Chapter 2 Being Customer Oriented Market Orientation Customer Orientation JW:sel:H/AW#5

Customer Commitment: How Market Leaders Do It Through masterfully creating and delivering value to their highly satisfied and loyal customers Greatness in marketing and customer services becomes a function of attitude, not resources.

The Traditional Marketing Concept Customer satisfaction at a profit Stresses conquest marketing (getting new business)

Relationship Marketing Concept (RMC) Evolved due to highly competitive global service markets 2 objectives: Maintaining and upgrading customer relationships (retention strategies) Growing business by finding new customers and creating long-term value

Becoming Marketing Oriented Marketing Variables Sales Oriented Market Oriented Starting Point Organization Target markets Marketing Focus Product/service Customer needs Customer Focus New business (attraction) Existing customer base (growth and retention) Competitive Edge Lowest delivered cost Superior quality or service Product Strategy Generic product Augmented product Promotional Strategy Selling/advertising Integrated marketing communications (IMC) Pricing Strategy Maximizing profit margins Profitable use of resources Marketing Objective Sales volume Customer satisfaction Planning Approach Reactive Proactive Time Perspective Short term (tactical) Medium and long term (strategic)

The Marketing Continuum Market Driving Market Driven Sales Product Production

Market Orientation A market orientation provides impetus for building an organizational culture which: Puts customers first Creates superior value for customers Leads to increased overall business performance Employees of marketing oriented companies become value-adders Employees of marketing oriented companies know how to listen to and respond to customers

Market Orientation Constructs and Models Narver & Slater: Customer Orientation Competitor Orientation Interfunctional Coordination Kohli & Jaworski: Intelligence Generation Intelligence Dissemination Responsiveness

The Market Orientation Process Market orientation involves learning about customers and competitors Firms operating in a competitive industry are most likely to benefit from a market orientation Market orientation inputs are valuable for formulating an initial definition of your market and for staying “in touch” with your customer base

Market Driving Vs. Market Driven Companies Market driving companies go beyond accepting given market structures and behaviors Market driving firms shape or change markets/ sectors by eliminating, adding, or modifying the players in markets and their functions Market driving companies rewrite industry rules and compete in new market arenas

Market Driving Vs. Market Driven Companies – cont’d Market driving companies have unique business systems and ideas Market driving companies deliver large leap in customer value

Developing a Customer-Oriented Organization Customer-centric marketing emphasizes understanding and satisfying needs, wants, and resources of individuals and customers rather than those of mass markets/segments (Sheth, et al., ) Table 2-2 Contrast of New Customerization Framework and Old Marketing Model

Becoming Customer Oriented A customer oriented business culture: Top management’s values Employee input Interdepartmental dynamics Organizational systems Responses to environment Dual customer and competitive emphases Long term view of business/value

Regis McKenna’s Marketing Philosophy Marketing is the responsibility of everyone in the organization Customer orientation equals organizational function rather than departmental as in marketing department A customer orientation is a service organization practicing Japanese style marketing Okyaku-sama – “honored customer” or the “customer is God

What Customers Require From Companies Today’s customers are quite smart and sophisticated and looking for companies that:: Create maximum value for them based on their needs and wants Demonstrate that they value their customers’ business

Characteristics of New Value-Seeking Customers Choice-seeking Demanding Knowledgeable Believe that loyalty must be earned Price conscious Environmentally aware Convenience-oriented

Market Myopia Organizations must avoid market myopia (forgetting customer needs) by: ■ Overcoming complacency ■ Staying relevant in the marketplace/space ■ Be creative in programs and processes

Organizations must avoid market myopia (forgetting customer needs) by: Market Myopia - cont. Organizations must avoid market myopia (forgetting customer needs) by: ■ Adapt and be flexible – responsive/proactive to market conditions and tastes ■ Use a Kaizen philosophy – continuous Improvement

The Bias for Action Continuum Non-responsive Reactive Responsive Proactive Anticipatory (Adapted from Barrett H. (1996)

Marketing Approaches to Achieve Customer Focus Customer oriented organizations build on the marketing concept (market orientation is the firm’s implementation of the marketing concept); ■ Designing customer-driven processes and programs ■ Establish a strong marketing information system ■ Segment and target markets ■ Hire the best talents ■ Stress operational efficiency ■ Continually measure and fine-tune their customer focus

Trigger Points of Customer Value Company/customers (marketing mix) Employees/customers (service providers) Technology/customers (e-marketing mix)

Customer-Oriented Marketing Approaches

The E-Marketing Mix Taxonomy Product Price Place Promotion Sales Promotion Personalization PRIVACY Community Site S e c u r i t y Customer Service Adapted from Kalyanam, K. and McIntyre, S. (2002) The e-marketing mix: a contribution of the e-tailing wars, Journal of the Academy of Marketing Science, 30 (4), pp. 487-499.