Evolution of Marketing Concepts
Marketing concept is the philosophy that companies should examine the requirements of their customers and then make decisions to satisfy those needs in a better manner than the competitors.
Today, most of the companies have adopted various marketing concepts, but this has not always been the case. Let us now understand major marketing concepts.
The major marketing concepts are −
Production Concept
According to the production concept, a company should focus on those items that it can produce most efficiently and also focus on creating supply of low-cost items that create the demand for the products.
The key questions that a company needs to ask itself before producing an item are −
Production orientation is a management orientation which assumes that the availability of production capacity creates a decisive competitive edge. It assumes that production is the bottleneck. This was the situation at the end of the WWII, when virtually everything had been destroyed and reconstruction was just getting underway. Anyone who could produce found purchasers, as the market was drastically under-supplied. A production orientation is the management orientation found in the complete absence of competition. Symptoms of production orientation include, disregarding the customer’s wishes, the arrogance of the monopolist, pronounced hierarchies, a tendency towards bureaucracy, and an inclination amongst staff to cultivate personal interests if there is a lack of control. Even now we come across examples of production orientation like islands in the sea of competition, for example, in local government bodies, or the ferry service of an island which receives a lot of visitors in summer but can only be reached by one shipping line. Centrally controlled economies are production oriented in principle. Production orientation will cause a firm to fail when competition emerges and the firm cannot radically reorganize itself very quickly.
This concept worked fairly during the 1920s as the items 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 task was to complete the transactions at a price fixed by the cost of production. The primary assumption under this concept is "Supply" is always less than the "Demand". All in all, this concept prevailed until the late 1920's.
Product Concept
If competition develops in a production-oriented economy, as in many economies after WWII, then a product orientation will tend to emerge. The reason for this lies in competition geared to product improvements and imitations that is intended to generate competitive advantage. As the supply situation is still not adequate, good, affordable products are much in demand. Customers are quite prepared to seek out and tolerate waiting times to obtain the product. Product orientation is a management orientation which assumes that the availability of good products creates a decisive edge in competition. The obstacle to corporate success is therefore product development. The principal symptom of product orientation, which can still be found here and there today, is a pronounced technical culture in the firm, where managers in R&D strive to extend scientific boundaries and lay claim to high status in the firm. Turns of phrase such as “the gentlemen in development, the men in production, and the people in sales” are indicative of the kinds of attitudes existing. A product orientation focuses on the superiority of the product, not the cost, and the quality of the product, not the volume. Long delivery times are seen as an indication of superiority. But a product orientation can sink a firm, if competitors with an aggressive pricing policy imitate or launch similar products on the market, and the supplier is not able to keep the imitators at bay by means of continuous product improvement.
Sales Concept
According to this concept, the companies would not only produce the items but would also try to convince customers to buy them through advertising and personal selling. Before producing a product, the key questions were −
When supply improves such that several products are available that can satisfy customers, competition intensifies and a stronger orientation towards selling will develop. The reason for this is that buyers will tend to prefer suppliers who make purchasing easier, cheaper, and more agreeable for them compared to others offering similar products. A sales orientation is one in which management assumes that the availability of a good sales team and low prices create a decisive edge in competition. Sales is thus the area restricting the success of suppliers. The reason for this situation emerging in Germany was that production plants had been built, and development teams had produced several new products which were available on the market. However, there was a lack of sufficiently experienced and motivated sales teams, so that the best and most successful suppliers were those mastering production, product development, and sales best. The attributes of a sales orientation are stocks of finished products, the aggressive use of instruments of “hard selling”—the deployment of sales people and trade fairs, and the greater use of advertising, pricing, and credit policies. A firm can founder when pursuing a sales orientation because the means used are expensive and their effect quickly evaporates in a competitive world.
Production, product, and sales orientations constitute orientations to the functions of a supplier (what we call a supplier orientation). These are quite different from the following stages of development of firm behavior.
The primary assumption under this concept is "Supply" is always more than the "Demand". This concept paid little attention to whether the item actually was required. The goal simply was to beat the competition with little focus on customer satisfaction. Marketing was an operation performed after the product was developed and produced and many people came to relate marketing with hard selling. Even today, people use the word "marketing" when they actually mean “sales.”
Marketing Concept
The marketing concept relies upon marketing studies to define market segments, their size, and their requirements. To satisfy those requirements, the marketing team makes decisions about the controllable parameters of the marketing mix.
This concept was introduced after World War II as the customers could afford to be selective and buy only those items that precisely met their changing needs and these needs were not immediately obvious. The key questions changed to −
In reply to these discerning customers, companies began to adopt marketing concepts, which includes −
When companies began to adopt this concept, they actually set up separate marketing departments whose objective was to satisfy customer needs. Mostly, these departments were sales departments with expanded responsibilities. While this widened sales department structure can be found in some enterprises today, many of them have structured themselves into marketing organizations having a worldwide customer focus.
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