Introduction to marketing
Hello everyone, Welcome to the topic of marketing on 7techniques.com. Now and in the future, we'll be discussing different techniques, elements, some amount of theory in some examples from the real world about marketing especially digital marketing.
What is marketing? After reading this whole article you will be able to understand the concept of marketing, value creation, communication, delivery, exchange, need, want and demand.
But before I start off with this whole topic, I would like to start off with a small definition of what marketing is, because it is important for us to understand what marketing is before we delve into details of how it is done in the digital space.
So I like to start off my article with this one central question. What is marketing? And it's very interesting. I get a large number of different answers to this one question. Most people think marketing is about advertising.
Like most of you, you would feel that it is about creating a lot of attentive, a lot of interesting advertisements so that you can entice customers to see and be interested in your products. Some other people feel that advertising is all about having a really motivated sales force. It is about making sure that there are people who are going to now sell your product and try to convince other customers to buy your product.
There are other people who feel that advertising and sales are of course there, but marketing is more importantly about understanding the needs of customers and then providing solutions to these needs, which can satisfy these customers.
Now marketing is all of these, but marketing is a little bit beyond what all of these things are. So marketing has a formal definition like any other discipline.
Definition of marketing
Marketing is the activities, set of institutions and processes that are involved in the creation, communication, delivery and exchange of offerings that have value for customers, clients, partners, and the society at large.
Let’s try to break this definition down
Now, I understand that it might be a little confusing definition at first. I'll try to break this definition down. Central to this entire definition of what marketing is is the concept of value. Now, this again is a question that is a follow-through to the question which I started off with, as to what marketing is?
Value, what do you understand value is? Value is central to all marketing decisions and all marketplace decisions.
Now, the definition of, or the conceptual understanding of what value is. Value is basically the net sum of all benefits and costs that a customer has to incur in order to have that offering.
Now, what do I mean by benefits and costs? There are different benefits that the customer gets by the consumption of a product.
Say, for example, you might be having a mobile phone with you right now. The mobile phone gives you a set of benefits. The first and most important benefit that you get from a mobile phone is the fact that you can communicate with your friends, your family members, and other people in your workspace and your colleges, and in other places that you go to. So communication is one benefit that you get.
Mobile phones today have other benefits as well. Say, for example, you have benefits such as watching, being able to watch a movie when you're sitting on the train, being able to play a game when you are not finding sleep, being able to find any sorts of entertainment at any point of time. This is again a benefit that the product gives you.
There are other services that come alongside a mobile phone. Say, for example, if your mobile phone fails to work one day, you have a service station where you can go to and give the mobile phone. It can be repaired very easily. So there are services that are provided to you as benefits and on top of all of that, there is a certain image that you get as somebody who's able to access and use a certain mobile phone.
Say, for example, if you are one of those people who are carrying a new generation, extremely flashy, extremely costly and premium mobile phone, your friends will look up to you and say that you are somebody who can afford such a phone. So it gives you a certain esteem benefit.
So there are different benefits that you can avail from the consumption of a product. There are of course product benefits, there are service benefits, and there are image benefits. So if you add up all of these benefits, you get the net sum of all the benefits that you get from the product.
Now in order to have all of these benefits, you also need to incur certain costs. What are the costs that you have to incur?
Of course, the first and most obvious cost that you have to incur is the cost that you have to pay in order to buy that device or the mobile phone as the example we were talking about. So this is basically the monetary cost that is involved.
Now apart from the monetary costs, there are other costs that you need to incur as well.
Say, for example, you don't have a shop or a place nearby your house where you get the mobile phone, so you have to travel, say a hundred kilometers to get access to such a device. Then there is travel cost that is involved. You don't know which mobile phone is the most appropriate for you. You might have to search for all the mobile phones that are out there. You might have to find out the different features and the different specifications of each of these devices before you go about and buy this phone. So there is a cost that you have to incur with respect to the time that you spend searching for information on that phone.
There are also other costs that are involved. Say, for example, you are letting go of certain other benefits that you could have had by spending money on this phone. So all of these costs can also be added up like we added up all the benefits and if you take the difference between all the benefits that you get and all the costs you had to incur in order to get these benefits, you get what is essentially called as value.
So benefits minus cost is what value is, and value is very central to all consumption decisions that we make and that is necessarily why we have this very famous quote, a very famous term that we use “value for money”. This is where we think about what is the offering, what is the product out there in the market that gives us the maximum value for the amount of money that we're giving. So value, like I defined to you, is central to what marketing is.
Now we take this value and we do four things with this value. The first of these things is the creation of this value. Now you would have understood by definition that to create value you basically have to define the benefits that the customer gets. And you also have to define the costs that the customer has to incur.
What is Value Creation?
So in order to create value, you have to create a product. Say, for example, we are talking still about the example of the mobile phone. You might have to create a mobile phone that customers can buy.
Now, creation of this mobile phone will incur all kinds of technology that goes into the mobile phone, the camera that goes into the mobile phone, the battery specifications that go into the mobile phone, the Android versus IOS versus other operating systems that are going to be used by the phone, the kind of services, the kind of warranty, all of these elements that are part of the offering that you're making.
You have to create all of these things. You will also have to put a price tag to this mobile phone or you will have to put a price tag to the offering that you're giving to the market. Thereby you are creating this value.
Many companies use internal resources to create this value. There might be research and development teams. There might be engineers who work in mobile phone companies who are creating value for customers. There might be expertise that is outsourced at times. So in many ways, marketers are involved in creating this value.
Now, when you're creating value, one important aspect that you have to always remember is that this value should be important for customers, who you are expecting to buy this product, and if this value has to be worthy enough for customers to buy it, then you basically have to ensure that the value that you create is in line with what the customers expect.
So that is where marketers are involved in understanding what are the needs and demands of customers. So that is about the creation of value.
What is communication?
Now, once you have created value, it is not just important for you to have created value and then just keep this value within the organization. You have to take this value out there to the customer and communicate this value to the customer.
There are different vehicles that we use to communicate all of this value to customers. One important element that we use and something that you all would be very familiar with is advertising. There are a lot of advertisements out there.
Same example, mobile phones, you might have seen that there are a lot of advertisements about mobile phones, some mobile phones advertise the fact that they have a great practical life. Some other mobile phones advertise the fact that they have extremely great camera quality. Some other mobile phones talk about the fact that they are durable and sturdy.
So, any of these value concepts or any of these elements of value that you have defined, you can take to the customer and communicate to the customer. So creation is the first element of what you do with this value. Communication is the next one.
What is delivery?
The third element is the delivery. Once you have created value in the format of a product or a service or an offering, you have to then communicate all of this value so that customers are aware of it. Once the customer becomes aware of the value that you're offering, the customer might be interested to come and acquire all of this value from you. The customer might be expecting to buy this mobile phone from certain places.
You have to ensure that there is a certain mechanism in place that will enable the customer to buy it from you. So you might have seen there are phones which are available on the online space. There are other phones which are available in electronic stores, near your house. There are also a lot of big department stores which carry mobile devices. So the marketer has to ensure that the delivery of all of this value is also planned properly. The place where the customer can come and buy this value from you is also to be defined properly. So that is where delivery of value happens.
What is the exchange?
And the last element is the exchange of value. There are a lot of things that you give to the customer. We defined the creation of value, communication of value and delivery of value, but there are a lot of valuable things that the customer has for you as well.
One of the most important things that you derive from the customer is money. As an exchange for the products and services that you offer to the customer, you have to get back money that is worthwhile for the benefits that you provide. So there is an exchange, involved there.
There are a lot of informational resources that the customer has. For example, do customers really like your product? Do customers actually feel that your mobile phone is worthy enough to suggest everything that it claims to have is really met? So you need to have a lot of feedback generated from customers.
You need to understand how the customer feels about your product as compared to a competitor’s product. So a lot of market research is also involved where you get back a lot of value from customers.
So creation, communication, delivery and exchange of value is what we are going to define first and this essentially is what marketing is all about.
So when we talk about advertising, it comes into a communication of value. When we talk about sales, it comes into the delivery of value. When we talk about understanding the needs of the customers and fulfilling them, it comes into the creation of value.
So every different aspect that you see is somewhere or the other related to this definition of what marketing is and then we not really do this for customers like you and me. There is marketing that happens in organizations that are involved in a business to business domain.
So that is where we call about marketing for clients. There are a lot of places where you have partners who are involved in business activities.
So that is where marketing gets involved in helping or providing value for partners. There are also a lot of organizations that do a lot of societal activities, a lot of NGOs out there, a lot of companies that are really involved in making the world a better place, who also use a lot of marketing techniques.
Okay, so now that we have understood the definition of marketing, we also have understood the concept of value, we will move further with other concepts that are relevant. The first and most important of these things is to understand how you're going to operationalize your marketing strategy for customers, and the most important thing here is to understand what the customer is looking for.
So next, we defined three broad things in order to explain what customers look for. The first of these elements is the concept of need. Then we'll discuss what wants are and thirdly, we'll discuss what is the demand, because all of these three terms are very closely linked with one another, but they have different meanings when it comes to the understanding and operationalization of what marketing is.
What is the need?
So, a need is what the customer has as a basic requirement. Say, for example, the customer can have both physiological and psychological needs. Hunger, for example, is a very basic need. Without food, you cannot survive, so when you feel hungry, we call that to be a very basic need, thirst or any other needs that are basically required for your survival are what we understand as needs.
What is the want?
Now, many times the customer knows that need can be fulfilled by different things. Say, for example, you can fulfill the need for hunger by eating Dosa, by eating a hamburger, by eating pizza, or by eating something even more expensive.
Now, each of these things that the customer knows can satisfy that basic need of hunger is what a want is.
So, when the customer can identify an offering that can satisfy basic needs, it becomes a want. Not all wants can be satisfied or fulfilled by customers. There might be customers who want a burger but can only afford a Dosa.
What is demand?
There might be customers who want to eat at a five-star restaurant but can only eat at a normal roadside vendor. So when the want is also accompanied by an ability to pay for that offering, we call it to be a demand.
So, needs are your basic necessities. Wants are the offerings that are available which you can direct or you can understand as being able to fulfill these needs, and demands are when these wants are also accompanied by an ability that the customer has, to pay for them.
So that is why the definition of marketing essentially talks about the set of activities, institutions, and processes that are involved in the creation, communication, delivery and exchange of offerings which have value for customers, clients, partners, and the society at large. So this essentially is what marketing is.
This article offered you a basic understanding of what marketing is, what value is, communication of value, delivery of value, exchange of value as well as an understanding of need, want and demand.
We will delve into details of each of these concepts and also delve into details of segmentation, targeting, positioning, marketing mix and we'll see how each of these concepts is relevant in the digital space in the next articles to come. So stay tuned.