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Competitiveness in Thai business through market orientation
A Thai woman recently made the front page of the nation’s newspaper as well as an appearance on prime time TV by smashing up a car. Miss Duenpen is not a violent maniac, a jealous mistress or a rich starlet. She is simply a consumer. Granted, a very dissatisfied consumer, she chose a drastic method of communicating with the organization, in this case Honda, Thailand who apparently failed to satisfy. Reactions have ranged from support to disgust. Many felt it was a shocking display not befitting a Thai woman when Miss Duenpen used a hammer (and a shovel) smash up the windshield and bumper of her one year old Honda CRV. But even more Thais will be sure to review their attitude towards the Honda brand. A sticker on the car read ''I would not have done this if this was a really good car. My condolences to Honda.'' Condolences indeed, as Honda will now feel effects of a customer relationship gone wrong. The company has done what many organizations do in this type of situation: Made a bad problem even worse by issuing clumsy statements and underestimating the power of the consumer.
This is a landmark incident showing how Thailand has developed far enough economically and socially that bullying and patronizing tactics used by large organizations is no longer viewed as acceptable. It could also be viewed as a sociological trend indicating more freedom and outspokenness among Thai women (a topic discussed in my article “The Asian Women's Shopping Experience” (http://www.asiamarketresearch.com/news/000309.htm). Finally, from a marketing perspective, the car smash-up is a wakeup call for organizations that make consumer product announcing that Thailand is abandoning the sales oriented approach traditionally applied. The question is how Thailand’s consumer market has changed along with the great changes in the economy and how companies located here must now change their business methods, not just to avoid bad press, but also to stay competitive. The use of consumer need satisfaction as a means of successfully gaining a competitive edge is well known. The sales oriented approach has been replaced in the marketing of consumer products with market orientation.
This article will discuss the benefits of using market orientation as a means to be more competitive by examining more recent theories on the subject and how they may apply to the Thai consumer market of the future. The discussion will include implications for the organization’s culture and structure.
Before looking at market orientation itself there are some related concepts which need clarification. There are three concepts that precede the development of Market Orientation:
• Sales Orientation
The Marketing Concept is defined as a philosophy where an organization succeeds by bringing value to the consumer. The requirement is an organizational culture in which the customer is the primary focus of the organization’s strategy and operations. (Deshpande and Webster, 1998). This way of thinking is radically different from the abandoned, by scholars at least, Sales Orientation where the organization establishes itself, creates a product and then tries to sell it. The Sales Orientation is still very much in effect, not just in Thailand but throughout the developing economies of the world and to some extent in industrialized countries as well. It must also be stressed that the Marketing Concept is most useful in dealing with consumer and household products. The Sales Orientation is still useful in businesses where a long term person-to-person relation is at the center of the marketing exchange, i.e. industry machinery and turn-key projects.
In order for the marketing to be of further use, there needs to be a practical application of the Marketing Concept. This leads us to the Market Orientation which serves as the implementation of the Marketing Concept (Wren, 1997). Is also serves as a contrast to the Sales Orientation as an approach to market consumer products. The Marketing Concept is concerned with how the organization thinks about its products and its marketing of products, whereas a Marketing Orientation is concerned with the undertaking of those activities necessary to implement the marketing concept.
After defining Marketing Orientation we now understand that the organization carries out activities that can satisfy customer needs in order to be competitive. The company accepts that a certain amount of flexibility within the organizational structure is in order to carry out these activities and that when customer needs change the changes must be made in various parts of the organization. Still, according to scholars, it is only when the entire organization is built around the customer needs, that it becomes truly competitive in relation to the market. Because the competition is also there to satisfy needs, competitors also are relevant here. This creates the transformation form Marketing Orientation to Market Orientation. Kohli and Jaworski define Market Orientation as: “The organization-wide generation of market intelligence across departments, and organization-wide responsiveness to it.” (1990).
Market Orientation is therefore the ultimate stage for the consumer company at this point in time. A company which is market oriented responds to consumer needs and changes herein on all levels of the organization including production, personnel, administration, and finance departments. One could say that the Market Orientation is part of the company’s culture. According to scholars, culture is the deeply rooted set of values and beliefs that provide norms for behavior in the organization (e.g., Deshpande and Webster 1989). One could further include the organizational climate in the discussion. Climate describes how the organization operationalizes its culture, the structures and processes that facilitate the achievement of the desired behaviors (e.g., Deshpande and Webster 1989). It is important for the organization's culture and climate to be complementary, because it is difficult to develop and sustain appropriate behaviors if the corresponding organizational values are not in place and, conversely, values are difficult to sustain if the appropriate incentives and examples do not exist. Although difficult to measure, the climate and culture must be the force that carries out actions and everyday activities in relation to the customer.
Based on the above theories, it is safe to say that Honda’s operations in Thailand are not Market Oriented at this point. According to the Bangkok Post, several meetings took place between the customer and the organization before the famous incident. Involved company departments of Honda were mechanics, executives, and finally the president of the company. In dealing with the case the Honda organization will inevitably learn from and adjust itself in relation to the rapidly changing Thai consumer market. And although Honda would probably have wanted to avoid the bad P.R. and likely drop in sales it is a natural process for a company moving towards Market Orientation. There have also been reports of other Honda customers wanting to return their cars and be compensated.
Sinkula talks about a learning organization in which three stages are followed including information acquisition, information dissemination, and shared interpretation (1994). Obviously the more seamless and efficient this process is carried out in the organization the more likely the “hard way” learning Honda experienced can be avoided. The information extracted from this case will be useful not only to Honda, but to the competitors and other institutions such as the Consumer Protection Board, The Thai Industrial Standards Institute (TISI) and Federation of Thai Industries' Automotive Club. That means the entire Thai car market and car industry will learn and adapt to the changes illustrated in cases such as this one.
In examining the sustainability of competitive advantage, it was found that all industries undergo substantial change, whether driven by customers, competitors, or technology suppliers (Williams). This change creates continuous pressure for businesses to augment their products and services to maintain or increase their value to customers (e.g., Levitt 1980), because no customer benefit is safe from being matched or exceeded by competitors (e.g., Bhide 1986; Ghemawat 1986; Williams 1992). Thus, it is no surprise that comments, such as "The ability to learn faster than your competitors may be the only sustainable competitive advantage" (DeGeus 1988, p. 71), is commonly heard. In other words, giving good service is beneficial to the company, but in the market place competitors are free to copy customer service, management methods and other intangible assets not patented. They are also free to learn from, not just their own, but the mistakes of the competition as well. The car manufacturers in Thailand will no doubt be spending weekends in seminar rooms and reviewing their customer service policies. Surveying their customer satisfaction will also be a good idea.
In the 90ies Toyota saw its quality advantage erode as competitors learned lean production methods and introduced them into their own facilities (Ingrassia and White 1994). Bhide (1986) argues that opportunities to gain a lasting advantage using a blockbuster strategic move are exceedingly rare. This means that an advantage gained through learning will only have an advantage until the knowledge is diffused into the industry. Does this mean that gathering extensive information about consumer trends is not worth the effort because sooner or later the competition will find out and adapt similar strategies with less effort? Not exactly as long as the knowledge is continuously updated and the service is continuously improved. The balance is to invest in a Market Orientation that gives a competitive edge for long enough time to be profitable while protecting the knowledge and at the same time does not drain the organizational resources. Erosion of knowledge makes companies wary when implementing processes whether they are production automation, new marketing channels, personnel training or new technology. In Honda’s case the damage is done and competitors will be looking at how the problem is handled and what improvements are made in customer service, mechanics training and perhaps most importantly the communications flow between head quarter and branches.
In reality, no companies are 100% Market Oriented. Indeed, the theories on Market Orientation are idealistic and even then not without flaws. For one, the Market Orientation may not encourage a sufficient willingness to take risks. For example, a substantial danger for many businesses that perceive themselves to be market oriented lies in the "tyranny of the served market" (Hamel and Prahalad 1991). This danger is the result of narrowly focusing market intelligence efforts on current customers and competitors, thus, ignoring emerging markets and/or competitors (e.g., Argyris 1994). In the Thai automobile industry such a change could appear in the form of more regulatory power given to the Consumer Protection Board. Honda and other manufacturers would have to abide by the regulations and tailor their new customer service strategy to satisfy this outside force. It will be interesting to see whether Thai consumers will be treated more respectfully from now on and if this is the beginning of a new consumer dominated era in the Thai market economy. There will certainly be some effect, because of the synergetic effect of the consumer-company relationship. The more companies try to satisfy and compete with each other, the more consumers will be accustomed to being treated well and having their complaints heard.
The dispute between customer and organization has been resolved. Miss Duenpen had the payment of her car refunded and used the money for the down payment on a Toyota Wish.
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