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Customer Centric Organizations and Product Centric Organizations Essay


Introduction and Definition of Customer Centric

In the modern-day era, the way business is conducted changing with most organizations realizing that the key to success lies with the number one priority of the organization who is the customer.

Organizations are (Davis 2004, pp. 14) becoming aware that consumers may not enjoy products that are designed just to drive the sales of the organization higher, rather than catering for the needs of the consumer through incorporating the consumer into every decision that is made by the organization (Davis 2004, pp. 14).

In most cases, large organizations strive to realize more revenues which are generated from the sales of already existing portfolio of products. However, generating increased revenue may be hard for large organizations through the sale of products which have already been launched by the organization, and this calls for the inevitable change by organizations through integrated solutions (IS).

Brandy at el (2005, pp. 4) defines integrated solutions as “combining products and systems with services in order to specify, design, deliver, finance, maintain, support and operate a system throughout its life cycle”. Firms, while moving to integrated solutions, can use their own manufactured products and services or the products and services of competitors.

One of the main reasons as to why firms are shifting to customer-centric (Davis & Hobday 2005, pp.10) is to stay afloat in the business in light of its competitors. Firms have realized that managing relationships with the already existing customer has long term benefits as opposed to being product or service-centric.

Integrated solutions, therefore, allows firms to compete with other firms in the industry, owing to the fact that firms that have incorporated integration offers coordinated products/services and sells them as a whole.

Customer’s needs are not static and they, therefore, keep on changing with time (Taylor 2000, pp. 41).

For organizations to effectively cater for the ever-changing needs of the consumer, integrated solutions are adopted where the organization is to provide the customer with a whole set of products and services that have been integrated into a whole and this means that the organization has to keep on searching for solutions to consumer’s needs even before the needs arise (Pine 1993, pp. 34).

Organizations do these in order to stay afloat in the market and always have solutions to consumers needs.

To be in a position to offer integrated solutions, firms adopt capabilities that allow them to foresee the needs of the consumer and also through mergers and acquiring competitors firms to offer a whole range of products and services to the consumer.

Of importance to note is that firms will merge or acquire competitors firms in order to merge their product or services with those provided by the competitors and helps firms in winning more customers.

Customer-centric is a new and emerging concept in the world of business with very few organizations walking the talk of catering for the needs of the consumer. An organization that is customer-centric tailors its resources in accordance to what the customer wants (Franke, Keinz & Steger 2009, pp. 67).

By resources we are referring to all those important aspects in the organization that are used or aid in the production of goods and services in an organization, for instance, human resources, capital resources, knowledge resources among others included.

Keegan, & Turner (2001, pp. 17) claim that customer-centric is dynamic, but the most basic aspect is the customer and what organizations are doing to fulfil his/her requirements.

Consumers have more knowledge of their rights in the modern-day era than before which Davis (2004, pp. 14) uses the term as sophisticated customer, so when focusing our attention as to why organizations are becoming more customer-oriented, we should also not fail to note that we are talking of consumers who have been empowered through the internet, know when there are treated well or not, have forums through the internet where they can engage with other consumers and share their experiences of certain products or the way a certain organization treats or reacts to its consumers’ needs.

With these said than done, organizations are more and more careful and therefore cannot afford to lag behind when it comes to shifting their focus from being product-based to consumer-centric. It is said that words spread like wildfire and when customers are not satisfied with a product or a service in the (Keegan, & Turner 2001, pp. 21) organization, they will often tell a friend who in turn will tell someone else.

Consumers have become more and more knowledgeable and this can be ascertained or assessed through the consumers buying habits and why they buy certain products and services. This calls for organizations to be smarter and sophisticated when providing the integrated solutions (Pine, 1993).

Characteristics of Firms that Offer Integrated Solutions

Firms that offer integrated solutions are able to conduct market research and identify the needs of the consumer. It is only through the assessment of consumer’s needs that firms can develop solutions through integrations and satisfy the consumer. This is the time that the firm will find it necessary to move from product/service strategy to being consumer-centric.

Organizations that move towards integrated solutions are more focused on creating customer relationships and trust with the customers.

This is a prime indicator that integrated solutions surpass the boundaries of selling products/services that are integrated and therefore are more confined to research and development, with emphasis placed on incorporating third parties on board to integrate and offer integrated products and services (Davis, 2004 pp 15).

Firms that move to provide integrated solutions specify the needs of the consumers and therefore, integrated firms also see integration as not only coming up with new products and services but also incorporating other organizations which may act partially to enable an organization to provide integrated solutions and thus become customer-centric.

Organizations that are consumer-centric care for their customers and this evidence is in the mission of the organization. By definition, an organization’s mission illustrates what the organization aims to achieve and the intentions that the organization has in its operations in satisfaction of the needs of the consumer.

A consumer-centric organization’s mission is geared towards satisfying the customer and the loyalty the organization has on the needs of customers.

When organizing for solutions, organizations analyze the buying blueprints of the consumer in trying to find out what the consumer specific needs.

Then the organization embarks on delivering products that address the consumer’s needs according to the analysis that has been made on the purchasing patterns of the consumer (Louwhoff 2007, pp. 22). In short, the organizations become self-motivated in finding out what the consumer needs, why the consumer needs certain product (s) with certain values and addresses such issues.

Galbraith (2002, pp. 198) ascertained that extant research shows that when firms make decisions to move to integrated solutions/consumer-centric, it is not always easy for the organization sacrifices short term objectives for it to benefit in the long run.

Therefore, organizations adoption of consumer-centric domain has to be in line with the vision of the organization, the long term objectives of the organization. This translates to the organization completely overturning their operations to focus more on the consumer, break the preexisting cultures where the consumer is not important and bring everybody on board into the inevitable change.

A consumer-centric organization cares for its customers, and this is even evident in the mission for the organization. By definition, an organization’s mission clearly illustrates what the organization aims to achieve and the intentions of the organization in its operations.

Taking the case study of BT (British Telecommunications), it is one of the most influential companies in the telecommunications industry operating in 170 countries. It is a dynamic corporation and has been in existence since 1846.

The organization’s core vision was geared towards being a leading organization in the world in the telecommunication industry. On the other hand, product-centric organizations will rarely include the consumer in their mission statement (Galbrath 2005, pp. 75).

The strategy for BT to achieve its vision was to take charge of all the opportunities that were at the disposal of the company in the global scenario and therefore BT in quest of fulfilling its vision engaged in numerous acquisitions around 1990’s. The major event that shaped the company was the sale of government shares to the public in 1990.

The numerous acquisitions of BT made it increase its debts with the total debts skyrocketing to 27.9 billion pounds. However, the management of BT changed with Sir Christopher Bland taking over as chairman. It was during the reign of Sir Christopher that an integrated solution to BT was sought by transforming the structure of Britain’s oldest telecommunication company.

The structural transformation included changing the vision of the organization to be more customers centric and therefore focus more on the consumers (Davis & Brady 2000, pp. 20).

Therefore BT structural system was designed to take into consideration the market sector rather than the geographical aspect of the organization, for instance (to be a successful communications company in the world).

The restructuring of BT into Ignite, BT Open world, BT Wireless and Yell comprised the integrated solution offered by BT in order to offer complete solutions to their clients.

That is, Ignite was mainly for the provision of broadband IP business, BT Open world group selling in the internet industry, BT Wireless to offer mobile services and Yell for the world wide provision of directories and electronic businesses (Davis & Brady 2000, pp. 20).

Financial restructure of BT involved the sale of BT Wireless and Yell to help the company offset its financial debts.

With these major restructuring in the organization, BT vision could not remain the same and the focus was now on customers and how BT was to acquire benefits through shifting their focus to customers rather than the dogmatic vision that sought to cater for the interest of the organization while disregarding the customers.

By so doing, BT was conducting an analysis where the organization identified its opportunities (catering for the needs of the consumers) and capitalized on them. Therefore, the company had to restructure financially and structurally, which is part of offering integrated solutions to cater for the needs of the consumer and is also reflected in the vision of the organization.

Firms that offer integrated solutions also develop products from the consumer’s viewpoint other than from the organizations perspective. The organizations come up with innovations that are designed to create a whole new experience to the customer rather than offer services and products provided by the organization (Davis & Brady 2000, pp. 20).

For instance, in the restructuring of BT has had to develop services which involved moving away from old processes and coming up with new processes for the overall development of the services that it provides to the consumers.

Organizations that offer integrated solutions involve even the top management. Integrated solutions are geared towards the overall performance of the organization and improving the organization in the competitive arena. A classic example is how BT shifted from service/product based organization to providing integrated solutions to its customers after the chairman of the company was changed.

The chairman also brought on board a new C. E. O. to the company and a project coordinator clearly illustrating that the move to offering integrated solutions, the top management has to be involved.

Therefore, consumer-centric organizations in most cases, add some management departments to their organizations in order to implement their various activities as they shift from being product-centric. The departments serve as bridges between the consumer, the product and service to be provided and the solution that the organization offers.

The reason as to why the emphasis that shifting to consumer-centric should be an overall strategy from top management is because the head of the organization has to show the other employees that he/she values the customer other than paying lip service to the idea while pushing his/her employees to be customer-centric for success of any organization lies in how decisions are implemented in a hierarchical order (top to bottom).

The top management also has to pardon employees who show sluggishness in adopting the consumer-centric approach in the organization.

There are the people responsible in changing the culture of the organization, the norm that the organization had conformed to of treating the customer as a not important person in the organization for the consumer is the driver behind the steering wheel when organizations shift to consumer-centric approach.

Through integrated solutions organizations that shift their focus to providing an integrated solution for the consumer develops projects that are geared towards enabling the organization to satisfy the needs of the consumer more (Galbrath 2005, pp. 30).

For instance, BT came up with a project; BT 21CN (BT 21st Century Newton) which acted as a platform that enabled the organization to continuously develop services for the ultimate goal of satisfying the consumer (Davis & Brady 2000, pp. 20).

Projects generated in light of integrated solutions allow the organization to generate multifaceted products/services using the technology that allows mass production of the multifaceted products and services. With time the organizations through the projects built comes up with new innovations that are geared towards the overall development of the company and satisfying the consumer.

For instance, BT 21CN, suppliers include Ciena, Lucent, Siemens and Ericsson among other suppliers. These organizations formed to create the BT 21CN and therefore provide complex products and services to consumers.

BT as a customer for the suppliers of Lucent, Ciena, and Ericsson among others encourages them to integrate for the overall benefit of the supplier and the projects that they form to provide integrated solutions (Davis, Brandy, & Hobday 2006, pp. 5).

An organization’s integrated solutions involve interfacing with even the customers in order to come up with innovations that provide complex products and services. For instance, BT 21 Century Network. This is the platform through which BT has made innovations through such developed projects with the suppliers.

Firms that offer integrated solutions are also able to reach a wider market. They drag along their customers, but they offer complex products and services unlike selling to the customers the single/isolated products and services. The main focus for firms offering integrated solutions is the consumer.

However, engaging in integrated solutions where firms provide complex products to customer’s means that the firms have to segregate the market and identify the type of customers to serve.

Firms that provide integrated solutions are also able to reduce operational costs for in most cases, these firms merge with other firms to provide complex products and services.

When firms merge, they increase their area of operations and are therefore able to benefit from internal economies of scales, for instance, managerial economies, financial economies and research and development economies. For instance, the suppliers of BT 21CN offers integrated solutions to BT 21CN, which in turn integrates the solutions to come up with more sophisticated products and services.

Through integrated solutions (Davis, & Brady 2000), firms provide services and products that are geared towards providing solutions to consumers needs (Louwhoff 2007, pp. 25).

The consumer-centric organization acts on the needs of the consumer and develops products and services that addresses the needs of the consumer (Davies, A. 2004) and thus moving away from their traditional concepts of producing products just for the sake of producing products that will ensure the organization makes sales (Louwhoff 2007, pp. 32) to providing integrated products and services that meets the needs of the consumer.

For instance BP in shifting its focus to providing integrated solutions, shifted completely from their traditional way of doing business which saw the company merge with other companies in the 1990 and thereby increasing its debts to new ways of the company (BT) outsourcing their systems from other suppliers which is a complete shift from their traditional way of doing business from 1990.

Customer-centric/integrated solution organizations are able to increase their turn over for they have a broader pull of products from competitors. They develop systems which allow them to become better in their operations and are therefore able to face able compete with their competitors.

With BT21 CN project where its suppliers are Ericsson and Alcatel among others, the organization is able to offer integrated solutions to its customers on a global level, for instance, Unilever, Visa Bank of New York and HSBC among others. Firms offering integrated solutions gain their competitive advantage when customers re-signing contracts with them.

They are, therefore, able to continue services and products to loyal customers. Customer loyalty can only be achieved through firms offering product/service that are consumer-centric, which allows the firm to have a competitive advantage (Pankay 2003, pp 45). over other competitors.

Firms that provide integrated solutions treat the customer as an important aspect in the process of integration. While seeking to provide integrated solutions unlike product-centric organizations, customer-centric organizations also look at the customer as a major determinant for provision of integrated solution.

For instance, the organizations do not only look at how they are going to supply the developed complex products and services but also at how the buyer is going to demand the products and services. Therefore, the consumer is a major resource in the process.

While product-centric organizations are keen on devising ways through which they are going to improve their products to gain more sales from the consumer, consumer-centric organizations, on the other hand, are after ways in which they can improve their customers’ satisfaction by catering for his/her needs (Prencipe & Tell 2001, pp. 72).

Their force comes from their customers having new experiences with the organization, which translates to customer satisfaction and in turn, this yields long term benefits like customer loyalty.

Customer experiences for consumer-centric organizations is so exceptional to the extent that the experience the customer will have before a product or services is launched is anticipated in advance before the launching of the product/service while for the product based organization, customer’s experience is valued or measured after a product/service has already been released into the market for the product-centric organization is not so interested in the consumers’ feelings (Prencipe & Tell 2001, pp. 75).

Therefore, the level at which the consumer becomes satisfied acts as a platform through which the success attained by integrated solutions (IS) is measured.

There are various benefits that firms which have shifted their focus to being customer-centric enjoy. Organization’s reputation is a ubiquitous benefit that the organization enjoys when its customers are well taken care of. As illustrated above, consumers through the forums that they use to interact with other consumers will not fail to mention or recommend a certain organization that treats its customers well.

This goes a long way in acquiring new customers for the organization through recommendations by other consumers and also retaining the ones the organization already has. This enables the organization to increase its competitive advantage over other organizations that are not consumer sensitive (Richard, Jacobs, Aquilano & Nicholas 2006, pp. 90).

The basic and most ideal priority for any organization is to satisfy the needs of the consumer so that it can market its products for the consumer is said to be the mean that is justified by the end (the organization’s products and services).

Therefore, when a company employs the domain of consumer centricity as its strategy, the company can be said to be fulfilling its number one priority and in turn, gain new customers or increase its market share.

However, (Keegan, & Turner 2001, pp. 20) as provide integrates solutions to offer products that create value to the consumer, not only should the organization focus on the consumer as the centre stage but also place some emphasis on the organization.

In as much as the organization will provide products and services that have integrated the consumer’s needs, the organization’s needs also need to rally behind the process of integration. That is, the organization should also have an overall improvement in providing complex products and services that meets the needs of the consumer.

Consumer-centric organizations take into consideration a whole range of factors that entice the consumer and factors that the consumer is concerned with besides producing the product or the service (Gulati 2010, pp. 120). Consumer-centric organizations do not solely concentrate on the end product, other than they produce products that are appealing to the consumer even with the way the products are produced.

Product centric organizations measure the value of the product in terms of money for their ultimate goal is to make money and maximize profits, and they try to cut down expenses that drive operational costs high.

Customer-centric organizations differ from product-centric organizations through the way employees in these two diverse organizations are trained to handle customers.

For the former, the organization continuously engages the employees in training programs that provide refresher courses on how to handle the customers with every employee of the organization getting involved for the organization realizes that being consumer-centric does not only touch on the department of sales and marketing while the latter, the organization, is so absorbed in the products and services that it offers to customers to the extent that the training programs are mostly geared towards improving the products of the organization to appeal to the consumers.

Product centric organizations also assume that training on how to handle customers is entirely in the department of sales and marketing. In light with training programs geared towards educating employees on how to handle customers, the guiding principles for customer-centric organizations are tailored towards aiding the consumer to be delighted by the interaction of the consumer with the organization’s employees.

Product centric organizations are mostly interested in the features of the products and services that they are offering to consumers. The products are attractively packaged to entice the consumer into buying the products and in most cases, they gain their competitive advantage through the way their products are branded differently from other company’s products.

According to Richard, Jacobs, Aquilano, & Nicholas (2006, pp. 75) such organizations offer products that have generalized the consumer’s needs and the reason as to why these organizations are very different from consumer-centric organizations.

Product centric organizations assume that consumers do not have varying needs when it comes to products and assumes that consumers are generally attracted to the same product or services.

Product centric organizations also gain a niche in the market ahead of their competitors through their pricing strategies. They play along with how they price their products with some organization employing tactics of psychological pricing to the consumer where the difference in prices between one organization and that of the competitors is a small margin, for instance, less than a 1 Dollar.

The department of customer relationship continuously grows in a customer-centric organization. The continuous interaction of the consumer and the management of the organization create benefits for the organization for the consumer is no longer treated like an outsider but as an important person who the organizations function around.

Customer-centric organizations act as an assurance that organizations do not turn a deaf ear to customers but are keen on catering the needs of their customers (Davis & Hobday 2005, pp. 22).

One may wonder how being customer-centric will improve the customer relationship management of the organization (Davis & Hobday 2005, pp. 18). Well, the answer lies in how consumers are able to give feedback to the organization regarding its products and the way the organization continuously grows through research and development on its products which is obviously enabled by the consumer.

When customers are treated well, they are not afraid to voice their concerns on what needs to be improved in the organization and what makes the customer happy in the organization (Louwhoff 2007, pp. 34).

This in turn works in helping the research and development team in improving the organization for we are all familiar with incidences where an organization would want to self evaluate itself through giving out questionnaires and interviewing its customers but the customers fail to respond for the same organization does not give them attention when it comes to addressing their concerns.

Consumers are known to buy products that are less costly and this is in this area that product-centric organizations gain their competitive advantage. The law of demand stipulates that consumers will tend to demand more of a product when the price of the product is low and demand less of the product when the price of the product is high.

Therefore, product-centric organizations employ the tactic of pricing in winning consumers. However, product-centric organizations have to recognize that offering attractive prices on their products is no longer adequate enough to stay afloat in business for consumers are more informed about the products and services that organizations are offering (Pine 1993, pp. 47).

While product-centric organizations engage in cementing the already existing policies that have no value for the customer, consumer-centric organizations are mostly interested with improving policies that will ensure that the customer’s needs are catered for.

For as long as the policies within the product-centric organizations are bringing good turnovers, the product-centric organization will be more than interested in improving the product to gain more sales than focus on policies that take the interest of the consumer at heart.

With these said and done, product-centric organizations continue implementing the same old policies and see no need for new policies in the organization. Consumer-centric organizations, on the contrary, seek to improve the policies of the organization to suit the emerging trends of the consumer, for instance, the buying habits of the consumer.

One of the ways through which customer-centric organizations are organizing for solutions is through bridging the psychological gap between the consumer and the organization. In most cases, organizations provide products that are generalized about what the customer may need without interacting with the customers themselves and finding out what they would want to be incorporated into the organization’s products.

Organization nowadays are moving out from their cocoon of comfort and reaching out to the customer to find out what the consumer wants and in turn, gives the consumer an upper hand in identifying and acquiring the incorporated solution.

For example, for organizations that are involved in manufacturing, when the customer is the epicentre of the organization, the organization tailors its products incorporating the views of the customer. This is known as customization in the world of business (Keegan, & Turner 2001, pp. 12).

Consumer-centric organizations also offer integrated solutions through Prencipe, Davis, & Hobday (2003, pp. 45) accurately measuring the major determinants influencing consumers into buying a particular product. Consumer-centric organizations do not equate the value of their products through the monetary worthiness of the product rather than the value the product provides to the consumer.

Other than money that is commonly used to measure the value of the product, other drivers of sales for a particular product involves things like the effect the product will have on the environment, whether the organization in producing a particular product is geared towards maintaining the environment, the various processes that a product passes through from the beginning to the time the product is delivered to the consumer among other factors.

Prencipe, Davis, & Hobday (2003, pp. 45) through Organizations providing integrated solutions, organizations are combining values into their products to come up with products that meet the value the consumer expects to get in a certain product or service and this involves listening to the consumer(s).

Organizations are providing consumers with products and services that combine different values and function well when compared to a product or service that does not have an integrated value. Therefore, organizations are continuously improving their products and services, a trend that is emerging in business practices (Davis, & Brady 2000, pp. 67).

I would say that the future belongs to those organizations that are able to offer integrated solutions to the consumer through their products and services (Davis, Brandy, & Hobday 2006, pp. 77). For instance, technology is evolving on a daily basis creating new ways in which organizations are to produce products and services and therefore organizations have to ensure that their products and services are in line with the advancing technology.

If we take a case study of the mobile industry, mobile phones were initially developed for calling and text messages services, but as the industry advanced, mobile phones that have cameras, Google maps and acts as tracking devices have been developed, further echoing my point that the future organizations are the ones which will be able to offer integrated solutions in their products and services through continuous improvements (Galbraith 2002, pp.15).

From the above analysis, organizations aiming to shift to consumer-centric have to forego their short term objectives and concentrate on the long term objectives. How many organizations would be willing to forego the profits that they are making through selling their products and services in exchange for long term benefits like consumer loyalty and therefore continuous sales?

It would take a no guts – no glory approach or attitude for an organization to decide to change and become consumer-centric. However, for the organizations that have already implemented the consumer model into their operations, we say kudos for they are the organizations that are changing the face of business and putting some value to the customer.

References

Davis, A. & Brady, T. 2000. ‘Organizational Capabilities and Learning in Complex Product Systems: Towards Repeatable Solutions’. Research Policy, ‘Special Issue: Innovation in Complex Products and Systems’. 29, 931 – 953.

Davis, A. & Hobday, M. 2005. The Business of Projects. Cambridge University Press. Chapter 7 & 8.

Davis, A. 2004. ‘Moving Base into High – Value Integrated Solutions: A Value Stream Approach’. Industrial and Corporate Change. Vol. 13. No. 5. 727 – 756.

Davis, A., Brandy, T. & Hobday, M. 2006. ‘Charting a Path toward Integrated Solutions’ MIT Slogan Management Review, Spring, 2006, Vol. 47, No. 3: 39.

Franke, N., Keinz, P. & Steger, C. (2009): Testing the Value of Customization: When Do Customers Really Prefer Products Tailored to their Preferences? Journal of Marketing: Vol. 73: Pp. 103 – 121.

Galbraith, J. R. 2002. ‘Organizing to Deliver Solutions’ Organizational Dynamics. 31 (2). 194 – 207.

Galbrath, J. 2005. Designing the Customer – Centric Organization: A Guide to Strategy, Structure and Process, San Francisco, Jossey – Bass. Business & Management Series.

Gulati, R. 2010. Reorganize for Resilience: Putting Customers at the Center of Your Business. Harvard. Harvard Business Press.

Keegan, A. & Turner, J. R. 2001. ‘Quantity Versus Quality in Project – Based Learning Practices’. Management Learning. 32 (1), 77 – 98.

Louwhoff, R. 2007. Meeting Customer’s Requirements in a Converged World. London, White Paper, BT Global Services.

Pankay, G. 2003. Globalization: The Strategy of Differences: The Wall Street Journal: November. pp.5

Pine, J. (1993): Mass Customization: The New Frontier in Business Competition: Boston: Harvard Business Press.

Prencipe, A. & Tell, F. 2001. ‘Inter – Project Learning: Processes and Outcomes of Knowledge Codification in Project – Based Firms’ Research Policy, 30, 1373 – 1394.

Prencipe, A., Davis, A., & Hobday, M. 2003. The Business of Systems Integration. Oxford University Press. Chapters 1 & 16.

Richard, C., Jacobs, F. Aquilano, R. & Nicholas, J. (2006): Operations Management for Competitive Advantage: New York: McGraw – Hill.

Taylor, M. 2000. Cultural Variance as a Challenge to Global Public Relations. The Wall Street Journal. pp. 41.

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IvyPanda. 2019. "Customer Centric Organizations and Product Centric Organizations." September 17, 2019. https://ivypanda.com/essays/customer-centric-organizations-and-product-centric-organizations-essay/.

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