There are two strategies that can affect the operational goals of a business. Marketing orientation focuses on the customer, while production orientation focuses primarily on cost. Both have their strengths and weaknesses, but there are multiple factors that determine which path you may choose to take. Understanding each business model is the key to making the right decision between them, or deciding to combine them.
In a marketing orientation model, a business focuses on identifying the wants and needs of its target audience and determining how many products it needs to make to satisfy those wants and needs. Through the help of marketing people and market research, business owners that pursue this strategy let their customers dictate how many products they make and what type of products they develop.
For example, a toy company may discover that its customers want more stuffed animals and fewer action figures. If sales figures confirm this, that company may drastically reduce production of action figures and significantly increase its production of stuffed animals.
In a production-oriented model, a business focuses on making as many products as possible, at the lowest cost available. Companies that sell in high volume typically follow this type of strategy. The demand is always high, and the goal is to keep pushing out quality products as cheaply as possible to maximize the profit margin.
Businesses that adopt this strategy focus on making better products to attract customers, rather than identifying the specific needs of their customers and building products to satisfy those needs. Production-oriented companies have a strong belief that quality is the best type of marketing and that if the price of a product is fair, customers will buy it.
The primary advantage of a marketing-oriented strategy is that it is responsive to the needs of its target audience, which can boost brand identification, loyalty and trust. When customers perceive that a company consistently tries to solve its problems, they tend to reward that company by consistently buying its products.
On the other hand, the main advantage of a production-oriented company is that it is always looking to refine and improve its products to make them the best in the industry. That focus on quality often means that a company’s products undergo rigid testing before they are released to the public. It also means that the quality of the product made by a production-oriented company may be superior to that of a marketing-oriented company.
One of the main disadvantages of a marketing-oriented strategy is that conducting effective market research is expensive, so the commitment to remaining vigilant regarding customers’ wants and needs comes at a high cost.
The main disadvantage of a production-oriented strategy is that competitors may develop a higher quality, less expensive version of your product that may price you out of the business. Another disadvantage is that businesses that focus on production will not be able to adapt and shift their strategy when their buyers’ tastes change.
