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The
marketing concept is the
philosophy that firms should
analyze the needs of their
customers and then make
decisions to satisfy those
needs, better than the
competition. Today most
firms have adopted the
marketing concept, but this
has not always been the
case.
In 1776
in The Wealth of Nations,
Adam Smith wrote that the
needs of producers should be
considered only with regard
to meeting the needs of
consumers. While this
philosophy is consistent
with the marketing concept,
it would not be adopted
widely until nearly 200
years later.
To
better understand the
marketing concept, it is
worthwhile to put it in
perspective by reviewing
other philosophies that once
were predominant. While
these alternative concepts
prevailed during different
historical time frames, they
are not restricted to those
periods and are still
practiced by some firms
today.
The
Production Concept
The
production concept prevailed
from the time of the
industrial revolution until
the early 1920's. The
production concept 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 creates 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.
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