Introduction
Background Information
The field of business has seen various companies experience productive competition for the past few decades. The success of a business enterprise depends on its market orientation among other aspects. The more oriented a company is, the more likely it is to take over the market in a particular industry.
A good market orientation can assist a company to predict, react and capitalise on the changes that occur in the business environment. A good market orientation enables a firm to improve its performance in the market by managing the competition it faces (Previous Assignment, 2012).
This paper uses Nestle to demonstrate how market orientation works and how it determines the performance of a business.
Objectives
The first objective of this paper is to define the concept of marketing management and show its relevance in the overall management of a business. Secondly, the paper defines the concept of market orientation and its benefits tin business. Ultimately, the paper uses Nestle to outline how the concept of market orientation affects operations of a company.
Lastly, the paper gives a number of recommendations to Nestlé’s management concerning the company’s market orientation. These recommendations are intended to help the management improve the company’s performance.
Research Strategy
The research strategy used to gather information in this report includes both qualitative and quantitative data. The main methods of data collection for the report include a survey and a literature review. The survey was done by administering face-to-face questionnaires to a total of 6 employees of Nestle.
The information obtained from the survey was used to determine how market oriented Nestle is. On the other hand, the literature review was used to obtain general information regarding marketing management and market orientation.
Marketing Management
Marketing Management Definition
Marketing management is a business strategy that involves tracking and application of a company’s resources to ensure that its marketing activities give a high return on investment. Consequently, the scope and design of a business organisation’s marketing management are determined by its size.
A properly designed marketing strategy should apply a firm’s resources to improve the base of its customers. This is the most effective way through which a company’s marketing manager can enhance the customers’ opinions regarding the company’s image, products and services (Mullins, 2005).
Components of Marketing Management
A good marketing management strategy should enable a business firm to achieve its goals and improve its perceived value. For a firm to rise above the current stiff competition in the business field, marketing managers have to develop a marketing strategy that outlines the available opportunities, changes in the industry, and competition.
The marketing strategy should also identify the target market to enable the marketing managers to develop a marketing plan that can improve the company’s market share. The main components of a comprehensive marketing management include: market penetration, communication, distribution, and growth strategies (Lancaster & Massingham, 2010).
The market penetration strategy refers to the process through which marketing managers create new customers for their companies. It involves a thorough evaluation of the available business opportunities, which assists in aggressively selling the company’s products.
A good market penetration strategy should be able to sustain a business for a long time. This strategy directly determines how the business soldiers on in the industry in which it operates (Lancaster & Massingham, 2010).
The communication strategy forms an important component of a marketing plan as it assists marketing managers to develop a comprehensive list of potential customers to whom they intend to sell the company’s products.
This strategy involves the modes of passing information regarding the company and its products to the target market. Most companies prefer to use catalogs, brochures, email campaign, and posters.
Some of the factors that influence the choice of a particular mode are its cost and effectiveness, and the size of the company as well as the nature of the industry in which it operates (Lancaster & Massingham, 2010).
The distribution strategy works together with the communication approach; the two strategies assist marketing managers to develop effective channels that can be used to ensure that the company’s products reach the consumers at the right time.
The most common participants in the distribution plan are the company’s internal sales workers, distributors, who are directly linked to the company and retailers, and the staff, who work for the distributors (Lancaster & Massingham, 2010).
The last component, the growth strategy, includes long-term tactics that managers use to build their businesses. The growth strategy, depending on the type and size of a business, may involve injecting more resources into the business or amalgamating it with other companies to enjoy the benefits of large-scale.
It easier for large-scale businesses to acquire new markets, suppliers and distributors than it is for small-scale ones. A company can also meet the needs of its customers by setting different price levels for its products.
For that reason, the growth strategy requires companies to identify and solve their customer problems to ensure that they remain loyal to them for a long time (Lancaster & Massingham, 2010).
Market Orientation
Market orientation refers to a culture that is set by a particular business; however, it is more than just an individual process. A properly designed market orientation comprises aspects such as systems, processes and controls that affect marketing operations in a business organisation.
Consequently, a market oriented business ensures that it designs its products and services in such a way that they satisfy the customers. That main factor that influences market orientation of a particular company is the needs of its customers (Shoham & Rose, 2001).
Market orientation is exclusively determined by what the customers want and not what the management thinks is right for them. This implies that before a company becomes market oriented, its management should carry out a market research to determine what the target market expects of its products.
Most of the companies that succeed in their respective industries are those that take a market-orientated approach and give their customers first priority (Deshpandé & John, 1998).
Several business organisations have realised the importance of market orientation and most of them are now adopting a market oriented approach. The motive is to produce what the markets are waiting for and what suits the needs of the customers.
Before, most companies, such as car manufacturers, created products and sold their features to markets that eagerly waited for them because the customers were less knowledgeable. However, with the growing opportunity costs and the need to make choices, consumers have become more knowledgeable.
For companies to stay competitive, they must develop their operations and products to reflect the market orientation in their respective industries (Kirca, Satish, & William, 2005).
Market orientation is intended to help a business accomplish a number of aspects, with the first one being the expectations of its consumers regarding its products.
Secondly, the concept assists marketing managers to connect and balance the needs of the customers with the capabilities of the companies they buy from.
Thirdly, the marketing strategy assists companies to create visions and build relationships with other firms.
Lastly, marketing orientation assists marketing managers to develop comprehensive internal marketing plans and communication strategies (Deshpandé & John, 1998).
Benefits of Market Orientation
A market oriented approach implies that a company is more closely aligned with its customers in terms of its operations. The concept means that a business transforms from a transactional approach, where it does not pay attention to market aspects, to a customer oriented one, where everything it does is controlled by the needs of its clients.
There are four main ways through which a business can benefit from a market orientation. The four ways include constant improvement, responsiveness, external influences and cost benefits (Kyriakopoulos, 2000).
A market oriented approach helps businesses to achieve a sustainable competitive advantage; since this approach encourages a culture of experimentation within a business organisation, it assists marketing managers to improve the company’s processes and systems on a regular basis.
The market orientation process involves studying the market and exploring opportunities to enable firms to develop and improve their products to suit the needs of their customers (Atuahene-Gima, 1995).
Responsiveness is the second benefit that a company can get from the culture of market orientation. One of the main pillars of market orientation is customer focus; organisations that are market oriented are better placed in terms of market responsiveness.
As a result, such companies can promptly produce products that cater for the needs of their customers. Market orientation encourages companies to rely on data-driven analysis, which assists them to improve their understanding of the market (Atuahene-Gima, 1995).
Thirdly, market orientation assists companies to have greater influence over other firms through a proper understanding of the market. It is evident that most companies that experience a high growth rate and rise above high competition are those that are market oriented.
If a company is market oriented, its managers are in a better position to gather comprehensive marketing intelligence and other information that can influence the most important decisions concerning its line of business (Masterson, & Pickton, 2010).
Lastly, a properly designed market orientation has significant cost benefits to a company. A market oriented approach brings about improved performance in a company. Improved performances, in turn bring about efficiency, where operations are executed at minimum costs.
The concept of market orientation helps to minimise a company’s costs, while maximising its efficiency (Kyriakopoulos, 2000).
Level of Market Orientation at Nestle
Nestle is one of the leading companies in the world that provide products and services that relate to health and nutrition.
The company and its team of marketing personnel are committed to seeing that the local communities improve their lives by assisting them to meet their basic needs. Through market research, Nestle uses its skills, technology and resources to help its customers get the best of its products (Bauer, 2011).
To determine how market oriented Nestle is, a survey was conducted in the company. Slater and Narver’s (1990) 14-items tool was used to design the questions in the questionnaires that were administered to the company’s employees on a face-to-face basis.
Six of the employees in the top management were chosen as the participants of the study. The main aspects of market orientation that were addressed in the survey included customer orientation, long-term profit focus, competitor orientation and inter-functional coordination.
From the survey, it was discovered that Nestle is more than 50% market oriented. Firstly, the company sets all its business objectives in such a way that they consider customer satisfaction.
For instance, all Nestle’s brands, including coffee and other drinks, are designed to ensure that all its customer categories are catered for.
To ensure that this task is fully accomplished, the marketing managers of the company have set up a team that ensures that its level of commitment and orientation in meeting the customers’ needs are monitored on a regular basis (Nestle, 2011).
The company does fairly well in terms of its market orientation; the marketing managers of the company design their strategies for competitive advantage using their understanding of the needs of its customers.
The main influential factor behind the marketing strategies that are developed at Nestle is the need to create greater value for the customers. The managers of the company believe that they have great potential to create products of high quality, which their customers prefer most (Lado & Maydeo-Olivares, 2001).
Thirdly, the customer satisfaction at Nestle is gauged on a systematic and frequent basis. This enables the managers to identify and seize any opportunities and remedy any shortfalls in time.
The management has also implemented good after-sale services. The two strategies are known for their effectiveness in assisting companies to earn the loyalty of their customers. Loyal customers are those who continue to purchase products of a particular company for a long time.
Apart from highly qualified marketing managers, Nestle has highly effective salespersons who aggressively market the company’s products. The salespersons at Nestle are tasked with the responsibility of ensuring that they obtain and share information regarding the marketing strategies of the company’s main competitors.
The salespeople at Nestle consist of a group of dedicated individuals, who provide the management of the company with the relevant information regarding the strategies of its competitors. The information is then used by Nestle’s marketing managers to develop new strategies to help it rise above its competitors (Kirca, Satish, & William, 2005).
The company also establishes and maintains its market by targeting the existing customer groups and individual customers. In addition, the company establishes markets in areas where it finds easy to develop a competitive advantage. These strategies are regularly discussed by the top management of the company.
It is this management team that decides on the most effective marketing strategies to launch at a particular time. However, the marketing managers make regular visits to the company’s prospective customers before any strategy is executed (Deshpandé & John, 1998).
Communication is another important aspect that helps Nestle to maintain a strong marketing orientation. The salespeople are expected to communicate information regarding the successful as well as the unsuccessful experiences that they have with the company’s customers.
The information is then used by the management team to install the mechanisms Nestle needs to ensure its business functions reflect the needs and expectations of its customers (Deshpandé & John, 1998).
Lastly, the other business functions of Nestle work together with the marketing department to ensure that the customers are served according to their needs and expectations.
The most active sections of the company, which help the marketing function, include: finance, manufacturing, personnel and transportation departments among others. These departments also work hard to ensure that the target markets are captured and retained for Nestlé’s products (Lado & Maydeo-Olivares, 2001).
Recommendations
From the survey that was conducted to determine the level of market orientation at Nestle, it is evident that the company has a fairly strong basis of market orientation. However, there are still chances that it can improve its market oriented approach to accommodate all the required aspects.
The company can enhance the approach by improving its customer orientation, competitor orientation, and inter-functional coordination (Kyriakopoulos, 2000).
The first step towards achieving a strong market orientation at Nestle involves having a genuine understanding of the requirements and expectations of the company’s clients. The understanding should also include the buying behaviours and characteristics of Nestle’s customers.
This understanding is important in establishing the best ways to communicate with the customers. Therefore, the management of Nestle can develop a strong customer orientation by establishing effective ways of communicating with its clients, identifying their problems, and dealing with their complaints amicably (Kyriakopoulos, 2000).
Secondly, the marketing managers at Nestle can make the company more market oriented by enhancing competitor orientation. Competitor orientation involves developing systems and processes to assist in identifying and evaluating competitors in the industry in which a company operates.
Consequently, the management of Nestle should establish a structure that addresses aspects such as competitors’ weaknesses and strengths, pricing mechanisms, client bases and product portfolios; it can do that to develop effective strategies that can help it stay ahead of its competitors (Masterson, & Pickton, 2010).
Lastly, the management of Nestle can improve its market oriented approach by improving inter-functional coordination among its departments. This strategy involves ensuring that the different departments work with one another to develop products that satisfy the needs and expectations of the customers.
To achieve a strong inter-functional coordination, Nestlé’s management should develop an effective communication network to connect all the operating departments in the company (Masterson, & Pickton, 2010).
Conclusion
The main aim of this report is to address the concept of market orientation and to establish the ways in which this concept can be used to determine how companies conduct their businesses in their respective industries.
Market orientation refers to the approach in which a company uses to ascertain and incorporate the needs and expectations of its customers in designing its products. It assists companies to manufacture products that satisfy the needs and requirements of the customers.
Nestle is used in this report to address the concept of market orientation. Nestle is a market oriented company that gives first priority to its customers. It can improve its market oriented approach further by enhancing inter-functional coordination among its functional units, as well as its customer and competitor orientations.
References
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