2. Ask 10 questions to the text.

1. Read text 3. Text 3. A Marketing Orientation

During the early days of industrialization manufacturing output could not keep pace with demand and industries therefore operated in a seller's market. This resulted in a production orientation, where firms concentrated on producing what they had the resources to make, believing that by improving production efficiency they could lower prices and thus increase sales.

In some cases, this concern with efficient mass production was carried to extremes, like when Ford USA calculated in the 1950s that it had accumulated in its warehouses a supply of spare parts for older models which was enough to last for 1000 years!

From the consumer's point of view, a production orientation meant very little choice and producers could therefore expect to sell whatever they made. The general disregard for consumer preferences was typified by the famous comment made by Henry Ford, 'They can have any colour they like: as long as it's black' - an off-hand attitude which reflected the lack of competition at that time. Ford had a 50 per cent share of the American car market in the 1920s.

Today, new and innovative products can expect to enjoy a seller's market for a limited period after they are first launched - at least until competitors are able to enter the market and increase supply. However, the pace of technological change today is such that even highly innovative products are quickly super­seded by more advanced models.

Clearly, then, a production orientation was no longer appropriate. Once productivity improved to the point where supply outstripped demand, indus­tries began to operate in a buyer's market. Since the Second World War, firms have adopted a marketing orientation, in order to survive fiercely competitive trading conditions. Consumers can now choose what they want to buy from the immense variety of products and services on offer. Producers cannot, therefore, count on selling whatever they make and have to concentrate instead on making what the market wants.

Writing in 1776, Adam Smith argued in “The Wealth of Nations” that, 'If a man maketh a better mousetrap, then even though he liveth in a wood, the world will beat a path to his door.' Obviously, Adam Smith could not have envisaged then the intense competition that was eventually to turn the rules of the game upside-down. Certainly today, firms can no longer presume, as in the early days of industrialization, that people will buy whatever they happen to make - even if they do have a vastly superior product.

As Robert Heller points out in his book, “The Supermarketers”, 'It's quite misguided to pursue the technology-push policy - a delusion with much industrial blood on its hands. The myth goes that if you make a better mousetrap the world will beat a path to your door. It is venerable to the point of decrepitude and has been disproved again and again, never more comprehen­sively than by the total defeat of competitors who had genuinely stolen technological marches on IBM in mainframe computers... Despite all such evidence, many allegedly marketing orientated companies still operate on the mousetrap principle: improve the product, they think, and technology push will create the sales.'

In practice, commercial success hinges on much more than having a good product. It means finding out what consumers need or want and then deciding whether the product can actually be sold at a profit. This involves:

• conducting market research;

• identifying the groups of consumers who are to be targeted;

• assessing consumer reaction to the product specification and packaging;

• working out a suitable price in line with production costs and what the market will bear;

• designing advertising and promotional tactics appropriate to the target group;

• organizing the retailers, wholesalers and methods of physical transport that are to be used to distribute the product.

In short, commercial success depends essentially on good marketing. It follows from this that firms who do not accord marketing a central role in their opera­tions have effectively made a decision not to be in business in ten or fifteen years. But what of those who have made marketing a priority? The research carried out by Peters and Waterman in America (and confirmed by other writers) revealed that the key factor distinguishing 'excellent' companies from those with a more ordinary performance was the way they treated their customers. As Peters and Waterman emphasize, 'the excellent companies realty are close to their customers. Other companies talk about it: the excellent com­panies do it.'