Marketing : Concept

The Marketing Concept

The concept of marketing has changed and evolved over time. Whilst in today’s business world, the customer is at the forefront, not all businesses in the past followed this concept. Their thinking, orientation or ideology put other factors rather then the customer first. Let us examine these below.

Production Oriented: The focus of the business is not the needs of the custobmer, but of reducing costs by mass production. By reaching economies of scale the business will maximize profits by reducing costs.

Product Orientation: The company believes that they have a superior product, based on quality and features, and because of this they feel their customers will like it also.

Sales Orientation: The focus here is to make the product, and then try to sell it to the target market. However, the problem could be that consumers do not like what is being sold to them.

Market Orientation: Puts the customer at the heart of the business. The organization tries to understand the needs of the customers by using appropriate research methods, Appropriate processes are developed to make sure information from customers is fed back into the heart of the organisation. In essence all activities in the organisation are based around the customer. The customer is truly king!

In today’s competitive world putting the customer at the heart of the operation is strategically important. Whilst some organizations in certain industries may follow anything other then the market orientation concept, those that follow the market orientation concept have a greater chance of being successful.

The Production Concept

The production concept prevailed from the time of the industrial revolution until the early 1920's. The production concepts was the idea that a firm should focus on those products that it could produce most efficiently and that the creation of a supply of low-cost products would in and of itself create the demand for the products. The key questions that a firm would ask before producing a product were:

• Can we produce the product?
• Can we produce enough of it?

At the time, the production concept worked fairly well because the goods that were produced were largely those of basic necessity and there was a relatively high level of unfulfilled demand. Virtually everything that could be produced was sold easily by a sales team whose job it was simply to execute transactions at a price determined by the cost of production. The production concept prevailed into the late 1920's.

The Sales Concept

By the early 1930's however, mass production had become commonplace, competition had increased, and there was little unfulfilled demand. Around this time, firms began to practice the sales concept (or selling concept), under which companies not only would produce the products, but also would try to convince customers to buy them through advertising and personal selling. Before producing a product, the key questions were:

• Can we sell the product?
• Can we charge enough for it?

The sales concept paid little attention to whether the product actually was needed; the goal simply was to beat the competition to the sale with little regard to customer satisfaction. Marketing was a function that was performed after the product was developed and produced, and many people came to associate marketing with hard selling. Even today, many people use the word "marketing" when they really mean sales.

The Marketing Concept

After World War II, the variety of products increased and hard selling no longer could be relied upon to generate sales. With increased discretionary income, customers could afford to be selective and buy only those products that precisely met their changing needs, and these needs were not immediately obvious. The key questions became:

• What do customers want?
• Can we develop it while they still want it?
• How can we keep our customers satisfied?

In response to these discerning customers, firms began to adopt the marketing concept, which involves:

• Focusing on customer needs before developing the product
• Aligning all functions of the company to focus on those needs
• Realizing a profit by successfully satisfying customer needs over the long-term

When firms first began to adopt the marketing concept, they typically set up separate marketing departments whose objective it was to satisfy customer needs. Often these departments were sales departments with expanded responsibilities. While this expanded sales department structure can be found in some companies today, many firms have structured themselves into marketing organizations having a company-wide customer focus. Since the entire organization exists to satisfy customer needs, nobody can neglect a customer issue by declaring it a "marketing problem" - everybody must be concerned with customer satisfaction.

The marketing concept relies upon marketing research to define market segments, their size, and their needs. To satisfy those needs, the marketing team makes decisions about the controllable parameters of the marketing mix.