1. The Marketing Orientation
Lay Views of Marketing
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:
Presenting an organisation and its products to potential customers.

Launching, advertising and promoting new products to support the sales
force.

Liasing with advertising and sales functions to attract new customers to
existing products.
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:
Production Orientation (pre 1950s)

Sales Orientation (1950s-80s)

Marketing Orientation (1980s+)
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 Production Orientation
In many ways, the production orientation phase can be seen as an inevitable
consequence of mass industrialisation. Expressed simply, this phase in the
development of marketing is characterised by a continual focus upon the product.
Manufacturers work on the assumption that products, when produced in sufficient
quantities and at the correct price, generate consumer demand. When sales fall,
the response is therefore simply to lower prices further through increased
productivity. It is a simple philosophy and highly effective in situations where
demand far outstrips supply.
The classic example of the production orientation is the Ford Motor Company.
Prior to the Second World War, conditions were right for mass automotive
production. Craft production techniques maintained high prices and demand was
far in excess of supply – mainly because very few people could actually afford a
car. Within this climate, Henry Ford developed the assembly line method of
production and the Model T Ford was born, the first relatively inexpensive massproduced car. The focus was very much on minimising production costs wherever
possible, hence Ford’s now famous assertion that consumers could have “any
colour, as long as it’s black!”
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!
So, the production orientation centres management of the marketing function
around mass production of the product itself, continuous cost reduction and
product innovation forming the basis of marketing strategy. Such an approach is
very effective where demand far outstrips supply, but the techniques employed
are easily replicated by competitors and the tactic is vulnerable to marketing
myopia and problems of consumer-product “fit”.
The Sales Orientation
To a certain extent, the adoption of a sales orientation can be seen as an
intuitive (some would say “knee-jerk”!) reaction to the problems of the
production oriented phase. If demand is falling, simply go for the “hard sell” and
persuade customers to buy through aggressive promotion. It is this philosophy
which leads to the common lay view of marketing as merely being “selling”.
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.
Towards a Marketing Orientation
The dominance of the market-led approach gained momentum as a result of five
interrelated sets of environmental factors:
Increasingly sophisticated and diverse consumers, with more disposable
income (e.g. depending on the consumer, a car can be a mode of
transport, a status symbol or even a hobby).

Increasing competition and globalisation (e.g. due to low labour costs
overseas, falling trade barriers, the growth of the Web).

Decreasing product differentiation
(e.g. generic drugs, look-a-like
products and “clones”, lower price differentiation, etc.).

New technologies
(e.g. traditional watch-making effected by
developments in electronics, printing effected by computer technologies,
music CDs and cassettes by mp3s on the Web, etc.).
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).
definition for a moment.
Let’s consider that
By creating customers, Brown means that organisations should be monitoring the
environment in which the business operates and acting on opportunities
presented by changes in consumer needs and/or competitor activities. Similarly,
keeping customers refers to the need to minimise threats to the organisations
existing customer base arising from changing consumer needs and/or competitor
activities. And profitable customers? The key here is the need to focus primarily
upon those customers with the potential to generate revenues which exceed
business costs, rather than on just pursuing any customer at any price.
In effect, then, the emergence of a marketing orientation marks a transition from
an organisation having an efficiency goal (“Doing the right things”) to the
adoption of an effectiveness goal (“Doing things right”). So, a more appropriate
definition of the term marketing might be as follows:“Marketing is the management process responsible
for identifying, anticipating and satisfying customer
requirements profitably.”
Chartered
Institute
of
Marketing
(1999)
But, what is a marketing oriented organisation?
Characteristics of the Marketing Orientation
Sadly, no single definition of a marketing orientation exists on which all would
agree. Some authors focus primarily upon the need for customer and competitor
intelligence (e.g. Kohli & Jaworski, 1990), for instance, whilst others focus more
on the organisation of the business unit itself (e.g. Narver & Slater, 1990).
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.
Information Dissemination: The second common feature is the emphasis on a
need for comprehensive information about the organisation’s customers,
competitors and operating environment. There is a recognition that successful
organisations are intelligence driven, with a thorough understanding of customer
needs and motivations, together with the potential impact of competitor activities
upon them. Information is disseminated throughout the firm, not just within the
marketing function, and input is encouraged from all areas and levels.
Interfunctional Coordination: Following on from the above, it is not sufficient to
merely disseminate intelligence if the organisational mechanisms are not in place
to ensure inclusive planning. All models of the market-led firm therefore stress
the need to act upon information received in a coordinated way, with strategic
and tactical decisions being taken interfunctionally.
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.
In sum, a marketing oriented organisation places satisfaction of the customer and
the pursuit of added value at the heart of its activities, has a corporate culture
which shares information and ideas across functions, and adopts a management
structure which ensures maximum responsiveness to changing circumstances via
inclusive tactical decision-making processes.
Identifying the Business Orientation
How do we know if a business is “marketing-oriented”? One test is simply to ask
the company the deceptively simple question: “What business are you in?”
Exercise:
Ask a senior manager in your own organisation this question.
What do you make of his or her reply? What does it tell you about the
organisation’s approach to marketing? If you get the opportunity, try asking
senior members of staff in the Business School the same question!
If the organisation is production or sales oriented in its marketing philosophy, the
answer given will focus firmly on the product or service offered for sale. So, seen
from this perspective, a senior executive of a company such as IBM might
describe the business in terms of “selling computers”. By contrast, a marketing
oriented executive would probably define IBM as “providing solutions to
customers’ business problems”.
In this latter definition, the emphasis has
switched from selling a product to satisfying consumer needs.
Managing Marketing
In a marketing-oriented organisation, successful management of the marketing
function cab be divided into four key areas: analysis, planning, control and
organisation.
Analysis: Successful marketing begins with a thorough understanding of
company, competitor and market activities. Information and its dissemination
becomes a crucial resource, informed by marketing research and the ongoing
development and refinement of marketing information systems.
Planning: Following on from the above, market opportunities must be rigorously
assessed and appropriate strategies developed.
Through careful planning,
customer needs become the focus of corporate decision-making and resources
are more efficiently allocated toward their satisfaction. In effect, the marketing
function acquires a crucial role in subsequent production, financial and human
resource decisions.
Control: Progress of the strategies developed must be continually monitored and,
where necessary, amended appropriately. The marketing-oriented company sees
control mechanisms as an essential failsafe, enabling corrective action to be
taken as soon as possible should the need arise.
Organisation: Last but not least, effective marketing management requires an
organisational structure which allocates specific responsibilities to specific
individuals, encourages effective communication throughout the organisation and,
most importantly perhaps, encourages all those employees within the
organisation who do not have direct contact with the consumer to nevertheless
remain totally focused upon satisfaction of the customer’s needs.
We will return to all of the above in subsequent sessions, particularly the final
session in the marketing block.
CASE STUDY: CORUS
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:1. Why is it important for business organisations today to be willing to
change?
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:
What environmental factors led to a change in business orientation at
Corus?

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?

What do you think a senior Corus executive might give today as an
answer to the question “What business are you in?”

Do the changes made simply involve marketing, or are there specific
areas you might pick out where the interface with strategic
management and operations are particularly apparent?
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!