Small Business Adoption of the Marketing Concept vs. Other Business Strategies

Abstract

Small businesses, like their larger counterparts, are guided by overall philosophies of what the firm is and what it should be doing. One philosophy, the marketing concept, is an operational approach that provides an overall perspective to all organization members. According to one source: The marketing concept is a managerial prescription relating to the attainment of an entity's goals .... The marketing concept states that an entity achieves its own exchange-determined goals most efficiently through a thorough understanding of potential exchange partners and their needs and wants, through a thorough understanding of the costs associated with satisfying those needs and wants, and then designing, producing, and offering products in light of this understanding. A more fundamental conceptualization of the marketing concept is that it is a business philosophy which requires that all organization members focus their efforts on customer satisfaction, that management emphasizes marketing strategy and planning, and that the organization strives to earn a profit through selectively meeting customer needs. For numerous managers, this approach to doing business is intuitively attractive. In addition, empirical evidence has demonstrated that it can be more profitably applied than other commonly used approaches.3 This is true despite the fact that the marketing concept has been the subject of criticism from both academics and practitioners in the field.4 The major alternative philosophies are the production concept, which emphasizes efficiency in production, the sales concept, which focuses on promoting products to customers, and the societal concept, whereby management attempts to engage in effective transactions with various publics, including target customers, the public at large, suppliers, governmental agencies, and special interest groups. It is of interest to business managers, public policy formulators, academics, and the public at large to gain insights into the overall strategies which guide business firms. To date, little database analysis has been done on the use of the marketing concept in small business.5 The present article reports the results of a study designed to help remedy that deficiency. The objective of the study was to determine the extent to which small businesses currently pursue the marketing concept, or some alternative concept, to guide their actions. Subsidiary objectives were to determine why firms that have adopted the marketing concept have seen fit to pursue this course of action, and to uncover problems associated with adopting and implementing the marketing concept. LITERATURE REVIEW In 1985, Hise examined the extent to which manufacturing firms had adopted the marketing concept. The sample consisted of 131 Fortune 500 manufacturing firms and 121 medium-sized firms (annual sales from $10 million to $50 million). Questions were asked relating to: (1) customer orientation, (2) profitability of operations, and (3) organizational structure of the marketing department. Based upon separate analysis of each of the three sets of questions, Hise concluded that to a large extent, both large and medium- sized manufacturing firms had adopted the marketing concept. Barksdale and Darden examined marketers' attitudes toward the marketing concept using a national sample of 203 company presidents and marketing educators. The members of the sample basically agreed with the statements that (1) the marketing concept has been adopted as an operating philosophy by most business firms in America; (2) the marketing concept is not an academic idea that works better in theory than in practice; and (3) the basic ideas of the marketing concept are equally valid for both large and small firms. Yet another study examined 1,492 companies with a net worth of at least $1 million in 21 manufacturing industry classifications. …

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