What is Marketing?

When you consider the functional areas of business—accounting, finance, management, marketing, and operations—marketing is the one you probably know the most about. After all, as a consumer and target of all sorts of advertising messages, you’ve been on the receiving end of marketing initiatives for most of your life. What you probably don’t appreciate, however, is the extent to which marketing focuses on providing value to the customer. According to the American Marketing Association, “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.”^[1]

In other words, marketing isn’t just advertising and selling. Marketing encompasses every part of a plan to turn a prospective consumer into a happy and satisfied customer. It includes everything from market research to advertising. The goal of marketing is to convince a person that your product is worth investing in, establish brand loyalty and increase overall sales. It includes everything that organizations do to satisfy customer needs, including:

• Coming up with a product and defining its features and benefits
• Setting its price
• Identifying its target market
• Making potential customers aware of it
• Getting people to buy it
• Delivering it to people who buy it
• Managing relationships with customers after it has been delivered

Think about a typical business—a local movie theater, for example. It’s easy to see how the person who decides what movies to show is involved in marketing; they select the product to be sold. It’s even easier to see how the person who puts ads in the newspaper works in marketing; they are in charge of advertising—making people aware of the product and getting them to buy it. What about the ticket seller and the person behind the counter who gets the popcorn and soda or the projectionist? Are they marketing the business? Absolutely. The purpose of every job in the theater is satisfying customer needs, and as we’ve seen, identifying and satisfying customer needs is what marketing is all about. Marketing is a team effort involving everyone in the organization.

If everyone is responsible for marketing, can the average organization do without an official marketing department? Not necessarily: most organizations have marketing departments in which individuals are actively involved in some marketing-related activity—product design and development, pricing, promotion, sales, and distribution. As specialists in identifying and satisfying customer needs, members of the marketing department manage, plan, organize, lead, and control the organization’s overall marketing efforts.

Consumer Behaviour

Knowledge of consumer buying behaviour and the influences on the consumer’s buying decision are critical to effective marketing.

The consumer buying process involves five steps:

1. Need recognition (first you realize you need or want something)
2. Information search (depending on the item you may do a short search or extensive search)
3. Evaluation of Alternatives (hmm…you consider where you will buy the item, getting the best deal, best quality, meeting your needs, etc.)
4. Purchase or No Purchase Decision (maybe you buy, maybe you don’t at this time)
5. Post-purchase Evaluation (you consider whether you enjoy it, if it works as advertised or will you return it, telling others about your experience, etc.)

Consumer Decision-making

The five step consumer decision-making process is part of a broader environmental context that influences each step. Effective marketing attempts to help consumers with their information search and the evaluation of alternatives, but there are other major influences on a consumer’s buying decision. These influences are listed below:

• Socio-cultural Influences: Culture, subculture, social class, family, and peers.
• Psychological Influences: Motivation, perception, attitudes, and learning.
• Situational Influences: Physical and social surroundings, type of product purchased.
• Personal Influences: Age, economic situation, lifestyle, and personality.
• Marketing Mix Influences: Product, price, place, and promotion.

The Marketing Concept

The marketing concept is a business philosophy where the organization’s goals are achieved by identifying customer needs and delivering value more effectively than competitors.^[2]

The nature of marketing has evolved over the years.^[3]

1. The Production Era (1920s-1940s) during which time companies focused on manufacturing and selling as many products as possible, assuming customers would buy whatever was available.
2. The Sales Era (1940s-1960s), Post-World War II economies led to increased competition as supply often exceeded demand. Businesses emphasized persuasion (door-to-door sales) and advertising (radio and print ads) to drive sales without prioritizing customer preferences.
3. The Marketing era (1960s-1980s). Consumer orientation, seeking to understand and satisfy needs and preferences of customer groups. The rise of market research and consumer behaviour studies. The 4Ps of marketing were introduced: product, price, place, promotion. This focus on creating products based on customer needs has become the foundation of modern marketing practices.
4. The Relationship era (1980s-2000s). Growth in technology allowed companies to engage with customers more personally. Benefits derived from deep, ongoing links with customers, employees, suppliers, and other businesses.
5. The Digital and Social era (2000s-Present). New ways for businesses and consumers to communicate and share information through the Internet and social media.
6. The Sustainability and ESG era (2010s-Present). Businesses prioritize ethical and sustainable practices, emphasizing green energy, ethical sourcing, and community impact. They aim to balance customer satisfaction, profitability, and societal well-being. Sustainability is integrated into core operations, addressing climate change, fair labour, and social responsibility.

The most important thing to remember about the marketing concept is that it is consumer-centric, meaning, it puts the customer first. Everyone in the organization must work to satisfy consumer needs while still being able to balance organizational needs. The company must ensure that it is profitable so that the organization can survive and grow.

Marketing Strategy

A marketing strategy consists of two major elements: the organization must determine its target market and then develop a marketing mix to meet the needs of that market. The target market is the specific group of consumers, with similar needs and wants, toward which a firm directs its marketing efforts. A target market is the group of people who are most likely to buy your product or service. The marketing mix is the combination of four factors, known as the “4Ps” of marketing. The 4Ps are designed to serve the target market and include product, price, promotion, and place.  A marketing strategy must not only define the target market, it must also define goals and outcomes, timelines, resources, and opportunities as well.  For example, the Statistics Canada 2021 Census stated that 6.2 million people (more than one in six Canadians) live in the GTA (Greater Toronto Area). A business would want to segment several specific customer groups to more effectively sell to its potential target markets living in the Toronto area.

There are five steps in the marketing planning process:^[5]

1. Mission (Understand the company’s mission and corporate objectives)
2. Situation Analysis (Identify opportunities, SWOT analysis, PEST analysis, 5C analysis)
3. Marketing Strategy (Define the target audience, Set measurable goals, Develop budget)
4. Marketing Mix (Product development, pricing, place and distribution, promotion)
5. Implementation and Control (Put plan into action, Monitor results)

Strategic marketing planning involves setting goals and objectives, analyzing internal and external business factors, product planning, implementation, and tracking your progress. Consider the example of Apple, winner of the CMO Survey Award for Marketing Excellence for the past sixteen years. Here’s an example of the five steps of the marketing planning process aligned to Apple Inc., one of the most successful companies in the world:

Mission: Apple is dedicated to making innovative, high-quality products.

Situation Analysis: Apple’s competitive advantage is driven by its commitment to understanding customer needs, focusing on the products that are core to its mission, and fostering a collaborative work culture.

Marketing Strategy: Apple usually is first to the marketplace with new products and the company relies on brand loyalty from existing customers as a strategy when launching new products and services.

Marketing Mix: While Apple offers a range of products, it values premium pricing and relies on strict guidelines for distribution.

Implementation and Control: Each Apple product complements the others and works within the same ecosystem, so customers tend to stay with the brand, creating loyal consumers.

The strategic marketing process puts all the pieces together so that everything you do contributes to the success of the business. Rather than executing haphazard activities and ideas, developing a solid plan that weaves goals and tactics into a seamless experience is essential.

Target Markets

Businesses earn profits by selling goods or providing services. It would be nice if everybody in the marketplace was interested in your product, but if you tried to sell it to everybody, you’d probably spread your resources too thin. You need to identify a specific group of consumers who should be particularly interested in your product, who would have access to it, and who have the means to buy it. This group represents your target market, and you need to aim your marketing efforts at its members.

Identifying Your Market

How do marketers identify target markets? First, they usually identify the overall market for their product—the individuals or organizations that need a product and are able to buy it. This market can include either or both of two groups:

• A consumer market—buyers who want the product for personal use
• An industrial market—buyers who want the product for use in making other products

You might focus on only one market or both. A farmer, for example, might sell blueberries to individuals on the consumer market and, on the industrial market, to bakeries that will use them to make muffins and pies.

Segmenting the Market

The next step in identifying a target market is to divide the entire market into smaller portions, or market segments—groups of potential customers with common characteristics that influence their buying decisions. You can use a number of characteristics to segment a market including demographic, geographic, behavioral, and psychographic. Demographic and geographic segmentation are quite common. To read more about each type of segmentation review the examples below.

Clustering Segments

Typically, marketers determine target markets by combining, or “clustering,” segmenting criteria. What characteristics does Starbucks look for in marketing its products? Three demographic variables come to mind: age, geography, and income. Buyers are likely to be of any gender, ranging in age from about twenty-five to forty (although college students, aged eighteen to twenty-four, are moving up in importance). Geography is a factor as customers tend to live or work in cities or upscale suburban areas. Those with relatively high incomes are willing to pay a premium for Starbucks specialty coffee and so income—a socioeconomic factor—is also important.

The Marketing Mix

After identifying a target market, your next step is developing and implementing a marketing program designed to reach it. This program involves a combination of tools called the marketing mix, often referred to as the “4P’s” of marketing:

1. Developing a product that meets the needs of the target market
2. Setting a price for the product
3. Distributing the product—getting it to a place where customers can buy it
4. Promoting the product—informing potential buyers about it

There are other models used for the marketing mix. One of which is the SAVE model, which stands for Solution, Access, Value, and Education. Unlike the initial 4Ps this idea promotes and advertises different virtues that fit productively in today’s marketing industry. Solution replaces product, access replaces place, value replaces price, and education replaces promotion. SAVE could potentially be a modern adaptation or evolution of this traditional framework.^[6] Another model is the 4Cs model, which stands for Customer, Cost, Convenience, and Communication. This is a contemporary marketing framework that expands on the conventional 4Ps paradigm. The 4Cs framework was proposed as a customer-centric alternative to the 4Ps, concentrating on the customer’s perspective and demands.^[7]

We will focus on the 4Ps Marketing Mix for the time being.

1st P=Product

There are many things that are involved in product development. The first step starts with coming up with an idea. It’s important to remember that when it comes to this first “P” of the marketing mix, the term “product” refers to both products and services.

New product development teams often consist of top management, and specialists from sales and marketing, research and development, manufacturing, and finance. This team will conduct market research and gather customer and employee feedback before formulating ideas for new products. The team will also evaluate the feasibility of ideas, consider the resources available, and identify risks. This group considers and plans new and improved products following the seven stages of new product development:

1. Idea Generation (Idea formulation)
2. Idea Evaluation (Screening)
3. Concept Testing
4. Product Development
5. Testing and Execution
6. Post Development (Commercialization, Market Introduction)
7. Support and Maintenance

Product Life Cycle

Once a product is developed, it begins the product life cycle. A product life cycle is a theoretical model describing a product’s sales and profits over the course of its lifetime. During this cycle the product typically goes through four stages: an introductory stage, a growth stage, a maturity stage, and a declining stage. Refer to Table 8.1 for a summary of the characteristics, marketing objectives, and strategies for each of the four stages of a product’s life cycle.

Circular Economy in Marketing

At its core, circular economy aims to minimize waste, reduce environmental impact, and maximize the value of products and materials throughout their lifecycle. In the realm of marketing, companies often take a linear approach, where content creation follows a ‘use and discard’ mentality. This approach leads to the proliferation of content that may not be sustainable or aligned with long-term planetary goals.

Circular business models offer an alternative that shifts the focus from selling products to providing and preserving value, whether through traditional sales or innovative circular services and activities, such as repair or resale. Kantar’s 2022 Global Issues Barometer found that 64% of people believe businesses have a responsibility to solve climate and environmental problems. And they match that belief with action, spending more with brands that can find ways to eradicate waste and pollution while still offering the essentials of value and convenience.^[8]

Circular solutions can impact a business in many of the same ways, including a company’s philosophy, purpose, and values; its sourcing of raw materials; product and packaging design; production procedures; and even its chosen business model. Since branding and circular solutions affect similar aspects of a business, they must be aligned to ensure a consistent business strategy. If a company starts implementing circular economy solutions, they must be incorporated into its core values and overall brand strategy. Likewise, if sustainability and corporate social responsibility are fundamental pillars of a brand strategy, then the circular economy can be a great way to implement these values and deliver the brand’s promise to consumers.^[9]

A circular economy offers a clear pathway to deliver, while also offering opportunity to build brand growth and business resilience. By embracing circular models, brands can tap into new revenue streams, reduce costs, and strengthen customer relationships. The future of marketing could well be circular.^[10]

Market Research

Market research is the process of gathering, analyzing, and interpreting information about a market, product, service, and customers. It helps companies understand their customers, competitors, and industry, and make strategic decisions about marketing and selling.

Once a business has an idea for a new product or service, the next step is to figure out who is going to buy it. If we use the example of potential consumers in the Greater Toronto Area, we know they will not all buy what the business has to sell. How does the company determine how to market to specific groups of consumers effectively? That’s where market research can help. Conducting market research will help the company find out what its consumer profile looks like.

The term market research refers to the process of evaluating the viability of a new service or product through research conducted directly with potential customers. It allows a company to define its target market and get opinions and other feedback from consumers about their interest in a product or service. Research may be conducted in-house or by a third party that specializes in market research. It can be done through surveys and focus groups, among other ways. Test subjects are usually compensated with product samples or a small stipend for their time.^[11]

Questions the company needs answers to include the following:

• Who are our potential customers?
• What do they like about this product? What would they change?
• How much are they willing to pay for it?
• Where will they expect to buy it?
• How can we distinguish it from competing products?
• Will enough people buy this product to return a reasonable profit for the company?

This data had to be collected in a systematic way. Market research seeks two types of data:

1. Marketers generally begin by looking at secondary data—information already collected, whether by the company or by others, which pertains to the target market.
2. With secondary data in hand, they’re prepared to collect primary data—newly collected information that addresses specific questions.

Gather Secondary Data

The company may use secondary data when researching the market. Secondary data usually refers to information that has been collected, processed, and published by someone else, although it can come from inside or outside the organization. Internally available data includes sales reports and other information on customers. External data can come from a number of sources. Here is a list of secondary data examples:

• Government publications and databases are a good place to start. Statistics Canada, for example, posts demographic information on Canadian households (such as age, income, education, and number of members), both for the country as a whole and for specific geographic areas. Using secondary data that is already available (and free) is a lot easier than collecting your own information.
• Industry reports published by industry associations such as Nielson, Gartner, or IBISWorld provide insights into market trends, competitor analysis, and consumer behaviour.
• Trade journals and magazines, such as Canadian Business and Marketing Magazine, can help an organization stay informed about industry news, trends, and analysis.
• Reviewing company annual reports, whitepapers, or press releases from competitors or industry leaders are helpful when analyzing the market. Publicly traded companies are required to disclose detailed financial and market information.
• Online databases and market research platforms like Statista, ProQuest, or MarketLine provide detailed market analysis.
• Academic research such as academic journals and university databases provide research on consumer behaviour and emerging trends.
• News outlets, Globe and Mail or CBC, and online media such as news websites, blogs, and social media to learn about industry shifts, consumer sentiment, or competitive developments.
• Existing customer data on sales, customer feedback, and customer relationship management (CRM software) records can help identify patterns and preferences within the company’s own database.

Google Trends can be a valuable tool for gathering secondary data. It provides insights into the popularity of search terms over time, across regions, and in specific categories, making it useful for understanding market trends, consumer interests, and geographic patterns. Google Trends is an excellent starting point for secondary market research, especially when paired with other data sources for a well-rounded analysis.

Explore Google Trends – What are people in Canada Searching for Right Now?

Explore Google Trends – What are people in the USA Searching for Right Now?

Explore Google Trends – What are people in Finland Searching for Right Now?

Explore Google Trends – What are people in India Searching for Right Now?

Explore Google Trends – What are people in the World Searching for Right Now?

By using these resources, businesses can gain a comprehensive understanding of their market without the need for direct primary research. Gathering secondary data is usually less costly than gathering primary data because the data is already available. Companies can save time by accessing existing data rather than conducting primary research. Secondary data also provides insights into industry-wide trends and historical data. It does have some disadvantages: data may not answer specific questions or fit unique needs of a company, it may be outdated and not reflect the current market, and competitors also have access to secondary data (or much of it).

Secondary research is ideal when looking for a quick, cost-effective understanding of broader market conditions, trends, or context.

Gather Primary Data

Primary research involves collecting firsthand data directly from the source, tailored to specific needs. There are a variety of tools for collecting primary data is data gathered by the company firsthand, including:

Focus Groups. Focus groups involve getting a group of people together who fit the consumer profile and asking them questions about the company’s product or service and taking note of their thoughts. Usually, the company will need to pay people to participate in the focus group. With a focus group, you can bring together a group of individuals (perhaps six to ten) and ask them questions. A trained moderator can explain the purpose of the group and lead the discussion. If sessions are run effectively, you can come away with valuable information about customer responses to both your product and your marketing strategy.

Observations. It’s important to note that while an independent facilitator is asking the questions of consumers in observation; representatives from the market research team are behind a two-way mirror observing consumer behaviour. Observations may also take place by observing consumers in action, such as buying groceries or electronics. Observations sometimes include home visits to observe consumers using the product.

Surveys. Surveys are done through questionnaires, they can be mailed to the target market; the challenge with it is that the response rate is usually low. Businesses may offer coupons or other incentives to entice consumers to complete the survey. Sometimes marketers mail questionnaires to members of the target market. The process is time consuming and the response rate generally low. Online surveys are easier to answer and so get better response rates than other approaches.

Interviews. Interviews are a good method as market researchers can take the time to talk to people about their thoughts about the product or service; they can demonstrate how the product or service works and they can get real-time feedback. Though time consuming, personal interviews not only let you talk with real people but also let you demonstrate the product. You can also clarify answers and ask open-ended questions.

Experiments. Experiments in primary research involve testing specific variables or conditions to observe outcomes and gather data directly relevant to the research question. They are structured studies designed to establish cause-and-effect relationships. Experiments are widely used in scientific research but are also valuable in business contexts, such as marketing, product development, and operations. For example, assume a retailer wants to understand how price changes affect product demand. Products are sold at varying prices across different regions or time frames. The retailer can identify the price range that maximizes revenue without significantly reducing sales volume.

While gathering primary data may be more time consuming (designing, collecting, analyzing) and more expensive (panning, execution, analysis) than gathering secondary data, it has its advantages. Primary research allows the company to customize the questions to gather specific data. It provide current information. It has exclusive ownership, data collected is proprietary to the company. Primary research also requires skilled personnel for accurate data collection and interpretation.

Primary research is best when a business requires detailed, specific, and proprietary insights to solve unique challenges or validate hypotheses. Combining both types of research is ideal. Start with secondary research to gain a foundational understanding and guide the focus of primary research. Secondary research can help identify gaps or areas requiring in-depth exploration, which primary research can address.

Branding

Brand strategy is “The entire experience your prospects and customers have with your company, product or service. Your brand strategy defines what you stand for, a promise you make, and the personality you convey.”^[12]

Branding is an essential tool for marketing. Consumers relate so strongly to brands that you can show them just the brand logo and they know everything about the brand. Visit the World’s Most Recognizable Brand Logos to see if you can recognize the company with their brand logo.

Below is a list of some brands that have become so popular they are used to refer to common products.^[13]  For example:

• Kleenex, which is a brand name, has become synonymous with facial tissues. It is often used to refer to any type of facial tissue, regardless of the brand.
• Q-Tips brand is often used when people refer to cotton swabs.
• You might think you are riding around on a Jet Ski, but if it’s not made by Kawasaki Heavy Industries, it’s just a personal watercraft.
• The Crock-Pot, a brand name for the slow cooker, was originally developed as a beanery appliance.
• Chapstick is a brand name of lip balm produced by Pfizer.
• Xerox has been trying to stop people from calling photocopying “xeroxing” for years.
• Google is the world’s largest and most powerful search engine.
• The actual name for “Band-Aid” is actually “bandage.” Band-Aid became a trademark of Johnson & Johnson in 1920 and has dominated the wound care market ever since.

Branding Strategies

Companies can adopt one of three major strategies for branding a product:^[14]

1. With private branding (private labeling or store branding), a company makes a product and sells it to a retailer who in turn resells it under its own name. A soft-drink maker, for example, might make cola for Wal-Mart to sell as its Sam’s Choice Cola.
2. With generic branding, the maker attaches no branding information to a product except a description of its contents. Products are sold without a widely recognized brand name, often with plain packaging and minimal marketing. Customers are often given a choice between a brand-name prescription drug or a cheaper generic drug with the same formula.
3. With manufacturer branding, a company sells one or more products under its own brand names such as Apple, Nike, or Coca-Cola. Adopting a multiproduct-branding approach, it sells many products under one brand name. Food-maker ConAgra sells soups, frozen treats, and complete meals under its Healthy Choice label. Using a multi-branding approach, the company assigns different brand names to products covering different segments of the market. Automakers often use multi-branding. The Volkswagen group of brands also includes Audi and Lamborghini.

Refer to Table 8.2 for a comparison of differences between branding strategies.

Branding is used in hotels to allow chains (Marriott, Hyatt, Hilton) to offer hotel brands that meet various customers’ travel needs while still maintaining their loyalty to the chain. The same customer who would choose an Extended Stay hotel with a full kitchen when on a long term assignment might stay at a convention hotel when attending a trade show and then stay in a resort property when traveling with their family. By segmenting different types of hotel locations, amenities, room sizes and décor, hotel chains can meet the needs of a wide variety of travelers. In the past decade “soft” branding has become common to allow unique hotels to take advantage of being part of a chain reservation system and loyalty program. For example, Marriott has over 100 affiliated independent hotels in its Autograph Collection. Loyalty programs are heavily used in the hospitality industry, especially airlines and hotels, as part of their Customer Relationship Management programs. Loyalty programs are often targeted to high value business travelers with less price sensitivity. They achieve loyalty status and perks while traveling as well as earning points to use for personal travel rewards. Once a loyalty program member obtains elite status with significant associated perks such as guaranteed room availability, airport club lounge access, etc., the customer is much less likely to use other brands.^[15]

When consumers have a favorable experience with a product, it builds brand equity. If consumers are loyal to it over time, it enjoys brand loyalty. To get an idea of how valuable brand equity is, think for a moment about the effect of the name Dell on a product. When you have a positive experience with a Dell product—say, a laptop or a printer—you come away with a positive opinion of the entire Dell product line and will probably buy more Dell products. Over time, you may even develop brand loyalty: you may prefer—or even insist on—Dell products. Not surprisingly, brand loyalty can be extremely valuable to a company.

Each branding strategy suits specific market needs, allowing businesses to cater to varying consumer priorities, such as cost, trust in brand, or exclusivity.

Packaging and Labelling

Packaging can influence a consumer’s decision to buy a product or pass it up. Packaging gives customers a glimpse of the product, and it should be designed to attract their attention, with consideration given to color choice, style of lettering, and many other details.

Labelling not only identifies the product but also provides information on the package contents: who made it and where or what risks are associated with it (such as being unsuitable for small children).

Packaging and labelling can provide many benefits for companies, including:^[16]

• Advertising. Packaging and labelling can be used to convey an advertising message.
• Consumer trust. Attractive packaging labels can help build trust in the product’s quality and contents.
• Product Safety. Labels can help protect products and keep them safe.
• Product Identification. Packaging and labelling can help consumers quickly identify a brand.
• Shipping Efficiency. Clearly printed labels can help eliminate confusion during shipping.
• Competitive Advantage. Packaging and labelling can help a company differentiate themselves from competitors.

2nd P=Price

The second P in the four Ps of marketing is price. Naturally, the company needs to price its products in a way that allows it to operate profitably. However, pricing is far more complex than calculating the cost of goods and adding on an additional amount that will let the business meet its desired profit margin.

Price is the only element of the marketing mix that directly generates revenue for a company. It’s also the most flexible element, and it’s important to continuously monitor and revise it.

When determining price, marketers consider a number of factors, including:

• Customer value: How much customers are willing to pay for the product?
• Competitors: What competitors are charging for similar products?
• Supply costs: What are the costs of supplying the product?
• Seasonal discounts: What discount should we offer and when?
• Business model: How does the price fit with the company’s business model?

Marketers may also use pricing strategies like:

• Cost-plus pricing: Adding a fixed percentage to the unit cost to determine the selling price
• Competitive pricing: Adjusting prices based on what competitors are doing
• Price skimming: Starting with a high price and then reducing it as customer volume increases
• Value-based pricing: Basing the price on how much customers are willing to pay
• Penetration pricing: Starting with a low price to build a customer base
• Dynamic pricing: Continually changing prices based on market forces like competitor pricing and customer demand

3rd P=Place

In marketing, “place” is the third of the “4Ps” of marketing and refers to where and how a company sells its products to consumers:

• Where: The physical locations or digital channels where a company will sell its products.
• How: The distribution channels, transportation, and storage methods a company will use to get its products to consumers.
• Goal: To reach the target audience and meet sales targets.

A great deal is involved in getting a product to the place in which it is ultimately sold. If you’re a fast food retailer, for example, you’ll want your restaurants to be in high-traffic areas to maximize your potential business. If your business is selling beer, you’ll want it to be offered in bars, restaurants, grocery stores, convenience stores, and even stadiums. Placing a product in each of these locations requires substantial negotiations with the owners of the space and often the payment of slotting fees (an allowance paid by the manufacturer to secure space on store shelves).

Retailers are marketing intermediaries that sell products to the eventual consumer. Without retailers, companies would have a much more difficult time selling directly to individual consumers, no doubt at a substantially higher cost. Many retailers do not fit neatly into only one category, for example, WalMart, which began as a discount store, has added groceries to many of its outlets, also placing it in competition with supermarkets. Similarly, IKEA is a furniture retailer but also provides a place to eat, “IKEA Swedish Restaurant” within the store, placing it in competition with restaurants.

The logistics of place are all the activities required to move a product from the production line to the end user. This includes transportation, warehousing, inventory management, order processing, and selecting distribution channels. Effective logistics requires strategic planning and coordination to deliver the right product to the right place, at the right time, in the suitable condition, and at the correct cost.

4th P=Promotion

Promotion is a part of the marketing mix that refers to the methods used to communicate with customers about a product or service. It involves a combination of promotional tools and techniques to reach a company’s goals. The Promotional mix is the means by which a company communicates with its customers and may include advertising, social media, email marketing, personal selling, sales promotion, public relations, and more. The goal of promotion is to create a message that resonates with customers and encourages them to purchase a product.

Before deciding on an appropriate promotional strategy, a business should consider a few questions:

• What’s the main purpose of the promotion?
• Who is the target market?
• Which product features should be emphasized?
• How much can the business afford to invest in a promotional campaign?
• How do competitors promote their products?

To promote a product, you need to imprint a clear image of it in the minds of your target audience. What do you think of, for instance, when you hear “Ritz-Carlton”? What about “Motel 6”? They’re both hotel chains that have been quite successful in the hospitality industry, but they project very different images to appeal to different clienteles. The differences are evident in their promotions. The Ritz-Carlton website describes itself as the “gold standard” and promises that the chain provides “the finest personal service and facilities throughout the world”.^[18] Motel 6, by contrast, characterizes its facilities as “no frills ” and assures you that you’ll pay “the lowest price”.^[19]

Promotional Tools

Advertising

Advertising is paid, non-personal communication designed to create an awareness of a product or company. Ads are everywhere—in print media (such as newspapers, magazines, mailers), on billboards, in broadcast media (radio and TV), and, increasingly, online. It’s hard to escape the constant barrage of advertising messages. Research on the exact number of ads the average person sees each day varies, but estimates suggest that we are exposed to anywhere from 4,000 to 10,000 ads daily. This figure includes all forms of advertising, from traditional media like TV and radio to digital platforms such as social media, search engines, and websites.^[20] You wear a GymShark T-shirt or a pair of lululemon pants while scrolling through your Facebook or Instagram feed while brushing your teeth with Crest toothpaste; and just within the first 20 minutes of your day! At some point, you start a screening process for what you engage with and you start ignoring brands and advertising messages, unless it’s something that you have a personal interest in.^[21] Even so, advertising is still the most prevalent form of promotion.

The choice of advertising media depends on the company’s product, target audience, and budget. A travel agency selling spring-break getaways to college students might post flyers on campus bulletin boards or run ads in campus newspapers. The co-founders of Sleep Country Canada found radio ads particularly effective, ingraining their catchy jingle, “why buy a mattress anywhere else?” into listeners nationwide.

Personal Selling and Direct Marketing

Personal Selling

Personal selling refers to one-on-one communication with customers or potential customers. This type of interaction is necessary in selling large-ticket items, such as homes, and it’s also effective in situations in which personal attention helps to close a sale, such as sales of cars and insurance policies. Many retail stores depend on the expertise and enthusiasm of their salespeople to persuade customers to buy. Home Depot has grown into a home-goods giant in large part because it fosters one-on-one interactions between salespeople and customers. Best Buy has staff helping educate consumers on technical devices; the store also offers technical support through the “Geek Squad.” When you visit the Honda or Subaru dealerships to buy a vehicle you will be greeted by a sales associate who will spend time with you discussing the vehicles’ features, financing, options, etc.

It is often used in business-to-business consultations and sales. The sales pitch is tailored to each customer’s specific needs.  There is a high level of personal interaction with immediate feedback. It works well in complex high-value product/service sales (e.g., real estate, custom software solutions). It is relationship driven, requires in-depth explanations or demonstrations in industries where trust is critical.

Direct Marketing

Direct marketing is a marketing approach that involves direct communication with consumers to generate a response or transaction. It does not rely on intermediaries such as retailers or advertising platforms. The company communicates directly with customers through various channels to elicit an immediate response, such as making a purchase or signing up for a service. Examples include email marketing, catalogs, or direct mail campaigns. Customer interaction is limited with no face-to-face interaction and relies on impersonal communication. It is a good choice for quick responses to promotions, reaching a broad segmented audience efficiently, or building brand awareness and driving online traffic.

Refer to Table 8.3 for a comparison of direct marketing and personal selling features.

Sales Promotion

A sales promotion is a marketing strategy that uses temporary offers or campaigns to increase sales, encourage customer loyalty, or build brand awareness. Sales promotions can include any of the following:

• discounts, coupons and rebates
• contests and sweepstakes
• free samples or trials
• bundling (e.g., buy a laptop and get a mouse free)
• loyalty programs (e.g., Tim Hortons)
• referral bonuses
• trade promotions (e.g., trade shows)
• in-store displays (e.g., while supplies last)
• seasonal promotions (e.g., Black Friday, Boxing Day, Back-to-school)
• event sponsorship and co-branding (e.g., movie promotions with fast-food chains)
• digital and social media campaigns (e.g., influencer collaborations, limited-time online sales)

It’s likely that at some point, you have purchased an item with a coupon or because it was advertised as a buy-one-get-one special. If so, you have responded to a sales promotion – one of the many ways that sellers provide incentives for customers to buy. Some promotional activities are targeted directly to consumers and are designed to motivate them to purchase now. You’ve probably heard advertisers make statements like “limited time only” or “while supplies last”. If so, you’ve encountered a sales promotion directed at consumers.

Other forms of sales promotion are directed at dealers and intermediaries. Trade shows are one example of a dealer-focused promotion. Mammoth convention centres such as the Enercare Centre in Toronto host enormous events in which manufacturers can display their new products to retailers and other interested parties. At food shows, for example, potential buyers can sample products that manufacturers hope to launch to the market. Feedback from prospective buyers can even result in changes to new product formulations or decisions not to launch. 

Publicity and Public Relations

Public relations (PR) refers to managing how others see and feel about a person, brand, or company. Free publicity—say, getting the company or product mentioned or pictured in a newspaper or on TV—can often generate more customer interest than a costly ad. Consumer perception of a company is often important to a company’s success. Many companies, therefore, manage their public relations in an effort to garner favorable publicity for themselves and their products. When the company does something noteworthy, such as sponsoring a fund-raising event, the public relations department may issue a press release to promote the event. When the company does something negative, such as selling a prescription drug that has unexpected side effects, the public relations department will work to control the damage to the company. Every year, Fortune puts out its list of the World’s Most Admired Companies. In 2024, these were the top five in ranked order: Apple, Microsoft, Amazon, Berkshire Hathaway, and JPMorgan Chase. Approximately 3,700 analysts, directors and executives are polled about corporate reputation to determine the final list.^[22]

Digital  and Social Media Marketing

Digital marketing is promotion through digital platforms, including websites, search engines, and social media. It includes all marketing efforts using digital channels to promote products, services, or brands. Examples include search engine optimization (SEO), pay-per-click (PPC) ads, and email campaigns.

In the last several years, the popularity of social media marketing has exploded. It is a subset of digital marketing focused specifically on using social media platforms to promote brands and engage audiences. You already know what social media is — Facebook, Twitter, TikTok ads, Instagram LinkedIn, YouTube, and any number of other online sites that allow you to network, share your opinions, ideas, photos, etc. Social media marketing is the practice of including social media as part of a company’s marketing program.

The days of trying to reach customers through ads on TV, in newspapers, or in magazines are over. Most television watchers skip commercials, and few people read newspapers or magazines, and even if they do, they don’t focus on the ads.

Social media marketing can have many advantages for businesses, including:

• Brand Awareness: Reaching a wider audience and increasing brand awareness.
• Website Traffic: Sharing links to the company website or blog on social media which can drive more traffic to the website.
• Customer Engagement: Improving customer engagement and customer service by connecting with customers and potential customers in two-way communication.
• Brand Loyalty: Building brand loyalty by providing opportunities for a targeted audience to participate in company-sponsored activities, such as contests.
• Incentives: Offering and publicizing incentives, such as special discounts or coupons.
• Feedback: Collecting feedback and ideas on how to improve products and marketing initiatives to get a better understanding of brand perception.
• Word-of-Mouth: Allowing customers to interact with each other and spread the word about the company’s products or marketing initiatives.
• Low-Cost: Taking advantage of low-cost marketing opportunities by being active on free social sites, such as Facebook.
• Target Segments: Delivering personalized content to specific audiences as social media platforms offer a range of targeting options.
• Rankings: Improving search engine rankings as Google and other search engines pull information from social media platforms into their search results.

Social media marketing can have several disadvantages, including:

• Negative feedback: Customers can publicly voice their complaints, which can damage a company’s reputation.
• Time-consuming: Social media marketing requires consistent content creation, community management, and engagement with followers.
• Difficult to measure: It can be challenging to measure the effectiveness of social media marketing, as it often involves tracking multiple metrics and analyzing complex data sets.
• Competition: With millions of businesses competing for attention on social media, it can be difficult to stand out.
• Platform changes: Social media platforms are constantly changing their algorithms and policies, which can make it difficult to predict and maintain success.
• Security and privacy policy issues: Social media platforms may have security and privacy policy issues.
• Not built for all groups: Social media marketing may not work for all groups of people.
• Expensive: Social media marketing can be expensive and confusing if done incorrectly.

Retaining Customers

Customers are the most important asset that any business has. Without enough customers, no company can survive. Firms must not only attract new customers but also retain current customers.

Here are a few facts about retaining customers:^[23]

• The probability of selling to an existing customer is 60-70%, while the probability of selling to a new prospective customer is only 5-20%.
• It costs up to 7 times more to acquire a new customer than to retain an existing customer.
• 65% of a company’s business comes from existing customers.
• Loyal customers spend 67% more than new ones.
• 82% of companies agree that customer retention is less expensive than customer acquisition.

Retaining customers is the purpose of customer-relationship management—a marketing strategy that focuses on using information about current customers to nurture and maintain strong relationships with them. The underlying theory is fairly basic: to keep customers happy, you treat them well, give them what they want, listen to them, reward them with discounts and other loyalty incentives, and deal effectively with their complaints. Do you know some companies that do a good job at retaining customers?  How about Amazon, Spotify, or Starbucks?  These companies seem to know how to keep customers happy.

Another advantage of keeping in touch with customers is the opportunity to offer them additional products. Amazon is a master at this strategy. When you make your first purchase at Amazon, you’re also making a lifelong “friend”—one who will suggest (based on what you’ve bought before) other things that you might like to buy. Because Amazon continually updates its data on your preferences, the company gets better at making suggestions.

Developed in-house, Amazon’s CRM software captures customer data at the point of purchase, which it uses to instantly customize its users’ online experience and get a full view of the customer journey. It learns about customer habits, improves relationships from the first purchase, and reduces returns or even cart abandonment based on the customer’s ecommerce activities.^[24]

Refer to Table 8.4 for key actions taken by Amazon, Nike, and Starbucks to retain customers.

Attributions

The contents of this chapter is a compilation sourced from various OER resources, please refer to the Book Information for details.

References

(Note: This reference list was produced using the auto-footnote and media citation features of Pressbooks)