The role of a mutually satisfying exchange is central to the marketing concept. The Marketing concept is satisfying the customer at a profit. Three features of the marketing concept are customer orientation, coordinated effort by all departments within the organization to provide customer satisfaction, and emphasis on long-term profit.
The marketing concept describes an ideal state of affairs. It exists when an organization focuses all of its efforts on providing products that satisfy its customers. The customer is the focal point for how each area of the organization is run. Products are created with the goal of satisfying customers' needs and wants. All departments within the organization work together toward the goal of customer satisfaction. They closely coordinate their efforts both to satisfy customer wants and achieve the organization's long-run goals.
When an organization is attempting to implement the marketing concept, it has a market orientation.
An organization is market oriented when it generates market intelligence on its customer needs, disseminates the intelligence across departments, and then responds organization-wide to the information. Organizations adopting the marketing concept are committed to market-focused and customer-driven philosophies.
A more recent philosophy is the societal marketing concept, which enlarges the marketing concept by asserting that organizations should determine customers' needs and wants and then deliver superior value to the target market in a way that improves customers' and society's well-being. It requires that an organization think about the long-run interests of society in satisfying consumers while meeting organizational objectives. Extending the time dimension means that the organization takes a long-term view of customer satisfaction. It takes into account the need for organizations to act responsibly not only towards their customers, but also towards the environment and other needs of society. Extending the breadth dimension means the organization recognizes that the market includes not only buyers of the organization's products but also other people affected by the organization's operations. It has become good business to consider and think of society's interests when the organization makes marketing decisions.
It is obvious to most consumers in the marketplace that many organizations have not adopted the marketing concept. In fact, these organizations are successful in spite of themselves. A market orientation is not important when competition is not intense, when market preferences are stable, during periods of booming economies, and when industries are characterized as technologically turbulent. Examples of marketers who do not follow the marketing concept include companies that make products in terms of what designers or engineers say they can produce.
The product planner does not study how the product or its features could meet consumer needs. For those companies, marketing remains just selling. Alternative concepts under which organizations conduct their marketing activities include production, product, and selling.
According to the Production concept, the focus of marketing efforts should be on improving production and distribution efficiency. This works well when there is a great deal of unmet demand for a product or when the cost of the product is so high that it needs to be manufactured cheaper in order to get consumers to adopt it. This philosophy is clearly seen in an anecdote about Henry Ford. When someone asked him why his popular Model T automobile was not available in the variety of colors, he is supposed to have quipped "Customers can have it in any color they want, as long as it is black!"
The production concept was rampant in American industry during the Industrial Revolution. Companies prided themselves on manufacturing more products better and cheaper than their competitors. However, a focus simply on production and distribution efficency ignores an important factor -- the needs of the customers. Inventors and entrepreneurs often fall victim to the production concept and fail to think about the needs of the customers. Developing an innovative product cheaper than the competition is no good unless it satisfies the needs of the customers. There are many examples of companies developing extraordinarily efficient and powerful software packages that have failed because of a lack of user-friendly features.
The product concept is a philosophy that focuses on the features of the product. While the production concept argues for the focus on production and distribution processes, the product concept assumes that consumers will buy the product with the best quality, performance and features. Ralph Waldo Emerson professed this philosophy when he said, "If a man … makes a better mousetrap … the world will beat a path to his door." Unfortunately, this is not necessarily true. Customers will buy products that they perceive as providing them with the best value. This is not necessarily the same as the product with the most features.
Theodore Levitt advanced the thesis that market definitions of a business are superior to product definitions of business. Focus on the product rather than the benefit the product offers to consumers can result in what Levitt calls marketing myopia or shortsightedness.
The organization fails to see the impact of a changing environment on its future. It loses sight of underlying customer needs by only focusing on existing wants. The product focus was apparent when the railroads went into decline, according to Levitt "because they assumed themselves to be in the railroad business rather than the transportation business." This resulted in their completely overlooking the threats posed by alternative forms of transportation. A product, according to Levitt, is not a thing but a complex cluster of satisfactions. (See Theodore Levitt's The Marketing Imagination, Free Press, 1983; Theodore Levitt, "Marketing Myopia," HBR July-August 1960, pp. 45-56.)
The selling concept is used when companies find themselves with an overabundance of products that they have to sell in order to deplete their inventories. Followers of the selling concept believe that consumers will not buy their products unless they undertake a large-scale selling and promotion effort. Their aim is to sell what they make rather than make what will sell in the market. This concept is typically practiced with unsought products, those that consumers don't ordinarily think of buying such as funeral insurance.
The danger, however, is that the focus on "making the sale" overshadows the focus on building long-term relationships with customers. Once a customer buys the product, this philosophy assumes that he or she will be satisfied with the product or will simply forget about any disappointment or dissatisfaction with having bought an unsatisfactory product.
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