Broadening the Concept of Marketing

PHILIP KOTLER

and

SIDNEY J. LEVY

Marketing is a pervasivesocietal activity that goesconsiderably beyond theselling of toothpaste, soap,and steel. The authors inter-pret the meaning of market-ing for nonbusiness organiza-tions and the nature of mar-keting functions such asproduct innprovement,pricing, distribution, andcommunication in such or-ganizations. The questionconsidered is whether tra-ditional marketing principlesare transferable to the mar-keting of organizations, per-sons, and ideas.

Journal of Marketing, Vol. 83 (JanuUT,1969). pp. 10-lK.

THE term "marketing" connotes to most people a function pe-culiar to business firms. Marketing is seen as the task of

finding and stimulating buyers for the firm's output. It involvesproduct development, pricing, distribution, and communication;and in the more progressive firms, continuous attention to the chang-ing needs of customers and the development of new products, withproduct modifications and services to meet these needs. But whethermarketing is viewed in the old sense of "pushing" products or inthe new sense of "customer satisfaction engineering," it is almostalways viewed and discussed as a business activity.

It is the authors' contention that marketing is a pervasive so-cietal activity that goes considerably beyond the selling of tooth-paste, soap, and steel. Political contests remind us that candidatesare marketed as well as soap; student recruitment by colleges re-minds us that higher education is marketed; and fund raising re-minds us that "causes" are marketed. Yet these areas of marketingare typically ignored by the student of marketing. Or they aretreated cursorily as public relations or publicity activities. Noattempt is made to incorporate these phenomena in the body properof marketing thought and theory. No attempt is made to redefinethe meaning of product development, pricing, distribution, and com-munication in these newer contexts to see if they have a usefulmeaning. No attempt is made to examine whether the principles of"good" marketing in traditional product areas are transferable tothe marketing of services, persons, and ideas.

The authors see a great opportunity for marketing people to ex-pand their thinking and to apply their skills to an increasingly in-teresting range of social activity. The challenge depends on theattention given to it; marketing will either take on a broader socialmeaning or remain a narrowly defined business activity.

The Rise of Organizational MarketingOne of the most striking trends in the United States is the in-

creasing amount of society's work being performed by organizationsother than business firms. As a society moves beyond the stagewhere shortages of food, clothing, and shelter are the major problems,it begins to organize to meet other social needs that formerly hadbeen put aside. Business enterprises remain a dominant type oforganization, but other types of organizations gain in conspicuous-ness and in influence. Many of these organizations become enor-mous and require the same rarefied management skills as traditionalbusiness organizations. Managing the United Auto Workers, De-fense Department, Ford Foundation, World Bank, Catholic Church,and University of California has become every bit as challenging as

10

Broadening the Concept of Marketing 11

managing Procter and Gamble, General Motors, andGeneral Electric. These nonbusiness organizationshave an increasing range of influence, affect as manylivelihoods, and occupy as much media prominence asmajor business firms.

All of these organizations perform the classic busi-ness functions. Every organization must perform afinancial function insofar as money must be raised,managed, and budgeted according to sound businessprinciples. Every organization must perform a pro-duction function in that it must conceive of the bestway of arranging inputs to produce the outputs ofthe organization. Every organization must performa personnel function in that people must be hired,trained, assigned, and promoted in the course of theorganization's work. Every organization must per-form a purchasing function in that it must acquirematerials in an efficient way through comparing andselecting sources of supply.

When we come to the marketing function, it is alsoclear that every organization performs marketing-like activities whether or not they are recognized assuch. Several examples can be given.

The police department of a major U.S. city, con-cerned with the poor image it has among an impor-tant segment of its population, developed a campaignto "win friends and influence people." One highlightof this campaign is a "visit your police station" dayin which tours are conducted to show citizens thedaily operations of the police department, includingthe crime laboratories, police lineups, and cells. Thepolice department also sends officers to speak atpublic schools and carries out a number of otheractivities to improve its community relations.

Most museum directors interpret their primaryresponsibility as "the proper preservation of anartistic heritage for posterity."' As a result, formany people museums are cold marble mausoleumsthat house miles of relics that soon give way toyawns and tired feet. Although museum attendancein the United States advances each year, a largenumber of citizens are uninterested in museums. Isthis indifference due to failure in the manner ofpresenting what museums have to offer? This nag-ging question led the new director of the Metropoli-taji Museum of Art to broaden the museum's appealthrough sponsoring contemporary art shows and"happenings." His marketing philosophy of museummanagement led to substantial increases in the Met'sattendance.

The public school system in Oklahoma City sorelyneeded more public support and funds to prevent adeterioration of facilities and exodus of teachers.It recently resorted to television programming todramatize the work the public schools were doing to

fight the high school dropout problem, to developnew teaching techniques, and to enrich the children.Although an expensive medium, television quicklyreached large numbers of parents whose responseand interest were tremendous.

Nations also resort to international marketingcampaigns to get across important points aboutthemselves to the citizens of other countries. Thejunta of Greek colonels who seized power in Greecein 1967 found the international publicity surround-ing their cause to be extremely unfavorable and po-tentially disruptive of international recognition.They hired a major New York public relations firmand soon full-page newspaper ads appeared carryingthe headline "Greece Was Saved From Communism,"detailing in small print why the takeover was neces-sary for the stability of Greece and the world.^

An anti-cigarette group in Canada is trying topress the Canadian legislature to ban cigarettes onthe grounds that they are harmful to health. Thereis widespread support for this cause but the or-ganization's funds are limited, particularly measuredagainst the huge advertising resources of the cig-arette industry. The group's problem is to findeffective ways to make a little money go a long wayin persuading infiuential legislators of the need fordiscouraging cigarette consumption. This grouphas come up with several ideas for marketing anti-smoking to Canadians, including television spots, apaperback book featuring pictures of cancer andheart disease patients, and legal research on com-pany liability for the smoker's loss of health.

2"PR for the Colonels," Newsweek, Vol. 71 (March18, 1968), p. 70.

This is the view of Sherman Lee, Director of theCleveland Museum, quoted in Newsweek, Vol. 71(April 1. 1968), p. 55.

• ABOUT THE AUTHORS. Philip Kotleris Professor of Marketing at North-western University. He earned his PhDat M.I.T. He is the author of Maiket-ing Managemenf: Analysis. Planningand Control. Professor Kotler is Ad-visory Editor of the Holt, Rinehart andWinston Marketing Series and is anactive consultant to many comp>anieson marketing planning and inlorma-tion systems. Currently he is Chair-man of the College on Marketing of The Institute of Manage-ment Sciences.

Sidney J. Levy is Professor of Market-ing at Northwestern University and isVice President of Social Research. Inc.He earned his PhD at the University ofChicago. Professor Levy is author ofPromofion; A Bebayioral View, co-authorof Living with Television, and of manyarticles.

12 Journal of Marketing, January, 1969

What concepts are common to these and manyother possible illustrations of organizational mar-keting? All of these organizations are concernedabout their "product" in the eyes of certain "con-sumers" and are seeking to find "tools" for further-ing their acceptance. Let us consider each of theseconcepts in general organizational terms.

ProductsEvery organization produces a "product" of at

least one of the following types:Physical products. "Product" first brings to

mind everyday items like soap, clothes, and food,and extends to cover millions of tangible itemsthat have a market value and are available forpurchase.

Services. Services are intangible goods that aresubject to market transaction such as tours, in-surance, consultation, hairdos, and banking.

Persons. Personal marketing is an endemichuman activity, from the employee trying to im-press his boss to the statesman trying to win thesupport of the public. With the advent of masscommunications, the marketing of persons hasbeen turned over to professionals. Hollywood starshave their press agents, political candidates theiradvertising agencies, and so on.

Organizations. Many organizations spend a greatdeal of time marketing themselves. The Republi-can Party has invested considerable thought andresources in trying to develop a modem look. TheAmerican Medical Association decided recentlythat it needed to launch a campaign to improvethe image of the American doctor.^ Many chari-table organizations and universities see sellingtheir organization as their primary responsibility.

Ideas. Many organizations are mainly in thebusiness of selling ideas to the larger society.Population organizations are trying to sell theidea of birth control, and the Women's ChristianTemperance Union is still trying to sell the ideaof prohibition.

Thus the "product" can take many forms, and thisis the first crucial point in the case for broadeningthe concept of marketing.

ConsumersThe second crucial point is that organizations must

deal with many groups that are interested in theirproducts and can make a difference in its success. Itis vitally important to the organization's success thatit be sensitive to, serve, and satisfy these groups.One set of groups can be called the suppliers. Sup-pliers are those who provide the management groupwith the inputs necessary to perform its work anddevelop its product elTectively. Suppliers include

"Doctors Try an Image Transplant," Business Week,No. 2025 (June 22, 1968), pp. 64.

employees, vendors of the materials, banks, adver-tising agencies, and consultants.

The other set of groups are the consumers of theorganization's product, of which four sub-groups canbe distinguished. The clients are those who are theimmediate consumers of the organization's product.The clients of a business firm are its buyers andpotential buyers; of a service organization thosereceiving the services, such as the needy (from theSalvation Army) or the sick (from County Hos-pital) ; and of a protective or a primary organization,the members themselves. The second group is thetrustees or directors, those who are vested with thelegal authority and responsibility for the organi-zation, oversee the management, and enjoy a varietyof benefits from the "product." The third group isthe active publics that take a specific interest in theorganization. For a business firm, the active publicsinclude consumer rating groups, governmental agen-cies, and pressure groups of various kinds. For auniversity, the active publics include alumni andfriends of the university, foundations, and cityfathers. Finally, the fourth consumer group is thegeneral public. These are all the people who mightdevelop attitudes toward the organization that mightaffect its conduct in some way. Organizational mar-keting concerns the programs designed by manage-ment to create satisfactions and favorable attitudesin the organization's four consuming groups: clients,trustees, active publics, and general public.

Marketing Tools

Students of business firms spend much time study-ing the various tools under the firm's control thataffect product acceptance: product improvement,pricing, distribution, and communication. All ofthese tools have counterpart applications to non-business organizational activity.

Nonbusiness organizations to various degreesengage in product improvement, especially when theyrecognize the competition they face from other or-ganizations. Thus, over the years churches haveadded a host of nonreligious activities to their basicreligious activities to satisfy members seeking otherbases of human fellowship. Universities keep up-dating their curricula and adding new studentservices in an attempt to make the educational ex-perience relevant to the students. Where they havefailed to do this, students have sometimes organizedtheir own courses and publications, or have expressedtheir dissatisfaction in organized protest. Govern-ment agencies such as license bureaus, police forces,and taxing bodies are often not responsive to thepublic because of monopoly status; but even herecitizens have shown an increasing readiness to pro-test mediocre services, and more alert bureaucracieshave shown a growing interest in reading the user'sneeds and developing the required product services.

All organizations face the problem of pricing their

Broadening the Concept of Marketing 13

products and services so that they cover costs.Churches charge dues, universities charge tuition,governmental agencies charge fees, fund-raisingorganizations send out bills. Very often specificproduct charges are not sufficient to meet the or-ganization's budget, and it must rely on gifts andsurcharges to make up the difference. Opinions varyas to how much the users should be charged for theindividual services and how much should be madeup through general collection. If the universityincreases its tuition, it will have to face losing somestudents and putting more students on scholarship.If the hospital raises its charges to cover rising costsand additional services, it may provoke a reactionfrom the community. All organizations face complexpricing issues although not all of them understandgood pricing practice.

Distribution is a central concem to the manufac-turer seeking to make his goods conveniently acces-sible to buyers. Distribution also can be an im-portant marketing decision area for nonbusinessorganizations. A city's public library has to con-sider the best means of making its books availableto the public. Should it establish one large librarywith an extensive collection of books, or severalneighborhood branch libraries with duplication ofbooks? Should it use bookmobiles that bring thebooks to the customers instead of relying exclusivelyon the customers coming to the books? Should itdistribute through school libraries? Similarly thepolice department of a city must think through theproblem of distributing its protective services effi-ciently through the community. It has to detenninehow much protective service to allocate to dif-ferent neighborhoods; the respective merits of squadcars, motorcycles, and foot patrolmen; and thepositioning of emergency phones.

Customer communication is an essential activityof all organizations although many nonmarketingorganizations often fail to accord it the importanceit deserves. Managements of many organizationsthink they have fully met their communication re-sponsibilities by setting up advertising and orpublic relations departments. They fail to realizethat everything about an organization talks. Custo-mers form impressions of an organization from itsphysical facilities, employees, officers, stationery,and a hundred other company surrogates. Only whenthis is appreciated do the members of the organiza-tion reorganize that they all are in marketing, what-ever else they do. With this understanding they canassess realistically the impact of their activities onthe consumers.

Concepts for Effective Marketing: Managementin Nonbusiness Organizations

Although all organizations have products, markets,and marketing tools, the art and science of effectivemarketing management have reached their highest

state of development in the business type of organiza-tion. Business organizations depend on customergoodwill for survival and have generally learned howto sense and cater to their needs effectively. Asother types of organizations recognize their market-ing roles, they will turn increasingly to the body ofmarketing principles worked out by business or-ganizations.and adapt them to their own situations.

What are the main principles of effective market-ing management as they appear in most forward-looking business organizations? Nine concepts standout as crucial in guiding the marketing effort of abusiness organization.

Generic Product DefinitionBusiness organizations have increasingly recog-

nized the value of placing a broad definition ontheir products, one that emphasizes the basic cus-tomer need (s) being served. A modern soap com-pany recognizes that its basic product is cleaning,not soap; a cosmetics company sees its basic productas beauty or hope, not lipsticks and makeup; a pub-lishing company sees its basic product as information,not books.

The same need for a broader definition of its busi-ness is incumbent upon nonbusiness organizations ifthey are to survive and grow. Churches at one timetended to define their product narrowly as that ofproducing religious services for members. Recently,most churchmen have decided that their basic productis human fellowship. There was a time when edu-cators said that their product was the three R's. Nowmost of them define their product as education forthe whole man. They try to serve the social, emo-tional, and political needs of young people in additionto intellectual needs.

Target Groups DefinitionA generic product definition usually results in

defining a very wide market, and it is then necessaryfor the organization, because of limited resources, tolimit its product offering to certain clearly definedgroups within the market. Although the genericproduct of an automobile company is transportation,the company typically sticks to cars, trucks, andbuses, and stays away from bicycles, airplanes, andsteamships. Furthermore, the manufacturer doesnot produce every size and shap)e of car but concen-trates on producing a few major types to satisfycertain substantial and specific parts of the market.

In the same way, nonbusiness organizations haveto define their target groups carefully. For example,in Chicago the YMCA defines its target groups asmen, women and children who want recreationalopportunities and are willing to pay $20 or more ayear for them. The Chicago Boys Club, on the otherhand, defines its target group as poorer boys withinthe city boundaries who are in want of recreationalfacilities and can pay $1 a year.

14 Journal of Marketing, January, 1969

Differentiated Marketing

When a business organization sets out to servemore than one target group, it will be maximallyeffective by differentiating its product offerings andcommunications. This is also true for nonbusinessorganizations. Fund-raising organizations have rec-ognized the advantage of treating clients, trustees,and various publics in different ways. These groupsrequire differentiated appeals and frequency ofsolicitation. Labor unions find that they must ad-dress different messages to different parties ratherthan one message to all parties. To the companythey may seem unyielding, to the conciliator theymay appear willing to compromise, and to the publicthey seek to appear economically exploited.

Customer Behavior AnalysisBusiness organizations are increasingly recogniz-

ing that customer needs and behavior are not obviouswithout formal research and analysis; they cannotrely on impressionistic evidence. Soap companiesspend hundreds of thousands of dollars each yearresearching how Mrs. Housewife feels about herlaundry, how, when, and where she does her laundry,and what she desires of a detergent.

Fund raising illustrates how an industry hasbenefited by replacing stereotypes of donors withstudies of why people contribute to causes. Fundraisers have learned that people give because theyare getting something. Many give to communitychests to relieve a sense of guilt because of theirelevated state compared to the needy. Many give tomedical charities to relieve a sense of fear that theymay be struck by a disease whose cure has not yetbeen found. Some give to feel pride. Fund raisershave stressed the importance of identifying the mo-tives operating in the marketplace of givers as abasis for planning drives.

Differential AdvantagesIn considering different ways of reaching target

groups, an organization is advised to think in termsof seeking a differential advantage. It should con-sider what elements in its reputation or resourcescan be exploited to create a special value in the mindsof its potential customers. In the same way Zenithhas built a reputation for quality and InternationalHarvester a reputation for service, a nonbusinessorganization should base its case on some dramaticvalue that competitive organizations lack. The smallisland of Nassau can compete against Miami for thetourist trade by advertising the greater dependabilityof its weather; the Heart Association can competefor funds against the Cancer Society by advertisingthe amazing strides made in heart research.

Multiple Marketing Tools

The modern business firm relies on a multitude oftools to sell its product, including product improve-

ment, consumer and dealer advertising, salesmanincentive programs, sales promotions, contests,multiple-size offerings, and so forth. Likewise non-business organizations also can reach their audiencesin a variety of ways. A church can sustain theinterest of its members through discussion groups,newsletters, news releases, campaign drives, annualreports, and retreats. Its "salesmen" include thereligious head, the board members, and the presentmembers in terms of attracting potential members.Its advertising includes announcements of weddings,births and deaths, religious pronouncements, andnewsworthy developments.

Integrated Marketing PlanningThe multiplicity of available marketing tools sug-

gests the desirability of overall coordination so thatthese tools do not work at cross purposes. Over time,business firms have placed under a marketing vice-president activities that were previously managed ina semi-autonomous fashion, such as sales, advertis-ing, and marketing research. Nonbusiness organiza-tions typically have not integrated their marketingactivities. Thus, no single officer in the typicaluniversity is given total responsibility for studyingthe needs and attitudes of clients, trustees, and pub-lics, and undertaking the necessary product develop-ment and communication programs to serve thesegroups. The university administration instead in-cludes a variety of "marketing" positions such asdean of students, director of alumni affairs, directorof public relations, and director of development;coordination is often poor.

Continuous Marketing Feedback

Business organizations gather continuous infor-mation about changes in the environment and abouttheir own performance. They use their salesmen,research department, specialized research services,and other means to check on the movement of goods,actions of competitors, and feelings of customers tomake sure they are progressing along satisfactorylines. Nonbusiness organizations typically are morecasual about collecting vital information on howthey are doing and what is happening in the market-place. Universities have been caught off guard byunderestimating the magnitude of student grievanceand unrest, and so have major cities underestimatedthe degree to which they were failing to meet theneeds of important minority constituencies.

Marketing Audit

Change is a fact of life, although it may proceedalmost invisibly on a day-to-day basis. Over a longstretch of time it might be so fundamental as tothreaten organizations that have not provided forperiodic reexaminations of their purposes. Organi-zations can grow set in their ways and unresponsiveto new opportunities or problems. Some great

Broadening the Concept of Marketing 15

American companies are no longer with us becausethey did not change definitions of their businesses,and their products lost relevance in a changingworld. Political parties become unresponsive afterthey enjoy power for a while and every so often ex-perience a major upset. Many union leaders growinsensitive to new needs and problems until one daythey find themselves out of office. For an organiza-tion to remain viable, its management must providefor periodic audits of its objectives, resources, andopportunities. It must reexamine its basic business,target groups, differential advantage, communicationchannels, and messages in the light of current trendsand needs. It might recognize when change is neededand make it before it is too late.

Is Organizational Marketing aSocially Useful Activity?

Modern marketing has two different meanings inthe minds of people who use the term. One meaningof marketing conjures up the terms selling, infiuenc-ing, persuading. Marketing is seen as a huge andincreasingly dangerous technology, making it pos-sible to sell persons on buying things, propositions,and causes they either do not want or which are badfor them. This was the indictment in Vance Pack-ard's Hidden Persuaders and numerous other socialcriticisms, with the net effect that a large number ofpersons think of marketing as immoral or entirelyself-seeking in its fundamental premises. They canbe counted on to resist the idea of organizationalmarketing as so much "Madison Avenue."

The other meaning of marketing unfortunately isweaker in the public mind; it is the concept ofsensitively sen-ing and satisfying human needs. Thiswas the great contribution of the marketing conceptthat was promulgated in the 1950s, and that conceptnow counts many business firms as its practitioners.The marketing concept holds that the problem of allbusiness firms in an age of abundance is to developcustomer loyalties and satisfaction, and the key tothis problem is to focus on the customer's needs.*Perhaps the short-run problem of business firms isto sell people on buying the existing products, butthe long-run problem is clearly to create the productsthat people need. By this recognition that effectivemarketing requires a consumer orientation insteadof a product orientation, marketing has taken a newlease on life and tied its economic activity to a highersocial purpose.

It is this second side of marketing that provides

* Theodore Levitt, "Marketing Myopia," Harvard Busi-ness Review, Vol. 38 (July-August, 1960), pp. 45-56.

a useful concept for all organizations. All organiza-tions are formed to serve the interest of particulargroups: hospitals serve the sick, schools serve thestudents, governments serve the citizens, and laborunions serve the members. In the course of evolving,many organizations lose sight of their original man-date, grow hard, and become self-serving. Thebureaucratic mentality begins to dominate the orig-inal service mentality. Hospitals may becomeperfunctory in their handling of patients, schoolstreat their students as nuisances, city bureaucratsbehave like petty tyrants toward the citizens, andlabor unions try to run instead of serve their mem-bers. All of these actions tend to build frustrationin the consuming groups. As a result some with-draw meekly from these organizations, accept frus-tration as part of their condition, and find their satis-factions elsewhere. This used to be the commonreaction of ghetto Negroes and college students inthe face of indifferent city and university bureaucra-cies. But new possibilities have arisen, and now thesame consumers refuse to withdraw so readily. Or-ganized dissent and protest are seen to be an answer,and many organizations thinking of themselves asresponsible have been stunned into recognizing thatthey have lost touch with their constituencies. Theyhad grown unresponsive.

Where does marketing fit into this picture? Mar-keting is that function of the organization thatcan keep in constant touch with the organization'sconsumers, read their needs, develop "products" thatmeet the.se needs, and build a program of communi-cations to express the organization's purposes. Cer-tainly selling and influencing will be large parts oforganizational marketing; but, properly seen, sellingfollows rather than precedes the organization's driveto create products to satisfy its consumers.

Conclusion

It has been argued here that the modern marketingconcept serves verj- naturally to describe an impor-tant facet of all organizational activity. All or-ganizations must develop appropriate products toserve their sundry consuming groups and must usemodern tools of communication to reach their con-suming publics. The business heritage of marketingprovides a useful set of concepts for guiding allorganizations.

The choice facing those who manage nonbusinessorganizations is not whether to market or not tomarket, for no organization can avoid marketing.The choice is whether to do it well or poorly, and onthis necessity the case for organizational marketingis basically founded.

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