What is Marketing, after all?

The Business Mindset

 

Marketing is a fundamental concept in business that plays a crucial role in the growth of any company, regardless of its size or area of expertise. In today's world, marketing involves selling products, building brand awareness, and establishing lasting and profitable customer relationships. Entrepreneurs who understand the power of marketing can grow their businesses exponentially, while those who don't will struggle to survive.

For these reasons, marketing is a term often used in the business world. However, you may be surprised to learn that marketing encompasses more than advertising or selling products. It includes a broader set of activities, from market research to product distribution.

Marketing also includes defining product strategy, customer relationship efforts, brand management, new product and service development, pricing, sales promotion, and more. Thus, marketing involves more than just advertising; it is an integrated approach to planning, developing, and implementing strategies that help achieve a company's marketing objectives.

This provides us with a more accurate marketing idea, but one question remains: how can we define it formally?

The Definition of Marketing

How can marketing be defined? Marketing refers to creating, promoting, and delivering customer products or services. It involves identifying customers' needs and wants to develop pricing strategies and create promotional content. 

Marketing isn't just for businesses; nonprofits and individuals can use marketing techniques. Effective marketing can benefit anything that needs persuasion and promotion.

More specific terms define marketing in various ways, which have been proposed over time by professors, consultants, and professional associations. Searching the internet reveals hundreds of definitions. However, two definitions warrant attention: one from the American Marketing Association (AMA) and the other from professors Philip Kotler and Gary Armstrong. Let's begin with the first.

The AMA is the best-known professional marketing organization in the world. Founded in the 1950s, it relies on the active participation of professionals who have made and continue to make a difference in marketing. Additionally, the AMA publishes two of the most important academic journals in the field: the Journal of Marketing and the Journal of Marketing Research. Some articles published in these journals have profoundly changed how we think and practice marketing, shaping much of what is taught and done today.

Among its duties, the AMA enhances the definition of marketing. The organization revises this definition every three years to keep it current. The last revision was from 2017, defining marketing as follows:

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.

Three aspects of this definition deserve our attention.

First, it treats marketing as an activity. In the managerial environment, we operate under the idea that companies and organizations continuously perform three levels of action:

1. Tasks;

2. Activities;

3. Processes.

Tasks are basic actions that are very specific. For example, when you want to create an image post for Instagram, you start by selecting a group of images related to your message. This selection process is considered a task.

Activities are actions at a higher level than tasks. We can define them as groups of tasks performed around a purpose. Returning to the previous example, after choosing an image, you will edit it to enhance its appearance. Now, you have completed an activity consisting of selecting images, choosing one, and editing it.

Processes represent the highest level of activity within companies or organizations. They comprise sets of actions performed to achieve specific goals and objectives. Each action taken contributes to the overall process. In our example, after editing the selected image, you will initiate the necessary tasks to create your desired post, including new activities.

Returning to the definition of marketing, when the AMA states that it is an activity, it consists of continuous actions not restricted to obtaining results. Of course, every initiative needs to guide the company or organization to achieve the desired results. Still, the AMA points out that this is just one part of marketing.

The definition also states that it is a set of institutions. This means marketing relies on tools, practices, approaches, and mechanisms developed over time. Among these institutions, there are many well-known universities, companies, and organizations, such as the marketing mix (price, place, promotion, and product), tools for relationship marketing, and models for measuring consumer satisfaction, such as ACSI (American Customer Satisfaction Index) and ECSI (European Customer Satisfaction Index), among others. If you want to learn more about these last two, I have published an article comparing both, highlighting their importance for effective marketing management. You can read the article for free and in full by clicking here.

The third aspect of the AMA definition indicates that marketing is a set of processes. We have already learned what a process is and can apply that understanding to better comprehend that part of the definition. The marketing function must be paired with processes to become useful for managers of companies and organizations. For instance, we can consider an example of a marketing process: studying customer behavior. This allows the organization or company to offer the appropriate product for each type of customer.

The definition of marketing emphasizes creating, communicating, delivering, and exchanging offers to customers. At this point, the AMA highlights the purpose of offering-centric marketing. This term does not mean merely placing discounted products on the market. An offering, in marketing terms, includes a value proposition. The product – whether a physical good or service – must meet the demands of target customers. However, it is insufficient to create an offering that meets this requirement; it must be effectively communicated and delivered to its recipient. Additionally, there should be opportunities for exchanging offerings, enhancing the benefits for companies and organizations.

Therefore, an offering is valuable when it meets the wants and needs of the target audience. However, the offering cannot be just any kind; it must provide value for consumers, customers, partners, and society at large. Offerings connected to this purpose often result in low sales and significant losses for companies and organizations.

These general aspects are essential, but the AMA's definition implies a specific point that needs to be addressed: it is not enough to create value. It is necessary to communicate it—through advertising and honest marketing—and deliver it to the client. This last point is fascinating. Many organizations and companies offer products that seemingly generate value for the customer. Still, they make it challenging to deliver this value, leaving that same customer feeling aggrieved in their rights. Many complaints lodged with the country's PROCONs and lawsuits against organizations indicate how much they fail to deliver value to their customers. The definition of the AMA is detailed. Still, if we pay attention, it highlights many similar terms. A second definition is vital to us. It states that marketing is:

The process by which companies engage customers, build strong customer relationships, and create customer value to capture value from customers in return.

This definition is from one of the world's most widely used introductory books: "Principles of Marketing," written by Philip Kotler and Gary Armstrong. Professor Kotler is legendary in the field; a professor at the Kellogg School of Management, one of the best in the world, he has written books and academic articles considered references in marketing. It is no wonder that, to date, Professor Kotler is on the list of the five most influential personalities in the managerial world. The definition used by him and Gary Armstrong in their book summarizes all the aspects addressed by the AMA in a more direct and easy-to-understand way. They reaffirm that marketing is a process, a set of tasks and activities that revolve around purposes established by the managers of companies and organizations.

Marketing aims to create customer value by presenting suitable offers to meet their needs. According to Kotler and Armstrong, a company creates value for customers when it provides a product—either a physical good or a service—whose price reflects the value perceived by the customer. Thus, it is ineffective for an organization to claim its products offer more value, as it is the customer who defines this!

Kotler and Armstrong's definition shows that marketing involves managing customer relationships, a critical yet often overlooked point. How many companies and organizations are known for their poor customer service? Worse, many don't seem to care about it at all.

Kotler and Armstrong's definition highlights the need for ethical marketing that avoids lying, deceit, and falsehood. Managers should remember that the customer relationship should benefit the organization and its stakeholders. This means the organization must have a broad view of its market performance. For instance, it cannot profit substantially from a product that harms the environment. Such actions would hurt its stakeholders. Therefore, every organization must be vigilant about any harmful consequences of its marketing practices.

The Importance of Marketing in Business

Marketing is vital for any business because it helps increase sales revenue, build brand awareness, and develop long-term customer relationships. Effective marketing strategies allow companies to reach a wider audience locally and globally.

For example, you need excellent marketing skills to attract potential buyers worldwide if you run an online store selling handmade decorative objects. Effective social media advertising campaigns combined with SEO optimization techniques on your website can reach thousands of people who may be interested in buying your products.

Additionally, effective marketing enables companies to outpace competitors by establishing themselves as market leaders. This cultivates trust among potential customers who view your brand as reliable, increasing the likelihood of choosing your product over competitors. Ineffective marketing strategies often signal that businesses need help attracting and retaining new customers.

In short, marketing is the foundation of any successful business and should be a central focus for every business owner. By understanding its importance, companies can establish themselves as relevant players in their respective industries.