Lesson 1, Topic 1
In Progress

What is marketing


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Production and marketing of goods and services are the essence of economic life in any society. All organizations perform these two basic functions to satisfy their commitments to their stakeholders – the owners, the customers and the society, at large. They create a benefit that economists call utility which is the want-satisfying power of a good or service. There are four basic kinds of utility – form, time, place and ownership utility. Form utility is created when the firm converts raw materials and component inputs into finished goods and services. Although marketing provides important inputs that specify consumer preference, the organization’s production function is responsible for the actual creation of form utility. Marketing function creates time, place and ownership utilities. Time and place utility occur when consumers find goods and services available when and where they want to purchase them. .Management guru, Peter Fuddruckers emphasized the importance of marketing in his classic book, The Practice of Management as: ‘If we want to know what a business is, we have start with its purpose, and its purpose must lie outside the business itself. In fact, it must lie in society since a business enterprise is an organ of society. There is one valid definition of business purpose: to create a customer’.

How does an organization create a customer? Guillotining and Paul explain it this way:

Essentially, ‘creating’ a customer means identifying needs in the market place, finding out which needs the organization can profitably serve and developing an offering to convert potential buyers into customers. Marketing managers are responsible for most of the activities

necessary to create the customers the organization wants, these activities include: Identifying customer needs

· Designing goods and services that meet those needs

· Communication information about those goods and services to prospective buyers

· Making the goods and services available at times and places that meet customers’ needs

· Pricing goods and services to reflect costs, competition and customers’ ability to buy

· Providing for the necessary service and follow-up to ensure customer satisfaction after the purchase.

In the digital economy, customers are socially connected with one another in horizontal webs of communities. Today, communities are the new segments. Unlike segments, communities are naturally formed by customers within the boundaries that they themselves define. Customer communities are immune to spamming and irrelevant advertising. In fact, they will reject a company’s attempt to force its way into these webs of relationship.

Marketing

According to Kotler, marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. Marketing can be defined as the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines measures and quantifies the size of the identified market and the profit potential.

Continuous exposure to advertising and personal selling leads many people to link marketing and selling, or to think that marketing activities start once goods and services have been produced. While marketing certainly includes selling and advertising, it encompasses much more. Marketing also involves analysing consumer needs, securing information needed to design and produce goods or services that match buyer expectations and creating and maintaining relationships with customers and suppliers.

In marketing, three concepts have a close connection. They include: market, product and marketer.

Market: A market is an arrangement between a seller and a buyer in which:

· The seller agrees to supply the goods or the service.

· The buyer agrees to pay the price.

Product: People satisfy their needs and wants with products. A product is any offering that can satisfy a need or want, such as one of the 10 basic offerings of goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.

Marketer: A person whose duties include the identification of the goods and services desired by a set of consumers, as well as the marketing of those goods and services on behalf of a company. Marketers are skilled in stimulating demand for their products. However, this is too limited a view of the tasks that marketers perform. Just as production and logistics professionals are responsible for supply management, marketers are responsible for demand management. They may have to manage negative demand (avoidance of a product), no demand (lack of awareness or interest in a product), latent demand (a strong need that cannot be satisfied by existing products), declining demand (lower demand), irregular demand (demand varying by

season, day, or hour), full demand (a satisfying level of demand), overfull demand (more demand than can be handled), or unwholesome demand (demand for unhealthy or dangerous products). To meet the organization’s objectives, marketing managers seek to influence the level, timing, and composition of these various demand states. According to definitions marketing management is seen as a social and managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others.

In terms of the path of the evolution of marketing, we see it plays an increasingly important role with strategic significance and gradually develops into the most important and core part of business development, namely, the market competition strategy. It helps to establish the continuous customer base, build a differentiated competitive advantage and make the business profitable. Around 50 years of marketing development also shows that the value of customers is moving forward. In the past, customers’ value was exploited to help clients get sales revenue and profits; but nowadays, gradually becoming the most important asset, they create value together with clients and thus form an interactive brand. Through further digitization of assets, enterprises, consumers and clients have become an ecosystem. Moreover, marketing connects technology and data, thus bringing them increasingly closer to each other. Positions like marketing technology officer and digital marketing officer show how such talent is favoured on the market. These executives need to not only understand marketing but also know how to process data, apply data, have an insight on data and understand how to apply emerging technology to upgrade

traditional marketing.

The thing that remains unchanged is the essence of marketing. Digital technology upgrades marketing tools and methods but has not altered the essence of marketing. What is the essence of marketing? What should marketing strategies be?

Below are some definitions of marketing strategy:

· Marketing strategy is a portfolio of a series of corporate activities including choosing value, defining value and passing on value (McKinsey).

· Marketing strategy creates customer value for enterprises. All work centres on value creation. Marketing strategy concerns the 4Ps that are provided based on the placement and positioning of target customers, including market segmentation, choice of target markets, STP as well as price, placement, promotion and products (AMA).

· Marketing strategy includes identifying opportunities, attracting and retaining customers, creating brands, managing marketing plans, etc. Additionally, the company should pay attention to finding external opportunities, increasing customer value, building a marketing management framework and creating a brand on that basis (Philip Kotler).

Digital marketing is not meant to replace traditional marketing. Instead, the two should coexist with interchanging roles across the customer path. In the early stage of interaction between companies and customers, traditional marketing plays a major role in building awareness and interest. As the interaction progresses and customers demand closer relationships with companies, digital marketing rises in importance. The most important role of digital marketing is to drive action and advocacy. Since digital marketing is more accountable than traditional marketing, its focus is to drive results whereas traditional marketing’s focus is on initiating customer interaction. (See Figure 1.2)

Marketing in the digital era is a marketing approach that combines online and off line interaction between companies and customers, blends style with substance in building brands, and ultimately complements machine- to-machine connectivity with human-to- human touch to strengthen customer engagement. It helps marketers to transition into the digital economy, which has redefined the key concepts of marketing.