University of Washington EMBA ProgramPuget 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 Systems Desire 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 Operation

sVP R&D

VP Sales/ Marketing

VP Human Resources

Differing Organizational Perspectives

Consensus

Marketing

Finance

Human Resources R & 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

CustomersCompetitor

sCollaborato

rs

Performance Indicators

Pre-Sale

Financial Oriented Volume Oriented

Sale

Post-Sale

Awareness

Attitude

Purchase Intention Dollars (Nominal, Real)

Units

Growth Market Share

Trial, Repeat

Contribution Bottom Line

Profit

Cash Generated

Gross Spreads

Return on Investment

Customer Satisfaction

Consideration

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!