“Marketing Management Philosophies”
We describe Marketing Management Philosophies as carrying out tasks to achieve desired ex- changes with target markets. What philosophy should guide these marketing efforts? What weight should be given to the interests of the organization, customers, and society? Very often these interests conflict. There are five alternative concepts under which organizations conduct their marketing activities: the production, product, selling, marketing, and societal marketing concepts.
The Production Concept
The production concept holds that consumers will favor products that are available and highly affordable and that management therefore should focus on improving production and distribution efficiency. This concept is one of the oldest philosophies that guides sellers.
The production concept is 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. For example, Henry Ford’s whole philosophy was to perfect the production of the Model T so that its cost could be reduced and more people could afford it. lie joked about offering people a car of any color as long as it was black. Today, Texas Instruments ( IT) follows this philosophy of increased production and lower costs in order to bring down prices. The company won a major share of the American hand-calculator market with this philosophy. But when it used Hie same strategy in the digital watch market, Ti failed. Although Tl’s watches were priced low, customers did not find them very attractive. In its drive.to bring down prices, TI lost, sight of something else that its customers wanted—namely, attractive, affordable digital watches.
The Product Concept
Another major concept guiding sellers, the product concept, holds that consumers will favor products that offer the most quality, performance, and innovative features, and that an organization should thus devote energy to making continuous product improvements. Some manufacturers believe that if they can build a better mousetrap, the world will beat a path to their door. But they are often rudely shocked. Buyers may well be looking for a better solution to a mouse problem, but not necessarily for a better mousetrap. The solution might be a chemical spray, an exterminating service, or something that works better than a Managing demand: During the gas shortages of the 1970s, the American Gas Association demarketed natural gas by telling people how to conserve. Now that natural gas is readily available again, the AGA and gas appliance makers are running ads to stimulate sales.
mousetrap. Furthermore, a better mousetrap will not sell unless the manufacturer designs, packages, and prices it attractively; places it in convenient distribution channels; brings it to the attention of people who need it; and convinces them that it is a better product.
The product concept also can lead to “marketing myopia.” For instance, railroad management once thought that users wanted trains rather than transportation and overlooked the growing challenge of airlines, buses, trucks, and automobiles. Many colleges have assumed that high school graduates want a liberal arts education and have thus overlooked the increasing challenge of vocational schools.
The Selling Concept
Many organizations follow the selling concept, which holds that consumers will not buy enough of the organization’s products unless it undertakes a large-scale selling and promotion effort. The concept is typically practiced with unsought goods—those that buyers do not normally think of buying, such as encyclopedias and funeral plots. These industries must be good at tracking down prospects and selling them on product benefits.
The selling concept also is practiced in the nonprofit area. A political party, for example, will vigorously sell its candidate to voters as a fantastic person for the job. The candidate works in voting precincts from dawn to dusk—shaking hands, kissing babies, meeting donors, and making speeches. Much money is spent on radio and television advertising, posters, and mailings. Candidate flaws are hidden from the public because the aim is to get the sale, not to worry,about v consumer satisfaction afterward.
The Marketing Concept
The marketing concept holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do. Surprisingly, this concept is a relatively recent business philosophy. The marketing concept has been stated in colorful ways such as “Find a need and fill it” (Kaiser Sand & Gravel); “To fly, to serve” (British Airways); and “We’re not satisfied until you are” (GE). J. C. Penney’s motto also summarizes the marketing concept: “To do all in our power to pack the customer’s dollar full of value, quality, and satisfaction.”
The selling concept and the marketing concept are frequently confused. Below image compares the two concepts. The selling concept takes an inside-out perspective. It starts with the factory, focuses on the company’s existing products, and calls for heavy selling and promotion to obtain profitable sales. In contrast, the marketing concept takes an outside-in perspective. It starts with a well-defined market, focuses on customer needs, coordinates all the marketing activities affecting customers, and makes profits by creating customer satisfaction. Under the marketing concept, companies produce what consumers want, thereby satisfying consumers and making profits.
Many successful and well-known companies have adopted-the marketing concept. Procter & Gamble, Disney, Wal-Mart, Marriott, Nordstrom, and McDonald’s follow it faithfully (MCDONALD’S APPLIES THE MARKETING CONCEPT). L. L. Rean, the highly successful catalog retailer of clothing and outdoor sporting equipment, was founded on the marketing concept. In 1912, in his first circulars, L. L. Bean included the following notice:
I do not consider a sale complete until goods are worn out and the customer still satisfied. We will thank anyone to return goods, that are not perfectly satisfactory… Above all things we wish to avoid having a dissatisfied customer.
Today, L. L. Bean dedicates itself to giving “perfect satisfaction in every way.” To inspire its employees to practice the marketing concept, L. L. Bean displays posters around its offices that proclaim the following:
What is a customer? A customer is the most important person ever in this company— in person or by mail. A customer is not dependent on us, we are dependent on him. A customer is not an interruption of our work, he is the purpose of it. We are not doing a favor by serving him, he is doing us a favor by giving us the opportunity to do so. A customer is not someone to argue or match wits with—nobody ever won an argument with a customer. A customer is a person who brings us his wants—it is our job to handle them profitably to him and to ourselves.
In contrast, many companies claim to practice the marketing concept, but do not. They have the forms of marketing, such as a marketing vice-president, product managers, marketing plans, and marketing research, but this does not mean that they are market-focused and customer-driven companies. The question is whether they, are finely tuned to changing customer needs and competitor strategies. Formerly great companies—General Motors-, IBM, Singer, Zenith, Sears—all lost substantial market share because they failed to adjust their marketing strategies to the changing marketplace. Several years of hard work are needed to turn a sales-oriented company into a marketing-oriented company. The goal is to build customer satisfaction into the very fabric of the firm. Customer satisfaction is no longer a fad. As one marketing analyst notes: “It’s becoming a way of life in corporate America…as embedded into corporate cultures as information technology and strategic planning.”
Why is it supremely important to satisfy customers? A company’s sales come from two groups: new customers and repeat customers. It usually costs more to attract new customers than to retain current customers. Therefore, customer retention is often more critical than customer attraction. The key to customer retention is easterner satisfaction. A satisfied customer buys more, stays “loyal” longer, talks favorably to others, pays less attention to competing brands and advertising, is less price sensitive, and costs less to serve than a first-time customer.
However, the marketing concept does not mean that a company should try to give all consumers everything they want. Marketers must balance creating more value for- customers against making profits for the company.
The purpose of marketing is not to maximize customer satisfaction. The shortest definition of marketing I know is “meeting needs profitably.” The purpose of marketing is to generate customer value fat a prof it. The truth is that the relationship with a customer) will break up if value evaporates. You’ve got to continue to generate more value for the consumer but not give away the house. It’s a very delicate balance.
The Societal Marketing Concept
The societal marketing concept holds that the organization should determine the needs, wants, and interests of target markets. It should then deliver the desired satisfactions more effectively and efficiently than competitors in a way that maintains or improves the consumer’s and the society’s well-being. The societal marketing concept is the newest of the five marketing management philosophies.
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 wants is always doing what’s best for consumers and society in the long run. According to the societal marketing concept, the pure marketing concept overlooks possible conflicts between short-run consumer wants and long-run consumer welfare.
Consider the Coca-Cola Company. Most people see it as a highly responsible corporation producing fine soft drinks that satisfy consumer tastes. Yet certain consumer and environmental groups have voiced concerns that Coke has little nutritional value, can harm people’s teeth, contains caffeine, and adds to the litter problem with disposable bottles and cans.
Such concerns and conflicts led to the societal marketing concept. As below image shows, the societal marketing concept calls upon marketers to balance three considerations in setting their marketing policies: company profits, consumer wants, and society’s” interests. Originally, most companies based their marketing decisions largely on short-run company profit. Eventually, they began to recognize the long-run importance of satisfying consumer wants, and the marketing concept emerged. Now many companies are beginning to think of society’s interests when making their marketing decisions.
One such company is Johnson & Johnson, rated recently in a Fortune magazine poll as America’s most admired company for community and environmental responsibility. J&j’s concern for societal interests is summarized in a company document called “Our Credo,” which stresses honesty, integrity, and putting people before profits. Under this credo, Johnson & Johnson would rather take a big loss than ship a bad batch of one of its products. And the company supports many community and employee programs that benefit its consumers and workers, and the environment. J&J’s chief executive puts it this way: “If we keep trying to do what’s right, at the end of the day we believe the marketplace will reward us.
The company backs these words with actions. Consider the tragic tampering case in which eight people died from swallowing cyanide-laced capsules of Tylenol, a Johnson & Johnson brand. Although J&J believed that the pills had been altered in only a few stores, not in the factory, it quickly recalled all of its product. The recall cost the company $240 million in earnings. In the long run, however, the company’s swift recall of Tylenol strengthened consumer confidence and loyalty, and Tylenol remains the nation’s leading brand of pain reliever. In this and other cases, J&J management has found that doing what’s right benefits both consumers and the company. Says the chief executive: “The Credo should not be viewed as some kind of social welfare program…it’s just plain good business.” Thus, over the years, Johnson & Johnson’s dedication to consumers and community service has made it one of America’s most admired companies, and one of the most profitable. We discussed Marketing Management Philosophies in this article.