Journal of the Academy of Marketing Science Spring 1975, Vol. 3, No. 2, 205-213

Reflections On the Future of Marketing

William L. Shanklin, D.B.A.

Western Kentucky University

Social observers have warned for years that, if mankind is to survive, the pace of consumption of t'mite resources must be dampened and the physical environment protected. For instance, Werhner Von Braun has characterized the planet Earth as a spaceship upon which all passengers share a common destiny of their own making. The caveats have been largely ignored but recent shortages in fuel food, paper, impending scarcities in other key industries, and unclean air and water have begun to disturb more people.

If resource scarcities, pollution, and the concerns for conservation and posterity that they foster become more prevalent in the years ahead, it is likely to have a marked effect on the institution of business. Historian Arnold Toynbee has predicted the ultimate demise of free enter- prise; in its place he envisions authoritarian governments which will be brought about by the necessity to control the manner in which the en- vironment is used. Although predictions along this line are probably too severe, most individuals would agree that current trends, when extrapo- lated, portend increasingly rigorous political, legal, and social demands upon business which will inhibit its freedom. Formulators of public policy will inexorably press for corporate attention to consumer welfare~ For example, proposals have already been made in the Congress of the United States that oil companies be converted to utilities because, allegedly, they are reaping excessive profits from a contrived energy crisis.

Change per se is not likely to require a move away from the primary corporate objective of profits. However, attaining profits will be more

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difficult under an expanding multiplicity of considerations, including materials shortages and ecology. For example, at the same time that the oil colnpanies are being criticized for not producing more, they are being attacked for their lack of ecological concern in connection with the tram- Alaskan pipeline, offshore drilling, and the possible utiliTation of shale- derived oil. In response to the new and stringent restraints on business enterprise, it seems likely that many of the present-day purposes, goals, and strategies of the various bnsine~5 ftmctions will require alteratiom.

Because marketing includes the two major, and frequently maligned demand-stimulating activities of advertising and ~LleS, it seems particularly vuinelable to transformation. What place is there for demand-stimulating activities in a nation and a world where conservation of limited resources, frugality, and ecology are all4mportant bywords, ignored only by the irreverent? Will marketing and its practitioners, academicians, and stu~ dents be relegated to a relatively obscure status, unneeded and disdained denizens of a past golden age of plenty? Will they be viewed as would-be perpetuators of a mentality of consume, consume, consume which debases humans and depletes vital inanimate resources?

In posing these questions, the intention is not to build a strawman to be conveniently vanquished, h~tead, the objective is to raise questions designed to stimulate thought by mdividual~ interested in ~ e direction which marketing will take in the immediate and not-so- immediate future. The attempt in this article is to illustrate why and how marketing will continue to remain an essential force in a seemingly unfavorable ambience.

MARKETING'S FUTURE

Ma[keting has always shown remarkable plasticity, with the capacity to be developed and adapted as the needs of the times dictate. Robert Keith (1960) has cogently delineated how marketing has progressed throughout the eras of industrial development i~. the United States. Marketing has moved from being a nonentily in the early clays ot industry, when lhe production function was preeminent, 1o a position of prominence and parity with other business activities in the latter part of the twentieth century. Keith envisions the era of the "marketing company" coming next wherein all corporate efforts will emanate from the desire to help the constuner to fulfill his needs.

An important trend in the United States, and to a lesser extent in other advanced nations, should ensure a significant role for marketing in con-

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tinuing economic development. The trend referred to is the rapid growth of the comparatively resource-conserving service sector of the economy vis-fi-vis the product or material goods sector.

It is not a revelation to predict that services represent the wave of the future. Many individuals share this view. For example, E. B. Weiss (1969), who is something of a seer when it comes to predicting economic trends, has observed:

� 9 we are the first nation in which more than half of the employed population is not involved in production in farm and factory, but in service. . , in ten years, well over 60 percent of those employed will be engaged in service functions, and in 20 years, thar figure may reach an incredible 80 percent. It required almost 40 years for employment in service to grow from 40 percent to over 50 percent of total employment; from the present 50 percent to 80 percent in 1990 would represent a jump of 60 percent in 20 years.

According to Victor Fuchs (1968), virtually all the net growth in em- ployment in the United States since the second world war has occurred in services. Total employment in the United States in 1947 stood at approxi- mately 57 million; by 1967, it was about 74 million. Most of the increase occurred in institutions that provide services. Fuchs cites a number of examples to dramatize the phenomenal growth of services. The increase in employment in the field of education between 1950 and 1960 was greater than the total number employed in the steel, copper, and aluminum indus- tries in either year. The increase in employment in financial firms between 1950 and 1960 was greater than total employment in mining in 1960. The increase in employment in the health field between 1950 and 1960 was greater than the total number employed in automobile manufacturing in either year�9 Between 1947 and 1965 alone, there was an increase of 13 million jobs in the service sector compared to an increase of only 4 million in industry and a decrease of 3 million in agriculture.

Statistics verify that service industries are booming�9 But why are serv- ices so attractive? What is the causality? William Regan (1963) believes that the growth of services is a logical result of several converging environ- mental forces. As the marginal attraction of services increases faster than that for goods, entrepreneurial capital and business managements are turn- ing more to the development of service markets. Having exhausted most of the visible growth potential in domestic markets for physical goods and physiological wants, large scale manufacturing enterprises increasingly have

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turned to other markets. Another author (Bennett 1969) lists five f'man- cial reasons for the attractiveness of services, compared to products. First, initial capital investment is apt to be lower. Second, cash tieup is likely to be smaller throughout the life of the business. Raw materials and in- process inventories to not have to be trimmed to recover cash when busi- ness activity recedes. The problem of obsolescent inventory is eliminated. Third~ cash flow begins to come through in a shorter period following the original investment. Fourth, although manpower needs may be higher in a service company (factories have been automated longer), this will change. Computer installations in service industries are beginning to lessen per- sonnel requirements. Fifth, service industries are not recession proof but they have come down more slowly in business lulls.

Included in the service sector is a vast array of intangibles provided by governmental institutions and by countless non-governmental, non-profit organizations. Philip Kotler (1974) reports that the non-profit sector now comprises more than 20 percent of the United States economy. These institutions have not historically been marketing oriented, nor are they today. However, Kotler believes that non-profit institutions are generally showing signs of marketing consciousness.

Increased interest in the application of marketing techniques to non- business problems is manifested in a variety' of efforts-e.g., in the use of professional marketing people to raise funds for colleges and universities; in massive promotional campaigns to obtain volunteers for the armed forces; and in logistical endeavors to alleviate inner-city congestion. In response to what some educators evidently feel will be a lasting trend, a few business schools are now offering graduate courses which focus on management within non-profit organizations.

Marketing, as a tool and as a way of thinking about meeting public problems, should slowly but surely propagate within non-profit private and public organizations as these institutions seek new solutions to mount- ing and pressing problems. For example, marketing research can be instru- mental in both identifying societal problems and in providing information needed to formulate solutions (the Food and Drug Administration, the U. S. Travel Service, and a number of other arms of government are already using marketing researchers). One import of increased marketing applications by non-business structures is that additional marketing per- sonnel will be required to staff newly created marketing positions.

In addition to the need for individuals with marketing expertise that will arise from the growth in business, governmental, and non-profit services, a need will remain within industries producing and distributing

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tangibles. However, public concern for ecology and resource conservation, vicissitudes in other societal attitudes, and technological advances may necessitate innovative approaches to marketing practices. Several projec- tions are discussed below.

BEYOND DEMAND STIMULATION

Demand stimulation is intrinsic in advertising, sales, and related promo- tional activities. The purposes of these activities have traditionally been viewed as being twofold-i.e., to change the location and the slope of the demand curve. Promotion is usually meant to stimulate demand and to make it more inelastic for the goods and services of a given company or industry. With recent shortages, these purposes no longer seem to be wholly descriptive. For instance, gas and electric utilities and the oil com- panies have lately attempted to discourage demand in their industries.

One unfortunate denouement stemming from encouraging demand, and then not fulfdling it, is the consumer discontent that arises from uncon- firmed expectations. Prospective owners of all-electric homes, to cite an example, were once glowingly apprised of the advantages of ownership of such homes but subsequent developments did not allow electric utilities to continue to supply low-cost power or, for that matter, any power at all for short periods of time. CBS news reported that a California woman's electric bill rose from $12 to an astonishing $300 per month in some two years. Injustices like this one not only worsen the public's existent suspicions of business but also invite governmental intervention.

Perhaps a superior statement of purpose for promotional activities would be that promotion is concerned with controlling or managing de- mand. The statement is sufficiently encompassing to account for situations where efforts are made to stimulate, to moderate, or to stifle demand for a class of goods or services.

Modifications in the normal modes of thinking of advertising and sales people will be required by the new concept of promotion which is emerging. Attempts to measure advertising effectiveness in terms of sales generated by advertising expenditures may well become of diminishing importance. The role of the salesman may gradually become one of counselor or consultant to customers, particularly with respect to supply and demand conditions. Accompanying innovations in methods for com- pensating salesmen would be needed. It is not inconceivable that industrial and institutional sales personnel could, at times, be rewarded for dis-

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couraging orders. The "get that order" kind of salesman may give way to individuals schooled in the tactful, orderly allocation of goods that corpo- rations have to offer. This occurrence would be beneficial to customers because uncertainty pertaining to the availability of goods would be reduced. The customer might not always be able to procure all the goods he wants but at least he will usually be informed of this fact in advance. In addition, managements who are intent on profit maximization, in lieu of sales maximization, should benefit since their factories can be operated at more efficient levels of production. More accurate production sched- uling-with the attendant cost savings that come from continuous runs- would also be facilitated.

Profound changes should be experienced in product planning and product development in the ensuing years. It is evident that planned obsolescence cannot remain a workable corporate strategy after public concern for resource conservation becomes pervasive and shortages com- monplace. Of necessity, inordinate emphases on style and fashion will have to be replaced by more stress on product durability and longevity. New businesses such as refurbishing centers, where products will be reconditioned instead of traded-in or discarded, will assist in the conserva- tion of resources. These centers should also assume much of the man- power slack which is likely to result from substantial personnel layoffs in the style-conscious manufacturing industries. One New England textile enterprise is presently taking an unprecedented step toward encouraging sensible consumption in clothing. The firm has representatives demon- strating the art of updating old clothes, into modem styles, to women in cities and towns throughout the United States.

Product planners and developers are likely to intensify their efforts to fred synthetics or substitutes for products in short supply. Soybeans, for example, have been found to be a good high-protein substitute for meat and reportedly can be flavored to taste like various meats. However, their marketability is still open to question.

Planners and developers of products will labor under additional con- straints imposed by environmental considerations. The short- and long-run availability of materials needed to manufacture a proposed new product, the ecological effects of the container which houses the product, and many other factors will be of prime importance in the planning process.

Adjustments in the functions of planning and developing products will require an effective liaison with marketing research-an "on line" liaison in the parlance of computer science. Marketing research is now, and will continue to be the activity which provides the information from the con-

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sumer and industrial user needed to plan and to develop successful products. Yet, marketing researchers will be asking new kinds of questiom as time progresses. For instance, would people rather lease the product or buy it? If the company produces an ecologically superior product will it be accepted in the marketplace? If so, how much of a premium are con- sumers willing to pay for the sake of ecology? Will consumers be respon- sive to an imitation in lieu of the genuine article-e.g., will they purchase a steak made of soybeans? Can advertising be effective in educating the masses concerning the social merits of consuming one product in place of another?

Marketing researchers are likely to become more involved in long-range corporate planning than is usually the case today. Less of their time will be devoted to "fire-fighting" efforts on short-range problems. This change may mean that a new breed of researchers, with exposure to individuals and information from diverse areas of inquiry, will occupy key marketing research positions. For example, in predicting demand it will not suffice to be merely competent in mathematically extrapolating quantifiable variables. Knowledge of nonquantifiable variables such as changing atti- tudes toward family size, medical advances which may portend an increased average life span, the evolving role of women in society, and permutations in the work ethic will be requisites to accurate consumption predictions.

Lastly, more attention in the coming years is certain to be devoted to the logistics function within corporations marketing tangibles. It is an area where there is frequently room for meaningful cost reductions. Cost savings are often possible to achieve because many physical distribution activities lend themselves to mathematical optimization techniques and to automation. The favorable effects that cost decrements have on profits should increasingly interest top executives in better logistical management. Moreover, improving profits through cost-cutting is especially compelling in an economy where augmenting profits by raising prices is often diffi- cult, due to government policies and jawboning, and improving profits by expanding sales volume is sometimes impractical because of shortage. The time appears to be rapidly approaching when physical distribution will rival the demand-stimulating marketing activities in importance.

CLOSING COMMENTS

A slightly modified adage applies well to marketing; i.e., necessity is the mother of adaptation. Throughout the various eras of industrial evolution,

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marketing has proved to be sufficiently adaptable to meet the chal- lenge of fulfdling ever-changing consumer needs. This fact provides a reason to believe that marketing will continue to demonstrate adequacy in a new era wherein services will dominate the economy, materials scarcities will be delimiting, and ecology will be an over- riding concern.

Effective adaptation of marketing to a changing environment and to new types of problems will require a close working relationship between marketing practitioners and academicians. For example, the discovery of new and better ways to augment marketing productivity and to improve methods of distribution cost analysis will be expedited by a two-way flow of ideas. On-the-job testing of theoretical formulations and applied tech- niques will be essential. Cooperation in ref'ming marketing theory and principles may be necessary in order to accommodate the marketing of intangibles and ideas.

At the outset of this article, a number of questions were posed relating to the future of marketing. It is this writer's belief that the clarion of the marketer of the future will be essentially the same as it is t oday - i.e., to deliver a Standard of living. However, attainment of this noble goal will call for changes in marketing practices, ingenuity, and a scientific approach to advancing marketing technology.

REFERENCES

Bennett, K.W. 1969. "Service Industries: A New Frontier." Iron Age 203 (June 12) 78-79.

Fuchs, Victor R. 1968. The Service Economy. New York: Columbia University Press.

Keith, Robert J. 1960. "The Marketing Revolution." Journal of Marketing 24 (January) 35-38.

Kotler, Philip. 1974. "Growing Nonprofit Seetor, Now 20% of Economy, Beeoming Marketing-Conscious." Marketing News VII (January 15).

Regan, William J. 1963. "The Service Revolution." Journal of Marketing 27 (July) 57-62.

Weiss, E. B. 1969. "Marketers: Don't Ignore Our Growing Service-Oriented Society." Advertising Age 40 (May 5) 104-107.

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ABOUT THE AUTHOR

WILLIAM L. SHANKLIN is Associate Professor of Marketing at Western Kentucky University and is a faculty member in the General Electric Corporation's Insti tute of Retail Appliance Management. He holds the M.B.A. degree from the University of Kentucky and the D.B.A. degree from the University of Maryland. He has previously taught at Maryland,

was associated with the Georgia-Pacific Corporation, and has published and presented a number of professional papers. He is also active as a business consultant.