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

Chapter 2Chapter 2

Being Customer Being Customer OrientedOriented

Market OrientationMarket Orientation

Customer Customer OrientationOrientation

JW:sel:H/AW#5

Customer Customer CommitmentCommitment::

How Market Leaders Do ItHow Market Leaders Do It Through masterfully Through masterfully creating and creating and

delivering valuedelivering value to their highly to their highly

satisfied and loyal customerssatisfied and loyal customers

Greatness in marketing and customer Greatness in marketing and customer services becomes a services becomes a function of function of attitude, not resources.attitude, not resources.

The Traditional Marketing The Traditional Marketing Concept Concept

Customer Customer satisfaction at a satisfaction at a

profitprofit Stresses conquest Stresses conquest

marketing (getting new marketing (getting new business)business)

Relationship Marketing Relationship Marketing

Concept Concept (RMC)(RMC)Evolved due to highly competitive Evolved due to highly competitive

global service marketsglobal service markets

2 objectives2 objectives:: Maintaining and upgrading Maintaining and upgrading

customer relationships customer relationships (retention strategies) (retention strategies)

Growing business by finding Growing business by finding new customers and creating new customers and creating

long-term valuelong-term value

Becoming Marketing Oriented

Marketing VariablesMarketing Variables Sales OrientedSales Oriented Market OrientedMarket Oriented

Starting PointStarting Point OrganizationOrganization Target marketsTarget markets

Marketing FocusMarketing Focus Product/service Product/service Customer needsCustomer needs

Customer FocusCustomer Focus New business (attraction)New business (attraction) Existing customer base Existing customer base (growth and retention)(growth and retention)

Competitive EdgeCompetitive Edge Lowest delivered costLowest delivered cost Superior quality or serviceSuperior quality or service

Product StrategyProduct Strategy Generic productGeneric product Augmented productAugmented product

Promotional StrategyPromotional Strategy Selling/advertisingSelling/advertising Integrated marketing Integrated marketing communications (IMC)communications (IMC)

Pricing StrategyPricing Strategy Maximizing profit marginsMaximizing profit margins Profitable use of resourcesProfitable use of resources

Marketing ObjectiveMarketing Objective Sales volumeSales volume Customer satisfactionCustomer satisfaction

Planning ApproachPlanning Approach ReactiveReactive ProactiveProactive

Time PerspectiveTime Perspective Short term (tactical)Short term (tactical) Medium and long term Medium and long term (strategic) (strategic)

The The MMarketing arketing CContinuumontinuum

Market DrivingMarket DrivingMarket DrivingMarket Driving

Market DrivenMarket DrivenMarket DrivenMarket Driven

SalesSalesSalesSales

ProductProductProductProduct

ProductionProductionProductionProduction

Market OrientationMarket Orientation A market orientation provides impetus for A market orientation provides impetus for

building an organizational culture which:building an organizational culture which:

Puts customers firstPuts customers first

Creates superior value for customersCreates superior value for customers

Leads to increased overall business performanceLeads to increased overall business performance

Employees of marketing oriented companies become value-Employees of marketing oriented companies become value-

addersadders

Employees of marketing oriented companies know how to Employees of marketing oriented companies know how to

listen to and respond to customerslisten to and respond to customers

Market OrientationMarket Orientation Constructs Constructs

andand MModelsodels

Narver & SlaterNarver & Slater:: Customer OrientationCustomer Orientation Competitor OrientationCompetitor Orientation Interfunctional Coordination Interfunctional Coordination

Kohli & JaworskiKohli & Jaworski:: Intelligence GenerationIntelligence Generation

Intelligence DisseminationIntelligence Dissemination ResponsivenessResponsiveness

The Market Orientation ProcessThe Market Orientation Process

Market orientationMarket orientation involves learning involves learning about customers and competitorsabout customers and competitors

FFirms operating in a competitive industry irms operating in a competitive industry areare most likely to benefit from most likely to benefit from a market orientation a market orientation

MMarket orientation inputs are valuable for arket orientation inputs are valuable for formulating an initial definition of your formulating an initial definition of your market and for staying “in touch” with market and for staying “in touch” with your customer baseyour customer base

Market Driving Vs.Market Driving Vs. Market Driven CompaniesMarket Driven Companies

Market driving companies go beyond accepting given Market driving companies go beyond accepting given market structures and behaviorsmarket structures and behaviors

Market driving firms shape or change markets/Market driving firms shape or change markets/

sectors by sectors by eliminating, adding, or modifyingeliminating, adding, or modifying the players the players in markets and their functionsin markets and their functions

Market driving companies rewrite industry rules and Market driving companies rewrite industry rules and compete in new market arenascompete in new market arenas

Market Driving Vs.Market Driving Vs. Market Driven Companies – cont’dMarket Driven Companies – cont’d

Market driving companies have Market driving companies have unique business systems and unique business systems and ideasideas

Market driving companies deliver Market driving companies deliver

large leap in customer valuelarge leap in customer value

Developing aDeveloping a

Customer-Oriented Customer-Oriented OrganizationOrganization

Customer-centric marketing emphasizes Customer-centric marketing emphasizes understanding and satisfying needs, wants, and understanding and satisfying needs, wants, and resources of individualsresources of individuals and customers rather than and customers rather than those of mass markets/segments (Sheth, et al., )those of mass markets/segments (Sheth, et al., )

Table 2-2 Table 2-2

Contrast of New CustomerizationContrast of New CustomerizationFramework and Old Marketing ModelFramework and Old Marketing Model

Becoming Customer Oriented

A customer oriented business culture:A customer oriented business culture:

Top management’s valuesTop management’s values Employee inputEmployee input Interdepartmental dynamicsInterdepartmental dynamics Organizational systemsOrganizational systems Responses to environmentResponses to environment Dual customer and competitive Dual customer and competitive emphasesemphases

Long term view of business/valueLong term view of business/value

Regis McKenna’s Marketing Regis McKenna’s Marketing PhilosophyPhilosophy Marketing is the responsibility of everyone in the Marketing is the responsibility of everyone in the

organizationorganization

Customer orientation Customer orientation equalequals organizational function s organizational function rather than departmental as in marketing departmentrather than departmental as in marketing department

A customer orientation is a service organization practicing A customer orientation is a service organization practicing Japanese style marketingJapanese style marketing

Okyaku-samaOkyaku-sama – “honored customer” or the “customer is – “honored customer” or the “customer is God God

What Customers Require What Customers Require From Companies From Companies

Today’s customers are quite smart andToday’s customers are quite smart andsophisticated and looking for companies that::sophisticated and looking for companies that::

Create Create maximum valuemaximum value for them based for them based on their needs and wantson their needs and wants

Demonstrate that they Demonstrate that they value their value their customers’ businesscustomers’ business

Characteristics of New Characteristics of New Value-Seeking Customers Value-Seeking Customers Choice-seekingChoice-seeking DemandingDemanding KnowledgeableKnowledgeable Believe that loyalty must be earnedBelieve that loyalty must be earned Price consciousPrice conscious Environmentally awareEnvironmentally aware Convenience-orientedConvenience-oriented

MMarket arket MMyopiayopia MMarket arket MMyopiayopia

Organizations must avoid marketOrganizations must avoid market

myopiamyopia (forgetting customer needs) (forgetting customer needs) byby::

■■ Overcoming complacencyOvercoming complacency

■■ Staying relevant in the Staying relevant in the

marketplace/spacemarketplace/space

■ ■ Be creative in programs and processes Be creative in programs and processes

Market Myopia - cont.Market Myopia - cont. Market Myopia - cont.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

TheThe Bias Bias forfor Action Continuum Action Continuum

Non-responsiveNon-responsive

ReactiveReactive

ResponsiveResponsive

ProactiveProactive

AnticipatoryAnticipatory

(Adapted from Barrett H. (1996)

Marketing Approaches to Achieve Marketing Approaches to Achieve Customer FocusCustomer Focus

Customer oriented organizations build Customer oriented organizations build on the marketing concept on the marketing concept

((market orientation is the firm’s implementation of the market orientation is the firm’s implementation of the marketing conceptmarketing concept););

■■ Designing customer-driven processes and programs Designing customer-driven processes and programs ■ ■ Establish a strong marketing information systemEstablish a strong marketing information system ■■ Segment and target marketsSegment and target markets ■ ■ Hire the best talentsHire the best talents

■■ Stress operational efficiencyStress operational efficiency■■ Continually measure and fine-tune their customer Continually measure and fine-tune their customer

focusfocus

Trigger PointsTrigger Points ofof CCustomer ustomer

VValuealue

Company/customers (marketing mix)

Employees/customers Employees/customers (service providers)(service providers)

Technology/customersTechnology/customers

(e-marketing mix)

Customer-Oriented Customer-Oriented Marketing ApproachesMarketing Approaches

Customer

Marketing Service E- Marketing Mix Providers Mix

CustomerCustomer

The E-Marketing Mix TaxonomyThe E-Marketing Mix Taxonomy

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.

PProductroduct PricePrice

PPlacelace PPromotionromotion SSales Promotionales Promotion PPersonalizationersonalization

PPRIVACY RIVACY

CCommunityommunity SSite ite SS e c u r i t y e c u r i t y