Company Orientation towards the marketplace
Since the later part of the 19th century, marketing has gradually evolved through various marketing orientations. These stages in marketing evolution present a generalized picture and a sufficiently significant number of companies have adopted the most modern marketing concept or philosophy.
A marketing orientation (also called the marketing concept, or consumer focus) is one that allows the wants and needs of customers and potential customers to drive all the firm’s strategic decisions. The firm’s corporate culture is systematically committed to creating customer value. In order to determine customer wants, the company usually needs to conduct marketing research. The marketer expects that this process if done correctly, will provide the company with a sustainable competitive advantage.
This consumer focus can be seen as a process that involves three steps. First customer wants are researched, then the information is disseminated throughout the firm, and products are developed, then finally customer satisfaction is monitored, and adjustments are made if necessary.
The concept of marketing orientation was developed in the late 1960s and early 1970s at Harvard University and at a handful of forward-thinking companies. It replaced the previous sales orientation that was prevalent between the mid-1950s and the early 1970s, and the production orientation that predominated prior to the mid-1950s.
The Production Concept
The production concept was popular in 1920 A.D. The production concept is one of the oldest concepts in business. It holds that consumers will prefer products that are widely available and cheaper in price. Managers of production-oriented businesses concentrate on achieving high production efficiency, low cost, and mass distribution. This concept is one of the oldest philosophies that guides sellers to produce on a mass scale. The production concept is still a useful philosophy in two types of situations. The first occurs when the demand for a product exceeds the supply. Here, management should look for ways to increase production. The second situation occurs when the product’s cost is too high and improved productivity is needed to bring it down. This concept ignores consumers’ needs. Although it is one of the oldest concepts of marketing, Chinese companies are still implementing this concept. Chinese products are cheaper in price and widely available in the market.
The Product Concept
The product concept was popular in 1920 – 1930 A.D. The product concept holds that consumers will favor those products that offer the most quality, performance, or innovative features under product concept, finding customers is viewed as a relatively minor function. Managers in these organizations focus on making superior products and improving them over time. However, these managers are sometimes caught up in a love affair with their products. They might commit the “better mousetrap” fallacy believing that a better mousetrap will lead people to beat a path to their door. A new or improved product will not necessarily be successful unless the product is priced, distributed, advertised, and sold properly,
The product concept also can lead to marketing myopia. German motors are examples Of product concepts.
The Selling Concept
The selling concept was very popular from 1930 to 1950 A.D. Selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization’s products unless it undertakes a large-scale selling and promotion effort. Therefore, the organization must undertake an aggressive selling and promotion effort. The selling concept is practiced most aggressively with unsought products, products that buyers normally do not think of buying, such as insurance policies and encyclopedias. Most firms practice the selling concept when they have overcapacity.
Their aim is to sell what they make rather than make what the market wants. Such marketing carries high risks. It focuses on creating sales transactions rather than on building profitable relationships with customers. It assumes that consumers who are coaxed into buying the product will like it. Or if they don’t like it, they will possibly forget their dissatisfaction and buy it again later. These are usually poor assumptions to make about buyers. Most studies show that dissatisfied customers do not buy it again. Worse yet, whereas the average satisfied customer tells three others about good experiences, the average dissatisfied customer tells ten others about his or her bad experiences.
Modern Marketing Concept
This concept of marketing was very popular from 1950 to 1970 A.D. The marketing concept, based on central doctrines crystallized in the mid-1950s, challenges the three business orientations we just discussed. The marketing concept holds that the key to achieving organizational goals consists of the company being more effective than its competitors in creating, delivering, and communicating customer value to its chosen target markets.
The marketing concept starts with a well-defined market, focuses on customer needs, coordinates all marketing activities affecting customers, and makes a profit by creating long-term customer relationships based on customer value and satisfaction.
Thus, under the marketing concept, customer focus and value are the paths to sales and profits. This concept is based on “we make what we can sell.”
In the words of Philip Kotler, “Instead of product-centred make and sell philosophy, the marketing concept is a customer centred sense and response philosophy. The job is not tofind the right customers for your product but to find the right products for your customers.”
Theodore Levitt of Harvard drew a perceptive contrast between the selling and marketing concepts: “Selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is preoccupied with the seller’s need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering, and finally consuming it.” The marketing concept rests on four pillars: target market, customer needs, integrated marketing, and profitability. The selling concept takes an inside-out perspective. It starts with the factory, focuses on existing products, and calls for heavy selling and promoting to produce profitable sales. The marketing concept takes an outside-in perspective. It starts with a well-defined market, focuses on customer needs, coordinates activities that affect customers, and produces profits by satisfying customers.
The Societal Marketing Concept
Some have questioned whether the marketing concept is an appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services, Are companies that successfully satisfy consumer wants necessarily acting in the best, long-run interests of consumers and society? The marketing concept sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare.
Yet some firms and industries are criticized for satisfying consumer wants at society’s expense. Such situations call for a new term that enlarges the marketing concept which is popularly known as a societal marketing concept, Societal marketing concept, holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well-being.
The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often conflicting criteria of company profits, consumer wants satisfaction, and public interest. Yet a number of companies have achieved notable sales and profit gains by adopting and practicing the societal marketing concept.
The societal marketing concept holds that the organization should determine the needs, wants, and interests of target customers. It should then deliver superior value to customers in a way that maintains or improves the customer’s and the society’s well-being. The societal marketing concept questions whether the pure marketing concept is adequate in an age of environmental problems, resource shortages, rapid population growth, worldwide economic problems, and neglected social services, It asks if the firm that senses, serves, and satisfies individual short term wants is always doing what’s best for consumers and society in the Tong run, According to the societal marketing concept, the pure marketing concept overlooks possible conflicts between consumer short term wants and customer long term welfare. The societal marketing concept calls on marketers to balance the three considerations: consumer, organization, and society. (Kotler, 2012)
The Holistic Concept
A whole set of forces that appeared in the last decade call for new marketing and business practices. Companies have new capabilities that can transform the way they have been doing marketing; they also need a more complete, cohesive approach that goes beyond traditional applications of the marketing concept.
The holistic marketing concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies (Kotler & Keller, 2016). Holistic Marketing acknowledges that “everything matters” with marketing – that a broad, integrated perspective is often necessary.
Holistic marketing thus recognizes and reconciles the scope and complexities of marketing activities. The four broad components characterizing holistic marketing are relationship marketing, integrated marketing, internal marketing, and performance marketing.
Increasingly, a key goal of marketing is to develop deep, enduring relationships with people and organizations that directly or indirectly affect the success of the firm’s marketing activities. Relationship marketing aims to build mutually satisfying long-term relationships with key constituents to earn and retain their business. Four key constituents for relationship are customers, employees, marketing partners (channels, suppliers, distribution, dealers, agencies), and members of the financial community (shareholders, investors, and analysts). Relationship marketing builds strong economic, technical, and social ties among the parties. This involves cultivating the right kind of relationships with the constituent groups. For marketing, key constituents are customers, employees, marketing partners like channels, suppliers, distributors, dealers, agencies’ etc•, and members Of the financial communities such as shareholders, investors, analysts, etc. Marketing must not only focus on customer relationship management but also on partner relationship management as well.
The ultimate outcome of relationship marketing is a unique company asset called a marketing network. Moreover, competition is not between companies but between marketing networks, with the prize going to the company that built the better network. The operating principle is simple: Build an effective network of relationships with key stakeholders, and profit will follow (Anderson, Hakansson, & Johanson, 1994).
The development of strong relationships requires an understanding of the capabilities and resources of different groups, as well as their needs, goals, and desires. A growing number of today’s companies are now shaping separate offers, services, and messages to individual customers. These companies collect information on each customer’s past transactions, demographics, psychographics, and media and distribution preferences. They hope to achieve profitable growth by capturing a large share of each customer’s expenditures by building high loyalty and customer lifetime value.
With integrated marketing, the marketer’s task is to devise marketing activities and assemble marketing programs that maximize the ability to create, communicate and deliver value for consumers. Marketing activities come in all forms. One traditional depiction of marketing activities is in terms of the marketing mix, which has been defined as the set of marketing tools the firm uses to pursue its marketing objectives (Borden). McCarthy classified these tools into four broad groups, as the four Ps of marketing: product, price, place, and promotion (McCarthy, 1996).
Marketing mix decisions must be made for influencing the trade channels as well as the final consumers. The firm can change its price, sales force size, and advertising expenditures in the short run. However, it can develop new products and modify its distribution channels only in the long run. Thus, the firm typically makes fewer period-to-period marketing mix changes in the short run than a number of marketing-mix decision variables might suggest.
Four Ps represent the seller’s view of the marketing tools available for influencing buyers. From a buyer’s point of view, each marketing tool is designed to deliver a customer benefit. Robert Lauterborn suggested that the sellers’ four Ps correspond to the customers’ four Cs (Lauerborn, 1990).
Winning companies will be those that can meet customer needs economically and conveniently and with effective communication.
Two key themes of integrated marketing are that (1) many different marketing activities are employed to communicate and deliver value and (2) all marketing activities are coordinated to
maximize their joint effects. In other words, the design and implementation of any one marketing activity are done with all other activities in mind. Business must integrate their systems for demand management, resource management, and network management.
Holistic marketing incorporates internal marketing, ensuring that everyone in the organization embraces appropriate marketing principles, especially senior management. Internal marketing is the task of hiring, training, and motivating able employees who want to serve customers well. Smart marketers recognize that marketing activities within the company can be as important as, or even more so, marketing activities directed outside the company. It makes no sense to promise excellent service before the company’s staff is ready to provide it.
Internal marketing must take place on two levels. At one level, the various marketing functions — sales force, advertising, customer service, product management, and marketing research — must work together. Too often, the sales force thinks product managers set prices or sales quotas “too high”; or the advertising director and a brand manager cannot agree on an advertising campaign. All these marketing functions must be coordinated from the customer’s point of view. At another level, marketing must be embraced by the other departments, who must also “think customer”. Marketing is not a department so much as a company orientation. In fact, marketing thinking must be pervasive throughout the company.
Holistic marketing incorporates social responsibility marketing and understanding broader concerns and the ethical, environmental, legal, and social context beyond the company and the consumer to society as a whole. Social responsibility also requires the marketers carefully consider the role that they are playing and could play in terms of social welfare (Kotler & Keller, 2008).
Are companies that do an excellent job of satisfying consumer wants necessarily acting in the best long-run interests of consumers and society? Instant noodles in Nepal, for instance, have been criticized for offering tasty but unhealthy foods. Recognizing these criticisms, companies should exclude unhealthier ingredients such as Ajinomoto.
Situations like this call for a new term that enlarges the marketing concept. Kotler and Keller
propose calling it the societal marketing concept, which holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the well-being of both consumer and society. The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often conflicting criteria of company profits, customer wants satisfaction and public interest.
A number of companies have achieved notable sales and profit gains by adopting and practicing a form of the societal marketing concept called cause-related marketing in developed countries such as Japan and America. Pringle and Thompson define this as an activity by which a company with an image, product, or service to market builds a relationship or partnership with a “cause’ or a number of “causes” for mutual benefit. Companies see cause-related marketing as an opportunity to enhance their corporate reputation, raise brand awareness, increase CUStomer loyalty, build sales and increase media coverage. They believe that customers will increasingly look for signs of good corporate citizenship that go beyond supplying rational and emotional benefits. Recently Philip Kotler has updated this socially responsible marketing to performance marketing.
Performance marketing requires understanding the financial and non-financial returns to business and society from marketing activities and programs. In the present context, successful marketers are increasingly going beyond sales revenue to interpret what is happening to market share, customer loss rate, customer satisfaction, product quality, and other measures. They are also considering the legal, ethical, social, and environmental effects of marketing activities and programs.
When they founded Ben & Jerry’s, Ben Cohen and Jerry Greenfield embraced the performance marketing concept by dividing the traditional financial bottom line into a “double bottom line that also measured the environmental impact of their products and processes. That later expanded into a “triple bottom line” to represent the positive and negative social impacts of the firm’s entire range of business activities. Some firms have failed to live up to their legal and ethical responsibilities, and consumers are demanding more responsible behavior. One research study reported that at least one-third of consumers around the world believed that banks, insurance providers, and packaged-food companies should be subject to stricter regulation.