Creating a customer as the purpose of business, and the nature and importance of marketing

The statement

The statement is widely attributed to the management thinker Peter Drucker, who argued that the purpose of a business lies outside the business itself, in society, and that it is the customer who decides what a business is. A business exists not to make products or even profits as such, but to create and keep customers by satisfying their wants; profit is the reward and test of how well it does so. It follows that marketing and innovation are the two basic functions of a business: marketing finds and satisfies customers, and innovation provides better ways to do so. Every other activity, production, finance, personnel, exists to support them. The statement therefore expresses the marketing concept: start with the customer.

The statement also implies that a customer is created, not merely found. A firm creates customers when it turns a latent want into effective demand: for example, by making a product affordable through small packs, available through new channels, or known through promotion. A service that lowers its price per use and sells small prepaid packs, for example, can draw in buyers who could not afford it before: customers it has created rather than taken from rivals. In this sense, marketing is the business itself seen from the customer's point of view, and every department shares responsibility for it.

Nature of marketing

1. Customer-oriented. Marketing begins with identifying customer needs and ends with satisfying them.
2. An exchange process. It involves voluntary exchange of value between two or more parties, each offering something the other wants.
3. A continuous, integrated process. It includes research, product planning, pricing, distribution, promotion and after-sales service, all coordinated.
4. Goal-oriented. It aims at customer satisfaction and, through it, at profit, growth and goodwill.
5. Relationship-building. Modern marketing seeks long-term relationships, not one-time sales.
6. Both art and science. It uses research and analysis but also creativity and judgement.
7. Dynamic. It changes with customer tastes, technology, competition and law.
8. Wide application. It applies to goods, services, ideas, places, persons and non-profit organisations.
9. Wider than selling. Selling is only one part of marketing: marketing starts before the product is made, by finding what buyers want, and continues after the sale, through service and relationships.

Importance of marketing

For the business:

1. It creates and retains customers, which is the very purpose of the business.
2. It generates revenue and profit, financing all other activities.
3. It provides market information that guides production, pricing and investment.
4. It helps the firm meet competition and grow into new markets.
5. It builds brand image and customer loyalty.

For consumers:

1. It offers choice, quality and value for money.
2. It makes goods available where and when needed.
3. It informs and educates consumers about products.

For society and the economy:

1. It raises the standard of living by spreading new and better products.
2. It creates employment in selling, transport, storage, advertising and retail.
3. It encourages production and investment, promoting economic growth.
4. It helps develop backward and rural areas by linking them with wider markets.
5. Its techniques promote social causes such as health, literacy and safety.

Conclusion

The statement places the customer at the centre of business. The customer-oriented nature of marketing and its wide importance show why creating and keeping satisfied customers is the business's true purpose, with profit as the result. A firm that forgets this and chases short-term profit at the customer's expense usually loses both customers and profit in the long run.