BusinessMarketing

Marketing Orientation

What is Marketing?

Marketing is the process associated with promoting for sale goods or services. It is considered a “social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and values with others.” It is an integrated process through which companies create value for customers and build strong customer relationships in order to capture value from customers in return.

Marketing is used to create the customer, to keep the customer and to satisfy the customer. With the customer as the focus of its activities, it can be concluded that marketing management is one of the major components of business management. The evolution of marketing was caused due to mature markets and overcapacities in the last decades. Companies then shifted the focus from production more to the customer in order to stay profitable.Marketing Orientation

The term marketing concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions. It proposes that in order to satisfy its organizational objectives, an organization should anticipate the needs and wants of consumers and satisfy these more effectively than competitors.

Marketing is defined by the American Marketing Association [AMA] as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” The term developed from the original meaning which referred literally to going to a market to buy or sell goods or services. Seen from a systems point of view, sales process engineering views marketing as “a set of processes that are interconnected and interdependent with other functions, whose methods can be improved using a variety of relatively new approaches.”

The Chartered Institute of Marketing defines marketing as “the management process responsible for identifying, anticipating and satisfying customer requirements profitably.” A different concept is value-based marketing which states the role of marketing to contribute to increasing shareholder value. In this context, marketing is defined as “the management process that seeks to maximize returns to shareholders by developing relationships with valued customers and creating a competitive advantage.”

Marketing orientations:

The marketing orientation is perhaps the most common orientation used in contemporary marketing. It involves a firm essentially basing its marketing plans around the marketing concept, and thus supplying products to suit new consumer tastes. As an example, a firm would employ market research to gauge consumer desires, use R&D to develop a product attuned to the revealed information, and then utilize promotion techniques to ensure persons know the product exists.

A. Customer orientation

A firm in the market economy survives by producing goods that persons are willing and able to buy. Consequently, ascertaining consumer demand is vital for a firm’s future viability and even existence as a going . concern. Many companies today have a customer focus (or market orientation). This implies that the company focuses its activities and products on consumer demands. Generally there are three ways of doing this:

a) the customer-driven approach,

b) the sense of identifying market changes and

c) the product innovation approach.

In the consumer-driven approach, consumer wants are the drivers of all strategic marketing decisions. No strategy is pursued until it passes the test of consumer research. Every aspect of a market offering, including the nature of the product itself, is driven by the.needs of potential consumers. The starting point is always the consumer. The rationale for this approach is that there is no point spending R&D funds developing products that people will not buy. History attests to many products that were commercial failures in spite of being technological breakthroughs.

A formal approach to this customer-focused marketing is known as SIVA (Solution, Information, Value, and Access). This system is basically the four Ps renamed and reworded to provide a customer focus. The SIVA Model provides a demand/customer-centric version alternative to the well-known 4Ps supply side model (product, price, place, promotion) of marketing management.

In a product innovation approach, the company pursues product innovation and then tries to develop a market for the product. Product innovation drives the process and marketing research. is conducted primarily to ensure that profitable market segment(s) exist for the innovation. The rationale is that customers may not know what. options will be available to them in the future so we should not expect them to tell us what they will buy in the future. However, marketers can aggressively over-pursue product innovation and try to overcapitalize on a niche. When pursuing a product innovation approach, marketers must ensure that they have a varied and multi-tiered approach to product innovation. It is claimed that if Thomas Edison depended on marketing research he would have produced larger candles rather than inventing light bulbs. Many firms, such as research and development focused companies, successfully focus on product innovation. Many purists doubt whether this is really a form of marketing orientation at all, because of the ex-post status of consumer research. Some even question whether it is marketing.

B. Contemporary approaches :

Recent approaches in marketing are the relationship marketing with a focus on the customer, the business marketing or industrial marketing with a focus on an organization or institution and the social marketing with a focus on benefits to the society. New forms of marketing also use the internet and are therefore called internet marketing or more generally e-marketing, online marketing, desktop advertising or affiliate marketing. It tries to perfect the segmentation strategy used in traditional marketing. It targets its audience more precisely and is sometimes called personalized marketing or one-to-one marketing.

The marketing discipline is fundamentally concerned with understanding customer needs and requirements; delivering value to customers resulting in high levels of customer satisfaction; pursuing long-term relationships with customers, and providing positive customer experiences when dealing with the firm V.Venkata Ramana and G. Somayajulu. An underlying premise is that relationship marketing provides value for the firm and is an essential element of the marketing concept Valarie A.Zeitharnl and Mary Jo Bitner. Businesses engaged in relationship marketing create and develop profitable exchange relationships with customers over time. ThisĀ implies that long-term relationships with customers are better than short-term transactional exchanges Rajendra Nargundkar.

Information technology is concerned with the use, design, development, implementation and support of computer-based information systems. This includes the secure collection, storage, protection, transmission and retrieval of information Paul Greenberg IT attempts to provide both strategic and operational value to businesses Paul E. Green, Donald S.TulI and Gerald Albaum It is concerned with the use and adoption of technology Patrica B. Seybold, critical aspects of technology implementation Jill Dyche and the strategic role of IT within businesses Jagdish N. Sheth, Atul Parvatiyar. IT provides the specific technology to implement one-to-one CRM applications and techniques on a large scale which are of benefit to firms, individuals and customers H Peeru Mohamed and A Sagadevan’

The relationship marketing (RM) and technology adoption literature contribute to the theoretical foundation for CRM research, and CRM can be viewed as a practical implementation of RM theory, with emphasis on one-to-one marketing techniques enabled through technology Hair, Bush and Ortinau.

Relationship between Information Technology and Marketing:

Marketing’s association with and utilization of IT began around the mid-1960s when the likely impact of massive data-processing capabilities on business practice was first considered G.C.Beri. Figure 1.1 presents a brief overview of the IT evolution with respect to marketing. Considered as purely a business support function in the early days, IT has evolved through simple, routine number crunching and data processing applications into a strategic contributor to contemporary business Bowerman, O’Connel and Hand was among the first to see the likely benefits of IT use in marketing including real-time information management of customer and competitor information, enhanced analytical capabilities and sophisticated decision support systems (DSS), anticipating the growth and early adoption of marketing information systems (MkIS) Adrian Paynee. Marketing’s need to provide comprehensive support for senior management decision-making, and group working processes (such as electronic meetings), provided drivers for the early utilization of executive information systems (EIS) and group support systems (GSS) Jagdish N Sheth and Atul Parvatiyar During the 1980s marketing practitioner began utilizing, Supply Chain Management (SCM) applications to help solve problems related to supply and distribution Valarie A.Zeithaml and Mary Jo Bitner.

IT Evolution with respect to marketing

Marketing has continued to take advantage of IT capabilities with artificial neural networks (ANN) and expert systems (ES) applications used extensively in marketing to help analyze and supplement customer self-service centers and web-based service initiatives Philip Kotler. Enterprise Resource Planning (ERP) provides integrated real-time solutions across all business processes, allowing companies to focus on their internal processes to improve efficiencies, quality, and profitability Atul Parvatiyar and Jagdish N Sheth. Data warehousing (DW) is considered a critical component of CRM-sometimes termed the CRM engine-while data mining is the process of extracting information from data warehouses, looking for previously unknown information, for use by applications such as CRM Don Peppers and Martha Rogers.

Notwithstanding the extensive history, the IT and marketing relationship can be strained due to such factors as organizational cultural disparity between IT and marketing, differing key performance indicators (both implicit and explicit), and misaligned perceptions of system usability C.B. Bhattacharya and Sankar Sen. Despite the difficulties, there continues to be a need for IT and marketing departments to actively work together to develop comprehensive and integrated business strategies, support management decision making, create sustainable competitive advantage, and generate real-time market research applications Fredrick F.Reichheld. As technologies continue to converge over time, their need will become even greater.

Transaction Versus Relationship Marketing:

A. Transaction Marketing: Traditionally the focus of marketing function used to be on attracting new customers, either by adding new segments to the existing base of customers or by acquiring the competitors’ customer base. Attracting new customers became the most important task for the marketing department. This process has resulted in making marketing personnel more interested in attracting new customers without caring for the existing ones, once the transaction (in most of the cases selling goods or services) is over. This phenomenon is termed as transactional marketing since the focus is mainly on closing the transaction (sale) with the customer.

The traditional marketing approach includes the mix of four ‘P’s i.e. Product. Price, Place, and Promotion. The emphasis used to be more on the product features, the pricing of the product (depending on the scale of economies and the target segment, arranging for the logistics and distribution of product so that it is made widely available to the target segments. Another component of marketing mixes ‘Promotion’ where communication and promotion strategies are implemented to ensure that the product gets required exposure in the market and sales have ensued. In other words, most of the marketing effort is spent on segmenting, targeting and positioning the products/ services, so that the sales targets are met.

Typical transactional marketing process starts with the process of prospecting and qualifying the customer i.e., identifying qualified potential customers. Salespeople approach many prospects to get just a few sales. Qualifying a prospect means identifying better prospective customers and screening out the poor ones. This is done generally by looking at factors like financial ability, the volume of business, special needs and possibilities for growth.

The next step in transactional marketing is ‘pre approach’ i.e., the salespeople try to learn as much as possible about their potential buyers and their buying styles, before making a sales call. `Approach’ is the next step in which the salesperson meets and greets the buyer. This is followed by some key questions to learn more about the customer’s needs or by showing a display or sample to attract the buyer’s attention and curiosity. Presentation is the next step in which the salesperson describes the product features, but concentrates on presenting customer benefits. This is followed up by product demonstrations in most of the cases.

The next step in transactional marketing includes handling objections, which involves clarification of any objections raised by the prospective customers. The next step is called closing in which the salesperson asks for the order, review points of agreement, etc., thus trying to close the deal by getting the order.

Follow-up is supposed to be the final step in transactional marketing process in which the salesperson follows up the customer after the sale to ensure customer satisfaction and repeat business, but unfortunately, this last step is least cared for in the process of transactional marketing, as the focus is shifted to the acquisition of new customers, once the sale is closed with the current one.

B. Relationship Marketing: The process of creating, maintaining and enhancing strong value-laden relationships with customers is known as Relationship Marketing. The concept of relationship marketing shifts the emphasis of marketing of an organization from a mere transaction focus to a relationship focus, with the aim of a long-term association between the parties involved. Attracting new customers is treated merely as the first step in the relationship marketing process. Relationship.marketing over a period of time has transformed into Customer Relationship Management.

The organization that practices relationship marketing does not merely seek a sale. It would like to demonstrate that it has the capabilities to serve the customer in the long run and develop a mutually profitable relationship. Relationship marketing goes beyond attracting customers and conducting transactions with them. It advocates companies to retain customers and build profitable, long-term relationships with them. In today’s world of changing demographics, intense competition and overcapacity in many industries, companies are fighting with each other for their own survival. The costs of attracting new customers are rising.

Some facts related to customer retention are as follows:

Acquiring new customers can cost five times more than the costs involved in satisfying and retaining current customers. It requires a great deal of effort to induce satisfied customers to switch away from their current suppliers.

  • The average company loses ten percent of its customers every year.
  • A five percent reduction in the customer defection rate can increase profits by twenty-five percent to eighty-five percent, depending on the industry.
  • The customer profit rate tends to increase over the life of the retained customer.

Another factor that has to lead to a growing emphasis on relationship marketing is the growing emphasis on deriving ‘Customer lifetime value’. Losing a customer translates to losing the entire stream of purchases that the’ customer would make over a lifetime of patronage, without defecting the loyalty to the competitors. This concept lays emphasis on extracting the total lifetime value from a customer.

Proactive customer business development and building relationships with important customers are the two key processes of relationship marketing, which lead to superior value creation for the customer and the company.

The recent surge in the practice of relationship marketing is due to the growth of the service industry (banking, insurance, air travel, telecommunications, hotels, hospitals, etc.). The expectations of the customers are changing rapidly with the availability of advanced product features and services. The best way to deal with this scenario is to maintain collaborative and co-operative relationships with the customers. Relationship marketing starts with in-depth knowledge of customers, their habits, desires to cultivate and develop long-lasting relationships with the customers. The typical examples for the relationship marketing can be found in the activities of the fruit seller, or the grocery shop person, who try to understand the habits of their regular customers and customize their products accordingly.

Marketing, sales, and after-sales personnel would be the knowledge sources of customers. Companies should harness this knowledge to make critical business decisions. In order to make the relationship marketing program a success, it is very important to identify real knowledge about different types of customers i.e. the most valuable customers, customers with the potential to acid more value and customers offering little or zero value to the organization.

The important differences between transactional marketing and relationship marketing can be summed up as follows:

Transaction MarketingRelationship Marketing
Focus on completing a sale.Focus on customer retention.
Orientation on product features.Orientation on product benefits.
The time scale of customer orientation is relatively short.Long time scale.
No emphasis on customer service area.Customer service is key focus.
Limited customer commitment.High customer commitment.
Moderate customer contact.High customer contact

Table: 1.1- Transaction vs. Relationship Marketing


Article Collected From:

  • Krishna, R. B. (2013). A study of customer relationship management in select public and private sector companies.
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