apply4mba

In this session, we briefly reviewed the AMA's 1985 definition of marketing (marketing as an organizational function) and then discussed in detail the AMA's 2004 definition of marketing (marketing as an organization as well as a management philosophy/company orientation.

Marketing as a Management Philosophy/Company Orientation

A management philosophy or a management orientation is the philosophy or the orientation (the "way") that the top management of the company (e.g., CEO) chooses to guide the operation of his or her company to achieve the company's objectives.  The implementation of the management philosophy or management orientation by the top management will result in the corporate culture or company orientation (or the way the company does its business).

When we look at the definition of marketing by AMA (2004), you can see that marketing, as a management philosophy, requires the integration of every function or department to work together to satisfy the target customers.  The target customer is the focus of the company's operations.  Everybody in the company (1) works together to create, communicate, and deliver value to the customer and (2) manages the relationship with customers in ways that benefits the company and its stakeholders.

There are 6 eras for marketing as management philosophy or orientation.  By "marketing as management philosophy", I mean companies in all eras achieved or achieve their objectives by satisfying the needs and wants of their customers.  The point is that managers in some eras "unconsciously" used the marketing concept (focusing on satisfying the needs and wants of the customers and managers in some other eras "consciously" use the marketing concept.

There are 6 eras for marketing as management philosophy or orientation: product orientation, production orientation, sales orientation, marketing orientation, societal marketing orientation, and relationship orientation.  Each orientation is the predominant management orientation in each era.  Note that demand was higher than supply in the first two eras (product orientation and production orientation) but supply has been higher than demand in the last four eras.  Note also that managers "unconsciously" used the marketing concept (i.e., they instinctively use the marketing concept) in the first three eras (product orientation, production orientation, and sales orientation) but "consciously" use the marketing concept (i.e., using the concepts of segmentation, targeting, positioning, and marketing mix strategy to satisfy the needs and wants of their target customers) in the last three eras.

Product Orientation.  In product orientation era (from old time to just before industrial revolutions), managers focused (internally) on producing "quality" products.  In this era, products were made by hand and in small quantity.  Durability and functionality were the two most important dimensions of quality during that period of time.  These two dimensions of quality were what customers wanted.  Both high-quality products firms and low-quality products firms survived because of higher demand than supply.  High-quality products firms tended to have higher market share and profit.

Production Orientation.  In production orientation era (from industrial revolution to just before WWII), managers focused (internally) on producing "cheapest" products.  Because of industrial revolutions, products could be mass produced by production lines.  But because of the lack of technological sophistication, products from different companies looked more or less the same.  So price became the determinant of sales and market share.  Both expensive and cheap products could be sold because of the higher demand than supply.  Cheaper products firms tended to have higher market share and profit.

Sales Orientation.  In sales orientation era (from after WWII to 1956), managers focused (internally) on using sales force to sell (high-tech) products.  Because of the application of technology (from the WWII) into consumer products, managers needed to use sales force to promote the products directly to consumers because salespersons were the best mean in selling technologically complicated products.  Many companies in this era failed because supply was higher than demand.  Those that were successful tended to have products that met the customers' needs and wants.

Marketing Orientation.  In marketing orientation era (from 1956 to early 1980s), managers have started focus externally on satisfying the customers' needs and wants.  The marketing concept (satisfying the needs and wants of the target customers) and marketing strategy (target market strategy-segmentation, targeting, positioning and marketing mix strategy-product strategy, pricing strategy, distribution strategy, communication strategy) have been formally used.  Successful companies have been companies that can satisfy the needs and wants of their "target" customers "better" than their competitors.

A company that adopts marketing as its company orientation (or a market oriented firm) will have the following characteristics:

1.       Customer Focus.  Everybody in the firm works together to acquire information about the problems/needs/wants of the target customers as well as the alternatives the customers have to solve the problems now and in the future.

2.       Competitor Focus.  Everybody in the firm works together to acquire information about the (major) competitors' objectives and strategies that are used to serve the target customers now and in the future.

3.       Interfunctional/Interdepartmental Coordination.  Everybody in the firm works together to respond to the target customers' needs/wants.

4.       Long-Tem Focus.  The firm has long-term vision and growth policy.

Societal Marketing Orientation.  In societal marketing orientation (from early 1980s to mid 1990s), managers focus externally on satisfying the needs and wants of the customers and on the long-term well being of the customers.  In other words, managers have started incorporated green marketing as well as corporate social responsibility into their orientation.  Companies try to strike a balance between the customers' desire and what is good for them.

Companies adopting societal marketing orientation not only focus on serving the needs/wants/preferences of their target customers, they also focus on the following issues:

1.       Green Marketing.  The company focuses on two issues: reducing wastes and managing the consequences of wastes).

2.       Corporate Social Responsibility.  The company focuses on its economic responsibility (be profitable), legal responsibility (be legal), ethical responsibility (be ethical), and philanthropic responsibility (be philanthropic).

Relationship Orientation.  In relationship orientation (from mid 1990s to present), managers focus on building, enhancing, and retaining/maintaining relationships with their "profitable" customers.  In other words, rather than using communication tools to reach all the customers in the target market, managers first segment his/or target market into segments based on profitability.  After the target customers are segmented into different profit segments, the manager systematically approaches each customer in the selected "profit" segment(s) by direct marketing tools (e.g., direct mail, telemarketing, and/or salespersons).  In other words, managers in this orientation proactively apply societal marketing orientation on their target customers (starting from the most profitable segment).  The concept of relationship selling is very appropriate for both B2B and B2C marketing.  The concepts of relationship marketing and CRM have been applied in industries where customer data bases are available.

The reason I discussed about marketing as management philosophy/orientation is that understanding historical development in management philosophy can help you understand the implications of your choice of management philosophy/orientation  as well as can enable you to "predict" the future management philosophy/orientation.

Exercise-Mini-Cases on Company Orientations: We discussed the mini-cases on company orientations in the session.  There are a few learning points from the exercise:

1.       Product orientation, production orientation, and sales orientation focus internally on the managers' own beliefs/convictions (which may be correct or wrong).  Marketing orientation, societal marketing orientation, and relationship orientation focus externally on the target customers.  Customer knowledge comes from quality marketing research, not from personal beliefs or feelings.

2.       A societal marketing oriented company will (ultimately) market only environmental friendly/healthy products that serve the customers' needs/wants.

Marketing as an Organizational Function

Then we discuss about marketing as an organizational or business function.  Marketing as an organizational or business function is the marketing process, which consists of marketing planning and marketing execution.  This is what marketing people do.  Marketing planning process will result in a detailed marketing plan, which consists of a lot of detailed programs for marketing execution.  Marketing execution is the implementation of the marketing programs specified in the marketing plan and the supervision, evaluation, and control of the implemented programs.

A marketing plan consists of the following components:

1.       Company Mission (A mission statement is presented here.)

2.       Environmental Analysis (Both internal and external environments are carefully and objectively evaluated through analysis of Current Marketing Situations and Opportunity and Issue Analysis.)

a.       Current Marketing Situations (becomes the input for SWOT analysis in the next step)

                                                                           i.      Product situation

                                                                         ii.      Market situation

                                                                        iii.      Distribution situation

                                                                       iv.      Competitive situation

                                                                         v.      Macro-environmental situation

b.      Opportunity and Issue Analysis

                                                                           i.      Strengths and weaknesses analysis (S/W analysis)

                                                                         ii.      Opportunities and threats analysis (O/T analysis)

                                                                        iii.      Issue analysis

3.       Objectives (Both marketing and financial objectives are guided by the issues identified in the SWOT and Issue Analysis.)

a.       Marketing Objectives

b.      Financial Objectives

4.       Marketing Strategy (also guided by SWOT and Issue Analysis and Objectives) which consists of

a.       Target Market Strategy

                                                                           i.      Segmentation

                                                                         ii.      Targeting

                                                                        iii.      Positioning

b.       Marketing Mix Strategy (guided by positioning)

                                                                           i.      Product strategy

                                                                         ii.      Pricing strategy

                                                                        iii.      Distribution strategy

                                                                        iv.      Communication strategy

5.       Marketing Programs (derived from marketing mix strategy and indicate who, do what, when, with how much budget, how to do it, and evaluation/control measures for the program).

Marketing execution consists of two steps:

1.       Implementation (which consists of assignment of marketing programs to your staff and empowerment of the staff to do their jobs)

2.       Evaluation & Control (the objective of the programs will be compared with the performance)

We have discussed briefly about the marketing planning.  We will focus more on each component of a marketing plan in more detail in the coming sessions.  In fact, the marketing process will be the focus of our class for the rest of sessions.  You are going to learn how to write a marketing plan based on marketing research that really works

summarize the discussion about the two types of marketing: consumer (or B2C) marketing and organizational marketing (or B2B marketing).  We discussed about each type of marketing by looking at the objectives, the types of customers, and the types of products, and buying criteria.

Consumer Marketing

            Objectives of the purchase:

·         For personal/family consumption

·         As gifts

Type of Customers:

·         Individual consumers buying for personal consumption

·         Individual consumers buying for family or friendship groups for family or friendship group consumptions

Types of Products:

·         Convenience goods/services

·         Shopping goods/services

·         Specialty goods/services

·         Unsought goods/services

Buying Criteria:

·         Not really economic-oriented

·         Relying more on psychological reasons

Organizational Marketing

            Objectives of the purchase:

·         To use the product as the ingredient, material, or component of the buyer's end product

·         To facilitate the operation of the buyer

·