Marketing Concepts and Tasks

Kings College

The marketing concept is the philosophy that firms should analyze the needs of
their customers and then make decisions to satisfy those needs, better than the
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 would not be 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, one of the oldest in business, holds that consumers
prefer products that are widely available and inexpensive. Managers of
production-oriented businesses concentrate on achieving high production
efficiency, low costs, and mass distribution. This orientation makes sense in
developing countries, where consumers are more interested in obtaining the
product than in its features. It is also used when a company wants to expand the
market. Texas Instruments is a leading exponent of this concept. It concentrates
on building production volume and upgrading technology in order to bring costs
down, leading to lower prices and expansion of the market. This orientation has
also been a key strategy of many Japanese companies.
The production concept prevailed from the time of the industrial revolution until
the early 1920's. 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 creates 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 the 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 Product Concept

Other businesses are guided by the product concept, which holds that
consumers favor those products that offer the most quality, performance, or
innovative features. Managers in these organizations focus on making superior
products and improving them over time, assuming that buyers can appraise
quality and performance. Product-oriented companies often design their
products with little or no customer input, trusting that their engineers can design
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exceptional products. A General Motors executive said years ago: “How can the
public know what kind of car they want until they see what is available?” GM
today asks customers what they value in a car and includes marketing people in
the very beginning stages of design. However, the product concept can lead to
marketing myopia. Railroad management thought that travelers wanted trains
rather than transportation and overlooked the growing competition from airlines,
buses, trucks, and automobiles. Colleges, department stores, and the post office
all assume that they are offering the public the right product and wonder why
their sales slip. These organizations too often are looking into a mirror when they
should be looking out of the window.

The Selling Concept

The selling concept, another common business orientation, holds that

consumers and businesses, if left alone, will ordinarily not buy enough of the
organization’s products. The organization must, therefore, undertake an
aggressive selling and promotion effort. This concept assumes that consumers
must be coaxed into buying, so the company has a battery of selling and
promotion tools to stimulate buying.
The selling concept is practiced most aggressively with unsought goods—goods
that buyers normally do not think of buying, such as insurance and funeral plots.
The selling concept is also practiced in the nonprofit area by fund-raisers, college
admissions offices, and political parties. 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. In modern industrial economies, productive
capacity has been built up to a point where most markets are buyer markets (the
buyers are dominant) and sellers have to scramble for customers. Prospects are
bombarded with sales messages. As a result, the public often identifies
marketing with hard selling and advertising. But marketing based on hard selling
carries high risks.
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
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:

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 • 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 holds that the key to achieving organizational goals
consists of the company being more effective than its competitors in creating,
delivering, and communicating customer value to its chosen target markets.
Theodore Levitt of Harvard drew a perceptive contrast between the selling and
marketing concepts: “Selling focuses on the needs of the seller; marketing on
the needs of the buyer. Selling is preoccupied with the seller’s need to convert
his product into cash; marketing with the idea of satisfying the needs of the
customer by means of the product and the whole cluster of things associated
with creating, delivering and finally consuming it. The marketing concept rests
on four pillars: target market, customer needs, integrated marketing, and
profitability. The selling concept takes an inside-out perspective. It starts with
the factory, focuses on existing products, and calls for heavy selling and
promoting to produce profitable sales. The marketing concept takes an outside-
in perspective. It starts with a well-defined market, focuses on customer needs,
coordinates activities that affect customers, and produces profits by satisfying
customers.

The Societal Marketing Concept

The societal marketing concept calls upon marketers to build social and ethical
considerations into their marketing practices. They must balance and juggle the
often conflicting criteria of company profits, consumer want satisfaction, and
public interest. Yet a number of companies have achieved notable sales and
profit gains by adopting and practicing the societal marketing concept.

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 Marketing Tasks

The process of marketing management is about attracting and retaining

customers by offering them desirable products that satisfy needs and meet
wants.
Marketing management in a customer-orientated business consists of five key
tasks summarized in the table below:
Marketing Task Commentary
Identify target Management has to identify those customers with whom
markets they want to trade. The choice of target markets will be
influenced by the wealth consumers hold and the
business' ability to serve them
Market research Management have to collect information on the current
and potential needs of customers in the markets they
have chosen to supply. Areas to research include how
customers buy (which marketing channels are used) and
what competitors are offering
Product Businesses must develop products and services that meet
development needs and wants sufficiently to attract target customers
to wish and buy
Marketing mix Having identified the target markets and developed
relevant products, management must then determine the
price, promotion and distribution for the product. The
marketing mix is tailored to offer value to customers, to
communicate the offer and to make it accessible and
convenient
Market monitoring The objective in marketing is to first attract customers -
and then (most importantly) retain them by building a
relationship. In order to do this effectively, they need
feedback on customer satisfaction. They also need to feed
this back into product design and marketing mix as
customer needs and the competitive environment
changes

Marketing Management - 1

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Marketing Management - 1

MBA