Classification of Marketing Functions

There is consensus regarding the functional area of marketing. It varies from 5 to 36 and
Rayan has even identified 120 different kinds of marketing functions in the marketing journey
of the roducts and articles.
If !e accet the marketing concet as stated in revious lesson !e must agree to the simle
roosition that suly in the functions of demand and therefore su"servient to it# here
demand is the limiting and key factor. $o a "etter understanding of the demand !ill make
clear a"out the various functions of marketing. %ates and &arkinson divide it into four asects.
They are
1. 'nalysis and forecasting i.e.# marketing research
2. &roduct develoment and design
3. Influencing the demand design# advertising etc
(. $ervice distri"ution after sales# service etc.
The success in marketing of a firm deends uon the co)ordination of these ingredients in
such a !ay as to create a suita"le mi* to the articular situation in hand.
The Marketing Mix
(The 4 P's of Marketing)
+arketing decisions generally fall into the follo!ing four controlla"le categories,
&roduct
&rice
&lace -distri"ution.
&romotion
The term /marketing mi*/ "ecame oulari0ed after 1eil 2. %orden u"lished his 136(
article# The Concept of the Marketing Mix. %orden "egan using the term in his teaching in the
late 13(04s after 5ames 6ulliton had descri"ed the marketing manager as a /mi*er of
ingredients/. The ingredients in %orden4s marketing mi* included roduct lanning# ricing#
"randing# distri"ution channels# ersonal selling# advertising# romotions# ackaging# dislay#
servicing# hysical handling# and fact finding and analysis. 7. 5erome +c6arthy later groued
these ingredients into the four categories that today are kno!n as the ( &4s of marketing#
deicted "elo!,
The Marketing Mix
These four &4s are the arameters that the marketing manager can control# su"ject to the
internal and e*ternal constraints of the marketing environment. The goal is to make decisions
that center the four &4s on the customers in the target market in order to create erceived value
and generate a ositive resonse.
Product Decisions
The term /roduct/ refers to tangi"le# hysical roducts as !ell as services that has the
otential to satisfy otential customers and they are received in e*change of money or any
consideration. 2ere are some e*amles of the roduct decisions to "e made,
%rand name
8unctionality
$tyling
9uality
$afety
&ackaging
Reairs and $uort
:arranty
'ccessories and services
Price Decisions
$ome e*amles of ricing decisions to "e made include,
&ricing strategy -skim# enetration# etc..
$uggested retail rice
;olume discounts and !holesale ricing
6ash and early ayment discounts
$easonal ricing
%undling
&rice fle*i"ility
&rice discrimination
Distribution (Place) Decisions
Distribution is about getting the products to the customer. Some examples of distribution
decisions include:
Distribution channels
Market coverage (inclusive, selective, or exclusive distribution)
Specific channel members
Inventor management
!arehousing
Distribution centers
"rder processing
#ransportation
$everse logistics
Promotion Decisions
In the context of the marketing mix, promotion represents the various aspects of marketing
communication, that is, the communication of information about the product %ith the goal of
generating a positive customer response. Marketing communication decisions include:
&romotional strateg (push, pull, etc.)
'dvertising
&ersonal selling ( sales force
Sales promotions
&ublic relations ( publicit
Marketing communications budget
Limitations of the Marketing Mix Framework
The marketing mi* frame!ork !as articularly useful in the early days of the marketing
concet !hen hysical roducts reresented a larger ortion of the economy. Today# !ith
marketing more integrated into organi0ations and !ith a !ider variety of roducts and
markets# some authors have attemted to e*tend its usefulness "y roosing a fifth &# such as
ackaging# eole# rocess# etc. Today ho!ever# the marketing mi* most commonly remains
"ased on the ( &4s. <esite its limitations and erhas "ecause of its simlicity# the use of this
frame!ork remains strong and many marketing te*t"ooks have "een organi0ed around it.
Market Definition
In marketing, the term market refers to the group of consumers or organi)ations that is
interested in the product, has the resources to purchase the product, and is permitted b la%
and other regulations to ac*uire the product. #he market definition begins %ith the total
population and progressivel narro%s as sho%n in the follo%ing diagram.
Market Definition
Concetual Diagram
+eginning %ith the total population, various terms are used to describe the market based on
the level of narro%ing:
Total oulation
Potential market , those in the total population %ho have interest in ac*uiring the
product.
!"ailable market , those in the potential market %ho have enough mone to bu the
product.
#ualifie$ a"ailable market , those in the available market %ho legall are permitted
to bu the product.
Target market , the segment of the *ualified available market that the firm has
decided to serve (the served market).
Penetrate$ market , those in the target market %ho have purchased the product.
In the above listing, -product- refers to both phsical products and services.
#he si)e of the market is not necessaril fixed. .or example, the si)e of the available market
for a product can be increased b decreasing the product/s price, and the si)e of the *ualified
available market can be increased through changes in legislation that result in fe%er
restrictions on %ho can bu the product.
Defining the market is the first step in anal)ing it. Since the market is likel to be composed
of consumers %hose needs differ, market segmentation is useful in order to better understand
those needs and to select the groups %ithin the market that the firm %ill serve.
Market %egmentation
Market segmentation is the identification of portions of the market that are different from one
another. Segmentation allo%s the firm to better satisf the needs of its potential customers.
The &ee$ for Market %egmentation
#he marketing concept calls for understanding customers and satisfing their needs better
than the competition. +ut different customers have different needs, and it rarel is possible to
satisf all customers b treating them alike.
Mass marketing refers to treatment of the market as a homogenous group and offering the
same marketing mix to all customers. Mass marketing allo%s economies of scale to be
reali)ed through mass production, mass distribution, and mass communication. #he dra%back
of mass marketing is that customer needs and preferences differ and the same offering is
unlikel to be vie%ed as optimal b all customers. If firms ignored the differing customer
needs, another firm likel %ould enter the market %ith a product that serves a specific group,
and the incumbant firms %ould lose those customers.
Target marketing on the other hand recogni)es the diversit of customers and does not tr to
please all of them %ith the same offering. #he first step in target marketing is to identif
different market segments and their needs.
'e(uirements of Market %egments
In addition to having different needs, for segments to be practical the should be evaluated
against the follo%ing criteria:
Identifiable: the differentiating attributes of the segments must be measurable so that
the can be identified.
'ccessible: the segments must be reachable through communication and distribution
channels.
Substantial: the segments should be sufficientl large to 0ustif the resources re*uired
to target them.
1ni*ue needs: to 0ustif separate offerings, the segments must respond differentl to
the different marketing mixes.
Durable: the segments should be relativel stable to minimi)e the cost of fre*uent
changes.
' good market segmentation %ill result in segment members that are internall homogenous
and externall heterogeneous2 that is, as similar as possible %ithin the segment, and as
different as possible bet%een segments.
)ases for %egmentation in Consumer Markets
3onsumer markets can be segmented on the follo%ing customer characteristics.
4eographic
Demographic
&schographic
+ehavioralistic
4eographic Segmentation
#he follo%ing are some examples of geographic variables often used in segmentation.
$egion: b continent, countr, state, or even neighborhood
Si)e of metropolitan area: segmented according to si)e of population
&opulation densit: often classified as urban, suburban, or rural
3limate: according to %eather patterns common to certain geographic regions
Demographic Segmentation
Some demographic segmentation variables include:
'ge
4ender
.amil si)e
.amil lifeccle
4eneration: bab,boomers, 4eneration 5, etc.
Income
"ccupation
6ducation
6thnicit
7ationalit
$eligion
Social class
Man of these variables have standard categories for their values. .or example, famil
lifeccle often is expressed as bachelor, married %ith no children (DI78S: Double Income,
7o 8ids), full,nest, empt,nest, or solitar survivor. Some of these categories have several
stages, for example, full,nest I, II, or III depending on the age of the children.
&schographic Segmentation
&schographic segmentation groups customers according to their lifestle. 'ctivities,
interests, and opinions ('I") surves are one tool for measuring lifestle. Some
pschographic variables include:
'ctivities
Interests
"pinions
'ttitudes
9alues
+ehavioralistic Segmentation
+ehavioral segmentation is based on actual customer behavior to%ard products. Some
behavioralistic variables include:
+enefits sought
1sage rate
+rand loalt
1ser status: potential, first,time, regular, etc.
$eadiness to bu
"ccasions: holidas and events that stimulate purchases
+ehavioral segmentation has the advantage of using variables that are closel related to the
product itself. It is a fairl direct starting point for market segmentation.
)ases for %egmentation in *n$ustrial Markets
In contrast to consumers, industrial customers tend to be fe%er in number and purchase larger
*uantities. #he evaluate offerings in more detail, and the decision process usuall involves
more than one person. #hese characteristics appl to organi)ations such as manufacturers and
service providers, as %ell as resellers, governments, and institutions.
Man of the consumer market segmentation variables can be applied to industrial markets.
Industrial markets might be segmented on characteristics such as:
:ocation
3ompan tpe
+ehavioral characteristics
:ocation
In industrial markets, customer location ma be important in some cases. Shipping costs ma
be a purchase factor for vendor selection for products having a high bulk to value ratio, so
distance from the vendor ma be critical. In some industries firms tend to cluster together
geographicall and therefore ma have similar needs %ithin a region.
3ompan #pe
+usiness customers can be classified according to tpe as follo%s:
3ompan si)e
Industr
Decision making unit
&urchase 3riteria
+ehavioral 3haracteristics
In industrial markets, patterns of purchase behavior can be a basis for segmentation. Such
behavioral characteristics ma include:
1sage rate
+uing status: potential, first,time, regular, etc.
&urchase procedure: sealed bids, negotiations, etc.
+lobal marketing
!hen a compan becomes a global marketer, it vie%s the %orld as one market and creates
products that %ill onl re*uire %eeks to fit into an regional marketplace. Marketing
decisions are made b consulting %ith marketers in all the countries that %ill be affected. #he
goal is to sell the same thing the same %a ever%here.
Elements of the global marketing mix
#he ;.our &<s= of marketing: product, price, placement, and promotion are all affected as a
compan moves through the five evolutionar phases to become a global compan.
1ltimatel, at the global marketing level, a compan tring to speak %ith one voice is faced
%ith man challenges %hen creating a %orld%ide marketing plan. 1nless a compan holds
the same position against its competition in all markets (market leader, lo% cost, etc.) it is
impossible to launch identical marketing plans %orld%ide.
Pro$uct
' global compan is one that can create a single product and onl have to t%eak elements for
different markets. .or example, 3oca,3ola uses t%o formulas (one %ith sugar, one %ith corn
srup) for all markets. #he product packaging in ever countr incorporates the contour bottle
design and the dnamic ribbon in some %a, shape, or form. >o%ever, the bottle or can also
includes the countr<s native language and is the same si)e as other beverage bottles or cans
in that countr.
Price
&rice %ill al%as var from market to market. &rice is affected b man variables: cost of
product development (produced locall or imported), cost of ingredients, cost of deliver
(transportation, tariffs, etc.), and much more. 'dditionall, the product<s position in relation
to the competition influences the ultimate profit margin. !hether this product is considered
the high,end, expensive choice, the economical, lo%,cost choice, or something in,bet%een
helps determine the price point.
Placement
2o! the roduct is distri"uted is also a country)"y)country decision influenced "y ho! the
cometition is "eing offered to the target market. =sing 6oca)6ola as an e*amle again# not
all cultures use vending machines. In the =nited $tates# "everages are sold "y the allet via
!arehouse stores. In India# this is not an otion. &lacement decisions must also consider the
roduct>s osition in the market lace. 8or e*amle# a high)end roduct !ould not !ant to "e
distri"uted via a ?dollar store@ in the =nited $tates. 6onversely# a roduct romoted as the
lo!)cost otion in 8rance !ould find limited success in a ricey "outiAue.
Promotion
'fter product research, development and creation, promotion (specificall advertising) is
generall the largest line item in a global compan<s marketing budget. 't this stage of a
compan<s development, integrated marketing is the goal. #he global corporation seeks to
reduce costs, minimi)e redundancies in personnel and %ork, maximi)e speed of
implementation, and to speak %ith one voice. If the goal of a global compan is to send the
same message %orld%ide, then delivering that message in a relevant, engaging, and cost,
effective %a is the challenge.
6ffective global advertising techni*ues do exist. #he ke is testing advertising ideas using a
marketing research sstem proven to provide results that can be compared across countries.
#he abilit to identif %hich elements or moments of an ad are contributing to that success is
ho% economies of scale are maximi)ed. Market research measures such as .lo% of 'ttention,
.lo% of 6motion and branding moments provide insights into %hat is %orking in an ad in an
countr because the measures are based on visual, not verbal, elements of the ad.
Global marketing Advantages and Disadvantages
!$"antages
Economies of scale in production and distribution
Lower marketing costs
Power and scope
Consistency in brand image
Ability to leverage good ideas quickly and efficiently
Uniformity of marketing practices
Helps to establish relationships outside of the political arena
Helps to encourage ancillary industries to be set up to cater for
the needs of the global plaer
#he benefits of eMarketing over traditional marketing
$each
#he nature of the internet means businesses no% have a trul global reach. !hile traditional
media costs limit this kind of reach to huge multinationals, eMarketing opens up ne% avenues
for smaller businesses, on a much smaller budget, to access potential consumers from all over
the %orld.
Scope
Internet marketing allo%s the marketer to reach consumers in a %ide range of %as and
enables them to offer a %ide range of products and services. eMarketing includes, among
other things, information management, public relations, customer service and sales. !ith the
range of ne% technologies becoming available all the time, this scope can onl gro%.
Interactivit
!hereas traditional marketing is largel about getting a brand<s message out there,
eMarketing facilitates conversations bet%een companies and consumers. !ith a t%o%a
communication channel, companies can feed off of the responses of their consumers, making
them more dnamic and adaptive.
Immediac
Internet marketing is able to, in %as never before imagined, provide an immediate impact.
Imagine ou<re reading our favourite maga)ine. ?ou see a double,page advert for some ne%
product or service, mabe +M!<s latest luxur sedan or 'pple<s latest i&od offering. !ith
this kind of traditional media, it<s not that eas for ou, the consumer, to take the step from
hearing about a product to actual ac*uisition. !ith eMarketing, it<s eas to make that step as
simple as possible, meaning that %ithin a fe% short clicks ou could have booked a test drive
or ordered the i&od. 'nd all of this can happen regardless of normal office hours. 6ffectivel,
Internet marketing makes business hours @A hours per da, B das per %eek for ever %eek of
the ear. + closing the gap bet%een providing information and eliciting a consumer reaction,
the consumer<s buing ccle is speeded up and advertising spend can go much further in
creating immediate leads.
Demographics and targeting
4enerall speaking, the demographics of the Internet are a marketer<s dream. Internet users,
considered as a group, have greater buing po%er and could perhaps be considered as a
population group ske%ed to%ards the middle,classes. +uing po%er is not all though. #he
nature of the Internet is such that its users %ill tend to organise themselves into far more
focussed groupings. Savv marketers %ho kno% %here to look can *uite easil find access to
the niche markets the %ish to target. Marketing messages are most effective %hen the are
presented directl to the audience most likel to be interested. #he Internet creates the perfect
environment for niche marketing to targeted groups.
'daptivit and closed loop marketing
3losed :oop Marketing re*uires the constant measurement and analsis of the results of
marketing initiatives. + continuousl tracking the response and effectiveness of a campaign,
the marketer can be far more dnamic in adapting to consumers< %ants and needs. !ith
eMarketing, responses can be analsed in real,time and campaigns can be t%eaked
continuousl. 3ombined %ith the immediac of the Internet as a medium, this means that
there<s minimal advertising spend %asted on less than effective campaigns. Maximum
marketing efficienc from eMarketing creates ne% opportunities to sei)e strategic competitive
advantages. #he combination of all these factors results in an improved $"I and ultimatel,
more customers, happier customers and an improved bottom line.
Disa$"antages
!ifferences in consumer needs" wants" and usage patterns for products
!ifferences in consumer response to marketing mi# elements
!ifferences in brand and product development and the competitive environment
!ifferences in the legal environment" some of which may conflict with those of
the home market
!ifferences in the institutions available" some of which may call for the creation
of entirel ne% ones (e.g. infrastructure)
!ifferences in administrative procedures
!ifferences in product placement$
KEY MARKETING ISSUES
Many key marketing issues need to be examined in the assessment of the
commercial potential of a given technology.
Listed below are fundamental points, answers to which, will help determine the
technology's market opportunity and worth:
The Marketing nvironment and Market !tructure
Market !egmentation and Targeting
Marketing "lanning and !trategy
Marketing #ommunications
$s biotech companies generally re%uire large capital investment, great emphasis is
placed on the results of marketing research. The above elements of marketing
research are essential in providing the necessary information with which to attract
potential funding and will form an integral part of the business and sales plan for the
newly formed company.

$
The Marketing nvironment and Market !tructure &
understanding your markets, customers and competitors
'hich markets do you feel would have a need for your product(service and why)
*ow big are those markets)
*ow effective are competitors' product(service offerings and can yours offer
advantages)
+s competition rife)
$ny potential need within these markets re%uires validation through marketing
research. ,alidate the need for the product(service by speaking to a few ma-or
potential customers and confirm that those markets are suitable, in terms of si.e and
growth rate, level of competition and their products, to be a genuine, profitable
market.
Market suitability can be further assessed by examining the wider marketing
environment /external factors which can affect markets0. 1ne useful tool for this is a
"!T analysis. This examines "olitical(Legal, conomic, !ocial and Technological
factors that may have an impact on your proposed business.
$
Market !egmentation and Targeting &
the identification and selection of markets
1nce favourable markets have been identified, which one/s0 are the best ones to
serve)
Markets can be divided in various ways: generally industry type is a first level
segmentation. 2urther segmentation could be based on the answer to the following
%uestion: +s it possible to offer a standard product(service to all chosen markets... or
would those markets all re%uire a slightly customised offering) +t is therefore
necessary to define the product(service offering.
$s a general rule, markets should be measurable /si.e, value0, accessible /can the
markets be reached and served0, substantial /big enough and profitable enough0 and
actionable /does the company have the resources to serve the market0.
$ useful tool for examining the fit between the company and a particular market is a
!'1T analysis. !'1T stands for !trengths, 'eaknesses, 1pportunities and
Threats.
$
Marketing "lanning and !trategy &
position your product(service and know your route to market
*ow will your product(service be positioned)
'ill you use distributors or will you deal direct with the customer)
*ow will you price your product(service)
'hat would encourage customers to purchase from you... and repeat purchase)
"roduct(service positioning is a very important factor as this is how you, as a
company, want to be perceived. The number of distributors(intermediaries will affect
your product's price to your end customer3 the more there are, the higher the selling
price and the less control you will have. *ow do competitors currently sell) 'hat is
the norm)
What are the unique selling points of your produt!ser"ie#
4ni%ue selling points help differentiate from competitor offerings. 2or example, your
technology may enable customers to test for something they currently cannot test for
or may speed up an analytical process. 'hat is the competitive advantage and is it
sustainable) !ustainability is a very important factor as competitors eventually catch
up either when patents lapse or when new companies with different approaches
enter the marketplace. $n active 567 effort with a focus on 'improved' or additional
products(services will help to safeguard against this and keep you one step ahead of
the competition.
$
Marketing #ommunications & how to communicate with your target
market/s0
*ow will your customers know you are there)
'hich are the best means of reaching them)
'ho exactly are they)... 567 director, business development director, technical
manager)
2or the purpose of marketing communications or 'advertising', it is essential you
know who the decision makers are within your target market /technical manager or
567 manager)0, so that your communications efforts reach the person who can
recognise the need for your product(service and has the authority to order. %ually
important is understanding the best means of reaching them. Marketing research will
provide the answers.
Methods of promoting products(services within the biotechnology market would
include:
8. $dvertising in appropriate maga.ines.
9. $dvertorials(ditorials in appropriate maga.ines & these are free of charge but
you do not have control of the contents and when the article will run.
:. 7irect mail & poster(fliers sent direct to companies.
;. xhibitions and conferences & stands are good for raising awareness and
conferences can be highly targeted and are a good opportunity to leave
posters and fliers or arrange to have them placed in delegates' packs.
<. Membership of trade organisations.
=. 4sing existing contacts to build up a network of named contacts in your target
market/s0.
>. 'ebsite & websites are good for raising awareness and also for e&commerce
but people need to know they are there. +ntegration is the key, if the website
address is visible on posters, fliers and adverts, a potential customer's
attention can be drawn to it
%C&'mobile advertsisng
(arketing trnds$
The To Fi"e Tren$s,
#1. Insight and Innovation Key: Insight and innovation are vie%ed as kes to combat do%n
economic and business ccles. Some B@C of respondents indicated that innovation efforts
%ould sta the same or increase, %hile DEC sa their use of market research %ill increase in
the next ear. #his is significant given that most marketing experts agree it<s imperative to
innovate and mine insights during a recession, 'nderson 'naltics said.
#2. Customers at Top of List: +asic customer satisfaction and customer retention remained
the top t%o concepts of interest to marketers, follo%ed b marketing $"I, brand loalt and
segmentation. #ogether, these represent a move back to the core principles of marketing,
'nderson 'naltics said.
"f the F@ identified marketing concepts, faith,based marketing, six sigma, game theor, anti,
'mericanism and immigration %ere vie%ed as the least important.
#3. Green Mareting and G!o"a! #arming Lose Importan$e: #he issue of global %arming
sho%ed the largest decrease in importance (dropping GA places in the rankings), %hile green
marketing sho%ed a statisticall significant HC drop.
#%. Mareters &'i$( of #e" 2.): #%ice as man marketers are ;sick= of hearing about !eb
@.I and related bu))%ords such as ;blogs= and ;social net%orking= compared %ith last ear<s
surve.
>o%ever, marketers still admit the don<t kno% enough about it. #his %as evident in results
from a 7ovember @IIJ M674 social media stud sho%ing FBC of executive marketers
consider themselves beginners %hen it comes to using social media for marketing purposes.
#*. Most +pportunity in China and among ,oomers: 3hina ranks as the KG greatest area of
opportunit (HDC) for marketers %ith international responsibilit, %hile India is a distant
second %ith votes from GBC of respondents.
In terms of the best opportunit for customer targeting, marketing execs also still feel that
+oomers hold the most promise. >o%ever, the perceived importance of 4eneration 5 and
4eneration ? gre% significantl compared %ith @IIJ surve results.
To Marketing )ooks - 'esources
#he main sources of marketing inspiration remained nearl the same this ear as last, the
surve found. Good to Great remained the most %idel read and most recommended book.
>o%ever, several ne% books appeared on the reading list this ear including: Groundswell,
Hot Flat and Crowded, The Black Swan, Predictably rrational, Mavericks at !ork, The "ew
#ules o$ Marketing and P#, The %rt o$ the Start, Pur&le Cow, Go Put 'our Strengths to !ork,
and (ur ceberg is Melting.
#he number,one business 4uru last ear, Seth 4odin, remained the favorite marketing guru
for @IIE, according to the surve. >o%ever, !arren +uffet and Malcolm 4lad%ell increased
significantl in popularit and no% occup the K@ and KD spots on the list, respectivel. Lim
Stengel also made the Marketing 4uru list for the first time this ear.
;#his ear %e sa% an increase in importance in several areas, not 0ust Mcustomer satisfaction<
and Mretention,<= said #om >.3. 'nderson, managing partner of 'nderson 'naltics. ;#here
%ere also significant increases in the importance of marketing concepts such as M3$M,< Mdata
mining<, and Mleading through analtics.< #hat together %ith interest in books like #he +lack
S%an and optimism on market research budgets signals marketing executives reali)e that in a
do%n econom, it<s even more important to utili)e information efficientl and keep the
customers ou have.=