Market Oriented Corporate and Business Unit Planning

Market Oriented Corporate and Business Unit Planning

Production Orientation to Marketing Orientation

In the following, the development from the traditional sales concept to today’s marketing concept will be outlined on the basis of and as the result of changes in market conditions. The spotlight will be placed, in a somewhat redundant manner, on what is generally understood today as marketing, so as to render the basic idea as clearly as possible.

Based on an article by Keith (1960), it is possible – though in a highly simplified way – to identify certain phases in the development of the sales sector. Although this classification has received considerable attention in the (textbook) literature due to its clarity and plausibility, there is still some doubt concerning its historic accuracy (Fullerton 1988).

According to this hypothesis, at the beginning, there were periods in which the suppliers of goods held a strong position due to high demand and scarce supply (sellers’ markets). The start of industrial mass production at the end of the nineteenth century and postwar Germany come to mind.

Under the conditions prevailing at the time, entrepreneurial activity mainly concentrated on the development (“rationalization”) of production and procurement, and less on sales, which hardly presented difficulties under these market conditions.

This may also be described as a phase of production orientation. Very little effort was made with regard to the relationships with potential customers. The scientific study of sales-related matters tended to concentrate on problems affecting the distribution of goods rather than on instruments for a comprehensive sales policy

In contrast, the more recent development of the sales sector is determined by a situation characterized as a buyers’ market: Buyers with a large share of disposable income are faced with a very large and varied supply of goods from which they can choose a relatively high degree of freedom.

So the providers are in a weaker position, as they have to compete with numerous other companies and have to adapt to and attempt to influence the wishes of the purchasers who are not just concerned with the satisfaction of elementary needs anymore.

This is the situation that has characterized the Federal Republic of Germany and Switzerland since the 1960s and 1970s. In a situation in which sales had become a bottleneck, many companies drew the logical conclusion and orientated their entire activities towards the requirements of the market. Such a policy, which will be examined more closely in the following, is known as marketing orientation. This refers to a situation in which companies are simultaneously adapting to market conditions and actively influencing them

In the past, numerous critical contributions on marketing dealt with the question to which extent customers/consumers can be actively influenced or “manipulated”. However, the perspectives regarding this question have expanded in relation to the development of strategies. Do providers have to act in a “market-driven” way (Day 1999) by adapting to pre-defined wishes/preferences that are kind of “given” or can they potentially influence or even determine these preferences themselves? Carpenter et al. (1997) describe this latter approach as “market driving strategies”.

The basic idea of this approach consists of not taking customer preferences as given but trying to influence them. In this context, especially companies that enter a new market early on (“pioneers”) can shape the customers’ assessment criteria for their own benefit.

THE END

The differences between production and marketing orientation become especially clear by comparing traditional and contemporary views on the sales sector. Traditionally, sales were the last phase of the operational process in which selling products or services generates revenue to secure the existence of the company and enable the continuation of production. Somewhat simplified, this point of view means that sales have the main purpose of serving to continue production.

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