What is marketing? In a nutshell, marketing is about offering your product or service to prospects, with the aim that you can satisfy their needs, and you can make profit from the sales. However, in reality the functions of marketing can be much more complex than that, starting from understanding your consumer’s needs to actually satisfying those needs.
In the modern, digital business world, these functions have become increasingly more complex than before. There are also cases where marketing functions will include purposes that traditionally belong to other teams—mainly, sales—.
So, with these points being said, here we will discuss the 7 basic functions of marketing. Understanding them can help you in implementing these functions better in your marketing activities, achieving better results in the process.
Let us begin with the first one.
1. Determining Price Point
How much should you sell your product or service? The answer to this question can often make or break your business. Sell too cheap, and you might not get any profit—or worse, lose money—. Sell too expensive, and you might not get any customers.
So, finding the right balance is very important, but this can be easier said than done. Here are the main considerations of pricing as a marketing function:
- There are two main factors when considering your price: your customers and your competitors, which are closely connected to each other. Customers will always consider the balance between affordability and value. So, setting a price for your product/service will require an extensive market research and competitive analysis
- If there’s a competitor selling a product with a particular price, you have two choices: sell your product cheaper—or at least, similar— to this product, or offer more value with your product. Remember that it’s the customers who will decide the perceived value of products/services, so communicating your unique value proposition is also important.
- Prices will move up or down depending on various market situations like the increase/decrease of COGS, whether your competitors are lowering/raising their price or offer new products/features, and so on. So, remember that fixing a price is a continuous process.
- In most cases, setting a price will require trials and errors.
For example, consider a business sells seasonal fishes to restaurants. This business has one major competitor, and is selling the fish for $10/lbs.
In this case, the business has two main choices: selling for lower than $10/lbs or offer more value. For example, the business can offer a free delivery service—which is not offered by the competitor—while also offering the $10/lbs price.
On the other hand, in the rainy season while the fish becomes more scarce, the company might choose to increase the price, but will also need to monitor the competitor’s price.
As you can see, there can be many different factors affecting price point, and it is one of the main functions of marketing to figure out the right balance.
2. Product Design
The most important principle to consider here is the fact that people actually don’t buy products and services, but rather the benefits tied to them.
So, when designing a product or service, we must always focus on how it can satisfy the customers, providing value to them or solving their existing problem. Before even a product or service exists, marketing already functions in driving the conception of a product.
Here, there are several key considerations:
This aspect can be more challenging for newer companies especially those selling a totally unique product/service. Here, the product has not garnered any preferences, but the key is still understanding your audience’s needs.
- Extensive market research is the key of success here, not only in the initial design of the product/service, but also in the necessary process of continuous improvement.
- The product or service, in a sense, is never truly finalized. We will need to update and change the product/service until they meet customer satisfaction, while customer’s preferences will also evolve with time. This can include changes in features, color, size, quality, material choices, and so on
- When necessary, the business might create new versions of the product/service or complementary ones to suit the consumer’s preferences.
As an example, let’s say someone figures out that the area is lacking of a good coffee shop with affordable price, and so creates a business based on that notion.
Over a period of time, this new coffee shop learns about the customers’ preferences, and continuously improves their product, introduces new recipes, and so on.
3. Promoting The Product/Service
No matter how good your product/service is, there’s no use if your ideal audience don’t know about it’s existence.
This is the main idea of promotion, one of—if not the—most important function of marketing. In fact, many will associate the term “promotion” as synonymous with marketing itself.
It’s fairly obvious that promotional activities have evolved dramatically in the past few decades. In the era of print media (newspapers and magazines), print advertising is the way to go. The same can be said when the trend moves to the television, the internet, and recently the social media.
So, when discussing promotion as the core functions of marketing, here are some key considerations:
- The main goal of promotion is increasing brand awareness. The more people know about your product/service, the more successful your promotional campaign is.
- There are two main approaches of promotional activities: “push”, where we push information—mainly in the form of advertising— towards the audience, and “pull”, where we put our information available in the form of content to attract the inwards
- As mentioned, there are a lot of available platforms where we can promote our product/service. Choosing the right channels frequented by our ideal audience is the key to success.
- It’s very important to maintain brand recall throughout your promotional campaigns.
4. Product Distribution
People are already aware of your product and already have the purchase intent. However, if the product is not within their reach, they can’t actually purchase the product.
This is the main idea of distribution, which is also a core function of marketing. In many organizations, the marketing team and the sales team work together to develop a distribution strategy, while in others it’s exclusively the job of the sales team. However, the fact remains that thinking about distribution tactics is also one of the main purposes of the marketing team.
When developing a distribution plan, here are the main concerns:
- The most important thing here is to figure out your channel options, which can differ depending on your product/service types. Some products can go directly to the brick-and-mortar shop, some others can go through retailers and wholesalers, some products/services are better off with online distribution channels. We can also consider the option of selling out of the country.
- Again, how you distribute your product should depend on your target customer’s preferences. Especially, how and where they usually purchase a product or service. An extensive market research is required here, so we can choose the best possible channels for our business.
- In this modern day and age, it’s increasingly difficult to attract customers to just one shop, since all of us are now accustomed to the freedom of choice. If you do plan to have a physical store, choosing the right location is extremely important.
- Online distribution channels come with their own perks and challenges.For instance, the online marketplace is always changing. Pay extra attention to the fluctuations and changes to act accordingly.
5. Managing Information
When discussing the previous functions, we have mentioned the importance of understanding audience as one of the core functions of marketing.
There are various information gathering methods we can use here, but the goal remains the same: to understand our target audience better:
- Market research is necessary to figure out our target audience’s needs, behaviors, and interests. Only after we are certain of these things, we can develop a corresponding marketing strategy.
- Conducting customer surveys and interviews are some of the most effective approaches to truly understand your customers.
- Collecting information is just half the job done. Analyzing the gathered information and turning it into an actionable plan is just as, if not even more important. The ability to understand the information and actually use it can make or break your business
- The good thing is, once people are more aware of your product/service and bought them, more people will talk about it. We can easily monitor the social media platforms as well as the internet in general to gather more information.
- In this modern social media age, monitoring (and responding to) reviews about our product and service is an essential way to understand our customers, and especially what they think about our products.
6. Financing and Budgeting
Marketing, in a lot of sense, is an investment—and often a long-term one—. So, one of the most obvious functions of marketing is financing: how we can obtain returns from our marketing investments, and how we can make sure to generate profit without spending too much.
- Marketing can be a very expensive effort, and so a business must have the required finance to promote their product/service. This is often called “marketing budget” or “marketing fund”. Properly allocating this budget is one of the core functions of marketing, and is also the key to success.
- Marketing can consist of many different campaigns utilizing many different channels. It’s important to properly calculate the ROI of each of these campaigns and allocate the right amount. This will require a lot of experiments, but the idea is fairly obvious: spend more on campaigns that bring you more revenue, and cut your budget (or eliminate altogether) on non-performing campaigns and channels.
- As more people are aware of your product, you will also need to spend more to ensure proper distribution and maintain your popularity.
- Other finance-related decisions like offering discounts, reducing the cost of certain products/services, offering bonuses, and so on are also included in this function.
Allocating the proper amount of marketing budget and spending on the best possible campaigns/channels can often be the biggest challenge in marketing. An extensive research for this marketing function is necessary, as also continuous monitoring of fluctuations and changes of many different factors.
In this age where the lines between sales and marketing are increasingly blurred, selling the product is also a core function of marketing.
All marketing activities must consider the ultimate goal of producing revenue, and nowadays, selling is arguably more complex than ever:
- Only after we truly understand our audience—and especially what drives the purchase— can we produce more sales. So, this will be closely tied to other marketing functions discussed above.
- The selling function is closely tied to distribution. We can sell our products directly in our store, through retailers and wholesalers, through online distribution channels, and so on. Again, choosing the right channels according to your customer’s preferences is important.
- Whatever methods of selling are chosen, we should treat marketing as a function to help the business sell the products/services. Marketing for the sake of sales, and not vice versa.
- Sales will also affect other decisions, like the quantity of production, pricing strategies (as discussed above), and marketing budget allocation. With more revenue, we have more room to spend for marketing, which in turn can further grow your revenue.
When thinking of selling as a marketing function, it’s important to consider the fact that nowadays, we can use both direct and indirect sales channels to sell our products. For example, we can sell our products/services through retailers, both online and offline.
Each channels will also require different marketing approaches. For instance, if you are selling your products in your own store, we should have in-store staffs to help the customers. On the other hand, with online channels (i.e. ecommerce sites), a thorough description of the product/service is required.
No business can succeed without proper marketing, but on the other hand, marketing can only be effective when the other aspects of your business are also proper. For example, marketing can’t help a product without any inherent value at all.
The end goal of marketing is satisfying your customer’s needs. This can come in the form of giving benefits, or solving their existing problems.