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Faculty Working Papers College of Commerce and Business Administration University of Illinois at Urbana-Champaign No. 34 FACULTY WORKING PAPERS College of Commerce and Business Administration University of Illinois at Urbana-Champaign December 15, 1971 The Development of the Marketing Management Concept Fred M. Jones University of Illinois ul : mene: a ie “ anmas 20 a i al ; vo i Rios ce | fumes Ne aR Ae ae " sdlseistatabh beens co ang asi io: os o abso aflt id seomrolaves. oe a rs ay’ arses aaa Sa : apn at kegs . aombENT bial sadadtieiasl ? ; | ie ani: 4 AL HY) The Development of the Marketing Management Concept by Fred M. Jones About the middle of the twentieth century the term "marketing concept" came into use to denote the management of the marketing activities of a manufacturing firm. During World War II when little or no marketing re- sistance had been encountered customers had been allotted quotas and their names had been placed on waiting lists. It was expected that this situation would change and executives began to give marketing activities more attention Firms had become large as the size of markets had increaged and executives who had much training and experience in marketing were arriving at positions of influence. In the years when a buyer's market prevailed these executives received a more attentive hearing. The Consumer Basis An element of the marketing concept is the firm must be market oriented, the entire firm must be keenly aware of the consumer, the marketing philose- phy must permeate the entire firm. From time to time, so it was said, the consumer had been forgotten. Adam Smith, perhaps not the first, commented on the neglect of the consumer in his Wealth of Nations (1776). He said 2 Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. The maxim is so per= fectly self-evident, that it would be absurd to attempt to prove it. But in the mercantile system, the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce. deo) Semnyamek sg Ro taeiqofeved otf pines wench oH Bett sania | 7 “Migqeonas yettox-ran® sript odd ques: tebdnews edt to efbbtm ond 8 to notttvidoa gntsennat edt ‘Io bo ers odd otoreb ot ous ont een pebtontran” cot HG BEALL wor IX tee Bitch gab: ert sabato hess bas aatorp ‘bedvolta moedbad waaimseio beratatooae. mood batt wottatidte etd? todd betosqxe sew IT “sadabe gaitisy no beoaly weed bad 8 notiantia ero told kekton” gnbs dulcis ow fy oF aged ‘bovidvoone bere enaedo f sevivucexs bers beysertort beet witextcam "2 entn edd an aytal emovod bait ek aaabtiney $0 gaivivi exey priteiuas nt somebmoaxe bas prtetent dav bed hevitromxe exeds battorerny doitt 0 abten w me eaeey, oct a OC . i — - ,gobvsod ovidnedta atom | * atnel sroensast00 ont Oe ; badrelte texxam ed ‘denie meth eddie? Sqeonap yiivordttem eit to dnsaatar’ bs moe oLtely pitdexas orld _ EBMTEAITOD ett to “otawe enews od Ferm wnt? wae) edt? vbise sew tt o8 ,omtt of omit aot, mst? erties ont etnearseg v 4 Setmemmoo tert edt ton oqedtzeq «dime sieht ~smeddopre? meed bod + avass yen of <(aves) nackte to dtteedt wid ok “reesrasep. od 0, soalyen edd tes srabicutions Sie to esq Su0 Soe efoe ord wf nobtaeredee you tk aa ast 08 yldo ot Sebretts ad of ddywo seoltbouq ed? To one ~Teq on et mixem odT .comuarion edt Io tent yalvomony to? yresneoen bestia sf sastnona edt to fevtssat eA csfngl Abo Gan a aa vebtencd of ameon FF big : topo oto ads 6 Tagine ltesane Lia Mo anette tne Bae sonata ailt ap. in nel terres ton bra, ti seers Bhs i! ~~ 7 Smith probably overstated the case since he said that the primacy of the consumer was so self-evident as to not to need proof. The files of the firms of his day eontained correspondence inquiring about the nature of the inarket and consumer preference in whatever parts of the world a firm traded. Conditions were such, however, that for the next century the primary concern was production and not marketing. The manufacturer of goods for the household consumer depended upon the wholesaler's and the retailer's interpretation of the consumer's preference. It was unnecessary, as Arch W. Shaw pointed out, for the businessman to search out unformulated human needs. Only recently had production outstripped the market and had the businessman become a pioneer on the frontier of human wants. The more progressive man was now (1912) search- ing out the unconscious needs of the consumer, was producing goods to gratify them, and was bringing to the attention of the consumer the existence of such sanad Shaw was an astute eee the business world and had witnessed the growth of advertising and the success of Sears, Roebuck & Company and Mont— gomery Ward & Company as well as the increase in the number and size of chain stores and department stores. The success of these retailers depended upon their sensitivity to the consumer's preferences and this they expressed through orders placed with manufacturers. It would be a while, however, be- fore manufacturers made a direct and concerted effort to interpret the con- sumer's needs. 2. Arch W. Shaw, "Some Problems In Market Distribution." Quarterly Journal of Economics, Vol. 26 (November, 1911--August, 1912), p. 708. Yo taean aft dnt Aten wnat iat Betton ‘te, volts edt veo bunet ot on ot eh sHehivewttok 8 soul » Yo wmxter ent trode webatepet comebirayeortse bomasace ws att to“k sbobuxt Bx?» binow orld 18) ade sowede tu ib sonreterig “Toxesa roo Bae a emcee an wt es tat sot Pera i ok hotest et 40% obooy TS TemMswtamen ot vyohtostiam ger ‘fnp Yo doktstenptote) eftalteses odt fina et so Lawes sits rages satmoges tire boda tog wade sy dowd tn” (cis dae oteaer gunk dt adie bneneaen al yon eltapoer ci00 emnembnninclne:iadebnuee: _rwosal & aood ammaedei OAY Si as Yodan’ ae Seta oa comme Ltt sn att to web eINAMO) OMEELON cbwrede od? ” 9 dnsbtaert emedtgatiton, B repiel! 96. ris i wJeoomesceb solae arid rath dae ira Beonsvbs. rn ee iets Set . sak view for. ,oldtamaquet od hie se, doom? egah iiakeb ‘odd 3 Bae + eae eat bd mobiuatcte Rie sapl mi Dee watt ‘Land be fia Cs ey tad oi La tietad ten anil Les ede: oF ere alex sagt £ fie Joonkb birede ef - iiraeb yriwonturet ad? od beseviteb ors yedd sédt6 8 ; ne Yidewoverdd, ot ae. ya ett ab ylod tremhieqed teetemmt oa dose ba as 1 dotthe bmg ot solvien. ‘add Pelt Fda ba a i tram roddae Binay aiailae pene eho ams betel geen bist ee the Lootninal wae Oar oe ai @ Kody! cet. Rahieir}te oa le ss us B eronidel domeet yinbatet ae i “gue Eaves jane 78. ctate oG etl sit. sElCl , otetitenl rot t J oak : ve hrraxets eptes) :.ferdd .sevall yor oa mocaht Wane g wie to a todtte od? eftO% wet # tee wa ad nate ai? RS Sri met =o “SELLS i sq « (ERE )) Ts building up a successful sales organization. All advertising is sell- ing; and therefore, in order to insure the right kind of cooperation, the advertising department should be a branch of the sales department, which necessitates the head of the sales department being a competent judge of advertising as yell as of selling. The distribution of the product, whether direct or through branch houses, involves service to the customers; therefore; the traffic department, which directs the movement of goods, and the branch houses that handle them, should come under the management of the head of the sales department. In no other way can the most efficient service be well secured. The sales department should have an equal or con=- trolling supervision in the credit and collection departments for the same reason that it affects so intimately, and, in the case of these departments, sensitively, the service to the customers. With reference to the relation of the sales department to the manufacturing _ department, Cottingham said that it was the business of the sales department to make known their requirements to the manufacturing department, andsthe man- ufacturing department should be operated for the benefit of the sales department, and not for the benefit of the factory. The sales department served the customer and the factory should serve the sales department. This early view of the sales department is essentially the marketing concept that was being discussed so widely fifty to sixty years later. Cottingham's Sales department was to have complete control of the product after it was de- livered by the production department for shipping. The entire staff from office boy to chief executive was to be imbued with the selling spirit. Their united aim would be to increase demand, not merely to supply demand. Cottingham also held that selling the product in volume at a profit was the object and test of & successful business organization. In the discussion that followed Mr. H. F. J. Porter, an industrial engineer and Secretary of the Society, had the final word. He said that Mr. Cottingham was not only a salesman, but an organizer, and as such was able in his own factories to develop the various departments so that they balanced each other. Otherwise, the emphasis placed on the dominating importance of the sales de-= partment would soon load up the production department with all sorts of special SRM Fo y ri s, in 4 tp te Lat i f ai iad ret poe z +fhew at salads 174 moth eaiia baba ae seule i wriseatint odd ‘avqet tqeornos Femee RA ram nhofae ony to mokdisLorve odd ot t aabtodunll obtitnatoe enddw ottay tavtocett wa weeds yrom Aqvonon , oe, oo Wew snngrittg a ntidy | .daow ot zoe ¥ bextqedt bow: (seg 9.20, demarofevel edi? bra Marthiea'anm obtteastes evoton Yo ‘eetgton! : i y 24 eved dotdw Wrote bas sac kaa by Belqtonter | nous wrt cro bona 7 | Wigitvtion Qs abhor? ‘aerlto, att ‘fen pe ry oes priate noteye # Baw yittdostians ottitted toe eat vou ore emt? "ho ercttatoge sda ody ‘-eormra oye, Este ened ta i otto ‘omod adit $n Mmdsogot bau e % mobloe ono Sormonteg grivedam Beli artvasren edd rie niator os ‘rvoveotvte iiskbeals el yTkT need” bad eal done rcbeaeriw yeotd as bresro tc totes bearers ley vitotetsnu tse a oF 4 : eae vee nT Meter ont dieu rokbnat sco at weternqe reba -ad solvastaaguo yerttodtma to yaw ot at efter patna erred” r eiththe maby aun aeMontye ee ws Eye t ox via, ot enivedaay dneeet tate ‘4 e | 0 oviticoexa’ totts. ett ad w teow betas a aah yictetird? af gcc r 10 Measure marketing activities. He discussed the following under the depart- mentizing of marketing activities: 1. Selling 7. Market research 2. Advertising 8. Marketing planning 3. Sales promotion 9. Marketing training 4. Traffic 19. Marketing accounting 5. Service 11. Purchasing 6. Credit 12. Product analysis Some of these activities would exist as separate large departments sub- ordinate to the Marketing Manager, but in some instances a department might consist of one man and in the case of preone the Marketing Manager might also be the head of the Plarming Department. : Since his system was based on the principles of scientific management, there was to be adherence to the prin- ciple of functionalization. White viewed his concept as a system to be installed in a firm and he ex- pected opposition to its installation from a variety of sources. It would be necessary to generate managerial support for it because some executives would View it as a possible curtailment of their authority or as a method of dis- Placing them. They had developed in a production oriented environment and, therefore, would not be marketing oriented. \ In the decade of the 1930's the number of those who contributed to the development of the marketing management concept increased. Lee H. Bristol (1932), a business executive, envisione’ a vice-president in charge of distribution, a distribution manazer, or a distribution director as being responsible for market~ ing activities. This distribution director would be a competent specialist in various marketing activities and also would have a perspective of marketing that was both broad and deep. This man would take the product from the factory door and turn it into profits. Bristol thought that increasing importance would be 19. Ibid., p. 113. A RE Nt eA Apress, Vodiaale re Dee Nin gn btestsall « ¢ Rey tr Oe tabi bent ght essa non apt oeaagee getter, 0 #): He NE Ct pet actinart 4 EL cn C0. eA ; ela James ec dos somemd-sagil eytal ostorengen we fata, ‘bigens wothivaton rand duit deroast ato ‘ soornsane, ourom at seid toupee pitdota re dyn ‘rogocealt pabtonraat ory, apierets. cr pe mith oy bem, ea i. o ae bound sew fad ey ate oonte state goheiess an te, baad sa ons ot ‘ome sent of 04 oe wrett irene osiineton tor ry | _robtanttarosto oh Sete ie ere a ij a “oth to: beton nite "0 tre ‘hen? to Srautbet statevon > : , | sew itremarvort bv ce betratsy. nabtoubor, B ak “beqoleveb bet vee } sPeamatto Bt oe, or, pom (se00) fot aii ci om | bessngeed Agoaee dneco ganas iene ost | pom s s wih: fhe is molt. ogy ‘grbrantinco®, ba, goer: Ws, eotitiedtearite? ett Cail oh a and mit ine! “gt ste St a) erat x pease gzaebs, - bee donde E82 oTOH patnok: wa sornerr, fk x tngt0 400d Eiken tot pie et oxatet x 19 beta deal tvigbnost no 38 a LRAER oa x 1. What the business should make and sell. 2. The price at which the business should sell the products. 3. To whom the business should sell. 4. When products should be added or withdraw. 5. The quantities at which the business should aim in the sale of each product line. 6. The standard of quality which the business should seek to maintain. The marketing division that Urwick envisioned was a facilitating or staff division performing duties and functions already being attended to by someone. What was wanted, however, was a definite, specialized organ within the organism for carrying out these duties. Urwick was expressing his concept at a time of great economic upheaval. He believed that emphasis had been improperly placed on production. For almost a century there had been a pronounced seller's market and the main con- cern had been with the development of new means of production and transportation. Businessmen had taken to thirking of production first and distribution after- wards. The main jéb of distribution was not to get rid of what production made, but to tell production what to make. Market research while of :great importance was almost always undertaken with e view, not of finding out what the consumer's habits really were, but to sell what some manufacturer could make. Urwick offered his concept of the Marketing Division as the solution to the problem. A broad view of what should be the responsibility of the Marketing Division continued to evolve. Bernard Lester (1925) saw every departmental activity of @ machinery manufacturer as having an affect on customer relationships, as either building up customer relationships or tearing them dowel He then ' Giscussed how manufacturing, design, research, patent, credit, and service and installation activities have a bearing on customer relationships. He did not advocate any particular orzanization structure but said that “the structure, va 23. Bernard Lester, Marketing Industrial Equipment. Wew York: McGraw-Hill Book Company, Inc., 1935, p. 196. 12 vatoubort ed pe Beek er sate nthe \ mmeartbilt hd” to babies d-Bimods atcoupory | fas ont wt wig, bh geri aac baal wey Pina ta-eekt bieesip: 4 taht Toabersy dose . vabstaton ee co olerentt bhi npantond, edi? dottene Wile te ieralenetRi Tints ne emia all ‘p Say benodetvne xotwatl das netstat 9 » Somme? ud. ot botoette wthed ehawnte anokton? 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Following the War, as customer waiting lists disappeared and competition. increased, the popularity of resale price mainten- ance declined, the discounter flourished, and the cause of the consumer became popular. In this atmosphere business executives could understandably assert their awareness of the import-nce of the consumer. Marketing executives who had been trained in marketing were well aware of the fundamental importance of the consumer. There were others, however, who had recent experience in the production of war material as well as consumer goods for a seller's market. The problems of marketing for the most part were unknown to them. Experienced marketing executives, row with the ear of top management, possibly sensed an opportunity and set forth on a program of making management conscious of marketing. Some of these knew of the writings Taylor, White, Bristol, Urwick, and others aed could support with logic the case for making the marketing division the dominating division of a firm. Those who had ex- perience in sales management were suitably equipped to push the cause for an organizational division of broad scope, but their efforts would not have had any widespread and lasting success had there been mo sound basis for urging the adoption and implementation of the marketing concept. The concepts of coérdination, planning, and functionalization were old in management theory and writers and speakers had long before illustrated and urged an increased application of these concepts in the marketing area. During the War,’ with ” consumer goods~ rationed and wholesalers and retailers on allottments, there was little or no need for market planning. Sales departments were greatly re- duced or practically disappeared. It was row necessary to rebuild these de- partments, often on a larger scsle. Population was increasing and the growth of markets was being accelerated by increasing incomes and improvements in tragsportation and comminication. &n opportunity existed for larger business 16 \ sey, atete pride ramovan, - od best ircorort : ' isis /ee ah tans eldatine desea ‘bison novttooxe ois sredauonte amy at x ody owylsunexe bdptestenl “yt ‘ec % “ee ao ott de * | “oonettogm. iasnsnatmd # ‘oni yo oreie ‘thew amu gabvetiad! ah bon Ricad ne os ino rbot snopes had orf awe sf | pinata: erew. erent? noel ie “fromenenon webdam to mesportg ® oo dtrot ‘dea bern. seinubaorie | 7- boanea “xe, bai tu sea? oteg ht & Yo abated prhdaitseh ‘ont Hokabyté sc eebakend Tepes hind hadiben » veataonge aa - tote ot satiad edd dey of bone Lupe widnstae st6w Sireesara ert fos i 7 * Batt evad ton’ b intone etxotte ahead dud on nord to mataters Lamottas ao oveds botucles of Tehaneoen wen aN ir Scenes pemamel ivory haeed bore gatenotomh naw qo btatogot -oiad | feito e' 3eLies 2 Les boon rap o> an ) Lia ap ‘Tolcotnm now ‘to: ors of anes oN | ta Pace ‘nd aot gitvotant 6 sree peas ot ‘to we edz ashy vor \ eer Nitosica pabtedian beget setts cian eyes haw odd Yo Noord non? 45 wok spate to wha xot saad ork ofyed diate droqqua isos tina wrbdtio tre hed 4 f io geet yeas 201 ataed bates on avied etedy 4 id seeoote pittent’ bre booreet ‘Qe etqeores eft 4g OTF witsex ‘tna ans Ro. nottatnemelamt bea ‘reed? Snensy onan at big tow nottaadtanelsoiwt bre: petite lg vai feigeotast' ta Beyrir hae bas nxdewitt wioted simak bai wxiclnete. ‘bia an | ditiv ya eat wnt bere] eo enitedian add et adqeonso geet? ton wteds riyonsdolte 10 evi tases bem. ‘sinc libata * yiteany BTew asobatraten setae ; ‘spies $0eFrem eo) boot oc ° oiett : ae tf < red evrt0u vont ral wemoart witesertort ae units and the accompanying larger units of internal organization structure, particularly that dealing with the marketing of a firm's products. Although the marketing executives of some firms would have had the market- ing philosophy prevailing throughout the firm and the marketing division dom inating the organization structure, it is doubtful that this view was com- pletely implemented. The marketing executive is subjected to pressures from customers which if yeilded to would increase manufacturing costs, endanger the firm's ligu&dity as well as result in increased marketing costs. Consequently, the chief executive of a firm, although he might have been marketing minded, found it necessary to control and coordinate marketing activities in a manner that an optimum profit might be earned. ‘The marketing divisision, admittedly having important responsibilities, was to be managed in a manrer that would effectively contribute to accomplishing the firm's profit objective. L7 in Peat Me me ABs ie - an , ane | ache i arty: ise ee hess pte sb it att ath ten ode had vi ‘ow A ee ert ptseian wit re . in | ; te oo K maiiciersbeas ds ‘nth twvese ‘Gtyoud we HO ‘< fod ee i | bi 2 a sabre ae Pan's e ah - ie ctr t ree Debris waliednen weed ind. oS eon wet ean terrae + ‘pb eitteting windontnan otentingan one ‘Lease id: = 7 , Shp, vam! ey. < besarte irettatyat sib tort al - erin wé Sikta tree , ae he i rea, ia ia biirew tgs, merirnn Ls rh berger od ot dial het? 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