In order to answer the question ‘why have companies so readily adopted marketing?’ we first need to define what we mean when we refer to marketing. Marketing has been defined as, ‘The conception, pricing, promotion and distribution of ideas, goods and services in order that exchanges may be created that are able to satisfy both individual and organisational objectives’ (Evans
Hospitality, Leisure & Tourism Series
Early forms of marketing +Marketing = exchange Production orientation +
+ + +
Increase in productivity Industrial revolution
Sophisticated institutions for facilitating exchange Specialization
Sales orientation +
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Sell what we can make
Products and services seen as a solution to generalized consumer needs
Marketing concept +
+
+
Process starts with market research
Marketing seen as integral to all aspects of the business process
Make what we can sell
147 The end of the marketing concept
and Moutinho, 1999). The Chartered Institute of Marketing in the UK focuses on the issue of matching the requirements of both the company and the consumer, suggesting marketing is a manage- ment process that identifies, anticipates and supplies customer requirements efficiently and profitably. A general definition of hospitality marketing, and one which is appropriate for use within this chapter, is that marketing is communicating to and giving the target market customers what they want, when they want it, where they want it, at a price they are willing to pay (Lewis and Chambers, 1989).
The issues this raises are how do firms determine who are their target markets? Where are their markets? What price are they willing to pay for goods and services? As Foxall and Goldsmith (1994: 7) argue, ‘in a competitive economic system, the survival and growth of firms requires accurate knowledge about con- sumers, how they buy, why they buy, and where they buy . . . nowadays successful management depends more than ever on matching every aspect of the business to the satisfaction of the customer’.
A simple, but useful, way of visualizing the development of the marketing concept is that of the ‘three eras’ approach advocated by Keith (1960) and Baker (1995) among others, highlighted in Figure 7.1. This, while being an oversimplification of a complex process, does seek to highlight the change of emphasis in the relationship between supply and demand over time.
Baker (1995) identifies the earliest forms of marketing as being seen in terms of marketing = exchange, whereby exchange came
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Figure 7.1 The evolution of the marketing concept
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Understanding the Hospitality Consumer
about due to surplus in excess of the immediate needs of a producer. Assuming that two producers of different products are brought into contact, each having a surplus and desiring the others’ surplus, it is logical to assume that a mutually beneficial exchange can take place. The evolution of a money-based economy encouraged greater specialization and has led to the development of sophisticated institutions for facilitating exchange both nationally and internationally. The Industrial Revolution led to increased productivity, which in turn led to the need for more sophisticated institutions for marketing.
As a result this era has become characterized as production orientated.
King (1965: 37) summarized the period of production orienta- tion as ‘an era of managerial concern with problems of capacity creation, work methods and volume production’. He goes on to argue that during this period, problems related to production assumed greater significance than those related to identifying and developing markets. The emphasis during this period was on volume rather than differentiation or choice, and is exempli- fied by the model-T motor car produced by Henry Ford. As Baker (1995: 4) argues, ‘Ford made his model-T available to vast segments of the market that otherwise would never have had the opportunity to own the basic product, which they sought, the colour of which was irrelevant’.
It is argued that the situation that brought the production orientation to an end was the creation of excess production.
Excess occurs when markets cease to absorb all of a firm’s supply and the economic model of reducing prices to stimulate demand is unacceptable due to the low prices that would be required.
Faced with such a situation the response of managers was to maintain volume of sales through non-price competitive mecha- nisms, that is, through product differentiation, promotion and sales activities. This led marketing from a production-orientated approach through to a sales-orientated one, defined as ‘selling what we can make’.With a sales-orientated approach products or services are taken as a given and people are encouraged to view them as the solution to generalized consumption needs. The sales orientation within organizations came to an end as a result of mass industrialization and the rapid growth in technological innovation. This was coupled with a slowing down in population growth in those markets where consumption was traditionally a key feature. As a result most markets became buyers’ markets as production outstripped consumption, leading to intense competi- tion among companies.
From the 1950s onwards a new philosophy was seen in the market, one that moved from a position of ‘selling what we can
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149 The end of the marketing concept
make’ to ‘making what we can sell’. The difference is seen as one in which customers themselves led production and market- ers organized the supply of consumer-desired objects or ser- vices. King (1965: 35) argues that the fundamental differences between selling and marketing are: ‘Under the traditional sales concept, engineering designed a product, manufacturing pro- duced it and then the sales people were expected to sell it.
Under the modern marketing concept, the whole process starts with marketing research and sales forecasting to provide a sound, factual, customer-orientated basis for planning all busi- ness operations, and the business function that has sales responsibility now participates in all the stages of the business planning process.’ As such, the marketing concept introduces marketing at the beginning of the process rather than at the end and integrates marketing into all phases of the business. In essence, the marketing concept says find wants and fill them, rather than create products and sell them. Thus the marketing concept, as defined by Kotler (1980: 31) is ‘a management orientation that holds that the key task of the organization is to determine the needs and wants of target markets and to adapt the organization to delivering the desired satisfaction more effectively and efficiently than its competitors’. The marketing concept as outlined by Kotler has been taken up by most of the literature within marketing to the extent that as Foxall and Goldsmith (1994: 7) suggest ‘the essence of marketing success stems from the adoption and implementation of the marketing concept’.