Describe and examine the major components of market orientation in relation to the marketing mix, target marketing, relationship marketing and the marketing plan. In doing so, explain and evaluate how the passive concept of the marketing mix adopts a market orientation focus.The marketing mix, target marketing, relationship marketing and the marketing plan are the key constituent parts of marketing as a general concept. Any successful company must be market orientated, but not all businesses subscribe as much as they should to this requirement.
There are three main components of market orientation – customer orientation, competitor orientation and inter-functional co-ordination. We need to examine each component of marketing orientation and look at how effective the concept of market orientation is in terms of contributing to the success of a business.Market orientation has been characterised as that part of an organisation that requires customer satisfaction to be paramount within the operations of a business (Liu et al, 2002). This, in turn, produces superior value for customers and outstanding performance for the firm (Day, 1994; Narver and Slater, 1990). A company must also remember that a customer’s expectations evolve over time, so there is an ever-present need for a company to deliver products of the highest quality and respond to changes in the marketplace (Jaworski et al, 1993).Every market orientated company wants to attract and retain customers and it can only do this by satisfying their wants and needs. In a company that is customer orientated, there are five main marketing tasks.
These are:- identifying target markets- conducting market research- developing products- setting the right marketing mix- monitoring the marketIn order to ensure that this customer orientation is successful, initially management has to identify the customers to whom it wants to appeal. Management’s choice of target markets will, in part, be governed by the socio-economic profile of its potential customers and its own ability to meet their needs. The company must also carry out market research to collect information on existing trends and the needs of customers.
The market research will look at what competitors offer and how their innovations can be improved and in turn capitalised upon. Businesses need to develop products and services that meet the needs of its target consumers. Then, having identified potential target markets and developed relevant products, management must utilise the marketing mix. They must set the correct price, promote it in an appropriate way by using relevant marketing mediums, ensure that the placement of the product is suitable for its target customers and ensure the product is distributed widely.The company must then monitor the market by building a stable relationship with their customers. They need feedback from customers as to what they like about a particular product or service and what they dislike. By using this information, they can tailor and tweak future products to ensure that they are better and more relevant.When looking at a customer orientated business from an economics and value-based perspective, consumers do not search for products with maximum quality or minimum price but seek products which are optimal to them on the quality-price-ratio (Rust and Oliver, 1994).
When deciding on a product, customers consider both quality and non-quality dimensions such as price and speed of delivery. In the modern technological world, consumers have much more information available to them and the ability to ensure that their decision-making process is made as well-informed as possible. For example, websites such as Kelkoo (www.kelkoo.co.uk) and Pricerunner (www.pricerunner.co.
uk) allow consumers to compare prices and delivery times on a range of products, as well as read reviews from other consumers to evaluate whether the item is suitable.’The marketing mix’ is one of the most well known phrases in marketing and incorporates ‘the four Ps’ – product, place, price and promotion. These concepts were first highlighted by McCarthy in 1960. Each of these components is vitally important to a company that is market orientated.
In terms of ensuring that a company is customer orientated, it is likely that it will need to balance of all four Ps in order to attract customers to the product and entice them away from the company’s competitors. However, the “mix” can vary as a company can alter how much importance it places on each component depending on the requirements of, or its own perceptions of, its prospective market.Above: ‘The Marketing Mix’For example, if a company has a new product where price may initially be less important compared to securing knowledge of its existence amongst the general public, the company will place more emphasis on the promotion element of the mix.A target market for a particular product is usually defined by its age, gender and socio-economic grouping.
For example, children’s toys are marketed to children and their parents but not to pensioners, though one should not forget that even they are potential grandparents. Similarly, a ‘Barbie’ doll would not be marketed towards young boys.Therefore, in terms of customer orientation and target marketing, a business must ensure that it targets a suitable demographic background. There is no point in investing money in targeting customers who are not interested in the product. This means that the business will need to conduct market research in order to determine who their product appeals to and therefore where they should invest their marketing budget.Relationship marketing places emphasis on longer term links with customers rather than on individual transactions.
The origins of modern relationship marketing date back to 1980 when Schneider (1980) noted: “What is surprising is that researchers and businessmen have concentrated far more on how to attract customers to products and services than on how to retain customers”. Later, Fornell and Wernerfet (1987) coined the term “defensive marketing” to examine ways of increasing customer loyalty and reducing customer turnover. This is part of the competitor orientation component of market orientation.
When using “defensive marketing”, a company focuses on reducing or managing the dissatisfaction of its customers, whereas offensive marketing focuses on tempting dissatisfied customers away from a competitor to generate new customers. This is of vital importance to a competitor orientated business if it is to assume a leading position in the market. As relationship marketing aims to build a rapport with customers through one good experience, it is likely that customers will assume that the company deals with them appropriately at all times so they are more likely to purchase from the company in future.Effective inter-functional co-ordination ensures that all departments of a business work in conjunction with each other to provide the best possible service and price to consumers. Each part of the business needs to support the end marketing objectives of the business as a whole. For instance, the technical specifications of a product are just as important as the promotional aspects or the pricing strategy.
They all have to work in tandem.Inter-functional coordination can be used effectively in the marketing mix to ensure that each department is properly represented. For example, the marketing department will need to consult with other departments in order to find out the relevant product specifications, the price that the item should be sold for and who the item is targeted to in order to work out the best way to promote the item. It means that every department must be communicating effectively with one another in order to ensure that the final customer experience is seamless.It must be noted, however, that there are alternatives to market orientation that don’t encompass Narver and Slater’s three components of customer orientation, competitor orientation and inter-functional co-ordination described above. Kohli and Jaworski’s (1990) behavioural approach defined market orientation in terms of organisational behaviours such as the generation of information, dissemination of information and responsiveness to information.There are alternatives to a pure market orientation business philosophy such as sales orientation, production orientation and product orientation.
Sales orientation focuses on selling the most number of units possible. Its premise is to make full use of selling, pricing, promotion and distribution skills just like a marketing orientated business, but unlike the latter, it pays less direct attention to the needs of customers and does not necessarily give priority to creating suitable products.A production orientated business is mainly concerned with making as many units as possible. In such a business, the needs of customers are secondary compared with the objective of increasing output. On the other hand, a product orientated business is obsessed with being at the forefront of its market in terms of believing that their product is the best in the market.
They may, however, not be up-to-speed with the latest developments and consumer preferences and therefore may find that their competitors start to overtake them.However, none of these three alternatives is likely to prove successful in anything but the short term. Companies have choices as to how they orientate their business and ensure they target the right market. By using the marketing mix thoroughly and effectively as a total concept, companies can benefit and use the theory to their advantage. They must, however, ensure that the mix is correct: if they do not give any single component sufficient attention, the mix will fail to produce the right results.