THE IMPACT OF THE MARKETING CONCEPT ON NEW PRODUCT PLANNING ·  · 2014-01-19of the adoption of the marketing concept on new product planning. ... through formal education, company

LEIGHLAWTON&A. PARASURAMAN

A survey of marketing literature reveals that little, if any,empirical research has been done to examine the impactof the adoption of the marketing concept on new productplanning. The purpose of this paper is to describe a researchstudy done to fill this void.

THE IMPACT OF THEMARKETING CONCEPT ON NEWPRODUCT PLANNING

A number of empirically and conceptually basedpapers related to the marketing concept have

appeared in the hterature. The empirical studieshave, for the most part, been confined to measuringthe extent of adoption and implementation of theconcept by business firms (Barksdale and Darden1971; Hise 1965; Lusch, Udell, and Laczniak 1976;McNamara 1972; Vizza, Chambers, and Cook 1967).Some conceptually based papers touting the valueof the marketing concept have discussed the benefitsto be derived from adopting it (Allen 1959; Veibranz1967) and suggested ways to implement it (Felton1959; Wakefield 1958). However, others have beencritical of the marketing concept. They have raisedquestions about the desirabihty of adopting it (Belland Emory 1971; Lundstrom 1976; Sachs and Ben-son 1978) and have questioned the feasibihty ofimplementing it (see Stampfl 1978).

Leigh Lawton is Associate Professor of Marketing at theCollege of St. Thomas, St. Paul, MN. A. Parasuramanis Assistant Professor of Marketing, College of BusinessAdministration, Texas A&M University, College Station,TX. The authors wish to express their appreciation tothe Graduate College of the University of Northern Iowafor financial assistance for this study.

With respect to product planning, it has beensuggested that adopting the marketing concept mayresult in increased reliance on customer-orientedsources for new product ideas (Marcus et al. 1975,p. 10; McCarthy 1978, p. 32). There is evidenceto support this beUef. General Electric has statedthat consumer wants dictate the direction for itsdesigning and engineering operations (Corey 1961).KoUat, Blackwell, and Robeson (1972) have report-ed, *'As increasing numbers of companies haveadopted the marketing concept, added emphasis hasbeen placed on customer-oriented sources of newproduct ideas" (p. 235). Conceptual papers haveargued that this increased dependence on customer-oriented sources for new product ideas may leadto a proliferation of imitative products at the expenseof breakthrough innovations (Kerby 1972; Lawtonand Parasuraman 1977). Furthermore, since themarketing concept emphasizes a customer orienta-tion, adoption of the concept imphes greater rehanceon marketing research in various stages of newproduct planning. Tauber (1974) has suggested thatrehance on marketing research between the ideageneration and commercialization stages may hinderthe introduction of potentially successful break-through innovations. While reUance on customer-oriented sources appears to be increasing, U.S.

Journal of MarketingVol. 44 (Winter 1980), 19-25 Impact of Marketing Concept on New Product Planning / 19

companies' efforts toward the development of newproducts seem to be decreasing (for example, seeBusiness Week 1976; Dun's Review 1976; Vander-slice 1977). This raises an intriguing question—Isthe adoption of the marketing concept contributingto the decline of innovativeness in U.S. firms? Themotivation for the present study derives from theabsence of empirical studies to answer this question.This study was designed to test the followinghypotheses:

• The greater the extent of adoption of themarketing concept by a firm, the more hkelyit is that it will use customer-oriented sourcesfor new product ideas.

• The greater the extent of adoption of themarketing concept by a firm, the greater itsutilization of marketing research between theidea generation and commerciahzationstages.

• The greater the extent of adoption of themarketing concept by a firm, the less innova-tive its new products will be.

Description of the StudyOperationalization of VariablesTo test these hypotheses, it was necessary tooperationalize three key variables (1) the extent ofadoption of the marketing concept, (2) customer-oriented sources of new product ideas, and (3) theinnovativeness of a new product.

By the very nature of the task, it is clear thatattempts to measure the extent of adoption andimplementation of a philosophy such as the market-ing concept is a difficult undertaking. Surprisingly,despite the appearance of a number of articlesdiscussing various facets of the marketing concept,relatively little has been written concerning howto measure the degree to which a firm has adoptedit. Attempts to measure the extent of adoption havetaken two forms: (1) Indications that the organiza-tional structure of the firms and the responsibilitiesassigned to marketing reflect a marketing emphasis(see Hise 1965; McNamara 1972), (2) Expressedagreement with statements embodying the tenetsof the concept (see Lusch, Udell, and Laczniak1976).

Specifically, the extent of adoption of the mar-keting concept was measured by summing the scaledvalues of responses to the following four items:

1. Thorough knowledge of the behavior andneeds of our customers is the focal point

of all the marketing activities of our firm.Strongly Neither agree StronglyAgree Nor disagree Disagree7 6 5 4 3 2 1

2. To what extent are the activities andefforts of the various departments withinyour firm coordinated to insure the satis-faction of the users of your products:Extremely well Not at allcoordinated Coordinated7 6 5 4 3 2 1

3. How often does the highest ranking mar-keting executive in your firm participatein top-level management decisions?Always Occasionally Never7 6 5 4 3 2 1

4. What percentage of management-levelpersormel in your firm have had someexperience in the marketing area (eitherthrough formal education, company train-ing, or work experience)?0-20% 21^0% 41-60% 61-80% 81-100%

1 2 3 4 5

The possible range of values for the summed mar-keting concept adoption score was four to 26.

To test the first hypothesis, it was also necessaryto operationalize "customer-oriented sources" ofnew product ideas. For purposes of this study, thisincluded complaints or suggestions from ultimateusers and formal research of ultimate users andtheir needs. Other sources of new product ideas(i.e., "noncustomer-oriented sources") included inthe study were suggestions of suppliers, analysisof relevant published infonnation, the firm's re-search and development department, internalsources other than research and development, andanalysis of competitors' products.

The second hypothesis required ope rationalizing"product innovativeness." Considerable attentionhas been given to determining what constitutes anew product (Hisrich and Peters 1978; Robertson1971). The two principal dimensions of innovative-ness are: (1) The degree of change in the user'sconsumption patterns necessitated by adoption. Theadoption of a new product could entail little orno change, moderate change, or substantial change.(2) The degree of difference between the newproduct and those already on the market. A newproduct can range from a minor to a major alterationof an existing product, to an entirely new productcategory. For purposes of this study, respondentswere asked to indicate their perceptions of howinnovative the company's new product was on eachof the two dimensions of innovativeness. That is

20 / Journal of Marketing, Winter 1980

TABLE 1Profile of Respondents and Nonrespondents

Number of Employees:Fewer than 100100 to 499500 to 9991000 and overNot available

Percentage of:Respondents Nonrespondents

Total(Base =

X̂ = 4.83'; df — 3—No significant difference between respondents and nonrespondents-'Analysis excluded the "Not available" category due to inadequate eel

Annual Sales Revenue:Less than $5 million$5 million to less than S15 millionS15 million to less than S50 millionS50 million to less than S100 millionS100 million and overNot available

X^ = 7,10, df ^ 5—No significant difference between respondents and

SIC Groupings Industry Types20-21 Food and tobacco22-23 Textile24-25 Lumber and furniture26-27 Paper and printing28-29 Chemical and petroleum30-32 Rubber, leather, glass33-34 Metal35-36 Machinery37-39 Transportation, measuring instruments.

miscellaneous

X^ = 4.73; df = 8—No significant difference between respondents and

size.

30391118

2

100%107) {Base =

Percentage of:

37366

210

100%393)

Respondents Nonrespondents

Total(Base =

nonrespondents.

3027191095

100%107) (Base =

Percentage of:

3623156

137

100%393)

Respondents Nonrespondents

Total(Base =

nonrespondents.

1011

5878

1425

12

100%107) (Base =

987988

2020

11

100%393)

the respondent was asked how much behavioralchange was required of the user and how muchthe new product differed from existing products.All product related information obtained was forthe most recent new product introduced by theresponding firms.

SampleA random sample of 500 manufacturing firms wasselected from Dun & Bradstreet's Million Dollarand Middle Market Directories (1978). A question-naire and a cover letter were mailed to the presidentof each firm. A second questionnaire maihng wasmade to nonrespondents five weeks later. A totalof 138 responses was received. Of these, 121 (24%)

questionnaires were completely filled out, but 14of the companies had introduced no new productsin the recent past. Therefore, subsequent analyseswere based on responses from the remaining 107firms. Chi-square tests were run to determinewhether significant differences existed betweenrespondents and nonrespondents in terms of thedistribution of SIC codes, sales revenue, andnumber of employees within the two groups. Thesetests showed no significant differences between thetwo groups on any of the three dimensions, suggest-ing that nonresponse bias was negligible. A profileof the respondents and nonrespondents, as well asthe results of the significance tests, are given inTable 1.

Impact of Marketing Concept on New Product Planning / 21

Twenty of the 107 questionnaires showed therespondents held some marketing title (such asVP—Marketing, Marketing Director, MarketingManager, etc.). The remaining 87 respondents (in-cluding 59 presidents) did not explicitly include theterm "marketing" in their titles. In subsequentanalyses, these two groups were labeled as "mar-keting" and "nonmarketing," respectively, al-though it is possible that some individuals in thelatter group may have been responsible for market-ing decisions. The total sample of 107 new productsconsisted of 69 industrial products, 35 consumerproducts, and 3 identified as being both.

Results of the StudyPrior to examining the resuhs, the "four to 26"scale of marketing concept adoption scores waslinearly transformed to an equivalent "zero to 100"scale, to make the scale values easier to interpret.The actual scores obtained for the 107 firms rangedfrom 38 to 100 on the transformed scale, with amean value of 79.4. Interestingly, the mean conceptadoption score for the marketing group of respond-ents was 74.2, as compared to a score of 80.5 forthe nonmarketing group. A t-test showed these twomeans to be significantly different. While one canonly speculate on this surprising finding, one plausi-ble explanation is that the marketing group as awhole may be indirectly expressing a sense ofdissatisfaction with the importance given to market-ing in their firms. In this research, the 107 firms

were grouped into three categories based on thedistribution of marketing concept adoption scoresas shown in Table 2. The points used to dividethe sample into the low, medium, and high categoriesof marketing concept adoption were chosen to makethe categories sufficiently different while ensunngan adequate number of units in each category.

Chi-square analysis of the relationship betweenextent of adoption of the marketing concept andtype of source of the new product idea was per-formed. The first hypothesis suggests that the great-er the extent of adoption of the marketing concept,the greater the likelihood that a firm will use acustomer-oriented source. As Table 3 indicates, thechi-square analysis does not confirm this. Further-more, when this analysis was performed separatelyfor industrial and consumer products, no significantrelationship between the extent of concept adoptionand the use of customer-oriented sources was foundin either instance. Likewise, when only the re-sponses of the nonmarketing group were considered,no significant relationship was found between con-cept adoption and the use of customer-orientedsources. The size of the marketing group wasinsufficient to statistically test this relationship forthe marketing respondents alone. These findingssuggest that adoption of the marketing concept, asmeasured in this study, does not have a significantimpact on the sources of new product ideas.

The second hypothesis suggests a positive rela-tionship between adoption of the marketing conceptand the use of marketing research at various stages

TABLE 2Relative Extent of Adoption

Extent of Adoptionof Concept

Low

Medium

High

of the Marketing Concept

Concept AdoptionScore

384658626569

73778185

889296

100

Number ofCompanies

112586

9161911

12746

Companies perCategory

23

55

29

Total 107

22 / Journal of Marketing, Winter 1980

of new product planning. Chi-square analyses wererun between the relative extent of adoption of themarketing concept—low, medium, and highlevels—and whether or not marketing research wasused at different stages of new product planning.As Table 4 shows, the extent of adoption of themarketing concept has little or no influence on theuse of marketing research between the idea genera-tion and commercialization stages. Furthermore, therelationship between marketing concept adoptionand the use of marketing research was examinedseparately for industrial and consumer products,as well as for the marketing and nonmarketing

groups. None of these separate analyses showedsupport for the hypothesized relationship.

Hypothesis three postulates a negative relation-ship between the extent of adoption of the marketingconcept and the innovativeness of the new product.As mentioned earlier, the degree of innovativenessof each new product was measured on two dimen-sions—degree of difference from existing productsand extent of modification of user behavior—basedon the perceptions of the responding executives.Table 5 shows that the extent of adoption of themarketing concept is not significantly related toeither dimension of product innovativeness. No

TABLE 3Chi-Square Analysis of Relationship Between Marketing Concept Adoption and Source of NewProduct Idea'

Named Customer-OrientedSource for New Product Idea

Y e s "Low 6

Relative Extent of Adoption of Marketing Concept Medium 10

High

No17

45

23

X' = 0.6209 df = 2Level of significance ^ 0.7331

'Of the 107 firms in the survey the percentage distribution of firms that used each source of idea for their new productswas as follows: Customer Oriented Sources—Complaints or suggestions from users (10.3%), Formal research of users andtheir needs (11.2%), Non-customer Oriented Sources—Research and development (16.8%), Internal sources other than R&D(33.6%), Analysis of competitors' products (29,9%). Analysis of relevant published information (8.4%), Suggestions of suppliers(11.2%). Also, 23 of the 107 firms used multiple sources for the same new product.

•*A company was classified under the "Yes" column as long as it named at least one customer-oriented source, irrespectiveof whether or not it also named a noncustomer oriented source for the same product

TABLE 4Chi-Square Analysis of Relationship Between Marketing Concept Adoption and Use of MarketingResearch in New Product Planning

Extent of Adoption of the Marketing Concept with: Chi-SquareDegrees ofFreedom

Level ofSignificance

Use of any marketing research {52.3%)*

Use of Product concept testing (19.6%)

Use of research to determine appropriate product form(25.2%)

Use of research to determine appropriate pricing, promotionand/or distribution strategy (26,2%)

Use of test marketing (25.2%)

2.37

2,28

0.75

0.30

5,32

2 0,3064

2 0.3192

2 0.6856

2 0,86142 0.0700

'The percentage figures refer to the percentage of the 107 firms that used each type of marketing research in their newproduct planning. Some firms used more than one type."While this relationship appears to approach significance (at the -05 level), examination of the chi-square table revealedthat the relationship was curvilinear; i.e., firms which were "Medium" in adoption of the marketing concept tended touse test marketing more often than the "Low" or "High" categories. Since no good a priori explanation exists for thistype of relationship, it is believed to be spurious.

Impact of Marketing Concept on New Product Planning / 23

TABLE 5Chi-Square Analysis of Relationship Between Marketing Concept Adoption and Innovativeness ofthe New Product

Magnitude of Difference BetweenNew Product and Existing Products

Low Medium HighLow 12 7 4

Relative Extent of Adoption of Marketing Concept Medium

High

19 25

12 7

X ' = 6.08 df = 4Level of significance = 0.1934

11

10

Magnitude of Behavioral ChangeRequired of User

Relative Extent of Adoption of Marketing Concept

Low

Medium

High

Low8

12

9

X' = 3.68 dfLevel of significance

Medium1022

11

= 0.4503

High3

18

8

significant relationship was found between market-ing concept adoption and either dimension of inno-vativeness when only industrial products or non-marketing respondents were analyzed separately.Chi-square analysis to examine this relationship forconsumer products, and for the marketing group,could not be meaningfully done due to inadequatecell sizes.

In summary, the results of this study failed tosupport any of the three hypotheses. The findingsthus suggest that the extent of adoption of themarketing concept has httle impact on new productplanning.

Discussion and ConclusionsTo date, theoretical speculation suggests that theadoption of the marketing concept should influencenew product planning. However, the empirical find-ings of this study find no evidence to support thiscontention. Several possible explanations may beadvanced to account for this discrepancy.

It is possible that this study did not adequatelymeasure the extent of adoption of the marketingconcept. However, as discussed earlier, the mea-surement instrument used was patterned after mea-surement procedures used in earlier studies. Ex-pressed agreement with the tenets of the conceptas well as evidence that the organizational structureof the firm reflected a marketing orientation wereused to determine a firm's extent of concept adop-tion. Nevertheless, the soundness of the conclusions

of this study are dependent on the validity of theinstrument used for measuring the extent of conceptadoption. It is possible that the behavioral measures,such as using consumers as sources of new ideasand conducting marketing research, are themselvesa better measure of marketing concept adoptionthan the instrument used here. Thus, there is aneed to develop alternative measurement instru-ments and to use those instruments to replicatethis study.

If the procedures used for measuring the extentof adoption of the marketing concept were adequate,the results of this study would suggest that adoptionof the concept is not an impediment to the develop-ment and introduction of breakthrough innovations.Hence, theoretical discussions criticizing the mar-keting concept's inhibiting effect on new productplanning may need to be reexamined. One possibleexplanation for the resuhs of this study beinginconsistent with theoretical speculation about theinfluence of the marketing concept on productinnovativeness is that finns may merely be payingUp service to the concept without actually imple-menting it. Due to the popularity of the marketingconcept, companies may be anxious to cash in onthe benefits which are supposed to be derived fromits adoption. As Lavidge (1966) has suggested, ifthe people charged with implementing the conceptdo not really understand it or are unable or unwillingto make the needed changes, attempts at imple-mentation may be resulting in companies assumingits trappings without adopting its substance.

24 / Journal of Marketing, Winter 1980

Finally, since the present study focused onlyon new product planning, any conclusions regardingthe impact of marketing concept adoption on other

areas of product or marketing planning are beyondits scope.

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