The Marketing Concept: A 21st Century Re-Definition
Defining Marketing & Current Trends
|Collection of Marteting books (Photo credit: Wikipedia)|
Starbucks or How Price-Takers Differentiate Products
Price-takers operate in perfectly competitive (or nearly so) markets. A price-taking business must accept whatever price the market requires. Examples include gasoline, many fruits and vegetables, coffee, and water. Considering coffee, an examination of Starbucks demonstrates a company that has embraced the marketing concept in the face of a cafe / coffeehouse market which is very competitive, has few barriers to entry, and was at a time populated with consumers who saw their products as a ubiquitous brown, bitter drink interchangeable with that of their competitors.
In a highly successful effort to get consumers to pay more for a product that is sold nearly everywhere, Starbucks has spent decades transforming what was once a breakfast staple into a morning ritual and a luxury experience.Coffee itself is now almost incidental to Starbucks’ business model: they have regular customers who buy tea and “coffee-drinks” in which coffee is merely one of many flavorings in a milk product. The true product sold by Starbucks today is the ability to buy a variety of stimulating or soothing drink products at a variety of price-points in wide range of locations which offer wireless Internet and a work / study space, all without having to become an expert on local coffee-houses every time that you drive to a new city. This is only a brief example of course, but the other price-taking producers listed provide similar examples, with fruit sellers resorting to localvore and organic marketing campaigns to add additional dimension to their homogeneous products, bottled water sellers working to impart a luxury experience through labeling and bottle shape, and gasoline sellers running successful marketing campaigns about additives which are present or not in their product (detergents, etc.). Price-taking producers love, and should love the marketing concept because it represents a way for them to regain some control over a market where the consumer (as an aggregate) holds much of the power.
Apple, Price-Maker in Chief
Price-making producers are a different breed of business and the question of just how much they should embrace the marketing concept is of some debate. Since price-makers rely upon their influence within the market to make a profit, in some cases they may be better served by dictating their terms to the consumer than by embracing the marketing concept. Apple is a prime example of this, as their proprietary products have few, if any, substitutes and an engineered sort of market scarcity. Apple owns its own operating system, which it does not license to others, and has developed distinctive physical product characteristics, in particular rounded, glossy, white surfaces. Apple has also worked aggressively to patent its design and interface features so that similar products cannot be made. All of these factors combine to help ensure that the only way to get the exclusive Apple experience is to purchase expensive Apple products. Even the average consumer with little business background can see each holiday season that Apple produces a smaller number of products and sells them at higher prices, in effect engineering product shortages which create hype in the form of consumers driving from store to store and standing in long lines trying to get that elusive Apple product, all while making the same profit as if the company sold more product at a lower price. Again, this strategy reflects fairly rudimentary microeconomic concepts, applied by a business that operates in a market with few substitutes and high bars to entry.
Microsoft worked hard to overcome the Apple iPod market dominance with its Zune MP3 player product, but was unable to do so, in part due to Apple’s deep entrenchment in that market but also because the Zune failed to differentiate itself from other, less expensive MP3 players the way the iPod had. Since much of Apple’s business strategy relies on customers purchasing their products because they are exclusive and scarce, Apple would risk diluting its own profit margin and damaging its status as a provider of luxury goods if it chose to produce more products to customer pricing and specifications than it does currently. Therefore, the marketing concept may not be as beneficial to companies like Apple as it is to businesses operating in less exclusive market circumstances.
Societal Marketing & SustainabilityAnother way that businesses seek to increase their sales and profits is via societal marketing, which is in short the concept of the members of society at large as a market stakeholder. In general, businesses that undertake societal marketing develop products which are socially conscious or have a positive impact for society, whether that be through increased ethical responsibility or so-called green, environmentally friendly products. There are probably few products, relatively speaking, that both accept the marketing concept and undertake societal marketing. A business operating under those guidelines would be working to market products that are strictly social goods, or products that benefit society as a whole. A couple examples of these might be carbon offset credit programs, charitable donation subscription programs (sponsor a child, etc.), and other charitably themed products where the primary benefit received by the purchaser is good will or a moral or ethical benefit.
More often, societal marketing tends to occur among companies which are looking for a PR boost, possibly due to negative associations with their product either from scandal or from the realities of the method by which their product is produced.For example, toilet paper and other paper goods are extremely maligned in the eyes of the environmentalist: they tend to cost living trees to create and few used paper goods are clean enough to suitable for recycling. Worse, public school programs, television, and the media now conspire, at the behest of government and private interests, to indoctrinate the population towards increased environmental awareness which includes moving away from paper products. On the other hand paper products are much more convenient than rags and other reusable absorbancy and cleanup products, so the public will naturally have a tendency towards them. For these reasons, paper product companies will go to great lengths to engage in societal marketing, such as sustainability based marketing campaigns, which focus specifically on operating practices which do not harm the Earth for future generations.
Soundview Paper Company of North Jersey (formerly Marcal), has gone to great lengths to establish itself as a green, sustainable business protecting the environment for future generations. In pursuit of this, Soundview features a calculator program on its website which explains how many trees one can save by using Soundview paper products. Soundview goes on to point out that its consumer paper products are made from 100% recycled paper, making a fairly robust argument for how consumers can actually help the environment by using their particular disposable product. Of course, consumers can save far more trees by simply using dish-rags, handkerchiefs, and rags rather than Soundview’s disposable products, but this hardly matters as many consumers may not be looking for a way to save the environment, but more so for a way to assuage their guilt about their own environmental impact and adopt a first do no harm attitude. Soundview’s sustainable product marketing fulfills that consumer need and so whitewashes over the inherent shortcomings of a disposable paper product. As an added benefit, societal marketing and sustainable marketing provide a talking point with the media for companies that use these practices. Soundview used this to their benefit when faced with a scandal in the late 2000’s when one of their disposal contractors was indicted for dumping, over several years, hundreds of tons of industrial waste into a flood zone adjacent to the Passaic River in Wayne, NJ.
Equally, BP oil company has likely run more television commercials showing pristine beaches and wildlife with confident speakers describing the company’s commitment to the environment in the few years after its gulf oil spill than in all of the years proceeding. Like Soundview, BP sells a product that suffers from an image problem and like Soundview, BP has embraced societal marketing and the green marketing trend to help to make their company appear more ethical even though their product remains unchanged.
Whether or not a business can benefit from operating in a sustainable manner through societal marketing depends on the specific needs of the business. If a business is a price-maker, has a great deal of control in their market, or has a product which is relatively non-controversial to begin with (i.e. luxury bottled waters), it seems likely that too much of a focus on societal marketing could distract from more efficient profit making activities. In some cases, as in the case of luxury goods, a company may not wish to do business with the entirety of society, holding their product as an exclusive status good for those who can afford it. In those cases too, demonstrating the sustainability of the production of luxury goods to a public who mostly cannot afford them may be an ineffective use of marketing dollars. Societal marketing will likely always serve a benefit to businesses as a form of insurance against bad publicity, but that alone may not be enough to make it worth all companies investing in societal marketing campaigns. In the end, each company will have to decide for itself if societal marketing and sustainability concerns are sufficiently important to their consumers, in respect to the marketing concept, for those customers to make purchases based upon those ideals.
At ChristopherLotito.Org, subscribers will find all the information they need to educate themselves and their families about the issues that effect their lives. A Drew University graduate, Christopher Lotito is a 10 year veteran volunteer within his municipal government in Pequannock, New Jersey. Lotito is also an accomplished local author and possesses a great depth of knowledge in both New Jersey history and flood control issues which he puts to use as an independent researcher.