Marketing Concept

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MARKETING CONCEPT

Business philosophy has experienced three major shifts during the history of commerce in the United States. It has moved from a production orientation to a sales orientation to the current consumer orientation. Each of these philosophies has reflected the economic environment of its time.

From the early years of the country into the late 1920s, businesses had limited production capacity and continuous demand for their products. Under those circumstances, it was inevitable that the prevailing philosophy would be "produce as much as you can and it will sell." Business goals based on that belief naturally focused on production. Marketing concerns were limited to order taking and product distribution.

With the introduction of mass production in the late 1800s, the gap between production and the demand for goods and services began to narrow. By the 1930s, production capacity had caught up with and, in many areas, exceeded demand. In order to maintain or regain production and sales levels, businesses adopted a sales-oriented philosophy. This philosophy held that "if you do enough advertising, promotional activities, and direct selling, you can persuade the market to buy all of your output." Initially, companies capitalized on the emergence of the radio as an advertising vehicle and the employment of large sales forces to reach prospective customers in new markets. In the 1940s, the introduction of television enabled them to expand sales efforts even further.

After the end of World War II (1939–1945), two forces combined to create an explosion in demand for goods and services. One was the pent-up demand for products resulting from wartime shortages. The other was the enormous added demand generated by the return of GIs who were establishing new homes and families. The spending boom caused by these forces was sustained by the baby boom and the increased standard of living that followed. At the same time, wartime production capacity and technological developments were shifted to civilian applications, production continued to increase, and new ventures were formed to take advantage of the opportunities.

The net result of all this economic activity was heavy competition for the consumer dollar. Businesses quickly came to realize that if they were going to get their share of those dollars, they were going to have to become more consumer-oriented. This change in philosophy became known as the marketing concept.

ORIGIN OF THE TERM

Although this philosophy had been taking shape for nearly seven years, it was not articulated until it appeared in the 1952 annual report of General Electric. One widely used definition evolving from the report's description is "an organization-wide consumer orientation with the objective of achieving long-range profitability." As this definition implies, there are three parts to the marketing concept. They are:

(1) A customer focus:

The marketing concept begins with the premise that the starting point for business decisions is the customer's needs and wants. Those needs and wants are carefully researched and thoroughly analyzed. Then, goods and services are identified and/or developed to satisfy them.

In many cases, a consumer's stated needs and desires are limited by a very narrow perception of what is possible. Firms often need to determine what "futuristic" products and services would satisfy latent needs and wants of which consumers are not yet aware. Many popular products such as the iPods, cell phones with cameras, and singing birthday cards were not envisioned by consumers twenty years ago. To successfully implement the marketing concept an organization must research the short-term desires and the long-term needs and wants of their potential customers.

(2) Long-term organizational success:

The marketing concept dictates that goods and services made available by a business must be produced and marketed so as to meet the long-term goals of the organization. In most businesses this would include the profit objective that is integral to the survival and growth of a business. Without it, the business would not be available to serve the needs and wants of customers. Other objectives, however, may include market share, sales growth, or new product success. Many successful nonprofit organizations, such as the Red Cross, effectively use the marketing concept.

(3) A total company effort:

Effective implementation of the marketing concept requires involvement of employees from all departments at all levels of the business. Training must be provided and employees must be motivated to achieve the common goals of maximum customer satisfaction and the long-term organizational objectives.

EXECUTING THE CONCEPT

Businesses that have embraced the marketing concept have found that this concept has had a strong impact on sales. They have also found that, in many respects, this concept has changed the way they operate.

Most of the changes in management practice have been related to changes in thinking inherent in the marketing concept. These include making decisions on the basis of customer needs and wants instead of production schedules and sales goals, encouraging every employee to take an active interest in all aspects of the business, and forcing managers to think through what they are going to do and their reasons for doing it.

Changes in marketing activities that have occurred under the concept involve both marketing strategies and marketing functions. Market research has become a prominent tool. Data gathered to determine customer needs and wants and to provide feedback on company performance are used more effectively. Special attention has been paid to product quality and to tailoring services, as well as products, to customer preferences. The customer's interest has been designated as the first priority in all marketing activities. In selling, for example, helping the customer has been given greater emphasis than getting the sale. In addition, the search for innovative ways to reach and serve the customer has become an ongoing enterprise.

Changes in production brought about by use of the marketing concept, such as closely controlled inventories, have centered on efficiency. Changes in operations, such as extended hours and immediate delivery, have focused on convenient product availability. Additional changes in business practice have been aimed at cost control to give customers maximum value for the price they pay.

A growing interest in the societal marketing concept recognizes the possible conflict between short-term consumer wants and the long-run welfare of consumers and society. Lawsuits against the tobacco industry and, in some cases, the fast food industry, along with other firms, demonstrate this conflict. Although these firms were satisfying the wants of consumers at the time, the long-term harmful results of using the products on those consumers and society have caused many to promote the societal marketing concept. This concept is based on satisfying consumers' needs and wants in a manner that would also maintain or improve the long-term welfare of the consumers as well as the well-being of society.