What is marketing?

What is marketing?

Marketing answers the questions "who are our customers, what should we sell them, and how do we induce them to buy it?" Marketing focuses on customer acquisition and retention. It includes customer, market and product research, advertising, distribution and sales. Strategic marketing focuses on improving market share in a competitive environment, while operational marketing focuses on customer satisfaction and retention. The American Marketing Association uses this definition:

"Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders."

Marketing traditionally has been defined by the marketing mix consisting of the four P's:

• Product: the actual product being offered to the customer, and consists of goods and services.
• Pricing: the price asked for the product, both monetary and intangible.
• Promotion: includes branding and advertising.
• Placement: the distribution channel and target market segment. Distribution channels include distributors, wholesalers and retailers. Web-based distribution channels are typically direct sales, and do not involve intermediaries.

When dealing with marketing of services, three additional P's enter into the extended marketing mix:

• Process: the way that the service is provided.
• People: those who are directly and tangentially involved with providing the service.
• Physical evidence: a means to substantiate the service (such as via testimonials) in order to reduce customer perception of risk.

Marketing plans and strategies

A marketing strategy is typically derived from overall corporate or organization strategy. It focuses obtaining competitive advantage and increased market share, and is the foundation of a marketing plan.

A marketing plan is a documented procedure to accomplish a business objective. A marketing plan should be well-defined, realistic, with specified results that can be quantitatively measured. A realistic marketing plan should align with the wants and needs of potential customers.

Sales conversion

A "sale" occurs when an interested party actually buys the product and becomes an actual customer. This is known as "conversion". The process of inducing the interested party to complete the sale is referred to as "closing the sale". (For more information on marketing terminology, see marketing terms).

The sales conversion rate is the ratio of actual sales to total contacts made. For example, in direct mailing, the conversion rate would be the ratio of actual sales to total mailings. Regarding a website, the conversion rate would be the ratio of actual sales (or registrations, votes, etc.) to total unique visitors.

In the commercial environment, a sale consists of the purchase of a product. More generally, a conversion can consist of any specific desired action - such as registering on a website - which can apply to non-profit organizations as well as commercial interests. Thus, the concepts of marketing and sales apply to most organizations as well as to commercial interests.