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0024-6301/83
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Pergamon
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Division
The author
U.K.
Marketing:
Effectiveness
91
Environmental
Influences
on Organization
~-------_----_
INPUTS FROM
ENVIRONMENT
+I
__
ORGANIZATION
ii
1
b
I
i
OUTPUTS
TO
ENVIRONMENT
Organizational
Influences
upon the Environment
Figure
A The Mechanistic
Market
Environment
This diagrammatic
representation
is designed simply
to reflect the way in which different organizational
structure
might
respond
over time to market
environment
changes. It is not intended
that the
market environment
changes at a constant rate but
is presented
in a linear fashion for the sake of
simplicity.
Likewise practical problems of mcasuring the amount of change are not considered.
The
important
points to note are that a rigid structure
should change in a stepped fashion whilst an organic
structure will change more gradually and will be
able to respond more easily to small environmental
changes. It will be likely that the mechanistic
type
structure will retain its form for as long as possible
before changing to cope with its new environment.
It is further likely that when an organizational
change is undertaken
it will be undertaken
not only
to meet the current environmental
situation but
also to meet future
predictions
regarding
the
environment.
The mistake made by Baligh and Burton involves
the belief that the full application
of the marketing
concept involves responding
to meet every change
in the market environment.
The employment
of
the marketing
concept is to enable one to identify
profitable
segments of the market and does not
involve ignorance of all costs. Taken to its logical
Type Organization
Time
Time
Figure
92
Long
Range
Planning
Vol. 16
August
individual. Employing
the marketing concept does
not mean that one tries to satisfy completely
every
customer at any price. Its use is designed to ensure
that one is adequately
satisfying a large enough
number
of customers
in order to achieve
the
objectives
of ones organization
with regard to
profit,
turnover
or whatever
criteria
has been
previously
determined;
continual
monitoring
of
the environment
ensures
that either one can
continue to meet these objectives by changing the
product
mix or if it is more feasible, that ones
objectives must be revised in accordance with the
new
conditions.
The
position
which
seems
applicable to the first case study example by Baligh
and Burton. Adoption
of the marketing
concept
does not mean that the telephone company is forced
to take as much of the PBX market as it possibly can
but simply to ensure that it remains in a profitable
sector where it can survive. If the market declines
far enough so that the telephone company can no
longer achieve satisfactory
returns then it must
perforce change its structure and become involved
with problems
of regulation
and competition
in
order to survive.
If the telephone
company
is
monitoring
its environment
and is consciously
taking a decision not to alter its structure for cost
reasons this is just as valid an employment
of the
marketing
concept as if they attempted
to retain
their previous market by altering to meet its every
need. It is still using the market environment
as a
basis for its decisions regarding its structure. Only
by adopting a marketing concept is the firm likely
to recognize the point at which the environment
has changed sufficiently
to justify a change in its
structure with all the costs and difficulties involved.
Baligh and Burtons second case study suggests a
firm that has recognized a segment of the market as
being profitable enough for its own aims and enjoys
a strategy of concentrated
marketing
rather than
differentiated
marketing.5
Employment
of the
marketing
concept by the firm Dassault would
ensure the monitoring
of the total aircraft market,
or indeed transport market, in order to ensure that
they
remained
in a profitable
segment.
A
completely
introspective
firm is certain to come to
grief eventually since the dynamic market situation
will change leaving it with an obsolete product and
no knowledge
of how best to stay in business. The
firm must be marketing orientated in at least three
directions.
Firstly, it must watch for the changes in demand
originating
from the consumer-for
example the
increased wealth and industrial location associated
with the development
of North
Sea Oil has
stimulated a whole new system of domestic flights
in the United Kingdom.
Secondly,
it must
be remembered
that
the
environment
one is monitoring
not only includes
the customer
but also the competitor.
Structural
1983
changes
changes
with
Thirdly,
even if ones organizational
structure in
such a highly competitive
field as the aircraft
industry. allows one a leading edge in technological
development,
this is not always a guarantee
of
success. A classical example of this has been the
development
of the Anglo-French
Concorde.
Undoubtably
in many
respects
Concorde
is
recognized
as being
the most technologically
advanced passenger aircraft in the world, yet as a
commercial
venture it would have been a disaster.
The reason for this is evident-there
is simply not
an existing
market large enough
to make it a
profitable
concern after taking into account the
costs involved.
Monitoring
the aircraft
market
would have shown not a development
towards
faster flight but a development
towards large scale
economy
flights using long haul, large bodied
aircraft
with
low passenger
costs per head.
Concorde
is left with a small market segment
wanting
fast, expensive
flight.
It is doubtful
whether any commercial
firm acting alone could
have developed the plane such were the costs; but
the lesson remains true for any firm who neglects to
observe its environment
for the sake of its structure
or anything
else-it
will undoubtable
produce
something
that no-one wants.
In conclusion
it can be said that it is not the
marketing concept that is inappropriate
to all forms
of organization
but the marketing strategy the firm
adopts-that
is the degree of concentration
or
coverage
of the various segments.
To make the
correct choices regarding its strategy it must adopt
an environmentally
based outlook and ultimately
the
interrelated
aims
and
structure
of the
organization
must be derived from the market. The
alternative for Dassault is not to enter production
in
all market segments at high costs but to monitor the
total market. Then if the occasion arises when, after
allowing for organizational
upheavals, they could
be more profitably
engaged in another segment.
Recognition
of this will have been made using the
marketing
concept as a logical basis for all their
decisions.
References
(1)
(2)
J. Woodward,
(3)
T. Burns, Mechanistic
and organismic structures,
New Age, New Society, 31 January (1963).
(4)
T. Levitt, Marketing
myopia, Modern
Marketing
Strategy
Bursk and Chapman),
Harvard University Press (1964).
(Ed.
(5)
P. Kotler,
Marketing
Management-Analysis
Control, 3rd edn, Prentice Hall (1976).
and
Management
and Technology,
HMSO
(1958).
Industry
Planning
in a