The Marketing Concept
The marketing concept can be best summed up in the phrase “the customer is always right”. Ultimately, the marketing concept is rooted in the belief that firms can only exist if they are serving their customers and providing value. As such, firms have to consider what the needs of their customers are, and how they can satisfy those needs better than their competitors as well as demonstrating this to customers. A more advanced version of the marketing concept revolves around attempting to convince customers that their needs are aligned with the company’s products, thus generating an inherent need that the company already fulfils.
Whilst the marketing concept has now become a core aspect of almost every company’s business model, it has not always need the dominant philosophy behind company’s operations. Indeed, these have been several concepts and philosophies which have driven corporate strategies over the years.
The Production Concept
The production concept became the dominant model for manufacturing and distribution during the industrial revolution, and remained such until the early 20th century. The production concept dominated because, at the time, there were relatively few manufactured goods and companies that manufactured them, hence there was a significant demand and many products were not available to any great extent. As such, firms simply produced whatever they were able to produce most profitably. The only real considerations were whether the firm could produce the product efficiently, and in sufficient quantity, to make a profit.
The production concept dominated through the early industrial period because all the goods produced in factories were basic necessities, and there was not enough production capacity in the economy to fill the demand. This meant that everything a company produced could be sold relatively simply and rapidly at a cost set by the firm. As such, companies simply concentrated on whatever goods they had the resources to produce.
The Sales Concept
In the early 20th century however, two innovations changed the core concept driving corporate strategies. They were the development of mass production and the rise of the automobile. Mass production meant it was possible for firms to produce ever more goods ever more cheaply, and the automobile meant it was relatively easy to transport goods to markets, and for consumers to travel to buy the goods they wanted. As such, there were enough goods available to fill most of the demand, and transport costs were low enough to supply the goods to most of the population. As such, firms could no longer rely on being able to sell all they produced, and instead switched their focus to only producing as much as they could sell for a product.
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As a result of this, the key considerations for a company when deciding on what goods to produce were could they sell a product, and could they charge enough for it. However, this focus on sales led to companies tending to sell their products as hard as possible, with little consideration as to whether the customer needed it. As such, the sales concept rapidly became associated with aggressive strategies by companies, primarily hard, personal often door to door selling.
The Marketing Concept
Ultimately, it was another technological development which turned the selling concept into the marketing concept. In the aftermath of World War II, the growth in sales of television sets, and the foundation of a number of commercial broadcast networks, gave businesses a more effective way to reach their customers, as well as forcing them to consider their customers’ needs. In addition, as the number and variety of products grew, hard selling became less effective. Instead, consumers were now able to see a wide range of products on television, and compare different products before they went to a store to buy. This, combined with a growth in disposable income, led to consumers becoming more selective about what they purchased, and only buying products which they felt met their needs.
This switched the focus of corporate strategies away from what firms could produce or sell, and towards what customers wanted, and whether firms could develop a product which fit that desire. In addition, firms had to consider changing customer tastes, and whether they could develop products whilst consumers still wanted it. Finally, the growth in broadcast media and communication methods such as the telephone meant that firms could now develop national and even global reputations, hence making customer satisfaction a priority.
This led to companies shifting their focus towards understanding customer needs, then developing products to fulfil them, rather than simply developing the products that the company could make profit from. In addition, the marketing concept requires companies to increasingly align all their functions towards fulfilling customer needs and satisfying them in the long term. As a result, many organisations now state that their entire organisational purpose is to solve the needs of their customers, making every member of the organisation concerned with marketing and customer satisfaction.