Multimedia Marketing/Marketing.iso/market/chapter1.4p

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SECTION 1.4  Business Orientation

INSTRUCTIONS Reflect for a few minutes on your philosophy of business--What, in
your opinion, are the overriding objectives of a company?

EXAMPLE

A small New Mexico based company has an effective philosophy of
business--it attempts to produce products that consumers demand. The
owner designed custom cat collars for her own cat and found that many
neighbors admired these items. The cat owner decided to sell similar
collars to neighbors and friends. She asked them for their preferences
and designed products accordingly. This effort was successful, leading
her to list the products in catalogs widely-read by consumers. By
keeping her ear to the market and designing only collars that are in
high demand, this individual has managed to earn substantial profits.

DETAILS

Long run success requires that a company find and maintain some type of
"differential advantage" (superiorty over competitors, in the eyes of
consumers) over its competition. There are four managerial
orientations or "business philosophies" that suggest how managers can
develop this: a production orientation, a sales orientation, a marketing
orientation and a societal orientation.

In this case the "orientation"means the major objective of the
business. Is the major objective to produce, to sell,  to market
goods and services, or to maintain the physical environment? A
company's orientation can be discovered by asking management to answer
the question: "What are you in business for?" Quite different answers
will come from different companies, revealing major disparities in
philosophy.

A "production orientation" holds that the key to business success lies
in solving technological problems. Managers who embrace this philosophy
may insist on product quality, but they do so from a technical
perspective, seeking products that are viewed as useful or important
by engineers and other specialists. They seek standardization and place
little emphasis on designing the right product to meet unique customer
needs. They also de-emphasize the importance of promoting the product ,
securing the right distribution , and other marketing activities.

Essentially, the philosophy assumes that good items will sell
themselves. Some of the U.S. auto manufacturers held this philosophy
in the years prior to the 1970's. They were generally engineering
oriented. But, major inroads by foreign competition forced a change
in management and the adoption of a marketing orientation.

Managers with this philosophy may over-engineer a product. This means
creating an offering that has more features and costs more than
consumers want. It is possible to create toys, for example, that are
so durable that they literally will last a lifetime. But the cost
would be exhorbitant for most parents. Most of these buyers would
rather pay much less and take the chance that their children will
break or misuse the toy.

PROBLEM 1

The management of a machine-tool manufacturer is dominated by the
production orientation. What phrase sums up its philosophy?

A. "We should produce products that meet unique demands of customers."
B. "Good products will sell themselves"
C. "We should hire a hard-hitting sales force to sell our items"
D. "Our products should be good for the environment."

WORKED

A machine tool producer with the production orientation
might believe that good products will sell themselves, and act on this.
Followers of the production concept accept the philosophy that "If
you design a better mousetrap, consumers will beat a path to your
door trying to get it". They see little or no need for marketing
activities. In an economy where consumer goods are very scarce but
demands for such goods are great (such as in China today) this
concept may work. But it has little chances of working in advanced
economies such as the United States, Canada, and Germany, where
consumers seek products that satisfy their unique needs.

ANSWER   B

INSTRUCTIONS Reflect for a few minutes on your philosophy of business--What, in
your opinion, are the overriding objectives of a company?

EXAMPLE

A small New Mexico based company has an effective philosophy of
business--it attempts to produce products that consumers demand. The
owner designed custom cat collars for her own cat and found that many
neighbors admired these items. The cat owner decided to sell similar
collars to neighbors and friends. She asked them for their preferences
and designed products accordingly. This effort was successful, leading
her to list the products in catalogs widely-read by consumers. By
keeping her ear to the market and designing only collars that are in
high demand, this individual has managed to earn substantial profits.

DETAILS
A sales orientation is the second guiding business philosophy. Based
upon substantial personal selling and mass promotion activities, its
emphasis is on persuading potential customers to buy the firm's
products. As with a production orientation, management does not tailor
products to meet unique customer needs. Instead, the thrust is on
convincing as many prospects as possible that the company's items are
what they want. Some used car dealers adopt an extreme form of this
philosophy by exaggerating--even lying--to obtain sales. They feel
that if they are sufficiently glib, marketing success will follow.
This, of course, is not true.

It may be evident that a sales orientation shares some of the defects
of a production orientation. Both are myopic, focusing on the needs of
the seller rather than the needs of the buyer. Retail managers who
embrace either philosophy , for example, are likely to carry easy-to-
handle products and schedule their store hours and services for the
convenience of management instead of customer preferences. Thus, both
are risky strategies indeed since long run success is based upon
building lasting customer relationships where both the firm and its
customers are satisfied.

Not surprisingly, many companies that have a sales orientation are
led by a chief executive who came up through the ranks through sales.
In fact, sales representatives learn many of the people and product
knowledge skills on the job that are needed to become the top ranked
officer in the company. An ex-sales representative or sales manager
can easily slip into the trap of thinking that the world revolves
around sales. The sales orientation is a result.

PROBLEM 2

A manufacturer of expensive precision-built wall clocks is dominated
by the sales concept. What sums up this philosophy?

A. "The key to our business is to design creative advertising".
B. "Our clocks are the best in the business. This keeps us competitive."
C. "We conduct consumer research and try to use this in designing
    clocks."
D. "We attempt to provide stable employment for our workforce."

WORKED
A manufacturer of expensive precision-built clocks is dominated
by the sales concept and would  believe that the key to its
business is to design creative advertising, or some like belief.

Followers of the sales concept, such as the clock company management,
do everything they can to stimulate sales. This means major emphasis
on advertising, personal selling, sales promotion, and publicity. They
are not concerned about whether or not the products meet the needs of
consumers. Many companies in the United States in the 1920's embraced
this philosophy. If they could employ an aggressive sales force and
conduct large advertising campaigns, they felt that they were on their
way to success.

ANSWER  A

INSTRUCTIONS Reflect for a few minutes on your philosophy of business--What, in
your opinion, are the overriding objectives of a company?

EXAMPLE

A small New Mexico based company has an effective philosophy of
business--it attempts to produce products that consumers demand. The
owner designed custom cat collars for her own cat and found that many
neighbors admired these items. The cat owner decided to sell similar
collars to neighbors and friends. She asked them for their preferences
and designed products accordingly. This effort was successful, leading
her to list the products in catalogs widely-read by consumers. By
keeping her ear to the market and designing only collars that are in
high demand, this individual has managed to earn substantial profits.

DETAILS
The marketing orientation (also called the marketing concept) is a
relatively new philosophy of doing business, but an increasingly
important one. A firm that advocates this orientation attempts to
attain its objectives by organizing and integrating all activities
around satisfying its customers' needs. Management realizes that
customer satisfaction is crucial or else the company will not achieve
its objectives.

Companies that employ the marketing concept try to determine the
needs of target customers. Some use marketing research to determine
these needs; others use judgment , intuition, and marketing theory
as guides. After determining customer needs they develop products
or services designed to fill these needs. These firms also formulate
pricing and place patterns intended to appeal to target customer.
Finally they promote the products or services in a manner designed
to convince these consumers that transactions with the firm are
need satisfying.

Under the marketing concept, all employees of the company, not just
those in marketing, attempt to satisfy consumers. At the same time,
they attempt to earn a profit for the company. There is no point in
satisfying consumers if the company goes out of business.

Coordination is a key to implementation of the marketing concept.
Marketing should coordinate what it does with production, finance,
engineering, personnel, and any other department that might have a
role in satisfying customers.

Companies that practice the marketing concept often involve their
sales forces in "consultative selling". This means that the sales
force acts as consultants for prospective customers, helping them
discover problems, define needs, and satisfy needs. Sales
representatives work as partners with prospective customers, rather
than trying to sell to them in a combative struggle.

PROBLEM 3

Which of the following actions of an appliance store illustrates
the marketing concept:

A. The store uses a commission system of compensating its sales
   personnel, whereby they receive ten percent of all of the
   sales they generate.
B. The store stocks only the highest quality appliances.
C. The store spends more on advertising than any competitor in its
   market area.
D. The store remains open 16 hours a day because many customers work
   and must shop during evening hours.

WORKED
If a store remains open 16 hours a day because many customers
work and must shop during evening hours, this is an illustration
of the marketing concept. Many store hours are dictated by the
needs of the managers and the employees, rather than customers.
These stores are closed on weekends or after 5:00 p.m. These
hours may be fine for the manager and employees but pose a real
inconvenience for working people. The supermarket industry found that
it was necessary for stores to stay open more hours to meet the
challenge of convenience stores. Appliance stores are confronted
with the same kind of competition, in the form of discounters and
mass merchandiser stores. Failure to do this will not allow the
appliance retailers to implement the marketing concept.

ANSWER  D

INSTRUCTIONS Reflect for a few minutes on your philosophy of business--What, in
your opinion, are the overriding objectives of a company?

EXAMPLE

A small New Mexico based company has an effective philosophy of
business--it attempts to produce products that consumers demand. The
owner designed custom cat collars for her own cat and found that many
neighbors admired these items. The cat owner decided to sell similar
collars to neighbors and friends. She asked them for their preferences
and designed products accordingly. This effort was successful, leading
her to list the products in catalogs widely-read by consumers. By
keeping her ear to the market and designing only collars that are in
high demand, this individual has managed to earn substantial profits.

DETAILS
A fourth orientation is the societal orientation. Here, management
strives to satisfy various publics, such as society at large,
employees, and minorities, in addition to target customers. The idea
is that satisfying customers is of paramount importance, but other
publics must also be considered.

This orientation also holds that the long run interests of
consumers should be considered. Consumers may demand some products
now, but these products may not be in their best interests in the
long run. Many consumers, for example, demand delicious food.
But, if this food contains harmful fats that cause
disease, marketers may have a moral responsibility to keep them from
the market.

However, some observers have pointed out that it is not the job
of marketers to decide what is good for people. If consumers want
fat in food, they should get it according to this view. Marketers
should not be the ones that act as dictators and tell others what
they should have.

This is a controversial issue and one that is not likely to be
resolved in the near future. Strong arguments are raised by those
on each side of the issue. Marketing and management theorists
and practicioners have argued  about this for some time and concensus
has still not been reached.

PROBLEM 4

A believer in the societal orientation might have the view that:

A. Consumer research into customer desires should guide the efforts
   of the company in introducing new products.
B. Prices should be kept as low as possible, to avoid inroads of
   competitors.
C. Product quality should be maximized, within limits set by costs.
D. Efforts should be made to package goods in degradable packages.

WORKED

Believers in the societal concept are also often believers in
maintaining the physical environment. They believe that firms should
take efforts to abate pollution, litter, the depletion of scarce
resources, the population explosion, and other environmental problems.
They believe that the needs of society at large, rather than just the
immediate wants of consumers, should receive prime consideration.
Pursuing a societal orientation may be unprofitable, of course.
Failure to give consumers what they demand may result in loss of
market share and profits, because consumers will go to competitors
to satisfy their needs, if a company fails to do so.

ANSWER D