Conceptual Foundations of Marketing

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Conceptual Framework

Conceptual Framework of Marketing

Roy Philip

Roy Philip is an Associate Professor of Marketing at Trevecca Nazarene University in Nashville, Tennessee.

A Conceptual Framework for Marketing

The essence of marketing is not about goods and services. It isn’t about selling, or beating the competition. Boone & Kurtz (2004) state, “[Marketing] is about developing a relationship with customers so that they will grow loyal to a company’s goods and services” (p. 3). Today’s marketing environment is burdened with numerous challenges as marketers endeavor to attract or retain customers. Today customers are looking for greater value when they spend their hard-earned dollars (Rawe, 2002).

To create and defend a conceptual framework for marketing must come subsequent to the understanding of marketing. Kotler (2003) defines marketing as “a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others” (p. 9). And marketing also involves analyzing consumer needs, securing information needed to design and produce goods or services that match buyer expectations, and creating and maintaining relationship with customers and suppliers.

The relationship between marketing philosophy, marketing strategy and marketing tactics toward the building of a conceptual framework for marketing is vital. A conceptual framework guides the organization toward achieving organizational objectives. Marketing philosophy needs to come out of the core values of the organization itself. How a marketing philosophy is shaped depends on the values of the organization.

So the first step in the conceptual framework is the “Organizational Values.” This step consists of the following: vision, mission, motive, goals, philosophy, objectives, and culture. Vision is where the company wants to be. The mission is the essential purpose that differentiates one company from the other. There is much literature on what the goal of an organization should be. Jaworski & Kohli (1990) believe that the goal of an organization should not be profitability and also Chang and Chen (1998) state that increased profitability is a characteristic of a firm’s market orientation, while not necessarily the goal of a firm’s market orientation. However, Narver & Slater (1990) state that profitability, though conceptually closely related to market orientation is appropriately perceived as an objective of a business. The culture of an organization is pivotal to the development of marketing philosophy. Microsoft is an organization with a very competitive culture. This competitive culture, which became a philosophy, has given birth to a very competitive strategy. This strategy only aims at finding ways not to share and to capture as much of the market as possible (Levy, 2001). They have locked themselves in fierce strategic battle with AOL to create loyal customers so much so that they have even dragged their cases to court ((Yang, 2001).

The organizational values then help shape the next step in the conceptual framework, “Marketing Philosophy.” This is a very important step as the marketing strategy of an organization and its tactics come straight out of the marketing philosophy. For example, if the marketing philosophy of company A is the production concept, then its strategy would be to make the product affordable and available, as opposed to the product concept, which posits that a quality product will sell. Since 1950’s we have seen the emergence of the marketing concept (Kotler & Armstrong, 2003) which is best explained by the shift from a “seller’s market” to a “buyer’s market.” The marketing concept can also be called “market orientation” (Jaworski & Kohli, 1990), “consumer oriented” (Rosenbush, 2001), “market driven” (Day, 1994). Morgan (1996) states and explains the marketing concept as a philosophy, a function and a discipline. This step should also include both the societal marketing concept (Kotler & Armstrong, 2003) and the relationship marketing concept, which involves long-term, value-added relationships

developed over time with customers and suppliers.

The next step in the framework is the formulation of “Marketing strategy.” A marketing strategic plan has a critical impact on a firm’s destiny because it provides long-term direction for its decision makers. This step involves an analysis of the market. A first step would be to conduct a SWOT analysis (Strength, Weakness, Opportunities, and Threats) test. This analysis is crucial because it helps compare internal organizational strengths and weaknesses with external opportunities and threats. This helps evaluate the organization’s fulfillment of its basic mission. It is important to note that a company’s strengths reflect its core competencies. Rigby (1998) in his article for Fortune states, “Core competencies are capabilities that customers value and competitors find difficult to duplicate” (p. 162). This means an organization’s strategy should mull over its capabilities and its competitors. Capabilities differ from assets in that they cannot be given a monetary value, as can tangible plant and equipment, and are so deeply embedded in the organizational routines and practices that they cannot be traded or imitated (Day, 1994). After a SWOT analysis there should be customer analysis. This includes segmentation of the market and also “knowing” your customer. There are other factors that come into play in this step of the framework. An effective environmental analysis will help identify these factors. For example, the political-legal environment is important to consider since noncompliance can scar firm’s reputation and hurt profits. Turbulence in the market is also important to consider. Rapid changes in industrial structure and global competition have occurred in the last two decades. Achrol (1991) states “these changes herald the post-industrial era, producing an environment of ambiguity and paradox at this point in time, but nevertheless causing profound impacts on our economic and social institutions” (p. 1). Thus the marketing strategy, after analyzing the market, should comprise of the following: competition, capabilities, segmentation, positioning,

one-to-one marketing, market share, product life cycle, product development, and customer service.

The marketing strategy now forms the basis for the fourth step in the framework, “Marketing Tactics.” It is pertinent for an organization to view its products the way the consumers view them. Is the organization selling a “product” or a “service?” If they are selling a product, do customers look at it as a product? Or do customers look at it as a service, provided by the product? “Customers do not buy goods or services. They actually buy offerings that render service which create value” (Vargo & Lusch, 2004, p. 2). We then ask the question, can a service be sold the same way as a product? Shostack (1977) states “Marketing seems to be overwhelmingly product-oriented. However, many service-based companies are confused about the applicability of product marketing, and more than one attempt to adopt product marketing has failed” (p.1). So the four P’s for product marketing may not work for service marketing. In fact, Beaven & Scotti (1990) claim that the four P’s framework is an “inappropriate conceptual tool for guiding the formulation and implementation of an effective marketing mix for services” (p.8). Under this framework, if the organization is selling a “good,” then they should use the four P’s, Product, Price, Place, Promotion (Borden, 1964). But if they are selling “intangibles,” then the SOAR principle should be used: Service scripts, Outlays, Accommodation, and Representation. This will form the marketing plan.

After the marketing plan is implemented, the next step in the framework is “Customer Feedback.” It is in this step the marketers monitor performance to ensure that objectives are being achieved. Customer loyalty is a key factor here. Boone & Kurtz (2004) state, “Customer loyalty is the watchword of 21st century marketing. Customer loyalty has always been important to business” (p. 4). Bolton (1998) talks about maximizing customer lifetime value.

The important point in the framework is that it cannot be linear. Sometimes strategies need to be modified if the product’s or company’s actual performance is not in line with expected results.

The argument raised by Bennett & Cooper does inform my model. Their view is the “Product Value” concept, which does keep the customer first as the marketing concept, but with significant differences. Marketing concept implies the process of finding, fulfilling, and meeting customer needs. But Bennett & Cooper in ferreting the clear understanding of the marketing concept bring out two important points that help inform my model. One, organizations who follow the marketing concept and keep customer first, must not rely on customers to provide them with the innovation. The consumer is limited in “innovative and significant new product ideas” (p. 54). The authors educate us in understanding that the strategic focus has shifted from the product to the customer. In the transaction between buyer and seller, it is the product’s value that the customer pays for. “Product value” is an important concept to business. The other three P’s are relevant but not as important as the product itself. Thus the product should be the “central or core element in the firm’s competitive strategy” (p. 58). That means companies must not only find, fulfill, and meet customer needs, they must actually anticipate such needs.

Two, and this is the crux of their product value concept, companies must not only anticipate, find, fulfill, and meet customer needs, but they must do all of this better than their competitors. This is what is missing in the marketing concept. Sure the customer is first and everything revolves around satisfying their needs. But if a company is to be successful, then it must follow the marketing concept better than its competitors.

In conclusion, the marketing philosophy in my framework will have the product value concept, as elucidated by Bennett & Cooper.

References

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