Marketing is a set of activities related to creating, communicating, delivering, and exchanging offerings that have value for others. In business, the function of marketing is to bring value to customers, whom the business seeks to identify, satisfy, and retain.
This module will emphasize the role of marketing in business, but many of the concepts will also apply to non-profit organizations, advocacy campaigns, and other activities aimed at influencing perceptions and behavior. In marketing, the act of obtaining a desired object from someone by offering something of value in return is called the exchange process. The exchange involves:. Individuals on both sides of the exchange try to maximize rewards and minimize costs in transactions, in order to gain the most profitable outcomes.
Ideally, everyone achieves a satisfactory level of reward. Marketing creates a bundle of goods and services that the company offers at a price to its customers. The bundle consists of a tangible good, an intangible serv ice or benefit, and the price of the offering. When you compare one car to another, for example, you can evaluate each of these dimensions—the tangible, the intangible, and the price—separately. Marketing is also responsible for the entire environment in which this exchange of value takes place.
Marketing generates value by creating the connections between people and products, customers and companies. How does this happen? Boiled down to its essence, the role of marketing is to identify, satisfy, and retain customers. Before you can create anything of value, first you must identify a want or need that you can address, as well as the prospective customers who possess this want or need.
Next, you work to satisfy these customers by delivering a product or service that addresses these needs at the time customers want it. Key to customer satisfaction is making sure everyone feels they benefit from the exchange. Your customer is happy with the value they get for what they pay. You are happy with the payment you receive in exchange for what you provide.
It also needs to retain customers by creating new opportunities to win customer loyalty and business. As you will learn in this module, marketing encompasses a variety of activities focused on accomplishing these objectives. How companies approach and conduct day-to-day marketing activities varies widely. Such companies rely on effective marketing for business success, and this dependence is reflected in their organizational strategies, budget, and operations.
Conversely, for other organizations, particularly those in highly-regulated or less competitive industries such as utilities, social services, medical care, or businesses providing one-of-a-kind products, marketing may be much less visible.
It could even be as simple as a Web site or an informational brochure. There is no one model that guarantees marketing success. Effective marketing may be very expensive, or it may cost next to nothing. What marketing must do in all cases is to help the organization identify, satisfy, and retain customers. When companies develop a marketing strategy, they make decisions about the direction that the company and their marketing efforts will take.
Companies can focus on the customer, product, sales, or production. As the business environment has changed over time, so has the way that companies focus their marketing efforts. An organization adopts the marketing concept when it takes steps to know as much about the consumer as possible, coupled with a decision to base marketing, product, and even strategy decisions on this information.
They operate on the assumption that success depends on doing better than competitors at understanding, creating, delivering, and communicating value to their target customers. Both historically and currently, many businesses do not follow the marketing concept. For many years, companies such as Texas Instruments and Otis Elevator have followed a product orientation , in which the primary organizational focus is technology and innovation.
All parts of these organizations invest heavily in building and showcasing impressive features and product advances, which are the areas in which these companies prefer to compete. This approach is also known as the product concept. Rather than focusing on a deep understanding of customer needs, these companies assume that a technically superior or less expensive product will sell itself. While this approach can be very profitable, there is a high risk of losing touch with what customers actually want.
This leaves product-oriented companies vulnerable to more customer-oriented competitors. Other companies follow a sales orientation. These businesses emphasize the sales process and try to make it as effective as possible. While companies in any industry may adopt the sales concept, multilevel-marketing companies such as Herbalife and Amway generally fall into this category.
Many business-to-business companies with dedicated sales teams also fit this profile. These organizations assume that a good salesperson with the right tools and incentives is capable of selling almost anything.
Sales and marketing techniques include aggressive sales methods, promotions, and other activities that support the sale. Often, this focus on the selling process may ignore the customer or view the customer as someone to be manipulated. The production concept is followed by organizations that are striving for low-production costs, highly efficient processes, and mass distribution which enables them to deliver low-cost goods at the best price.
This approach came into popularity during the Industrial Revolution of the late s, when businesses were beginning to exploit opportunities associated with automation and mass production.
Production-oriented companies assume that customers care most about low-cost products being readily available and less about specific product features. Today this approach is still widely successful in developing countries seeking economic gains in the manufacturing sector. Marketing exists to help organizations understand, reach, and deliver value to their customers.
In the process of the marketing exchange, value must be created. There is no value in the exchange. Now, imagine that you are passing by a machine that dispenses bus tickets. How does that make sense in the v alue equation? From his perspective, the ability to use the bus ticket dispenser in that moment adds value in the transaction.
Value is not simply a question of the financial costs and financial benefits. It includes perceptions of benefit that are different for every person. The marketer has to understand what is of greatest value to the target customer, and then use that information to develop a total offering that creates value.
The inconvenience of filling in many forms, or concerns about providing personal information, can add cost which will subtract from the value the customer perceives. For this person, the benefit of attending and participating is lower because of costs related to personal connection and convenience. As you saw in these examples, the process of determining the value of an offering and then aligning it with the wants and needs of a target customer is challenging.
As you continue through this section, think about what you value and how that impacts the buying decisions you make every day. Customers instinctively make choices between competitive offerings based on perceived value. Save your sale by getting customers and prospects the information they need, when they need it.
Retain customers. For small businesses, with limited time and resources, customer satisfaction is even more important. The U. Not to mention that happy customers and word of mouth can also be some of the most effective drivers for new business. Find opportunities to cross-sell and upsell. Your current customers can be one of your best sources of business. When you connect all of your support channels and the apps you use to run your business, like a customer relationship management CRM app, everyone at your company can be in the know about customers.
Support agents can see order histories, open opportunities, and shipping status. Sales knows when a customer needs help. When you share customer information, product insights, and support metrics across the company, not only can everyone be more productive and do a better job of building relationships, but you can uncover opportunities to cross-sell and upsell customers. Improve the products and services you offer.
Unlike product management or marketing teams — which only talk to customers from time to time — your agents talk to real customers every single day. A good customer service application coupled with a CRM system will gather information from a huge variety of sources across your business and beyond. If you categorize your cases carefully, you can see what modifications and features customers would like to see in your product or what the biggest pain points are.
These customer service insights are crucial in driving the most critically important product decisions. Previous customers are the most important proof that potential buyers need to be convinced. In addition to using customer case studies and testimonials in your marketing, also consider asking customers to post positive reviews.
This helps prospects see them as objective and impartial viewpoints. Forbes recommends not only considering customers in your marketing strategy, but also in your customer experience strategy. This means asking key customers for feedback on specific interactions and engagements to understand how the business can improve its processes, products and customer service.
The importance of marketing to the society is that businesses can learn from their responses. For example, if the majority of customers report that they feel rushed when trying on clothes in the change rooms because of the staff, it means that reviewing that process is necessary.
If the majority of customers report that they love the way they are greeted when coming to the store, then the business can see how to replicate that response in other areas of the business. Not only can understanding your customers help create better marketing, but it can help improve marketing campaigns with each iteration.
This means you can test things like messaging, taglines, call-to-action buttons, sales offers and more. Once you see which aspects customers prefer, then you can roll out the finalized campaign to the rest of your target audience.
Businesses will find the most success with marketing that has been created with customers in mind. Anam Ahmed is a Toronto-based writer and editor with over a decade of experience helping small businesses and entrepreneurs reach new heights. She has experience ghostwriting and editing business books, especially those in the "For Dummies" series, in addition to writing and editing web content for the brand.
Anam works as a marketing strategist and copywriter, collaborating with everyone from Fortune companies to start-ups, lifestyle bloggers to professional athletes. As a small business owner herself, she is well-versed in what it takes to run and market a small business. Anam earned an M.
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