Academic journal article Review of Business

Market Power and Successful Global Competition

Academic journal article Review of Business

Market Power and Successful Global Competition

Article excerpt

American companies have long been influenced by the philosophy of consumer needs and wants, but this is no longer sufficient for successful marketing. Every firm should have a customer component, but this alone will not allow a firm to develop a competitive advantage. The customer is only one of many potential resources available to an organization to achieve its end.

The American marketing response to international competition continues to advocate a functional approach to marketing in which meeting these customer needs and wants is perceived as the way to achieve success. Other disciplines focus on other goals. Financial analysts advocate maximizing stockholder wealth as a way to create a competitive advantage. Economists tell us that supply and demand dictate a firm's ability to create an advantage, while human resource specialists teach that maximizing human resources creates the difference between success and failure. This has created an environment where each group's philosophical framework is counterproductive when placed next to an opposing functional view.

The authors do not reject any of these functional applications, but instead see them as resources (means) rather than philosophical ends in themselves. All of these functions are required to develop a corporate strategy, but the artificial boundaries between them are counterproductive.

Marketing and Customer Orientation

It is difficult to find a marketing principles or management textbook that develops any approach other than an identical historical evolution of the marketing concept/orientation (such as Kotler and Armstrong 1989). Authors invariably trace marketing practice from production to product to sales to the marketing concept--and now to a societal marketing concept. This has served to reinforce the marketing paradigm so that many have been led to believe that the marketing concept has been validated. Now, however, evidence is mounting that contrasts this position:

Given its widely acknowledged importance, one might expect the concept to have a clear meaning, a rich tradition of theory development, and a related body of empirical findings. On the contrary, a close examination of the literature reveals a lack of clear definition, little careful attention to measurement issue, and virtually no empirically based theory. Further, the literature pays little attention to the contextual factors that may make a market orientation either more or less appropriate for a particular business (Kohli and Jaworski 1990, p. 1).

The current American marketing paradigm (first developed in the 1950s) advocates that the organization must analyze customer needs and wants, and then produce products or services to fill those needs and wants at a profit. Therefore, it is hypothesized that organizations that continue to meet internal and external customer needs and wants will prosper, while those that do not will decline.

Kotler defines marketing as "a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others" (1988, p. 3). This definition of marketing emerges from the earlier work of Peter Drucker: "There is only one valid definition of a business purpose: to create a customer.... It is the customer who determines what the business is.... Because it is its purpose to create a customer, any business enterprise has two -- and only these two basic functions: marketing and innovation"(1954, p. 37).

Theodore Levitt contributed to this philosophy when he speculated (incorrectly) that the railroads did not stop growing because the requirements for transporting passengers and freight declined. Rather "they defined their industry wrong....because they were railroad-oriented instead of transportation-oriented; they were product-oriented instead of customer-oriented" (1960, p. 45).

Levitt's example, from one of the most quoted Harvard Business Review articles, has little if any historical justification (Morris 1990). …

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