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Understanding Market Orientation What is Marketing? What is Market-Driven? “The business enterprise has only two basic functions — marketing and innovation.” Peter Drucker “Marketing today is not a function; it’s a way of doing business.” Regis McKenna What is marketing? Gathering, monitoring, analyzing information – Environment – Customers – Competitors Interacting with all areas of organization, sharing information Developing, implementing, and controlling strategic marketing plan, based on information Creating satisfying exchanges External environment Internal environment Marketing & Sales Competition Consultants & Advisors R&D Consumers Other Organizations Retailers & Wholesalers Other internal information sources Marketing Manager Other Publics Suppliers Production Finance & Accounting What is Market Orientation? Superior ability to understand, attract, and keep valuable customers. Externally oriented culture Capabilities in market sensing, market relating, and anticipatory strategic thinking Adaptable and coherent organizational configuration of culture, capabilities, and processes Elements of Market Orientation Competitors Customers Culture is externally oriented Shared Knowledge Base Configuration Focus on superior customer value Coherence of structure & systems Capabilities Adaptability Market sensing Market relating Strategic thinking Channels Superior Ability to Understand, Attract, and Keep Valuable Customers Collaborators Advantages of Market Orientation $$ Customer Satisfaction & Retention Market-Based Strategy Market Orientation Why does market orientation lead to greater profits? Cost and investment efficiency Employee satisfaction Price premium Revenue growth Competitive preemption But…. Have to be truly market driven!! Superior ability to understand markets Sense emerging opportunities Anticipate competitors’ moves Make fact-based decisions Superior ability to attract and keep customers Deliver superior value Encourage loyalty Leverage market investments Impediments to Being Market Driven Being oblivious to market Becoming compelled by the market Feeling superior to the market Market Driven Culture Market-Driven Organization Self-Centered Organization All decision start with the customer and opportunities for advantage Quality is defined by customers We’ll sell to whoever will buy The best ideas come from living with customers Employees are customer advocates Customer knowledge is a valuable asset and channels are value adding partners Customer loyalty is key to profitability Quality is conformance to internal standards Customers don’t know what they want Customer relations are problems for the marketing dept Customer data are a control mechanism and channels are conduits New accounts (conquests) are what matters Market Driven Culture Market-Driven Organization No sacred cows—cannibalize yourself Learn from mistakes Market research is decision insurance Paranoia about competitors is healthy The behavior of competitors can be anticipated and influenced We know more than the competitors Self-Centered Organization Protect the existing revenue stream Avoid mistakes Market research is a justification tool We can live with our competitors Competitors are unpredictable If competition does it, it must be good Culture Dimensions Flexibility/spontaneity vs. control, order stability Internal maintenance vs. external positioning