Sample Management Essay Paper on Marketing Orientation

Marketing Orientation

Executive Summary

Marketing orientation is one of the most essential practices in the modern business. Using the Toyota Company as a case study, this paper explores the underlying importance of marketing orientation philosophy with organizations and the society as a whole as well as identifying its weaknesses. Through critical evaluation, the paper has established that marketing orientation plays significant roles in modern business marketing by driving sales, company’s performance, as well as customer loyalty and pride. Marketing orientation is divided into five components namely customer orientation, competitor orientation, interfunctional co-ordination, and organizational culture.

Marketing Orientation

Introduction

The concept of marketing has been evolving over time and new philosophies have come into practice aimed at driving sales and the company’s performance. For instance, as explained by Ochieng and Knerr (2015), in today’s business, customer is considered the king, which was not the case some years ago because businesses put other factors rather than customers at the forefront priority. According to Blattberg, Kim, and Neslin (2008), modern businesses orient their marketing around three core areas namely customers, production, sales, and product as illustrated by the chart below.

Source: www.learnmarketing.net

This article concentrates on one aspect of marketing by evaluating the concept of marketing orientation as practiced by the contemporary businesses. Cromer (2008) defined marketing orientation as a business philosophy or approach that primarily focuses on the identification and meeting the particular needs of its customers. It is based on treating and perceiving a customer as a king. In essence, this philosophy requires the business to react positively to the needs of its customers and satisfy their wants. As a result, as explained by Doole and Lowe (2005), a market oriented business make decisions that are based on the customers’ needs and wants. Key consideration of marketing orientation includes products, service, processes, and lastly research.

This paper uses Toyota Company as a case study to explore the underlying importance of marketing orientation. The paper is divided into three sections namely introduction, body, and conclusion. The body section discusses the marketing orientation practiced by the Toyota Company and it is divided into five sections namely customer orientation, competitor orientation, interfunctional co-ordination, and lastly organizational culture.

The Perspective of Marketing Orientation

Using Toyota Company a case study, this section of the article discusses the perspective of marketing orientation in the contemporary business. According to Hooley, Piercy and Nicoulaud (2012), the concept of marketing orientation can be divided into five components namely customer orientation, competitor orientation, interfunctional co-ordination, and lastly organizational culture. This section of the article assesses the principle behind of these components and their effectiveness in driving company performance and profitability: each component is discussed as follows.

(a) Customer Orientation

According to Spotts (2014), customer orientation can be described as a collection of actions or approaches that are used by the business to consider the needs of customers and satisfying them in delivering sales of services and products. It includes all types of business strategies that are developed to meet the needs and wants of customers. Lamb, Hair and McDaniel (2009) explained that the concept of customer orientation is all about understanding the customers and creating products and services that create superior value for them. Customer orientation, as used in the lean business model, requires employees as well as the management of the company to focus on the varying needs and wants of each and every customer. It is underpinned by the business philosophy that customers are kings and therefore their needs and wants should be given priority by the business.

This actually implies that a company customer oriented approach focuses on the products, services, and activities that are demanded by customers. Such companies achieve this by using three approaches namely (1) customer-driven approach, (2) product innovation, and (3) market change identification. As explained by Lindgreen and Ebrary (2010), marketers often use constructive criticism strategy to identify and adapt products, services, and activities that meets the changing customer needs: the figure below illustrates the concept of constructive criticism as applied in marketing and product development.

Singh (2004)explained that SIVA (Solution, Information, Value, and Access) is the common approach to customer orientation approach as applied by most companies. Basically, SIVA is a system of the famous Ps (Product, Price, Placement, and Promotion) of marketing reworded and renamed to allow companies focus on the customers. The beauty of the SIVA model is that it provides a more customer-centric model in marketing as compared to the 4Ps supply side model.

ProductSolution
PromotionInformation
PriceValue
Place (Distribution)Access

According to a statistics by Baaghil (2013), most modern companies including the Toyota are transitioning from the traditional to a more customer-oriented approach in terms of their product design, development, as well as marketing strategy. For instance, because the Toyota Company as fully embraces the idea and philosophy of customer orientation, it has to change its entire operations to fit the consumer needs. For example, at the moment, the company is producing a wide range of motor vehicles, which are designed to meet specific consumer needs depending on the region, level of income as well as tastes and preferences. The company is also spending huge resources in educating their employees about the customer needs to enable them suggest and adopt operations and products mix that meets the need of every consumer.

(b) Competitor Orientation

According to Schmid (2013), a business that is competitor oriented rests its strengths and weaknesses in relation to its competitors in the market. The company may use various indicators such as delivery times, pricing, production efficiency, innovation, customer satisfaction, and market share as well as employee retention to evaluate their performance against their competitors. In a competitive market, each company attempts to maximize and stabilize their positions against competitors in the market. Analysis of competition is very important to companies in their strategy development especially those which deal with other businesses such as wholesalers and resellers.

In addition to customer orientation, competitor orientation is a key strategy of creating customer value. As explained by Hill (2013), competitor orientation is an effective approach works by giving the business high level of competitive advantage in the market. According to Chaston (1999), a balanced focus towards the industry competitor is essential because it help in the identification and reinforcement of weak areas in marketing. However, unbalanced competitor orientation is destructive because exclusive attention on competitors may make a company neglect the needs of its customers. The focus of competitor orientation is on understanding the weaknesses and strengths of both potential and existing competitors in the market as well as discovering their attitude towards customer satisfaction.

Cheverton (2000) suggested that a balance mix of competitor orientation and customer orientation is needed in order to maintain high level of competitive advantage in the market. Through their strategy, the company is determined to understanding its competitors, types, and nature of technology they are using or offering, how they attract the target customers, and lastly the marketing tools they are using to promote their products and services. The competitor orientation focuses on creating awareness and developing both sort term and long-term capabilities against the competitors.

This marketing orientation is not effective to small and medium sized companies because, due to their market size, they choose to focus more on customer service that competition strategies. However, it is a very effective marketing orientation strategy to large companies such as the Toyota Company. Over the past 3-4 decades, the Toyota Company has successfully used this strategy in the development new motor vehicles, which are able to compete with other providers such as Mercedes among others.

(c) Interfunctional Co-ordination

At the beginning of 90s, the concept of interfunctional coordination was introduced and it was defined as the coordination of all activities of the company that would lead to a substantial increase on the overall performance of the business. As asserted by Stauble (2000), interfunctional coordination, as relates to marketing orientation, is all about using the company’s resources in order to create measureable value beneficial for the company’s customers. Because it has direct connection with marketing orientation, interfunctional coordination is one of the most important principles for driving sales and performance, as well as maintaining the company’s customers. It is made up of three essential components namely continuance, affective, and normative commitment.

According to Paley (2007), interfunctional coordination is an important characteristic of market-oriented companies in the modern businesses because it helps the company in becoming affective to customers in undertaking its business functions: being affective plays essential role in driving customer value and loyalty. In addition, this marketing orientation strategy is very successful in removing all the possible walls that might prevent effective marketing of the company’s brand to both existing and potential customers.

The Toyota Company uses a team of people from various departments and business functions to enhance their interfunctional coordination through planning, developing, and marketing of the company’s products. They work closely to define the needs of their customers and develop new products that would meet such needs and satisfy their customers. The Toyota Company achieves the required interfunctional coordination through interventional teamwork focused on building customer value.

(d) Organizational Culture

Rogers (2001) defined an organizational culture as a system of behaviors and values that lead to the establishment of both psychological and social environment in a company. He further stated that in the modern way of doing business, organizational culture represents collective principles, beliefs, as well as values held by members of an organization that influences their product, technology, market, management styles among other factors. Organizational culture includes all aspects of the organization such as values, vision, systems, norms, language, assumption, habits, as well as beliefs among others. The benefit of establishing organizational culture lies in its roles in linking managerial behaviors and employees to customer satisfaction.

When developing marketing orientation, every company establishes its own unique culture, which it is identified with. Through this strategy, every company works to establish its own personality, which is referred to as its culture. Even though organizational culture is invisible, it is very effective tool in marketing orientation in the modern business since consumers want to recognize with a particular behavior or culture. It reveals the shared values, which determines how an organization dictates how they act, dress, perform their jobs, as well as interact with customers. In a competitive market, every company develops a unique culture, which acts as a guideline and boundary on their behaviors as well as interactions with consumers in the market.

Over the years, the Toyota Company has established a strong organizational culture, which is characterized by innovativeness. The company is risk-oriented and places high value on innovations that encourages employees to adopt new creative and innovative ways in their jobs. This has worked miracles in the Toyota Company as they developed new creative and innovative motor vehicle designs. In addition, Toyota Company has successfully established an organizational culture that emphasize on the outcome. This has enabled them to focus on results rather than the means of achieving it. For example, the sales people do whatever it takes to make sales. Furthermore, Toyota Company has developed a strong organization culture that emphasizes on people and network. This strategy has helped Toyota company place high value on their organizational culture and work activities.

(e) Long-Term Creation of Shareholder Value

Marketing orientation is determined by the overriding business objective of creating long-term shareholder value. According to Doole and Lowe (2008), shareholder value is defined as the value that a company offers to its shareholders due to the ability of the management team in growing dividends, earnings, and share prices. This is reflected in the sum of all strategic decisions by the management team, which directly affects the ability of the firm to increase its efficiency in operation as well as profitability. Long-term creation of the shareholder’s value is an important aspect of marketing orientation.

Long-term development of shareholder’s value is a good marketing orientation strategy because it plays a significant role in the process of market capitalization, profitability, and growth of the company. Another importance of establishing long-term shareholder value is the need for increasing the wealth of the company owners. This creates confidence of both the shareholders as well as customers in the company thus playing a significant role in establishing a strong market share in the long term. In essence, this strategy helps the firm’s management in working hard towards ensuring that the shareholders’ capital earns higher returns throughout the business lifecycle. Hallberg (1995) asserted that the management decisions have great influence on various value drivers such as operating margin, revenues, capital expenditure, competitive advantage, cost of capital, cash tax rate, as well as investment in the working capital.

Over the past century, the Toyota Company has invested heavily in creating long-term shareholder value. The management team at the company has been working on strategies that ensure growth of the company’s share price, dividends, and revenues. Maximizing share price has significantly helped the company improve its marketing orientation thus attracting more potential customers and retaining the existing. The increasing profit has played a significant role in building a strong brand for the Toyota Company and reputation in the market.

Conclusion and Recommendations

Marketing orientation is a peculiar and important philosophy because it takes into consideration the significance of customer’s needs. As a result, it requires companies to satisfy their customer’s needs in order to exist in the market and provide both corporate and shareholder benefits. There is need to establish long-term customer relationship in order to sustain the corporate and shareholder benefits. A company that is market-oriented considers a customer as a king and puts him at the heart of the business. As a result, as explained by Doyle (2008), all activities of the company revolve around the customer. This approach is very effective in driving sales and company performance in the market. From market development to sales of products, the company endeavors to understand the specific needs and wants of every customer. Marketing orientation is a very important marketing strategy in today’s competitive world where there are many companies competing for scarce customers.

It is recommended that every company adopt marketing orientation strategy in order to achieve maximum benefits from the market. As explained by Ferrell and Hartline (2014), most companies and markets are moving towards market-oriented approach consumers require more variety and quality products as they become more knowledgeable about the market. The first step towards achieving this requirement is training and empowering your staffs. A company needs to train all staffs including salespersons, customer-service representatives, and call-center staff. The training should be beneficial in enhancing the employees’ knowledge of marketing orientation philosophy and the available tools of implementation.

Secondly, marketing orientation starts from the top. If a company wants its employees to care about its customers, priority should start with the top management and flowing down to junior employees. The top management of a company should make it clear to other employees that customers are important to their company’s success (Shankar & Carpenter, 2012).

In addition, the company should hire only people who fit and are capable of enhancing the concept of marketing orientation for their corporate and stakeholder benefits: they should fit in the organizational culture that has been established by the company. Lastly, the company should ensure that everyone is involved in the marketing orientation strategy: every employee should have something to do about customer service (Hooley, Saunders & Piercy, 2012).

References

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