Marketing Mondays: What Is Marketing?

marketing-101

In today’s Marketing Mondays post, we’re going to answer the question: what is marketing? Let’s start with a few definitions by some reasonable sources:

“Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” American Marketing Association

“Marketing are activities of a company associated with buying and selling a product or service. It includes advertising, selling and delivering products to people. People who work in marketing departments of companies try to get the attention of target audiences by using slogans, packaging, design, celebrity endorsements and general media exposure. The four ‘Ps’ of marketing are product, place, price and promotion.” Investopedia.com

“The management process through which goods and services move from concept to the customer. It includes the coordination of four elements called the 4 P’s of marketing: (1) identification, selection and development of a product, (2) determination of its price, (3) selection of a distribution channel to reach the customer’s place, and (4) development and implementation of a promotion strategy.” — BusinessDictionary.com

“Marketing is about aligning a firm’s activities with its customers so as to produce mutually beneficial exchanges. The basic idea is to create value for customers and allow the firm to extract a portion of it. This includes tactical elements such as product or service design, pricing, communications, and go-to-market decisions. It also includes the evaluation of opportunities and threats in relation to the firm’s current capabilities and the selection of desirable product-markets and product positioning therein. This latter role of marketing automatically feeds into the firm’s strategic direction. Hence, marketing is best seen as a general management responsibility and not solely the purview of a functional area within the firm.” — from a MBA marketing management syllabus

Yep, no wonder people are confused about marketing…

My point of view most closely aligns with that of the syllabus above and that of Peter Drucker, the founder of modern management: “Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation.” Marketing is at the core of business, and it is not owned solely by the marketing function within an organization. Thus, one could argue that a great marketer is a great business strategist and general manager. Jack Welch, Kevin Plank, Bob Iger, A.G. Lafley, Satya Nadella: great marketers. Furthermore, one could argue that great a entrepreneur is a great marketer. Steve Jobs, Richard Branson, Ted Turner, Elon Musk, Travis Kalanick, Brian Chesky, Marco Zappacosta: all great marketers.

FourPs

In fact, if we’re going by the Four Ps (product, price, place and promotion) the marketing organization is typically only responsible for promotion, and they partner with other functional groups in the organization on product, price and place. And, of course, these responsibilities depend on the industry, stage and organizational structure of the firm.

PRODUCT

In an engineering-led culture/firm (think biotech and manufacturing industries like medical device and auto) product is typically handled by the R&D (research and development) team. In a tech firm (think internet companies), product is typically led by an actual product team with “product marketers” or “project/program managers” leading a team of developers and engineers, whereas at a consumer packaged goods company (think Proctor & Gamble or PepsiCo), product is typically led by an innovation team and a “brand manager”.

Where ever the product responsibility lies within the organization, the purpose is to identify an unmet customer need and to design a product (product, service, solution, process) that solves that customer need. This sometimes works in reverse, such as in healthcare (medical research) or engineering-led companies with R&D teams: a new technology/innovation arises, and the marketer’s job is to identify a customer that would find value in that product.

Finally, often times, product starts with the corporate strategy or corporate development team. This team is responsible for long-term strategy for the organization, evaluating and deciding where the company should move to stay competitive. Often times, this involves identifying new product opportunities and deciding whether or not the company has the intellectual and human capital to build that new product, or if it needs to acquire that product/capability. This gets us into M&A (mergers and acquisitions). Take Verizon as an example in recent events. Their acquisition of AOL and their bid for Yahoo! is because of a long-term strategy to become vertically integrated. They have the infrastructure of the largest and fastest mobile network in the U.S. with Verizon Wireless. With AOL, Verizon acquired advertising technology that they can use to deliver more personalized advertising experiences to their mobile customer base, and content in which to serve those ads. Yahoo! adds to that library of content. Instead of building ad tech and the capability to create content internally, they bought the tech and capability. Verizon becomes vertically integrated in offering products along the value chain of mobile infrastructure and devices, delivering valuable content to consumers and serving personalized advertising to drive more revenue from brands. Microsoft’s acquisition of Linkedin follows the same logic. Microsoft and Linkedin share a global customer base of enterprises and professionals. They can provide more value to those customers by integrating their products vs. serving their customers separately.

PRICE

Pricing strategy is critical to maximizing revenues across a spectrum of customers willing to pay for products at different price points. The obvious example here is Apple vs. its competitors – whether that be in desktop/laptop or mobile devices. Apple is positioned as a premium product, offering its products at higher price points (e.g. basic MacBooks sell for more than basic HPs or other PC makers’ devices, and the iPhone sells for more than Android phones). Apple may sell less products because less consumers can afford their products, but they achieve higher margins and cash in the bank. Apple competitors have to make up the revenue and profit gap in volume – selling more devices to more consumers, but at lower margins.

Price too can be led by a variety of functions. Finance plays a key role whether it be directly in the finance functional team (under the chief financial officer), or embedded within a corporate strategy/development team or marketing team.

PLACE

Place is all about getting the product to the right customers in the right channels. SaaS (software as a service) businesses have this easy. Their products are readily available to customers via the internet (think companies like Dropbox, Box and Slack). E-commerce companies also offer customers easy access to browsing, researching and purchasing physical products via the internet, while managing less overhead (think Amazon.com). Whereas retail companies that have physical locations (think Walmart) have to manage higher overhead costs of their retail locations and staff. The internet has dramatically changed this landscape over the last two decades. Responsibility for product placement can range as well, from marketing to business development to sales teams.

PROMOTION

This is what most people think about when they hear marketing. It sits within the marketing function under the CMO (chief marketing officer) and is focused on communications across an array of channels to build awareness and equity for a brand and promote the sale of its product(s). This is where advertising and public relations (at least the promotional side of PR) comes into play. I’d argue that it’s the loudest crowd and most visible marketing function. The rise of the internet, social networks and mobile devices has also dramatically evolved this landscape – especially over the last decade. Marketing promotion disciplines have become increasingly fragmented and specialized across traditional (TV, radio, print, outdoor), digital (.com, CRM, display, SEO/M) and social (Facebook, Twitter, YouTube, SnapChat, etc.) media channels. Marketers practicing in this space are drowning in a sea of channels, technologies and newly available customer data.

Through this Marketing Mondays series, I’ll touch on marketing across the Four Ps, but expect that I’ll spend more time on the promotion area, given the level of complexity and confusion that exists in the communications landscape. I’ll also bring in other frameworks beyond the Four Ps, case studies, current events, new technologies and practices as those opportunities arise.

KEY TAKEAWAYS

  • Marketing is not restricted to the functional marketing team or to communications alone
  • Marketing is about the core business, and spans organizational functional areas
  • Great marketing requires a high level of collaboration across these organizational functional areas
  • A great general manager is a great marketer
  • A great entrepreneur is a great marketer

 

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