Updated: 6 days ago
What does marketing mean? What’s the difference between digital and traditional marketing? Why is marketing important and how has it changed over time?
In this article, you will learn the fundamentals to run and manage a marketing campaign. I’ll show you examples, case studies and definitions about every type of marketing. This article represents the basics in understanding a #MarketingPlan.
Now, don’t be shy and dig in!
Table of contents
WHAT MARKETING MEANS
According to Marketing and management of Kotler and Keller, marketing is the ability to identify and match human and social needs. In a few words, meeting needs profitability.
Definition of traditional marketing
Marketing is a process composed by marketers and prospects. Marketers search for a response from another player called a prospect.
Marketers role is understanding prospects’ needs and wants, stimulate their demand, and offer a solution that brings value to both sides. They can represent a middle person who aims at meeting companies’ and prospects’ objectives.
A traditional definition of marketing is given by the American Marketing Association (AMA):
Marketing is 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.
It is clear that everything starts from the consumer and their demand of goods and services. In marketing, there are different types of demands:
Negative demand: consumers don’t like the product/service and are also willing to pay to stay away from it;
Non-existent demand: consumers don’t have interest in buying the product/service or are unaware of its existence;
Latent demand: it is a strong request of a product/service, but the product/service itself doesn’t exist yet. It represents a huge potential for marketers;
Declining demand: the need of a certain product/service is decreasing and consumers stop buying it. For a company, it represents the time to innovate or change the offering;
Irregular demand: consumers purchase a product/service seasonally. It represents a risk for a company, since it causes an irregular cash flow;
Full demand: the product/service is regularly purchased by consumers;
Overfull demand: the demand of a product/service is greater than its availability in the market;
Unwholesome demand: consumers buy products/services that have negative social implications. For instance: cigarettes, drugs, alcohol and others.
Marketers should understand the underlying reasons of a certain demand to increase the desirability of their offering.
The concept of demand is critical in marketing. According to a survey of CB Insights the major reason why startups fail in 2019 is because the market doesn’t need their product/service (42% of startups fail for mismatch between their offering and demand).
We have just understood the meaning of demand, but what about the market?
Difference between market and industry
Defining a market as a physical place where supply and demand meet is not enough.
A market represents a group of consumers expressing a specific demand.
Sellers are considered part of the industry, instead buyers are part of the market. When marketers target a distinct audience, it means they aim at a specific market.
The image below represents the interactions among the five types of market in a modern economy.
Manufacturers buy resources (raw material, labor, money…) and transform them into products and services. Then, they sell finished products to intermediaries (companies or individuals) that in turn sell them to the final consumers.
Consumers sell their labor in exchange for money which they can spend to purchase products and services.
The government collects taxes and uses them to buy products and services from the other four markets to provide public services.
Every nation’s economy consists in exchanging processes between interconnected markets.
This is just a fictional representation and some flows must be adapted case by case. For example, online businesses can use digital platforms and advertising to easily reach the final consumers without passing through traditional intermediaries.
Nevertheless, a digital platform itself is an intermediary. Facebook Ads allows companies to reach their target audience and a CMS (Content Management System, like WordPress, Magento, Wix and so on) facilitates the dialogue between a business and multiple visitors at the same time (just think of a website).
This flowchart can be broken down into even more passages. Let’s consider the traditional publishing industry. A writer who wants to publish their book must find an agent, the first intermediary. The agent sells their work to a publisher, a second intermediary, which sells the book to the final consumer or can sell the rights to a film producer, which is another intermediary.
Example of marketing system
A marketing process can be depicted as a stream of mutual interactions between a market and an industry. The image below illustrates a basic marketing system.
This relationship is represented by an exchange of sellers’ goods, services and communications (like ads or direct mail) for people’s money and information (like customer behavior or sales data).
The internal loop portrays the flow between money and products/services, instead the external loop shows the stream of information.
DIFFERENCE BETWEEN TRADITIONAL
AND DIGITAL MARKETING
Although laymen think traditional and digital marketing are two different processes, digital marketing is nothing more than a marketing system applied on the Internet.
The differences between traditional and digital marketing are not in the method/system itself, but in some technicalities, rules and way of thinking that must be slightly adapted to the online world.
That’s why professionals usually specialize in one of the two. For example, I’ve chosen to specialize in digital marketing and help organizations do business online. You can schedule my digital marketing consultancy now!
Example of digital marketing system
Being more practical, digital marketing is a system that facilitates and stimulates the transactional relationship between online businesses and consumers.
It aims at generating money from a specific target audience.
In the image above, I have reproduced a typical digital marketing system.
Given a specific product/service, a business starts advertising to its target audience (a group of consumers representing potential buyers).
The users who responded to the adverts are poured into a digital marketing funnel. The latter is a series of content that encourage users to take certain actions. It allows the business to skim qualified leads (real potential buyers) from those who are not in target or not interested.
This process is part of what it is called lead generation. In brief, I can define a lead as a prospect who has strongly and publicly expressed their interest in a company’s product/service.
So, the user receives a sequence of videos where they are indoctrinated and learn more about the offering (features, benefits, opportunities, value proposition...).
If the user doesn’t finish the sequence, an automated system moves them into another mailing list and tries to bring them back to the video sequence. If they still don’t take the bait, it means the user is not in target or the offer must be reviewed.
If the user finishes the video sequence and clicks to the final CTA (Call To Action), they are ready to receive the first offer.
If they buy, they become customers and the company can try two different strategies:
Upsell: trying to sell an upgraded version of the product/service (e.g.: a bigger size of French fries);
Cross-sell: trying to sell a related or complementary product/service (e.g.: French fries and a sandwich).
For both cases, the loop starts again from the beginning: customers must be educated on the offering, selected and persuaded to buy.
If the user doesn’t accept the first offer, it’s useless trying to upsell or cross-sell. It is more appropriate to activate a downsell strategy: trying to sell a downgraded and cheaper version of the product/service (e.g.: a smaller size of French fries).
Again, the digital marketing system repeats.
If the user rejects the downsell, it means they are not in target or the offering must be reviewed to be more appealing.
Downsell, upsell and cross-sell are only possible if the business has a value (or ascendency) ladder.
A value ladder is fundamental in marketing and represents the key to increase profits and expand the customer base.
The worst 3 mistakes in digital (and traditional) marketing
The worst three mistakes that entrepreneurs make in marketing are starting a business based on their:
Many gurus say that you can make a list of your passions, pick one and start a business on it.
Or why not founding a business on your skills? If you are so good at something, why can’t you make money from it?
The last trap for laymen is starting a business on one of your interests.
Why is starting a business upon passions, skills or interests wrong?