Executives in the Pillsbury Company point to different stages in the life of their firm. Using Pillsbury as an example, we can identify three distinct stages experienced by many consumer-oriented manufacturing firms in the United States.
Production Era Goods were scarce in the early years of the United States, so buyers were willing to accept virtually any goods that were produced and make do with them as best they could. French economist J.B. Say developed his law in the nineteenth century that described the prevailing business theory of the period: “Production creates its own demand.” The central notion was that products would sell themselves, so the major concern of business firms was production, not marketing.
In 1869, Charles Pillsbury founded his company on the basis of high-quality wheat and the accessibility of cheap water power. Robert Keith, a Pillsbury president, described his company at this stage: “We are professional flour millers. Blessed with a supply of the finest North American wheat, plenty of water power, and excellent milling machinery, we produce flour of the highest quality. Our basic function is to mill quality flour.” This production era generally continued in America through the 1920’s.
Sales Era About that time, many firms discovered that they could produce more goods than their regular buyers could consume. Competition became more significant, and the problems of reaching the market became more complex. The usual solution was to hire more salespeople to find new markets and consumers. Pillsbury’s philosophy at this stage was summed up simply by Keith: “We must hire salespersons to sell it [the flour] just as we hire accountants to keep our books.” The role of the Pillsbury sales force, in simplified terms, was to find consumers for the goods that the firm found it could produce best, given its existing resources. This sales era continued into the 1950’s for Pillsbury and into the 1960’s for many other American firms.
Today: The Marketing Concept Era In the 1960’s, marketing became the motivating force in Pillsbury. Since then its policy can be stated as, “We are in the business of satisfying needs and wants of consumers.” This is really a brief statement of what has come to be known as the marketing concept. This consumer-oriented idea is that an organization should (1) strive to satisfy the wants of consumers (2) while also trying to achieve the organization’s goals.
Probably the best-known statement of a firm’s commitment to satisfying consumer wants and needs is that appearing in a 1952 annual report of General Sectric Company:
The concept introduces... marketing... at the beginning rather than the end of the production cycle and integrates marketing into each phase of the business. Thus, marketing, through its studies and research, will establish for the engineer... what the customer wants in a given product, what price he is willing to pay, and where and when it will be wanted. Marketing will have authority in product planning... as well as sales, distribution, and servicing of the product.
This statement has two important points. First, it recognized that sales is just one element of marketing—that marketing includes a much broader range of activities. Second, it changed the point at which marketing ideas are fed into the production cycle to before the item is designed rather than after it is produced. Clearly the marketing concept is a focus on the consumer.
In today’s marketing concept era, a firm stresses solving the consumer’s problems, not its own problems.
Executives have discovered that applying the marketing concept in practice is not always easy, but it serves as a guideline for their decisions. Even sophisticated firms such as Pillsbury occasionally stub their toes and fail to recognize consumer trends: one reason Jim Watkins left Pillsbury was because he didn’t think the company recognized the importance of microwave foods in the future. Pillsbury has now changed its thinking and is investing $30 million annually in developing microwave food.
The consumerism movement started in the 1960’s because the marketing concept was being overlooked by sellers. American consumers sought to obtain a greater say in the quality of products they buy and the information they receive from sellers. Although both the marketing concept and consumerism are constant reminders that “the customer is king,” with today’s competition, firms must also have efficient production and sales operations—carryovers from earlier eras.
