The marketing process
Clarke Ricks
School of Business, Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
April 5, 2021
The marketing process
The marketing process consists of four elements: strategic marketing analysis,
marketing-mix planning, marketing implementation, and marketing control.
Strategic marketing analysis
Market segments
The aim of marketing in profit-oriented organizations is to meet needs profitably.
Companies must therefore first define which needs—and whose needs—they can satisfy.
For example, the personal transportation market consists of people who put different values
on an automobile’s cost, speed, safety, status, and styling. No single automobile can satisfy
all these needs in a superior fashion; compromises have to be made. Furthermore, some
individuals may wish to meet their personal transportation needs with something other
than an automobile, such as a motorcycle, a bicycle, or a bus or other form of public
transportation. Because of such variables, an automobile company must identify the
different preference groups, or segments, of customers and decide which group(s) they can
target profitably.
Market niches
Segments can be divided into even smaller groups, called subsegments or niches.
A niche is defined as a small target group that has special requirements. For example,
a bank may specialize in serving the investment needs of not only senior citizens but also
senior citizens with high incomes and perhaps even those with particular investment
preferences. It is more likely that larger organizations will serve the larger market segments
(mass marketing) and ignore niches. As a result, smaller companies typically emerge that are
intimately familiar with a particular niche and specialize in serving its needs.
Marketing to individuals
A growing number of companies are now trying to serve “segments of one.” They
attempt to adapt their offer and communication to each individual customer. This is
understandable, for instance, with large industrial companies that have only a few major
customers. For example, The Boeing Company (United States) designs its 747 planes
differently for each major customer, such as United Airlines, Inc., or American Airlines,
Inc. Serving individual customers is increasingly possible with the advent
of database marketing, through which individual customer characteristics and purchase
histories are retained in company information systems. Even mass-marketing companies,
particularly large retailers and catalog houses, compile comprehensive data on individual
customers and are able to customize their offerings and communications.
Positioning
A key step in marketing strategy, known as positioning, involves creating and
communicating a message that clearly establishes the company or brand in relation to
competitors. Thus, Volvo Aktiebolaget (Sweden) positioned its automobile as the “safest,”
and Daimler AG (Germany), manufacturer of Mercedes-Benz vehicles, positioned its car as
the best “engineered.” Some products may be positioned as “outstanding” in two or more
ways. However, claiming superiority along several dimensions may hurt a company’s
credibility because consumers will not believe that any single offering can excel in all
dimensions. Furthermore, although the company may communicate a particular position,
customers may perceive a different image of the company as a result of their actual
experiences with the company’s product or through word of mouth.
Marketing-mix planning
Having developed a strategy, a company must then decide which tactics will be most
effective in achieving strategy goals. Tactical marketing involves creating a marketing mix of
four components—product, price, place, promotion—that fulfills the strategy for the
targeted set of customer needs.
Product
Product development
The first marketing-mix element is the product, which refers to the offering or group of
offerings that will be made available to customers. In the case of a physical product, such as
a car, a company will gather information about the features and benefits desired by a target
market. Before assembling a product, the marketer’s role is to communicate customer
desires to the engineers who design the product or service. This is in contrast to past
practice, when engineers designed a product based on their own preferences, interests,
or expertise and then expected marketers to find as many customers as possible to buy this
product. Contemporary thinking calls for products to be designed based on customer input
and not solely on engineers’ ideas.
In traditional economies, the goods produced and consumed often remain the same
from one generation to the next—including food, clothing, and housing. As economies
develop, the range of products available tends to expand, and the products themselves
change. In contemporary industrialized societies, products, like people, go through life
cycles: birth, growth, maturity, and decline. This constant replacement of existing products
with new or altered products has significant consequences for professional marketers. The
development of new products involves all aspects of a business—
production, finance, research and development, and even personnel administration
and public relations.
Packaging and branding
Packaging and branding are also substantial components in the marketing of a product.
Packaging in some instances may be as simple as customers in France carrying long loaves of
unwrapped bread or small produce dealers in Italy wrapping vegetables in newspapers or
placing them in customers’ string bags. In most industrialized countries, however, the
packaging of merchandise has become a major part of the selling effort, as marketers now
specify exactly the types of packaging that will be most appealing to prospective customers.
The importance of packaging in the distribution of the product has increased with the
spread of self-service purchases—in wholesaling as well as in retailing. Packaging is
sometimes designed to facilitate the use of the product, as with aerosol containers for room
deodorants. In Europe such condiments as mustard, mayonnaise, and ketchup are often
packaged in tubes. Some packages are reusable, making them attractive to customers in
poorer countries where metal containers, for instance, are often highly prized. Customers in
wealthier countries may prefer packaging that can be recycled.
Marketing a service product
The same general marketing approach about the product applies to the development of
service offerings as well. For example, a health maintenance organization (HMO) must
design a contract for its members that describes which medical procedures will be covered,
how much physician choice will be available, how out-of-town medical costs will be handled,
and so forth. In creating a successful service mix, the HMO must choose features that are
preferred and expected by target customers, or the service will not be valued in the
marketplace.
Price
The second marketing-mix element is price. Ordinarily companies determine a price by
gauging the quality or performance level of the offer and then selecting a price that reflects
how the market values its level of quality. However, marketers also are aware that price can
send a message to a customer about the product’s presumed quality level. A Mercedes-Benz
vehicle is generally considered to be a high-quality automobile, and it therefore can
command a high price in the marketplace. But, even if the manufacturer could price its cars
competitively with economy cars, it might not do so, knowing that the lower price might
communicate lower quality. On the other hand, in order to gain market share, some
companies have moved to “more for the same” or “the same for less” pricing, which means
offering prices that are consistently lower than those of their competitors. This kind of
discount pricing has caused firms in such industries as airlines and pharmaceuticals (which
used to charge a price premium based on their past brand strength and reputation) to
significantly reevaluate their marketing strategies.
Place
Place, or where the product is made available, is the third element of the marketing mix
and is most commonly referred to as distribution. When a product moves along its path
from producer to consumer, it is said to be following a channel of distribution. For example,
the channel of distribution for many food products includes food-processing plants,
warehouses, wholesalers, and supermarkets. By using this channel, a food manufacturer
makes its products easily accessible by ensuring that they are in stores that are frequented
by those in the target market. In another example, a mutual funds organization makes
its investment products available by enlisting the assistance of brokerage houses and banks,
which in turn establish relationships with particular customers. However, each channel
participant can handle only a certain number of products: space at supermarkets is limited,
and investment brokers can keep abreast of only a limited number of mutual funds. Because
of this, some marketers may decide to skip steps in the channel and instead market directly
to buyers through factory outlets, direct mail, and shopping via the Internet (a significant
trend from the late 20th century).
Promotion
Promotion, the fourth marketing-mix element, consists of several methods of
communicating with and influencing customers. The major tools are sales force, advertising,
sales promotion, and public relations.
Sales force
Sales representatives are the most expensive means of promotion, because they
require income, expenses, and supplementary benefits. Their ability to personalize the
promotion process makes salespeople most effective at selling complex goods, big-ticket
items, and highly personal goods—for example, those related to religion or insurance.
Salespeople are trained to make presentations, answer objections, gain commitments to
purchase, and manage account growth. Some companies have successfully reduced their
sales-force costs by replacing certain functions (for example, finding new customers) with
less expensive methods.
