Evaluation of the relationship between electronic-marketing and market-driven

companies

Ezatollah Asgharizadeh Assistant Professor, Faculty of Management

University of Tehran Tehran, Iran

asghari@ut.ac.ir

Amir Ekhlassi Ph.D. Candidate, Faculty of Management

University of Tehran Iran

amirekhlassi@yahoo.com

Pedram Toloei MBA student, Faculty of Management

University of Tehran Iran

pedramt@gmail.com

Abstract—The aim of this paper is to show the relationship between e-marketing and Market Driven Companies. Market driven companies have previously been referred to as “Market-Oriented Companies” in the literature. It is no doubt that the marketing concept is a starting point of market orientation. In this paper we focus on the relationship between e-marketing and market orientation and introduce the concept of e-market orientation as a new approach in implementing the marketing concept with the aid of the electronic environment. For this purpose, we reviewed the literature on both e-marketing and market orientation, explained the relationship between each of these subjects and business performance and then evaluated the impact of e-marketing on market orientation. It was shown that e-marketing is a strong tool that can push a company into market orientation and improve its performance.

Keywords: electronic marketing; market orientation;e-market orientation; market- driven

I. INTRODUCTION There are many slogans about being market driven such

as “The customer is at the top of the organization chart” (Scandinavian Airline Systems). Market-driven firms focus on customers Instead of product or selling. Companies usually use "We want to market and sell what services we offer." Instead, they should adopt a more realistic position, such as "We want and need to market and sell what the customer requires." This approach is market-driven, focused and positioned. The final goal is to be more effective than competitors in creating, delivering and communicating. This paper proposes e-marketing as a tool with which a company is able to be Market-Driven. Previous research has linked market orientation to firm performance (Kohli & Jaworski, 1990; Shoham, Rose & Kropp, 2005). The connection between market orientation and electronic marketing has not been explored. This paper addresses the following question: Is there a connection between electronic marketing efforts and marketing orientation of the firm?

II. WHAT DOES IT MEAN TO BE MARKET- DRIVEN? To define a market-driven company, it is important to illustrate the principles of being market driven. Kohli and Jaworski [5] refer to market orientation as "the organization wide generation of market intelligence pertaining to current and future customer needs, dissemination of the intelligence across departments, and organization wide responsiveness to it." According to above definition it is clear that market orientation has three important elements: intelligence generation, dissemination, and responsiveness. Intelligence generation is the starting point of a market orientation. It is obvious that responding effectively to a market need requires the participation of virtually all departments in an organization. A formal intelligence dissemination procedure is obviously important, but it seems that informal communication is an extremely powerful tool for keeping employees tuned to customers and their needs. Responsiveness refers to the ability of the organization to react to generated and disseminated information. On the other hand, Narver and Slater[6] define market orientation as “the organizational culture that most effectively and efficiently creates the necessary behaviors for the creation of superior value for buyers and, thus, continuous superior performance for the business”. The theory of Narver and Slater[7] introduces a conceptual model of market orientation based on competitive advantage. This model presented Market orientation as a five-fold construct focused on customer-orientation, competitor orientation, interfunctional co-ordination, long-term focus and profitability. The findings of Kohli and Jaworski showed that a market orientation can be facilitated by the amount of emphasis top management places on market orientation and a certain level of risk taking on the part of senior managers and a

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willingness to accept occasional failures of new products is required. A business that increases its market orientation will improve its market performance. The findings of Kohli and Jaworski (1990) and Narver and Slater (1990) offered empirical support for this relationship. They also converge at this point that the market orientation of a business is an important determinant of its performance. Finally they found that market-driven firms are more profitable than their rivals. Components and decision area in these approaches are shown in Table 1.

Table1: Components and decision area

Components and decision criteria

Explanation

Customer orientation

A market-orientated company has a sufficient understanding of the target buyers to create superior value or an ‘‘augmented product’’ continuously (Narver and Slater, 1990, p. 21)

Competitor orientation

A market-orientated company understands strengths, weakness, capabilities and strategies of current and potential competitors (Narver and Slater, 1990, pp. 21-2).

Inter-functional co-ordination

A market-orientated company makes ‘‘coordinated utilization of company resources in creating superior value for target customers’’ (Narver and Slater, 1990, p. 22)

Long-term focus A market-orientated company takes a long-term focus of profits

Profitability A market-orientated company focuses on maximizing the economic wealth

In a third view, George S. Day's fine statement about market driven company includes [11]: “Make the customer the final arbiter” “Understand our market” “Commit to leadership in the markets we choose to serve” “Deliver excellence in execution across our enterprise.” To outperform the rival of the company, there are foundation elements that set market driven company in his view:

• values, beliefs and behaviors, • superior market sensing and customer-linking

capabilities, • strategic thinking processes • organization structures, systems and incentives.

Figure 1. The elements of market orientation (George S.Day view)

In sum, it seems that both Narver and Slater and Kohli and Jaworski's definition and construction of market orientation concentrate on the activities of market information acquisition, dissemination and proper responses to create a superior value for customers, but each of them look at the issue at different approaches. They were unable to trace exactly how a market orientation enhances profitability. George S. Day's Market-Driven approach addresses the integrated actions by which a firm comes to understand and align itself to its markets to profitably prevail over competitors.

III. INTRODUCTION TO E-MARKETING Electronic marketing is the transfer of goods or services from sellers to buyers that involves one or more electronic methods or media. [3] E-marketing includes the management of the consumer’s online experience of the product, from first encounter through purchase to delivery and beyond. [2] E-marketing also can be defined as the use of electronic channels of communication to spread your marketing messages. New media including the web, mobile phones, and interactive TV can all be harnessed as part of the marketing mix. [2]

Electronic marketing is defined as the process of building and maintaining customer relationship through online activities to facilitate the exchange of ideas, products, and services that satisfy the goals of both buyers and sellers. Although electronic-marketing does not yet have the potential to replace traditional marketing efforts, the following advantages have made it a worthwhile tool in the marketer’s box.

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IV. MAIN ADVANTAGES OF E-MARKETING

• Increasing the efficiency of traditional

marketing functions

Electronic marketing can efficiently assume a multi-channel role by serving as a tool to conduct and execute business functions such as marketing, sales, and distribution. This leads to an increase in the efficiency of traditional marketing functions.

• Creating competitive advantage

Because it is interactive, electronic marketing can assist all phases of the “trade cycle”- pre-sale, execution, settlement and after-sale. Some companies have created competitive advantage solely by their implementation of electronic marketing (for example Dell, Amazon, etc.)

• Increasing effectiveness and efficiency in communicating with customers

Electronic environment is an excellent channel for communicating with customers with immediate and direct interaction capability.

• Entering new markets

Electronic marketing has the potential to give the opportunity to enter new markets which have previously been inaccessible.

• Self design products

In the electronic marketing environment, customers can be involved in the creation of virtually any product or services they want.

• Direct sale to customer

Electronic customers deal directly with sellers. Therefore, the necessity of wholesalers and retailers has faded for them.

• Improving the effectiveness and efficiency of

promotion

The established tools of promotion such as advertising, sales promotion and direct marketing have been augmented by the development of the information technology which is the base of electronic marketing.

• Solicitation of customer’s response

Electronic marketing environment has the advantage of gaining a response in real time and enabling providers to interact with potential and actual customers.

Philip Kotler [1] says Companies can conduct e-marketing in any of the four ways shown in figure (1).

Creating a web site: for most companies, the first step in conducting e-marketing is to create a web site. Placing ads and promotion online: e-marketers can use online advertising to build their internet brands or to attract visitors to their web sites. Creating or participating in web communities: the popularity of forums and newsgroups has resulted in a rash of commercially sponsored web sites called web communities. Using e-mail and webcasting: to compete effectively in this ever more cluttered e-mail environment, marketers are designing “enriched” e-mail messages- animated, interactive, and personalized messages full of streaming audio and video.

Figure 2. Four possible ways of conducting electronic marketing

V. THE RELATIONSHIP BETWEEN E-MARKETING AND MARKET ORIENTATION

As we mentioned before, a business that increases its market orientation efforts will improve its market performance. It is obvious that every factor that facilitates and reinforces market orientation in a company can increase its performance. As we said earlier the main aim of this paper is to assess the impact of e-marketing as a marketing mix on a company with market orientation approach. In other words the aim of this paper is to illustrate whether e-marketing can reinforce business performance of a company through increasing its market orientation. In figure 2 we show this relationship.

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Figure 3. The relationship between electronic marketing, market

orientation and business performance

For answering these questions we need to (1) review our accepted definition of market orientation, (2) the benefits of e-marketing and finally (3) establish linkage between our definition of market orientation and benefits of e-marketing. As we said market orientation is "the organization wide generation of market intelligence pertaining to current and future customer needs dissemination of the intelligence across departments, and organization wide responsiveness to it." According to above definition market orientation has three important elements: intelligence generation, dissemination, and proper responsiveness to customers so that company is able to create a superior value for them and gain sustainable competitive advantages over the competitors. Also we expressed the benefits of e-marketing including Increasing the efficiency of traditional marketing functions, increasing effectiveness and efficiency in communicating with customers, Improving the process, Entering new markets, Self design products, Direst sale to customer, Strategic and operational benefits for business partners, Improving the effectiveness and efficiency of promotion, Solicitation of customer’s response. These benefits lead to increase company business performance and help to gain competitive advantages. But in addition to that each of these benefits have positive impact on market orientation elements. In table 2 we show the effect of each benefit on market orientation elements. As depicted in table 2 increasing the efficiency of traditional marketing functions, increasing effectiveness and efficiency in communicating with customers, Entering new markets, Self design products and Solicitation of customer’s response will cause the company to increase its capability to acquire more information from market so increase its market orientation. Also the benefits like increasing effectiveness and efficiency in communicating with customers, direct sale to customer, improving the effectiveness and efficiency of promotion will cause the company to increase its capability to better response to

customers so increase its market orientation. Regarding to dissemination element of market orientation, e-marketing Facilitate the market/business processes of a company so that the speed and accuracy of dissemination of information within company can increase and then increase its market orientation.

Table2: The impact of e-marketing on market orientation construction

market

information acquisition

dissemination proper responses to market

Increasing the efficiency of traditional

marketing functions

×

Increasing effectiveness in

communicating with customers

× ×

Product and service augmentation

×

Entering new markets

× ×

Self design products × Direst sale to

customer ×

Improving the effectiveness and

efficiency of promotion

×

Solicitation of customer’s response

×

Facilitating the market/business

processes

×

VI. CONCLUSION At this paper we reviewed the literature on both e-marketing and market orientation, explained the relationship between each of these subjects and business performance and then evaluated the impact of e-marketing on market orientation and showed that e-marketing as a strong tool can push a company into market orientation and improve its performance. Integrating e-marketing and market orientation concept opens a new way for firms to gain competitive advantages through deep attention to implementing marketing activities with using of new emerging tools like web site, online advertising, Creating or participating in web communities, Using e-mail and webcasting and as a consequence it shapes the business orientation of a company into e-market orientation.

REFERENCES

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Market Orientation

Business Performance

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The main aim of

this paper

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