The market-led organisation
The market-led organisation

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The market-led organisation

2.4 Marketing as a management process

This last definition is the one that most modern marketing writers support. Piercy (1997) makes a distinction between ‘marketing plan marketing' – the activities that traditional marketing departments do – and the concept of ‘going to market’ – a much more general management issue. He writes:

‘Marketing’ belongs to marketing specialists but ‘going to market’ is a process owned by everyone in the organisation.

This approach sees marketing as managing an exchange process. In commercial (for-profit) organisations, products and services are exchanged for money and resources. In non-profit organisations, goods and services are sometimes exchanged for money and sometimes also to support ideas and beliefs. An example might make this clearer – why do I buy my Christmas cards from Oxfam rather than from the local supermarket? There is a commercial exchange, i.e. a card for money, but also there is an exchange based on ideas and beliefs. Buying from Oxfam enables me to support their ideas and beliefs and to feel good about spending money on a worthwhile cause. Examples of other exchange relationships are shown in Figure 1.

Figure 1
Figure 1 Exchange relationships

Marketing as the managing of exchange relationships is described in the following extract:

Marketing consists of individual and organisational activities that facilitate and expedite satisfying exchange relationships in a dynamic environment through the creation, distribution, promotion and pricing of goods, services and ideas.

(Dibb et al., 1997)

Piercy (1997) describes this approach to marketing as a market-led approach – others refer to it as pan-company marketing. The distinguishing feature of both these approaches is that they emphasise that every department in the organisation is involved with the customer – not just the marketing department. I shall use the terms market-led, market orientation and pan-company marketing throughout the text to describe this organisation-wide customer-led approach.

Another suggestion is that:

Marketing is too important to leave to the marketing department.

(Bill Packard, Hewlett Packard, in Piercy, 1997)

An example of pan-company marketing (from the Chartered Institute of Marketing's marketing portal website https://www.cim.co.uk/cim/sho/html/boo.cfm/ [accessed 09/10/06]) is given in the following example.

Example 2 Pan-company marketing was pioneered by British Airways

Customer champions

In 1982 the pressure to prepare for privatisation was intense. A fundamental shift in the way BA did business was needed.

Lord Marshall – then Sir Colin – took charge of transforming BA into a totally customer focused organisation.

Insight

Lord Marshall and his top team instituted investigative techniques, mainly in-depth interviews with staff, to uncover what they thought about customers. An insight was generated: speed and efficiency, although important, were of secondary importance to the customer. They wanted to see warm, personal and caring staff.

Innovation and improvement

All existing business processes and operations were disregarded. Only the customers and their needs were used as the basis for redesigning the company.

Customer culture

Front-line staff were now rated as the company's main assets. The ‘Putting People First’ programme involved them in redefining the tasks which win customers, based on teamwork. This became the driver of business strategy.

Engineers and pilots insisted that they too be involved in the programme. Customer First Teams were created to suggest solutions to customer problems.

Media advertising communicated ‘The World's Favourite Airline’ to staff as well as to customers. Motivation and incentives were prioritised and company-wide performance-related pay was instituted. Awards for Excellence were conferred by Lord Marshall on 1–1.5% of staff annually.

Measurement

Everything pointed to the need for better metrics and standards. A Market Place Performance Department, reporting to the CEO, was set up. Mystery flyers were created [Mystery shoppers/flyers are researchers who are hired by organisations to pretend to be customers and secretly evaluate the quality of the customer service].

A continuous upward trend in customer satisfaction ratings was now registered right through into the late 1990s. Continuous improvements in market share, passenger traffic and staff productivity were achieved.

Profitability

The direct result of adopting pan-company marketing was a 30% increase in productivity and an increase in market share of 2.4% in a highly competitive market and the posting of improved profits when, for example, from 1990–1994 the airline industry world-wide lost US$15 billion.

An organisation like British Airways (BA), which takes into account the needs of its markets before it plans its processes, is said to be market led or market oriented. It has changed the focus of its marketing from a marketing plan devised in the marketing department to an organisation-wide involvement in creating an offering of superior value for the customer. Studies have shown that being market led is linked to profitability in profit-based organisations and to survival in non-profit organisations (Slater, 1990).

The market-led approach has three components:

  • consumer orientation

  • competitor orientation

  • inter-functional co-ordination.

Figure 2
Figure 2 The market-led organisation (Source: Jaworsky and Kohli, 1990)

The first two involve the organisation-wide generation of market intelligence regarding current and future customer needs, and making this information available to all departments. Customer orientation also involves continuously monitoring customer information in order to be able to create superior value.

Inter-functional co-ordination concerns the organisation-wide co-ordination of resources in response to customers. Inter-departmental ‘connectedness’ has a key role to play in the dissemination of and the responsiveness to market intelligence by the organisation (Jaworski and Kohli, 1990).

The Chartered Institute of Marketing (CIM) suggests that:

Marketing is the management process for identifying, anticipating and satisfying customers’ needs at a profit.

Can you see how the CIM has incorporated market-led concepts in this definition of marketing? If you work in a non-profit organisation you may be put off by the word profit in their definition. As we discuss later, the notion of being market led is also relevant outside the commercial sector.

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