All business organizations perform certain basic functions namely: Production and marketing of goods, services, or ideas. Since it is practically impossible for people to provide all they need in the process of living, thus bringing about the need for exchange of goods and services between individuals.
Defining Marketing
Going through the extant literature in marketing, one will appreciate the fact, that like any other Social and Management Science discipline, there are many definitions and understanding of the subject of marketing as there are writers of marketing.
The reason being that the background and knowledge of marketing leaned from cognate disciplines such as Psychology, Sociology, Economics, Management Sciences and so on. Each defining and explaining Marketing from the domain of their discipline.
According to the American Marketing Association, “Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services to create exchanges that satisfy individual and organization objectives (1991) defined Marketing as “consisting of individual and organizational activities that facilitate and expedite satisfying exchange relationship in a dynamic environment through the creation, distribution, promotion, and pricing of goods, services, and ideas.”
The UK Chartered Institute of Marketing defined Marketing as the management process responsible for identifying, anticipating and satisfying consumer’s requirement, profitability. According to Kotlers & Armstrong (1987) marketing is a set of human activities directed at facilitating and consummating exchanges.
A commonly cited of all these definitions is that offered by McCarthy and Perreault (1984) in which marketing was defined at both the micro level and macro level.
Micro marketing is the performance of activities which seek to accomplish an organisation’s objectives by anticipating customer’s or client’s needs and directing flow of need satisfying goods and services from producer to customer or clients, macro, few of good and services from producers to consumers in a way which effectively matches marketing on the other hand, is a social process which directs an economy’s supply and demand, and accomplishes the objectives of society, Implied in all these definitions are the concepts like needs and wants, products, exchange, and Marketing.
(a) Need – is that state of feeling of deprivation.
(b) Want – this is a need that is shaped by a person’s culture, knowledge, and individual characteristics.
(c) Product – this implies anything that can satisfy a need that is offered to a market.
(d) Exchange – this is the art of taking something by giving something in return.
(e) Market – this is a set of actual and potential users of a product
Functions of Marketing
Marketing performs eight basic functions namely: buying function, selling function, transportation, storage, standardization and grading. Financing, Risk taking and Marketing Information.
1. Buying Function
This function could be performed by the manufacturer, whole sale, or the retailer and involves a number of activities likes.
(a) Determining the kinds of goods required
(b) Determining the quality and features of the goods
(c) Determining the quantity of goods required.
(d) Selecting proper source of supply
2. Setting Functions
The purpose of marketing is to create possession utility. It involves the creation of demand, finding of buyers, and ensuring exchange.
3. Transportation Function
Marketing bridges the map between the producer and the customers. This is much more appreciated nowadays in the face of international business.
4. Storage
Marketing ensure even distribution of products all the time by storing goods that are not consumed immediately till when they are needed.
5. Standardization and Grading
Marketing ensures that products conform to some specified grades and standards; products are as sorted according to the established standard.
6. Financing
Involves the provision of money and credits and management of such funds in order to get goods to the ultimate consumers or industrial users. This function ensures that the producer’s money is quickly recovered.
7. Risk Taking
Marketing assumes risks involved in the process of transferring of ownership title which is associated with storing like price changes, damages, obsolescence etc.
8. Marketing Information
Through marketing information, marketers are able to identify consumer’s need and consumers want in their products, how they want them, prices etc. and as well measure their satisfaction.
The Marketing Process
Marketing activities are centred on consumer satisfaction. It identifies and anticipates the needs and wants of the consumers and facilitates the goods and service that will satisfy such identified needs. It also makes sure that the goods and services reach the consumers and ensures that they are satisfied, figure I below clearly illustrates the process.
Identify Consumer’s Needs and Wants
The starting point of business activities is the consumer for whom the company produces. This involves the knowledge of the consumer (market) in terms of who buys the (Need Identification to Demand Analysis to Product Development to Physical Distribution to Production Marketing Communication and Exchange) product? (Actual buyers), who are the potential buyers? Where are they located? Why do they buy? What will be their reactions to the envisaged new product? What are their reactions to the existing substitutes? What do they want in their ideal products?
Demand Analysis
The knowledge of the consumer will aid the marketer in the markets demand analysis. It will aid the company in measuring and understanding the demand pattern of their envisaged product. Analysis in terms of the nature of demand, extent of demand, competition, and the skills of the firm in providing the product.
Product Development
The knowledge of the market situation will assist the marketer in advising the production department to develop the product incorporating most of the market suggestions. In some cases, a limited quantity may be produced for the purpose of market testing and test marketing.
But some companies choose to go straight into production without market testing of test marketing. At the point of market testing, customers are invited to express their opinion about the new product.
Market testing may make further changes in the products necessary before it is finally into the market in test marketing products are introduced into limited sectors’ of the market for sale to further check on the consumers’ attitudes towards it before it is introduced nation wide.
Production
Having developed the product and market tested, or even test marketed, the next task is the full-scale production of the product.
Organizational resources are pooled and thus channeled toward the production of the product. Marketing plays a very passive role at this stage since it has so far gathered information and has assisted the production department in the development of the product.
Marketing Communication
After developing the product, the next stage in the marketing process is the communication of the product to the consumer. At this stage, marketing develops a promotional programme aimed at informing and persuading the target consumers to buy the product.
This is achieved through the use of promotions-promotion mix advertising, sales promotion, personal selling, publicity and public relations. The consumers are informed of the existence of the product its usefulness, and perhaps the places they can be bought. They are as such persuaded to buy.
Physical Distribution and Exchange
Having informed the customers of the existence of the product, the organisation ensures that the product is made available in places where consumers can have easy access to it of course, “consumption is a function of availability” Exchange is thereby facilitated whereby the product is exchange for the consumers, money. Possession utility is thereby effected. By this, consumer satisfaction is ensured.
Market Segmentation
Targeting and Positioning: Having identified market needs, a marketer needs to segment the market process of aggregating prospective buyers into groups that have common needs and as well will respond similarly to a marketing action, and as well choose a target market (market targeting) that is adjudged to posses the best potential in achieving the organisation objectives. The marketer can then take marketing action in terms of product, price, place and promotion, in satisfying the identified needs of the chosen segment(s)
Why Do We Segment?
Market segmentation is the process of forming or dividing market into segments or sub markets. A market segment is the groups that result from the process of market segmentation that (1) have common needs and (2) will respond similarly to a marketing action. A business firm segments its markets so it can respond more efficiently to the wants of prospective buyers and thus increase its sales and profit.
When Do We Segment?
A business firm undertakes the process of segmentation when this increases its sales revenue, profit, and return on investment (ROI).
How Do We Segment and Target Markets?
The process of market segmentation and targeting consist of five steps
namely:
1. Segment customers in the market
2. Group products to be hold
3. Develop a market-product grid and estimate market size
4. Select target on, which to focus effort
5. Develop and implement a marketing programme
However, when marketers are segmenting customers in the market, (step1), they ensure that such. segment(s) meet these five principal criteria.
1 There must be potential for increased profit and return on investment (ROI).
2 There must be similarity of needs of potential buyers within segment(s).
3 It must be easy to differentiate between the needs of buyers between the various segments.
4 There must be feasibility of a marketing action to reach the segment(s)
5 It must also be easy to recognise and assign potential buyers to segments.
If these criteria are not met, it is better not to segment at all. Similarly, when selecting target segments, marketers ensure that target segment(s) meet these five criteria víz:.
1. Size: The estimated size of the market must be large enough to be able to justify the firms marketing effort.
2. Expected growth: Though the present size of the market may be small, there should be a high potential for it to grow in the future
3. Competitive position: There should be minimal competition in the segment both now and in the future. The less the competition, the more attractive the segment.
4. Cost of reaching the segment: It should not be very expensive to reach the target segment. The cost should be low.
5. Compatibility with the firm’s objectives and resources: The requirement to serve the target market must be such that can easily be met with the firm’s resources and as such make it easy to achieve the firm’s objectives.
A segment that is very high on these attributes is the most attractive. The marketer then move on to take marketing actions. A marketing programme in terms of product, price, place and promotion. Once a company has decided which segments of the market it will enter, it must decided what positions it wants to occupy in those segments.
Product position is the way the product is defined by consumers on important attributes the place the product occupies in consumers’ minds relative to competing products.