The Marketing Concept

Levitt (1975)
To continue growing, companies must ascertain and act on customers’ needs and desires and not assume the longevity of their product

The reason industries stop growing isn’t because markets are satisfied, its management’s fault

All about defining the industry correctly!

No such thing as a growth industry, only companies organised and operated to create and capitalise on growth opportunities

Selling focuses on the needs of the seller and marketing on those of the buyer

Trap with market research is to not research what the consumer actually wants, but only the preferences between what’s already on offer (Can throw in Honda example here)

The firm buys consumers.

Vargo and Lusch (2004)
Originally marketing characterised as decision-making activity directed at satisfying the customer at a profit by targeting a market and making optimal decisions based on the marketing mix

Now it has moved away from exchange theory of tangibles to have a greater focus on intangibles, like specialised skills, knowledge and processes

In the past, human activity was dominated by goods-centred logic and focus on operation and resources

Goods versus services: goods are distribution mechanisms for service provisions. A Mercedes isn’t just the functions

Knowledge is the fundamental source of competitive advantage

Enterprise consists of 3 core business processes: product development management, supply chain management and customer relationship management

All economies are service economies

The customer is always a co-producer

Jaworski et al. (2000)
Market driven refers to a business orientation that is based on understanding and reacting to the preferences and behaviours of players within a given market structure

Driving markets implies influencing the structure of the market and/or behaviour of the players that enhances the competitive position of the business

3 ways of changing the structure of the market: eliminating players, building new/modified set of players/changing the functions performed by players

Market behaviour can be modified by changing the mind-set of market players (customers, competitors and other stakeholders)

Slater and Narver (1998)
Christensen reports how customer power contributes to the failure of leading firms during a period of industry discontinuity

The conclusion that developing a customer orientation is not wise under these conditions however this is contradicted by theory and recent research in marketing

This is because there is difference between customer-led (expressed needs, short term) and what companies need to be focusing on which is a market-orientated philosophy (goes beyond satisfying expressed needs, proactive and long term)

The concept that is the foundation of modern marketing theory is that an organisation’s purpose is to discover needs/wants in its target markets, and to satisfy those needs more effectively and efficiently than competitors

Lusch (2007)
“to market” model: historically, buyer and seller were separate and there was a shortage of supply; marketing was getting goods to consumers; tangibles were seen as source of value and marketing useful only in adding time/place/possession

“marketing to” model: More developed and efficient economies mean the issue is now stimulating demand rather than filling it; focus on satisfying the customer; shift from societal to managerial perspective; focus on satisfying customer; but intrusive nature can be overwhelming and so consumers choose to avoid it all

“marketing with” model: customers are made into endogenous, operant resources (produce effects, dynamic, and intangible) as opposed to exogenous, operand resources (performed acts, static, and tangible); value is cocreated.

Brynjolfsson et al. (2006)
The wide variety of products that the internet has made available to consumers and that they value more highly than the lower prices

Supply-side drivers: lower costs because warehouses rather than shop space; can aggregate demand with no geographic restrictions so don’t have to cater only to mainstream; lower production costs for niche products (printing on demand, lower search costs for f of p); innovation lowers costs (digitalised products)

Demand-side drivers: provision of active and passive search tools to prevent overwhelming consumers with choice; passive search tools use revealed preferences; sales distribution far more even over internet

Second-order effects: positive feedback loops; niche products become viable/profitable, creating incentives for their production and design

More niche markets appear and consumers develop more specific tastes; consumers openly share information online; destroys incentive to invest in previously mainstream goods