1: The Concept of Modern Marketing
What is Marketing?
The author strolls through a handful of different definitions of "marketing" that don't quite fit before coming to the American Marketing Association's current definition:
Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals.
(EN: Even that is not an entirely satisfactory definition of the practice, as "promotion" is directly intended to create an exchange, but "marketing" is a boarder concept that may include activities that do not have a direct impact on "exchanges" - such as brand/image marketing, public relations, and customer relationship management. Since this is the definition he settles upon, the remainder of the book may be of limited use.)
Development of Modern Marketing
The current era in marketing was preceded by a production era (in which few goods were available and all one needed to do was produce something and people would seek it out and purchase it) and a sales era (in which producers resorted to aggressive and often unethical tactics to "move product" to individuals who may not have been interested in them).
The current concept of marketing emerged in the 1950's - it's one of orienting a firm toward the needs of its customers. Hence, a company begins by identifying a need and developing a product to satisfy it. It also recognizes that the concept of "need" is broader than the need for a given widget, but also pertains to other qualities such as availability, convenience, and affordability.
In the 1990's, the concept was extended to "relationship marketing," a recognition that a company has better long-term performance if it develops an ongoing and bilateral relationship with its customers rather than considering each transaction to be an isolated event. This requires a company not to merely seek out buyers, but to adapt to the unique needs of each individual customer and to change, over time, in response to changing in needs.
The author also notes that "modern" marketing is difficult to put into practice due to organizational resistance. Companies tend to stick with "what worked in the past," i.e., the one-sided relationship in which the company decides what to produce and merely shoves it upon the customer. Unless a customer-service mentality pervades a company's culture, it cannot successfully transition to the modern conception of marketing; and so long as a company remains profitable using outdated practices, it will be unlikely to embrace such as significant change.
Marketing Management
The term "management" implies a controlled and systematic approach to a given activity, and while most companies understand the value of operations management, it is less common for them to recognize the value of a more systematic and planned approach to their marketing effort.
The author trots out a list of companies that have benefitted greatly from careful management of their marketing, and implies that it's generally the result of a CEO who engendered a culture of customer service within the organization.
Market
An organization's "market": is understood to be the individuals who buy its products, which are generally categorized by various factors (location, demographics, lifestyles, etc.), and understanding one's market (or intended market) is key to being successful in planning and decision making. In many instances, there may be multiple markets for a given company, and the company may seek to enter new markets.
A significant change in recent years has been the emergence of global markets. Even relatively small companies sell to customers around the globe, and the overseas market is often seen as the greatest potential area of growth for US companies, due to the maturity and saturation of the domestic market.
The internet has also had a significant impact on marketing, as it overcomes the constraints of location and time that had traditionally been significant factors in a company's choice of (or ability even to reach) markets. (EN: The author presents some outdated statistics on the size of the internet market, to imply that it is large and growing, but my sense is there's no need to beat that particular drum anymore.)
The Marketing Mix
The author provides brief description of the four "P"s of marketing:
- Product - The widget itself, insomuch as its features and core functionality have appeal to the market
- Price - The price charged for the product, in that it is acceptable to the prospective buyer
- Place - Whether the product can be obtained in a convenient manner, generally related to the location of physical stores (but also, to the hours of operation, delivery options, etc.)
- Promotion - The effort undertaken by the company to communicate information about the product, its price, and its availability, to prospective customers
(EN: The author overlooks the fifth "P" of retail marketing - people. The "people" are an increasingly significant concept in relationship marketing. Customers don't have a relationship with a company, a brand, or a product, but with the people who represent the abstraction. I sense that, by overlooking this, the author may have a handful of precipitating blind-spots.)
Environmental Forces
Marketing does not take place in a vacuum, but in a dynamic environment in which there are many external factors over which we have no control, but with which we must nonetheless contend. The author describes five kinds of "forces":
- Demographic - The qualities of the population, such as size, growth rate, age, educational levels, etc. (Examples: the aging American population, an increasingly educated consumer base)
- Societal - The cultural and social values of the market, including lifestyles and attitudes (Examples: the time pressure of American culture, the recent growth of environmental concerns)
- Political - The constraints of law upon business, some of which impact marketing directly (laws against deceptive advertising), others of which have an indirect impact (safety standards)
- Economic- Includes economic factors that affect the customer's ability to buy (high interest rates) or the company's ability to sell (entry of an aggressive competitor)
- Physical - Considers the physical environment, such as climate, natural resources, weather disasters, seasonal changes, etc.
(EN: This is a traditional model for marketing, and some sources have suggested adding "technical" as a sixth environmental force, though it would seem that most of the influence that technology bears may be categorized under the existing five.)