Introduction
Companies’ approaches to marketing have been evolving continuously throughout history. The focus of marketing strategies has been changing and shifting, arriving at what is known as the societal marketing concept today and is applied by the majority of businesses. Currently, companies’ social responsibility has grown, and the marketing techniques used by organizations mainly aim to promote products or services that aim at society as a whole.
As such, societal marketing involves strategies that prioritize achieving business objectives and complying with sustainability goals and ethical business practices. This has not always been the case, as the philosophy guiding an organization’s approach reflected changing consumer behaviors, economic dynamics, and society’s values.
The marketing orientations that used to prevail among companies are the production orientation, the product orientation, and the selling orientation. This paper will examine the reasons why some businesses have preferred these orientations up to this day, how this choice can impact profitability and customer satisfaction, and analyze some examples of companies operating under these orientations.
Production Orientation
Production orientation is an approach that focuses on the production process rather than the quality of the product, its sales or ethical standards, and societal benefits. Its main goal is to maximize production efficiency while reducing costs to a minimum (Masterson et al., 2021). When production costs are reduced, the product becomes more affordable and available. The product’s affordability is the main factor that attracts customers, so, historically, many companies adopted this approach, and some businesses still prefer to do it now.
There are several key principles central to this marketing orientation. Production efficiency is the first key principle, and it often involves streamlining manufacturing processes, minimizing waste, and achieving economies of scale (Masterson et al., 2021). Another common feature of this approach is the standardization of products, meaning the mass production of identical or highly similar products to lower unit costs (Masterson et al., 2021).
The approach also aims to cut costs at every production stage, starting from sourcing raw materials and finishing with the final step, product distribution. Keeping the product available at all times is the basis of production orientation. Therefore, companies intend to build the production process so that stockouts and shortages never prevent customers from accessing the product.
Impact on Profitability
When companies apply a production orientation model, their main goal is to reduce costs. Indeed, the profit is created by lowering the production costs to the minimum level. However, there are other ways in which production orientation helps companies increase their profitability. The first benefit of this model is that lowered production costs allow businesses to set competitive prices. As a result, the product attracts more price-conscious consumers, leading to increased sales volume and higher overall profitability. Finally, this model ensures profit stability for companies as their emphasis on the efficiency of production helps them maintain a consistent cost structure.
Impact on Customer Satisfaction
On the one hand, there are obvious benefits when it comes to ensuring the affordability and availability of the products that attract a particular segment of customers. On the other hand, however, there are various downsides regarding customer satisfaction. Limited product variety can cause customers to not feel satisfied with the products they are offered as, in many cases, customers might seek diverse choices, unique features, or more personalized and tailored offers. The other aspect of production that the company has to sacrifice with this approach is the quality of the product. The costs of production are frequently minimized at the expense of the product’s quality, which can eventually cause customer dissatisfaction.
Production orientation, as it has been mentioned, implies a focus on the production process rather than customers’ needs. This can result in the company not investing enough in evaluating what products customers are willing to purchase in reality and ending up manufacturing products that will not be in demand (Hult et al., 2022). Finally, there is also a lack of investments in innovations in this model. This can hinder the organization’s ability to adapt to changing markets and foresee what the trends and customer demands will be in the future.
Production Orientation in Ford Motor Company
Ford Motor Company is an example of a company that has been using the production orientation approach throughout its existence. This manufacturer was the first one to revolutionize mass automobile production and make the production processes highly efficient, which influenced the business approaches of many other motor companies. There are several reasons why Ford has applied this marketing orientation to this day. The first reason is the focus on the affordability of Ford cars. Ford positions itself as an affordable brand that is accessible to the popular masses, which can be achieved through an emphasis on efficiency.
Ford opts for the mass production of cars that are available in the widest markets. This can be made possible through standardization, which is also characterized by Ford’s business approach. It manufactures products in large quantities and makes them as standardized as possible. Ford also aims to reduce production costs so as to make mass production more beneficial. Overall, applying this business approach allowed Ford Motor Company to expand in the market, compete with other motor companies, and acquire a significant market share. As a result, the company has achieved lower production costs with higher profit margins.
Product Orientation
Product orientation favors the development of the product’s qualities and unique features instead of the efficiency of the production process. In this approach, the focus is on creating top-notch offerings, prioritizing design, and investing in research. Manufacturing processes are also emphasized, but in this case, the company places emphasis on their improvement rather than efficiency and cost-cutting (Willan, 2021). In the marketing efforts, the manufacturer also makes sure that marketing campaigns highlight the product’s high quality and benefits, conveying to the customer why they need to choose this precise product among other similar ones.
Impact on Profitability
One of the results of focusing on the quality of the product is being able to set premium prices on the market. This helps the company achieve healthy profit margins, particularly in the cases when consumers perceive the value of the product. Companies with a product orientation often set standards on the market and become market leaders. This grants them strong brand loyalty and market dominance, leading to high profitability (Willan, 2021). Product orientation also leads to repeat business and loyal clientele who prefer this product for its quality and opt for purchasing it continuously over long periods of time, leading to consistent revenue streams.
Impact on Customer Satisfaction
In this orientation, the level of customer satisfaction is typically high due to the satisfying product quality. On the other hand, similar to production orientation, product orientation may lack product customization, as in many cases, the approach to product development may be standardized (Hult et al., 2022).
Another aspect similar to that of the production approach is limited investment into evaluating customer needs. Excessive focus on the features of the product may result in the company overlooking what the customer really prefers. As a result, they may create a high-quality product that does not, however, collide with what is actually in demand at the moment and does not follow the current market trends. Overall, the impact on customer satisfaction may vary, as customers who value innovation and quality will be satisfied while others may seek something more personalized or a product complying with the trends.
Product Orientation in Tesla Motors
Tesla Motors became a company that revolutionized the automotive industry in several ways. The revolution that Tesla started became possible largely due to the product approach that the company’s CEO, Elon Musk, adopted. Tesla is a relatively young company that managed to enter a highly competitive market with strict entry barriers owing to emphasizing unique features of a product that no other company could offer (Thomas & Maine, 2019).
For example, the company introduced a new advanced feature, such as the autonomous driving capability of their cars, which distinguished Tesla’s products from the products of any other motor manufacturer (Thomas & Maine, 2019). An innovative approach that characterizes Tesla was not limited by the introduction of self-driving cars. Tesla also preferred to opt for the development of electric vehicle technology, a type of technology that not many competitors used at the time (Thomas & Maine, 2019). Tesla’s CEOs did not consider customer demand or customer needs largely, which did not prevent them, however, from winning over a significant segment of the market.
Tesla has differentiated its products from those of its competitors in several other ways as well. In addition to cutting-edge features, it also places emphasis on improving the performance of Tesla cars. As a result, they are recognized for their remarkable acceleration and driving capabilities. They also focus on battery innovation and the development of a supercharger network, making it possible for the owners of electric Tesla vehicles to charge them quickly (Hussein & Massoud, 2019). Another aspect of the product that Tesla prioritizes is its design. The design of Tesla vehicles is distinctive and aesthetically pleasing; many customers distinguish Tesla from other electric vehicles due to their appearance.
Tesla’s product-oriented approach contributed to its high profitability, allowing it to pay premium vehicle prices. The CEOs strived to create a product that would stand out on the market and that the customers would desire for its innovative features, which they have managed to achieve. The company has gathered an enthusiastic customer base that sees the value in the product, its technologies, quality, and performance.
Selling Orientation
Selling orientation as a business approach implies that the company focuses on persuading the customer to purchase their product. This approach is often viewed as rather aggressive, as it implies overly active promotional efforts while not placing much emphasis on the quality of the product or the efficiency of its production (Herjanto & Franklin, 2019). Specific sales and marketing tactics are applied in this model, as the manufacturers believe that achieving the desired sales performance can only be possible by pushing the customer into buying the product (Bozkurt, 2019). The goals are often short-term and consist of achieving immediate selling results instead of building long-term customer relationships.
Impact on Profitability
Prioritizing short-term selling goals can often boost revenue and create short-term spikes in sales. However, this approach may not seem as effective in the long term, and revenue can decrease significantly over time. Regarding the positive impact, this approach also implies high sales volume. The focus is often on selling large quantities of the product, increasing revenue (Herjanto & Franklin, 2019). Overall, the main goal of this approach is to sell as much as possible to raise the profitability to the highest level possible in the short term.
Impact on Customer Satisfaction
Customer satisfaction can be heavily influenced by the selling techniques applied by the company. The tactics often include pressuring customers to convince them to buy the product, which they often feel they might not need. In some customers, such an aggressive approach can create aversion, a lack of willingness to purchase the product again, and decreased satisfaction.
The impact can be particularly damaging if the quality of the sold product is low while the salespeople are trained to manipulate the customer into thinking the opposite. As a result, the product or service often does not meet customer expectations, lowering customer satisfaction (Jobber et al., 2019). Companies that use this business approach often do not have strong customer loyalty and repeat business due to aggressive selling tactics and issues with their reputation.
Amway’s Selling Orientation
Selling orientation is typical for multi-level marketing (MLM) companies such as Amway, which sells health, beauty, and home care products. Amway, like other MLM businesses, relies on a network of independent distributors called Amway Business Owners (ABOs). ABOs sell Amway products directly to the consumers, and they are also incentivized to seek recruits who will sell more products as well. They are also taught to use persuasive techniques to sell the product to acquaintances, friends, and family. The model is built around expanding the sellers’ network and selling as much as possible. Discounts and promotions are frequently used to encourage distributors to meet sales targets.
The profitability of Amway depends directly on its ability to sell products and recruit new members. Customers’ satisfaction can vary, as Amway’s marketing model causes aversion for many customers. However, many are satisfied with the quality of the products. Nevertheless, the quality can be compared to that of the products from retail stores with higher prices than average, which has consistently caused customer dissatisfaction.
Conclusion
Production, product, and selling orientation all help companies achieve specific goals. Production orientation aims to increase efficiency, while product orientation allows for a leading position in the market and distinguishes the product from the competitors. The goal of selling orientation is to maximize sales and profitability in the short term. Companies such as Ford, Tesla, or Amway choose a business orientation depending on their targets and how they want to position themselves in the market.
References
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