Principles of Marketing, Customer Concept - Essay Example

Principles of Marketing According to the world recognized marketing guru Philip Kotler (2001), "marketing is the delivery satisfaction at a profit." He further stated that marketing has a twofold goal which includes attracting potential customers by the promise of delivering superior value and retaining current customers by continuing the delivery of customer satisfaction. This view about marketing has huge implications for business organizations. For one, it highlights the current emphasis placed on satisfying customers by delivering products and services that they value. This new approach also emphasizes that companies should become market focused and customer driven in order to succeed, and even merely survive in the world's more competitive market. It is irrefutable that this principle also changes the role and function of marketing managers in the business organization. Marketing management is defined as the "analysis, planning, implementation, and control of programs designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives (Kotler & Armstrong 2001, p.14)." Truly, the business arena has evolved from placing emphasis on production, product improvements, and selling approaches and started to focus on customers. Marketing management functions now covers how a company can create and extend more valuable goods and services to each customer. This paper will look at the evolution of different philosophies which relates to marketing. In order to fully offer insight regarding the difference of marketing concepts to other competing thoughts, the five main concepts namely, production concept, product concept, selling concept, marketing concept, customer concept, and societal marketing concept will be briefly defined and discussed. Lastly, this paper will also expound why organizations should focus on applying the marketing concept on their operations. The Marketing Concept The marketing concept holds that "achieving organizational goals depends on determining the needs and wants of target market and delivering the desired satisfaction more effectively and efficiently than competitors do" (Kotler & Armstrong 2001, p.18). This concept gained wide acceptance and popularity in the mid-1950s and is an integration of customer centered and sense-and-respond philosophy. The marketing concept rests on four pillars namely, target market, customer needs, integrated marketing and profitability. Companies capitalizing on marketing concept first define a specific target market as an aim. This helps them to tailor a specific marketing which appeals to the target market. In order to become effective, marketers should be able to know their customers' needs. Though this task can be daunting as customer needs are often unexpressed and is hard to define, the marketing concept strongly advises companies to know their customers in order to come up with products that deliver superior value. Integrated marketing means that all the departments of the firm work together to serve the interest of the customer. This transfers the responsibility of the marketing department to all the functional areas. Marketing concept holds that marketing is a responsibility and must be embraced by all employees because everything they do has a corresponding impact to the customer. (Kotler 2003). Marketing, aside from satisfying customers, should also help business organizations reach their goal of profitability. As to be discussed in the below, the main difference of the marketing concept to other philosophies is its employment of an outside-in perspective. The marketing concept "starts with a well defined market, focuses on customer needs, coordinates all activities that will affect customers, and produces profits by satisfying customer needs" (Kotler 2003, p. 20). The Production Concept The production concept is recognized as one of the oldest philosophies employed in business operations. This concept holds that "consumers will prefer products that are widely available and inexpensive" (Kotler 2003, p. 17). This implies that management should focus on improving production and distribution efficiency. Concentrating on these aspects will lead to lower costs of production which will be passed on to customers in terms of lower prices. It is also important that companies gain increasing economies to scale in order to facilitate mass production of products. In comparison with the marketing concept, the use of the production can be market focused in two different situations. First, when a product is highly demanded by customers that demand is significantly more than supply. In this case, companies have the incentive to raise the level of production to meet clients' demand. The second situation occurs when the specific product's cost is too high that improved productivity is needed to bring it down. The company can then invest in developing efficient production method in order to manufacture a higher level of inventory. Also, the production concept is seen to work well in developing economies where consumers are typically price-sensitive. This concept is also applied on other service organizations such as medical and dental practices which follow assembly-line principles (Kotler and Armstrong 2001). However, as the production concept only focuses on mass production and price, companies employing this concept often fall short on improving product quality. This is a deviation of the role of marketing to create products which deliver value to customers. Inferior quality often signals that customer satisfaction is unmet. The Product Concept The product concept is another popular concept among business circles. This philosophy states that "customers will favor products that offer the most quality, performance and innovative features" (Kotler and Armstrong 2001, p. 18). In this case, manufacturers strive in producing products which are superior in quality, performance, or innovative features. The focus of marketers is product development as they try to improve the current product in order to come up with better ones. This concept also assumes that buyers are able to identify the quality and performance of products and typically choose ones which are better. However, companies that are following this philosophy are criticized as this concept can lead to "marketing myopia." In facts, it directly contrasts the marketing philosophy of looking at customer's preference, needs, and wants. In an ardent thrust to develop their existing products, marketers often fail to look the greater needs of customers. As Kotler puts it, "Buyers may be looking for a better solution to a mouse problem but not necessarily a better mousetrap" (Kotler and Armstrong 2001, p. 18). Focusing on product improvements can hamper innovation of better solutions. As we can see, the product concept generally employs an inside out marketing strategy which focuses only on the capacity of the company to develop and make new products without looking at the particular needs and wants of buyers. Instead of being customer centric, the product concept adheres to a product centered philosophy. The Selling Concept The selling concept promotes that "consumers and businesses will not buy enough of the organization's products unless it undertakes a large-scale selling and promotion effort" (Kotler and Armstrong 2001, p. 18). This philosophy is typically used by companies which produce unsought goods or those that the customers not often think of buying like insurance, encyclopedias, and funeral plots. This concept assumes that buyers wanted to be coaxed into buying companies' products, thus, the need for more aggressive selling. This philosophy, in direct contrast to the marketing concept, assumes a very simple model of influencing customers. This concept argues that the only factor which influences buyer behavior is intensive selling effort. Thus, it fails to take into account the full preference of customers in terms of product quality, performance, etc. The philosophy, which is company-driven, instead of being customer centric is more likely to fail as it does not fully and thoroughly determine the demand of the buyer thus, failing to deliver customer value and satisfaction. Also, this concept holds that buyers will continue to buy even after having bad experience with the sellers. This is absurd knowing that the marketing concept clearly shows that marketing goes beyond the selling transaction. Post-purchase experience of a buyer is important as the value of customer is not only measured on the level of revenue that a company generates in one time transaction but a lifetime stream of revenue if the customer is satisfied. Theodore Levitt of Harvard, has presented a very good comparison between selling and marketing: Selling focuses on the needs of the seller; marketing the needs of the buyer. Selling is preoccupied with the seller's need to convert his product into cash; marketing with the idea of satisfying the needs of customer by means of product and the whole cluster of things associated with creating, delivering, and finally consuming it (Kotler 2003, p.20). The Customer Concept The customer moves beyond the marketing concept by recognizing that each customer differs from the other and that each needs a unique marketing strategy. The starting point in customer concept is the individual customer while it focuses on their different needs and values. The company does this by "one to one marketing integration and value chain" and ends with "profitable growth through capturing customer share, loyalty, and lifetime value" (Kotler 2003, p.22). The customer concept follows the marketing principle of tailoring company's products to customer needs. The most notable company in UK which is ardently doing this is Tesco PLC which collects information about each customer through its loyalty card. The company carefully notes the products purchased and the pattern of purchases of the customer and designs a targeted marketing to attract that buyer. The center of consumer concept is "building high customer loyalty and focusing on customer lifetime value" (Kotler 2003, p.22). The Societal Marketing Concept The societal marketing concept holds that "the organization's task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer's and the society's well being" (Kotler 2003, p.22). As with the customer concept, the societal marketing concept enlarged the span of marketing concept to look at the external environment of the business operation. In an age of environmental degradation, resource shortages, rapid population growth, world hunger and poverty, and neglected social interests, it becomes imperative that business entities act with the long run interest of customer and society in mind. Companies should focus not only on satisfying customers and generating profit but also in pursuing sustain able business development. Another example of societal marketing can be seen on the thrusts of Tesco PLC. Tesco has been awarded the Ethical Marketing Award in 2003 due to its Race for Life Program which supports cancer research. This promotes the retailer's effort in encouraging individuals to adopt a healthy lifestyle. This program also gives opportunity for all women in the United Kingdom to jog, walk, or run the 5 km distance while at the same time raising money for Cancer Research UK's vital life saving research. Marketing at the Heart of Business Operations The discussion above shows why the marketing concept is superior among the other business philosophies presented. The four pillars of the marketing concept integrate the importance of customer satisfaction and business profitability. Thus, the concept encompasses the key factors which determine the success of a business organization. The next paragraph will discuss why the marketing concept is important in today's market environment. It is irrefutable that business organizations are now operating on what Kotler termed as a hypercompetitive environment. This arena is characterized by more intense rivalry between players and higher buyer leverage. This becomes a great challenge for companies to create products which suit the need of individuals and come up with strategies to capture their intended markets. Market researches are continuously conducted to determine the need of customers. Product research and development are also becoming the preoccupation of large companies. Failure to understand and address the needs of customers leads to huge losses for marketers. This illustrated by Robert McMath's New Product and Learning Center which showcases the great failure of marketers. Products offered by companies like Gerber food for adults, Ben-gay aspirin, R.J Reynolds Premier smokeless cigars and others failed to address the needs of the customer and were rejected by the market. This shows the huge power of customers in the marketplace. Thus, marketers should make the marketing concept the heart of their business operation. References Kotler, Philip. 2003. Marketing Management. 11th Edition. New Jersey: Prentice Hall Kotler, Philip & Armstrong, Gary. 2001. Principles of Marketing. 9th Edition. New Jersey: Prentice Hall Tesco PLC Website, www.tesco.com Read More