The word market originally meant the place where the exchange between seller and buyer took place. Today, we speak of a market not only as a place but also as a particular type of buyer — for example, the youth market or the motorcycle market. The phrase share of market refers to the percentage of the total market in a product category that buys a particular brand. As Figure 2.1 shows, the four main types of markets are 1) consumer, 2) (or industrial), 3) institutional, and 4) channel. We can further divide each of these markets by size or geography. Consumer markets consist of people who buy products and services for personal or household use. As a student, you are considered a member of the consumer market for companies that sell jeans, athletic shoes, sweatshirts, pizza, music, textbooks, backpacks, computers, education, checking accounts, bicycles, travel, and vacations, along with a multitude of other products that you buy at drug and grocery stores, which the marketing industry refers to as packaged goods. Business-to-business markets consist of companies that buy products or services to use in their own businesses or in making other products. Advertising in this category tends to be heavier on factual content, but can also be beautifully designed. Institutional markets include a wide variety of profit and nonprofit organizations, such as hospitals, government agencies, and schools that provide goods and services for the benefit of society. Ads for this category are very similar to business-to-business ads in that they are heavy on copy and light on visuals and emotional appeals. Channel markets include members of the distribution which is made up of businesses that we call resellers or intermediaries. Channel marketing, the process of targeting a specific campaign to members of the distribution channel, has become more important now that manufacturers consider their distributors to be partners in their marketing programs. As giant retailers, particularly Wal-Mart, become more powerful, they can dictate to manufacturers what products their customers want to buy and how much they are willing to pay for them. Businesses spend most of their advertising dollars on consumer markets, although business-to-business advertising is becoming almost as important. Why Is Services Marketing Important? Services are the dominant part of the economy in most developed countries. Marketing a service-based business is different in a number of ways from marketing goods because the product is intangible.
manufacture, market, and service goods that fill those needs and wants, that is, create solutions for customer problems. An important principle to remember is: Customer-focused marketing is designed to address consumer needs and wants. Marketing communication can be designed to acquire consumer feedback that leads to insights into consumer decision making. This information then feeds back into marketing plans, where it can stimulate new product development that is better designed to more effectively and efficiently meet customer needs. In advertising, the difference between a product and a consumer focus lies in the orientation of the ad. Ideally, the ad will address both by interpreting product features in terms of consumer benefits. The United Airlines ad in Exhibit 2.8 provides an example of this. We often use the words consumer and customer interchangeably, but there are some differences in meaning. Consumer is a general term for people who buy and use products and services. The word customer, however, refers to someone who has purchased a specific brand or visited a specific retailer. By virtue of those actions, these people can be said to have a relationship with a brand or a store. Differentiation, Competitive Advantage, and Positioning Marketing experts point to the importance of differentiation as a selling strategy. They recommend strategies that are informed by consumers, but led by fundamental marketing decisions that make the brand stand out as different from its competition, a process known as positioning. How a brand is different and superior in some way is called a competitive advantage. This concept is referred to in marketing strategy as product differentiation. The point of difference is seen in the way the product is positioned relative to its competitors. Positioning refers to how consumers view and compare competitive brands or types of products. A product can be differentiated and therefore positioned in a variety of ways. Positioning is discussed later in this chapter, and also in Chapter 7. Added Value Added value refers to a marketing communication activity that makes the product more valuable, useful, or appealing to the consumer. Added value is the reason consumers are willing to pay more for one brand over its competition. Advertising and other marketing communication not only showcase the product’s value but also may add value by making the product appear more desirable. Providing news
In practice, this problem is best solved through cross-functional organization, which means a team is created involving members from all of the relevant parts of a company that interact with customers, other stakeholders, and with outside agencies. This cross-functional team operates with a singular brand vision as it plans marketing communication, monitors its impact and tracks consumer response. Who is in charge of planning all of these brand-building opportunities? Ed Chambliss, featured in the Inside Story box in this chapter, discusses the qualifications needed to be an IMC manager, whether on the client or agency side. Principles and Practices Four principles that guide the use of integrated marketing communications have been introduced thus far and are summarized below. Additional principles will be introduced in upcoming chapters. First Principle of IMC: Everything communicates. Second Principle of IMC: A brand is a unified vision (the art) and a complex system (the science.). Third Principle of IMC: Brand relationships drive value. Fourth Principle of IMC: You can’t be integrated externally if you are not integrated internally. BRAND COMMUNICATION IN A TIME OF CHANGE Below are some of the ways in which marketing is changing. Accountability Marketing managers are being challenged by senior management to prove that their decisions lead to the most effective marketing strategies. They are under pressure to deliver business results measured in terms of sales increases, increase in market share percentages, and corporate return on investment (ROI). Therefore, advertising and other marketing communication agencies are creating tools and techniques to help marketers evaluate the efficiency and effectiveness of their marketing communication expenditures. Global Marketing The issue of accountability is made more complicated by the growing use of global marketing. In most countries, markets are composed of local, regional, and international brands. A local brand is one marketed in a single country. A