COMPANY ORIENTATION TOWARDS THE MARKETPLACE ( prepared by U Phiri)
Production Concept
A production orientation dominated business thought from the beginning of Capitalism the mid 1850′s. Business concerned itself primarily with production, manufacturing, and efficiency issues. This view point was encapsulated in Says Law which states Supply creates its own demand (from the French economist Jean – Baptiste Say.) To put it another way, If a product is made, somebody will want to buy it. The reason for the predominance of this orientation is there was a shortage of manufactured goods (relative to demand) during this period so goods sold easily. The basic proposition is that customers will choose products and services that are widely available and are of low cost. So business is mainly concerned with making as many units as possible. By concentrating on producing maximum volumes, such a business aims to maximise profitability by exploiting economies of scale. Managers try to achieve higher volume with low cost and intensive distribution strategy. This seems a viable strategy in a developing market where market expansion is the survival strategy for the business. Companies interested to take the benefit of scale economies purse this kind of orientation. In a production-orientated business, the needs of customers are secondary compared with the need to increase output. Such an approach is probably most effective when a business operates in very high growth markets or where the potential for economies of scale is significant. It is natural that the companies cannot deliver quality products and suffer from problems arising out of impersonal behavior with the customers.
As the market has changed, so has the way the company deals with the marketplace. The company orientation towards marketplace deals with the concepts which a company may apply while targeting a market. There are basically five different orientations which a company takes towards the marketplace.
The Selling Concept
During WWII world industry geared up for accelerated wartime production. When the war was over this stimulated industrial machine turned to producing consumer products. By the mid 50′s supply was starting to out-pace demand in many industries. Businesses had to concentrate on ways of selling their products. Numerous sales techniques such as closing, probing, and qualifying were all developed during this period and the sales department had an exalted position in a company’s organizational structure.
The Selling Concept proposes that customers, be individual or organizations will not buy enough of the organization’s products unless they are persuaded to do so through selling effort. So organizations should undertake selling and promotion of their products for marketing success. The consumers typically are inert and they need to be goaded for buying by converting their inert need in to a buying motive through persuasion and selling action.
This approach is applicable in the cases of unsought goods like life insurance, vacuum cleaner, and firefighting equipment including fire extinguishers. These industries are seen having a strong network of sales force. This concept is applicable for the firms having over capacity in which their goal is to sell what they produce than what the customer really wants.
In a modern marketing situation the buyer has a basket to choose from and the customer is also fed with a high decibel of advertising. So oftenthere is a misconception that marketing is all about selling. The problem with this approach is that the customer will certainly buy the product after the persuasion and if dissatisfied will not speak to others. In reality this does not happen and companies pursuing this concept often fail in the business.
The Product Concept
The product concept proposes that consumers will prefer products that have better quality, performance and features as opposed to a normal product. The concept is truly applicable in some niches such as electronics and mobile handsets.
Two companies which stand apart from the crowd when we talk about the product concept are Apple and google. Both of these companies have strived hard on their products and deliver us feature rich, innovativeand diverse application products and people just love these brands.
One problem which has been associated with the product concept is that it might also lead to marketing myopia. Thus companies need to take innovations and features seriously and provide only those which the customer needs. The customer needs should be given priority.
In the past several of Microsoft product have been brought under the hammer with people feeling more and more disgruntled with the operating systems because of lack of innovation and new features. Each Microsoft operating system appears almost similar with just few tweaks.
On the other hand, innovating too soon becomes a problem. Several innovative products are marked as experimental in the market instead of being adopted as a result of which these products have less shelf life and might have to be taken off the market.
Thus companies following the product concept need to concentrate on their technology such that they provide with excellent feature rich and innovative products for optimum customer satisfaction.
Customer/Marketing Orientation
Customer orientation is of ultimate importance to deliver value added products. There are 4 basic stages for customer orientation
1) Develop
· Development has to be done keeping customer needs into mind.
· Products should be customer oriented.
· The development cycle time should be minimal
2) Manufacture
· As per the product, the manufacturing should be such that it gives the best products to the customer
· Quality should not be compromised
· Manufacturing cycle time should be reduced
3) Market
· Identifying and targeting the right customer
· Processing the demand as early as possible
· Customization of the products for the market
4) Deliver
· Deliver to the target customer
· Reduce delivery time
· Value for money products
Thus by these 4 steps, A value added product is delivered.
A customer driven organization always relies on its business strategy to give the best customer experience by employing the right tactics. The figure above explains the working of a customer driven organization.
A customer driven organization might have Customer and business intelligence as its strategy for which it needs to use Data mining, Database marketing and Decision support. These tactics help understand the customer and provides value to the organization.
A customer driven organization also has its branding and marketing strategy in place for which it needs regular brand assessment and development. Because of these tactics the organization builds the right expectations for the customers from the brand.
Through its online interactivity, these organizations provide websites that prove very compelling to use and are very practical. The website of Dell is such an example. For such a strategy, the organization needs to design a really effective website and develop the supporting web solutions.
The customer driven organization also needs to have an integrated marketing approach through email, web or phone. For this to happen it needs completely co-ordinated channels and operations such that it can reach the customer through these channels.
Finally the organization needs real time knowledge transfer between employees and customers such that it promotes the organizations products by themselves. In such real time knowledge transfer customers get to research and interact about upcoming products and services thereby increasing the sales ratio for the organization. This is especially true for financial organizations.
Thus a customer driven organization has 5 different strategies which can be applied and for any firm wanting to make a change to customer driven strategies, following these 5 strategies will do the work
Societal Marketing Concept
The societal marketing concept leads to a company orientation which believes in giving back to the society what it had received from the society. This concept believes that the company is profiting because of society and hence it should also take measures to make sure the society also benefits from the company. .