<< Chapter < Page Chapter >> Page >

Business Fundamentals was developed by the Global Text Project, which is working to create open-content electronictextbooks that are freely available on the website http://globaltext.terry.uga.edu. Distribution is also possible viapaper, CD, DVD, and via this collaboration, through Connexions. The goal is to make textbooks available to the manywho cannot afford them. For more information on getting involved with the Global Text Project or Connexions email us atdrexel@uga.edu and dcwill@cnx.org.

Editors: Salvador Treviño and Carlos Ruy Martinez (ITESM, Monterrey Campus, Mexico)

Contributors: Carlos Alberto Alanis, Gaspar Rivera, Jorge Echeagaray, Jose de Jesus Montes, Juana Monica Garcia, Ramiro Robles, and Roberto Sanchez

The formal use of marketing concepts is a fairly recent activity in developing economies. In the past, most companies focused on producing products or offering services without much emphasis on customers and wants. Understanding consumer behavior was not considered to be important. The emphasis was on the product or service per se. Given the emergence of a global economy, however, which brought the opening of markets and increased competition, the traditional approach has changed dramatically. Companies are increasingly focusing on what customers need and/or want. Market-oriented companies are beginning to emerge in every developing economy in the world.

The purpose of this section is to introduce you to the importance of marketing oriented companies in developing economies, as well as identifying business models which follow a marketing model rather than a product model .

The product model vs the marketing model

According to Philip Kotler, the product model is a management orientation that assumes that if a quality product is produced, and offered to consumers at a price they find to be acceptable, the company will be successful in the market place. Another author who successfully introduced a marketing orientation is Theodore Levitt. His orientation is sometimes referred as a “marketing myopia” approach since companies define their business in terms of products and not in terms of customer needs and wants. For example, a car manufacturer may think they are in the “car business” while they are, in fact, competing in the transportation industry.

Under the product model, management focuses on developing high quality products which can be sold at the right price, but with insufficient attention to what it is that customers really need and want. For example, Apple determined that what customers wanted was the ability to purchase music one song at a time rather than purchase an entire CD with 16 tracks, only three of which were really wanted. They subsequently developed and introduced the iPod and iTunes online store which revolutionized the way consumers buy music. In the meantime, traditional producers of traditional CDs lost market share to Apple, which had a much better understanding of how to satisfy consumers.

The premises implicit in the product model are:

  • Consumers buy products more than solutions.
  • Consumers are interested basically in product quality.
  • Consumers recognize product quality and differences in performance alternative products.
  • Consumers choose between different products based on getting the best quality for the money.
  • The main task of organization is to keep improving quality and reducing cost as key factors to maintain and attract customers.

The product model used to be applied in developing or closed economies where few, if any choices were available. Advantages of the product model are that the cost of determining consumer preferences and the development of new products and services are minimized or eliminated because consumers are in some way captive. By way of example, compare the automobile industry in developed countries to the automobile industry in the Soviet Bloc countries prior to 1989. Customers had a wide variety of automobile models to choose from while citizens in the Eastern Bloc had few. The latter was operating on a product model rather than a marketing model. Disadvantages of the product model are that as soon as a company could offer a product more oriented to satisfy customers´ needs and desires the companies oriented to products will lose the most if not all of its market share. The traditional CD companies referred to above are a good example of this.

In summary, market orientation is essentially a customer orientation. Understanding customer needs lies at the core of the marketing concept.

Questions & Answers

the diagram of the digestive system
Assiatu Reply
How does twins formed
William Reply
They formed in two ways first when one sperm and one egg are splited by mitosis or two sperm and two eggs join together
Oluwatobi
what is genetics
Josephine Reply
Genetics is the study of heredity
Misack
how does twins formed?
Misack
What is manual
Hassan Reply
discuss biological phenomenon and provide pieces of evidence to show that it was responsible for the formation of eukaryotic organelles
Joseph Reply
what is biology
Yousuf Reply
the study of living organisms and their interactions with one another and their environments
AI-Robot
the study of living organisms and their interactions with one another and their environment.
Wine
discuss the biological phenomenon and provide pieces of evidence to show that it was responsible for the formation of eukaryotic organelles in an essay form
Joseph Reply
what is the blood cells
Shaker Reply
list any five characteristics of the blood cells
Shaker
lack electricity and its more savely than electronic microscope because its naturally by using of light
Abdullahi Reply
advantage of electronic microscope is easily and clearly while disadvantage is dangerous because its electronic. advantage of light microscope is savely and naturally by sun while disadvantage is not easily,means its not sharp and not clear
Abdullahi
cell theory state that every organisms composed of one or more cell,cell is the basic unit of life
Abdullahi
is like gone fail us
DENG
cells is the basic structure and functions of all living things
Ramadan
What is classification
ISCONT Reply
is organisms that are similar into groups called tara
Yamosa
in what situation (s) would be the use of a scanning electron microscope be ideal and why?
Kenna Reply
A scanning electron microscope (SEM) is ideal for situations requiring high-resolution imaging of surfaces. It is commonly used in materials science, biology, and geology to examine the topography and composition of samples at a nanoscale level. SEM is particularly useful for studying fine details,
Hilary
cell is the building block of life.
Condoleezza Reply
what is cell divisoin?
Aron Reply
Diversity of living thing
ISCONT
what is cell division
Aron Reply
Cell division is the process by which a single cell divides into two or more daughter cells. It is a fundamental process in all living organisms and is essential for growth, development, and reproduction. Cell division can occur through either mitosis or meiosis.
AI-Robot
What is life?
Allison Reply
life is defined as any system capable of performing functions such as eating, metabolizing,excreting,breathing,moving,Growing,reproducing,and responding to external stimuli.
Mohamed
Got questions? Join the online conversation and get instant answers!
Jobilize.com Reply

Get Jobilize Job Search Mobile App in your pocket Now!

Get it on Google Play Download on the App Store Now




Source:  OpenStax, Business fundamentals. OpenStax CNX. Oct 08, 2010 Download for free at http://cnx.org/content/col11227/1.4
Google Play and the Google Play logo are trademarks of Google Inc.

Notification Switch

Would you like to follow the 'Business fundamentals' conversation and receive update notifications?

Ask