There are all sorts of markets: farmers' markets, the stock market, even flea markets. But what is marketing? In the most simple sense, marketing can be explained in one sentence: the customer is always right. But what does that mean?
Marketing is the process of meeting the needs and demands of consumers. Marketing is about products and services, and how you persuade the public to want what you have, and how you make them get up and buy it.
Things get a little sticky, though, because marketing people define the terms "needs" and "demands" in a specific way. A need is a human essential, like food, water, shelter, and clothing. A demand is a luxury. It's anything that you want, but you don't need to stay alive. Needs keep you alive, demands keep you happy.
Now, what exactly is a market? A market is all the people that buy or could buy a certain product. So, the market for cheese is all the people who buy cheese, and all the people who might buy cheese. Further, the people in the marketthe consumersmust have the ability to buy, the authority to buy and the willingness to buy. In a way, then, marketing is essentially about generating sales for a product or service.
There are three traditional ways of generating sales: the product orientation, the selling orientation, and the marketing orientation.
The product orientation is when the manufacturers believe that consumers will buy their product if the product is clearly the best dang whatever it is on the market.
If manufacturers use the product orientation makes manufacturers, they are always attempting to improve their product. The product orientation manufacturer can generally sell all the product that is produced, so the only way to generate new sales is to change the product itself. That's why you might see Flabco's Door Grease first trying to sell "Door Grease," then "New and Improved Door Grease," then "Extra Strength Door Grease," and finally "New and Improved Extra Strength Door Grease (with Mango Flavor)."
In this case, Flabco truly believes that each new improvement will generate new sales. The problem with this approach is that it ignores what Flabco's competitors (Dabco and Zabco) are doing with in terms of grease technology, it ignores the desires of the actual consumers. The consumers may like door grease, but what they really want is window grease!
Manufacturers who buy into the selling orientation believe that their product is fine, they just need to advertise to get people to buy it. The selling orientation manufacturers think that the more they advertise and push their product, the more people will buy it.
Manufacturers who embrace this marketing method usually have an overcapacity. Having an overcapacity means that the manufacturer has too much productmore product than the public wants or needs at the moment. Manufactures with an overcapacity need to sell, sell, SELL! And they don't care what the actual consumer demand for the product is.
Selling orientation marketers believe that the right advertising message will allow them to unload their product on an unsuspecting market. Well okay, the market isn't always unsuspecting, but these marketers realize that consumers have a certain resistance to advertising. That makes sense, doesn't it? You don't automatically buy a product just because you see it in advertised in the store, or on TV, do you?
Well, the selling orientation marketers believe that the right advertising or the right salesperson can overcome this resistance to advertising. They may use a well-known celebrity to endorse their product or some other novel approach to advertise their product.
If a selling orientation marketing campaign initially succeeds, it's usually because the advertising campaign was fortunate. The company hit the right place at the right time with the right message. To continue the success, the company will have to adjust its product and message as the market changes.
Sunblock and Bacon
Let's say you own a company called Sunsunblockblock. Your company makes sunblock
that smells like bacon. Yeah, bacon.
Initially, your company used a product orientation approach to marketing. Under the product orientation, the company accentuated the good parts of your product, like the fact that it makes you smell like bacon. Well, people started buying and everything was good. So you made more sunblock.
Then you had a problem, because you had more sunblock than you had customers. You had the dreaded overcapacity.
So your company switched to a selling orientation. Your marketers thought it was the best thing to do. You started this huge advertising campaign and Sunsunblockblock
sold marvelously. You thought nothing could go wrong. Then, just like that, everyone stopped buying your bacon sunblock.
So what happened? Your selling orientation campaign was going so well!
Well, as we said, if a selling orientation works, it's probably because you had good timing and were fortunate. You happened to have launched your campaign in the summer! That's when people need sunblock. When the summer ended, people stopped buying. Now you're stuck with a lot of sunblock, and you have no one to sell to.
What to do? Well, you might then switch to the third traditional way to generate sales: the marketing orientation.
The marketing orientation is kind of a cross between the two previous orientationsbut not really. Hang in there and we'll explain!
Under a marketing orientation, a company's marketers realize that they can't sell all of their product to all of the market. So, the company starts with the assumption that the product may not be perfect the way it is. Then, the company finds a part of the market that is most likely to buy the product and concentrates on them, tailoring the product and the campaign to that section of the market. This section of the market is called the company's target market or the target audience.
Let's look at it another way. The marketing orientation begins with the customer, not the product. If the marketer understands the lifestyle, needs, wants, and demands of the target market, the marketer can develop the product to fit these needs and wants and then customize a campaign to demonstrate how the product can best serve the target market.
Let's see it at work for your company, Sunsunblockblock.
You have all this bacon smelling sunblock and you don't know what to do. So, you turn to your marketing department, and they decide to come up with a market-oriented strategy: the market orientation.
First, they examine the market to find the people who are most likely to buy your product. That's people who need shelter from the sun and want to smell like bacon year-round. Knowing who these people are and where to find them, your marketers can then devise a plan to get them to buy.
So, they say to your target market (the people who need protection from the sun and want to smell like bacon year-round), "Hey, you bacon-smell and sunlovers! We know that you need protection from the sun and want to smell like bacon year-round. And we've got the perfect product just for you! Sunsunblockblock! Buy it today!"
So, very basically, you now know how the three traditional ways of generating salesthe product orientation, the selling orientation, and the marketing orientationwork. Let's see how all they work in the real world!
The Marketing Concept
Guess what? Companies don't just pick an orientation and go. Their orientations usually progress through a cycle that starts at the product orientation, moves through the selling orientation, and ends with the marketing orientation.
This is how it works with Sunsunblockblock: it begins with the product orientation, when the company is still small and is producing all the product that can be sold. The product seems to sell well, and Sunsunblockblock doesn't need to consider the consumer, because the product is selling fine. The company subscribes to the notion that a good product will sell itself. Which, at this point, is true.
The thing is, someone is going to notice that Sunsunblockclock's good product is selling well, and wanna get in on the business. This is just a sign to Sunsunblockblock that the product is indeed good. However, to sell the product in the midst of all that competition, Sunsunblockblock believes it has to try harder at the sell, and that's when our company moves into the selling orientation.
So, Sunsunblockblock undertakes big sales campaigns and maybe even hires a spokesperson, and that works for awhile. When the sales begin to wind down, and even more competition shows up, the company realizes that only way to get and keep customers is to serve their exact needs and wants.
This is the point when Sunsunblockblock switches to a marketing orientation. The company focuses on the parts of the market that they can best serve and they hope will be the most profitable, and lets the competition worry about everything else.
Companies usually find more success in the marketing orientation, because the market they choose is made up of people who already want to buy, and because the companies have products specifically designed for their target markets.
To market effectively, a company needs a plana marketing plan, natch! A marketing plan balances incoming data about the market with a company's goals and resources.
Marketing plans are usually created once a year, at the beginning of each fiscal year. A fiscal year is a twelve-month period that a company chooses to be its financial yearmany companies choose to start their fiscal year in September.
So what's in a marketing plan? Stuff. And lots of it. That will have to suffice for now, because there are a few other things we have to look at before we get into the down and dirty of a marketing plan: the marketing process.
The Marketing Process
Marketing is a process with involved steps. The main idea of this process is to start with broad ideas and goals, and then narrow them down to specific goals and actions. This way, you never lose sight of your overall goal, but you still produce specific actions that are easy to execute.
The marketers' first step? Determine their organization's purpose. Things like, "Why are we marketing, what's the whole point?"
This part of the process is called "defining the organization's mission." To define an organization's mission, you write down its purpose. You can define the purpose in terms of the product orientation, or in terms of the marketing orientation.
Years ago, before everyone got into the marketing orientation, everyone's mission statement was in a product orientation, but now, most companies realize that a market-oriented mission statement is more helpful.
The market-oriented mission statement relates the company to the consumer and is usually a more descriptive way of defining the company's mission. Kinda like this:
|The Old Way: Product-Oriented
||The Newer Way:
|"We make hockey sticks."
||"We make hockey players more effective by helping them be faster, stronger and meaner."
|"We sell lipstick."
||"We offer consumers an intimate means of expression."
|"We run contraband to subversives."
||"We provide capability to the disenfranchised of the political system."
The most important role of the mission statement is to set a tone for the company both internally and externally. Internally, the employees know what their company is about and why they're working so hard. Externally, the mission statement lets consumers know what the company is about as well.
So, once you've finished determining the company's purpose, or mission, you've finished step one. Then it's on to step two: determining organizational objectives.
This step involves looking at your mission statement and saying, "This is our mission, so what does our organization, our company, really hope to achieve?'
At this point, the company's marketers are basically determining what they can do to carry out the mission statement. Let's do a little example.
Tabi Ice Hockey Manufacturing
Tabi is an ice hockey products manufacturer. They're trying to figure out how best to generate saleshow to market.
To make hockey players faster, stronger and meaner, Tabi may need to produce ice skates that can help players skate faster. But to do this, the company needs to research advanced metallurgy. There we have our organizational objective: to research advanced metallurgy to produce faster skates. You can see how it's an organizational objective because it grows right out of the company's mission statement.
But you can't just stop there! A company will also need to examine the ramifications of your organizational objective. Advanced metallurgy is great, but it's also expensive. Tabi will have to pay for it somehow. The execs think hard and decide that to pay for that research, the company needs more money, and they can get that by either increasing profits or cutting costs.
Cutting costs is not really a marketing issue, but increasing profits means creating an increase in sales, and that is a marketing objective. Isn't that a coincidence? We're just about ready to start talking about marketing objectives, the third step of the marketing process.
Essentially, a marketing objective is the specific goal that a company hopes to achieve through marketing.
How about a recap? Good.
The mission statement: this is the absolute statement of what the company is about.
The organizational objectives: the means by which the company hopes to achieve their mission statementthe concrete things that company hopes to accomplish.
The marketing objectives: the tasks that help the company accomplish their organizational objectives. Specifically, marketing objectives involve tasks that include interaction with customers, essentially stuff that the company can do marketing for.
Okay, let's move on.
To make an effective marketing objective, a company must define its market and determine what role is plays in that market.
Tabi hockey equipment has had a prestigious history in the hockey industry, but the company's executives are aware that Tabi's position in the market isn't as strong as it could be. In fact, it stinks. The company ranks a distant eighth in terms of its competitors, and holds a miserable 2% of the market.
No place to go but up, right?
Okay, the 2% of the market that Tabi holds is called Tabi's market share. This means that Tabi's products account for about two percent of all the hockey products sold in the United States.
So Tabi's marketing goal could easily just be to increase its market share. But a marketing objective is better if it is more specific than that. Tabi decides on this specific marketing objective: to increase market share from 2% to 4% by the end of the next fiscal year.
So, a marketing objective is a specific goal that can be achieved through marketing. To achieve marketing objectives, you need to create one or more marketing plans. The marketing plansound familiar? Let's get back to it.
Back to the Marketing Plan!
A company creates a marketing plan for each section of its business. Sometimes, if the company makes separate products, a separate marketing plan is usually made for each product.
In a basic sense, every marketing plan contains three things:
1. A situation analysis
2. Development of goals
3. A strategy to achieve those goals
Let's start with the situation analysis.
The situation analysis consists of much of the same information we've covered. The situation analysis examines the company's product and its place in the market. It also examines the products and positions of competitors. The basic idea of the situation analysis is to let the marketers know where they stand before anything gets started.
Once the company has a good hold on the current conditions, it can start on the second part; the development of goals. Tabi Hockey Equipment's marketers, for example, realize that they have the potential to increase their share in the ice hockey equipment market, so they set that specific goal: increasing Tabi's market share.
Don't get confused. At this point, we're at a more specific level than we were on with the marketing objectives. We're talking about the specific goals of specific marketing plans. Many marketing plans combined achieve the marketing objectives.
Increasing market share or increasing sales isn't always the goal of a marketing plan. Sometimes it's something a little more mundane. Maybe the situation analysis determines that the product has an antiquated image. In this case, the goal of the marketing plan may simply be to update the product's image. As long as your goal is in line with your company's marketing objectives, the marketing plan can do just about anything.
Once a situation analysis has been finished and the goals have been set, marketers move to the third part of the marketing plan: a strategy to achieve those goals.
This strategy can involve any of four areas: the product, the price, the place it's sold, or the promotion the company does for the product. The company can devise a strategy that incorporates all of those means, or just some of them, or just one of them.
The most important factor about the strategy is that the company chooses the most effective method that is within its means. Tabi might want to advertise during the Super Bowl, but it probably can't afford the couple million bucks to do that.
So that's the marketing plan in a nutshell: the situation analysis, a development of goals, and a strategy to achieve those goals.
Okay guys and gals, we've scratched the surface of marketingnow go out there and start generating some sales!
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