The Marketing Concept

The marketing concept is the philosophy that firms should analyze the needs of their customers and then make decisions to satisfy those needs, better than the competition. Today most firms have adopted the marketing concept, but this has not always been the case.

In 1776 in The Wealth of Nations, Adam Smith wrote that the needs of producers should be considered only with regard to meeting the needs of consumers. While this philosophy is consistent with the marketing concept, it would not be adopted widely until nearly 200 years later.

To better understand the marketing concept, it is worthwhile to put it in perspective by reviewing other philosophies that once were predominant. While these alternative concepts prevailed during different historical time frames, they are not restricted to those periods and are still practiced by some firms today.

There are 5 different concepts of marketing, each of which vary in the function that they deal with. For example – production concept deals with production and selling concept deals with selling. Each of the concept was developed as per the need of the market. As the market changed, so did the concepts of marketing. And today, we have an opportunity to look at all 5 concepts of marketing and what they represent. 

The Production Concept

The production concept prevailed from the time of the industrial revolution until the early 1920's. The production concept was the idea that a firm should focus on those products that it could produce most efficiently and that the creation of a supply of low-cost products would in and of itself create the demand for the products. The key questions that a firm would ask before producing a product were:

• Can we produce the product?
• Can we produce enough of it?

At the time, the production concept worked fairly well because the goods 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 job it was simply to execute transactions at a price determined by the cost of production. The production concept prevailed into the late 1920's.

The Sales Concept

By the early 1930's however, mass production had become commonplace, competition had increased, and there was little unfulfilled demand. Around this time, firms began to practice the sales concept (or selling concept), under which companies not only would produce the products, but also would try to convince customers to buy them through advertising and personal selling. Before producing a product, the key questions were:

• Can we sell the product?
• Can we charge enough for it?

The sales concept paid little attention to whether the product actually was needed; the goal simply was to beat the competition to the sale with little regard to customer satisfaction. Marketing was a function that was performed after the product was developed and produced, and many people came to associate marketing with hard selling. Even today, many people use the word "marketing" when they really mean sales.

The Marketing Concept

After World War II, the variety of products increased and hard selling no longer could be relied upon to generate sales. With increased discretionary income, customers could afford to be selective and buy only those products that precisely met their changing needs, and these needs were not immediately obvious. The key questions became:

• What do customers want?
• Can we develop it while they still want it?
• How can we keep our customers satisfied?

In response to these discerning customers, firms began to adopt the marketing concept, which involves:

• Focusing on customer needs before developing the product
• Aligning all functions of the company to focus on those needs
• Realizing a profit by successfully satisfying customer needs over the long-term

When firms first began to adopt the marketing concept, they typically set up separate marketing departments whose objective it was to satisfy customer needs. Often these departments were sales departments with expanded responsibilities. While this expanded sales department structure can be found in some companies today, many firms have structured themselves into marketing organizations having a company-wide customer focus. Since the entire organization exists to satisfy customer needs, nobody can neglect a customer issue by declaring it a "marketing problem" - everybody must be concerned with customer satisfaction.

The marketing concept relies upon marketing research to define market segments, their size, and their needs. To satisfy those needs, the marketing team makes decisions about the controllable parameters of the marketing mix.

The Product Concept

The product concept proposes that consumers will prefer products that have better quality, performance and features as opposed to a normal product. The concept is truly applicable in some niches such as electronics and mobile handsets.

Two companies which stand apart from the crowd when we talk about the product concept are Apple and google. Both of these companies have strived hard on their products and deliver us feature rich, innovative and diverse application products and people just love these brands.

One problem which has been associated with the product concept is that it might also lead to marketing myopia. Thus companies need to take innovations and features seriously and provide only those which the customer needs. The customer needs should be given priority.
In the past several of Microsofts product have been brought under the hammer with people feeling more and more disgruntled with the operating systems because of lack of innovation and new features. Each microsoft operating system appears almost similar with just few tweaks.

On the other hand, innovating too soon becomes a problem. Several innovative products are marked as experimental in the market instead of being adopted as a result of which these products have less shelf life and might have to be taken off the market.

The Marketing Concept

The marketing concept proposes that the success of the firm depends on the marketing efforts of the company and in delivering a better value proposition as  compared to its competitors in its own target market.

Example of Marketing concept

Lets take an example of 2 eternal rivals – Pepsi and Coke – Both of these companies have similar products. However the value proposition presented by both is different. These companies thrive on the marketing concept. Where Pepsi focuses on youngsters, Coke delivers on a holistic approach. Also the value proposition by Coke has been better over ages as compared to Pepsi which shows that coke especially thrives on the marketing concept, i.e it delivers a better value proposition as compared to its competitor.

The marketing concept also demands that the strategic decisions made by the company are taken keeping the customer in mind. Especially the needs wants and demands of the customers. A holistic approach is taken with the whole orgnization striving to make the customer experience better. Applying the marketing concept also means knowing what the market needs and expects from the company as a result of which companies which apply the marketing concept need to carry out more of market research.

The marketing concept is the most followed ideology by top companies. This is because, with the rise of economy, consumers have become more knowledgeable and choosy as a result of which the organization cannot concentrate on what it sells but rather it has to concentrate on what the customer wants to buy.

As we are ultimately satisfying the customer, the marketing concept also demands that the organization integrate all its different departments to give value to the customer. This means that all the departments including Marketing, Finance, HR or Operations should have an idea of the core objectives of the company as well as the goal of the company.

How to implement the marketing concept?

To implement the marketing concept, you need to ask 3 basic questions to yourself or your organisation.

1. What is the target market – The first step is to determine exactly which is the target market. This can be by market research and deciding which target market will give the best returns.
2. What are the needs wants and demands of the target market – A further step in marketing research is the consumer preferences study. This study will help the firm determine the needs wants and demands of the target market thereby helping the firm in deciding their strategies.
3. How best can we deliver a value proposition – In this step, the firm decided what strategy it needs to adopt. What combination of ATL and BTL activities should be adopted. What kind of value should the firm create and deliver. How should it integrate its different departments. Ultimately, the firm decides how to apply the marketing concept within itself to deliver a better customer experience.

To summarise, The marketing concept relies on market research and determining needs of the customer such that a better marketing strategy can be devised which satisfies the needs of the customer. The marketing concept also demands a holistic approach from the organization.