Marketing

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Editor: Sonya D. Hill
Date: 2012
Encyclopedia of Management
Publisher: Gale, a Cengage Company
Document Type: Topic overview
Pages: 6
Content Level: (Level 4)

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Marketing

The primary goal of marketing is to reach a defined audience to affect its behavior by informing, persuading, and reminding. Marketing acquires new customers for brands by building awareness while reinforcing their purchase behavior by providing additional information about the brand's benefits.

Successful marketing relies on a combination of options called the promotional mix. These options include advertising, sales promotion, public relations, direct marketing, and personal selling. The role each element takes in a marketing program relies in part on whether a company employs a push strategy or a pull strategy. A pull strategy relies more on consumer demand than personal selling for the product to travel from the manufacturer to the end user. The demand generated by advertising, public relations, and sales promotion “pulls” the good or service through the channels of distribution. A push strategy, on the other hand, emphasizes personal selling to push the product through these channels.

For marketing to be successful, sound management decisions must be made in the other three areas of the


Figure 1 Elements of Marketing Communication

Figure 1 Elements of Marketing Communication

marketing mix: the product, service, or idea itself; the price at which the brand will be offered; and the places at or through which customers may purchase the brand. The best promotion cannot overcome poor product quality, inordinately high prices, or insufficient retail distribution.

INTEGRATED MARKETING

The evolution of this perspective has two origins. Marketers began to realize that advertising, public relations, and sales were often at odds regarding responsibilities, budgets, management input, and a myriad of other decisions affecting the successful marketing of a brand. Executives in each area competed with the others for resources and a voice in decision making. Second, the marketing perspective itself began to shift from being market oriented to market driven. Advertising was the dominant element in the promotional mix because the mass media could effectively deliver a sales message to a mass audience. But then, the mass market began to fragment; consumers became better educated and more skeptical about advertising. News reports, word-of-mouth, experts' opinions, and financial reports were just some of the “brand contacts” consumers began to use to learn about and form attitudes and opinions about a brand or company, or make purchase decisions. In response, companies began to seek new ways to coordinate the multiplicity of product and company messages being issued and used by consumers and others.

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Thus, two ideas permeate integrated marketing: relationship building and synergy. Customers are viewed not as targets but as partners in an ongoing relationship. Customers, prospects, and others encounter the brand and company through a host of sources and create from these various contacts ideas about the brand and company. By knowing the media habits and lifestyles of important consumer segments, marketers can tailor messages through media that are most likely to reach these segments at times when these segments are most likely to be receptive to these messages, optimizing the marketing effort. Companies keep comprehensive databases on customers and their habits for this purpose.

ADVERTISING

Advertising has four characteristics: it is persuasive in nature; it is nonpersonal; it is paid for by an identified sponsor; and it is disseminated through mass channels of communication. Advertising messages may promote the adoption of goods, services, persons, or ideas. Because the sales message is disseminated through the mass media—as opposed to personal selling—it is viewed as a much cheaper way of reaching consumers. However, its non-personal nature means it lacks the ability to tailor the sales message to the message recipient. Advertising's contribution to sales is difficult to isolate because many factors influence sales. The contribution advertising makes to sales are best viewed over the long run, although precise customer reactions can sometimes be gauged in online settings. While banner ads, pop-ups, and interstitials should still be viewed as brand promoting and not necessarily sales drivers, technology provides the ability to track how many of a Web site's visitors click the banner, investigate a product, request more information, and ultimately make a purchase.

Through the use of symbols and images, advertising can help differentiate products and services that are otherwise similar. Advertising also helps create and maintain brand equity. Brand equity is an intangible asset that results from a favorable image, impressions of differentiation, or consumer attachment to the company, brand, or trademark. This equity translates into greater sales volume or higher margins or both, thus greater competitive advantage. Brand equity is established and maintained through advertising that focuses on image, product attributes, service, or other features of the company and its products or services.

Credibility and clutter are among the disadvantages of advertising. Consumers have become increasingly skeptical about advertising messages and tend to resent advertisers' attempt to persuade. Advertising is everywhere, from network television, to daily newspapers, roadside billboards, golf course signs, and stickers on fruit in grocery stores. Clutter encourages consumers to ignore many advertising messages. Further, technologies such as DVRs (digital video recorders) allow consumers to record programs and then skip commercials, and satellite radio provides a majority of its channels advertising free.

PUBLIC RELATIONS

Public relations is a management function which identifies, establishes, and maintains mutually beneficial relationships between an organization and the public upon which its success or failure depends. Public relations considers multiple audiences (consumers, employees, suppliers, vendors, etc.) and uses two-way communication to monitor feedback and adjust both its message and the organization's actions. Publicity coverage by the news media provides a vital boost to the marketing message: credibility. Articles in the media are perceived as being more objective than advertisements, and their messages are more likely to be absorbed and believed. For example, after the CBS news magazine 60 Minutes reported in the early 1990s that drinking moderate amounts of red wine could prevent heart attacks by lowering cholesterol, red wine sales in the United States increased 50 percent.

Public relations' role in the promotional mix is becoming more important because of what Philip Kotler describes, in his introduction to Thomas L. Harris's book, The Marketers Guide to Public Relations, as an “over-communicated society.” Consumers develop “communication-avoidance routines” where they are likely to tune out commercial messages. As advertising loses some of its cost-effectiveness, marketers are turning to news coverage, events, and community programs. In this regard, public relations plays an important role in presenting, through news reports, sponsorships, and “advertorials” (a form of advertising that instead of selling a product or service promotes the company's views regarding current issues) on what the company stands for.

DIRECT MARKETING AND DATABASE MARKETING

Direct marketing is the process of communicating directly with target customers to encourage response by telephone, mail, electronic means, or personal visit. Direct marketing represents one of the most profound changes in marketing and promotion since the mid-1980s. Aspects of direct marketing like direct response advertising have been adopted by virtually all companies engaged in marketing products, services, ideas, or persons.

Direct marketing benefits from three market conditions. First, two-income households are common and leave little time for shopping. Second, shoppers can make immediate purchases using credit or debit cards. Third, multimedia connections through the Internet allow

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markets to practice direct marketing with a variety of telecommunications options.

Direct marketing allows a company to target more precisely a segment of customers and prospects with a sales message tailored to their specific needs and characteristics. Where network television in the past offered opportunities to reach huge groups of consumers at a low cost per thousand, direct marketing can reach individual consumers and develop a relationship with each of them. Research indicates that brands with strong brand equity are more successful in direct marketing efforts than little-known brands.

Consumers also have resistance to direct marketing efforts. Marketers have responded by being less sales oriented and more relationship oriented. Other companies relegate direct marketing to a telemarketing department that hurts both the image of the company and consumer views of direct marketing in general, leading to legislation like the National Do Not Call Registry, where consumers add their names to a list that telemark-eters must eliminate from their outbound call database.

Database Marketing. Successful database marketing continually updates lists of prospects and customers by identifying who they are, what they are like, and what they are purchasing now or may be purchasing in the future. By using database marketing, marketers can develop products and product packages to meet their customers' needs or develop creative and media strategies that match their tastes, values, and lifestyles.

People who may be considered current customers, potential customers, and former customers and people who are likely never to be customers are constantly changing. By identifying these various segments and developing a working knowledge of their wants, needs, and characteristics, marketers can reduce the cost of reaching nonprospects and build customer loyalty. Perhaps the most important role of database marketing is its ability to retain customers. The cumulative profit for a five-year loyal customer is between seven and eight times the first-year profit.

SALES PROMOTION/SPONSORSHIPS/EXHIBITIONS

Sales promotions are direct inducements that offer extra incentives to enhance or accelerate the product's movement from producer to consumer. Sales promotions may be directed at the consumer or the trade. Consumer promotions such as coupons, sampling, premiums, sweepstakes, price packs, low-cost financing deals, and rebates are purchase incentives. Trade promotions include slotting allowances (“buying” shelf space in retail stores), allowances for featuring the brand in retail advertising, display and merchandising allowances, buying allowances (volume discounts and other volume-oriented incentives), bill back allowances (pay-for-performance incentives), incentives to salespeople, and other tactics to encourage retailers to carry the item and to push the brand.

Sales promotions can motivate customers to select a particular brand, especially when brands appear to be equal, and they can produce more immediate and measurable results than advertising. However, too heavy a reliance on sales promotions results in “deal-prone” consumers with little brand loyalty and too much price sensitivity. Sales promotions can also force competitors to offer similar inducements, with sales and profits suffering for everyone.

Sponsorships. Sponsorships, or event marketing, combine advertising and sales promotions with public relations. Sponsorships increase awareness of a company or product and build loyalty with a specific target audience. Organizations sometimes compare sponsorships with advertising by using gross impressions or cost-per-thousand measurements. However, the value of sponsorships can be very difficult to measure. Companies considering sponsorships should consider the short-term public relations value of sponsorships and the long-term goals of the organization. Sports sponsorships make up about two-thirds of all sponsorships.

Exhibits. Exhibits, or trade shows, are hybrid forms of promotion between business-to-business advertising and personal selling. Trade shows provide opportunities for face-to-face contact with prospects, enable new companies to create a viable customer base in a short period of time, and allow small and midsize companies that may not be visited on a regular basis by salespeople to become familiar with suppliers and vendors. Because many trade shows generate media attention, they have also become popular venues for introducing new products and providing a stage for executives to gain visibility.

INTERNET MARKETING

Web sites provide a new way of transmitting information, entertainment, and advertising, and have generated a new dimension in marketing: electronic commerce. E-commerce is the term used to describe the act of selling goods and services over the Internet. Public relations practitioners soon realized the value that Web sites offer in establishing and maintaining relationships. For example, company and product information can be posted on the company's site for news reporters researching stories and for current and potential customers seeking information. Political candidates have Web sites that provide

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information about their background and their political experience.

The interactivity of the Internet is perhaps its greatest asset. By communicating with customers, prospects, and others one-on-one, firms can build databases that help them meet specific needs of individuals, thus building a loyal customer base. Because the cost of entry is negligible, the Internet is cluttered with Web sites. However, this clutter does not present the same kind of problem that advertising clutter does. Advertising and most other forms of promotion assume a passive audience that will be exposed to marketing messages via the mass media or mail regardless of their receptivity. Web sites require audiences who are active in the information-seeking process to purposely visit the site. Therefore, the quality and freshness of content is vital for the success of the Web site.

Search Engine Optimization (SEO). It is difficult to practice Internet marketing without running into the concept of SEO, or search engine optimization. SEO can be a complex idea for businesses without experience operating in an online environment, and many organizations fall victim to SEO scams that do nothing to improve the business's marketing efforts. Essentially, SEO refers to certain words or patterns of words within a Web site, as well as the frequency that people visit that Web site when searching for those words.

The goal of SEO marketing is to use word patterns in business Web sites that search engines like Google and Bing will favor, showing Web sites early on when consumer search for items so that more consumer will visit the company Web site. When done correctly, SEO marketing will position Web sites in prime locations for customer interaction and win more sales. Links to other Web sites, page visits, keywords, and Web site structure are some popular SEO factors.

However, SEO can be a confusing practice. Each search engine uses searching programs to collect data from Web sites differently, and each has a zealously guarded formula for ranking Web sites according to SEO, making it impossible for organizations to accurately judge how effective their tactics are. As Jason McCormick wrote in SEO Made Simple for 2011, “Google, as well as the other major search engines, are masters of changing their algorithms and elements that weigh into their algorithm used to determine the PageRank of each URL.” These formulas use hundreds of different elements for each Web page, making good SEO a challenge. If businesses do not have the resources to study and plan for SEO, they are better off simply creating a high-quality Web site they can reference to consumers.

E-mail Marketing. E-mail marketing is the oldest type of online marketing and suffers from the most modern problem—namely, spam. Spam filters intercept most e-mails ever received and dismiss them immediately as unwanted advertisements sent by spam bots. With the dangers of malware and viruses, most e-mail readers will not open an e-mail they do not recognize even if it does make it past spam filters. This completely removes the chance of a business sending out mass e-mails to clients based on an arbitrary list.

To avoid the spam issue, businesses must formally ask customers permission to send them periodic e-mails advertising products and promotions before adding them to an e-mail list. Once subscribed, customers are much more likely to look at e-mails they expected to receive. Of course, getting people to read marketing e-mails is only the first step: they have to interact with them. As Gail Goodman wrote in “Is Your Email Marketing Ready for 2011?” a 2010 Entrepreneur, article, “Email marketing and social media are complementary. While email offers a way to directly contact your customers via their inboxes, social media provides new ways to share your content and engage in conversations with networks of people. One without the other is an incomplete solution to your marketing needs.” E-mail messages should be friendly, to the point, and invite customers to join social media services and forums to help them make purchasing decisions.

Viral Marketing. The Internet has also given rise to completely new forms of marketing. Often, these techniques are not generated by a marketing department but are adaptations of communications that have emerged independently. Ultimately, the Internet allows for direct communication with potential customers as well as providing those customers with a greater degree of interactivity. For example, in The New Rules of Marketing and PR, David Meerman Scott notes that the marketers of businesses like FutureNow have released numerous press releases directly to the Web, instead of targeting the press and other media outlets. The strategy was to “reach bloggers and consumers via search engines and RSS feeds through news release content.”

In particular, blogs (short for “Web logs”) have become a way of communicating with potential customers as well as a means to track public perception of a company. For instance, Meerman Scott points out the ability to comment on blogs provides a way for marketers to target and tailor communication while also making this communication seem more like a dialogue. Company blogs must balance between friendliness and quality: consumers expect a higher quality of production for blogs and businesses must continually impress to attract new customers.

Social media allows for other marketing options, such as the treasured viral marketing campaign. Viral marketing depends largely on “buzz” and word of mouth for its

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effectiveness. The goal is to create a marketing campaign based around an attractive hook that can be sent through social media applications. The business spreads the hook between its customers and hopes they will do the same, creating a costless, underground marketing movement based solely on interest in the advertising itself. Old Spice's 2010 viral online videos are one of the most successful viral marketing campaigns yet achieved.

COMPLICATIONS FROM GLOBALIZATION

Globalization leads to the need to market to foreign consumers, often those with a vastly different culture than the business is used to. This leads to a number of problems for marketing teams, most dealing with translation issues. An innocuous word in English may have a dozen different connotations when translated into another language, some highly negative. Made-up words for products may sound like real words in different languages, too. Even personal selling can be hampered by differences in non-verbal communication.

Colors were used to communicate before words, and even the colors of a company brand can present difficulties. According to Adam Wooten, in his 2011 Deseret News article, “Orange, the brand name of France Telecom's mobile and Internet subsidiaries, ran an amazingly successful ad campaign in the 1990s using the slogan 'The Future's Bright—the Future's Orange.' However, the company reportedly had to alter its slogan for politically divided Northern Ireland, where people strongly associate the color orange with the Orange Order.” Businesses interested in global marketing may be wise to open a marketing branch in the country they are targeting so they can hire natives with experience in that culture for proper message translation.

CONSUMER SAVVINESS

Though many feel that the information explosion of the late twentieth and early twenty-first centuries has provided companies with more marketing opportunities, the media environment has also resulted in a public that is increasingly savvy and sophisticated in terms of reading and interpreting marketing. In 2007, consultants James H. Gilmore and Joseph Pine II argued in their Advertising Age article that consumers value “authenticity” in both products and marketing messages. They noted that the patina of authenticity is crucial and that a lack of this (or a notable degree of insincerity) could mean the loss of a sale. Pine and Gilmore argued that “authenticity” can only be achieved through a combined marketing effort. Advertising, public relations, and other forms of communication must all be unified in message. This sense of authenticity can be derailed by aberrant messages.

An incomplete or superficial marketing effort can also result in cynicism. In 2008, with environmental concerns growing, the publication Marketing ran a story about “greenwashing,” an attempt to appear environmentally friendly. However, the article pointed out that a brand can be damaged if this effort is seen as disingenuous. The lesson here is that a company's marketing cannot be out of step with its core business and practices.

THE FUTURE OF MARKETING

Online marketing will continue to influence all marketing strategies but in more differentiated ways that allow businesses to pursue Internet advertisement even without selling products online. Consumers use online resources to make brick-and-mortar purchases. In fact, according to a 2009 Forrester study, consumers bought online goods retailing at $155 billion but made what the survey called “Web-influenced” retail purchases of $917 billion. Businesses are realizing they do not need to sell online to market online, which will lead to a rapid increase in business promotions and blogs in cyberspace.

Location-based services are also becoming a powerful influence in marketing, and one that will probably remain out of business hands in the near future. These GPS services, when used in mobile applications, can pinpoint nearby stores or restaurants for whoever is using the phone, then link the businesses to online social media rating systems. At the most, businesses can attempt to influence location-based services by listing their services in GPS applications like Google Maps, and encouraging customers to give them favorable ratings.

A new form of consumer shopping known as social shopping is also emerging. According to Jennifer Wang and Kara Ohngren's Entrepreneur article, “The Disruptors: Forces Driving Change in 2011,” people who engage in social media conversation and browsing end up spending more money, not necessarily because of advertisements but because of the social shopping experience. They can pick up on the recommendations of friends, check reviews or company histories, and make their decisions all in one application. Online shopping, in other words, is no longer a relationship between a business and a customer, but between a business and a community, which changes the marketing needs of many consumers. Social media advertising can help, but experience is key: companies need to understand what online shoppers do and do not like, and be prepared for people who will post negative comments on anything, just because they can. Since this is an emotional-oriented aspect of marketing its results are difficult to measure, but the impact can be significant.

Demographically, consumers are falling more and more into specific generations, from the dwindling parents of the baby boomers up to Generation Y and Z. Each group

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appreciates different marketing techniques and approaches. For instance, in his 2010 book, From Grey to Silver,, Michael Boppel refers to the aging generation as the silver demographic and shops which use experienced, aged customer service representatives “silver shops” where quality, conversation, and proof of value are highly regarded. Younger generations, on the other hand, can be attracted if companies are willing to provide information immediately and let them make up their own minds in creative ways. As studies reveal continuing differences in these age groups, businesses will follow suit with new marketing plans.

BIBLIOGRAPHY

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Wooten, Adam. “Color Meanings Can be Lost and Found in Translation.” Deseret News,, 21 January 2011. Available from http://www.deseretnews.com/article/705364808/Color-meanings-can-be-lost-and-found-in-translation.html .

Source Citation

Source Citation   (MLA 8th Edition)
"Marketing." Encyclopedia of Management, edited by Sonya D. Hill, 7th ed., Gale, 2012, pp. 655-660. Gale Ebooks, https%3A%2F%2Flink.gale.com%2Fapps%2Fdoc%2FCX4016600195%2FGVRL%3Fu%3Dmnarasmuss%26sid%3DGVRL%26xid%3D9ce8b7b2. Accessed 17 Sept. 2019.

Gale Document Number: GALE|CX4016600195

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