How can companies become marketing oriented

For multinational corporations, fully-implementing this culture across the whole company is extremely complex and time consuming. Image: adapted from strategic-planet. In the world of business, companies can develop new products and services based on either the product orientated or market orientated approach.

With a product oriented approach, the company develops goods and services based on what it does well, rather than what the consumer wants. This is risky, because if you make something new, regardless of how good you are at creating it, what happens if the customer does not want or need it? A product oriented company makes unsuccessful products significantly more frequently than a market oriented business, which reacts to what customers want.

Slater, Jakki J. Mohr, and Sanjit Sengupta wrote:. Becoming a market oriented company is no easy task. Sometimes it means completely transforming the way the business is organized — from head to toe. In order to be able to do this successfully, the top management needs to be fully committed.

According to a study carried out by Gary F. They then identify specific initiatives that need to be implemented as part of the transformation process. In their study, which examined seven companies that were just starting to adopt greater market orientation, the authors identified one business that had been losing millions of dollars in revenue.

Senior management responded by outlining a new set of values expected of all employees — respect for others, empathy, collaboration, etc.

Following the presentation of the plan to the entire organization, the company can explain to everybody how cultural values affect its ability to meet the needs of the market by sending teams of people from different departments and functions to meet with key stakeholders, including customers.

Employees who are not willing to embrace this new culture need to be replaced with individuals who are. Companies and managers are constantly under immense pressure to demonstrate the financial strength every quarter. Further, the focus on short term profitability invariably comes at a very high cost. Most companies tend to ignore the impact of their actions on the long term strategic capabilities. Moreover, under the traditional marketing paradigms, short-term focus was inevitable as the emphasis was on products rather than on customers.

But within the framework of market orientation, profitability encompasses both financial measures such as ROI, EVA, and market share and non financial measures such as awareness, attitudes and behavioral patterns. Such a comprehensive measurement would allow companies to balance between short term and long term profitability with a cautious eye on long term financial health of the company. But having followed the traditional marketing model for decades, it is indeed a tough call for companies to become market oriented.

The following section of the article offers guidelines on how companies can establish a structure that allows management and employees to inculcate new way of thinking about marketing and ultimately channeling the aggregate mentality towards a market orientation. Leverage customer database systems: One of the greatest advantages that companies have today is the power of customer databases.

The explosion of internet and the possibility of recording very specific details about customers, their online movement and their purchase behavior have only added power to these databases. The first step for companies in moving towards market orientation is to optimally leverage these databases. Such a shift from product centricity to customer centricity will be an important first step. Create a marketing dashboard: To achieve complete market orientation, companies should create a systematic structure that would enable different functions to collectively discuss about customers and markets.

A market orientation mandates that all these functions operate jointly. Further, for marketing to become an organization wide discipline, it must not only understand the different functions within a company but also should be able to relate marketing activities to other functional activities.

Marketing dashboards provides marketers a structured platform to ensure marketing become coordinated and company wide. Constantly update metrics: Metrics used to measure the outcomes of marketing activities cannot be generalized across companies. Rather, they have to be modified and adopted depending on the company, the product class, the industry, the important criteria being measured and the ability of the company to track marketing investments.

A first step in recognizing and developing useful metrics would be a collaborative discussion with other functional departments within the company. But caution should be taken to ensure that these metrics capture both financial and non-financial measures. Marketing should also strive for developing metrics that go beyond the discipline and are able to capture the outcomes of all activities that bear on the relationship with customers.

Our variable costs are out of control. Our marketing and sales expenses are unreasonable. If each division had its own sales force, we would have better coordination between sales and the other functions.

As the group adjourned for lunch, the president interjected a last word. In my view, three characteristics make a company market driven. Information on all important buying influences permeates every corporate function. A company can be market oriented only if it completely understands its markets and the people who decide whether to buy its products or services. In some industries, wholesalers, retailers, and other parts of the distribution channels have a profound influence on the choices customers make.

These include architects, consulting engineers, and doctors. In still other markets, one person may buy the product and another may use it; family situations are an obvious illustration. In commercial and industrial marketplaces, a professional procurement organization may actually purchase the product, while a manufacturing or operational function uses it. When the technologists, for example, get unvarnished feedback on the way customers use the product, they can better develop improvements on the product and the production processes.

If, on the other hand, market research or marketing people predigest the information, technologists may miss opportunities. Of course, regular cross-functional meetings to discuss customer needs and to analyze feedback from buying influences are very important. At least once a year, the top functional officers should spend a full day or more to consider what is happening with key buying influences. Corporate officers and functions should have access to all useful market research reports.

If company staff appends summaries to regular customer surveys, like the Greenwich commercial and investment banking reports or the numerous consumer package-goods industry sales analyses, top officers are more likely to study them. Some companies that have customer response phones—toll-free numbers that consumers or distributors call to ask questions or make comments—distribute selected cassette recordings of calls to a wide range of executives, line and staff. The cassettes stimulate new ideas for products, product improvements, packaging, and service.

Reports to read and cassettes to hear are useful—but insufficient. High-level executives need to make visits to important customers to see them using their industrial and commercial products, consuming their services, or retailing their consumer goods. When, say, top manufacturing executives understand how a customer factory uses their products, they will have a more solid appreciation of customer needs for quality and close tolerances.

Because different customers have different needs, a marketer cannot effectively satisfy a wide range of them equally. The most important strategic decision is to choose the important customers. All customers are important, but invariably some are more important to the company than others. Collaboration among the various functions is important when pinpointing the key target accounts and market segments. Then the salespeople know whom to call on first and most often, the people who schedule production runs know who gets favored treatment, and those who make service calls know who rates special attention.

The choice of customers influences the way decisions are made. Once you have a certain group of customers, the product mix is pretty much set; you must make the types of products they want.

If sales and marketing choose the customers, they have undue power over decisions. Customer selection must involve all operating functions. Strategic and tactical decisions are made interfunctionally and interdivisionally.

Functions and divisions will inevitably have conflicting objectives that mirror distinctions in cultures and in modes of operation. The glimpse into the meeting at French Lick demonstrates that.

The customer-oriented company possesses mechanisms to get these differences out on the table for candid discussion and to make trade-offs that reconcile the various points of view.

Each function and division must have the ear of the others and must be encouraged to lay out its ideas and requirements honestly and vigorously. To make wise decisions, functions and units must recognize their differences.

A big part of being market driven is the way different jurisdictions deal with one another. The result: a missed deadline and an overrun budget. If, on the other hand, the two functions get together, they are in a position to make intelligent technological and marketing trade-offs. They can change a specification or extend a delivery date with the benefit of both points of view.

An alternative to integrated decision making, of course, is to kick the decision upstairs to the CEO or at least the division general manager. But though the higher executives have unbiased views, they lack the close knowledge of the specialists. An open decision-making process gets the best of both worlds, exploiting the evenhandedness of the general manager and the functional skills of the specialists.

Divisions and functions make well-coordinated decisions and execute them with a sense of commitment. An open dialogue on strategic and tactical trade-offs is the best way to engender commitment to meet goals. When the implementers also do the planning, the commitment will be strong and clear.

The depth of the biases revealed at the French Lick gathering demonstrates the difficulty of implementing cross-functional programs. On the other hand, if each function is marching to its own drum, implementation will be weak regardless of the competence and devotion of each function.

But joint opportunity analysis, in which functional and divisional people share ideas and discuss alternative solutions and approaches, leverages the different strengths of each party. Powerful internal connections make communication clear, coordination strong, and commitment high. Poor coordination leads to misapplication of resources and failure to make the most of market opportunities. Not just us, but the whole industry—especially with our fast response rate.

Even though the technology was the best, the product flopped. Because the industry changed its process so that the response rate was less important than the ability to handle tough operating conditions and higher temperatures and pressures. We wasted a lot of talent on the wrong problem. Probably the salespeople, and perhaps the technical service people, knew about the evolving customer needs. But the company lacked the coordination that a focused market orientation stimulates.

Just about every company thinks of itself as market oriented.