Critical Thinking in Marketing - Literature review Example

Marketing orientation By Introduction Significant research has been undertaken with an intentionof getting a better understanding of the term market orientation. According to Narver & Slater (1990), market orientation refers to the values of a company that focuses on identifying and satisfying customers’ needs. Marketing orientation is believed to boost competitive performance. The company employs product mix in achievement of its objectives. It contrasts with other previous strategies that were based on developing selling points for the products in the current world, companies have to adapt to the orientation of the market due change of consumers choices and global economy. A firm on the other hand is defined as a commercial organization, which provides services and products to consumers with expectations of getting profits in return. Market orientation is widely utilized in contemporary marketing. It entails analyzing competitors’ strategies and their impact on the public. Firms should redirect all resources toward achieving a common goal to ensure success of the market orientations. Marketing orientation mainly focuses on supplying products, which are made according to the needs, requirements, and desire of the customers in question. According to Jaworski &Kohli (1993), marketing orientation is firm’s generation of intelligence based on market strategies and focus on the need of the customers. The customers’ demands are either future or current. The intelligence should be disseminated to all other departments in the firm and the company of firm should be able to respond to it. Background During the industrial revolution to around sixty years ago, companies’ focus was based on utilizing the economies of scale and decreasing the cost of production. Products of high quality were less available during such periods and the firms’ main point of focus was to produce products in large quantities. Marketing elements such as design were ignored. The changes were due to the rise of capitalism created by the increasing number of middle class. After the Second World War, the markets became saturated with all types of products. The selling of the products declined. However, the companies adopted a model that focused on the making products and then supplying them to consumers, the model was called sales orientation (Harris, 2008). Despite the changes in strategies, customers were not involved in the process of developing products. Early 1970s Theodore Levitt a Harvard professor with other academicians criticized the sales orientation model and argued that it was ineffective in supply of products aimed at satisfying the consumers’ needs. They advised businesses on the need to change their strategies and focus on developing products with the desires, opinions, and insights of the customers in mind. With the customer’s needs in mind, companies were able to produce goods that competed effectively in the market. A technological advance has made customers to increasingly participate in the business strategies. Planning of marketing activities revolve around the customer in most companies. Another important part of market orientation is competitive analysis. Most companies have employed this strategy in assessing of the weaknesses and strengths of their competitors. They retrieve such information through use of surveys, research and focus groups (Harris, 2008). Market orientation has been repackaged under names such as customer intimacy, customer orientation, and customer philosophy. Marketing orientation has three components. They include Competition orientation, interfunctional coordination and customer orientation. The customer is the point of focus in market orientation. The effect of a market orientation on business profitability According to Narver &Slater (1990), marketing experts have analyzed for over thirty years that the performance of business is influenced by market orientation. However, there is no systematic assessment on the effect of market orientation recorded so far. The study focuses on, assessing the impact of market orientation on profits in a business. It is believed that application of market orientation in a business will boost its performance. Lack of recorded data on the impact of market orientation on majority of businesses has impaired its application. Some business organizations still do not understand the meaning of market orientation. The study aimed at developing an acceptable measure and assessing the effect of market orientation on market profitability. The study hypothesis was tested by square regression analysis. Dummy variables were used as a control between the non-commodity businesses and the commodity business. The small size of the sample determined the kind of samples size to employ. The findings of the study were in line with the hypothesis, which indicated that market orientation was of essence for both the non-commodity and commodity business. The relationship between the business’s profitability and market orientation was monotonic in non-commodity businesses, whereas in the commodity business, the findings revealed a positive profitability / market orientation relationship in the businesses that were past the median in market orientation model. Relative cost emerged to be a determinant in both the type of businesses used. The results of the study revealed that, the growth of market was an essential determinant targeting profitability in the business types used. The relationship however differed. Market growth that was created for a shorter term resulted to a profitable opportunity in non-commodity businesses unlike in the commodity businesses, which had low adaptation; the profitability appeared to decline with the short term of growth. A person can therefore justify that market oriented commodity businesses are able to impact on programs aimed at increasing values with able buyers to affect an outcome that is profitable. Commodities, which develop great customer values, tend to generate economic dependency on strong buyers. The study observed a non-linear relationship between the profitability and market orientation among the commodity businesses used. It was observed that those businesses with high degree of market orientation were associated with profit increment. Sufficing to note, many of those businesses are still below the marketing score. An economic law stipulates that the benefit of increasing market orientation exceed the incremental benefits. According to the theory of market orientation, Market orientation is believed to be of essence in all the business environment, the statement however, is different from a study done by (Harris, 2008). The findings of their study indicated that applying marketing orientation in some environment is rendered uneconomical. The important concept does not concern market orientation but is based on the level of market orientation applied in the environment. The study however, focused on only small sample and thereby failed to give conclusive results. Use of large study samples will be effective in analyzing the robustness of market orientation. The study‘s cross sectional nature restricted the study conclusion to association and avoided causation. The study failed to create a successful measure of profit orientation focusing on long range as a one-dimensional construct. The study is essential in evaluating the relationship between market orientation and performance. The study concludes that, there exist a strong relationship between market orientation and performance. For a business to compete effectively in the market, then it should be founded on a strong market orientation. Market orientation: antecedents and consequences The study conducted by Jaworski & Kohli (1993) was aimed at addressing the following issues; the reason for organizations being more market oriented than others, the effect of market orientation on the performance of business and the employees and lastly finding out whether the relationship between market orientation and performance of business rely on the business environment. The study utilized the available scales to measure the structure constructs of the organization, departmentalization, and centralization. Departmentalization was analyzed by counting the total numbers of department in the business unit of an organization. The study result showed that market orientation in a business is controlled by a variety of factors. Market intelligence is believed to be influenced by top manager’s emphasis. The study indicates that top business managers communicate the need of engaging the consumer in product production from time to time. They also communicate the achievements they have made in the business to the employees and come up with strategies that may promote continued presences in the market. The conflicts between the different departments in the business unit appear to impact on the progress of the business as per the study findings. Such conflicts according to the study impair appropriate dissemination of market intelligence. Individuals working in business units that experience many of such conflicts may find it difficult to share information that is essential in marketing of the organizational products and services. The presence of conflict in the various departments in an organization affect market orientation because, some employees may not want to contribute information that may end up affecting the marketing strategies. The findings of the study reveal that organizations that are more concerned with the welfare of the employees are more market oriented. The employees are motivated and therefore build more customer relationships. The study also revealed that market orientation is impaired when decision-making process in an organization becomes centralized. Centralization affects the dissemination of information from the employees. According to the study findings, formalization is not related to market orientation. The result parallels with a previous finding by Narver & Slater (1991). Their study suggests that it may not be effective to upgrade market orientation by programmatic approach. Formalization is defined as the presence of regulation and rules in the organization that are considered formal and the action taken by such an organization to enforce the rules. The study reveals that, the organization become less adaptive to changes in the environment if the regulations are emphasized. Emphasis on the rules and regulations is however believed to facilitate market orientation, even though it is unrelated to the orientation of the market. If the rules target marketing issues in the organization, then it is likely to promote dissemination of intelligence information. If market share is measured more objectively, there seem to be less relationship between performance and market orientation according to the study findings. Market share might not be the appropriate determinant of performance. The business world has encountered situations where high share companies are outperformed by those with low shares. Market orientation is believed to impact on the high market share after a long period of time. The study findings also revealed that the bond between the organization and the employees is enhanced by marketing strategies. The employees are made to feel the sense of belonging as they work to satisfy consumers’ needs and demands. The association between performance and market orientation ranges basing on technology, competition, and level of the market. The study however, finds it impossible to relate the moderating effects affecting market orientation due to the smaller sample size that was employed. The findings of the study indicate that the performance of a business is determined by its market orientation, regardless of technology, competition and the environment of operation. Managers have to raise the customer relationship with an aim of improving the performance of the business. The study indicated that there was no relationship between market orientation and shares in the market. It also reveals the presence of the many factors that influence market orientation. Conflicts emerging from the various departments in the business organization appear to impact on the market orientation. For example, the conflict hinders the dissemination of information from one employ to the other. It also influences the probability of an employee sharing the information that may be important in creation of a strong customer base. Conflicts within the various departments may however be controlled through activities that are cross-functional, alignment of departmental objectives and provision of training programs. Centralization impairs marketing strategies. Organizations should therefore focus on the empowering employees found at the lower level of the organization. Since departmentalization and formalization do not greatly influence marketing strategies, the content of the rule in the organization may support market orientation rather than its mere presence. The results of the study supports the existence of a relationship between market orientation and performance, however, it failed to support the association between market orientation and market shares. The performance of business is multi dimensional and may therefore be influenced by factors such as adaptation and effectiveness. The study also failed to consider how employee’s character can influence the performance of business or market orientation. Such factors include attitudes and personalities. Cross sectional analysis has been employed to analyze numerous large businesses. The various processes of change that may end up influencing market orientation have not been brought into context by the study. Alteration of factors such as rewards and motivation by managers of organizations can affect building strong relationship between the employees and the organization, which can directly influence the customer relationship. Management action in developing market orientation: a report from a customer knowledge project at Volvo cars The study conducted by Brjesson & Dahlsten (2004) found out that it was quite difficult to implement the marketing orientation by most firms. The study was aimed at discussing the challenges facing the managers of Volvo cars in the implementation of market orientation strategies. Development of market strategies is associated with the changes in practices, actions and behavior rather than proclamations and procedures. A study conducted by Kohli and Jaworski (1990) reveals that the most important thing about marketing orientation is its implementation. Creation of a market strategy within an organization requires applications and continuous changes. The study is based on increased customer orientation on Volvo cars. The study reveals that more improvemement s should be directed on the market orientation development than creating the intelligence framework as revealed by Kohli & Jaworski (1990). Several methods of market intelligence are believed to play a crucial role in the implementation of marketing orientation. However, such factors were never captured by previous studies. Most organizations have continued to employ the information of the product associated with the customer rather than focusing on doing research about the customers. Limited personal intelligence has also hindered the implementation of the marketing orientation approach. Development of the market oriented has faced many challenges, which are not necessarily being targeted by many of these organizations. The interaction between the customers and the organization was still low. According to the study, several changes were put in place at the Volvo cars to improve the relationship with the customers through market orientation. The company was adviced to invest on increasing customer’s knowledge on the products produced. The policy developed should be more experimental than administrative in the implementation of marketing strategies. Managers are supposed to be more experienced in dealing with the customers and should pass such strategies to the employees. The managers of the Volvo cars were unable to implement the strategy because of inadequate knowledge in gathering, taking action and disseminating information. The planning of the company changed through targeting the future rather than putting the plan into action at that specific moment. On behavior change, the study revealed that that the Volvo cars had indicated slow change in market orientation .organization’s involvement and slow progress in follow up declined the implementation of the strategy. It took long for the managers of such a company to adapt to new strategies. Most managers were not accountable in creation of the marketing orientation strategies. Very few examples of the market orientation strategies had been reported in the organizations such as the Volvo cars. The study reveals that for an organization to perform well and apply an effective marketing strategy, the employs should be allowed to share information and be opening minded. These should be applied both within and outside the organization. Conclusion The organization should also focus on creating a good customer interaction and relationship. The customers should be provided with the information pertaining to the product. The customers too should be allowed to participate in the production process by listening to the design and the king of the product they will want to utilize. According to Ellis (2006), a good organization should invest in research that targets the customer. The main purpose of the marketing oriented approach is to produce product that satisfy the needs of the customer. The organization or a firm has to be managed with the needs of the customer in mind. Change of behavior is a prerequisite for creation of a long-term marketing strategy. The managers should apply better and current way of doing business that focus on the consumer rather than applying old practices, which are not evidence based. Development of marketing orientation strategies should focus on changing practices and actions as revealed in the study conducted by Brjesson & Dahlsten (2004). Managers should stop applying old practices and focus on information pertaining to the consumer. Managerial actions such as politics, planning and making policy should be stressed to ensure full implementation of the marketing strategy. Many firms are increasingly investing in marketing orientation. Marketing concept has been considered as a practical concern for many managers. Managers should focus on rewarding and motivating employees. The conflicts that exist in various departments in the organization have to be stopped. Such conflicts affect negatively on organizations’ approaches to marketing. Policies and rules in the business firms that boost marketing orientation have to be effected. Centralization approach in an organization has to be replaced. Employees at the lower levels of the organization are to be engaged in order to share the information they have pertaining to improving marketing process. For a business to compete effectively in the market, then it should be founded on a strong market orientation. Amount of emphasis by the managers through reminding employees constantly that they need to be responsible and sensitive to the developments in the markets appear to impact on marketing strategies. Moreover, the managers of organization have to accept the existence of occasional loss of products and services; they should consider it as part of business process. Significant research has been undertaken with an intention of getting a better understanding of the term market orientation. According to Narver & Slater (1990), market orientation refers to the values of a company that focuses on identifying and satisfying customers’ needs. Market growth that was created for a shorter term resulted to a profitable opportunity in non-commodity businesses unlike in the commodity businesses, which had low adaptation; the profitability appeared to decline with the short term of growth. A person can therefore justify that market oriented commodity businesses are able to impact on programs aimed at increasing values with able buyers to affect an outcome that is profitable. Reference Brjesson, S. and Dahlsten, F. 2004. Journal of Change Management, 4(2): 141-154. Management action in developing market orientation: a report from a customer knowledge project at Volvo cars Ellis, P. 2006. Market orientation and performance: a meta analysis and cross-national comparisons. Journal of Management Studies, 43(5): 1089-107. Harris, L. 2008. Implementing strategic change. In: Baker, M. & Hart, S. (eds.). The Marketing Book, 6th Edn. Elsevier Butterworth-Heinemann, Oxford. Jaworski, B., and Kohli, A. 1993. Market orientation: antecedents and consequences. Journal of Marketing, 57(July): 53-70. Narver, J. and Slater, S. 1990. The effect of a market orientation on business profitability. Journal of Marketing 54(October): 20-35. Read More