214

WHAT IS MARKETING?

Marketing is a branch of commerce concerned with examining

products and markets, studying customers' requirements and
taking any relevant commercial steps so as to have the right
product to reach the right market at the right price. It comprises
such features as:

1. gathering information on all aspects of the business

2. devising a marketing plan in terms of aims, resources and
strategies to follow
3. applying to services of management consultancy
4. running a market research and finding out the market potential
5. pondering upon the problems connected with production
6. devising relevant advertising campaigns
7. availing of computer bureau services which process customers'
data
8. considering the opportunity of allowing special discounts
9. arranging product demonstrations at local supermarkets
10. sending circular letters

Marketing does not only mean selling products or services. It

requires the application of a wide number of disciplines and areas
of expertise in order to satisfy the tastes and meet the needs of
potential customers. The main factors to consider are concerned
with product conception and design, brand name, packaging,
price, sales promotion, methods of advertising, discovering new
customers, determining customers' needs, organizing sales
strategies, determining sales areas, planning delivery service,
examining expenses, etc.
Marketing organization has to cover all these aspects.
 215

Example of Marketing Organization

MARKETING DIRECTOR

Product Sales Promotion Transport Service

Research and Advertising
and
Development

Market Analysis of Costs Customer Service

Research and expenses and Relations

Companies have a considerable number of experts and designers

involved in the production and design of new products suitable to
meet the needs of the market. The creation of a new product is
subject to an evaluation process designed to improve the original
idea before launching the product on the market. The main points
to consider are reflected in the following questions:
· Do customers really need this new product?
· What features are likely to meet customers' requirements?
· On the base of our existing resources and abilities, are we
really able to make it?
· What kind of costs ( production, distribution, advertising, etc.)
do we have to cope with?
· Is our present capital availability sufficient to support such
production project?
· What will be the effective return in terms of profit?
· What is the business forecast for the first period of one or two
years?
· What do our competitors offer?

These and similar questions are deeply investigated by teams of

skilled and exsperienced executives and researchers. They
analyse reports from the various sections, sales projections,
technical difficulties, competition pressure, suggestions, etc. and
decide upon starting the new production project or not.
The main sections regarding the organization of a production
project are the following: Market Research, Test Marketing, Sales
Promotion, Advertising and Distribution.
 216

Market research
The aim of market research is gathering information about the
people who buy in order to examine the possible sales of a
company's product or services. Researchers ask questions about
consumers' purchasing habits, the market trend, the products of
competitor firms and interview trade operators and prospective
buyers.. They contact wholesalers, distributors, retailers and
market operators or mail questionnaires to sample participants.

Test marketing
It is a less expensive method of finding out if a new product,
which has been launched only in a small geographical area, sells
well or not. This method reduces the risks and expense involved
in launching the new product all over the country.

Sales promotion
Sales promotion is concerned with a variety of methods used to
promote the sale of a product or service. The most common
method of promoting sales is the advertising through the mass
media: television, radio, press, cinema, billboard. Other types of
sales promotion include consumer leaflets, display posters in
retail outlets, permanent signs, display stands, display windows,
distribution of samples, coupons and vouchers, etc.

Distribution
Distribution is concerned with the channels through which goods
reach consumers. A farmer carries his agricultural produce to a
wholesale market where they are sold to retailers, hotels ,
restaurants, supermarkets, etc. A manufacturer reaches
consumers through wholesaler-retailer channel or through
multiple stores.
 217

Today's successful companies are the ones that have learned how
to get their strategy right. They understand and build on their
strengths, they know with whom they wish to compete, and they
have effective mechanisms for establishing their priorities. They
act to create strategic advantage.

The Competitive Strategic Market

Environment Planning

Strategic Human Resources

Analysis of
Industry Structure Advantage
Information
Management

Business Portfolio Capital

Investment
 218

DISTRIBUTION CIRCUITS

Manufacturer

Importer
Wholesaler's Warehouse

Grocer's

Consumer
Retailer

Retail outlets
 219

Grower's Farm

Hotel

Restaurant

GREENGROCER'S

Retail shop
Fruit and vegetables Market

Hypermarket
 220

In advanced economies where most of the population is engaged

in specialized production of goods of which they themselves can
use only a small part, marketing is a key activity. The modern
farmer as well the manufacturer could not manage without it. The
marketing system makes possible sales for cash. The farmer can
then buy improved seed, fertilizers, pesticides and machinery,
and so obtain higher yields per man and per acre. The
manufacturer can purchase materials from a wide range of
sources. Both farmer and manufacturer can pay their workers in
cash instead of in kind.
Consumers concentrated in urban centres, where they produce
no food themselves, depend on marketing for survival; food must
be brought to them. If the marketing channels were interrupted -
as seemed likely for some cities during World War II - then many
millions of people would be without food. Thus specialization,
industrialization and urban concentration are associated with
organized marketing, and rapid economic development is
conditional upon a comparable growth of marketing functions and
services. (From Encyclopaedia Britannica)
 221

A Farmer

buys produces and sells

seeds fruit and vegetables

fertilizers
eggs
pesticides
milk
machinery
cheese
tools
A Manufacturer

buys makes and sells

raw materials manufactured products

 222

An aspect of marketing considers the opportunity to have the

right product to reach the right market. This implies having to
solve any problems concerning with assembly, distribution,
transportation, storage, grading, packaging, exchange, finance
and risk.

Assembly
The assembly of produce of differing type and quality from a
number of sources is usually the first step in marketing.
Concentration at convenient points attracts buyers who could not
spare the time to visit scattered producers; it permits transport,
storage, grading, packing and processing on a larger scale and
with more specialized techniques. Most products undergo
substantial changes before they are ready for the final purchaser.
For example grain is ground into flour and baked into bread; milk
is converted into butter and cheese.

Distribution
Distribution systems develop to match available supplies to
consumer demand. Supplies flowing into assembly points and
warehouses fluctuate in type, quantity and quality. Consumer
demand may also vary according to season, climate, local
customs, religious teaching and many other factors. Distributors
adapt the flow of supplies to such variations in demand by using
their experience and market intercommunication.

Transportation
Movement of products between places is an essential part of
marketing. Transport to railheads, ports or processing plants may
be provided by either the original producer or the first buyer.
Longer-distance movement by road, rail or sea is often furnished
by specialized transport firms. Many of the disadvantages and
much of the strength of different marketing systems have their
origin in transport methods. If deliveries are slow, and equipment
is inadequate, products deteriorate before reaching their market,
and contracts cannot be met. Careless handling and delays can
result in serious damage and loss, and impose heavy costs on
that part of the load which does reach the market in sound
condition.
 223

Storage
Storage facilities are needed at various stages of the marketing
sequence. Most traders who take possession of produce also
control storage facilities in order to have freedom of choice as to
the time of resale. At ports and other transshipment centres, and
near important commodity markets, storage is provided by
specialized enterprises and made available for a fee. Wholesalers
and retailers also maintain storage to hold stocks from which they
can satisfy clients' requests promptly.

Grading
Grading products according to recognized uniform standards
enables buyers to purchase more precisely what they want and
are willing to pay for; to this extent it increases their satisfaction
and makes the marketing system more efficient. Where buyer
and seller are separated by long distances and personal
inspection is impracticable, then detailed standard quality
specifications established by governments are effective.

Packaging
Most food and manufactured products must be enclosed in some
kind of container if they are to be marketed widely and efficiently.
These containers afford a convenient way of handling, help to
prevent physical deterioration, make theft, adulteration and
substitution more difficult, ensure cleanliness and facilitate
measurement, labelling and the attachment of sales instructions
and descriptions. They may also promote sales because of their
attractive appearance. Specialized equipment and enterprises
have been developed to pack goods in wood, metal, paperboard
or plastic containers adapted to a wide range of requirements.

Exchange
An essential part of marketing is the facilitation of exchange. Two
phases are involved: the contacting of possible buyers and sellers
of particular products at a given time, and the negotiation of the
terms of exchange. In many countries the town market square is
the scene of a steady flow of direct transactions between
producers and consumers. In larger markets, and where
producers and consumers are separated by distance, time and
processing requirements, the negotiation of sales may be
undertaken in return for a fee by specialized commission agents,
 224

brokers and auctioneers who, perhaps, neither take possession of

nor handle the goods sold. Accurate information on the character
and quality of a product, its suitability for various purposes and
its price in alternative markets is important for persons engaged
in buying and selling. Special reporting services designed to
supplement such information and help consumers buy to the best
advantage had acquired great influence in the United States and
Britain by the 1960s.

Finance and Risk

All marketing requires finance. The owner of goods at any stage
must either sacrifice the opportunity to use his own capital
elsewhere or borrow the necessary capital from some other
source. Farmers, wholesalers, manufacturers and retailers need
capital or credit for the time during which they are in possession
of products and are awaiting sale and payment. Wholesalers, for
example, must finance their packing, processing and storage
plants, transport equipment and display premises. Retailers must
also finance their sales premises, that part of their stock which
wholesalers do not carry and, in trades like that for consumer
durables, a large proportion of their customers' purchases. Risk
bearing is also involved in marketing and must be covered by an
equivalent expectation of profit. One of the major risks is that of a
fall in price. Price variations are greater for agricultural products,
which are subject to the impact of drought, rain and frost, than
for many other traded commodities. The risks of such changes for
individual traders are often minimized by resort to organized
commodity exchanges, where "futures" may be bought and sold
as a hedge against cash transactions. Risks of quality
deterioration are very important in the case of perishable
products such as milk and some fruits and vegetables.
(From Encyclopaedia Britannica).

NOTE:
Processing is carrying out a series of actions aimed at changing the chemical features of
liquids, powder, grains into finished or partly finished form before they are used or sold.
Examples of process industries are the oil industry, the sugar industry, the cement
industry, the paper industry, etc.
Grading consists in separating something (wool, grain) into different lots by quality or
size.
Futures (Forward purchasing sales)are commodities or securities which are bought or
sold at a certain price now for delivery at some agreed time in the future.

Oral Test

1. What is marketing?
2. What are the main features of marketing?
 225

3. What factors are considered when conceiving a new product?

4. What kind of problems does the creation of a new product arise?
5. What are the main sections regarding the organization of a production
project?
6. What is the aim of market research?
7. What is test marketing?
8. What methods are used to promote sales?
9. What is distribution concerned with?
10. What advantages does a farmer get from marketing?
11. What does marketing mean to consumers?
12. What are the advantages of assembling produce in a concentration point?
13. What is the function of distribution?
14. How does transportation affect marketing?
15. What is the function of storage?
16. What is the advantage of grading?
17. What is the function of packaging?
18. Who are the operators who facilitate sales in large markets?
19. Why is capital necessary to marketing?
20. What risks may occur in marketing?
 226

Advertising is a fundamental branch of commerce and one of the

major aspects of marketing. 'It is the activity of telling people
about products, services, events or job vacancies, and making
people want to buy the products or services, go to the events, or
apply for the jobs'. From a commercial point of view, it is a means
of communication aiming at promoting sales of consumer goods
or at making consumers aware of the existence of a new product
or service so as to arouse their interest and persuade them to
buy.

ADVERTISING MEDIA

Advertising is associated with the following advertising media:

1. Newspapers and magazines

2. Specialised trade journals
3. TV commercials
4. Trade fairs
5. Exhibition and conference facilities
6. Posters displayed in public places or means of transport
7. Point-of-sale displays
8. Billboards placed along motorways
9. Catalogues
10. Pattern books or sets of samples
11. Electric signs affixed to buildings
12. Screen ads
13. Shop signs
14. Advertising illustrative literature
15. Descriptive brochures
16. Stickers

The choice of a medium

 227

Among the main features which affect the choice of a medium

are:
1. the quality of the product or service offered,

2. the kind of people to whom the medium applies,

3. the area covered by the medium,
4. the cost of the medium.

Advantages of advertising. The main advantages of

advertising are:
1. since it helps to sell more goods, it keeps more people
employed;
2. it increases producers' profits;
3. it keeps consumers informed about the products available on
the market;
4. it contributes to keep the cost of newspapers and magazines
low;

Disadvantages of advertising. The main disadvantages of

advertising are:
1. it persuades consumers to buy what they do not need or what
they cannot afford;
2. it affects the cost of production cinsiderably;
3. it arouses questions of ethics and creates false symbols
especially on the young;

ADVERTISING EXPENDITURES
Advertising expenditure rose by 10.6 per cent in 1989 to £7,555
million. The press accounted for nearly 64 per cent of the total,
television for 30 per cent, posters for nearly 4 per cent, and
commercial radio and cinema for the rest.
These proportions have remained roughly constant since 1983.
By product category, the largest advertising expenditure is on
food, retail and mail order services, financial services, motor cars
and leisure equipment.
Campaigns are planned mainly by advertising agencies, of which
there are several hundred in Britain; in some cases they also
provide marketing, consumer research and other services. (From
Britain 1991)
 228

Advertising investment
Advertising Investments in media
per product category

70 70
60 60
50 50
40 40
30 30
20 20
10 10
0 0

Press Television Food Retail services

motor
Posters Other media Financial services
cars
Leisure equipment
 229

READING PASSAGE

ADVERTISING AS A CONSUMER AID

The alert consumer has a number of resources at his or her

command when choosing goods and services. Some of them are:

Advertising
Merchants inform consumers of products, their uses and prices
through advertisements they place in the media. Advertising is
especially important in today's large scale national market
because "word-of-mouth" knowledge about products is
impractical. Businesses find advertising useful because it enables
them to differentiate their products from those of their
competitors.
In 1979, businesses in the United States spent almost $50,000
million on advertising. Advertising is considered a normal
business expense, not unlike research and development, or
product safety.
Although advertising performs some useful functions, critics
argue that consumers are often enticed into buying things they
do not want or need. They note that ads are prepared by experts
who appeal to psychological desires and uncoscious needs of
prospective consumers. They also claim that the familiarity of the
public with a brand name, or the amount of money a particular
company spends to advertise its products, may be significant in
terms of sales but is not necessarily reflected in the quality of the
product advertised.

Consumer Testing Organizations

Several private organizations test thousand of products and
publish the results. They explain usually how tests were made,
list brand names, and present relevant and comparative
information. Products are usually classed according to which have
the best quality, which are acceptable, and which are to be
avoided. Individuals can subscribe to these services for modest
annual fees.

Labels
A shrewd consumer makes a practice of reading labels on
products. Federal regulations require an accurate description of
 230

the contents of products and a statement of how to use them.

Misleading statements are prohibited.
(From An Outline of American Economics - United States Information Agency)
 231

NEWSPAPER AND MAGAZINE ADVERTISING

1. People and planning stages required in making an

advert

A newspaper or magazine advertisement is a very common

means of communication as well as a product. As a product it
implies administrative and presentation skills and is the result of
a working group of people. The following is a list showing
businesses and people usually engaged in making an advert:

Advertising agency A company which provides the

services of designing and making
adverts, placing them in suitable
advertising media, and carrying
out research.

Advertiser or his/her The person or company

representative representative who needs to
advertise a product or a service.

Advertising manager A person in charge of planning

and overseeing a company's
advertising department

Advertisement or The person in charge of the selling

business manager of advertising on behalf of a
company (Advertising agency)

Copywriter (=redattore) The person who takes charge of

the layout of an advert
transforming the idea into suitable
words.

Artist A person who makes drawings and

pictures to match the basic idea
or purpose of the advertising
message.
 232

Photographer A person who takes photos to

support the aim of the advertising
message.

Engraver A person who makes engravings

of the final drawings or
illustrations combined with the
worded message.

Printer The person who actually prints the

advert on the page of the
publication.

The main stages in making an advert are:

1. Planning the advert according to the basic underlying idea so

as to work up a general layout in terms of contents and costs
(Advertiser, Business manager and Advertising manager)
2. Designing the advert into words and pictures (Copywriter and
Artist/Photographer)
3. Preparing both words and illustration according to the layout
previously agreed
4. Making engravings or electronic recordings to be used in the
printing stage
5. Printing the advert on the newspaper or magazine page

Glossary

Advertiser
An advertiser is a person or company that has a product, or a service, or an event, or a
job vacancy to advertise and to this end he applies to and pays an advertising agency to
perform this service.
Advertising agency
An advertising agency is a company which provides the services of designing and
making advertisements, placing them in suitable advertising media, and carrying out
research. (From Business English Dictionary by M.Wallace and P.J.Flynn - Collins)
Advertising media
They are the channels of communication ( newspapers, magazines, television, radio,
cinema, posters, etc.) by which a company or a manufacturing concern informs people of
its goods or services.
to advertise
means to inform, to give/to publish a notice of, to give conspicuous information of a
product, a service, an event, a job vacancy to the public through such media as
newspapers, magazines, periodical publications, radio, television, posters, etc.
Examples: We advertise goods for sale, The Manager advertised for a secretary, This
product has been advertised on television, This is a brochure advertisingthe rangeof our
services, We should advertise for someone to take care of our children.
 233

Advertisement
An advertisement (shortened "ad" or "advert") is an announcement in a newspaper, on
television, or on a poster about something such as a product on sale, a service offered, an
event to occur, a room to let, an agency to entrust, or a job vacancy to fill. Examples: to
publish/to release an advertisement, an advertisement for Arbor shoes, we have read
your advert for an accountant.

TYPES OF ADVERTISEMENTS

There are two types of adverts:

1. Classified adverts which are so called because they are

selected and sorted into different classes according to their
contents features. They are generally arranged in colums
headed as follows: family announcements (births, deaths,
engagements, marriages, acknowledgement, in memoriam,
wedding anniversaries), situations vacant, situations wanted,
entertainments, personal, professional & executive,
representatives & agents, part time, miscellaneous wanted,
miscellaneous for sale, property wanted, property for sale,
accomodation wanted, Flat & House rentals, notices, business
services, business opportunities, travel & leisure, articles for
sale, education & tuition, what's on, etc.

2. Display adverts which are usually illustrated and are placed

in different advertising spaces. A display advert generally
contains one or more headlines, a logo, text and illustration.

Oral Test

1. What is advertising?
2. What are the main advertising media?
3. What features affect the choice of a medium?
4. What are the advantages of advertising?
5. What are the disadvantages of advertising?
6. How does advertising affect business?
7. What is the function of testing?
8. Who are the people engaged in making an advertisement?
9. What is an advertising agency?
10. What are the main stages in making an advert?
11. How many kinds of adverts do you know?
12. What are classified adverts?
13. What are display adverts?