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Marketing

A Behavioural Analysis

Peter M. Chisnall

Concept     Cognitions   Motivation


1. The marketing concept: a review

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Successful management is not achieved haphazardly; it is characterized by the development and application of an analytical approach to the process of decision-making. From this sound base, the deployment of resources can be effectively organized and a corporate strategy evolved. Analysis, planning, and control are vital, therefore, to achieve the objectives of an organization, whether this is a profit-oriented commercial company marketing consumer or industrial products, or a public services utility. Organizations of all kinds require the skills of professional management.

 

In the specialized activities related to the marketing of goods and services, the disciplined techniques of modern management are particularly relevant. Marketing as an activity is not, of course, new; it has been practised in rudimentary fashion by traders for thousands of years. But in advanced industrial economies, where specialization of production, labour and managerial talents is widely adopted, marketing has acquired significance as a distinctive area of management activity and responsibility. It has assumed the role of the entrepreneur in identifying market opportunities and relating these to the skills, productive capacity, and other resources of a company. This has included assessing the nature and degree of risk. involved in entering specific product markets. The intimate personal knowledge of their customers' needs which craftsmen and small local manufacturers possessed at one time, suffered when large-scale production plants generally superseded them. Products were no longer designed and made to suit individual requirements; mass-production techniques demanded uniformity, and, at the same time, more distant markets had to be developed to take up the vastly increased volume of production. The gap between producer and consumer widened as a result of this industrial and commercial metamorphosis.

Marketing as a separate, identifiable function of management has evolved from the business philosophy which recognizes the importance of the customer to the success of the business.

This reorientation of suppliers' attitudes and behaviour towards their customers first became evident in post-war Britain when the artifical restrictions on trading-such as furniture coupons, clothing coupons, licences for specific raw materials, etc., were finally abolished. The Conservative Government of that period (1951) held a 'bonfire of controls' which liberated industry and exposed it again to the brisk atmosphere of competitive business.

Consumer products were the first to experience the decline of a 'sellers' market (when satisfactory sales figures could be achieved fairly easily because people were willing to spend money freely to satisfy their long-awaited needs), and the strong development of a 'buyers' market (when customers were able, once more, to exercise their personal preferences in the choice of products). These conditions were world-wide, moreover, and from the early 1950s, companies became increasingly aware of the need to know more about the preferences, prejudices and buying habits of those who bought their products or services. The days of easy trading were numbered, and no company could expect to survive for very long if customers' needs were not adequately met.

On the whole, manufacturers of consumer products have successfully answered the challenge of the market-place. Some have not survived; others have sought the shelter of larger and more enterprising organizations. Few could prosper in today's harsh economic climate without being aware of the dynamic conditions which operate in most markets and which could significantly affect the demand for their products.

But, until comparatively recently, the 'marketing revolution' appeared to have by-passed the industrial and institutional areas of activity. To a considerable degree, reluctance to adopt the techniques of modern marketing appears to rest on a false premise: marketing is very suitable, no doubt, for soap, chocolates, and cosmetics, but our products and services are vastly different; they don't need all these fancy methods of selling.

This bold assertion should be considered against the findings of the Machine Tools Economic Development Committee l which, in October 1970, published the results of a detailed and objective study of the marketing methods of successful firms in the British machine tool industry. Their report, based on a 2-year intensive study of manufacturers, merchants, and agents by the P.E. Consulting Group, states it was 'vitally important' for many companies to improve their marketing techniques.

Successful firms were characterized by their wholehearted commitment to serving the needs of their customers. Every executive in these companies-from top management down through the entire management structure-was personally oriented towards the customer. Marketing attitudes generated the specific motivation of these successful companies.

After carefully noting the valuable role played by systematic marketing research and product planning, the report emphasized the responsibility of the selling function. It was felt that many companies could improve their selling methods considerably. Selling effort should be planned carefully and directed at all levels of customers' staff likely to be concerned in the buying decision. This may involve salesmen in patiently analysing and identifying those who are 'key' influences, particularly where complex negotiations are involved.

The findings of the machine tools 'Little Neddy' indicate that the decisionmaking processes of modern industry should not be considered in isolation, for they are inextricably linked with human factors which are fundamental in organizational behaviour.

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Complacency, therefore, is ill founded in industrial markets. The skills of modern marketing can usefully be applied to all types of products wherever they may be offered for sale. The actual techniques used in industrial marketing are not, of course, simply transferred from consumer product markets: they are adapted for effective use in a vastly different enviromnent. But the fundamental concepts and practices of marketing remain the same, and these were cogently expressed by PEp,2 the independent research organization which investigated 47 British industrial firms' attitudes to marketing:

Productive efficiency is not the sole criterion of an efficient economy. It is also necessary that the goods produced should be what the consumer requires. Such a simple proposition would need no emphasis, were it not for the fact that in many British firms production is still carried out with small regard for marketing.

...The essence of marketing is that a firm will make what it can sell rather than sell what it can make. Marketing therefore required an assessment of consumer needs through market research and the orientation of all the firm's activities towards the satisfaction of those needs.

This clarion call for effective marketing of industrial products is echoed strongly in an article which appeared in the November 1971 issue of Engineering. 3 The writer pungently commented on the general attitude towards the marketing function in industrial products and services:

... Among the old school of businessmen there used to be a saying that ,excellence always tells'; which may have been true once-upon-a-time but certainly is no longer. In these highly competitive days the marketing man has to tell the world about the excellence. He has, also, to tell the engineers what the world wants. Otherwise the engineer's product, however beautifully engineered and however well firdshed, will gather dust in storage, eating up expensive space, while a flood of inferior products captures all the custom ...

Far too many firms are still production-oriented instead of marketoriented. For historical reasons this is more particularly a vice of engineering. The tradition dies hard that British is necessarily the best and that the world is avid to have it. The disease can strike any firm ... Sometimes managements fall so much in love with their own product that they convince themselves it must always remain supreme. A case in point on the large scale was that of steam locomotive manufacturers, quite sure that steam would always hold its own, who suddenly found it displaced by diesel electric engines.

From the United States, B. Charles Ames, 4 a director of McKinsey & Co. Inc., instanced a capital-goods company whose management policy was always to sell the lar est, highest-powered, most maintenance-free units possible, because this suited their manufacturing facilities. However, a trend developed among customers towards smaller, less costly units 'without the rugged engineering characteristics required for maintenance-free operation'. The marketing people recommended a major re-design of the product line, but they were strongly opposed by the manufacturing and technical experts, 'who argued convincingly that the current product design and cost structure were all superior to any competitors'. All that was needed., they said, was a better selling effort; this was demanded by top management who accepted the technical experts' views. Only after the company had lost a substantial share of its market was the president willing to reject the opinions of the engineering and manufacturing executives and order the whole range to be redesigned. 'Now that he has, things are looking up. In a situation like this, it is unrealistic, of course, to expect a dramatic turnaround.'

Ames stresses that marketing recommendations 'lack the precision of technical data'. Top management regularly receives 'hard' data relating to production and raw material costs from production and financial experts, whereas marketing men must argue their case on the basis of forecasts and judgements. Although their forecasts are also quantified, they inevitably lack the precision of historical data submitted by manufacturing and administrative departments.

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1.1 Marketing in a dynamic environment

Markets seldom experience static conditions, especially today, when technological change and planned innovation have speeded up the pace of competition. Even successful products have a shorter expectancy of life than a few years ago. The costs of developing new products grow remorselessly each year, while the risk of failure haunts the dreams of entrepreneurs. Lack of success with a new product range may involve a company in substantial financial loss, apart from the social costs resulting from short-time working or closure of manufacturing plants.

Companies over the whole spectrum of industry and commerce should develop their marketing skills. It is no longer safe to assume that certain 'traditional markets' will always remain the preserve of old-established or well-known manufacturers. Vastly improved methods of modern transport have brought competitors nearer to each other and access to markets has, likewise, become easier. Technologies are now widely dispersed over many countries; Britain is no longer 'the workshop of the world', with unique manufacturing resources and skills developed through generations of industrial activity.

To survive against world competition, British industrialists must become more aware of the need to define closely their trading objectives and to relate their resources to the developing needs of their markets.

In times of rapid change a business must be alive to its aims. A major consideration is the type of business to be pursued. Contrast the experiences of two companies. One thought of itself as part of the steel industry and manufactured steel fittings. It suffered competition from asbestos, concrete, aluminium and plastic alternatives. The second company, in a similar business, thought of itself as providing a service in public and private street lighting. It manufactured, or factored, supplies in any material and offered a design and contracting service.s

Marketing management has the responsibility of identifying customers, of evaluating their present needs, and also of predicting their likely future requirements. Drucker 6 stresses this last point; management has to live in both the present and the future. Future opportunities must be examined, realistically, and critically surveyed in the light of the present state of the organization. The enterprise must be kept healthy to ensure that it will live to enjoy the future successes which are planned. Marketing management should aim, therefore, to retain the initiative in their product markets by carefully planning innovative products in collaboration with technical experts.

British industrial products, in particular, need a strong infusion of marketing skills. llese skills include acquiring a deeper understanding of the principal influences affecting buying behaviour.

1.2 Behavioural studies related to marketing

Nowadays, few, surely, would argue that buying behaviour in general is so very different from other forms of human behaviour that none of the theories and findings from the behavioural sciences are relevant. In fact, in the study of individual and household buying patterns, some of the concepts of sociology and psychology have been used to great effect. Interest is now growing in extending social science concepts to the study of industrial buying behaviour.

This willingness to consider the interplay and significance of 'non-economic' influences in business activity is pertinently reflected in a stimulating article which appeared in The Times. The writer, Andrew Shonfield, an economist of substantial reputation who was chairman of the Social Sciences Research Council, suggested that:

... it is arguable that the disappointment with our current performance in the management of the economy is the result of expecting economics to do on its own a job that requires a joint, and massive, effort by the whole range of social sciences. It is as if one had turned to the surgeons during the early stages of the development of modern medicine, and commanded them on their own to take over responsibility for curing all bodily ailments: no doubt a few more people would have lived; but a lot more would have had their limbs chopped off ...

Economic commentators, says Shonfield, talk and write as if the whole area of psychological uncertainty could be ignored. Economics is a very useful science and should not be discarded but it must be acknowledged that it cannot bear the whole burden of 'what might be termed clinical prescription for society whether the subject is the management of money or industrial relations or the drive for exports-or any other of the subjects conventionally labelled "economic" '. Shonfield urges that the newer social sciences, social psychology, and sociology in particular, should be used 'to fill out and give substance' to economic studies.

This plea is also taken up by Michael Shanks: 8 'We have now reached the point where we need to call in sociology and psychology to help solve our current economic problems.' Social values held by society often tend to be in conflict with economic motivations: what is needed is a deeper and fuller study of all the influences affecting industrial and commercial activities.

When the organizational buyer enters his office, he is not suddenly transformed into that curious, completely rational human being dreamed up by early classical economists and fondly termed 'Economic Mad. Further, he can rarely buy in ideal market conditions. The business environment is complex and real man is exposed to the conflict of economic and social motivations. Although the early classical economists' view is now generally discredited, there still appears to be reluctance by some people to accept that rationality is not the sole influence in buying situations, particularly those related to organizational suppliers.

Drucker has observed that a business enterprise has three levels of activity: the  physical level which includes plant, tools and materials; the economic level which reflects the activities of producing and distributing products; and the human level, which relates to the activities of individuals within the organization. Later discussion will be dealing with the effects of the last category of business activity on the other two levels. It will be seen that human behaviour has profound effects on the policy and day-to-day operations of organizations of all kinds. This further reinforces the need to know more about the wants and goals of man; to dig down deeper into the underlying factors affecting behaviour in general, and to attempt to relate these findings to particular market situations. People's behaviour as buyers cannot be artificially isolated from their characteristic behaviour as parents, workers or students. In purchasing food for her family, the housewife, for example, will be affected by her role as a wife and mother; she will carefully judge the nutritional value of alternative kinds of food. Her personal values and beliefs inevitably contribute to the decisions she makes in the supermarket; these subjective criteria deserve careful investigation and evaluation by marketers.

Marketers accept that products are brought for the satisfactions which customers hope to obtain from them; these benefits are often more than physical. Indeed, it has been said that, in economics of affluence, consumption tends to place greater emphasis on psychological satisfactions. Food, for example, is eaten not just to quell the appetite and to sustain life: it has assumed significance as an aesthetic experience to be savoured for its colour, texture, and flavour. Frequently it acquires social meanings through being consumed at certain times or in surroundings which lend prestige to the occasion. Similarly, clothing is hardly ever bought solely for its basic function of giving physical protection against climatic variables. On this simple foundation, a complex structure of motivations has been erected, and people endeavour to express their personalities by carefully selecting colours to suit their complexions, types of fabric that please them visually and tactually, and styling which is a la mode. It is increasingly evident that these psychological satisfactions are no longer the preoccupation exclusively of women shoppers. Men's clothing, in general, is now subject to the vagaries of fashion to an extent not previously experienced on so wide a scale.

In marketing products of many kinds, the so-called non-rational factors warrant special study. Consumers may view products very differently from manufacturers, and may not necessarily articulate their needs, aspirations, or fears. Study of customer behaviour should, therefore, include overt or observable factors and should also attempt to identify the covert, less apparent influences which affect consumption habits. The complex interaction of both economic and 'non-rational' factors demands a comprehensive research strategy.

Purchasers appear often to indulge in rationalization of their past decisions to buy some product; they may tend to feel rather guilty about acquiring luxury goods which entail unusually heavy outlays. For reasons of prestige, such buyers frequently search for acceptable motivations which would enable them to demonstrate to their families and friends that they carefully weigh up the economic consequences of spending large sums of money on what may be considered by others to be frivolous products. Marketers should appreciate that this tendency towards insisting on rational motives, logical appeals, and behaviour based on the satisfaction of qualified economic needs, may be influential in the product categories in which they do business. Edward C. Bursk9 writing in the Harvard Business Review, has commented that:

... for every selling situation the buyer must have some self-approved reason for saying 'yes'-whether the affirmation is in terms of handing over the money or signing on the dotted line, or just feeling agreement with an advertising message. For example, a man may want to buy a new car because it is new and sleek and shiny but he also needs some rationalization like "I'll get a better trade-in if 1 buy now . . ." 1 am convinced this is also true in advertising; that of two advertisements, both of which apply to a product mainly bought for irrational reasons, the one that provides in addition some cogent rational reason should produce a stronger reaction than the one that does not. 1 suspect that one explanation of why the combination of an advertising appeal to the image of masculinity and a new crush-proof box worked so well for Marlboro cigarettes is that the box offered a generally acceptable rationalization.

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1.3 Research into behavioural influences

Research should be aimed at acquiring comprehensive, reliable knowledge about every aspect of buying behaviour, and, concerning personal goods and services or organizational needs, should take note not only of economic factors but should be extended to cover the many other, and complex, motivations which may arise from psychological, cultural and social influences. In real life conditions, these subtle influences may not easily be identified, but this does not mean that they should be ignored. The growing sophistication of modem living, the greater experience of the buying public, and the dynamic nature of the environment in which needs incubate and develop, point to the necessity for marketers to develop comprehensive knowledge of their customers and their complex and growing needs. Successful entrepreneurs seek to acquire sensitive insights into human behaviour; study of the fundamental processes of perception, motivation, attitude formation, learning theory, and sociological factors such as social class, social mobility, leadership, reference group theory, etc., adds depth to market investigations. Economic analyses supply the skeletal outline of buyers' needs; behavioural data add fullness and richness to the understanding of market behaviour.

The social sciences are not, of course, to be looked upon as entirely relevant to.. purposes of marketing analyses. Some aspects of cultural anthropology, for instance, have limited usefulness in this area, while in the field of psychology there are many concepts which are of no direct interest in studying buying behaviour. But there are several useful areas of social science which may be translated into market studies. Joseph W. Newmanio remarked some years ago: '. . . As marketers have become increasingly aware of how much they have to learn about the nature of buying and consumption, they have turned for assistance to the behavioural sciences, which have made great progress in recent times. Much can be gained from this move ... 1

Research techniques borrowed from other areas of study have been adapted by marketing analysts. Psychological instruments such as attitude scales and projective techniques have proved valuable in marketing research. From social science and quantitative concepts, sampling methodology, questionnaire construction, regression analysis and Markov processes have contributed to the development of marketing science. That much of the formal content of marketing is drawn from other areas of study is, not surprising; what is of particular interest is the degree of success with which these techniques have been adapted and applied in developing a deeper understanding of market variables. In fact, the Marketing Science Institute of Americall has reviewed the general develop. rnent of marketing theory, and noted its reliance on borrowed concepts: 'HistoricallY, most sciences started by borrowing their conceptual approach and general theoretical ideas from other sciences. Our current state of marketing theory is no different.' At the same time, marketing analysts should be wary of indiscriminate borrowing from other fields of study. Care is also needed to avoid swinging from the extreme of explaining all buying behaviour as stemming from the 'rational' explanations offered by economic theory to the other extreme unduly emphasizing irrational or emotional motivations. oversimplified psychological explanations based on some personality theory, e.g., Freudian, do not adequately explain buying behaviour. Marketing investigations should be conducted with 'scientific care and conceptual honesty', 1 1 and the wholesale importing of techniques from other sciences is not likely to result in valuable contributions to marketing theory and practice.

Techniques are not, of course, ends in themselves; managers have the responsibfiity of applying the data obtained by these modern and sometimes, expensive, methods of analysis to the task of making better decisions. Datagathering should always be undertaken within the defined objectives of disciplined research. 'Management itself must think through its problems, formulate its specific needs, and make explicit its purposes; otherwise the techniques are likely to be pointless, and only fruitful by accident'. 9

Analyses derived from sophisticated methods of inquiry need to be translated into action. Unfortunately, many potentially valuable research studies are scanned by senior management, and then conveniently ignored because their findings are unpalatable or they do not coincide with preconceived notions of market behaviour. In some cases, from sheer inertia, management fails to take advantage of the data submitted by professional marketing researchers.

1.4 Systematic approach to the study of behavioural influences in marketing

A behavioural analysis and study of market variables may usefully be founded on an appreciation of some of the fundamental psychological factors which affect individual behaviour. These may be listed as: cognitions, learning processes, interpersonal response traits, attitudes, motivations, and personality theories. The interaction of these individual factors and their expression in buying behaviour in both personal and organizational areas requires careful study. Since individuals are also members of a society in which they grow up and by whose standards they are influenced, analysis needs to be extended to include social and cultural aspects of marketing behaviour. Knowledge of the contributions towards buying decisions made by individual members of a family or other social groups demands systematic investigation. Cultural inhibitions may be important influences affecting the diffusion of new products; educational achievements inevitably develop critical appraisal ot commercial practices, including the methods of promoting products and services. The aspirations of the individual are closely linked with his social and cultural life, and his buying habits and preferences reflect to some degree his personal view of life.

A comprehensive approach to buying behaviour acknowledges that man is a complex creature, and that any explanation of his economic activities which does not also take note of his psychological make-up, the society in which he lives, and the cultural background that flavours his orientation towards life, is likely to result in unsound business decisions being taken by manufacturers and distributors of a very wide range of goods.

These multiple influences wfil be discussed at some length in this book so that an insight into buying behaviour affecting both personal and organizational needs may be derived. Leading theoretical explanations of buying behaviour will be examined closely when an overall appreciation of the factors involved has been obtained.

Fig. 1. 1 gives, in general outline, a graphic illustration of the multiple influences which bear on buying proposals. The behavioural factors-personal 

wpe96867.jpg (822029 bytes)

and societal-will be examined for their relevance in specific buying situations. Empirical data are quoted wherever they are available to demonstrate the usefulness of some of these behavioural concepts in the marketing of goods and services. More extensive research is, of course, necessary to validate certain of the hypotheses offered as explanations of buying behaviour. Environmental variables and personal dispositions and motivations cannot be left as mere speculations, however well informed these may appear to be. The greater general awareness of the contribution which social psychology offers to marketing management in understanding people's behaviour should now be backed up by programmes of research directed to building up a fund of expert knowledge about specific types of product and service markets.

 

References

1. Machine Tools Economic Development Committee, A Handbook for MarketingMachinery, HMSO, October 1970.

2. Gater, Anthony, Insull, David, Lind, Harold, and Seglow, Peter, Attitudes in British Management-a PEP Report, Pelican, 1965.

3. Rhodes, Clifford, 'Engineers must be market oriented', Engineering, November 1971.

4. Ames, Charles B., 'Trappings vs substance in industrial marketing', Harvard Business Review, July/August 1970.

5. Tricker, lan R., The Accountant in Management, Batsford, London, 1967.

6. Drucker, Peter F., The Practice of Management, Heinemann, London, 1961.

7. Shonfield, Andrew, 'Neglect of psychology in managing the economy', 7'he Times, 24 February 1971.

8. Shanks, Michael, The Stagnant Society, Pelican, 1972.

9. Bursk, Edward C., 'Opportunities for persuasion', Harvard Business Review, September/October 1958.

10. Newman, Joseph W., 'New insights and new progress for marketing', Harvard Business Review, November/December 1957.

11. Halbert, Michael (dir.), line Meaning and Sources of Marketing Theory, Marketing Science Institute, McGraw-HIll, New York, 1965.

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Concept     Cognitions   Motivation