Marketing Culture and Orientation

The Development of Marketing

What is marketing?
The Strategic Orientation of Business
Developing a Marketing Orientation
Strategic Implications of a Marketing Orientation
Coordination of Marketing with Other Management Functions
Organization for Marketing

A. The Development of Marketing

 When communities began to specialize they produced surpluses in certain products
which they then sought to exchange with other communities.
 The need to exchange goods encouraged the emergence of local markets where different products could
be brought together in one place for sellers and buyers to trade.
 In these simple market structures, the sellers had a fairly good idea of what pleased their customers,
since often they were neighbors of each other.

The Industrial Revolution

 Prior to the 17th century and the start of the Industrial Revolution, producers and merchants
tended to operate on a small scale, concentrating their operations in very localized markets.
 The Industrial Revolution, however, brought with it advances in technology and production techniques which
meant new processes, greater output and a transformation of the British economy away from its
dependence on agriculture to one of industrial production.\
 Industry now became more remote from its markets as it sought power and fuel to generate its
machines.
 The era was founded on the principle of supply in trying to satisfy even greater demands by increasing
production efficiency.
 It laid the foundation of the modern industrial society, with sophisticated systems
of marketing institutions and finances, all of which are based on the fundamental concept
of carrying out trade through exchange.
The 20th Century
 The invention of the internet has had a major impact on businesses and the way customers
purchase products by providing customers with wider access to products and services, more information
to inform their purchase decisions and more transparent pricing and by providing businesses with both
opportunities and threats, for example, being able to reach new and wider markets but being exposed to
increased competition.
 All kinds of industries are now engaged in an intense struggle to establish customer preference in favour
of their products over that of the competition.
 Rather than wait for orders to come to them, the industry must go out and manage demand for its
products by winning customers and also importantly retaining customers by building customer

Advertising appeared as a means of stimulating sales.

Branding and packaging were developed as a way of saying something about the quality of the product.
Salesforces were introduced rather than relying solely on the merchants to find and develop new markets for
their products, while products themselves were developed to better satisfy customer needs.

B. WHAT IS MARKETING?
 Marketing is now recognized almost as a science.
 It is seen as a logical approach to business which involves the studying, and understanding, of
relationships and exchanges between buyers and sellers.
 Various definitions of "marketing" have been proposed by practitioners of marketing:
"Marketing is a human activity directed at satisfying needs and wants"(Kotler).
"The management process responsible for identifying, anticipating and satisfying customer requirements profitably" (CIM).
 In marketing terms, a customer's needs, wants or requirements tend to mean a product or service.
  Products are tangible, albeit the wider meaning of a product includes intangible benefits such as after
sale service and services are intangible.
 People can satisfy their requirements, or problems, in one of four ways:
a. Self-solution (coming up with the answer to the problem themselves)
b. Force (threatening/stealing)
c. Begging (pleading/seeking sympathy)
d. Exchange (offering something of value to the owner).
 This value exchange summarises marketing and applies in every type of product exchange, from the
simple purchase of a bar of soap by a customer in a supermarket, to the purchase of attack aircraft by a
government.
 In every case both parties give, or exchange, something of value to the other. For this to be possible, two
parties must:
a. Have something of value to exchange
b. Be capable of communicating
c. Be free to accept or reject the exchange situation.
d. The existence of these criteria does not necessarily mean that an exchange WILL take place only
that it is possible.

C. THE STRATEGIC ORIENTATION OF BUSINESS

Production Concept

 A company following this concept is operating on the idea that the more you can produce the more you
can sell.
 Managers assume that customers are only interested in the availability of products and low prices
and that marketing is not necessary. This may or may not be true.
 Consider the following examples:
a. A fashion company making exclusive dresses, selling on average at £3,000, produces and sells 12 dresses
each month. If they were to double their production rate it is unlikely that they could retain their
"exclusive" appeal.
b. This would mean prices would have to be reduced and revenue would fall not to mention the increased costs
in materials and labour needed to make more dresses.
 Companies following a production orientation gain from:
a. Economies of scale
b. Reduced marketing and production costs
c. Greater market share
 d. Strength over the competition.

 However, they lose:

a. Any degree of "exclusive" appeal
b. Close contact with customer needs
c. High levels of customer loyalty.

Product Concept
 This type of orientation is present when managers in the company believe that customers will
recognize a good product or service and buy it when it is made available.
 The managers have such a firm belief in the quality and appeal of their product that they cannot
accept that customers may not readily see the same advantages and they fail to undertake any marketing
or even carry out essential research before beginning production.
 Consequently the managers are dumbfounded when customers are not beating a path to their door to
buy up the existing stocks
 We must not overlook the fact that sometimes a good product does have a good future and that the belief of a
manager can save the product from disappearing.
 Innovative products spring from creative minds and sometimes creative minds can be far ahead of the
majority of the public.
 It is only after a period of time, and education, that people will appreciate the benefits and begin to buy.
 The product may then take off and become very successful.
 If every new product that did not sell was dropped immediately we would never move forward, but to simply go
ahead and produce a product because its creator believes in it is dangerous.
 Companies following a product orientation can only be successful if:
a. There is a current demand for the product
b. There is a potential demand for the product
c. Products are given full marketing support
d. Products meet customer requirements.
 Thus it is obvious that product orientation MUST, if it is to be successful, be adopted only after research
has been carried out.

Sales Concept
 Orientation on selling means that the company sells what it makes ²it does not make what it
can sell.
 Managers believe that buyers have to be "coaxed" into buying by aggressive techniques.
 This will involve heavy activity on the selling and promotional aspects with perhaps discounted prices
being used and incentives to buy being offered.
 The company is more interested in "moving stock" than in stocking the right goods.
 Sales orientation usually implies the existence of an aggressive sales-force and this can bring a
company into disrepute.
 If a salesperson is more interested in his/her commission from a sale than in repeat business
from a customer they are more likely to use methods which could be, to put it mildly, disreputable.
 Corporate reputations can be damaged very easily, but can take a long time to be recovered.
 The sales concept only works when:
a. There is little need for an after-sales service
b. Companies are not interested in forming relationships with customers
c. Buyers have low expectations of the product or service
d. Repeat purchasing is unlikely.

Marketing Concept
 Companies following the marketing concept firmly believe that the customer is the key to
successful business.
  Unlike the three concepts discussed above, the marketing concept actually begins WITH the
customer and the company is trying to provide what the customer wants rather than making the customer
want what the company has.

 If an organization is following the marketing concept it will have three distinct characteristics:
a. Customer Orientation – The organization must define customer needs from the point of view of the
customer and not its own. It will need to seek information actively from the marketplace in order to assess
whether the offerings are meeting customer requirements and, if not, why not.
b. Organizational Integration – all functions, sections or departments of the organization must
work together to meet the overall objectives of the organization which must be to satisfy customer
requirements. When individual sections of a company do not fit in with the total effort there may be friction or
problems which can result in lost opportunities or dissatisfied customers.
c. Mutually Profitable Exchange – The organization is entitled to a reasonable profit for a reasonable
product. The customer is entitled to a reasonable product for a reasonable price. In other words ²both should be
satisfied. This satisfaction may well be the result of negotiation where the customer has accepted
an alternative product or where the organization has had to accept a lower profit ²but they must be
satisfied with the exchange. If it is not a mutually accepted exchange, it is not marketing.

D. DEVELOPING A MARKETING ORIENTATION

 The Need for Integration – Marketing affects most other activities in the company, so it is inevitable there will be a lot
of discussion between managers about the outcome of the marketing decisions. The situation can
change if a marketing concept is introduced gradually, rather than overnight. Even in companies which consider
themselves to be marketing oriented, changes in activities which will affect other departments must be
made with care, so that managers are aware of the benefits they can achieve as well as the different working routines,
which they may not like

 Introducing the Marketing Concept – The activities called "marketing" go on in most companies and it
is useful to identify just what level they work at. If the marketing function can be shown to be useful to
other departments, any changes which may be recommended will be accepted more readily. When
"marketing" can be seen to be beneficial to other departments, changes can be made so the total
marketing effort is more efficient.

 Internal Marketing – You might have deduced by now that the marketing manager has a marketing job to do
within his own company if he is to introduce the marketing concept fully and effectively. Internally, there is a variety
of “customers", starting with the chief executive (to be handled with care) and including all the
directors and senior managers. The marketing effort required here will be to persuade them that the
inconveniences which marketing will demand are worthwhile in the long run. Many of the ideas used to
communicate with customers outside the company can also be used, with modifications, to
communicate with people inside the company.

E. STRATEGIC IMPLICATIONS OF MARKETING ORIENTATION

 External Changes
The change from sales orientation to marketing orientation was described this way by Levitt in his famous
article Marketing Myopia: "Selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is
preoccupied with the need of the seller to convert his product into cash; marketing with the idea of satisfying the
needs of the customer by means of the product and the whole cluster of things associated with creating,
delivering and consuming it."

Changes in the company's strategy, as it changes from sales orientation to marketing orientation, will be
evident to people outside the company in various ways and we can look at some of the more
significant strategic changes.

 Product Design
Customers will see the changes which they asked for in design now begin to be available, whereas
the sales-oriented company just wanted to push what they had or could get easily. Customers will notice that the
 sales team will ask more questions and there may even be marketing researchers asking questions about
desirable features in products.

 Suppliers
The old, long-run demands for existing products will be replaced by shorter-run demands for different
products to suit customers' needs. There ought to be a new enthusiasm in the company, which will be reflected in
purchases of raw materials and components. Product line changes will show in different buying patterns
in the company and ideas might also come through for quite different types of supplies.

 Publicity
A marketing-oriented company will be much more "visible" inappropriate journals and maybe in other
media too. There will be more originality in the design of advertising campaigns and evidence of co-
ordination of different media.PR campaigns will be evident and the company name will feature more prominently
in trade and other journals as articles are published by the company's technical experts. If the new strategy
runs to sponsorship of sporting events, there will be dramatic changes in publicity efforts; selling activities
ought to synchronize with sponsorship activities as far as possible.

 Distribution
"When do you want it?" might surprise some customers who have become accustomed to "You'll have it
next Tuesday, when the lorry will be round your way".

Scheduled deliveries to fit in with the customer's production plans may even feature in the strategy of a
marketing-oriented company. "Just-in-Time" deliveries are part of the marketing strategy of some suppliers,
who get the benefits of long-term association with valued customers.

 Prices
There are not likely to be any bargains simply because a company changes its strategy from sales to
marketing orientation, but the prices and terms which are applied are likely to be more realistic. Financial
arrangements should be more in line with the customer's individual needs, because the marketing-
oriented company will see the total offering, from analysis of the customer's needs right through to
satisfying them, as one integrated concept.

F. COORDINATION OF MARKETING WITH OTHER MANAGEMENT FUNCTIONS

 The most important single element in the implementation of the marketing concept is that
of coordination ²or bringing together and reconciling a diversity of conflicting views and attitudes in
order to design a uniform customer-orientated plan of action.
 In effect the marketing department has the responsibility for coping with all the vagaries of the
marketplace.
 It provides the organization with forecasts and estimates of sales volume, profitability and
market potentials, as well as the limitations imposed by the company on resources and policies.

G. ORGANISATION FOR MARKETING

 Regional/Geographic – This is a very simple way of splitting up responsibilities. The region can be small
(local towns) to very large (Africa, Indonesia, United States, etc.). As the business develops each area can then
be sub-divided to cope with increased work, e.g. north, south, etc. or perhaps in one of the ways we
consider below.

 Task/Function – Typical functions to be found in organisations are: Finance, Production, Purchasing,

Marketing, Personnel, etc. Structuring a company by this method means that, irrespective of the region involved, there are
people who are responsible for certain activities with the resulting benefits of experience and
expertise. If a company organizes in this way and then subsequently grows in size, it may further sub-divide the
activities into regions.
 Market/Customer – Depending on what is being offered by the company this may be a very good way
of structuring. For example, a company which provides diagnostic testing media will have many different
types of customers: hospitals, agricultural testing laboratories, food manufacturers, public health
laboratories, cosmetic manufacturers. Having personnel who deal with specific customer groups
means that expertise can be built up and specialized knowledge is available to deal with
any relevant problems.
 Product/Technology – This type of structure is usually found in the large conglomerates which have
a wide range of products, e.g. ICI has paint, chemicals and textiles, which are used by different people
for different purposes. The production processes can vary greatly and may have their own requirements
which demand that they are regarded separately. Add this to the different customers they are likely to be
dealing with and you can see why such a structure might be used.

 Matrix – This is a form of management structure which involves bringing personnel from
various sections of an organization together for specific reasons. Predominantly used for a problem-
solving exercise, it is most commonly used for managing complex projects and has the benefit of multiple-
skilled and experienced people working together. NASA (North American Space Agency) was
one of the first organisations to use this type of structure when they wanted to land a man on
the moon!

 Vertical and Horizontal

a. Vertical structure can mean a long chain from the top to the bottom of the organisation, with power
and authority reducing the further you move down the chain of command.
b. Horizontal structure means fewer "lines" of management and that people are nearer to the top. This
can create better communication links which add to the overall efficiency and effectiveness levels

 Strategic Business Units – The evolution of markets and business into the highly complex and
competitive state which exists today has led many companies to base their activities on Strategic
Business Units (SBUs). This idea was first introduced by McKinsey & Co. (USA) for
General Electric in the early 1970s but it is common practice today.