Every company follows a business philosophy that allows it to achieve its objectives, generally set with a perspective of profitability and growth. Becoming an industry leader is often an expression that combines this dual approach to development.
The question is how to achieve it. Or put another way, knowing the way of thinking that allows the company to be profitable and grow to become an industry leader.
Producing efficiently, distributing intensively, selling aggressively, developing an advantageous financial engineering scheme, following procedures that guarantee the quality of the processes or providing excellent customer service are examples of statements that demonstrate business orientation.
These statements differ from each other because of the emphasis they place on one of the different functions of the company and their relevance has changed through the evolution of the world economy: orientation towards production in the 50's, towards distribution in the 60's, towards sales in the first half of the 70's and to the market since the second half of that decade.
This evolution corresponds to the post-war situation that required a change in the use of installed capacity to produce the necessary consumer goods for the internal population and no longer for the military front. Producing was the key to success while demand remained greater than supply, but it was necessary to change as supply began to exceed it, competition became more intense and consumers more demanding, to the extent that by the end of the century XX companies changed their orientation, emphasizing aspects such as service and quality in order to be successful.
In the short term, it is relatively easy to identify these changes in orientation through the evolution of a company. It is enough to observe the small businesses that are started by the ability of their owner to produce something or provide a service and that, as it becomes efficient, requires improving its access to a competitive market in order to grow and be profitable.
The sequence of evolution of the last century does not have to follow the described order of production, distribution, sales, market. In fact, adopting any one of these different directions can work for a company, whether it is new or already in operation.
If any of them can make a profit for the company at any given time, the question is different: How long can it allow it to develop successfully?
Towards the end of the 60's Peter Drucker established that customers are the main reason for being of a company. Theodore Levitt defined the concept of marketing by stating that, to achieve its objectives, a company must focus its attention on identifying and satisfying customer needs. And Philp Kotler proposed that a market orientation of the company was the business philosophy that would deliver the best results in the long term.
Market orientation is about facilitating these exchanges through understanding purchasing behavior and serving customers profitably and better than competitors.
A company exists thanks to the relationship it establishes with its public: consumers who pay for goods and services; companies that are provided through other companies; citizens who cast their vote in favor of a political party or candidate; believers who profess their faith, etc.
In all cases, the relationship between the two is established in terms of an exchange through which the public (client) is willing to give some of their money, effort, attention or time to receive a benefit, satisfaction or solution from the company.
According to Kotler, the business relationship can be of different types, ranging from the impersonal to the personal, depending on whether they involve a greater or lesser number of clients, as well as a smaller or greater contribution margin.
That the relationship is minimal does not imply that the company is not market oriented. Nestlé, Unilever or Procter & Gamble are successful precisely because of their ability to understand needs and attend to them in a differentiated way, however, their profits come from the volume of sales, rather than the unit contribution margin and they take their products to millions of last consumers.
What this scheme shows us is that what is desirable for a company is to develop a relationship with its customers of a higher level than it has by nature. Thus, Coca Cola includes a telephone number on its soda cans for the customer to call if they need something, taking their relationship with the consumer from a minimal level to a reactive level.
With today's terminology, we could refer to the lower end relationships as those typical of 'b 2 c' businesses (business to consumer), while those at the upper end are typical of 'b 2 b' businesses (business to business).
The big difference is in the closeness of the relationship with customers, which leads to consider that more than a market approach, what helps to develop a higher-level relationship is an approach towards customers. Today this approach is called CRM and it has multiple meanings, of which my favorite is Customer Relationship Marketing.
The idea is not new. Since always, a person as a client feels better served when she is known by name and her provider is aware of her needs, tastes and preferences. This person, satisfied, not only returns to the provider, but, identified with him, recommends it to other people.
What is new is the possibility that a company serving a mass market has the real possibility of establishing a personalized relationship with its individual clients, thanks to information technology.
In principle, it is feasible when the transaction necessarily requires identifying the customer who carries it out (credit cards, banking operations, airlines, movie rentals), or at least it is reasonable to ask them to identify themselves (retail purchases in supermarkets, restaurants, Hotels).
And although it is practically impossible to individualize in the case of many consumer products, it is possible to obtain information on the profile of clients in specific market niches that allow the design of commercial programs that seek to establish a closer - almost personal - relationship with them.
A customer-oriented company is able to manage its information by customers, not just by sales volume; to know their share in the client's portfolio, in addition to their market share; to determine the value that each customer represents over time and to set goals regarding the number of customers you want to attract and retain.
