Describing Characteristics of Market Driven Companies for Your Superiors Colgate has declared, “Our mission is to find needs and fill them, not make products and sell them” (Day, 1999, p. 8 ). These words and similar slogans are often used by companies to emphasize and reassure the customers and employees that the company is market driven and customer centric. Unfortunately these slogans are just words and being a “Market Driven” company means and takes much more than regurgitating the CEO’s PR gem of the month.
In order for a company to be market driven it is important for the whole company to be on board and actively seeking to remain market driven. The culture of a market driven company is an ongoing effort on several fronts including relationships, exchanges, internal knowledge and competitors. George Day describes a market driven company as one with, “a superior ability to understand, attract and keep valuable customers. ” (Day, 1999, p. 5). Day adds to this definition of market driven companies by qualifying that these companies have, “a willingness to keep reorienting themselves as markets change. (p. 25). These definitions provide the base which is built on by a company having an externally oriented culture, distinctive capabilities and configuration which allows the company to adapt (p. 7). The key to this setup is that a market driven company cannot pick and choose these elements. It is necessary to have all of them due to the multiplicative nature of being market driven. By taking away one part of the market driven definition and elements a company is not simply less market driven, it is not market driven.
Once these pieces of the company have been put into place a company cannot rest on its laurels and expect to succeed for the long term. Part of being a market driven company is realizing that configuration is an ongoing concern requiring monitoring and changes to continue to, “deliver superior customer value” (p. 12). It is important for a company to be market oriented in order to remain competitive and profitable, for example one study found that, “market driven businesses were 31% more profitable” (p. 13).
Companies who are market driven have the understanding that not all customers are profitable or worth pursuing, which removes some power from the customer in demanding the lowest prices (p. 34). Relationships, views of the customer and the use of knowledge within the company all play a part in this profitability. Due to the multiplicative nature of the market driven style it is important that the entire organization including the CEO and front line individuals are bought in to the need, “to identify and seize market opportunities as they arise. ” (Day, 1999, p. 82).
Intuit the makers of Quicken utilized this piece of being market driven well and gather information about the use of their product from many sources including frontline staff and non customers. This has allowed them to react and offer a product which met the customer’s needs. These observations and changes did not magically happen; a key part of being market driven is keeping and sharing the internal knowledge in the company. This knowledge is gathered from interactions with suppliers, customers, competitors, vendors, technical support, and front line personnel to name a few sources.
Market driven companies excel at sharing and augmenting knowledge through the use of a shared knowledgebase. The knowledge base contains information such as past results for example, which seeds perform well in a certain climate/soil combinations, allowing the company to make logical recommendations to current and future customers (p. 131). The knowledge base should also be a repository of the firm’s successes and failures in many areas ranging from product support to relationship building.
The shared data allows the company to make educated decisions without wasting time and resources where projects have failed in the past. Market driven organizations must use the knowledgebase with an open mind, past failure cannot negate an option from ever being tried again, the data simply enables educated decisions by open minded leaders (p. 85). The knowledgebase provides a venue for employees to share information which may have normally been tossed aside for fear it would be put into a black hole with no affect on the company.
All of this information can be put to use to provide value adding services to the relationships the company has. For example the Milliken Company provides software and training to laundries in order to gain favor and a price premium (Day, 1999, p. 123). These relationships allow market driven companies to retain customers, allowing for higher average profit per customer (p. 125). This is a move away from the zero sum transaction mentality towards value adding and collaborative exchanges which provide a net benefit to both parties.
Value adding and collaborative exchanges which focus on retaining customers and working closely with customers can provide a positive sum game in which both parties benefit, resulting in a much higher overall benefit than the transactional model (p. 137). These relationship methods can provide market driven companies with a competitive advantage in meeting needs and retaining customers. These pieces fit together within market driven companies to enable success. If a company does not allow the culture to pervade the entire organization or fails to share knowledge then it is not market driven and is not likely to reap the benefits.
In order to be defined as a market driven company the organization should; value its relationships with customers and focus on providing a positive sum game relation while sharing knowledge and working to understand the customer. These tasks will provide opportunities for market driven companies to increase profits and customer retention while sustaining long term benefits such as profit and excellent relationships with customers and suppliers. Works Cited Day, G. S. (1999). The Market Driven Organization. New York: The Free Press. How does this resonate with your organization? Any readers have thoughts on being market driven?