It is a fundamental idea of marketing that organisations survive and prosper through meeting the needs and wants of customers. This important perspective is commonly known as the Marketing Concept which as we saw earlier at its highest is a philosophy and business orientation about matching a company's capabilities with customers’ wants. This matching process takes place in what is called the marketing environment and involves both strategic and tactical marketing within the organisation’s structure. A truly marketing oriented business is actually structurally designed to facilitate the Marketing Concept as a philosophy and as a way of operating.
An entrepreneur realised that the feedback his company was getting had begun to show less and less positive results over the past twelve months. This period happened to coincide with an expansion of the business and a significant increase in the number of staff, form what had been before a relatively small team. Looking deeper a key issue seemed to be that customers where no longer finding the business easy and flexible to deal with.
The entrepreneur hit on a novel solution. He split his staff into those roles were to directly serve customers, e.g. Customer service, Sales, Marketing and those whose roles were to support the company, e.g. Accounting, Logistics, HR. Once complete a meeting was called and as the staff assembled he personally gave small blue button badges to the support group, he proudly wore his own to show commitment, and small green button badges to those directly serving the customers.
Once assembled he explained the reason for the meeting and that he had reached a solution; the badges. “From this moment on we only have two rules that I want you all to bear in mind at all times. Those of you wearing a green badge – it is your job to say yes to a customer and find a way to do it. Those of you wearing a blue badge – when someone wearing a green badge comes to you and says I need to do this for a customer, your job is to find a way to say yes and to then do it”.
Now that’s the Marketing Concept as a cultural philosophy for a business.
Example 1: Management by Button Badge
Businesses do not undertake marketing activities alone. They face threats from competitors, and changes
in the political, economic, social and technological aspects of the macro-environment. All of which have
to be taken into account as a business tries to match its capabilities with the needs and wants of its target
customers. An organisation that adopts the marketing concept accepts the needs of potential customers as
the basis for its operations, and thus its success is dependent on satisfying those customer needs.
So to understand customers better – which as students striving to be better marketers we need to do, we
should actually define what we mean by wants and needs, rather than just use such terms loosely;
Maslow's hierarchy of needs is depicted as a five level pyramid. The lowest level is associated with
physiological needs, with the peak level being associated with self-actualisation needs; especially identity
and purpose.
The higher needs in this hierarchy only come into focus when the lower needs in the pyramid are met.
Once an individual has moved upwards to the next level, needs in the lower level will no longer be
prioritized. If a lower set of needs is no longer being met, i.e. they are deficient; the individual will
temporarily re-prioritize those needs by focusing attention on the unfulfilled needs, but will not
permanently regress to the lower level.
Thus, whilst customer needs are broad, customer wants are usually quite narrow. Consider this example:
Consumers need to eat when they are hungry. What they want to eat and in what kind of environment will
vary enormously. For some, eating at McDonalds satisfies the need to meet hunger, others wouldn’t dream
of eating at McDonalds or any other fast food restaurant. Some are perfectly happy with a microwaved
ready-meal, others will only countenance a scratch cooked meal with organic ingredients. Equally there
are those who are dissatisfied unless their food comes served alongside a bottle of fine Chablis or Claret,
or is served silver service by waiters in evening wear or has to be ordered from menus written in French.
Indeed it is this diversity of wants and needs that allows a variety of ‘solutions’ to be developed in any
market and that directly leads to the need to think carefully about how and what can satisfy wants and
needs. It is this approach we will explore at 1.3.2 later in this Chapter when examining Porter’s Five
Forces model.
This leads onto another important concept - that of demand. Demand is a want for a specific
product/service supported by the ability and willingness to pay for it, i.e. there is a market of customers
who both want and can pay for the product/service. For example, many consumers around the globe want
a Ferrari car, but relatively few are able and willing to actually buy one.
The concept of demand is absolutely fundamental to marketing, and is what much marketing research is
actually aimed at; establishing the level of demand, and what Product Managers & Planners in many
businesses spend their time trying to predict – patterns of demand and how they change as new products
and services come to market and the needs/wants of the consumers and customers in the market evolve.
Indeed the concept of demand is how we in marketing actually define a market – a group of potential
customers with a shared need that can be satisfied through an exchange relationship to the mutual
satisfaction of the potential customers and the supplier. Indeed looking at this you should be able to see
that this very neatly brings together the Marketing concept with more traditional views on exchange,
utility, needs and wants
So to understand Marketing we need to understand the exchange process;
This is as equally true of a charity as it is of a commercial business. A charity takes a donation and the
exchange is the feeling of self-gratification the giver of the donation feels for giving. Effective marketing
– at all three levels - can increase the value of this self-gratification in the eyes of the donator, e.g. making
them feel they are making more of a difference, and thus marketing makes giving easier, i.e. marketing is
a facilitator of the exchange by creating utility.
In marketing we define utility as the want-satisfying power of a good or service. Richard Buskirk has
presented an idea that marketing is an activity that creates from, place, time and ownership utility;
1. Form utility: The usefulness of a product that results form its form; converting raw materials into
finished products. Product planning and development activities create form utility.
2. Time utility: making a product available when consumers want to purchase it. After production
goods are stored by the manufacturer, wholesalers, retailers, etc until such time, the demand of the
product is created and such goods are made available to the customer at the time when they are
needed or demanded.
3. Place utility: making a product available in a location convenient for customers, the flow of goods
through different distribution channels from producer to consumer from the place of abundant to
the place or where they are needed creates place utility.
4. Ownership utility: refers to the orderly transfer of legal title to the product and/or service/s from
the seller to the buyer via a sales transaction. Goods may be lying in a reliable state with producer
or the manufacturer or their agents until some other person needs them.
The production process creates form utility of a goods or service, whereas time, place, and ownership
utility are created by the marketing function; it is the act of offering a goods or service, when (time
utility), where (place utility) and via processes that make possession easy, e.g.
price/distribution/purchasing terms (ownership utility). Think back to the point made above about how
businesses try and increase demand; the four factors stated on how a business does this are ways of
increasing the utility of the product/service. So the greater the utility, the greater the demand and
potentially the more successful the business.
Marketing therefore, consists in moving goods to the manufacturers, in a form in which it is required at a
time when they required, to the place where they are to be used and for those who are to use them for
various purposes.
It is worth noting at this point that the concept of utility overlaps into later points on the Marketing Mix,
value chain and on goods versus services marketing.
An entrepreneur realised that the feedback his company was getting had begun to show less and less positive results over the past twelve months. This period happened to coincide with an expansion of the business and a significant increase in the number of staff, form what had been before a relatively small team. Looking deeper a key issue seemed to be that customers where no longer finding the business easy and flexible to deal with.
The entrepreneur hit on a novel solution. He split his staff into those roles were to directly serve customers, e.g. Customer service, Sales, Marketing and those whose roles were to support the company, e.g. Accounting, Logistics, HR. Once complete a meeting was called and as the staff assembled he personally gave small blue button badges to the support group, he proudly wore his own to show commitment, and small green button badges to those directly serving the customers.
Once assembled he explained the reason for the meeting and that he had reached a solution; the badges. “From this moment on we only have two rules that I want you all to bear in mind at all times. Those of you wearing a green badge – it is your job to say yes to a customer and find a way to do it. Those of you wearing a blue badge – when someone wearing a green badge comes to you and says I need to do this for a customer, your job is to find a way to say yes and to then do it”.
Now that’s the Marketing Concept as a cultural philosophy for a business.
Example 1: Management by Button Badge
-----------------------------------------------------------------------------------------------------------------
Businesses do not undertake marketing activities alone. They face threats from competitors, and changes
in the political, economic, social and technological aspects of the macro-environment. All of which have
to be taken into account as a business tries to match its capabilities with the needs and wants of its target
customers. An organisation that adopts the marketing concept accepts the needs of potential customers as
the basis for its operations, and thus its success is dependent on satisfying those customer needs.
So to understand customers better – which as students striving to be better marketers we need to do, we
should actually define what we mean by wants and needs, rather than just use such terms loosely;
- A “need” is a basic requirement that an individual has to satisfy to continue to exist.
Maslow's hierarchy of needs is depicted as a five level pyramid. The lowest level is associated with
physiological needs, with the peak level being associated with self-actualisation needs; especially identity
and purpose.
The higher needs in this hierarchy only come into focus when the lower needs in the pyramid are met.
Once an individual has moved upwards to the next level, needs in the lower level will no longer be
prioritized. If a lower set of needs is no longer being met, i.e. they are deficient; the individual will
temporarily re-prioritize those needs by focusing attention on the unfulfilled needs, but will not
permanently regress to the lower level.
Source: Maslow (1943)
Figure 1: A Representation of Maslow’s Hierarchy of Needs
People have basic needs for food, shelter, affection, esteem and self-development. Indeed many of you
should recognise a link here to the work of Abraham Maslow and his hierarchy (figure 1) of needs in
explaining human behaviour through needs motivation. In fact many of these needs are created from
human biology and the nature of social relationships, it is just that human society and marketers have
evolved many different ways to satisfy these basic needs. All humans are different and have different
needs based on age, sex, social position, work, social activities etc. As such each person’s span of needs is
likely to be unique and this it follows that customer needs are, therefore, very broad.
should recognise a link here to the work of Abraham Maslow and his hierarchy (figure 1) of needs in
explaining human behaviour through needs motivation. In fact many of these needs are created from
human biology and the nature of social relationships, it is just that human society and marketers have
evolved many different ways to satisfy these basic needs. All humans are different and have different
needs based on age, sex, social position, work, social activities etc. As such each person’s span of needs is
likely to be unique and this it follows that customer needs are, therefore, very broad.
- A “want” is defined as having a strong desire for something but it not vital to continued existence.
Consumer wants are shaped by social and cultural forces, the media and marketing activities of
businesses; as such a want is much more specific and goes beyond the basic to include aspirational values
as well as the need satisfaction.
businesses; as such a want is much more specific and goes beyond the basic to include aspirational values
as well as the need satisfaction.
Thus, whilst customer needs are broad, customer wants are usually quite narrow. Consider this example:
Consumers need to eat when they are hungry. What they want to eat and in what kind of environment will
vary enormously. For some, eating at McDonalds satisfies the need to meet hunger, others wouldn’t dream
of eating at McDonalds or any other fast food restaurant. Some are perfectly happy with a microwaved
ready-meal, others will only countenance a scratch cooked meal with organic ingredients. Equally there
are those who are dissatisfied unless their food comes served alongside a bottle of fine Chablis or Claret,
or is served silver service by waiters in evening wear or has to be ordered from menus written in French.
Indeed it is this diversity of wants and needs that allows a variety of ‘solutions’ to be developed in any
market and that directly leads to the need to think carefully about how and what can satisfy wants and
needs. It is this approach we will explore at 1.3.2 later in this Chapter when examining Porter’s Five
Forces model.
This leads onto another important concept - that of demand. Demand is a want for a specific
product/service supported by the ability and willingness to pay for it, i.e. there is a market of customers
who both want and can pay for the product/service. For example, many consumers around the globe want
a Ferrari car, but relatively few are able and willing to actually buy one.
The concept of demand is absolutely fundamental to marketing, and is what much marketing research is
actually aimed at; establishing the level of demand, and what Product Managers & Planners in many
businesses spend their time trying to predict – patterns of demand and how they change as new products
and services come to market and the needs/wants of the consumers and customers in the market evolve.
Indeed the concept of demand is how we in marketing actually define a market – a group of potential
customers with a shared need that can be satisfied through an exchange relationship to the mutual
satisfaction of the potential customers and the supplier. Indeed looking at this you should be able to see
that this very neatly brings together the Marketing concept with more traditional views on exchange,
utility, needs and wants
.
We can also take this a step further. Remember we earlier talked about STP, well in fact the process we use
to segment a market is one of demand assessment via grouping potential customers together by their shared
need and/or wants that can be fulfilled through an exchange relationship. This grouping through
understanding shared needs is fundamental to effective marketing, but is also a major area of contention
within most businesses because it is easy to get wrong. Good use of STP leads to a segmentation of the
market into groups that are homogenous by need, these groups can then be prioritised by their potential
return and one or more is then chosen to be served – it/they become a target market - and a marketing mix is
chosen to do just that.
We can also take this a step further. Remember we earlier talked about STP, well in fact the process we use
to segment a market is one of demand assessment via grouping potential customers together by their shared
need and/or wants that can be fulfilled through an exchange relationship. This grouping through
understanding shared needs is fundamental to effective marketing, but is also a major area of contention
within most businesses because it is easy to get wrong. Good use of STP leads to a segmentation of the
market into groups that are homogenous by need, these groups can then be prioritised by their potential
return and one or more is then chosen to be served – it/they become a target market - and a marketing mix is
chosen to do just that.
So to summarise;
- A firm’s marketers carefully study of the needs individuals and businesses in order to asses the
potential of a market. - A market consists of people with purchasing power, willingness to buy, and authority to make
purchase decisions.
- A target market
o The group of people toward who an organization markets its products or ideas with a strategy
designed to satisfy their specific needs and preferences.
o Customer needs and wants vary considerably, and no single organization has the resources to satisfy everyone.
Businesses therefore have not only to make products that consumers want, but they also have to make
them affordable to a sufficient number to create profitable demand. Businesses do not create customer
needs or the social status in which customer needs are influenced. It is not Burger King or KFC that make
people hungry, nor Budweiser or Coco-cola that make them thirsty.
them affordable to a sufficient number to create profitable demand. Businesses do not create customer
needs or the social status in which customer needs are influenced. It is not Burger King or KFC that make
people hungry, nor Budweiser or Coco-cola that make them thirsty.
However, businesses do try to influence demand by designing products and services that are;
- Attractive
- Work well
- Are affordable
- Are available
From what we’ve looked at so far it should be evident that Marketing also fundamentally involves an
exchange process, that is marketing involves two or more parties trading something of value with each
other. If you go to a restaurant you exchange money for food and service. If we travel to another city and
stay at a hotel, we exchange money or more commonly credit through the use of a credit card, for the use
of the room and services of the hotel. The meal and the services of the hotel & restaurant in these
examples are products passed onto us in an exchange of money or credit.
exchange process, that is marketing involves two or more parties trading something of value with each
other. If you go to a restaurant you exchange money for food and service. If we travel to another city and
stay at a hotel, we exchange money or more commonly credit through the use of a credit card, for the use
of the room and services of the hotel. The meal and the services of the hotel & restaurant in these
examples are products passed onto us in an exchange of money or credit.
So to understand Marketing we need to understand the exchange process;
- There must be two parties, each with unsatisfied needs or wants. This want, of course, could be
money for the seller. - Each must have something to offer. Marketing involves voluntary “exchange” relationships where
both sides must be willing parties. Thus, a consumer who buys a soft drink in a vending machine
for £1.00 must value the soft drink, available at that time and place, more than the money.
Conversely, the vendor must value the money more. (It is interesting to note that money is, strictly
speaking, not necessary for this exchange to take place. It is possible, although a bit weird, to
exchange two ducks for a pair of shoes.) - The parties must be able to communicate. This could be through a display in a store, an
infomercial, or a posting on eBay. - An exchange process exists when two or more parties benefit from trading something of value.
Because of marketing, the buyer’s need for a certain product is satisfied, and the seller’s business
is successful. - Marketing can contribute to the continuing improvement of a society’s overall standard of living.
So we can see that Marketing is said to have a positive effect on an economy and helps satisfy needs by
bringing supplier and customer together, it facilitates the exchange transaction.
bringing supplier and customer together, it facilitates the exchange transaction.
This is as equally true of a charity as it is of a commercial business. A charity takes a donation and the
exchange is the feeling of self-gratification the giver of the donation feels for giving. Effective marketing
– at all three levels - can increase the value of this self-gratification in the eyes of the donator, e.g. making
them feel they are making more of a difference, and thus marketing makes giving easier, i.e. marketing is
a facilitator of the exchange by creating utility.
Utility is a concept within economics that is related to marketing. Utility is a measure of the relative
satisfaction from, or desirability of, consumption of various goods and services. Given this measure, one
may speak meaningfully of increasing or decreasing utility, and thereby explain economic behaviour in
terms of attempts to increase one's utility. The Product and/or service and marketing of the product and/or
service form the foundation of the exchange process and together they create a utility.
satisfaction from, or desirability of, consumption of various goods and services. Given this measure, one
may speak meaningfully of increasing or decreasing utility, and thereby explain economic behaviour in
terms of attempts to increase one's utility. The Product and/or service and marketing of the product and/or
service form the foundation of the exchange process and together they create a utility.
In marketing we define utility as the want-satisfying power of a good or service. Richard Buskirk has
presented an idea that marketing is an activity that creates from, place, time and ownership utility;
1. Form utility: The usefulness of a product that results form its form; converting raw materials into
finished products. Product planning and development activities create form utility.
2. Time utility: making a product available when consumers want to purchase it. After production
goods are stored by the manufacturer, wholesalers, retailers, etc until such time, the demand of the
product is created and such goods are made available to the customer at the time when they are
needed or demanded.
3. Place utility: making a product available in a location convenient for customers, the flow of goods
through different distribution channels from producer to consumer from the place of abundant to
the place or where they are needed creates place utility.
4. Ownership utility: refers to the orderly transfer of legal title to the product and/or service/s from
the seller to the buyer via a sales transaction. Goods may be lying in a reliable state with producer
or the manufacturer or their agents until some other person needs them.
The production process creates form utility of a goods or service, whereas time, place, and ownership
utility are created by the marketing function; it is the act of offering a goods or service, when (time
utility), where (place utility) and via processes that make possession easy, e.g.
price/distribution/purchasing terms (ownership utility). Think back to the point made above about how
businesses try and increase demand; the four factors stated on how a business does this are ways of
increasing the utility of the product/service. So the greater the utility, the greater the demand and
potentially the more successful the business.
Marketing therefore, consists in moving goods to the manufacturers, in a form in which it is required at a
time when they required, to the place where they are to be used and for those who are to use them for
various purposes.
Marketing functions are the activities that create utility and facilitate the exchange process and include;
- Buying or leasing
- Selling or leasing
- Transporting
- Storing
- Standardising or grading
- Financing
- Risk taking
- Information gathering
It is worth noting at this point that the concept of utility overlaps into later points on the Marketing Mix,
value chain and on goods versus services marketing.
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