Marketing Innovative Products and Services

According to the American Marketing Association, marketing is:

“the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large”[1].

STUDENT ACTIVITY:

Take a look at the following You Tube video:

Think about the definition of marketing and write down 3-5 points, applicable to the marketing concept.

This definition implies several points:

• Marketing is about creating products and services for customers, but it should also deliver value for all stakeholders of a business (clients, partners…), as well as the society, in which the business is located. Therefore, marketing is not (only) about creating sales and making money, but also about creating a sustainable and socially responsible business.

• Marketing is also a process, consisting of different activities, which will be covered in detail by this workbook. For each activity in this process, a detailed worksheet will be provided for you, in order to make your marketing thinking and planning as easy as possible,

• Marketing is about creating an offer, to be traded, or exchanged through a market, or another institution, which functions on market principles. The importance of market-based transactions (exchanges) is really all about the power of the forces of supply and demand.

These market forces make sure that no one consumes too much of an offer, just because it’s “free”, since each offer comes with a price, which is determined by the balance of the supply and demand. The price is always there, even if the actual product or service is actually “free” (in monetary terms). For instance, if a non-profit organization offers a free training session for unemployed people, they still need to “pay” for using this service by allocating their time (which they could have used to perform a low-paid job and earn some money) and paying for a ride to the location, in which the session is being held. So, they need to expect that some value will be delivered by the training session and they will be better-off, once they invested their time and effort to attend it.  For instance, once they are trained, they should be able to attract better jobs and end up employed with an attractive company. All stakeholders should be happy with this exchange, including the employees of a non-profit organizations, who receive their salaries, in exchange for their training and other services to the unemployed people – the users of this service. The actual money, needed to fund these activities may come from a corporate donation, or from the state budget, but the funder should be also satisfied with the results achieved, because it helps the funding organization to achieve its social responsibility objectives.

What is value?

Based on the previous example, it is easy to describe the concept of value:

VALUE = CUSTOMER BENEFITS – PRICE – TROUBLE TO RECEIVE THE BENEFITS[2]

The value formula above gives some important points for the development of your entrepreneurial idea:

• You don’t need to invent the wheel, in order to be successful. Many products existed on the market as utter failures, before being “re-invented”: just consider the tablet computers, which were, for many years, considered to be mostly useless.
• Identify your customers (target group/market) and try to provide them with as many benefits as possible and make your product (or service) as hassle-free as possible.

STUDENT ACTIVITY:

Take a look at the following You Tube video of late Steve Jobs, presenting the Apple iPad tablet:

Think about how Apple, under Steve Job’s leadership, redefined the tablet computer value for customers. Write down a short essay (half a page) about the topic and address the issue of (re)inventing customer value.

Is marketing only about making a single transaction/sale?

In this way, a relationship has been formed, based on market-like exchanges, providing value to all the stakeholders involved into the process. The contemporary marketing emphasizes the long-term relationships as being most satisfying and most profitable for the majority of market-based exchanges: it is, usually, not recommended to “take the money and run”.

Marketing is also about customer (user) satisfaction and loyalty, but this should be taken with a lot of precaution. For instance, if a customer expects a very high level of service, they will not be satisfied, even if an organization provides a very good service, without going that “extra mile”, to which the pampered customers are accustomed. At the other hand, if a given customer is accustomed to being treated badly, a simple smile will do wonders to ensure that he or she is satisfied. Customer satisfaction is, therefore, a relationship between the initial expectation of the value, to be delivered from an organization, and the perception of the value obtained at the end of the market-based transaction[3].

What is the job of a marketing professional?

It should be obvious that a marketing professional creates value for the customers and stakeholders, but how does one achieve such a complex objective? The traditional marketing theory gives a simple answer, consisting of four dimensions of a marketer’s job (being, also, the four fundamental points in marketing, as well):

• He or she creates a compelling product (or a service), which is attractive to the customers.
• This product comes with a price, reflecting the actual relationship between the forces of supply and demand on the marketplace.
• The market offer needs to be made accessible to the customers by making partnerships with wholesalers and retailers (i.e. distributors of a product, or a service), i.e. by creating marketing channels to distribute a product/service to the actual customers. In other words, the offer needs to be “moved” to a place, in which customers are able to buy and consume it.
• The customers also need to be informed about the offer and motivated to spend their money on purchasing it. This is the function of promotion, which communicates information about the product to the customers, but also makes sure that information about the organization, offering the product/service, is delivered to all its stakeholders, as well.

These four fundamental determinants of marketing are usually referred to as the “four Ps”, or the marketing mix. All four Ps need to reinforce each other and your job, as a future entrepreneur, will be to develop the best possible marketing mix for your idea. We hope that this workbook will help you to achieve this.

The activities (or stages in the marketing process) you will need to go through, in order to make marketing work for you are as follows:

• Analyzing the marketing environment – you need to find out about the industry into which are you entering, as well as about the customers, competitors and other important “players” in the industry. You also need to know about the forces in the wider environment, which are relevant for your future business.
• Marketing research – your customers have specific needs and ideas, related to the value and convenience expected from your product/service and you need to find out about those.
• Customer segments, market targeting, differentiation and positioning – you cannot serve all the customers, but, rather, have to choose a specific target group/market and develop a competitive market offer, tailored to this specific group.
• Planning the marketing mix – all elements of the marketing mix need to support the execution of your entrepreneurial idea in the specific context of your target market.
• Products, services and brands – managing the existing and developing new – since your idea probably involves development of a new brand, you should be also able to identify marketing implications, as well as to perform activities, related to branding and new product development.

[1] Source: https://www.ama.org/AboutAMA/Pages/Definition-of-Marketing.aspx

[2] Source: Saylor.org academy: Principles of Marketing open education resource, http://www.saylor.org/site/textbooks/Principles%20of%20Marketing.pdf, p. 5

[3] In marketing science, this is called the expectancy confirmation (or disconfirmation) theory. If you are interested in it, please look at the following journal articles: Oliver R. L, 1977, “Effect of Expectation and Disconfirmation on Postexposure Product Evaluations – an Alternative Interpretation,” Journal of Applied Psychology, 62(4), p. 480. Oliver R. L, 1980, “A Cognitive Model of the Antecedents and Consequences of Satisfaction Decisions,” Journal of Marketing Research, 17(4), p. 460.