create in the process of pursuing profits.
Ultimately, the enlightened marketer is really trying to contribute to the
quality of life. The quality of life is a function of the quantity and need-
satisfying quality of goods and services, the quality of the physical
environment, and the quality of the cultural environment. Too often the
firm rests its case on its ability to produce great quantities of goods and
services and does not pay enough attention to its impact on the other
components of life quality.
Marketing
Marketing is the cornerstone discipline of some of the most successful
companies in America and a discipline of growing interest to companies and
nonprofit organizations throughout the world. All organizations face the
problem of how to increase value for target markets that are undergoing
continuously changing needs and wants. Organizations must thoughtfully
define their products, services, prices, communications, and distribution
in a way that meets real buyer needs in a competitively viable way. That is
the task of marketing.
Although selling is a very old subject, marketing is a relatively new
subject. It represents a higher-order integration of many separate
functions - selling, advertising, marketing research, new-product
development, customer service, physical distribution - that impinge on
customer needs and satisfaction. Many organizations at first resist
marketing because it threatens vested interests within the organization and
their own concepts of how to manage the organization effectively. Marketing
gradually gets established, however, first as a promotion function, later
as a customer service function, still later as an innovation function, then
as a market positioning function, and ultimately as an analysis, planning,
and control function. Few companies understand and install marketing in its
full form when first considering it. Even after marketing is effectively
implemented in an organization, there is a tendency for many managers to
forget its main principles in the wake of success.
Marketing's task in the organization is not only to help it recognize
business opportunities and serve the various publics but also to harness
the organization's energy to enhance the quality of life in society.
Marketing is human activity directed at satisfying needs and wants through
exchange processes.
Human Needs and Wants
The starting point for the discipline of marketing lies in human needs and
wants. Mankind needs food, air, water, clothing, and shelter to survive.
Beyond this, people have a strong desire for recreation, education, and
other services. They have strong preferences for particular versions of
basic goods and services.
There is no doubt that people's needs and wants today are staggering. In
one year, in the United States alone, Americans purchased 67 billion eggs,
250 million chickens, 5.5 million hair dryers, 133 billion domestic air
travel passenger miles, and over 20 million, lectures by college English
professors. These consumer goods and services led to a derived demand for
more fundamental products, such as 150 million tons of steel and 3.7
billion pounds of cotton. These are a few of the wants and needs that get
expressed in a $1.3 trillion economy.
A useful distinction can be drawn between needs, wants, and intentions,
although these words are used interchangeably in common speech. A need is a
state of felt deprivation of some generic satisfaction arising out of the
human condition. People require food, clothing, shelter, safety, belonging,
esteem, and a few other things for survival. People actually need very
little. These needs are not created by their society or by marketers; they
exist in the very texture of human biology and the human condition.
Wants are desires for specific satisfiers of these ultimate needs. A person
needs food and wants a steak, needs clothing and wants a Pierre Cardin
suit, needs esteem and buys a Cadillac. While people's needs are few, their
wants are many. Human wants are continually shaped and reshaped by social
forces and institutions such as churches, schools, corporations, and
families.
Intentions are decisions to acquire specific satisfiers under the given
terms and conditions. Many persons want a Cadillac; only a few intend to
buy one at today's prices.
These distinctions shed light on the frequent charge by marketing critics
that "marketers create needs" or "marketers get people to buy things they
don't need." Marketers do not create needs; needs preexist marketers.
Marketers, along with other influentials in the society, influence wants.
They suggest to consumers that a particular car would efficiently satisfy
the person's need for esteem. Marketers do not create the need for esteem
but try to point out how a particular good would satisfy that need.
Marketers also try to influence persons' intentions to buy by making the
product attractive, affordable, and easily available.
Products
The existence of human needs and wants gives rise to the concept of
products. Our definition of product is very broad:
A product is something that is viewed as capable of satisfying a need or
want.
A product can be an object, service, activity, person, place, organization,
or idea. Suppose a person feels depressed. What might the person do to get
out of his or her depression? What products might meet the need to feel
better? The person can turn on a television set (object); go to a movie
(service); take up jogging (activity); see a therapist (person); travel to
Hawaii (place); join a Lonely Hearts Club (organization); or adopt a
different philosophy about life (idea). All of these things can be viewed
as products available to the "feeling depressed." If the term product seems
unnatural at times, we may substitute the term resource or offer or
satisfier to describe that which may satisfy a need.
In the case of physical objects, it is important to distinguish between
them and the services they represent. People do not buy physical objects
for their own sake. A tube of lipstick is bought to supply a service:
helping the person look better. A drill bit is bought to supply a service:
making a needed hole. Every physical object is a means of packaging a
service. The marketer's job is to sell the service packages built into
physical products.
Exchange
Marketing exists when people decide to satisfy needs and wants in a certain
way that we shall call exchange. Exchange is one of four ways in which a
person can obtain a product capable of satisfying a particular need.
The first option is self-production. A hungry person can relieve hunger
through personal efforts at hunting, fishing, or fruit gathering. The
person does not have to interact with anyone else. In this case there is no
market and no marketing.
The second option is coercion. The hungry person can forcibly wrest food
from another. No benefit is offered to the other party except the chance
not to be harmed.
The third option is supplication. The hungry person can approach someone
and beg for food. The supplicant has nothing tangible to offer except
gratitude.
The fourth option is exchange. The hungry person can approach someone who
has food and offer some resource in exchange, such as money, another good,
or some service.
Marketing centers on that last approach to the acquisition of products to
satisfy human needs and wants. Exchange assumes four conditions:
There are two parties.
Each party has something that could be of value to the other.
Each party is capable of communication and delivery.
Each party is free to accept or reject the offer.
If these conditions exist, there is a potential for exchange. Whether
exchange actually takes place depends upon whether the two parties can find
terms of exchange that will leave them both better off (or at least not
worse off) than before the exchange. This is the sense in which exchange is
described as a value-creating process; that is, exchange normally leaves
both parties with a sense of having gained something of value.
Market
The concept of exchange leads naturally into the concept of a market:
A market is the set of all actual and potential buyers of a product.
An example will illustrate this concept. Suppose an artist spends three
weeks creating a beautiful sculpture. He has in mind a particular price.
The question he faces is whether there is anyone who will exchange this
amount of money for the sculpture. If there is at least one such person, we
can say there is a market. The size of the market will vary with the price.
The artist may ask for so high a price that there is no market for his
sculpture. As he brings the price down, normally the market size increases
because more people can afford the sculpture. The size of the market
depends upon the number of persons who have (1) an interest in the object,
(2) the necessary resources, and (3) a willingness to offer the resources
to obtain it. These three things make up the level of demand.
Wherever there is a potential for trade, there is a market. The term
"market" is often used in conjunction with some qualifying term that
describes a human need or product type or demographic group or geographical
location. An example of a need market is the relaxation market, which
exists because people are willing to exchange money for lessons on yoga,
transcendental meditation, and disco dancing. An example of a product
market is the shoe market, so defined because people are willing to
exchange money for objects called shoes. An example of a demographic market
is the youth market, so defined because young people possess purchasing
power that they are willing to use for such products as education, bikinis,
motorcycles, and stereophonic equipment. An example of a geographic market
is the French market, so defined because French citizens are a locus of
potential transactions for a wide variety of goods and services.
The concept of a market also covers exchanges of resources not necessarily
involving money. The political candidate offers promises of good government
to a voter market in exchange for their votes. The lobbyist offers services
to a legislative market in exchange for votes for the lobbyist's cause. A
university cultivates the mass-media market when it wines and dines editors
in exchange for more publicity. A museum cultivates the donor market when
it offers special privileges to contributors in exchange for their
financial support.
The Marketing Concept
The marketing concept is a management orientation that holds that the key
task of the organization is to determine the needs and wants of target
markets and to adapt the organization to delivering the desired
satisfactions more effectively and efficiently than its competitors.
In short, the marketing concept says "find wants and fill them" rather than
"create products and sell them." This orientation is reflected in various
contemporary ads: "Have it your way" (Burger King); "You're the boss"
(United Airlines); and "No dissatisfied customers" (Ford).
The underlying premises of the marketing concept are:
Consumers can be grouped into different market segments depending on their
needs and wants.
The consumers in any market segment will favor the offer of that
organization which comes closest to satisfying their particular needs and
wants.
The organization's task is to research and choose target markets and
develop effective offers and marketing programs as the key to attracting
and holding customers.
The selling concept and the marketing concept are frequently confused by
the public and many business people. Levitt draws the following contrast
between these two orientations:
Selling focuses on the needs of the seller; marketing on 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 the customer
by means of the product and the whole cluster of things associated with
creating, delivering and finally consuming it.
The marketing concept replaces and reverses the logic of the selling
concept. The selling concept starts with the firm's existing products and
considers the task as one of using selling and promotion to stimulate a
profitable volume of sales. The marketing concept starts with the firm's
target customers and their needs and wants; it plans a coordinated set of
products and programs to serve their needs and wants; and it derives
profits through creating customer satisfaction
Among the prime practitioners of the marketing concept is McDonald's
Corporation, the fast-food hamburger retailer.
In its short, twenty-year existence, McDonald's has served Americans and
citizens of several other countries over 27 billion hamburgers! Today it
commands a 20 percent share of the fast-food market, far ahead of its
closest rivals, Kentucky Fried Chicken (8.4 percent) and Burger King (5.3
percent). Credit for this leading position belongs to a thoroughgoing
marketing orientation. McDonald's knows how to serve people well and adapt
to changing needs and wants.
Before McDonald's, Americans could get hamburgers in restaurants or diners,
but not without problems. In many places, the hamburgers were poor in
quality, service was slow, decor was poor, help was uneven, conditions were
unclean, and the atmosphere noisy. McDonald's was formulated as an
alternative, where the customer could walk into a spotlessly clean outlet,
be greeted by a friendly and efficient order-taker, receive a good-tasting
hamburger less than a minute after placing the order, with the chance to
eat it there or take it out. There were no jukeboxes or telephones to
create a teenage hangout, and in fact, McDonald's became a family affair,
particularly appealing to the children.
As times changed, so did McDonald's. The sit-down sections were expanded in
size, the decor improved, a very successful breakfast menu featuring Egg
McMuffin was added, and new outlets were opened in high-traffic parts of
the city. McDonald's was clearly being managed to evolve with changing
customer needs and profitable opportunities.
In addition, McDonald's management knows how to efficiently design and
operate a complex service operation. It chooses its locations carefully,
selects highly qualified franchise operators, gives them complete
management training and assistance, supports them with a high-quality
national advertising and sales promotion program, monitors product and
service quality through continuous customer surveys, and puts great energy
into improving the technology of hamburger production to simplify
operations, bring down costs, and speed up service.
A marketing orientation is also relevant to nonprofit organizations. Most
nonprofit organizations start out as product oriented. Thus many colleges
facing declining enrollments are now investing heavily in advertising and
recruitment activities. These organizations begin to realize the need to
define their target markets more carefully; research their needs, wants,
and values; modernize their products and programs; and communicate more
effectively. Such organizations turn from selling to marketing.
In recent years marketing has become a driving force in most companies.
Underlying all marketing strategy is "The Marketing Concept", explained in
this diagram:
THE MARKETING CONCEPT (We must produce what people want, not what we want
to produce) - This means that we PUT THE CUSTOMER FIRST (We organize the
company so that this happens) - We must FIND OUT WHAT THE CUSTOMER WANTS
(We carry out market research) - We must SUPPLY exactly what the customer
We can do this offering the right MARKETING MIX "The Four P's". The right
PRODUCT at the right PRICES available through the right channels of
distribution: PLACE, presented in the right way: PROMOTION.
Nowadays, all divisions of a company are used to "Think Marketing". To
think marketing we must have a clear idea of:
what the customer needs,
what the customer wants;
what cruses them to buy.
What the product is to the customer: functional, technological, economical,
aesthetic, emotional, psychological aspects.
"FEATURES" (what the product is) + "BENEFITS" (which means that a company
that believes in marketing is forward thinking and doesn't rest its past
achievements: it must be aware of its strengths and weaknesses as well as
the opportunities and threats it faces in market (remember the letters
"SWOT")).
More about "The marketing Mix" and the "Four P's"
PRODUCT: the goods or service that you are marketing. The product is not
just a collection of components, but includes its design, quality and
reliability.
Products have a life cycle, and forward-thinking companies are continually
developing new products to replace products whose sales are declining and
coming to the end of their lives. A "total product" includes the image of
the product as well as its features and benefits (see below). In marketing
terms, political candidates and non-profit-making public services are also
"products" that people must be persuaded to "buy" and packaged attractively
(see Promotion below).
PRICE: making it easy for the customer to buy. The marketing view of
pricing takes account of the value of a product, its quality, the ability
of the customer to pay, the volume of sales required, the level of market
saturation and the prices charged by the competition. Too low a price can
reduce the number of sales just as significantly as too high a price. A low
price may increase sales but not as profitably as fixing a high, yet still
popular, price. As fixed costs stay fixed whatever the volume of sales,
there is usually no such thing as a "profit margin" on any single product.
PLACE: getting the product to the customer. Decisions have to be made about
the channels of distribution and delivery arrangements. Retail products may
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