Lesson 02 - Introduction to Marketing Philosophies and

Marketing Orientations

2.1 Explain the role of Marketing

Marketing management is an art as well as a science of choosing target

markets and getting, keeping, and increasing customers through creating,
delivering and communicating with superior customers. Accordingly,
marketing management is recognized as one of the functional processes of
an organization. It is a conscious effort to achieve desired exchange
outcomes with target markets. However, the question is what will guide a
company’s marketing efforts? What is the relative emphasis the company
gives to the conflicting interests of the organization, the customers, and
society? Further, the marketing activities of the company should be carried
out under a well thought out philosophy of efficiency, effectiveness and
social responsibility. Moreover much literature on marketing theory has
recognized marketing as an organizational philosophy or ‘an approach to
doing business.’

In addition, the marketing orientations are contrasted by the emphasis

based on customer and competitors. The figure 2.1 illustrates four types of
firms based on the two types of emphasis i.e. competitor and customer
emphasis.

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Figure 2.1: Major Emphasis and Types of Firms

Competitor emphasis

MINOR MAJOR
Customer emphasis

MINOR Self-centered Competitor-

centered

MAJOR Customer- Market-driven

oriented

2.2 Orientations of Marketing

Marketing activities should be carried out under a well-thought out

philosophy of efficient, effective, and responsible marketing. There are five
competing orientations/concepts under which organizations carry out their
marketing activities. In a way these orientations indicate how firms view
their markets.

 The Production Concept

 The Product Concept
 The Selling Concept
 The Marketing Concept
 The Societal Marketing Concept

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The Production Concept: The production concept is one of the oldest
concepts guiding sellers. The production concept holds that consumers will
favor those products that are widely available and low in cost. Managers of
production-oriented organizations concentrate on archiving high production
efficiency and wide distribution coverage.

The Product Concept: Some other sellers are guided by the product
concept. The product concept holds that consumers will favor those
products that offer the most quality, performance, or innovative features.
Managers in these product-oriented organizations focus their energy on
making superior products and improving them over time. The product
concept leads to ‘marketing myopia’, a focus on the product rather than on
the customer’s need.

The Selling Concept: The selling concept or sales concept is another

common approach many firms take to the market. The selling concept holds
that consumers, if left alone, will ordinarily not buy enough of the
organization’s products. These organizations must therefore undertake an
aggressive selling and promotion effort. Most firms practice the selling
concept when they have overcapacity. Their aim is to sell what they make
rather than make what the market wants. As a result, the public identifies
marketing with hard selling and advertising.

The Marketing Concept: The marketing concept is a business philosophy

that challenges the previous concepts. Its central tenets crystallized in the
mid-1950s. The marketing concept holds that the key to achieving
organizational goals consist in determining the needs and wants of target
markets and delivering the desired satisfactions more effectively and
efficiently than competitors. The marketing concept rests on four main
pillars.
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  Target market/market focus:
Market focus is concerned with careful identification and definition of target
market in which a company can market its marketing mix profitably. Target
market means a fairly homogenous group of customers to whom a company
wishes to appeal.

 Customer needs/orientation:
Customer orientation is concerned with a careful and precise understanding
of needs of target market and definition of the needs from the target
market’s point of view.

 Coordinated/integrated marketing:
Coordinated marketing means two things. First, the various marketing
functions – sales force, advertising, product management, marketing
research, and so on – must be coordinated among themselves. These
marketing functions must be coordinated from the customer point of view.
Second, marketing must be well coordinated with the other company
departments. Marketing does not work when it is merely a department; it
only works when all employees appreciate the impact they have on customer
satisfaction.

 Profitability
The purpose of the marketing concept is to help organizations achieve their
goals. In the case of private firms, the major goal is profit; in the case of
nonprofit and government/public organizations, it is surviving and attracting
enough funds to perform their work. Now the key is not to aim for profits as
such but to achieve them as a byproduct of doing the job well. A company
makes money by satisfying customer needs better than competitors can.
Furthermore, marketers must be involved in analyzing the profit potential of
different marketing opportunities.
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Figure 2.2 Selling Vs Marketing

STARTING FOCUS MEANS ENDS

POINT
SELLING

Factory Products Selling and Profits through Sales

Promoting Volume

MARKETING

Target Market Customer Needs Integrated Profits through

Marketing Customer Satisfaction

“The entire organization needs to be informed about customers

and competitors and has to be responsive to that information”

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 satisfaction more effectively and efficiently than competitors in a
way that preserves or enhances the customer’s and the society’s well-being.”

Philip Kotler 1998.

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The societal marketing concept calls upon marketers to balance three
considerations in setting their marketing policies: company profits, consumer
wants, and society’s interests. Originally, most companies based their
marketing decisions largely on short-run company profit. Eventually they
began to recognize the long-run importance of satisfying consumer wants,
the marketing concept emerged. Now, many companies are beginning to
think of society’s interests when making their marketing decisions as shown
in Figure 2.3.

Figure 2.3: Three considerations underlying societal marketing

concept

Society – Human Welfare

SOCIETAL
MARKETING
CONCEPT

Consumers – Want Satisfaction Company Objectives – Profits

“Repeat business and the lifetime purchases of customers

generate the most profit”

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Customer Orientations: Today’s companies are designing separate offers,
services, and messages to individual customers. With development of
information technology these companies are equipped with all the
information about each customer’s past transactions, demographics,
psychographics, media and distribution preferences. They use techniques
such as factory customization, computers, the internet, and database
marketing software. The objective of these companies is to achieve
profitable growth through capturing a larger share of each customer’s
expenditure by building high customer loyalty and focusing on customer
lifetime value.

Each philosophy/concept can be contrasted based on their unique features.

Accordingly, the emphasis of a company which follows the selling concept
differs from the emphasis of a company which follows any other concept,
e.g. product concept as shown in Figure 2.4.

Figure 2.4: Major Differences of Orientations/Concepts of Marketing

NO STARTING FOCUS MEANS ENDS

POINT
PRODUCTION ORIENTATION
1
Factory Product Low cost and Profit through
high availability high production

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 PRODUCT ORIENTATION

2 Factory Product Continuous Profit through

quality and offering quality
performance product
improvement

SELLING ORIENTATION
3
Factory Product Selling and Profit through
promoting sales volume

MARKETING ORIENTATION

4 Target market Customer needs Coordinated Profit through

(integrated) customer
marketing satisfaction

CUSTOMER ORIENTATION

5 Individual Customer needs One to one Profitable

customer and values marketing growth through
integration and customer care,
value chain loyalty, and
lifetime value

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 “Marketing is outward-looking function in which you try to
match the real requirements of the customer”

Please do the Self Assessments 01 of Lesson 02

2.3 Rapid Adoption of Marketing Management

Marketing management today is a subject of growing interest in all types of

organizations within and outside the business sector in all kinds of countries.

Marketing and Business Sector: In the business sector, marketing

entered the consciousness of different companies at different times. General
Electric, General Motors, Procter & Gamble, and Coca Cola were among the
early leaders in USA while Sri Lanka had several market leaders in business
sector. Marketing spread most rapidly in consumer packaged-goods
companies, consumer durables companies, and industrial-equipment
companies. Producers of commodities like steel, chemicals, and paper came
later to marketing consciousness, and many still have a long way to go.
Within the past decades, consumer-service firms, especially airlines, banks
and insurance have move toward modern marketing. Marketing is beginning
to attract the interest of real estate, hotels, and stock brokerage companies,
although they also have a long way to go in applying marketing effectively.
The most recent business groups to take interest in marketing are
professional service providers, from private sector hospitals (medical) to
constructions firms (engineering, architecture) and professional societies.
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 “Customers don’t buy products; they seek to acquire benefits”

Marketing and Service Sector: Some service sector organizations have

been at the forefront of marketing. In general, however, much of this
sector’s management has been antipathetic toward marketing for a number
of reasons, all of which are mainly self-imposed limitations and do not relate
to any genuine problems inherent in marketing itself. Some of these so-
called reasons are as follows:

 Lack of tangibility – The intangible nature of services makes them

less immediately responsive to marketing techniques. For example,
it is more difficult for customers to try out a service than a
manufactured good. The difference, however, only means that
marketing approaches have to be more personal, more direct, and
more customer interactive.

 Lack of mass marketing – Many service suppliers, such as

accountants, have only small offices that are very individualized in
their contact with customers. As the emergence of large chains
such as KPGM and H & R Block, have shown, however, there is
ample opportunity to introduce national communication and a
central marketing structure for such services.

 Lack of direct competition – Some organizations, such as banks,

have traditionally not seen themselves as having customers. At
times they have behaved almost as if they themselves were the
customers. Such organizations used to be in the fortunate position
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 where the supply of their offering was swamped by considerably
more demand than could be met, and their role was to ration this
scarce supply. Now, however, the situation has changed in many
countries, and service providers need to face the test of competition
every day.

 Professional status – Other groups of service providers have long

been organized into professions, such as lawyers, physicians, or
dentists. Their professional organizations, due to their monopoly
power, often effectively removed direct competition and with its
marketing. Many professions used to have rules that specifically
barred their members from almost every form of marketing activity.
As these prohibitions have been weakened or removed, however,
marketing thinking has been quick to emerge.

Marketing and Non-profit Sector: Nonprofit organizations have the

greatest difficulty in coming to terms with marketing, probably because
much of marketing theory is described in terms of improving profit
performance. Using profit as the main gauge of marketing effectiveness
allows for a practical and measurable approach in commercial organizations
but can pose major problems for organizations that cannot assess their
performance in such terms. One resulting problem, therefore, is that some
nonprofit organizations simply do not recognize the requirement to meet
their customers’ needs.

On the other hand, marketing is increasingly attracting the interest of

nonprofit organizations such as colleges, hospitals, churches, performing
arts groups, etc. These organizations have marketplace problems. Their
administrators are struggling to sustain these organizations in the face of
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rapidly changing consumer attitudes and diminishing financial resources.
They are turning to marketing in most countries in the world. Various
government and private nonprofit agencies are also launching ‘social
marketing campaigns’ to discourage cigarette smoking, excessive drinking,
hard-drug usage, and unsafe sex practices and to improve the quality of the
environment.

International Sector: Multinational companies are investing heavily to

improve their global marketing skills. In fact, several European and
Japanese multinationals, such as Nestle, Benetton, Unilever, Toyota, Sony,
etc. have in many cases understood marketing better and outperformed
their US competitors. Multinationals have introduced and spread modern
marketing practices throughout the world. This trend has stimulated smaller
domestic companies in various countries to strengthen their marketing
muscle so they can compete effectively with the multinationals.

In the former socialist economies, marketing had a bad name, even though
some public-sector agencies carried on limited marketing research and
advertising. Today these economies are undertaking a major effort to
convert to market-driven economies. The challenge is enormous and this
conversion will take years if not decades to achieve. Countries in the West
and the Far East are giving economic aid, and multinationals are exploring
the potentially large market opportunities that lie in trading and investing in
the East Bloc countries.

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 Please do the Self Assessments 02 Lesson 02

Activity
a) Name 50 listed companies in Sri Lanka and try to identify which
business they engage in.
b) List 25 multinational companies in the world and the business they
engage in.
c) Make a list of multinational companies which are operative in Sri
Lanka.
d) Identify the nonprofit sector activities in Sri Lanka.
e) Name your best business organization in the world and in Sri Lanka
respectively. Explain why?

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Summary

Marketing management is the conscious effort to achieve desired exchange

outcomes with target markets. The marketer’s basic skill lies in influencing
the level, timing, and composition of demand for a product, service,
organization, place, person, or idea.
Five alternative philosophies can guide organizations in carrying out their
marketing work. The production concept holds that consumers will favor
products that are affordable and available, and therefore management’s
major task is to improve production and distribution efficiency and bring
down prices. The product concept holds that consumers favor quality
products that are reasonably priced, and therefore little promotional effort
is required. The selling concept holds that consumers will not buy enough
of the company’s products unless they are stimulated through a substantial
selling and promotion effort.
The marketing concept holds that the main task of the company is to
determine the needs, wants, and preferences of a target group of
customers and to deliver the desired satisfactions. Its four principles are
target market, customer needs, coordinated marketing, and profitability.
The societal marketing concept holds that the main task of the company is
to generate customer satisfaction and long-run consumer and societal well-
being as the key to satisfying organizational goals and responsibilities.
Interest in marketing is intensifying as more organizations in the business
sector, the nonprofit sector, and the international sector recognize how
marketing contributes to improved performance in the marketplace.

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Now please go to lesson review questions try to answer them by
yourself to complete this lesson

Additional Reading

www.cadillac.com
www.ama.org

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