Transcript The Role of Marketing in Creating Corporate Identity Bruce

The Role of Marketing in Creating
Corporate Identity
Bruce Wrenn
School of Business
Andrews University
1
What do we Mean by
“Corporate Identity”?
Corporate Identity: A mutually shared communal statement
about who you are. It does not have to be relegated to
businesses, or even formally organized organizations,
whether for-profit or non-profit. Your identity tells the world
about your values, your character, what you stand for, who
you are at the most fundamental level.
2
The Question We’ll Seek
to Answer:
How does an organization’s marketing
philosophy affect the ability of the
organization to engage customers in
mutually beneficial exchange relationships?
3
Organizational Orientations:
Production
The Production Orientation
The Production orientation holds that consumers will prefer products that are widely
available and inexpensive. Managers of production-oriented businesses concentrate on
achieving high production efficiency, low costs, and mass-distribution. They assume that
consumers are primarily interested in product availability and low prices. This orientation
make as sense in developing countries, where consumers are more interested in
obtaining the product than in its features.
Some service organizations also operate on the production orientation. Many medical
and dental practices are organized on assembly-line principles, as are some government
agencies. Although this management orientation can handle many cases per hour, it is
open to charges of impersonal and poor-quality service.
4
Organizational Orientations:
Product
The Product Orientation
Other businesses are guided by the product orientation, which holds that consumers will
favor those products that offer the most quality, performance, or innovative features.
Managers in these organizations focus on making superior products and improving them
over time. However, these managers are sometimes caught up in a love affair with their
products.
Product-oriented companies often trust that their engineers can design exceptional
products. They get little or no customer input, and very often they will not even examine
competitors’ products.
The product orientation can lead to “marketing myopia” These organizations are looking into
a mirror when they should be looking out of the window.
5
Organizational Orientations:
Selling
The Selling Orientation
The selling orientation holds that consumers and businesses, if left alone, will ordinarily
not buy enough of the organization’s products. The organization must, therefore,
undertake an aggressive selling and promotion effort. This orientation assumes that
consumers typically show buying inertia or resistance and must be coaxed into buying. It
also assumes that the company has a whole battery of effective selling and promotion
tools to stimulate more buying.
The selling orientation is practiced most aggressively with unsought goods, goods the
buyers normally do not think of buying, such as insurance, encyclopedias, and funeral
plots. The selling orientation is also practiced in the nonprofit area by fund-raisers,
college admissions offices, and political parties.
6
Organizational Orientations:
Selling (cont)
Most firms practice the selling orientation when they have overcapacity. Their
aim is to sell what they make rather than make what the market wants…
However, marketing based on hard selling carries high risks. It assumes that
customers who are coaxed into buying a product will like it; and that if they do
not, they will not bad-mouth it or complain to consumer organizations and will
forget their disappointment and buy it again. These are indefensible
assumptions. One study showed that dissatisfied customers may bad-mouth
the product to 10 or more acquaintances; today bad news travels even faster
and further with the Internet.
7
Organizational Orientations:
Marketing
The Marketing Orientation
The marketing orientation holds that the key to achieving its organizational goals
consists of the company being more effective than competitors in creating,
delivering, and communicating superior customer value to its chosen target
markets.
The selling orientation takes an inside-out perspective. It starts with the factory,
focuses on existing products, and calls for heavy selling and promoting to
produce profitable sales. The marketing orientation takes an outside-in
perspective. It starts with a well-defined market, focuses on customer needs,
coordinates all the activities that will affect customers, and produces profits by
satisfying customers.
8
Organizational Orientations:
Societal Marketing
The Societal Marketing Orientation
Are companies that do an excellent job of satisfying consumer wants necessarily acting in the
best long-run interests of consumers and society? The marketing orientation sidesteps the
potential conflicts among consumer wants, consumer interests, and long-run societal welfare.
The societal marketing orientation holds that the organization’s task is to determine the needs,
wants, and interests of target markets and to deliver the desired satisfactions more effectively
and efficiently than competitors in a way that preserves or enhances the consumer’s and the
society’s well-being.
The societal marketing orientation calls upon marketers to build social and ethical considerations
into their marketing practices. They must balance and juggle the often conflicting criteria of
company profits, consumer want satisfaction, and public interest.
9
Key Question:
Is organizational performance dependent
on the extent to which the organization has
adopted a thoroughgoing marketing
orientation?
10
What Does It Mean to Be Marketing
Oriented?
What exactly does a marketing orientation consist of in a health care setting? Kotler and Clarke
(1987, 32) specify five components of a health care marketing orientation:
1.
Customer philosophy. Does management acknowledge the primacy of the marketplace and
of customer needs and wants in shaping the organization’s plans and operations?
2.
Adequate marketing information. Does management receive the kind and quality of
information needed for conducting effective marketing?
3.
Strategic orientation. Does management generate innovative strategies and plans for
achieving its long-run objectives?
4.
Operational efficiency. Are marketing activities selected and handled in a cost-effective
manner?
5.
Integrated marketing organization. Is the organization staffed to carry out marketing
analysis, planning, implementation and control?
11
Research Methodology
Empirical Setting—61 hospitals in 5
not-for-profit chains, 2 for-profit chain.
Questionnaires completed by
administrators at both the corporate
level and at each hospital.
12
Phase One of Research: Differences in
Perceptions of Administrators About Hospital
Marketing Practice
Results of the research indicated there is no
significant agreement between CEOs/COOs
and their CMOs (chief marketing officers)
regarding the marketing behaviors being
executed in their hospital.
13
Phase One of Research: Differences in
Perceptions of Administrators About Hospital
Marketing Practice
Possible Explanations:
1.Possibly a consequence of marketing
respondents being more optimistic in
identifying behaviors being conducted by
the hospital that fall toward the higher end
of the marketing orientation scale.
14
Phase One of Research: Differences in
Perceptions of Administrators About Hospital
Marketing Practice
2. Line respondents were more conservative than
were marketing respondents in identifying marketing
behaviors that were performed in the hospital.
Neither explanation is true. There is no consistent bias
in ratings such that marketers are either more or less
optimistic than CEOs/COOs about the marketing
behaviors enacted in the organization.
15
Phase One of Research: Differences in
Perceptions of Administrators About Hospital
Marketing Practice
On a hospital-by-hospital basis, CEOs/COOs and their marketing officers do not
see the same marketing activities taking place, but there is no consistent bias
such that marketers generally report behaviors that are more or less marketing
oriented. What this does mean is that within individual hospitals, there is
disagreement between marketers and administrators—in some cases the
marketer sees the institution as more marketing-oriented than does the
administrator and in other, sees the institution as less marketing-oriented.
At this point one might wonder if both are wrongly identifying marketing behaviors
or whether one type of respondent is more correct in perceptions than the other.
“Wrong” or “correct” in this case refers to the ability to identify marketing
behaviors related to hospital performance.
16
Phase One of Research: Differences in
Perceptions of Administrators About Hospital
Marketing Practice
The correlation of .44 between marketing orientation and staffed
bed occupancy rates means that we can explain 19 percent of
the variance in occupancy rates—twice as much as did McKee,
Varadarajan, and Vassar. Perhaps of greater significance is the
finding that a roughly 10 percent improvement in marketing
orientation is associated with a $25 million increase in total net
patient revenues and an 8 percentage point improvement in
occupancy rates.
This confirms results from other research that studied the
relationship between marketing orientation and performance in a
hospital setting. This finding can be considered robust, having
been shown to be consistent across time periods, for hospitals
of different types (for-profit and not-for-profit), independents vs.
chains, and using different means of measuring marketing
orientations.
17
Phase Two of Research: Incorporating All Five
Components of a Marketing Orientation Is Important
The next research phase investigated the
contribution of each of five components of
marketing orientation to hospital
performance. The intent was to discover if a
hospital gets more “mileage” from adopting
certain marketing oriented practices or must
incorporate all five components to derive
the full benefits of being marketing oriented.
18
Phase Two of Research: Incorporating All Five
Components of a Marketing Orientation Is Important
The study provides support for the contribution of the “gestalt” of marketing
orientation—success is at least partly due to a successful implementation
of the synergistic combination of all five elements.
However, it is also true that at the relatively early stages of adoption of a
marketing orientation, as is the case with hospitals, some aspects of a
marketing orientation are contributing more to organizational success than
others.
More specifically, a philosophy of being “close to the customer,” which in
the case of hospitals means patients, physicians, and businesses,
accounts for disproportionate share of success.
19
Phase Two of Research: Incorporating All Five
Components of a Marketing Orientation Is Important
Hospital marketers, then, must find ways of infusing a marketing orientation
throughout the hospital by defining and training people to understand what it
means to adopt a customer orientation (customer philosophy); obtaining,
analyzing, and interpreting information concerning what the hospital’s markets
are saying about the services the hospital should effectively operate
(adequate marketing information); assisting line officers in designing and
implementing strategic plans that use such information and obtain competitive
advantages for the hospital (strategic orientation); monitoring performance
and suggesting corrective actions where needed (operational efficiency); and
ensuring that such market-driven thinking is integrated throughout the
organization (integrated marketing organization).
20
Phase Three of Research: Being
“Good” Is Better than Being “Lucky”
Phase three examined data to determine if having a
marketing orientation (i.e., being “good”) made a
significant incremental contribution to hospital
performance beyond the success enjoyed from facing low
competition from other major healthcare providers (i.e.,
being “lucky”), or by having a large promotional budget
(i.e., “throwing money at the problem”).
21
Phase Three of Research: Being
“Good” Is Better than Being “Lucky”
Empirical data provide support for the hypothesis that it is
better to invest in making the organization marketing oriented
than to spend more (i.e., increase marketing effort) or hope
for weak competition. This conclusion certainly is consistent
with what marketers have been claiming all along as the
benefits of having a marketing orientation – you can’t
generate satisfied customers by merely turning up the volume
of promotional “shouting” or by getting customers by default
from lack of competition.
22
Phase Three of Research: Being
“Good” Is Better than Being “Lucky”
This research suggests that luck in the form of weak
competition is no substitute for having a strong market
orientation. Long-term success depends on having
satisfied customers and satisfied customers don’t just
“happen.” They are generated by all members of an
organization working very hard to make sure what they
do contributes to the organization’s value to the
customer. If anything, lack of competition makes this
dedication less likely.
23
Conclusion
The issue facing healthcare providers would seem to no longer
be whether a marketing orientation can contribute to the success
of healthcare firms. Empirical evidence from several studies has
consistently demonstrated that having a marketing orientation
leads to better organizational performance. Nor is the debate
over what it takes to have a marketing orientation – it requires
proficiency in all five components. And neither do we need to
wonder if we really “need” to be marketing oriented if we are
fortunate enough to be in a competitively benign environment.
We do. Rather, the issue now might be better stated as what
can be done to more thoroughly integrate such an orientation
throughout the organization.
24
Source
Note: An earlier version of this paper
was published as:
Bruce Wrenn, “Marketing Orientation
in Hospitals: Findings From A MultiPhased Research Study,” Health
Marketing Quarterly, Vol. 24, No.1/2,
2007, 15-22 (Published Summer
2008).
The references in this article contain a
full set of statistical analyses that
lead to the statements made in this
25