Changes in the economy and society have affected how the marketing concept has been defined or understood in different times. When you study marketing, ask yourself the following questions: What does the marketing concept include and what is its relation to company operations in general?

Stages in the Evolution of Marketing

Describing the evolution of marketing through the five stages shown below (production orientation, sales orientation, marketing orientation, customer orientation and omprehensive marketing) is one way to analyze the changing role of marketing in business operations in different times and under different circumstances. Kotler (2003, 17 - 26) discusses the same historical development under the title company orientations toward the marketplace by introducing six different concepts (production concept, product concept, selling concept, marketing concept, customer concept, societal marketing concept).

(1.1) Production Orientation (tuotantosuuntaisuus)

(1.2) Sales Orientation (myyntisuuntaisuus)

(1.3) Marketing Orientation (kysyntäsuuntaisuus)

(1.4) Customer Orientation (asiakassuuntaisuus)

• Deepening of the marketing orientation stage
• Starting from the oil crisis (1973)
• Internal and external marketing
• Customer is King
• Individual service
• Market segmentation according to lifestyles
• Good quality
• Patrons (regular customers)
• A satisfied customer:
  - buys again
  - talks favourably to others about the company
  - pays less attention to competing brands and advertising
  - buys other products of the company

(1.5) Comprehensive marketing (kokonaisvaltainen markkinointi)

• From the1990s
• Marketing is integrated with all business operations (all staff members participate in marketing)
• Competitive advantage
• Customer satisfaction
• Image
• Customer relationships

Definitions of Marketing

In 1985, marketing was defined as follows: "Marketing is the process of planning and executing conception, pricing, promotion and distribution of goods, ideas and services to create exchanges that satisfy individual and organizational goals."

This definition was based on the "4 P" approach, with companies aiming to maximize sales transactions without focusing on building long-term customer relationships.

4 Ps (marketing mix (the four P’s):

• Product (tuote)
• Price (hinta)
• Place (saatavuus)
• Promotion = marketing communications (markkinointiviestintä)

The American Marketing Association adopted a new definition of marketing in August 2004: "Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders."

(2.2) Market and Customer

The word market refers to the company's existing and potential (prospective) customers. To understand the word customer, it is useful to understand the following categorizations, each with a different viewpoint.

	Customer
	|	|	|	|
	Consumer	Suspect	Distributor	External customer
	Corporate customer	Prospect	End-buyer	Internal customer
	Nonprofit org. cust.	Existing customer	End-user
		Patron
		Loyal customer

(A) Customer categorization based on the buying motive

• Marketing to corporate customers is often called business-to-business (b-to-b) marketing, as opposed to business-to-consumer (b-to-c) marketing.

(B) Customer categorization based on the potentiality or intensity of the customer relationship

The customer relationship may evolve through the following stages:
    Suspect --> Prospect --> Existing customer --> Patron (regular customer) --> Loyal customer

(C) Customer categorization based on the role of the buyer in the distribution chain.

1. Distributors/resellers (e.g. exporters, importers, wholesalers, retailers) who buy the product to resell it
2. End-buyer (maybe not an established term in marketing literature; often the same as the end-user but the final buyer may buy the product for another family member, or an organisation buyer may buy the product for another employee's use)
3. End-user (consumer, business or other organization who uses the product) 

(D) Customer division into external and internal customers

1. External customers (outside the organization)
2. Internal customers (e.g. other units, departments or employees within the organization)

Customer segmentation and targeting is discussed in chapter 5.

(2.3) Products

= Goods (tangibles) and services (intangibles) and combinations of both (e.g. machine and service)

(A) Consumer products (kulutushyödykkeet)

• Intended for use by household consumers for personal, nonbusiness purposes

(B) Industrial products (tuotantohyödykkeet)

• Intended for use in producing other products (goods or services) in a company to earn money (e.g. a machine in a factory or the car of a taxi driver)

Nondurable goods, durable goods, services

An American needs food and wants a hamburger.
A person needs clothing and wants…
A person needs esteems and buys a…

(3) The Business Environment (Marketing Environment)

Factors and forces that affect a company's capability to operate effectively in providing products and services to its customers.

• Microenvironment
  = Factors in the firm's immediate environment that affect its capabilities to operate effectively in its chosen markets.

• Macroenvironment
  = Broader forces that affect not only the company but also the other actors in the microenvironment. These shape the character of the opportunities and threats facing a company, and yet are largely uncontrollable.

Macroenvironment

Demographic: Population, population growth, age structure, ethnic groups, household patterns, migration

Cultural and social: Cultural values, attitudes, subcultures, education, lifestyle

Economic: Income distribution, economic growth, inflation, interest rates, unemployment, savings, debt, credit availability, European Union

Natural/physical/ecological: Raw materials and energy, climate, pollution, environmental protection

Technological: Product and process technologies, materials, technological change

Political and legal: Legislation, regulation, influential forces

Microenvironment

Customers

• Market size and growth, demand
• Customer characteristics
• Their buying behaviour
• What benefits do they seek?
• Their choice criteria
• Their information sources
• Their perceptions of us and our competitors

Competition

• Major competitors
• Their goals and strategies
• Their strengths and weaknesses
• Their size and market shares
• Profitability analysis
• Entry barriers

Suppliers

Distributors

(4) Factors Affecting Consumer Behaviour

	Cultural and social factors	Culture Subculture Social class Reference groups (membership groups, aspirational groups) Family	-->	Consumer behaviour Seeking different benefits Different purchase occasions Different uses Etc
Profile	Geographic factors	Location Climate
Profile	Demographic factors	Age Gender Lifecycle Family or household size Ethnic background
Profile	Socio-economic factors	Occupation Income Wealth
	Psychographic factors	Personality Lifestyle
	Psychological factors	Needs Motives Attitudes Perception Learning

(5) Segmentation, Targeting and Positioning

(1) Analyse the demand and buying behaviour of potential customers
(2) Analyse the factors behind buying behaviour and select the segmentation criteria
(3) Segment the market (divide the market into distinct groups of potential buyers)

(4) Select a segmentation and target marketing strategy (undifferentiated, differentiated, specialised marketing)
(5) Select the target segments

(6) Position the company or product in the market
(7) Plan and implement a marketing mix for each segment
(8) Monitor the results

Segmentation criteria

• Factors affecting consumer behavior (see table above)
• Behavioural factors
  • Benefits sought
  • Purchase occasion
  • Use (heavy users, medium users, light users, nonusers)
  • Etc.

(6) Marketing Mix

(7) Business Mission

To describe the business mission of a selected company, it is possible to use one or a combination of the following models (or another suitable model).

Ashridge business mission model
1	Purpose	Why the company exists.
2	Company values	What senior management believes in.
3	Standards and behaviours	The policies and behaviour patterns that guide how the company operates.
4	Strategy	The commercial rationale.

To study the Ashridge business mission model, see Jobber, David 1998. Principles and Practice of Marketing. Second edition. London: McGraw-Hill. Chapter 2, pages 34 - 35. (Newer edition: Jobber, David 2001. Principles and Practice of Marketing. Third edition. London: McGraw-Hill.)

Good source regarding the mission statement:

Zimmerer, Thomas W and Scarborough, Norman M 2002. Essentials of Entrepreneurship and Small Business Management. Third edition. Upper Saddle River, New Jersey: Prentice Hall, Inc. Pages 72 - 74 and 340 - 341.

Scandinavian business mission model
1	Target groups (chosen segments)	To whom?
2	Products	What?
3	Operation mode	How?
4	Target image

Bibliography

• Grönroos, Christian 1989. Defining Marketing: A Market-Oriented Approach. European Journal of Marketing, vol. 23, no. 1, 51–60.

• Grönroos, Christian 1994. From Marketing Mix to Relationship Marketing: Towards a Paradigm Shift in Marketing. Management Decision, vol. 32, no. 2, 4–15.

• Kotler, Philip 2003. Marketing Management. International edition. Eleventh edition. Upper Saddle River, New Jersey: Prentice-Hall International, Inc.
• Jobber, David 2001. Principles and Practice of Marketing. Third edition. London: McGraw-Hill.
• Zimmerer, Thomas W and Scarborough, Norman M 2002. Essentials of Entrepreneurship and Small Business Management. Third edition. Upper Saddle River, New Jersey: Prentice Hall, Inc. Pages 72 - 74 and 340 - 341.