Understanding Market Orientation in Business Marketing

Market Orientation

When a business bases its marketing mix on its perception of what the market wants.

Product Orientation

When a business bases its marketing mix on what the business sees as its internal strengths.

Features of Market Orientated Approach

Consumers are central to a business's decision making - strong understanding of their needs.

Market Responsiveness

Can respond quickly to changes in the market.

Marketing Definition

Marketing is the management process involved in identifying, anticipating and satisfying consumer requirements.

Competitive Positioning

In a strong position to meet the challenges of new competitors entering the market.

Product-Oriented Selling

Businesses with a product-orientated approach to selling try to sell whatever they can make, without trying to find out if it is what the customers want.

Market Change Anticipation

More able to anticipate market changes.

Marketing Process

The management process of getting the right product, to the right place at the right price and at the right time.

New Product Launch Confidence

More confident that the launch of new product will be a success.

Customer Satisfaction Benefit

Customers get greater satisfaction.

McDonald's Product Orientation Example

McDonalds' approach with its products is heavily product-orientated, with core products produced the same way in a range of very different international markets.

Market Research

Researching the market - this involves gathering and analysing information on consumers, the marketplace and competition.

Market Analysis

Analysing the market - this is an examination of market conditions to identify new opportunities.

Product Development Emphasis

Emphasis on developing, producing and selling a technically sound product.

Consumer Contact Timing

Contact with the consumer largely at the final stage.

Marketing Goals Setting

Setting of marketing goals - these must be linked to the business's overall objectives.

Competition Susceptibility

Loyal customers are less susceptible to competition and are more willing to pay higher prices.

Long Term Profitability

Long term profitability means that a business will remain viable and successful.

Fashion and Tastes in Product Mix

Fashion and tastes are not accounted for in product mix.

Marketing Strategy Development

Developing a marketing strategy - this involves constructing a plan that details how the marketing objectives can be achieved.

Emotional Impact in Advertising

Familiarity with the market allows a business to build emotional impact into their advertisements, i.e. to market more effectively.

Economies of Scale Increase

Increase economies of scale.

Product Development Focus

Focus on product development.

High-Cost Market Research Disadvantage

High-cost market research to understand the market.

Production Management Ease

Easier to apply production management methods.

Quality Focus Advantage

Focus on quality.

Internal Change Challenge

Constant internal change as the needs of the market are met.

Future Unpredictability Disadvantage

Unpredictability of the future, especially from the point of view of staff.

Product Investment Abandonment

Abandonment of earlier product investment.

Market Structure Change Response

Changes in market structure will not be responded to.

Marketing Activities Range

Marketing involves a whole range of activities that are aimed at providing goods and services that will satisfy the customer and make a profit for the business.

Desirability and Profit Relationship

The better the marketing, the more desirable (or desired) the product or service that is provided for the customer, and the more profits the business should be able to make.

Selling via the Internet

Can eliminate or reduce the need for expensive high-street premises.

Widening potential market

Could lead to increased sales and profits.

Lower costs

Costs can be lowered by moving to places where rent and wages are considerably lower.

Internet shopping trend

More and more people shop on the Internet; 'most buying decisions start at a keyboard'.

Reduced need for staff

Can reduce the need to employ staff, as seen with banks closing branches due to Internet banking.

Awareness of business

Raises awareness of the existence of a business, giving a competitive edge.

Convenience of shopping

It is often easier to shop from home rather than physically visit the shops.

Flexibility in operations

Adds flexibility to business operations and allows businesses to reach customers 24 hours a day.

Website impact

A well constructed and up to date website can improve the image of the business.

Core marketing tool

For some businesses, it is their core marketing tool, e.g. Amazon.

Home delivery

Even groceries can now be delivered, saving busy people time.

Customer data storage

Data on customers can be cheaply stored and easily accessed for effective targeting.

24/7 availability

Open 24/7 for customer convenience.

Setup costs

Can be expensive to set up - £10,000 plus is a significant investment for a small business.

Product range viewing

Customers can view a huge range of products quickly compared to conventional shopping.

Website maintenance costs

Maintaining quality websites is costly, and businesses must offer products online to remain competitive.

Profit justification

Must generate enough profit to justify the initial expenditure.

International purchasing

It is possible to buy products from other countries and pay using services like PayPal.

Negative website impact

A poorly constructed or out of date website can project a negative image and lose sales.

Price comparison

Customers can compare prices and read reviews to inform their choices more effectively.

Personal service limitation

Not particularly useful where personal service is the key to sales.

High-street presence costs

Maintaining a high-street presence can be particularly costly in a competitive market.

Internet accessibility

Not all customers have access to the Internet.

Delivery delays

Delay in delivery can result in items arriving too late.

Technical issues

Technical problems on a website can result in loss of reputation and sales.

Online fraud/security

There is always a risk when paying online that security details may get stolen.

Trial limitations

Unable to try products can lead to hassle when returning items for refunds.

Lack of access

In some parts of the country, access to the internet is still limited.

Industrial Marketing

Selling goods and services that are not directly aimed at consumers, which may include finished goods, raw materials, components, or services.

International Marketing

Marketing that targets a much larger potential market beyond the domestic market.

Marketing Budget

It sets out targets for the marketing department, including how much money is available to be spent, targets for sales, and targets for market share.

Purpose of a marketing budget

It is a planning and control tool that ensures that spending is kept under constant review.

Benefits of a marketing budget

It helps to control marketing costs.

Difficulties when marketing globally

Selling abroad can be more risky than the domestic market.

Opportunities when marketing globally

It can earn greater profits and thereby grow the business.

Spreads the risk

Being in a number of different markets can safeguard against economic downturns.

Enhances business reputation

Investors may be attracted towards the business.

Cultural differences

Differences in language, religion, and attitude towards advertising can impact marketing strategies.

Economic factors

The general level of income will need to be taken into account so that marketing can be targeted effectively.

Trade fairs and exhibitions

May be used to establish contacts and display goods in industrial marketing.

Highly specialised sales personnel

A one-to-one relationship with the purchasing manager/buyer is likely to be more important.

Trade magazines and journals

May be used to advertise goods or services in industrial marketing.

Identifying high costs

A marketing budget can help to identify where costs have been too high.

Ineffective marketing expenditure

A marketing budget identifies situations where marketing expenditure has been ineffective.

Planning the future of the business

A marketing budget helps to plan the future of the business.

Co-ordinating strategies

A marketing budget helps to co-ordinate strategies with other departments.

Setting targets

A marketing budget sets targets which may help to motivate employees.

Rigid budgets

Budgets may be too rigid and not responsive to changes in market conditions.

Ambitious budgets

If too ambitious, they may demotivate employees.

Competition understanding

Understanding the degree of competition that already exists in the markets being considered is crucial.

Exchange rate difficulties

Fluctuations in exchange rates can pose challenges for international marketing.

Marketing

The management process involved in identifying, anticipating and satisfying customer requirements profitably.

Researching the market

Gathering and analysing information on consumers, the marketplace and competition.

Analysing the market

An examination of market conditions to identify new opportunities.

Setting of marketing goals

Goals that must be linked to the business's overall objectives.

Developing a marketing strategy

Constructing a plan which details how the marketing objectives can be achieved.

Marketing mix

The combination of the 4Ps of marketing: product, price, promotion, and place.

Product (4Ps)

The goods or services offered to satisfy customer needs.

Price (4Ps)

The amount charged for a product or service.

Promotion (4Ps)

The activities that communicate the product's features and benefits and persuade customers to purchase.

Place (4Ps)

The distribution channels through which a product or service is made available to customers.

Asset-led marketing

When marketing decisions are based on the needs of the consumer and the strengths of the business.

Market orientation/market-led

When a business's marketing activities are dictated by the market, attempting to meet its needs with little reference to internal strengths.

Advantages of market orientation

Flexible to changes in taste and fashion, decisions based on effective market research, and new products designed to meet customer needs.

Disadvantages of being market-led

There can be disadvantages to being market-led.

Global market

A market in which buyers and sellers are linked by telephones, faxes, and the internet, and trading takes place in many locations.

Local markets

Small markets with a specific location.