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Franklin S.

Houston

The Marketing Concept:


What It Is and What It Is Not
The marketing concept has been misunderstood and misused over the years. It is not obsolete nor is it
the optimal managerial approach to marketing. The marketing concept is restated in a way that more
clearly shows what it is and what it is not.

The Marketing Concept is so ubiquitous in the mar- ined. This examination concludes with the recognition
keting classroom that the naive student of marketing that the marketing concept has suffered in two ways:
is generally led to believe that firms who fail to em-
ploy this philosophy are business criminals. first, it has been established as the optimal manage-
Jolson (1978, p. 81) ment philosophy when it is not necessarily so in all
instances, and second, we can see many examples of
Is is not time to discard the marketing concept?
Sachs and Benson (1978, p. 74) poor marketing practice that have been adopted in the
name of the marketing concept. It is time that we re-
F OR years the marketing concept has been so her-
alded by marketing academics and practitioners that
its acceptance as the optimal marketing management
leam the marketing concept.

philosophy is almost universal. Infrequently, articles T h e Definition of . . .


have appeared which have critically examined some
The marketing concept has been described by differ-
aspect of it, but their impact on the marketing com-
ent authors as
munity has been slight. The following discussion is
an examination of the marketing concept and a review A corporate state of mind that insists on the integra-
of both new and previously stated questions about it. tion and coordination of all of the marketing func-
A consistent statement is made as to what the mar- tions which, in tum, are melded with other corporate
functions, for the basic objective of producing max-
keting concept is and is not, the conditions under which imum long-range corporate profits (Felton 1959,
the marketing concept is an attractive, meaningful p. 55).
managerial philosophy are expressed, and the rele- The extemal consumer orientation . . . as contrasted
vance of the sales and production concepts is exam- to intemal preoccupation and orientation around the
production function; profit goals as an altemative to
sales volume goals; and . . . complete integration of
organizational and operational effort . . . (Konopa
Franklin S. Houston is an Associate Professor of Marketing at the Uni- and Calabro 1971, p. 9).
versity of Alabama. The author would like to acknowledge the support
and contributions of E. H. Bonfield of Rider College, Pat Rudolph, and, While customer focus, profits, and integration of
especially, J. Thomas Lindley of the University of Alabama in the writ- organizational efforts are frequently discussed when
ing of this article.
the marketing concept is described, the term has be-

Joumal of Marketing
Vol. 50 (April 1986), 81-87. The Marketing Concept / 81
come synonymous with having a customer orienta- Few, if any, of these organizations come into being
tion. through altruism; that is, organizations do not come
into being to achieve the goals of a nonmember con-
The marketing concept means that an organization stituency. Instead, it is the set of objectives defined
aims all its efforts at satisfying its customers—at a
profit (McCarthy and Perreault 1984, p. 35). by the membership that guides the organization.
The marketing concept . . . holds that the key to The initiators of a commercial venture do so to
achieving organizational goals consists of . . . de- satisfy their own needs. The initiators of public pro-
termining the needs and wants of target markets . . . grams, such as an infant immunization program or a
(Kotier 1980, p. 22).
myriad of other public policy efforts, do so for the
The marketing concept . . . calls for most of the ef- benefit of the citizens of that political body. It is the
fort to be spent on discovering the wants of a target
audience and then creating the goods and services to goals of the membership which define the organiza-
satisfy them (Kotier and Zaltman 1971, p. 5). tion's purpose.^
Some organizations are self-sufficient; the satis-
faction of the organizational needs do not depend on
The Origin of . . . nonmembers (e.g., a bridge club). Many, however,
Keith's article (1960) on the marketing concept is one depend on the behavior of nonmembers for the at-
of the earliest and most popular. It is a descriptive tainment of the organization's satisfaction. To the ex-
article illustrating the adoption of the marketing con- tent that the organization relies on exchange as the
cept in an applied setting. The intuitive appeal of the means of obtaining compliance with the organiza-
concept and the illustration of its use in practice played tion's needs, we describe that organization as engag-
an important role in its acceptance.' ing in "marketing" (cf Bagozzi 1975, Kotier 1972).
In the article, Keith describes the Pillsbury Com- One source of marketing expenditure for an or-
pany's evolution through three managerial phases, fi- ganization is the time, effort, and financial expense
nally reaching what he calls a marketing control phase. of gathering information about present or prospective
His description suggests that movement from the pro- exchange partners. If, as the marketing concept sug-
duction through the sales and later through the mar- gests, we are to strive to understand exchange partners
keting phase has been an evolutionary process which and tailor offerings for them, information is a nec-
left the organization a stronger entity. The implication essary preparatory step to developing that proper blend
for the reader is that this evolutionary process is the Borden (1964) calls the marketing mix. He notes that
correct one for all organizations. The goal of any or- each mix is necessarily unique.
ganization intending to be a viable entity is a mar- Expenditures, financial and otherwise, resulting
keting dominated perspective. from research into who might engage in exchanges
with the organization or what those exchange partners
need and/or want, represent an increase in the value
The "Why" of . . . given up by an organization in any exchange. This
Knowing the customer and satisfying him/her has be- added expenditure furthers the organization's objec-
come the shibboleth of the marketing community since tives only to the extent that this added information
Keith's time, yet the marketing concept has not been increases the value received in the exchange or iden-
subjected to formal scmtiny. What follows is an at- tifies ways in which the organization can reduce the
tempt to assess the conditions under which the mar- value it gives up in the exchange.
keting concept offers the proper guidance to the mar- The value received in exchange is increased by
keter and the conditions under which the marketer creating more individual exchanges and by getting more
should not follow its prescription. value from each exchange. The value given up in an
In a commercial venture, the ultimate goal is some exchange is reduced by expending less effort in mak-
form of profit achievement, whether that be described ing those exchanges and by giving up less in the ex-
as profit maximization or the attainment of some sat- change. To restate this, an organization benefits from
isfactory profitability (cf. Ackoff 1970). Similady, a additional information about its exchange partners
nonprofit group will have a goal or set of goals which through:
defines the organization's reason for existing.^
• more exchanges,
• an increase in value received from each ex-
'One bit of evidence as to the article's significance is that it appears change.
in two separate collections purporting to contain seminal works in
marketing: Classics in Marketing (Walters and Robin 1978) and Mar-
keting Classics (Enis and Cox 1981).
^The following discussion describes the marketer-to-be or one who 'Some organizations change their objectives (e.g., the March of
represents an organization. Clearly, the entity could be a single person Dimes) or lose sight of their original purpose (see Houston and Ho-
as well. mans 1977 for a discussion of this).

8 2 / Journal of MarJceting, April 1986


• less effort needed for each exchange, and that would have done a better job of satisfying the
• less value given up in each exchange. organization's goals. Further, such exchanges can only
be made under conditions that allow the organization
Understanding when these occur allows us to recog- to negotiate and consummate exchanges uniquely. For
nize when the organization's objectives are furthered those cases where an organization negotiates with more
by added research into current or potential exchange than one exchange partner at a time, and the organi-
partners. ** zation makes a single offering available to all mem-
More exchanges can occur when there are unsatis- bers of that group, the usefulness of the information
fied exchange partners remaining. They cannot occur received about any single exchange partner is in-
when all potential exchange partners are satiated, and versely related to the number of individual exchange
they cannot occur when the organization has nothing partners in each group with which the organization
valued by the potential exchange partner to offer in negotiates.* Further, if for some reason one or both
such an exchange. of the exchange partners is prevented from negotiating
Illustrations of situations where added information and/or adjusting the terms of an exchange, the infor-
is not needed are not new to this discussion. The tra- mation cannot be used to further the organization's
ditional example of a good for which there is no mar- goals.
ket is air, since people have enough.^ As examples of Illustrations of these conditions under which in-
offerings that cannot be made available, we can in- formation loses value are straightforward and com-
clude products that are conceivable but not feasible— monplace. Much of retail marketing in the above-
the transportation industry would like a modestly priced ground economy consists of marketers interacting with
teleportation system, but such a system is not avail- groups of exchange partners, and the usefulness of in-
able outside of science fiction. Products which are formation about a single individual is inversely related
temporarily or permanently exhausted—certain natu- to the size of the market segment of which he/she is
ral resources, like water and a variety of energy re- a member. In a society where marketers are free to
lated products—are limited in supply and periodically vary their product offerings, more knowledge is better
become unavailable; certain species of animals no if that knowledge is free, but since gaining and re-
longer exist. taining knowledge can be expensive for an organi-
In addition to these examples where a product can- zation, the information must be assessed as to value.
not be procured because of its general lack of avail- In a society where marketers are unable to vary their
ability, there are also instances where the specific or- offerings, such information holds no value: such an
ganization under study cannot or will not make the instance would be the butcher in Poland who is not
product available. An example would be the restau- able to vary the price of his/her meat. In the United
rant that refuses to stock and serve certain less ex- States, milk and liquor prices are often bounded in
pensive wines. In general, there are many examples some manner.
of potential exchanges that could occur but one of the The mirror image of obtaining greater value in an
potential exchange partners cannot or will not engage exchange is the giving up of value in that same ex-
in that exchange, and this is known without the ben- change. Therefore, briefly, the added information from
efit of additional research. investigating a single, specific potential exchange
To be assured that the organization will obtain the partner loses its value to the degree that terms of ex-
greatest value possible in any single exchange, it is change must be negotiated with groups of exchange
necessary to understand exactly what the potential ex- partners, and to the degree that restrictions are placed
change partner needs or wants, and to know exactly on what can be offered in exchange.
what the exchange partner would be willing to offer Finally, added information can be used to reduce
to consummate that exchange. Without these condi- the organization's effort in making exchanges. This
tions, the organization can typically assume that they value is directly related to the effort required to make
could have negotiated an exchange under different terms exchanges. In the extreme, if finding exchange part-
ners and consummating exchanges is effortless, such
information holds no value.
*A fifth situation that is not developed here is the role information
plays in identifying those exchanges which should be avoided. An
entity might spend resources and decide not to engage in an exchange,
based on the information received. Here, there would be a net loss ''Several important caveats must be inserted. First, this statement
in value, yet its position is superior to the entity's position had it holds if all other conditions are constant. That is. in comparing a
engaged in the exchange. smaller with a larger group, the statistical characteristics of the dis-
'Clearly, this remark can lead to a lengthy discussion of the sale of tribution of the offerings made by individuals in each group must be
compressed air, its constituents, products to clean it, and the need for identical. Second, it is important to recognize that the usefulness of
mechanisms to help some people use it properly. It does not serve the total set of information about the individuals in a group is directly
our purpose to explore these avenues. Most of us find air to be freely related to the size of that group, though generally it can be assumed
that additional amounts of information are of decreasing value.
available.

The Marketing Concept / 8 3


A wide variety of circumstances creates situations colleagues or to intemally held standards. On some
where exchange partners seek out a marketer, leaving occasions this pride of production confiicts with the
the marketer with no need to pursue the customer. For product design that would be appropriate if one were
example, when product offerings are highly desired serving the marketer's set of needs exclusive of these
but in limited supply, there is little incentive for the product related constraints. In cases where the most
marketer to seek out his/her customers. This is illus- desirable product design confiicts with the producer's
trated by most govemment services. Liquor monopo- values or with the producer's desire to meet the stan-
lies in various states also illustrate this. dards set by some altemative market (e.g., peers within
To summarize, the following briefiy restates the the profession), the marketer must incorporate these
identified conditions under which gaining additional product design standards into his/her set of goals.
information about exchange partners holds no value Certain organizations will not only have product
to an organization: standards that are integral to the membership's set of
needs but will have a specific, fixed product form as
• Exchange partners are satiated. part of its need set. A subset of these is the class of
• A desired offering is not to be made available. producers that has adoption of a fixed, given product
• The value of incremental bits of information as its reason for being. This includes religious leaders
about individuals who are members of groups who seek to have their own religious tenets accepted
of exchange partners will not exceed the value and would not be willing to modify them to achieve
of gathering that information. greater market acceptance. Many artists and ideolo-
• The organization or all of its exchange partners gists fall into this category, and these artists and ideol-
are restricted from varying and/or negotiating ogists are the proselytizers who achieve their objec-
what they will offer. tives by having the markets accept their unique
offerings. Included here are artists who have their own
style or vision and achieve success in their own eyes
Imposing Product Related Goals by having their artistic offering accepted by peers or
on . . . by the marketplace. Similarly, some ideologists achieve
The why of the marketing concept ties directly to the success only by having their concepts adopted (see
ability of the organization to meet its own needs. In Dixon 1978).
fact, if we were to ask the question asked of every A second class of marketer who cannot design the
introductory marketing student, "Whose needs come product offering as a result of studying exchange part-
first?," the answer should be "the marketer's . . . ." ners is the marketer who cannot redesign the product.
It is the organization's needs that are served by leam- This is an important case because it is a very common
ing about exchange partners and tailoring product of- situation; very few product offerings are custom de-
ferings to their needs, whether these needs are finan- signed, and the salesperson is typically given a prod-
cial profits or some other nonfinancial goal. uct to sell and cannot make product modifications. Also,
Hirschman (1983) recognized that producers in the the commercial marketer who has established produc-
world of art and ideology often have personal goals tion facilities (sunk costs) or has inventories will find
which are not satisfied by commercial success. These no opportunity to develop altemative products in light
goals stem from a desire to be recognized by one's of a better understanding of exchange partners (Zelt-
peers or from some intemal sense of accomplishment. ner 1976). The decisions that this latter marketer will
As a result, she states " . . . that the marketing con- make include whether it is worth the cost of modi-
cept—as a normative framework—is not applicable fying existing production facilities to produce a prod-
to two broad classes of producers [artists and ideol- uct variation desired by potential exchange partners
ogists] because of personal values and social norms (see Zeltner 1976), or whether he/she should discon-
that characterize the production process" (p. 46). tinue operations.
Hirschman proposes that marketers adopt a modified Therefore, there is a wide variety of marketers who
version of the marketing concept that accommodates do not rely on the maxim of leaming about customer
these producers. needs and designing new product offerings to suit those
Being a marketer is a role, and marketers, like other needs. These marketers are constrained from modi-
people, carry more than one role at a time. When the fying their core product, yet they still have needs which
roles of marketer and producer are vested in the same depend upon exchange partners and successfully cul-
person, it is not unusual to see confiicting goals. Pro- minated exchanges.
ducers, whether they are widget makers, bus drivers,
assembly line workers, marketing professors, artists,
or ideologists, have product related constraints as part Alternatives t o . . .
of their need set; that is, they often take pride in their Keith (1960) describes the production and sales con-
work, holding that work up to the standards set by cepts as inferior and antecedent to the marketing con-

84 / Journal of Marketing, April 1986


cept. Where the marketing concept directs the orga- can and do use the marketing, sales, and production
nization to design its marketing mix—including concepts (or the relabeled equivalents, shown in Fig-
product—only after the needs and wants of current ure 1).
and potential exchange partners have been assessed,
the sales and the production concepts describe the or- A S t a t e m e n t of . . .
ganization that makes an offering available without
having tailored it as a result of this information. The The following provides a succinct and comprehensive
sales concept describes an organization which ag- statement of what the marketing concept is, its pur-
gressively studies and seeks out exchange partners for pose, and how it is bounded.
already established offerings, where the production The marketing concept is a managerial pre-
concept is passive with regard to marketing. The pro- scription relating to the attainment of an enti-
duction concept was illustrated by the Bell Telephone ty's goals. For certain well-defined but re-
System prior to its court-imposed restmcturing, or the strictive market conditions and for exchange
artist who derives his/her satisfaction from the crea- determined goals which are not product re-
tion of a unique product that meets some intemally lated, the marketing concept is a prescription
held standard. That same artist would be relying on showing how an entity can achieve these goals
the sales concept if he/she sought information about most efficiently.
potential buyers and used that information in an at-
tempt to engage in an exchange. The marketing concept states that an entity
achieves its own exchange determined goals
Figure 1 restates the distinction between the mar- most efficiently through a thorough under-
keting, sales, and production concepts. It shows the standing of potential exchange partners and
buyer side of a marketing exchange, pointing out that their needs and wants, through a thorough un-
buyers can also gather information about current and derstanding of the costs associated with sat-
potential exchange partners, tailoring offerings as suit isfying those needs and wants, and then de-
the needs and wants of those exchange partners. Like- signing, producing, and offering products in
wise, the buyer may elect not to negotiate on what light of this understanding.
he/she is seeking or offering in exchange, though ag-
gressively pursuing the exchange through the other in- Notice that the marketing concept requires an un-
gredients of the marketing mix. This is shown in the derstanding of the market and does not suggest that
Figure as the Buying Concept, since it is the buyer's products be designed to satisfy the market's demand.
form of the sales concept. In the same vein, some Satisfaction of the market's demand is important to
buyers are quite passive in their buying behavior, ac- the extent that doing so yields profits.^ A commercial
cepting or rejecting that which has been made avail- organization that has decided to offer a single, undif-
able but not choosing to actively seek an exchange. ferentiated offering instead of designing products to
This is shown as the Offering Concept, since it is the suit each perceived market segment, may have arrived
buyer's form of the production concept. at this decision with a thorough understanding of the
In summary, it is important to recognize that un- market's response and the accompanying costs, and,
der some circumstances, the production concept or the thus, be an exemplary user of the marketing concept.
sales concept would be a more appropriate manage-
ment philosophy for the organization than the mar- Misconstruing . . .
keting concept. Furthermore, exchange consists of both
buyers and sellers, and as noted many years ago, buy- Unfortunately, many marketers have taken the mar-
ers are marketers too (Kotier and Levy 1973). Buyers keting concept to mean that marketers should take their
lead from the expressed needs and wants of cus-
tomers. As a result, when the limitations of doing so
FIGURE 1 are recognized, the marketing concept is criticized,
Defining Alternative Concepts when it would be more appropriate to criticize the way
Available to the Marketer in which the concept is implemented.
Behavior . . . the marketing concept is an inadequate pre-
Passively Actively Seeks to scription for marketing strategy, because it virtually
accepts pursues serve needs ignores a vital input of marketing strategy—the cre-
of exchange ative abilities of the firm (Kaldor 1971, p. 19).
exchange exchange
partners partners partners
R Seller Production Sales Marketing 'While this may seem obvious, some argue that profits (or implic-
O Concept Concept Concept itly, satisfaction of the marketing entity's own objective function) should
L be a consequence of satisfying the market's needs (cf. Bell and Emory
Offering Buying Marketing 1971), and not part of the allocation process in which the firm decides
E Buyer Concept Concept Concept to what extent it will satisfy the demand of the market.

The Marketing Concept / 85


Kaldor notes that the customer does not always know meaning of the marketing concept can be confused
what is "needed." An extreme example of this is the with its weak implementation:
medical doctor-patient relationship, where the patient Twenty years of adherence to the marketing concept
does not specify the treatment; it is the doctor's task may have taken its toll on American enterprise. The
to assess the specific product needs of the patient. Yet, marketing concept has diverted our attention from the
this does not mean that the doctor is not addressing product and its manufacture; instead, we have fo-
cused our strategy on responses to market wants and
the needs and wants of the patient; the doctor's unique have become preoccupied with advertising, selling,
offering is that special capability to identify and sat- and promotion. And in the process, product value has
isfy the patient's needs. suffered.
Rather than describing the marketing concept as What is ironic about this statement is that it follows
an "inadequate prescription," it would be better to de- a discussion of the success foreign competitors have
scribe it as an "incomplete prescription." The mar- had by addressing the needs and wants of buyers. The
keting concept focuses the marketer's attention on the authors do a good job of addressing a number of se-
customer but does not tell the marketer to disregard rious issues in today's business community, but the
his/her unique capabilities and resources when decid- management practices criticized are not inherent in the
ing how to serve the customer's needs and wants best. marketing concept.^
Kerby (1972) and Tauber (1974) make the point The marketing concept does not consist of adver-
that by looking to customers for guidance in new tising, selling, and promotion. It is a willingness to
product research, marketers fail to take advantage of recognize and understand the consumer's needs and
the creative capabilities of product research person- wants, and a willingness to adjust any of the mar-
nel. keting mix elements, including product, to satisfy those
. . . it is quite certain that few if any of the really needs and wants.
significant product innovations which have been placed
on the market to date were developed because the
inventor sensed that a latent pool of needs was yeam- The Positive Side o f . . .
ing to be satisfied (Kerby 1972, p. 31).
The marketing concept has been an expression of the
The marketing concept does not urge us to depend marketer's recognition of the importance of the con-
solely on marketing research (customer surveys) for sumer in the buying process. This understanding did
guidance in new product research. not begin with the introduction of the term marketing
Dependence on customers' expressions of their own concept, the customer focus clearly existed when the
needs and wants suggests that some marketers have king ordered boots from the bootmaker. Yet, the la-
failed to take a long run view of the marketing con- beling of the concept is an important aid to our un-
cept. Customers are not necessarily good sources of derstanding and provides a focal point around which
information about their needs a decade from now. They to organize our thoughts.
don't necessarily know how they will react under dif- The marketing concept has suffered in two ways:
ferent environmental conditions. They don't have in- first, it has been established as the optimal manage-
sight into the possible value of major technological ment philosophy when it is not necessarily so in all
innovations. Sometimes customers have to leam about instances, and second, we can see many examples of
new technologies, beliefs, and ways of behaving. poor marketing practices which have been adopted in
Anticipating future needs and wants is consistent the name of the marketing concept. It is time that we
with the marketing concept. Earlier the point was made releam that the marketing concept is one of a set of
that some marketers, like religious groups, would find three concepts—marketing, sales, and production—
the marketing concept inappropriate; these are mar- that form the basis for understanding the management
keters who want to persuade customers that what the of marketing. And it is time that we remember that,
marketer has to offer is desirable. The innovator who under differing circumstances, each can be the ori-
has an unfamiliar offering likewise must educate and entation that best furthers the objectives of the orga-
persuade the customer, but this marketer has not nec- nization.
essarily rejected the marketing concept, which is not This discussion has gone far in identifying the many
limited to the current, expressed needs and wants of circumstances under which the guiding managerial
customers. If the marketer sees an innovative offering
that has the potential to satisfy needs and wants and
is willing to develop this offering with the customer's *In an earlier article, they state they are less concemed with defi-
nitions as such. " . . . the results of implementing the marketing con-
satisfaction in mind, the marketing concept is being cept, rather than the concept itself, are examined" (Bennett and Cooper
used. It is the marketer who has a fixed offering which 1979, p. 76). This article makes important points about the need to
he/she is unwilling to change who is not using it. rely on the unique capabilities of the organization, which may be non-
marketing capabilities. This theme is also present in the articles by
Bennett and Cooper (1981) illustrate how the Kaldor (1971), Kerby (1972), and Tauber (1974).

86 / Journal of Marketing, April 1986


philosophy should be something other than the mar- not exhaustive, and it remains our task to recognize
keting concept. The examples given merely scratch and enumerate others. It is important to examine these
the surface and are designed to illustrate general con- conditions more closely to understand their nuances
ditions, rather than to demonstrate the degree to which and to assess their implications.
such conditions exist around us. Probably the list is

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The Marketing Concept / 8 7

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