Concepts in Marketing

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. 

Quality in Marketing

The customer is the final judge of value. Customer satisfaction is the extent to which a product's perceived performance matches a buyer's expectations. Quality is defined in various ways, but in terms of competitiveness and profitability, none is more important than customer satisfaction. It is critical to create products that customers will buy, enjoy, tell their friends about, and buy again. 

The quality of a product is a major determinant of customer satisfaction. The American society of qualitydefines quality as the characteristics of a product or service that bear on its ability to satisfy stated or implied needs. 

The quality viewpoint stresses the provision of high-quality products and services at all times. The aim of W. Edward Deming's Total Quality Management (TQM) approach is constant quality improvement.

 Deming was one of the founders of the quality movement and helped Japanese organizations make statistical quality control improvements. Later, United States marketers recognized his contributions. Deming's recommendations include planning for quality, striving for zero defects, using only a few suppliers who have demonstrated that they can deliver quality, and inspecting for quality during the process and not after. 

For marketers the focus of the total Quality Movement has shifted to total customer satisfaction. Quality begins with customer needs and ends with customer satisfaction. Successful marketers want their customers to be delighted when actual performance exceeds expectations. When customers are surprised with more quality, their perceived sense of value is heightened. Marketers manage satisfaction by targeting the customers who are most likely to appreciate the organization's distinctive competence.

Exchange is the Focus of Marketing

The basis for marketing is exchange, a way to satisfy a want.Exchange is to give or receive something of value for another thing. value is the worth of a product, usually in money. "Something of value" exchanged by the marketer can be an idea, good, or service and is not limited to physical objects. Marketers, as well as many businesspeople, use the term product to encompass anything that can be offered to a market that might satisfy a need or want. This could include persons, places, organizations, and activities, as well as ideas, goods, and services. Or as Charls Revsonwas reported to say, "In the factory we make cosmetics. In the store we sell hope."

The customer is the individual or organization that actually makes the exchange or purchase. The consumer is the person or organization that actually uses or consumes the product. Even though customer and consumer are differentiated, he or she can be one and the same person. Existing or potential customers can be considered a market. A market is a group of customers who have the need, the ability, and the authority to purchase a specific product. Thus, buyers constitute a market.

Natural separations exist between exchange parties. Buyers and sellers might be separated by geographical location, lack of information, and timing in production versus demand. Five different forms of separation between potential exchange parties include spatial, temporal, perceptual, ownership, and value. Marketers bridge these separations by performing the functions of exchange (buying and selling), logistics (transporting and storing), and facilitating (financing, risk taking, providing information, standardizing/grading).

Marketing creates and provides utility (usefulness or value) for the consumer. Utility is the attribute in an item that makes it capable of satisfying wants. Form utility is the physical change that makes a product more valuable. Strictly speaking, this is a function of production but marketing plays a vital role in directing the ultimate shape, size, quality, and design of products. Place utility makes a product accessible to potential customers where they want it. Time utility makes a product available when they want it. Possession utility is created when ownership is transferred to the buyer.

Importance of Marketing

The American Marketing Association (AMA) defines marketing as the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals. This definition of marketing first appeared in Marketing News on March 1, 1986. It is included in the Dictionary of Marketing Terms, 2d edition, edited by Peter D. Bennett, published by the American Marketing Association, 1995.

The definition of marketing describes the nature of the process. Ralph Mroz of ad lineam defines marketing as the process that aligns the desires of customers with the capabilities of the enterprise. Marketing is a continuous cycle that involves satisfying customer needs and wants by creating mutually beneficial exchanges. A need is a state of felt deprivation. A want is the conscious recognition of a need. Marketing begins with an idea about a want-satisfying product and does not end until customers' wants are completely satisfied, which sometimes occurs after the sale. 

The desire for a product together with the ability to pay for it is known asdemand More specifically, it is the quantity of a product that will be sold during a period of time at different prices. Demand comes from new customers and repeat customers. Marketers must find demand, as well as increase or decrease demand. Demarketing is the marketing task used to reduce or shift demand. Marketing is essentially management of supply and demand.. Outstanding marketers go to great lengths to learn about and understand their customers' demands.

Purpose of Marketing

In today's competitive environment, a strong focus on customer satisfaction is essential to the success of any organization. Rapid globalization means that companies now compete in markets all over the world. Foreign and domestic organizations are realizing that profit will only be achieved through the use of marketing. Marketing is the business function that focuses on satisfying the needs and wants of coustemers through exchange processes. It is the only revenue-producing activity for the organization. Drucker says, "Because its purpose is to create a customer, the business has two - and only two - functions: marketing and innovation. Marketing and innovation create value, all the rest are costs." (See Drucker, Peter F., People and Performance, Harper college Press, 1977, p. 90) Thus, sound marketing is critical to the success of the organization, whether for-profit or not-for-profit, foreign or domestic. 

The idea that profit is not the primary goal of business is not a new. In 1954, Peter Drucker made the point in his book, The Practice of Management. "Profit is not the explanation, cause or rationale of business behavior and business decisions, but the test of their validity." Profits are an essential result of business success. Again, the true purpose is the creation of customers: the efficient provision of goods and services which people want to buy. Satisfy customers and profit will follow. 

Many people think that marketing is just selling and advertising. Peter Drucker explains marketing this way: "The aim of marketing is to make selling superfluous. The aim is to know and understand the customer so well that the product or service fits him or her and sells itself." This is not to say that selling and advertising are unimportant, but rather that they are part of a larger "marketing mix" that must be orchestrated for maximum impact on the marketplace. 

Jerome McCarthy delineates the marketing mix as the four Ps (product, price, promotion, and place). Thus, a marketing mix is a specific combination of four strategies -- product, price, place or distribution, and promotion or marketing communications -- designed to satisfy customers. The focus of marketing is to do such an excellent job of developing, pricing, promoting, and distributing a product to customers that the product practically sells itself.