Topic Page: Marketing

Transcription

1 Topic Page: Marketing Definition: marketing from The Hutchinson Unabridged Encyclopedia with Atlas and Weather Guide Promoting goods and services to consumers. In the modern business world, marketing plays a prominent role in determining company policy, influencing product development, pricing, methods of distribution, advertising, and promotion techniques. weblinks Advertising Age BBC Work Business Week Summary Article: Marketing from Encyclopedia of Business in Today's World Marketing identifies unfulfilled needs and desires and satisfies those needs Image from: Causerelated marketing and desires in the target market. Marketing entails an entire process that involves identifying opportunities in the market that have potential to make a pairs a for-profit... in profit, developing a new product, attracting the customer to the product or Green Business: An service, keeping the customers, building brand loyalty, and creating value for A-to-Z Guide customers. Companies that do this well are successful marketers. Marketing is no longer just a department in a company; various departments work together to market a product or service. Nowadays marketing starts even before there is a product. It is effective only if the company is successful in delivering the promised value and satisfaction. In simple terms, marketing encompasses everything a company does to place its product or service in the hands of its target market. The target market is the potential customers of that product or service. People no longer just buy the product; they buy the ideas behind the product ideas of what that particular product would do for them. Dunkin' Donuts and Starbucks both sell coffee and both are successful chains. Dunkin Donuts' target market is serious coffee drinkers who need a quick inexpensive cup of coffee on their way to work. Starbucks, on the other hand, is marketing not just coffee but an entire experience, lifestyle, variety, flavor, and music to its target market. The Starbucks target market is customers who want not just coffee but ambiance, a place to relax, read, work, meet friends, listen to new music, etc. At Starbucks, people are buying the concept of flavor, ambiance, and fun. Marketers today take time to discover who their target market is and how to reach them. There are two types of marketing: lateral and vertical. Lateral marketing is to create a new market. In lateral marketing, an existing product is transformed to satisfy new customers. Cereal manufacturers realized that the market was saturated and there was no more room for growth. A European company took cereal and turned it into a healthy snack that can be eaten any time, not just for breakfast, and thus a new market for healthy cereal snacks was developed. In vertical marketing, potential customers are converted and a new market is developed. It is a niche market. An example is technology-oriented products. The real goal of marketing is to own a market rather than compete for a market. Apple, Ikea,

2 Wal-Mart, and Amazon.com are all great examples of companies that realized that to invent a new market is better than competing for share. Marketing decisions can be categorized as a mix of the 4Ps: product, price, place, and promotion. Professor Jerry McCarthy introduced the 4Ps framework in the first edition of his book Marketing, published in Marketers make decisions based on these 4Ps in the target market. Product The integral part of the marketing mix is the product. A product is anything that can satisfy the target markets needs and wants. A product includes more than a physical good or service. It can be a person (Tiger Woods, political figures, Madonna), a place (Niagara Falls, Disney World, Hawaii), an organization (Red Cross, Girl Scouts), and also ideas (quit smoking, drive safely). A product is designed, manufactured, and presented to the target market for sale. In order to decide what product to offer to the market, the marketer researches and thinks about what product will add value, provide a benefit, fulfill the end user's needs. A product can be an existing product line or a new product. Brand name, quality, style, features, functions, etc., have to be kept in mind in terms of the product. Characteristics of a product need to be defined. Marketers need to ask themselves: What makes the product better than the competitor's? What is the brand image? How do consumers perceive the product? What does the customer want from the product? What needs does it satisfy? What features does it have to meet these needs? What shape, size, color? Name of the product? How is it branded? Branding is an important part of marketing that falls under the product category. People are willing to pay a premium price for strong, well-known, trusted brands. Consumers have become very brand conscious and brand oriented, and companies are spending millions to establish brand recognition and awareness in the eyes of consumers. A great brand brings to mind certain attributes, such as the product features and brand characteristics. It should also suggest a visual of the brand users and the company values. Price Price is the cost that the consumer pays to receive the product. It is an integral part of the mix. Costs to produce and sell the product and pricing strategies need to be determined. Should the price be lower than competitors' or higher? How much are intended customers willing to pay for the product? What are the costs to sell and produce the product? These are some questions marketers need to answer at this stage. A marketer can adopt various pricing strategies: Penetration pricing: This is usually when a new product is being introduced in the market. A low price is set to enter and gain the market, increase sales and market share. Competition pricing: Determine a price based on what the competitor's product price is. Bundle pricing: Bundle a group of products and sell as a package. Skimming pricing: Start by keeping the price of the product very high and then at a later stage lower the price to appeal to a mass market. Product-line pricing: Price different products within the same product range at different price points. This lets the company maximize its profits. Psychological pricing: When the product is sold at $0.99 instead of at $1, or $1.99 instead of at

3 Place $2. Premium pricing: Price is set at a high level as the product is premium and offered to an exclusive target market. Place or distribution is making sure the product is available where the target market wants it. Marketers decide how to distribute the product at the right time and in the right place. Manufacturers can choose to sell their products directly to consumers or through wholesalers and retailers. At this stage, marketers research where consumers look for the product. Decisions on market coverage (inclusive, selective, or exclusive distribution) are made. What are the distribution channels? What distribution channels do competitors use? Is a sales force needed to sell the product, or are there other channels such as the internet, specialty stores, supermarkets, or direct mail? For example, Dell uses direct distribution from manufacturer to consumer. Promotion Promotion is the final P in the marketing mix. It deals directly with the consumer. Promotion includes the various tools of marketing communication. Some methods of promotion are advertising, public relations, sales promotion, personal selling, direct mail, internet promotion, and promotional strategy (pull and push strategy). All this increases consumer awareness of the products that exist in the market and also provides knowledge about the product features and benefits. These marketing communication channels also help educate, inform, and persuade consumers. Companies use these promotional vehicles to enhance the product's brand image and encourage consumers to try the new product or remain loyal to their brand. Pepsi succeeded in India using culture-specific marketing, such as using locals as brand ambassadors. Important questions need to be answered at this point: What mode should be used to get across the marketing messages to the target market? How do we reach the audience? Do we use advertising in the newspaper or TV ads or on the radio, billboards, or internet? If it is a new product launch, when is the best time to promote the new product? What are competitors doing to promote their product? What factors influence the choices the company makes on its promotions? An effective marketing communication is needed. No matter what the mode of marketing is, it has to be successful in delivering a clear, concise, effective message to the target market. This last P in the marketing mix also comprises promotional strategies. The marketer needs to develop the message strategies. What message do we want delivered to the target market? Will it be through branding, or perhaps a new logo? The message should reinforce the benefits of the product and develop the positioning strategy of the product. Companies that have been successful with effective message strategies include McDonald's ( I'm Lovin' It ) and Nike ( Just Do It ).

4 There are two important kinds of promotional strategies: push and pull. A push promotional strategy uses methods to create consumer demand for a product. The producer promotes the product to wholesalers, the wholesalers promote it to retailers, and the retailers promote it to consumers. A push strategy tries to sell directly to the consumer, bypassing other distribution channels. In push strategy, consumer promotions and advertising are the most likely promotional tools. It is all designed to have the retailer promote one product to the end users over a different product. A pull selling strategy requires high spending on advertising and consumer promotion to build up consumer demand for a product. If the strategy is successful, consumers will demand the products from their retailers, the retailers will ask the wholesalers, and the wholesalers will ask the producers. Examples are 50 percent off today or bring in this coupon to save 25 percent or buy one, get one free, spend $100 and get $25 off your purchase. A successful promotional strategy is not just claiming that the product is better than any other product in the market but making a claim that is true. Example: If a company promotes a sofa as a product that is comfortable and of superior quality but the sofa does not live up to the claim or the claim is incorrect, it will only hurt the company. Wal-Mart, Ikea, and Southwest Airlines have all claimed to have low-priced products with good quality and all three have innovated ways to keep costs down while maintaining good quality. Marketing Communication and Promotions Advertising is a tool of communication used by marketers to inform potential consumers about the product, product features, benefits, and availability. Advertising also reinforces the brand image to maintain brand loyalty. Advertising media include newspapers, television, radio, magazines, movies, the internet, and billboards. Advertisements are usually placed where the target audience can easily see it/hear it. Companies spend billions on advertising, and it is the most effective and expensive tool of communicating persuasive messages to the target audience. Subliminal or covert advertising is becoming very popular. Marketers are placing their products or brands on popular TV shows or movies. The audience sees the brand being used by a famous, wellliked person on TV or in a movie and does not realize that the product is being advertised to them. Subliminal advertising is the technique of exposing consumers to product pictures or brand names without consumers having conscious awareness that they are being exposed to advertising. Example: Omega watches and Aston-Martin cars were seen in the James Bond movies. Other tools include public relations, which manages a company's internal and external communication to build and maintain the company's positive image. Also, sales promotion is an integral part of the promotion mix. Sales promotion is used to increase demand to enhance market share and profits. Examples include contests, coupons, rebates, loyal customer rewards programs, sweepstakes, etc. Personal selling is the oldest form of promotion. Companies use a sales force to communicate the product and its benefits to potential buyers and close the deal and make a sale. It also involves developing a relationship with the potential buyer and extending exceptional customer service. The major advantage of personal selling is that it involves a personal face-to-face activity that allows room to customize the message to the consumer's needs. For example, pharmaceutical and consumer product companies employ a large sales force to sell their products. Direct mail is unsolicited mail sent to consumers to inform them about the products and services

5 available. It is commonly referred to as junk mail. Direct mail is marketing in which companies market and advertise directly to consumers without using media. Direct mail includes advertising flyers and catalogs. A major advantage of direct mail is that marketers are able to target the exact consumers they want. A major disadvantage is the cost. In internet advertising, companies use the internet to advertise their brands and communicate messages to their audience. This includes banner advertising, spam, search engines, pop-up ads, and affiliate advertising. Many marketing gurus are now talking about a fifth P in the mix: positioning. This is part of the promotion mix, but many marketers feel that extra emphasis should be made on product positioning, market positioning, and corporate positioning. Spending more time earlier on positioning goes a long way for marketers. The success of a new product depends on how consumers perceive it, what they think of the product, what they take from the positioning. Companies that differentiate themselves can position themselves as a brand that is different from competitors and offer a unique product with benefits that succeed and reap profits. Product Life Cycle Understanding the product life cycle is very important as it impacts the marketing mix. There are four stages in the product life cycle: 1. Introduction stage: In the introduction stage, the company wants to introduce the new product and build product awareness and develop a market for the product. This stage includes (a) product: branding is established; (b) pricing may be low in order to build market share; (c) distribution is selective, just enough to introduce the product to consumers; and (d) promotion is aimed at innovators and early adopters. Marketing strategy is to build product awareness and to educate consumers about the product. 2. Growth stage: In the growth stage, the company wants to build the brand and increase market share. Product quality is sustained and any needed improvements are made. Pricing is maintained as the firm tries to gain more market share and gain new consumers. Distribution channels are added as demand increases and customers accept the product. Promotion is increased and aimed at the entire target market. 3. Maturity stage: At the maturity stage, the strong growth levels off. Competition increases. Product features maybe enhanced to differentiate the product from that of competitors. Pricing may be lower due to increased competition. Distribution increases and more incentives are offered to consumers. Promotion now includes product differentiation. 4. Decline stage: As sales decline, the firm can choose to maintain the product, perhaps repackage, redesign, and rejuvenate by adding new features and finding new uses; or to discontinue the product or sell it to another firm that is willing to continue the product. International Marketing Versus Global Marketing In international marketing, marketers apply the marketing mix decisions to more than one country. In global marketing, marketers integrate marketing decisions across multiple countries. As an international marketer, a firm may start exporting to a foreign country or, if doing business seems lucrative in a foreign country, a firm may enter and start marketing to that specific country. As a global marketer, the firm makes decisions keeping the entire world market in mind. The home country is not the focus marketing decisions are made keeping in mind how they will affect the product or firm globally.

6 Globalization has changed the way companies do business. It has also impacted marketing. Companies are no longer competing in their respective regions only but are now competing on a global level. Even if some marketers had not planned it this way, global marketing is now an integral part. In the past, a company only had to worry about marketing within its national boundaries, but due to rapidly growing technology and globalization, companies now focus on their home market as well as outside competition in their home market. A global marketer views the entire world as one market. In this scenario the global marketer makes marketing and business decisions based on how they affect the regional markets. The same 4Ps of the marketing mix apply in global marketing, but marketing decisions and applications are different in global marketing. A global marketing company launches a single product and makes changes to the same product depending on the demands of the different markets around the world. The logo and brand remains the same in all the regions, for example, Nike, Coca-Cola, Pepsi, Microsoft, and Apple. Price is different in every market. How the product is distributed is also a region-by-region decision that depends on the target market and competition in a specific region. Promotion is usually the most important P in the marketing mix in global marketing. Decisions as to whether the message will be the same or will be different in every country are made at this stage. In global marketing the biggest advantage is that companies can achieve economies of scale, increase and sustain their brand image worldwide, and increase their presence and brand recognition worldwide. The disadvantage, on the other hand, is that the competitive environment and consumer needs are different in every region. Local companies know the market; they understand the consumers better than a foreign company. Some products are easy to sell globally like beverages and electronics such as ipods, laptops, and cell phones, but some products like clothing and food require local adaptation. Global marketers need to analyze their markets, conduct market research, and get to know the consumers in all regions and cultures before they mass market a product globally Many developing countries now have an increased demand for products that are mature or declining products in the West, thus giving many marketers the opportunity to sell their products globally at a greater profit. Today global multinational marketers are everywhere. A person can fly American Airlines to Asia, rent a car at Hertz, have a McDonald's burger with fries and a Coke, buy an Apple or Microsoft computer, and catch The Bold and the Beautiful on a brand new Samsung, Sony, or Panasonic TV. This is an example of marketing in a borderless world. Companies such as Coke, Pepsi, and McDonald's are successful marketers they have worked hard to understand their markets and the culture, tastes, and attitudes of their customers. McDonald's has a similar marketing strategy but has customized its burgers according to region. It offers burgers with no bacon options in Muslim-oriented countries that do not eat bacon or ham. Marketers who have not studied their markets are not successful globally and experience resistance from the market. For example, Toys R Us, after doing well in Europe and the United States, tried to capture the Japanese market but faced much opposition and difficulty. They had to find a local partner to enter the market. Coke, when marketing to Indian consumers, had based its advertising on its worldwide image and had not made any changes in its marketing strategy. Pepsi, on the other hand, had customized their marketing strategy and advertising, keeping the Indian locals in mind and using local heroes as brand ambassadors. This practice put Pepsi in a better position in India than Coke. Car manufacturers such as Honda, Toyota, and Nissan have developed their own niche markets globally.

7 They do not sell standardized cars but customize the product and marketing strategy based on the region and its demands. Procter & Gamble is a good example of a successful global brand that has expanded rapidly into new markets by tailoring their products to meet local consumer demands in each country. See also Advertising, Branding, Brand Loyalty, Consumer Behavior, Global Brand Strategy, Globalization, Market Research, Media and Direct Marketing, Positioning, Product Development, Promotions, Sales Bibliography Armstrong, Gary and Kotier, Philip, Marketing: An Introduction ( Pearson Prentice Hall, 2007.). Cateora, Philip R. and Graham, John L., International Marketing ( McGraw-Hill Irwin, 2007.). Kotier, Philip, According to Kotier: The World's Foremost Authority on Marketing Answers Your Questions ( AMACOM, 2005.). Kotier, Philip and Keller, Kevin Lane, Marketing Management ( Pearson Prentice Hall, 2009.). Naveed, Pareesa A. Rutgers University APA Chicago Harvard MLA Naveed, P. A., & Naveed. (2009). Marketing. In C. Wankel (Ed.), Encyclopedia of business in today's world. Thousand Oaks, CA: Sage Publications. Retrieved from Copyright 2009 by SAGE Publications, Inc. Copyright 2009 by SAGE Publications, Inc.

8 APA Naveed, P. A., & Naveed. (2009). Marketing. In C. Wankel (Ed.), Encyclopedia of business in today's world. Thousand Oaks, CA: Sage Publications. Retrieved from Chicago Naveed, Pareesa A., and Naveed. "Marketing." In Encyclopedia of Business in Today's World, edited by Charles Wankel. Sage Publications, Harvard Naveed, P.A. and Naveed. (2009). Marketing. In C. Wankel (Ed.), Encyclopedia of business in today's world. [Online]. Thousand Oaks: Sage Publications. Available from: [Accessed 11 April 2019]. MLA Naveed, Pareesa A., and Naveed. "Marketing." Encyclopedia of Business in Today's World, edited by Charles Wankel, Sage Publications, 1st edition, Credo Reference,. Accessed 11 Apr