- Marketing Orientation
This philosophy puts the customer at the centre of everything; it is the needs of the customer that becomes the starting point of the production process. A business that is marketing orientated will find out what the customer wants and then invest time and effort into developing a product/service that will satisfy the customers needs. In an extract from the Journal of Marketing Keith suggests the following opinion of a business that is marketing orientated:
“The consumer, not the company, is in the middle. In today’s economy the consumer, the man or woman who buys the product, is the absolute dead centre of the business universe. Companies revolve around the consumer not the other way around.”
A business must put structures and processes in place to achieve this and this has lead to the development of customer service departments within most businesses.
It is easy however for a business to convince itself that it knows best what the customer wants and that its products are indispensable. Among some examples of this are
- The railway industry’s failure to respond to the transport revolution of the 1940’s and 1950’s.
- The inability of major TV companies to develop successful cable or satellite operations.
- The failure of the film industry to break into television.
These established businesses missed golden opportunities and subsequently their businesses have been affected.
It is important that a business is continually reviewing its marketing strategy and seeks customer feedback on a regular basis so that it can improve the products/services or develop new ones to satisfy changing demands.
Whilst marketing can be an expensive process it reaps many benefits. An organisation that adopts a marketing orientation will
- Achieve long-term survival
- Increase profitability
- Increase customer loyalty
- Build relationships with customers and suppliers
- Benefit from word of mouth
- Plan for changes
- Identify customer trends
- Invest in new product development
- Gain advantage over its competitors.
One of the greatest earliest marketing turnarounds was General Motors (GM) who successfully overcame the market dominance held by Ford. In 1926 Ford sold 1,550,000 cars to General Motors’ 750,000 within the US. The position was reversed within only four years due to two policies:
- The understanding of needs – GM undertook detailed analysis of the US car market and realised it was made up of varying customer groups which had some needs that were the same and others that varied. It subsequently not only developed a car to get from A to B at an affordable price, but further developed a design which outshone the Ford and provided safety and comfort (important to the customers needs).
- The match of need with total product proposition – not only did GM meet the customers product needs but provided a total service which included different models, trade-ins, financial services and servicing.
GM was amongst the first businesses to draw together this marketing mix.
- Marketing Mix
There are various controllable elements within marketing activity that need to be considered to ensure that the customer is satisfied. There are a number of descriptions of what constitutes the mix elements, the most popular being McCarthy’s mnemonic 4 P’s:
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Product (or service)
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Price (or fees)
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Promotion
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Place (or availability of service)
The success of a business relies upon its ability to effectively manipulate these four key areas.
The service industry has been one of the fastest growing parts of most economies. Services have distinguishing characteristics which need to be borne in mind when marketing their service; these are:
- Intangibility – services are not physical products. A customer cannot see, smell or taste the service before it is bought. Therefore a customers judgement about the service will be based upon price, promotional material, location and staff.
- Inseparability – services are produced and consumed at the same time and often customers are directly involved in the service.
- Heterogeneity - the quality of a service relies upon the person performing it, and maintaining consistency can be difficult. Therefore areas such as customer care and training need to be monitored.
- Perishability – a service cannot generally be stored and demand for the service can fluctuate at different times.
Services have additional elements to be considered as part of their marketing mix
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People – a key element for most services is the staff, who are an integral part of the process. The effect that staff can have upon a service should never be underestimated.
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Process – customers should not be faced by unnecessary bureaucracy or delay. The processes in place within a service should have the customers’ interests at their core.
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Physical – the environment within which the service is offered ensuring that the product is as tangible as possible.
- Product
The product is the object offered to the customer and can either be tangible such as a computer or intangible (a service) such as education. In some cases both may be offered such as car sales offer the tangible (the car) and the intangible (financing or free servicing). Demand for products will be constantly changing therefore businesses and services need to be planning for this change in market demand.
Within Local Government the product is the services provided. At all times the local authority needs to ensure that its services are meeting the needs of its residents. Derbyshire County Council undertook a MORI opinion poll to ask residents what they thought of existing services, what services they considered unnecessary and what services they would like to see in the future. This information was then used to plan aims and objectives and help develop a business case for additional/alternative funding from Central Government. Local authorities need to consider the needs of all their service users and these can vary greatly from rural to urban residents, early years to elderly services and residential to business customers.
- Price
Pricing is key to all organisations whether profit making or not. The price charged for a product or service is likely to involve a number of factors, including ensuring that production/service costs are covered and, in the case of most businesses, that a profit is made. An objective of local government is to offer ‘best value’ and most local authority services have been subject to service reviews to ensure this is the case. Many local authorities undertake research, often in the form of household questionnaires, to ascertain customer satisfaction with services and their willingness to pay. This is particularly prevalent when local authorities set their council tax charges. West Sussex County Council, faced with a reduced settlement from Central Government and having to make cuts, recently surveyed all its residents asking what level of services they are prepared to fund, offering a wide variety of options. Only 8% of respondents suggested that services should be cut across the board, 43% suggested selected cuts but the remainder suggested an increase in council tax to maintain and improve existing services. Some of the comments received included charging for services that had previously been subsidised.
Different businesses may adopt different pricing policies including:
- Penetration – this is where prices are initially set low to encourage as many customers as possible to buy the product.
- Skimming – involves setting high prices to gain a quick recovery of costs. This strategy was used by mobile phone companies at the start of the PLC. This strategy is particularly suited to innovative products with little market competition.
- Variable – this is when different prices are charged to different customers.
- Competitive – is used to reflect the pricing policies and structures of competitors (e.g. Esso Pricewatch).
- Promotion
Promotion includes any method of communication that a business/service uses in an attempt to gain customers. These methods can be either controllable, such as advertising, or uncontrollable, such as word of mouth. An organisation may use various methods of promoting itself or its product including;
- corporate identity – this is very important in terms of creating customer loyalty and developing how customers view that particular organisation. It is essential that the projected image is consistent with the activities and messages that the organisation wishes to be associated with. Derbyshire County Council has a corporate colour and livery for all its service vehicles. This enables people to identify that the service is provided by the County Council. It is essential therefore that these vehicles do not contravene messages that the Council promotes, such as speeding or mobile phone use. In a recent review of its communication strategy West Sussex County Council identified that its corporate identity was very poor. A trawl of leaflets produced by different departments highlighted a multiplicity of styles and inconsistent application of the corporate logo and design, leading to a lack of recognition and appreciation by service users.
- Public Relations – this involves informing the public about the product or service available and can have a great impact on the public perception of that organisation. A well structured PR strategy can have many benefits, including creating a favourable corporate image and encouraging a positive outlook from different customers. The Sussex Safety Camera Partnership informs the public on a daily basis via its website and local radio as to the location of its mobile camera sites. By doing this it is increasing public confidence in its open and honest approach to the camera scheme.
- Press Relations - It is said that there is no such thing as bad press but this is of course not the case. A bad news story about an organisation can have an irretrievably damaging affect and can result in customers losing confidence in an organisation.
- Advertising – this is probably the most familiar form of promotion but can often also be the most expensive. Adverts can be placed using various media including TV, radio, magazines, direct mail and billboards. Organisations must identify their key target audience to ensure their campaign is successful. Within road safety various forms of advertising are used to get different messages across. Radio is often used to get the message of speeding across, enabling safety messages to reach the driver (via car radio) whilst carrying out the activity they are targeting. Recruitment displays are used by School Crossing Patrol teams and are taken to shops within areas where there are particular problems with recruitment.
- Place
This refers to the way in which an organisations products or services are made accessible or available. It falls into two broad areas – channels and physical distribution. Channels of distribution refer to the organisations involved in making a product or service available to the customer. Physical distribution refers to the physical transportation, handling and storage of the product available. The level of effectiveness of channels must be offset by cost and an organisation must decide how accessible and available it wants its service to be. Nottinghamshire County Council has opened a number of ’Contact’ shops – one-stop shops where residents can gain information on all services available from the council. In this way the council is providing a front office direct to the customer. The advent of the internet has increased accessibility for businesses and customers alike, allowing twenty four hour a day access. In addition, this has lead to the development of e-government, where local authorities are expected to have most of their policies and access to facilities such as council tax payment available on-line.
- Market research
The Oxford Dictionary of Business defines ‘marketing research’ as:
“the systematic collection and analysis of data to resolve problems concerning marketing, undertaken to reduce the risk of inappropriate marketing activity.”
As discussed previously marketing concerns profitably keeping customers happy, this includes understanding:
Market research is used to gather information to gain an understanding of the marketplace and the future possibilities available.
Socio-economic analysis is the most commonly used approach, and divides the customers according to their social and economic positions. Other schemes are also used but less widely so. Common to all is that within the groups there are similarities in buying habits, needs and changing buying behaviour. Using this data will enable a business to both segment the market according to existing purchase patterns and target marketing at groups with common characteristics.
- Sources of information
The information needed from market research can be gathered from and by various sources and is generally classified as primary or secondary data. The diagram below identifies this classification.
Primary data originates directly as a result of a particular issue being investigated and is usually gathered in the field by various means including; observations, interviews and surveys.
Secondary data is usually data that already exists. This may be obtained internally or externally from the organisation.
- The Research Process
The table details the stages involved when carrying out market research. By following this process the business will be more assured of gathering reliable and valid information that achieves the research objectives.
5. Market Segmentation
It would be impossible to satisfy all the needs of individual customers, therefore customers with similar characteristics are grouped together. These characteristics traditionally included income, class and age. However these have expanded over time to include geographic, demographic, psychographic, benefit, volume, marketing-factor and product space. This is known as segmentation. If these segments are effectively identified then marketing mixes can be developed to target the needs of the segment. This is known as target marketing.
This segmentation may benefit the business in various ways including:
- They are in a better position to identify and compare marketing opportunities
- They can use knowledge of the differences in responses between the various segments to allocate resources
- They can adjust both product/service and marketing tactics to the different segments
All these can lead to an increased profitability of a business/service.
6. Planning
Effective planning improves the chances of success for an organisation. Marketing planning should be a continuous process and should endeavour to be flexible, reactive and opportunistic. Above all else the plan should be long-term, and often outlive the life-expectancy of the existing product.
The benefits of an effective strategic plan include
- Identification of new market developments and opportunities
- Being prepared for changes
- Minimisation of non-rational responses to the unexpected
- Coordination of activities
- Better communication
- Reduction in conflicts
- Achieving corporate objectives
The marketing plan/strategy needs to remain live and ever evolving to meet the demands of the dynamic marketplace. Appendix One shows the marketing plan for the Sussex Safety Camera Partnership and details its aims and how by using marketing it hopes to achieve these aims.
7. Conclusion
Marketing is essential in today’s business environment. Companies and organisations are facing increased competition and, if customers are dissatisfied they will simply seek satisfaction from competitors. Within the public service sector dissatisfied customers can ultimately change the face of local politics or services by showing their dissatisfaction through local and national elections
But marketing is more than a process it is a philosophy. The business that puts the customer at the heart of its activities will achieve its objectives. Research may be expensive but businesses need to understand their customers. The business that best satisfies customers will remain profitable and generate customer loyalty.
Marketing is a strategic process and if the business is to be market orientated then effective planning is essential.
8. Bibliography
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BTEC (1996). HNC/HND Business Studies: Market Relations, BPP Publishing, London.
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Cannon,T. (1992) Basic Marketing (Third Edition), Cassell Ltd, London.
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Lancaster,G. Massingham,L. (1998) Marketing Management (Second Edition), McGraw-Hill, Maidenhead.
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Gabay,J. (2003) Teach Yourself Marketing, Bookpoint Ltd, Oxon.
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Bishop,J. (2002) Effective Marketing, LBP, Lverpool.
- MANCAT (2001) Traffic and Safety Management Course Notes.
