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 Marketing Manager Other internal information sources Other Organizations Retailers & Wholesalers Finance & Accounting Other Publics Production Suppliers

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 Customers Competitors Culture is externally oriented Superior Ability to Understand, Attract, and Keep Valuable Customers Configuration Focus on superior customer value Coherence of structure & systems Adaptability Shared Knowledge Base Capabilities Market sensing Market relating Strategic thinking Channels 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 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 We’ll sell to whoever will buy 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 Self-Centered 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 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