MARKETING CONCEPT
The concept of marketing is widely misunderstood in many developing countries, particularly among non-marketers who tend to erroneously equate it with selling and advertising. This is not very surprising because these two activities – selling and advertising – are the most conspicuous functions of the marketing manager. As we shall see later, however, they are only a few of the important economic activities that marketing entails.
This chapter examines the nature, importance, and functions of marketing, the marketing concept, the place of marketing in the organisation, the marketing environment, and criticisms of marketing in Nigeria.
WHAT IS MARKETING
Marketing emerged initially as a business function concerned with the performance of activities “that direct the flow of goods and services from the produce~ to the consumer or user.”) Since 1960 when this definition was formulated, the scope of marketing has widened thereby making this definition obsolete for two reasons. First, the performance of marketing activities is no longer the exclusive preserve of business organisations as the definition implies. Many non-business organisations now apply marketing techniques and principles. For example, Christians canvass for converts, churches and political parties advertise, andcharitable organisations solicit for funds, while religious denominations adapt and modemise their doctrines, regulations and practices in an attempt to win and retain converts. A second reason for the inadequacy of the above definition of marketing is that it implies that marketing starts only after goods and services have been produced and end after they have been sold. Today, the wise marketer first conducts some research to find out the needs of his potential customers in order to know the right product to make and in what form. After the sale of the commodity, the marketing manager sometimes tries to ensure that it satisfies the customer. Sometimes, he does this by providing him with after-sale services such as transport, maintenance, repairs and guarantees.
In consonance with the above observations, contemporary marketing may be defined as “consisting of individual and organisational activities aimed at facilitating and expediting exchanges within a set of dynamic environmental forces”. This definition implies that:
1. Marketing, as we shall see later, consists of activities aimed at ensuring that the right product is available to the right consumers, at the right place, and at the time. Examples of marketing activities are buying, selling, transportation, risk-bearing and storage.
2. Marketing activities may be performed not only by business organisations, but also by individuals and non-business organisations. An applicant should be able to market himself or his credentials to employers, a political candidate tries to market himself to the electorate, and a new general manager has to be to market himself to his subordinates so that they will willingly accept his instructions. The case of marketing in non-business organizations has already been illustrated.
3. The ultimate goal of marketing is to bring about an exchange of things of value between the producer and the consumer. Peugeot Automobile Nigeria Limited, Kaduna, seeks through its marketing activities, to exchange her cars for the consumer’s money. The car is of value to both the company and the buyer. So also is the money. The primary basis for marketing exists if and only if two more parties (persons or organizations) possess thing-of-value to the other(s).
4. As explained earlier, marketing starts ever before the products to be sold are produced and should continue after exchange until the consumer is satisfied that the product has met his needs.
5. Things of value, other than goods and services, may be the objects of exchange. We have already alluded to the fact that organizations (such as clubs. Churches, and banks) and persons (such as celebrities and political candidates) may be “marked”. Places such as resort centres and factory sites may also be marked. Finally, social causes and programmes such as the Green Revolution, Free Education and “Smoking is injurious to your health” may be marked. In marketing persons, organizations, and places, potential clients are being asked to patronize them. In the case of social causes, the purpose of marketing is either to persuade people to take or to dissuade them from taking, certain actions.
6. Marketing takes place within a dynamic environment. As will become obvious when we discuss the marketing environment, the marketing programmes of any person or organization are constrained by factors outside the control of the marketing manager. For example, technological changes, competition, culture, politics and government laws, regulations and socio-economic policies affect a company’s marketing activities.
From the foregoing, there is no doubt that marketing is a pervasive and complex series of activities whose outcomes affect, not only the fate of the marketing organization, but the welfare of consumers and society in general. Clearly, therefore, marketing is an important function.
Before we discuss its importance in greater detail, it should be noted that although we have shown that some form of marketing takes place in non-business organizations, the following discussion is what the business organization bear in mind. This should not bother the reader since, with little or no modification, the discussion applies to non-business organizations.
THE IMPORTANCE OF MARKETING
The importance of marketing in any modern society is easily demonstrated by the fact that in making any purchase and in consuming what we did not produce on our own, we are enjoying the benefits of marketing. It is clear therefore, that our present standard of living would marketing.
A more comprehensive way to appreciate the value of marketing is to consider its benefits to the company, consumers and the wider society. From the point of view of the business organization, marketing generates revenue. It does this in two major ways. First, it converts the organization’s goods and services into money which the organization needs for survival and growth. Second, even when the business enterprise wishes to raise money through the sale of bonds or shares, it has to market these securities in order to attract the right kind of people to invest in the company. Apart from generating revenue, marketing is the major avenue through which the company monitors its environment. As open systems, business organizations receive information and other inputs from the environment as a basis for adapting to the outside world. Marketing personnel aid in this process. They are in constant contact with the outside world and they communicate the company’s policies to consumers. At the same time, they observe consumers and listen to their complaints. They also observe the sales patterns of the company’s products, the actions of competitions, the pattern of government regulations and changes in a consumption and demand patterns. By furnishing the organisation with vital date on these issue, the company is in a better position to adapt, survive, and grow.
Consumers also benefit immensely from marketing activities. Firstly, marketing makes it possible for them to have a wide array of goods. It monitors and interprets the needs of consumers. Then, it initiates action for the production and delivery of goods and services capable of fulfilling these needs to the satisfaction of the consumer. Secondly, marketing communicates information about new and existing products to consumers. Such information includes vital data about the nature of the products, their uses, their prices, and where they can be obtained as well as how they can be used safely and economically. Thirdly, marketing channels consumer complaints and suggestions to the company. This makes it possible for consumers to seek redress and to be assured of safer and more useful products without the ordeal of going to the law courts. Finally, marketing renders a wide range of miscellaneous services to consumers. Examples of such services are storage, installation, maintenance and repairs.
Marketing is not only beneficial to organisations and consumers. It also benefits society in general. For example, it permits specialisation whereby a person, an organisation, or a country concentrates on producing one or a few items which it then exchanges indirectly with the products of others. This enhances efficiency. It is clear that without marketing, specialisation would not be possible since every one would have to produce what he needs. But marketing enables one to specialise, on the understanding that one can sell one’s excess products and use the proceeds to purchase other products. A second way in which marketing is beneficial to society is that it offers employment to very many people. In Nigeria, as in other countries, many people earn their livelihood through marketing. Examples of such people are salesmen, transporters, drivers, shopkeepers, sales girls and boys, advertisers and marketing research personnel. Everyone who sells something is engaged in marketing. Considering, these, therefore, there is no doubt that marketing generates employment for many people, thereby raising society’s standard of living.
In spite of the important role of marketing in any economy, there is ample evidence that some business organizations in Nigeria underrate it. For example, a study by Imo Isili shows that marketing is much less represented in top management than production and finance. Another study reported by Odia has shown that marketing was rated lower than other managerial functions. With this and other findings, he noted that marketing was surprisingly the neglected managerial function of Nigeria’s booming economy of the later 1970s. On the basis of these evidences, Olusoga reached a similar conclusion, that “Nigerian businesses accord little importance to the marketing function in top management decision making”. There are, at least, three reasons for this neglect. First, marketing as a discipline, or a profession is new in Nigeria. Secondly, because most organizations find it easy to dispose of their products, little attention is paid to marketing. Finally, some people tendto think that marketing is anybody’s job. This probably explains why geographers, pharmacists, historians, mathematicians and linguist (to name a few) who do not have any training or experience in marketing are appointed to marketing positions in many Nigerian organizations.
THE MARKETING CONCEPT
The marketing concept as a philosophy of business was articulated in the United States of America in the late 1950s. Before then, there were two dominant orientations, one preceding the other. The first was the product orientation. Under this, management reasoned that in order to make profits, a business organization should seek to produce a well-engineered, well-manufactured, and fairly priced product. The emphasis was on mass production of goods as a way of reducing costs. It was believed that a good product could literally sell itself. However, experience soon showed that mass production only led to excess products. Attention then shifted from the product to selling which was then solely relied upon to dispose of the excess created by mass-production. Under the sales orientation, the emphasis was on selling techniques such as advertisement, sales promotion, and the use of salesmen. The inability of the sales orientation to solve the problem of glut eventually led to the emergence of the marketing concept.
Unlike the two earlier business philosophies, the marketing concept focuses on the needs of the customer. It advocates that the business organization should take its direction from the market-place by seeking to identify and satisfy the needs of consumers. By so doing, the attainment of the long-run goals of the company is enhanced. This is so since consumer patronage is a pre-requisite for the firm’s survival and for the achievement of its goals. Furthermore, the marketing concept presupposes that the profitable satisfaction of the needs of consumers can best be achieved by coordinating andintegrating all the activities of the organization. This minimizes conflict and the concomitant dissipation of energies over unproductive activities. Of recent, there have been arguments that business organizations should not only seek the satisfaction of the needs of consumers but should consider the overall welfare of society in all its actions. This broadened version of the marketing concept is called the social or societal marketing concept.
In the United States of America where the marketing concept was first articulated, many firms have tried to implement it as a means of withstanding competition. But, in view of the relatively low level of competition among business firms, its relevance in developing countries is being questioned. For example, Olusoga has cautioned businesses in developing countries not to adopt it indiscriminately. In his opinion, the appropriateness of the concept for any individual firm is a function of; (i) whether the company desires long or short-run objectives, (ii) whether the company produces consumer or industrial goods, and (iii) the relationship between supply and demand in the industry. He believes that, for consumer goods companies which aim at short-run profit-maximization, the marketing concept is inappropriate, unless the supply of their kind of product exceeds,the demand.
Some evidence has been adduced to show that some firms in Nigeria do not appear to have adopted the marketing concept. The probable reasons for non-adoption of the marketing concept include:
(1) total ignorance of the existence of the concept on the part of some key members of some Nigerian organizations;
(2) management’s belief that the concept is irrelevant;
(3) scarcity of many commodities and services;
(4) lack of the human and financial resources needed by the organization to adopt and implement the concept;
(5) the fact that many commodities sold in Nigeria are imported, and so not adapted to suit Nigerians using them in Nigeria;
(6) lack of commitment of some key managers to the success of their organizations;
(7) reluctance on the part of management of how to effectively implement the concept and, (8) ignorance on the part of management of how to effectively implement the concept.
Whatever its operationalization problems, the marketing concept remains a useful tool for obtaining and retaining consumers and for achieving the long-run goals of the company, even in a developing country such as Nigeria.
MARKETING FUNCTIONS
Marketing functions are those economic activities which producers, middlemen, and facilitating agencies (such as transport and warehousing firms) perform in order to expedite and consummate exchange. These functions are outlined hereunder:
1. Product Planning and Development: This is the process by which producers identify the needs of consumers and select and develop products to satisfy them. In performing this task, producers often conduct market research aimed at identifying the characteristics, needs, incomes, habits, attitudes, complaints and preferences of present and potential customers. This then provides a basis for deciding whether and when new products should be added.
2. Buying: This involves searching for, evaluating, and purchasing goods that will appeal to customers. This function is performed by all middlemen who must decide what range and kinds of products to stock. Producers also make purchases to aid their production processes.
3. Promotion: Every seller, be he a producer or a middleman, makes some efforts tocommunicate with consumers in order to inform them about the company’s products and to persuade them either directly or indirectly to buy them. Promotional activities are many, the major ones being advertising, personal selling, and publicity.
4. Pricing: This is the task of deciding what the buyer should pay for the product. It also includes decisions regarding discounts. Both producers and middlemen perform this function.
5. Distribution: This involves the movement of goods to the point of sale or consumption. It includes the handling and storage of the products until they are required by customers.
6. Risk-bearing: Risk-bearing is a necessary evil in business. Producers produce in anticipation of demand. Wholesalers and retailers also buy and stock various commodities on the assumption that consumers will be willing and able to buy them. In either case, the producer or middleman bears the risk that the goods may never be bought or that they will only be bought at a price much lower than that anticipated. There is also the risk of product obsolescence, damage and theft. In bearing these risks or in paying an insurance company to shoulder those that are insurable, the producer or middleman renders a vital economic service to his customers.
7. Standardization and Grading: In preparing goods for sale to consumers, they sometimes have to be sorted on the basis of predetermined weight, quality, size and quantity standards. This assures the consumer that when he buys the, right size of spark plugs they will fit his car. Similarly a car owner who wants to re-spray the fender of his car can easily select the, appropriate colour because the paints have been standardized and graded.
8. Financing: Producers help in financing the operations of middlemen in the same way that some wholesalers finance someretailers. When a producer or middleman sells on credit, he is financing the buyer. It is like loaning money to the buyer to buy. the products on the agreement that he will repay the loan and the accrued interest at some specified future date. The reverse of credit sales is also possible. A middleman can pay for goods in advance. For example, a common practice among breweries in Nigeria is to require distributors to pay for beer in advance. In such a case, the distributor actually finances part of the operations of the producer or brewery, in this case.
The functions we have discussed above are sometimes classified into three categories. Product planning and development, buying, pricing and promotion are regarded as merchandising functions. They are concerned with ensuring that the right product gets to the right consumers at the right price and time. Distribution which consists of transportation, storage and materials handling are called physical distribution functions while the others (standardization and grading, financing and risk-bearing) are referred to as auxiliary functions. Distribution ensures that the products get to the consumer at the right place and at the right time while auxiliary functions facilitate the performance of merchandising and distribution activities.
Although these marketing functions are vital for the smooth running of any economic system, marketing has, surprisingly, been sharply criticized arid denounced. Before we turn to a discussion of these criticisms, we shall first discuss the environment in which marketing activities are performed.
ORGANIZING FOR MARKETING
We have seen that marketing is one of the basic business functions which a business enterprise must perform in order to fulfill its mission, the others being finance, productionand personnel management. All these functions are .interdependent and indispensable. Whether a particular function is departmentalized or not, someone somewhere must perform it. Funds must be raised and invested, people must be employed and managed, the business must produce goods or provide services and market them.
In most organizations, tasks are usually grouped along functional lines. Each functional manager reports to either the general manager or his assistant. An organizational chart depicts the relationships among jobs, functions and individuals in the organization.
1. The Place of Marketing in the Organization
In a typical, large manufacturing business enterprise that is yet to adopt the marketing concept, the organizational chart is likely to resemble that in Figure 29.1. The creation of sales and advertising departments which between them handle the distribution, pricing, advertising and other promotional tasks reflects the emphasis on selling. But on adopting the marketing concept, management is likely to restructure the organization to reflect the change from a sales to a marketing orientation. Hence a marketing department will be created. Under the new structure, a director of marketing or a marketing manager will oversee all marketing functions. This integration of tasks facilitates consumer orientation in all the company’s marketing activities as in all other functional areas. It also eases the coordination of marketing activities. Figure 29.2 shows the new relationships among the various functions after the company has adopted the marketing concept.
Some of the factors that influence the structuring of a marketing organization (that is, the grouping of marketing tasks) are the size of the organization and hence the marketing function; the type of product which the company sells, the geographical area to be covered and the number of customers. Others are the financial ability of the firm and marketingorganisation of competitors. Therefore, a structure that is appropriate for one firm may be grossly inadequate for another. For example, a structure appropriate for a local, medium-sized supermarket group may be inappropriate for an international manufacturing company because of differences in size, type of products, and geographical market coverage.
2. The Marketing Manager and Management Function
As the name implies, the head of the marketing function is a manager. He often has other managers and sub-managers reporting to him. Being a manager, the marketing executive’s job involves the performance of management functions such as planning, organizing, staffing, directing, coordinating, motivating and controlling. He has to formulate marketing strategies (master plans) and other derivative plans and policies for implementing them. At times, particularly in large national and international organizations, the marketing organization may be very large with numerous employees and branch offices. In such situations, the marketing manager plays a vital role in structuring and staffing his department. Marketing managers also direct, coordinate, motivate and control the efforts of their subordinates in the implementation of marketing strategies.
Other managers in the marketing division may also be involved in planning, organizing, staffing, directing, coordinating, motivating and controlling the efforts of marketing personnel. They all work through others, hence they are called managers.