{"id":3912,"date":"1989-03-01T01:00:00","date_gmt":"1989-03-01T01:00:00","guid":{"rendered":"https:\/\/www.rbc.com\/en\/about-us\/history\/letter\/vol-70-no-2-march-april-1989-the-role-of-marketing\/"},"modified":"2022-11-27T02:31:25","modified_gmt":"2022-11-27T02:31:25","slug":"vol-70-no-2-march-april-1989-the-role-of-marketing","status":"publish","type":"rbc_letter","link":"https:\/\/www.rbc.com\/en\/about-us\/history\/letter\/vol-70-no-2-march-april-1989-the-role-of-marketing\/","title":{"rendered":"Vol. 70 No. 2 &#8211; March\/April 1989 &#8211; The Role of Marketing"},"content":{"rendered":"<div id=\"layout-column-main\">\n<p class=\"boldtext\">The marketing philosophy of business                     says that customer satisfaction should govern a company&#8217;s                     every action. Considering how important marketing has become                     to society , it makes a good social philosophy as well&#8230;<\/p>\n<p> If you were to stop five people on the street and ask them                     what it meant by marketing, the odds are that four would say                     &#8220;selling&#8221; and the fifth, &#8220;advertising.&#8221; In one way they would                     all be right; in another, all wrong. The ultimate aim of marketing                     is indeed to sell things, and advertising is employed in attempts                     to carry sales to their conclusion. But these activities are                     to marketing what wheels are to a car &#8211; essential to the purpose,                     but inadequate to fulfil it by themselves.<\/p>\n<p>Selling is making transactions, advertising is persuading                     people to buy, marketing is&#8230;? Even professional marketers                     have trouble saying exactly what it consists of. Marketing                     professors are always pecking at one another&#8217;s definitions,                     this one being judged too narrow, that too broad. It seems                     that the subject is just too big to allow for capsule explanations.<\/p>\n<p>So as not to be completely detached from what we are talking                     about, however, let us take as a starting-point one of those                     debatable definitions. &#8220;Marketing is ascertaining, creating,                     and satisfying the wants of people and doing it at a profit,&#8221;                     it runs. By referring only to &#8220;people,&#8221; this has the weakness                     of giving the impression that marketing is confined to consumer                     products or services, whereas it applies just as much to inter-company                     transactions in services, industrial goods and commodities.                     The reference to profit implies that it must necessarily be                     profitable, whereas these days marketing programs are routinely                     undertaken by non-business institutions with no profit as                     such in mind.<\/p>\n<p>Still, the choice of language does convey a notion of why                     marketing has gained such importance in western society. The                     key words are &#8221; creating&#8221; and &#8220;wants.&#8221; The science or art                     (or mixture of both) called marketing is a natural outgrowth                     of an economy of surpluses. Most people in countries like                     Canada have surplus money to spend after they have acquired                     life&#8217;s necessities. At the same time, markets are full of                     surplus products which must be sold to keep the system going                     round.<\/p>\n<p>Marketing takes its cue from management psychologist Douglas                     McGregor&#8217;s observation that &#8220;man is a wanting animal.&#8221; It                     stimulates human wants, though that is not to say that it                     is concerned strictly with wants as opposed to needs. Most                     of what is sold in Canada can be classified as necessary up                     to a point; what marketing does is take the necessary and                     add value to it. For instance, a winter coat might be a necessity                     to a Canadian woman, but she does not absolutely need an expensive                     designer model. The efforts made to market the coat are aimed                     at combining her need with a want, making her feel that looking                     smart is worth the price.<\/p>\n<p>Dynamic companies are constantly moving through a marketing                     cycle. It begins when products and services are developed                     to be offered for sale. Since it is fruitless to try to sell                     something nobody wants to buy, market research must establish                     that there is a probable demand for it. Often the order is                     reversed: market research establishes that there is a potential                     demand for something new and different, then the product or                     service is developed to meet the demand.<\/p>\n<p>The next step is to set a price, which must be competitive                     and sufficient to cover the expense of producing and selling                     it over the long term. From there the cycle moves on to packaging                     and labelling it. A decision must then be made on how best                     to distribute it &#8211; whether through wholesalers, retailers,                     mail order or other methods. Advertising and promotional programs                     are created. Once the sales message has been disseminated,                     the cycle passes on to the direct salespersons, who try to                     convince customers that this is what they should buy.<\/p>\n<p>Oddly enough, at least some textbook explanations of the                     marketing cycle omit its final, vital stage &#8211; ensuring that                     the customer is happy and is kept happy through servicing,                     the fulfilment of guarantees, and ongoing contact after the                     initial transaction. &#8220;The sale merely consummates the courtship,                     then the marriage begins,&#8221; writes the dean of American marketing                     education, Theodore Levitt of Harvard University. &#8220;How good                     the marriage is depends on how well the relationship is managed                     by the seller.&#8221; He adds a cautionary note: &#8220;The natural tendency                     of relationships, whether in marriage or in business, is entropy                     &#8211; the erosion or deterioration of sensitivity and attentiveness.&#8221;                     When entropy threatens, the marketing-minded organization                     is ready to renew its attentiveness and do its best to correct                     whatever the buyer finds wrong with the relationship.<\/p>\n<p>&#8220;I would rather pay ten million dollars for trademark-goodwill                     without property than one million dollars for property without                     trademark-goodwill,&#8221; said the old-time American industrialist                     George K. Morrow. This goes straight to the heart of the marketing                     philosophy: that, since there obviously can be no sellers                     without buyers, getting and keeping customers must come before                     anything else . It is remarkable that anybody in business                     large or small should lose sight of this simple precept, but                     it happens. In their best- selling book <em> In Search of Excellence<\/em>                     , Thomas J. Peters and Robert H. Waterman Jr. quote Lew Young,                     editor of <em> Business Week<\/em> : &#8220;Probably the most important fundamental that is being ignored                     today is staying close to the customer to satisfy his needs                     and anticipate his wants. In too many companies, the customer                     has become a bloody nuisance whose unpredictable behaviour                     damages carefully made strategic plans, whose activities mess                     up computer operations, and who stubbornly insists that purchased                     products should work.&#8221;<\/p>\n<p>The roots of such negligence lie deep in human nature. Arthur                     Schopenhauer&#8217;s dictum that &#8220;every man takes the limits of                     his own vision for the limits of the world&#8221; has never been                     better illustrated than by people in their jobs. In this age                     of specialization, workers get stuck in compartments, and                     become so mesmerized by their immediate functions that they                     cannot perceive the final purpose of what they are doing.                     Human nature also decrees that communications between different                     parts of an organization become clogged, and priorities clouded.                     Thus, say, an airline will schedule flights at odd hours for                     its own operational convenience, forgetting about the inconvenience                     it may be causing passengers.<\/p>\n<p>Ironically, such &#8220;marketing myopia,&#8221; in Levitt&#8217;s phrase,                     frequently comes from being successful. Prosperous companies                     are inclined to ignore potential competition and concentrate                     on products that lend themselves to cost reductions through                     economies of scale. They attach more importance to saving                     money from within than to going out and making more of it.<\/p>\n<h3>Opening the door to innovation by redefining                   a company&#8217;s job<\/h3>\n<p>A common symptom of marketing myopia is the inability to                     see beyond the narrowest conception of a company&#8217;s business.                     Organizations suffering from it tend to define themselves                     in terms of products (&#8221; We are a fertilizer company&#8221;) or technology                     (&#8220;We are a chemical processing company&#8221;) instead of what they                     can do for their customers (&#8220;We help farmers increase their                     productivity&#8221;).<\/p>\n<p>Levitt implies that if companies were to straighten out                     their thinking about what their job really is, they would                     stand a better chance of survival. A company at the turn of                     the century which considered itself a horse carriage maker                     would have closed down when automobiles took over the market.                     If it had thought of itself as being in the people-moving                     business, it would have made a smooth transition from manufacturing                     carriages to manufacturing automobiles .<\/p>\n<p>A redefinition of a company&#8217;s <em> raison d&#8217;etre <\/em> from                     the customer&#8217;s point of view can be the first step in spreading                     an organization-wide consciousness of marketing. A railway                     might conclude that it is not in the business of running trains,                     but in the distribution of goods and commodities to customers                     in the most efficient and inexpensive way. Suddenly the door                     is opened to innovative thinking about how to use the optimum                     combination of trains, trucks, and perhaps water transport.                     The change in mentality affects everyone&#8217;s job from the chief                     financial officer ( who must become concerned with pricing}                     to the switchman (who must deal with the movement of containers                     from rail cars to trucks}.<\/p>\n<p>Persuading people throughout an organization that they should                     keep the customer uppermost in mind may be the toughest selling                     job marketing people have ever encountered. It is easy enough                     to convince a store clerk that his or her job depends on not                     keeping people waiting; but how do you tell a foreman scrambling                     to meet production schedules that he (or she} is just as responsible                     as the direct sales person for &#8220;selling&#8221; the product, because                     what he does affects the quality?<\/p>\n<p>The idea that marketing should be the leading preoccupation                     of a company in all its parts goes against business tradition,                     which has always placed a premium on doing the main job effectively                     &#8211; the main job usually being operations or production. As                     in the case of the proverbial better mousetrap, the presumption                     was that if you offered something superior, the world would                     beat a path to your door in the woods, with only a little                     traffic direction from your sales force. The customary order                     of priority was to conceive a product without consulting the                     sales people, set a price for it based on production costs,                     then hand it over to them with instructions to sell it or                     else.<\/p>\n<p>In recent years professional marketers have been insisting                     that the selling process should begin at the beginning of                     the production cycle, not the end of it. This, they say, means                     that marketing people should be involved in top management                     decisions regarding the allocation of resources, including                     how the company&#8217;s money will be spent. Management at every                     level should be geared to the &#8220;marketing concept,&#8221; which entails                     a realignment of functions so that the entire operation is                     turned in the direction of getting and keeping customers.                     Thus the chief of marketing has a say in activities like research                     and development, inventory control, quality control, production                     scheduling and traffic.<\/p>\n<p>Resistance to the marketing concept is at its least in organizations                     where the realization has spread that marketing is not a separate                     part of the body, but is organic. It is like the central nervous                     system, which interacts with all the parts. In their book                     <em> Marketing Management &#8211; Analysis, Planning and Control<\/em> , Philip Kotler and Ronald E. Turner state: &#8220;Enlightened marketers                     argue for <em> customer orientation <\/em> in which all functions                     work together to sense, serve, and satisfy the customer.&#8221;                     The customer, they say, is the &#8220;controlling function,&#8221; and                     marketing the &#8220;integrative function&#8221; in such an approach.<\/p>\n<h3>The power of marketing must be balanced                   by responsibility<\/h3>\n<p>The more competition there is, the clearer the need for                     marketing becomes. It began in its modern form in the United                     States among big rival producers of consumer products as they                     fought it out for market share by putting &#8220;new, improved&#8221;                     products on store shelves. More recently it has spread to                     the service, industrial goods and primary materials industries                     as competition has sprung up from substitutes &#8211; plastics for                     metals, for example. To stay in the running, companies of                     all kinds have had to diversify their product lines, and pay                     more attention to servicing.<\/p>\n<p>The ultimate winner in the marketing race is the consumer.                     By its nature, marketing is concerned with improvements in                     quality and design. It has channelled human ingenuity into                     innovations in both products and services which make everyday                     life incomparably more convenient than it was years ago. By                     widening the choice of products and improving distribution,                     it has brought luxuries formerly reserved for a fortunate                     few within the geographic and financial reach of millions                     who had never had access to such things before.<\/p>\n<p>For all the benefits it has brought to the public, however,                     it is not without its public opponents. They claim that marketers                     manipulate people into spending more than they can afford.                     They argue that it costs too much, taking up 50 cents of every                     retail dollar spent in Canada. High costs for marketing are                     said to mean unnecessarily high prices for consumers. This                     ignores the fact that marketing activities are a large source                     of consumer income in themselves. Over 20 per cent of the                     Canadian labour force works in distribution and sales.<\/p>\n<p>If there is one word which sums up all the complaints made                     against the marketing system, it is &#8220;irresponsibility.&#8221; Marketers                     are accused of being willing to do anything for a profit,                     not stopping at misleading or tasteless advertising or stitching                     loopholes into guarantees. Some will cover up deficiencies                     and even dangers in products. Marketers are alleged to have                     no social conscience; they always ask whether something <em>                     can <\/em> be sold, never whether it <em> should <\/em> be sold.<\/p>\n<p>The truth is that there is just as much amorality and downright                     immorality in marketing as there is in any other walk of life,                     so that sharp practices will never be entirely eliminated.                     Still, in their desire to have their occupation recognized                     as a profession, influential marketing people lately have                     been urging their colleagues to pay keen attention to the                     ethical and social consequences of what they do. This accords                     with the age-old rule that those who have power also have                     responsibility. Marketing today exerts tremendous power over                     peoples&#8217; preferences and habits. Thus its professional practitioners                     must, if they are to live up to that description, exercise                     vigilance over the impact of their activities on the society.<\/p>\n<p>The point overlooked in all the criticism is that marketing                     performs a positive social role merely by going about its                     business, which is to allocate the flow of production efficiently                     throughout the population. To see what happens when this is                     not done, one need only look at the bare shelves, line-ups                     and crowded housing in Marxist countries where marketing as                     we know it does not exist.<\/p>\n<p>Any system which puts the ordinary citizen&#8217;s wants and needs                     first cannot be all bad; on the contrary, that has been the                     dream of idealistic philosophers throughout the centuries.                     In a curious way, a commercial philosophy has achieved what                     egalitarian political philosophies have signally failed to                     do.<\/p>\n<p>To suggest, as some of its critics do, that marketing widens                     social and economic inequalities is to mistake its fundamental                     purpose. If marketers had their way, every man, woman and                     child would be a millionaire. The goal of a consumer society                     is, after all, to create more and more free-spending consumers.                     As for the argument that it misdirects spending away from                     those in need, it should not be forgotten that marketing is                     good for the economy, which is the mainstay of social security.                     It has been demonstrated again and again that you cannot have                     a solid welfare system to aid the disadvantaged without having                     a solid economy.<\/p>\n<h3>By stimulating wants, it leads people                   to work                   hard and save<\/h3>\n<p>In Canada&#8217;s case, at least, economists are always talking                     about the need for innovation to back up our efforts to pay                     our way in the world; and marketing, of course, thrives on                     innovation. It also promotes productivity, the key to prosperity                     in a country like ours , because when marketing competition                     is intense, companies cannot afford waste. A healthy economy                     is one in which people work hard and save to build a strong                     capital base. By stimulating wants, marketing indirectly stimulates                     the work and saving which ordinary people must do to be in                     a financial position to fulfil them. As Winston Churchill                     wrote of the net effect of advertising, &#8220;It sets up before                     a man the goal of a better home, better clothing, better food                     for himself and his family. It spurs individual exertion and                     greater production. It brings together in fertile union, those                     things which otherwise would not have met.&#8221;<\/p>\n<p>Marketing is the heart of our economic system in the sense                     that a heart is a pump which circulates a life-giving essence                     throughout the body. In the broadest terms, a consumer economy                     lives through exchange: workers buy things produced by other                     workers with the income they receive from producing things                     those other workers buy. Without marketing to keep the flow                     of these exchanges alive, clots would soon occur in the system,                     with damaging if not fatal effects on the body politic. One                     of the incomplete definitions of marketing is &#8220;the delivery                     of a standard of living.&#8221; When it is doing its job effectively                     and responsibly, it might be more apt to say that it is the                     delivery of a way of life.<\/p>\n<\/div>\n","protected":false},"author":79,"featured_media":0,"template":"","categories":[1],"rbc_letter_theme":[],"rbc_letter_year":[76],"class_list":["post-3912","rbc_letter","type-rbc_letter","status-publish","hentry","category-uncategorized","rbc_letter_year-76"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Vol. 70 No. 2 - March\/April 1989 - The Role of Marketing - RBC<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.rbc.com\/en\/about-us\/history\/letter\/vol-70-no-2-march-april-1989-the-role-of-marketing\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Vol. 70 No. 2 - March\/April 1989 - The Role of Marketing - RBC\" \/>\n<meta property=\"og:description\" content=\"The marketing philosophy of business says that customer satisfaction should govern a company&#8217;s every action. 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