1.2 The Market-led Organization
Marketing as a job title: emphasis still on selling rather than satisfying customer needs.
Marketing department marketing: All marketing activities (advertising, sales, market research, …) grouped together in the marketing department. The focus is on increasing the customer’s understanding of existing products and services
Marketing as a Management process: Marketing as an exchange process/relationship. Marketing should help facilitate that mutually satisfying exchange.
“Marketing consists of individual and organizational activities that facilitate and expedite satisfying exchange relationships in a dynamic environment through the creation, distribution, promotion and pricing of goods, services and ideas.” Dibb et al, 1997
This approach is what Piercy calls market-led, every department in the organization is involved.
“Marketing is too important to leave to the marketing department” — Bill Packard, Hewlet Packard, in Piercy, 1997
You need to take into account the needs of your markets before your plan your processes.
The market-led approach has three components:
\- Customer orientation
\- Competitor orientation
\- Inter-functional co-ordination
“Marketing is the management process of identifying, anticipating and satisfying customers’ needs at a profit.” Charter Institute of Marketing
You need to understand the difference between customers and consumers.
Customers: there is an exchange relationship that adds value to the organization
Consumers: there is no exchange relationship and do not give any value to the organization
“Most people think that marketing is a tool, but for governments and not-for-profits it is a way of thinking. It goes beyond selling and advertising, it is a mindset that puts the customer first and ensures that the organization’s philosophy is ‘without consumers there is no organization’.” — Kotler (Drucker, 1992)
Products and services have tangible (evaluated by intrinsic characteristics) and intangible (evaluated by extrinsic characteristics) elements. Salt is fully tangible, judged by taste. Teaching is fully intangible judged by extrinsic clues such as environment and teaching materials.
If you have more intangibility attached to a product or service then you move into High-Credence Qualities. You need to trust the person or company providing the service or product. This is called ‘fiduciary’ responsibility, meaning ‘one who holds anything in trust’.
Drucker (1992) suggest that you need to ask yourself 5 questions to become market-led:
\- What is our business?
\- Who is our customer?
\- What does our customer consider value?
\- What have been our results?
\- What is our plan?
Find your customers and then focus on providing superior value to them. Treacy and Wiersema (T&W) suggest:
\- choose your customers
\- narrow your focus to provide a unique ‘value proposition’ to your market
\- dominate your market
You need to choose a group of customers and offer them superior value, the company’s value proposition. A unique value proposition needs a value-driven operating model. Market leaders often have value-driven cultures and:
\- A long-term view
\- External and internal networks to anticipate and respond to customer needs, listen closely, focus on customer satisfaction, build and sustain long-term relationships
If you use your value proposition and value-driven operating models right you will dominate your market.
T&W found three ‘value discipline’s that provide a unique value:
\- Product leadership: push performance boundaries; the best product; continue to innovate; competition is about product excellence
\- Operational excellence: the no-frills approach; middle-of-the-market products at best price with the least inconvenience
\- Customer intimacy: what specific customers want; cultivate relationships; satisfying unique needs; we have the best solution for you
Managing such a company needs to move from ‘marketing department marketing’ to a value-driven culture where everybody is market oriented. Put all your customer data into one database.
“Suppliers, shareholders, customers and employees are not rivals for the battle for profits — they are partners, and will be more successful once they learn to work together.” — Egan and Thomas, 1998
In relationship marketing Piercy suggested looking at four relations. Those with:
\- Competitors
\- Customers
\- Collaborators
\- Co-workers
Millman suggested another approach in the six markets model. It splits this up a little further
(Competitors)
(Customers)
\- Customer Markets
(Collaborator)
\- Supplier Markets
\- Referral Markets
\- Influence Markets
(Co-Workers)
\- Internal Markets
\- Recruitment Markets