Xiaoou Han
Published: 2014
Total Pages: 199
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In the forest products business and management literature, one common categorization of different types of innovation is product innovation, process innovation and business systems innovation. Forest products companies have long placed high emphasis on process innovations, which are related to yield maximization, manufacturing efficiency and operating costs reduction. This is considered insufficient from a long-term perspective as customer needs become increasingly complex in a changing market environment. Business and managers should seek innovation opportunities from the market and customer side of the business, i.e., business system innovations. In a company, marketing serves as the interface between the organization and its market and customers and thus possesses substantial opportunity for developing business system innovations. The approach to marketing in the forest products industry has traditionally been production- and sales- oriented. Management attention was almost entirely on keeping the production capacity in full and letting sales worry about how to move the products. As technology advanced, competition intensified and customer needs became more complex, the forest products industry needed to start adopting a more sophisticated marketing approach, by focusing more on meeting the needs of customers and other stakeholders. The term "marketing sophistication" is used in this research to characterize how marketing is understood and implemented in a firm. Literature in general marketing and forest products marketing both document an evolution in marketing sophistication, from a production/sales orientation to a customer/market/stakeholder orientation. However, there is no systematic investigation of marketing sophistication, especially in the context of the forest products industry. To fill the knowledge gap, this research examines marketing and marketing sophistication in the forest products industry. A theoretical foundation about the evolution of marketing sophistication is firstly developed. The relationships between a market orientation and other firm characteristics are then assessed. Data was collected through mail survey from the top 100 global Forest, paper & packaging industry companies, identified by PricewaterhouseCoopers (PWC) in its 2008 global forest, Paper & Packaging Industry Survey. The results show that market orientation is positively related with other firm cultures including learning orientation and innovativeness. Market orientation can play an important role in a firm by potentially supporting other cultures and practices that are related to firm performance. Also, the connection between a market orientation and corporate social responsibility implementation could potentially signal that a market orientation is affiliated with a stakeholder orientation. The implied importance of market orientation from the study leads to a more in-depth investigation of marketing sophistication within the context of the private U.S. sawmilling companies. The marketing culture, marketing strategies and the role of marketing were studied using a case-based approach. Findings suggest that the companies did not have a holistic understanding of marketing and were mostly production/sales-oriented. Also, many companies did not have an integrated marketing department but a sales department that was mainly performing sales work. Although a production/sales orientation largely existed, it was quite clear that many of the studied companies have begun to pursue a customer/market/stakeholder orientation as a more sophisticated marketing approach.
