Marketing as an Organizational Philosophy

An organization typically has some type of philosophy that directs the efforts of everyone in it. The philosophy might be stated formally, as in a mission statement, or it might become established informally through the communications and actions of top management. An organizational philosophy indicates the types of activities the organization values. Three different philosophies deserve mention.

A production philosophy exists when an organization emphasizes the production function. An organization following such a philosophy values activities related to improving production efficiency or producing sophisticated products and services. Production drives the organization. Marketing plays a secondary role because the organization thinks the best-produced products can be easily marketed. High-technology companies often follow a production philosophy.

A selling philosophy predominates where the selling function is most valued. The assumption is that any product can be sold if enough selling effort is given to it. Marketing’s job is to sell whatever the organization decides to produce. Although selling is one component of marketing, organizations driven by a selling philosophy emphasize selling efforts to the exclusion of other marketing activities.

A marketing philosophy suggests that the organization focuses on satisfying the needs of customers. This focus applies to people in the marketing function as well as to those in production, personnel, accounting, finance, and other functions. Production and selling are still important, but the organization is driven by satisfying customer needs. Applied Materials reinforced the importance of a marketing philosophy every payday. “Your payroll dollars are provided by Applied Materials customers” appears on the front of every employee’s paycheck.

Marketing as an organizational philosophy has been based on the marketing concept. This concept consists of three interrelated principles:

• An organization’s basic purpose is to satisfy customer needs.

• Satisfying customer needs requires integrated and coordinated efforts throughout the organization.

• Organization should focus on long-term success.

The marketing concept has been embraced by many firms since the 1950s. However, the competitive business climate of the 2000s suggests that merely satisfying customers is not enough.

Comprehension questions:

1. What type of philosophy has an organization?

2. What does the organizational philosophy indicate?

3. What kinds of philosophies do you know?

4. What has marketing been based on?

5. What are the three interrelated principles of marketing concept?

Marketing Exchanges

Exchange is generally viewed as the core element of marketing. Exchange has been defined as the “transfer of something tangible or intangible, actual or symbolic, between two or more social actors. “ Thus, the basic purpose of marketing is to get individuals or organizations to transfer something of value (tangible or intangible, actual or symbolic) to each other. The most familiar type of exchange occurs when a customer exchanges money with a retail store for a product. Every time a customer pays a Papa John’s pizza delivery person and receives a pizza, a marketing exchange takes place.

Marketing exchanges are not confined to transactions of money for products. Businessses engage in barter where they exchange their goods and services of another firm. Nonprofit organizations, colleges and universities, politicians, and many other “social actors” are also involved in exchanges. Volunteers and contributors to nonprofit organizations, for example, exchange their time and money for the satisfaction derived from helping a good cause. Or consider the tuition that students pay a university or college in exchange for the education they receive. Even politics involves exchanges, with people trading their votes for the promise of representation from a political candidate.

The major objective of marketing exchanges is to satisfy the needs of the individuals and organizations involved. For an exchange to take place, each party must be willing to give up something to get something. What each party gets must be as satisfying as what it gives up. If someone decides to buy a delivered pizza from Papa John’s, the pizza must be as important as the money exchanged to get it. Similarly, Papa John’s must think the money it receives from the customer is as important as the delivered pizza it exchanges.

Creating exchanges that satisfy customer needs requires that marketing strategies be developed and marketing activities performed. The process involves people in various marketing positions who determine what is to be done (they plan) and then do it (they execute). Some people in marketing positions are employed by the firm that produces the product and some by other organizations that specialize in specific marketing activities.

Comprehension questions:

1. How can “exchange” be defined?

2. What is the basic purpose of marketing?

3. What is the major objective of marketing exchanges?

4. What does the process of creating exchanges involve?

Referring to Unit 4