The Faltering MarketingConcept

MARTIN L. BELL

and

C. WILLIAM EMORY

Companies professing to be"customer-oriented" are underattack. Have they erred inimplementing the marketingconcept or has it faltered?The authors suggest that thetraditional marketing conceptis an operational statementwhich does conflict with acompany's social responsibil-ity to consumers. A revisedmarketing concept is offeredto deal with the challenge ofthe new consumerism.

Journal of Marketing, Vol. 36 (October.1971), pp. 37-42.

r I ^HE marketing concept has been widely accepted as an adequate-I statement of the function and role of marketing in today's

society as well as in the business firm. In recent years, however,there has been a growing indication that the concept has falteredto the point where it is no longer an adequate statement. Evidenceexists to support the questioning of the marketing concept. Oneis organizational stress, excessive costs, and high product failurerates in some companies incurred by attempting to implement theconcept.1 Additional evidence of a breakdown in the marketingconcept is found in the deterioration of relations between businesson the one hand and the public and government on the other. Thesedevelopments include events which are now widely called "con-sumerism." For example, "In the very broadest sense, consumer-ism can be defined as the bankruptcy of what the business schoolsha\e been calling the 'marketing concept.' "- Is such an indictmentjustified?

Consumerism and the Marketing Concept

For decades there have been outcries that the consumer hasbeen mistreated.^ However, the present challenge is part of amuch broader and deeper concern with a variety of social problems.The new wave of social criticism started to build in the late 1950sand early 1960s. Popular books began to focus attention on theimpacts of various marketing activities upon consumers and so-ciety as a whole.̂ The criticism increa.sed and several self-ap-pointed consumer spokesmen emerged to organize and lead theattack upon alleged marketing abuses and the companies respon-sible for them.

The challenges by the consumerists are not restricted to a singleproduct, industry, or practice. Many of the leading corporationsare under the strongest attacks. Automobile manufacturers, pub-lishers, soap companies, and especially oil companies have beenconfronted. For example, gasoline marketers have periodically been

1 For example, see T. L. Berg, Miannarketing (Garden City, N. Y.:Doubleday and Company, 1970) ; Theodore Levitt, The MarketingMode (New York: McGraw-Hill Book Company, 1969), p. 230; andA. P. Felton, "Making the Marketing Concept Work," Harvard Busi-ness Review, Vol. 37 (July-August, 1959), pp. 55-65.

2 "Business Responds to Consumerism," Business Week (September6, 1969), p. 95.

3 Robert 0. Herrmann, "Consumerism: Its Goals, Orgranizations andFuture," JOURNAL OF MARKETING. Vol. 34 (October, 1970), pp. 55-60.

* For example, see Rachel Carson, Silent Spring (Boston: HoughtonMifflin Co., 1962) ; Jessica Mitford, American Way of Death (NewYork: Simon and Schuster, Inc., 1963); Ralph Nader, Unsafe atAny Speed (New York: Brossman Publishers, Inc., 1965).

37

38 Journal of Marketing, October, 1971

accused of pricing irregularities. Certain commer-cials for long-mileage ingredients have been bannedfrom television. The use of lotteries and games hasbeen denied because the outcomes have been manipu-lated, and the chances of winning have been deceit-fully promoted.5 Their products have been severelycriticized as pollutants and the slowness of the in-dustry to develop ways of lessening the harmfulwaste has also come under attack.

Major food companies have been accused of feed-ing "empty calories" to both adults and children.One nutritionist claimed that the consumer typi-cally receives fewer vitamins and minerals todaythan he did ten years ago." Along with other in-dustries, notably the toy manufacturers, the food in-dustry has also been accused of infiuencing childrenwith its television advertising.

Appliance manufacturers have been castigated fortheir self-serving warranties. Corporations that areclo.sely identified with the popularization of the mar-keting concept have been accused of producing un-safe merchandise. The important point is thatcharges are not being brought against the "mar-ginal few" who skirt the edge of the economicprocess using the marketing approach of the "cara-van trader." The consumerists have focused on theelite of U.S. industry.

Business, however, is not without its defenders.Many claim, with much justification, that ethics inthe marketplace are as high or higher today thanat any time in history. Most firms try to providegood values; many firms extend themselves to offersuperior services and products to the consumer.Where practices are deficient, they are often at-tributed to competitive pressures and sometimeseven to government regulations. As a result, itsdefenders claim that business is the target of awitch hunt; that it is being criticized for problemsthat it did not create and which lie beyond itscontrol. In fact, many businessmen see consumerismas an attack upon the free enterprise system ratherthan as an effort to improve it.^

Consumerists would probably agree that U.S.business has provided society with many benefits.However, the message is clear—society expectsmore. Businessmen cannot look back at theirachievements; rather, they are exhorted to accept

5 Investigation of 'Preselected Winners' SweepstakesPromotions: Hearings before the Subcommittee onActivities of Regulatory Agencies Relating to SmallBusiness of the Select Committee on Small Business,House of Representatives, 91st Congress, 1st Session,p. 2.

•"• Dr. Jean Mayer in a speech reported in AdvertisingAge, (March 23, 1970), p. 106.

' See Ralph Gaedeke, "What Business, Government,and Consumer Spokesmen Think ahout Consumerism,"The Journal of Consum^er Affairs, Vol. 4 (Summer,1970), p. 10; see also "Roche, Larken Views Confiicton Consumerism," Advertising Age (March 29, 1971),p. 1.

new standards by which to judge their role insociety. The focus of the consumerist message isthat the existing marketing concept is an inade-quate standard.

The Marketing Concept

The marketing concept is the result of an attemptto operationalize a basic philosophy of marketingheld by economists and marketing theorists. Wel-fare economics is replete with references to the re-sponsibility of business to provide utilities forconsumers. Adam Smith, the father of enterpriseeconomics, noted that the purpo.se of production isto serve consumption. The authors of early market-ing texts also emphasized that the purpose of mar-keting is to provide consumer satisfactions. Notethe following statement from an early edition of aleading marketing text.

Business functions to satisfy the needs of theconsumers. The first measure of the success ofany business is how well it serves the con-sumers. If an operation is not in the interestof the consumers, it is not justified, no matterhow profitable it may be to its owners. Heprofits most who serves best.*

This philosophy of customer satisfaction was notclearly articulated in operational business termsuntil the 1950s. However, this situation changedas the "marketing revolution" unfolded. The needto look to the customer for guidance in the organi-zation and direction of business was recognized."

McKitterick, a leading marketing executive, pre-sented a paper before the American MarketingAssociation which became one of the most widelv

p. D. Converse and H. W. Huegy, The Elements ofMarketing (New York: Prentice-Hall, Inc., 1946),p. 21.R. J. Keith, "The Marketing Revolution," JOURNALOF MARKETING, Vol. 24 (January, 1960), pp. 35-38.

• ABOUT THE AUTHORS. Martin L.Bell is professor of marketing at theGraduate School of Business Adminis-tration, Washington University (St.Louis) and a principal in The Market-ing Resource Group. Dr. Bell is authorof the forthcoming book. Marketing:Concepts and Strategy. He has writtena history of Pet, Incorporated and waseditor of the 1960 AMA Winter Pro-ceedings.

C. William Emory is professor ofmarketing at the Graduate School ofBusiness Administration, WashingtonUniversity (St. Louis) and a principol inThe Marketing Resource Group. Dr.Emory is coauthor of Making Manage-ment Decisions.

The Faltering Marketing Concept 39

reproduced statements on the marketing concept.'"He clearly tied the emerging marketing concept tothe problems of corporate growth and the need todevelop a meaningful, internalized "philosophy" ofbusiness to guide the planning and profit controlfunctions. The first contributions to marketing liter-ature concerning the operational concept came fromconsultants and practitioners such as Alderson.Borch, Felton, Jewell. McKay, and Keith." By 1965practically all introductory marketing texts includesome di.scussion of the "new" marketing concept.

What is this concept? In what respects, if any,does it differ from traditional philosophical state-ments of marketing's responsibility to consumers?To answer these questions it is necessary to restatethe generally accepted meaning of the concept, andthen to distinguish its operational from its philo-sophical aspects.

The marketing concept has three basic elements:1. Cu.itomer Orientation. Knowledge of the cus-

tomer, which requires a thorough understand-ing of his needs, wants, and behavior shouldbe the focal point of all marketing action. Itimplies the development of products and ser-vices to meet these needs. It does not excludethe possibility that these needs may be "stimu-lated" by business or that aggressive sellingmay be needed to persuade consumers to buygoods and services which have been createdfor them.

2. Integrated Effort. Ultimately, the entire firmmust be in tune with the market by placingemphasis on the integration of the marketingfunction with research, product management,sales, an* advertising to enhance the firm'stotal effectiveness.

3. Profit Direction. The marketing concept isintended to make money for the company byfocusing attention on profit rather than uponsales volume.

'OJ. B. McKitterick, "What is the Marketing Manage-ment Concept?" in The Frontiers of MarketingThought and Science, Frank M. Bass, ed. (Chicago:American Marketing Association, 1958), pp. 71-82.

"W. Alderson, "A Marketing View of Business Pol-icy," Cost and Profit Outlook, Vol. VIII (December,1955), p. 1; F. J. Borch, "The Marketing Philosophyas a Way of Business Life," Marketing Series No.99 (New York: American Management Association.1957), pp. 193-195; A. P. Felton, "Conditions of Mar-keting Leadership," Harvard Business Review, Vol.34 (March-April, 1956), pp. 117-127; A. P. Felton."Making the Marketing Concept Work," HarvardBusiness Review, Vol. 37 (July-August, 1959), pp.55-65; "New Marketing Concept at Westinghouse:Decentralize and Study the Consumer," Printer's Ink(January 24, 1958), pp. 33-35; E. S. McKay, "Blue-print for an Effective Marketing Program," Market-ing Series No. 91 (New York: American Manage-ment Association, 1954); and Keith, same referenceas footnote 9, pp. 35-38.

As defined here, the marketing concept is entirelyoperational, although the statement on customer ori-entation touches on elements that could be philo-sophical in a different context. But philosophicalissues are not raised. Rather, the purpose of cu.s-tomer orientation is to improve the firm's sellingeffectiveness. Providing customer satisfaction is amean.s to achieving a company profit objective anddoes not imply protection of the consumer's welfare.

Consumer Protection Under theMarketing Concept

Those who have considerable faith in the freeenterprise system tend to believe that it is not theconcept that has failed the consumer but its im-plementation. They argue that if companies hadactually designed their total marketing mix to meetthe needs and wants of consumers, there would notbe a "consumerism" problem today. Of course, thereis no way to prove what "might have been." It isclear, however, that many companies which claimadherence to the marketing concept are presentlyunder attack. Chemical companies, appliance andautomobile manufacturers, and food processors have.sought to be customer oriented, and yet they havebecome the principal targets of the consumerists.These industries are among the "elite" of modernmarketers — leaders in marketing research, newproduct development, and innovative methods ofmerchandising. If the marketing concept could havebeen implemented correctly, should not these com-panies have been the ones to do it?

Faulty implementation is not the problem. Themarketing concept as it is practiced today does notimply a commitment to the kind of consumer satis-faction that is now being demanded. Customer ori-entation turned the manager away from the factoryto the market place. Decisions were based on whatcould be sold at a profit instead of on what couldbe manufactured to .satisfy the needs and wantsof society. The marketing concept was thus anoperational concept, not a philosophical one.

Even as a means to business profits, the market-ing concept can serve the interests of consumers.Good products, creatively promoted, adequately dis-tributed, and fairly priced might result from anoperational approach to customer orientation. Butwhat if the seller consciously compromises productquality in order to improve profits? How is theconsumer protected from inferior products, mis-leading promotion, and exploitative prices?

Business has relied upon a number of assump-tions to bridge the gap between the operationalmarketing concept and its social responsibility toprotect the consumer:

1. The company and its long-run sur\-ival comefirst. Providing the consumer with goods andsen-ices is a means to this end.

2. The consumer should and can defend his own

40 Journal of Marketing, October, 1971

best interest; i.e., he assures his consumptioneffectiveness through his own buying abilityand the sanction of his market veto. In thosefew cases where the buyer is unwilling orunable to make rational decisions, the pres-sures of competition plus the generally preva-lent ethical standards governing transactionswill provide adequate safeguards.

3. Since the consumer can look out for himself,if a product sells well in the marketplace, thisis prima facie evidence that it is meeting theneeds of the consumer.

4. The seller recognizes that long-run survivaldepends upon satisfaction of the consumer;therefore, in the long run he must meet theconsumers' needs. Thus, long-run survival isprima fade evidence of a marketer's abilityto satisfy consumers.

Consumerists maintain that society can no longeraccept these assumptions as a basis for an equitablerelationship between buyer and seller. The follow-ing assumptions are suggested as a more equitablebasis for the buyer-seller relationship;

1. The consumer comes first. If there is aconflict between the consumer and the firm'sobjectives, then the consumer must have pri-ority.

2. The typical consumer is at such a disadvan-tage that he cannot assure his own effective-ness. Business has the responsibility to helphim, and if business fails then the governmentor other parties must act on the consumer'sbehalf.

3. Offering products and/or services that "willsell" is not an adequate measure that the selleris fulfilling his responsibility. It is the dutyof business to promote proper consumptionvalues.

4. The assumption of the long-run congruencebetween buyer and seller interests is neitherquick enough nor certain enough. The inter-ests of buyer and seller must be reconciledin the short run.

The key to the consumerist message may be statedas follows:

To be legitimate (business objectives) mustbe in conformity with public interest. Ananalysis of business objectives should includea study of the assumptions on which ourvalues rest. . . The "free enterprise" systemis based on the right of the private property.Society has delegated to individual citizensthe right to own and use physical property forthe production and distribution of goods andservices to the public. . , Their right to aprofit depends . . . on the ability of the busi-

ness organization to discharge this responsi-

The Conflict

The businessman's operational interpretation ofcustomer orientation has not approached the philo-sophical meaning of providing customer satisfactionas the ultimate goal of marketing. One apparentreason is that the attempt to provide customer satis-faction may conflict directly with the most basicoperational goal of the business—to earn a satis-factory rate of return on its shareholders' invest-ment.

In resolving the conflict between consumer orien-tation and profits, one element usually dominateswhile the other is rationalized. The manner in whichthis rationalization was accomplished at one majorcorporation provides some evidence that the con-sumer's interest is secondary to the company's.

. . . with the new marketing concept now apart of the Westinghouse operating philosophy,the customer is all important. Production isbased on market forecasts. Marketing planningcontrols sales activities. All operations relatedto marketing are coordinated. The goal is im-proved market position and adequate return oninvestment . . . it is designed to insure thatthe customer gets what he wants, where hewants it, when he wants it—if these needsprovide some kind of opportunity to Westing-house. (Italics added here for emphasis.)"

The little "if" became the point of rationalization.Customer satisfaction yielded to corporate profitopportunity, and customer orientation was acceptedas an operational rather than as a philosophicalguide to direct the marketing activities of the firm.It appears that customer orientation has meant littlemore than looking to the customer for guidance asto what can be sold at a profit. It has meant know-ing the customer, knowing him even better thanhe knows himself. It has implied the appropriate-ness of using this knowledge to persuade and evento manipulate him.

There is a danger that the position taken in thisarticle might be misunderstood because it has beenoverstated. Marketing is not anti-consumer. With-out question, much that is good in marketing todayis the result of paying more attention to consumerneeds and desires. Still, the responsibility for cus-tomer welfare has existed within the marketingconcept, but not beyond the point of sale. Customerorientation has been related to the company's goalsof sales and profits. The goal of marketing has beena profitable transaction, but the emergence of con-sumer welfare as a business goal necessitates arevision in the marketing concept.

•2 Ralph Currier Davis, The Fundamentals of TopManagement (New York: Harper & Brothers, Pub-lishers, 1951), pp. 91-92.

13 Printer's Ink, same reference as footnote 11, pp. 33-35.

The Faltering Marketing Concept 41

The Marketing Concept Revisited

The most acceptable basis for a revised market-ing concept is the set of assumptions suggested bythe consumerist position. Based on these assump-tions, the marketing concept would have three ele-ments :

1. Consumer Concern. A positive effort by themarketer to make the consumer the focus ofall marketing decisions through service thatdelivers a high level of satisfaction per con-sumer dollar spent.

2. Integrated Operations. A view that the entirebusiness is a total operational system withconsumer and social problems taking prece-dence over operational considerations in allfunctional areas.

3. Profit Reward. Profit must be viewed as theresidual that results from efficiently supplyingconsumer satisfactions in the marketplace.

Consumer ConcernA firm can show consumer concern by supplying

more and better product information to the buyer.Although many consumers do not appreciate or useinformation, this is not adequate justification fordenying such information or for seeking to per-petuate buyer ignorance. Packaging and advertis-ing have often been criticized by consumerists andgovernment regulatory spokesmen for not providinguseful information.'^ These criticisms are beginningto have an effect. Demands for more nutritionalinformation, use instructions, and content infor-mation bring responses from sellers, and this isonly the beginning. Food manufacturers are pro-viding more informative labels, the FTC has pro-posed that gasoline pumps display octane ratings,and it has also suggested that textiles carry prod-uct-care labels.'' Such information will clearly servethe buyers' best interests and should benefit mostsellers.

A second manifestation of more consumer concernis to revise the criteria of acceptability for promo-tional efforts. The selective presentation of data,the level of puffery, and the freedom of the copy-writer are all being challenged by the consumeristsas well as by the government's regulatory bodies.'^Leading corporations are currently accused of: (1)misleading and manipulating children—the TV ad-vertising to children controversy; (2) producing

'* See comments of Charles Edwards, Commissionerof the Food and Drug Administration, before the an-nual meeting of the Toilet Goods Association, as re-ported in "Consumers' Product Information DemandsMust Be Met, TGA Told," Advertising Age (Janu-ary 18, 1971), p. 14.

15 "Enforcer Pitofsky Explains FTC's New Get ToughPolicy," Advertising Age (January 18, 1971), p. 1.

16 "FTC to Demand Substantiation of Ads, Supply Itto Consumerists," Advertising Age (June 14, 1971),p. 1.

merchandise with "miracle" ingredients which, infact, are of little value—FTC investigation ofmouthwash claims; (3) advertising ordinary or in-ferior features in a way to suggest that they areactually superior features—the analgesic probe; and(4) offering warranties for the consumer's protec-tion that are not understood by the consumer and, infact, protect the seller more than the buyer—theConsumer Products Guaranty Act now pending be-fore Congress. These charges do not characterizeall companies, but the growing list of chargesbrought against business suggests that more com-plaints are forthcoming.

The broadened responsibility for consumer con-cern will also require companies to allocate moreresources to post-sale service. Major corporationsare now establishing corporate ombudsmen to pro-vide better feedback systems for dissatisfied cus-tomers. However, these moves have been chiefiyreactive. In order for a company to adequatelyprocess consumer complaints, a formal informationsystem with a genuine consumer concern is neces-sary.

Finally, out of concern for the safety of the con-sumer as well as for the quality of life, societydemands that sellers assume more responsibilityfor the effects of the use of their products. Sincethe consumer does not always act in his own orsociety's best interest, the seller is now being calledupon to assume more responsibility to protect theuser of his products. For example, pressures de-veloped to change detergent ingredients in orderto reduce damage to the environment, particularlyby the elimination of phosphates. Business effortsto do this while continuing to provide effectivecleaning agents have now brought additional de-mands that the substitute products be labeled be-cause their caustic ingredients may be harmful tothe skin.'^ Up to now, the steps taken by businesshave largely been in reaction to pressures from thegovernment and the public. The revised marketingconcept, however, would include a positive businesseffort to advance product safety and environmentalprotection.

Integrated Operations

The preceding changes are some of the most ob-vious consequences of a revised concept of consumerconcern. In addition, company managements willfind that their organizations and operations mustchange. While the exact form of these changes willvary widely among firms, it is suggested thatgreater emphasis be placed upon company inte-gration.

In the revised marketing concept, operations in-tegration encompasses the entire firm—in some

'•"Detergent Makers Ordered to Initiate, ToughenWarnings," Wall Street Joumal (June 29, 1971),p. 8.

42 Journal of Marketing, October, 1971

cases an entire industry—to ascertain that re-sources are efficiently and purposely channeled tothe satisfaction of consumer wants.

Profit Reward

The implications for profit making are severe. Thecrux of the revised marketing concept is that anyconflict between customer orientation and profit willbe resolved by the rationalization of profit. Doesincreased concern for consumer protection meanthat business should not plan for profits? Notnecessarily; however, the order of the planningprocess should be changed. Instead of setting profitgoals and then seeking means and methods ofachieving them, the corporation should approachplanning in the following manner:

1) What specific satisfactions should be providedto the consumer?

2) What specific consumer satisfactions can mycompany provide?

3) What is the most efficient way to provide thesesatisfactions?

4) Is the rate of return expected from the ven-ture sufficient to justify the investment?

5) If the anticipated return is below, the desiredstandard, what can still be done to supply theconsumer need? For example,a) Provide the services at less than normal

profit?b) Contribute know-how or other aid to others

who might provide the services?c) Pool interests with other businesses to

provide the services cooperatively?d) Assist government or other agencies to

provide the services?

Conclusions

In this approach, the first objective for the com-pany is to assume more responsibility for consumerwelfare. The reward for doing this should be profit.On the other hand, these dual goals will make itmore difficult to evaluate the performance of cor-porate programs and personnel. Probably the mosteffective way to handle the conflict of recognizingthe dual social and profit goals will be to establishexplicit company criteria of social responsibility.Within such restraints executives will still be

charged with achieving profit goals. Some com-panies are beginning to move in this direction. Forexample, one major marketer of food products haspublished a list of five basic principles which areexpected to guide the company in achieving itscorporate objectives.'* These principles are:

1. "We apply the highest ethical and moral stan-dards, and strive for excellence and leadershipin everything we do.

2. "We believe in a dual responsibility to share-holders:—To earn a return on their invest-ment that compares favorably with the returnfor other leading companies in our industries;—To apply our corporate resources whereverpractical to the solution of public problems inwhich the interests of shareholders, employees,customers, and the general public are funda-mentally inseparable.

3. "We concentrate our efforts on products andservices that are useful, of good quality, andof genuine value to consumers.

4. "We conduct our operations with respect forthe intelligence and good taste of consumers.

5. "We seek to provide an environment for per-sonal development and advancement that at-tracts, stimulates, and rewards outstandingemployees, whose integrity, ability, and ambi-tion are essential to the Company's progress."

This type of approach will require that companymanagements include the consideration of socialimplications in their decision processes and theirmanagement control procedures. It will require asubstantial increase in feedback mechanisms, moreintra-industry consultation and even negotiationwith competitors, government agencies, and con-sumers.

It will be difficult to assume the responsibilityfor the social implications of its operations, prod-ucts, and services, but nearly every advance in mar-keting has made severe demands upon marketingmanagements. Concern for the consumer will bemarketing management's greatest challenge in thenext decade. A revised view of the marketing con-cept is one approach to meet this challenge.

Principles and Objectives (Chicago: The Quaker OatsCompany, 1970), p. 2.