The marketing concept lays emphasis on satisfying the customer’s needs and wants while meeting the organizational goals.
It is a comprehensive concept that is to be followed by all employees at different levels in the organization.
Marketing concept is reflected in the following definitions- “Marketing is the process of discovering and translating consumer wants into products and services and then in turn making it possible for more and more people to enjoy more and more of these products and services.”
1. Meaning of Marketing Concept 2. 5 Concepts 3. Traditional and Modern Concepts 4. Benefits 5. Pillars 6. Functions
7. Advantages 8. Factors 9. Shift in Orientation 10. Stages of Evolution. 11. Implementation 12. Application 13. Criticisms.
Marketing Concept: Meaning, Concept, Importance, Functions, Advantages, Stages, Application and Other Details
Marketing Concept — Meaning (With the Nature of Marketing)
The ‘consumer-oriented’ marketing has led to a new philosophy of doing business known as ‘marketing concept’. Under this concept, marketing is much more than a physical process of distributing goods and services. It is a distinct philosophy of business under which all business activities are integrated and directed to supply the goods and services which customers want, in the way they want, at the time and place where they want and at a price which they are able and willing to pay for.
Marketing concept is reflected in the following definitions- “Marketing is the process of discovering and translating consumer wants into products and services and then in turn making it possible for more and more people to enjoy more and more of these products and services.”
“Marketing is a total system of interacting business activities designed to plan, price, promote and distribute wants satisfying products and services to present and potential customers.”
An analysis of these definitions reveals that marketing concept has the following implications (Nature of Marketing):
(i) Customer Orientation:
The entire system of business should be market or customer oriented. Customers’ wants must be recognized and satisfied effectively. All the plans, policies and operations of a business enterprise should be oriented towards the customer. Consumer-orientation is a way of managing so that every business decision is made with a prior knowledge of its impact on the customers.
(ii) Integrated Marketing:
Marketing is considered as an integrated and dynamic business process rather than a fragmented assortment of functions. It is not any one activity but the result of the interaction of several activities. Therefore, all business activities must be organisationally unified and coordinated.
(iii) Systems Approach:
Marketing concept is a systems approach to marketing. It requires intelligent coordination of the four ‘Ps’ of marketing mix, namely, product, price, place (channel of distribution) and promotion. Price should be made consistent with the product quality, the channel made consistent with the price and nature of product and promotion made consistent with product quality, price and channel.
(iv) Marketing Research:
Under the marketing concept, marketing begins with the generation of product idea and ends only after the customer wants are completely satisfied. All marketing decisions are taken on the basis of knowledge or information concerning the consumers and their wants. Marketing information is collected through marketing research. There should be a sound system for the dissemination, retrieval, etc. of data on a regular basis.
(v) Customer Satisfaction:
The aim should be to maximize profit over the long run through the satisfaction of customers’ wants.
According to Philip Kotler, “The marketing concept is a consumer orientation backed by integrated marketing aimed at generating customer satisfaction as the key to satisfying organization goals. It is a management orientation that holds that the key task of the organization is to determine the needs, wants and values of a target market and to adapt the organization to delivering the desired satisfactions more effectively and efficiently than its competitors in a way that preserves or enhances the consumers’ and society’s well-being.”
Marketing Concept – 5 Concepts
Marketing is an evolutionary subject. Alderson, a leading marketing theorist has pointed out, ‘It seems altogether reasonable to describe the development of exchange as a great invention which helped to start primitive man on the road to civilization’. Production is not meaningful until a system of marketing has been established.
A saying goes as – ‘Nothing happens until somebody sells something’. Although marketing has always been a part of business, its importance has varied over period of time, in contemporary economy its importance has grown more than ever.
It is required to understand various phases which it has gone through and various approaches that practitioners has taken during its journey to current stage. The evolution of Marketing could be furcated into four important eras.
During each of these eras market conditions and environmental variables has shaped the approach taken by practitioners towards marketing.
The important concepts, attitude and approach prevailing in these eras are as follows:
In the production era, the production orientation dominated business philosophy. It was believed that consumers favor products that are available and highly affordable. Indeed business success was often defined solely in terms of production victories. The focus was on production and distribution efficiency. The drive to achieve economies of scale was dominant. The goal was to make the product affordable and available to the buyers.
In the product era, the dominant belief was to build a better mouse trap and mouse will be bewildered. It was assumed that buyers will flock the seller who offers best product, best according to manufacturer.
However, a better mousetrap is no guarantee of success and marketing history is full of miserable failures despite better product designs. Inventing the greatest new product is not enough. That product must also fulfill a perceived consumer need. Otherwise, even the best- engineered highest quality product will fail.
Theodre Levitt in 1960’s has given the concept of Marketing Myopia under which it is emphasized that some companies relentlessly focus on their firm and improving their products, taking short term perspective of consumer’s needs.
Those companies having narrow, short sighted and self-centered approach towards the business and firmly believe that customers are obsessed with quality products and they will keep buying the best product are more prone to fail in their business. Rather he suggested that better business acumen is to keep eye and focus on consumer preferences for satisfying needs.
Such companies have better chances to succeed because usually needs live but consumer preference for products to satisfy these needs changes. Kotler and Singh in 1981 coined the term Marketing Hyperopia, by which they mean a better vision of distant issues than of near ones.
Baughman in 1974 coined the term Marketing Macropia meaning an overly broad view of the industry to which the firm belongs.
In the sales era, firms attempted to match their output to the potential number of customers who would want it. Firms assumed that customers will resist purchasing goods and services not deemed essential and that the task of selling and persuasive advertising is to convince them to buy.
Further it was believed that people don’t know what they want and they must be pursued to adopt a product or service, only after they use and feel it, they will realize they needed it. These theorists failed to foresee that selling is only one component of marketing. Selling was nicely articulated as ‘Hunting’ by one author whereas marketing was described as ‘Gardening’.
Famous management guru Peter Drucker correctly explains marketing and selling when he say that role of selling is superfluous; actually marketer should understand consumer’s need so correctly and design product services to suit him so well that once he is aware, he should be ready to obtained it.
The role of sales is merely to make it available to him. This view may belittle sales too much, but improves our understanding of difference between marketing and sales nicely.
Next came the marketing era during which the company focus shifted from products and sales to customers’ needs. The marketing concept, a crucial change in management philosophy, can be explained best by the shift from a seller’s market – one with a shortage of goods and services – to a buyer’s market – one with an abundance of goods and services.
The advent of a strong buyer’s market created the need for a customer orientation. Companies had to market goods and services, not just produce them. This realization has been identified as the emergence of the marketing concept. The keyword is customer satisfaction.
It was felt that the organization must contribute first to assessing and then to satisfying customer needs and wants. The relationship marketing era is a more recent one. Organization’s carried the marketing era’s customer orientation one step further by focusing on establishing and maintaining relationships with both customers and suppliers.
This effort represented a major shift from the traditional concept of marketing as a simple exchange between buyer and seller. Relationship marketing, by contrast, involves long-term, value-added relationships developed over time with customers and suppliers.
The marketing is described as organizational function and set of processes. This approach circumvents all parties involved in creating, communicating and delivering ‘value’ to the customer. Hence a coordinated and integrated effort is required to achieve marketing objectives and characterizes marketing as an organization wide activity.
The relationship and interaction among involved stakeholders should work as unified whole. This everything matters kind of approach of marketing is Holistic Marketing.
The holistic marketing has following four elements:
i. Internal Marketing:
It is required that marketing job should not be seen in abstract and isolated organizational function rather, it is expected that entire organization should contribute in fulfilling marketing objectives. Marketing should be everybody’s task including all employees at whatever level they work in the organization.
It is believed that job role of every employee offers potential to him/her to contribute towards customer satisfaction. When one department treats other department as its customer and works towards satisfying their needs leading to ultimately satisfying costumers, such an approach is generally referred as Internal Marketing.
It is well accepted that marketers must ensure optimum value to its customers. In doing so they must develop their offering in such a manner that the target customer sees the offering as most suitable to him among the available competing offerings.
For achieving this, the marketer should consider all different aspects that could bring customer satisfaction while designing his offering. Mc Carthy has classified four broad aspects classically called as 4 P’s, the variables that marketer should try to optimize as per the wants of target market.
These 4 P’s (Product, Place, price and Promotion) popularly called as Marketing Mix variables, are the tools in hands of marketer that they should blend to achieve market success and customer satisfaction.
One important thing to understand that there exist no standard marketing mix composition that could be deployed as thumb rule for a given type of product or service and market conditions. In fact achieving a suitable and successful marketing mix is highly creative and scientific process, knowledge and experience are key requirements for this.
An important goal of marketing is to develop an ongoing, sustainable and mutually beneficial relationship with all the parties with whom the firm interacts for achieving its objectives. A firm has to perform large number of activities to successfully deliver intended customer value.
These activities are performed in conjunction with marketing network comprising of various partners such as suppliers, shareholder, investors, distributors, retailers, employees, researchers etc. collectively called as Marketing Stakeholders.
In order to achieve smooth, effective and efficient functioning of the company leading to generate expected return on capital deployed and customer satisfaction, all stakeholders must work in a collaborative manner with minimal bullwhip effect where members of value chain focus on individual benefits and fail to generate synergistic effect deteriorating customer value and ultimately their own.
Now companies believe in building long term and sustainable relation by sharing rewards among stakeholder in proportionate manner. Instead of treating marketing network members as suppliers, distributors etc., they are better called as partners and interaction with them has changed from transaction based to relationship based long term collaborative development.
Businesses cannot be established in abstraction. They are bound to be socially active. In fact Exchange is the very basic cause of development of society as people has to be interdependent to fulfill their requirements. Existence of every firm completely depends on its environment and society where it operates.
A firm offers its products and services to the people in the society who allow these companies to service them. Further a firm takes many other resources from its society such as labor, raw material, infrastructure, most scarce environmental elements etc. Therefore it is responsibility of every firm to serve the society and replenish at least what it can within existing constraints.
The scope of marketing extends beyond the company and consumers; it circumvents the society as a whole. Hence marketing process must take cognizance of this cause and effect and stay responsive to the society where they operate.
Marketing Concept – Traditional and Modern Concepts
There are two different concepts of marketing:
(1) Traditional or Production- Oriented Concept;
(2) Modern or Consumer-Oriented Concept.
In order to understand and develop an understanding of the gradual evolution of this concept, we have to look back to the time of the industrial revolution. In this period, factories were being set up, automation was relatively novel and it presented the opportunity for mass production.
Sales, especially of essential commodities, was growing at a fast pace due to huge unfulfilled demand and the cost of production was relatively low. This phase can be named as the era of production or the age of production concept. Producers concentrated on selling more and more of their products to make quick profits.
This period was succeeded by what we call the era of sales, or the sales concept. In the 1930’s, the number of producers, especially in America and United Kingdom, had registered a manifold increase and consequently production had risen in totality. Producers had begun to feel the heat of competition. They began to experiment new methods of affecting sales. The time had come for advertisers to enter the market and offer their services to producers who quickly saw it as a means to broadcast the need- satisfying virtues of their ware. The era of hardcore selling had begun; all focus was brought to selling as much as possible.
According to Philip Kotler, “The selling concept holds that in the absence of marketing, the consumer will ordinarily not buy enough of the organisation’s products. The organisation must, therefore, undertake aggressive selling and promotion work aimed to induce the customer to buy the products.”
Towards the end of the 1940’s another change appeared in the business scenario. The’ end of the World War II saw an increase in purchasing power of the consumer due to many reasons. It also brought about a change in the perception of the consumer.
Resources released from the war efforts found way into new plants and industries. Production of goods and services saw a quantum leap and the buyers realised that they had a lot of choices in the market. They began to grow more discerning about the goods and services. As a result, the producers began to react and respond to this new change. They began to think in terms of what the consumers really needed. They focused on identifying consumer needs and wants. Thus, the modern concept of marketing began to take root.
According to the modern concept, “Marketing is the identification of customer needs and subsequent efforts of the producer to satisfy them by producing and selling the required product or service.”
According to Prof. William J. Stanton, “Marketing is a system of interacting business activities designed to plan, price, promote and distribute want satisfying goods and services to present and potential customers.”
According to Philip Kotler, “Marketing is the process of planning and executing the concept, pricing, promotion and distribution of goods and services and ideas to create exchanges with target groups that satisfy customer and organisational objectives”.
The concept of marketing focuses on the consumer’s wants and needs and the means to satisfy them at a price that justifies the producer. This concept begins with the identification of the needs and carries much beyond the mere satisfaction of the needs.
Major Features of the Concept of Marketing:
Philip Kotler states that “marketing concept is a customer orientation backed by integrated marketing aimed at generating customer’s satisfaction as the key to satisfying organisational goals.”
The main features of the marketing concept are described as under:
1. Customer-oriented- This is the main feature of the marketing concept. It focuses on the needs and wants of the consumer and the ways these wants can be satisfied.
2. Dynamism- Marketing begins with the identification of the consumer needs and desires. Thus, it begins much before production. Secondly, it does not end with the sale of the product or service. It continues beyond the process of selling.
3. Marketing research- A very important part of the concept of marketing relates to marketing research which is extensively used to gain understanding of consumer needs and wants. Continuous marketing research is an integral part of marketing.
The marketing concept was quickly embraced by the organisations. The producers reoriented themselves, began focusing on the consumers, looking and analysing their needs and wants and producing goods and services that tended to satisfy their needs and requirements more efficiently. The consumer had suddenly become the king.
However, by now it was realised that though the producer’s orientation had changed in favour of the consumer, he was well on his way to produce more and more goods without taking into consideration some harmful aspects that could harm the environment and humans in the long-term. Concerns arose about environmental degradation, senseless use of natural resources and increasing hunger and poverty around the world.
Money-minded business houses were depleting the valuable resources and none even gave a serious thought to preserve the environment. Producers were still busy furthering their revenue at the cost of Mother Nature. There arose the question whether the organisations were really working in the long-term interest of the society and the consumers or not.
These thoughts and concerns brought about a change in the earlier concept of marketing. A new school of thought came up and became famous as the Societal Concept of Marketing.
The societal concept is a variation of the modern concept of marketing. It was born out of the questionable role of traditional marketing which though focused on the consumer and his want satisfaction paid no heed to the long-term welfare of the society at large. They concentrated more on casting their consumers into different categories and then proceeded to satisfy their needs and wants by selling goods that were very similar but differently priced.
The societal concept of marketing concentrated on bridging the gap between the consumer wants and their satisfaction on one side, and the society’s long-term welfare on the other side.
Prof. Phillip Kotler, the renowned authority on marketing, holds the view that, “the organisation’s task is to determine the needs, wants and interests of the target market and deliver the desired satisfaction more efficiently than the competitors in a way that preserves or enhances the consumer and societal wellbeing.”
Marketing Concept – Benefits of Using Marketing Concepts
The adoption and use of the marketing concept leads to the following benefits:
(i) Concern for customers’ needs and wants rather than for the product increases the acceptability of the product. When the firm produces the product which meets the requirements of the customers, the need for promotion is reduced. The chances of the firm becoming a sick unit are also reduced due to continuous patronage of customers.
(ii) Marketing concept requires an integrated and coordinated approach to marketing. Unification of business activities leads to economy and efficiency in marketing operations. The firm can make a comparative evaluation of the contributions of different products and sales territories.
(iii) By finding out the interacting activities and institutions and flows in exchange, the systems approach facilitates a rational analysis of all marketing problems along with their effective solutions.
(iv) Marketing concept has strategic and philosophical value. It helps the management to direct organizational efforts towards the long-term and wider goals, i.e., stability and growth of the firm. Sustained interaction with customers becomes possible.
(v) The business firm pursuing the marketing concept can respond effectively to changes in its environment. By understanding the complex interplay of different variables, it can detect the impending changes and prepare itself to exploit them. The firm can very well face the pressures of competition and environmental changes.
However, marketing concept is not free from limitations. It does not recognise the wider social dimension of marketing. It focuses attention solely upon satisfying consumers and ignores other stakeholders like employees, investors, suppliers, the State and the public at large. Consequently, the concept may lead managers to commit actions that are harmful to various groups, e.g., polluting air or water in the manufacturing operations.
“Marketing managers are well advised to consider the well-being of all their public, not consumers, in marketing decision-making. Management should consider the general public, for instance, in determining such things as ‘should the firm produce items requiring technologies that cause air pollution?’ and, should our advertisement glorify the image of large families in the era of increasing world population?” Failure to recognise the interests of all parties may result in restrictive laws, negative corporate image and poor industrial relations.
Marketing Concept – 4 Important Pillars: Target Market, Customer Needs, Integrated Marketing and Profitability
Marketing is a process of getting the right products to the right people at the right price and at the right place and time with the right promotion. Marketing can also be defined as 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. Creating customer value and satisfaction are at the very heart of modern marketing thinking and practices. A very simple definition of marketing is that it is the delivery of customer satisfaction at a profit. Sound marketing is critical to the success of every organization.
The marketing concept considers consumer as the focal point of attention. According to Sam Walton, the founder of Wal-Mart, ‘there is only one boss—the customer’. So each department, every worker, and manager should think customer and act for the customer. They must combine their efforts in order to deliver value to the customers. The aim of business must be to serve the needs of customers profitably.
Consumer orientation, integrated marketing, and coordinated efforts are meant to deliver consumer satisfaction ensuring survival, and growth of business. The aim of marketing is to create, communicate, and deliver value to the consumers. The marketing concept holds that the key to achieving organizational goals consists of being more effective than competitors in integrating marketing activities toward determining and satisfying the needs and wants of target markets.
The marketing concept rests on four pillars:
1. Target market,
2. Customer needs,
3. Integrated marketing, and
No company can operate in every market and serve every need. To be effective, it must choose the profitable segments. It wants to serve better than its rivals. It is tempting to choose a very large segment of the market for this purpose. But this would require lot of resources and competencies. Hence, it is always wise to know beforehand what a company cannot do and focus on things that it can do better than rivals—consistently. If you are good at serving the lower-end of the market (Bata shoes), it is better to remain in that position. It gives a chance to know the mind of the customers better and serve their needs well.
The success of Domino’s Pizza Inc. during the 1980s shows how a company that targets a particular market and is sensitive to its customer’s needs can achieve success in the marketplace. Tom S Monaghan opened his first store in 1960 with $500 and built his tiny enterprise into a chain of four stores by 1965. Strong competition and the lack of a cohesive marketing strategy, however, forced him into bankruptcy. Monaghan researched pizza consumers and entered the pizza business again in 1971.
He decided to target residential customers between the ages of 18 and 34 who preferred to have pizzas delivered to their door. He found that consumers were generally dissatisfied with the taste and reliability of the delivery available from other pizza shops. As a result, Monaghan developed a pizza that his customers liked and then promised delivery within 30 minutes from the time the order was placed.
His restaurants were strictly operated on the concept of ‘delivery and carry-out’. By the 1990s, the chain had expanded internationally with thousands of outlets worldwide and sales worth billions of dollars. The entry of Domino’s Pizza in other countries has proved to be a big hit—including India—in recent years.
The marketing concept places the customer on top of every business. He/she is the pivot around which organizational activities revolve. Research is used to aid the organization, and read the mind of the customer—his/her needs, concerns, expectations, etc. Appropriate processes are developed to ensure that information from the customers is fed back into the heart of the organization. In essence, all the activities in the organization are based around the customer.
The customer is truly king! In this economic jungle, there is room for only customer-focused, customer- centric, and customer-maniac organizations. Marketers should focus attention on customer needs and deliver desired satisfactions more effectively and more efficiently than their competitors. Some marketers are able to draw a distinction between responsive marketing and creative marketing. A responsive marketer finds a stated need and fills it. A creative marketer discovers and produces solutions that customer did not ask for but to which they enthusiastically responded.
A satisfied customer –
i. Buys more
ii. Remains loyal to the firm
iii. Buys other products of the company
iv. Talks about the company products favourably
v. Pays less attention to competing brands
vi. Is less price sensitive
vii. Offers valuable feedback and ideas to the company.
When all the departments of a company work together to serve the customer’s interests, the result is integrated marketing. Integrated marketing takes on two levels. First, the various marketing functions—sales force, advertising, product management, marketing research, and so on—must work together. Second, they must be well-coordinated with other departments of the company. The company is said to do proper marketing only when all employees appreciate their impact on customer satisfaction.
To foster teamwork among all the departments, the company carries out internal marketing as well as external marketing. External marketing is marketing directed at people outside the company. Internal marketing is the task of successfully hiring, training, and motivating employees who want to serve the customers well. In fact, internal marketing must precede external marketing. It makes no sense to promise excellent service before the staff of the company is ready to provide excellent service.
The ultimate purpose of the marketing concept is to help organizations achieve their goals. In the case of private firms, the major goal is profit. Marketing managers have to provide value to the customer and profits to the organization. Marketing managers have to evaluate the profitability of all alternative marketing strategies and decisions, and choose most profitable decisions for long-term survival and growth of the firm.
The marketing concept compels the firms to make a positive and indelible impression on the customers by delivering outstanding value—surpassing all their expectations. Making the customer feel happy about the company’s offer is one thing. More importantly, it advocates the importance of going beyond the book. The journey from customer attraction to customer satisfaction is undertaken by every firm that wants to become a long-distance runner. But if the firm wants to stay ahead of its competition, it must try to cross this point as well and indulge in what is known as customer delight.
Delighted customers are those where you anticipate their needs; provide solutions to them before they ask; and where you are observing to see if new and/or additional expectations are about ready to be required. Customer delight brings customers coming back for more. It causes new customers to come. You are, in a way, creating customers for life.
Marketing Concept – 4 Categories of the Functions of Marketing
The scope of marketing can be understood in terms of functions that a marketing manager/director/department performs. In most of the business enterprises, marketing department is set up under supervision of the Marketing Manager. The major purpose of this department is to generate revenue for the business by selling wants satisfying goods and services to the customers.
In order to achieve this purpose, the Marketing Manager performs the following functions:
(i) Marketing research
(ii) Product planning and development
(iii) Buying and assembling
(vi) Grading and branding
The functions of marketing may be classified into four categories:
i. Marketing Research- It means the intelligence service of the organisation. Marketing research helps in analysing the buyer’s habits, relative popularity of a product, effectiveness of advertisement media, etc.
ii. Product Planning and Development- A product is something which is offered by a business form to customers to satisfy their needs. It has great importance in all other areas of marketing management.
2. Functions of Exchange:
i. Buying and Assembling- Procurement of raw materials, semi-finished or finished products has gained great importance for the modern industrial and commercial enterprises. Raw materials are purchased for production by the industrial enterprises and finished goods are purchased for resale by the commercial enterprises. Whatever may be the ease, the marketing department plays an important role.
ii. Selling- This is an important aspect of marketing under which ownership of goods is transferred form the seller to the buyer. Sale may take the form of- (a) a negotiated sale, and (b) an auction sale.
3. Functions of Physical Treatment:
i. Standardisation, Grading and Branding- Standardisation means setting up of specifications of a product. Grades of agricultural products are based on these specifications and standards. Industrial goods are given brand names by their manufactures to convey to the customers that their goods conform to certain well-defined standards. These activities promote the sale of products.
ii. Packaging- Packaging is traditionally done to protect the goods from damage in transit and to facilitate easy transfer of goods to customers. But now it is also used by the manufacturer to establish his branded products as distinct form those of his rivals.
iii. Storage- Goods are generally produced in anticipation of the demand. They have to be stored properly in warehouses to protect them from any damage which may be caused by ants, rats, moisture, sun, left, etc.
iv. Transportation- Modern organisations produce on a large scale to cater to the requirements of customers scattered throughout the country. This calls for transportation of goods from the place of production to the place of consumption. Transportation provides the physical means which facilitate the movement of persons. Goods and services form one place to another.
4. Functions of Facilitating Exchange:
i. Salesmanship- Personal selling in an important method of selling goods. It is widely used in retail marketing. Salesmanship or personal selling involves direct and personal contact of the seller or his representative with the purchaser. It is the oldest known form of selling and is the most important and recognized method of selling.
ii. Advertising- Advertising has become an important function of marketing in the competitive world. It helps to spread the message about the product and thus promote its sale. It facilitates creation of a non-personal link between the advertiser and the receivers of the message.
iii. Pricing- Determination of price of a product is an important function of a marketing manager. Price of a product is influenced by the cost of product and services offered, profit margin desired, prices fixed by the rival firms and Government policy.
iv. Financing- Financing and marketing functions of a business are inter-linked with each other. The marketing department has an important say on policies of the finance department in regard to cash and credit sales. Financing of customer-purchasing has become an integral part of modern marketing. The provision of goods to the customers on credit basis is an important device to increase the volume of sales.
v. Insurance- A large number of risks are involved in exchange of goods and services. Insurance helps to cover these risks. It facilitative the smooth exchange of goods by covering risks in storage and transportation.
This concept offers the following advantages:
1. Long term success is assured to an enterprise if it recognises that needs have the market are paramount.
2. It enables the firm to move more quickly to capitalize on market opportunities. Marketing risks can be reduced by knowing and understanding the market.
3. Customers needs, wants and desires receive top consideration in all business activities.
4. Greater attention is paid to the product planning and development so that merchandising can become more effective.
5. Demand side of the equation or exchange is honoured more and supply is adjusted to changing demand. Hence more emphasis is given to research and innovation.
6. Marketing system based on the marketing concept assumes integrated view of business operation and indicates interdependence of different departments of a business organization.
7. Interests of the enterprises and society can be harmonised as profit through services is emphasised.
1. Marketing is consumer oriented i.e., marketing starts with the determination of consumer wants and ends with satisfaction of those wants.
2. Marketing is an integrated management function i.e., all marketing functions and activities are completely integrated and effectively coordinated.
3. Marketing is profit directed -profit to the company and to the consumer.
4. Marketing concept involves scientific planning, action, control. The marketing concept is the marketing plan. The plan of action, control, objectives, and follow through.
Marketing Concept – Factors Influencing Marketing Concept
1. Population Growth – The increase in population naturally increases the demand too. Markets are made up of people. Increase in population causes increasing the markets, increasing the consumer, who have increased demand for goods, in kinds, varieties, preferences etc. Thus the producers have to meet the changing demands of people.
2. Increasing Households – The growth of demand for household products is more than it is to the total population at any time. Joint family system has become unpopular because of many reasons. Most of the families are sub-divided and this increases the number of families and their demands.
Example – Automobiles, Refrigerators, Electrical Appliances, and Television sets etc.
3. Disposal Income – Automation in industries, births of many new firms etc. open the door of employment. Thus people have increased their income and in turn aim for more satisfaction and more comforts. When the income continues to increase, the purchasing power also increases.
4. Surplus Income (Discretionary Income) – The people have surplus income left after meeting the expenses on essential items. This surplus amount will be spent on non-necessary products or luxury good.
5. Technological Development – Science and technology improves day by day. Some technological advancement may outmode the existing products; in turn the whole industry may come to a standstill. People always prefer to have the latest model. A number of new products, in the place of old ones, are being introduced into the market often. Consumers are at liberty to choose from the new products. Therefore, consumer-oriented marketing system is essential.
6. Mass Communication Media – The growth of mass communication media; Newspapers, magazines, radio, television, etc., facilitates the buyers to learn about the new products available for sale. The buyer gets information about the new products, faster and more effectively before the products come to the market.
7. Credit Purchases – Credit purchases through hire-purchase schemes and installment schemes are common today. Credit purchase pushes sales. The customers can enjoy the facilities and this widens the market.
Marketing Concept – A Shift in Orientation (From Old Concept to New/Modern Concept)
In short, the marketing concept essentially represents a shift in orientation:
1. From Production Orientation to Marketing Orientation
2. From Product Orientation to Customer Orientation
3. From Supply Orientation to Demand Orientation
4. From Sales Orientation to Satisfaction Orientation
5. From Internal Orientation to External Orientation
Thus, marketing is the process of creating, communicating and delivering value to customers.
From a societal point of view, marketing is the link between a society’s material requirements and its economic patterns of response. Marketing satisfies these needs and wants through exchange processes and building long term relationships. Marketing can be looked at as an organizational function and a set of processes for creating, delivering and communicating value to customers, and managing customer relationships in ways that also benefit the organization and its shareholders.
Marketing is the science of choosing target markets through market analysis and market segmentation, as well as understanding consumer buying behavior and providing superior customer value. There are five competing concepts under which organizations can choose to operate their business; the production concept, the product concept, the selling concept, the marketing concept, and the holistic marketing concept.
The four components of holistic marketing are relationship marketing, internal marketing, integrated marketing, and socially responsive marketing. The set of engagements necessary for successful marketing management includes, capturing marketing insights, connecting with customers, building strong brands, shaping the market offerings, delivering and communicating value, creating long-term growth, and developing marketing strategies and plans.
Marketing Concept – 5 Main Stages of Evolution
The marketing concept lays emphasis on satisfying the customer’s needs and wants while meeting the organizational goals. It is a comprehensive concept that is to be followed by all employees at different levels in the organization.
In other words, marketing is not something that only the marketing department is concerned with; it is a philosophy that has to be adopted wholeheartedly by the entire organization.
The crux of marketing is to identify the customer’s wants and make plans to satisfy their needs. It is the customer who is the foremost in every manager and employee’s mind. Marketing concept is one of the most recent among the business philosophies which have evolved over many centuries.
Stage # 1. Production Concept:
This is the oldest marketing philosophy which started at time of industrial revolution and lasted till early twentieth century. Manufacturers produced goods on a large scale. At that time there was a shortage of goods in the market and there was a huge gap between demand and supply —demand was vast but supply was scarce. Mass production of low priced goods filled a part of the demand-supply gap.
Firms tried to achieve high production efficiency and cover wide area of distribution. During that era goods which were mass produced could be easily sold because of the huge unfulfilled demands of the people.
Customer satisfaction was not considered important. New techniques of mass production were adopted which provided economies of scale to the companies. Availability of goods at lower price expanded the markets and increased competition among firms.
Stage # 2. Product Concept:
The product concept is the philosophy that a product that is worthy will create its own demand and will not require excessive advertising or selling efforts. Such products by virtue of their high quality and features will attract the buyers themselves. People will be ready to pay more for superior quality products.
Companies believing in this philosophy were focused on product improvement. Efforts to add newer and better features to the product were made constantly. This concept too, emphasised more on the product’s characteristics but did not take into view the customer’s needs and preferences.
Stage # 3. Selling Concept:
The selling concept started during the 1930s. By this time most of the companies had adopted mass production techniques and the goods so produced no longer created their own demand.
There were many producers in the market and the high volume of output created surpluses. Now the supply was more than the demand. So organizations started using advertising and personal selling to create market for the goods they produced.
A separate marketing department was created in the organization to take care of the selling activities. The selling concept was the shortest lived one. The producers started adopting aggressive sales strategies to sell off all their stocks.
The realization that the goods and services will no longer sell themselves prompted the firms to invest considerably in promotional efforts. The underlying belief behind the selling concept was that people will not buy by themselves, so they would have to be persuaded to buy the products through intensive sales efforts.
The selling concept did not give heed to whether the customers really need the product or not. The enterprises were not interested in knowing the customer preferences, needs or feedback. The only emphasis was on earning profits by selling the goods produced by the companies.
Stage # 4. Marketing Concept:
The shortcomings of the selling concept made the producers rethink their views about marketing. Thus evolved a more consumer oriented concept, i.e. the marketing concept. The customer is accorded utmost importance under the marketing concept. According to this concept, the organizational goals should be met by meeting the customer’s needs.
The customer’s requirements are to be understood first before designing the product. If goods are produced according to customer’s preferences, then it would be easier to sell them and make profits.
Marketing research techniques were developed to know the customer better and learn about his needs. Companies also realized the importance of customer feedback. Firms try to forge close relations with the customers in a bid to continually monitor their wants and provide with goods and services that would fulfill their requirements. Companies have recognized the fact customer satisfaction is the key to long-term growth and profitability.
Stage # 5. Societal Concept:
This is a higher marketing concept which states that the organization should not only be customer oriented, but it also should care about the society it operates in. This is the most recent development in marketing philosophies. Companies are increasingly becoming aware of their responsibility towards the various sections of the society.
Pollution of the environment, exploitation of natural resources, and growing awareness about consumer rights have necessitated the transition from marketing concept to societal concept.
Societal concept is an extension of the marketing concept; here the emphasis is not just on the consumer, but on the society as a whole. The organization has to balance its profitability with satisfaction of customer needs and society’s well- being.
Firms often leverage their social welfare activities to create goodwill. Today, almost all the big organizations are involved in social activities like sponsoring children’s education, rural development, women’s welfare, etc.
Marketing Concept – Implementation of the Marketing Concept
The adoption and execution of the marketing concept requires action on the following lines:
1. Customer Orientation:
All business activities should be directed to create and satisfy the customer. Emphasis on the needs and wants of consumers keeps the business on the right track. All marketing decisions should be made on the basis of their impact on the customer. Consumer becomes the guide of business.
2. Marketing Research:
Under the marketing concept knowledge and understanding of customer’s needs, wants and desires is very vital. Therefore, a regular and systematic marketing research programme is required to keep abreast of the market. In addition, innovation and creativity are necessary to match the products to requirements of customers.
Up-to- date and adequate knowledge must be available to answer the following questions:
(a) What business are we really in?
(b) Who are our customers?
(c) What do the customers want?
(d) How should we distribute our products?
(e) How can we communicate most effectively with our customers?
3. Marketing Planning:
The marketing concept calls for a goal-oriented approach to marketing. The overall objectives of the firm should be the earning of profits through satisfaction of customers. On the basis of this goal, the objectives and policies of marketing and other departments should be defined precisely. Marketing planning helps to inject the philosophy of consumer orientation into the total business system and serves as a guide to the organization’s efforts.
4. Integrated Marketing:
Once the organizational and departmental goals are formulated, it becomes necessary to harmonize the organizational goals with the goals of the individuals working in the organization. The activities and operation of various organizational units should be properly coordinated to achieve the defined objectives. The marketing department should develop the marketing mix which is most appropriate for accomplishing the desired goals through the satisfaction of customers.
The marketing concept thus requires:
(i) The identification and assessment of the market,
(ii) Formulation of marketing policy to cater to the chosen market,
(iii) Integration of business operations to achieve the desired goals, and
(iv) Evaluation of the results to check whether the organization is providing the desired level of customer satisfaction.
Marketing Concept – Application of Marketing Concept
To apply the marketing concept, marketers must do three things:
1. Meet customer needs and wants,
2. Achieve and maintain long-term profitability, and
3. Integrate marketing with the other functions in the company.
A conscious dedication to meeting customer wants and needs is at the core of the marketing concept. This dedication requires two steps – understanding what customers expect and then meeting those expectations better than your competitors. Some wants and needs are obvious.
For instance, drivers need cars that are safe and dependable, and many would like cars that are stylish, comfortable, and quiet. On the other hand, there are some customer expectations that you may not think about right away. These could include certain terms of the warranty, a pleasant experience of shopping in a store, not being addressed by your first name, customer orientation.
The second component of the marketing concept is maintaining acceptable profit levels year after year while meeting customer needs. Even when companies are well aware of customer needs and are motivated to meet them, doing so is not always easy. Marketing research, product design, manufacturing, promotion, and customer service all require money. Marketers have to perform all these functions, meet customer needs, and still generate enough revenue to have some profit left over.
The emphasis on long-term profitability is the key here. If your only interest is making a fast-buck, it doesn’t make sense for you to invest in research laboratories, support personnel, repair facilities, and the other elements often needed to satisfy customers. But if you want to be financially healthy 5, 10, or 20 years from now, it is perfectly sensible to make these investments.
However, investing for the long-term is not something that all firms find easy to do. A commonly noted problem in U.S. business today is a focus on short-term profits. Much of this pressure comes from the people who invest in companies, whether through loans, stock ownership, or other means.
These people often want a quick return on their investment, and they may not have the patience that is often required to develop new products, new markets, and new ways of satisfying customers. This short-term mentality is at least partly responsible for the hostile takeovers, leveraged buyouts, and other financially motivated moves that seemed to dominate U.S. business in the last decade.
Fortunately, many companies do recognize the need to spend money to satisfy customers, and research clearly supports a correlation between satisfied customers and satisfactory profits. Companies such as – Procter & Gamble, IBM, Merck, Nordstrom, Domino’s Pizza, Caterpillar, and thousands of others (both large and small) have chosen to make investments that lead to both customer satisfaction and profitability over the long haul.
The concept of profitability should be considered by nonprofit marketers as well. For a charity or other noncommercial organisation, profit may be interpreted as the group’s ultimate goals or as the benefits it gives to its membership. Greenpeace’s goal, for example, is to safeguard the environment.
The group markets its political action to contributors and “profits” by being able to carry out its mission of protecting the environment. It generates money along the way by collecting contributions and membership dues, but money is simply a means to an end.
The marketing concept’s final component is integration of the marketing department with other functional groups, such as – research and development (R&D), manufacturing, and finance. Cooperation between these functional groups greatly increases a firm’s chances of success, and poor relationships can undercut its performance.
One study of new-product development projects showed that in cases where “severe disharmony” existed between marketing and R&D, 68 percent of the projects failed. Only 11 percent were commercially successful.
To foster better working relationships between marketing and other departments, some companies have developed programs in which financial and technical people call on customers, just as the salespeople do. By walking a mile in their colleagues’ shoes, the non-makers gain some marketing insights and, ideally, some sympathy for their peers in sales and marketing.
Moreover, the interaction helps marketers understand the challenges faced by their counterparts in engineering, production and finance. The result is better communication and relationships that are more productive.
Marketing Concept – Criticisms
The marketing concept has been criticised on the following grounds:
The marketing concept discourages product innovation; perhaps the most widely criticised aspect of the marketing concept is the suggestion that organisations must be customer oriented to effect new products meeting customers’ needs and wants. Buyer models implicitly assumed in the marketing concept have been based on the basis of rational decision making hypothesis, in particular that;
i. Consumers have goals/wants to satisfy which have low cost for them.
ii. The wants and needs of consumers can be identified by researchers from how people say and express their goals.
Kaldor says that customers do not always know their needs and cannot be always rational in the sense of their future needs. He also claims that the marketing concept is an inadequate prescription for marketing strategy, because it ignores the creative abilities of organisations. Houston has suggested that “rather than describing marketing concept as an ‘inadequate prescription it would be better to describe it as an ‘incomplete prescription’. The marketing concept focuses the marketer’s attention on the customer but does not tell the marketer to disregard his/her unique capabilities and resources when deciding how to serve the customer’s needs and wants best”.
It has been argued that the marketing concept discourages major product innovation leading organisations away from major product innovation towards low risk product changes. In fact, Bennett & Cooper blame the marketing concept in the sense that “the marketing concept has diverted our attention from the product and its manufacture; instead we have focused our strategy on responses to market wants and have become preoccupied with advertising, selling and promotion”.
Houston’s understanding however is somewhat different. “The marketing concept does not urge us to depend solely on marketing research for guidance in new product research… the marketing concept does not consist of advertising, selling, and promotion. It is willingness to recognise and understand the customer’s needs and wants, and a willingness to adjust any of marketing mix elements, including product, to satisfy those needs and wants”.
Bennet & Cooper argued that the marketing concept will result in the killing of new products. In order to encourage significant product innovation they propose “The product value concept” in their second article. “The product value concept is a business orientation that recognises that product value is the key to profits. It stresses competing on the basis of customer need satisfaction with superior, higher value products. Value depends on the customer’s perception of the product attributes, which are largely a function of the firm’s technological, design and manufacturing strengths and skills”.
Bennet & Cooper also argue that “technology push” models has given way to “market pull models” that used to provide little encouragement for technological discoveries, inventions or significant breakthroughs. They maintain that market pull models constitute the antithesis of the technology push model. Riesz agrees that the shift from “science pushes” to “market pull” can have negative effects on the corporate strategy of the firms and the public policy of the governments.
In contrast to Bennett & Cooper, and Riesz arguments, Kiel states that the defence of marketing is based on three main arguments; “Firstly, marketing pull and technological push are not opposing, mutually exclusive paths to innovation. These concepts have become strawmen built upon a misunderstanding of the nature and roles of science and technology. Secondly, considerable empirical evidence on the innovation process proves that market-related forces are the primary influence on technological innovation. Thirdly, the view of the marketing concept put forward by its detractors is overly simplistic”.
In addition, Kiel proposes that the marketing concept can work in conjunction with R&D efforts to produce innovation. He enlists support for his argument from an empirical study claiming market related forces to be the primary influence on innovation.
Some empirical studies support such claims that the marketing concept can work successfully on new product planning. Lawton & Parasuman in fact have proposed that there is no evidence to support that the adaptation of the marketing concept should influence new product planning. Recently Kodama has stressed that it is “the market [that] drives the R&D agenda, not the other way around”.
He has also pointed out that companies that rely on a technology strategy that no longer works in such a fast changing environment, cannot be successful in the longer term, because a single breakthrough technology focuses on the R&D effort too narrowly and ignores the possibilities of combining technologies. Therefore, companies need to have both the breakthrough and the “technology fusion” approaches in their technology strategies.