill that need that are not being provided to families.

Question # 4: Who will deliver customer satisfaction?
Answer: Let’s get it together, through a small staff of highly trained and ethical individuals, will provide this service to families

Question # 5: Where will I deliver customer satisfaction?
Answer: The service will be provided through small introductory seminars and through meetings in the homes of the families, if preferred.

Question # 6: When will I deliver customer satisfaction?
Answer:  Customer satisfaction will start with the first seminar and continue through a continuing association with Let’s get it together.

Question # 7: How will I deliver customer satisfaction?
Answer:  Through a personal and caring approach with my clients involving seminars and continuing personal contacts

If you review the seven questions, and the answers above, you can see that some of the planning has been done.  What remains is to identify specific actions that must take place to ensure success such as identifying the characteristics of the best candidates for our service, creation of the service materials (seminar materials, etc.) and details of the logistics by which the service will be promoted and provided.

A brief example of one aspect of this organization’s marketing planning is:
“We will provide seminars that last one-half day to families who perceive the need for help in organizing their activities, thus we must identify likely places to offer these seminars.  We have obtained a list of community centers, where space is provided free-of-charge for such activities, and will offer our seminars there, initially.  However, we may change that approach after initial seminars are offered (monitoring and correction) and move our seminars to more centrally located sites such as hotels and churches.”

The Business Plan

 

The business plan is an overall blueprint for the anticipated activities for the organization over a coming time period, usually one-year (short term) or five-year (long-term).  We should mention that many businesses are moving their long term planning periods to ten years and beyond in order to better prepare for the future.  These businesses often make use of creativity techniques to attempt to outline what changes may occur in their respective environments and how the organization should respond to those changes.

The Marketing Plan

 

To formulate effective marketing programs an organization needs to create and follow a marketing plan.  A marketing plan is a document that describes the activities in which the organization intends to engage in a coming time period, usually one-year.  However, there are often situations in which an organization will have a medium-term marketing plan (two to five years) and a long-term marketing plan that covers plans for a five-year period or greater.

 

While there are many different approaches to preparing a marketing plan, the following conditions should exist:

 

1. those who do the plan are responsible or accountable for the plan’s implementation
2. this same group is committed to the plan’s success
3. management is committed to the plan’s success and is willing to expend the necessary resources for its implementation
4. the marketing plan is created in the context of the organization’s overall business plan
5. people in the organization share a similar orientation to the marketing function

If these five conditions are met, the organization is much more likely to be able to successfully create and implement its marketing plan. 

An example for the marketing is as follows:

1. Executive summary (a one-page to two-page overview of the contents of the plan)
2. Vision for the marketing plan (a paragraph that briefly describes the aspirations for the coming time period and the theme of the plan)
3. SWOT analysis outlining the strengths and weaknesses (internal to the organization) of the organization and the opportunities and threats (external to the organization) that the organization faces.
4. Description of market/customer types and products/services that will provide satisfaction to those markets and customers
1. Market grid of markets and customers
2. Product/service positioning strategy
5. Marketing objectives for the coming period (objectives should be “SUMAC” or specific, understandable, measurable, attainable, and consistent)
6. Description of marketing programs with timeline (a calendar of major marketing events planned, with a description of each event)

This outline should be combined with the PIMC model described earlier in the chapter.  The PIMC serves as a good guide for on-going implementation of the marketing plan.

While the outline above is simplified, it touches on the critical areas for a marketing plan.  It is important to point out, however, that a plan is only as good as its implementation, thus, it is usually better to have a poor plan and good implementation than a great plan that never gets implemented.

Chapter Two – Glossary

Marketing management - the process allocating the resources of the organization toward marketing activities
Marketing plan - a document that describes the activities leading to customer satisfaction the organization anticipates intends to engage in a coming time period, usually one-year.