Franklin S.

Houston

The Marketing Concept:

What It Is and What It Is Not
The marketing concept has been misunderstood and misused over the years. It is not obsolete nor is it
the optimal managerial approach to marketing. The marketing concept is restated in a way that more
clearly shows what it is and what it is not.

The Marketin8 Concept is so ubiquitous in the marketing classroom that the naive student of marketing
is generally led to belleve that finns who fail to employ this philosophy are business criminals.
Iolson (1978. p. RI)
Is is not time to discard the marketing concept'?
Sachs and Benson (1978. p. 74)

OR years the marketing concept has been so her-

alded by marketing academics and practitioners that

its acceptance as the optimal marketing management
philosophy is almost universal. Infrequently, articles
have appeared which have critically examined some
aspect of it, but their impact on the marketing community has been slight. The following discussion is
an examination of the marketing concept and a review
of both new and previously stated questions about it.
A consistent statement is made as to what the marketing concept is and is not, the conditions under which
the marketing concept is an attractive, meaningful
managerial philosophy are expressed. and the relevance of the sales and production concepts is examFranklin S. Houston is an Associate Professor of Marketing at the University of Alabama. The author would like to acknowledge the support
and contributions of E. H. Bonfield of Rider College. Pat Rudolph, and,
especially. J. Thomas Lindley of the University of Alabama in the writing of this article.

Journal of Marketing
Vol. 50 (April 19861. 81-87.

ined. This examination concludes with the recognition

that the marketing concept has suffered in two ways:
first, it has been established as the optimal management philosophy when it is not necessarily so in all
instances, and second. we can see many examples of
poor marketing practice that have been adopted in the
name of the marketing concept. It is time that we relearn the marketing concept.

The Definition of

.,.

The marketing concept has been described by different authors as

A corporate state of mind that insists on the integration and coordination of all of the marketing functions which, in Nm, are melded with other corporate
functions, lor the basic objective of producing maximum long-range corporate profits (Felton 1959,
p. 55).
The external consumer orientation . . . as contrasted
to internal preoccupation and orientation around the
production function: profit goals as an alternative to
sales volume goals; and . . . complete integration of
organizat~onaland operational effon . . . (Konopa
and Calabro 1971, p. 9).

While customer focus, profits, and integration of

organizational efforts are frequently discussed when
the marketing concept is described, the term has be-

The Marketing Concept / 81

come synonymous with having a customer orientation.

The marketing concept means that an organization
aims all its efforts at satisfying its customers-at a
profit (McCarthy and Perreault 1984, p. 35).
The marketing concept . . . holds that the key to
achieving organizational goals consists of . . . determining the needs and wants of target markets. . .
(Kotler 1980, p. 22).
The marketing concept . . . calls for most of the effort to be spent on discovering the wants of a target
audience and then creating the goods and services to
satisfy them (Kotler and Zaltrnan 1971, p. 5).

The Origin of

...

Keith's article (1960) on the marketing concept is one

of the earliest and most popular. It is a descriptive
article illustrating the adoption of the marketing concept in an applied setting. The intuitive appeal of the
concept and the illustration of its use in practice played
an important role in its acceptance.'
In the article, Keith describes the Pillsbury Company's evolution through three managerial phases, finally reaching what he calls a marketing confxol phase.
His description suggests that movement from the production through the sales and later through the marketing phase has been an evolutionary process which
left the organization a stronger entity. The implication
for the reader is that this evolutionary process is the
correct one for all organizations. The goal of any organization intending to be a viable entity is a marketing dominated perspective.

The "Why" o f .

..

Knowing the customer and satisfying him/her has become the shibboleth of the marketing community since
Keith's time, yet the marketing concept has not been
subjected to formal scrutiny. What follows is an attempt to assess the conditions under which the marketing concept offers the proper guidance to the marketer and the conditions under which the marketer
should not follow its prescription.
In acommercial venture, the ultimate goal is some
form of profit achievement, whether that be described
as profit maximization or the attainment of some satisfactory profitability (cf. Ackoff 1970). Similarly, a
nonprofit group will have a goal or set of goals which
defines the organization's reason for e x i ~ t i n g . ~
'One bit of evidence as to the article's significance is that it appears
in two separate collections purponing to contain seminal works in
marketing: Classics in Morkering (Walten and Robin 1978) and Morkering Classics (Enis and Cox 1981).
'The following discussion describes the marketer-to-be or one who
represents an organization. Clearly. the entity could be a single penon
as well.

82 / Journal of Marketing, April 1986

Few, if any, of these organizations come into being

through altruism: that is, organizations do not come
into being to achieve the goals of a nonmember constituency. Instead, it is the set of objectives defined
by the membership that guides the organization.
The initiators of a commercial venture do so to
satisfy their own needs. The initiators of public programs, such as an infant immunization program or a
myriad of other public policy efforts, do so for the
benefit of the citizens of that political body. It is the
goals of the membership which define the organization's purpose.3
Some organizations are self-sufficient; the satisfaction of the organizational needs do not depend on
nonmembers (e.g., a bridge club). Many, however,
depend on the behavior of nonmembers for the attainment of the organization's satisfaction. To the extent that the organization relies on exchange as the
means of obtaining compliance with the organization's needs, we describe that organization as engaging in "marketing" (cf. Bagozzi 1975, Kotler 1972).
One source of marketing expenditure for an organization is the time, effort, and financial expense
of gathering information about present or prospective
exchange partners. If, as the marketing concept suggests, we are to strive to understand exchange partners
and tailor offerings for them, information is a necessary preparatory step to developing that proper blend
Borden (1964) calls the marketing mix. He notes that
each mix is necessarily unique.
Expenditures, financial and otherwise, resulting
from research into who might engage in exchanges
with the organization or what those exchange partners
need and/or want, represent an increase in the value
given up by an organization in any exchange. This
added expenditure furthers the organization's objectives only to the extent that this added information
increases the value received in the exchange or identifies ways in which the organization can reduce the
value it gives up in the exchange.
The value received in exchange is increased by
creating more individual exchanges and by getting more
value from each exchange. The value given up in an
exchange is reduced by expending less effort in m&ing those exchanges and by giving up less in the exchange. To restate this, an organization henefits from
additional information about its exchange partners
through:
more exchanges,
an increase in value received from each exchange,
'Some argankations change their objectives (e.g., the March of
Dimes) or lose s i ~ h of
t their original purpose (see Houston and Homans 1977 for a discussion of this).

less effort needed for each exchange. and

less value given up in each exchange.
Understanding when these occur allows us to recognize when the organization's objectives are furthered
by added research into current or potential exchange
."
More exchanges can occur when there are unsatisfied exchange partners remaining. They cannor occur
when all potential exchange partners are satiated, and
they cannot occur when the organization has nothing
valued by the potential exchange partner to offer in
such an exchange.
Illustrations of situations where added information
is not needed are not new to this discussion. The traditional example of a good for which there is no market is air, since people have e n ~ u g hAs
. ~ examples of
offerings that cannot he made available, we can include products that are conceivable but not feasiblethe transportation industry would l i e a modestly priced
teleportation system, but such a system is not available outside of science fiction. Products which are
temporarily or permanently exhausted-certain natural resources, like water and a variety of energy related products-are limited in supply and periodically
become unavailable; certain species of animals no
longer exist.
In addition to these examples where a product cannot be procured because of its general lack of availability, there are also instances where the specific organization under study cannot or will not make the
product available. An example would be the restaurant that refuses to stock and serve certain less expensive wines. In general, there are many examples
of potential exchanges that could occur but one of the
potential exchange partners cannot or will not engage
in that exchange, and this is known without the benefit of additional research.
To be assured that the organization will obtain the
greatest value possible in any single exchange, it is
necessary to understand exactly what the potential exchange partner needs or wants, and to know exactly
what the exchange partner would be willing to offer
to consummate that exchange. Without these conditions. the organization can typically assume that they
could have negotiated an exchange under different terms
1A fifth sinration that is not developed hem is the role information
plays in identifying those exchanges which should be avoided. An
entity might spend resources and decide not lo engage in an exchange,
based on thc information received. Here. there would be a net loss
in value. yet its position is superior to the entity's pasition had it
engaged in the exchange.
'Clearly. this remark can lead 10 a lengthy didiseuioion of the sale oF
compressed air. its constituents, products to clean it. and the need for
mechanisms to help some people use it properly. It does not serve
our purpose to explore these avenues. Most of us find air to he freely
available

that would have done a better job of satisfying the

organization's goals. Further, such exchanges can only
be made under conditions that allow the organization
to negotiate and consummate exchanges uniquely. For
those cases where an organization negotiates with more
than one exchange partner at a time, and the organization makes a single offering available to all members of that gtoup, the usefulness of the information
received about any single exchange partner is inversely related to the number of individual exchange
partners in each group with which the organization
negotiates."urther,
if for some reason one or both
of the exchange partners is prevented from negotiating
and/or adjusting the terms of an exchange, the information cannot be used to further the organization's
goals.
Illustrations of these conditions under which information loses value are straightfonvard and commonplace. Much of retail marketing in the aboveground economy consists of marketers interacting with
groups of exchange partners, and the usefulness of information about a single individual is inversely related
to the size of the market segment of which he/she is
a member. In a society where marketers are free to
vary their product offerings, more knowledge is better
if that knowledge is free, but since gaining and retaining knowledge can be expensive for an organization, the information must be assessed as to value.
In a society where marketers are unable to vary their
offerings, such information holds no value: such an
instance would be the butcher in Poland who is not
able to vary the price of his/her meat. Ln the United
States, milk and liquor prices are often bounded in
some manner.
The mirror image of obtaining greater value in an
exchange is the giving up of value in that same exchange. Therefore, briefly, the added information from
investigating a single, specific potential exchange
panner loses its value to the degree that terms of exchange must be negotiated with groups of exchange
partners, and to the degree that restrictions are placed
on what can be offered in exchange.
Finally, added information can be used to reduce
the organization's effort in making exchanges. This
value is directly related to the effort required to make
exchanges. In the extreme, if finding exchange partners and consummating exchanges is effortless, such
information holds no value.
Several impnaot caveats must be inserted. First. this statemcnt
holds if all other conditions are constant. That is, in comparing a
smaller with a l a r p group. the statistical characteristics of the distribution of the offerings made by individuals in each emup must be
identical. Second. i t is important to recognize that the usefulness of
the total set of information about the individuals in a group is directly
related to the s i x of that gmup, though generally it can he assumed
that additional amounts of information are of decreasing value.

The Marketing Concept / 83

A wide variety of circumstances creates situations

where exchange partners seek out a marketer. leaving
the marketer with no need to pursue the customer. For
example, when product offerings are highly desired
but in limited supply, there is little incentive for the
marketer to seek out his/her customers. This is illustrated by most government services. Liquor monopolies in various states also illustrate this.
To summarize, the following briefly restates the
identified conditions under which gaining additional
information about exchange partners holds no value
to an organization:

Exchange partners are satiated

A desired offering is not to be made available.
The value of incremental bits of information
about individuals who are members of groups
of exchange partners will not exceed the value
of gathering that information.
The organization or all of its exchange partners
are restricted from varying and/or negotiating
what they will offer.

Imposing Product Related Goals

on.. .
The why of the marketing concept ties directly to the
ability of the organization to meet its own needs. In
fact, if we were to ask the question asked of every
introductory marketing student, "Whose needs come
first?," the answer should be "the marketer's . . . ."
It is the organization's needs that are served by learning about exchange partners and tailoring product offerings to their needs, whether these needs are financial profits or some other nonfinancial goal.
Hirschman (1983) recognized that producers in the
world of art and ideology often have personal goals
which are not satisfied by commercial success. These
goals stem from a desire to be recognized by one's
peers or from some internal sense of accomplishment.
As a result, she states " . . . that the marketing concept-as a normative framework-is not applicable
to two broad classes of producers [artists and ideologists] because of personal values and social norms
that characterize the production process" (p. 46).
Hirschman proposes that marketers adopt a modified
version of the marketing concept that accommodates
these producers.
Being a marketer is a role, and marketers, like other
people, cany more than one role at a time. When the
roles of marketer and producer are vested in the same
person, it is not unusual to see conflicting goals. Producers, whether they are widget makers, bus drivers,
assembly line workers, marketing professors, artists,
or ideologists, have product related constraints as part
of their need set: that is, they often take pride in their
work, holding that work up to the standards set by
84 / Journal of Marketing, April 1986

colleagues or to internally held standards. On some

occasions this pride of production conflicts with the
product design that would be appropriate if one were
serving the marketer's set of needs exclusive of these
product related constraints. In cases where the most
desirable product design conflicts with the producer's
values or with the producer's desire to meet the standards set by some alternative market (e.g., peers within
the profession), the marketer must incorporate these
product design standards into his/her set of goals.
Certain organizations will not only have product
standards that are integral to the membership's set of
needs but will have a specific, fixed product form as
part of its need set. A subset of these is the class of
producers that has adoption of a fixed, given product
as its reason for being. This includes religious leaders
who seek to have their own religious tenets accepted
and would not be willing to modify them to achieve
greater market acceptance. Many artists and ideologists fall into this category, and these artists and ideologists are the proselytizers who achieve their objectives by having the markets accept their unique
offerings. Included here are artists who have their own
style or vision and achieve success in their own eyes
by having their artistic offering accepted by peers or
by the marketplace. Similarly, some ideologists achieve
success only by having their concepts adopted (see
Dixon 1978).
A second class of marketer who cannot design the
product offering as a result of studying exchange partners is the marketer who cannot redesign the product.
This is an important case because it is a very common
situation: very few product offerings are custom designed, and the salesperson is typically given a product to sell and cannot make product modifications. Also,
the commercial marketer who has established production facilities (sunk costs) or has inventories will find
no opportunity to develop alternative products in light
of a better understanding of exchange partners (Zeltner 1976). The decisions that this latter marketer will
make include whether it is worth the cost of modifying existing production facilities to produce a product variation desired by potential exchange partners
(see Zeltner 1976), or whether he/she should discontinue operations.
Therefore, there is a wide variety of marketers who
do not rely on the maxim of learning about customer
needs and designing new product offerings to suit those
needs. These marketers are constrained from modifying their core product, yet they still have needs which
depend upon exchange partners and successfully culminated exchanges.

Alternatives to

...

Keith (1960) describes the production and sales concepts as inferior and antecedent to the marketing con-

cept. Where the marketing concept directs the organization to design its marketing mix-including
product-only after the needs and wants of current
and potential exchange partners have been assessed,
the sales and the production concepts describe the organization that makes an offering available without
having tailored it as a result of this information. The
sales concept describes an organization which aggressively studies and seeks out exchange partners for
already established offerings, where the production
concept is passive with regard to marketing. The production concept was illustrated by the Bell Telephone
System prior to its court-imposed restructuring, or the
artist who derives his/her satisfaction from the creation of a unique product that meets some internally
held standard. That same artist would be relying on
the sales concept if he/she sought information about
potential buyers and used that information in an attempt to engage in an exchange.
Figure I restates the distinction between the marketing, sales, and production concepts. It shows the
buyer side of a marketing exchange, pointing out that
buyers can also gather information about current and
potential exchange partners. tailoring offerings as suit
the needs and wants of those exchange partners. Likewise, the buyer may elect not to negotiate on what
he/she is seeking or offering in exchange, though aggressively pursuing the exchange through the other ingredients of the marketing mix. This is shown in the
Figure as the Buying Concept, since it is the buyer's
form of the sales concept. In the same vein, some
buyers are quite passive in their buying behavior, accepting or rejecting that which has been made available but not choosing to actively seek an exchange.
This is shown as the Offering Concept, since it is the
buyer's form of the production concept.
In summary, it is important to recognize that under some circumstances, the production concept or the
sales concept would be a more appropriate management philosophy for the organization than the marketing concept. Fluthermore. exchange consists of both
buyers and sellers, and as noted many years ago, buyers are marketers too (Kotler and Levy 1973). Buyers

FIGURE 1
Defining Alternative Concepts
Available t o t h e Marketer
Behavior

can and do use the marketing, sales, and production

concepts (or the relaheled equivalents, shown in Figure 1).

A Statement of

...

The following provides a succinct and comprehensive

statement of what the marketing concept is, its purpose, and how it is bounded.
The marketing concept is a managerial prescription relating to the attainment of an entity's goals. For certain well-defined but restrictive market conditions and for exchange
determined goals which are not product related. the marketing concept is a prescription
showing how an entity can achieve these goals
most efficiently.
The marketing concept states that an entity
achieves its own exchange determined goals
most efficiently through a thorough understanding of potential exchange partners and
their needs and wants, through a thorough understanding of the costs associated with satisfying those needs and wants, and then designing, producing, and offering products in
light of this understanding.
Notice that the marketing concept requires an understanding of the market and does not suggest that
products be designed to satisfy the market's demand.
Satisfaction of the market's demand is important to
the extent that doing so yields profits.' A commercial
organization that has decided to offer a single, undifferentiated offering instead of designing products to
suit each perceived market segment, may have arrived
at t h ~ sdecision with a thorough understanding of the
market's response and the accompanying costs, and.
thus, be an exemplary user of the marketing concept.

Misconstruing

...

Unfortunately, many marketers have taken the marketing concept to mean that marketers should take their
lead from the expressed needs and wants of customers. As a result, wben the limitations of doing so
are recognized, the marketing concept is criticized,
when it would be more appropriate to criticize the way
in which the concept is implemented.

. . . the marketing concept is an inadequate prescription for marketing strategy. because it virtually
ignores a vital input of marketing strategy-the creative abilities of the fum (Kaldor 1971. p. 19).
'While this may seem obvious, some argue that $ofits (or implicitly. satisfaction of the marketing entity's own objstive function) should
be a consequence of satisfying the market's needs (cf. Bell and Emory
1971). and not pm of the allocation process in which the fmdecides
to what extent it will satisfy the demand of the marker.

The Marketing Concept / 85

Kaldor notes that the customer does not always know

what is "needed." An extreme example of this is the
medical doctor-patient relationship, where the patient
does not specify the treatment; it is the doctor's task
to assess the specific product needs of the patient. Yet,
this does not mean that the doctor is not addressing
the needs and wants of the patient; the doctor's unique
offering is that special capability to identify.and satisfy the patient's needs.
Rather than describing the marketing concept as
an "inadequate prescription," it would be better to describe it as an 'incomplete prescription." The marketing concept focuses the marketer's attention on the
customer but does not tell the marketer to disregard
his/her unique capabilities and resources when deciding how to serve the customer's needs and wants best.
Kerby (1972) and Tauber (1974) make the point
that by looking to customers for guidance in new
product research, marketers fail to take advantage of
the creative capabilities of product research personnel.
. . . it is quite certain that few if any of the really
significant product innovations which have been placed
on the market to date were developed because the
inventor sensed that a latent pool of needs was yeaming to be satisfied (Kerby 1972. p. 31).
The marketing concept does not urge us to depend
solely on marketing research (customer surveys) for
guidance in new product research.
Dependence on customers' expressions of their own
needs and wants suggests that some marketers have
failed to take a long run view of the marketing concept. Customers are not necessarily good sources of
information about their needs a decade from now. They
don't necessarily know how they will react under different environmental conditions. They don't have insight into the possible value of major technological
innovations. Sometimes customers have to learn about
new technologies, beliefs, and ways of behaving.
Anticipating future needs and wants is consistent
with the marketing concept. Earlier the point was made
that some marketers, like religious groups, would find
the marketing concept inappropriate: these are marketers who want to persuade customers that what the
marketer has to offer is desirable. The innovator who
has an unfamiliar offering likewise must educate and
persuade the customer, but this marketer has not necessarily rejected the marketing concept, which is not
limited to the current, expressed needs and wants of
customers. If the marketer sees an innovative offering
that has the potential to satisfy needs and wants and
is willing to develop this offering with the customer's
satisfaction in mind, the marketing concept is being
used. It is the marketer who has a fixed offering which
he/she is unwilling to change who is not using it.
Bennett and Cooper (1981) illustrate how the

86 / Journal of Marketing, April 1986

meaning of the marketing concept can be confused

with its weak implementation:
Twenty years o f adherence to the marketing concept
may have taken its toll on American enterprise. The
marketing concept has diverted our attention from the
product and its manufacture; instead, we have focused our strategy on responses to market wants and
have become preoccupied with advertising, selling,
and promotion. And in the pmcess, product value has
suffered.

What is ironic about this statement is that it follows

a discussion of the success foreign competitors have
had by addressing the needs and wants of buyers. The
authors do a good job of addressing a number of serious issues in today's business community, but the
management practices criticized are not inherent in the
marketing concept.'
The marketing concept does not consist of advertising, selling, and promotion. It is a willingness to
recognize and understand the consumer's needs and
wants, and a willingness to adjust any of the marketing mix elements, including product, to satisfy those
needs and wants.

The Positive Side of

...

The marketing concept has been an expression of the

marketer's recognition of the importance of the consumer in the buying process. This understanding did
not begin with the introduction of the term marketing
concept; the customer focus clearly existed when the
king ordered boots from the bootmaker. Yet, the labeling of the concept is an important aid to our understanding and provides a focal point around which
to organize our thoughts.
The marketing concept has suffered in two ways:
first. it has been established as the optimal management philosophy when it is not necessarily so in all
instances, and second, we can see many examples of
pmr marketing practices which have been adopted in
the name of the marketing concept. It is time that we
releam that the marketing concept is one of a set of
three concepts-marketing.
sales, and productionthat form the basis for understanding the management
of marketing. And it is time that we remember that,
under differing circumstances, each can be the orientation that best furthers the objectives of thc organization.
This discussion has gone far in identifying the many
circumstances under which the guiding managerial
'In an earlier article, they state they are less concerned with definitions as such. '. . . the results qf implrmenrin~the marketing concept, rather than the concept itself, are examined" (Bennen wd Cooper

1979, p . 761. This anicle makes imponant points about the need to
rely oo the unique capabilities of the organizalion, which may be nonmarketing capabilities. This lheme is also present in the arlirles by
Kaldor (1971), Kerby (19721. and Tauber (1974).

philosophy should be something other than the marketing concept. The examples given merely scratch
the surface and are designed to illustrate general conditions, rather than to demonstrate the degree to which
such conditions exist around us. Probably the list is

not exhaustive, and it remains our task to recognize

and enumerate others. It is important to examine these
conditions more closely to understand their nuances
and to assess their implications.

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The Marketing Concept / 87