1.What is Marketing?

Marketing is an activity that surrounds our daily lives. Everywhere you look on your way to school or work you will see the impact of marketing. You will undoubtedly pass billboards advertising goods or services, you will pass retail establishments, or you may see trucks or trains transporting merchandise. Each of these is an important part of the marketing system.

Marketing is a complex process, and marketing experts often disagree on what marketing is and what it consists of. To avoid this controversy, we will use the official American Marketing Association definition of marketing:

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

Note several things about this definition. First, marketing is viewed as a process of planning and executing, which suggests that marketing is a managerial process. Second, this managerial process involves conception (i.e., thinking of or deciding what idea, goods or service to market) and the pricing, promotion and distribution of ideas, goods, and services. Third, the managerial process is directed at creating exchanges that satisfy individual and organizational objectives.

A key point about this definition of marketing is that it views marketing as an exchange process. For exchange to occur, five conditions are necessary:

1. There must be two parties.

2. Each party must have something that could be of value to the other.

3. Each party must be capable of communication and delivery.

4. Each party must be free to accept or reject the offer.

5. Each party believes it is appropriate or desirable to deal with the other party.

When these five conditions are met a potential exchange relationship has been established.

Marketing is part of our society. Its influence on society is more than economic. Marketing has a cultural influence on society. As a cultural phenomenon it can help shape our wants and desires. Marketing is also important to an organization because it helps that organization create successful exchange relationships with potential buyers. For this to take place, the right products must first be produced and then correctly distributed, promoted, and priced. Note that these tasks relate to our definition of marketing.

Marketing is important to each of us because it allows us to specialize. To better appreciate this, imagine a society in which each person must hunt, cook, and make his or her own clothing, shelter, and tools. Predictably, not everyone in this society would be equally proficient at all these activities. In fact, if the best hunter concentrated on hunting, the best toolmaker on making tools, and so on, then the society could create a higher level of wealth. However, this system would only work if everyone could exchange their surpluses for the goods and services they needed. By establishing a marketing system, people are given the freedom to specialize.