Business marketing is a marketing practice of individuals or organizations It allows them to sell products or services to other companies or organizations.
Marketing is defined by the American Marketing Association as the activity set of institutions and processes for creating communicating delivering and exchanging offerings that have value for customers clients partners and society at large11 The term developed from the original meaning which referred literally to going to market with goods for sale From a sales process engineering perspective marketing is a set of processes that are interconnected and interdependent with other functions of a business aimed at achieving customer interest and satisfaction.
Philip Kotler defined marketing as Satisfying needs and wants through an exchange process13 and a decade later defines it as a social and managerial process by which individuals and groups obtain what they want and need through creating offering and exchanging products of value with others.
The Chartered Institute of Marketing defines marketing as the management process responsible for identifying anticipating and satisfying customer requirements profitably14 A similar concept is the valuebased marketing which states the role of marketing to contribute to increasing shareholder value15 In this context marketing can be defined as the management process that seeks to maximise returns to shareholders by developing relationships with valued customers and creating a competitive advantage.
In the past marketing practice tended to be seen as a creative industry which included advertising distribution and selling However because the academic study of marketing makes extensive use of social sciences psychology sociology mathematics economics anthropology and neuroscience the profession is now widely recognized as a science16 allowing numerous universities to offer MasterofScience MSc programs.
The process of marketing is that of bringing a product to market which includes these steps broad market research market targeting and market segmentation determining distribution pricing and promotion strategies developing a communications strategy budgeting and visioning longterm market development goals18 Many parts of the marketing process eg product design art director brand management advertising inbound marketing copywriting etc involve use of the creative artscitation needed.
The marketing concept proposes that to complete its organizational objectives an organization should anticipate the needs and wants of potential consumers and satisfy them more effectively than its competitors This concept originated from Adam Smiths book The Wealth of Nations but would not become widely used until nearly 200 years later20 Marketing and Marketing Concepts are directly related.
Given the centrality of customer needs and wants in marketing a rich understanding of these concepts is essential.
Needs Something necessary for people to live a healthy stable and safe life When needs remain unfulfilled there is a clear adverse outcome a dysfunction or death Needs can be objective and physical such as the need for food water and shelter or subjective and psychological such as the need to belong to a family or social group and the need for selfesteem
Wants Something that is desired wished for or aspired to Wants are not essential for basic survival and are often shaped by culture or peergroups
Demands When needs and wants are backed by the ability to pay they have the potential to become economic demands
Marketing research conducted for the purpose of new product development or product improvement is often concerned with identifying the consumers unmet needs22 Customer needs are central to market segmentation which is concerned with dividing markets into distinct groups of buyers on the basis of distinct needs characteristics or behaviors who might require separate products or marketing mixes23 Needsbased segmentation also known as benefit segmentation places the customers desires at the forefront of how a company designs and markets products or services24 Although needsbased segmentation is difficult to do in practice it has been proved to be one of the most effective ways to segment a market2522 In addition a great deal of advertising and promotion is designed to show how a given products benefits meet the customers needs wants or expectations in a unique way:
B2B and B2C Marketing
The two major segments of marketing are businesstobusiness B2B marketing and businesstoconsumer B2C marketing.
B2B businesstobusiness marketing refers to any marketing strategy or content that is geared towards a business or organization Any company that sells products or services to other businesses or organizations vs consumers typically uses B2B marketing strategies.
Examples of products sold through B2B marketing include
The four major categories of B2B product purchasers are
Producers use products sold by B2B marketing to make their own goods eg Mattel buying plastics to make toys
Resellers buy B2B products to sell through retail or wholesale establishments eg Walmart buying vacuums to sell in stores
Governments buy B2B products for use in government projects eg purchasing contractor services to repair infrastructure
Institutions use B2B products to continue operation eg schools buying printers for office use.
Businesstoconsumer marketing or B2C marketing refers to the tactics and strategies in which a company promotes its products and services to individual people
Traditionally this could refer to individuals shopping for personal products in a broad sense More recently the term B2C refers to the online selling of consumer products.
Consumertobusiness marketing or C2B marketing is a business model where the end consumers create products and services which are consumed by businesses and organizations It is diametrically opposed to the popular concept of B2C or Business to Consumer where the companies make goods and services available to the end consumers.
Customer to customer marketing or C2C marketing represents a market environment where one customer purchases goods from another customer using a thirdparty business or platform to facilitate the transaction C2C companies are a new type of model that has emerged with ecommerce technology and the sharing economy.
Differences in B2B and B2C marketing
The different goals of B2B and B2C marketing lead to differences in the B2B and B2C markets The main differences in these markets are demand purchasing volume number of customers customer concentration distribution buying nature buying influences negotiations reciprocity leasing and promotional methods.
Demand B2B demand is derived because businesses buy products based on how much demand there is for the final consumer product Businesses buy products based on customers wants and needs B2C demand is primarily because customers buy products based on their own wants and needs.
Purchasing volume Businesses buy products in large volumes to distribute to consumers Consumers buy products in smaller volumes suitable for personal use.
Number of customers There are relatively fewer businesses to market to than direct consumers
Customer concentration Businesses that specialize in a particular market tend to be geographically concentrated while customers that buy products from these businesses are not concentrated
Distribution B2B products pass directly from the producer of the product to the business while B2C products must additionally go through a wholesaler or retailer
Buying nature B2B purchasing is a formal process done by professional buyers and sellers while B2C purchasing is informal4
Buying influences B2B purchasing is influenced by multiple people in various departments such as quality control accounting and logistics while B2C marketing is only influenced by the person making the purchase and possibly a few others
Negotiations In B2B marketing negotiating for lower prices or added benefits is commonly accepted while in B2C marketing particularly in Western cultures prices are fixed
Reciprocity Businesses tend to buy from businesses they sell to For example a business that sells printer ink is more likely to buy office chairs from a supplier that buys the businesss printer ink In B2C marketing this does not occur because consumers are not also selling products
Leasing Businesses tend to lease expensive items while consumers tend to save up to buy expensive items4
Promotional methods In B2B marketing the most common promotional method is personal selling B2C marketing mostly uses sales promotion public relations advertising and social media
Main article History of marketingOrientations or philosophies that inform marketing practice
A marketing orientation has been defined as a philosophy of business management5 or a corporate state of mind29 or as an organisational culture30 Although scholars continue to debate the precise nature of specific orientations that inform marketing practice the most commonly cited orientations are as follows.
A firm employing a product orientation is mainly concerned with the quality of its product A product orientation is based on the assumption that all things being equal consumers will purchase products of superior quality The approach is most effective when the firm has deep insights into customer needs and desires as derived from research or intuition and understands consumers quality expectations and price consumers are willing to pay Although the product orientation has largely been supplanted by the marketing orientation firms practicing a product orientation can still be found in haute couture and arts marketing.
Further information History of marketing and Selling orientation
A sales orientation focuses on the sellingpromotion of the firms existing products rather than developing new products to satisfy unmet needs or wants This orientation seeks to attain the highest possible sales through promotion and direct sales techniques34 The sales orientation is typically practiced with unsought goods35 One study found that industrial companies are more likely to hold a sales orientation than consumer goods companies36 The approach may also suit scenarios in which a firm holds dead stock or otherwise sells a product that is in high demand with little likelihood of changes in consumer tastes diminishing demand.
A 2011 meta analyses37 found that the factors with the greatest impact on sales performance are a salespersons sales related knowledge knowledge of market segments sales presentation skills conflict resolution and products degree of adaptiveness changing behavior based on the aforementioned knowledge role clarity salespersons role is expressly to sell cognitive aptitude intelligence and work engagement motivation and interest in a sales role.
Further information History of marketingProduction orientation
A firm focusing on a production orientation specializes in producing as much as possible of a given product or service in order to achieve economies of scale or economies of scope A production orientation may be deployed when a high demand for a product or service exists coupled with certainty that consumer tastes and preferences remain relatively constant similar to the sales orientation The socalled production era is thought to have dominated marketing practice from the 1860s to the 1930s but other theorists argue that evidence of the production orientation can still be found in some companies or industries Specifically Kotler and Armstrong note that the production philosophy is one of the oldest philosophies that guides sellers and is still useful in some situations.
Further information Market orientation
The marketing orientation is the most common orientation used in contemporary marketing It is a customercentric approach that involves a firm basing its marketing program around products that suit new consumer tastes Firms adopting a marketing orientation typically engage in extensive market research to gauge consumer desires use RD ResearchDevelopment to develop a product attuned to the revealed information and then utilize promotion techniques to ensure consumers are aware of the products existence and the benefits it can deliver39 Scales designed to measure a firms overall market orientation have been developed and found to be robust in a variety of contexts.
The marketing orientation has three prime facets which are
Customer orientation A firm in the market economy can survive by producing goods that people are willing and able to buy Consequently ascertaining consumer demand is vital for a firms future viability and even existence as a going concern.
Organizational orientation The marketing department is of prime importance within the functional level of an organization Information from the marketing department is used to guide the actions of a companys other departments.
As an example a marketing department could ascertain via marketing research that consumers desired a new type of product or a new usage for an existing product With this in mind the marketing department would inform the RD department to create a prototype of a productservice based on consumers new desires.
The production department would then start to manufacture the product while the marketing department would focus on the promotion distribution pricing etc of the product Additionally a firms finance department would be consulted with respect to securing appropriate funding for the development production and promotion of the product Finance may oppose the required capital expenditure since it could undermine a healthy cash flow for the organization.
Mutually beneficial exchange In a transaction in the market economy a firm gains revenue which thus leads to more profits market shares or sales A consumer on the other hand gains the satisfaction of a needwant utility reliability and value for money from the purchase of a product or service.
Main article Societal marketing
A number of scholars and practitioners have argued that marketers have a greater social responsibility than simply satisfying customers and providing them with superior value Marketing organizations that have embraced the societal marketing concept typically identify key stakeholder groups such as employees customers and local communities Companies that adopt a societal marketing perspective typically practice triple bottom line reporting whereby they publish social impact and environmental impact reports alongside financial performance reports Sustainable marketing or green marketing is an extension of societal marketing.
The Marketing Mix
Main article Marketing mix
A marketing mix is a foundational tool used to guide decision making in marketing The marketing mix represents the basic tools that marketers can use to bring their products or services to the market They are the foundation of managerial marketing and the marketing plan typically devotes a section to the marketing mix.
The traditional marketing mix refers to four broad levels of marketing decision namely product price promotion and place642
The 4Ps of the marketing mix stand for product price place and promotion.
One version of the marketing mix is the 4Ps method
The product aspects of marketing deal with the specifications of the actual goods or services and how it relates to the endusers needs and wants The product element consists of product design new product innovation branding packaging labeling The scope of a product generally includes supporting elements such as warranties guarantees and support Branding a key aspect of the product management refers to the various methods of communicating a brand identity for the product brand or company.
This refers to the process of setting a price for a product including discounts The price need not be monetary it can simply be what is exchanged for the product or services eg time energy or attention or any sacrifices consumers make in order to acquire a product or service The price is the cost that a consumer pays for a productmonetary or not Methods of setting prices are in the domain of pricing science.
Place or distribution
This refers to how the product gets to the customer the distribution channels and intermediaries such as wholesalers and retailers who enable customers to access products or services in a convenient manner This third P has also sometimes been called Place or Placement referring to the channel by which a product or service is sold eg online vs retail which geographic region or industry to which segment young adults families business people etc also referring to how the environment in which the product is sold in can affect sales.
This includes all aspects of marketing communications advertising sales promotion including promotional education public relations personal selling product placement branded entertainment event marketing trade shows and exhibitions This fourth P is focused on providing a message to get a response from consumers The message is designed to persuade or tell a story to create awareness.
One of the limitations of the 4Ps approach is its emphasis of an inside outview 45 An insideout approach is the traditional planning approach where the organisation identifies its desired goals and objectives which are often based around what has always been done Marketings task then becomes one of selling the organizations products and messages to the outside or external stakeholders43 In contrast an outsidein approach first seeks to understand the needs and wants of the consumer46
From a modelbuilding perspective the 4 Ps has attracted a number of criticisms Welldesigned models should exhibit clearly defined categories that are mutually exclusive with no overlap Yet the 4 Ps model has extensive overlapping problems Several authors stress the hybrid nature of the fourth P mentioning the presence of two important dimensions communication general and informative communications such as public relations and corporate communications and promotion persuasive communications such as advertising and direct selling Certain marketing activities such as personal selling may be classified as either promotion or as part of the place ie distribution element47 Some pricing tactics such as promotional pricing can be classified as price variables or promotional variables and therefore also exhibit some overlap.
Other important criticisms include that the marketing mix lacks a strategic framework and is therefore unfit to be a planning instrument particularly when uncontrollable external elements are an important aspect of the marketing environment.
Modifications and extensions
To overcome the deficiencies of the 4P model some authors have suggested extensions or modifications to the original model Extensions of the four Ps are often included in cases such as services marketing where unique characteristics ie intangibility perishability heterogeneity and the inseparability of production and consumption warrant additional consideration factors Other extensions have been found necessary for retail marketing industrial marketing and internet
marketing include people process and physical evidence and are often applied in the case of services marketing49 Other extensions have been found necessary in retail marketing industrial marketing and internet marketing
Physical the environment customers are in when they are marketed to
People service personnel and other customers with whom customers interact with These people form part of the overall service experience
Process the way in which orders are handled customers are satisfied and the service is delivered50
Physical Evidence the tangible examples of marketing that the customer has encountered before buying the advertised product
Productivity the ability to provide consumers with quality product using as few resources as possible51
In response to environmental and technological changes in marketing as well as criticisms towards the 4Ps approach the 4Cs has emerged as a modern marketing mix model
Consumer or Client
The consumer refers to the person or group that will acquire the product This aspect of the model focuses on fulfilling the wants or needs of the consumer 7
Cost refers to what is exchanged in return for the product Cost mainly consists of the monetary value of the product Cost also refers to anything else the consumer must sacrifice to attain the product such as time or money spent on transportation to acquire the product 7
Like Place in the 4Ps model convenience refers to where the product will be sold This however not only refers to physical stores but also whether the product is available in person or online The convenience aspect emphasizes making it as easy as possible for the consumer to attain the product thus making them more likely to do so 7
Like Promotion in the 4Ps model communication refers to how consumers find out about a product Unlike promotion communication not only refers to the oneway communication of advertising but also the twoway communication available through social media 7
Main article Market environment
The term marketing environment relates to all of the factors whether internal external direct or indirect that affect a firms
marketing decisionmakingplanning A firms marketing environment consists of three main areas which are:
The macroenvironment over which a firm holds little control
The microenvironment over which a firm holds a greater amount though not necessarily total control
The internal environment which includes the factors inside of the company itself.
Main article Macromarketing
A firms marketing macroenvironment consists of a variety of external factors that manifest on a large or macro scale These include factors that are:
A common method of assessing a firms macroenvironment is via a PESTLE Political Economic Social Technological Legal Ecological analysis Within a PESTLE analysis a firm would analyze national political issues culture and climate key macroeconomic conditions health and indicators such as economic growth inflation unemployment etc social trendsattitudes and the nature of technologys impact on its society and the business processes within the society.
A firms microenvironment comprises factors pertinent to the firm itself or stakeholders closely connected with the firm or
A firms microenvironment typically spans
In contrast to the macroenvironment an organization holds a greater though not complete degree of control over these factors.
A firms internal environment consists of factors inside of the actual company These are factors controlled by the firm and they affect the relationship that a firm has with its customers These include factors such as
Main article Marketing research
Marketing research is a systematic process of analyzing data that involves conducting research to support marketing activities and the statistical interpretation of data into information This information is then used by managers to plan marketing activities gauge the nature of a firms marketing environment and to attain information from suppliers A distinction should be made between marketing research and market research Market research involves gathering information about a particular target market As an example a firm may conduct research in a target market after selecting a suitable market segment In contrast marketing research relates to all research conducted within marketing Market research is a subset of
Marketing researchers use statistical methods such as quantitative research qualitative research hypothesis tests Chisquare tests linear regression correlation coefficients frequency distributions Poisson and binomial distributions etc to interpret their findings and convert data into information.
The stages of research include
Define the problem
Main article Market segmentation
Market segmentation consists of taking the total heterogeneous market for a product and dividing it into several submarkets or segments each of which tends to be homogeneous in all significant aspects10 The process is conducted for two main purposes better allocation of a firms finite resources and to better serve the more diversified tastes of contemporary consumers A firm only possesses a certain amount of resources Thus it must make choices and appreciate the related costs in servicing specific groups of consumers Moreover with more diversity in the tastes of modern consumers firms are noting the benefit of servicing a multiplicity of new markets.
Market segmentation can be defined in terms of the STP acronym meaning Segment Target and Position
Segmentation involves the initial splitting up of consumers into persons of like needswantstastes Commonly used criteria
Geographic such as a country region city town
Psychographic eg personality traits or lifestyle traits which influence consumer behaviour
Demographic eg age gender socioeconomic class education
LifeCycle eg Baby Boomer Generation X Millennial Generation Z
Lifestyle eg tech savvy active
Behavioural eg brand loyalty usage rate
Once a segment has been identified to target a firm must ascertain whether the segment is beneficial for them to service The DAMP acronym is used as criteria to gauge the viability of a target market The elements of DAMP are
Discernablehow a segment can be differentiated from other segments
Accessiblehow a segment can be accessed via Marketing Communications produced by a firm
Measurablecan the segment be quantified and its size determined
Profitablecan a sufficient return on investment be attained from a segments servicing
The next step in the targeting process is the level of differentiation involved in a segment serving Three modes of differentiation exist which are commonly applied by firms These are
Undifferentiatedwhere a company produces a like product for all of a market segment
Differentiatedin which a firm produced slight modifications of a product within a segment
Niche in which an organization forges a product to satisfy a specialized target market
Positioning concerns how to position a product in the minds of consumers and inform what attributes differentiate it from the competitors products A firm often performs this by producing a perceptual map which denotes similar products produced in the same industry according to how consumers perceive their price and quality From a products placing on the map a firm would tailor its marketing communications to meld with the products perception among consumers and its position among competitors offerings.
Integrated marketing communications and Promotional mix
The promotional mix outlines how a company will market its product It consists of five tools personal selling sales promotion public relations advertising and social media.
Main article Personal selling
Personal selling involves an oral presentation given by a salesperson who approaches an individual or a group of potential customers Personal selling allows for twoway communication and relationship building that can aid both the buyer and the seller in their goals Personal selling is most commonly seen in businesstobusiness marketing eg selling machinery to a factory selling paper to a print shop but it can also be found in businesstoconsumer marketing eg selling cars at a dealership.
Main article Sales promotion
Sales promotion involves shortterm incentives to encourage the buying of products Examples of these incentives include
Depending on the incentive one or more of the other elements of the promotional mix may be used in conjunction with sales promotion to inform customers of the incentives.
Main article Public relations
Public relations is the use of media tools to promote a positive view of a company or product in the publics eye Public relations monitors the public opinion of a company or product and generates publicity to either sustain a positive opinion or lessen or change a negative opinion.
Public relations can include interviews speechespresentations corporate literature social media news releases and special events.
Advertising occurs when a firm directly pays a media channel to publicize its product Common examples of advertising include
Direct mail ads
Main article Social media marketing
Social media is used to facilitate twoway communication between companies and their customers Social media outlets such as Facebook Twitter Tumblr Pinterest Snapchat and YouTube allow brands to start a conversation with regular and prospective customers Viral marketing can be greatly facilitated by social media and if successful allows key marketing messages and content in reaching a large number of target audiences within a short time frame Additionally social media platforms can also house advertising and public relations content.
The Marketing Plan
Main article Marketing plan
The area of marketing planning involves forging a plan for a firms marketing activities A marketing plan can also pertain to a specific product as well as to an organizations overall marketing strategy An organizations marketing planning process is derived from its overall business strategy Thus when top management are devising the firms strategic directionmission the intended marketing activities are incorporated into this plan.
Within the overall strategic marketing plan the stages of the process are listed as thus:
SWOT Strengths Weaknesses Opportunities Threats Analysis
Targeted Marketing Strategy
Levels of marketing objectives within an organization
As stated previously the senior management of a firm would formulate a general business strategy for a firm However this general business strategy would be interpreted and implemented in different contexts throughout the firm
At the corporate level marketing objectives are typically broadbased in nature and pertain to the general vision of the firm in the short medium or longterm As an example if one pictures a group of companies or a conglomerate top management may state that sales for the group should increase by 25 over a tenyear period.
A strategic business unit SBU is a subsidiary within a firm which participates within a given marketindustry The SBU would embrace the corporate strategy and attune it to its own particular industry For instance an SBU may partake in the sports goods industry It thus would ascertain how it would attain additional sales of sports goods in order to satisfy the overall
The functional level relates to departments within the SBUs such as marketing finance HR production etc The functional level would adopt the SBUs strategy and determine how to accomplish the SBUs own objectives in its market To use the example of the sports goods industry again the marketing department would draw up marketing plans strategies and communications to help the SBU achieve its marketing aims.
Product life cycle
Further information Product lifecycle management marketing
The product life cycle PLC is a tool used by marketing managers to gauge the progress of a product especially relating to
sales or revenue accrued over time The PLC is based on a few key assumptions including
A given product would possess introduction growth maturity and decline stage
No product lasts perpetually on the market
A firm must employ differing strategies according to where a product is on the PLC
In the introduction stage a product is launched onto the market To stimulate the growth of salesrevenue use of advertising may be high in order to heighten awareness of the product in question.
During the growth stage the products salesrevenue is increasing which may stimulate more marketing communications to sustain sales More entrants enter into the market to reap the apparent high profits that the industry is producing
When the product hits maturity its starts to level off and an increasing number of entrants to a market produce price falls for the product Firms may use sales promotions to raise sales.
During decline demand for a good begins to taper off and the firm may opt to discontinue the manufacture of the product This is so if revenue for the product comes from efficiency savings in production over actual sales of a goodservice However if a product services a niche market or is complementary to another product it may continue the manufacture of the product despite a low level of salesrevenue being accrued.