Steps in the marketing process

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What are the five steps in the marketing process?

Marketing is a critical business process that does not just involve advertising and promotions but includes much more. Customer engagement, customer relationships, branding etc, are all a part of marketing. On the one hand while marketing serves to attract new customers by promising superior value, on the second it involves delivering customer value and creating customer satisfaction.

Marketing is all around us in one or the other form. From the ads we come across daily to the several brands we are familiar with and make purchases from, marketing is everywhere. Marketing has evolved a lot in the 21st century. Digital channels have become the primary sales and promotion channels for businesses and marketers worldwide. Moreover, companies are using these channels to grow their market influence and improve customer loyalty.

The simplest definition of marketing according to Kotler is that “Marketing is the process of engaging customers and managing profitable customer relationships”. Marketing does not involve only selling or promotions as has been the popular misconception. It also involves generating product ideas, creating the products according to customer needs and providing excellent customer service.

All the dominant players across various industry sectors from Nike to Apple, Samsung, and Starbucks have marketed their brands well and that is why they are the marketed leaders. There are several brands like Costco that do not spend on advertising and promotions but still have been able to create excellent brands. They have delivered on their promise of providing superior value to their customers and maximizing customer satisfaction.

There are three critical things about marketing which involve knowing your consumers and understanding their needs, building customer value and creating strong customer relationships. If you do the first three things right, you can reap the rewards in the form of higher sales and superior customer loyalty.

Overall, there are five important steps in the process of marketing, which we have dealt with in detail below:

Understanding the marketplace and consumer needs:-

Marketers need to be aware of the marketplace in which they are operating and the needs of the customers that they aim to satisfy. Understanding customer needs and wants is critical to marketing. However, it is equally critical to knowing the marketplace in which you are operating. There are five important market place that can help marketers in this regard.

Five core marketplace concepts:

  1. Needs, wants and demands:

Understanding human needs is a critical concept in marketing. Several types of human needs exist and marketers just identify these needs. Human needs and basic needs and include physical needs as well as personal and social needs. These needs can be understood as a state of felt deprivation. When you are hungry, you need food. You feel deprived of food when you are hungry and want to satisfy your hunger by eating.

Wants are different from needs as they are not as basic as human needs. It is because needs can also differ from person to person based on his personality and culture. For example, the food we eat differs from one culture to another and the same applies to the types of clothes we wear. So, when needs are influenced by society, culture and personal preferences, they become wants. One person wants to eat a burger while another prefers pizza. In one culture, while people prefer to wear casual clothes that make them look more fashionable, in another ethnic wear is preferred against casual clothing. So, needs become wants and when backed by buying power, they become demands.

What you demand also depends on your needs and your buying power. If you cannot afford to buy expensive clothes, you will go for ordinary and affordable clothing. However, someone who can afford a luxury life will spend on premium products and services. So, demands are wants backed by buying power. People demand the products that provide the highest perceived benefits and satisfaction based on their wants and available resources.

Marketers need to understand customer needs, wants and demands to be able to do their job satisfactorily or market effectively to their target market. Companies invest a lot in this process since understanding customer needs, wants and demands gives them a better understanding of the types of products that will sell and how they can maximize customer satisfaction. So, they invest in collecting customer data that helps them understand consumer preferences or what people are more likely to demand and then cater to customer demand effectively. Market research and collecting customer data at various touch points including sales and service touchpoints helps companies improve their marketing process and create better products.

  1. Market offerings:

You have read and understood customer needs, wants and demands. To satisfy these, companies create products, services or experiences or what we call market offerings. These offerings can be tangible like fashion and food products or automobiles or intangible like entertainment services and other services or experiences like fun parks. Marketers need to think of the need or want they are trying to satisfy through their product offerings.

What happens in many cases is that the focus of the marketer is higher on the product itself rather than the benefit from the product. This is called marketing myopia. So, you developed a great product but another brand developed a similar product and focused on the need it satisfies or the benefit it offers. The second brand serves the same need better than the first and so experiences higher sales while the sales of the first brand suffer.

So, to win in marketing, the marketer must think beyond the product and find methods to create a product that serves the same need in a better manner. Harvard Business School Professor Theodore Levitt had coined the term marketing myopia. According to him the problem was that marketers spent more time on their products rather than understanding customer needs and wants better. He said that rather than a quarter inch drill, people want a quarter inch hole. Understanding this difference is critical for marketers so that they can know which product will fulfill the customer needs in a better manner.

  1. Customer value and satisfaction:

Customer value and satisfaction are two crucial concepts related to marketing since they affect people’s choice of products and brands. There are several products in the market that satisfy the same or similar needs. So, the customers’ selection of products is based on their expectation of value and satisfaction from a product. They are more likely to buy the product that they expect will provide higher value and create higher satisfaction for them.

A customer buying a product for the first time, will use the product and then based on his satisfaction and expectations of value from that product will tell others about it. If he feels highly satisfied from that product, he is more likely to praise it before others and buy it again. If he is not, he will criticize the product. Marketers also need to be very cautious in this regard. They must not make false promises to drive sales higher since in that case they might end up setting very high expectations and then fail on delivering them.

Setting too high expectations from your product may drive sales in the short run but can hurt sales and brand image in the longer run if the product fails to satisfy those expectations. Understanding customer value and satisfaction is critical for marketers so they set the right expectations from their product and make only the promises they can deliver. It is also important for managing and developing customer relationships.

  1. Exchanges and relationships:
    Exchanges and relationships are a critical part of marketing. Exchange means obtaining a thing from someone in exchange for something else. This is how people obtain something that they need or want. Marketing happens when people decide to fulfill their needs through exchange relationships. Marketers take certain actions to create, maintain, and grow exchange relationships with their target audience involving a product, service or idea. To build strong customer relationships companies have to offer superior customer value.
  2. Markets:
    Markets include a set of buyers of a particular product or service that is targeted at meeting a particular need or want. There is a need or want that these buyers can satisfy through exchange relationships. So, the concept of markets is based on exchange relationships.
    Marketing also includes managing markets to create profitable exchange relationships. Sellers and marketers need to make a lot of effort to manage it. They need to search for potential buyers, engage the buyers, understand their needs and wants, design products that meet those needs, promote the products and sell them. Marketing includes customer research, product development, market communication, distribution and sales as well as pricing and customer service.

Marketing is no more limited to just the business or the seller but now it also involves the customers. Customers are also engaged in marketing to some extent and it has taken the form of a two way process. Their interaction with brands has increased as people search for information before deciding which product to buy. Customers are actively engaging with businesses through the various digital channels including social media accounts, apps and their websites.

This has increased the involvement of customers in the marketing of products and brands. Customers also discuss their favorite brands and products on social media channels including Facebook, Twitter, YouTube and Reddit. However, this can also have a negative impact since dissatisfied customers are quite likely to share their experience on social media channels and blogs.

  1. Designing a customer driven marketing strategy

The first step in the marketing process was understanding consumer needs, wants and demands. Once the marketer has understood these points, he is in a position to design a customer driven marketing strategy which will yield superior results. Marketing includes the selection of target markets and building profitable relationships with them. Marketing mainly aims to target, attract, engage and retain customers, while also growing the customer base by creating, communicating and delivering superior customer value. To design a customer driven marketing strategy, there are two questions that marketers must successfully answer:

  1. What is our target market?
  2. What is our value proposition?

Target market:

Target market simply means the part of the market you are targeting through your product or service. It means the segment of the entire market that a business plans to serve through its product or service. To know your target market, marketing managers must first undertake market segmentation or dividing the market into identifiable segments and then selecting the segment they are planning to serve. For example, someone has created a product that fulfills a particular need. However, he must also know which customer segment will most likely benefit from it.

If the product serves the needs of working women, there is no need to target the other segments in the market. Any product or business cannot serve every customer and therefore it is an essential step in marketing to clearly identify your target market. It is also important to target the segment that it can serve profitably. For example, you have created a product for female customers but it is a premium product that is priced higher than competing products. In that case, targeting affluent females would be the right method to market the product since not all women are equally likely to buy and use the product.

You can also understand the concept of target market by knowing how leading brands like Nike or Apple market their products. Nike targets mainly the athletes or people living an active lifestyle. Both Apple and Nike target mainly the affluent customers since they make premium products priced higher than the rival products and brands.

Value proposition:

Like the concept of target market answers the question which customers to serve, the concept of value proposition allows marketers to answer the question how to serve their target market well. The role of value proposition is not limited to just that but it will also help you differentiate your brand and products from the others. It affects your positioning strategy and differentiation strategy. It is a statement of the benefits or value that the company promises to deliver to its customers.

For example, Walmart promises Every Day Lower Prices. It has been delivering on its promise and has achieved the leading position in the physical retail sector. This is also what differentiates Walmart from its rivals. It basically helps customers know why they should purchase from one particular brand rather than from any in the market.

In this way, knowing the answer to the two critical questions including your target market and value proposition helps businesses and marketers design a marketing program that will help them win in the market. Now, the next step is the preparation of the marketing communication strategy which will help you communicate to your customers.

  1. Integrated Marketing Program for delivering Superior Customer Value

In the third step of marketing, the marketers construct the actual marketing communication which brings the marketing strategy into action. The aim of an integrated marketing program is to deliver the intended value to the target market. It also aims to build stronger customer relationships.

The integrated marketing program includes the marketing mix or the set of tools and methods the company utilizes for the execution of its marketing strategy. These tools are divided into four basic categories or four Ps for product marketing and seven Ps for the services. The four basic Ps of marketing mix includes product, place, price, and promotion. These tools are included in a comprehensive integrated marketing program to communicate the value that the brand promises to deliver to its customers.

  1. Customer engagement, building profitable relationships and creating customer delight:

In the fourth step of the marketing process, the marketers must engage the customers and build strong and profitable relationships. It is one of the most vital steps in the process of marketing. The primary focus of this step is customer engagement and building strong and profitable relationships which requires delivering superior customer value and satisfaction. This step also deals with the acquisition and growth of customer base and customer engagement.

For managing strong and profitable customer relationships, the marketers must focus on customer value and customer satisfaction which are the foundational blocks of customer relationship management. Delivering superior customer value and creating higher customer satisfaction results in strong profitable and long lasting customer relationships. The focus of marketing is creating strong customer value but in a profitable manner.

This is where businesses and marketers need to strike a balance. It means while creating superior customer value they cannot sacrifice profitability. However, it is also important to note that superior customer value and higher satisfaction will result in higher customer loyalty.

  1. Capturing value from customers for generating profits and customer equity:

In the final step of the marketing process, the marketers capture value from the customer. Generally, it means growing sales, market share and profitability. When a business delivers superior customer value and higher satisfaction, it creates strong customer relationships and enjoys higher loyalty. This will translate into higher sales and profitability in the longer term. However, another aim of customer relationship management is to create higher customer equity. The focus of marketing is not limited to creating profits by driving sales higher.

When you take the total customer lifetime value of all of the existing and potential customers of a business, it is called customer equity. Kotler explains it as a measure of the future value of a firm’s customer base. Higher customer equity means the profitable customers of a business are more loyal to it.

A few last words:

Marketing is several times misunderstood as a process that targets to grow profits by driving sales. However, it is not the entire focus of marketing since it also focuses on building and maintaining stronger customer relationships. Marketers need to be aware of their customer needs, wants and demands to market successfully.

The role of marketing begins from need identification and includes everything from idea generation to product creation, promotion, sales and service. Marketing also aims to maximize customer satisfaction which is critical to building profitable customer relationships and growing the customer base.

Marketing is a five step process that includes need identification, marketing strategy creation, integrated marketing communication, customer engagement and relationship management and finally capturing value and creating customer equity.

The role of customers in marketing has grown as their involvement in various areas has grown. However, marketers must focus on the benefit they are planning to offer and not remain focussed on just the product. If done in the right manner, marketing helps you grow your customer base, expand market share and build customer equity which will strengthen your market position.