How is marketing defined, what is the marketing process, and what are marketing’s key concepts?
How does marketing communication contribute to the development of a brand?
What is integrated marketing communication and what are its key concepts?
How is brand communication evolving during this time of change?
Chapter Overview This chapter opens with an explanation of the fundamental principles of marketing. It begins with the concept of exchange, and continues with a discussion of marketing’s key players, the most common types of markets, services marketing, the marketing concept, and development of a marketing plan. Strategic elements of market planning, including the marketing mix, differentiation, competition advantage, and positioning are also detailed. Next, the various components of branding strategy are explored, with an emphasis on the role of marketing communication in building strong, viable brands. The difference between advertising and integrated marketing communications (IMC) is explained, the practical challenges of IMC implementation within an organization are discussed, and four of the principles that guide effective implementation of IMC are listed. Throughout the chapter, the importance of monitoring all marketing elements to ensure a singular, unified message is reiterated. The chapter closes with a discussion of the ways in which the practice of marketing is changing.
Chapter Outline What is Marketing?
Marketing is designed to build brand and customer relationships that generate sales and profits or, in the case of nonprofits, memberships, volunteers and donations. In spite of these economically turbulent times, most of the basic marketing principles remain viable.
Why Marketing 101?
Marketing is the way a product is designed, tested, produced, branded, packaged, priced, distributed, and promoted. The American Marketing Association (AMA) defines it as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”
Traditionally, the objective of most marketing programs has been to sell products, which we define as goods, services, or ideas. This is accomplished by matching a product’s availability and the company’s production capabilities to the consumer’s need, desire, or demand for the product.
Goods and services are identified in terms of their product category, the classification to which the product is assigned. Marketing managers manipulate the marketing mix, also called the 4Ps, which refers to product, price, promotion, and place.
The Concept of Exchange
Marketing helps to create demand for a product leading to an exchange, that is, the act of trading something of value for a desired product. Demand, however, drives exchange. In addition to economic exchange, marketing also facilitates communication exchange. Marketing provides both information and the opportunity for customer-company interaction.
Who Are the Key Players?
The marketing industry is a complex network of professionals. The four categories of key players include 1) marketers, 2) suppliers and vendors, 3) distributors and retailers, and 4) marketing partners, such as advertising agencies.
The marketer, also referred to as the advertiser or the client, is any company or organization behind the product, that is, the organization, company, or manufacturer producing the product and offering it for sale. The Day in the Life feature in this chapter describes the job of a marketing communications manager.
The materials and ingredients used in producing the product are obtained from other companies, referred to as suppliers or vendors. The phrase supply chain is used to refer to this complex network of suppliers whose product components and ingredients are sold to manufacturers.
The distribution chain or distributionchannel refers to the various companies that are involved in moving a product from its manufacturer into the hands of its buyers. Suppliers and distributors are also partners in the communication process.
Marketing relationships also involve cooperative programs and alliances between two companies that work together as marketing partners to create products and promotions.
What Are the Most Common Types of Markets?
The word market originally meant the place where the exchange between seller and buyer took place. Today, we speak of a market not only as a place but also as a particular type of buyer — for example, the youth market or the motorcycle market. The phrase share of market refers to the percentage of the total market in a product category that buys a particular brand.
As Figure 2.1 shows, the four main types of markets are 1) consumer, 2) business-to-business (or industrial), 3) institutional, and 4) channel. We can further divide each of these markets by size or geography.
Consumer markets consist of people who buy products and services for personal or household use. As a student, you are considered a member of the consumer market for companies that sell jeans, athletic shoes, sweatshirts, pizza, music, textbooks, backpacks, computers, education, checking accounts, bicycles, travel, and vacations, along with a multitude of other products that you buy at drug and grocery stores, which the marketing industry refers to as packaged goods.
Business-to-business markets consist of companies that buy products or services to use in their own businesses or in making other products. Advertising in this category tends to be heavier on factual content, but can also be beautifully designed.
Institutional markets include a wide variety of profit and nonprofit organizations, such as hospitals, government agencies, and schools that provide goods and services for the benefit of society. Ads for this category are very similar to business-to-business ads in that they are heavy on copy and light on visuals and emotional appeals.
Channel marketsinclude members of the distribution chain, which is made up of businesses that we call resellers or intermediaries. Channel marketing, the process of targeting a specific campaign to members of the distribution channel, has become more important now that manufacturers consider their distributors to be partners in their marketing programs. As giant retailers, particularly Wal-Mart, become more powerful, they can dictate to manufacturers what products their customers want to buy and how much they are willing to pay for them.
Businesses spend most of their advertising dollars on consumer markets, although business-to-business advertising is becoming almost as important.
Why Is Services Marketing Important?
Services are the dominant part of the economy in most developed countries. Marketing a service-based business is different in a number of ways from marketing goods because the product is intangible.
Many goods manufacturers also offer a service, such as technical advice and set-up, parts and repair, financing, and so forth. Also, most companies have customer service operations that provide follow-up services for their products, answer questions, and deal with complaints.
An important principle to remember is: In many economies, services marketing, which is intangible and creates a more personal relationship with the customer, dominates goods marketing.
Other differences between a good and a service include the relationship between the provider of the service and the customer and the delivery process involved.
How Does the Marketing Process Work?
The primary goal of the marketing process is to create and execute a marketing plan, which is a document that proposes strategies for using marketing elements to achieve marketing objectives. The process of creating a marketing plan and managing its execution begins with the marketing research, which helps marketers make a set of key strategic and tactical decisions that guide deployment of the marketing mix. Its steps are outlined below:
Step 1:Research the consumer market and the competitive marketplace and develop a situation analysis or a SWOT analysis (strengths, weaknesses, opportunities, threats).
Step 2: Set objectives for the marketing effort.
Step 3: Assess consumer needs and wants relative to the product; segment the market into groups that are likely to respond; target specific markets.
Step 4:Differentiate and position the product relative to the competition.
Step 5: Develop the marketing mix strategy: select product design and performance criteria, pricing, distribution, and marketing communication.
Step 6: Execute the strategies.
Step 7:Evaluate the effectiveness of the strategy.
What Key Concepts Drive Marketing Practices?
Historically, marketers developed a product and then tried to find a market for it. This is referred to as a product-driven philosophy. However, the marketing concept has turned the attention of marketers toward consumer needs and wants and has moved marketing closer to a customer-focused philosophy rather than one based on production.
Focus on Consumers
The marketing concept says marketing should focus first on identifying the needs and wants of the customer, rather than on finding ways to sell products that may or may not meet customers’ needs. The marketing concept involves two steps: 1) determine through research what the customer needs and wants, and 2) develop, manufacture, market, and service goods that fill those needs and wants, that is, create solutions for customer problems.
An important principle to remember is: Customer-focused marketing is designed to address consumer needs and wants.
Marketing communication can be designed to acquire consumer feedback that leads to insights into consumer decision making. This information then feeds back into marketing plans, where it can stimulate newproduct development that is better designed to more effectively and efficiently meet customer needs.
In advertising, the difference between a product and a consumer focus lies in the orientation of the ad. Ideally, the ad will address both by interpreting product features in terms of consumer benefits. The United Airlines ad in Exhibit 2.8 provides an example of this.
We often use the words consumer and customer interchangeably, but there are some differences in meaning. Consumer is a general term for people who buy and use products and services. The word customer, however, refers to someone who has purchased a specific brand or visited a specific retailer. By virtue of those actions, these people can be said to have a relationship with a brand or a store.
Differentiation, Competitive Advantage, and Positioning
Marketing experts often point to the importance of differentiation as a selling strategy. They recommend strategies that are informed by consumers, but led by fundamental marketing decisions that make the brand stand out as different from its competition, a process known as positioning.
How a brand is different and superior in some way is called a competitive advantage. This concept is referred to in marketing strategy as product differentiation. The point of difference is seen in the way the product is positioned relative to its competitors.
Positioning refers to how consumers view and compare competitive brands or types of products. A product can be differentiated and therefore positioned in a variety of ways. Positioning is discussed later in this chapter, and also in Chapter 7.
Added value refers to a marketing communication activity that makes the product more valuable, useful, or appealing to the consumer. Added value is the reason consumers are willing to pay more for one brand over its competition. Advertising and other marketing communication not only showcase the product’s value but also may add value by making the product appear more desirable. Providing news and useful information of interest to consumers is another way that advertising adds value, as the example in Exhibit 2.9 illustrates.
Other aspects of marketing strategy can add value, such as convenience, a lower price, useful features, or higher quality. Ensuring the product’s utility and convenience is one of the tasks of customer-oriented marketing and the point of many advertisements.
What Is the Marketing Mix?
The traditional marketing mix, also called the 4Ps, include four main elements: product, price, distribution, and communication. All four elements are equal in importance, and to a marketing manager, marketing communication is just one part of the marketing mix. The importance of marketing communication relative to the other three Ps differs by product category and sometimes even by brand. A list in the textbook explains the components of the marketing mix.
The product is the focal point of the 4Ps. Design, performance, and quality are key elements of a product’s success. The goals of marketing communication are to build awareness of the new brand, explain how the product works, and how it differs from competitors. However, product performance sends the loudest message about the product or brand and determines whether or not the product is purchased again or if the buyer recommends it to others. The idea is that if the product is well engineered and its manufacturer maintains a high standard of quality, then the brand will last and perform at a high level.
The price a seller sets for his product is not only based on the cost of making and marketing the product, but also on the seller’s expected margin of profit. The price of a product is based upon what the market will bear, the competition, the economic well-being of the consumer, the relative value of the product, and the consumer’s ability to gauge the value, which is referred to as price/value proposition.
Price sends a message, and advertising is often the primary vehicle for telling the consumer about price. A number of pricing strategies can affect how the price is communicated or signaled in advertising. These strategies include value pricing, promotional pricing, and prestige pricing.
Some prices are relatively standard, such as those at movie theaters. In contrast, promotional pricing is used to communicate a dramatic or temporary price reduction through terms such as sale, special, and today only.Psychological pricing strategies use marketing communication to manipulate the customer’s judgment of value. In fact, the meaning of the price is often dependent upon the context provided by the marketing communication, which puts the price in perspective.
The term price copy means advertising copy devoted primarily to telling the consumer about the price.
Distribution includes the channels used to make the product easily accessible to its customers. The common strategy of distributing a product through one or more distributor and retailer is called channel marketing. Because the choice of a distribution channel also sends messages, marketing managers consider a variety of channels when selecting channel members.
Direct marketing companies distribute their products directly to a consumer without the use of a reseller. “Clicks or bricks” is a phrase used to describe whether a product is sold online or in a traditional store. This is a new question that the Internet has raised for marketers.
A pushstrategy directs marketing efforts toward resellers, and success depends on the ability of these intermediaries to market the product, which they often do with their own advertising. In contrast, a pullstrategy directs marketing efforts toward the consumer and attempts to pull the product through the channel by intensifying consumer demand.
The last of the 4Ps is promotion, or what we call marketing communication (marcom). It includes advertising, public relations, sales promotion, direct marketing, events and sponsorships, point of sale, digital media, and the communication aspects of packaging, as well as personal sales and new forms of online and place-based communication that have emerged recently.
The first principle of IMC is that everything communicates. That can be rephrased to say that everything in the marketing mix can send a message or everything a brand does, and sometimes what it doesn’t do, can send a message. Because unintentional messages can come from brand messages, it is necessary to monitor all marketing elements from a communication perspective.
An important principle to remember is: Every part of the marketing mix, not just marketing communication, sends a message.
Personal selling relies upon face-to-face contact between the marketer and a prospective customer, rather than contact through the media. In contrast to most advertising, whose effects are often delayed, marketers use personal selling to create immediate sales to people who are shopping for a product. Field sales, retail sales, and door-to-door selling are different components of this profession.
Lead generation is a common objective for trade promotion and advertising. Marketing communication works as a partner with sales programs to develop leads, the identification of potential customers or prospects.
what is marcom’s role in branding?
Branding is the management function that defines the tangible and intangible elements of a product. Through effective marketing communication, a unique identity is established for a product that engages the hearts and minds of consumers in a process that differentiates it from similar products. Branding is defined as a perception, often imbued with emotion, which results from experiences with and information about a company or a line of products.
A brand is much more than a product. Hamburgers are products but the Big Mac and Whoppers are brands. In fact, all organizations with a name can be considered brands. As a branding expert explains: “Organizations should be aware that simply by existing and interacting with others, an organization is branding itself. So branding the organization is inevitable. It’s going to happen whether the process is managed or not.” The Matter of Practice feature in this chapter explains how organization brands are distinct from product brands.
Sometimes the difference between brands in the same product category lie in product features, but often consumers often choose one brand over another because of a difference in brand impressions they carry. A brand differentiates a product from its competitors and makes a promise to its customers.
An important principle to remember is: A brand is more than a product. Companies make products but sell brands. Branding involves a complex set of philosophies and activities. A successful brand is the product of both art and science, in which all of the pieces and parts fit together perfectly in a coherent brand perception.
The second principle of IMC is:A brand is a unified vision (the art) and a complex system (the science). Marketing communicators manage a multiplicity of interrelated brand activities and programs that will only work well to the extent that they work together. When the pieces and parts fit together perfectly, meaning is generated and something of value is created. This describes the art of brand management.
How Does a Brand Acquire Meaning?
A brand is a perception but what does that mean? The answer is – a difference in the brand meaning. Meaning-making ideas and images are what marketing communication delivers to brands. This perception of brand meaning is the one thing a brand has that cannot be copied. Competitors can make a similar product, but it’s difficult for them to duplicate a brand because brand meaning is built on personal impressions.
A Brand Is a Perception
A brand, then, is basically a perception loaded with emotions and feelings (intangible elements), not just a trademark or package design (tangible elements). Tangible features are things you can observe or touch, such as a product’s design, size, shape, and performance. Intangibles include the product’s perceived value, its brand image, positive and negative impressions and feelings, and past experiences. Intangibles are just as important as tangibles because they create the emotional bonds people have with their favorite brands, are impossible for the competition to copy, and can lend monetary value and legal protection to the brand’s unique identity.
The Principled Practice feature in this chapter allows you to consider the importance of brand presence in a situation faced by Twitter: the hacking and hi-jacking of its accounts.
The impressions created by the brand’s tangible and intangible features come together as a brand concept. Such impressions are particularly important for parity products, products with few distinguishing features. For these products, feelings about the brand can become a critical point of difference.