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Lesson - Marketing Orientation

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Marketing and Marketing Orientation

Today, to be effective in marketing, an organisation has to be marketing oriented. It needs to adopt a marketing

based business philosophy in all its functions. Let us commence by looking at some basic concepts relating to

marketing and marketing orientation.

Basic Concepts

A market consists of buyers and sellers - trading in products/services. The price is normally set by the

supply of or the demand for, the product. The market for any business consists of its actual and potential

customers. This market may be local (e.g. a street market), national (e.g. the mass market) or international.

Markets may be classified as:

Consumer markets (B2C)

Business markets (B2B)

Read the definition of B2B and B2C markets at:

http://www.marketingterms.com/dictionary/b/

To supply goods and services in a competitive environment a business needs to discover:

1. What to make and sell.

2. How many to make and sell.

3. Who to sell to.

4. How to encourage people to buy.

5. How much to charge for what is sold.

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Imagine you are a manager of a company marketing the following three items. Answer the five key

questions for each item.

1. An electronic organiser.

2. Sandwiches sold from a mobile van.

3. A mobile beautician service.

1. An electronic organiser

Small but with enough space for details of appointments, notes, expenses, etc.

Probably in the thousands.

General business environment.

Attractive/fashionable design, internet connectivity.

Modest price, but not too cheap!

2. Sandwiches sold from a mobile van.

A variety of fillings, sandwiches, rolls, snacks, etc.

Only enough for today's sale.

Office/factory employees.

Quality must be good, tasty product.

Less than local competition.

3. A mobile beautician service.

Personal fashion products.

Supplies sufficient for likely demand.

Customers with disposable income.

Emphasis on beauty and fashionable.

Prices high to represent prestige service.

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The marketing function in any organisation must link production to consumption. To do this, marketing must ensure

that the demands of its customers are met by what is being produced; whether products or services or both. If it

achieves this, it will meet customer needs/wants and help the business make a profit.

What do you understand by the term marketing?

The term marketing is used extensively in modern life. If you stop someone in the street and ask them what itmeans, they will probably use words like "advertising", "market research" and "a modern word for selling". In fact,

marketing is a lot more than just selling, advertising and research, although all of these functions are importantaspects of marketing.

The Chartered Institute of Marketing in the UK defines marketing as follows:

"Marketing is the management process which identifies, anticipates, and supplies customer requirements

efficiently and profitably".

The view of marketing can be summarised by this illustration:

Figure 1.1.1 - What is marketing?

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Marketing as a philosophy

Marketing as a business philosophy can be summarised as:

Marketing is a management process, and the support of management for the marketing concept is a key

element in its success. Today, a company has to be marketing orientated if it is to be successful.

Marketing is involved with identifying customer requirements - usually with market research.

We have to consider current needs and anticipate the requirements of the customer in the future. This

requires planning- a very important aspect of the marketing process. The satisfaction of the needs will

require the supplier to provide benefits - the right market offering at the right place at the right time.

Truly market-driven companies adopt strategic level marketing, where marketing has a key role in defining

the long-term objectives and mission of the company. In this way, a strategic framework is established

whereby the customer is placed at the centre of the organisation's activities.

Marketing is not just for profit-making companies. Marketing is for any organisation that has customers,

and that includes charities and government bodies. Very many selling jobs in fact are in non-profit-making

organisations, although very often the people who have those jobs would not think of themselves as

salespeople!

Marketing is a business philosophy, the process responsible for anticipating, identifying and satisfying

customer current and future needs.

The characteristics of a marketing orientation are in contrast to that of product orientation.See Figure 1.1.2.

Figure 1.1.2 - Marketing Orientation and Product Orientation

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The Evolution of the Marketing Concept

Marketing is basically about anticipating and serving customer needs, but where does the concept come from?

Below we identify the evolution of the marketing concept; from product orientation to market orientation.

Production Orientation

The Industrial Revolution and the subsequent mass-production techniques introduced by Henry Ford and others

changed all that. This period gave rise to what is generally called "production orientation". This is a view that if

you make something cheap enough, people will buy it. That was certainly the thinking behind Henry Ford's model

that, rather famously, was quoted as being available in "...any colour you wanted providing it was black". Ford's

idea was to make a simple model and produce it in large volumes to reduce costs. It worked, of course, because thedemand for cars was huge and customers would buy what was available. Today, though, the choice in cars is huge

and Henry Ford's ideas would seem laughable. What has changed is the fact that, whereas in Ford's day demand

exceeded supply, today the situation is reversed and now the customer is king! There are still situations where a

product focus is required. An engineering company producing components to specification, for example.

Sales Orientation

Whilst production orientation is not as common today, sales orientation is still found occasionally in today's

business environment.

Originally sales orientation was associated with scripted presentations and closing techniques. Today, the modern

sales oriented organisation uses non-manipulative selling techniques that are based upon marketing principles:

1. Identify the customer needs.

2. Fit product benefits to customer needs.

3. Use customer orientation.

Product Orientation

Product orientation is another view that has many problems and is also very common.

Product oriented organisations essentially push their products without focus on the customer requirement or

business need. It takes the view that if it makes a better quality or better specified item, the item must sell. A good

example of this was the Digital Equipment Company (now part of HP), which developed and perfected the

minicomputer. Unfortunately, they continued to do so long after the demand for minicomputers had been replacedby the use of personal computers. It is very easy for an organisation to forget that it is in business to serve

customers.

Think about your organisation's products or services. Is your organisation really meeting customer needs or

is it "pushing" products.

Marketing Orientation

Market-oriented companies put the customer first. One of the great writers on marketing, Philip Kotler, suggests

that there are four main features of marketing:

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Market Focus

Marketing is all about satisfying needs. No organisation, no matter how big, is able to satisfy every need in the best

possible way. The basis of marketing is to focus on those areas of the market that a company can serve to a very

high standard.

Customer Orientation

The company has to meet customer needs from the customer's point of view. It is easy to identify and focus on a

market but still not satisfy customer needs. Researching customers to ensure that their needs are being identified is

the role of market research and in many companies an important part of the customer feedback comes from the

salesperson. The customer is king.

Coordinating Marketing

As David Packard of Hewlett Packard said, "Marketing is too important to be left to the Marketing Department!"

You do need a marketing department, but Packard's point is the whole company must be market oriented. Orders

are lost because a customer, well looked after by the marketing department and sales force, is offended by bad

treatment from the accounts department, or despatch. Everyone in the company must work towards customer

satisfaction at every level.

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Profitability

Professor Kotler lists this as a further aspect of marketing. Achieving a profit is an aim of marketing, however,

marketing is not just for profit-making commercial organisations. It is for every organisation that has customers,

whether profit making or not.

Marketing Strategy

Marketing strategy follows a firm's understanding of its purpose and objectives, and from these it will derive its

vision of what (and where) it wants to be. Its mission statement will describe what it does to get there.

The strategic plan defines how a business can make best use of its competences, assets and strengths to servecustomers needs and wants effectively and efficiently. Today, the customer should be the focus of all planning and

execution of strategy, tactics and operations.

In contrast to the approaches of even a few years ago, where organisations often developed products in isolation and

without consultation with the customer and then 'marketed' it, in contemporary business, customer orientation is at

the crux of marketing strategies. Successful organisations see the vital role of understanding the 'big' picture, the

marketplace, and only then formulating their business development strategy of defining products, services and

markets to operate in.

The main features of a marketing-based organisation are:

Market focus.

Customer orientation.

Co-ordinated marketing.

Profitability.

A marketing-based organisation is customer-centric. The customer is the focus of all planning and

execution of strategy, tactics and operations.

A company that adopts market orientation and focuses on customer preferences rather than its own ideas

about a product/service can gain major competitive advantage over its more product-oriented competitors.

It can also increase its share of the cake in the customer's business.

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Read more about the marketing concept at:

http://www.netmba.com/marketing/concept/

Think of an example, perhaps from your own business context, of how market orientation as a strategy has

led to competitive advantage and increased business.

There are many examples from differing sectors. A good example is from the IT sector, where a contrast can bemade between the product-oriented and market-oriented approaches.

A product oriented company in the IT sector typically delivers to the client a set of disparate hardware and/or

software systems. The client then configures the system, including selection of relevant applications to supporttheir business. A marketing oriented company, on the other hand, will seek to understand the total customer

problem and empathise with the customer pains. It will seek to carry out a situational assessment and propose atotal solution. It is likely to help the client analyse their business needs, evaluate their business processes and thenselect the most suitable hardware, storage systems, software and business applications, and configure the system

to the satisfaction of the client. It may even help the client with the day-to-day running and maintenance of thesystem.

If conducted well, the customer will have made huge cost savings (as this approach is usually more efficient). In

return, the vendor would have carved out a very lucrative revenue stream, with high profit margins - a 'win-win'

scenario. Profit margins are generally much higher for integrated services than individual products. Many ITservices companies (e.g. EDS, IBM, Accenture) take this approach in their business strategy. Marketingorientation helps companies get up the value chain.

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Resource Library

Websites:

http://marketingteacher.com/

http://www.strategy-business.com

http://www.franteractive.net/

http://www.thetimes100.co.uk/

http://www.netmba.com/strategy/

References:

Ansoff, H I (1987) Implanting Strategic Management, Prentice Hall

Doyle, P (1998) Marketing Management and Strategy, Prentice Hall

Drucker, P (1973) The Practice of Management, Pitman

Hamel, G and Prahalad C K (1996) Competing for the Future, Harvard Business School Press

Johnson, G and Scholes, K (2002) Exploring Corporate Strategy, 6th Edition, Prentice Hall

Kotler, P (2003) Marketing Management, 11th Edition. Prentice Hall.

Mintzberg, H, Quinn, J and Ghosal, S (1998) The Strategy Process, Concepts, Prentice Hall

Mitroff Stakeholders of the Organisational Mind (1983)

Needham et al (2002) Business for Higher Awards, Heinemann

Piercy, N (2001) Market-led Strategic Change: Transforming the Process of Going to Market, ButterworthHeinemann

Porter, M (1998) Competitive Strategy, Free Press
http://marketingteacher.com/http://www.strategy-business.com/http://www.franteractive.net/http://www.thetimes100.co.uk/http://www.netmba.com/strategy/http://www.netmba.com/strategy/http://www.thetimes100.co.uk/http://www.franteractive.net/http://www.strategy-business.com/http://marketingteacher.com/

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