In tracing development of marketing there can be four distinct stages that can be identified
Figure: Four stages of marketing
Let us look at each one of them in detail:
1. Production Orientation
This is philosophy that:
- Concentrates on increasing production
- Controls and reduce costs
- Makes profit through sales volume
This was the first era, from mid nineteenth century to 1940s where all the efforts were on producing goods and services. All the efforts were devoted towards high product efficiency, this lead to ignorance of customer needs and wants as companies were into mass production of standard items, thus no choice to customers.
The reasoning behind this philosophy was that the customer would buy whatever goods are available in the market as long as it is reasonable. This era is best epitomized by Henry Ford’s classic statement that his customers could have any color (Model ‘T’ Ford) as long as it was black. This method was more suited to an environment where demand is more than supply.
2. Product Orientation
This is philosophy that
- Good Quality products ‘sell themselves’
- Companies concentrate on improving and controlling quality
- There is greater profit through increased sales due to ‘quality products’
In United Kingdom during the period 1950s and 1960s emphasis was more on designing and engineering the best products that a sensible customer would buy. A popular statement was ‘Build a better mousetrap, and the world will beat a path to you your door.’ This attitude that underpinned product orientation proved for many companies and industries in their downfall.
A problem with this approach that not all customers want or can afford superior quality product. Moreover this approach concentrates more on the product leaving out the customers.
3. Sales Orientation
This philosophy suggests that:
- Emphasis on stock clearance
- Aggressive sales and promotion
- Profit through quick sales of high volumes
This was the situation in the USA in the 1930s and in most developed economies in the late 1950s: over-capacity accompanied by a fall in demand due to the Depression in the USA in the 1930s and in Western Europe due to Second World War shortages being fulfilled in the late 1950s
Key issue here was high level of production, the underlying philosophy was that customers are reluctant to purchase and needed to be coerced into buying. Although a small number of firms still practice sales orientation, the consumer is now protected by law from more dubious selling techniques, largely due to the consumer movement.
4. Marketing Orientation
In this method the companies are planning and decision making revolve around customer needs and wants. It is vital to satisfy customer needs through a coordinated set of activities including the actions and functions of all employees of the organization, irrespective of the area of the business in which they work. In other words, a marketing orientation requires everyone in an organization to become customer oriented and not just people who work in marketing.
Lancaster and Massingham identify the marketing-oriented firm as follows: ‘A marketing oriented firm produces goods and services that consumers want to buy rather than what the firm wants to make.’
People normally confuse and assume sales and marketing orientation to be same, however both are different. Selling focuses on needs of seller and marketing on needs of buyer.
Figure: Distinction between sales and marketing orientations