Drucker on Marketing: Lessons from the World's Most Influential Business Thinker

Drucker on Marketing: Lessons from the World's Most Influential Business Thinker

by William Cohen


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Product Details

ISBN-13: 9780071778626
Publisher: McGraw-Hill Professional Publishing
Publication date: 10/19/2012
Pages: 288
Sales rank: 464,534
Product dimensions: 6.10(w) x 9.10(h) x 1.30(d)

About the Author

WILLIAM A. COHEN, PhD, a retired Air Force major general, has written two previous books on Drucker. He was the first graduate of the PhD program Drucker developed and taught for practicing executives at the Peter F. Drucker and Masatoshi Ito Graduate School of Management at Claremont Graduate University where Cohen now serves on the Board of Visitors. He writes a monthly column,
"Lessons from Peter Drucker," for several Internet newsletters including Human Resources IQ and is president of the California Institute of Advanced Management,
located in El Monte, California.

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Drucker on Marketing

Lessons from the World's Most Influential Business Thinker


The McGraw-Hill Companies, Inc.

Copyright © 2013William A. Cohen
All rights reserved.
ISBN: 978-0-07-177862-6



Two Different Views on the Development of Marketing

Traditionally marketing theorists have categorized marketing by different eras of marketing development. These eras are important to understand because they not only help to explain the development of marketing thought, but if we can understand why these eras occurred, they will help us in formulating marketing strategies in a variety of environments in both the present and the future. Drucker did not use this approach. Nevertheless, we need to understand this traditional approach before we look at Drucker's analysis of marketing development because the two differ conceptually, and these differences provide insights necessary to understand the basis of Drucker's thinking. While different writers and marketing researchers have given different titles to these eras of marketing development, they can be generalized as follows:

1. Craftsmen and simple trade era. The manufacturer, a craftsman, traded for what he made for something he wanted or needed. A caveman no longer able to actively participate in hunting, but with a developed skill in design and construction of weaponry, was still able to earn his keep and was considered valuable to the tribe through the production of hunting tools. This progressed through other skilled craftsmen selling their services to obtain goods or services that they required.

2. The production era. The production era arrived as a result of the development of technology. This greatly enhanced our ability to produce formerly scarce goods. Once a worker struggled for months to meticulously produce a single book that few people could afford to buy. The invention of the printing press permitted satisfactory reproduction of thousands of copies of the same work over the same amount of time it took to produce a single copy in the past. This brought the cost down significantly, and now many people could afford the product. Previously the emphasis was simply on producing the product, since buyers who could afford the expense competed for the limited number of products available. Now the emphasis shifted to reducing the cost of production in order to further lower the price in order to win additional buyers.

3. The selling era. Those who were doing the selling, whether manufacturers or intermediaries who bought products from the manufacturer for resale or their agents who earned a percentage from all products sold, recognized that it was one thing to have competitive features, but in addition the prospective customer had to know about these features and to understand and be persuaded to purchase the product because of the benefits that resulted from these features. At the same time, since more advanced production methods had led to plenty of available product, the bigger challenge for producers and those getting the product out the door and to market shifted to getting customers to buy what had been produced. Thus sales departments and sales forces increased in size, number, and skill. But the emphasis was more on the product and convincing the customer to buy the product than on any notion of customer satisfaction except in a very basic sense.

4. The marketing era. Most industrialized countries had suffered in their ability to produce as a result of physical damage to industry during World War II. U.S. industry, untouched by the war directly, had greatly increased its capacity and ability to manufacture goods during the war. This put the United States in a highly competitive position relative to other countries, but it also created a highly competitive environment within the country. At the same time sophisticated techniques of analysis that were developed during the war could be applied to analyzing potential customers and markets. Thus manufacturing opportunity and the ability to discover what the customer wanted before the product was developed came together to implement a conclusion about how to increase sales that was unexploited before the war. Simply said, more products could be sold if they were the right products for the right market. The know-how was now available to determine exactly what the "right products" should be. With the impetus of internal competition in the country, and the attraction of worldwide markets, the marketing era was born. Even today, some do not understand that marketing is not simply a sophisticated way of speaking about selling. Marketing is differentiated from selling in several important ways. Drucker led the way in deducing that selling was persuading someone to buy something that you had and wanted to sell while marketing was having something that a prospect already wanted to buy. Drucker concluded that if marketing were done perfectly, selling would be unnecessary, and he made the on-the-face-of-it outrageous statement (which we examine more closely in Chapter 15) that marketing and selling are not complementary and might even be adversarial.

5. The marketing company era. Drucker's thinking is clearly closely intertwined in the idea of the marketing company, although he did not think of its onset as an era. He simply noted that all business depends on only two functions: marketing and innovation. We examine this principle in detail in Chapter 4. However, in passing, we should note that a closer examination including that of the "P" of product in Jerome McCarthy's four Ps of marketing must lead to the conclusion that this product innovation is itself an integral part of marketing. However, Drucker meant innovation in a much broader sense.

The philosophy of bringing all departments together with the objective of satisfying their customers' needs was incorporated into the very heart of marketing in what has been termed "the marketing concept." What Drucker wrote is that marketing "is the whole business seen from the point of view of the final result, that is, from the customer's point of view. Concern and responsibility for marketing must therefore permeate all areas of the enterprise." But Drucker did not claim this concept as an era. It seems somewhat presumptuous to claim it as such, when even today some companies do not have marketing departments, or if they do, they are sales departments misnamed.

6. The societal marketing era. Drucker would certainly agree with the notion that corporations should recognize societal benefit as an important goal for any organization and that they should not lie, cheat, or steal from society in the interest of selling a product. Drucker took this further and reasoned that it is creation of a customer and not profit that is the basic purpose of a business. However, he also noted that it would be disastrous to somehow overlook profit as a business necessity. Looking at the evidence of corporate scandal and lack of consideration of the potential harm to customers that exists today hardly supports the idea that we are in an era of societal marketing, although many companies, to their credit, do attempt to consider the impact of what is done in the name of marketing on society. Unfortunately it is doubtful that we are in an era in which companies routinely follow basic tenets that are not required of them by law, although we should be.

Drucker Saw Things Differently

While Drucker did not deny that marketing development could be categorized by eras, he did not do so. Rather, he looked at critical incidents of historic catalysts. He thought these incidents to be the crucial turning points in marketing development as he conceptualized marketing (along with innovation) as the two essential foundations of all business enterprise.

According to Drucker, modern marketing was invented in Japan in around 1650 by an unknown member of the Mitsui family w

Excerpted from Drucker on Marketing by WILLIAM A. COHEN. Copyright © 2013 by William A. Cohen. Excerpted by permission of The McGraw-Hill Companies, Inc..
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Table of Contents

Foreword vii

Introduction Drucker and His Different Marketing Approach xiii

Part I The Ascendancy of Marketing

1 Two Different Views on the Development of Marketing 3

2 The Purpose of Business Is Not to Make a Profit 11

3 Any Organization Has Only Two Functions: One Concerns Marketing, and the Other Is Marketing 19

4 Drucker's Marketing View 29

5 Marketing Is Leadership 39

Part II Innovation and Entrepreneurship

6 Where the Best Innovations Come From: The Seven Mothers of Invention 53

7 Demand-Side Innovation 63

8 Supply-Side Innovation 73

9 Drucker's Entrepreneurial Marketing 85

Part III Drucker's Marketing Strategy

10 The Best Way to Predict the Future Is to Create It 99

11 The Fundamental Marketing Decision 109

12 Drucker's New Certainties for Formulating Marketing Strategy 121

13 Success by Abandonment of Profitable Products 133

14 Marketing and Selling Are Not Complementary and May Be Adversarial 141

Part IV New Product and Service Introduction

15 How to Do Marketing Research the Drucker Way 153

16 Exploiting Demographic Change 163

17 Timing Isn't Everything; It's the Only Thing 171

18 How to Avoid Major Failure 181

19 Drucker's Five Deadly Marketing Sins 189

20 The Only Way to Set a Price 199

Part V Drucker's Unique Marketing Insights

21 Quality According to Drucker-It's Not What You May Think 209

22 Integrity Is Critical to Marketing 217

23 The Dangers of Marketing Professionalism 227

24 Why Buying Customers Won't Work 235

25 With Drucker into the Future 243

Notes 249

Index 259

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