We next explore one of the most important concepts in modern marketing -- the Marketing Concept. Although simple to understand and extremely logical as a 'philosophy of doing business,' the Marketing Concept still is not adopted by many firms. Indeed, many are only vaguely aware of its existence and importance. After finishing this course, no one will be able to accuse you of this deficiency!
For our purposes, the marketing concept is a philosophy for doing business. It is a philosophy that says "this is how we ought to conduct our firm's operations."
At the center of the marketing concept are three fundamental premises or bases. The first, and most important, is that firms must be customer orientated in conducting all of their operations. The customer must be the focal point of everything the firm does. We must remember that firms are in business to identify and satisfy customer needs. The firm should strive to first determine what the market wants and then tailor product offerings to achieve the best possible match.
The second component, or base, of the Marketing Concept is that everyone in the firm has to believe in and practice the concept. All business functions (not just marketing functions) must be coordinated and focused on the central goal of 'customer satisfaction.' Put another way, application of the Marketing Concept must be an integrated company-wide effort -- and this starts with top management. If decision makers at the top don't believe in the Marketing Concept, it just is not going to happen. Many firms say they believe in the Marketing Concept. Their managers even go on national TV and preach that they believe in it and practice it. However, they are just paying the Marketing Concept lip-service. They may believe in it, but they practice some other business philosophy (we will look at some of these alternative business philosophies in a bit).
Firms must remain profitable as they strive to satisfy their customers' wants and needs. This suggests that firms must select or target those customer groups for which it possesses the resources to serve. Moreover, the focus should be on long-term profitability rather than short-term profitability. In other words, firms should recognize that some decisions may, in the short-term, lose money. However, if these decisions are in the customers' and the company's best interests, they are likely, in the longer-term, to be profitable. We have not been very good at doing this in the United States. Business decisions are too often geared to generating short-term profits in order to boost shareholder equity.
The marketing concept is not a new philosophy for conducting business . It has been around for decades. As a matter of fact, some firms established well before the turn of the century have practiced the marketing concept -- and have been quite good at making it work! I show a film in class at this point that shows three such firms: McCormick Industries (now McCormick-Deering), Xerox, and Kodak. Lets briefly highlight each firm and its history, as it relates to practicing the marketing concept.
McCormick, by far, provides the best illustration of the marketing concept in action of the three firms highlighted in the film. Its founder, Cyrus McCormick, introduced the first mechanical wheat reaper into this country just prior to the Civil War. His reaper is considered to be one of the most important inventions of the Nineteenth Century, and is credited with contributing to the North winning the Civil War. Video 1 provides background on McCormick and the development of the reaper.
McCormick believed in the marketing concept, although he never called it that. McCormick knew that successful commercialization of the reaper involved more than just making a good product. He understood that an entire marketing program was required to demonstrate the value of his reaper and make it a practical reality. As highlighted in Video 2, he did such things as provide sales demonstrations to help overcome initial sales resistance. He implemented installment payment plans, post sale product service, standardized parts, off-season servicing, and full product warranties. As a matter of fact, he had one of the first product recalls, was among the first to use full-color ads and employ a comprehensive set of brochures to promote his products.
The second company
highlighted in the film (no video clip provided) is Eastman-Kodak, founded by George Eastman.
Eastmans idea was to make the "camera as convenient as the pencil."
Interested in photography since childhood, he spent untold hours trying to improve
photographic emulsions. It was his dry emulsion coating that eventually paved the way for
his first camera. Eastmans first commercial enterprise was the production and
sale of dry emulsion plates. He built his reputation on the quality of his product and his
willingness to stand behind what he sold, sometimes at great expense.
The Kodak camera was introduced in 1888. Although re-loadable, the camera had to be spent back to the factory for film processing and reloading. The Brownie, introduced in 1891, was the first "day-light loading" camera with packaged roll-type film. Selling for one dollar, it was assumed to be affordable for everyone. Convenient photography, according to Eastman, was finally a reality.
The Xerox Corporation of today was founded by Chester Carlson. Carlson spent decades developing an efficient photo-duplicating system. At a very early age he recognized the problem of getting words into print. While working for a patent attorney, he found that there was not effective way to get copies of specifications and drawings. Specifications had to be retyped in order to generate copies yielding numerous errors and requiring substantial labor. His idea for the office copier was conceived as a solution to this problem. In 1938 he succeeded in developing a crude photo-duplicating process that produced a distinct image (shown at left).
Repeated attempts by Carlson to interest major business equipment manufacturers in his processes failed. He visited NCR, 3M and IBM, none of which were interested. Finally, he interested Joe Wilson of Haloid Corporation in his idea. Over the next several years they dedicated virtually all of Haloids assets to the development and commercialization of the Xerox 914. By the time the 914 hit the market, its price tag was over two thousand dollars -- a prohibitive price-tag in 1959. In order to make the machine affordable, Wilson stumbled onto the idea of 'renting' the 914 -- customers were charged for the number of copies made, a practice still adhered to today!
Page last modified: April 24, 2007