Many organizations follow the selling concept, which holds that consumers will not buy enough of the organization's products unless it undertakes a large-scale selling and promotion effort. The concept is typically practised with unsought floods - those that buyers do not normally think of buying, such as encyclopaedias and funeral plots. These industries must be good at tracking down prospects and convincing them of product benefits.
The selling concept is also practised in the non-profit area. A political party, for example, will vigorously sell its candidate to voters as a fantastic person for the job. The candidate works hard at selling him or herself - shaking hands, kissing babies, meeting donors and making speeches. Much money also has to be spent on radio and television advertising, posters and mailings. Candidate flaws are
' products sales volume r promoting
The selling concept
The marketing concept
Profits through customer satisfaction
Profits through customer satisfaction
The selling and marketing concepts contrasted often hidden from the public because the aim is to get the sale, not to worry about consumer satisfaction afterwards.
Most firms practise the selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants. Thus marketing based on hard selling carries high risks. It focuses on short-term results -creating sales transactions - rather than on building long-term, profitable relationships with customers. It assumes that customers who are coaxed into buying the product will like it. Or, if they don't like it, they may forget their disappointment and buy it again later. These are usually poor assumptions to make about buyers. Most studies show that dissatisfied customers do not buy again. Worse yet, while the average satisfied customer tells three others about good experiences, the average dissatisfied customer tells ten others his or her bad experiences.9
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. Surprisingly, this concept is a relatively recent business philosophy.
The selling concept and the marketing concept are frequently confused. Figure 1.4 compares the two concepts. The selling concept takes an inside-out perspective. It starts with the factory, focuses on the company's existing products and calls for heavy selling and promotion to obtain profitable sales. It focuses on customer conquest - getting short-term sales with little concern about who buys or why. In contrast, the marketing concept takes an outside-in perspective. It starts with a well-defined market, focuses on customer needs, co-ordinates all the marketing activities affecting customers and makes profits by creating long-term customer relationships based on customer value and satisfaction. Under die marketing concept, companies produce what consumers want, thereby satisfying consumers and making profits.
Many successful and well-known global companies have adopted the marketing concept. IKEA. Marks & Spencer, Procter & Gamble, Marriott, Nordstrom and McDonald's follow it faithfully (sec Marketing Highlight 1.2). Toyota, the highly successful Japanese car manufacturer, is also a prime example of an organization that takes a customer- and marketing-oriented view of its business.
marketing concept The marketing management philosophy •which holds that achieving organisational goals depends on determining the needs and wants qf target markets and delivering the desired satisfactions more effectively and efficiently than competitors do.
McDonald's Applies the Marketing Concept
McDonald's Corporation, the American fast-food hamburger retailer, is a master global marketer. With over 18,000 outlets in more than 90 countries and more than $23 billion in annual worldwide sales, McDonald's opens a new restaurant every three hours somewhere in the world. Credit for this performance belongs to a strong marketing orientation: McDonald's knows how to serve people and adapt to changing consumer wants.
Before McDonald's appeared, Americans could get hamburgers in restaurants or diners. But consumers often encountered poor-quality
Marketing Highlight 1.2
hamburgers, slow and unfriendly service, unattractive d6cor, unclean conditions and a noisy atmosphere. In 1955 Ray Kroc, a 52-year-old salesman of milkshake-mixing machines, became excited about a string of seven fast-food restaurants owned by Richard and Maurice McDonald. He bought the chain for $2.7 million and expanded it by selling franchises, and the number of restaurants grew rapidly. As times changed, so did McDonald's. It expanded its sit-down sections, improved the decor, launched a breakfast menu, added new food items and opened new outlets in busy, high-traffic areas.
Kroc's marketing philosophy is captured. in McDonald's motto of 'QSC & V, which stands for quality, service, cleanliness and value. Customers enter a spotlessly clean restaurant, walk up to a friendly counter-person, quickly receive a good-tasting meal, and eat it there or take it out. There are no jukeboxes or telephones to create a teenage hang-out. Nor are there any cigarette machines - McDonald's is a family affair, appealing strongly to children.
McDonald's has mastered the art of serving consumers and it carefully teaches the basics to its employees and franchisees. All franchisees take training courses at McDonald's 'Hamburger
McDonald's delivers "quality, service, cteanlmess, and value" Co customers around the 'world, hern in the world's largest McDonald's in Beijing.
University1 in Elk Grove Village, Illinois. McDonald's monitors product and service quality through continuous customer surveys and puts great energy into improving hamburger production methods in order to simplify operations, bring down costs, speed up service and bring greater value to customers. Beyond these efforts, each McDonald's restaurant works to become a part of its neighbourhood through community involvement and service projects.
In its restaurants outside the United States, McDonald's carefully customizes its menu arid service to local tastes and customs. For instance, McDonald's India offers products developed especially for the Indian market - particularly vegetarians. It serves only mutton, chicken, fish and vegetable products, not beef, pork and their byproducts. Big Mac in India is called Maharaja Mac! It serves corn soup and teriyaki burgers in Japan, pasta salads in Rome, and wine and live piano music with its McNuggets in Paris. When McDonald's opened its first restaurant in Moscow, the company had to overcome enormous hurdles to meet its high standards for consumer satisfaction in this new market. It had to educate suppliers, employees and even consumers about the time-tested McDonald's way of doing things. Technical experts with special strains of disease-resistant seed were brought in from Canada to teach Russian farmers how to grow nisset Burbank potatoes for French fries, and the company built its own pasteurizing plant to ensure a plentiful supply of fresh milk, it trained Russian managers at Hamburger University and subjected each of 630 new employees to hours of training on such essentials as cooking meat patties, assembling Filet-O-Fish sandwiches and giving service with a smile. McDonald's even had to train consumers, most of whom had never seen a fast-food restaurant. Customers waiting in line were shown videos telling them everything from how to order and pay at the counter to how to handle a Big Mae. And in its usual way, McDonald's began immediately to build community involvement. On opening day, it held a kick-off party for 700 Muscovite orphans and donated the day's proceeds to the Moscow Children's Fund. As a result, the new Moscow restaurant got off to a very successful start. About 50,000 customers swarmed through the restaurant during its first day of business.
Riding on its success in Moscow, McDonald's continues to expand its worldwide presence. The 28,000 square-foot restaurant in Beijing has 29 cash registers and seats 700 people.
Thus, McDonald's focus on consumers has made it the world's largest food-service organization. The company's huge success has been reflected in the increased value of its stock over the years: 250 shares of McDonald's stock purchased for less than $6,000 in 1965 would be worth well over a million dollars todav!
SOURCES: Scott Hume, 'McDonald's l<'red Turner: making all the right moves', Ad-oertiKini> Age (1 January 1990), pp. 6, 17; Gail McKnight, '1 [ere comes Bolshoi Mac', USA Today Weekend (26-8 January 1990), pp. 4-5; Roscniarie Boyle, 'McDonald's gives Soviets something worth waiting for', Adocrtising Age (19 March 1990), p. 61; 'Food draws raves, prices don't aE Beijing McDonald's opening', Durham Herald-Sun (12 April 19921, p. HI 2; Laura Manur, Marketing Kusiness (September 1997), p. 35.
Toyota openly publicizes its intent on getting deep into the hearts and minds of its customers, to establish precisely what they want and subsequently find ways to fulfil their wishes. In Japan, Toyota has built the Amhix, a 14-storey building resembling a blue and black striped rocket, which it uses to attract millions of visitors. These could be potential customers or people with ideas on how the company should respond to consumers7 vehicle requirements. These visitors are allowed to spend as much time as they want designing their own vehicles on computer/ TV screen in the vehicle-design studio. There is a two-way information centre where visitors obtain specific information about the company, its dealers or products. The visitors are also allowed to expound, at length, on what they think Toyota should be doing or making. Meanwhile, Toyota's attentive note-taking staff ensure that the entire Amlux complex is dedicated to involving societal marketing concept
The idea that the organization should determine the needs, wants and interests of target markets and deliver the desired satisfactions more effectively and efficiently than competitors in a <u>ay that maintains or improves the consumer's and society's well-being.
potential customers who can give them close insights into how their car needs can be satisfied.
In marketing-led organizations, real customer focus has to work from the top down and the bottom up, and it has to be totally accepted by the whole workforce. This organization-wide belief ensures that customer retention becomes a priority and all staff are committed to building lasting relationships with the eustomer. To achieve successful implementation of the marketing concept, the organization therefore focuses on how best to tap and channel the knowledge and understanding, the motivation, the inspiration and the imagination of all staff to deliver products and services that meet exactly what the eustomer requires from the organization.
Many companies claim to practise the marketing concept, but do not. They have the forms of marketing - such as a marketing director, product managers, marketing plans and marketing research - hut this does not mean that they are market-focused and customer-driven companies. The question is whether they are finely tuned to changing customer needs and competitor strategies. Formerly great western companies - Philips, General Motors, IBM, General Electric Company - all lost substantial market share because they failed to adjust their marketing strategies to the changing marketplace. Years of hard work are needed to turn a sales-oriented company into a marketing-oriented company. The goal is to build customer satisfaction into the very fabric of the firm. Customer satisfaction is no longer a fad. As one marketing analyst notes; 'It's becoming a way of life ... as embedded into corporate cultures as information technology and strategic planning.'1"
However, the marketing concept does not mean that a company should try to give all consumers everything they want. Marketers must balance creating more value for customers against making profits for the company: As one marketing expert notes, 'The purpose of marketing is not to maximise customer satisfaction. The shortest definition of marketing I know is "meeting needs profitably". The purpose of marketing is to generate eustomer value (at a profit]. The truth is [that the relationship with a eustomer] will break up if value evaporates. You've got to continue to generate more value for the consumer but not give away the house. It's a very delicate balance.'11
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