Studies reveal that different organizations have different perceptions of Marketing. These differing perceptions have led to the formation of different concepts of Marketing. There are six alternative concepts under which organizations conduct their marketing activities: the exchange concept, the production concept, the product concept, the sales concept, the marketing concept, and the societal marketing concept.
Concept of Marketing
1. The Exchange Concept
The exchange concept of marketing, as the name suggests, holds that exchange of a product between the sellers and buyers is the central idea of marketing. While exchange does form a significant part of marketing, but considering marketing as simply exchange of product and services would amount to gross undermining of the essence of marketing. Marketing is much broader than exchange. Exchange, at best covers the distribution aspect and the price
mechanism. The other important aspects of marketing, such as concern for customers, generation of value satisfactions, creative selling and integrative activity of serving the customers, get completely overshadowed in the
exchange concept of marketing.
2. The Production Concept
The production concept holds that consumer will favour products that are available and highly affordable. Here, production and technology dominate the thinking process of key people. They believe that marketing can be managed by managing production. The concept holds that consumer would, as a rule, support those products that are produced in great volume at a low unit cost.
Naturally in such organizations all efforts gets focused on production. Organizations favouring this concept are impelled by a drive to produce all they can. They do achieve efficiency in production but they do not get best of
customer patronage. Customers after all are motivated by a variety of alternatives in their purchases.
However, production concept as a philosophy work undertow situations
- When the demand for the product exceeds the supply, management should look for ways to increase production
- When the products cost is too high, improved productivity is needed to bring it down.
3. The Product Concept
The product concept is somewhat different from production concept. Whereas the production concept seeks to win markets and profits via high volume of production and low unit costs, the product concept seeks to achieve the same
result via product excellence – improved products, new products and ideally designed and engineered products. It also places emphases on the quality assurance.
Organizations that are guided by product concept believe that consumers automatically go for products of high quality. They concentrate on achieving product excellence. They spend considerable amount of money and time on research and development activities in order to produce product of excellence. Yet, in many cases these organizations fail in the market because they do not study the market and the consumers in depth. They totally get engrossed with the product and almost forget the consumer, for whom the product is manufactured, they fail to find what the consumers actually need and would gladly accept.
4. The Sales Concept
The sales or selling concept says that consumers will not buy enough of the organizations product unless it undertakes the large scale selling and promotion effort. It cannot expect its products to get picked up automatically by the customers. The company has to consciously push its products. Aggressive promotion and advertising, price discounts and publicity and public relations are the tools that increase sales. However, sales without satisfaction of
consumers may be counter productive in the long run.
5. The Marketing Concept
The marketing concept represents a radically new approach to business and is the most advanced of all the ideas of marketing that have emerged over years. Only marketing concept is capable of keeping the organization free from
“marketing myopia”. All others viz. exchange concept, production concept, product concept and selling concept suffers from marketing myopia in one form or the other.
The marketing concept has four major distinguishing features
a) Consumer orientation:
An overwhelming emphasis on the consumer and his needs is the first distinguishing characteristic of marketing concept. It enables the firm to look at a business activity from the point of view of
b) Integrated management action:
Integrated management action simply means that all the different management functions are tightly integrated with one another, keeping marketing as the pivot.
For example, marketing department may have identified that there is going to be increase in the demand of certain product with some modifications. This information is sent to the manufacturing department that in turn informs purchase, inventory and other related departments, so as to produce the best benefits and satisfaction to the consumers.
c) Consumer satisfaction:
Marketing concept is a means for fulfilling consumer’s needs. It emphasizes that just consumer orientation of firm is
not enough; it is essential that such an orientation lead to consumer satisfaction and no firm can afford to ignore it.
d) Realizing organizational goals including profits:
The marketing concept treats consumer satisfaction as pathway of attainment of other goals of the organization. The firm tries its maximum to control costs and simultaneously ensure quality, optimize productivity and maintain a good organization climate and profitability.
6. The Societal Marketing Concept
The societal marketing concept holds that the organization should determine the needs, wants and interests of target market. It should then deliver superior value to the consumers in a way that maintains and improves the consumers
and society’s well being. It questions whether the pure market concept is adequate in an age of environmental problems, resource shortages, rapid population growth, worldwide economic problems and neglected social
Consider, for example, most of the industries are just garbaging the by-product in the soil or are drained away in the river causing water and soil pollution. This causes lot of health related problems to the people. Such
concerns led to the emergence of societal marketing concept. The societal marketing concept calls on business people to balance three considerations in setting their marketing policies: company profits, consumer’s wants and society’s interests.
Evolution of Marketing
1. The Stage of Barter
The pre-industrial revolution world was characterized by an agricultural cum handicraft economy. The agriculturist, whether produce wheat or rice, or wool or cotton, exchange the surplus with other agriculturists because the products produced by one agriculturist is required by other who were not engaged in the same activity. In this way, they meet their requirement by exchanging the product of value with each other. There was no elaborate distribution system because the need and habit of the people and the technology did not demand such system.
2. The Stage of Money Economy
The next stage in the evolution of marketing was money economy. The fundamental change that took place in this period was the replacement of barter system by money economy. Money becomes the mechanism of
exchanging goods and services.
3. The Stage of Industrial Revolution
Many fundamental changes took place at this stage. Industrial revolution gave the birth to new business system. It introduced new products, new manufacturing system, new transportation mode and methods of communication, and also brings changes in the physical and economic environment of man. The concept of mass production was introduced and variety of low cost products is manufactured in abundance. The industrial revolution also gave birth to income revolution, giving a great deal of disposable income to large mass of people. And because of this disposable
income only, mass production and mass distribution sustained during industrial revolution.
4. The Stage of Competition
The mass production and mass distribution brought by industrial revolution soon to the stage of competition. The ever-increasing size of the industrial firms leads to stiff competition among the producers. Earlier, during industrial revolution the main task of the industrial firms was to produce and distribute the products but now the main issue was to face the competition and sustain in the business. They started differentiating their products in order that their products are preferred over the competitor’s product.