The Marketing Concept

Marketing Framework

Marketing concept is the belief that firms should first analyze the needs of their customers and then make decisions to satisfy those needs, better than the exixting competition. Today most firms have adopted the marketing concept, but this has not always been the case.

In 1776 in The Wealth of Nations, Adam Smith wrote that the needs of producers should be considered only with regard to meeting the needs of consumers. While this philosophy is consistent with the marketing concept, it was not adopted widely until nearly 200 years later.

To better understand the marketing concept, it is worthwhile to put it in perspective by reviewing other philosophies that once were predominant. While these alternative concepts prevailed during different historical time frames, they are not restricted to those periods and are still practiced by some firms today.

The Production Concept

The production concept has prevailed from the time of the industrial revolution until the early 1920’s (It has still not ceased to exist). The production concept was the idea that a firm should focus on those products that it could produce most efficiently and that the creation of a supply of low-cost products would in and of itself create the demand for the products. The key questions that a firm would ask before producing a product were:

* Can we produce the product?
* Can we produce enough of it?

At that time, the production concept worked fairly well because the goods that were produced were largely those of basic necessity and there was a relatively high level of unfulfilled demand. Virtually everything that could be produced was sold easily by a sales team whose job it was simply to execute transactions at a price determined by the cost of production. The production concept prevailed into the late 1920’s.
The Sales Concept

By the early 1930’s however, mass production had become commonplace, competition had increased, and there was little unfulfilled demand. Around this time, firms began to practice the sales concept (or selling concept), under which companies not only would produce the products, but also would try to convince customers to buy them through advertising and personal selling. Before producing a product, the key questions were:

* Can we sell the product?
* Can we charge enough for it?

The sales concept paid little attention to whether the product actually was needed; the goal simply was to beat the competition to the sale with little regard to customer satisfaction. Marketing was a function that was performed after the product was developed and produced, and many people came to associate marketing with hard selling. Even today, many people use the word “marketing” when they really mean sales.

The Marketing Concept

MArketing Concept Challenges

After World War II, the variety of products increased and hard selling no longer could be relied upon to generate sales. With increased discretionary income, customers could afford to be selective and buy only those products that precisely met their changing needs, and these needs were not immediately obvious. The key questions became:

* What do customers want?
* Can we develop it while they still want it?
* How can we keep our customers satisfied?

In response to these discerning customers, firms began to adopt the marketing concept, which involves:

* Focusing on customer needs before developing the product
* Aligning all functions of the company to focus on those needs
* Realizing a profit by successfully satisfying customer needs over the long-term

When firms first began to adopt the marketing concept, they typically set up separate marketing departments whose objective it was to satisfy customer needs. Often these departments were sales departments with expanded responsibilities. While this expanded sales department structure can be found in some companies today, many firms have structured themselves into marketing organizations having a company-wide customer focus. Since the entire organization exists to satisfy customer needs, nobody can neglect a customer issue by declaring it a “marketing problem” – everybody must be concerned with customer satisfaction.

The marketing concept relies upon marketing research to define market segments, their size, and their needs. To satisfy those needs, the marketing team makes decisions about the controllable parameters of the marketing mix.

Marketing of The Marketing Concept

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

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

2. A profit goal: The marketing concept dictates that goods and services made available by a business must be produced and sold at a profit. The profit objective is integral to the survival and growth of the business. Without it, the business would not be available to serve the needs and wants of customers.

3. A total company effort: Effective implementation of the marketing concept requires involvement of employees from all departments at all levels of the business. Training must be provided and employees must be motivated to achieve the common goals of maximum customer satisfaction and profitability.