This is a question I used to get a fair amount during college, and it's something others in the field are probably asked quite a bit. I actually had to think about this a little more because I haven't been asked this question in a while. I guess being in the industry this long means I'm surrounded with people who know and understand what I do, or have given up trying to understand what I spend my days doing.
Before I get to my current explanation of "marketing", I want to dispel two common myths around marketing.
1. Marketing is NOT SALES. Sales is it's own beast. Awesome sales people may or may not make good marketing people (actually this is rarely the case, in my experience.)
2. Advertising is NOT MARKETING. They are more related than sales is to marketing, and marketing will often have more influence on advertising than on sales, but advertising is its own beast as well.
Now you are probably quite confused, but read through this next bit and then I think it will all come together.
Basically, marketing is "taking something to market".
All the decisions, activities, research, and productivity that goes into "taking something to market" is marketing, including what you do with it when you get there (assuming that the decisions you made in the "taking something to market" phase actually leads you to market, meaning, you don't pull the plug on the whole thing.)
What are all these pre-market decisions?
There's too many to list here, but we can break these down into a few broad categories:
Product - what product - or service - (when I say "product" I mean product or service) are you going to make? How are you going to make it? Is there demand for it? Who are you going to sell it to? Why? What is the competition like? What are your goals with the product?
Price - how much can you charge? What is the demand? How are you going to make money? What is your cost structure? Competition?
Place - "place" is a catchall for distribution and "where are you going to sell it". What's the distribution model? Will you sell direct or through a channel? What is the channel like? How are they compensated? Is there channel demand for your product? How can you generate channel demand? What pricing policies do they have? How will you sell it?
Promotion - this is where all your advertising and PR decisions are made. What methods and to what extent you promote will be a result of the decisions you made in the first three categories. How will you tell people about your product? How will you generate demand? Who will you tell about your product? Why should they care? What's special about your product that will make them care? How noisy is the market?
So, as you can see, there are many decisions to be made, and "sales" and "advertising" are extremely important, but those activities are only a part of the overall pie, and if done correctly, should flow from decisions made in the first two categories - Product and Price.