There are three types of business orientation which are production, sales and marketing orientations. They usually develop in stages orderly and in hierarchy. Production orientation is the primary purpose business in the nineteenth centuries. It refers to the firms which concentrate on improving the efficiency of the production in order to break down cost. Firms produce goods which they could produce well. Sales orientation is a concept that demand has to be created by using sales techniques. The sales department was interpreted to be most important to organization’s successful and survival. Scant attention was paid to the final consumer’s need, but it was understood that goods and services did not sell themselves without effort. Finally marketing orientation is an approach which most firms use nowadays. It focuses on consumer needs. This shift in thinking led to the growth of marketing research to decide unmet consumer needs and systems for pleasing those needs. We are going to discuss if the marketing orientated approach stand the greatest chance of success or not in the marketplace extensively.
“Market orientation is a business corporate culture, disseminated in the organization through interfunctional coordination, having the objective to design and promote, at a profit for the firm, superior value solutions to the firm’s direct and indirect customers and to the other involved market stakeholders” – Lambin.
Focusing on the consumer has not been the hallmark of strategic planning in past years. This market concept is believed to survive in the long term, an organization must understand the needs of the consumer to classify the target markets. It then produces goods profitably which satisfy consumer’s requirements, and consumer is the centre of the business attention. Production and sales are gradually not the purposes to success, survival and growth in the market. In market orientated organization, the whole firm values the importance of consumers as the centre, and there is no business without satisfying consumers. For example, Durr AG, the German paint and gathering systems manufacturer gets closer to the consumers by allocated over half its workforce to the sites of its consumers such as Ford and Audi. The focus in this approach has shifted from consumer transactions to consumer relationship and from competition to collaboration. The market concept of this approach has to begin with identifying needs of specifically defined target market, then they have to decide which needs are able to meet the consumers by concentrating on certain segments of the target market. After that they have to design products and services of value that meet potential consumer’s requirements, products and services are being modified if necessary. Finally the final product has to be checked if it achieves the organization’s goal through consumer satisfaction, continuous feedback will be collected in order to improve the product and the hierarchy works again from the first stage. By forming organizational cultures that put consumers first, market orientated firms are likely to perform at higher level in order to receive higher satisfaction from consumers. Customers are being placed at the top of the organizational hierarchy in a truly marketing orientation, each level in the hierarchy must respond to the levels above it in order to assure each level perform well, and therefore the role of CEO in this hierarchy is to ensure the employees perform well on their jobs.
“Market orientation is organisational wide generation of market intelligence pertaining to current and future customers needs, dissemination of the intelligence across departments and organisational wide responsiveness to it” – Kohli and Jaworski.
One of the marketing concepts for market orientated business is market driven business. It has also placed consumer at the centre. Strategy, research and development are controlled by marketers in this market concept. Market driven business understands how their products and services are being evaluated against the competitions as they know the choice criteria which consumer are using and make sure the marketing mix matches the criteria that is better than the competitors’ so that they can reduce risk for having a product which is not going to benefit much. The approach has segmentation analyses on customer differences that have implication for marketing strategy which ensure different consumer in different division has the right product, it gives more choice for different consumers to buy the product which they prefer or even they think it is valuable. What is more, recognition is a trait in market driven business, marketing research expenditure is an investment that can receive rewards through better consumer understanding. For example, Toyota’s new marketing strategy is based on a consumer’s research survey and it has improved the service of the customers which led to a profitable reward. The approach is pleased with the organizational changes as it can be fitted to the marketing strategy, changing the product needs present possible market opportunities which are able to drive the firm. For example, Nestle launch of Partners’ Blend as well as opportunities for the creation and growth of new companies such as Cafedirect, it has changed toward the ethical consumption which created opportunities for current firms. Moreover, employees will be rewarded if they take risk and are innovative. For example, the success of German machine tool manufacturers can be decided their own idea on the products with lead consumers, those firms themselves are innovative and are contrast harshly with the attitude of the UK machine tool manufacturers who do not take risk and think that innovation will result in a opposite effects on its current product. However, we need to understand the fact that most of the new products failed because of the limited punishment on the employees and therefore it led to an idea that, sometimes firms have to avoid risk but not supporting all of the risks-taking. Market driven business seems to adjust the product and service offering to the demand of current and latent market, it can be supported by the forming of the eBay web site. eBay has developed the latent market formed by individuals who wished to sell product to other people directly online. Furthermore, market drive business has to respond fast to the latent market, manufacture, innovation and issue services and products in order to catch up with the consumer’s need, this helps to follow the trend for the latest market and able to respond fast to the consumers’ needs. A key characteristic of marketing orientated business is that the firms make effort for competitive advantages, they tend to serve consumer better than the competition and they are also both effective and efficient. These help the firms to improve their abilities regularly and give a good image for the consumers.
On the other hand, marketing orientated business doesn’t focus on the product that if it is convenience for the firms to product. It might cause problem as the firms aren’t keen on the production of the specific product which the consumer prefer, it will lend to a failure on the final product. Price and product performance are important to business because if the price is too high in order to cover the production cost, the demand may decrease as the marketing orientated only concern about the consumers’ need. It is useless when the product performance is good but the consumers can’t afford the high price product. Marketing orientated business also invests in market research to track market changes but not rely on anecdotes or receive wisdom. Firms have to spend more time on market research in order to have a reliable source to invest their new product, but this way will cause inefficiency. For example, mobile phones have moved from being a business accessory to being a big consumer brand item, with many additional devices, such as pictures, video and Internet access. Innovations create the need rather than the customer being able to second-guess how new technology is going to develop. Moreover, marketing orientated business is unable to keep the consumers in long term as the product changes regularly. For example, Burberry’s check pattern is the logo of the products and it is still producing the logo on the latest products. If Burberry stops the check pattern, they may lose the loyalty consumers, therefore they move to attract different targets like the new generations of younger consumers and create a more fashionable line such as ‘classics with a twist’ (recasting the classic trenchcoat in hot pink).
Researchers studied the relationship between marketing orientation and business performance. Data is collected from strategic business units of a major US corporation which included commodity businesses and non-commodity businesses. They are link to the SBU’s profitability and they are measured by return on assets in relation to competitors in last year. The result shows that commodity businesses with low and high market orientated business have a higher profitability than in the mid range of market orientation. It can be explained by the business in lower orientation will be success in a low cost strategy. A linear relationship is found in the non-commodity which shows that the higher the level of orientation, the higher the level of profitability. There is a positive relationship between market orientated business and business performance as the business has a positive effect on sales growth, market share and profitability.
In conclusion, market orientated business is able to respond the market information successfully. It focuses on consumer and competitor analysis. It also provides consumer’s value and satisfaction as well as long term profit by generating the firm’s resources. In order to be successful, the firms have to concentrate the resources and efforts on the consumers’ needs and services so that they can improve the firms’ abilities to produce a supportable competitive advantages. Although there are criticisms in the marketing orientated business, it is suitable for the market nowadays as consumers change relatively fast then previous years. For instance, it takes a long time to invest in market research as firms need to do survey or even understand the competitions in detail. Moreover, market orientated firms are likely to take risk and reward employees who are innovative. If consumers dissatisfy the products, it might lend to a serious failure for the firms which hugely decrease the profitability and the employees’ morale. Also customers taste is changing faster than in past days. It is important to know exactly what the customers want, then invest a new product by their tastes and reduce the probability on failure. Therefore, market orientated approach should stand the greater chance to success in the marketplace.