Marketing Theory Lecture

1.0 Definition of Marketing

Marketing is often thought to be just about advertising or selling, which is not the case. It is a management process that ensures businesses can interpret consumer needs and match or exceed them while making profit. Marketing is an exchange process through which companies satisfy existing and potential consumer needs by creating and offering goods or services with some added value. Marketing ensures organisations have a better chance of profitably carrying out their business activities by matching what they are offering with the customer’s needs. In other words, as opposed to the popular views, marketing considerably focuses on product demand development and consumer satisfaction.

2.0 Importance of Marketing to Contemporary Businesses

Marketing is crucial for the survival and continuity of business. This is because businesses achieve their business goals through marketing as it enables them to determine consumer needs, satisfy the needs, target the right customers, stay ahead of competitors and enhance their profitability.

One of the most important functions of marketing is to create awareness about products and services to potential customers and increase consumer loyalty. Through marketing, customers become knowledgeable of what a firm is offering and on the other hand, businesses use the opportunity to convince these consumers to buy their products or seek their services. Thus, marketing gives an organisation the opportunity to be discovered by prospective customers. An example of a company who continuously utilise successful marketing is Coca-Cola. Coca-Cola consistently utilise aggressive marketing campaigns across multiple platforms to increase customer awareness of its full range of beverages.

Marketing enables organisations to increase and/or retain market shares and retain their loyal consumers as well as attracting new customers through the development of long-term strategic relationships with customers. Increased market share results in more sales for businesses because the involved firm’s market reach is high and customers are more likely to buy products and services from firms that have a large market following.  When loyal customers inform friends and family about the products of their organisation, the sales progressively grow, and customers trust an organisation more.

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Marketing also helps strengthen a company’s reputation through brand building. An organisation’s participation in community activities and programmes, effective public communication and relations together with quality products and services supported by marketing serve to enhance the corporation’s reputation. Good marketing strategies can influence how potential and existing customers position a firm in their minds. For example, Apple is the leading seller of smartphones because, in the last decade, it has consistently launched products of unmatched quality.

Marketing also fosters healthy competition in the market environment. Marketing enables small and new businesses to enter a market and compete with well-established companies through aggressive product awareness and pricing strategies. Marketing makes rival businesses knowledgeable about each other’s strategies. In turn, such information compels businesses to modify their approaches to win targeted consumers, for instance, through developing competitive price packages.

Apart from prices, marketing also provides highly relevant information to firms such as the demand levels, successes and failures of products in the market. For instance, competition between Coca-Cola and Pepsi has maintained the companies’ product prices and led to the development of innovative products, for instance, Diet Coke, a soft drink targeting health-conscious consumers, among others.

3.0 Marketing Theories

Marketing management involves numerous ideas and theories on how businesses should carry out their marketing activities. The theories' usability and application are dependent on the prevailing market situation, as will be discussed in this chapter.

The commonly used theory in the development of marketing business strategies is the Ansoff matrix. Besides being simple, the matrix visualises the current strategic position of an organisation and offers possible alternatives that could be employed. The only shortcoming of the Ansoff matrix is that it does not consider external factors that affect marketing such as unprecedented market changes or resource unavailability and hence cannot be used singlehandedly.

Figure 1 - Ansoff’s Matrix Illustrated

The PESTLE and SWOT analysis are also suitable methods of identifying marketing opportunities and therefore, can be used alongside the Ansoff Matrix to develop a marketing strategy. A PESTLE analysis is used to analyse and gain knowledge of the external environment in which a business operates using the headings as illustrated in the below figure (figure 2). Conversely, a SWOT analysis is an internal investigation of a company’s strengths, weaknesses, opportunities and threats.

Figure 2 - PESTLE Analysis Illustrated

Figure 3 - SWOT Analysis Illustrated

However, there is also the BCG (Boston-Consulting-Group) model that measures a company’s strength in a relevant market segment is much more flexible than the SWOT and PESTLE analyses and especially when employed alongside the GEM (General-Electric-Matrix) in identifying the possible opportunities and problems facing given products in the market.

Despite the correlation between BCG and GEM, the two differ on how they define business units. In the BCG matrix, only products are measured against the industry’s attractiveness scale, and on the other hand, in GEM, business units can be products, product lines, a service or even a brand.

Apple deals in a wide range of products from desktops, tablets, smartphones and watches. The GE matrix has helped Apple and other similar organisations to evaluate the business units that need further investment, development or divestiture.

In addition, Booms and Bitner recommend the use of the 7Ps marketing mix (people, process, physical evidence, place, price, promotion and product) by marketers to determine the type of product or brand a business can offer to its customers. The 7Ps approach is a cost-effective method of identifying marketing opportunities and makes it easier for businesses to adapt to the dynamic marketing environment than most of the other marketing theories.

4.0 Advertising Campaigns

An advertising campaign involves strategic messages placed in multiple media channels at fixed times. The messages have a single campaign theme, which is the central message communicated through such promotions. Advertising campaigns aim at achieving goals such as brand establishment, raising brand awareness and increasing sales. In this section, the factors to consider when creating a successful campaign strategy along with the different types of marketing strategies adopted by businesses will be extensively discussed.

Nike’s Just Do It advertising campaign is one of the most successful marketing campaigns in the world together with Coca-Cola’s Christmas campaign that reinvented the Santa Claus image.

4.1 Fundamentals for Building a Good Advertising Campaign Strategy

4.1.1 Setting the advertising objective

Marketing campaigns help organisations achieve their marketing goals. Some of the objectives include brand awareness, creating interest, providing information, stimulating demand and brand strengthening.

A business should set realistic and achievable advertising campaign goals. A well-crafted advertising campaign that has a strong message targeting a given population can be used to achieve some of the aims mentioned above. For example, to increase consumer’s interest, an organisation should mention the features and benefits of existing as well as future products.

4.1.2 Setting the advertising budget

Proper planning and allocation of an organisation’s resources such as personnel and funds enable it achieve its advertising campaign’s objectives. Running advertisement campaigns can be quite costly to an organisation; hence the need to make adequate plans on how the funds are to be spent during marketing.

Businesses could use numerous methods to develop cost-effective advertising budgets. A commonly employed technique is setting the advertising cost as a percentage of either previous sales or forecasted sales (Hise, 2013).

Promotional activities can be run as planned and over the intended period of the marketing campaign if budgeting is done properly.

4.1.3 Selecting media channels for message delivery

With the objectives and budget already agreed on, an organisation now focuses on the media outlet that it will use in delivering the advertising campaign’s message.

Media channels have a significant influence on the type of message to be created and its frequency of delivery. Businesses can incorporate both traditional (radio and television) and modern media (the internet and mobile devices) channels to pass messages to their target audience. The use of the right media channel will enable companies to reach their intended customers quickly and affordably. The chosen media outlet should deliver multi-sensory advertisements and messages that have both visual and audio appeal (Hultén, 2011). 

The market reach of a media channel should also be considered, together with the cost of placing an advertisement. Another factor is advertising clutter where media outlets include many advertisements within a limited space and time. Advertising clutter forces businesses to increase the frequency of their ads, which in the long run, increases their expenses. Making a well-informed selection of a media outlet will help an organisation achieve its marketing campaign objectives.

4.1.4 Creating an advertisement message

An advertising campaign is composed of many promotional activities that are tailored to fit into the message an organisation is sending to its target population. To create an effective message, businesses must take into consideration factors such as the characteristics of the target audience, the media outlet being used, products and general advertising objectives.

Firms need to research well on the make-up of its intended audience when making the message content. Additionally, the target audience’s knowledge about a product affects the contents of a message. For example, new products will have a message different to that of popular products.

A consideration of these factors together with the general objectives of the advertising campaign will help an organisation craft a message that is effective in achieving its marketing goals.

Overall, through the marketing process, a business establishes a suitable slogan (word or phrase), value proposition (reason for customers to be interested in a product) and appeal (emotional, use of fear, humorous or sexual) for its intended market.

4.1.5 Evaluating advertising campaign results

The evaluation of promotional activities is crucial to ensuring the success of an advertising campaign. Continuous assessment enables businesses to identify opportunities and threats facing the success of marketing campaigns allowing organisations to develop measures that ensure advertising campaigns achieve set marketing targets.

To evaluate a campaign’s success, the results of the process are compared against its set objectives. For example, when the objective is to improve brand awareness, a successful campaign will measure the number of people made aware of the brand at the end of the advertising campaign.

Evaluation and monitoring are of great use if a company sets realistic, measurable and achievable advertising campaign objectives.

4.2 Marketing Strategies

A marketing strategy refers to the way marketing activities are planned, together with the allocation of resources to involved activities. These strategies are modelled with the aim of ensuring that marketing goals and the overall business objectives are achieved. Companies use the marketing mix, which is a combination of product, price, place and promotion, to develop and test a marketing strategy.

4.2.1 Types of marketing strategies

Marketing strategies adopted by businesses vary widely depending on factors such as cost, marketing objectives, the intended market and other unique marketing situations. In this section, different kinds of marketing strategies will be compared with and contrasted against each other.

Mass marketing and guerrilla marketing strategies are cheaper and appeal to larger audiences (Nufer, 2013) than direct marketing strategy. Similarly, the viral marketing strategy, which involves the use of social networking services and word of mouth has a strong linkage with mass marketing and online marketing strategies.

Viral marketing strategy, when used alongside mass marketing and guerrilla marketing strategies has often been recommended as a suitable marketing strategy for increasing brand awareness (Nufer, 2013). Furthermore, using the three of them together could potentially reach a vast number of both prospective and existing customers while not being a financial burden to businesses.

Coca-Cola has used guerrilla marketing previously to great success. Coca-Cola used special beverage vending machines that produced not only beverages but also other gift vouchers to customers such as skateboards.

Direct marketing strategy, in which sellers communicate directly with consumers via emails, text messages, online adverts and even promotional letters, is affordable and has a high response rate, unlike mass, viral and guerrilla marketing strategies.

Additionally, direct marketing together with the call-to-action marketing strategy is effective in converting prospects to customers by providing links in emails and on websites or asking a prospect to call a toll-free phone number.

Many businesses prefer using the direct marketing strategy because its results can be measured directly, unlike mass marketing. However, many customers have expressed concerns over the privacy of promotional spam emails, along with environmental implications of the large volumes of published materials that marketers send them.

The close-range marketing strategy, which involves the use of wireless communication such as Bluetooth and Wi-Fi technologies, together with other online-based marketing strategies is valuable to businesses targeting tech-savvy consumers.

Call-to-action marketing strategy and close range marketing are very successful in arousing customer interest and providing businesses with useful market information. Both close-range and call-to-action marketing strategies appeal to technology-oriented customers. However, online marketing is cheaper than the two and as in the case of the methods mentioned above, targets tech-savvy people. Moreover, the high response rate and feedback relay of online marketing make the method preferable over the close range and call to action marketing strategies.

Relationship marketing strategy is suitable for organisations focused on influencing consumers to have a long-lasting emotional connection to their brands, which is crucial to business sustenance. Relationship strategy is good for businesses selling high-end products as it enables the business to connect with its customers and maintain their loyalty.

On the other hand, the transactional marketing strategy focuses on short-term goals such as customer acquisition and increasing individual sales. For example, the Coca-Cola company intends to have its customers emotionally attached to its products so that they can keep coming back to buy more. Relationship marketing strategy is fit for businesses that want to foster such a consumer brand loyalty.

The transactional marketing strategy has a return on investment in the short-run while the relationship marketing strategy’s benefits are experienced in the long-run.

Besides, niche marketing strategy, which concentrates its marketing efforts on given market segments has a strong linkage with the relationship marketing strategy and has been recommended as a suitable marketing strategy when used alongside the relationship marketing strategy (Shani & Chalasani, 1992).

Both relationship and niche marketing strategies are related to each other in that they focus on low sales and high prices. For instance, businesses dealing with high-end brands can price their products expensively and still maintain their loyal customers. The relationship marketing strategy is employed to convert customers into loyal brand lovers.

Cause-marketing strategy, in which a business aligns its brand with a cause to create brand awareness, generate profit and socially benefit those fighting for the cause, is a widely-employed marketing strategy.

Cause marketing is also a good strategy for organisations that sell products directly to consumers. Through cause marketing, a company can increase its brand loyalty by making customers feel like they are making a difference when buying a product that supports a good cause in their society.

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5.0 Marketing Methods and Concepts

In this chapter, the various types of marketing concepts and techniques will be discussed and evaluated on their usefulness in many business situations.

5.1 Marketing Concepts

A marketing concept is a management philosophy that determines the marketing tools to be used in achieving marketing goals through identification and satisfaction of customer needs.

5.1.1 Production concept

The production concept, which prevailed in the early twentieth century, focused on business operations. The production concept assumes that consumers prefer readily available and inexpensive goods. Accordingly, in this concept, management focused on high production levels to increase efficiency, lower costs of production and have mass distribution.

Companies that use the production concept have continual steady sales volume together with the availability of their products in many locations for their customers. Moreover, low production costs enable firms using the production concept to use competitive pricing models.

However, with poor control systems, mass production negatively affects the quality of the goods, which in turn has an adverse impact on consumer loyalty and brand strength.

The production concept is best suited for firms involved in the overseas production with the aim of reducing production costs while producing enough goods to satisfy customer demand in the market. It is also suitable for organisations delivering standardised goods that require minimal or no variation.

5.1.2 Selling concept

The selling concept philosophy states that businesses have to aggressively market their products through personal selling, advertisements, sales promotions and good public relations, among others, to increase consumer demand. The concept argues that in case no promotional information is passed to consumers, they are unlikely to buy large quantities of company products.

The selling concept helps firms to exhaust unnecessary inventories, which in turn ensures that the flow of resources in and out of a firm is uninterrupted. However, the concept’s focus on making sales undermines activities aiming to build long term company-consumer relationships pointing to low loyalty levels among consumers.

The selling concept is suitable for businesses dealing in goods that are not highly sought after and that have numerous alternatives, for instance, insurance products. Moreover, the concept is highly applicable to organisations whose supply exceeds the demand in the market.

5.1.3 Product concept

In the product concept, customers are assumed to desire products of higher quality, better performance and superior features. Therefore, in this concept, customers are likely to purchase innovative and feature-rich products that have numerous applications.

A major advantage of products of a high quality and superior specifications is that they can sell without much focus on consumer awareness. Furthermore, marketers do not need to carry out extensive research on the targeted audience.

A good example is Apple, which, rather than depending on market needs, innovatively shapes market tastes for various technological products, for instance, smartphones. The product concept is suitable for businesses involved in the production of electronic products such as mobile phones, computers, refrigerators and other electronic components.

5.1.4 Marketing concept

In the marketing concept, firms have to study the market well to be able to satisfy consumers better than their competitors.

Firms can produce quality products that fulfil the requirements of consumers hence no wastages in terms of excess inventory.

Satisfied customers become brand ambassadors; hence businesses that focus on satisfying the needs of their consumers grow their sales and profits.

The main challenge with the marketing concept is identifying the ever-changing market tastes and preferences. Difficulty in recognising consumer needs makes it considerably difficult for businesses to satisfy customers and to establish a strong brand loyalty.

The marketing concept is suitable for organisations in the fast-moving goods industry such as fries, snacks and burgers because of the wide variances in the needs and wants of the consumers.

5.1.5 Societal concept

In the societal marketing concept, firms determine the needs and wants of customers and supply products that satisfy consumer needs, as well as their social well-being.

Socially responsible firms that satisfy customers while also caring about their society establish a good public image. Consumers are much willing to purchase products of businesses they perceive as concerned about their social well-being.

A major drawback of using the societal concept is ambiguity in that customers have a wide range of challenges, and there is no given technique that can fully address societal difficulties.

The societal concept is suitable for organisations that align their brands with a social cause with the aim of raising its brand awareness and customer loyalty while also ensuring that the society benefits from the cause.

5.2 Marketing Methods

5.2.1 Advertising

Advertising is a form of audio and visual marketing communication which involves presenting strategic messages to the market audience to promote a product or service. Advertisements are transmitted through various mass media channels such as newspapers, magazines, television, radio and websites.

Through advertisements, useful information about products that are in the market, and especially new products, is relayed to consumers. Market information provided ranges from price, functionality, quantity and other product specifications that consumers require to make good purchasing decisions.

Advertisements stimulate consumers to buy goods, hence enabling an increment in the sales of the involved firm. In addition, advertising helps businesses to remain competitive.

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However, to place advertisements on various media channels, high costs are involved. Huge costs can be a financial burden to small businesses.

Marketers can also provide misleading information to sway consumer thinking. Moreover, some advertisements may be inappropriate to certain age groups such as children.

Advertisements are suitable for businesses entering a new market, and that want to create awareness of their new product. The method is also fit for businesses intending to reach a large audience.

Advertising compliments the messages delivered to customers by salespeople as the consumers will not doubt the validity of the marketers.

5.2.2 Promotion

Promotion is one of the four elements of the marketing mix. Promotion raises the customer awareness of a product, service or brand. Furthermore, promotion achieves all these objectives by presenting product information to customers, increasing demand and differentiating a given product from other products in the market.

Organisations, through promotional activities, position their products as superior in the minds of consumers. In addition, through media channels such as television, billboards and newspapers, promotion can improve brand awareness by sending out a brand’s message clearly to the target audience.

Promotional activities can trigger regular customers to inform their friends of a firm’s new product through word-of-mouth. Multi-level marketing carried out by delighted customers creates demand, which drives up the sales of a firm.

Customers get suspicious of products they think have been exaggerated in promotions resulting in the creation of a negative image about the product in their minds.

Excessive demand is also a likely result of doing promotions and in such cases, should a firm fail to satisfy the demand, the consumer's trust will be negatively impacted.

Promotions are very useful to companies with slow-moving products such as insurance covers because the marketing method helps trigger demand and creates a continuous flow of inventory.

5.2.3 Packaging

Packaging is the process of designing and producing materials that are used to cover or enclose products for distribution, storage and sale. Packaging plays several roles in the marketing of goods. The roles include protecting products during shipment, branding and including regulatory information, for instance, ingredients.

Packaging helps firms to draw consumers. The process achieves that by enabling the development of packages with intricate designs and that can be spotted easily and readily linked to the manufacturing company.

Packaging is essential in extending the shelf life of sensitive goods such as foodstuffs. Some packages maintain the enclosed to suitable atmospheric conditions. Moreover, creative packaging by a company helps to increase the brand loyalty of consumers.

However, packaging can be bulky, environmentally hazardous and expensive.

Packaging is important for all businesses.

5.2.4 Branding

Branding is a marketing method involving the conception of a name, symbol, slogan, design or a mixture of these components that identify and separate products from others.

A good branding strategy provides a firm with an advantage in competitive markets.

Organisations need to continuously conduct research, define and build their brands because of the high value it adds to business. A good brand will emotionally connect customers with the products and services of a company, motivates buyers to purchase goods and services, guarantees consumers about the quality of service they are to receive and enhances the consumers’ loyalty.

A major disadvantage is that a negative event can damage a company’s whole image and brand within a short period. A business whose image and brand have been negatively affected must build an entirely new brand to try and regain its place in the market.

Organisations that produce goods with close substitutes in a market will find branding useful in positioning its products as superior to those of rivals. With branding, a business can differentiate its products from those of its competitors to realise consistent sales volumes.

5.2.5 Public Relations

Public relations involves the effective management of information transmitted by a business when interacting with the public in a bid to shape how the general public views the involved company. Articles about a firm, events and press releases are some of the most appropriate methods of nurturing good relations between an organisation and its key publics.

Organisations do not pay media outlets for the publicity created when stories about them are aired, and this is unlike advertisements, in which involved firms incur huge costs to promote their company visibility or products. Public relations has the aspect of longevity, which makes it a better method of building a brand and image.

Publicity can reach a colossal audience through the media. The public’s view of the media as an objective third party raises the credibility of such publicity.

Businesses have no control over the type of publicity they receive from media outlets. The publicity can be positive or negative depending on the media story.

Companies facing major crises can use public relations to help salvage the damage on their brand and image. Public relations is a suitable marketing option for businesses creating awareness of a product that is being re-launched in the market.

6.0 Summary

Over the last few decades, marketing has emerged as the generation of demand rather than making consumers pay for products by focusing on identifying and satisfying their needs.

We have looked at various marketing strategies, methods and concepts that apply to all kinds of marketing situations that businesses might face.  We have also compared and contrasted various marketing theories that help a marketing function and the whole business management in deciding on the marketing strategies, concept and methods to use in achieving its marketing objectives.

We have also deliberated on the importance of marketing in the success of modern organisations and critically analysed how various marketing strategies, concepts and methods are appropriate to the unique business situations that firms might encounter.

Over time, most businesses have come up with criteria for evaluating the success of marketing strategies and methods. Besides, businesses have also developed unique combinations of marketing approaches and strategies that help them to achieve their goals. New marketing plans and methods are cropping up because of the use of crude combinations of concepts and marketing strategies by businesses. The marketing function in a business plays a paramount role in ensuring the success of an organisation.

Recommended Text Books

Ferrell, O.C. and Hartline, M., 2012. Marketing strategy, text and cases. Toronto: Nelson Education.

Jobber, D. and Ellis-Chadwick, F., 2012. Principles and practice of marketing (No. 7th). New York: McGraw-Hill Higher Education.

References

Hise, R.T. and Strawser, R.H., 2013. Application of Capital Budgeting Techniques to Marketing Operations. Readings in Managerial Economics: Pergamon International Library of Science, Technology, Engineering and Social Studies, p.419.

Hultén, B., 2011. Sensory marketing: the multi-sensory brand-experience concept. European Business Review, 23(3), pp.256-273.

Nufer, G., 2013. Guerrilla Marketing-Innovative or Parasitic Marketing?. Modern Economy, 4(9A), p.1.

Shani, D. and Chalasani, S., 1992. Exploiting niches using relationship marketing. Journal of Consumer Marketing, 9(3), pp. 33-42