University of Washington EMBA Program Puget Sound 19 Marketing Management “Outward Orientation and Industry Structure” Instructor: Elizabeth Stearns

Market Orientation and Organizations The way an organization thinks about the nature and conduct of organizational activities A paradigm which permeates all aspects of organizational philosophy, structure, and conduct

Finance Product/ Technology Production/ Manufacturing Alternate Inward Orientations Sales Marketing

Reward SystemsDesire for Stability Dominant Culture Pressures for an Inward Orientation Pressures for Efficiency Fixed Investment Task Specialization

Pressures for Inward Orientation Organizational Structure –Task specialization –Reward systems Culture & Inertia –Cost of organizational change –Stakeholder influence

Market or Outward Orientation Organization wide generation and implementation of market intelligence –Strategy: Develop organizational plans –Implementation: Executing the initiatives Set of processes touching all aspects of the organization –Information on all important buying influences permeates every organizational function –Strategic and tactical decisions are made interfunctionally and interdivisionally

Functional Structures CEO VP Finance VP Operations VP R&D VP Sales/ Marketing VP Human Resources

Differing Organizational Perspectives Consensus Marketing Finance Human ResourcesR & D Operations Sales Contention Creativity

Finance Product/ Technology Production/ Manufacturing Alternate Inward Orientations Sales Marketing

“Market Orientation,” Heiens Approaches –Customer focus: “Customer Preoccupied” Focus on current and future customer needs –Competitor focus: “Marketing Warriors” Focus on competitive core competencies, technologies, and tactical implementations Consider equal emphasis: customer and competitor –“Strategically Integrated” (“Strategically inept”)

Creating the Outward Oriented Firm Organizational Structure Organizational Mission, Culture & Values Systems Strategy Human Resource Management Customers Competitors Collaborators

Performance Indicators

Hierarchy of Strategy Corporate Strategic Business Unit (SBU) Product-Market

Setting Objectives PurposePurpose To identify the results we wish to achieve in the market segments and provide a platform for measurement and evaluation. Types of Marketing Objectives –Strategic: Qualitative and directional –Operational: Quantitative and time dependent (SMART)

Objectives Statements Our primary objective in the loudspeaker market is to grow market share from 25% to 30% by stealing share from competitors in 2002 while maintaining margins at 23%. (What is wrong with this?) Our task is to generate $70 million cash flow from mainframes in both 2001 and 2002, while maintaining dollar-denominated market share at 45%. –Primary objectives are most important –Secondary objectives are relevant and desirable, but tradeoffs for primary objectives are acceptable

Using Objectives Write an operational marketing objective Project all viable alternatives onto the dimension of the objective  use expected value of outcome Measure the “attractiveness” of each alternative according to whether/the degree to which it satisfies your operational marketing objective –If only 1 alternative meets your objective—choose it –If 2 or more alternatives meet your objective… Choose the one which performs best on the dimension underlying your objective Move to “tiebreaker” criteria –Risk/variance in performance –Cost –“Fit” –Etc.

Thank You!