The Marketing Book

Michael Baker, Susan Hart, Michael J. Baker, Susan Hart

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781134506125
• Edition: 7
• Topic: Business
• Subtopic: Marketing
• Index: Business

The Marketing Book is everything you need to know but were afraid to ask about marketing. Divided into 25 chapters, each written by an expert in their field, it's a crash course in marketing theory and practice. From planning, strategy and research through to getting the marketing mix right, branding, promotions and even marketing for small to medium enterprises.

This classic reference from renowned professors Michael Baker and Susan Hart was designed for student use, especially for professionals taking their CIM qualifications. Nevertheless, it is also invaluable for practitioners due to its modular approach. Each chapter is set out in a clean and concise way with plenty of diagrams and examples, so that you don't have to dig for the information you need. Much of this long-awaited seventh edition contains brand new chapters and a new selection of experts to bring you bang up to date with the latest in marketing thought. Also included are brand new content in direct, data and digital marketing, and social marketing.

If you're a marketing student or practitioner with a question, this book should be the first place you look.

Part I Organisation and planning

1 What is marketing?

Michael J. Baker

DOI: 10.4324/9781315890005-1

The enigma of marketing is that it is one of mankind’s oldest practices, but the most recent of the business disciplines.

(Baker 1976)

Marketing is also an enigma in the sense that while some people see it as a force for good, others see it as a force for evil. As with most things, the reality is that it may be either or both depending upon the uses to which people put marketing ideas and practices.

There are many misconceptions about marketing so we will only deal with 4, which we have encountered most frequently in more than 50 years’ experience as both practitioner and academic. These misconceptions are:

1. marketing is a modern or ‘new’ approach to business;
2. that it is essentially a functional activity;
3. that it is concerned principally with advertising and high-pressure selling;
4. and that this is largely irrelevant.

The first misconception is that marketing first developed in the US in the early to mid-twentieth century. A useful benchmark for judging whether a subject or practice is of sufficient substance to justify formal study is to establish when it first began to be taught in leading universities. Using this criterion, we know that the first chair of marketing was established at the Wharton Business School in the 1880s and, by the turn of the century, the subject was being offered in most leading American universities. However, the subject taught then was very different from the modern marketing concept, which began to emerge in the aftermath of the Second World War and is the foundation of what is known today as the marketing management school of thought.

So marketing is a relatively new academic discipline with strong roots in America. The problem is that, as a practice, marketing has existed since time immemorial and so is very old indeed. As we shall see, it would not be extravagant to claim that modern civilisation owes its origins to the discovery that task specialisation and exchange (marketing) increases productivity and enhances both the standard of living and the quality of life. History also suggests that successful entrepreneurs and businesses have always understood the principles of effective marketing even if they did not describe their practices in quite the same language as we use today.

Prior to the industrial revolution, buyers and sellers enjoyed close contact with one another with the result that sellers often knew precisely what their individual customers wanted and did their best to satisfy them. Industrialisation and the development of the factory system were to change all that as they created both a physical and psychological distance between the producer and the consumer. As a result, it became necessary to develop new techniques to track the precise nature of consumer demand, to let consumers know about the availability of goods and services and to ensure the widest possible distribution to reach as many potential customers as possible. Early industrialists, like Josiah Wedgwood, were extremely successful at this and pioneered many techniques in the eighteenth century, such as market segmentation, branding, celebrity advertising, sales promotion, etc. long before any business schools came into existence. And so, the reality is that marketing is the oldest of the business practices, but among the newest, if not the newest, of the business disciplines.

The question as to whether marketing is a philosophy or function, frequently expressed in terms of statements along the lines, ‘Marketing is a concept or way of thinking about the way organisations should interact with their customers’, compared with the bald statement, ‘Marketing is a practice’, has already been partially answered a moment ago when it was claimed that marketing is probably the oldest of business practices but among the newest, if not the newest, of the business disciplines.

As taught in business schools, marketing is presented as a body of knowledge derived from observation of experience and theorisation about cause and effect in commercial exchange processes. Persons familiar with this body of knowledge should then be able to diagnose the interaction between sellers and buyers in the market place and propose future strategies for enhancing and improving these interactions by means of strategic marketing planning. Clearly, the emphasis is very much upon theory as a basis for successful practice.

However, many practitioners dismiss the relevance of theory and argue that marketing is a skill acquired through practice. And, in support of this view, there is plenty of evidence that academic research into marketing has very little direct impact upon successful practice.

But just as marketing is both old and new, so it is also about learning from experience, as well as capturing the nature of that experience, and careful research and analysis in order to better inform future decision-making. Where the mismatch occurs, if it does, is that theorising results in what at the Harvard Business School we used to call currently useful generalisations. But these can rarely provide precise answers to explicit questions of the kind that practising marketing managers are grappling with. It is because marketing problems are usually highly specific in an often unique context that useful generalisation cannot provide an exact answer. On the other hand, as we shall see, theories very often provide an analytical framework with which we can diagnose our problem, so that we can then draw on our practical knowledge and experience to solve it.

The third and fourth misconceptions are closely related. Many regard marketing as an unnecessary extra or ‘trapping’, which is really irrelevant as conveyed by the opinion that, ‘Organisations got on fine before anyone mentioned marketing’.

Such misunderstanding about marketing is because, like an iceberg, the most visible part represents only a very small proportion of the total marketing effort. Information about products for sale is everywhere – on display in retail outlets, through advertising on television and radio, in print and in posters and, increasingly, in social media. But, as research shows, it is only when we experience an unfilled need or want that we catch sight of the tip of the iceberg and become aware of sellers who claim to have the answer to our need. To be in that happy position they will have to have identified a marketing opportunity and designed a product or service to satisfy it. They will then have to have acquired the plant, equipment, labour, supplies and all the other resources required to create a product and, apart from things that are made to order, they will then have to make and stock the product before letting it be known that it is available for sale – the tip of the iceberg! This is illustrated in Figure 1.1.

Figure 1.1 The marketing iceberg

The reality is summarised in the quotation, ‘Marketing is essential to the long-term success of the organisation’, which is from Peter Drucker (1954), probably the most influential of all the management gurus, which is making the point that if you don’t get the product right, then all the costs that you have incurred would have been wasted and no amount of advertising and promotion will be able to put that right. Yes, advertising and promotion are important, but never as influential as some people make them out to be. It is much easier and cheaper to change a product than to change people’s minds about it.

It is beyond doubt that modern civilisation owes its existence to the practice of marketing. Even in the subsistence economies of prehistory, when life was ‘nasty, brutish and short’, marketing offered a better standard of living than could be achieved through attempts at self-sufficiency. Long before the discovery of agriculture, or the domestication of animals, gender encouraged role specialisation with males responsible for hunting and security, and females for gathering and child rearing. However, the real breakthrough in human development occurred when specialisation extended to the performance of the many tasks necessary for survival. The benefit of task specialisation is that it increases output or productivity, so there is more of everything to go around. But, for this to happen, the specialist must be able to exchange what they have to offer for goods and services provided by others. The gains from task specialisation will soon be dissipated if we have to spend a lot of time trying to make contact with persons who have a coincidence of wants – we each have something the other needs, so we can negotiate an exchange. Obviously, we need a central place where anyone with something to exchange can meet up with other like-minded individuals, and this place is the market.

Over time, increased specialisation encouraged permanent settlement in locations with natural advantages and trade between them. To manage this trade, the medium of exchange (money) had to be created, as had writing and accounting to keep a record of stocks and transactions. This occurred in Phoenicia around 4000 bc. In time, the search for greater variety and choice prompted trade between nations, exploration and wars. However, the great breakthrough in economic growth came in the eighteenth century with the Industrial Revolution in Great Britain.

The origins of ‘modern' marketing

The Industrial Revolution, which gave birth to modern society and the practice of marketing as we know it today, was the consequence of three major developments:

1. the application of science and technology to production and distribution;
2. the division of labour;
3. entrepreneurial management.

The division of labour was described eloquently by Adam Smith in his Wealth of Nations (1970 [1776]). Smith’s description of the development of a primitive production line for the manufacture of pins identified at least ten different tasks:

One man draws out the wire, another straightens it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; the head requires two or three distinct operations; to put it on is a peculiar business; to whiten the pins is another; it is even a trade by itself to put them into the paper.

Two points are of particular significance in this step forward. First, organisation is required to bring together the men, provide a workplace and source raw materials. Second, the enormous increase in output reduces the price of the product, necessitates the development of channels of distribution to make it available to those with a demand for it, and leads to the exploitation of a much larger market. It also means that the ‘factory’ tends to produce standardised products and no longer makes to the order of individual customers.

While international trade has also existed since time immemorial, the development of manufacturing industry greatly accelerated its growth. Mass production demanded ever-increasing quantities of raw materials, and overseas colonies and plantations were soon established in less-developed countries to supply these. In turn, employment generated income and income transformed a latent demand for manufactured goods into expanding export markets.

To begin with, manufacturing was concentrated in Europe and North America, where there was a skilled workforce and the necessary infrastructure to support it, with the r...