What Everyone Needs To Know About Marketing

As companies turn to marketing to identify opportunities for top-line growth and profit, executives in finance, R&D, engineering, sales, marketing research, and other functions in the organization need to have a firm grasp of core marketing knowledge. "There is more of a cross-functional emphasis in organizations," said Wharton Professor Jagmohan Raju. "Marketing people have to be able to talk to others. People in other disciplines have to be able to talk to marketing people."

While marketing leaders once only came up through the marketing organization, they now often come from outside areas such as engineering or R&D. "Companies are trying to cross-fertilize, so that people from other disciplines are capable of taking on the marketing role," Raju said.

Essential Marketing Knowledge

What do managers who are just starting a marketing career and nonmarketing managers need to know about marketing? Wharton’s Essentials of Marketing program offers fundamentals of marketing for managers in other disciplines as well as marketing professionals who want to update their knowledge of the field. Among the core knowledge:

• Taking new products or other offerings to market: Launching new products and services is critical to growth. Managers need to understand the intersection between the potential for a new product and the needs of the market, translating those insights into profitable new offerings.

• Segmentation, targeting, and positioning: At the core of marketing work are understanding and segmenting the market, targeting specific segments, and positioning the offering based on this targeting. "Positioning identifies the target segment, the point of difference, and a frame of reference," Raju said. "Who are the customers? How can they be reached? Companies need to choose positions that play to their strengths, that they can serve profitably, and are distinct from rivals." A positioning statement sums up the positioning. It should focus on a unique selling proposition or value proposition for the buyer. It should be mind grabbing and clearly stated in 30 seconds or less.

• Customer decision making: Customer decisions are based on their awareness of a certain choice set, the availability of products at the time of purchase, and assessment of alternatives. The primary decision maker, in business-to-business decisions, and even in some consumer purchases, may not be the end user. The decision sets can sometimes be far more complex than many managers realize. For example, a customer for a new car may be comparing a mini-van against a sports car or even a family vacation. Many auto dealers might not recognize that they are in competition with travel companies.

• Channel strategies: Companies reach customers through different channels, and these channels are more diverse today. With online commerce, direct-to-consumer, and traditional retail, managers need to understand the diverse channels available and when they are best used.

• Customer lifetime value and marketing metrics:  While marketing is sometimes viewed as an art, in an age of better information, it is becoming more of a science. There are more refined marketing metrics and improved data that allow for better assessment of the design of marketing initiatives. These metrics not only improve marketing investments but also allow marketers to better communicate their benefits to finance people in the organization.

• Market evolution and product lifecycles: In the launch of new products, particularly high-tech products such as HDTV, managers need to understand the dynamics of market evolution. There are patterns of adoption that define the uptake of new products, and marketers need to avoid arriving too far ahead or behind the curve. They also need to understand the lifecyle of products. In some industries, such as fashion and technology, these cycles are rapid, so companies need to be at work on the next product assortment before the previous one begins to decline.

• Pricing: Beyond the price itself, strategies such as bundling, variable pricing, and discounting can add to the complexity and opportunities for effective pricing. Marketers need to understand the best pricing strategy to maximize profit without setting prices too high or reducing profits by setting prices too low.

• Competitive dynamics:  A brilliant strategy can be undermined by the moves of competitors. What are their likely responses, and how do these responses affect the profitability of the strategy? The moves and countermoves of the company and rivals will determine the success of a company’s marketing strategy.

All of these insights from marketing come together in the marketing plan. This begins with a marketing analysis of "the 5 Cs": consumers, competitors, company, collaborators, and the context in which a company operates. Based on this analysis, managers can develop the best positioning for the product. This positioning then needs to be translated into the right "marketing mix." The marketing mix is traditionally referred to as the "4 Ps": product, price, place, and promotion. "Each of these four dimensions, and perhaps a few others, must be addressed in designing marketing plans," Raju said. "The product itself, its pricing, where it is offered, and the promotions that are used to support it will all affect its success."

Finally, managers need to be able to put these plans into action. Execution is critical. "It is not just knowing," Raju said. "It is doing."

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