The Definition of Marketing

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It’s interesting once in awhile to step back and observe change … You can almost hear the conversations evolve as marketing has evolved from mass marketing to segment marketing to target marketing to relationship marketing:

• “Consumers don’t know what they want until we tell them.”
• “This is warfare: Let’s launch campaigns and bombard our targets with messages.”
• “If you really watch the consumer, they’ll tell you what they wish. And if you listen hard, you can create better products for them.”

Let’s take a quick walk down marketing’s history lane:

The pre 60s rise of brand products and advertising agencies. Focus: mass communication

• The American Marketing Association definition of Marketing:
“The performance of business activities that direct the flow of goods and services from producers to consumers.”
AMA – 1948 & 1960

The 70s and 80s beginning of direct marketing. Focus: identification of the target group

• The American Marketing Association definition of Marketing:
“The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.”
AMA – 1985

The 90s rise of loyalty programs. Focus: databases, analysis systems

The 2000s evolution of marketing. Focus: creating value for the customer and the organization.

• The American Marketing Association definition of Marketing:
“Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.”
AMA – 2004

We have a global audience in this forum. Does the American Marketing Association’s definition of Marketing resonate with you? It’s interesting, because for some it does not. Let’s advance this line of thought.

You can find several definitions of CRM; however, in general “CRM is a business discipline designed to maximize the value of a company’s customer portfolio through effective marketing, sales and customer service. CRM puts the customer at the core of a company’s processes and practices.” Comparing the two definitions:

• Both are considered a discipline and a strategy focused on the acquisition, expansion and retention of profitable customer relationships.
• Both recognize the importance of aligning strategy, operations, and touchpoints with the needs and values of the customer. Customer-Centric or Customer-Focused.
• Both recognize the need to maximize value for the organization.

If someone asked you what you do “day-to-day” as a marketer, would you tell them you create, communicate and deliver value to customers and manage customer relationships? Are the definitions getting to close for your tastes? What’s your definition of marketing? By the way, there’s no right or wrong answer for purposes of this discussion … Only different roles and responsibilities, points-of-view, opinions and perspectives.

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8 COMMENTS

  1. The most recent AMA definition, i.e. “Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.” is incomplete in two ways, at least IMHO. First, increasingly, communication isn’t controlled, or even managed, by marketing. It’s now largely under the control and/or management of customers, and others, themselves. Second, there’s a big difference between inside-out marketing, commitment, and advocacy creation (what Glen Urban is describing in this latest book) and the outside-in commitment and advocacy behavior (or indifference and sabotage) that is owned by the peer-to-peer communication of customers.

    Also, traditional definitions of CRM have become increasingly obscure, obtuse, and diffuse. It’s a key reason why CRM Guru is now Customer Think. While the definitions you cite are appropriate and help with linkage to how marketing has traditionally been defined, the one I use most often is that “CRM is the creation of a single, integrated view of the customer across the enterprise.” This is the core of customer-centricity, and is an enabler for marketing to focus on delivering optimized customer value and experience.

    And…in termns of what I do (for clients) everyday, I would just broaden your definition to include other key stakeholds, especially employees, who are pivotal in delivering optimized customer value.

    Michael Lowenstein, PhD CMC
    Vice President and Senior Consultant
    Harris Interactive Loyalty

  2. Alan, Michael

    For me, Peppers & Rodgers nailed CRM when they described it simply as:

    “Treating Different Customers Differently”

    This simple expression captures the strategic intent of CRM. It is a meme that has travelled far and wide through the business community and deservedly. It encapsulates so much without being either inane or prescriptive.

    Sometimes less is much much more.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  3. The process of establishing a definition is interesting in it’s own right. Additional information collected from the AMA’s website …

    The AMA has appointed a committee to review the 2004 definition of marketing. An e-mail survey of AMA members was conducted. This survey asked specifically about the current and prior definitions and generated 2,500 responses. The respondents:

    Academic 14.4%
    Professional 46.2%
    Researcher 10.3%
    Other 25.0%
    Unknown 26.7%

    Overall reaction to the current definition was mixed (3.37 on a 5-point scale), with the rating similar across academics, professionals, and researchers. While 45.7% rated it as “good” and 7.2% “very good,” 22.6% rated it as “very poor.” This heterogeneity makes it unlikely that one definition will satisfy everyone.

    In terms of what people liked about the 2004 definitions, the top words/concepts were, in order, 1) Value, 2) Processes, 3) Relationships, 4) Set, and 5) Organizational Function. In terms of changes they would make (either additions or deletions), the top seven were: 1) Transaction, 2) User, 3) Organizational Function, 4) Organization, 5) Definition, 6) Processes, and 7) Stakeholder. (Interestingly, at least as many people seem to dislike the word “organizational” as like it.)

    In terms of preference for the 2004 vs. 1985 definitions, 2004 was a clear winner. It was rated as “better” by 30% and “much better” by 28% vs. 21% “better” and 8% “much better” for the 1985 one (i.e., 58% preferred 2004 vs. 29% for 1985).

    As a result of comments and committee discussions the following revised definition has been proposed:

    AMA’s 2007 Revised Definition:

    “Marketing is the activity, conducted by organizations and individuals, that operates through a set of institutions and processes for creating, communicating, delivering, and exchanging market offerings that have value for customers, clients, marketers, and society at large.”

    Rationale for the Recommended Revised Definition (based on the 2,500 responses):

    1. The phrase “Marketing is an organization function” in the 2004 definition was seen to be too strongly associating marketing with a departmental “company silo.” Since it is limiting, we dropped the term “organizational function.”

    2. The 2007 definition substitutes “Marketing is the activity, conducted by organizations and individuals,” which recognizes that marketing is an “action word.” That is, marketing is something that organizations (including both formal marketing departments and others in organizations), as well as individuals (e.g., entrepreneurs and consumers), engage in or do. Thus, the definition points out who (i.e. organizations and individuals) actually conducts (i.e. guides or directs) the activity called “marketing.”

    3. The 2004 definition included the phrase “a set of processes,” but is ambiguous as to who is engaged in the processes. The 2007 definition substitutes “a set of institutions and processes,” which acknowledges that institutions such as manufacturers, wholesalers, retailers, and marketing research firms are an important part of marketing. The phrase “institutions and processes” implies that marketing systems such as channels of distribution are a part of marketing as are social processes (e.g., regulations and norms).

    4. The 2004 definition included “creating, communicating, and delivering,” but not “exchanging.” Exchange was a central construct of the 1985 definition. The 2007 definition thus captures this historical focus of marketing. Because the 2007 definition reads “creating, communicating, delivering, and exchanging,” however, while it acknowledges that exchange continues to be an important part of marketing, it does not make it the central focus.

    5. The 2004 definition included “value” but left the concept ambiguous. Indeed it may be argued that organizations do not “create” value at all. We focus on market offerings (i.e. “ideas, goods, and services,” as the 1985 definition put it) that have value (to someone).

    6. The 2007 definition maintains that organizations create, communicate, deliver, and exchange “market offerings that have value,” which clarifies what, specifically, is being created (i.e. market offerings).

    7. The 2004 definition indicated that organizations create “value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.” However, marketing creates market offerings that have value to those who are not “customers.” Also, “managing customer relationships” inappropriately elevates the strategy of “customer relationship management” to such prominence that this one, particular, strategic thrust becomes a part of the very definition of marketing.

    8. The 2007 definition maintains that market offerings have value for “customers, clients, marketers, and society at large.”

    a. Adding “clients” acknowledges that nonprofit institutions such as the United Way and the Girl Scouts engage in marketing. Such organizations do not see themselves as having “customers.” Rather, they have clients.

    b. Adding “marketers” acknowledges that those organizations and individuals that do the marketing benefit from the created, communicated, delivered, and exchanged market offerings.

    c. Adding “society at large” incorporates the 2004 definition’s concept of “stakeholders,” and acknowledges the aggregated nature of marketing across competing organizations that impels innovations, improvements, and price competition. Creating market offerings that have value benefits society, as do communications about, and the delivery of, marketing offerings. In short, the practice and activity of marketing benefits society.

    Does the proposed 2007 definition ring true for you? As I suggested in my post “Crew Wanted for Hazardous Journey” marketing’s role based on any definition will always provide opportunity for “honor and recognition in case of success!”

    Alan See
    Blog: Welcome to Marketing 101

  4. Alan

    I asked a few of my fellow marketers at a client with a large marketing department if they saw themselves and what they did in the 2007 definition.

    The overwhelming answer was yes, but not really. Yes, because they did/had many of the things the definition describes, but not really, because the definition was vague, waffly, seemed to cater for every interest group under the sun and didn’t explicitly mention profitability. It does strike me as taking a lot of words to say precisely nothing!

    Maybe great marketing is a bit like a blind man describing an elephant: “I can’t describe what it looks like, but you will know it when you see it”.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  5. Yes, the feedback you received from your marketing contacts makes perfect sense. The proposed 2007 definition left a glazed look in the eyes of many of my contacts (and students) as well. It’s not that the definition is incorrect; it’s just unlikely that one definition will ever satisfy everyone. Marketing’s scope is both wide and deep. Consider the following marketing frameworks that have been proposed over the years:

    The four Ps:
    Product
    Price
    Place (distribution)
    Promotion

    The six Ps:
    Product
    Price
    Place (distribution)
    Promotion

    The seven Ps:
    Product
    Price
    Place (distribution)
    Promotion
    Personnel
    Process
    Physical evidence

    The four Cs:
    Customer needs & wants
    Cost to customers
    Convenience
    Communication

    The four As:
    Acceptability
    Affordability
    Accessibility
    Awareness

    The four Rs:
    Receptivity
    Readiness
    Resources
    Risk

    In the right context they can all be correct. Now, when you step back and think about the marketing related “technology – solutions” in place to address the elements of those frameworks you run into another definition challenge like: operational CRM, collaborative CRM, analytical CRM, strategic BI, tactical BI and operational BI solutions, just to name a few!

    One thing for sure … there is plenty of material for marketing courses these days!

    Alan See
    Blog: Welcome to Marketing 101

  6. Alan

    Maybe it is time for a Marketing Jargon 101 course.

    On another but a related note. Most of the definitions we have discussed so-far stem from the American Marketing Association. Maybe it needs to take a dose of its own medicine. I let my annual subscriptions to the Journal of Marketing and Journal of Marketing Research lapse, partly because of the irritating, in-your-face, 1950s catalogue-style direct marketing they bombarded me with to try and get me to resubscribe. And partly because there are other ways to get all their best content on-line for free these days. Maybe it is time the AMA woke up to the power of the Internet!

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  7. A book put out by The Social Venture Network Series called “Marketing that Matters” by author’s Chip Conley and Eric Friedenwald-Fishman provides some interesting thoughts on using marketing as a core business strategy … no matter how the subject is technically defined. The author’s stress that:

    “Strategic marketing is acquiring a deep understanding of the needs and desires of your existing and potential customers and designing your business (products, services, delivery mechanisms, customer experience, branding, outreach, etc) to meet and exceed their needs and desires.”

    In order to use marketing as a central function of business planning and make sure the concept is integrated into your business the author’s mention three key factors:

    1. Make sure that marketing is “at the table” from the beginning.
    2. Distinguish between strategy and tactics.
    3. Develop and use marketing plans.

    In my post “Welcome to Marketing 101” I also mentioned that …

    “A simple but often overlooked discipline to ensure that marketing is facilitating strategic alignment and that the marketing mix is focused on the desired customer experience is to use a written marketing plan for each marketing strategy developed. There is value to organizing, documenting and writing down a marketing plan. The very process of bringing functional areas together to ask and answer the questions posed in a comprehensive marketing plan will create a road map to guide your total marketing efforts, and help bring strategic alignment.”

    One might say the marketing as a “core business strategy” is a “Management 101” given!

    Alan See
    Blog: Welcome to Marketing 101

  8. Alan

    I agree with you about the importance of formal marketing plans, not just because of the end product they produce, but also because of the robust thinking process they force you to go through.

    I have long used the Chartered Institute of Marketing’s approach to marketing planning for a number of years. But it is a bit long in the tooth; it was designed more for a Porterian world of defensive strategy within industries rather than for today’s D’Avenian hypercompetition across markets.

    Each time I develop a new marketing plan, I end up updating the previous already updated approach before I start! That is fine for me as I have been doing this for a number of years. But what about newcomers to marketing planning who do not have the benefit of years of experience?

    Is the marketing planning they are taught at college still fit for purpose?

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

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