Unit 2. The Marketing Concept

1. Read and translate the text "The Marketing Concept".

Text a. The Marketing Concept

The process that leads any business to success seems simple. First, the firm must talk to its potential custo­mers to assess their needs for its goods or services. Then the firm must develop a good or service to satisfy those needs. Finally, the firm must continue to seek ways to provide customer satisfaction. This process is an ap­plication of the marketing concept, or marketing ori­entation.

Evolution of the Marketing Concept. Until the early twentieth century, business was direct­ed mainly toward the production of goods. Consumer demand for manufactured products was so great that manufacturers could almost sell everything they produced. Business had a strong production orientation, in which emphasis was placed on increased output and production efficiency. Marketing was limited to taking orders and dis­tributing finished goods.

In the 1920s, production began to catch up with de­mand. Now producers had to direct their efforts toward selling goods to consumers whose basic wants were al­ready satisfied. This new sales orientation was characte­rized by increased advertising, enlarged sales forces, and selling techniques. Manufacturers produced the goods they expected consumers to want, and marketing consisted primarily of taking orders and delivering goods, along with personal selling and advertising.

During the 1950s, however, business people started to realize that even enormous advertising expenditures and the most thoroughly proven sales techniques were not enough. Something else was needed if products were to be sold as well as expected. It was then that business managers recognized that they were not primarily producers or sellers but rather were in business of satisfying customers' wants. Marketers realized that the best approach was to adopt a customer orientation — in other words, the organization had to first determine what customers need and then de­velop goods and services to fill those particular needs.

This marketing concept is a business philosophy that involves the entire organization in the process of satisfying customers' needs and achieving the organization's goals. All functional areas — research and development, pro­duction, finance, human resources, and, of course, marketing — are viewed as playing a role in providing customer satisfaction. Utility is one of the main principles of marketing concept.

Utility: The Value Added by Marketing. Utility is the ability of a good or service to satisfy a human need. There are 4 kinds of utility.

1. Form utility is created by converting production inputs into finished products. The data gathered as part of marketing research are frequently used to determine the size, shape and features of a product.

2. Place utility is created by making a product available at a location where customers wish to purchase it. A pair of shoes has a place utility when it is delivered from a factory to a department store.

3. Time utility is created by making a product available when customers wish to purchase it. For example, sum­mer shoes might be manufactured in winter, but they must be displayed only in June or July when they are wanted and consumers start buying them.

4. Possession utility is created by transferring title (or ownership) of a product to the buyer (for an acceptable price at his/her location).

The three kinds of utility that are directly created by marketing are place, time, and possession utility. Place, time, and possession utility have real value in terms of money and convenience. This value is created and added to goods and services through a wide variety of marketing activities — from research indicating what cus­tomers want, to product warranties ensuring that custo­mers get what they pay for. These marketing activities ac­count for about half of all the money spent by consumers. When they are part of an integrated marketing program that delivers maximum utility to the customer, most of us would agree that they are worth the cost. Place, time, and possession utility are only the most fundamental applications of marketing activities.

Implementing the Marketing Concept. The marketing concept has been adopted by many of the most successful business firms.

To implement the marketing concept, a firm must first obtain information about its present and potential customers. The firm must determine not only what custo­mers' needs are but also how well those needs are being satisfied by products on the market — both its own pro­ducts and those of competitors. It must ascertain how its products might be improved and what opinions custo­mers have of the firm and its marketing efforts.

The firm must then use this information to pinpoint the specific needs and potential customers toward which it will direct its marketing activities and resources. Next, the firm must mobilize its marketing resources to (1) pro­vide a product that will satisfy its customers; (2) price the product at a level that is acceptable to buyers and that will yield a profit; (3) promote the product so that potential customers will be aware of its existence and its ability to satisfy their needs; and (4) ensure that the product is distributed so that it is available to customers where and when needed.

Finally, the firm must always obtain marketing infor­mation — this time regarding the effectiveness of its ef­forts. Can the product be improved? Is it being promoted properly? Is it being distributed efficiently? Is the price too high? The firm must be ready to modify any or all of its marketing activities on the basis of this feedback.