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Ask the average person what marketing is and a range of answers will probably
be forthcoming. Typically, the answers offered tend to fall into three loose
categories:-
The problem with all of the above, however, is that they emphasise what
marketers do rather than what marketing actually is. To arrive at a more formal
definition, we therefore need to consider the underlying philosophy behind the
marketing function which, as we shall see, has evolved subtly over the years.
Generally speaking, the marketing concept can be seen as having evolved via
three distinct developmental stages:-
A word of caution, though. In each of the above, the dates provided represent
only a rough guide to the dominance of particular business orientations – they are
not absolutes, as some text books would have us believe. The reality is that
organisations have always deviated from these general trends. Even today, for
instance, we can find firms still rooted in the traditional production orientation
phase, whilst Adam Smith espoused the virtues of a market-led approach to
management as early as the eighteenth century!
The Model T Ford was a resounding success, but its market dominance was
actually quite short-lived. Many of the problems the company experienced are
typical of an organisation adopting a production orientation in its marketing
strategy. In particular, low-cost mass production is very easy to replicate by new
market entrants and Ford was almost put out of business by intense competition
from General Motors. As both supply levels and consumer disposable income
increased, GM began to offer a greater range of colours and refinements to a
more discerning new clientele. The Ford Motor Company soon began to face
severe financial problems, particularly when supply eventually began to overtake
demand.
Supply-demand problems are not the only dangers associated with a production
orientation, however. So-called marketing myopia can also be a danger,
companies focused solely upon their own products and those of their immediate
competitors failing to recognise threats emerging in other industries. Expansion
in the dry cleaning industry, for example, was halted almost overnight by
developments in fabric technologies and the growth in domestic appliance
ownership. On a more general level, even where a product does not become
obsolete, over-refinement can lead to a widening gulf between consumer needs
and product specification. The home video recorder, for instance, became
increasingly complex during the 1980s and 90s, to the extent that consumers
began to complain quite vocally that the product was becoming too complicated
to actually use!
The problem with this approach is that it still focuses attention firmly on the
product as produced, the emphasis being upon sales rather than consumer
satisfaction. This is fine where a company’s market affords few opportunities for
repeat business (e.g. fitted kitchens, double glazing). Even here, though, it can
be argued that dissatisfied customers can damage a company’s reputation
through word of mouth. Moreover, where competition intensifies, a sales
orientation demands ever larger budgets in order to merely hold on to existing
consumers. Quite simply, a company ends up spending more and more money
on promotion just to stand still.
Take the example of the package holiday. From the mid 1960s, demand
increased dramatically and the initial success of a few companies (e.g. Thomson)
was soon under severe threat from intense competition. The holiday market
became ever more “cut-throat” and the emphasis was firmly on cutting prices to
drive out competitors. Low prices were often at the expense of quality and
consumer satisfaction, however, and travel agents soon became as notorious as
estate agents in the consumer psyche. Established companies began to resort to
ever more ingenious (or often just bizarre!) methods of promotion. Thomson, for
example, introduced the so-called “honest” holiday brochure, including negative
comments about a particular hotel or resort alongside the traditional sales
“blurb”. Initiatives such as these were, however, typically greeted with cynicism
by consumers. Moreover, they completely missed the point – instead of making a
virtue of honesty about your product’s weaknesses and spending a fortune trying
to persuade customers to buy a product you know doesn’t quite satisfy their
requirements, wouldn’t it be far simpler to just find out exactly what the
consumer wanted and then provide it?!?
The sales orientation, then, uses aggressive pricing and promotion to counter
increasing competition and falling demand. Such a strategy can be quite effective
as a short-term “fix”, but in the longer term organisations must strive to provide
added value as price differentiation narrows and there are few further
production savings to be made.
In essence, the marketing orientation places the customer’s needs at the heart
of business strategy and is based around a view of marketing as being “the ability
to create and keep profitable customers” (Brown, 1987). Let’s consider that
definition for a moment.
In a review of the literature, however, Lafferty and Hult (1999) identify four key
features of a marketing oriented firm, common to all current theoretical
perspectives:-
Customer Focus: All models place the importance of identifying and satisfying
customer needs at the heart of the business, together with the need to strive to
provide added value to the customer in the face of intense competition and the
continual erosion in product/service differentiation. This focus is seen as
pervading all areas of the organisation as a guiding principle, of equal relevance
even to those functions with no direct customer contact at all. Marketing is thus
seen as a business philosophy rather for all within the organisation, rather than
as just a particular person or team’s job.
Taking Action: Finally, all models agree that organisations need to be continually
amending strategy in light of current and anticipated market developments. This
responsiveness should be corporate wide, utilising all of the firm’s resources to
proactively ensure continuing satisfaction of customer needs.
Managing Marketing
We will return to all of the above in subsequent sessions, particularly the final
session in the marketing block.
The case study for this lecture is called “Developing a stronger customer focus”
and concerns organisational changes made by the steel corporation Corus. The
case study itself poses five basic questions to help guide your analysis:-
2. What external difficulties did Corus face while it was introducing the
change process?
3. Why did Corus’ Construction and Industrial Unit create a series of account
managers?
4. How did the changes that took place at Corus’s Construction and Industrial
Unit involve a change of culture?
5. How could you evaluate the effectiveness of the changes made at Corus?
When reflecting on the case study after the session, there are a few particular
issues you might want to consider in relation to these lecture notes. For
instance:-
Does the company now satisfy the criteria for a marketing oriented
organisation in terms of its customer focus and organisational
philosophy?
What were the obstacles and potential pitfalls in achieving the current
business orientation?
Thinking about issues such as these after discussion of the case studies each
week will help enormously when it comes to the course assignment and exam!