activity: Jacob makes a career decision
Stephen Fanning
The takeaway is that not all organisations operate from the marketing concept.
Jacob has had a number of jobs in recent years, it seems, he just can’t find an organisation aligned with his personal values. Some of his mates have said that he needs to ‘leave his values at home when he goes to work’, however, he admires people that have a sense of purpose in their lives. His last job was as a ‘telemarketer’ for a company that painted roofs. This job involved cold calling homeowners over the phone in suburbs that were identified as having a large proportion of concrete tiled roofs that would be showing their age. When he arranged an appointment for a salesperson he would bill the salesperson $60.00 and if the salesperson successfully sold a roof painting contract he would be paid a further $60.00. He was told that it was a ‘number’s game’ so keep phoning people.
Although Jacob secured 6 appointments and one was successful, he never received any commissions; this was due to a 2-month delay in payments. By the end of the first week he found that the company seldom paid any commissions as most people could not survive on such arrangements. After two weeks, he found that the company’s salespeople employed some hard-selling tactics to secure an order and often from people who could not afford the service. After three weeks, he found that the company had many complaints and the business owners just ignored the complaints and would employ delaying tactics in the hope that the dissatisfied customers would lose motivation. In addition the organisation employed ‘stand-over’ tactics to receive payments.
Jacob’s frustration came to a head at a family barbecue in a conversation with his uncle. His uncle had a mid-management role in a large well-respected national retail organisation. His uncle stated that
‘you spend a lot of time at work so you should do something that is fulfilling … I am happy with a mid-level role, we have a group that goes bushwalking and it just makes work more social. Jacob, sales revenue is important, however, quality, value, customer satisfaction make tomorrow’s cash register ring. But, it sounds to me like your last job was an organisation that worked from a selling philosophy, these organisations treat their customers and staff the same – total contempt. You did the right thing leaving’.
His uncle maintained that without experience, a trade or a degree, this would not be the last low-rung organisation that Jacob would encounter. His uncle then told him that the organisation he worked for always took on young people; but Jacob would have to agree to put in a big effort and commitment before he would assist Jacob to secure a position.
Jacob, was conscious that his uncle wanted to safeguard his reputation and after submitting an application for employment and after several interviews Jacob secured a position.
Two months later Jacob’s line manager suggested that he enrol in a tertiary education course as this would demonstrate a desire to learn and provide the knowledge needed to advance his career.
Tasks
Q: Is the roof painting business operating from a selling philosophy? Justify your opinion.
Q: [Let’s imagine a different roof painting business one that operated from the marketing concept and practiced a marketing philosophy] In your opinion, what percentage of work would come from word of mouth in a roof painting company that is customer focused and practiced a marketing philosophy.
Q: Take on the role of Jacob’s uncle working for an organisation practicing a marketing philosophy – what values would the national retail organisation demonstrate that would be part of their culture?
Q: How would the organisation culture determine how an organisation would handle customer complaints [think short-term and long-term]?
The 3 business concepts
Consumer behaviouralists generally agree that attitudes have three components affect, cognition, and behaviour [also known as feeling, thinking, and doing]. The theory suggests that how a person feels about a topic and what a person thinks about a topic will influence how a person behaves. This is consistent with the adage that we move towards what we think about. Organisations are a collection of people. This tells us – that understanding how an organsation collectively feels and thinks is likely to influence how the organisation will collectively behave. Therefore, understanding the collective attitude of an organisation is strategically and tactically important.
Collective attitudes will influence what products an organisation offers, what markets are selected, and also market behaviour. This in turn, will influence how customers evaluate quality, value, satisfaction, and trust; which will influence future customer behaviour and determine whether an organisation has a competitive advantage or a competitive disadvantage.
Although some marketing scholars have suggested that there are 5 business concepts [the production concept, the product concept, the selling concept, the societal marketing concept, and the marketing concept] other marketing scholars argue that there are really only 3 business concepts [the production concept, the selling concept, and the marketing concept]. Proponents of the 3 business concept model argue that the product concept and the societal marketing concept are part of the marketing concept and not separate concepts. They argue that the principles of the product concept; the design and development of best satisfying products is central to the marketing concept and that the principles of the societal marketing concept are now embedded within the marketing concepts rather than a ‘new’ business concept.
Of the 3 business concepts the marketing concept is the most adopted business concept in advanced economies; however, it is not universally adopted or practiced. Some organisations have adopted the production concept and take advantage of the prevailing situational factors to drive costs down; they have little regard for their employees, customers, channel partners or society. Other organisations have adopted the selling concept these organisations often use misleading advertising and employ deceptive selling tactics designed to coerce consumers; they generally over-promises and under-deliver – a goal of the selling concept is to overcome customer objections and get the order.
In the above slideshow I have provided a snapshot of the three business concepts. One slide indicates that it is unlikely that an organisation is going to be 100% the production concept, or, 100% the selling concept, or, 100% the marketing concept – let’s find out why.
The 3 business concepts result in 3 business philosophies. A business concept is broad notion – whereas, a business philosophy is specific to an organisation and in progressive organisations is designed and developed after considering the situational factors facing the organisation. Similar to the business concepts – the business philosophies are a production philosophy, a selling philosophy and a marketing philosophy.
However, what is often overlooked is that organisations are comprised of employees who are enculturated to a business philosophy prior to joining a new organisation.
Organisations are also faced with ever changing situational factors [COMP] and this is likely to influence thinking; for example, a product in the latter stage of the product life cycle may motivate the organisation to be more selling concept and production concept to maintain market share or reduce inventory. Another area that should be considered is that organisations often recruit from outside an organisation and the new recruit may be enculturated quite differently to the business philosophy of the organisation – even when an organisation recruits internally they may select someone who was enculturated in another organisation and is not fully acculturate to the organisation – care is needed when managing staff.
Therefore, we may conclude that most organisations will be comprised of people who are enculturated differently and therefore most organisational philosophies will be an amalgam of all 3 business concepts.
Authors comments
I had an interesting discussion regarding the 3 business concepts and a particular situation. I was asked
Q: IF – an organisation set up a manufacturing plant in a country to take advantage of low labour costs with little regard for the workers, the environment, and to avoid regulations of their home country then is the organisation practicing the marketing concept?
A: Many marketing scholars would argue the answer, in this case, would be NO they are practicing the production concept. [For a number of reasons they may even be operating through a contracted channel partner but the answer is still NO]
Q: WHAT IF – that company is employing a powerful and persuasive advertising campaign but still behaving in a manner that would not be tolerated in their home country?
A: Then that is the selling concept. AND YES an organisation can be a mix of the production concept and the selling concept.
What is interesting is that the organisation’s branding activities will never erase their behaviour and their brand identity [what consumers perceive] will take this behaviour into account. Sure consumers may still purchase these products but it is likely that the problem will reappear in the future, therefore, with these risks this approach would not be considered a truly sustainable competitive advantage.
This should not be interpreted that managing costs is not important with the marketing concept or that competing on the basis of low-price is excluded within the marketing concept. But rather highlights the importance of profitable exchange relations and the components embedded within this concept.
When we conceptualise how organisations go to market 3 broad business concepts emerge. When we analyse how organisations internally communicate 3 broad philosophies emerge. In time each philosophy develops a culture and whilst it may be relatively easy to change a communication message culture are more durable and more resistant to change.
People move from organisation to organisation, they are influenced by the cultures of their previous organisations. Marketing managers must be mindful of this and must continually nurture the preferred culture of the organisation. When we study the 5-Gap model we see that the 2nd ‘standards gap’ is about documenting the expectations of the organisation. The 5th ‘total gap’ is the realisation that consumer expectations are constantly evolving and how managing the culture is a continual process.
The production concept is based on the premise that if a product meets a customer’s core needs and is priced at an attractively low price – then volume and profits can be achieved. Not every organisation has a low-production cost advantage; therefore, not every organisation can profitably achieve or maintain the lowest price. The production concept is a popular option for new market entrants with low-costs or low labour costs who wish to gain volume; however, it generally has a limited life as new entrants enter the market with lower operating costs.
The selling concept is generally adopted when an organisation no longer has a cost advantage, no longer has a compelling value proposition [based on being the lowest price], and/or when demand has dropped below production capacity. The premise is that if a product is not desired and demanded then the organisation must aggressively sell the product and overcome customer objections. The aggressive nature of the selling concept results in limited customer appeal and low levels of customer loyalty.
In time, the unfair practices of the selling concept were questioned in many countries. As a consequence of increased attention, consumer activism, and academic research a consumer movement emerged in the 1960s. Since then, the consumer movement has grown in importance. The consumer movement is concerned with the misuse of power, ethical behaviour, the rights of consumers, and the protection of consumers. There are a number of government departments, quasi-government organisations, and interested organisations involved to ensure that the market operates in a fair manner and does not engage in misleading or deceptive practices.
The marketing concept starts with the customer and is directed towards the satisfaction of the customer and as a result the satisfaction of the organisation. The marketing concept does not imply that the organisation’s needs are secondary; it implies that customer satisfaction is the best route to achieving organisational satisfaction. At first inspection, the production concept and the selling concept appear to have much in common with the marketing concept; whilst there are similarities there are fundamental differences. The production concept and the selling concept view customers as a means to an end and have little regard for customer satisfaction.
The selection of the business concept determines how an organisation operates – we call this an organisational philosophy. There are three business philosophies – a marketing philosophy, a production philosophy, and a selling philosophy.
Whilst the marketing concept as a business philosophy with mutual satisfaction is preferred, different organisations will adopt a different approach to marketing – this may be influenced by the product category or the degree of customer involvement. In this slide we are assuming that each organisation is operating ethically. At the base we see marketing as a method of communicating with a leaning towards the production concept, then marketing as a method of propagating leads with leanings towards the selling concept all the way up to marketing as a philosophical approach to achieve the 9 objectives of marketing practitioners.
Understanding organisational culture is part of a marketing audit
Organisations that have adopted the marketing concept will, after considering the COMP factors, design and develop a marketing philosophy as part of their business plan, marketing plan, and marketing action plan. The business-marketing planning process is part of an acculturation process where the marketing audit reveals a present position and the organisation business plan reveals the strategic intent or desired market position. Therefore, the business-marketing planning process is directed towards both internal customers and external customers.
A marketing audit should explore the degree to which the 3 business concepts are influencing the organisation and decide whether this requires attention; if so an ‘as needed’ marketing action plan should be designed, developed, implemented and evaluated. This highlights that marketing action plans are often part of the ‘internal marketing’ of an organisation.
