Firms and businesses, approach and conduct business in different ways in order to achieve their organizational goals. There are five competing concepts by which firms and business are guided in their marketing effort.
The first three concepts production, product and selling, focus all on the product. The last two concepts marketing and societal marketing, focus on the customer. However, the commonality in all five philosophies is that they all have the same goal which is organizational profit. The choice as to which concept or philosophy to adopt depends on the circumstances of the situation
The first concept, the production concept, is the philosophy that consumers will favour products that are available and highly affordable. This philosophy states that any amount of goods produced will sell if it is available and affordable to customers. When firms adopt this concept, generally they produce goods on a mass production level, to be able to produce large quantities, therefore make it more available; investing in technology is essential, to reduce the costs of production and make it more affordable. In such case the management is required to focus mostly on improving the production and distribution of a particular product.
The production concept can be an appropriate philosophy in two types of situations: The first one is where the demand for a product exceeds the supply. Here the management should concentrate on finding ways to increase production. The second situation is where the product’s cost is too high and therefore improved productivity is needed to bring it down.
A disadvantage of the production concept, is that firms which employ this concept risk to lose sight of what the customers really want.
The product concept holds that consumers will favor those products that offer the most quality, performance, and features, and therefore the organization should devote its energy to making continuous product improvements. Firms adapting this concept believe that customers are attracted to products which are very efficient and therefore the management emphasizes on adding and building more value on a product. This concept holds that if one manages to produce the best product it will sell it self easily.
A disadvantage of this concept is that firms adopting the product concept, tend to focus too much on the product and this can lead to marketing myopia. Buyers might be looking for a better solution to a problem, but not necessarily a better product in that category.
The selling concept states the idea that consumers will not buy enough of the product unless the firm undertakes a large-scale of selling and promotional effort. Firms adopting this philosophy do not produce goods and services in line with people’s need and wants because they try to create demand for that particular product themselves. This task involves investing a lot in advertising and selling because this concept states that demand will be generated by doing so. This requires a good sales force, and firms to perfect various sales techniques to track down prospects and hard-sell them on the benefits of their product. The selling concept is generally practiced with unsought goods, such as insurance, encyclopedias, and funeral plots. A situation in which the selling concept is typically adopted is, when firms have overproduction, and try to sell what they have rather than what people want.
A disadvantage of the selling concept is that by adopting this concept, firms mainly aim to get the sale and do not bother about any post-purchase satisfaction. This carries high risks, if customers are not satisfied, relationships are not created and therefore they are not inclined to make other purchases.
The marketing concept is the philosophy that holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfaction more effectively and efficiently than others do. Firms practicing the marketing concept, start from the customer, by targeting a specific market and determining its needs and wants through market research. Products and services are than developed accordingly with the market’s demand through integrated marketing. In the marketing concept profit is generated through building long-term relationships with customers, by delivering superior value and satisfaction.
The focus of management is on the customer’s ultimate satisfaction. Hence, while the selling concept takes an inside-out perspective, the marketing concept takes an outside-in perspective. The selling concept focuses on the needs of the seller whilst the marketing concept focuses on the needs of the buyer. The Selling concept’s aim is to convert the product into cash. On the other hand the marketing concept aims to satisfy the needs of the customer by means of the product and the whole process associated with creating, delivering and finally consuming it.
A disadvantage of the marketing philosophy is that this concept must be based on a long-term process and profits are realised in the long run. Also firms adopting this concept must invest a lot financially, in conducting research and in building relationships with their customers.
The fifth concept, the societal marketing concept is the newest concept. It holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that it maintains and improves the consumer’s and the society’s well-being. The societal marketing concept is similar to the marketing concept, except that it also takes into consideration the society’s well-being.
This concept was developed in a time where society began to question if the marketing concept was adequate in the face of worldwide environmental problems, resource shortages, and other social problems. Firms adopting the societal marketing concept believe that consumers will respond more favourably to companies which are socially responsible and react unfavourably to companies which they feel are not socially responsible. This gives socially-responsible companies a competitive edge over their competitors.
The disadvantages of the societal marketing concept are the same disadvantages of the marketing concept, with the exception that this concept involves more extra costs with regards to the well being of society.