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Marketing: Historical Perspectives

ing focuses on the needs of the seller; marketing focuses From the beginning, our focus has been on offer-
on the needs of the buyer. ing our customers compelling value. We realized
The popular insight by Levitt concerning Ford’s that the Web was, and still is, the World Wide
adaptation of the assembly line illustrates the difference Wait. Therefore, we set out to offer customers
between firms that focus on production (i.e., a production something they simply could not get any other
orientation) and those that focus on customers (a cus- way, and began serving them with books. We
tomer orientation). Ford is widely known as a production brought them much more selection than was pos-
genius for incorporating the assembly line into automo- sible in a physical store (our store would now
bile production. Many incorrectly believe that the assem- occupy 6 football fields), and presented it in a use-
bly line reduced the cost of manufacturing automobiles ful, easy-to-search, and easy-to-browse format in a
and therefore Ford could sell millions of $500 cars (a pro- store open 365 days a year, 24 hours a day. We
duction orientation). maintained a dogged focus on improving the
shopping experience, and in 1997 substantially
Ford’s thinking, however, was actually the reverse. He
enhanced our store. We now offer customers gift
employed the assembly line because he concluded that
certificates, 1-Click SM shopping, and vastly more
millions of buyers would be willing to pay $500 for an
reviews, content, browsing options, and recom-
automobile (a customer orientation). His main task was to mendation features. We dramatically lowered
reduce manufacturing costs (in whatever way possible) so prices, further increasing customer value. Word of
that he could sell cars at $500 and still make a profit. The mouth remains the most powerful customer
assembly line was the result, not the cause of his low price. acquisition tool we have, and we are grateful for
As Ford himself put it:
the trust our customers have placed in us. Repeat
we first reduce the price to the point where we purchases and word of mouth have combined to
believe that more sales will result. Then we go make Amazon.com the market leader in online
ahead and try to make the prices. We do not bookselling. (Amazon.com)
bother about the costs. The new price forces the
cost down … because what earthly use is it to As can be seen with Amazon.com, marketing is the
know the cost if it tells you that you cannot man- basic motivating force for all activities within the corpora-
ufacture at a price at which an article can be sold? tion, with the objective of satisfying the needs of the cus-
But more to the point is the fact that, although tomer. Firms that practice this philosophy of bringing all
one may calculate what a cost is, and of course all
of our costs are carefully calculated, no one knows departments together with the objective of satisfying their
what a cost ought to be. One way of discovering customers are practicing the marketing concept.
… is to name a price so low as to force everybody The marketing concept states that if all of the organi-
in the place to the highest point of efficiency. zation’s functions are focused on customer needs, profits
(Ford, 1923, pp. 146–147)
can be achieved by satisfying those needs. The satisfaction
of customer needs can be accomplished through product
In short, during the marketing department era, many
companies changed their thinking or purpose from that of changes, pricing adjustments, increased customer service,
manufacturing products to that of satisfying customers. distribution changes, and the like.
Firms with a customer orientation attempt to create value- Today, some firms take the marketing concept one
satisfying products that customers will want to buy. Some step further by establishing long-term relationships with
firms have implemented this customer-oriented philoso- their customers. The following section discusses how
phy to the point where the marketing department sets the firms attempt to satisfy their customers even further by
agenda for the entire company. These types of firms are entering into long-term relationships with them.
referred to as marketing companies.

The Relationship Marketing Era. Relationship marketing
The Marketing Company Era. Firms that have moved takes the marketing concept one step further by establish-
from simply having a marketing department that follows
a customer orientation to one where the marketing ing long-term, satisfying relations with customers in order
department guides the company’s direction are called mar- to foster customer loyalty and encourage repeat buying of
the firm’s products. Philip Kotler, a noted author of sev-
keting companies. In marketing companies, the market-
ing department sets company operating policy, including eral books and articles on marketing, pointed out that the
technical research, procurement, production, advertising, need for customer retention is evident because the cost of
and sales. An excerpt from Amazon.com’s 2004 annual attracting a new customer is estimated to be five times the
report exemplifies the strategy of a marketing-driven firm: cost of keeping a current customer happy.

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 497