Lakhasly

As we have seen, markets and marketing are as old as exchange itself yet many people regard marketing as a phenomenon which emerged in the second half of the twentieth century - to be precise about 1960 when Professor Ted Levitt published an article entitled 'Marketing myopia' in the Harvard Business Review in which he addressed the fundamental question of why do firms, and indeed whole industries, grow to a position of great power and influence and then decline.Taking the American railroad industry as his main example, Levitt showed that this industry displaced other forms of overland transportation during the nineteenth century because it was more efficient and effective than the alternatives it displaced.In truth, marketing has been around since the very first commercial exchange but there can be little doubt that until comparatively recently it has been of secondary or even tertiary importance to other more pressing imperatives in terms of increasing supply to meet the needs and wants of a rapidly expanding population.The objective of authors and teachers in using the three-stage evolutionary model has been to highlight the major changes in the dominant orientation of business rather than to analyse in detail the much more complex processes which underlay and resulted in these changes.What is beyond doubt is the fact that from around 1960 onwards marketing thinking and practice has been dominated by the marketing management school of thought. Numerous examples support Fullerton's contention that producers of the so-called production era made extensive use of marketing tools and techniques as well as integrating forward to ensure their products were brought to the attention of their intended customers in the most effective way.That said, the examples provided (with one or two possible exceptions) do not, in my opinion, invalidate the classification of the period as the 'production area' in the sense that it was the producer who took the initiative and differentiated his product to meet the assumed needs of different consumer groups based on economic as opposed to sociological and psychological factors.Some of the famous pioneers of production such as Matthew Boulton and Josiah Wedgwood were also pioneers of modern marketing, cultivating large-scale demand for their revolutionary inexpensive products with techniques usually considered to have been post-1950 American innovations: market segmentation, product differentiation, prestige pricing, style obsolescence, saturation advertising, direct mail campaigns, reference group appeals, and testimonials among others.Similarly, while the period from 1870 to 1930 saw the emergence and development of important marketing institutions in terms of physical distribution, retailing, advertising and marketing education, which are still important today, it does not seem unreasonable to argue that all these institutions were designed to sell more of what was being produced.This is not to deny the 'rich marketing heritage' documented by Fullerton, but to reinforce the point that the transition to a 'marketing era' was marked by a major change in business philosophy from a producer-led interpretation of consumer needs to a consumer-driven approach to production.By contrast the 'era's model' is seen, at least by this author, as serving a different purpose in that it seeks to distinguish betweenmarketing as a practice clearly present in both the production and sales eras, and marketing as a philosophy of business which shifts the emphasis from the producer's pursuit of profit as the primary objective to the achievement of customer satisfaction which, in the long run, is likely to achieve the same financial reward.First, there is a 'philosophical belief that historical phenomena such as OVERVIEW 10 OF MARKETING THEORY markets are intrinsically rich and complex; efforts to simplify or assume away aspects of such phenomena are deeply distrusted' (Fullerton, 1988: 109).In other words, producers inferred the consumer's behaviour but they had MARKETING - PHILOSOPHY OR FUNCTION 11 not yet developed techniques or procedures which would enable them to define latent wants, and design, produce and market products and services to satisfy them.Fullerton's analysis reflects a growing interest in the history of marketing thought and confirms that 'modern marketing has a rich heritage worthy of our attention' (1988: 123).Whether one should substitute his conceptualization as contained in his complex flux model for the widely accepted production-sales-marketing era's model is not seen as an either/or choice.In the USA it was adopted with enthusiasm and Americans came to be seen as 'the supreme masters of aggressive demand stimulation', a fact frequently referred to in contemporary marketing texts of the early 1990s.In the early years this challenge was limited because of the high cost of the substitute product, its lack of sophistication and reliability and low availability.However, its potential was clear to see - if you owned a car or truck you had complete personal control over MARKETING - PHILOSOPHY OR FUNCTION 9 your transportation needs and could travel fromdoor to door at your own convenience.In addition to the reality of a depressed world economy in the 1930s, which required large-scale producers to sell more aggressively to maintain economies of scale, the period saw the migration of many behavioural scientists from a politically unstable Europe to the safety of the USA.Precipitated by the Industrial Revolution, and the mass migration from the countryside to an urban environment, potential markets had to be created through marketing techniques and activities.In the sales era firms were still largely production orientated but, as demand stabilized supply, continued to grow, resulting in fierce competition between suppliers.Second, the historical research tradition emphasizes 'systematic and critical evaluation of historical evidence of accuracy, bias, implicit messages, and now extinct meanings' (1988: 109).In retrospect it appears that it was this migration that led to the more rigorous analysis of consumer behaviour which was to underpin the emergence of a new 'marketing era'.Combined with its greater insight into consumer behaviour was a period of great economic growth and prosperity following the SecondWorldWar, together with a major increase in the birth rate, which was to result in a new generation of consumers brought up in a period of material affluence (the baby boomers).Thus, if the railroad management had concentrated on the need served - transportation - rather than their product, they might have been able to join the infant automobile industry and develop a truly integrated transportation system.The essence of the production orientation - a preoccupation with the product and the company - and the marketing orientation - a focus on the consumer's needs and the best way to serve it - have already been touched on in reviewing Levitt's 'Marketing myopia'.Fullerton's complex flux model embraces four eras: 1.(Fullerton, 1988: 112).2.3.4.2.3.4.

As we have seen, markets and marketing are as old as exchange itself yet many
people regard marketing as a phenomenon which emerged in the second half of
the twentieth century – to be precise about 1960 when Professor Ted Levitt
published an article entitled ‘Marketing myopia’ in the Harvard Business Review in
which he addressed the fundamental question of why do firms, and indeed whole
industries, grow to a position of great power and influence and then decline.Taking
the American railroad industry as his main example, Levitt showed that this industry
displaced other forms of overland transportation during the nineteenth century
because it was more efficient and effective than the alternatives it displaced. By
the beginning of the twentieth century, however, development of the internal
combustion engine, and the building of cars and trucks, had provided an alternative
to the railroads for both personal and bulk transportation. In the early years
this challenge was limited because of the high cost of the substitute product, its
lack of sophistication and reliability and low availability.However, its potential was
clear to see – if you owned a car or truck you had complete personal control over
MARKETING – PHILOSOPHY OR FUNCTION 9
your transportation needs and could travel fromdoor to door at your own convenience.
Henry Ford perceived this market opportunity, invented the concept of mass assembly
and began to produce a reliable, low-cost motor car in constantly increasing numbers.
From this time on the fortunes of the railroad began to decline so that, by the
1950s, this once great industry appeared to be in terminal decline.
What went wrong? Levitt’s thesis is that those responsible for the management
of the railroad were too preoccupied with their product to the neglect of the need
that it served, which was transportation. Because of their myopia, or ‘production
orientation’, they lost sight of the fact that the railroad product had been a substitute
for earlier, less attractive products, so that, offered a choice, consumers have
switched from the old to the new to increase their personal satisfaction. It should
have been obvious, therefore, that if a new, more convenient mode of transportation
was developed then consumers would switch to it too. Thus, if the railroad
management had concentrated on the need served – transportation – rather than
their product, they might have been able to join the infant automobile industry
and develop a truly integrated transportation system. In other words the railroads
failed because they lacked in marketing orientation.
At almost the same time as the appearance of Levitt’s seminal paper, Robert
Keith (1960) published an article in which he described the evolution of marketing
in the Pillsbury Company in which he worked. In Keith’s view the company’s
current marketing approach was a direct descendant of two earlier approaches, or
eras, which he termed production and sales. This three eras, or stages, model –
production, sales, marketing – was widely adopted by what has come to be known
as the marketing management school whose ideas dominated the theory and
practice of marketing for 30 years or more.
The essence of the production orientation – a preoccupation with the product
and the company – and the marketing orientation – a focus on the consumer’s
needs and the best way to serve it – have already been touched on in reviewing
Levitt’s ‘Marketing myopia’. Keith’s contribution then was to propose an intermediate
or transitional phase he termed the ‘sales era’. In the sales era firms were still
largely production orientated but, as demand stabilized supply, continued to grow,
resulting in fierce competition between suppliers. One aspect of this was that
producers committed more effort to selling their products with an emphasis on
personal selling, advertising and sales promotion – hence the ‘sales orientation’.
Chronologically the production era dated from the mid-1850s and lasted until
around the late 1920s, at which point the sales era was born, which lasted to
around the mid-1950s, when the marketing era commenced. This conceptualization
is now seen to be seriously flawed in terms of its historical accuracy but
nonetheless remains a useful pedagogical device for reasons we will return to. First,
however, it will be helpful to set the record straight.
As we have noted on several occasions there has been a tendency to date the
emergence of marketing to the late 1950s and early 1960s. In an article entitled
‘How modern is modern marketing?’ Fullerton (1988) provides a rigorous analysis
based on historical research.
At the outset it will be helpful to summarize the three key facets of the historical
approach. First, there is a ‘philosophical belief that historical phenomena such as
OVERVIEW 10 OF MARKETING THEORY
markets are intrinsically rich and complex; efforts to simplify or assume away
aspects of such phenomena are deeply distrusted’ (Fullerton, 1988: 109). Second,
the historical research tradition emphasizes ‘systematic and critical evaluation of
historical evidence of accuracy, bias, implicit messages, and now extinct meanings’
(1988: 109). The third facet of historical research is the process itself through
which the researcher seeks to synthesize and recreate what actually happened in
the past.
While there is considerable evidence that supports the existence of a production
era there are also strong arguments to support a contrary view. Fullerton summarizes
these as follows:

1. It ignores well-established historical facts about business conditions –
   competition was intense in most businesses, overproduction, and demand
   frequently uncertain.


2. It totally misses the presence and vital importance of conscious demand
   stimulation in developing the advanced modern economies. Without such
   stimulation the revolution in production would have been stillborn.


3. It does not account for the varied and vigorous marketing efforts made by
   numerous manufacturers and other producers.


4. It ignores the dynamic growth of new marketing institutions outside the
   manufacturing firm. (Fullerton, 1988: 111)
   Each of these arguments is examined in detail and substantial evidence is marshalled
   to support them. A particularly telling point concerns the need for active demand
   stimulation and the need for production and marketing to work in tandem.
   Some of the famous pioneers of production such as Matthew Boulton and Josiah
   Wedgwood were also pioneers of modern marketing, cultivating large-scale
   demand for their revolutionary inexpensive products with techniques usually
   considered to have been post-1950 American innovations: market segmentation,
   product differentiation, prestige pricing, style obsolescence, saturation advertising,
   direct mail campaigns, reference group appeals, and testimonials among
   others. (Fullerton, 1988: 112).
   In Fullerton’s view ‘demand enhancing marketing’ spread from Britain to Germany
   and the USA. In the USA it was adopted with enthusiasm and Americans came to
   be seen as ‘the supreme masters of aggressive demand stimulation’, a fact frequently
   referred to in contemporary marketing texts of the early 1990s. Numerous
   examples support Fullerton’s contention that producers of the so-called production
   era made extensive use of marketing tools and techniques as well as integrating
   forward to ensure their products were brought to the attention of their intended
   customers in the most effective way.That said, the examples provided (with one or
   two possible exceptions) do not, in my opinion, invalidate the classification of the
   period as the ‘production area’ in the sense that it was the producer who took the
   initiative and differentiated his product to meet the assumed needs of different
   consumer groups based on economic as opposed to sociological and psychological
   factors. In other words, producers inferred the consumer’s behaviour but they had
   MARKETING – PHILOSOPHY OR FUNCTION 11
   not yet developed techniques or procedures which would enable them to define
   latent wants, and design, produce and market products and services to satisfy them.
   Similarly, while the period from 1870 to 1930 saw the emergence and development
   of important marketing institutions in terms of physical distribution, retailing,
   advertising and marketing education, which are still important today, it does
   not seem unreasonable to argue that all these institutions were designed to sell
   more of what was being produced.This is not to deny the ‘rich marketing heritage’
   documented by Fullerton, but to reinforce the point that the transition to a
   ‘marketing era’ was marked by a major change in business philosophy from a
   producer-led interpretation of consumer needs to a consumer-driven approach to
   production.
   As to the existence of a sales era (rejected by Fullerton) this seems as convenient
   a label as any to give to the transitional period between a production and marketing
   orientation. In addition to the reality of a depressed world economy in the
   1930s, which required large-scale producers to sell more aggressively to maintain
   economies of scale, the period saw the migration of many behavioural scientists
   from a politically unstable Europe to the safety of the USA. In retrospect it appears
   that it was this migration that led to the more rigorous analysis of consumer behaviour
   which was to underpin the emergence of a new ‘marketing era’.
   Combined with its greater insight into consumer behaviour was a period of great
   economic growth and prosperity following the SecondWorldWar, together with a
   major increase in the birth rate, which was to result in a new generation of
   consumers brought up in a period of material affluence (the baby boomers). It was
   this generation which sought to reassert consumer sovereignty and so initiated the
   change in the balance of power between producer and consumer which heralded
   the ‘marketing era’.
   Fullerton’s argument that the production–sales–marketing era framework is a
   ‘catastrophic model’ ‘in which major developments take place suddenly, with few
   antecedents’ (1988: 121) is not without merit. Certainly, it could and has had the
   effect of disguising the evolutionary nature of marketing thought and practice.
   In place of a catastrophic model, or indeed, a continuity model which tends to
   observe differences over time, Fullerton suggests a ‘complex flux model’. Such a
   complex flux model has the ability to incorporate dramatic changes but it also
   ‘stresses that even dramatic change is based on and linked to past phenomena’
   (Fullerton, 1988: 121). It is also neutral in the sense that it does not automatically
   equate development or evolution with ‘improvement’, leaving such judgements
   for others to make.
   Fullerton’s complex flux model embraces four eras:


5. Setting the stage: the era of antecedents. A long gestational period beginning
   around 1500 in Britain and Germany, and the 1600s in North America. The period
   of low levels of consumption in which ‘75–90% of the populace were self-sufficient,
   rural and viscerally opposed to change’ (1988: 122). Commerce was generally
   discredited but its standing improved as the benefits of trade became apparent.


6. Modern marketing begins: the era of origins. Britain in 1759;Germany and the USA
   circa 1830. ‘This period marked the beginning of pervasive attention to stimulating
   OVERVIEW 12 OF MARKETING THEORY
   and meeting demand among nearly all of society’ (1988: 122). Precipitated by the
   Industrial Revolution, and the mass migration from the countryside to an urban
   environment, potential markets had to be created through marketing techniques
   and activities.


7. Building a superstructure: the era of institutional development. Britain in 1850;
   Germany and the USA circa 1870 until 1919. ‘During this period most of the major
   institutions and many of the practices of modern marketing first appeared’ (1988: 122).


8. Testing, turbulence and growth: era of refinement and formalization. From 1930 to
   the present day. ‘The era’s most distinguishing characteristic, however, has been a
   further development, refinement, and formalization of institutions and practices that
   were developed earlier’ (1988: 122).
   Fullerton’s analysis reflects a growing interest in the history of marketing thought
   and confirms that ‘modern marketing has a rich heritage worthy of our attention’
   (1988: 123).Whether one should substitute his conceptualization as contained in his
   complex flux model for the widely accepted production–sales–marketing era’s
   model is not seen as an either/or choice. Indeed, Fullerton’s emphasis on the origins
   and evolution of marketing thought and practice reflects the historical research
   approach and merits attention in its own right. By contrast the ‘era’s model’ is seen,
   at least by this author, as serving a different purpose in that it seeks to distinguish
   betweenmarketing as a practice clearly present in both the production and sales eras,
   and marketing as a philosophy of business which shifts the emphasis from the
   producer’s pursuit of profit as the primary objective to the achievement of customer
   satisfaction which, in the long run, is likely to achieve the same financial reward.
   In other words the three eras model provides a convenient framework for
   summarizing changes in the dominant orientation of business management. Thus
   it is a useful, albeit oversimplified, model of the evolution of modern marketing,
   or what I prefer to designate ‘the rediscovery of marketing’ (Baker, 1976). In truth,
   marketing has been around since the very first commercial exchange but there can
   be little doubt that until comparatively recently it has been of secondary or even
   tertiary importance to other more pressing imperatives in terms of increasing
   supply to meet the needs and wants of a rapidly expanding population.The objective
   of authors and teachers in using the three-stage evolutionary model has been
   to highlight the major changes in the dominant orientation of business rather than to
   analyse in detail the much more complex processes which underlay and resulted
   in these changes.What is beyond doubt is the fact that from around 1960 onwards
   marketing thinking and practice has been dominated by the marketing management
   school of thought.