Executive Summary
Marketing management and market orientation are essential aspects of marketing in any business organisation. In the current study, the author analyses marketing management and market orientation concepts. As a concept, market orientation is very beneficial to an organisation.
The current study highlights some of the benefits an organisation derives from the adoption of market orientation concept in its marketing management. The benefits range from improved market competitiveness to enhanced overall organisational performance.
The market orientation of a given organisation can be determined using a scholarly developed questionnaire. In addition, the same can be determined through the analysis of market orientation components in light of a given organisation. In the current study, the author performs a market orientation analysis of Coca Cola Company, a global leader in the soft drinks industry.
From the company’s market orientation, various shortcomings in relation to the concept are highlighted. To improve the market orientation of Coca Cola Company, recommendations are made in this paper. The recommendations lay the groundwork for the proposed improvement of the firm.
Introduction: Marketing Management and Market Orientation
Marketing management and market orientation are vital aspects of marketing for any given organisation, whether non-profit or commercial. An organisation intent on realising its main goals and objectives must have a keen marketing strategy. Both marketing management and market orientation are driven by the marketing strategy. The combination of the two optimises the chances of a business succeeding in a given venture.
Kotler and Keller (2012) provide a working definition of the marketing concept. Kotler and Keller view this concept as the creation and exchange of value between the organisation, the customers, and the larger society. As a concept, marketing focuses on identifying and meeting both human and social needs of the businesses.
On the other hand, marketing management is defined from the perspective of creation and sustenance of markets. It is the science and art of identifying market segments and delivering goods and services to the same (Kotler & Keller, 2012). Therefore, marketing management is a broader perspective or dimension of marketing.
Several approaches have been adopted in explaining the concept of market orientation. According to Shoham, Rose, and Kropp (2005), two approaches are widely adopted by scholars in this field. Both approaches embrace three components in defining market orientation.
On one hand, market orientation focuses on the organisation’s generation of information with regards to current and future needs of customers. It also involves the dissemination of this information across departments and individuals. The processes take place within a market-oriented business organisation. Market orientation also illustrates the reaction of the business entity to the aforementioned information (Jaworski & Kohli, 1993).
The second approach to market orientation is different from the first. Three behavioural components become apparent in the definition of this concept. According to Narver and Slater (1990), these components include customer orientation and competitor orientation. The other component involves inter-functional coordination. The first component entails the activities carried out in gathering and analysing information regarding customers.
On its part, the second component entails the gathering and analysis of information touching on the competitors. The third and final component involves the activities carried out by a business to create and maintain value in the market (Narver & Slater, 1990).
Theoretically, market orientation is responsible for the implementation of the marketing concept. More precisely, market orientation highlights the ability of the firm to anticipate and respond to fluctuations in the market. The organisation exploits these changes to create competitive advantage (Shoham et al., 2005).
In this paper, marketing and market orientation of Coca Cola Company is analysed. A modified version of the questionnaire by Narver and Slater was administered on four executives in the company to determine the organisation’s degree of market orientation. The results of this survey are used to evaluate the company and make recommendations.
Benefits of Market Orientation to an Organisation
Organisations usually develop market orientation characteristics by exploiting existing range of goods and services offered to consumers. In addition, the organisations also anticipate future customer needs. The anticipation is critical to the organisation’s sustained success. Market orientation enables the management to put customers first in planning for the business (Dutta, 2013). The concept facilitates the translation of market knowledge into strategic competence. The capabilities are communicated throughout the organisation.
The process entails the analysis of external perspectives on the organisation. To this end, it significantly influences how the organisation aligns itself with and adapts to current market requirements. The alignment and adaptation is in relation to changing trends in technology, customer demands, and market trends.
Shoham et al. (2005) are of the view that market orientation has positive impacts on the firm’s employees. It provides the employees of the organisation with a sense of direction, belonging, and feelings of customers’ needs satisfaction. Therefore, their team spirit takes more roots in the process. The benefit is a behavioural outcome of market orientation in an organization, through facilitation of both psychological and social aspects of teamwork.
Kohli & Jaworski (1993) also determined that, market orientation positively correlates with business performance. It is noted that the extent of market orientation in an organisation is related to the entity’s business performance in terms of profitability and growth. Market oriented firms have greater intelligence generation capacity, dissemination and responsiveness as opposed to non-market oriented firms.
Market orientation is also essential in the development of market capabilities, such as market sensing and customer linking capabilities (Dhar, Chavas, Cotterill, Gould, 2005). Market sensing capability refers to the anticipatory capability that enables firms to track market advancement ahead of competitors. The capabilities are attained through an open approach to development and interpretation of market information, as well as the capturing of market insights.
In addition, the firm’s sensing and customer-linking capabilities are essential in attainment of sustainable competitive advantage. Such capabilities allow for effective and efficient resource management, allowing the organisation to cope adequately with the changing environment.
More generally, the concept of market orientation exhibits relationships with the broad performance aspects of a firm. The related aspects include improved customer satisfaction, increased market share, innovativeness, and increased customer loyalty (Poulis & Poulis, 2012). Such factors sum up the benefits of market orientation to an organisation.
However, some studies are sceptical about the benefits of market orientation to an organisation. Such studies have raised questions and doubts about the net benefits of embracing market orientation. For instance, Berthon, Hulbert, and Pitt (1999) postulate that focus on market orientation may lead to distraction from innovativeness. In addition, Berthon et al. feel that a business may lose its industry leadership position by paying too much attention to customers.
Theoretical Foundations of Market Orientation
According to Steinman, Deshpande and Farley (2000), the concept of marketing has traditionally focused on consumer needs and profit generation through the creation of customer satisfaction. However, market orientation, a recent phenomenon, has shifted the focus of strategic marketing.
Market orientation is based on several theories, especially depending on the context of explanation. For instance, the behavioural perspective of market orientation has its foundations on institutional theory.
The foundation explains a firm’s behaviour. Behavioural perspective of market orientation defines the concept as involving generation, dissemination, and response to market intelligence in relation to current and future customer needs. It also addresses competitor strategies and the broader business environment (Kohli & Jaworski, 1990).
In relation to the social learning theory, market orientation is a market concept relayed from managers to their immediate subjects in the organisational context (Lam, Kraus & Ahearne, 2010). Therefore, it is apparent that the concept of market orientation assumes different theoretical perspectives, depending on the organisational context of application.
Market Orientation Measure for Coca Cola Company
Company Background
The Coca Cola Company is the largest beverage company in the world, boasting of more than 500 brands; both still and sparkling brands (The Coca Cola Company, 2013). In addition to Coca Cola, other prominent brands under the company portfolio include Fanta, Diet Coke, Coca- Cola Zero, Sprite, Minute Maid, PowerAde, Vitamin Water, among others.
Coca Cola Company has realised the present market status and brand recognition through very effective marketing management strategies. Market orientation has also contributed to the exemplary performance of this firm. Considering the company a commercial multinational corporation, Coca Cola Company provides a suitable case for market orientation analysis.
According to Kirea, Bearden, and Roth (2010), market orientation for subsidiaries of multinational corporations positively correlates with local competition. It also links with local markets, legal institutions, and market orientation of the headquarters.
Coca Cola Company Market Orientation
Determination of Coca Cola Company market orientation was based on Slater and Narver’s (1990) tool. The tool involves a questionnaire with 14-items answered by particular individuals well versed in the operations of the company. Consequently, their responses provide a comprehensive view of the market orientation of the company.
Four employees with knowledge on the operations of the company provided the information that was used in analysing market orientation of the company. The employees included the Chief Administrative Officer, Chief Marketing and Commercial Officer, Chief Quality and Product Integrity Officer, and chief Sustainability Officer.
Slater and Narver Coca Cola Market Orientation Measure
Appendix one attached indicates the responses of each of the managers in relation to Slater and Narver’s (1990) tool questions. The responses further provide information on the precise depiction of Coca Cola Company market orientation. From the responses of the questionnaire, it is apparent that Coca Cola Company market orientation is relatively moderate. It has an average scale of 5.4.
Slater and Narver’s (1990) 7-item scale measure used utilised a 1 (not descriptive) to 7 (extreme extent) in relation to the fourteen questionnaire questions in appendix one. The scale is a Likert-type scale. Overall, scale responses from the selected managers ranged between 6 and 7. This showed that their outlook with regard to market orientation of Coca Cola Company concurred. Thus, the summative result of 5.4 average indicates that Coca Cola Company is moderately market-oriented company.
Narver, Slater, & MacLachlan (2004), further analyse market orientation of an organisation based on the other components of market orientation namely competitor orientation, customer orientation, and interfunctional coordination. The named aspects of market orientation embed extensively in Coca Cola Company marketing management. Further determination of the Company’s market orientation is determinable from analysis of these behavioural aspects of market orientation concept.
Customer Orientation
Customer Orientation refers to the sufficient understanding of target buyers for an organisation’s products, and being able to supply them continuously with superior value (Slater & Narver, 1990). Market focus and the company vision attest to Coca Cola’s customer orientation aspect.
In relation to market focus, Coca Cola Company emphasises on needs of consumers, partners, and other customers (MarketLine, 2013). In addition, the company maintains excessive curiosity, market keenness, and posses a world view of consumer needs, and how to meet them. Therefore, by understanding the entire supply chain of consumers, Coca Cola Company embraces consumer orientation aspect of market orientation.
Currently, the company has embarked on addressing specific consumer needs in the market. The needs range from products with no calories, those having little calorie, and products with low Sodium content (Coca Cola Enterprises Inc., 2013). Others include products with no artificial colours or sweeteners among others.
Varying consumer needs are being covered by the company through offering such products as Fanta and Sprite with Stevia; naturally derived and low calorie sweetener (MarketLine, 2013). A beverage, such as glaceau vitamin water, contains no artificial ingredients like sweeteners, or even Sodium.
Competitor Orientation
Competitor orientation implies that the seller comprehends both the short-term strengths as well as weaknesses, in addition to the long-term strategies and capabilities of key potential and current competitors (Slater & Narver, 1990). Despite the market leadership, Coca Cola faces stiff competition in the beverages industry globally.
Some of the major competitors of Coca Cola Company include PepsiCo, Inc., Nestle S.A., and Dr Pepper Snapple Group Inc. (Coca Cola Company Competition, 2013). Despite the impressive performance and market leadership, Coca Cola Company has greatly relied on competitive culture to reach its present status.
Competitor orientation is not very apparent in Coca Cola Company. The competitive culture of Coca Cola Company has been boasted mainly by its core competency of brand building (The Coca Cola Company, 2013). The strategy has so far boasted effectiveness, although much needs accomplishment in relation to competitor orientation, considering growing competition in the industry.
According to Kohli and Jaworski (1990), competitor orientation assumes determination of competitor actions and strategies, as well as their abilities and channel requirements. The competition for Coca Cola Company market share is growing, because of shortcomings in competitor orientation in the company.
Interfunctional Coordination
Interfunctional coordination refers to the coordinated utilisation of the resources owned by a business organisation, in creation of superior value for the targeted customers (Slater and Narver, 1990; Berthon, Hulbert, & Pitt, 1999). Apparently, Coca Cola Company exhibits a strong interfunction coordination in relation to market orientation. The company boasts a strong brand name, and its network of distributors and bottlers provides unparalleled competitive edge (Coca Cola Company Competition, 2013). In addition, Coca Cola Company commits to sustainable community building, by focusing on various initiatives that are beneficial to society. Such initiatives include reduction of environmental footprint in their production, processes, supporting active and healthy living, among others.
Recommendations
Despite of Coca Cola Company qualifying as a model successful company, the level of market orientation can be merely regarded average. The average 5.4 value from the sampled managers clearly indicates that more needs to be done in relation to market orientation in the company.
A market-oriented firm organises its activities, services, and products to revolve around the customer needs and wants. According to Ngo & O’Cass (2012), determination of the needs and wants of customer needs and wants forms the key to achievement of organisational goals, such as market shares, profitability, and sales growth.
Since the company operates based on subsidiaries, market orientation would greatly be enhanced through their identification with the headquarters. The implication is that competitive intensity at the subsidiary level would exhibit increased positive effects on market orientation implementation if carried out in relation to the parent organisation.
Development of a context of performance management, backed with the necessary social support can result to a better organisation whereby decisions taken revolve around customer needs and wants (Dutta, 2013). Thus, the company would not develop products based on what they believe to be good for customers.
Promotion of ambidexterity in Coca Cola Company is another key to promoting market orientation in the firm. Ambidexterity would promote alignment and adaptability as cultures of Coca Cola Company, hence realisation of higher benefits for the company in terms of market orientation.
The nature of Coca Cola Company operations as a global supplier requires greater alignment and adaptability in the industry market. Contextual ambidexterity of an organisation refers to the behavioural capacity of simultaneously demonstrating alignment and adaptability throughout an entire business unit (Birkinshaw & Gibson, 2004).
Although Coca Cola boasts of a competitive culture, much more needs to accomplishment to promote the firm’s competitor orientation. Development of a trust climate, coupled with discipline and support for the subsidiaries would respond to this aspect of market orientation. The approach would promote collection of market intelligence by the subsidiaries, dissemination of the same information, and response thus fostering superior market orientation for the firm.
According to Lam, Kraus, and Ahearne (2010), market orientation viewed in terms of social learning theory does not take place in vacuum. Frontline employees usually undergo vicarious and experiential learning from role models. The managers usually play a dominant role in implementation of marketing strategy.
Therefore, by maintaining highly market oriented leaders, Coca Cola Company will in essence facilitate market-oriented culture in the organisation. The leaders are more likely to utilise their operational powers in creating measurements, rewards, and punishments exerting normative influence on their immediate followers (Hammond, Webster, & Harmon, 2006).
Actually, Kumar, Jones, Venkatesan, & Leone (2011), postulate that the commitment of top management is the greatest predictor of market orientation. In addition, workgroup socialisation is very essential in dissemination of customer-oriented strategy in relation to customer to employees contact. Therefore, Coca Cola market orientation requires the managers to embrace market-oriented approach in their mandate, and the same will be passed on to their immediate subjects.
Conclusion
The concept of market orientation is not only vital in relation to marketing management, but also in the overall performance of a business organisation. A business organisation aiming at realising marketing goals in the contemporary world needs to seriously consider, and incorporate market orientation concept in its strategic marketing management plan.
As evidenced by Coca Cola Company case, a company can be market oriented but only in line with one or two behavioural components of the concept. Effective market orientation requires balancing of all the components of market orientation. There are three components associated with this concept.
Market orientation concept is forming an inevitable part of marketing management, which no business organisation can expect to perform well in the market without. Apart from facilitating marketing in organisation, market orientation has an organisation-wide value addition attribute. Tools, such as market research, testing, and customer focus, are vital in realisation of market orientation.
Appendix
Questionnaire: Scale
- Not at all- 1 point
- To a very slight extent- 2
- To a small extent- 3
- To a moderate extent- 4
- To a considerable extent- 5
- To a great extent- 6
- To an extreme extent- 7 points
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