MARKETING IN HISTORICAL PERSPECTIVE AND EVOLUTION OF MARKETING:End of the Mass Market

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Principles of Marketing MGT301

Lesson 4

Lesson overview and learning objectives:

In last Lesson the focus of discussion was core concepts of the marketing and the increasingly

important role of the marketing process in the ever-changing domestic and global business

environment Today we will be covering following topics:

A. MARKETING

HISTORICAL

PERSPECTIVE

AND

EVOLUTION OF MARKETING

The marketing concept is a matter of increased marketing activity, but it also implies better

marketing programs and implementation efforts. In addition, the internal market in every

company (marketing your company and products to and with the employees of the company) has

become as challenging as the external marketplace due to diversity and many other social/cultural

issues.

What image comes to mind when you hear the word "marketing"? Some people think of

advertisements or brochures, while others think of public relations (for instance, arranging for

clients to appear on TV talk shows). The truth is, all of these--and many more things--make up

the field of marketing. Marketing as "planning and executing the strategy involved in moving a

good or service from producer to consumer."

With this definition in mind, it's apparent that marketing and many other business activities are

related in some ways. In simplified terms, marketers and others help move goods and services

through the creation and production process; at that point, marketers help move the goods and

services to consumers. But the connection goes even further: Marketing can have a significant

impact on all areas of the business and vice versa. Lets discuss some Marketing Basics In

introductory marketing you learned some basics--first the four P's, and then the six P's:

· Product--What are you selling? (It might be a product or a service.)

· Price--What is your pricing strategy?

· Place or distribution--How are you distributing your product to get it into the

marketplace?

· Promotion--How are you telling consumers in your target group about your

product?

· Positioning--What place do you want your product to hold in the consumer's

mind?

Personal relationships--How are you building relationships with your target consumers?

Marketing management is the conscious effort to achieve desired exchange outcomes with target

markets. The marketer's basic skill lies in influencing the level, timing, and composition of demand

for a product, service, organization, place, person, idea or some form of information.

There are several factors that participated role to evolution of marketing like:

1. Changes in Consumer Behavior

There have been many major marketing shifts during the last few decades that have shaped

marketing in the 21st century. There is a view among professional marketers that there is no longer

the substantial product loyalty that existed over the last few decades. Product and brand loyalty,

many argue, has been replaced by something more akin to a consumer decision that is based on the

absence of a better product or service. In addition, there are major changes in the way customers

look at market offerings. During the 1980s customers were optimistic, and in the early 1990s they

were pessimistic. Later in the 1990s, consumers appeared rather optimistic, but still cautious at

Principles of Marketing MGT301

times. The following chart demonstrates some of the major shifts that have occurred to the

present:

Increasingly it is clear that while the 4 Ps (product, price, promotion, and place) have value for the

consumer, the marketing strategies of the 21st century will use the four "4 Cs" as added critical

marketing variables:

1. Care: It has replaced service in importance. Marketers must really care about the

way they treat customers, meaning that customers are really everything.

2. Choice: Marketers need to reassess the diversity and breadth of their offerings into

a manageable good-better-best selection.

3. Community: Even national marketers must be affiliated, attached to neighborhoods

wherever they operate stores.

4. Challenge: The task of dealing with the ongoing reality of demographic change.

2. End of the Mass Market

During the late 1990s, we witnessed the death of the concept of mass market. Regardless, some

marketers continue to argue that database marketing will never replace mass marketing for most

products. The view is that communicating with users by e-mail, Web site, mail, telephone, or fax

will never become cost-efficient enough to justify the return. However, the success of the Internet

provides considerable evidence that one-to-one marketing is and will be appropriate for many

packaged goods and other high- and low-involvement products that in the past sold almost

exclusively with brand advertising.

Through the 1970s, only high-end retailers and personal-service firms could afford to practice one-

to-one marketing. For the most part, they did it the old-fashioned way with personal selling and

index-card files.

During the 1990s, bookstore chains, supermarkets, warehouse clubs, and even restaurants began to

track individual purchase transactions to build their "share of the customer." Many of these

programs now run on Personal Computers platforms or workstation environments much more

powerful than the most capable mainframes of the 1970s. It is possible today to track 5 or 6

million customers for the same real cost as tracking a single customer in 1950. With Internet-based

databases and remote access, this capability literally has exploded in the last few years.

The situation will become even more interesting as one-to-one marketing becomes even

increasingly pervasive. With an increasingly powerful array of much more efficient, individually

interactive vehicles, the options are virtually unlimited, including on-site interactivity, Web site

connections, fax-response, e-mail, and interactive television.

Most households today either have direct Internet access, or with TV sets that also provide real-

time interactivity through the Internet. We are closing rapidly on the time where individuals will

interact with their television and/or computer simply by speaking to it. Via various Web sites,

computers work for us to enable us to remember transactions and preferences and find just the

right entertainment, information, products, and services. Likewise, online capabilities enable

providers to anticipate what a consumer might want today or in the future. Unfortunately, the

system has been slower to protect consumers from commercial intrusions that they may not find

relevant or interesting.

The increasing level of market definition and refinement (and resulting opportunities for

marketers) is possible through the massive social, economic, and technological changes of the past

three decades. Some of the important demographic shifts have been:

· Increasing diversity of the population. The United States has always been an immigrant

nation. However, large numbers of immigrants from Latin America and Asia have

increased the proportion of minorities in the country to one in three, up from one

in five in 1980. This diversity is even more noticeable in the younger market.

Principles of Marketing MGT301

Changing family and living patterns. There has been a substantial rise in the divorce rate,

cohabitation, non-marital births, and increased female participation in the labor

force. In addition, married couples with one earner make up only 15 percent of all

households. Dual-earner households have become much more common--the

additional income is often necessary for the family to pay their bills. Thus, older

have replaced the stereotypical family of the 1950s, working parents with much less

time available.

· Emergence of a new children's market. Minorities are over-represented in the younger

age brackets due to the higher fertility and the younger population structure of

many recent immigrants. The result is that one in three children in the United

States is black, Hispanic, or Asian. In addition, nearly all of today's children grow

up in a world of divorce and working mothers. Many are doing the family shopping

and have tremendous influence over household purchases. In addition, they may

simply know more than their elders about products involving new technology such

as computers.

· Income and education increases are two other important demographic factors impacting

the marketing management arena. Generally, income increases with age, as people

are promoted and reach their peak earning years, and the level of education

generally has increased over the last few decades. Family units today often have

higher incomes because they may have two earners. Accordingly, there is an

increased need for products and services because they likely have children and are

homeowners.

In sum, the need for market analysis and marketing decision-making, and managers to perform

those tasks has never been greater. But, as the course will demonstrate, the complexities of, and

analytical tools required for, these activities have never been greater. Be prepared for a challenging

experience.

3. Marketing Management Philosophies:

There are several alternative philosophies that can guide organizations in their efforts to carry out

their marketing goal(s). Marketing efforts should

be guided by a marketing philosophy. Decisions

SOCIETAL

PRODUCT

about the weight, given the interests of the

MARKETING

CONCEPT

organization, customers, and society need to be

CONCEPT

made by marketing managers. There are five

alternative concepts under which organizations

conduct their marketing activities.

KEY

MARKETING

a. The Production Concept

PHILOSOPHIES

The production concept holds that consumers will

MMARKETIING

ARKET NG

favor products that are available ad highly

PRODUCTION

CCONCEPT

ONCEPT

affordable and that management should,

CONCEPT

therefore, focus on improving production and

distribution efficiency. This is one of the oldest

SELLING

CONCEPT

philosophies that guide sellers. The production

concept is useful when:

1). Demand for a product exceeds the supply.

2). The product's cost is too high and improved productivity is needed to bring it down.

The risk with this concept is in focusing too narrowly company operations. The production

concept holds that consumers will favor products that are affordable and available, and therefore

management's major task is to improve production and distribution efficiency and bring down

prices.

Principles of Marketing MGT301

The Product Concept

The product concept holds that consumers favor quality products that are reasonably priced, and

therefore little promotional effort is required. The selling concept holds that consumers will not

buy enough of the company's products unless they are stimulated through a substantial selling and

promotion effort. The product concept states that consumers will favor products that offer the most

quality, performance, and features, and that the organization should, therefore, devote its energy to

making continuous product improvements. The product concept can also lead to "marketing

myopia," the failure to see the challenges being presented by other products.

The Selling Concept

Many organizations follow the selling concept. The selling concept is the idea that consumers will not

buy enough of the organization's products unless the organization undertakes a large-scale selling

and promotion effort.

1).

This concept is typically practiced with unsought goods (those that buyers do not normally

think of buying e.g. insurance policies).

2).

To be successful with this concept, the organization must be good at tracking down the

interested buyer and selling them on product benefits.

3).

Industries that use this concept usually have overcapacity. Their aim is to sell what they

make rather than make what will sell in the market.

4).

There are not only high risks with this approach but low satisfaction by customers.

The Marketing Concept

The marketing concept holds that achieving organizational goals depends on determining the needs

and wants of target markets and delivering the desired satisfactions more effectively and efficiently

than competitors do. The marketing and selling concepts are often confused. The primary

differences are:

1). The selling concept takes an "inside-out" perspective (focuses on existing products and

uses heavy promotion and selling efforts).

2). The marketing concept takes an "outside-in" perspective (focuses on needs, values, and

satisfactions). Many companies claim to adopt the marketing concept but really do not unless they

commit to market-focused and customer-driven philosophies:

· Customer-driven companies research current customers to learn about their desires, gather

new product and service ideas, and test proposed product improvements.

· Such customer-driven marketing usually works well when there exists a clear need and

when customers know what they want.

· When customers do not know what they want, marketers can try customer driving

marketing--understanding customer needs even better than customers themselves do, and

creating products and services that will meet existing and latent needs now and in the

future.

The Societal Marketing Concept

The societal marketing concept holds that the organization should determine the needs, wants, and

interests of target markets. It should then deliver the desired satisfactions more effectively and

efficiently than competitors in a way that maintains or improves the consumer's and the society's

well being.

1). The societal marketing concept is the newest of the marketing philosophies.

2). It questions whether the pure marketing concept is adequate given the wide variety of

societal problems and ills.

3). According to the societal marketing concept, the pure marketing concept overlooks

possible conflicts between short-run consumer wants and long- run consumer welfare.

Principles of Marketing MGT301

4). The societal concept calls upon marketers to balance three considerations in setting their

marketing policies:

a). Company profits.

b). Customer wants.

c). Society's interests.

5). It has become good business to consider and think of society's interests when the

organization makes marketing decisions.

4. Evolving Views of Marketing's Role:

Finance

As expressed in figures initially the Marketing was considered Production Finance

Production

to play equal function as other departments of the

Human

resources

organization. But with the passage of times and growing

Marketing resumans

Marketing

ource

importance of the customers marketing department attained

more importance and

b. Marketing as a more

attained the central

a. Marketing as an

important function

equal function

part

the

ion

Production

organization.

Afterwards the customer is now the main actor that is

Marketing

Customer

controlling almost all functions and efforts of the

marketing department, because the success of any

tin

organization in today's competitive era depends upon the

level

c. Marketing as the

d. The customer as the

major function

controlling factor

satisfaction

provided by

P ro d u c tio n

the company. Nowadays the marketing department is

M arketin g

acting, as integration department to provide

C ustom er

integration among the functions performed by the

company and customer is acting as controlling factor

in the organization

e. T h e cu sto m er as th e c o n tro llin g

fu n c tio n a n d m ark eting as th e

in teg ra tive fu n ctio n

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