Share some basic marketing concepts and important marketing theories

Marketing seems simple but it is not simple at all. If you want to achieve good marketing results, you have to learn some marketing theories. Let’s read this article to learn more.

The origin of this article is a question from a friend on Zhihu: "What basic concepts of corporate marketing are worth sharing?"

After answering his question on Zhihu, I decided to share this article on the official account, hoping to have some exchanges with everyone on the underlying thinking of marketing.

Marketing is to solve the business problems of enterprises. In the marketing process, enterprises conduct market research to understand market demand, consumer behavior, competition status, etc., and then formulate new marketing strategies based on the analysis conclusions. Through appropriate channels and means, they deliver relevant information about products, services, and the enterprise itself to target consumers, promote consumers' knowledge, understanding and recognition of products, services, and the enterprise itself, so as to achieve the purpose of consumer purchase, recognition and participation, sharing and recommendation.

In my opinion, the marketing process requires concepts to guide people's behavioral norms, and even more so, theories to guide specific marketing work.

The marketing concept summarized and refined from marketing activities is the ideological basis for the emergence of marketing theory, and marketing theory provides theoretical support for the reality of marketing concept and proves it through practice.

Therefore, marketing concepts and marketing theories are interrelated and are very important to corporate marketing work.

1. Some basic marketing concepts

1. Customer-centricity

The customer-centric marketing concept means that companies put customer needs and interests at the core, formulate and implement marketing strategies with customers as the center, strengthen the management of customer relationships, deeply understand customer needs in order to provide products or services that can better meet these needs, understand customer behavior characteristics in order to provide these products or services more efficiently, and optimize customer service experience and improve customer satisfaction and loyalty.

2. Differentiated Marketing

In a free market, companies face fierce competition. If products or services tend to be homogenized, companies will have to resort to price wars to gain consumer purchases, making it difficult to obtain substantial profits to support their continued development.

To this end, companies must actively differentiate themselves in terms of products, services, prices, channels, etc., build their own unique advantages to meet consumers' segmented needs and unique preferences, stand out in the fierce competition, and increase consumers' awareness and loyalty to the company.

3. Market segmentation

Enterprises can divide the overall market into different market segments according to certain standards, and select the market segments that can better play their own advantages and have the potential to succeed as target markets based on the needs, price sensitivity, scale space and the company's own situation of each market segment, and formulate corresponding product positioning and marketing strategies to improve competitiveness, market share and profitability.

4. Brand Equity

By establishing, maintaining and consolidating brand image and value, enterprises can promote consumers' purchasing decisions and loyalty. This marketing concept emphasizes the value and importance of the brand, believing that the brand is one of the core assets of the enterprise, and that through brand marketing, the market competitiveness and profitability of the enterprise can be improved.

5. Data-driven decision making

With data as the foundation of marketing, data analysis is used to better understand consumer demand and market dynamics, so as to improve decision-making efficiency and accuracy, provide a basis for guiding the formulation and implementation of marketing strategies, find target audiences more accurately, use more effective marketing methods, and establish a more refined operation system to more efficiently achieve marketing goals such as informing users, increasing understanding, promoting purchases, and strengthening recognition.

In addition, data-driven decision-making can help companies gain insight into changes in market demand, predict future trends, and seize new business opportunities.

6. Social Responsibility

While pursuing economic interests, enterprises should actively fulfill their social responsibilities, pay attention to social responsibility issues and sustainable development needs, and through active participation in public welfare, environmental protection activities and social responsibility projects, allow business operations to bring commercial and social benefits, enhance brand image and overall competitiveness, and achieve harmonious development between enterprises, society and the environment.

7. Continuous innovation

Enterprise marketing needs to be constantly innovative to adapt to the ever-changing and developing needs of the market, including product innovation, service innovation, marketing strategy innovation, etc., aiming to improve market competitiveness, increase brand value and market share, meet the ever-changing needs of consumers, and seize new growth points and opportunities; at the same time, it helps to improve the enthusiasm and work enthusiasm of employees, so that enterprises can maintain vitality and vigor to meet challenges and achieve long-term and stable development.

8. Summary

Concepts such as "customer-centric", "differentiated marketing" and "market segmentation" are the most important guiding ideas in current marketing work, corresponding to theoretical models such as 4Ps (10Ps), STP and customer relationship management.

The concept of brand assets corresponds to the brand asset theory and has become the cornerstone of brand long-termism. It has become a principle generally followed by marketing practitioners that all marketing activities should contribute to brand assets to maximize brand value, and the corresponding principle is the brand asset management theory.

The concept of social responsibility allows corporate marketing to break away from the narrow vision of the business environment, anchors the social significance of corporate existence, and provides inspiration for companies to establish a harmonious relationship with the external environment. It is reflected in related theories such as 10PS, CSR and the current ESG.

Continuous innovation reveals the basic method for enterprises to establish competitive advantages and maintain youthful vitality. It is the subconscious mind that every marketing practitioner should cultivate and is reflected in the blue ocean strategy theory.

2. Some important marketing theories

1. 4Ps

In his book Basic Marketing in 1960, Jerome McCarthy generally summarized these elements into four categories: Product, Price, Place, and Promotion, which are the famous 4Ps.

• Product: The product must have a unique selling point and put the product’s functional demands first.
• Price: Develop different pricing strategies based on different market positioning.
• Channel (Place): Focus on cultivating dealers and establishing sales networks.
• Promotion: Focus on changes in sales behavior to stimulate consumers, use short-term behaviors such as profit sharing, buy one get one free, marketing atmosphere, etc. to promote consumption growth, attract consumers of other brands or induce early consumption to promote sales growth.

In the 1980s, Robert Lauterborn expanded the 4Ps into the 7Ps, adding three elements: People, Process, and Physical Evidence, which are suitable for marketing in the service industry and B2B market.

• People: refers to employees within the enterprise and all external personnel who come into contact with customers, including their quality, service attitude, professional knowledge, etc., which are important components of service quality.
• Process: covers the entire process of customer purchase and consumption, including customer service, ordering process, delivery process, etc. Optimizing these processes can improve customer experience and satisfaction.
• Physical Evidence: refers to the physical environment of the service and all tangible displays that support the service, such as store decoration, corporate logo, website interface, product packaging, etc., which can affect consumers' perception and evaluation of the company and its services.

The expansion from 4Ps to 7Ps is to adapt to a broader and more complex marketing environment, especially the characteristics of the service industry, so that companies can fully consider various internal and external factors that affect marketing effectiveness when formulating marketing strategies.

2. STP

STP theory is the target market marketing theory. STP theory was first proposed by American marketing expert Wendell Smith in 1956. It was further developed and improved by American marketing expert Philip Kotler. In the book "Marketing Management" published in 1967, it finally formed a mature and widely used STP theory, which is the embodiment of the core and essence of modern marketing.

STP includes three parts: market segmentation (Segment), target group (Target), and product positioning (Position). The theory requires companies to segment the market based on existing consumer consumption behaviors and background characteristics, select appropriate target markets, and determine the company's target market positioning.

• Market segmentation: Based on the diversity of market demand and differences in consumer behavior, the entire market is divided into several segments with common characteristics in order to effectively evaluate the attractiveness and potential of each segment and select one or more target markets suitable for the development of the enterprise.
• Target: refers to one or more market segments selected by the enterprise, which have high demand potential and attractiveness and meet the enterprise's business objectives and resource conditions. According to the demand characteristics of the target market, the enterprise needs to formulate corresponding marketing strategies and measures to attract consumers in the target market.
• Product positioning (Position): The enterprise needs to create a distinctive image and characteristics in the target market, so that the product or service occupies a certain position in the minds of consumers, so as to distinguish it from the products or services of competitors. Market positioning needs to consider factors such as the demand characteristics of the target market, the competitive situation and the enterprise's own conditions, so as to highlight the advantages and characteristics of the enterprise and improve brand awareness and competitiveness.

Let's talk about it in more detail here. What is marketing? Kotler said that marketing is to manage consumer demand. Its strategic system can be described in a formula: STP+4P.

STP is strategy - market segmentation (Segment), target group (Target), product positioning (Position). 4P is tactics - that is, the 4P proposed by Jerome McCarthy, product (Product), price (Price), channel (Place) and promotion (Promotion).

3. 10Ps

In 1986, Philip Kotler proposed the concept of "Big Marketing". He added two more Ps to the original 4P combination: Political Power and Public Relations.

He believes that companies in the 21st century must master two new skills:

1. The first is dealing with political power, that is, understanding a country’s political situation and political barriers, including government policies, laws and regulations, and establishing good relations with government departments to obtain the necessary support and recognition, so as to better carry out marketing activities in the country’s market;
2. The second is to establish good public relations, establish a good corporate image among the public, assume social responsibility, thereby winning public opinion, improving brand awareness and reputation, and enhancing consumers' trust and loyalty to the company.

After adding these two Ps, Kotler further interpreted STP into another 4Ps: Probing, Partitioning, Prioritizing, and Positioning.

• Probing: refers to gaining an in-depth understanding of market demand and consumer behavior through market research and analysis, in order to provide a basis for formulating more effective marketing strategies.
• Partitioning: refers to dividing the market into different segments based on differences in market demand and consumer behavior in order to better meet the needs of different consumers.
• Prioritizing: refers to determining the needs and preferences of the target market based on the results of market research and analysis, and giving priority to meeting these needs.
• Positioning: refers to determining the market positioning of a company or product based on the needs and preferences of the target market so that it occupies a unique position in the minds of consumers.

In this regard, the 10Ps marketing theory emerged. The first 4Ps: Probing, Partitioning (i.e., market segmentation in STP), Prioritizing (i.e., target group in STP), Positioning (i.e., product positioning in STP) are strategies. The second 4Ps: Product, Price, Channel, Promotion are tactics.

The last 2Ps: Public Relations and Political Power, are new marketing skills and powers.

4. Customer Relationship Management Theory

In short, customer relationship management marketing theory is a customer-centric marketing strategy with customer value management as its core. It requires companies to fully understand customer needs and behaviors, that is, through the "one-to-one" marketing principle, meet the personalized needs of customers of different values, improve customer satisfaction and loyalty, and thus achieve the company's marketing goals.

It mainly includes the following aspects:

• Customer value management: The core is customer value management, that is, through the "one-to-one" marketing principle, to meet the personalized needs of customers of different values, improve customer loyalty and retention rate, achieve continuous contribution of customer value, and thus comprehensively enhance the profitability of the enterprise.
• Customer data analysis and mining: Emphasis on the analysis and mining of customer data in order to better understand customer needs and behaviors, and then formulate personalized marketing strategies. This requires companies to establish a complete customer database and conduct in-depth analysis of customer needs, preferences, purchasing behaviors, etc.
• Customer Care and Service: Emphasize customer care and service to improve customer satisfaction and loyalty. This includes providing personalized service and product solutions, and continuously improving products and services to meet the changing needs of customers.
• Customer relationship maintenance: Focus on maintaining customer relationships, including establishing good communication channels, timely understanding customer feedback and opinions, and handling customer issues and disputes. Through these measures, companies can establish stable customer relationships and improve customer satisfaction and loyalty.

The development history of customer relationship marketing theory can be traced back to the 1980s.

In 1985, Barbara Bender Jackson proposed relationship marketing, which views a company's marketing activities as a process of mutual influence with consumers, suppliers, distributors, competitors, government agencies and the general public. Establishing, developing and consolidating relationships between a company and these organizations and individuals is considered the core of marketing.

The purpose of marketing is not to create purchases, but to establish relationships. Only by establishing close and long-term relationships with users can companies continue to profit from them. Following relationship marketing, Gartner Group proposed the Customer Relationship Management (CRM) theory in 1999, further developing the concept of relationship marketing and emphasizing that companies need to achieve more efficient and targeted marketing activities through effective management of customer relationships.

Around the same time, the Customer Asset Management (CAM) theory emerged, which viewed customers as important assets of the enterprise and proposed to maximize the value of the enterprise through effective management of customer assets, which further highlighted the importance of customer relationships in corporate marketing.

Customer relationship management marketing theory is of great significance to modern enterprises.

By implementing customer relationship management, enterprises can establish a business philosophy oriented towards customer needs, improve business operation efficiency, enhance customer satisfaction and loyalty, enhance corporate competitiveness and promote sustainable development.

5. Brand Equity Theory

Brand asset theory looks at brands from the perspective of business operations and finance, which enhances the status and role of brands in corporate management and provides strong reasons for companies to build their brands.

Since then, the brand is no longer a tool for short-term promotion, but represents the core competitiveness of the enterprise and directly affects the valuation of the enterprise. The significance and importance of the brand have been greatly improved. The development history of brand equity marketing theory can be traced back to the 1980s.

In 1988, the Marketing Science Institute (MSI) proposed the concept of "Brand Equity"; in 1991, David A. Aaker, professor emeritus of marketing at the Haas School of Business at the University of California, Berkeley and vice president of Prophet Brand Strategy, published the book "Managing Brand Equity"; in 1993, another brand guru, Kevin Lane Keller, professor of marketing at the Tuck School of Business at Dartmouth University, also published a groundbreaking paper, proposing the idea of ​​"customer-based brand equity", namely the CBBE (Customer-Based Brand Equity) model.

The most representative theoretical models of brand equity are David Aaker's five-star brand equity model and Kevin Keller's CBBE model. The five-star brand equity model includes five aspects: brand awareness, perceived quality, brand association, brand loyalty and other proprietary assets.

This model can help companies understand the value and influence of their brands, and guide them on how to enhance their value and competitiveness by managing their brand assets.

The BBE model is a brand value enhancement model based on consumer cognition. It believes that brand value is formed based on consumers' cognition and attitude towards the brand, emphasizing the brand's image and status in the minds of consumers, as well as consumers' trust and loyalty to the brand.

This model guides companies on how to enhance the value and influence of their brands by building and maintaining long-term relationships with consumers.

6. CSR and ESG

CSR emphasizes that while pursuing economic benefits, enterprises should actively fulfill their social responsibilities and pay attention to the sustainable development of society and the environment. By fulfilling their social responsibilities, enterprises can enhance their brand image and reputation, strengthen their competitiveness, and promote the sustainable development of society. Enterprises should strengthen CSR in the following aspects in their marketing practices:

• Pay attention to social issues: Pay attention to social issues such as poverty, environmental pollution, education, etc., and contribute to society by formulating corresponding CSR marketing strategies, actively participating in social welfare activities and charity.
• Environmental protection actions: Take environmental protection measures, such as reducing waste emissions, saving energy and reducing emissions, and using renewable resources to reduce the impact on the environment.
• Employee benefits: Pay attention to the welfare and rights of employees, such as providing health insurance, housing provident fund, paid annual leave, etc., to improve employee work enthusiasm and loyalty.
• Charity activities: Actively participate in charity activities and charitable causes, such as donating to charities, supporting education, etc., to enhance the company's social image and reputation.
• Sustainable development: Focus on sustainable development and formulate long-term development strategies, such as adopting green technologies and promoting circular economy, to achieve coordinated development of economy, society and environment.
• ESG emphasizes that in the marketing process, companies should not only pay attention to their own economic interests, but also pay attention to their responsibilities and impacts in environmental, social and governance aspects. Its core idea is to combine the company's marketing goals with social responsibilities, enhance the company's brand image and reputation by implementing ESG practices, and thus achieve long-term development of the company.

The main contents of ESG marketing theory include three value pillars: environment, society and governance.

• Environmental value means that enterprises should improve environmental performance in production and operation and reduce internal and external environmental costs per unit of output;
• Social value means that enterprises should adhere to higher business ethics, social ethics and legal standards, attach importance to the internal connection with the external society, safeguard the rights of people, the interests of stakeholders and the Pareto improvement of the industry ecology;
• Governance value means that enterprises should improve the modern enterprise system, reasonably allocate the power of shareholders, boards of directors, and management around the fiduciary responsibilities, and form a scientific management system from development strategies to specific actions.

7. Blue Ocean Strategy

The blue ocean strategy is a corporate strategy that aims to create new "uncontested" market space through innovation and differentiation, completely break away from competition, and create a blue ocean of its own.

This strategy requires companies to shift their focus from the supply side of the market to the demand side, and from competing with rivals to providing customers with a leap in value. By looking at the market across existing competitive boundaries and screening and reordering customer value elements in different markets, they can rebuild market and industry boundaries, unlock huge potential demand, and thus escape the bloody competition in the "red ocean", create a "blue ocean", and achieve the simultaneous pursuit of "differentiation" and "cost leadership".

The blue ocean strategy marketing theory was first proposed by W. Chan King and Renee Mauborgne in their co-authored book "Blue Ocean Strategy" in February 2005.

The previous marketing theories mainly focused on finding opportunities in the existing market rather than creating new market opportunities. The existing market is often a fiercely competitive red ocean. The blue ocean strategy seeks advantages by opening up new business markets through innovation. It is a new idea. Enterprises mainly use the blue ocean strategy through the following steps:

• Define the current market situation: Evaluate the current competitive situation in the red ocean market, determine the current competitive advantages and pain points, as well as market needs and trends.
• Conduct market research: Conduct extensive market research to identify potential blue ocean market opportunities. This can be done through consumer research, competitive analysis, and trend research, with an emphasis on finding unmet market needs and untapped market areas.
• Determine blue ocean strategic goals: Based on market research results, determine the new markets and targets that the company hopes to enter. Strategic goals should be clear, specific, and aligned with the company’s core capabilities and resources.

The blue ocean strategy believes that focusing on the red ocean is equivalent to accepting the restrictive factors of business war, that is, seeking victory on limited land, but denying the possibility of creating new markets in the business world.

By using the blue ocean strategy, the focus will shift beyond competitors to buyer demand, cross existing competitive boundaries, screen and reorder buyer value elements in different markets, and shift from positioning choices under a given structure to changing the market structure itself.

The blue ocean strategy is a correction to the competitive strategy (red ocean), and is actually a value innovation theory. It reminds companies that the essence of marketing is not to defeat competitors, but to surpass competition through value innovation.

8. Conclusion

In marketing practice, companies need to combine marketing concepts and marketing theories to help formulate more scientific and effective marketing strategies.

At the same time, companies also need to constantly update their marketing concepts and theories based on development conditions and market environment, and maintain the advanced nature of marketing practices to create sustainable competitive advantages.

In this process, marketing practitioners must keep in mind the three dimensions of products, users, and competition, which are the unchanging iron triangle of marketing. They must analyze, think, and plan from these three dimensions to solve the problems encountered in business operations.

Author: Chen Hao

WeChat Official Account: Brand Market Relativity (ID: Brand-Marketing)