An Analysis of the Fundamentals of Marketing (part 5)

Implementing a Market Orientation

by

Charles Lamson

Do marketing managers agree with the academics about what a marketing orientation is? In studying this, Kohli and Jaworski (1990) first had to construct a composite definition to describe the academic view. They found that economic definitions of marketing orientation are organized according to three core pillars' which underpin them all. These comprise customer focus, co-ordinated marketing and profitability. 

Are Market-Oriented Firms More Successful?

Over the years marketing academics have sought to ascertain whether firms which are marketing-oriented are more successful than those which are not. Another focus for enquiry has been the overall extent to which firms have embraced the marketing concept.

Hooley and Lynch (1985) studied the marketing characteristics of high and low-performing companies based on a basket of indicators including profitability, market share and return on equity. They found that a number of marketing-related activities differentiated high-performance companies from their counterparts. Higher-performing companies were more likely to just be found in growth markets; to be proactive in planning; to work more closely with other departments, including the finance department, and to spend more on market research.

Narver and Slater (1990) took strategic business units (SBUs) in the US as the focus of their study. They sought not only to understand the links, if any, between market orientation and profitability but, furthermore, to see if there were any differences between commodity (raw materials) businesses, such as water and minerals extraction, and non-commodity businesses. Market orientation was operationalized in terms of three components: customer orientation, competitor orientation and degree of interfunctional orientation. The authors found that for commodity businesses, those with the highest marketing orientation showed higher profitability than the businesses in the mid-range businesses. The authors sought to explain this by arguing that the low marketing orientation companies were highly cost-focused and, consequently, were likely to be more profitable on that basis. For non-commodity companies the authors found that businesses with the highest level of market orientation achieved the highest levels of probability and those with the lowest orientation the lowest profitability.

Developments in Marketing Theory

While the above seems to indicate that those firms that embrace the marketing concept are more successful than others, to what extent has this been embraced by business? At the dawn of the 1960s there was a lot of satisfaction if not smugness among marketing academics amid a general feeling that most firms were identifying and satisfying people's needs and not merely selling things to them. It was felt that marketing had at last come of age, having moved through a series of 'phases' from a 'mass distribution' or 'production era' to 'aggressive selling' and now to a genuine 'marketing orientation', such that by the 1960s it was considered unAmerican for a company not to practice the marketing concept (Lipson and Paling, 1974; Stidsen and Schutte, 1972). Imagine then the shock, horror, and disappointment of marketing academics to what happened later in the 1960s. It is difficult now to comprehend the scope of the change and, in particular, the widespread disaffection of the young with respect to much that concerned business and marketing in particular. In one year only 8 percent of Harvard graduates decided to elect for business careers (Gartner and Reissman, 1974). Marketing, especially selling and advertising, was singled out as the most controversial and most criticized single zone of business (Bauer and Greyser 1967). In addition to this criticism, in the US, business (and marketing in particular) attracted considerable attention from state regulatory agencies and by the end of the decade claims were made that the industry was being tied up by the amount of consumer legislation passed. Additionally, a large number of consumer affairs offices were opened to investigate consumer complaints. The publication of The Hidden Persuaders (1957) and The Waste Makers (1960) by Vance Packard, Silent Spring by Rachel Carson (1962) and work by Ralph Nader casting doubt on the safety record of General Motors, contributed to the establishment of the consumer movement.

The response of marketing academics to the furore of the 1960s was varied. Innovators like George Fisk opened up new avenues for research by exploring macro-marketing processes. However, the general response of mainstream US marketing academics to the wave of protest in the 1960s was much more defensive. Some suggested that the reason for the spate of government legislation was poor communications between government and marketers. Others felt that marketers had been targeted unfairly particularly with claims about product obsolescence which were really the responsibility of production personnel. Management guru Peter Drucker felt that the growth of consumerism was the shame of marketing, that basically consumers saw manufacturers as people who were not bothered to find out what they wanted. He felt there was a need to get back to basics, or the fundamentals of marketing, and look at things from the consumer's point of view (Drucker 1969). Phillip Kotler suggested that the problem was that while the business community had grasped the spirit of the marketing concept, and, while top management professed the concept, line managers did not practice it faithfully (Kotler 1972). Charles Ames (1970) sought to explain why marketing practices were so slow to develop in industrial marketing concepts. His general argument is that while management had adopted the superficial trappings of market orientation through the establishment of marketing departments and advertising budgets, they had not attended to its substance, a matter which required real commitment from the top and continuous effort from all managers.

Marketing academics initially viewed the consumer movement with suspicion, fear, and sometimes downright hostility. Kotler poured some water on the flames by suggesting that consumerism was not a danger to marketing and could even be viewed as being pro-marketing because it helped balance the power of the seller by acting in the interests of buyers. Kotler considered that the consumer backlash was mainly due to marketing managers misinterpreting the marketing concept by equating customer satisfaction with consumer desire. He argued that managers mistakenly had catered to consumer desires for products which while they were pleasing were also harmful to consumers' long-term satisfaction, e.g. by offering products such as cigarettes and alcohol for sale. For this reason, Kotler suggested that the marketing concept should be modified to add the view that marketers should also generate long-run consumer welfare as the key to attaining long-run profitable volume. This means that marketers should pay attention to ways of reformulating pleasing products such as tobacco (which give high immediate satisfaction but ultimately hurt consumers' interests) so that they become more socially desirable (Kotler 1972). 

*SOURCE: FUNDAMENTALS OF MARKETING, 2007, MARILYNN A. STONE AND JOHN DESMOND, PGS. 33-35* 

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