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What is Advertising?

(Source: www.knowthis.com)

Advertising is a non-personal form of promotion that is delivered through selected media outlets that, under most circumstances, require the marketer to pay for message placement.  Advertising has long been viewed as a method of mass promotion in that a single message can reach a large number of people.  But, this mass promotion approach presents problems since many exposed to an advertising message may not be within the marketer’s target market, and thus, may be an inefficient use of promotional funds.  However, this is changing as new advertising technologies and the emergence of new media outlets offer more options for targeted advertising.

Advertising also has a history of being considered a one-way form of marketing communication where the message receiver (i.e., target market) is not in position to immediately respond to the message (e.g., seek more information).  This too is changing.  For example, in the next few years technologies will be readily available to enable a television viewer to click a button to request more details on a product seen on their favorite TV program.  In fact, it is expected that over the next 10-20 years advertising will move away from a one-way communication model and become one that is highly interactive.

Another characteristic that may change as advertising evolves is the view that advertising does not stimulate immediate demand for the product advertised.  That is, customers cannot quickly purchase a product they see advertised.  But as more media outlets allow customers to interact with the messages being delivered the ability of advertising to quickly stimulate demand will improve.

Importance of Advertising

Spending on advertising is huge.  One often quoted statistic by market research firm ZenithOptimedia estimates that worldwide spending on advertising exceeds (US) $400 billion.  This level of spending supports thousands of companies and millions of jobs.  In fact, in many countries most media outlets, such as television, radio and newspapers, would not be in business without revenue generated through the sale of advertising. 

While worldwide advertising is an important contributor to economic growth, individual marketing organizations differ on the role advertising plays.  For some organizations little advertising may be done, instead promotional money is spent on other promotion options such a personal selling through a sales team.  For some smaller companies advertising may consist of occasional advertisement and on a very small scale, such as placing small ads in the classified section of a local newspaper. 

But most organizations, large and small, that rely on marketing to create customer interest are engaged in consistent use of advertising to help meet marketing objectives.  This includes regularly developing advertising campaigns, which involve a series of decisions for planning, creating, delivering and evaluating an advertising effort.  We will cover advertising campaigns in greater detail in our next tutorial.

Managing Advertising Decisions

Delivering an effective marketing message through advertising requires many different decisions as the marketer develops their advertising campaign.  For small campaigns, that involve little creative effort, one or a few people may handle the bulk of the work.  In fact, the Internet has made do-it-yourself advertising an easy to manage process and has especially empowered small businesses to manage their advertising decisions.  As we will see, not only can small firms handle the creation and placement of advertisements that appear on the Internet, new services have even made it possible for a single person to create advertisements that run on local television.  For instance, a company called SpotRunner allows users to select from a list of high-quality television ads that can be customized and then placed within local cable television programming.

For larger campaigns the skills needed to make sound advertising decisions can be quite varied and may not be easily handled by a single person.  While larger companies manage some advertising activities within the company, they are more likely to rely on the assistance of advertising professionals, such as those found at advertising agencies, to help bring their advertising campaign to market.

Advertising Agency Functions

Professionals at advertising agencies and other advertising organizations offer a number of functions including:

• Account Management – Within an advertising agency the account manager or account executive is tasked with handling all major decisions related to a specific client.  These responsibilities include locating and negotiating to acquire clients.  Once the client has agreed to work with the agency, the account manager works closely with the client to develop an advertising strategy.  For very large clients, such as large consumer products companies, an advertising agency may assign an account manager to work full-time with only one client and, possibly, with only one of the client’s product lines.  For smaller accounts an account manager may simultaneously manage several different, though non-competing, accounts.
• Creative Team –The principle role of account managers is to manage the overall advertising campaign for a client, which often includes delegating selective tasks to specialists.  For large accounts one task account managers routinely delegate involves generating ideas, designing concepts and creating the final advertisement, which generally becomes the responsibility of the agency’s creative team.  An agency’s creative team consists of specialists in graphic design, film and audio production, copywriting, computer programming, and much more.
• Researchers – Full-service advertising agencies employ market researchers who assess a client’s market situation, including understanding customers and competitors, and also are used to test creative ideas.  For instance, in the early stages of an advertising campaign researchers may run focus group sessions with selected members of the client’s target market in order to get their reaction to several advertising concepts.  Researchers are also used following the completion of an advertising campaign to measure whether the campaign reached its objectives.
• Media Planners – Once an advertisement is created, it must be placed through an appropriate advertising media.  Each advertising media, of which there are thousands, has its own unique methods for accepting advertisements, such as different advertising cost structures (i.e., what it costs marketers to place an ad), different requirements for accepting ad designs (e.g., size of ad), different ways placements can be purchased (e.g., direct contact with media or through third-party seller), and different time schedules (i.e., when ad will be run).  Understanding the nuances of different media is the role of a media planner, who looks for the best media match for a client and also negotiates the best deals.

Types of Advertising

If you ask most people what is meant by “type” of advertising, invariably they will respond by defining it in terms of how it is delivered (e.g., television ad, radio ad, etc.).  But in marketing, type of advertising refers to the primary “focus” of the message being sent and falls into one of the following four categories:

Product-Oriented Advertising

Most advertising spending is directed toward the promotion of a specific good, service or idea, what we have collectively labeled as an organization’s product.  In most cases the goal of product advertising is to clearly promote a specific product to a targeted audience.  Marketers can accomplish this in several ways from a low-key approach that simply provides basic information about a product (informative advertising) to blatant appeals that try to convince customers to purchase a product (persuasive advertising) that may include direct comparisons between the marketer’s product and its competitor’s offerings (comparative advertising).

However, sometimes marketers intentionally produce product advertising where the target audience cannot readily see a connection to a specific product.   Marketers of new products may follow this “teaser” approach in advance of a new product introduction to prepare the market for the product.  For instance, one week before the launch of a new product a marketer may air a television advertisement proclaiming “After next week the world will never be the same” but do so without any mention of a product or even the company behind the ad.  The goal is to create curiosity in the market and interest when the product is launched.

Image Advertising

Image advertising is undertaken primarily to enhance an organization’s perceived importance to a target market.  Image advertising does not focus on specific products as much as it presents what an organization has to offer.  In these types of ads, if products are mentioned it is within the context of “what we do” rather than a message touting the benefits of a specific product.  Image advertising is often used in situations where an organization needs to educate the targeted audience on some issue.  For instance, image advertising may be used in situations where a merger has occurred between two companies and the newly formed company has taken on a new name, or if a company has received recent negative publicity and the company wants to let the market know that they are about much more than this one issue.

Advocacy Advertising

Organizations also use advertising to send a message intended to influence a targeted audience.  In most cases there is an underlying benefit sought by an organization when they engage in advocacy advertising.  For instance, an organization may take a stand on a political issue which they feel could negatively impact the organization and will target advertisements to voice their position on the issue.

Public Service Advertising

In some countries, not-for-profit organizations are permitted to run advertisements through certain media outlets free-of-charge if the message contained in the ad concerns an issue viewed as for the “greater good” of society.  For instance, ads directed at social causes, such as teen-age smoking, illegal drug use and mental illness, may run on television, radio and other media without cost to organizations sponsoring the advertisement.

Advertising Trends

Like most areas of marketing, advertising is changing rapidly.  Some argue that change has affected advertising more than any other marketing function.  The more important trends in advertising include:

Digital Convergence

While many different media outlets are available for communicating with customers, the ability to distinguish between outlets is becoming more difficult due to the convergence of different media types.  In advertising convergence, and more appropriately digital convergence, refers to a growing trend for using computer technology to deliver media programming and information.  Convergence allows one media outlet to take advantage of features and benefits offered through other media outlets.  For instance, in many areas around the world television programming is now delivered digitally via cable, telephone or satellite hookup.  This delivery method uses the same principles of information delivery that is used to allow someone to connect the Internet. 

The convergence of television and Internet opens many potential opportunities for marketers to target customers in ways not available with traditional television advertising. For example, technology may allow ads delivered to one household to be different than ads delivered to a neighbor’s television even though both households are watching the same program.  But convergence is not limited to just television.  Many media outlets are experiencing convergence as can be seen with print publications that now have a strong web presence.  The future holds even more convergence opportunities.  These include outdoor billboards that alter displays as cars containing geographic positioning systems (GPS) and other recognizable factors (e.g., GPS tied to satellite radio) pass by or direct mail postcards that carry a different message based on data that matches a household’s address with television viewing habits.

Focus on Audience Tracking

The movement to digital convergence provides marketers with the basic resources needed to monitor user’s activity, namely, digital data.  Any media outlet that relies on computer technology to manage the flow of information does so using electronic signals that eventually form computer data.  In simple form, electronic data is represented by either an “on” or “off” electronic signal.  In computer language this is further represented by two numbers “0” and “1” and, consequently, is known as digital information.  All digital information can be stored and later evaluated.  For media outlets delivering information in digital form, the potential exists for greater tracking and matching this with information about the person receiving the digital data.  And tracking does not stop with what is delivered; it also works with information being sent from the customer.  For instance, as we noted earlier, by clicking on their television screen viewers will soon be able to instantly receive information about products they saw while watching a television show.  This activity can be tracked then used in future marketing efforts.

Audience Concern with Tracking

While media convergence offers marketers more options for tracking response to advertisements, such activity also raises ethical and legal concerns.  Many consumers are not pleased to learn their activities are being monitored when they engage a media outlet.  Yet consider the following examples of how marketers are tracking users:

• Television Viewing – As we noted, the advent of digitally delivered television allows cable, telephone and satellite providers to track user activity through the set-top boxes connected to a subscriber’s television.  Future innovation will make the user television experience even more interactive and, consequently, open to even more tracking.
• Television recording – The days of television videotape recording are quickly coming to an end, replaced by recording using computer technology.  A digital video recorder (DVR), such as TiVo, can track users recording habits and, based on a viewer’s past activity, make suggestions for programs they may want to record.  Additionally, advertising services can program the DVR to insert special advertisements within a program targeted to a particular viewer.
• Internet Spyware – Downloading entertainment from the Internet, such as games, video and software, may contain a hidden surprise – spyware.  Spyware is a special program that runs in the background of a user’s computer and regularly forwards information over the Internet to the spyware’s company.  In some cases spyware keeps track of websites the user has visited.  The information is then used to gain an understanding of the user’s interests, which then results in delivery of special ads when a user visits a certain site.

Ad Skipping and Blocking

As noted above, television recording devices offer marketers tremendous insight into viewers’ habits and behavior.  Yet from the consumer side, the DVR is changing how people view television programs by allowing them to watch programming at a time that is most convenient for them. 

Viewer convenience is not the only advantage of the DVR.  The other main reason consumers are attracted to the DVR is their ability to quickly skip over commercials.  Of course this presents major issues for advertisers who are paying for advertisements.  As more DVR devices with ad skipping or even ad blocking features are adopted by mainstream consumers the advertiser’s concern with whether they are getting the best value for the advertising money becomes a bigger issue.  Advertisers who feel frustrated with television ad-skipping may opt to invest their promotional funds in other media outlets where consumers are more likely to be exposed to an advertisement.

Changing Media Choices

There is a major cultural shift occurring in how people use media for entertainment, news and information.  Many traditional media outlets, such as newspapers and major commercial television networks, are seeing their customer base eroded by the emergence of new media outlets.  The Internet has become the major driver of this change.  In particular, a number of important applications tied to the Internet are creating new media outlets and drawing the attention of many, mostly younger, consumers.  Examples include:

• Podcasting Audio – This involves delivering programming via downloadable online audio that can be listened to on music players, such as Apple’s iPod.  Many news websites and even other information site, such as blogs, offer free downloadable audio programming.
• Podcasting Video – While audio downloading has been available for some time, the downloading of video to small, handheld devices, including cellphones, is in its infancy.  Many television networks are now experimenting with making their programming available for download, albeit, for a fee.
• RSS Feeds – This is an Internet information distribution technology that allows for news and content to be delivered instantly to anyone who has signed up for delivery.  Clearly those registering for RSS feeds represent a highly targeted market since they requested the content.
• Networked Gaming – While gaming systems have been around for some time, gaming systems attached to the Internet for group play is relatively new and becoming more practical as more people move to faster Internet connections.  This type of setup will soon allow marketers to insert special content, such as advertising, within game play.

For marketers these new technologies should be monitored closely as they become accepted alternatives to traditional media outlets.  While these technologies are currently not major outlets for advertising, they may soon offer such opportunity.  As these technologies gain momentum and move into mainstream acceptance marketers may need to consider shifting advertising spending. 

Marketers should also be aware that new media outlets will continue to emerge as new applications are developed.  The bottom line for marketers is they must stay informed of new developments and understand how their customers are using these in ways that may offer advertising opportunities.

What is Marketing? 

(Source: www.knowthis.com)

Welcome to the World of Marketing and the Principles of Marketing Tutorials. The main intention of this tutorial is to offer a straightforward examination of one of the most important, exciting and challenging business activities crucial to nearly all organizations.

The Principles of Marketing Tutorials are ideal for anyone who is new to marketing as it covers all essential marketing areas.  By spending time with this tutorial the marketing novice will quickly gain the foundation needed to appreciate what marketers do and understand the full scope of marketing decision making.  For some, reading this tutorial may also offer insight into career options that exist in the marketing field.

Experienced marketers may also find this tutorial useful.  Often seasoned marketers tend to focus on just a few areas of marketing as part of their day-to-day activities and this tutorial may serve as a good refresher for areas of marketing for which they have not recently spent much time.

Before we get started we should mention that most of what we discuss applies to all types of businesses including those whose objective is to make money (i.e., for-profit businesses) as well as those not driven by a profit-making motive (i.e., not-for-profit organizations). However, the reader should be aware that we often use the terms organization, company, corporation, and firm interchangeably.  While the later three terms are often associated with profit-making businesses, the reader should understand the use of one of these terms does not necessarily limit the context of the discussion to for-profit businesses but may apply across all types of marketing situations including not-for-profits.

Definition of Marketing

Our starting point for learning about marketing is to begin with the basics and that starts with defining marketing.  Since marketing has been an important part of business for a long time we could consult one of the many hundreds of books written on the subject to locate a definition.  Or, as is more the custom today, we could search the Internet to see how marketing is defined.  Whether we search print or electronic form we will find that marketing is defined in many different ways.

Some definitions focus on marketing in terms of what it means to an organization, such as being the key functional area for generating revenue, while other definitions lean more toward defining marketing in terms of its most visible tasks, such as advertising and creating new products.

There probably is no one best way to define marketing, however, whatever definition is used should have an orientation that focuses on the key to marketing success – customers.

For the purpose of this tutorial we will define marketing as follows:

Marketing consists of the strategies and tactics used to identify, create and maintain satisfying relationships with customers that result in value for both the customer and the marketer.

Definition Dissected

Let’s examine our definition of marketing in a little more detail by looking at the key terms.

Strategies and Tactics - Strategies are best explained as the direction the marketing effort takes over some period of time while tactics are actionable steps or decisions made in order to follow the strategies established.  For instance, if a company’s strategy is to begin selling its products in a new country, the tactics may involve the marketing decisions made to carry this out.  Performing strategic and tactical planning activities in advance of taking action is considered critical for long-term marketing success.

Identify - Arguably the most important marketing function involves efforts needed to gain knowledge of customers, competitors, and markets (i.e., where marketers do business).  We will see throughout this tutorial how marketing research is utilized in all decision areas.

Create - Competition forces marketers to be creative people.  When marketers begin new ventures, such as building a new company, it is often based around something that is new (e.g., a new product, a new way of getting products to customers, a new advertising approach, etc.).  But once something new is launched innovation does not end.  Competitive pressure is continually felt by the marketer, who must respond by again devising new strategies and tactics that help the organization remain successful.  For marketers, the cycle of creating something new never ends.

Maintain - Today’s marketers work hard to insure their customers return to purchase from them again and again.  Long gone (see our discussion of History of Marketing below) are the days when success for a marketer was measured simply in how many sales they made each day.  Now, in most marketing situations, marketing success is evaluated not only in terms of sales figures but also by how long a marketer retains good customers.  Consequently, marketers’ efforts to attract customers do not end when a customer makes a purchase.  It continues in various ways for, hopefully, a long time after the initial purchase.

Satisfying Relationships - A key objective of marketing is to provide products and services that customers really want AND to make customers feel their contact with the marketer is helping build a good relationship between the two.  In this way the customer becomes a partner in the transaction, not just a source of revenue for the marketer.

Value for Both Customer and Marketer - Value refers to the perception of benefits received for what someone must give up.  For customers, value is most often measured by how much benefit they feel they are getting for their money, though the value one customer feels may differ from what another customer feels even though they purchase the same product.  On the other side of the transaction, the marketer for a for-profit organization may measure value in terms of how much profit they make for the marketing efforts and resources expended.  For a successful marketing effort to take place both the customer and the marketer must feel they are receiving something worth while in return for their efforts.  Without a strong perception of value it is unlikely a strong relationship can be built.  Throughout this tutorial we will emphasize value and show ways marketers build value into the products they offer.

What Marketers Do

In order to reach the goal of creating a relationship that holds value for customers and for the organization, marketers use a diverse toolkit that includes (but is not limited to) making decisions regarding:

   1. Target Markets – markets consist of customers identified as possessing needs the marketer believes can be addressed by its marketing efforts
   2. Products – consists of tangible (e.g., goods) or intangible (e.g., services)  solution to the market’s needs
   3. Promotion – a means for communicating information about the marketing organization’s products to the market
   4. Distribution – the methods used by the marketer that enable the market to obtain products
   5. Pricing – ways for the marketer to set and adjust the cost paid by the market to obtain products
   6. Supporting Services – additional options that enhance a product’s value

While these decisions are shown with a number, the order of decision-making does not necessarily follow this sequence. However, as we will discuss, in almost all cases marketers should first identify target markets (#1) prior to making decisions #2 through #6 (commonly called the Marketing Mix) since these decisions are going to be directed toward satisfying the desired target markets.

Each option within the marketer’s toolkit is tightly integrated with all other options so that a decision in one area could, and often does, impact decisions in other areas.  For instance, a change in the price of a product (e.g., lowering the price) could impact the distribution area (e.g., requires increased product shipments to retail stores).

Additionally, options within the toolkit are affected by factors that are not controlled by the marketer.  These factors include economic conditions, legal issues, technological developments, social/cultural changes, and many more.  While not managed in the way marketers control their toolkit, these external factors must be monitored and dealt with since these can cause considerable harm to the organization.  Ignoring outside elements also can lead to missed opportunities in the market especially if competitors are the first to take advantage of the opportunities.  As part of the strategic and tactical planning process discussed above it is wise for marketers to pay close attention to the environment outside the organization.

Finally, as noted earlier, research plays a significant role in all marketing decisions areas.  As we will see in the Marketing Research Tutorial, marketing decisions should not be made without first committing time and resources to obtaining needed information. 

History of Marketing

It is hard for many to believe, but when compared to economics, production and operations, accounting and other business areas, marketing is a relatively young discipline having emerged in the early 1900s.  Prior to this time most issues that are now commonly associated with marketing were either assumed to fall within basic concepts of economics (e.g., price setting was viewed as a simple supply/demand issue), advertising (well developed by 1900), or in most cases, simply not yet explored (e.g., customer purchase behavior, importance of distribution partners).

Led by marketing scholars from several major universities, the development of marketing was in large part motivated by the need to dissect in greater detail relationships and behaviors that existed between sellers and buyers.  In particular, the study of marketing led sellers to recognize that adopting certain strategies and tactics could significantly benefit the seller/buyer relationship.  In the old days of marketing (before the 1950s) this often meant identifying strategies and tactics for simply selling more products and services with little regard for what customers really wanted.  Often this meant companies embraced a “sell-as-much-as-we-can” philosophy with little concern for building relationships for the long term.

But starting in the 1950s, companies began to see that old ways of selling were wearing thin with customers.  As competition grew stiffer across most industries, organizations looked to the buyer side of the transaction for ways to improve.  What they found was an emerging philosophy suggesting that the key factor in successful marketing is understanding the needs of customers.  This now famous Marketing Concept suggests marketing decisions should flow from FIRST knowing the customer and what they want.  Only then should an organization initiate the process of developing and marketing products and services.

The marketing concept continues to be at the root of most marketing efforts, though the concept does have its own problems (e.g., doesn’t help much with marketing new technologies) a discussion of which is beyond the scope of this tutorial.  But overall, marketers have learned they can no longer limit their marketing effort to just getting customers to purchase more.  They must have an in-depth understanding of who their customers are and what they want.  

The Role of Marketing

As we’ve seen the key objective of an organization’s marketing efforts is to develop satisfying relationships with customers that benefit both the customer and the organization.  These efforts lead marketing to serve an important role within most organizations and within society.

At the organizational level, marketing is a vital business function that is necessary in nearly all industries whether the organization operates as a for-profit or as a not-for-profit.  For the for-profit organization, marketing is responsible for most tasks that bring revenue and, hopefully, profits to an organization.  For the not-for-profit organization, marketing is responsible for attracting customers needed to support the not-for-profit’s mission, such as raising donations or supporting a cause.  For both types of organizations, it is unlikely they can survive without a strong marketing effort.

Marketing is also the organizational business area that interacts most frequently with the public and, consequently, what the public knows about an organization is determined by their interactions with marketers.  For example, customers may believe a company is dynamic and creative based on its advertising message.

At a broader level marketing offers significant benefits to society.  These benefits include:

    * Developing products that satisfy needs, including products that enhance society’s quality of life
    * Creating a competitive environment that helps lower product prices
    * Developing product distribution systems that offer access to products to a large number of customers and many geographic regions
    * Building demand for products that require organizations to expand their labor force
    * Offering techniques that have the ability to convey messages that change societal behavior in a positive way (e.g., anti-smoking advertising)

Criticisms of Marketing

While marketing is viewed as offering significant benefits to organizations and to society, the fact that marketing is a business function operating in close contact with the public opens this functional area to extensive criticism.

Among the issues cited by those who criticize marketing are:
Marketing Encourages People to Purchase What is They Do Not Need

Possibly the criticism most frequently made about marketing is that marketers are only concerned with getting customers to buy whether they want the product or not.  The root of this argument stems from the belief that marketers are only out to satisfy their own needs and really do not care about the needs of their customers.

As we will discuss, while many marketers are guilty of manipulating customers into making unwanted purchases, the vast majority understand that undertaking such tactics will not lead to loyal customers and, consequently, is unlikely to lead to longer term success.
Marketers Embellish Product Claims

Marketers are often criticized for exaggerating the benefits offered by their products.  This is especially the case with the part of marketing that engages in customer communication, such as advertising and salespeople.  The most serious problems arise when product claims are seen as misleading customers into believing a product can offer a certain level of value that, in fact, it cannot.

But sometimes there is a fine line between what a rational person should accept as a “reasonable exaggeration” and what is considered downright misleading.  Fortunately, many countries offer customers some level of protection from misleading claims since such business practices may subject the marketer to legal action.  Again, using such tactics is likely to lead to marketing failure as customers will not be satisfied and will likely not return.

Marketing Discriminates in Customer Selection

We will see later that a key to marketing success is to engage in a deliberate process that identifies customers who offer marketers the best chance for satisfying organizational objectives.  This method, called target marketing, often drives most marketing decisions, including product development and price setting.  But some argue that target marketing leads marketers to focus their efforts primarily on customers who have the financial means to make more expensive purchases.  They contend that doing so intentionally discriminates against others, especially lower income customers who cannot afford to purchase higher priced products.  This group ends ups being targeted with lower quality (and in some cases less safe) products or for some groups, no product options.

While this criticism is often valid, it is worth noting that while many “lower quality” products are inferior to current high-end products, comparison of their quality to similar products from just a few years ago shows there has been significant improvement.  For instance, low cost electronic equipment, such as digital cameras, offer more features compared to low cost cameras of just a few years ago.  Thus, while certain customer groups may not be the target market for certain new product offerings they may eventually benefit from higher-end products.
Marketing Contributes to Environmental Waste

In recent years one of the loudest complaints against marketing concerns its impact on the environment.  Those critical of marketing’s effect on the environment point to such issues as:

    * the use of excessive, non-biodegradable packaging (e.g., use of plastics, placing small products in large packages, etc.)
    * the continual development of resource consuming products (e.g., construction of new buildings, golf courses, shopping malls, etc.)
    * the proliferation of unsightly and wasteful methods of promotions (e.g., outdoor billboards, direct mail, etc.). 

Marketers have begun to respond to these concerns by introducing “green marketing” campaigns that are not only intended to appease critics but also take advantage of potential business opportunities.  For example, auto makers see opportunity by creating new fuel efficient hybrid vehicles, the demand for which has accelerated in the last few years.  Also, certain retailers are finding financial opportunity and promotional value by asserting their marketing muscle to encourage customers to become more environmentally responsible.  This can be seen with retailers, such as Wal-Mart, that are shifting its inventory of light bulbs from standard incandescent types to more efficient fluorescent products.  It is expected that as environmental activism gains political clout and more consumer support, marketers will see even more opportunity to market environmentally friendly products.

Marketing Encroaches on Customers’ Right to Privacy

As we will see later in our discussion of Marketing Research, gathering and analyzing information on the market in which marketers conduct business is a vital step in making good marketing decisions.  Often the most valuable information deals with customers’ buying behavior and especially determining which factors influence how customers make purchase decisions.

But to some consumer advocates digging deep into customer buying behavior crosses the line of what is considered private information.  Of most concern to privacy advocates is marketers’ use of methods that track user activity.  In particular, they are critical of the growing use of advanced technologies that allow marketers to gain access to customer shopping and information gathering habits.  For instance, marketers can use highly advanced techniques to track user activity on the Internet.  Some marketers do so using questionable practices, such as loading tracking software onto a user’s computer, without the knowledge or permission of the user.  One type of software called adware allows marketers to monitor users’ website browsing activity and use this information to deliver advertisements based on users Internet habits.

Privacy issues are not limited to concerns with online tracking; marketers also use technique to track customers’ offline purchase activity.  One example of offline tracking occurs when retail stores match sales transactions to individual shoppers.  This is easy to do when customers use purchase cards (a.k.a. loyalty cards, discount cards, club cards, etc.) as part of the buying process.

Privacy issues are not restricted to marketing research.  Other areas of marketing have also experienced problems.  For instance, there have been several recent incidences, most notably those involving mishandled credit card payment information, where a breach in customer privacy has placed customers at risk.

The issue of customer privacy is likely to become one of the most contentious issues marketers face in the coming years.  If this continues marketers may soon face greater legal limits on how they conduct business.

Ethics in Marketing

In addition to problems cited above, some critics also argue that the money-making motive of some marketers has encouraged many to cross the line in terms of ethical business behavior.  Ethics is concerned with what is right and what is wrong.  Many people assume that only actions that violate laws are considered unethical.  While it is true that illegal activity is also unethical, a business activity can be unethical even though no laws are violated.  For instance, some consider it unethical for marketing companies to aggressively promote unhealthy foods to children though such promotional practices are generally not viewed as illegal.

Sometimes the line between what is considered ethical and unethical is difficult to distinguish since what is right and wrong differs depending on such factors as nationality, culture, and even industry.  For example, many websites offer users access at no monetary charge to their content (e.g., articles, videos, audio clips, etc.) but do so only if users register and provide contact information including email addresses.  Some of these sites then automatically add registrants to promotional email mailing lists.  Some view the practice of automatic “opt-in” to a mailing list as being unethical since customers do not request it and are forced to take additional action to be removed from the list (“opt-out”).  However, many marketers see no ethical issue with this practice and simply view adding registered users to an email list as part of the “cost” to customers for accessing material. 

Marketing Code of Ethics

The call for marketers to become more responsible for their actions has led to the development of a code of ethics by many companies and professional organizations.

A company code of ethics includes extensive coverage of how business is conducted by members of an organization.  For instance, Yahoo! lays out an extensive list of what is expected of their employees in their document http://yhoo.client.shareholder.com/conduct.cfm. Among the issues covered are:

    * Business Relationships (“must never take unfair advantage of others through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice”)
    * Offering Gifts to Clients (“may not furnish or offer to furnish any gift that is of more than token value or that goes beyond the common courtesies”)
    * Receiving Gifts From Clients (“must never request or ask for gifts, entertainment or any other business courtesies”)
    * Business Communication (“should take care to avoid exaggeration, colorful language, guesswork, legal conclusions and derogatory remarks or characterizations of people and other companies”)

Marketers often join professional organizations for the purpose of associating with others who share similar interests.  These organizations include industry associations, whose membership is mostly limited to those who work within a particular industry, and professional services associations, whose membership consists of those who share similar job responsibilities.  Marketers joining these organizations often find that a code of ethics has been developed that is intended to be followed by all organization members.  For example, the Canadian Marketing Association lays out rules for its membership, which includes marketers from many for-profits and not-for-profit organizations, in its Code of Ethics and Standards and Practices. The Code discusses such issues as:

    * Accuracy of Representation of Products (“must accurately and fairly describe the product or service offered”)
    * Support of Claims Made About Products (“must be able to substantiate the basis for any performance claim or comparison“)
    * Acceptability for Using the Word “Free” (“Products or services offered without cost or obligation”)
    * Guidelines for Advertising Which Compares One Product to Another ("must be factual, verifiable and not misleading”)

Social Responsibility in Marketing

Most marketing organizations do not intentionally work in isolation from the rest of society.  Instead they find that greater opportunity exists if the organization is visibly accessible and involved with the public.  As we’ve seen, because marketing often operates as the “public face” of an organization, when issues arise between the public and the organization marketing is often at the center.  In recent years the number and variety of issues raised by the public has increased.  One reason for the increase is the growing perception that marketing organizations are not just sellers of product but also have an inherent responsibility to be more socially responsible, including being more responsible for its actions and more responsive in addressing social concerns.

Being socially responsible means an organization shows concern for the people and environment in which it transacts business.  It also means that these values are communicated and enforced by everyone in the organization and, in some cases, with business partners, such as those who sell products to the company (e.g., supplier of raw material for product production) and those who help the company distribute and sell to other customers (e.g., retail stores).

In addition to insuring these values exist within the organization and its business partners, social responsibility may also manifest itself in the support of social causes that help society.  For instance, marketers may sponsor charity events or produce cause-related advertising.

Marketers who are pursuing a socially responsible agenda should bear in mind that such efforts do not automatically translate into increased revenue or even an improved public image.  However, organizations that consistently exhibit socially responsible tendencies may eventually gain a strong reputation that could pay dividends in the form of increased customer loyalty.

Characteristics of Modern Marketers

As we’ve seen, marketing is a critical business function that operates in an environment that is highly scrutinized and continually changing.  Today’s marketers undertake a variety of tasks as they attempt to build customer relationships and the knowledge and skill sets needed to perform these tasks successfully are also varied.

So what does it take to be a successful marketer?  Obviously, at the center of a successful marketing career is an understanding of the important concepts that are discussed in the Principles of Marketing Tutorials.  But basic marketing knowledge is just the beginning, for today’s marketers must possess much more.  Among the most important knowledge and skills needed to be successful are:
Basic Business Skills

Marketers are first and foremost business people who must perform necessary tasks required of all successful business people.  These basic skills include problem analysis and decision-making, oral and written communication, basic quantitative skills, and working well with others.
Understanding Marketing’s Impact

Marketers must know how their decisions will impact other areas of the company and others business partners.  They must realize that marketing decisions are not made in isolation and that decisions made by the marketing team could lead to problems for others.  For example, making a decision to run a special sale that significantly lowers the price of a product could present supply problems if the production area is not informed well in advance of the sale.
Technology Savvy

Today’s marketers must have a strong understanding of technology on two fronts.  First, marketers must be skilled in using technology as part of their everyday activities.  Not only must they understand how basic computer software is used to build spreadsheets or create slide presentations, but in a world where information overload is a problem marketers must investigate additional technologies that can improve their effectiveness and efficiency, such as multifunction cellphones, GPS navigation services and web-based productivity applications.  Second, marketers must understand emerging technology and applications in order to spot potential business opportunities as well as potential threats.  For instance, the rapid growth of search engines requires marketers to firmly understand how these fit within an overall marketing strategy.
The Need for a Global Perspective

Thanks in large part to the Internet, nearly any company can conduct business on a global scale.  Yet, just having a website that is accessible to hundreds of millions of people worldwide does not guarantee success.  Marketers selling internationally must understand the nuances of international trade and cultural differences that exist between markets.
Information Seeker

The field of marketing is dynamic.  Changes occur continually and often quickly.  Marketers must maintain close contact with these changes through a steady diet of information.

In the remaining parts of the Principles of Marketing Tutorials we explore in further detail the key concepts and strategies that are consistent across nearly all industries and marketing jobs.  While reading the tutorial will not guarantee marketing success, it will certainly offer the foundation needed to be a Modern Marketer.