Originally published: May 16, 2020. Last updated: Oct 10, 2026.
Every business has the same two problems: too few people know what it sells, and too few of those who know choose to buy. Marketing is the organized work of solving both. The American Marketing Association defines marketing as 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. In simpler terms, marketing is how a business finds its customers, earns their attention, convinces them to buy, and keeps them coming back.
Marketing is not the same as selling, though the two work together. Selling closes the individual transaction; marketing builds the conditions that make transactions happen again and again: awareness, trust, preference, and demand. Companies that treat marketing as a serious business function keep investing in it for a reason. According to Gartner’s 2025 CMO Spend Survey of 402 marketing leaders, average marketing budgets held steady at 7.7% of company revenue, and more than 60% of companies now view marketing as a profit center rather than a cost center.
This guide explains the six concrete ways marketing drives business success, from creating demand to measuring returns, so you can judge what your own marketing is supposed to do and whether it is doing it. If you want the tactical side of reaching buyers, start with our guide on how to reach customers through digital marketing.
1. Marketing Creates Demand and Builds Competitive Advantage
No one buys what they have never heard of. Marketing is what turns an unknown product into a considered option: it identifies who the buyers are, reaches them with a relevant message, and gives them a reason to choose you over competitors selling similar things. That reason to choose is your competitive advantage, and it rarely comes from the product alone. In crowded markets, several businesses sell nearly identical products; the one that wins is usually the one whose marketing made its difference clearest.
The investment behind that advantage is real and deliberate. Gartner’s 2025 CMO Spend Survey found that marketing budgets held flat at 7.7% of company revenue for the second year running, with paid media taking the largest share at 30.6% of the marketing budget and digital channels accounting for 61.1% of total marketing spend, the highest digital share since Gartner began the survey. More telling than the spend is the confidence behind it: more than 60% of companies now view marketing as a profit center rather than a cost center, up from 53% the year before, and 94% of CMOs said they met or exceeded their ROI goals in the previous 12 months, according to Chief Marketer’s coverage of the survey.
For inspiration on what demand creation looks like in practice, see our roundup of the best digital marketing campaigns with examples.
2. Marketing Builds Brand Equity That Compounds Over Time
The most valuable thing marketing builds is not a single campaign’s sales; it is brand equity: the accumulated trust, recognition, and preference that make every future sale easier and cheaper. Strong brand equity means customers arrive already convinced, which lowers the cost of each new customer and raises the odds that each one buys.
Kantar’s research quantifies the compounding effect. Between 2019 and 2021, brands with growing brand equity increased their brand value by 72%, compared with just 20% for brands with declining equity. Kantar’s marketing ROI models show that the long-term, brand-driven effect of marketing accounts for 60% of total marketing ROI, larger than the 40% coming from short-term sales activation. And companies that rebalance their spending between brand building and short-term activation have seen total sales increase by about 10%, driven by baseline growth.
The practical lesson is balance. Marketing that chases only immediate conversions steadily weakens the baseline: Kantar finds that when the mix skews too far toward performance marketing, baseline sales erode and the business becomes dependent on ever more paid spend just to stand still. Brand building (a distinctive identity, consistent presentation, memorable creative) and demand activation (search ads, promotions, retargeting) work best together. Start with a clear identity: our beginners guide to creating brand identity covers the foundations, and brand video marketing dos and don’ts covers one of the highest-impact brand formats.
3. Marketing Finds Customers and Turns Interest Into Sales
Awareness is only the start. Marketing’s next job is finding the right people and moving them from “never heard of you” to “ready to buy”. This is demand generation in practice: defining who your best customers are, reaching them through the channels they actually use, and nurturing their interest until they are ready to talk to sales.
Targeting is where precision pays. Blanket advertising wastes most of its budget on people who will never buy; segmented, intent-based marketing concentrates spend on the people most likely to convert. Our guide on what lead segmentation is explains how to divide your audience into groups that each receive the right message, and the breakdown of the different types of leads in the sales process shows how to match your effort to each lead’s readiness.
Referrals are the quiet multiplier. A customer won through good marketing often brings the next one: satisfied buyers recommend you to friends, colleagues, and family, and that word of mouth arrives pre-loaded with trust that no advertisement can buy. Marketing earns those referrals twice: first by acquiring the right customers, then by keeping them happy enough to recommend you, which is the subject of the next section.
4. Marketing Keeps Customers and Grows Their Lifetime Value
Winning a customer is expensive; keeping one is cheap, and marketing is the function that does the keeping. Retention marketing (email, SMS, loyalty programs, useful content, timely offers) reminds existing customers why they chose you and gives them reasons to buy again.
The economics are decisive. Research by Bain & Company and Harvard Business Review finds that acquiring a new customer costs 5 to 25 times more than retaining an existing one, and that increasing customer retention rates by just 5% can increase profits by 25% to 95% (see the retention statistics roundup). Existing customers also buy more over time and are far more likely to try your new products than strangers are.
Email remains the highest-return retention channel in most businesses. Industry benchmarks from Litmus put email marketing’s average return at $36 for every $1 spent, driven largely by automated lifecycle messages to existing customers: welcome series, post-purchase follow-ups, win-back campaigns, and replenishment reminders (see the retention marketing measurement framework). SMS plays the same role for time-sensitive messages; see our guides to SMS marketing for restaurants and takeaway services and retail text message marketing for shopping stores for channel-specific playbooks.
5. Marketing Builds Pricing Power and Business Resilience
Strong marketing does something advertising alone cannot: it lets you charge more. Brands that customers perceive as meaningful and different command premium prices, because the purchase decision stops being purely about price. Kantar’s framework identifies three drivers behind this: being meaningful (meeting customers’ functional and emotional needs), being different (standing out from the category), and being salient (coming to mind easily when a buying decision happens). Brands that score well on all three grow their brand value far faster than the rest.
That pricing power is also a shock absorber. When markets tighten, undifferentiated businesses compete by cutting prices and margins; strong brands hold their ground because their customers are buying the brand, not just the cheapest option. Marketing built this way is not a cost to cut in a downturn; it is the asset that protects revenue when demand softens.
6. Marketing Measures What Works and Compounds the Wins
The final thing marketing does for a business is something no other function can: it tells you, with data, what is actually working. Modern marketing is measurable end to end: which channels brought the visitors, which messages converted them, which customers stayed, and what each outcome cost. That measurement turns marketing from a gamble into an investment you can steer.
This is why marketing budgets survive scrutiny. When 94% of CMOs report meeting or exceeding their ROI goals, it is because they can show which part of the budget worked and shift spend toward it. For a small business, the discipline is simpler but the same: set a few clear goals, attach a number to each, review monthly, and double down on what moves. Our guide to the marketing goals behind setting up an ecommerce website walks through a goal-setting framework (qualified traffic, owned audience, conversion, personalization, content) that applies to any business: decide what each marketing activity is supposed to achieve, measure it, and keep what earns its keep.
Conclusion
Marketing does six jobs for a business, and every one of them shows up in the numbers: it creates the demand your sales team closes, builds the brand equity that makes future selling cheaper, finds the right customers and converts their interest, keeps those customers buying, protects your prices, and measures everything so the wins compound. A business with a great product but no marketing is invisible; a business with good marketing and a decent product has a growth engine. The data backs the investment: most companies now treat marketing as a profit center, and the ones that balance brand building with demand activation grow faster and more durably than the ones that do not.
Learn More:
Types of Print Advertisement to Boost Business Sales
How to Reach Customers Through Digital Marketing
Best Digital Marketing Campaigns With Examples
Frequently Asked Questions
What is the main purpose of marketing in a business?
The main purpose of marketing is to create customers and keep them. The American Marketing Association’s definition frames it as creating, communicating, delivering, and exchanging offerings of value. In practice that means finding the right buyers, earning their attention and trust, converting interest into sales, and retaining customers so they buy again and recommend you.
How does marketing increase sales?
Marketing increases sales through six mechanisms: it creates demand by making buyers aware of your offering, builds brand equity that makes future selling cheaper, targets the right customers instead of wasting spend, retains existing customers who buy more over time, supports premium pricing through differentiation, and measures results so winning tactics get more budget. Companies that balance brand building with demand activation see stronger, more durable sales growth.
What is the difference between marketing and selling?
Selling closes the individual transaction; marketing builds the conditions that make transactions happen repeatedly. Marketing handles awareness, positioning, lead generation, and customer retention, while selling handles the direct conversation that converts a qualified prospect into a buyer. The two are complementary: good marketing makes selling easier, and sales feedback makes marketing sharper.
How much should a business spend on marketing?
There is no single right number, but benchmarks help. Gartner’s 2025 CMO Spend Survey of 402 marketing leaders found average marketing budgets held at 7.7% of company revenue, with digital channels taking 61.1% of the spend. Smaller and growth-stage businesses often spend a higher share of revenue, while established B2B companies may spend less. The practical approach is to set a budget, tie it to measurable goals, and scale what proves its return.
Can a small business succeed without marketing?
Almost never for long. A great product with no marketing stays unknown, and competitors with better marketing win the customers. Small businesses do not need big budgets, but they do need the fundamentals: a clear identity, a way to be found (search, social, or local presence), a way to stay in touch with customers (email or SMS), and basic measurement. Consistency with small budgets beats occasional big spends.
How do you know if your marketing is working?
Attach a number to each marketing goal and review it regularly. Track where visitors come from, what it costs to acquire a customer, how many customers buy again, and what revenue each channel produces. If 94% of CMOs can report meeting or exceeding their ROI goals, as Gartner found, a small business can certainly track the handful of metrics that matter: traffic, conversion rate, customer acquisition cost, retention rate, and revenue per channel.
