To explain marketing, we start with pig slaughtering.
1. The Era of Mass Production
The Ford Model T, launched on September 27, 1908, is hailed as the most influential car of the 20th century. From its inception until its discontinuation in 1927, it produced 15 million units, a record that stood for nearly a century. By 1915, when the 10 millionth Model T rolled off the line, 90% of all cars in the world were Fords.
The Model T was so successful that it didn't need any advertising between 1917 and 1923.
Why was the Model T so remarkable? Because it was the first car to extensively use standardized parts and mass assembly line production.
This innovation was inspired by William C. Klann, who visited a Chicago slaughterhouse and observed how the entire butchering process was broken down into specialized steps, with each worker handling one part, repeating the cut, and using conveyor belts. This efficiency caught Klann's attention. He introduced this revolutionary assembly line to the Ford factory, greatly improving production efficiency and reducing costs.
By 1914, Ford could produce a car in 93 minutes, while all other automakers combined couldn't match that output. By the 1920s, the Model T's price had dropped to $300 (initially $850, while competitors typically charged $2,000-$3,000).
Klann is thus known as the father of the assembly line, and the Henry Ford Museum still preserves his documents about the slaughterhouse inspiration.
The Model T not only sold in huge numbers but also set a standard for advanced industrial technology and management, transforming the global auto industry and contributing greatly to industrial and manufacturing development.
At the same time, Frederick Taylor published "The Principles of Scientific Management," emphasizing standardization, division of labor, detailed management, separation of planning and execution, worker training, and piece-rate pay to boost efficiency and cut costs.
The Model T was a perfect embodiment of scientific management, which has had a profound impact on all enterprises today. Taylor is thus regarded as a figure who influenced the industrialization of humanity.
(Frederick Taylor)
In the early 20th century, the biggest concern for companies was production: how to improve efficiency and reduce costs? John D. Rockefeller had already discovered in the late 19th century that integrating exploration, production, transportation, refining, and sales into one corporate system could maximize efficiency and lower costs. His Standard Oil Trust, based on transaction cost theory, may have been the most profitable large enterprise in business history.
Since the problem was production, with a focus on efficiency and cost, marketing from its inception emphasized improving the systemic efficiency from production to consumption.
In 1922, Fred Clark defined marketing as "the efforts made to facilitate the transfer of ownership and physical distribution of goods."
The essence of marketing is circulation, and for circulation, the core is efficiency and transaction costs.
Until 1960, the American Marketing Association (AMA) defined marketing as "the performance of business activities that direct the flow of goods and services from producer to consumer or user." (We will refer to AMA's definitions again later.)
This was the first marketing problem: how to improve distribution efficiency.
2. The Product Era
Then, the Great Depression, which spread from the New York Stock Exchange in 1929 to the whole world, swept through Europe and America and directly led to World War II. The 1930s and 1940s were overshadowed by war, clearly not two decades for business and marketing.
Only after WWII, with the recovery of production, did business flourish again.
Europe was a battlefield, and the war's demand for arms and food stimulated American mass production, expanding global markets. WWII also advanced science and technology, propelling the U.S. economy to superpower status. The 1950s and 1960s saw a golden age for the American economy.
This economic vitality spurred marketing theory and academia, leading to a period of diverse schools of thought.
The 1950s was the decade marketing shifted from a production orientation to a product orientation.
Companies were no longer concerned with production technology and efficiency but with the product itself. If you made a good product, customers would come.
In 1950, Neil Borden began using the concept of the marketing mix, trying to understand the components of marketing. He believed marketers would go further than economists (who only care about price), salespeople (who only care about selling), and advertisers (who only care about media space).
By 1960, Jerome McCarthy clarified this marketing mix with his famous 4Ps: Product, Price, Place, and Promotion. This was actually his teacher Richard Clewett's idea, but McCarthy's summary was more vivid and memorable.
In the same year, Joel Dean introduced the concept of the product life cycle, which Theodore Levitt later endorsed in his famous article "Exploit the Product Life Cycle."
From then on, product became a fundamental and controversial issue in marketing.
(Rosser Reeves)
In advertising, in the early 1950s, Rosser Reeves, chairman of Ted Bates & Company, proposed the famous USP theory: Unique Selling Proposition. This theory emphasized that every advertisement must offer a proposition to the consumer, making clear what benefit they would get from buying the product.
That was the 1950s, when marketing held high the banner of product orientation, helping companies solve product problems: what to produce and what functions to promote.
3. The User Era
In the 1960s, the U.S. economy boomed, but technological progress and intensifying competition led to product homogenization and faster product upgrades. For companies, simply producing a product and telling consumers its benefits was no longer enough. Before producing, they had to know what consumers wanted and what would persuade them to open their wallets.
During this period, the biggest problem was the user.
The 1960s was the decade marketing shifted from a product orientation to a user orientation.
(Theodore Levitt)
In 1960, Theodore Levitt published his seminal article "Marketing Myopia" in Harvard Business Review, which established his place in marketing history. He argued that companies decline because they focus on the "product" rather than the "customer."
A product is just a current means to satisfy a persistent customer need. Once a better product appears, it will replace the existing one. Thus, industries producing "existing products" decline.
This is like the classic marketing anecdote: Steve Jobs said he never did user research. He said if Henry Ford had done market research before inventing the car, the answer would have been "a faster horse."
According to Levitt, carriage makers would be replaced by car makers, but the consumer's need for "faster" is enduring.
If you don't focus on users but only on existing products, any company will be eliminated, no matter how successful or glorious the current product is.
A bit earlier, in 1957, John McKitterick of General Electric proposed the "marketing concept" philosophy, explicitly stating that business activities should shift from the traditional view of "product as the starting point, sales as the means, and profit through increased sales" to a marketing view of "consumer as the starting point, marketing mix as the means, and profit through satisfying consumer needs."
This is considered a revolution in marketing history—the first revolution.
Because it reversed the positions of production and marketing in business activities. Previously, the market was the end of production; now, the market is the start of production. Previously, production determined sales; now, sales determine production.
What a great insight!
This gave rise to Philip Kotler, the "father of modern marketing," who published "Marketing Management" in 1967.
What is marketing? Kotler said marketing is managing consumer demand.
Its strategic system can be expressed as STP + 4P.
STP is strategy: Segmentation, Targeting, Positioning.
4P is tactics: Product, Price, Place, Promotion, as proposed by Jerome McCarthy.
"Marketing Management" has become a major IP in marketing, now in its 15th edition, and remains a standard textbook in many universities.
Today, marketing and advertising agencies still follow Kotler's framework: start with market analysis, find segments and positioning, then design the marketing mix.
This is also a path for creating a business and brand. First, clarify who the users are and their needs, then develop products, set profit models, sales channels, and communication channels.
Of course, we must not forget that "market segmentation" was a concept proposed by Wendell Smith in 1956. Consumers in a market have different needs and seek different products. Therefore, companies must segment the market and choose one segment to develop products for, achieving product differentiation and avoiding homogenization.
This deepens the user orientation. The market is the start of production; sales determine production.
Attention to users extends beyond needs research to psychological exploration.
In 1955, Sidney Levy proposed "brand image," and in 1963, William Lazer proposed "lifestyle."
These are extensions of market segmentation: different segments have different lifestyles, so we should design products and user images (brand image) according to the needs of specific lifestyle groups.
These two fascinating concepts were warmly welcomed by advertising and PR industries. They required companies to spend heavily on advertising to build brand image and lifestyle, which is significant for long-term profitability.
These concepts expanded employment and the advertising industry, creating various profit opportunities. By the 1960s, major ad agencies were competing to tout brand image and personality.
Especially David Ogilvy's Ogilvy & Mather, the advertising godfather.
(David Ogilvy)
Ogilvy said: Every advertisement should be a long-term investment in the brand image. Every product should develop an image; otherwise, it's not a brand.
So from Ogilvy on, ad agencies began to claim they were brand stewards for clients (hence the title "advertising godfather").
Ogilvy's logic was based on the 1960s business environment. Product homogenization made consumer decisions more emotional than rational, so portraying brand image was more important than emphasizing specific product functions.
Moreover, consumers buy not just a physical product but psychological satisfaction, so advertising should give products emotion and personality to meet that need.
Thus, BI replaced USP, and customer orientation replaced product orientation.
That was the fascinating 1960s.
4. The Competition Era
In the 1970s, after the golden 50s and 60s, the U.S. economy suddenly took a downturn.
In 1969, another economic crisis hit the U.S.
This was partly due to the Vietnam War and President Lyndon Johnson's "Great Society" programs, which caused huge fiscal deficits, high national debt, and severe inflation.
It was also due to the resurgence of Germany and Japan, which took away U.S. market share globally, reducing U.S. competitiveness and leading to trade deficits. The U.S. was no longer the only giant in the global market; new competitors had emerged.
Additionally, the 1973 oil crisis caused by the Egypt-Israel war raised oil prices from $3 to $12 a barrel.
In fact, not just the U.S., but the entire Western world was mired in stagflation in the 1970s. High unemployment, high inflation, and business bankruptcies shocked Americans who had come from the golden age.
So why study products and user needs? Survival was the most important thing.
(Jack Trout and Al Ries)
Jack Trout said that the essence of marketing is not to serve customers but to calculate, surround, and defeat competitors.
Marketing is competition-oriented, not demand-oriented.
The 1970s and 1980s were the two decades marketing shifted from a user orientation to a competition orientation.
Trout compared business to warfare—marketing warfare.
The battlefield of marketing is in the consumer's mind; companies must occupy a position in the consumer's mind. This is the book "Positioning," proposed by Jack Trout and Al Ries in 1968 and published in 1981.
Due to intensifying competition, the market was flooded with more and more products. Companies faced not only homogenization but also category differentiation.
For example, shampoo: initially, if you could produce shampoo, customers would buy. Later, when everyone was producing shampoo, you had to study specific needs of some consumers, develop differentiated products, and build a brand.
Now, shampoo categories have differentiated into anti-dandruff, smoothing, nourishing, styling, black hair, anti-hair loss, etc.
With so many products, consumers can't even remember who you are—consumer minds are simple and hate complexity; they can remember at most 7 brands in a large category.
So companies must become the representative of a category to occupy a position in the consumer's mind. The closer the position, the larger the market share.
Then, based on their position in the consumer's mind, companies determine their strategic nature: defensive, offensive, flanking, or guerrilla warfare. This is Trout and Ries's marketing warfare.
However, the concept of marketing warfare was actually researched and discussed by Ray Kroc and Philip Kotler in 1981, applying military theory to marketing.
Trout and Ries didn't publish "Marketing Warfare" until 1986, but they were better at self-promotion: they rented a military tank and drove down Fifth Avenue in New York to sell their book.
But the essence of positioning is managing consumer perception through categories; it's more of an advertising communication concept than a true marketing strategy.
(Michael Porter)
So in 1980, following the competition line, Michael Porter published "Competitive Strategy." Along with his subsequent "Competitive Advantage" (1985) and "The Competitive Advantage of Nations" (1990), Porter became the world's leading authority on strategy and one of the greatest business thinkers, known as the "father of competitive strategy."
How to beat competitors? Professor Porter proposed three generic competitive strategies:
1. Cost Leadership: Even if your product is identical to mine, if I'm cheaper, I win.
2. Differentiation: If everyone is the same, I create differences through personalized value and value-added services to achieve profitability.
3. Focus: Achieve cost leadership or differentiation in a specific market segment.
So the essence of competitive strategy is differentiation; a company has only two strategic choices: low cost or high value.
Cost leadership is actually a form of differentiation.
That's competitive strategy.
When competitive strategy is taken to the extreme, market monopoly theories emerge. The ultimate goal is to occupy the commanding heights of the industry, control the value chain or key channels, raise market barriers and entry thresholds, squeeze out potential competitors, increase customer switching costs, and enhance bargaining power over customers, thereby monopolizing the market.
With the help of positioning, competitive strategy, and market monopoly theories, military terms like strategy and competition suddenly became fashionable in marketing.
A small anecdote: In 1964, when Peter Drucker published "Managing for Results," he originally planned to title it "Business Strategy," but was persuaded by the publisher to change it.
The publisher felt the concept of strategy was too avant-garde and completely unfamiliar to businesses.
Drucker later recalled: "They kept telling me that strategy had always been a military term; politicians might use it for campaign tricks, but business didn't need it."
That was the intense 1970s and 1980s.
The evolution of marketing has gone through product orientation, user orientation, and competition orientation—a complete cycle.
Product, consumer, and competitor form the iron triangle of marketing. Any company's market activities involve producing products, finding and selling to consumers, and defending against and defeating competitors.
5. Openness and Return
After the 1980s, marketing moved toward openness and return.
On one hand, outside the U.S., Japan, Europe, and China rose successively, and economic globalization became a key feature and trend. Especially after the Soviet Union's collapse and the end of the Cold War, economic development became a global theme, the world became more interconnected, and the global village emerged.
In 1983, Theodore Levitt wrote another heavyweight article (if you don't remember this name, see Part 3, the 1960s).
In it, he proposed the concept of global marketing, suggesting that multinational companies offer a uniform product worldwide with uniform communication methods. Overemphasizing local differences would increase costs and lose economies of scale.
This sparked huge controversy: global marketing vs. local marketing, each with its merits.
Perhaps the best solution is HSBC's slogan: "The world's local bank."
Earlier, the concept of social responsibility marketing had been proposed: companies should consider not only business goals and consumer needs but also the long-term interests of the public and society, acting as responsible citizens.
In 1986, Philip Kotler proposed "megamarketing." He added two more Ps to the original 4Ps: Political Power and Public Relations.
21st-century companies must master two new skills: first, how to deal with countries, understanding a country's political situation and barriers to better sell products there; second, how to build a good corporate image in the public eye and assume social responsibility to win public opinion, enabling effective marketing in the global market.
These are the three forces Kotler believes shape modern marketing: technology, globalization, and corporate social responsibility. We can see marketing becoming more open, social, public, and global.
(Philip Kotler)
After adding these 2Ps, Kotler also expanded STP into another 4Ps. So 4P+4P+2P = 10Ps.
The first 4Ps: Probing, Partitioning (market segmentation), Prioritizing (targeting), and Positioning—are strategy.
The next 4Ps: Product, Price, Place, Promotion—are tactics.
The last 2Ps: Public Relations and Political Power—are new marketing skills and forces.
Some call these 10Ps the second revolution in marketing, or perhaps the fifth?
Beyond these 10Ps, Kotler reiterated the importance of another "P": People. This is the most basic and important of all Ps.
Marketing must return to people.
As we discussed earlier, according to the competition school, having a good product isn't enough, nor is capturing consumer needs; you must defeat competitors to thrive.
But unfortunately, when Kodak defeated all other film companies, it found consumers had stopped using film cameras; when Nokia's leadership in mobile phones was unshakable, its mobile business collapsed.
So is defeating competitors enough?
When RT-Mart was sold to Alibaba, founder Huang Mingduan left sadly, saying: "I defeated all my opponents, but lost to the times."
(W. Chan Kim and Renée Mauborgne)
So in 2005, W. Chan Kim and Renée Mauborgne proposed the Blue Ocean Strategy.
They advised companies not to focus solely on beating competitors but to create value for consumers; not to make positioning choices within existing market structures, but to break the existing market structure through value innovation.
Only by aiming to break through competition, starting from user value, redesigning the product value chain, and restructuring the cost structure can you create new consumer demand and move from the red ocean of intense competition, low profits, and lackluster growth to a vast, new blue ocean.
According to competitive strategy, a company must choose between value and cost: either cost leadership or high differentiation. If you want to provide differentiated value, it means higher costs.
Blue Ocean Strategy, however, says that if we shift our focus from the supply side to the demand side, we can achieve both low cost and differentiation through value innovation.
Thus, Blue Ocean Strategy is a correction to competitive strategy (red ocean). It reminds companies that the root of marketing is not defeating competitors but transcending competition through value innovation.
Blue Ocean Strategy is essentially a theory of value innovation.
It creates a differentiated value combination through value innovation, not only satisfying user needs but also making it difficult for competitors to imitate.
In a sense, Blue Ocean Strategy reconciles the two major marketing concepts: user needs and market competition.
Only companies that continuously provide value to users can achieve longevity. This is a return of marketing to people.
At the beginning of this article, we mentioned that in 1960, the AMA defined marketing as "the performance of business activities that direct the flow of goods and services from producer to consumer or user."
It's clear that the essence of marketing is circulation. In 1985, the AMA updated the definition: "Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives." According to this, marketing goes beyond circulation to become a management process including planning, execution, and control.
By 2004, the AMA updated it again: "Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders."
This time, we see that user value has become the new benchmark for marketing. Marketing is creating value and delivering value.
Of course, in this definition, we also see managing customer relationships. This is relationship marketing, proposed by Barbara Bund Jackson in 1985.
She viewed marketing activities as a process of interaction between a company and its consumers, suppliers, distributors, competitors, government agencies, and the public. The core of marketing is to establish, develop, and consolidate relationships with these organizations and individuals.
The goal of a company is not to create purchases but to build relationships. Only by establishing close, long-term relationships with users can you continue to profit.
After relationship marketing came CRM (Customer Relationship Management), proposed by Gartner Group in 1999, and around the same time, CAM (Customer Asset Management).
From relationship marketing to Blue Ocean Strategy, CRM, and CAM, we can feel marketing's return to people: creating user value and building user relationships.
Since the 1960s' user needs and brand image, marketing has once again raised the banner of user orientation.
Since 1912, when Harvard scholar J.E. Hagerty published the first "Marketing" textbook, marketing has a history of over a hundred years.
In this century, many marketing theories with different perspectives have emerged in different periods. But we must not forget that different theories were born in different social and business environments, addressing different problems companies faced. Therefore, different marketing theories were developed to solve the operational problems of enterprises.
The root of marketing is to help companies solve problems.
If you ask me what marketing strategy is, I can only tell you that marketing is about solving business problems. How? By solving problems from the perspectives of product, user, and competition.
A company will encounter many problems during its growth. Different companies face different problems. But ultimately, the problems are either product-related, competition-related, or user-related.
Product, User, Competition
Product, User, Competition
Product, User, Competition
This is the unchanging iron triangle of marketing, the continuous cycle of concepts in a century of marketing history.
Source: 空手 (ID: firesteal13)
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