Incisive Outlook on Marketing Orientation, Marketing Management of the McDonalds Corporation - Case Study Example

Running Head: MARKET ORIENTATION Market Orientation Name Course Institution Date Market Orientation Introduction Marketing management revolves around the practical application of marketing strategies. In order to actualize effective strategies of marketing management, organizations need to fully understand the model of their businesses and the markets that they operate in. Market orientation is a key marketing management strategy that focuses on identifying and meeting the existing demands of a particular market. Over the years, various organizations have developed market oriented operation models geared towards meeting the needs of their market. As result, a good number of these organizations have experienced improved business performance (Mohan, 2005). This report seeks to present an incisive outlook on marketing orientation. The report will explore what marketing management entails by reviewing a number of literatures that focus on marketing management. This report will depict what market orientation is about based on the sentiments of Kohli and Jaworski (1990) and Narver and Slater (1990) among many theorists. This report will further explore ways in which market orientation benefits organizations. Moreover, this report will seek to analyze the marketing management of the McDonalds Corporation and determine how market oriented the company is using Narver and Slater (1990) MKTOR scale. In addition this report will seek to recommend several time bound marketing strategies that the Corporation can employ in order to meet its marketing goals. The recommended marketing strategies will be based on the findings of the survey conducted on the Corporation. Marketing management According to Mohan (2005), marketing management is an imperative aspect of business that focuses on the management of an organization’s resources and the practical application of marketing strategies. In order to actualize effective strategies of marketing management, organizations need to fully understand the model of their businesses and the markets that they operate in. Marketing management provides a framework of analyzing and understanding the market environment with regards to completion and the needs of consumers (Mohan, 2005). Louden and Steven et al (2004) note that there are four main elements that marketing management focuses on in order to improve efficiency, profits and market share. These elements include; value, relationships, quality and customer satisfaction. Effective marketing management holistically addresses these four elements and adapts to the societal marketing orientation as the main guiding principle. Evidently, the need to effectively address these four elements in hypercompetitive markets is a challenging task to most organizations. However, marketing managers can counter these challenges by implementing a societal marketing approach. According to Louden and Steven et al (2004), effective marketing management is often driven through a distinctive orientation of the organization’s marketing strategy towards the organization’s products and the customers. Thus effective marketing management is characterized by market orientation as the guiding principle (Louden & Steven et al, 2004). Market orientation In reference to the sentiments of Kohli and Jaworski (1990) market orientation is the generation of an organization’s marketing intelligence with regards to the current and future needs of customers, propagating this intelligence across the organization’s departments and the responsiveness of the organization to it. Kohli and Jaworski therefore weigh the concept of market orientation on the basis of an organization’s responsiveness to the needs of the future and current market (Kohli & Jaworski, 1990). Narver and Slater (1990) consider market orientation as an organizational culture that effectively creates necessary behaviors with the aim of developing more superior value for its customers and hence improved business performance. In their definitions, these authors have identified three key components revolving around market orientation, they include, organizational coordination, competitor orientation and customer orientation (Narver& Slater, 1990). Conversely, Deshpande, Farley and Webster (1993) challenge the sentiments of Narver and Slater (1990). According to Deshpande, Farley and Webster (1993) market orientation is equivalent to customer orientation. Thus according to them customers interest is the most fundamental element of market orientation. Deshpande, Farley and Webster (1993) accentuate that marketing strategies should mainly focus on the customers (Deshpande, Farley & Webster, 1993). Never et al (1998) recommends that marketing orientation can be established through organizational learning. There are two main approaches that an organization can employ to improve its marketing orientation. The first approach involves developing principles of market orientation subsequently should be trained and communicated so as to develop necessary knowledge and skill. The second approach involves direct involvement and interaction with the current market and experimenting as a method of learning (Never et al, 1998). Deshpande (2001) accentuates on the significance of knowledge management as a means of improving market orientation. Knowledge management entails creating, diffusing and utilizing information in the market. These approaches are holistic since they not only focus on the generation and dissemination of information but they also revolve around the meaning and interpretation of information (Deshpande, 2001). Another approach of improving market orientation of an organization is by realigning its internal function especially the Human resource function. Narver & Slater (1990) suggest that inter functional coordination is key to improving market orientation of an organization. On the other hand, Lings (1999) argue that external orientation should be balanced with internal orientation so as to actualize effective results (Lings, 1999). Figure 1: Market orientation model Benefits of market orientation In order for an organization to realize superior performance in the market, the organization ought to establish and maintain a competitive advantage. Currently, a company’s competitive advantage is based on its capability to deliver continuously superior value to the customers. Recent research studies indicate that a market oriented culture in an organization establishes a strong foundation for a company to have the capability to create a more superior value to customers. An organization can be regarded as market oriented when its organizational culture is consistently and systematically committed in the creation of superior value for its customers (Narver & Slater, 1990). According to Kohli and Jaworski (1990), market orientation provides a combined focus for the projects and efforts of people thus contributing to superior performance. A number of empirical research studies have established strong connection between market orientation and a number of measures of business performance such as customer retention, sales growth, success of new products and profitability. Market orientation model helps organizations to monitor customer loyalty by continuously focusing on the satisfaction of customers. In order for business to maintain their clients it is essential that they deliver superior customer value by paying close attention to the services that they render, this in turn fosters solid customer loyalty. In addition, market orientation promotes greater employee satisfaction (Kohli &Jaworski, 1990). An overview of the McDonald’s Corporation The McDonald’s Corporation is one of the world’s largest fast food restaurants based in over 119 countries around the world and serves over 58 million customers daily. The primary products of McDonalds include hamburgers, French fries, chicken, soft drinks and desserts among many other products. However, in response to the increasing trends of obesity particularly in the western countries, the company introduced a modified menu that offers products such as fruits, salads and wraps. The McDonald’s Corporation is ranked as one of the top companies in the food industry worldwide. The company’s success and tremendous growth over the years can be attributed to its marketing strategies, quality of management and quality of products and services (Thomas & Jay, 2004). Understanding the needs of customers and reacting to the changing dynamics of the market is an essential marketing strategy. The McDonald’s Corporation is known for conducting in-depth customer research and audits of its brands. The research conducted by the company entails both qualitative and quantitative methods. Research conducted by the McDonald’s also covers the local bases of its chains and its general market environment. In addition, the company fosters a thorough understanding of its competition. Among the main competitions that the McDonald’s faces in its market niche include, the Burger House Sector, Quick Service Restaurant and the Total Eating Out Market among many others (Thomas & Jay, 2004). An analysis of McDonald’s market orientation using Narver and Slater MKTOR scale According to Narver and Slater (1990) MKTOR scale, market orientation is measured using three key elements namely; customer orientation, competitor orientation and interfunctional coordination. Hence, in order to analyze how the McDonald’s company is market oriented this section will explore the customer, competitor and interfunctional orientation of the McDonald’s Corporation. Customer and competitor orientation involves how an organization acquires information regarding the needs of its customers and the competition within its marketing niche. Interfunctional orientation involves how an organization uses its resources to create superior value to its customers (Narver & Slater, 1990). Customer orientation Based on the first six elements of the MKTOR scale on customer orientation, the McDonald’s Corporation scores an average of 80%.The McDonalds Corporation is considered as one of the organizations in the food industry that is mostly customer oriented. In order to meet the current needs of its customers, the McDonald’s Company modifies the distribution of its products by taking into account the traditions, local tastes and values of a particular market. Owing to the fact that McDonald is a multi-national company with many chains around the world, the company has invented a variety of food so as to soothe local tastes. For instance, In India, a large population of Indians are vegetarians due to religious beliefs, so as to cater for the needs of this market, McDonald’s has become responsive to these sensitivities by introducing a new line of vegetarian products such as McAlooTikki and McVeggie burger. Moreover, in other markets McDonald’s continually adapts to the language, perceptions, value systems and tastes of its customers (Chaney & Martin, 2007). The company lacks an effective system of monitoring the customer’s level of commitment, this area thus requires improvement. McDonald’s maintains its competitive advantage by understanding the needs of its customers. For instance, in Thailand Thai food is known for its chilly, hot and spicy flavor thus when McDonald launched its base in Thailand they modified their hamburger recipe such that it incorporates a hot and spicy effect that is similar to the Thai food(Chaney & Martin, 2007). McDonald’s marketing strategies are largely driven by the belief of creating greater values for its customers. For example, in response to the increasing trends of obesity particularly in the western countries, the company introduced a modified menu that offers products such as fruits, salads and wraps. The company mostly implements customer oriented services by regularly conducting research on its market bases so as to understand the needs of its customers. The Company is known for continuously conducting in-depth customer research and audits of its brands. The extent in which McDonald’s gives close attention to after-sales service is wanting. This is apparent due to the number of law suits that company has faced over the year as a result of its services and products. Competition Orientation Based on the elements of the MKTOR scale on competition orientation, the McDonald’s Company scores an average of 90%. Over the years, the McDonald’s company has managed to maintain its market dominance in the fast food industry despite the fact that there are various strong competitions in the market such as Burger House Sector, Quick Service Restaurant and the Total Eating Out Market among many others. The company’s workforce shares information within its various restaurant chains around the world regarding the strategies employed by its competitors in the market. As a result a good number of McDonald’s restaurants chains around the world have managed to out do its competition. The McDonalds Corporation actively responds to the competitive actions that threaten its market dominance. For instance, in order to outdo its competition, the company uses various marketing communication mix such as advertising, direct marketing, sales promotions, discounts and offers especially during the festive seasons. The McDonald’s restaurant chains are known for targeting customer groups so as to create competitive advantage. For example the company employs the demographic segmentation based on the parameters of age. It key target segments include the youth, children and urban families. In order to attract children most of its restaurant chains have a “Happy Meal” section for children that provide special play facilities for children such air hockey and play arcade games. This helps in turn helps McDonald’s to attract urban families which want a quality outlet to spend time with their children. A key practice that the top management of the McDonald’s restaurant chains undertake is exploring competitors’ strengths and strategies. By so doing the company is able to keep abreast of the strategies of its competitors and take advantage of their weaknesses in the market. Interfunctional orientation On the basis of the last four the elements of the MKTOR scale on interfunctional orientation orientation, the McDonald’s Company scored an average of 70%. The managers of the McDonad’s restaurant chains hardly visit their customers or prospective customers. Apparently, this is an area in which there is need for improvement and thus the company should become more market oriented with regards to this aspect. Communicating operation efficiencies and inefficiencies across the various McDonad’s restaurant chains is common practice that the company conducts regularly. The company is known for creating monthly and manual reports that depict its performance in the market. Often times these reports highlight both the successful and unsuccessful customer experiences across the various restaurant chains. The various units of the McDonald’s Corporation are integrated in such a way that, though these units have different roles they work unanimously to realize the common goal of meeting the needs of its targets. Nonetheless, there is still room for improvement with regards to integration of these units. The leadership of the McDonald’s Corporation inherently understands how each person in the workforce can contribute to developing customer value. As a result the leadership been able to initiate training programs over the years for its workforce so that they can enhance skills and contribution towards the creation of customer value. Figure 2: McDonald’s market orientation analysis using MKTOR scale Slight extent Moderate extent Great extent Customer Orientation Customer Orientation 1. Marketing strategies are driven by the satisfaction of customers √ 2.The level of customer commitment and loyalty is continuously monitored √ 3. Competitive advantage strategies are based on the understanding of customer needs √ 4. Business strategies are based on the principle of creating greater value to customers √ 5. Customer satisfaction regularly and systematically measured √ 6.After-sale service is given close attention √ Competition Orientation 7. The workforce shares information with regards to the strategies employed by its competitors in the market. √ 8. The company actively responds to the competitive actions that threaten its market dominance. √ 9. Targets customer groups and develop a competitive advantage √ 10. The management explores the strengths and weaknesses of its competitors. √ Interfunctional orientation 11. Managers visit current and prospective customers. √ 12. The company communicates about its efficiencies and inefficiencies across its business functions. √ 13. Business functions such as manufacturing, finance and marketing among many others are integrated to meet the needs of the target markets. √ 14. All managers understand how each person in the workforce can contribute to developing customer value √ In reference to the over all score of the McDonald’s Corporation based on the MKTOR scale, it is evident that the McDonald’s Corporation is to a large extent market oriented. Nevertheless, there are some areas that require improvement in order for the company to become more market oriented and thus experience improved business performance in the market. The key areas that require improvement based on the McDonald’s market orientation analysis using MKTOR scale include: The level in which customer commitment and loyalty is continuously monitored The level of attention given to after-sale services Managers visits to current and prospective customers Recommendations Using the MKTOR scale, it became apparent that the McDonald’s Corporation moderately monitors customer’s commitment and loyalty. According to Slater and Narver (1994) market oriented driven companies continually monitor their level customer commitment by ensuring that customer satisfaction is a constant objective. Therefore, within a time frame of three to five months the McDonald’s Corporation should develop and implement a performance indicator that enables it to weigh its commitment to customer satisfaction. The findings of the MKTOR scale show that the McDonald’s Corporation gives a slight level of attention to after-sale services. Slater and Narver (1994) recommend that market oriented companies should give attention to before and after services. Thus it is important for the McDonald’s Corporation to develop a platform in its official websites that can be used to address issues with regards to after-sale services. Moreover, the company should have local after sale customer care hotlines that enables customers to give feedbacks to the company. This proposal is executable within a time frame of one year. McDonald’s market orientation analysis using the MKTOR scale depicts that managers from the various McDonald’s restaurant chains hardly visit current and prospective customers. In reference to the sentiments of Slater and Narver (1994) it is essential for any business model to be acquainted with its current and prospective customers. Hence, managers from the various McDonald’s restaurant chains should initiate a local visitation program that enables them to get acquainted with their current and prospective customers, so that they can understand more about the needs of their customers. This proposal can be implemented within a time frame of one year (Clancy & Kriegafsd, 2000). Conclusion This report has established what market orientation entails based on Narver and Slater (1990). In this report, the benefits of market orientation have been clearly stated as improved business performance, increased employee and customer satisfaction and superior customer value (Narver & Slater 1990). This report has further analyzed to what extent that the McDonald’s Corporation is market orientation using MKTOR scale. The overall findings of this analysis depicts that the McDonald’s Corporation is to a large extent market oriented. However, there are some areas that require improvement in order for the company to become more market oriented and thus experience improved business performance in the market. Based on the results of MKTOR scale the areas that require improvement include, the monitoring of customer commitment, attention given to after-sale services and managers visits to customers. In a bid to address these issues this report recommends that the McDonald’s Corporation should, develop and implement performance indicators, the company should develop a platform in its official websites that can be used to address issues with regards to after-sale services. In addition, managers of various local chains should initiate local visitations program that enables them to get acquainted with their customers. References Chaney, L. & Martin, S. (2007). Intercultural business communication. 4th Ed. Upper Saddle River, NJ: Pearson Prentice-Hall. Clancy, K & Kriegafsd, P. (2000). Counter intuitive Marketing. 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