Management School Key Concept Overview The Marketing Concept - Defined or Re-defined? KMGT 679 Managing Marketing in a Changing World Week 1 2015

© 2015 Laureate Education, Inc. Page 1 of 7 Management School The Marketing Concept – Defined or Re -defined? KMGT 679 Managing Marketing in a Changing World Week 1 Key Concept Overview © 2015 Laureate Education, Inc. Page 2 of 7 Key Concept The Marketing Concept – Defined or Re -Defined? The marketing concept refers to the philosophy that organisations design to meet their commercial objectives . They meet these objectives by providing products and services that fulfil consumers’ needs. These needs are addressed by coordinating all activities deployed by the organisation (finance, production, human resources etc.) in an effort to address the needs of target customers. The marketing concept differs from marketing in that marketing refers to ‘exchange relationships’ between consumers and businesses. The marketing concept is about the integration and coordination of many, if not all, of a firm’s activities in the pursuit of customer satisfaction. It is through this coordination that value for customers is achieved. The marketing concept holds that the needs of consumers take priority over the needs of the producer. Only when the needs of the consumer have been met will the c ommercial needs of the producer be satisfied. The marketing concept may seem to be a commercially expedient way of running a business. However, history shows that the needs of customers were not always at the forefront of companies’ business decisions. Henry Ford has been credited with the now (in)famous statement ‘customers can whatever colour they want as long as it’s black ’. Dibb et al. (2006) suggest that the marketing concept is a product of what they refer to as the fourth er a in the history of business. Anita Roddick founded The Body Shop in 1976. It has provided beauty products, skin - care and make -up governed by an ethical approach to the sourcing and selling of these products. The Body Shop is based on the core principles of its founder: It is against animal testing of products, and it supports community trade and espouses human rights strongly. This ethical approach also extends to packaging. Customers of The Body Shop are attracted not only by the products it offers, but also by its approach to the cos metic and beauty care market. Sources: Fernando, R. & Purkayastha, D. (2008) Body shop brand: repositioning to target the ‘Masstige’ segment and impact of its acquisition by L’Oreal [Online]. Available from: http://www.thecasecentre.org/educators/products/view?id=77596 (Accessed: 28 October 2015). MBASkool (2015) Societal marketing concept [Online]. Available from: http://www.mbaskool.com/business - concepts/marketing -and -strategy -terms/8699 -societal -marketing -concept.html (Accessed: 28 October 2015). © 2015 Laureate Education, Inc. Page 3 of 7 The first era of marketing is referred to as the production era , which coincided with the industrial revolution period of the late 19th century. Advances in technology and transportation meant that goods could be produced and distributed on a scale not previously possible. The underlying philosophy of the production era was, ‘if you build it they will come and buy it’. The holistic satisfaction of customers was certainly not at the forefront of the industry leaders of the production era. The production era was followed by what has been termed the sales era. The initial period of the sales era saw the world economy suffer from the Great Depression of the late 1920s and the 1930s. Demand for products declined as a result of the Depression, and businesses now viewed selling as an important function required to entice poten tial customers to purchase products. The post -war 1950s saw a development of the sales -oriented business philosophy into what has become known as the marketing era . Increased affluence and customer spending led to a rise in consumer power in the market p lace. Businesses now realised that they had to compete for customers; this resulted in the emergence of marketing departments within companies geared at meeting the needs of these increasingly affluent consumers. Dibb et al. (2006) contend that the marke ting concept has emerged as a result of the final era, the relationship marketing era . The relationship marketing era saw the emergence of the realisation that marketing is more than a transactional function carried out by organisations. Rather, to satisfy customers’ needs, and as a result meet the commercial objectives of a business, a more long -term relationship approach is required, in which customer loyalty is built up by addressing the ongoing requirements of targeted customer segments – what we now re fer to as customer relationship marketing (CRM). Furthermore, the relationship marketing era also saw the growing acknowledgement that customers are only one of many stakeholders that are important in the business -customer interaction process. Suppliers, legislators, distributors and financial institutions also play a role in ensuring that the needs of customers are met. Kotler and Armstrong’s (2006) diagram illustrates the emphasis of relationship marketing: Source: Kotler, P. & Armstrong, G. (2010) Principles of marketing. 15th Ed. Boston: Pearson Education. Of course, there are some notable exceptions to this philosophy , n otably the late Steve Jobs of Apple who stated: © 2015 Laureate Education, Inc. Page 4 of 7 ‘We think the Mac will sell zillions, but we didn't build the Mac for anybody else. We built it for ourselves. We were the group of people who were going to judge whether it was great or not. We weren't going to go out and do market research. We just wanted to build the best thing we could build.’ (cited in Traitler, Coleman and Hoff man, 2014) This quotation does not do justice to a company that has managed to satisfy the needs of a growing market segment successfully to the extent that, in 2015, it was named as one of the world’s richest companies. Implementing the marketing concept Implementing the marketing concept requires buy -in from a number of important stakeholders. From the top down, the philosophy of the marketing concept needs to be taken on board by top executives, middle management and lower -level employees. Internal functions, such as finance and information technology, need to be aligned with ensuring that customers’ needs are addressed. The marketing concept today – societal marketing The early years of this century have witnessed r apid developments in information technology, most notably the ubiquitous Internet. The continuing growth of the Internet, e - commerce and social media for both consumers and organisations has created a new dynamic in both the business -to -consumer (B2C) and business -to -business (B2B) markets. This, in turn, has impacted how the marketing concept is viewed today. The Internet and social media have facilitated exchange between customers and businesses, as well as inter -business communication. The needs and va lues of consumers have been given a more widespread voice as a result of this improved communication and interaction, to such an extent that Schultz terms marketing as a ‘[c]onstructive engagement – a societal function and a systemic set of processes for creating, communicating, and delivering value to customers and for managing customer and societal relationships in ways that benefit local and global stakeholders of these processes.’ (2007, p.293) This definition highlights how the marketing concept ha s almost swung 180 degrees from one that was production orientated to one that now is fed by the needs and values of consumers. The use of the words societal and global stakeholders reveals that the marketing concept views marketing as much more than a c ommercial interaction. Today, it is viewed as including all who are impacted by engagements between commercial businesses and consumer and between businesses. Therefore, to operate in this new environment, © 2015 Laureate Education, Inc. Page 5 of 7 organisations need to be cognisant of the percepti ons of their actions as they relate to those stakeholders. Source: Kotler, P. & Armstrong, G. (2010) Principles of marketing. 15th Ed. Boston: Pearson Education. Kotler and Armstrong (2010) contend that today’s consumers are looking for ways of addressing the issues that face the globalised community. Therefore, these constituents seek companies that address not only their economic needs, but also their emotional a nd environmental concerns. Marketing challenges for the 21st century In light of the preceding discussion, this section will focus on recognising some of the challenges that face marketing and marketing managers in the 21st century. This section is designed to provide an introduction to some of the topics that will be explored later in this module. Information technology It will come as no great surprise that information technology will continue to present not only opportunities but also challenges in how organisations interact with consumers and other stakeholders. Low -cost Internet connectivity and mobile communications have enabled consumers t o express their opinions and corroborate each other’s views on a scale that was not possible in earlier times. In what has been termed ‘the age of participation’, the creation of new ideas is no longer the sole domain of companies.

Consumers have evolved a s prosumers, demanding input on the types of services and products that they enjoy. Consumers of today and tomorrow © 2015 Laureate Education, Inc. Page 6 of 7 As we have already seen, today’s consumers differ greatly from those of past generations.

Therefore, companies need to be aware that, in addition to customers being more engaged and participating in the decisions that companies make, this engagement means customer satisfaction is at a micro rather than macro level. In other words, companies and organisations must meet the specific needs of consumers instead of providing products and services for general consumption. Niche markets, sub - markets and tailored products and services require organisations to be more focused on particular target segments of the market. Engaging with partners Relationship marketing means much more than mere customer engagement. In order to successfully provide solutions to consumers’ needs, organisations must embrace a more complete set of relationships, many of which are with outside companies. Companies need t o develop strategies in partnership with other external organisations in order to deliver the types of products and services that create value for consumers. Changes in the world economy This century has seen a change in the world economic order. Writin g for Bloomberg, Press Smialek (2015) predicted that by 2030, economies such as China, India and Brazil will lead a new world economic order. This contention is supported by Rapoza (2011), who suggests that by 2020, the world’s economy will be dominated by Asia, the Middle East, parts of Africa and Latin America. Therefore, meeting the needs of these ‘new’ and growing affluent consumers will pose its own challenges for companies. References Fernando, R. & Purkayastha, D. (2008) Body shop brand: repositioning to target the ‘Masstige’ segment and impact of its acquisition by L’Oreal [Online]. Available from: http://www.thecasecentre.org/educators/products/view?id=77596 (Accessed: 28 October 2015). Forbes (2015) The world’s biggest public companies [Online]. Available from: http://www.forbes.com/global2000/list/#tab:overall (Accessed: 28 October 2015). Kotler, P. & Armstrong, G. (2010) Principles of marketing . 15th Ed. Boston: Pearson Education. MBASkool (2015) Societal marketing concept [Online]. Available from: http://www.mbaskool.com/business -concepts/marketing -and -strategy -terms/8699 - societal -marketing -concept.html (Accessed: 28 October 2015). Rapoza, K. (2011) By 2020, China no. 1, US no. 2 [Online]. Available from: http://www.forbes.com/sites/kenrapoza/2011/05/26/by -2020 -china -no -1-us -no -2/ (Accessed: 1 August 2015) © 2015 Laureate Education, Inc. Page 7 of 7 Schultz, C.J. (2007) ‘Marketing as constructive engagement’, Journal of Publi c Policy and& Marketing, 26 (2), pp.293 -301. Smialek, J. (2015) These will be the world's 20 largest economies in 2030 [Online] . Available from: http://www.bloomberg.com/news/articles/2015 -04 -10/the -world -s-20 - largest -economies -in-2030 (Accessed: 8 Octob er 2015). Traitler, H., Coleman, B. & Hofmann, K. (2014) Food industry design, technology and innovation. Hoboken: Wiley -Blackwell.