There are three major modern approaches to marketing and they include Product Orientation, Market Orientation and Asset-Led Marketing. Let’s take a look at Product Orientation in this article.
Product Orientation developed in late 19th century when efficient production of goods allowed firms to meet strong customer demand.
Product Orientation is inward-looking as the business focuses on making products – the production process and the products themselves. Companies using Product Orientation intend to make products that can be made and then try to tempt the customers who will purchase those products.
In Product Orientation, businesses focus on making products that they can sell rather than selling products that they make.
What products are sold using Product Orientation?
Product-Oriented businesses produce and sell high quality, creative and innovative products. These firms believe that if their products are of high quality, then they will be purchased. The assumption is that customers value quality and unique features above and instead of just following market fashions.
Product-oriented businesses invent and develop products in the belief that they will ultimately find consumers to purchase them. Therefore, they concentrate all their efforts on efficiently producing high-quality expensive goods. Such firms still exist, especially in product areas where the highest quality is of the great importance.
Very often for Product Orientation, the development of the product is driven more by technological innovation than by customers’ needs and wants. It is because customers are not even aware that such products are possible to exist. Pure research is important to make the invented concept developed into the innovative new product.
Many technology products that are used in our daily life were created using Product Orientation such as cars, TVs, smartphones, MP3 players, computers or even the Internet were unknown to the mass market when invented and even during their initial launch to the market.
What influence the choice between Product Orientation and Market Orientation?
The following factors will help to determine what type of marketing orientation a firm will choose. The approach adopted will be determined by:
- The firm, its management and corporate culture.
- The market nature and market size.
- The product(s).
- The competition or lack of thereof.
- Laws, regulations and policies.
Examples of companies using Product Orientation approach
Example 1: Ferrari producing custom-made sports cars.
Example 2: Apple selling iPhones and other technological innovations such as iPads and Apple Watch.
Example 3: Boeing and Airbus producing aircrafts.
Example 4: Microsoft’s selling computer software including Windows operating systems and Microsoft Office.
Example 5: Sony selling PlayStation 4 games consoles around the world.
Example 6: Merck, AstraZeneca, Pfizer and other the pharmaceutical companies manufacturing generic and specialized medications.
Example 7: Dyson’s highly profitable cyclone vacuum cleaner.
Example 8: Bottled-water producers such as Nongfu Spring in China.
Advantages of Product Orientation
The benefits of Product Orientation include:
- Availability of high-quality products. When great products are launched to the market and customers realize their value, the supply will create its own demand. Customers will be tempted to buy those products because companies that specialize in producing them will make the best products possible. Many product-oriented businesses today concentrate on producing very high-quality products as believe that customers will be willing to pay a higher price for exclusivity and uniqueness.
- More control over its operations. With its own specialized manufacturing process, the product-oriented businesses have more control over their own operations. They will be able to assure quality of their products from the beginning to the end.
- Weak competition. There is not much competition for highly specialized or niche products as barriers are high to enter the market. Even though the products have premium pricing, the business can sell all of its output at the price it determines. Product-oriented firms have lots of market power in pricing and distribution as well, and very little incentives to carry out market research. Companies without much competition tend to be less customer-oriented. When the market grows in size after more competitors enter, increased competition will force product-oriented firms to become more market-orientated.
Disadvantages of Product Orientation
The drawbacks of Product Orientation include:
- Failure to continuously produce desirable products. The days when a company could produce only one product and successfully sell it for decades are long gone. With fast paced markets in the era of the Internet and smartphones, anyone assuming that there will always be a market for that one product is very irresponsible. While the management of product-oriented businesses may wish to consistently producing desirable products, the truth is that most of the new products entering into the market fail. Not all products can be successful and producers are not really sure whether it is going to be hit-or-miss. Whether customers will love the product, or hate it.
- Only focusing on production efficiency. Many established firms in the manufacturing sector which use product orientation concentrate too much resources on the production process. Their corporate cultures are mainly about manufacturing and cost controls. This approach may prove to be risky when costs are raising rapidly, technology becomes out of date or the company is no longer able to retain qualified production workers.
- Risky due to changes in the markets. Product-oriented businesses ignore the needs and wants of markets and customers. They assume that they know better what the market and the customers need and want. However, because of frequent changes that happen on the markets caused by new fashions and tastes, raising disposable incomes, etc. there is a high failure rate. All the resources that the firm spent on researching and developing groundbreaking products without considering the customers’ expectation, may never be recovered if customers do not buy the product in the end
To summarize, remember that nowadays there are four main approaches to doing marketing. These approaches include Product Orientation, Market Orientation and Asset-Led Marketing.