You already know the importance of marketing.
Perhaps you already have a small marketing team.
Or for the moment you have someone handling both sales and marketing.
Regardless, it’s important that you know and understand the 7 functions of marketing and how they can influence every aspect of your business.
As you ramp up your marketing team, you will hire people, set their KPIs and monitor their performance around on these functions.
So, understanding them is crucial.
Let’s get right to them.
What are the 7 Functions of Marketing?
The 7 Functions of Marketing are:
- Market Research & Analysis
- Market Segmentation, Targeting and Positioning
- Customer Value Creation
- Pricing & Promotion Strategies
- Brand Development & Management
- Marketing Information Management
- Marketing Channel Development & Management
1. Market Research and Analysis
Market Research
The primary goal of Market Research is to understand the needs, wants and demands of your target customer so that you can generate value that’s necessary for customer satisfaction and retention.
Market Research and analysis is the foundation on which a competitive market strategy is built.
Market Research will give you an insight into your customers’ buying behavior, drivers, and their decision-making process.
With it, you will be able to identify potential customers, competitors, suppliers, distributors and influencers in your target market.
Analyzing Market Forces
The Analysis of Market Forces includes an understanding of the environment in which your business operates – at the micro-level and the macro-level.
At the micro-level, this includes the analyses of forces inside your own company as well as those in your immediate vicinity – your suppliers, resellers, distributors, customers and competitors.
At the macro-level, the analysis includes insights into the macro environment which includes the demographic environment, technological environment, economic environment, geopolitical environment, etc.
By understanding the market and the forces which influence your business, you will be able to craft a marketing strategy that develops your competitive advantage and positions your company for success in your target market.
2. Market Segmentation, Targeting and Positioning
Segmentation
Customers differ from each other. They differ based on their needs, desires, motivations, their buying behavior, locations, buying practices, habits, income, ability to spend, etc.
Segmentation refers to the slicing of the target market into different groups or segments of customers each with a distinct set of characteristics.
The key benefit of segmentation is that you will be able to reach and serve customers more efficiently and develop products and services to serve the unique characteristics of each segment.
Targeting
Once you’ve finished with Segmentation it’s time to decide which of the market segments to serve (and, just as important, which to ignore).
You begin by first evaluating market segments and then selecting the ones to target. This is called Target Market Selection.
Targeting can be accomplished by one of three marketing strategies:
- Undifferentiated Marketing
- Differentiated Marketing
- Concentrated Marketing
Undifferentiated Marketing is another term for mass marketing where the marketing strategy focuses on the common needs of all customers and ignores the special requirements of each segment.
On the other hand, In Differentiated Marketing, you will use product and marketing variations to target each segment separately. Differentiated Marketing can be far more expensive than Undifferentiated marketing but can give you higher sales and better positioning in each of the segments that you choose to target.
Concentrated Marketing is a strategy that is best when a company has limited resources. Instead of spreading your efforts over many segments only to fall short in each of them, you can be better off by concentrating your marketing firepower on a single segment to do well in it.
Positioning
Positioning refers to the space a product occupies in the customer’s mind. It defines the perception, feeling and emotions that the customer has for the product vis-à-vis a competitive product.
When choosing a Position for your product or service, you will need to identify the competitive advantages which differentiate what you offer from what your competitors offer.
You will then need to select a few of these competitive advantages on which to build a positioning strategy.
Your Positioning Strategy will specifically promote those competitive advantages which provide the highest value to the customer. This becomes your Value Proposition.
3. Customer Value Creation
Product Development
Product is one of the 4 Ps of marketing (the others being Price, Place and Promotion).
Product Development refers to the entire range from idea to validation to concept to prototype to development to testing.
Customer Value is created when the customer uses a product that has the attributes necessary to solve his or her problem and deliver satisfaction.
But the customer’s needs are likely to change. And they will. And so, Product Development is an ongoing process that lasts throughout the lifecycle of a product.
Product-Market fit
A key aspect of creating customer value is ensuring that you have product-market fit. Product-market fit occurs when the attributes of a product satisfy the needs of the market.
Beware, however, that Product-Market fit is a moving target. The needs of the market are liable to change – sometimes with no notice. A key function of marketing is to change product attributes based on the changing needs of the market to always ensure there is Product-Market fit.
4. Pricing and Promotion Strategies
The Pricing and Promotion strategies you deploy will have a consequential impact on your ability to get your product purchased (or service used) by your target market.
Factors affecting Pricing
When it comes to pricing, keep in mind the factors that affect the setting of price:
- Costs (What it costs you to make, acquire, stock and ship the product)
- Value (as perceived by your customer vis-à-vis their sensitivity to the price)
- Competition (their pricing and positioning)
- Channel (different channels will cost you differently)
- Regulations (laws might play a role in how you set prices)
Pricing Strategies
Pricing Strategies change as the product goes through its lifecycle.
If you are introducing a new product into the market, you can set its price following one of two strategies:
- Market Skimming or
- Market Penetration
In Market Skimming, pricing a new product is priced high where it just skims the surface of the market but is highly profitable despite low sales volume. Over time prices drop to a more sustainable level.
In Market Penetration, the new product is brought in at a low price or through a price-cutting strategy with the intention of driving large sales volume and gaining market share. Once market penetration is achieved, the price can be increased to a more sustainable level.
Other Pricing Strategies you can deploy throughout the product lifecycle include Segmented Pricing, Discounted Pricing, Product-Line Pricing, Captive Product Pricing, Promotional Pricing, International Pricing, etc.
Promotion, Communication, Advertising and PR
An important aspect of marketing is building a company’s Communications Strategy.
This includes defining the communication mix – the mix of advertising, promotion, direct marketing, social media, public relations and sales promotions.
5. Brand Development and Management
Brand Positioning
A brand is a set of associations, thoughts, emotions, perceptions and psychological meanings linked to a name, a mark or a symbol or to a product or a service.
Brand building involves deliberate strategies and actions designed to create these associations, thoughts and emotions in your customer’s mind.
You need to intentionally and methodically create meaning for your brand in the customer’s psyche.
This is your Brand Positioning which you should capture in a formal brand positioning statement.
Brand Design
Brand Design involves defining the aspects of a brand that touch the customer. These could involve brand names, colors, packaging, logos, etc.
Brand Design is the transformation of a theoretical exercise internal to your company into something tangible that the customer can experience.
Brand Nurturing and Management
A Brand is a living object that needs nurturing for it to live, grow, thrive and adapt as the customer’s and the market’s needs change.
The value that a brand has is its Brand Equity. And a brand needs nurturing for its value – or equity – to grow over time.
Brand Management is the end-to-end process of creating, nurturing, growing and evolving a brand so that it eventually leads to growth in Brand Equity, Brand Recognition and Brand Loyalty.
6. Marketing Information Management
Marketing Information Flow
Marketing Information Management is the process of collecting, analyzing, assessing, and distributing information needed for making marketing decisions.
The process begins with the assessment of information needs. Information is then gathered through various sources – these could be internal, or from customers or partners or from market intelligence. The raw information is then analyzed, and the analysis is distributed within the company.
Marketing Information System
The flow of marketing information can be best handled by a Marketing Information System or MIS. An MIS can be essential in managing large volumes of marketing data, it can help make sense of this data and it can help you distribute data to those who need it.
7. Marketing Channel Development and Management
Marketing Channels
A Marketing Channel is a conduit through which you interact with the customer.
Marketing channels can be online or offline.
Online Marketing Channels include your Website, Blog, Email, Social Media, YouTube channel, a store on Amazon or eBay, etc.
Offline Marketing Channels a physical store, print media, brochures, mail-order catalogs, direct mail, etc. You will need to decide which channels will work best for your business
Multi-channel Marketing
Almost certainly, you will need to develop a multi-channel marketing strategy where you judiciously use a mix of channels to always have a way to reach and interact with your customer.
Earlier in this article we talked about Segmentation. When designing a multi-channel marketing approach, you may choose to use different channels to target customers in different market segments.
For instance, you could be more successful in reaching a younger customer base via Instagram, Pinterest or tiktok. Whereas an older audience might be better reachable through email or direct mail.
Summary
The 7 Functions of Marketing should be the cornerstone of your company’s marketing strategy.
It involves Market Research and Analysis to truly understand your customer and the environment in which you operate. But not all customers are created equal. That’s where Segmentation comes in.
Using Segmentation techniques, you will slice the market into more manageable chunks or segments, so that you can decide which segments to target and which to ignore.
Once you’ve selected your target markets, you can use different marketing strategies like Undifferentiated, Differentiated and Concentrated.
Each marketing strategy will help position your products and your brand in the customer’s mind. Your Positioning Strategy will help define your Value Proposition based on which you will create value for your customer.
Value Creation takes the form of Product Development and finding Product-Market fit.
This Value can only reach your customer if your Pricing and Promotion strategies get your customer to purchase your product.
Your customer’s perception of your product will surely be based on their experience with it. But it will also be based on how they see your brand. Therefore, the development and management of your brand is a crucial marketing function.
The volume of marketing data available to you will be enormous. Figuring out how to sift through it and then make sense of it will be a great challenge. Use a Marketing Information System and make your life easier. It’ll also give you better results than doing everything manually.
Finally, the interaction you have with your customer whether direct or indirect, online or offline, will impact your customer’s perception of your product, your company and your brand. Take the time to build, develop and nurture these marketing channels.
