The Marketing Concept

In tracing the development of the marketing concept, it is customary to chart three successive stages in the evolution of modern business practice: production orientation, sales orientation, and marketing orientation.

Sales Orientation VS Marketing Orientation

Production Orientation

It was characterized by focusing company efforts on producing goods or services. Specifically, management efforts were aimed at achieving high production efficiency, often through the large-scale production of standardized items. In this situation, other functions such as sales, finance, and personnel were secondary to the main function of the business, which was to produce. The underlying philosophy was that customers would purchase products, provided they were of reasonable quality, available in sufficiently large quantities and at a suitably low price.

Sales Orientation

The sales-oriented company is one where the focus of company effort switches to the sales function. The main issue here is not how to produce but, having products, how to ensure this product is sold. Customers will be slow or reluctant to buy. In any case, even those customers who are seeking to purchase the type of product or service the company produces will have a wide range of potential suppliers. This situation is exacerbated when, in addition to sufficient capacity on the supply side, demand is depressed. 

Marketing Orientation

The marketing concept holds that the key to successful and profitable business rests with identifying the needs and wants of customers and providing products and services to satisfy them. This concept doesn't appear to be a far-reaching and fundamentally different philosophy of business, but in fact, the marketing concept requires a revolution in how a company thinks about and practices its business activities as compared with production and sales orientation. Central to this revolution in business thinking is the emphasis given to the needs and wants of the customer.  

Implementing The Marketing Concept

For a company to be marketing oriented requires a number of organizational changes take place in practices and attitudes. The management requires to develop a set of tools (techniques and concept) to implement the marketing concept. The behavioral science can lead to an understanding of buyer behavior, another example is the development of quantitative and qualitative techniques of marketing research for analyzing and appraising markets. 

Market Segmentation and Targeting

Because marketing focuses on customer needs and wants, this requires that companies identify these needs and wants and then develop marketing programmes to satisfy them as a route to achieving company objectives. The diversity of customer needs and wants, and the multiplicity of ways in which these may be satisfied, mean that few if any companies are in a position effectively to serve all customers in a market in a standardized manner. Market segmentation is the process of identifying those clusters or segments of customers in a market which share similar needs and wants and will respond in a unique way to a given marketing effort. Having identified the various segments in a market, a company can then decide which of them are most attractive and to which segments it can market most effectively. Company marketing efforts can then be tailored specifically to the needs of these segments on which the company has decided to target its marketing.

Market segmentations and targeting are two of the most useful concepts in marketing, and a set of techniques has been developed to aid companies in their application. Some of the more important benefits of effective segmentation and targeting are as follows:

  • A clearer identification of market opportunities and particularly the analysis of gaps (where there are no competitive products) in the market.
  • The design of product and market appeals that are more finely tuned to the needs of the market.
  • Focusing of marketing and sales efforts on those segments with the greatest potential.

There are several bases of segmenting markets, which may be used singly or in combination. The seller will find that the various segments will respond more favourably, in term of sales, if the products and marketing programmes are more closely tailored to the needs of each segment. Here are some of the more frequently used bases for segmentation:

  • Consumer products and markets --> age, sex, income, social class, geographical location type of residence using ACORN (A Classification of Residential Neighborhood), personality, benefit sought, usage rate, e.g. Heavy users versus light users.
  • Industrial products and markets --> end-user market, type of industry, product application, benefit sought, company size, geographical location, usage rate.

Whatever the chosen bases, the application of segmentation and targetting is a major step towards becoming marketing oriented.

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