Part
1
The Fundamentals of
Marketing â Preparing
Chapter
1
What marketing is all
about
Introduction
By the end of this chapter you will:
Have reviewed the development of marketing through to the current day.
Know the full meaning of the term âmarketingâ and the reasons for its growing importance.
Recognize that, while many organizations may not have âcustomersâ
per se, like clubs, charities and public services, they will still benefit from adopting many of marketing's approaches and philosophies.
Realize how widely the principles of marketing can be usefully applied.
Be aware of some of the criticisms that have been levelled at marketing.
Realize the need for companies to have a âcompetitive differential advantageâ.
Appreciate the need for a dynamic approach to deal with constant change in the factors that affect our business.
âMarketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.â
Chartered Institute of Marketing Definition
1.1 What Marketing Means
Before going any further, look back at the Chartered Institute of Marketing's definition of marketing at the start of this chapter. What for you is the key word in the definition?
Is it customer? Indeed, marketing is about customers. The whole purpose of many an organization has to do with dealing with customer requirements and making a profit.
So is it profitably? Certainly, one needs to profit from the interaction between customers and the organization and so much the better if both the customer and the organization are satisfied by some sort of âprofitâ.
Or perhaps you feel that the key word is satisfying? Well, no business is going far without satisfying the needs of those with a financial stake in the business, the creditors and the employees; and these are satisfied in the long term only when customers continue to be satisfied. But how do we know what they need?
Then does identifying needs seem paramount? Clearly this is going to be crucial, yet so will many other organizations be aiming to identify the same needs so there may be more than just satisfying identified needs alone.
Thus anticipating needs suggests that, if we can do this better than our competitors, we will keep ahead. So, perhaps this is the most fundamental point. But without being able to satisfy the current need, the organization may not survive long enough to deal with those anticipated needs!
All that is left is âmanagement processâ. If one takes a moment to reflect, how do any of the above happen without someone making sure that they do? How can an organization identify, anticipate or satisfy any given customer requirement and make a profit without someone managing the process? Thus, the management process is the foundation for all successful marketing.
So, in the Chartered Institute of Marketing's definition, it is the management process that is responsible for âidentifying, anticipating and satisfying customer requirements profitablyâ and that enables everything else to happen. And this process is the duty of all the people in an organization whose activities make up all the stages that ultimately deliver what the customer needs. These are the marketing people to whom this book is directed.
However, the term âmarketingâ is used in different ways by different people; so, to avoid talking at cross purposes, it is necessary to disentangle these differences at the outset. Commonly, there are three ways in which people use the term:
- As a description for some part of the organization or in a person's function or job title, such as the âmarketing departmentâ or âmarketing directorâ.
- To describe certain techniques used by the organization. Such activities as advertising, market research, and sometimes sales or product development, can be conveniently described by the collective term âmarketingâ to distinguish them from other activities coming under the headings âproductionâ or âfinanceâ or other similar main subdivisions of an organization. Some organizations feel that producing the brochure or launching the web page is doing the âmarketingâ.
- To indicate a particular approach to business, or a management attitude, in relation to customers and their needs. This âbusiness philosophyâ has become known as the âmarketing conceptâ.
It is in this third way that the term is mainly used in this book, and the meaning and implication of the marketing concept are discussed fully later in this chapter. However, we must look briefly at the other two uses of the term in order to get them in perspective.
1.1.1 Marketing as an Organizational or Functional Term
There are fashions in management jargon as in everything else. In recent years âmarketingâ has become one of the more fashionable management words. This means it is often used widely without too much attention to its true meaning. For example, many a sales or complaints department has been renamed the âmarketing departmentâ overnight with no change in its function or attitudes. The term is often used to describe advertising and public relations activities, market research or merchandising. All this means is that it is sometimes wise to ask âWhat do you understand by âmarketingâ?â. Are they focusing on the fundamental management processes that go on in the organization that deliver customer solutions, or are they simply classifying a certain set of techniques that are the visible manifestations or outputs of those activities?
One of the direct drawbacks of having a marketing department, or someone with that specific job title, is that they get labelled with âdoing the marketingâ. This seems to absolve everyone else in the organization from any responsibility of having to worry about customers, and gives them cover if the âmarketingâ should fail.
1.1.2 Marketing to Describe Certain Techniques
Many activities are particularly concerned with a company's relations with its customers â for example, market research, public relations, customer enquiries and advertising. Often these activities are grouped together under the collective term âmarketingâ.
Since we all see advertising, buy products and services, or get direct mail through our letter boxes, we all âconsumeâ great volumes of âmarketingâ and, therefore, become immediate experts. Since it appears so simple to the man (or woman) in the street, the role is often added to some poor hapless individual's task list with varying, and often poor, results.
As we shall see in the next section, marketing in its fullest sense must motivate the whole company. The managing director, production people, accountants, keyboard operators â all must be concerned with marketing. To put the marketing label on some parts of the business can be read as indicating that they and only they are concerned with marketing. This, in turn, would mean that they and only they are concerned about the customers on which the business depends. The saying âMarketing is too important an activity to be trusted to the marketing departmentâ contains a great deal of truth. A fairly common solution to the problem is to label these specialist departments âMarketing servicesâ (see Section 1.9.1).
Be that as it may, we do commonly find within a company structure a marketing department set up something along the following lines:
Marketing is one of the three basic areas of activity in the typical industrial business. It begins by influencing the format of the product to secure maximum acceptance in the market. It also defines the prices at which and the quantities in which the product should be offered in any given period to secure the maximum return to the business in the long term.
It normally includes:
An evaluation of the market and estimates of sales.
Development of the marketing approach or policy.
The planning and operation of the marketing function overall (internal and external) for maximizing sales and for dealing with customers.
All forms of promoting sales.
Setting budgets for the marketing activity.
The evaluation of results by reference to internal data and the results of market research.
This is a perfectly valid and worthwhile approach, provided it does not obscure the need for the whole company to be committed to the management process that âidentifies, anticipates and satisfies customer requirements efficiently and profitablyâ.
1.2 The Marketing Concept
During the 1960s there emerged what is known as the âmarketing conceptâ. This is how we refer to the way in which many modern businesses have come to look at the total activity of their company in a different light. William J. Stanton, Professor of Marketing at the University of Colorado, stated:
The marketing concept is based on two fundamental beliefs. First, all company planning, policies, and operations should be oriented toward the customer; second, profitable sales volume should be the goal of a firm.
As we can see, in its fullest sense, the marketing concept is a philosophy of business. Simply state...