2.The Marketing Concept

Now that we have introduced you to what marketing is and why you should study it, let's examine how organizations should practice marketing. During the 1950s, a philosophy for the practice of marketing emerged known as the marketing concept. Organizations that practice the marketing concept study the consumer to determine consumer’s needs and wants while simultaneously achieving organizational goals. There are three pillars to the marketing concept: 1) consumer orientation; 2) integrated or total company effort, and 3) achievement of organization goals

1.Consumer Orientation. The consumer orientation dimension of the marketing concept argues that a firm can be more successful if it determines what the consumer needs and wants before it decides what product to produce and/or sell. In the past, many firms would produce what they were good at producing. This practice allowed them to turn out numerous products, many of which were of extremely high quality; however, these products often were difficult to sell because they did not meet a consumer need.

To successfully practice the principle of consumer orientation firms need to regularly conduct marketing research. Marketing research is the systematic collection, recording, and analyzing of data that deal with the marketing of goods and services. The tools of marketing research allow the firm to assess consumers' needs and wants.

Regardless of how much marketing research is conducted, no organization can be certain of consumers' wants and needs. This is especially true with new product development or anticipatory manufacturing. For instance, Firestone Tire Company must produce snow tires in the summer for the coming fall and winter season. No matter how much research Firestone conducts, it will still face some uncertainty about the weather and therefore may overproduce or underproduce snow tires for the coming season. Consequently, the role of good executive judgment in marketing decision-making cannot be ignored. Since marketing is not a precise science, good subjective judgment resulting from years of "hands on" experience is also a key to successfully implementing the marketing concept.

2.Integrated Effort. A second pillar of the marketing concept is the principle of integrated effort, in which departments within the organization work together toward the common goal of satisfying the customer. Integrated effort is a systems point of view, in which all departments recognize they are interdependent parts of an organization. Because they are interdependent, they must cooperate to enable the firm to achieve its objectives. Cooperation is often difficult because one department's goals may conflict with those of another department and with the organization's overall objectives.

Several types of conflicts can develop between departments within an organization. One type is the inherent conflict between low unit production costs and high consumer satisfaction. For example, if Sony were to standardize all its television production processes to produce a single size black and white television in a single style, then it could achieve significantly lower costs per television produced. However, this would hurt Sony's marketing efforts because most consumers want variety and selection when purchasing a new television.

3.Organizational Goals. The final pillar of the marketing concept stated that the organization should engage in exchanges based on their potential for helping the organization achieve its goals. Organizations do not participate without expecting something in return, and what they receive should help them achieve their objectives.

Most U.S. organizations are profit oriented and thus only plan to sell their output if it is profitable to do so. A firm may increase its sales, but this does not necessarily mean that its profit will increase. If the transaction costs more to complete than the product is priced, then total company profitability is harmed. Although an organization can increase its sales by more intense advertising and personal selling, if costs rise quicker than sales revenue, then the firm will be worse off.