Chapter 1: The role of marketing in organisations and society

Chapter 1: The role of marketing in

organisations and society
Essential reading
Kotler, P. and G. Armstrong Principles of Marketing. (Upper Saddle River, NJ:
Prentice Hall, 2004) tenth edition [ISBN 0131018612] Chapters 1 and 20.
Keywords: activity; function; philosophy; needs and wants; orientation;
transactions and relationship marketing; globalisation; environment;
demographics.

Introduction
Consider what the word ‘marketing’ means to you. You may imagine it to be
the title of a department within an organisation or a particular activity that
can be undertaken by people, government departments and organisations.
There are, in fact, three major ways in which marketing can be perceived,
and we start this chapter by defining each of them. As an activity, marketing
is possible only where there is a market and we will identify the conditions
necessary for the existence of a market later in this chapter. Over the years
there have been significant developments in the way marketing is used by
firms. In this chapter, we will introduce the branches of marketing that have
developed to address the needs of particular groups of marketers. We will
also draw your attention to the ways in which marketing can help to develop
a firm’s orientation towards the marketplace. Such an orientation can affect
the very functioning of an organisation – from the way it develops its
products to the way it sells them. We end the chapter by looking at the
impact of ethics and social responsibility on marketers.

Learning outcomes
By the end of this chapter you should be able to:
• identify the major differences between the various types of orientation a
firm may have
• explain the situations in which each may be most appropriate and
effective
• distinguish between needs and wants
• distinguish between social responsibility and ethics
• understand the implications of social responsibility and ethics for
marketers.

Activity, function and philosophy

The three ways in which marketing can be perceived are:
• as an activity through which exchanges are undertaken
• as a function within an organisation which deals with specific activities
• as a philosophy which affects an entire organisation’s dealings with the
marketplace.
Figure 1.1 shows the linkages between these three notions of marketing.

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Marketing

Marketing

Guided by Carry out

Marketing Marketing functions

Believe in

Figure 1.1: Marketing linkages.

Seen as an activity, marketing is a social and managerial process by which
individuals and groups obtain what they need and want through creating,
offering and exchanging with others products of value. When goods and
services change hands without any reciprocation, a transfer is said to have
taken place and marketing can play only a very limited role in such
situations.

Needs and wants

Needs are a basic requirement for human survival, for example the need for
food, while wants are the specific means by which individuals’ satisfy those
needs (e.g. McDonald’s hamburgers). Products such as Cacharel perfumes
can also be considered to be fulfilling a want, albeit a psychological one. An
additional issue that faces the profit-seeking marketer is the demand for
their products/services. A customer’s ‘want’ for a product is translated into a
demand only if they are willing and able to pay for it. So a product may fulfil
a want, but unless there is a demand, marketers will not be able to fulfil the
want profitably. Before products or services are launched, firms undertake
market research to find out whether there is enough demand at a profitable
price.

Value and satisfaction

The notion of value is an important one in marketing. It takes into account
the benefits that a customer enjoys as a result of making a purchase, and also
that by making the purchase the customer will have incurred both money
costs and non-money costs (e.g. the time and effort that it takes to go out
and make the purchase). Value is the difference between the total costs of
making a purchase and the total benefits received. For marketers this concept
is an important one because they can consider how they can offer customers
‘value’. Some marketers will, for example, add additional features to a
product so that it delivers more benefits. If the increase in value is
considerably more than that offered by competitors, the marketer may be
able to charge a higher price and thereby improve profit margins.
Prior to making a purchase customers have expectations about what they are
going to buy. These expectations will depend on, among other factors, the
marketers’ advertising, those of competitors and the customer’s own previous
experience of making that purchase. If the purchase meets expectations, the
customer will be satisfied and, in marketing terms, feel that they have made a
quality purchase. Satisfaction is important because it can lead to customers’
trusting the brand that they have just bought and thus being encouraged to
buy it on future occasions. If the purchase does not meet expectations, then
the customer will be dissatisfied and may buy another brand next time. This
concept is also important in terms of the implications for marketers – they

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 Chapter 1: The role of marketing in organisations and society

need to ensure that the promises made by their marketing communications

can actually be met by their products and services. Figure 1.2 shows the
relationship between quality, expectations and satisfaction.

Figure 1.2: Quality: a customer’s view.

Social, services and professional services marketing

Although marketing is normally associated with the profit-making private
sector, it can also be used in the profit-oriented public sector (for example,
public utilities). Moreover, marketing can be used in non-profit-making
situations, when it is referred to as social marketing. An example of such
activity is health promotion (e.g. the state encouraging individuals to lead
healthier lifestyles). Indeed, wherever an exchange is involved – whether it is
of goods, services or ideas – marketing can play a role.
Within the commercial, for-profit sector new specialist areas are developing
within the marketing discipline. Services marketing deals with the
marketing issues facing service providers such as banks and airlines. Within
services marketing there is an increasing interest in the specific marketing
needs of groups such as lawyers and doctors. This has given rise to marketing
concepts which apply in the context of professional services marketing.
The focus of marketers’ attention can shift to an even more abstract concept,
‘experiences’. For organisations such as DisneyWorld, who operate theme
parks, this concept can be important because it emphasises not just the
attributes of the product or service, or indeed the benefits that they offer
customers; the concept of ‘experience’ also takes into account the fact that
customer satisfaction may well depend on how customers’ senses have been
stimulated by their experience of the offering.
There are limits to what can be achieved by marketing. Although it can
influence customer’s wants by, for example, making products attractive,
appropriate, affordable and easily available, marketing cannot change
customers’ basic needs. Therefore marketers cannot induce people to buy
what they do not need.

Firms’ orientation
How wants are influenced can depend on firms’ marketing orientation. Firms
that are production oriented emphasise efficient production techniques at
the expense of providing choice for customers. Such an orientation can work
when there is high demand among undiscriminating customers. Those
firms that are product oriented aim to attract discriminating customers
through product quality. In contrast a firm with a selling orientation tries to

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affect customer wants through sheer persuasion, since it is felt that unless an
aggressive effort is made, customers will not buy. This may happen where
the firm is selling goods which are unsought by customers. Alternatively,
selling may be needed when an organisation has overcapacity. Finally where
competing firms are selling homogeneous goods (i.e. they are very similar)
aggressive selling may be the only basis for competition. Figure 1.3 shows the
different orientations firms can have towards the marketplace.

THE SELLING CONCEPT

Factory Existing products Selling and promoting Profits through
sales volume
Starting point Focus Means End

THE MARKETING CONCEPT

Market Customer Integrated Profits through
needs marketing customer satisfaction
Starting point Focus Means End

THE PRODUCT CONCEPT

Product Product Improvement and Profits through
quality innovation better product features
Starting point Focus Means End

THE PRODUCTION CONCEPT

Factory Output Production quantity Profits through
and efficiency volume and low
production costs
Starting point Focus Means End

Figure 1.3: Comparison of major marketing management philosophies.

Firms with a marketing orientation aim to produce what the customers will
want to buy. A marketing orientation rests on some important principles.
First, marketers need to define their target market. Then they need to
understand customer needs. Within such a firm the marketing department
will influence the activities of other corporate functions such as finance and
production – this is referred to as co-ordinated marketing. In this context
marketing can be considered to be a philosophy.
Within the marketing framework there is an increasing emphasis on
‘relationship marketing’ as opposed to ‘transactions marketing’. The latter
involves one-off transactions between people who will never see each other
again. Marketers may find it more profitable to undertake relationship
marketing, which involves developing long-term relationships with
customers.
Recently there has been an increasing interest in ‘societal marketing’ which
involves the marketer paying attention not only to the needs of customers but
also to the wider natural and social environment. Marketers’ concern for the
natural environment involves taking into account the environmental impact
of production and distribution and their attempts to minimise this. Firms can

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 Chapter 1: The role of marketing in organisations and society

play a more active role in local communities as a means of showing concern

for the social environment. Where their goods are sourced from developing
countries, attempts can be made to ensure that workers are not exploited.
Marketers who pursue cause-related marketing make a positive virtue of
their caring policies towards the social and/or physical environment. Table
1.1 shows the different orientations that firms can follow, important
differences between them and, most importantly, an assessment of when
each orientation may be most effective.
PRODUCTION PRODUCT SALES MARKETING SOCIETAL
Assumptions There is a lack of There is a lack of Oversupply/lack of Over supply/ lack of As well as
regarding market supply quality products demand requires demand can be overcome products which satisfy
conditions additional sales if take into account needs and wants
effort needs and wants issues – in their own
right
Assumptions regarding Customers are not Customers are not aware They need to be pushed Customers prefer products Customers will buy
buyer behaviour concerned about product of the possibilities for into buying which cater for their from marketers with
quality or variety product class needs and wants and if concerns for wider
this is done they may environmental issues
come back. Will need This will also win
less sales effort favour with
government
Situations when When there is a lack of In high technology When buyers’ behaviour Where customers have a Where there is
effective supply – customers will businesses where there is characterised by choice and will prefer pressure to look
buy whatever is available is an asymmetry of inertia those products which after the environment
information between cater most closely to and other social
buyer and seller their needs issues
Situations when When customers have a When marketers come to Where focus on selling Where customers are Where there is no
ineffective choice – they will want regard themselves in the leads marketers to sell unable to identify their pressure from
quality and variety business of making a whatever they have needs and wants. Where customers/gov’t and
particular product and rather than consider there is a lack of no long term benefits
not fulfilling a particular customers’ wants production capability and and the costs
want customers will buy outweigh the
anything benefits
Combinations of + Marketing develop Sell products which
orientations product and then people want to buy, but
undertake market accompany with heavy
research sales pitch

Table 1.1: Comparisons of the different marketing philosophies.

Marketing management
Marketing management is a process involving planning, implementation and
control of a firm’s marketing activity.
It is particularly important since marketers function in a dynamic
environment. The marketing opportunities facing organisations depend on
the changing needs of society. Consumers are becoming more sophisticated
and more discerning in their expectations. Globalisation of the world’s
marketplace has not only created new possibilities but also the challenge of
new competition. Even within their home markets, environmental concerns
and changing demographics are presenting new challenges for marketers.
For example, greater consumer awareness of the environment has led to
increased demand for products which are ‘environmentally friendly’.
Conversely, those products that are considered harmful may have suffered
not merely from consumer demand but even government legislation.

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1
Social responsibility and marketing ethics1 This topic is covered in Chapter
20 of Kotler and Armstrong
Both these concepts are becoming increasingly important in marketing and (2004).
have had a major impact on marketers around the world. In this section we
will provide you with material that complements Kotler and Armstrong
(2004). First of all, you should be aware that social responsibility and ethics
are two related but quite different concepts. Social responsibility refers to a
‘social contract between business and the society in which it operates’ (Robin
and Reidenbach, 1987, p. 45).2 In contrast, ethics requires organisations to 2
Robin, D.P. and R.E.
‘behave in accordance with the rules of moral philosophy’ (Robin and Reidenbach ‘Social responsibility,
ethics and marketing strategy:
Reidenbach, 1987, p. 45). The implication of this is that an action could well closing the gap between concept
be socially responsible, but at the same time unethical. A cigarette and application’, Journal of
Marketing (January 1987) 51, pp.
manufacturer, for example, that sponsors a community event may be acting
44–58.
in a socially responsible manner, but if that helps to promote cigarettes,
people may argue that it is unethical.
The reason why ethics is an important issue in marketing is because, as many
of you will have studied in economics, consumers usually only have imperfect
information, they are not rational and they are less powerful than most
marketers. This is exemplified in the following quotation: ‘any transaction
might be considered fair and ethical if both parties have adequate and
appropriate information and both enter into the transaction willingly and
without coercion’ (de George, 1999).3 3
De George, R. Business ethics.
(Upper Saddle River, NJ: Prentice
We mentioned earlier that ethics is not the same as social responsibility, Hall, 1999) [ISBN 0130797723].
though sometimes an ethical action can also be socially responsible. You
should also be aware that acting in an ethical manner does not necessarily
mean acting in customers’ best interests. Some ethical codes can hold that
any action is worthwhile as long as the overall costs are less than the overall
benefits. This argument is sometimes applied by cigarette manufacturers who
argue that the pleasure gained by smokers may equal or outweigh any
possible health effects. This is referred to as the ‘utilitarian’ approach. On the
other hand another ethical approach (associated with the German
philosopher Kant) holds that certain actions are inherently wrong no matter
what the end results. This approach would hold that if smoking results in
death, it is wrong, regardless of whether smokers gain pleasure, help raise
taxes and so on.
While acting in an ethical manner deals with issues of moral ethics, acting in
a socially responsible manner refers to a more ambiguous ‘social contract’
between business and the society in which it operates. The reason why firms
may act in this manner is, for example, in order to develop a good reputation
and differentiate themselves from their competitors.

Summary
Demand for goods and services depends on needs, wants and an ability to
pay. Marketers need to ensure that they take these into account if they are to
sell products that are commercially successful. Commercial success may also
depend on meeting customers’ expectations and in order to do this marketers
may need to sell ‘quality’ products. The way in which marketers approach the
market place is also important and firms can have one of a number of
different orientations towards the market place.

Reminder of the learning outcomes

By the end of this chapter you should be able to:
• identify the major differences between the various types of orientation a
firm may have

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 Chapter 1: The role of marketing in organisations and society

• explain the situations in which each may be most appropriate and

effective
• distinguish between needs and wants
• distinguish between social responsibility and ethics
• understand the implications social responsibility and ethics for
marketers.

Activity
Try to complete the following table; the result could be useful for any examples you use
in exams.

Concept Characteristics Examples of firms Methods used

Production
Product
Selling Aggressive selling Fitted kitchens Cold calling
Unsought for Unrepeatable offers
goods
Ltd difference Discounts if
between customer makes
offers immediate
purchase
Marketing

Sample examination questions

1. What would you expect to be the major characteristics of a production
oriented company? (7 marks). What difficulties would you expect to meet
in introducing the marketing concept to such a company? (10 marks)
What kinds of circumstances or events might encourage a company to
become more marketing oriented? (8 marks) (Zone B 2003 BSc Econ)
2. Even when companies try to implement the marketing concept many of
their products fail, why may this happen? (Zone B 1990 BSc Econ)
3. In what ways may the marketing concept be helpful to each of the
following: A charity providing support to the homeless. (15 marks) A
government sponsored campaign to discourage smoking. (10 marks)
(Zone A 2003 BSc Econ)
4. Distinguish clearly between the following and explain why each is
important in the design of a marketing strategy: needs; wants; demands.

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