The Marketing Concept - What It is and What It is Not_revised

8/10/2019 The Marketing Concept - What It is and What It is Not_revised

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Franklin S

ouston

The Marketing Concept:

What

It

Is and What

It Is

Not

The marketing concept h as been m isunderstood and m isused o ver th e years . It

is

n o t o b s o l e t e n o r is it

the op t imal manager ia l approach to marke t ing . The marke t ing concep t

is

res ta ted in a way tha t more

clearly sh ow s wha t it

is

and what i t

is

not.

The Marketin8 Concept is so ubiquitous in the mar-

keting classroom that the naive student of marketing

is generally led to belleve that finns who fail to em-

ploy this philosophy are business criminals.

Iolson (1978. p. RI

Is is not time to discard the marketing concept ?

Sachs and Benson (1978. p. 74

F

R years the marketing concept has been so her-

alded by marketing academics and practitioners that

its acceptance as the optimal marketing management

philosophy is almo st universal. Infrequ ently articles

have appeared which have critically examined some

aspect of it but their impact on the marketing com-

munity has been slight. The following discussion is

an

examination of the marketing concept and

a

review

of both new and previously stated questions about it.

consistent statement is made as to what the mar-

keting concept is and is

not,

the conditions under which

the marketing concept is an attractive meaningful

managerial philosophy are expressed. and the rele-

vance of the sales and production concepts is exam-

Franklin S. Houston is

an

Associate Professor of Marketing at the

Uni

versity

of

Alabama. The author would like to acknowledge the support

and contributions of E. H Bonfield of Rider College. Pat Rudolph, and,

especially. J. Thomas Lindley of the University of Alabama in the writ-

ing of this article.

ournal

of Marketing

Vol.

50 (April

19861. 81 87.

ined. This examination concludes with the recognition

that the marketing concept has suffered in two ways:

first it has been established as the optim al manage-

ment philosophy when it is not necessarily so in all

instances and second. w e can see many examples of

poor marketing practice that have been adopted in the

name of the marketing concept. It is time that we

re-

learn the marketing concept.

The efinition of

The marketing concept has been described by differ-

ent authors as

corporate state of mind that insists on the integra-

tion and coordination of all of the marketing func-

tions which, in Nm, are melded with other corporate

functions, lor the basic objective of producing max-

imum long-range corporate profits (Felton 1959,

p.

55 .

The external consumer orientation as contrasted

to internal preoccupation and orientation around the

production function: profit goals as an alternative to

sales volume goals; and complete integration of

organizat~onaland operational effon (Konopa

and Calabro 1971, p. 9).

While customer focus profits and integration of

organizational efforts

are

frequently discussed when

the marketing concept is described the term has be-

The Marketing Concept /

81


2/7

come synonymous with having a customer orienta-

Few, if any, of these organizations come into being

tion.

through

altruism

that is, organizations do not come

The marketing concept means that an organization

aims

all

its efforts at satisfying

its

customers-at a

profit (McCarthy and Perreault 1984, p. 35).

The marketing concept holds

that the

key to

achieving organizational goals consists of de-

termining the needs and wants of target markets.

(Kotler 1980, p. 22).

The

marketing concept calls for most of

the ef-

fort to

be

spent on discovering the wants of a target

audience and then creating the goods and services to

satisfy them (Kotler and Zaltrnan 1971, p. 5).

The Origin

of

Keith's article (1960 ) on the marketing conc ept is one

of the earliest and most popular. It is a descriptive

article illustrating the adoption of the marketing con-

cept in an applied setting. The intuitive appeal of the

concept and the illustration of its use in practice played

an important role in its acceptance.'

In the article, Keith describes the Pillsbury Com-

pany's evolution through three managerial phases, fi-

nally reaching what he calls a marketing confxol phase.

His description suggests that movement from the pro-

duction through the sales and later through the mar-

keting phase has been an evolutionary process which

left the organization a strong er entity. Th e implication

for the reader is that this evolutionary process is the

correct one for all organizations. The goal of any or-

ganization intending to be a viable entity is a mar-

keting dominated perspective.

The Why

o f .

Knowing the customer and satisfying him /her has be-

come the shibboleth of the marketing community since

Keith's time, yet the marketing concept has not been

subjected to formal scrutiny. What follows is an at-

tempt to assess the conditions under which the mar-

keting concept offers the proper guidance to the mar-

keter and the conditions under which the marketer

should not follow its prescription.

In acomm ercial venture, the ultimate goal is some

form of profit achievement, whether that be described

as profit maximization or the attainment of some sat-

isfactory profitability (cf. Ackoff 1970). Similarly, a

nonprofit group will have a goal or set of goals which

defines the organization's reason for ex i ~ t i n g .~

'One

bit

of evidence as

to

the article s significanceis that it

appears

in tw separate collections purponing

to

contain seminal

works

in

marketing: Classics

in

Morkering

(Walten and

Robin

1978)

and M o r

kering Classics (Enis and Cox

1981).

'The following

discussion

describes the

marketer-to-be

or on who

represents an organization. Clearly.

the

entity could

be

a

single penon

as

well.

into being to achieve the goals of a nonmember con-

stituency. Instead, it is the set of objectives defined

by the membership that guides the organization.

The initiators of a commercial venture do so to

satisfy their own needs. The initiators of public pro-

grams, such as an infant immunization program or a

myriad of other public policy efforts, do so for the

benefit of the citizens of that political body. It is the

goals of the membership which define the organiza-

tion's purpose.3

Some organizations are self-sufficient; the satis-

faction of the organizational needs do not depend on

nonmembers (e.g., a bridge club). Many, however,

depend on the behavior of nonmembers for the at-

tainment of the organization's satisfaction. To the ex-

tent that the organization relies on exchange as the

means of obtaining compliance with the organiza-

tion's needs, we describe that organization as engag-

ing in marketing (cf. Bagozzi 1975, Kotler 1972).

One source of marketing expenditure for an or-

ganization is the time, effort, and financial expense

of gathering information about present or prospective

exchange partners. I f as the marketing concept sug-

gests, we a re to strive to understand exc hang e partners

and tailor offerings for them, information is a nec-

essary preparatory step to developing that proper blend

Borden (1964) calls the marketing mix. He notes that

each mix is necessarily unique.

Expenditures, financial and otherwise, resulting

from research into who might engage in exchanges

with the organization o r what those exchan ge partners

need and/or want, represent an increase in the value

given

up by an organization in any exchange. This

added expenditure furthers the organization's objec-

tives only to the extent that this added information

increases the value received in the exchange or iden-

tifies ways in which the organization can reduce the

value it gives up in the exchange.

The value received in exchange is increased by

creating more individual exchanges and by getting more

value from each exchange. The value given up in an

exchange is reduced by expending less effort in m&-

ing those exchanges and by giving up less in the ex-

change. T o restate this, an organization

henefits from

additional information about its exchange partners

through:

more exchanges,

an increase in value received from each ex-

change,

'Some argankations change their objectives

e.g.,

the

March

of

Dimes) or

lose

s i ~ h t f their

original

purpose see Houston

and Ho

mans

1977

for

a discussion

of this).

82 /

Journal

o Marketing, April 1986


3/7

less effort needed for each exchange. and

that would have done a better job of satisfying the

less value given up in each exchange.

Understanding when these occur allows us to recog-

nize when the organization's objectives are furthered

by added research into current or potential exchange

.

More exchanges can occur when there are unsatis-

fied exchange partners remaining. They

c nnor

occur

when all potential exchange partners are satiated, nd

they cannot occur when the organization has nothing

valued by the potential exchange partner to offer in

such an exchange.

Illustrations of situations where added information

is not needed

re

not new to this discussion. The tra-

ditional example of a good for which there is no m ar-

ket i s a ir , s ince people have e n ~ u g h . ~s examples of

offerings that cannot he made available, we can in-

clude products that re conceivable but not feasible-

the transportation industry would l i e a modestly priced

teleportation system, but such a system is not avail-

able outside of science fiction. Products which are

temporarily or permanently exhausted-certain natu-

ral resources, like water and a variety of energy re-

lated products-are limited in supply and periodically

become unavailable; certain species of animals no

longer exist.

In addition to these examples where a product can-

not be procured because of its general lack of avail-

ability, there are also instances where the specific or-

ganization under study cannot or will not make the

product available. An example would be the restau-

rant that refuses to stock and serve certain less ex-

pensive wines. In general, there are many examples

of potential exchanges that could occur but one of the

potential exchange partners cannot or will not engage

in that exchange, nd this is known without the ben-

efit of additional research.

To

be

assured that the organization will obtain the

greatest value possible in any single exchange,

it

is

necessary to understand exactly what the potential ex-

change partner needs or wants, nd to know exactly

what the exchange partner would be willing to offer

to consummate that exchange. Without these condi-

tions. the organization can typically assume that they

could have negotiated

an exchange under d ifferent terms

1A fifth sinration that is not developed hem is the role information

plays in identifying those exchanges which should be

avoided

An

entity might spend resources and decide not lo engag e in an exch ange,

based on thc information received.

Here

there would be

a

net loss

in value. yet its position is superior

t

the entity s pasition had

t

engaged

in the exchange.

Clearly.

this remark

c n

lead 10

a

lengthy didiseuioion

of

the sale oF

compressed air. its constituents, products to

clean

it. and the need for

mechanisms to help some people use t properly. It does not serve

our

purpose

to explore these avenues. Most of

us

find air to

he

freely

available

organization's goals. Further, such exchanges can only

be made under conditions that allow the organization

to negotiate and consummate exchanges uniquely. For

those cases where an organization negotiates with more

than one exchange partner at a time, and the organi-

zation makes a single offering available to all mem-

bers of that gtoup, the usefulness of the information

received about any single exchange partner is in-

versely related to the number of individual exchange

partners in each group with which the organization

negotiates. urther, if fo r som e reason one or both

of the exchange partners is prevented from negotiating

and/or adjusting the terms of an exchange, the infor-

mation cannot

be

used to further the organization's

goals.

Illustrations of these conditions under which in-

formation loses value are straightfonvard and com-

monplace. Much of retail marketing in the above-

ground economy consists of marketers interacting with

groups of exchange partners, and the usefulness of in-

formation about a single ind ividual is inversely related

to the size of the market segment of which he/she is

a member. In a society where marketers are free to

vary their product offerings, more knowledge is better

if that knowledge is free, but since gaining and re-

taining knowledge can be expensive for an organi-

zation, the information must be assessed as to value.

In a society where marketers are unable to vary their

offerings, such information holds no value: such an

instance would be the butcher in Poland who is not

able to vary the price of his/her me at. Ln the U nited

States, milk and liquor prices are often bounded in

some manner.

The mirror image of obtaining greater value in an

exchange is the giving up of value in that same ex-

change. Therefore, briefly, the added information from

investigating a single, specific potential exchange

panner loses its value to the degree that terms of ex-

change must be negotiated with groups of exchange

partners, and to the degree that restrictions are placed

on what can be offered in exchange.

Finally, added information can be used to reduce

the organization's effort in making exchanges. This

value is directly related to the effort required to make

exchanges. In the extreme, if finding exchange part-

ners and consummating exchanges is effortless, such

information holds no value.

Several impnaot

caveats

must e inserted. First. this statemcnt

holds if all other conditions are constant. That is, in comparing a

smaller with

a

l a r p group. the statistical characteristics of the dis-

tribution of the offerings made by individuals in each emup must be

identical. Second. t is important to recognize that the usefulness of

the total set of information about the individuals in a group is directly

related to the s i x o f that gmup, though generally

t

can

h

assumed

that additional amounts

of

information are of decreasing

value

The Marketing Concept 8


4/7

A wide variety of circumstances creates situations

where exchange partners seek out a marketer. leaving

the marketer with no need to pursue the custom er. For

example, when product offerings are highly desired

but in limited supply, there is little incentive for the

marketer to seek out his/her customers. This is illus-

trated by most government services. Liquor monopo-

lies in various states also illustrate this.

To summarize, the following briefly restates the

identified conditions under which gaining

ddition l

inform tion about exchange partners

hol s

no v lue

to an organization:

Exchange partners are satiated

desired offering is not to be made available.

The value of incremental bits of information

about individuals who are members of groups

of exchange partners will not exceed the value

of gathering that information.

The organization or all of its exchange partners

re restricted from varying and/or negotiating

what they will offer.

Imposing Product Related Goals

o n .

The

why

of the marketing concept ties directly to the

ability of the organization to meet its own needs. In

fact, if we were to ask the question asked of every

introductory marketing student, Wh ose needs com e

first?, the answe r

should be the marketer's

.

. .

It is the organiza tion's nee ds that are served by learn-

ing about exchange partners and tailoring product of-

ferings to their needs, whether these needs are finan-

cial profits or some other nonfinancial goal.

Hirschman (1 983) recognized that producers in the

world of art and ideology often have personal goals

which are not satisfied by commercial success. These

goals stem from a desire to be recognized by one's

peers or from some internal sense of accomplishment.

As a result, she states

.

. that the marketing con-

cept-as a norm ative framework-is not app licab le

to two broad classes of producers [artists and ideol-

ogists] because of personal values and social norms

that characterize the production process (p. 46 ).

Hirschman proposes that marketers adopt a modified

version of the marketing concept that accommodates

these producers.

Being a marketer is a role, and marketers, like other

people, can y mo re than one role at a time. W hen the

roles of marketer and producer are vested in the same

person, it is not unusual to se e conflicting goa ls. Pro-

ducers, whether they re widget makers, bus drivers,

assembly line workers, marketing professors, artists,

or ideologists, h ave product related constraints as part

of their need set: that is, they often take pride in their

work, holding that work up to the standards set by

colleagues or to internally held standards. On some

occasions this pride of production conflicts with the

product design that would be appropriate if one were

serving the marketer's set of needs exclusive of these

product related constraints. In cases where the most

desirable product design conflicts with the producer's

values or with the producer's desire to meet the stan-

dards set by som e alternative market (e.g ., peers within

the profession), the marketer must incorporate these

product design standards into his/her set of goals.

Certain organizations will not only have product

standards that are integral to the mem bership's set of

needs but will have a specific, fixed product form as

part of its need set.

A

subset of these is the class of

producers that has adoption of a fixed, given product

as its reason for being. T his includes religious leaders

who seek to have their own religious tenets accepted

and would not be willing to modify them to achieve

greater market acceptance. Many artists and ideolo-

gists fall into this categ ory, and these artists and ideol-

ogists are the proselytizers who achieve their objec-

tives by having the markets accept

their

unique

offerings. Included here re artists who have their own

style or vision and achieve success in their own eyes

by having their artistic offering accepted by peers or

by the marketplace. Similarly, some ideologists achieve

success only by having their concepts adopted (see

Dixon 1978).

A

second class of marketer who cannot design the

product offering as a result of studying exch ange part-

ners is the marketer w ho c nnot redesign the product.

This is an important case because it is a very common

situation: very few product offerings are custom de-

signed, and the salesperson is typically given a prod-

uct to sell and cannot m ake product m odifications. A lso,

the commercial marketer who has established produc-

tion facilities (sunk costs) or h as inventories w ill find

no opportunity to develop alternative products in light

of a better understanding of exchange partners

(Zelt-

ner 1976 ). Th e decision s that this latter marketer will

make include whether it is worth the cost of modi-

fying existing produ ction facilities to produce a p rod-

uct variation desired by potential exchange partners

(see Zeltner 1 976 ), or wh ether he/she should discon-

tinue o perations.

Therefore, there is a wide variety of marketers who

do not rely on the maxim of learning about customer

needs and designing new product offerings to suit those

needs. These marketers are constrained from modi-

fying their core produc t, yet they still have needs wh ich

depend upon exchange partners and successfully cul-

minated exchanges.

Alternatives to . . .

Keith (1960) describes the production and sales con-

cepts as inferior and antecedent to the marketing con-

8

/

Journal

of Marketing April 1986


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cept. Where the marketing concept directs the orga-

nization to design its marketing mix-including

product-only after the needs and wants of curren t

and potential exchange partners have been assessed,

the sales and the production concepts describe the or-

ganization that makes an offering available without

having tailored it as a result of this information. The

sales concept describes an organization which ag-

gressively studies and seeks out exchange partners fo r

already established offerings, where the production

concept is passive with regard to marketing. The pro-

duction concept w s illustrated by the Bell Telephone

System prior to its court-imposed restructuring, o r the

artist who derives his/her satisfaction from the crea-

tion of a unique product that meets some internally

held standard. That same artist would be relying on

the sales concept if he/she sought information about

potential buyers and used that information in an at-

tempt to engage in an exchange.

Figure I restates the distinction between the mar-

keting, sales, and production concepts. It shows the

buyer side of a m arketing exch ange, pointing ou t that

buyers can also gather information about current and

potential exchange partners. tailoring offerings as suit

the needs and wants of those exchange partners. Like-

wise, the buyer may elect not to negotiate on what

he/she is seeking or offering in exchange, though ag-

gressively pursuing the exchange through the other in-

gredients of the marketing mix. This is shown in the

Figure as the Buying Con cept, since it is the buy er s

form of the sales concept. In the same vein, some

buyers are quite passive in their buying behavior, ac-

cepting o r rejecting that which has been made avail-

able but not choosing to actively seek an exchange.

This is shown as the O ffering Con cept, since it is the

buyer s form of the production concept.

In summary, it is important to recognize that un-

der some circumstances, the production co ncept or the

sales concept would

be

a more appropriate manage-

ment philosophy for the organization than the mar-

keting concept. Fluthermore. ex change consists of both

buyers and sellers, and as noted many years ago , buy-

ers are marketers too (Ko tler and Levy 1973). Buyers

FIGURE

1

Defining Alternative Concepts

Av a il ab le t o t h e M a r k e t e r

Behavior

L

can and do use the marketing, sales, and production

concepts (or the relaheled equivalents, shown in Fig-

ure 1 .

Statement of

The following provides a succinct and com prehensive

statement of what the marketing concept is, its pur-

pose, and how it is bounded.

The marketing concept is a managerial pre-

scription relating to the attainment of an enti-

ty s g oals. For certain we ll-defined bu t re-

strictive market conditions and for exchange

determined goals which are not product re-

lated. the marketing concept is a prescription

showing how an entity can achieve these goals

most efficiently.

The marketing concept states that an entity

achieves its own exchange determined goals

most efficiently through a thorough under-

standing of potential exchange partners and

their needs and wants, through a thorough un-

derstanding of the costs associated with sat-

isfying those needs and wants, and then de-

signing, producing, and offering products in

light of this understanding.

Notice that the marketing con cept requires an un-

derstanding of the market and does not suggest that

products be designed to satisfy the market s deman d.

Satisfaction of the market s dem and is imp ortant to

the extent that doing so yields profits.

A

commercial

organization that has decided to offer a single, undif-

ferentiated offering instead of designing products to

suit each perceived m arket segment, may have arrived

at th ~ s ecision with a thorough understanding of the

market s response and the accompanying cos ts, and.

thus, be

an exemplary user of the marketing concept.

Misconstruing

Unfortunately, many marketers have taken the mar-

keting concept to mean that marketers should take their

lead from the expressed needs and wants of cus-

tomers. As a result, wben the limitations of doing so

are recognized, the marketing concept is criticized,

when it would be more appropriate to criticize the way

in which the concept is implemented.

the marketing concept is an inadequate pre-

scription for marketing strategy. because

it

virtually

ignores a vital input of marketing strategy-the

cre-

ative abilities of the

fum

(Kaldor 1971. p. 19).

While this may seem obvious, some argue that ofits (or implic-

itly.

satisfactionof the

marketing

entity s

own

objstive

function)should

be

a

consequence of

satisfying the market's nee s (cf.

Bell

and

Emory

1971).

nd

not

p

of the allocation process

in which

the

m ecides

to

wh t

extent

t

will satisfy the demand of the marker

he

Marketing

Concept 8


6/7

Kaldor notes that the customer does not always know

what is needed. An extreme example of this is the

medical doctor-patient relationship, where the patient

does not specify the treatment; it is the doctor's task

to assess the specific product needs of the patient. Yet,

this does not mean that the doctor is not addressing

the needs and wants of the patient; the doctor's unique

offering is that special capability to identify.and sat-

isfy the patient's needs.

Rather than describing the marketing concept as

an inadequate prescrip tion, it would e

better to de-

scribe it as an 'incomplete prescription. Th e mar-

keting concept focuses the marketer's attention on the

customer but does not tell the marketer to disregard

his/her unique capabilities and resources when decid-

ing how to serve the customer's n eeds and wants best.

Kerby (1972) and Tauber (1974) make the point

that by looking to customers for guidance in new

product research, marketers fail to take advantage of

the creative capabilities of product research person-

nel.

it is quite certain that few if any of the really

significant product innovations which have been placed

on the market to date were developed because the

inventor sensed that a latent pool of needs was yeam-

ing to be satisfied (Kerby

1972.

p .

31).

The marketing concept

does not

urge us to depend

solely on marketing research (customer surveys) for

guidance in new product research.

Dependence on customers' expressions of their own

needs and wants suggests that some marketers have

failed to take a long run view of the marketing con-

cept. Customers are not necessarily good sources of

information about their needs a decade from now. They

don't necessarily know how they will react under dif-

ferent environmental conditions. They don't have in-

sight into the possible value of major technological

innovations. Sometimes customers have to learn about

new technologies, beliefs, and ways of behaving.

Anticipating future needs and wants is consistent

with the marketing concept. Earlier the point was made

that some marketers, like religious groups, would find

the marketing concept inappropriate: these are mar-

keters who want to persuade customers that what the

marketer has to offer is desirable. The innovator who

has an unfamiliar offering likewise must educate and

persuade the customer, but this m arketer has not nec-

essarily rejected the marketing concept, which is not

limited to the

current expressed

needs and wants of

customers. If the marketer sees an innovative offering

that has the potential to satisfy needs and wants and

is w illing to develop this offering with the customer's

satisfaction in mind, the marketing concept is being

used. It is the marketer who has a fixed offering which

he/she is unwilling to change who is not using it.

Bennett and Cooper (1981) illustrate how the

meaning of the marketing concept can be confused

with its weak implementation:

Twenty years o f adherence to the marketing concept

may have taken its toll

on

American enterprise. The

marketing concept has d iverted our attention from the

product and its manufacture; instead, w e hav e fo-

cused our strategy on responses to market wants and

have become preoccupied with advertising, selling,

and promotion. And in the pm ces s, product value has

suffered.

What is ironic about this statement is that it follows

a discussion of the success foreign competitors have

had by addressing the needs and wants of buyers. The

authors do a good job of addressing a number of se-

rious issues in today's business community, but the

management practices criticized are not inherent in the

marketing concept.'

The marketing concept does not consist of adver-

tising, selling, and promotion. It is a willingness to

recognize and understand the consumer's needs and

wants, and a willingness to adjust any of the mar-

keting mix elements, including product, to satisfy those

needs and wants.

The Positive Side of

The marketing concept has been an expression of the

marketer's recognition of the importance of the con-

sumer in the buying process. This understanding did

not begin with the introduction of the term marketing

concept; the customer focus clearly existed when the

king ordered boots from the bootmaker. Yet, the la-

beling of the concept is an important aid to our un-

derstanding and provides a focal point around which

to organize our thoughts.

The marketing concept has suffered in two ways:

first. it has been established as the optimal manage-

ment philosophy when it is not necessarily so in all

instances, and second, we can see many examples of

p m r marketing practices which have been adopted in

the name of the marketing concept. It is time that we

releam that the marketing concept is one of a set of

three concepts-marketing. sales, and

production-

that form the basis for understanding the management

of marketing. And it is time that we remember that,

under differing circumstances, each can be the ori-

entation that best furthers the objectives of thc orga-

nization.

This discussion has gone far in identifying the many

circumstances under which the guiding managerial

'In

n

earlier article, they state they are less concerned with defi-

nitions as

such.

. .

he

resultsq imp l rm nr in~ he

marketing

con-

cept, rather

th n

the concept itself,

re

examined (Bennen

w Cooper

1979, p . 761. This anicle makes imponant points about the need to

rely oo the unique capabilitiesof the organizalion, which may

be

non

marketing capabilities.

his

lheme is also present

in the

arlirles

by

Kaldor (1971), Kerby (19721. and Tauber (1974).

8 ournal of Marketing April 1986


7/7

philosophy should be something other than the mar-

keting concept. The examples given merely scratch

the surface and are designed to illustrate general con-

ditions rather than to demonstrate the degree to which

such conditions exist around us. Probably the list is

not exhaustive and it remains our task to recognize

and enumerate others. It is important to examine these

conditions more closely to understand their nuances

and to assess their implications.

REFERENCES

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Documents

The Marketing Concept - What It is and What It is Not_revised