Episode Transcript
[00:00:00] Hello and welcome to the fifth episode of the Bullshit Fight where we talk about marketing, business and life. This is your reminder that this podcast is for critical thinkers, savvy entrepreneurs and curious minds of all walks of life. Here we worship no gods nor celebrities. We learn, we laugh, and we think independently. Today, well talk about something that is rarely discussed and this is companies orientation type and how this influences the role of marketing, sales and the overall company behavior. I know it sounds a tad complex and perhaps even boring, but if you have come across any other episodes of this podcast, you will know that here we work hard to debulgeify topics making them make sense. And this one is far more interesting than you would imagine. So I kindly invite you to stick around. Let's get into it.
[00:00:55] Im sure you have already heard about company mission, vision and values, those well crafted pr messages that many organizations use purely for throwing dust in the eyes of media and the public whilst focusing on profits. Once upon a time, the mission, vision and value statements aimed to give each company a direction and a goal to strive towards. The idea was that once employees were introduced to the mission, vision and values of the company that were carefully crafted by the leadership team, they will be able employees, that is, to make autonomous decisions that align with the organizations overall objectives only by using their common sense. In simpler terms, if a delivery companys value stated that every parcel must be delivered personally, this is what a delivery person would prioritize, even if that means that they will have to return to the same address multiple times until the addressee is finally there to open the door for them.
[00:01:56] You dont need me to tell you though that this isnt the case. Private hospitals whose mission states that they are focusing on advanced technology will happily buy robotic surgery equipment because it makes them look fancy. But they will not. Same hospital will not use anti adhesion products during surgeries because of the additional costs, even though anti adhesion translates into far better long term outcomes for the patient. But who cares about long term if short term profits are not good? Firms that organize corporate reads rarely have a read rate for their own stuff. Luxury restaurants are often called buying cheap products.
[00:02:36] See, the list is truly endless and very very sad. Yes, I am saying that people dont trust companies and its not even only cynics like me. According to a 2023 survey by Price, Waterhouse and Coopers, only 20% of 27% of consumers claim to trust the companies they buy from, even though ironically 84% of executives believe that they are trusted. And I am not even sure if this survey is correct because it is published on PwC page that suggests you book a consultation with them to help you increase trust. See the survey quite well. Serves the purpose of the landing page doesnt it? But I digress. The point im trying to make is that mission, vision and values are an exercise for copywriters these days and are very nice to have wall decoration for large offices, but they seem to serve no other purpose. And dont come at me saying that its not all companies. Of course not. Of course there are exceptions, but there are just enough of those exceptions to confirm the rule. Since neither one of us is likely to bet their life on a company being true to its mission, we need a way to qualify organizations so we can understand what they truly value and how will they act in different scenarios. This is what company type is best used for. In this episode we will highlight five company what differentiates them, what they prioritize, and what is the role of marketing in these structures.
[00:04:12] Please note that this is not an exhaustive list, but these five are the most common company types. If you're an entrepreneur, this will help you identify where you stand and probably empower you to stop lying to yourself and claim your real goals. See, being honest with yourself and the world is far more empowering than you may think. If you're an employee, this will help you understand what your employers truly value after we scrape off the niceties.
[00:04:43] And if you're a marketer, this will help you understand what your day to day work life will be. Focusing on how important your position is going to be for the organization and what your progress is going to be measured on the five company types we'll be reviewing today. Product orientation companies production orientation companies and yes, those two are different. Market orientation, selling or sales orientation, and societal marketing concept.
[00:05:11] Here is where it gets confusing though.
[00:05:14] Any company can be a combination of two, three, four, or even all five types, particularly large corporations with multiple departments. I have seen instances in which one area of the business has market orientation and another one has product orientation. In any case, though, every company has most qualities of one of the types and a couple or more qualities of another type, so trust that leadership will make decisions based on the prevalent company type, particularly when the organization is under pressure. So let's review each one. We'll start with production orientation. In a production orientation type of organization such as McDonald's, for example, the focus is on maximizing production and minimizing production costs to make a profit. The general belief is that if you create a satisfactory product and offer it at affordable price, clients will come to you even if the product doesnt meet 100% of their requirements. For these organizations it is not about the product being the best, neither about meeting every demand and want of the customer. The main goal is consistent increase of production quantity and maintenance of price point as well as continuous optimization of the production process.
[00:06:36] Many companies are production orientated the invention of the assembly line by Henry Ford in 1913 was the starting point of a rapid increase in this type of orientation across the world and we see these firms today amongst the top notable names in many industries. Insurance firms, car manufacturers, fast fashion and many other companies are production orientated oriented depending on where in the world you live. The role of marketing in a production orientation company is to successfully segment the market, define its target audience and position itself optimally as well as to ensure the customer service process is as flawless as can be with minimal investment.
[00:07:24] As production orientation companies rely on the volume of manufacturing and volume of sales. The marketing department will focus more on optimizing internal processes instead of on innovation. As a matter of fact, the biggest focus in production orientation is to enhance processes and work at scale. It's all about productivity and pushing as much as possible out there.
[00:07:48] Production oriented companies are the first ones to eliminate working places when possible.
[00:07:55] Automation and robotization are welcome since the key goal of these organizations is to increase profits. If you think about production oriented companies such as McDonald's, you will realize that you will rarely hear someone being a sworn fan of either McDonald's or Burger King. Somebody taking a pride in driving a Ford or flaunting an outfit from Primark with a sense of superiority. The overwhelming sense when talking about a production orientation company is that the product does the job.
[00:08:27] Would the customer choose differently if circumstances allowed for it? Perhaps yes. But production companies know that they will always have their place in the market so long that they maintain the quality to price ratio that they are known for. This takes us to the most important aspects of marketing of within a production orientation company. Maintaining the status quo when in 1995, McDonald's debuted their attempt for a grown ups burger crafted by a world renowned chef. A chef really, though they faced the reality of every other company with their orientation, people did not believe that the new product was any different to their main offering, so no one wanted it. Having spent a significant amount on creating and marketing the burger, McDonalds were forced to completely remove it off the menu in year 2000, only four short years after it was launched in the US.
[00:09:26] And while some marketers may believe that working in a production oriented company can be a rather boring task, it is perhaps one for the most innovative amongst us, where only bold decisions can help a company expand. Were not talking about day to day marketing here, were talking about expansion. In 2017 we saw McDonalds new attempt to offer a more refined burger in the UK with their signature collection.
[00:09:51] Today the burger is offered in 150 restaurants across the country out of a total number of 1300, which may signify that history is repeating itself and this will be yet another failed menu item. Or will it? As it turns out, the fast food giant may have found a recipe to win, as it were, to surprise and delight us, and probably even win by clients whom they have lost after the clients outgrew their main offering. The innovation we are seeing slowly spreading around the world now is a chain of Instagram worthy McDonalds restaurants where you can enjoy their signature collection in an atmosphere that might just sell you on the taste. Whether this will work out, only time will tell, but it surely is an innovative way to diversify.
[00:10:45] Another approach to diversification taken by a production orientation company we are all familiar with is the launch of the Lexus in 1989 by Toyota. Instead of launching a luxurious model of the brand that they are already known with, Toyota invested in an invested an incredible amount of time and resource into launching their Lexus, keeping it completely separate from the main offering. But deciding to do the investment that such a step requires is not for the weak at heart. It is unclear what was the exact sum spent for the creation of the Lexus, but it is known that Toyota built an entirely new separate manufacturing plant. It shipped 1000 cars to the US for the initial launch and ensured that they are sold by dealerships that do not offer its main brand with a premium customer service approach. So the places where you could buy a Lexus did not sell Toyota. The places where you could buy a Toyota did not sell a Lexus and that was a key ingredient in the launch.
[00:11:50] As you can see from these examples, working in the marketing of production brands can place you in the position of making a difference on a large scale where all of your resourcefulness will be needed. But lets get back to the day to day. The majority of the work in a production orientation company involves either following sops or standard operating procedures, or on optimizing those. If youre in the marketing department of a production oriented company you are likely going to split your time between creating demand for the product and optimizing the sales process, mostly focusing on creating digital sales or working with resellers where you can sell at scale.
[00:12:34] Expect to spend a lot of time looking at data and tweaking small things in the hope that you will achieve incremental success. And one last thing, as a general rule, although there are exceptions, production oriented companies are very strictly hierarchical and moving up and down the ladder is typically difficult. More difficult up obviously than down. But thats another story and to everyones ultimate annoyance. When a production oriented company decides to innovate, they tend to look externally for talent, completely ignoring internal resources. There is a reason for that, but well not dive into this.
[00:13:14] Well move on instead to a product orientation organization. This is perhaps most marketers dream type of company, particularly when they care about the product.
[00:13:25] An organization is product oriented when it focuses on creating the best possible product without necessarily being concerned about the needs and wants of customers, assuming that the perfect product in the right price category will bring in the customers.
[00:13:43] In product oriented companies, most effort is dedicated to research and development of the products for the purpose of polishing it to perfection. The products are typically innovative, specialized or high end. A wonderful example of a product oriented organization is Apple. They focus heavily on product development, ensuring that they are best in class. Another example is Netflix, a company focused on developing its product and continuously improving it. When you think about both these companies, you will notice that they have a common characteristics.
[00:14:20] Theyre focused on innovation. Some will argue that both Apple and Netflix are market orientation companies because both do indeed carry out plenty of market research and tend to serve their customers really, really well. There is, however, an easier way to identify a product orientation company. You will traditionally see that the company changes entire industries with its product development for the mere purpose of creating a product that matches its vision, just because they can kind of apple music transformed the music industry, moving buyers from purchasing albums to purchasing individual tracks. Netflix completely revolutionized the concept of watching and even making television, giving Hollywood a run for their money in a production. In a product oriented company, marketing will have three main functions.
[00:15:12] First is to participate in innovation. The second one is to create a cult like following, and the third one is to guarantee a flawless customer journey. Now let's quickly review each of these functions. Participation in innovation one of the most common approaches for product oriented organizations is to create an end to end product where the customer won't need anything purchased from an external company. This means that marketing will be tasked with sensing the pulse of society and potential shifts and creating innovation, which will lead the change instead of responding to it. Therefore, the marketing department will work hand in hand with the research and development team, utilizing a scientific approach and knowledge from disciplines such as psychology, sociology, anthropology, along with technological landscape in the industry that it finds itself in godlike following is the promotional activities in a product oriented organizations which are similar to the approach of celebrities and influencers, and the building of the brand is done mostly by ensuring that the achievements of it are newsworthy. One of the most remarkable facts about the promotion of Apple, for example, is that it doesn't really have to two active presence on social media channels if you look at Apple on Facebook, Instagram and Twitter, you will see that there aren't regular publications. Most advertising comes from partners of the brand. Apple marketing revolves around the several events which the company runs every year, as well as in store events which show their clients how much is achievable through their products and finally, the flawless customer journey. The third aspect of the marketing in a product oriented company is designing a customer journey that simply works. This can sometimes mean that the company will sacrifice the number of people it will reach. Netflix, for instance, will only launch within a country when it can ensure that its offering is of a certain standard, although theoretically it should be possible for them to make their service available worldwide.
[00:17:29] Apple selects their partners exceptionally carefully and has very strict requirements under which a company can become an authorized reseller. All in all, what is important to remember about a product oriented organization is that it often revolves around perfectionism and making a difference in the industry in which it exists.
[00:17:49] As a marketer, one should know that working in a product oriented company tends to bleed into your life and the borders get blurrier and blurrier with time until they completely disappear.
[00:18:03] All employees are surrounded by a lot of secrecy and strong rules about what can and cannot be said and every single word in a piece of text, every ad, every image will be carefully reviewed to ensure it doesn't reveal more than it should.
[00:18:21] Product oriented companies are one of the few in which the customer is almost never right. The main opinions and suggestions that companies always receive will for the most part be completely ignored, and you should be comfortable with that. Being a marketer in a product oriented company means that you will worship the product and ignore anyone who doesn't get it. It also means that you will work a lot with the concept of the product lifecycle in that you need to become very familiar with it. So stick around because we'll cover this later on.
[00:18:57] Marketing is an important function in a product oriented company and although there are some notable downsides, working in this environment will give you the opportunity to create some truly great things that will shape a beautiful portfolio. Most importantly, the companys name is undoubtedly going to be known in the industry and you will be able to claim some of that glory as your own.
[00:19:24] Heres what to expect.
[00:19:27] As for being employed in a product oriented company, overall, this will translate almost to joining a cult of sorts. The leadership of these organizations typically trains their staff from scratch, so you will be welcome even if your knowledge is not superior. But your attitude must be spot on, willing and ready to bow to the author of your product.
[00:19:51] Now lets move on to market orientation.
[00:19:54] Here are the symptoms of one such organization. As the name suggests, a market orientation company holds the function of marketing at its core, focused greatly on the customer. This type of organization aims to deliver the product that the customers want with all the features that they consider perfect. To launch a product, a market orientation company will first ensure that there is a market demand for it, a confirmation which often comes following market research, surveys and focus groups. Although innovation is not uncommon in marketing organizations, this innovation is very often minimal and comes from customer demand, as opposed to organizations inner drive to transform the industry.
[00:20:41] Because market orientation companies aim to provide what pleases their customers, many will argue that Apple is one such firm. And although the company is known to delight its sworn fans, it is also known to create innovation, which is often perceived as too bold and sometimes even downright inconvenient. To make a better illustration of a market oriented company, lets look at Amazon. Amazon is a prime example of market orientation and yeah, the pun is intended. The company continues to upgrade its offering following customer requirements and polishing its service. In 2016, Amazon announced that it will focus heavily on developing its prime video content, together with developing its warehouse structure to allow more suppliers to join prime, ultimately enhancing its final customer product.
[00:21:32] In a market orientation company, the marketing function is involved with every aspect of the business and is usually the source of most changes and adaptations.
[00:21:43] Here is where the main difference with a product oriented company lies. In a product orientation innovation will be implemented if it makes the product better, even if it will cause a slight inconvenience to customers and require an adjustment period. For example, here is Apple's removal of USB a ports from its computers with the plan of making all peripheral devices connected via Bluetooth in the future. In a market orientation company, no such implementation will be made unless an easy transition can be offered to customers immediately. An example of such action would be Amazon discounting its prime now app, but moving the service to its main platform beforehand to ensure that no customer is inconvenienced.
[00:22:32] Working in a market orientation marketing department means working with data and continuously ensuring that customers are least offering justified changes and adaptations to the product and service when needed. It also means conducting survey after survey, implementing automations, and continuously improving on the customer journey.
[00:22:57] Here's what to expect in a market orientation company for most other employees, market orientation company means that the customer will be right nearly 100% of the times and those who get it will thrive in the organization. The negative side of a market orientation firm is that you work in customer service, for example, and stumble upon a few currents. You might lose your promotion opportunity even if you have zero fault.
[00:23:25] On the positive side, market orientation companies tend to grow fast and be stable for as long as they stick to their orientation. The biggest and most common downfalls of market orientation companies is when they shift from market to sales orientation. The trust of the customer is then very quickly lost and usually the only path from there is downhill.
[00:23:50] So let's talk about sales orientation now. Here are the symptoms. The sales orientation approach is one that has been adopted by almost every company in the world at some point, and its existence and the majority of modern day organizations can seem to let it go.
[00:24:10] The essence of this approach is focusing the entire company's effort into sales, employing many salespeople and attempting to sell as large a number of products or services as possible. When an organization employs the sales orientation approach, the focus is turned to the number or the value of sales transactions. In some instances, the customer experience is also taken into account, but the efforts are focused on covering clients minimal expectations instead of delighting customers as in the case of market orientation. For instance, a somewhat successful example of a sales orientation organization is eBay. Despite being somehow in a direct competition with Amazon, nowadays, eBay doesnt focus on delighting its customers. Instead it focuses on ensuring that customers can find the lower price possible and that it can onboard as many sellers as it can.
[00:25:10] Another example of a sales orientation company would be insurance brokers, real estate brokers, car dealerships and most retailers. What you will notice as a common trend in these organizations is is the various tricks that the companies will utilize to attract customers. This often translates to multiple sales promotions such as buy one get one free, a reward with a purchase, and many, many others do not, however, think that all sales orientation companies have salespeople. Some just have a setup, encouraging sales and customer representatives that aim to assist client in their buying process.
[00:25:52] But pushing sales is not a sustainable business model and sooner or later companies are forced to change or simply risk dying right under the scrutiny of the ever more demanding societies. In modern days, some sales oriented organizations are beginning to employ principles of other orientation and slowly transitioning to different models.
[00:26:17] The role of marketing in a sales orientation company. Depending on the type of product and service an organization is offering. In a sales orientation model, marketing is involved with supporting the sales at all costs. There is little interest in building a brand or any other work which cannot be measured with sales growth of any type. In a business to business environment, marketing's main goal will be lead generation and supporting the sales team with materials that can be used during meetings and sales presentations. In a business to consumer environment, marketing's main function is to design and run promotional campaigns, clearly demonstrating ever increasing return on marketing investment.
[00:27:05] The fastest way to find out if a company is sales oriented is by the language it uses. Most, if not all of the sales of these companies employ all adjectives, putting them to work in every possible way. Sales oriented companies, more than anyone else, use emotional manipulation in their message and are the first ones caught to use their achievements as an organization to impress their customers.
[00:27:33] Saying things like we have stores in 50 locations in the country is a sales oriented companies approach what to expect since sales orientation type is the most common organizational orientation. Unfortunately, there are hardly two organizations that are identical. Nevertheless, all sales oriented companies prioritize their sales team who are usually the highest earners, often by a lot in comparison to anyone else in the organization.
[00:28:06] The biggest hurdle for this type of organizations is that they rarely, and quite frankly almost never, focus on quality product or service and rarely do any conscious work to improve their offering unless it becomes absolutely crucial.
[00:28:22] Employees in these organizations, on the other hand, often suffer the backlash of customer dissatisfaction, which is common, and try to push for improving the product or service. The result is often quite funny. Leadership resists doing anything about the product because theyre focused on sales and employees to resist selling the product because they have long stopped believing in it. The truth is that managing a sales oriented company is perhaps one of the hardest, most stress inducing experiences for anyone in leadership. For employees, it is an exhausting experience of trying to constantly battle their values to maintain the job for as long as it is needed in their lives.
[00:29:08] Although sales orientation is so common that almost every organization experiences it at some point of its development, it remains the least sustainable way to run a company, the most mentally exhausting environment for employees and from the customers perspective, the least pleasant company to do business with.
[00:29:28] Please do not mix sales orientation with an organization's need to sell products or services. All organizations sell. Not all organizations are focused on sales above everything else, and it is important to consider the difference. Another key thing to remember is that sales oriented companies focus on selling what already exists.
[00:29:51] They're not a production company that manufactures something and aims to sell it. Often they are a reseller or a service company with pre designed services that don't get upgraded for years simply because the focus is on selling them.
[00:30:10] And finally, let's talk about the latest concept which is societal orientation.
[00:30:16] Here are the symptoms. This is a fairly new company type and is an organization which aims to align the goals of society, the goals of customers and the goals of companies. Simultaneously. Disorientation is a result of the attention shift towards clean organic product and environmental sustainability.
[00:30:39] The focus of societal orientation companies to delight its customers with the best quality product produced in the most environmentally friendly way possible.
[00:30:50] Whilst in most other orientation types the question is can this product be sold and how? Societal orientation companies often ask should this product be sold?
[00:31:03] Whilst the general criticism of this concept is that it is not a sustainable business strategy as it fails to deliver the usual high profits for investors, many such firms are already successful. One example that is most commonly used to describe societal orientation actually is the body shop. Despite recent criticism, the company's famous approach to creating all of its products from vegetable oils and its advocation against testing on animals are still what creates customer loyalty today.
[00:31:36] Many other companies use societal marketing orientation in part or fully. Tesco's efforts in the UK to ensure most produce is locally sourced is one of those examples. Natwest bank many efforts to support startups are another demonstration of the societal marketing concept. As you will see, very often societal marketing concept is employed within organizations but not necessarily the full type of the organization.
[00:32:09] So what to expect now? Be cautious when describing a company as societal orientation for it to be so. For a company to be societally oriented, the firm should have in its very core of business operations the aim to enhance the society in which it exists. This is not to be confused with CSR or corporate social responsibility which is part of the modern companys activities, but is often a side task instead of a core value.
[00:32:39] True societal orientation companies are rare and often don't maintain their orientation for too long.
[00:32:47] So let's summarize. We have just reviewed five of the most common company type orientations and what orientation truly means for the way that the business runs, the priorities of that business and the risk and how everybody feels inside and outside of the business. So let's recap very quickly.
[00:33:08] The production orientation company has the symptoms of focused on manufacturing, creating and in a never ending search to increase volume and profits. The role of marketing in a production orientation is to optimize processes, work with partners, resellers, etcetera.
[00:33:26] What to expect from a production orientation company is a constant creation and refreshment of processes and procedures. Focus on innovation for the sake of cutting costs, but not for any other reason.
[00:33:41] Employees are often just a pawn in the large scheme of things and this company tends to worship the engineering mindset.
[00:33:51] A product orientation company's main symptom is that it's focused on developing a cutting edge product. Most often approaches things that do not exist at all. It usually changes industries and often everyday life.
[00:34:09] The role of marketing in a product orientation company is to create awareness and a cult like following in what you can expect from a product orientation company, well, you can expect plenty of secrecy, lots of trials and errors, lots of research, worshipping of different thinking.
[00:34:30] It leaks into everyone's life until it becomes their life and the customer is never right because it's well, the customer was never introduced to the final vision in the first place.
[00:34:43] The symptoms of a market orientation company are that it satisfies obvious market needs, it aims to make life easy for its customers and it focuses on core constant improvement.
[00:34:56] The role of marketing in a market orientation company will be to work with NP's or net promoter score until it starts coming out of your nose. Focus on data, serve customers best at all times and what to expect from a market orientation company. The end customer is always right, the focus is on them even when it harms the company and potentially maybe harms the company's partners.
[00:35:22] Very data driven and everything must be supported by statistics. Huge success usually and often has a lot of growth, but there is always plenty of competition in a market orientation company.
[00:35:37] Sales orientation symptoms are focusing on selling what already exists. It's all about profits, profits, profits. The role of marketing is to support the actual star of the business aka the salespeople. And from a sales orientation company you can expect absolute constant focus on return on investment. Commonly rapid growth with no sustainable elements. Fast moving, zero values outside of profit and growth. Difficult, often toxic environment, but the opportunity to earn a lot if you join the sales team and for societal orientation the symptoms is focused on making the world a better place through a service or a product that is more sustainable than alternatives. The role of marketing is to convince people that it's worth paying more or for something that has a higher purpose and what you can expect. Well, you can expect values to be at the core of the company, but internal stability doesn't quite seem given. Often leadership struggles to maintain their values when facing financial struggles.
[00:36:49] I hope you found this interesting and that I managed to debulgeify one more topic for you my name is Nina Alexander. And it was a pleasure. Remember, the world is full of mysteries and so is your potential. Keep exploring, stay curious. And as always, thank you for the boy. The Bolshevik. One more topic with me. Talk soon.
