Page 517 - Encyclopedia of Business and Finance

eobf_M 7/5/06 3:15 PM Page 494

Marketing Concept

followed. At the same time, wartime production capacity ing must be provided and employees must be motivated
and technological developments were shifted to civilian to achieve the common goals of maximum customer sat-
applications, production continued to increase, and new isfaction and the long-term organizational objectives.
ventures were formed to take advantage of the opportuni-
ties.
EXECUTING THE CONCEPT
The net result of all this economic activity was heavy Businesses that have embraced the marketing concept
competition for the consumer dollar. Businesses quickly have found that this concept has had a strong impact on
came to realize that if they were going to get their share of sales. They have also found that, in many respects, this
those dollars, they were going to have to become more concept has changed the way they operate.
consumer-oriented. This change in philosophy became
Most of the changes in management practice have
known as the marketing concept.
been related to changes in thinking inherent in the mar-
keting concept. These include making decisions on the
ORIGIN OF THE TERM basis of customer needs and wants instead of production
Although this philosophy had been taking shape for schedules and sales goals, encouraging every employee to
nearly seven years, it was not articulated until it appeared take an active interest in all aspects of the business, and
in the 1952 annual report of General Electric. One widely forcing managers to think through what they are going to
used definition evolving from the report’s description is do and their reasons for doing it.
“an organization-wide consumer orientation with the Changes in marketing activities that have occurred
objective of achieving long-range profitability.” As this under the concept involve both marketing strategies and
definition implies, there are three parts to the marketing marketing functions. Market research has become a
concept. They are: prominent tool. Data gathered to determine customer
(1) A customer focus: The marketing concept begins needs and wants and to provide feedback on company
with the premise that the starting point for business deci- performance are used more effectively. Special attention
sions is the customer’s needs and wants. Those needs and has been paid to product quality and to tailoring services,
wants are carefully researched and thoroughly analyzed. as well as products, to customer preferences. The cus-
Then, goods and services are identified and/or developed tomer’s interest has been designated as the first priority in
to satisfy them. all marketing activities. In selling, for example, helping
the customer has been given greater emphasis than getting
In many cases, a consumer’s stated needs and desires
are limited by a very narrow perception of what is possi- the sale. In addition, the search for innovative ways to
ble. Firms often need to determine what “futuristic” prod- reach and serve the customer has become an ongoing
ucts and services would satisfy latent needs and wants of enterprise.
which consumers are not yet aware. Many popular prod- Changes in production brought about by use of the
ucts such as the iPods, cell phones with cameras, and marketing concept, such as closely controlled inventories,
singing birthday cards were not envisioned by consumers have centered on efficiency. Changes in operations, such
twenty years ago. To successfully implement the market- as extended hours and immediate delivery, have focused
ing concept an organization must research the short-term on convenient product availability. Additional changes in
desires and the long-term needs and wants of their poten- business practice have been aimed at cost control to give
tial customers. customers maximum value for the price they pay.
(2) Long-term organizational success: The marketing A growing interest in the societal marketing concept
concept dictates that goods and services made available by recognizes the possible conflict between short-term con-
a business must be produced and marketed so as to meet sumer wants and the long-run welfare of consumers and
the long-term goals of the organization. In most busi- society. Lawsuits against the tobacco industry and, in
nesses this would include the profit objective that is inte- some cases, the fast food industry, along with other firms,
gral to the survival and growth of a business. Without it, demonstrate this conflict. Although these firms were sat-
the business would not be available to serve the needs and isfying the wants of consumers at the time, the long-term
wants of customers. Other objectives, however, may harmful results of using the products on those consumers
include market share, sales growth, or new product suc- and society have caused many to promote the societal
cess. Many successful nonprofit organizations, such as the marketing concept. This concept is based on satisfying
Red Cross, effectively use the marketing concept. consumers’ needs and wants in a manner that would also
maintain or improve the long-term welfare of the con-
(3) A total company effort: Effective implementation
sumers as well as the well-being of society.
of the marketing concept requires involvement of employ-
ees from all departments at all levels of the business. Train- SEE ALSO Marketing

494 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION