The Evolution Of The Marketing Concept Marketing Essay

Background

The fundamental question facing nowadays both the practitioners and academicians is what philosophy should be adopted to guide a company’s marketing efforts? To answer such question, we need to discuss the evolution of the marketing concept. The evolution of marketing as a business philosophy has gone through several stages. From the early production concept which suggests that consumers will prefer products that are widely available and inexpensive; to the product concept which holds that consumers will favor products that offer the better quality, performance and innovative features; through the selling concept which focuses on the consumers and businesses need, and employs aggressive selling and promotional efforts to induce consumers to purchase company’s product and services; to the marketing concept which emerged in mid 1950’s in the United States and has challenged all the preceding concepts. (Mckitterick, 1957). Therefore, the marketing concept suggests a shift to customer orientation, whereby the philosophy demands the process of sensing, analyzing, understanding, disseminating, and responding to customers and market changes.. The goal is not to find the right customers for your product, but the right products for your customers.

However, the Chartered Institute of Marketing (2009) defines the marketing concept as “‘the management process responsible for identifying, anticipating and satisfying customer requirements profitably”. Similarly, the American Marketing Association (2007) defines it as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large”.

On the other hand, Felton defines the concept as “a corporate state of mind, which insists on the integration and coordination of all of the marketing functions which in turn, are melted with other corporate functions, for the basic objective of producing maximum long-range corporate profit” (Felton, 1959, P. 55). However, over a number of years there has been different discussion not only tackling the divination issue, but also related to what is the marketing concept and what is not. (Kotler and Levy, (Kotler and Levy, 1969; Kotler and Zaltman, 1971; Hunt and Burnett, 1982; Baker, 1987). In addition, McNamara (1972) reviews various definitions and argues that there are three components of the marketing concept as (a) focusing on the customer as a focal point for the entire business activities, (b) integrating the different marketing activities across the different functional areas, and through the entire organization, and (c) the attainment of profit resulting from satisfying customer needs (as cited by McNamara 1972). In fact, Levitt (1975) clarifies the contrast between the selling and marketing concepts and argues that while selling focuses on the need of the seller, marketing focuses on the need of the buyer. He argues that selling focuses on the seller’s need to convert his products or services into cash; while marketing attempts to satisfy the needs of the customer by means of the product and the various aspects associated with creating, delivering and finally consuming it. While others emphasized on the external consumer orientation compared to the internal preoccupation and focusing around the production function. In addition there have been emphasis on the profit goals as opposed to the sales volume goals; suggesting the integration of the concept within the organizational and operational efforts (Konopa and Calabro, 1971 as cited by Houston, 1986). Hence, the current marketing concept contends that the success of the business organization in achieving its goals is derived from being more effective than competitors in creating, delivering, and communicating superior customer value to its chosen target markets. Kotler (2003) provide further support to such arguments and other researchers such as Houston, 1986; and Lichtenthal and Wilson, 1992; when he illustrates the contrast between the selling and marketing concepts in figure (1). He argues that the selling concept takes an inside-out perspective. It starts with the factory, focuses on existing products, and calls for heavy selling and promotional activities to attain profitable sales. The marketing concept on the other hand, takes an outside-in perspective. As Kotler explains, it “the marketing concept consists of four major elements: target market, customer needs, integrated marketing, and profitability” (2003, P. 20).

Therefore, and according to him the process starts with defining the market, focuses on customer needs, coordinates the organizational activities that will affect customers, and achieves profit through customers’ satisfaction. Other researchers support Kotler’s (1988) definition of the marketing concept as the underlying theme of understanding thoroughly the customer groups with similar demand characteristics and satisfying each of them with a specific marketing mix while achieving organizational objectives.

In addition, Hooley et al have undertaken an attempt to transfer the concept from being a theory into practice trying to develop a typology covering the various current approaches to it within four different groups (Hooley et al, 1990).

Implementing the marketing concept

The next issue that one can wonder about is how a business organization who wants to adopt the marketing concept undertakes the implementation process? A number of researchers have tackled the different approaches to the implementation of the marketing concept. According to Levitt (1960) argues that in defining its purpose, the firm must focus on its customers’ needs as the core of such a purpose. Therefore, the product must be considered as one of the variables that should be customized to meet the changing customer needs and preferences. Accordingly, he claims that the adoption of a marketing concept requires constant and continuous change in line with the evolving market conditions. In fact, Webster supports such an argument when he claims that in order to become a customer oriented organization, the business organization must offer well-selected products that are customized to meet the customers’ needs and wants, and select an integrated mix of marketing elements that is “designed to suit the markets in term of price, distribution, products and services, and promotional activities” (Webster, 1988, p. 31). In addition, Hooley et al. (1990) argue that shifting the emphasis from short-term financial goals to longer term marketing goals facilitates the development of both the corporate attitude and structure that will allow the business organization to effectively implement its marketing activities. In fact, Webster (1994), implementation of the marketing concept requires five steps that include:

Developing an organizational culture that guides the behaviors of the members to be customer oriented.

Putting emphasis on achieving profitability goals instead of sales volume.

Formulating strategies that will allow the firm to compete through the processes of market segmentation, targeting and product positioning.

Developing an overall integrated marketing mix.

Defining precisely and clearly the organization responsibilities for the various marketing activities.

Problems associated with the adaptation of the marketing concept

However, and despite the various attempts to study the concept and its implementation, different problems have been identified in the implementation process. McNamara (1972) asserts that while there are three pillars that may be appropriate for businesses operating in a stable market, the dynamic nature of today’s marketplace demand that the firm must also consider the competitive offering and the strategies of its rivals. Furthermore, Houston (1986) argues that even though marketing academics and practitioners consider the marketing concept as the marketing management philosophy, there were several articles, which have critically examined its different aspects. In addition, he suggests that we should examine and assess the condition under which the concept will provide a proper guidance to the marketers. Finally, he argues that the objectives and goals of the organizational members are what define the organization’s purpose, and influence the approach and philosophy employed to conduct their activities in their markets. Therefore, he suggests that only if the attainment of the organizational goals depends on adopting the marketing concept, the organization will adopt marketing as a business philosophy. He adds that even though the concept is considered as the optimal management philosophy, it is not so in all situations, and market conditions. Based on that he suggest that the business organizations will only devote the time, effort and money to understand their customers’ needs and wants if the value received during the benefits exchange justifies the devoted time, efforts and expenditures (See also Lawton and Parasuraman, 1980). Therefore, he concludes that the marketing concept cannot be considered as the complete prescription, without considering the business organization’s unique capabilities and resources, which would facilitate its attempt to serve its existing and future customers’ needs and wants more effectively. Furthermore, Day and Wensley (1988) argue that all the earlier conceptualizations of the marketing concept failed to adequately address the need for a competitor orientation. In addition, Webster (1988) asserts that until mid 1950s, businesses equate marketing with selling. Therefore, businesses considered the achievement of a higher sales volume as the key to profitability. Accordingly, marketing was assigned the responsibility to ensure the sales of what the company could produce or offer. Hence, the focus was on selling the products and not on providing a value that would satisfy the customers. However, Even though Kohli and Jaworski (1990) argue that the organization’s objectives and needs drive its activities to generate and disseminate intelligence related to its customers, then design and implement the response that will satisfy those partners, one can wonder whether the organization’s capabilities and resources would allow the business organization to do so successfully. However, although many researchers have conducted studies to measure the extent to which business organizations adopt and implement the marketing concept Kohli & Jaworski argue that, “Though the marketing concept is a cornerstone of the marketing discipline, very little attention has been given to its implementation” (Kohli & Jaworski, 1990, p1). In fact, they claim that their examination of the literatures reveals that there is no clear definition, and certainly there is very little careful attention to the measurement issues. Therefore, one can argue that the concept is misunderstood and even misused by various business organizations (see Barksdaie and Derden, 1971; McNamara, 1972; Kerby, 1972; Lusch et al, 1976; Lawton and Parasuraman, 1977; Prahalad and Hamel, 1990, Ward and Lewandowska, 2008). Furthermore, Ruekert (1992) cited Day and Wensley (1988) and argues that despite the various early refinements of the concept that have been undertaken, have been followed by a limited amount of research. He claims that these researches have been and to a large extent descriptive identifying the benefits that can be obtained through the adaptation of this marketing concept. In addition he asserts that these researches have also pinpointed its limitation, and identified the factors that mediate the implementation of the concept. In addition, Webster (1994) identifies four errors related to the implementation of the marketing concept that includes business’s failure to be focus-focused, inadequate investment in marketing, inability of the marketing function to perform as expected, and the “creation of a marketing bureaucracy” Webster, 1994, p. 20).

In fact, one can wonder if the business organizations in many occasions have been moving beyond just asking the customers what they need or want. In addition, one can argue how many of us were asking 20 or 30 years ago for cellular phones, 24 hours discount brokerage accounts, multivalve automobile engines, compact disc players, cars with on-board navigation systems, hand-held global satellite positioning receivers, automated teller machines (ATM), or the home shopping network? Therefore, in the past, responding to customer needs and making a product that fits these needs may be enough. However, several of today’s firms go beyond that and attempt to customize their offer in response to every customer’s need. For example, Dell Computers does not manufacture a fully assembled computer for its target market, instead it provides each customer with a customized computer with features that the customer desires.

Another criticism against the marketing concept is that it does not contain a significant strategic content, it does not suggest much about how the firm should go about satisfying customers’ needs. In reality, it says nothing about which customers’ needs a firm must focus on. Because there are no clear answers to these questions, the marketing concept has a fuzzy quality that makes it very difficult for marketing managers and other supporters of the marketing concept to provide clear answers to the other management functions.

However, and despite that Slater and Narver (1998) argue that customer focus is distinctly different from market orientation, it should be noted that the terms marketing concept, market orientation, customer orientation, market focus, customer focus, and market-driven organization are used synonymously in the literature. In fact, they argue that there is much inconsistency in using these terms, and therefore, they have withdrawn their support for their 1995 statement related to the synonymy of these terms. On the other hand, Deshpande asserts that “terms such as market oriented, customer-focused, market-driven, and customer centric have become synonymous with proactive business strategy in firms Worldwide” (Deshpande, 1999, p. 1). (See also Shapiro, 1988)

Therefore, with this background in mind the researcher uses the term “customer orientation” on the current study to discuss this concept and its implementation further and tries to shed more light on adopting this concept by practitioners and the attempts made by academics to resolve some of the issues associated with the concept.