Evolution of the marketing concept

The marketing concept and philosophy is one of the simplest ideas in marketing, and at the same time, it is also one of the most important marketing philosophies. At its very core are the consumer and his or her satisfaction. The marketing concept and philosophy states that the organization should strive to satisfy its customers' wants and needs while meeting the organization's goals. In simple terms, "the customer is king".

The implication of the marketing concept is very important for management. It is not something that the marketing department administers, nor is it the sole domain of the marketing department. Rather, it is adopted by the entire organization. From top management to the lowest levels and across all departments of the organization, it is a philosophy or way of doing business. The customers' needs, wants, and satisfaction should always be foremost in every manager and employees' mind. Wal-Mart's motto of "satisfaction guaranteed" is an example of the marketing concept. Whether the Wal-Mart employee is an accountant or a cashier, the consumer is always first.

As simple as the philosophy sounds, the concept is not very old in the evolution of marketing thought. However, it is at the end of a succession of business philosophies that cover centuries. To gain a better understanding of the thought leading to the marketing concept, the history and evolution of the marketing concept and philosophy are examined first. Next, the marketing concept and philosophy and some misconceptions about it are discussed.

The marketing concept and philosophy evolved as the last of three major philosophies of marketing. These three philosophies are the product, selling, and marketing philosophies. Even though each philosophy has a particular time when it was dominant, a philosophy did not die with the end of its era of dominance. In fact, all three philosophies are being used today.

PRODUCT PHILOSOPHY.

The product philosophy was the dominant marketing philosophy prior to the Industrial Revolution and continued to the 1920s. The product philosophy holds that the organization knows its product better than anyone or any organization. The company knows what will work in designing and producing the product and what will not work. For example, the company may decide to emphasize the low cost or high quality of their products. This confidence in their ability is not a radical concept, but the confidence leads to the consumer being overlooked. Since the organization has the great knowledge and skill in making the product, the organization also assumes it knows what is best for the consumer.

This philosophy of only relying on the organization's skill and desires for the product did not lead to poor sales. In much of the product philosophy era, organizations were able to sell all of the products that they made. The success of the product philosophy era is due mostly to the time and level of technology in which it was dominant. The product era spanned both the pre-Industrial Revolution era and much of the time after the Industrial Revolution.

The period before the Industrial Revolution was the time when most goods were made by hand. The production was very slow and few goods could be produced. However, there was also a demand for those goods, and the slow production could not fill the demand in many cases. The importance for management of this shortage was that very little marketing was needed.

An example illustrates the effects of the shortages. Today, the gunsmith shop in Williamsburg, Virginia, still operates using the product philosophy. The gunsmiths produce single-shot rifles using the technology available during the 1700s. They are only able to produce about four or five rifles every year, and they charge from $15,000 to $20,000 for each rifle. However, the high price does not deter the demand for the guns; their uniqueness commands a waiting list of three to four years. Today's Williamsburg Gunsmith Shop situation was typical for organizations operating before the Industrial Revolution. Most goods were in such short supply that companies could sell all that they made. Consequently, organizations did not need to consult with consumers about designing and producing their products.

When mass production techniques created the Industrial Revolution, the volume of output was greatly increased. Yet the increased production of goods did not immediately eliminate the shortages from the pre-industrial era. The new mass production techniques provided economies of scale allowing for lower costs of production and corresponding lower prices for goods. Lower prices greatly expanded the market for the goods, and the new production techniques were struggling to keep up with the demand. This situation meant that the product philosophy would work just as well in the new industrial environment. Consumers still did not need to be consulted for the organization to sell its products.

One of the many stories about Henry Ford illustrates the classic example of the product philosophy in use after the Industrial Revolution. Henry Ford pioneered mass production techniques in the automobile industry. With the techniques, he offered cars at affordable prices to the general public. Before this time, cars were hand made, and only the very wealthy could afford them. The public enthusiastically purchased all the Model T Fords that the company could produce. The evidence that the product philosophy was alive and well in Ford Motor Company came in Henry Ford's famous reaction to consumer requests for more color options. He was said to have responded that "you can have any color car you want as long as it is black." Realizing that different colors would increase the cost of production and price of the Model T's, Henry Ford, using the product philosophy, decided that lower prices were best for the public.

SELLING PHILOSOPHY.

The selling era has the shortest period of dominance of the three philosophies. It began to be dominant around 1930 and stayed in widespread use until about 1950. The selling philosophy holds that an organization can sell any product it produces with the use of marketing techniques, such as advertising and personal selling. Organizations could create marketing departments that would be concerned with selling the goods, and the rest of the organization could be left to concentrate on producing the goods.

The reason for the emergence of the selling philosophy was the ever-rising number of goods available after the Industrial Revolution. Organizations became progressively more efficient in production, which increased the volume of goods. With the increased supply, competition also entered production. These two events eventually led to the end of product shortages and the creation of surpluses. It was because of the surpluses that organizations turned to the use of advertising and personal selling to reduce their inventories and sell their goods. The selling philosophy also enabled part of the organization to keep focusing on the product, via the product philosophy. In addition, the selling philosophy held that a sales or marketing department could sell whatever the company produced.

The Ford Motor Company is also a good example of the selling philosophy and why this philosophy does not work in many instances. Ford produced and sold the Model T for many years. During its production, the automobile market attracted more competition. Not only did the competition begin to offer cars in other colors, the styling of the competition was viewed as modern and the Model T became considered as old-fashioned. Henry Ford's sons were aware of the changes in the automobile market and tried to convince their father to adapt. However, Henry Ford was sure that his standardized low-price automobile was what the public needed. Consequently, Ford turned to marketing techniques to sell the Model T. It continued to sell, but its market share began to drop. Eventually, even Henry Ford had to recognize consumer desires and introduce a new model.

The selling philosophy assumes that a well-trained and motivated sales force can sell any product. However, more companies began to realize that it is easier to sell a product that the customer wants, than to sell a product the customer does not want. When many companies began to realize this fact, the selling era gave way to the marketing era of the marketing concept and philosophy.

MARKETING PHILOSOPHY.

The marketing era started to dominate around 1950, and it continues to the present. The marketing concept recognizes that the company's knowledge and skill in designing products may not always be meeting the needs of customers. It also recognizes that even a good sales department cannot sell every product that does not meet consumers' needs. When customers have many choices, they will choose the one that best meets their needs

MARKET CONCEPT AND PHILOSOPHY

The marketing concept and philosophy states that the organization should strive to satisfy its consumers' wants and needs while meeting the organization's goals. The best way to meet the organization's goals is also by meeting their needs and wants. The marketing concept's emphasis is to understand them before designing and producing a product for them. With their wants and needs incorporated into the design and manufacture of the product, sales and profit goals are far more likely to be met.

With their satisfaction as the key to the organization, the need to understand the consumer is critical. Markering research techniques have been developed just for that purpose. Smaller organizations may keep close to them by simply talking with them. Larger corporations have established methods in place to keep in touch with their consumers, be it consumer panels, focus groups, or third-party research studies. Whatever the method, the desire is to know the consumers so the organization can better serve them and not lose sight of their needs and wants.

The idea of keeping close to the organization's consumers seems simple. In reality, it is very easy to forget the consumer's needs and wants. Sometimes the management is so involved with the product that their own desires and wants begin to take dominance, even though they have adopted the marketing concept.

Yet it is easy for managers to forget the marketing concept and philosophy. For example, many years ago—before there was a Subway on every corner—a college student opened a small submarine sandwich shop near his university's campus. The Sub shop was an immediate success. By using the marketing concept, the young entrepreneur had recognized an unmet need in the student population and opened a business that met that need.

Unfortunately, the story does not end at this point. The sub shop was so successful that it began to outgrow its original location after about three years. The shop moved to a larger location with more parking spaces, also near the university. At the new sub shop, waiters in tuxedos met the students and seated them at tables with tablecloths. Besides the traditional subs, the shop now served full meals and had a bar. Within a few months the sub shop was out of business. The owner of the shop had become so involved with his business vision that he forgot the customers' needs and wants. They did not want an upscale restaurant—there were other restaurants in the area that met that need, they just wanted a quick sub sandwich. By losing sight of the customers' wants and needs, the owner of the sub shop lost his successful business

There is another way of looking at the evolution of the marketing concept over time.

Five orientations (philosophical concepts to the marketplace have guided and continue to guide organizational activities:

1.         The Production Concept

2.         The Product Concept

3.         The Selling Concept

4.         The Marketing Concept

5.         The Societal Marketing Concept

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The Five Concepts Described

            The Production Concept. This concept is the oldest of the concepts in business.  It holds that consumers will prefer products that are widely available and inexpensive.  Managers focusing on this concept concentrate on achieving high production efficiency, low costs, and mass distribution.  They assume that consumers are primarily interested in product availability and low prices.  This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features.

This concept works on an assumption that consumers prefer a product which is inexpensive and widely available. This view point was encapsulated in Says Law which states ‘Supply creates its own demand’. Hence companies focus on producing more of the product and making sure that it is available to the customer everywhere easily.Increase in the production of the product makes the companies get advantage of economies of scale. This decreased production cost makes the product inexpensive and more attractive to the customer.

Low price may attract new customers, but focus is just on production and not on the product quality. This may result in decrease in sales if the product is not up to the standards.

This philosophy only works when the demand is more than the supply. Moreover, a customer not always prefers an inexpensive product over others. There are many other factors which influence his purchase decision.

Examples of Production Concept of Marketing Management Philosophies

• Companies whose product market is spread all over the world may use this approach.
• Companies having an advantage of monopoly.
• Any other company whose product’s demand is more than its supply
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•     The Product Concept. This orientation holds that consumers will favor those products that offer the most quality, performance, or innovative features.  Managers focusing on this concept concentrate on making superior products and improving them over time. They assume that buyers admire well-made products and can appraise quality and performance.  However, these managers are sometimes caught up in a love affair with their product and do not realize what the market needs.  Management might commit the “better-mousetrap” fallacy, believing that a better mousetrap will lead people to beat a path to its door. 

   

This concept works on an assumption that customers prefer products of ‘greater quality’ and ‘price and availability’ doesn’t influence their purchase decision. Hence company devotes most of its time in developing a product of greater quality which usually turns out to be expensive. Since the main focus of the marketers is the product quality, they often lose or fail to appeal to customers whose demands are driven by other factors like price, availability, usability, etc.

         The Selling Concept. This is another common business orientation. It holds that consumers and businesses, if left alone, will ordinarily not buy enough of the selling company’s products.  The organization must, therefore, undertake an aggressive selling and promotion effort.  This concept assumes that consumers typically sho9w buyi8ng inertia or resistance and must be coaxed into buying.  It also assumes that the company has a whole battery of effective selling and promotional tools to stimulate more buying. Most firms practice the selling concept when they have overcapacity.  Their aim is to sell what they make rather than make what the market wants.

            The Marketing Concept.  This is a business philosophy that challenges the above three business orientations.  Its central tenets crystallized in the 1950s.  It holds that the key to achieving its organizational goals (goals of the selling company) consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its selected target customers. The marketing concept rests on four pillars:  target market, customer needs, integrated marketing and profitability.

            Distinctions between the Sales Concept and the Marketing Concept:

           

1.         The Sales Concept focuses on the needs of the seller.  The Marketing Concept focuses on the needs of the buyer. 

2.         The Sales Concept is preoccupied with the seller’s need to convert his/her product into cash.  The Marketing Concept is preoccupied with the idea of satisfying the needs of the customer by means of the product as a solution to the customer’s problem (needs).

            The Marketing Concept represents the major change in today’s company orientation that provides the foundation to achieve competitive advantage.  This philosophy is the foundation of consultative selling. 

            The Marketing Concept has evolved into a fifth and more refined company orientation:  The Societal Marketing Concept. This concept is more theoretical and will undoubtedly influence future forms of marketing and selling approaches.

            The Societal Marketing Concept. This concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors (this is the original Marketing Concept).  Additionally, it holds that this all must be done in a way that preserves or enhances the consumer’s and the society’s well-being.

            This orientation arose as some questioned whether the Marketing Concept is an appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services. 

Are companies that do an excellent job of satisfying consumer wants necessarily acting in the best long-run interests of consumers and society?   

            The marketing concept possibily sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare. Just consider:

The fast-food hamburger industry offers tasty buty unhealthy food. The hamburgers have a high fat content, and the restaurants promote fries and pies, two products high in starch and fat.  The products are wrapped in convenient packaging, which leads to much waste.  In satisfying consumer wants, these restaurants may be hurting consumer health and causing environmental problems.

  

Holistic Marketing Concept

Holistic marketing is new addition to the business marketing management philosophies which considers business and all its parts as one single entity and gives a shared purpose to every activity and person related to that business. A business, like a human body, has different parts, but it’s only able to function properly when all those parts work together towards a same objective. Holistic marketing concept enforces this interrelatedness and believes that a broad and integrated perspective is essential to attain best results.