Theories of Marketing Summary:
Topic 1:
The effect of marketing orientation on business profitability – Narver & Slater 1990
- Origin of our current marketing thinking
- Market orientation: customers orientation, competitor orientation, interfunctional coordination
- Cultural/ managerial concept
- Market orientation mainly covering the cultural dimensions how should companies operate
differently: it should have an orientation towards customers, towards competitors, and should
make sure that there is a cross-functional coordination of all the information so internally all
parties and functions should be aligned in creating customer value
- In this concept strategic directions were not included
- Firm capabilities: what should a company excel at, they explain it from an exploitative mindset
which is very reactive
- Looking at the market you digest information for you, and think about how can I exploit the
strengths that I already have to sell more than what I can already to
- Market orientation is the culture of putting the customer first
- Starting point is the customer, how can we now measure who is more market oriented
- Came up with three measures that indicate how market oriented a firm is
- Companies that excel on being customer and competitor oriented, as well as able to disseminate
all that information internally could be measured as more market oriented
1. Measurement of market orientation
- Found measurement scale
- 3 dimensions are proved
2. Effect on profitability
- Companies that are market oriented are more profitable (differs between types of businesses)
- Distinguish between commodity & non-commodity markets/ products
- Degree to which company invests in market orientation & return on assets (profitability
measure)
- For non-commodity companies: linear relationship, the more market oriented the higher the
profitability (can modify their goods& services to better meet the needs of consumers)
- Commodity companies: U-shaped curve, must invest a lot in market orientation to become
profitable (share generic products that are difficult to personalize, usually raw materials)
, - Impact of MO on profit and sales is declining over time because more firms started investing in it,
decreased overall margin
- Effect diminishes over time; however, it still pays off to invest the impact is just getting smaller
(still a significant effect)
Customer-led and market-oriented let’s not confuse the two – Slater & Narver 1998
- The authors rethink the concept of market orientation 8 years later
- If we listen too closely to the customer, it will not give us the insight we need to become
successful
- so now we look at two types of market orientation, the one described in the 1990s responsive
MO and the new one proactive MO
- companies are still market-oriented but let’s not wait for consumers to tell us what they need
but start to understand latent needs
- Latent needs: consumer did not express the need; didn’t know they needed the product in the
first place
- Both types of MO are equally important, need to listen to consumers be responsive but also
innovative think out of the box
Frontiers of the marketing paradigm in the third millennium – Achrol & Kotler 2012
- What the article is about: need to change our assumptions on which we base our marketing
decisions, because the environment has changed
, - only if we take the view of networks and start acting upon it, we can understand our world
better and become more successful
- paradigm is about how we should change our thinking
- if paradigm must change then it means that something in the environment has changed to what
we need to adapt our thinking
- change in value chain it is not solely going from supplier -> organization -> distributors anymore,
interacting more with consumers and worldwide networks which is mostly influenced by media
channels
- networks -> interaction through social media, consumers interact with each other, interact also
with brands
- organizations are not defined by their production capacity anymore but by the brand
- organizations start to outsource are now more depended on supplier as they must produce what
brand promises
- Paradigm: implicit assumptions from which you try to understand and therefore influence the
phenomena in the world
- Paradigm shift: fundamental change in these basic assumptions
- E.g. when people thought the world was flat they made different assumptions from when they
learned the world is actually round
- This was the article is talking about we need a paradigm change, a change in how we approach
marketing problems and decisions
- Authors say that we should approach marketing problems not from an exchange paradigm but
from a network paradigm
- We need to do these changes because we see that on all three levels of phenomena, if we do so
take a network perspective we can much better explain and predict what’s going on, make better
decisions than from an implicit view (exchange paradigm)
1. Exchange paradigm
- Two entities that exchange information or products
- Implicit view marketeers approach the market
- Companies interact with individual consumers or individual companies
- Understand needs and wants of customers/ suppliers, make decisions on this basis
2. Network paradigm
- On all three levels its networks interacting with networks
- Need different decision-making
Different levels:
1. Subphenomena: consumption experiences
- Lowest level
, - Value exchange between company and consumer
- Has also changed over the decades from a bundle of benefits given to the consumer, to an
exchange of experiences
- Company wants to compete on experience touches consumer on many more levels
- Wanting to touch senses and have full experience, go beyond just satisfying a need
- Implicates we must think in terms of an exchange of network experiences rather than discrete
transaction
2. Phenomena: marketing networks
- Looking at all sites (supply, production, interaction) we can see that all parties have become
networks/ groups
- We have networks interacting with networks rather than individual parties (company) interacting
with individual party (the consumer)
- Supply: core functions being outsourced (dependent on companies), networks are created to
interact with focal companies, produce innovations
- Production: consumers interacting with companies that produce value e.g. co-creation design
Nike shoe
- Interaction: co-production, company may design the end product, but the customer produces it
themselves, even stronger network whatever the customer is producing reflects on the company
3. Superphenomena: sustainable development
- Beyond the value chain
- Core of competition, parties in value chain must look beyond their own value chain
- Even here we see networks, with parties competing in value chain who are related to parties
outside of it
- Need to consider whole network to become successful
- E.g. sustainability, poverty
- Companies become more proactive (e.g. Coca cola proactively deciding to stay away from
schools, before being banned there)
Conclusion:
- As marketers we should move away from implicit view (viewing phenomena as exchanges
between discrete parties)
- they will not anymore be a good measure of outcomes or decisions
- Must take the network perspective because of all these changes of phenomena levels
- Can only explain current world when we look at it as if network is interacting with networks
- That’s how we should pursue research in marketing and marketing decision making
Customer experience management – Homburg 2017
- CEM: buzz word in marketing
- Widely used in advertisements, customer experience is the new marketing
- Commodities difficult to compete on cannot really differentiate, move to make products that are
better aligned to certain target groups, if you can’t make big difference there you want to
compete on deliver services, lot of competition there we add experiences that are more
involving for customers
