3-business-concepts

The above slides provide an overview of the 3 business concepts – please refer to themarketingconcept [e-book] for a more detailed discussion.

Consumer behaviouralists generally agree that attitudes have three components affect, cognition, and behaviour [also known as feeling, thinking, and doing]. This is consistent with the adage that we move towards what we think about. This tells us – that understanding how an organsation feels and thinks is likely to influence how the organisation will 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.

In this post I will discuss the business concepts and how an amalgam of the business concepts generally creates the collective attitude.

Although some marketing scholars have suggested that there are 5 business concepts other marketing scholars argue that there are really only 3 business concepts [the production concept, the product concept, the selling concept, the societal marketing 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.

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.

I welcome comments on this post.

Joseph’s reactions to the post

After reading the post, Joseph’s first reaction is to consider his market. He believes that  the post has identified an often-overlooked organizational consideration – that businesses are often an amalgam of the 3 business concepts and not just one business concept. Joseph feels that this post partly explains why car salespeople ‘conceptualise’ their roles differently and have different attitudes towards customers and their employers and therefore relevant to the car industry.

Joseph is reluctant to comment as his employer may view making a public comment on LINKEDIN as over-stepping his position. Furthermore, there are risks – including the reaction from the dealer network that would take it as a personal criticism from someone that lacks industry experience.

Instead, he sends a personal text to Neil, Maddison, Bernadette, Claire and Sarah to bring the post to their attention.

Considerations 

Consideration 1: We frequently discuss the customer considerations, the market considerations, the product considerations and often miss the organisational considerations.

Identify the organisational considerations that Stephen has discussed in his post.

Consideration 2: In what ways would this information be of value to an organisation undertaking a Marketing Audit?

Consideration 3: In what ways would this be of interest to a sales manager of a high involvement buying decision [e. g.,buying a home or  motor car].

Consideration 4: Why do you believe Joseph is reluctant to make a ‘public’ comment on LINKEDIN?

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.

Regards

Stephen