Marketing Orientation: The Basis of an Effective Marketing Strategy in UK
Abstract
This article addresses the paucity of research into the development of an effective marketing of firms in the UK. The need for UK marketers to balance their external focus on customers and competitors with a complementary internal focus on service processes and employees recognized and the academic discourses on market orientation is reviewed. The contribution of internal marketing, and its associated internal focus, to complement the external focus of market orientation is explored.
Introduction
As the cornerstone of both marketing and strategic management, (Greenley, 1995), market orientation has been presented as the implementation of the marketing concept (Kohli and Jaworski, 1990). Despite the broader focus of market orientation in UK on exogenous market factors (e.g., competition, regulation) that affect customer needs and preferences and current as well as future needs of customers (Kohli and Jaworski, 1990), it does not challenge the spirit of the first pillar of the marketing concept, customer focus. This narrow external vision has endured for nearly forty years, despite changes in the service requirements of today s markets and the need for a complementary internal focus. Gummesson (1994) identifies this narrow external vision as a marketing myopia and identifies the need to broaden the management focus of the firm, calling for research examining the importance, costs and contribution of other relationships, including relationships with employees for a more effective marketing orientation.
A market orientation is an organization culture in which all employees are committed to the continuous creation of superior value for customers. Being the organization’s culture, a market orientation is necessarily cross-functional and thus radically different from a marketing (single-function) orientation. A market orientation consists of three components customer orientation, competitor orientation, and interfunctional coordination. It is measured as a continuous variable.
The greater a business’s market orientation, the greater its ROI, sales growth, new-product success, and customer retention. The market orientation performance relationship is observed in dynamic as well as static analyses. There is no evidence that either market condition or industry type moderates the market orientation performance relationship.
A market orientation can best be created by results-driven processes rather than by programmatic change efforts. Top management plays a vital role in creating and maintaining a market orientation. However, a market orientation also requires that the organization’s market units, not the top management, have the ongoing authority for managing customer satisfaction.
This paper is split into three main sections. The next section reviews the academic discourse on the concept of market orientation as a tool in effective marketing and examines the relationship between the firm’s employees and its marketing orientation. Marketing orientation is reported to have important consequences for effective marketing.
Market Orientation and Marketing Orientation
Market orientation has been proposed as the cornerstone of both marketing effectiveness and strategic management (Greenley, 1995). It is differentiated from marketing orientation y its broader focus. Market orientation, in contrast to marketing orientation, puts the marketing emphasis on customers, competitors, and organizational issues and has been defined empirically and validated as a way of improving business performance. The literature dealing with market orientation, however, shows remarkable inconsistency in defining the concept as either a business philosophy or management behavior.
Several studies explore the relationship between marketing orientation and some output measure such as profitability or customer satisfaction, see for example Day and Nedungadi (1994), and Pelham and Wilson, (1996). Perhaps the most significant finding for theorists and practitioners is the consistent evidence that being marketing oriented does improve marketing strategy. This has been found to be true for large firms (Jaworski and Kohli, 1993, Day and Nedungadi 1994) as well as for small firms (Pelham and Wilson, 1996) for product producers, (Narver and Slater 1990), as well as service suppliers (Naidu and Narayana, 1991) and for-profit (Slater and Narver, 1994) as well as for not for profit (Wrenn, La Tour and Calder, 1994).
Research on marketing orientation has centered around understanding the construct and examining its relationship to performance (Kumar and Subramanian, 2000). Two important studies sought to define and operationalize market orientation. Based on an extensive review of the literature on sustainable competitive advantage and marketing strategy, Narver and Slater (1990) operationalized market orientation as consisting of three dimensions: customer orientation, competitor orientation, and inter-functional coordination. Using both a literature review and field interviews of managers, Kohli and Jaworski (1990) operationalized the market orientation construct as consisting of three basic components: intelligence generation, intelligence dissemination, and responsiveness. Intelligence generation extends beyond collecting information about customer needs and preferences to include information about the entire task environment confronting an organization. To be market-oriented, an organization has to communicate, disseminate, and often “sell” market intelligence to relevant departments and individuals in the organization. (Kumar, Subramanian, & Yauger, 1998). And finally, the market-oriented organization responds to or acts on the market intelligence gathered and disseminated.
The two approaches to defining the market orientation construct are similar in their emphasis on behavioral issues (Greenley, 1995). Both groups of researchers identify the construct as consisting of collecting information about the task environment, disseminating the information to all organizational units, and readying the organization to act on the information to provide value to the customer. Both approaches are similar also in operationalizing the market orientation construct as a multi-dimensional concept, where each dimension measures a different feature of market orientation. Finally, both studies view an organization’s magnitude of market orientation as the sum total of its relative emphasis on the different components of market orientation.
It is conceivable that a given magnitude of market orientation may be highly skewed to either customer emphasis or competitor emphasis. The literature on sustainable competitive advantage supports this notion. While some authors (e.g., Peters & Austin, 1985) suggest that customer emphasis is the most important component, others (Jaworski & Kohli, 1993) contend that a high magnitude of market orientation will yield superior performance only when swift managerial responses follow, regardless of the focus.
Marketing Orientation and Effective Marketing in the UK
It may be reasonably expected that if managers buy into the marketing orientation philosophy, they would also show a level of consideration for employees. It appears, therefore, that managerial consideration is an important component of marketing orientation and how managers respond to the wants and needs of employees forms one of the dimensions of the construct.
Common to all conceptualizations of marketing orientation is the need to collect information about the internal environment. This information also has a broader focus than employees. It involves the generation of internal information, about the current satisfaction of employees with their working conditions and employment activities, the factors that influence satisfaction and the important attributes of job offer that employees consider. There is also an external focus relating to the activities of competitors in the employee market and generating intelligence about employment conditions with firms competing for the same employees. A range of industries seek effective customer contact staff, and competition for employees may be from sectors not normally considered by marketing intelligence.
It appears therefore that marketing orientation may be operationalised as an internal marketing orientation in a similar manner to the operationalisation of external marketing as market orientation.
At this juncture, it appears that marketing orientation may contribute directly and indirectly to the marketing performance of the firm. The direct impact of marketing orientation on firm performance has been suggested by Pfau et al (1991), as improving service quality; as increasing employee and customer satisfaction and Gummesson (1994), as decreasing staff turnover and reducing training costs. Indirectly market orientation may contribute to the effective marketing strategy of the firm.
Analysis
Achieving effective marketing involves serious issues and decisions which deserve disciplined consideration. Leading advertising agencies apply a planning process which identifies the critical decision junctures and issues to be addressed at each specific stage of development, working with clients to develop strategy and create marketing communications. A disciplined approach systematically guides the marketing decision maker through the following key decisions: What should my marketing orientation strategy be? Is my product line/service right?
The first question is the most critical since the decisions made at this step in the process set the stage for the rest of marketing communications development. Research is especially important at this initial phase since the depth and breadth of information needed for planning strategies includes objectives such as: Uncovering new opportunities for products and services to meet consumer needs. Identifying those consumers who represent the greatest potential.
The key issues to be considered in the creation of the marketing orientation strategy must be approached from two perspectives: internal, in terms of business considerations, and external, in terms of the consumer’s wants and needs. The consumer is the other important source of information in creating the specific dimensions of the marketing communications strategy. Strategic research among relevant consumers helps to address these fundamental questions. It helps the marketer to understand the consumer’s “ABCs” — their attitudes, usage behavior and demographic and lifestyle characteristics.
For instance, strategic piece of research for one client uncovered the existence of distinct segments of consumers within the camera market to which it could direct a different camera model. The segments differed significantly according to their attitudes, behavior, and characteristics. For example, within the segment profiles developed, the desire for sophisticated, complex features was a key differentiator between the kinds of people in one segment versus another.
Through this product line diversification by segment and the segmented communications effort that accompanied it, the company was able to address each target group with the most relevant product message for them. Ultimately, this strategy helped it to expand the market and strengthen its position as market leader.
In this case, companies’ marketing strategy would want to maintain and leverage the distinctive, appealing parts of the brand’s heritage and yet update it as well. With this research, specific visual, non-verbal stimuli were used to help understand how users were perceived and how that imagery related to the target consumers’ perception of themselves and their aspirations. The results confirmed the positive image traits of the brand but also indicated that certain other elements of its personality were not being projected, since the picture of the user and the self-image of its target audience were not in synch. The need for changes such as a more youthful presence was identified and the advertising approach in turn was modified with successful marketplace results.
The basic questions marketers face at the final point include: What was the “effect” of the marketing orientation effort on the consumer’s mind in terms of awareness and attitudes toward the brand? What was the effect on consumer behavior in terms of purchase of the brand? Should the campaign continue as is, be refined and refreshed, or be replaced? The primary research tool to measure the effect on consumer attitudes is the tracking study among the target audience. These studies usually compare consumer attitudes at a point prior to a campaign’s launch to a point (or many) after a campaign has been established. Measures used within the tracking vehicle should be developed according to the strategy and objectives defined in the first phase of the process.
Conclusion
Recent research has suggested a positive effect of market orientation, the implementation of marketing concept, on business profitability (Jaworski and Kohli, 1993; Slater and Narver, 1994) and salesforce behavior and attitude. Because of its potential effect on business performance, market orientation plays a key role in the formation of business strategy (Day, 1994).
A marketing orientation does not only enhances the effectiveness but also reduces management waste by knowing what customers do not require. Employees and assets are two main resources of any organization. A measure of cost efficiency is how much sales, on average, an employee can produce. Another measure is how much sales can be generated from available assets.
The association between market orientation and cost efficiency offers a promising opportunity for many service firms. While many marketing managers view a market-oriented campaign as expensive and often question its contribution to profitability, the present study shows that market orientation can actually lower operating costs and increase per employee contribution. Being customer-oriented enables the firm to learn not only what customers desire but also what customers do not need. As many firms are learning to be leaner in the21st century, UK managers may find that marketing orientation can be very useful.
One purpose of this article was to explore the new expectations for a marketing orientation in an ever more demanding marketing environment in UK. Today, marketing needs to go beyond the traditional challenges of reflecting a brand’s positioning, communicating product benefits, and building awareness to establishing a Brand Character or a personality for the brand. This will better enable the products to form a bond with its target consumer. Today, marketing strategies are also expected to extend beyond the traditional media into the concept of “integrated marketing communications,” including public relations, sales promotion, and direct marketing efforts.
This article also described the vast panorama of research issues that are at the heart of the marketing orientation and effective development process, and many of the research tools available to serve as a guide in making key decisions in this process. This article asserts that for marketing orientation to be effective in UK, marketers must improve its internal capabilities and at the same time be creative in researching and presenting the products to the public. An effective approach to such is the development of market orientation. This shall be the basis of an effective marketing strategy.
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