Marketing orientation - Marketing Management

In the marketing-oriented company, planning and decision making centre on customer needs having due regard to competitors and distributors. It is vital to satisfy customer needs through a co-ordinated set of activities including the actions and functions of all employees of the organization, irrespective of the area of the business in which they work. In other words, a marketing orientation requires everyone in an organization to become customer oriented and not just people who work in marketing. An increasing awareness of this need to co-ordinate and integrate all the various functional areas of a business in delivering customer satisfaction has led to the growth of internal marketing. We consider the nature and importance of internal marketing later in this chapter and again in Chapter 9 when we consider customer care and relationship marketing.

Lancaster and Massingham10 identify the marketing-oriented firm as follows: ‘A marketing oriented firm produces goods and services that consumers want to buy rather than what the firm wants to make.’ When a company moves from a sales to a marketing oriented approach it is not just a case of changing the job title of Sales Director to Marketing Director; it requires a revolu tion in how a company practises its business activities. When shown in diagrammatic form from Jobber and Lancaster,11 this fact is clarified. This also illustrates the importance of the consumer movement during transition from a sales to a marketing based approach, in that marketing orientation stems from customer needs. For a business to be successful, consumers and their needs must be placed at the very centre of business planning.

There is some confusion as to the difference between selling and marketing and they are sometimes thought to be similar. This is a fallacy. Theodore Levitt,12 in his classic article ‘Marketing Myopia’, sums up this distinction between selling and marketing orientation: ‘Selling focuses on the needs of the seller, marketing on the needs of the buyer. Selling is preoccupied with the seller’s need to convert his product into cash; marketing with the idea of satisfying the needs of the customer.

. . .’ A philosophy of marketing, even as an important first step, is not the same as putting the philosophy into practice. Once the framework of the marketing concept has been established, the organ ization must implement it. Doubt has been expressed as to the extent to which the philosophy has been implemented. The practical manifestations of this philosophy are not well known, and this prompts the question: how can marketing orientation be recognized?

The following constitutes a list of requirements that must be met if a move towards marketing orientation within an organization is to be effective:

  • Is there good understanding of needs, wants and behavioural patterns of targeted customers?
  • Is the enterprise profit directed rather than volume driven?
  • Does the chief executive see him/herself as the marketing strategist or marketing champion?
  • Does the enterprise have a market driven mission?
  • Do strategies reflect realities of the marketplace (including the competitive situation)?
  • Is marketing seen as more important by managers than other functions and orientations?
  • Is the enterprise organized in such a way that it can be more responsive to marketing opportunities and threats than its competitors?
  • Does it have a well designed marketing information system?

The distinction between sales and market orientations

distinction between sales and market orientations

  • Do managers make full use of marketing research inputs in their decision making?
  • Are marketing costs and revenues systematically analysed in relation to marketing activities to ensure the latter are being carried out effectively?
  • Is there a strong link between the marketing function and the development of new products and services?
  • Does the enterprise employ marketing staff who are professionals (rather than being, say, salesoriented in their approach)?
  • Is it understood that marketing is the responsibility of the entire organization?
  • Are decisions with marketing implications made in a co-ordinated way and executed in an integrated manner?

Developing marketing orientation is a long-term process and needs to be thought of as a form of investment that can change the organization’s culture, so common values relating to the need to highlight service to customers and a concern for quality in all activities are shared throughout the organization. This cannot be provided by a ‘quick fix’; it must permeate the entire culture of the organization.

A variety of steps can be taken to enhance the degree of marketing orientation of an enterprise:

  • The first step is to secure top management support. A bottom-up approach would be doomed from the outset, given the company-wide implications of marketing orientation.
  • There needs to be a specified mission relating to the development of marketing orientation. This should have a plan associated with it, and the necessary allocation of resources to enable it to be executed.
  • A task force should be set up as part of the plan to bring together managers from across the company (possibly assisted by consultants) to carry out tasks such as identifying the current orientation of the company; carrying out a needs analysis as a basis for a management development programme to change the company’s culture in a desired way; advising on structural change within the company to support marketing activities; and ensuring commitment to change via a system of rewards (such as bonuses and promotion) that will apply to facilitate change.
  • The momentum of change can be maintained by continuously monitoring marketing

performance to ensure inertia does not set in. Progress towards improved marketing orientation can be measured by regularly asking questions like: ‘Are we easy to do business with?’ ‘Do we keep our promises?’ ‘Do we meet the standards we set?’ and ‘Do we all work together towards a common goal?’

  • Developing marketing orientation requires a focus on customers, competitors, the changing environ ment and company culture. Achieving it is expensive and time consuming. However, companies that make the effort are likely to have a higher level of marketing effectiveness and greater organizational effectiveness. The results may be extremely important amid uncertainties following the worldwide economic downturn and greater competitiveness in modern day commerce.

On 22 February 2008 Northern Rock, for nearly twenty years one of the UK’s fastest growing and apparently most successful building societies, which became a bank in 1997, was taken into public ownership. The cause was a major liquidity crisis prompted by the world wide credit crunch.

As if this was not bad enough for Northern Rock customers, by March 2009 over 17,000 mortgage accounts were in arrears; an increase of nearly 400 per cent in just over 12 months .Some of these arrears were due to borrowers losing their jobs as a result of the recession. Others were due to illness or changed family circumstances. In other words, reasons that could be considered a normal part of the mortgage business or at least outside of the control of Northern Rock. However, the major reason for default was borrowers who had borrowed more than was prudent.

During the good times Northern Rock developed a mortgage product which allowed customers to take out a personal loan on top of their mortgage loan, in some cases enabling borrowing of upwards of five times earnings. In a period when house prices were rocketing this product had tremendous appeal to borrowers who otherwise were not able to get on the housing ladder. As a result sales of this product soared and Northern Rock expanded its sales and market share quicker than virtually than other company in the industry. At first glance it might appear that Northern Rock was being customer oriented in developing this product; after all, if sales were anything to go by there was a real customer need. However, with the benefit of hindsight, for many customers this was an inappropriate mortgage product.

Far from being market oriented, Northern Rock was very much sales driven. Certainly there was a strong demand, but for many customers the product was unsuitable. Marketing this product to these customers was not in the spirit of the marketing concept.

Standard Life, a major financial services organization in the UK, has been the target of an attempt to demutualize the company. After a long and at times bitter campaign, the management of the company secured victory in their attempt to persuade policyholders to reject the demutualization proposal. In the course of fighting this campaign, Standard Life realized that one of the reasons many investors were considering voting for demutualization was that over time the company had, through sheer inertia, begun to lose contact with its customers e.g. often only communicating with members when policies matured.

The challenge of demutualizers alerted an otherwise excellent company to the need to pay more attention to the needs of its customers and for this to be a company-wide effort backed by senior management commitment and resources.

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