Concept of Marketing Management

Over a period of time, five alternative marketing concepts have emerged under which organisations operate their marketing activity and programmes giving emphasis to the organisation or to the market or to the society –

1. The production concept
2. The product concept
3. The selling concept
4. The marketing concept
5. The social marketing concept

The marketing activity is an exchange process between the marketer and the chosen market, and it is a well-planned and systematically practised marketing management philosophy. However, the marketing management philosophy and concept practised by any organisation is guided by social factors, organisational philosophy and culture, market characteristics and the dynamic characteristics of consumers.

The intensity of marketing programmes and efforts is ultimately decided by the importance given by the company itself to the interests of the customer or the society. 

Read this article to learn about all the essential concepts of marketing.

Concept of Marketing Management

1. The Production Concept:

The production concept is the management philosophy, which believes and operates with the guiding force that the consumer will prefer those products which are conveniently available in adequate quantity and at affordable price.

Therefore, the management should make all efforts to produce adequate quantities of products with acceptable quality and properly distribute them to the users. This concept presumes that production so offered to the consumers would generally be acceptable and sold out.

The salient features of production concept are:

i. This concept is based on the belief that consumer’s needs can be satisfied with reasonable quality and reasonably priced products.

ii. There is a fair amount of competition and competing products are sold with complete knowledge of the products available in the market.

iii. The manufacturer should maintain availability of sufficient quantities of products and consistency in quality.

The production concept is useful or applicable in situations where a mass quantity of product is consumed or used in bulk and demand of product exceeds supplies. The production concept is best suited for mass-consumed products like fertilizer and food commodities, cooking products, stationery items.

In fact, it was the early 1900s when Henry Ford thought of the concept of mass production to reduce the cost of production of cars. Ford hired technical people and put all his talent into mass production of automobiles to bring down the cost of automobiles so that American consumers could afford them.

Later, other American companies like Texas Instruments, IBM, and US Steel followed this concept. Japanese companies like Toyota, Mitsubishi Steel and National Electronics followed this concept to mass produce good quality products at a very competitive price for their global business.

Many non-profitable, social and service organisations like general hospitals, public distribution outlets, schools, colleges, teaching general curriculum, sports academy, eye care centres are organised on production concept basis, to provide service to the maximum and cover as many people as possible. However, this might dilute the efficiency of service but the emphasis is on mass distribution of products and services.

2. The Product Concept:

The Product concept is a variation of production concept and emerged later as a management philosophy based on which marketing management programmes and efforts were developed. The concept can be defined as –

The product concept is management philosophy that consumers generally prefer those products in the market which offer the best in terms of quality and price and essentially all organisations in marketing business to produce and provide sustainable improved quality products.

The implication of this concept is that consumers look for products which are affordable as well as quality that meets their requirements. The emphasis is on the quality of the product that is available in the market.

The concept is primarily based on following premises:

i. Consumers generally look and prefer quality of the product

ii. Consumers compare quality of products to competing product or brand quality

iii. Consumers generally buy products to meet their overall needs and not specific needs.

iv. Consumers are aware of the product quality differences between competing brands and they choose the quality which comes closest to their preference and their affordable price.

v. Consumers’ rating of manufacturers is based on their quality products and reliability and brand loyalty is also based on quality perception.

Many organisations follow product concepts but they often overlook the customers’ specific need for a solution. The major steel producer believed in this concept without bothering to meet specific needs of structural steel, heavy duty steel and anti-rust or corrosion steel. Earlier many big restaurants and hotels, hospitals, and clinics believed that their business would flourish if the customers are served standard quality products. It may satisfy a sizable section of the market but not the affluent market segment.

Non-profit and service organisations often follow product concepts. Police departments, general hospitals, municipal offices, post offices, railways, airlines, health care or eye care centres believe they are offering the best of goods and services and no one should complain. In product concept, the overconfidence of their product and services quality may be a self-inflicting injury which may be costly for long-term business strategies.

3. The Selling Concept:

The selling concept is a major deviation from earlier two concepts and in this concept, the role of selling is a useful technique for business. The selling efforts help in getting business and satisfying customers. The selling concept can be defined as –

The selling concept is a management philosophy based on the premises that consumers generally do not buy products that are not essential or do not buy in sufficient quantity unless the organisation itself puts efforts to create awareness and interest of the consumer in its products and makes them inclined positively to buy these products.

The selling concept gives sufficient importance to selling efforts and techniques used in selling. It also maintains that products and services, however good in quality and affordable, may not sell on their own unless this is pushed by selling vigorously.

It also emphasizes that selling efforts and selling techniques vary from product to product and service to service. Selling an ordinary land telephone may require display and small promotion but selling a mobile phone would require aggressive selling efforts and promotional activity.

The selling concept to be based on following premises:

i. Consumers generally do not waste money in buying things which are not essential or buying excess quantities than required.

ii. Consumers prefer to be motivated to buy things by use of selling efforts by organisations.

iii. Consumers appreciate good selling techniques, efforts and criteria and good salesmanship not aggressive ill-behaved salesmanship is always useful.

iv. Consumer ratings of organisations and retail outlets are high where there is an organised and effective selling effort.

The selling concept is used vigorously by insurance companies and insurance agents try to hard sell their policies to potential customers. The real estate, automobile dealers, credit card, home or car loans by banks, housing, tours and travel and courier services are all using the selling concept to get their business and share of the market.

The focus of the selling concept is on products and services and the objective is to earn sales revenue and profit by ways and means of selling and promotional exercises. The selling concept focusses on the needs and objectives of the seller and the seller has to sell his products or services to make sales and profit. The buyer is not the focal point nor are his needs and wants.

4. The Marketing Concept:

The marketing concept as the management philosophy emerged in the 1950s and early 1960s, when the organisations started working out in different segments of the market and found that market characteristics and their needs are not similar, they are not static and changing with time and place. The needs of the customers gradually took the centre stage of the marketing management plans and programmes.

The marketing concept underlines the importance of customers and their needs and wants and finds solutions to satisfy these needs. The focus is on determining the customers’ requirements and then finding solutions to satisfy these requirements. The marketing concept can be defined as –

The marketing concept is a management philosophy that focuses on the needs and wants of the customers of the target markets and the organisation would need to find products and services that will prove to be a useful solution to solve the requirement of such needs and wants and derive the satisfaction of the customers.

The market concept treats customers as the pivotal point in the entire marketing management plan. The customers’ needs and wants are supreme. The customer is the boss. Henry Ford said, “No dissatisfied customers”. There is an old saying, “It takes months to find a customer and seconds to lose one”. Therefore, finding and retaining a satisfied customer is the objective and not finding a customer and selling the product.

The main premises on which the marketing concept is based are:

i. The customers’ needs and wants are varied and many and these must be understood and suitable products and services offered to match the requirement.

ii. The market consists of different segments and these segments can be grouped according to the customers’ characteristics.

ii. The consumers in any market look for products and services which carry attributes of features and these are perceived closest to solving their needs and wants and consumers’ preference will be for such products and services.

iv. The consumers in any market may not buy a product if they feel that it will not serve the purpose of solving their needs and wants.

v. The success of marketing concepts lies in proper analysis of market research, segmenting the market and offering products specific to the segments, along with proper marketing programmes.

Therefore Levitt has mentioned the following differences between the selling concept and marketing concept:

Selling focusses on the needs of the seller and marketing on the needs of the buyer.

The selling concept starts with the terms existing products and services and tries to fit into the needs of the customers whereas the marketing concept starts with the proper understanding of target customers’ needs and wants and then developing products and services which would help consumers to use and derive satisfaction and this will lead to business transactions, profits and better satisfaction means growth, more revenue and profits.

However, it must be clearly understood that the marketing concept is not devoid of selling effort but the objective is to sell only those products and services which are in tune with the needs and wants of the customer and not just sell the products.

The marketing concept revolves around customer needs and wants and this concept is supported by integrated marketing effort with a view to providing solutions to customers need-based problems and derive customer satisfaction and this ultimately helps in making profits for the business process.

The integrated marketing effort deals with a view to providing solutions to customers need-based problems and derive customer satisfaction and this ultimately helps in making profits for the business process.

The integrated marketing efforts takes into consideration product quality, packaging, distribution, transportation, storing, retailing, after sales service and customer relationship and this helps in getting more business from growing number of satisfied customers and reducing cost of operation due to economies of scale.

All these factors lead to a single point of higher profit with bigger market share. The international companies like General Electric (GE), Ford Motor, General Motors’, IBM, American Express, McDonalds, Coca Cola and Wal-Mart have all practised in different forms and means of principle of marketing concept. All have flourished keeping customers’ needs as the top priority.

Take for example the automobile car market in India. There were three manufacturers-Hindustan Motor (Ambassador Car), Premier Padmini (Fiat & Padmini cars) and Standard motors (Standard two door car) and the entire Indian market was fed by these three manufacturers with five models.

The needs of small budget consumers, medium budget and big budget consumers, i.e., market segment by disposable income was not emphasised. But the automobile industry underwent significant changes with the launching of Maruti car followed by other manufacturers like Tata, Hyundai, Daewoo, Fiat and Ford motors and all these companies have launched cars in small, medium, and big budget segment and the result is that consumers are satisfied with their transportation and status or life style needs.

Marketing concept is now being gradually used in non-profit organisations and service industries also. Non-profit organisations are using marketing concepts to serve the society or community’s needs better and also using marketing concepts to improve their resources and membership. Service industries like health care, skin care, restaurants, hotels, insurance banks, tours & travels, and charity organisations are using marketing concepts to provide better service to their target market and deriving higher profits through better customer satisfaction.

All these organisations have begun to realise the need to understand their target market more thoroughly, develop products and services to suit such needs, communicate more effectively and promote their products. These organisations are now trying all techniques of marketing concept from simply selling products or offering services without bothering about the needs of the consumers.

Among American manufacturing companies, the outstanding practitioner of marketing concept approach is IBM and is also the best example of the power of marketing. IBM does not rely totally on technological innovation or product superiority but in understanding market segments so that it gives them tailor-made products backed by extremely good service.

Peter Drucker in his book Management – Task, Responsibilities, Practice mentions that despite the emphasis on marketing and marketing approach, marketing is still rhetoric rather than reality in far too many businesses. Consumerism proves this. For what consumerism demands of business is that it actually is an effective use of the marketing concept.

It demands that business starts with the needs, the realities and the values of customers. It also demands that business define its goal as the satisfaction of customer needs. But consumerism can be viewed as the opportunity of marketing, which will force businesses to become more market-focused in their actions as well as in their pronunciation.

Marketing Myopia:

The two concepts, selling concept and marketing concept, have often been the subject of confusion and wrong interpretation in marketing programmes. Therefore Levitt, in his treatise referred to this marketing myopia and explained the disadvantages of excessive emphasis and preoccupation with product or production and selling, ignoring the customer in the process and due to this shift in focus results in marketing myopia. This leads to poor or even incomplete understanding of customer’s needs and wants and results in failure of the marketing system to get customer’s satisfaction and affects the business prospects.

The automobile industry would treat its product i.e., car from seller’s point of view but as per the marketing concept, should have focused on transportation needs of the customers. Levitt explained that the marketing environment changes with time but some fundamental characteristics in each business maintains itself and this invariably relates to human needs and wants. Marketing management activity should address these needs and wants and try to satisfy them.

A comparative statement of the four concepts, i.e., production concept, product concept, selling concept and marketing concept on various parameters, shows the focus and emphasis of various philosophies of management.

5. The Social Marketing Concept:

Even though the marketing concept has been practiced for last two decades and ideally this orientation is best suited for taking care of customer’s needs and wants, but concerns have been raised on three fronts – whether the marketing concept can be timely practiced in a competitive situation with business objectives, secondly are all marketing companies are really practising marketing concept in their regular marketing efforts and finally, does this concept emphasise the interest of consumers and consumer needs but this need not always be in the interest of society.

For example- Consumers may have no interest in the environmental impact of the production process and marketing management activities needed to satisfy wants. The consumers who would love to spend huge money to buy furcoat or garments made of leather and wildlife products may not be interested in the serious threats to endangered wildlife species. Consumers may choose to consume potentially harmful products like liquor and cigarettes and harmful medicines and unbalanced diet posing health hazards to society.

It is indeed practically difficult to keep pace with the changing consumer characteristics to produce products or offer services which would bring satisfaction to consumers. It is extremely difficult for any organisation to achieve marketing management objectives fully. In fact, after twenty five years of marketing concepts, the consumer movement or consumer forums have become more and more active. Peter Drucker in his book Management – Tasks, Responsibilities and Practices mentions that the rise of consumerism is the “shame of marketing”.

Some critics have even questioned whether it is possible for any organisation to practice marketing concepts when consumers are changing their needs and wants more frequently than earlier times, and then with the advent of electronic media and potential advertisements, consumer awareness has reached a new level and thus raising their expectations.

Coupled with this the sourcing of raw materials, rising cost of fuel energy and transportation of eco-friendly packaging materials, rigid environmental laws, fast changing technological inputs, global political disturbances and rise of regionalism have made things difficult for major companies to sustain their business operations, leave aside practicing marketing orientation.

It has been observed that while meeting the customers’ wants, the organisations have neglected society’s needs.

For Example:

i. Industrialisation of countries has resulted in availability of products for masses but it has definitely added to existing pollution problems. Environmental pollution problems have caused more damage to society than the products have given satisfaction to some consumers in the society.

ii. Improved technological changes have brought better products but it has already resulted in higher wastages and artificial demand and quicker product obsolescence.

iii. The soft drink industry and liquor industry in developed countries have now switched over to one-way bottles (non-returnable bottles) but this has added to environmental (disposal) problems as well as waste of resources. However, purely for economic reasons, soft drink and beer bottles are reused many times before they are discarded in developing countries like India, washing methods and hygienic factors are now debated for safer use of these reusable bottles.

iv. The detergent industry has been producing products for consumers for washing clothes but at the same time polluting rivers and causing problems for aquatic lives and human lives.

v. The auto industry and sudden spur in demand for cars have caused high fuel consumption but it has also added to safety problems and craze for fast driving, traffic congestion and pollution.

vi. For consumer convenience, marketing companies have introduced carry-way plastic bags, plastic trays and containers, plastic disposable cups, tumblers and containers and all these plastic items are thrown all over the place without any environmental considerations. Customers feel convenient to carry their purchase in such plastic bags and this is certainly a social problem. These days, developed countries are slowly realising this problem and have changed laws to make use of eco-friendly packing material.

vii. High speed or supersonic aircraft like CONCORD have been useful for travelling long distances quicker for passengers but what about noise pollution caused by the aircraft’s high decibel level which affects common people? Travelling communities may prefer such aircrafts but they should also consider social problems caused by noise pollution.

viii. The marketing companies are selling food products, mineral water, cosmetics, and personal products which are so well packed in plastic containers but there are health hazards and disposal problems.

ix. Companies like McDonald, Kentucky Fried Chicken, (KFC) Pizza that serve very tasty food which may not be nutritious. These food products are packed in paper again which may not be good for your health.

All above examples have led to the birth of a new concept, popularly known as “the societal marketing concept”.

The societal marketing concept is a management philosophy that believes in assessing the needs and wants of consumers or target market and to adapt the organisation to produce and market goods to give expected satisfaction more effectively than its competitors in such a way that preserves the consumers and society’s well-being.

The social concept is sometimes also referred to as “the human concept” or “the ecological imperative concept” or “the intelligent consumption concept”.

However, in reality consumers’ wants and objectives do not coincide with society’s needs and objectives and therefore it is difficult to satisfy both. But rational consumers will favour and support those organisations which try to take care of consumer needs, and at the same time, try to take care of society’s well-being. The objective should be long-term social and consumer well-being.

The social marketing in short has following objectives to meet:

a. To satisfy consumers’ long-term needs and wants and satisfy society’s long-term interests. Consumers will prefer and favour such marketing organisations.

b. Consumers are now concerned about safety and environmental problems and marketing companies need to understand them.

c. The marketing activity should be synchronised to offer products which will satisfy consumers’ needs and society’s long-term interests.

The society has started realising the long-term effects of marketing company’s malafide supply of products which are adverse to social well-being. Sociologists and economists have now started demanding products which are safer, less polluting and eco-friendly. The reduction in the use of plastic packs and containers in USA and European countries is a pointer in this direction. The Green Dot Scheme was enforced in Germany, insisting on using biodegradable and eco-friendly packaging materials.

The term social marketing is used to denote marketing of those products and services which have social significance or enjoy social acceptance. The objective of social marketing is to market and distribute products and services which will benefit the majority of members of society or community. The social probity itself may arise from the nature of the consumers or the products or both within the overall transport and economic development of the society.

There is a considerable unanimity on identifying some of these target groups deserving priority in social marketing and their needs. Landless labourers, marginal farmers, construction workers, artisans, masons, tribal people, people below poverty line, unemployed and illiterate people are the target.

In addition to identifying such target markets or target groups, social marketing involves identifying consumption of products which would benefit society at large. Viewed in this aspect, primary health care, primary education, housing, family planning and agricultural input products are some of the priority products of social marketing, For example- selling drip irrigation system, high-yielding farming and irrigation water equipment and systems, welfare schemes for the rural population, child health care schemes, and new nutritional concepts of low fat food for the traditional population.

The Government of India’s family planning project launched its Nirodh Commercial Project by utilising distribution resources and marketing skills of large companies, using advertising campaigns and promotional skills to promote awareness and usage of ‘Nirodh’ brand condoms for family planning. These are some examples of social marketing that have been employed by organisations to achieve social marketing objectives.

The social products can either take the form of family planning, anti-smoking campaigns, rehabilitation of street children or eradication programmes of leprosy, eye donation and AIDS awareness programmes.

For the very first time in India, social marketing gained relevance in the early seventies with the marketing of contraceptives and other family planning inputs. The challenge to the social marketer lay in the contraceptive being in demand as a preferred good by a person who has to allocate his resources over many consumption goods.

So far, family planning programmes in India were addressing the problem from the macro-level of controlling the national population. For years government agencies have been distributing free contraceptives, even slipping them under the doors of rural homes, just to meet official targets. For family planning to be successful, they have to target the individual customer.

For example- Most of the population control programmes talk of benefit to the nation, which has little relevance at the individual level. To begin with, it is important to find out what motivates people to have so many children, and what would motivate them to have fewer children. Developmental projects have so far had a top-down approach without adequate research on the needs of the market.

Social marketing has a long way to go in a country like India. Even a poor child in a remote village in India comes and asks for Coca Cola in the village store but if the same store stacked some preventive medicine, it would not move from the store shelf, according to Dr. Scarlett Epstein, British social anthropologist. The same holds for other consumer items like chocolates and toothpastes.

The difference lies in marketing. Coca Cola is one of the greatest marketing successes of our times. Coca Cola has tailored its marketing strategy after an in-depth study of the market-place. They are so tuned into the culture of their target audience that the way they sell Coca Cola in Papua. New Guinea is completely different from the way it is sold in India.

The socially concerned product has not quite taken off as Coca Cola mainly because selling the social product is more difficult. In business marketing, the ‘marketing mix’ could be varied according to consumer tastes, whereas the social marketer has a product that cannot be altered to suit consumer tastes.

For example- A new brand of toothpaste launched in the market can cause an adverse market reaction, the peppermint flavour and the green colour of the toothpaste can be changed according to market reaction. While commercial marketing is all about making a product that a consumer wants, in social marketing, the consumer might not really want the product. It is easier to sell a cigarette than to sell an anti-smoking campaign.

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Basic Concepts of Marketing Management

Marketing management refers to carrying out tasks to achieve desired exchanges with target markets. There are five alternative philosophies that should guide organizations to conduct their marketing activities — the production, product, selling, marketing and societal marketing concepts.

1. Production Concept :

According to the production concept, consumers will favour products that are available and affordable and that management therefore should improve production and distribution efficiency. This is an old philosophy which guided sellers.

The production concept is a useful philosophy in two situations. The first occurs when the demand for a product exceeds the supply. There are two ways to increase production. The second situation occurs when the product’s cost is too high and improved productivity is needed to bring it down.

2. The Product Concept:

Second major concept guiding sellers —the product concept — holds that consumers will favour products which offer the most quality, performance and innovative features and that an organization should thus devote energy to make continuous product improvements.

3. The Selling Concept:

Many companies follow the selling concept which holds that consumers will not buy enough of the company’s products unless it undertakes large scale promotion efforts. This concept is usually practiced with unsought goods, those that buyers do not usually think of buying such as encyclopaedias.

4. The Marketing Concept:

The marketing concept holds that achieving a company’s goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively than competitors do. The marketing concept has been stated in such ways as “Find a need and fill it” or “We are not satisfied until you are”. It is very important to satisfy customers because the key to customer retention is customer satisfaction. A satisfied customer buys more, stays loyal longer and pays less attention to competing advertising.

5. The Societal Marketing Concept:

The marketing concept is based on two fundamental beliefs, first company planning, policies and operations should be oriented towards the customer; second profitable sales volume should be the goal of a firm. The societal marketing concept holds that the company should determine the needs, wants and interests of target markets. It should then deliver the desired satisfactions more effectively than competitors in a way that improves the consumers’ and the society’s well-being. This is the newest marketing management philosophy.

The societal marketing concept questions whether the pure marketing concept is acceptable in an age of environmental pollution, resource shortages, rapid population growth and worldwide economic problems. Is it a fact that a company which satisfies individual wants is always doing what is best for consumers and society in the long run?

It is held that the pure marketing concept overlooks possible conflicts between short- run consumer wants and long-run consumer welfare. Take the case of Coca-Cola Company. Most people consider it a responsible company producing soft drinks that satisfy consumer tastes. But some consumer groups expressed concerns that Coke has little nutritional value, can harm people’s teeth and adds to the litter problem with disposable cans.

Such concerns led to the societal marketing concept. The societal marketing concept asks the marketers to balance three considerations in setting their marketing policies — company profits, consumer wants and society’s interests.

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