Market_Orientation

As a Business philosophy, market orientation is a management frame of mind. Discuss the core elements that need to be present to ensure such an orientation can prosper and flourish. A business philosophy is the primary principle that forms the operation and existence of a business. This can be defined through the market orientation of the business. The term “market orientation” refers to the degree to which a firm implements the marketing concept (McCarthy and Perrault, 1984). There are various definitions of market orientation, A business that takes the approach of being customer focused, with full co-ordinated organisational support and positive profitability. The three major components of market orientation – 1) customer orientation, 2) competitor focus, and 3) cross-functional coordination - are long-term in vision and profit-driven. By Stanley F. Slater, John C. Narver. 1) Customer Orientation: The challange of any business is to determine what the customers want and to be customer focused, which is the core philosophy if marketing. A business needs to understand the customer, to do so they need to become customer orientated, this can be accomplished by the undertaking of various techniques that take in account a customer’s needs and creating value for them on a regular basis. A business will also need to continually improve their customer orientation as a strategic measure which should provide a competitive edge and future development of the company. Customer needs are current and future this should allow a business to echoes Houston (1986) in that it urges organizations to anticipate needs and initiate steps to meet them. Employees throughout the organization need to spend time with customers, and involving customers to be part of key decisions this will allow for different views and ideas on a business being customer orientated as well as customer satisfaction by a business showing the customer their interest and want to satisfy their needs, as well as creating customer loyalty. 2) Competitor Focus: In order for a business to become more successful they also need understand the strengths and weaknesses of their competitors and when the key factors have been identified in customer orientation the business to be able to differentiate themselves from the competition. Being competitor focused allows a business to position themselves favourably in the market. A business should constantly monitor their competitors and consider any threats carefully and this information should be shared throughout the organisation, by doing so a business can respond faster to the market demand, develop and place themselves one step ahead. 3) Cross- Functional Coordination. Another key starting point is the incorporation of customer orientation in the business, starting with management, and then actively implemented throughout the business across all hierarchical levels. Integration of effort by all areas of the organization to satisfy corporate goals by satisfying customer needs and wants (Perreault and McCarthy 2002). By having all departments involved a business creates the addition of value for the customer. Every department, facility, branch office, and other organizational unit has a role that must be defined and understood. All employees, regardless of their distance from the strategy formulation process, must recognize their role in helping a firm achieve and sustain competitive advantage. (Michael Porter 1985). Competitor Focus A organizations hierarchy should be focused around the customer which will allow the involvement of all departments. This creates a positive input from all levels of the business and allows a faster more efficient and effective approach at meeting the customers’ needs. The customer focus needs to start with top management and be a core value reflected down through the business. Customer Focus Cross Functional Coordination Market Orientation Competitive Advantage Positive Performance – Employee and Profit With those three factors in mind the market orientation concept has to be an overall strategy for positive progress in the business. Studies show that businesses that are market orientated and adapt the three core values have a positive outcome on sales growth and profitability, customer loyalty or retention and also new product development success. References: Kohli, A J., Jaworski B J., 1990 Market Orientation: The Constuct, Research propositions, and Managerial Implications. Journal of Marketing Vol. 54, 1-18 Narver J C., F S Stanley., 1990 The Effect of a Market Orientation on Business Profitability. Journal of Marketing , 20-35 Gronroos, C., Defining Marketing: A Market Orientated Approach, European Journal of Marketing 23,1 52-59 Martin Roll “Market Orientation – Essentail foundation for a strong marketing strategy”. Venturerebulic.com 27 Nov, 2010 http://www.venturerepublic.com/resources/Market_orientation_marketing_strategy_brand_leadership.asp Stanley F. Slater "Market orientation, customer value, and superior performance". Business Horizons. FindArticles.com. 27 Nov, 2010. http://findarticles.com/p/articles/mi_m1038/is_n2_v37/ai_15419777/ Singh S., “Market Orientation, corporate culture and business performance”. 2004 Business Econmics. books.google.co.uk. 27 Nov, 2010. http://books.google.co.uk/books'id=GpnxhGg1pfoC&printsec=frontcover&dq=market+orientation+and+its+implications The marketing audit is a fundamental marketing management tool that shapes, focuses and determines decision making. Outline the key component parts of the audit and indicate how an analysis of each will aid in the development of organisational core strategy. "A marketing audit is a comprehensive, systematic examination of a company's marketing organization, strategies, tactics, objectives, and activities. A marketing audit enables senior management to discover the organization's strengths and weaknesses in relation to opportunities and threats it faces in the marketplace, and pinpoint more effective uses for the available marketing resources" (Willson, 2003). A marketing Audit has 4 Characteristics: Comprehensive – The audit covers all major marketing issues facing the organisation. Systematic – The audit should take place in an orderly sequence and cover the organisation’s marketing environment, internal marketing system, specific marketing activities. Independant – The audit is normally conducted by and inside or outside party will have objective. Periodic – The audit should be carried out on a regular basis to be successful. (Lamb CW,. Hair JF., Mcdaniel C., 2008 Essentials of Marketing pg 48-49) The audit process and components outlined by Professor Philip Kotler (marketing management – 11th edition) Environmental audit The Environmental audit consists of two key areas the Microenvironment(external factors) and Microenvironment(internal factors). As part of the businesses planning and objectives an audit of these environments should take place annually. Macroenvironmental audit The External factors that a business should take into consideration are Social/Cultural, Legal/Political, Economic, Physical and Technological. These factors all have affects on a business’s performance. By considering these factors a business can identify key future events that can be beneficial to the business, make key decisions when threats and opportunities become visible as well as identifying any uncertainties in the market. A business will also be able to recognize who their competitors are. Microenvironmental audit The internal marketing audit consists of analysing factors that affect the marketing organisations immediate environment. These allows the business to look closely at its strategy and objectives, marketing systems that are in place, the business structure, the operating results and the effectiveness of the marketing mix. Marketing strategy audit This audit involves assessing the business direction and how well it is adapted to in the current and future changing environment. Strategies are a means of achieving objectives, without a strategy the business will have no goals which will result in unfocused employees. The strategy audit reveals who the organization should do business with, and where to position themselves in that target market. Marketing organisation audit This is an evaluation of the businesses structure and capabilities and how well they are implemented in the current and future environment. Is the business efficient with a well structured marketing team and is communication about goals between all departments comprehensible and apparent. Unclear and unobtainable objectives and strategies can lead to confusion and poor quality in work. Which affects how the production, sales, value and satisfaction is perceived by the consumer. Marketing system audit The system audit allows management to access and analyse the planning and control for the business. It is vital as it gauges whether or not objectives and goals have been achieved. As well as should the plan be re evaluated, and re implemented. Marketing productivity audit Is used to examine the sales, profitability and cost effectiveness of marketing. Marketing productivity defined by Hawkins, Best and Lillis (1987) as “relative market share times relative price divided by marketing outlays Marketing functions audit A business must use the marketing mix of product, price, promotion and place/distribution to create a positive combination that will appeal to its target market. The concept of the mix has proved a helpful devise in teaching, in business problem solving, and as an aid to thinking about marketing (Neil H, Borden, 1984).The audit will reveal how price is perceived by the customer and the value the customer gets from the purchase, as well as whether or not the business has chosen the right promotional methods. Distribution channels need to be clearly defined and looked after so sufficient products are available to the target market. The marketing audit and analysis is an ongoing and ever changing process that by being constantly reviewed and adjusted will help to identify changes and opportunities for the business. By acknowledging the assessment the business can maintain competitive advantage and solid marketing strategy. Referances: Kotler P., Gregor W T., Rodgers III W H., January 15, 1989 The marketing Audit Comes of Age (online)Accessed 27 Nov, 2010 http://sloanreview.mit.edu/the-magazine/articles/1989/winter/3025/the-marketing-audit-comes-of-age/4/ Lamb C W., Hair, Jr. J, McDaniel C., 2008 Essentials of marketing (online) South Western Cengage learning, Accessed 27 Nov, 2010 Business & Economics http://books.google.co.uk/books'hl=en&lr=&id=9Kf_O1eI0J4C&oi=fnd&pg=PA13&dq=essentials+of+marketing Loudon DL ., Loudon D., Stevens R., Wrenn B., - 2004 marketing Management Text and Cases, Best Business books, (online) Accessed 27 Nov, 2010 Business & Economics http://books.google.co.uk/books'id=_cBLrJ6FO4EC&pg=PA221&lpg=PA221&dq=marketing+system+audit&source