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Evolution of Modern Marketing Concept for Marketing Management Mcom Sem 2 Delhi University

Evolution of Modern Marketing Concept for Marketing Management Mcom Sem 2 Delhi University

Evolution of Modern Marketing Concept for Marketing Management Mcom Sem 2 Delhi University

Evolution of Modern Marketing Concept for Marketing Management MCOM Sem 2 Delhi University : The expanded concept of marketing activities permeates all organizational functions. It assumes that the marketing effort will follow the overall corporate strategy and will proceed in accordance with ethical practices and that it will effectively serve the interests of both society and organization. The concept also identifies the marketing variables – product, price, promotion and distribution – that combine to provide customer satisfaction. In addition, it assumes that the organization begins by identifying and analyzing the consumer segments that it will later satisfy through its production and marketing activities.

The concept’s emphasis on creating and maintaining relationships is consistent with the focus in business on long-term, mutually satisfying sales, purchases and other interactions with customers and suppliers. Finally it recognizes that marketing concepts and techniques apply to non-profit organizations as well as to profit-oriented businesses, to product organization and to service organizations, to domestic and global organizations, as well as to organizations targeting consumers and other businesses.

Evolution of Modern Marketing Concept for Marketing Management Mcom Sem 2 Delhi University

Evolution Of Marketing

As noted earlier, exchange is the origin of marketing activity. When people need to exchange goods, they naturally begin a marketing effort. Wroe Alderson, a leading marketing theorist has pointed out, ‘It seems altogether reasonable to describe the development of exchange as a great invention which helped to start primitive man on the road to civilization’. Production is not meaningful until a system of marketing has been established. An adage goes as: Nothing happens until somebody sells something. Although marketing has always been a part of business, its importance has varied greatly over the years. The following table identifies five eras in the history of marketing: the production era, the product era, the sales era, the marketing era and the relationship marketing era.

Evolution of Modern Marketing Concept for Marketing Management Mcom Sem 2 Delhi University

The Evolution Of Marketing

Era Prevailing attitude and approach
Production 
  • Consumers favor products that are available and highly affordable
  • Improve production and distribution
  • ‘Availability and affordability is what the customer wants’
Product 
  • Consumers favor products that offer the most quality, performance and innovative features
  • ‘A good product will sell itself’
Sales
  • Consumers will buy products only if the company promotes/ sells these products
  • Creative advertising and selling will overcome consumers’ resistance and convince them to buy’
Marketing
  • Focuses on needs/ wants of target markets and delivering satisfaction better than competitors
  • ‘The consumer is king! Find a need and fill it’
Relationship marketing
  • Focuses on needs/ wants of target markets and delivering superior value
  • Long-term relationships with customers and other partners lead to success’

Evolution of Modern Marketing Concept for Marketing Management Mcom Sem 2 Delhi University

In the production era, the production orientation dominated business philosophy. Indeed business success was often defined solely in terms of production victories. The focus was on production and distribution efficiency. The drive to achieve economies of scale was dominant. The goal was to make the product affordable and available to the buyers. In the product era, the goal was to build a better mouse trap and it was assumed that buyers will flock the seller who does it.

However, a better mousetrap is no guarantee of success and marketing history is full of miserable failures despite better mousetrap designs. Inventing the greatest new product is not enough. That product must also solve a perceived marketplace need. Otherwise, even the best-engineered. Highest quality product will fail. In the sales era, firms attempted to match their output to the potential number of customers who would want it. Firms assumed that customers will resist purchasing goods and services not deemed essential and that the task of selling and advertising is to convince them to buy. But selling is only one component of marketing. Next came the marketing era during which the company focus shifted from products and sales to customers’ needs.

The marketing concept, a crucial change in management philosophy, can be explained best by the shift from a seller’s market – one with a shortage of goods and services – to a buyer’s market – one with an abundance of goods and services. The advent of a strong buyer’s market created the need for a customer orientation. Companies had to market goods and services, not just produce them. This realization has been identified as the emergence of the marketing concept. The keyword is customer orientation.

All facets of the organization must contribute first to assessing and then to satisfying customer needs and wants. The relationship marketing era is a more recent one. Organization’s carried the marketing era’s customer orientation one step further by focusing on establishing and maintaining relationships with both customers and suppliers. This effort represented a major shift from the traditional concept of marketing as a simple exchange between buyer and seller. Relationship marketing, by contrast, involves long-term, value-added relationships developed over time with customers and suppliers. The following table summarizes the differences between transaction marketing (i.e. exchanges characterized by limited communications and little or no on going relationship between the parties) and relationship marketing.

Evolution of Modern Marketing Concept for Marketing Management Mcom Sem 2 Delhi University

Marketing Framework

The basic elements of a marketing strategy consist of

(1) the target market, and

(2) the marketing mix variables of product, price, place and promotion that combine to satisfy the needs of the target market.

Marketing activities focus on the consumer. Therefore, a market-driven organization begins its overall strategy with a detailed description of its target market: the group of people toward whom the firm decides to direct its marketing efforts. After marketers select a target market, they direct their activities towards profitably satisfying that target segment. Although they must manipulate many variables to reach this goal, marketing decision making can be divided into four areas: product, price, place (distribution) and promotion (marketing communication).

These 4 Ps of marketing are referred to as the marketing mix. The 4 Ps blend to fit the needs and preferences of a specific target market. These are the four variables that a marketer can use and control in different combinations to create value for customers. Figure 1.1.1 illustrates the focus of the marketing mix variables on the central choice of consumer or organizational target markets. In addition, decisions about the 4 Ps are affected by the environmental factors in the outer circle of that figure. Unlike the controllable marketing mix elements, the environmental variables frequently lie outside the control of marketers.

A correct understanding of marketing concept is fundamental to the study of modern marketing and marketing management. In any walk of life, thinking precedes doing; the way of thinking that determines the very course of action.

Evolution of Modern Marketing Concept for Marketing Management Mcom Sem 2 Delhi University

A ‘concept’ is a philosophy, an attitude, a course of thinking, an idea or a notion relating to any aspect of divine and human creations. The philosophy of an organisation in the dynamic realm of marketing is referred to as a ‘marketing concept.’ A concept is an orientation or a philosophy;

Thus, marketing concept is the way of life in which all the resources of an organisation are mobilized to create, stimulate and satisfy the consumer at a profit. It represents a distinct philosophy of business and considers marketing more than a physical process.

Wherever this concept prevails, that marketing organisation is future oriented, customer oriented, value oriented, profit oriented and applies modern management practices to all sales, distribution and other marketing functions.

This marketing philosophy has undergone a thorough and gradual change since the great Industrial Revolution that took place during the latter-half of the 18th and first-half of the 19th centuries. This gradual change can be traced under four periods and captions namely, production orientation period, sales-orientation period, customer-orientation period and social orientation period.

Evolution of Modern Marketing Concept for Marketing Management Mcom Sem 2 Delhi University

Following is the brief explanation of each philosophy and corresponding period:

1. Production Orientation Philosophy:

Till 1930s, there prevailed a strong feeling that whenever a firm has a good product, it results in automatic consumer response and that needed little or no promotional efforts. This production-oriented marketing concept was built on “Good wine needs no push.” That is, if the product is really good and the price is reasonable, there is no need for special marketing efforts.

The assumptions of this concept are:

(i) Anything that can be produced can be sold,

(ii) The most important task of management is to keep the cost of production down.

iii) A firm should produce only certain basic products.

This concept can be illustrated as under:

Evolution of modern marketing concept for Marketing Management MCOM sem 2 Delhi University

Under this concept, production is the starting point. The product acceptability occurs after the product is produced.

2. Sales Orientation Philosophy:

The failures of the production orientation philosophy of 1930s paved the way for change in the outlook that was possible during 1940s. This reshaped philosophy was sales-orientation that holds good to a certain extent even today.

It states that mere making available the best product is not enough; it is futile unless the firm resorts to aggressive salesmanship.

Effective sales-promotion, advertising and public- relations are of top importance. High pressure salesmanship and heavy doses of advertising are a must to move the products of the firm.

The essence of sales orientation philosophy is “Goods are not bought but sold.” The maker of product must say that his product is best and he fails if he keeps mum.

The assumptions of this philosophy are:

(i) Producing the best possible product.

(ii) Finding the buyer for the product,

(iii) The management’s main task is to convince the buyers through high pressure tactics, if necessary.

It can be illustrated as under:

Evolution of Modern Marketing Concept for Marketing Management MCOM Sem 2 Delhi University

The philosophy has been prevailing since 1940. It is more prevalent in selling all kinds of insurance policies, consumer non-durables and consumer durable products, particularly the status-symbols.

3. Customer Orientation Philosophy:

This philosophy was brought into play during 1950s and points out that the fundamental task of business undertaking is to study and understand the needs, wants, desires and values of potential consumers and produce the goods in the light of these findings so that consumer specifications are met totally.

Here, the starting point is the customer rather than the product. The enterprise is to commence with the consumer and end with the requisite product. It emphasizes the role of marketing research well before the product is made available in the market place.

The assumptions are:

1. The firm should produce only that product as desired by the consumer.

2. The management is to integrate all its activities in order to develop programmes to satisfy the consumer wants.

3. The management is to be guided by ‘long-range profit goals’ rather than ‘quick sales.’

It can be illustrated as under:

Customer Orientation Philosophy

This means a radical change in the philosophy.

It meant two basic changes namely:

(i) Move from production to market-orientation,

(ii) Gradual shift from age old “Caveat emptor” to “Caveat vendor”.

Since 1950, this philosophy is in vogue and will continue so long as consumer is the King of the market.

4. Social Orientation Philosophy:

There has been a further refinement in the marketing concept particularly during 1970s and 1980s. Accordingly, the new concept goes beyond understanding the consumer needs and matching the products accordingly.

This philosophy cares for not only consumer satisfaction but for consumer welfare or social welfare. Such social welfare speaks of pollution-free environment and quality of human life.

Thus, a firm manufacturing a pack of cigarettes for consumer must not only produce the best cigarettes but pollution-free cigarettes; an automobile not only fuel efficient but less pollutant one.

In other words, the firm is to discharge its social responsibilities. Thus, social welfare becomes the added dimension.

The assumptions of social-orientation philosophy are:

(i) The firm is to produce only those products as are wanted by the consumers,

(ii) The firm is to be guided by long-term profit goals rather than quick sales.

(iii) The firm should discharge its social responsibilities,

(iv) The management is to integrate the firm’s resources and activities to develop programme to meet these individual consumer and social needs.

This concept can be illustrated as under:

Social Orientation Philosophy

This social oriented philosophy is the latest and is considered as an integrated concept. This philosophy, as it covers earlier long-standing concepts, is bound to rule the marketing world for pretty long time.

However, we are to wait and see as to what changes are likely in the coming years and decades that will shape the new marketing concept.

Evolution of Modern Marketing Concept for Marketing Management Mcom Sem 2 Delhi University

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