Marketing Concept

The marketing concept combines the concepts of customer focus, profitability, and the integration and coordination of marketing with the other major functional areas of the organization, such as finance, human resources, logistics, purchasing, and operations. This approach evolved from conditions that existed immediately after World War II, when rationing of goods for the war effort left the consumer (end user) feeling deprived of products beyond the basic, from basic foodstuffs such as sugar and flour, to shoes and clothing, to automobiles and appliances. As a result, in the late 1940s and into the 1950s consumers would buy almost any product that came on the market, regardless of lack of assortment or quality. The focus in the firm was thus on production rather than the consumer, with profits being obtained through cost controls and efficiencies in the manufacturing and delivery process.

In the late 1950s and early 1960s, after the Korean War, consumers became more discriminating, having satisfied their pent-up demand. Firms then concentrated on the sales force, working under the assumption that aggressive selling would produce the volume of sales necessary to sustain profitability. This assumption proved false as the consumer became increasingly discriminating on a quality basis.

In the 1970s and 1980s the techniques of Deming and Juran were applied in Japan. The upgrading of Japanese goods to demonstrably superior quality over those produced in the United States resulted in the dominance of a number of Japanese products in the marketplace. U.S. firms realized that to compete, they would not only have to match quality with the Japanese firms, but would also have to understand what both intermediaries such as wholesalers and retailers, as well as consumer end users, wanted from a product or service. They would have to improve their industries in order to survive the Japanese, and later German, top level of quality and customer orientation.

This quality approach, even when combined in the United States with research to understand end user (particularly) and intermediary wants and needs, did not produce the desired profit levels. Companies had evolved in functional “silos,” in which each functional area operated almost independently of others in the firm. This resulted in a lack of communication and interaction that made efficient, effective business practice problematic. The impetus toward profitability thus added the last element to the marketing concept, that being the integration and coordination of marketing and other functional areas of the firm.

The marketing concept is now becoming increasingly relevant in health care, particularly with the declining profitability produced by the pricing and margin restrictions inherent in managed care in areas such as physician practice, hospital management, and the pharmaceutical industry. Specifically, there is an increasing understanding in health care that to maintain profitability, a focus on the needs and wants of customers such as patients and referring physicians is central to success. In addition, for health care organizations to be most efficient, different functional areas of those organizations that had been competing and separate must work together in order to make operations smooth, efficient, and cost effective.

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