The Role of Marketing in Creating Corporate Identity Bruce Wrenn School of Business Andrews University

1. The Role of Marketing in Creating Corporate IdentityBruce WrennSchool of Business Andrews University

2. What do we Mean by “Corporate Identity”? Corporate Identity: A mutually shared communal statement about who you are. It does not have to be relegated to businesses, or even formally organized organizations, whether for-profit or non-profit. Your identity tells the world about your values, your character, what you stand for, who you are at the most fundamental level.

3. The Question We’ll Seek to Answer: How does an organization’s marketing philosophy affect the ability of the organization to engage customers in mutually beneficial exchange relationships?

4. Organizational Orientations:Production The Production Orientation The Production orientation holds that consumers will prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs, and mass-distribution. They assume that consumers are primarily interested in product availability and low prices. This orientation make as sense in developing countries, where consumers are more interested in obtaining the product than in its features. Some service organizations also operate on the production orientation. Many medical and dental practices are organized on assembly-line principles, as are some government agencies. Although this management orientation can handle many cases per hour, it is open to charges of impersonal and poor-quality service.

5. Organizational Orientations:Product The Product Orientation Other businesses are guided by the product orientation, which holds that consumers will favor those products that offer the most quality, performance, or innovative features. Managers in these organizations focus on making superior products and improving them over time. However, these managers are sometimes caught up in a love affair with their products. Product-oriented companies often trust that their engineers can design exceptional products. They get little or no customer input, and very often they will not even examine competitors’ products. The product orientation can lead to “marketing myopia” These organizations are looking into a mirror when they should be looking out of the window.

6. Organizational Orientations:Selling The Selling Orientation The selling orientation holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization’s products. The organization must, therefore, undertake an aggressive selling and promotion effort. This orientation assumes that consumers typically show buying inertia or resistance and must be coaxed into buying. It also assumes that the company has a whole battery of effective selling and promotion tools to stimulate more buying. The selling orientation is practiced most aggressively with unsought goods, goods the buyers normally do not think of buying, such as insurance, encyclopedias, and funeral plots. The selling orientation is also practiced in the nonprofit area by fund-raisers, college admissions offices, and political parties.

7. Organizational Orientations: Selling (cont) Most firms practice the selling orientation when they have overcapacity. Their aim is to sell what they make rather than make what the market wants… However, marketing based on hard selling carries high risks. It assumes that customers who are coaxed into buying a product will like it; and that if they do not, they will not bad-mouth it or complain to consumer organizations and will forget their disappointment and buy it again. These are indefensible assumptions. One study showed that dissatisfied customers may bad-mouth the product to 10 or more acquaintances; today bad news travels even faster and further with the Internet.

8. Organizational Orientations: Marketing The Marketing Orientation The marketing orientation holds that the key to achieving its organizational goals consists of the company being more effective than competitors in creating, delivering, and communicating superior customer value to its chosen target markets. The selling orientation takes an inside-out perspective. It starts with the factory, focuses on existing products, and calls for heavy selling and promoting to produce profitable sales. The marketing orientation takes an outside-in perspective. It starts with a well-defined market, focuses on customer needs, coordinates all the activities that will affect customers, and produces profits by satisfying customers.

9. Organizational Orientations: Societal Marketing The Societal Marketing Orientation Are companies that do an excellent job of satisfying consumer wants necessarily acting in the best long-run interests of consumers and society? The marketing orientation sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare. The societal marketing orientation holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s well-being. The societal marketing orientation calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often conflicting criteria of company profits, consumer want satisfaction, and public interest.

10. Key Question: Is organizational performance dependent on the extent to which the organization has adopted a thoroughgoing marketing orientation?

11. What Does It Mean to Be Marketing Oriented? What exactly does a marketing orientation consist of in a health care setting? Kotler and Clarke (1987, 32) specify five components of a health care marketing orientation: 1. Customer philosophy. Does management acknowledge the primacy of the marketplace and of customer needs and wants in shaping the organization’s plans and operations? 2. Adequate marketing information. Does management receive the kind and quality of information needed for conducting effective marketing? 3. Strategic orientation. Does management generate innovative strategies and plans for achieving its long-run objectives? 4. Operational efficiency. Are marketing activities selected and handled in a cost-effective manner? 5. Integrated marketing organization. Is the organization staffed to carry out marketing analysis, planning, implementation and control?

12. Research Methodology Empirical Setting—61 hospitals in 5 not-for-profit chains, 2 for-profit chain. Questionnaires completed by administrators at both the corporate level and at each hospital.

13. Phase One of Research: Differences in Perceptions of Administrators About Hospital Marketing Practice Results of the research indicated there is no significant agreement between CEOs/COOs and their CMOs (chief marketing officers) regarding the marketing behaviors being executed in their hospital.

14. Phase One of Research: Differences in Perceptions of Administrators About Hospital Marketing Practice Possible Explanations: 1.Possibly a consequence of marketing respondents being more optimistic in identifying behaviors being conducted by the hospital that fall toward the higher end of the marketing orientation scale.

15. Phase One of Research: Differences in Perceptions of Administrators About Hospital Marketing Practice 2. Line respondents were more conservative than were marketing respondents in identifying marketing behaviors that were performed in the hospital. Neither explanation is true. There is no consistent bias in ratings such that marketers are either more or less optimistic than CEOs/COOs about the marketing behaviors enacted in the organization.

16. Phase One of Research: Differences in Perceptions of Administrators About Hospital Marketing Practice On a hospital-by-hospital basis, CEOs/COOs and their marketing officers do not see the same marketing activities taking place, but there is no consistent bias such that marketers generally report behaviors that are more or less marketing oriented. What this does mean is that within individual hospitals, there is disagreement between marketers and administrators—in some cases the marketer sees the institution as more marketing-oriented than does the administrator and in other, sees the institution as less marketing-oriented. At this point one might wonder if both are wrongly identifying marketing behaviors or whether one type of respondent is more correct in perceptions than the other. “Wrong” or “correct” in this case refers to the ability to identify marketing behaviors related to hospital performance.

17. Phase One of Research: Differences in Perceptions of Administrators About Hospital Marketing Practice The correlation of .44 between marketing orientation and staffed bed occupancy rates means that we can explain 19 percent of the variance in occupancy rates—twice as much as did McKee, Varadarajan, and Vassar. Perhaps of greater significance is the finding that a roughly 10 percent improvement in marketing orientation is associated with a $25 million increase in total net patient revenues and an 8 percentage point improvement in occupancy rates. This confirms results from other research that studied the relationship between marketing orientation and performance in a hospital setting. This finding can be considered robust, having been shown to be consistent across time periods, for hospitals of different types (for-profit and not-for-profit), independents vs. chains, and using different means of measuring marketing orientations.

18. Phase Two of Research: Incorporating All Five Components of a Marketing Orientation Is Important The next research phase investigated the contribution of each of five components of marketing orientation to hospital performance. The intent was to discover if a hospital gets more “mileage” from adopting certain marketing oriented practices or must incorporate all five components to derive the full benefits of being marketing oriented.

19. Phase Two of Research: Incorporating All Five Components of a Marketing Orientation Is Important The study provides support for the contribution of the “gestalt” of marketing orientation—success is at least partly due to a successful implementation of the synergistic combination of all five elements. However, it is also true that at the relatively early stages of adoption of a marketing orientation, as is the case with hospitals, some aspects of a marketing orientation are contributing more to organizational success than others. More specifically, a philosophy of being “close to the customer,” which in the case of hospitals means patients, physicians, and businesses, accounts for disproportionate share of success.

20. Phase Two of Research: Incorporating All Five Components of a Marketing Orientation Is Important Hospital marketers, then, must find ways of infusing a marketing orientation throughout the hospital by defining and training people to understand what it means to adopt a customer orientation (customer philosophy); obtaining, analyzing, and interpreting information concerning what the hospital’s markets are saying about the services the hospital should effectively operate (adequate marketing information); assisting line officers in designing and implementing strategic plans that use such information and obtain competitive advantages for the hospital (strategic orientation); monitoring performance and suggesting corrective actions where needed (operational efficiency); and ensuring that such market-driven thinking is integrated throughout the organization (integrated marketing organization).

21. Phase Three of Research: Being “Good” Is Better than Being “Lucky” Phase three examined data to determine if having a marketing orientation (i.e., being “good”) made a significant incremental contribution to hospital performance beyond the success enjoyed from facing low competition from other major healthcare providers (i.e., being “lucky”), or by having a large promotional budget (i.e., “throwing money at the problem”).

22. Phase Three of Research: Being “Good” Is Better than Being “Lucky” Empirical data provide support for the hypothesis that it is better to invest in making the organization marketing oriented than to spend more (i.e., increase marketing effort) or hope for weak competition. This conclusion certainly is consistent with what marketers have been claiming all along as the benefits of having a marketing orientation – you can’t generate satisfied customers by merely turning up the volume of promotional “shouting” or by getting customers by default from lack of competition.

23. Phase Three of Research: Being “Good” Is Better than Being “Lucky” This research suggests that luck in the form of weak competition is no substitute for having a strong market orientation. Long-term success depends on having satisfied customers and satisfied customers don’t just “happen.” They are generated by all members of an organization working very hard to make sure what they do contributes to the organization’s value to the customer. If anything, lack of competition makes this dedication less likely.

24. Conclusion The issue facing healthcare providers would seem to no longer be whether a marketing orientation can contribute to the success of healthcare firms. Empirical evidence from several studies has consistently demonstrated that having a marketing orientation leads to better organizational performance. Nor is the debate over what it takes to have a marketing orientation – it requires proficiency in all five components. And neither do we need to wonder if we really “need” to be marketing oriented if we are fortunate enough to be in a competitively benign environment. We do. Rather, the issue now might be better stated as what can be done to more thoroughly integrate such an orientation throughout the organization.

25. Source Note: An earlier version of this paper was published as: Bruce Wrenn, “Marketing Orientation in Hospitals: Findings From A Multi-Phased Research Study,” Health Marketing Quarterly, Vol. 24, No.1/2, 2007, 15-22 (Published Summer 2008). The references in this article contain a full set of statistical analyses that lead to the statements made in this presentation.