Basics of Marketing

Video Transcription

Hi, I'm Jeff. And in this lesson, we'll begin learning the basics of marketing. We'll discuss how marketing communicates value and utility to consumers. And we'll talk about how public relations and advertising differ from marketing.

So let's get started. First, what is marketing? The American Marketing Association defines marketing as 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.

The AMA is an excellent resource for more information on marketing and ways to become involved in the marketing community. Their website can be found at www.ama.org.

Marketing may also be considered the process of developing a reciprocal exchange, including the development of informational and promotional materials to stimulate demand. How important is marketing to business? Well, for 2013 Apple Computers spent $1 billion on marketing and advertising. And if you think that's a lot, Coca-Cola spent over $3 billion.

That's because marketing can be used in many ways to communicate with a customer. And a company can focus marketing on a product, service, or idea.

For example, a company like Coca-Cola can focus marketing on their soft drinks. They do this by describing a need or want to a customer, like thirst. Then they remind a customer how well their product will satisfy that need.

Or a company like H&R Block will market the ways they help you save money or deal with an uncomfortable task like preparing tax returns.

And marketing works for public service announcements too. People of a certain age will always remember the public service commercial that compared your brain on drugs to eggs frying in a pan. That was effective because it was so memorable and the message was clear. So you can see that both for-profit and nonprofit companies can benefit from marketing.

But what are the values and benefits to consumers? Value is the corresponding usefulness, practicality, or significance. In quantitative terms. It is often written as value equals benefits divided by cost.

When you break down what you pay for a product or service by the benefits that you receive from it, that's the value. Marketing creates value for consumers by better describing the benefits of a product and associating those benefits with a consumer's need.

Some of the benefits are tangible, such as the properties of a product. A t-shirt might be cotton and breathable. Organic food can be good for the environment.

And there are intangible benefits that also provide value to consumers. They bring feelings of comfort or the positive association of being part of a group. High-end products such as Gucci handbags, Omega watches, and Mercedes cars differentiate themselves from other products and services by their intangible benefits.

Imagine how cool you will feel when others see that you own this product. These intangibles also provide positive feelings about the brands themselves. And that benefits the company.

In addition to value, marketing will also communicate about the utility of a product or service. These are the details necessary when a customer makes a purchase.

Some examples of utility are time. When can the customer buy the product or service? A company might market itself as open 24 hours a day, seven days a week.

Place. Where can the customer buy? When your local cinema markets its 16 movie screens, they are marketing utility. Or when Starbucks or McDonald's markets their many convenient locations.

Form. What styles can the customer buy? A vehicle that has warmed leather seats or a coffee shop with free Wi-Fi is marketing form.

And finally ownership. What benefits does the customer gain by buying? For example, if you buy this 5.1 stereo system, then this will increase the benefits of your television by making movies sound like the theater.

Utility should always be considered when developing marketing materials because it's one of the ways marketing shifts someone from merely viewing those marketing materials to actually making a purchase. But how does marketing compare to advertising and public relations?

Advertising is the paid communication to inform about a product, idea, or service. These can be a component of marketing, but marketing is more than just the physical advertisements. Public relations is communication that is not directly paid for, but functions to inform about a product, idea, or service.

There is still a cost to the creation of public relations. But unlike advertisements, PR's primary goal is to build company influence or generate goodwill toward a brand.

And that's all for this lesson. Good job. In this lesson, we learned about the basics of marketing. We talked about the ways marketing communicates value and utility to consumers. And we compared advertising and public relations to marketing.

Thanks for your time, and have a great day.