CHAPTER TWO
MARKETING EVOLUTION AND ORIENTATIONS
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
1. Identify and explain the stages in the historical development of marketing;
2. Explain the term “marketing orientation”;
3. List and explain types of marketing orientation.
HISTORICAL DEVELOPMENT OF MARKETING
Before marketing developed into a discipline that is studied and practiced, it passed through eight evolutionary stages: simple trade era, production era, selling era, marketing era, societal marketing era, relationship marketing era, and social/mobile marketing era.
1. Simple Trade Era
This period covers pre-barter and barter period. During pre-barter period (subsistence economy), people produced all things they needed by themselves: food, clothing and housing. There was no exchange of goods among people, and so no trade. As the society moves away from subsistence economy to early barter economy, exchange of one good with another good started taking place among people and trade originated. In the later part of barter economy, the society began to recognize the importance of division of labour, thus people continued to concentrate more on the production of goods and services in which they are exceptionally good at. The first consequence is that each member in a community specialized in the production of just one or few items out of many items he/she needed. The second consequence is that each individual over produced what he/she specialized in thereby enabling him/her to exchange the surplus goods with other goods which he/she needed but could not produce. Trade became more acceptable and sophisticated, and the foundation for a new discipline – marketing, was laid. This era lasted till early 19th century.
2. Production Era
This era started during industrial revolution in early nineteenth century. The era witnessed invention of production machineries and improved methods of production that facilitated mass production of goods by firms located in Europe. This era also witnessed the introduction of money especially in Africa and Asia to overcome the problems of barter; this contributed in simplifying and boosting trade among people.
At the beginning of industrial revolution, industrialization was skewed to few countries in Europe while most parts of the world remained unindustrialized and dependent on industrialized nations for manufactured goods. This caused demand for manufactured products to exceed their total supply. Secondly, most countries of the world had large population whose demand for manufactured products exceeded the demand for total supply or production by the few existing firms. Thus, firms concentrated in the production of any commodity they desired in large quantity without any regard for consumer preference because there was a ready market for most products with little or no competition. This era lasted till 1930’s.
3. Sales Era
From 1930 and beyond, the number of manufacturing firms increased tremendously in Europe, America and some parts of Asia such as Japan, and coupled with better factory machineries and methods of production, total production of manufactured products exceeded the demand for them. However, the worldwide recession of 1930’s which reduced peoples’ purchasing power contributed to a general fall in the demand for goods and services. The world war of 1940’s worsen the economic crisis. To overcome these challenges, companies started emphasizing on how to find buyers and sell their products to them. Companies created “Sales Department” and recruited sales people to do the job of finding buyers and selling to them. During this period, local intermediaries also emerged as distinct line of business to help producers sell their increased output. This era lasted till 1950’s.
4. Marketing Era
The features of “sales era” deepened after 1950 and companies decided to establish one best way of satisfying consumers in order to sell optimally and beat competition. Thus, companies started emphasizing on producing goods according to consumers needs which is a divorce from the old practice where goods were produced based on the producers’ discretion and in the end a lot of resources are deployed in finding buyers to sell products to the consumers. This led to the establishment of marketing department in various profit seeking organizations to handle product conception, pricing, distribution and promotion. This era is still in play, but many argued that it ended in 1970’s.
5. The Societal Marketing Era
Societal marketing era is an off-shoot of the marketing era. Unlike the marketing era where companies concentrated their efforts in identifying and satisfying consumer needs, the societal marketing first gauge the needs of stakeholders before designing, producing, packaging, pricing, distributing and promoting a product to the target market so that it benefits the consumers and also improves the society’s general welfare. That is, companies should try to build in social or ethical consideration into their product and other marketing practices. In addition, the societal marketing era tries to balance the pursuit of business profits with consumer desires and society’s best interest. Societal marketing also enjoined companies to strive and satisfy consumers’ short-term needs as well as cater for the long-run welfare of the consumers. This era is still in play to a large extent.
6. The Relationship Marketing Era
This era was driven by advancement in information and communication technologies between 1990 to early 2000’s. This era re-focused marketing goals at building long-term, mutually beneficial relationship with the customers. That is, the era ushers in a new marketing philosophy that no two customers are totally the same in terms of needs, and therefore, advocates for one-to-one marketing, otherwise called customization and personalization. Data on individual customers’ past purchases are captured, stored and used to serve customer in future or real-time purchases.
7. The Social-Mobile Marketing Era
There is a paradigm shift from relationship marketing to a new marketing culture – the social-mobile marketing era. This era subsumes and incorporates the theories of the relationship marketing era, but it differs in the sense that it focuses on the real-time connections and social exchanges based on relationships driven by the consumers. Here, businesses are connected 24/7 to current, future and potential consumers in real-time or concurrently.
MARKETING ORIENTATIONS
There is always one best way to produce and market a product. The market conditions prescribe the one best way to market a product, thus making producers operating in the same industry but targeting different markets to hold different market orientations, and producers operating in different industry but serving the same market to also hold different market orientation.
An orientation, in the marketing context, relates to the perception or attitude a firm holds towards its product or service, essentially concerning consumers and end-users. Marketing orientation, otherwise called “concepts of marketing”, refers to the producers and marketers’ philosophy on what to do to meet marketing goals. What can the producer do to satisfy the conflicting needs of the stakeholders – customers’ needs, company profit and societal problems at large?
Seven forms of marketing orientation exist. These are:
i. Production concept;
ii. Product concept;
iii. Selling concept;
iv. Marketing/customer concept;
v. Organization concept;
vi. Societal marketing concept; and
vii. Holistic marketing concept.
PRODUCTION CONCEPT
Philosophy | Consumers will buy products that are affordable and available. |
Strategy | Company focuses on mass production and distribution efficiency. |
Conditions | Suitable for markets where demand for goods exceeds their supply. |
Market | Monopoly or oligopoly market. |
Criticism | Company may not bother about consumer satisfaction. |
PRODUCT CONCEPT
Philosophy | Consumers will buy products that have superior quality, higher performance and innovative features. |
Strategy | Company focuses on continuous product improvement and innovation. |
Conditions | Suitable for markets where supply of goods exceeds their demand. |
Market | Competitive market. |
Criticism | Quality products are often expensive and not affordable to low income consumers. |
SELLING CONCEPT
Philosophy | Consumers will only buy enough of a company’s product when the company embarks on mass or aggressive selling and promotional efforts. |
Strategy | Company maintains Sales Department and hires professional sales people to find and convince buyers to purchase the company’s product. |
Conditions | § Suitable for markets where supply of goods exceeds demand. § Also suitable for companies that are faced with overcapacity. |
Market | Competitive market. |
Criticism | § Emphasis is laid on selling what we make rather than making what the market wants. § Emphasis is also on making one time sales (i.e. sales transaction) instead of creating repeated sales (building long-term profitable customer relationship). |
MARKETING/CUSTOMER CONCEPT
Philosophy | Company should strive to produce goods and services that satisfy consumers’ needs at a profit. |
Strategy | § Company must identify the needs of consumer before production. § Company should focus on finding right product for her customer rather than finding right customer for her product. |
Conditions | Suitable for markets where demand for goods exceeds supply. |
Market | Competitive market. |
Criticism | Some organizations are too customer possessed leading to loss. Neglects creative marketing. (A creative marketer discovers and produces solution customers did not request for but to which they respond enthusiastically. At times, customers may not know what they want.) For example, 3M expresses her goal in a form of creative marketing as thus: our goal is to lead customers where they want to go before they know where they want to go.” |
ORGANIZATION CONCEPT
Philosophy | All the departments and employees in a given company have a primary function of satisfying consumer wants/needs |
Strategy | § Company trains all employees to be customer friendly. § Company requires all employees and departments to attract and keep customers. |
Conditions | Suitable for markets where supply exceeds demand. |
Market | Competitive market. |
Criticism | § Company employees may be too customer possessed leading to loss. § The job of marketing department is duplicated by other department leading to confusion and inefficiency. |
SOCIETAL MARKETING CONCEPT
Philosophy | Company activities should not be limited to satisfying consumers’ short-term needs, but extended to catering for the long-run welfare of the consumers. |
Strategy | Company must satisfy consumers’ immediate needs while at the same time maintaining and improving the societal well-being. In other words, firms should not undermine the quality of the society and its inhabitants in the process of producing goods and services to satisfy consumers’ needs and when this is not avoidable, firms should be socially responsible for their action. |
Conditions | Suitable for all companies producing goods and services. |
Market | Monopoly, oligopoly, and competitive markets. |
Criticism | Adopting societal marketing concepts is quite expensive. |
HOLISTIC MARKETING CONCEPT
Philosophy | It holds that “everything matters in marketing.” That is, all the marketing concepts discussed earlier are vital and must be integrated. |
Strategy | · Company lays emphasis on interactive marketing rather than transactional marketing. Interactive marketing is otherwise called relationship marketing. · Company must ensure that all marketing activities or programs (e.g. product, price, place and promotion) are packaged and lunched as one. This is called integrated marketing. · All management levels, departments and employees must have adequate marketing orientation so that they can dream customers, attract customers, serve customers and retain customers. This is called internal marketing. · Company must be socially responsible. That is, they should carry out their marketing activities in a way that enhances stakeholders’ and societal wellbeing in the long run. This is called social responsibility marketing. |
Conditions | Suitable for all kinds of market. |
Market | Suitable for all kinds of market. |
Criticism | · It negates the principles of specialization. · Curbing societal problems is the sole responsibility of government; the responsibility of a business organization is to pay tax to the government. · Employees may be too customer possessed leading to loss. · The job of marketing department is duplicated by other departments leading to inefficiency. |
SELF-ASSESSMENT QUESTIONS
1. Marketer ‘A’ defines marketing as the act of selling goods and services and making profit. Marketer ‘B’, who partially disagrees with Marketer A’s definition, defines marketing as producing a qualitative product for consumers at a profit.
a. Describe marketers A and B’s views of marketing.
b. Attempt a holistic definition of marketing.
c. Identify the salient features present in your own definition but absent in both Marketers A and Marketer B’s definitions.
d. Change the marketing orientation of both Marketer ‘A’ and Marketer ‘B’ using the salient features identified in (iii) above.
2. Though the discipline of marketing evolved in the 20th century, the foundation of marketing had been laid from time immemorial. Discuss.
3. As a marketer, what marketing orientation are you going to hold and implement in the following markets:
a. highly competitive market;
b. competitive market; and
b. monopoly market.