Introduction to Marketing Process - Essay Example

Introduction to Marketing Marketing is the process of planning and executing the pricing, promotion, and distribution of goods, ideas, andservices to create exchanges that satisfy individual and organisational goals. Another definition, perhaps simpler and more universal, it is the process of moving people closer to making a decision to purchase, use, follow, refer, upload, download, obey, reject, conform, become content to another person's, society's or organisation's worth. Before to the introduction of market research, many companies were product-focused, employing teams of salesperson to push their products into or onto the market, without taking into consideration the consumer's desire. A market-focused, or customer-focused, organisation instead first determines what its possible customers desire, and then builds the product or service (Marketing, 2006). Marketing is a continuing ongoing process; its environment is always dynamic. This means that the market tends to change-what customers want today is not necessarily what they want tomorrow (Background, n.d.). Marketing issues are important in all areas of the organisation. In business organisations, marketing efforts (including such services as promotion and distribution) often account for more than half of the price of a product (Background, n.d.). From the time of the industrial revolution until the early 1920's, production concept was the idea that an organistion should focus on those products that it could produce most efficiently and that the creation of a supply of low-cost products would in and of itself create the demand for the products. The key questions that a firm would ask before producing a product were: can we produce the product can we produce enough of it During those times, the production concept worked well due to the fact that the goods that were produced were mostly those of basic necessity and there was a relatively high level of unfulfilled demand. Virtually everything that could be produced was sold easily by a sales team whose job it was simply to execute transactions at a price determined by the cost of production. The production concept prevailed until the late 1920's before mass production become a norm (The marketing concept, 2005). During the early 1930's however, mass production had become commonplace, competition had increased, and there was little unfulfilled demand. During this time, business organisations began to practice the sales concept (or selling concept), under which companies not only would produce the products, but also would try to convince customers to buy them through advertising and personal selling. Before producing a product, the key questions were: Can we sell the product Can we charge enough for it The sales concept paid little attention to whether the product actually was needed; the goal simply was to beat the competition to the sale without paying attention to consumer needs and desire. Marketing was a function that was performed after the product was developed and produced, therefore, many people came to associate marketing with hard selling. Until today, most people use the word "marketing" when they really mean sales (The marketing concept, 2005). The Marketing Concept However, after World War II, the variety of products increased and hard selling no longer could be relied upon to generate sales. With increased flexible income, customers could afford to be selective and buy only those products that will exactly met their fast changing needs, and these needs were not right away known. The key questions became: What do customers want Can we develop it while they still want it, How can we keep our customers satisfied (The marketing concept, 2005) In reaction to these sensitive customers, firms began to adopt the marketing concept, which involves: Focusing on customer needs before developing the product, Aligning all functions of the company to focus on those needs, realising a profit by successfully satisfying customer needs over the long-term (The marketing concept, 2005). The marketing concept is the philosophy that business organisations use to analyse the needs of their customers and then make decisions to meet those needs, better than the competition. Today, most business organisations have adopted the marketing concept, but this has not always been the case (The marketing concept, 2005). The marketing concept is a philosophy. It makes the customer, and the fulfillment of customer's needs, which is the focal point of all business activities. It is driven by senior managers, zealous about satisfying their customers. Some important elements of marketing are (What is marketing 2005): 1. Marketing focuses on the satisfaction of customer needs, wants and requirements. 2. The philosophy of marketing needs to be owned by everyone from within the organisation. 3. Future needs have to be identified and anticipated. 4. There is normally a focus upon profitability, especially in the corporate sector. However, as public sector organisations and not-for-profit organizations adopt the concept of marketing, this need not always be the case. 5. More recent definitions recognise the influence of marketing upon society (What is marketing, 2005). The marketing vs. the selling concept. The traditional selling concept emphasises selling of existing goods. The philosophy here is that if a product is not selling, more aggressive measures must be taken to sell it-e.g., cutting price, advertising more, or hiring more aggressive (and obnoxious) sales-people. However, the marketing concept, in contrast, emphasises on getting consumers what they seek, regardless of whether there is the need to come up with entirely new products (Background, n.d.). The marketing concept relies upon marketing research to define market segments, their size, and their needs. To satisfy those needs, the marketing team makes decisions about the controllable parameters of the marketing mix (The marketing concept, 2005). Marketing Research Marketing research (also called consumer research) is a form of business research. It is a form of applied sociology which concentrates on understanding the behaviours, whims and preferences, of consumers in a market-based economy. The field of marketing research as a statistical science was pioneered by Arthur Nielsen with the founding of the ACNielsen Company in 1923 (Market research, 2006). Market Research is a systematic, objective collection and analysis of data about a particular target market, competition, and/or environment. It always incorporates some form of data collection whether it is secondary research (often referred to as desk research) or primary market research which is collected direct from a respondent. The aim of any market research project is to attain a greater perception of the subject matter. With markets throughout the world becoming increasingly more competitive, market research is now part of the agenda of most organisations, whether they are large or small (An introduction to market research, n.d.) Market research plays a great role in identifying potential market. Market research involves understanding the potential market's population size and demographic profile, as well as identifying the most desirable store site. When conducting after-opening studies, Kessler reports, management is, in most cases, seeking specific information. The decision to use store-specific market research is generally made because management is either dissatisfied with sales figures, or current returns on investment contradict what pre-development research indicated (Gap analysis, 2004). Methodologically, marketing research uses four types of research designs in order to identify potential markets, namely: Qualitative market research, quantitative market research, observational techniques, and experimental techniques (Market research, 2006). Qualitative Market Research Qualitative market research gives an understanding of how or why things are as they are. As an example, a Market Researcher may stop a consumer who has purchased a particular type of bread and ask him or her why that type of bread was chosen. Unlike quantitative research there are no fixed set of questions but, instead, a topic guide (or discussion guide) is used to explore various issues in-depth. The discussion between the interviewer (or moderator) and the respondent is greatly determined by the respondents' own thoughts and feelings (An introduction to market research, n.d.). There are various types of qualitative market research methodologies. Research of this sort is mostly done face-to-face. One of the best-known techniques is the market research group discussion (or focus group). These are usually made up of 6 to 8 targeted respondents, a research moderator whose role is to ask the required questions, draw out answers, and encourage discussion, and an observation area usually behind one way mirrors, and video and/or audio taping facilities. Additionally, qualitative market research can also be conducted on a 'one on one' basis i.e. an in-depth market research interview with a trained executive interviewer and one respondent, a paired depth (two respondents), a triad (three respondents) and a mini group discussion (4-5 respondents) (An introduction to marketing research, n.d.). Quantitative market research Quantitative market research is oriented on numbers. It requires momentous attention to the measurement of market phenomena and often involves statistical analysis. As an example, a bank might ask its customers to rate its overall service as excellent, good, poor or very poor. This will provide quantitative information that can be analysed statistically. The main rule with quantitative market research is that every respondent is asked the same series of questions. The approach is often well structured and usually involves large numbers of interviews/questionnaires (An introduction to market research, n.d.). One of the most frequently used quantitative techniques is the 'market research survey'. These are basically projects that involve the collection of data from multiple cases - such as consumers or a set of products. Quantitative market research surveys can be conducted by using post (self-completion), face-to-face (in-street or in-home), telephone, email or web techniques. The questionnaire is one of the more common tools for collecting data from a survey, but it is only one of a wide ranging set of data collection aids (An introduction to market research, n.d.) Observational techniques In observational techniques, the researcher observes social phenomena in their natural setting - observations can occur cross-sectionally (observations made at one time) or longitudinally (observations occur over several time-periods) - examples include product-use analysis and computer cookie traces (Market research, 2006). Experimental techniques In experimental techniques, the researcher creates a quasi-artificial environment to try to control spurious factors, and then manipulates at least one of the variables - examples include purchase laboratories and test markets (Market research, 2006). Marketing Mix For a marketing plan to be successful in today's fast changing marker condition, the mix of the four "p's" must reflect the wants and desires of the consumers in the target market. These four "p's" are: promotion, pricing, product, and place. Trying to convince a market segment to buy something they don't want is extremely expensive and seldom successful. Therefore, marketers depend on marketing research, both formal and informal, to determine what consumers like and what they would like to pay for. Marketers hope that this process will give them a continued competitive advantage. Marketing management is the practical application of this process (Marketing, 2006). The term "marketing mix" became known after Neil H. Borden published his 1964 article, The Concept of the Marketing Mix. Borden began using the term in his teaching in the late 1940's after James Culliton had described the marketing manager as a "mixer of ingredients (The marketing mix, 2005)." The four P's are the parameters that the marketing manager can control, subject to the internal and external constraints of the marketing environment. The goal is to make decisions that focus the four P's on the consumers in the target market in order to create apparent value and generate a bright response (The marketing mix, 2005). These four elements are often referred to as the marketing mix. A marketer can use these variables to craft a marketing plan. The four Ps model is most useful when marketing low value consumer products. Industrial products, services, high value consumer products require adjustments to this model. Services marketing must account for the unique nature of services. Industrial or business to business marketing must account for the long term contractual agreements that are typical in supply chain transactions. Relationship marketing attempts to do this by looking at marketing from a long term relationship perspective rather than individual transactions (Marketing, 2006). The marketing mix framework was predominantly useful in the early days of the marketing concept when physical products represented a larger portion of the economy. Today, with marketing more incorporated into organisations and with a greater diversity of products and markets, some experts have attempted to extend its usefulness by proposing a fifth P, such as packaging, people, process, etc. Today however, the marketing mix most commonly remains based on the 4 P's. Despite its limitations and perhaps because of its simplicity, the use of this framework remains strong and many marketing experts have recognised it (The marketing mix, 2005). Promotion This includes all of the tools available to the marketer for 'marketing communication'. As with Neil H.Borden's marketing mix, marketing communications has its own 'promotions mix.' Just like a cake mix, the basic ingredients are always the same. However if the amounts of one of the ingredients are varied, the final outcome is different. It is the same with promotions. Different aspects of the promotions mix can be integrated in order to deliver a unique campaign. The elements of the promotions mix are: Personal Selling, Sales Promotion, Public Relations, Direct Mail, Trade Fairs and Exhibitions, Advertising, and Sponsorship (Promotion, 2005). Pricing Strategies This refers to the process of setting a price for a product, including discounts (Marketing, 2006). Some ways to price a product are: Premium Pricing, Penetration Pricing, Economy Pricing, Price Skimming, Psychological Pricing, Product Line Pricing, Optional Product Pricing, Captive Product Pricing, Product Bundle Pricing, Promotional Pricing, Geographical Pricing, Value Pricing (Price, 2005). Product The Product Life Cycle (PLC) is based upon the biological life cycle. As an example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline) (Product, 2005). In theory it's the same for a product. After a period of development it is introduced or launched into the market; it gains more and more customers as it grows; eventually the market stabilises and the product becomes mature; then after a period of time the product is overtaken by development and the introduction of better competitors, it goes into decline and is finally withdrawn. However, most products fail in the introduction phase. Others have very cyclical maturity phases where declines see the product promoted to regain customers (Product, 2005). Place Another element of Neil H.Borden's Marketing Mix is Place. Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer (Place, 2005r). In today's globalised economy, where consumer's needs are changing rapidly, any business organization need more and more to understand its potential customers. By adapting the modern day marketing concept, with the aid of market research, most organizations now have the tools to aid organizations on its essential business decisions. Decisions such as product design in order to meet the ever-increasing sophisticated consumers' taste are very important for the survival of today's business organisations. Reference List An introduction to market research. (n.d.). DJS research. Available from: [15 Dec. 2006]. Background. (n.d.). Consumerpsychologist.larsperner.com. Available from: http://consumerpsychologist.larsperner.com/intro.htm [15 Dec. 2006]. Gap Analysis Aids Retail Marketing. (2004). Informa Research Services (Formerly Market Trends), C & K MARKET, INC.Available from: [15 Dec. 2006]. Marketing. (2006). Wikimedia. Available from: [15 Dec. 2006]. Marketing Research. (2006). Wikimedia. Available from: [15 Dec. 2006]. Promotion. (2005). Marketingteacher.com. Availalable from: [15 Dec. 2006]. Pricing Strategies. (2005). Marketingteacher.com. 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