Marketing and the company

Sales – or production–oriented organizations sell what they can make.

Customer–oriented organizations make what they can sell. (Anon)

The purpose of business is the creation of value for key stakeholders, customers, shareholders, employees and other collaborators in the process. An organization cannot create value for any of them unless it can create value for customers. The essential element in marketing is to view the exchange process from the perspective of the customer.

The marketing function within an organization is the primary means by which customer value is created and delivered. It is the process by which an organization focuses its resources, systems, structure and culture on achieving value for customers in order to achieve its own objectives.

Directors have to create value in global markets and against global competition. They have knowledgeable and highly critical customers and demanding shareholders.

Marketing-orientated thinking is absolutely vital for success in this business environment. Company directors have to understand their company's market position and capability, their customers’ real needs and the influences on them, use this knowledge effectively to establish and maintain the company’s place in its chosen markets.

A marketing–led company

Marketing is an attitude of mind, a philosophy and a culture that must permeate the organization at all levels and in all functions. To achieve this, a company must retain its customer focus at all times, change with its customers, develop new products and move into new markets at the right moment.

The company must be prepared to adapt in line with market changes. This is an understanding of both the changes that are taking place and their causes. The board must also be able to change in the right direction in order to keep ahead of both current and potential competitors. However, even identifying competitors has become a complex issue in its own right, as customers have an ever-wider choice of ways to satisfy their needs.

The marketing function’s primary task is to deliver the marketing strategy as a starting point for the determination of the company’s corporate strategy. Directors will only be able to maximize their company’s potential if they have a good understanding of marketing strategy and are prepared to apply marketing principles throughout the organization. The marketing approach is sometimes contrasted with the approaches of production–led and sales–led companies.

A production–led company

A production–led company focuses on optimizing the use of its own production facilities. Typically, this involves maximizing use of production capacity and staff time, streamlining operations and improving product quality. It may be highly time-efficient, cost-efficient and apparently thriving.

The problem with such companies is that they can lose touch with market needs and sometimes even develop products to fill production capacity without a clear idea of whether there is a demand for them. At best they react to market changes but are often too late to take advantage of new opportunities, so any success is likely to be short-lived.

A sales–led company

For a sales-led company, problems might arise from the focus on maximizing sales. These companies see resistance by potential customers as a problem that can be overcome by stronger selling techniques and more active promotion. Goals tend to be short-term and general.

The tendency is to use pressure-selling techniques to chase turnover at almost any cost. Salespeople who are judged on how well they meet sales targets are tempted to offer lower prices in order to win business. The sales force may then be blamed for loss of business, lower margins or even selling below cost.

The result is a de-motivated and vulnerable sales force, which cannot solve the problems. It has no defense against competitors who can match their product to the needs of their target customers and offer a more attractive proposition.

Exercise 9. Read the text once again and express the contents of every passage in one sentence.

Exercise 10. Fill in the gaps in this passage with the words under the line; learn all the new words to expand your vocabulary on the topic.