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An account of evolution of the concepts of Marketing over the years of human existence –
from the primitive “Exchange Concept” to the latest “Holistic Marketing Concept”.
[This is an improved version of my earlier article of same title.]
Contents :
1. Introduction :
a. Definitions
b. What is Marketed
c. Marketing Concepts
d. Trends in Marketing Practices
2. Holistic Marketing Concepts :
a. Integrated Marketing
b. Internal Marketing
c. Relationship Marketing
d. Social Responsibility Marketing
e. Holistic Marketing Matrix
3. Future of Marketing
4. Conclusion
Introduction
DEFINITIONS OF MARKETING :
Marketing Concepts
The Marketing concepts under which organisations have conducted marketing activities have
undergone some sort of evolution during the period of human existence. Chronologically they
are :
1. Exchange Concept : This is the primitive & fundamental concept of marketing. Exchange
of goods and services between two agencies called buyer and seller, or exchange of goods
and services for money or barter system. This involves the process of obtaining a desired
product or service from someone else by offering something (money or any other item) in
return.
2. Production Concept : This concept is one of the oldest, and suggests that the consumers
will like to buy the products which are available easily, cheaply & widely. So the
marketers must have a mass production facility (efficient production) with low price (cost
efficiency) and make it available very near to the customers (mass distribution). This
concept is normally adopted when the Company wants to expand.
3. Product Concept - This is the next step of evolution of marketing concepts. It depicts that
customers will go for those products which offer quality, utility, features, performance,
value, benefits, etc. So the marketers must improve the products in an innovative way &
continuously. This is more often accompanied by a suitable pricing, distribution,
promotion (all the 4Ps of marketing) programme.
4. Selling Concept : This concept involves aggressive selling and promotional effort. “The
purpose of marketing is to sell more stuff to more people more often for more money in
order to make more profit”. This kind of marketing is practised for goods & services which
buyers normally don’t like to buy, like insurance, dictionaries, encyclopaedia, etc. The
aim of the marketers is to sell what they produce, rather than make what the market
wants.
5. Marketing Concept - This concept was evolved in the 1950s, and for the first time the
attention was shifted to Customers. Instead of concentrating on the Products /
Production / Selling, the business became "Customer Oriented". The "Make & Sell"
philosophy gave way to the "Sense & Respond" philosophy. Instead of finding the right
customer for the product, the marketer now has to find the right product for the
customer. The perceptive contrast between the selling and marketing concepts – selling
focuses on the needs of the seller, marketing on the needs of the buyer. This concept
holds the secret of the company being more effective than its competitors in creating,
delivering & communicating superior value to the targeted customers.
6. Holistic Marketing Concept – In the new marketing environment, companies wonder how
to operate & compete. Marketers in the current age are increasingly recognising the need
to have a more complete & cohesive approach that goes beyond traditional application of
marketing concepts. This concept is based on the development, design and
implementation of marketing programs, processes and activities that recognise their
breadth and inter-dependencies. Holistic Marketing recognises that “everything matters”
with marketing - and that a broad integrated perspective is often necessary. The
important components are :
a. Integrated Marketing,
b. Internal Marketing,
c. Relationship Marketing,
d. Social Responsibility Marketing.
The Holistic Marketing Concept is an approach to marketing that seeks to recognise &
reconcile the scope & complexities of various marketing processes. We shall discus each one
of these in the following.
Trends in Marketing Practices
The marketplace is not the same as it used to be. It is rapidly changing as a result of major,
sometimes interlinking societal forces that have created new behaviours, new opportunities &
new challenges, such as :
Changing Technologies Customer Empowerment
Customisation Deregulation
Disintegration Globalisation
Heightened Competition Industry Convergence
Market Fragmentation Privatisation
Retail Transformation Retail Transformation
Technological Advances The Internet Revolution
In response to this rapidly changing environments companies have restructured their
business & marketing practices in some of the following ways :
1. Reengineering : Appointing teams to manage customer-value-building processes & break
down walls between departments.
2. Outsourcing : Greater willingness to buy more goods & services from outside domestic or
foreign vendors.
3. Benchmarking : Studying “best practice companies” to improve performance.
4. Supplier Partnering : Increased partnering with fewer but better value-adding suppliers.
5. Customer Partnering : Working more closely with customers to add value to their
operation.
6. Merging : Acquiring or merging with firms in the same or complementary industries to
gain economy of scale & scope.
7. Globalising : Increased effort to “Think Global & Act Local”.
8. Flattening : Reducing the number of organisational levels to get closer to the customers.
9. Focusing : Determining the most profitable business & customers & focusing on them.
10. Accelerating :Designing the organisation & setting up processes to respond more quickly
to changes in the environment.
11. Empowering : Encouraging & empowering personnel to produce more ideas & take more
initiative.
Accordingly the role of marketing organisation is also changing. Traditionally, the marketers
have played the role of middlemen between the customers & the various functional areas of
the organisation. In a networked enterprise, every functional area can interact directly with
customers. Thus marketing needs to integrate all the customer-facing processes so that
customers a single face (Integrated Marketing) & hear a single voice (Integrated Marketing
Communications) when they interact with the company.
Integrated Marketing
One of the major tasks of marketers is to “integrate” all the marketing activities &
programmes like “creating”, “communicating” & “delivering” value to the customers. The
marketing programme consists of various decisions on value-enhancing marketing activities
that can be used. The Famous Marketing Mix – the Four Ps, as devised by McCarthy
constitute the traditional marketing activities in four broad groups as given below in details :
1. Products – Design, Features, Brand Name, Models, Style, Appearance, Quality, Warranty,
Package (design, type, material, size, appearance & labelling), Service ( pre-sale, after
sale, service standards, service charges), Returns.
2. Price – Pricing Policies, List Price, Margins, Discounts, Rebates, Terms of Delivery,
Payment Terms, Credit Terms, Instalment Purchase Facility, Resale Price, Maintenance
prices.
3. Place – Channels of Distribution (channel design, types of intermediaries, location of
outlets, channel remuneration, dealer-principle relation, etc.), Physical Distribution
(transportation, warehousing, inventory levels, order processing, etc.)
4. Promotion – Personal Selling, Selling Expertise, Size of Sales Force, Quality of Sales
Force, and Marketing Communications - Advertising (media-mix, media vehicles, and
programmes), sales promotions, publicity & public relations, direct & interactive
marketing).
Now, these traditional concepts of Four Ps represent the sellers’ view of the marketing tools
available to influence buyers. In holistic marketing one has to see also the buyers’ point of
view, where each of these tools will deliver the customers’ benefit or value. Robert Lauterborn
suggested the buyers’ Four Cs as follows :
Product = Customer Solution Price = Customer Cost
Place = Convenience Promotion = Communication
Thus the successful companies are those who can meet (1) customer needs (2) economically,
(3) conveniently & (4) with effective communication. Two broad concepts of integrated
marketing are as follows :
1. Several different marketing activities are used to create, communicate & deliver customer
value,
2. All marketing activities coordinated to maximise their joint efforts.
Or in other words, the design & implementation of one activity is done with all other activities
in mind. The business of running a successful organisation is to integrate the system for
management of demand, resources & network. Integrated marketing communication is a case
in point.
Internal Marketing
Internal marketing ensures that everyone in the organisation adopts appropriate marketing
principles and the top management should see it happen. This is the management task of
hiring, training & motivating the employees to serve the customers well. Smart & successful
companies understand that there is as much activity outside the company as inside. For it
makes no sense to promise excellent services before the company’s service staff is ready to
provide. Internal marketing must happen in two levels as follows :
1. At the first level, all the marketing functions like, sales force, market research, customer
service, product management, advertising, etc. must go together, i.e., all the personnel
should work in tandem or unison for common goal.
2. At the second level, “marketing” must be embraced by other departments for a common
goal of the organisation. All the relevant functional departments like Finance, HR,
Operations, Logistics, Systems, etc. must coordinate each other to have a marketing
orientation. Only trying to meet individual department’s target & norms and not
supporting the marketing objectives will take the company nowhere. One has to bear in
mind that it’s marketing that earns revenue.
Internal marketing requires that everyone in the organisation buy into the concepts & goals
of marketing, and engage themselves in selecting, creating, communicating & delivering
customer value. Only when all the employees realise that their jobs are to create, serve &
satisfy the customers does the company become an effective marketer.
Relationship Marketing
The development of deep, enduring relationships with all the people or firms involved directly
or indirectly in the firm’s marketing activities is appearing as a key goal; of marketing. This is
the concept of Relationship marketing – it aims at building mutually satisfying long-term
relationships with key parties like customers, financiers, suppliers, distributors & of course
the stakeholders, in order to earn & retain their business. It also builds strong economic,
technical & social binding amongst the parties. There are four key constituents of marketing
are :
1. Customers
2. Employees
3. Marketing Partners : Channels, Suppliers, Distributors, Dealers, Retailers, Agencies, etc.
4. Financial Community : Shareholders, Stakeholders, Financiers, Investors, Analysts, etc.
5. Another key constituent is the Society : well-wishers, scientists, professors,
environmentalists.
The ultimate goal of relationship marketing is the building of a unique company asset called
a marketing network, which consists of the company & its supporting stakeholders as listed
above with whom it has built manual profit relationships. Interestingly, today, the
competition is not between companies as such, but between the carefully built marketing
networks – whoever has a better network wins. So the principle is simple – build an effective
network, & the profits will follow. But the practice is not so. The development & building of a
strong relationship requires a deep understanding of the capabilities & resources of different
groups as well as their needs, goals & desires. Relationship marketing involves the right kind
of relationships with right constituent groups, like Customer Relationship Management
(CRM) with customers, Partner Relationship Management (PRM) with other partners. Since
these being separate subjects themselves, are beyond the scope of this article.
Mass Market Oriented Segment Oriented Niche Oriented & Customer Oriented
CONCLUSION
The Nineteenth century American author Ralph Waldo Emerson had said, “This time like all
times is a good one, if we but know what to do with it”. Thus, the exciting time for marketing
has arrived now. And also, in the relentless pursuit of marketing superiority & dominance,
new concepts, new rules, new tools & practices are ever emerging. There are a number of
benefits of successful twenty-first-century marketing. All we need are hard work, insight,
right application of mind & tools, inspiration, perseverance & of course a willingness to
achieve greater heights.
Reference : For the preparation of this seminar article the following text book was referred.
Readers may refer to this book for further study :
“Marketing Management”, 12th. Edition (2006), By Philip Kotler and Kevin Lane Keller.
Chapters - 1 & 22.