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Market Orientation and its Implications

Contents

1. Objectives
2. 1 Market orientation: A definition
3. Box 2.1 The price of good night's sleep
4. 2 Market orientation: A historical analysis
5. Box 2.2 Different orientations of businesses
6. The lucky Bulgarian customer
7. The risks of adopting a production orientation
8. 3 Market orientation in the USA and Europe
9. 3.1 Market orientation and the USA
10. 3.2 Market orientation and Europe
11. 3.2.1 Two world wars
12. 3.2.2 Delayed market integration
13. 3.2.3 Heavy regulations
14. 3.2.4 Public sector involvement
15. 3.2.5 National markets
16. 3.2.6 Protectionist tendencies
17. 3.2.7 Language differences
18. 3.2.8 Local business traditions and practices
19. 3.2.9 Dilatory approach to marketing education
20. 4 Organizational and managerial characteristics of market-oriented companies
21. 4.1 Company response and innovation
22. 4.2 Two distinct organizational types of market orientation
23. 4.3 Management and market orientation
24. Talk to your customers if you wish to be profitable
25. 4.4 The relationship between market orientation and the learning organization
26. 5 Implanting market orientation in organizations
27. 5.1 A strategic vision and long-term commitment
28. Marketing matters too much to be left to everybody
29. Making dedication to customers an obsession
30. 5.2 Managing the change for market orientation
31. 5.3 A guideline for implanting market orientation
32. 6 The future
33. Further reading
34. Discussion questions

Section: Customers, Markets, and Marketing Objectives


The objectives of this chapter are:

1. to define the term ‘market orientation’;


2. to describe the development of the concept of market orientation;
3. to explain why European organizations were slower than those in America to accept the
concept;
4. to set out the characteristics of organizations that are market orientated;
5. to consider how a market orientation can be implanted in an organization.

1 Market orientation: A definition


THE short story in Box 2.1 portrays a case of a ‘niche’ marketer—a small business organization
that has discovered a ‘niche’, a tiny segment or segment of a segment, in the market that had
been ignored by the big companies in the same industry. It is a highly flexible, lean, and mean
organization, operating very closely to its customers and supplying its customers with the best
beds in every form they may require to suit their different needs. In return, it may charge a
premium price, but customers do not mind this because they believe they are getting value for
their money. They have flexibility of choice, flexible delivery time, and prompt response from the
shopkeepers. In this shop are stored different types of beds, in different colours, shapes, and
types, including plastic ones, orthopaedic ones, ones with springs, and so on. The owner of the
Bed Centre keeps a list of his customers and keeps them informed about new stocks, sales, etc.
He asks what types of beds they require and he has close connections with several bed
manufacturers in both Ireland and the UK. They can deliver his requests without delay. A niche
marketer applies the marketing concept by operating very closely to its customers and taking the
customers to the centre of its operations. It is also classified as a market-oriented business.

Market orientation has been classified in different ways by several researchers. The following are
the most frequently used classifications:

• a corporate philosophy;
• the implementation of the marketing concept;
• an ideal;
• a policy statement;
• a corporate state of mind;
• a faith;
• an organizational culture;
• a concept of periods or stages of development and degree of maturity of an organization
that parallels the economic development of the national market within which it operates.

The author wishes to thank P. Blackhurst and M. Leuw (Henley Doctoral Fellows) for their
assistance.

Despite these seemingly different classifications of market orientation, we may conclude that all
of the above labels hold true. Market orientation can be a business philosophy held by the
management of an organization (McGee and Spiro 1988), or the implementation of the marketing
concept (McCarthy and Perreault 1997). Market orientation can also be described as a form of
organizational culture that:

• places the highest priority on the profitable creation and maintenance of superior customer
value while considering the interests of other key stakeholders;
• provides norms for behaviour regarding the organizational development of and
responsiveness to market information.

As Day (1994: 43) puts it: ‘A market driven culture supports the value of thorough market
intelligence and the necessity of functionally coordinated actions directed at gaining a
competitive advantage.’ Essentially the market-oriented culture is externally oriented.

Business organizations may be classified according to their tendencies or orientations. In


business, some companies are described as production or sales oriented, while others may come
under the category of market oriented. The first two descriptions indicate an emphasis on
production and sales, while the latter indicates an emphasis on the marketplace, indicating that
such companies are directed towards or centred around their customers. Some authors add more
orientations. For example, Payne (1988) argues that most organizations have a range of
conflicting orientations and associated attitudes. Similarly, other authors, such as Levitt (1960),
argue that many organizations do not serve their markets satisfactorily because of the fact that
their managers are product oriented. Different orientations that may possibly exist in business
organizations are given in Box 2.2.
Box 2.1 The price of good night's sleep

Mr Tony Johnson had got a new job in an international service company with its European Head
Office in Dublin, the capital city of the Irish Republic. Together with his wife, Mr Johnson found a
lovely house in the south of Dublin at a small town called Dun Laoghaire. It takes fifteen minutes
to drive to his office, which is situated in the industrial district of Tallaght. Resettlement problem
were solved without any hustle and the family travelled from Amsterdam by plane, leaving some
old furniture there. They wanted to buy household durables, etc., new in Ireland. They had even
found an international school for their son Jim. The school is called St Andrews College, is situated
not far from their new house, and has a good reputation in Ireland among both local and
expatriate communities.

Everything went well until Mr Johnson started to look for an orthopaedic bed for his back problem.
He and his wife visited almost all the department stores in Dublin but they could not find a high-
quality orthopaedic bed. Although some of the stores displayed good-quality beds, they did not
have good-quality orthopaedic ones. Even if the Johnsons were to choose one of those displayed
beds, department stores asked for at least a week for delivery, and he needed one as soon as
possible. One day, after they had spent hours in the shops, they were returning to their home
when they saw a shop in Dun Laoghaire, on the main street, with a sign ‘Bed Centre’. Mr Johnson
pulled up his car and they went into the shop. This was a small shop displaying beds of different
types, colours, and shapes, including good orthopaedic ones. They were delighted with this
discovery so close to their home. Mr Johnson asked for the delivery time; the shopkeeper said ‘I
can deliver tonight’. So the sale was completed easily, although the price was over £400. Mr
Johnson was ready to pay a premium for the good-quality product and prompt service. At last he
had a restful night in Ireland.

2 Market orientation: A historical analysis


MARKET orientation has also been defined as a stage of development of an organization, or as a
level that reflects an organizational maturity that parallels with the development of a national
economy, from a historical point of view. Several authors, including Baker (1991), Dalgic (1992),
Cannon (1996), and Kotler et al. (1996), subscribe to this definition. They see a market
orientation as the ultimate stage of development of a business organization, and draw a parallel
with the economic development of a country by accepting the fact that a market orientation
develops through stages or eras of business orientations. These economic development stages
are production orientation, sales orientation, and market orientation. This approach tries to
explain the enabling macro-environmental factors, mainly supply and demand relationships and
competitive conditions, that are thought to have influenced the progression of firms through
these different orientation stages.

In this view, market orientation has been a natural progression from the practice of selling
towards the understanding of customers, their problems, and needs, and it works towards a
solution and satisfaction of those needs. At first the emphasis was on producing. After the
Industrial Revolution, mass production, assembly lines, and division of labour made it possible to
manufacture products more efficiently and cheaply. As a result of new technology, new ways of
using labour, and an increasing demand for goods, production was of the greatest importance in
the West. Companics were manufacturing/production oriented and ‘marketing’ was limited to
taking orders and shipping goods. In such a situation, with excess demand needing to be
satisfied, companies were usually not very interested in customers' desires and wishes. This was
clearly illustrated in Eastern Europe under the communist regimes, where demand for most
products exceeded supply and as a result customers were treated in a dismissive manner (see
Insert).

During this period companies grew in size and this began to put distance between executive
decision-making and the customer. However, this had little impact on corporate performance at
the time, as the prevailing shortages meant that it was easy for entrepreneurs to find markets for
their goods. Raw materials, capital, technology, and labour were viewed as scarce resources;
customers were not.
According to some authors this so-called production era began in the early part of the twentieth
century (Pride and Ferrell 1989), and according to some others with the Industrial Revolution,
which focused on plant efficiency and quantitative output, and operated on principles of scientific
management (F.W. Taylor 1947; Skinner 1990). Jobs were broken down into discrete parts and
labour was specialized in order to become highly efficient in the execution of a small, repetitive
part of the whole. Henry Ford's production line was the physical manifestation of the principle of
scientific management. Production-line operatives, often paid by piecework rates, became
detached from the holistic nature of work. Individual and departmental objectives and reward
systems became inconsistent with satisfying the needs of the final customer (see Insert overleaf).
In retrospect, this gave rise to disenchanted, demotivated employees, satisficing behaviour (that
is, behaviour that seeks a satisfactory rather than optimal outcome), and low-quality output.

It is interesting to debate whether Henry Ford, in setting up his River Rouge plant in the 1920s,
was a production-oriented man who satisfied a huge demand in a market, or, in fact, a perceptive
marketer who saw the enormous need in the market for a car that the working man could afford.
His own words suggest the latter, in which case the man credited with the initial application of
the production line should be seen not only as someone in the vanguard of production technology
but also as an early mass marketer, for whom that production-line technology made possible the
creation of the product that the market wanted: a no-nonsense one-colour car that was
affordable ($500) to the working man. In Baker's (1985: 46) words, ‘when Henry Ford first
produced the Model T, he was exactly in tune with the needs of his market, and … his failing, if
such it was, was not seeing that the basic demand for cars had become saturated and that the
demand needed to be stimulated through the provision of a differentiated product’. As Levitt
(1960: 51) states, ‘Mass production was the result not the cause of his low prices.’

In time, of course, ‘any colour they like as long as it's black’ began to sound arrogant, and, when
Alfred P. Sloan at General Motors (GM) began to offer cars in a variety of colours, many
customers moved to GM. These two examples help us to illustrate another complexity in
marketing, and thus business in general: that the competitive environment is always changing.
Different industries may exhibit different characteristics regarding the rate of change, but it is
true in all industries that what works today, in terms of satisfying customers, may not work
tomorrow, and most likely will not work in the long term. The implication for market orientation is
the necessity to monitor, share, and respond to changes in the market that arise both from the
supply side (competitors and suppliers) and from the demand side (consumer demands, changes
in the needs of buyers).

The production orientation raises another debate over whether marketing is required in shortage
or monopoly situations. One view holds that marketing is an expensive luxury to exercise unless
competitive forces demand its application. The opposing view says that marketing is not
necessarily more expensive and that any organization that is perceived to survive by exploiting a
monopoly position rather than by creating customer satisfaction has not customers but hostages.
Sooner or later, particularly in the late-twentieth-century era of deregulation and increased global
competition, an alternative supplier will materialize and then the customers will desert. There can
be (but do not have to be) aspects of cost in market orientation, such as in providing variety or
enhanced customer service, but these should be accepted only if they are offset by increased, or
more profitable, business (Houston 1986). If we take another look at the Ford/GM example above,
Ford held an early monopoly at the price level that it established (the $500 car). At this point, by
displaying superior (to currently competing car manufacturers) understanding of customer needs
and responding to them, Ford was displaying a high degree of market orientation. When it
entered the market, GM would have incurred higher costs than Ford, by offering multiple colours.
However, because of its superior (compared to Ford) understanding of the needs of the market at
that time, GM was able to gain a price premium and increased its business at the expense of
Ford. It did this by offering something to which the customer attributed a value greater than the
price of the car, which itself was greater than GM's cost. To the extent that market orientation
takes into account profitability and core competencies in order to supply goods/services that the
market will value at a price that is more than they will cost to supply, market orientation, like
quality, is free.
Key words in marketing are ‘matching’, ‘appropriateness’, and ‘suitability’. A common
misunderstanding concerning the application of marketing is that ‘more is better’. Any company
that indiscriminately loads its market offering with services, variety, and options without taking
account of whether the target market needs, values, and hence will pay for those additional
services is not market oriented and is not applying the marketing concept. A market orientation
is the degree to which a business unit obtains and uses customer information, develops a
strategy that will meet customer needs, and implements that strategy by being responsive to
customer needs and wants. Marketing is choosing and understanding a certain part of the market
very well, and using company strengths and its core competence to satisfy the needs of that
market segment with a suitable, appropriate, matching product.

If the segment that the company chooses to serve requires low-price, low-service, standard
products, then the company that delivers that, reliably and to an acceptable (or better) standard
of quality, can rightly be described as market oriented. The degree of market orientation in the
firm cannot be measured by what it spends on advertising, or the number of its salesmen or
product lines. These attributes are easy to measure but, without a situational context, are
meaningless. Market orientation must be approached by asking questions about how well the
company's offers ‘fit’ the target market's needs, how closely the company monitors changes in
those needs, and how prepared the company is to change in order to satisfy new or modified
needs.

Bartels (1962), in his book about the history of marketing thought, reveals that in the late 1950s
there was a growing need for problem-solving salesmen who could understand the customers'
needs and offer solutions. This need created the practice of customer problem-solving, which
required a new approach to be adopted by the salesmen. They were expected to be closer to
their customers in order to understand their needs and problems. This was simply a customer-
oriented approach rather than a company-oriented ‘sales-only’ approach. Earlier, when the issue
was simply sales only, it was expected that salesmen should be familiar with customers' buying
motives; now it was assumed that they should have some familiarity with the idea that selling
and all other business functions logically begin with an understanding of the customers and their
needs and the interpretation of this understanding into all activities of the business. This was, of
course, the manifestation of a new business philosophy, the ‘marketing concept’.

Box 2.2 Different orientations of businesses

Product orientation. We sell what we can make. The quality of our products speaks itself and our
products sell themselves. They should be glad we exist.

Cost orientation. By reducing our production and marketing costs we can improve the profits of
our business.

Capacity orientation. The bigger the production of our company, the more profitable it becomes.

No-commitment orientation. We cannot plan the future in our industry. No one knows what will
happen from today to tomorrow.

Competitor orientation. We observe and understand the strengths and weaknesses and the
strategies and capabilities of the current and potential competitors.

Market orientation. We make what we can sell. We make our profit by creating opportunities to
satisfy our customers' needs more effectively within the constraints of our resource and skill
limitations.

Sources: Aaker (1988); Day and Wensley (1988); McCarthy and Perreault (1997).

The lucky Bulgarian customer


‘Lucky customers are those who, on reaching the front of the queue, find that the product on
offer is not so defective as to be beyond their capability of repairing it.’

Source: Bulgarian sales manager, 1989.

The risks of adopting a production orientation

‘The scarcity of a particular item puts the producer into a privileged position vis-à-vis the
consumer. And so we get the rule of the producer under which contact is lost with the demands
of the consumer and society.

But when the producer rules, absolutely everything is done the wrong way round. The factory
sees it as more profitable to increase the output, to mass produce …

The producer's main aim is to get rid of his output. Out of sight—out of mind. How and where the
product will be used and how long it will work are not the producer's worry.’

Source: Ganbegyan (1989: 43).

3 Market orientation in the USA and Europe

3.1 Market orientation and the USA

In the USA, by the early 1950s, living standards were relatively high, discretionary income
became available, and, by definition, the consumer was able to make choices regarding the way
that such money was spent. In the academic world, textbooks that featured a marketing
management perspective began to appear (McCarthy 1960), and the ground-breaking article by
Levitt (1960) on marketing myopia helped enormously in raising marketing consciousness among
the US businessmen. Some of the larger US firms began to establish marketing departments
(admittedly, mainly to coordinate sales and advertising) by the 1950s and by the end of that
decade many academic articles had begun to appear. At this stage, some of them were already
seeking to follow the pure ‘ideology’ that marketing puts the customer first and involves the
entire organization in the creation of customer value (Levitt 1960).

3.2 Market orientation and Europe

The European experience on this matter, however, showed a different pattern. If we look at the
growth of marketing as a distinct aspect of business management, it was stimulated at the
beginning of the 1960s because of the prevailing climate of goods and services shortage on the
Continent. There was not a single united economy in Europe, as was the case in the USA, where
one economy embraced the whole continent as a unified, single, internal market. As early as
1959 the US authors Myers and Smalley had suggested that the evolutionary course of the future
European Common Market might be more accurately predicted if the development of marketing
in the USA were better understood. What they were saying was that the interstate trade barriers
that did exist in the USA were threatening US economic development in its earlier phases. Some
other authors called these interstate barriers the ‘Balkanization of America’ —the division of the
US market into small economic-warring sectors (Hollander and LaFrancis 1993). This was similar
to the case of Europe between the two world wars and was reflecting the reality after the Second
World War.

Historically, in Europe, a real Balkanization took place. Several smaller markets were formed as a
consequence of the turbulent European history and they exhibited different patterns of economic
development, from very early industrialization levels to mass-production stages. This may lead us
to the conclusion that market orientation in Europe showed differing levels of practical
application depending upon each national economy's own environments. However, despite these
national differences of application levels and moderating factors, it may be claimed that Europe
in general was later in applying market orientation than the USA. Again, we may claim that, in
general, there were European-wide causes that delayed a similar economic development for the
whole of Europe and consequently hampered the development of market orientation by
European business organizations. The obvious conclusion of this is that market orientation did not
take place in European markets at the same time as in the US market. There are several reasons
for this late development of marketing in Europe.

3.2.1 Two world wars

Two world wars destroyed not only the material wealth and production facilities in Europe, but
also human resources such as design and manufacturing engineers, scientists, and qualified
production workers. It took two decades after the Second World War to return to a level where
basic production needs were satisfied. This may have delayed the European economies in
general reaching a level of excess supply where competition could have forced the companies to
adopt a market orientation. Indeed, since the Second World War, the economic conditions have
been such that there has been a seller's market most of the time. The most acute problems have
been those associated with meeting promised delivery dates and other more production oriented
difficulties.

3.2.2 Delayed market integration

Old rivalries, cultural bias, and political problems meant that there was very little
intergovernmental cooperation among the European states after the war. This delayed the
creation of a larger European market, that in turn could have created a larger European
economy. However, the Marshall Plan, and then the establishment of Benelux (Belgium, the
Netherlands, and Luxembourg), the Organization for Economic Cooperation and Development
(OECD), the Council of Europe, the European Coal and Steel Community (ECSC), the European
Economic Community (EEC), and the European Atomic Energy Community (Euratom) gave many
European countries the impetus to increase their production ability and capacity.

3.2.3 Heavy regulations

Although almost all West European countries had theoretically free market economies and
multiparty democracies as their common goals, in many parts real competition did not exist. The
reason for this could be attributed to heavy regulatory practices governing business life in
several parts of Europe. Even in 1999 some broadcasting, telecommunications, and transport
systems as well as utilities were in the hands of the public sector.

3.2.4 Public sector involvement

During the post-war period, governments interfered with the markets by establishing companies
that were owned and run by the public sector. This practice was particularly dominant in the
countries in the Soviet-led Eastern bloc that were run on communist principles based on a one-
party and state-owned economic system, and continued until the early 1990s. In addition to that
practice, many West European countries had formed companies owned solely by their
governments. These practices delayed the establishment and development of private companies
based on profit motivation. At the end of the twentieth century many European countries still had
several nationalized or renationalized companies—the so-called stateowned enterprises. This
European public-sector tradition is in contradiction to the US business traditions.

3.2.5 National markets


Strong national identities and nationalist thoughts in terms of business practices did little to
support a unified European market but rather accelerated a tendency towards more
fragmentation. Products would be labelled as made in a specific country, and until the 1990s it
was not possible to find products with the label ‘Made in Europe’. This fragmentation of Europe
into smaller markets did not help West European countries develop the conditions necessary to
achieve economies of scale in many production areas.

3.2.6 Protectionist tendencies

In several European national markets, import substitution was a national economic policy for
many years. This practice hampered the development of a bigger European market and helped
the further fragmentation into many industries with smaller production capacity. Consequently, it
took a long time to develop global, standard European products that can compete in global
markets.

3.2.7 Language differences

Strong feelings supporting the maintenance of national languages and regional diversities have
influenced the economic and political agenda of many European states over the centuries. This
supported the fragmentation tendencies and prevented the development of a common European
business language, though English is becoming the language of both European and global
business, perhaps because of the influence of the US companies in international markets (Dalgic
1992).

3.2.8 Local business traditions and practices

In many European markets some companies were kept going despite the fact that they were not
economically as sound as they could be. Several forms of government subsidies and government
contracts were used to keep many non-economic entities working. In the end, many European
companies have had to rely on continued government support in order to continue to exist in the
face of competition. This practice, which is characterized by lack of competition and protection by
various means, has delayed many West European markets from reaching the level of the sales
era and from proceeding on to the era of market orientation.

3.2.9 Dilatory approach to marketing education

Marketing was seen as an unimportant activity in many European universities until the 1970s.
Even at the end of the twentieth century some old European universities still retained this
tradition. This might have led to the late entrance of European researchers into the field of
marketing as compared to their North American colleagues. In many European universities,
marketing as an independent area of study was introduced only in the late 1960s or early 1970s.
According to a European practitioner, Europeans should blame themselves for this lack of
interest. A European marketing author, Grönroos (1989: 53), points out that marketing mix and
the other basic ideas of marketing were developed in North America and are widely accepted in
the Western world, and admits: ‘We have no European marketing theory or model geared to
European conditions.’ He also blames the European researchers as the cause for this
development.

However, these views do not seem to be justified in the light of the reasons discussed. It is
neither a matter of laziness nor a lack of vision of European scholars but a cultural, historical,
political, and economic reality of Europe and its macroenvironmental factors. Even in the late
1990s, differing opinions among the EU nations about the interpretation and application of
articles of the Maastricht Treaty and enlargement issues were perceived to be a reflection of the
past, which could explain some of the reasons why Europeans did not develop coherent
Euromarket and Euromarketing models.
After studying 436 organizations in the Netherlands, Bamossy (1988) concluded: ‘Marketing has
a bad image. At best, marketing was seen as equal to advertising, and at worst marketing was
associated with aggressive attempts to stimulate demand for and increase the market share of
commercial goods. Potential contribution of marketing management concept is not well
understood.’

Piercy (1985,1989) and Piercy and Morgan (1989) reported several research studies from the UK
about the state of marketing as a function, marketing as a department, and marketing as a
guiding principle among UK companies. They concluded that a great majority of the UK firms that
were the subject of those surveys had had problems understanding and handling their marketing
activities. Another European author, Baker (1991: 5), in explaining the state of market orientation
in the UK, concluded that the Americans ‘appreciated this in the 1950s, the West Germans and
Japanese in the 1960s, the British belatedly in the late 1970s (up until the mid-1970s nearly all
our commercial heroes were sales people, not marketers)’.

Much of the literature since 1970 concerns itself with a renaissance of the original marketing
concept. The number of theoretical papers published since 1974 in the Journal of Marketing and
the European Journal of Marketing has steadily increased following a period of neglect in the early
1970s (Howard et al. 1991). The Marketing Science Institute in the USA added weight to these
investigations by declaring the understanding of customer-oriented organizations ‘as one of four
… highest priority research topics’ (Marketing Science Institute 1990:4).

4 Organizational and managerial characteristics of market-oriented companies


ORGANIZATIONAL and managerial characteristics of market-oriented companies and the
antecedents of this orientation in terms of managerial implementation issues have been covered
in various conceptual and practical studies. In two separate empirical studies by different
researchers, similar or very close conclusions were reached about the definitions and constructs
of market orientation. Kohli and Jaworski (1990: 2) define market orientation as the
organizationwide generation of market intelligence pertaining to:

• current and future customer needs;


• Dissemination of the information across departments;
• Organization-wide responsiveness to it.

In another study aiming at the exploration of the correlation between the market orientation and
business profitability, Narver and Slater (1990a: 21) stated that the three hypothesized
behavioural components of a market orientation comprised the activities of:

• market information acquisition;


• dissemination;
• the coordinated creation of customer value.

A careful analysis between these two conclusions will reveal the following three common
constructs that underline a market orientation:

• organization-wide acquisition/generation of market intelligence/information pertaining to


current and future customer needs;
• dissemination of market intelligence/information across departments within the
organization;
• organization-wide responsiveness/coordinated creation of customer value.

The authors of these studies consider market intelligence (market information) as the primary
activity and as a starting point for market orientation, while, Kohli and Jaworksi (1990) consider
the following as market information:
• exogenous forces that affect the needs and preferences of end-users and distributors—e.g.
competition, regulation, etc.;
• current as well as future needs of customers.

These researchers posit that each company may be evaluated as to whether or not it has those
antecedent characteristics. As stated by Webster (1992:14), ‘marketing can no longer be the sole
responsibility of a few specialists.’

Peter Drucker (1954) argues convincingly that creating a satisfied customer is the only definition
of business purpose, or, as McKenna (1991) succinctly states, ‘Marketing is everything.’
Intuitively, and sometimes explicitly, successful entrepreneurs and traders have always accepted
as a fundamental truth the fact that creating customer satisfaction is the only way to long-term
business success.

The principles of marketing have been applied for many thousands of years. No company, or
trader, would ever have existed without supplying a product or service that, at one time, was the
best available solution to certain needs of the customer. Traders would perceive needs, develop
offerings to meet those needs, and communicate that such solutions to those needs were
available. Products would be priced, or bartered at a rate, such that both buyer and seller shared
in the value created, the seller by means of a profit and the buyer by means of utility of some
kind. This notion is central in the justification of free enterprise capitalism as a social and political
system. As Houston (1986) points out, ‘Customer focus clearly existed when the king ordered
boots from the bootmaker.’

Many small companies still operate on the principles of customer intimacy, where the proprietor
is literally ‘very close to the customer’. Inside growing firms, such customer intimacy is hard to
maintain, and that increasing distance is often the beginning of the end of a market orientation.
Dalgic and Maarten (1994) link this closeness with the concept of niche marketing and argue that
start-ups are closer to their customers and this closeness may create a niche for them.

The word ‘profit’ or ‘profitability’ is often included in definitions of marketing, and, in Narver and
Slater's (1990a) words, profit (together with ‘long-term’) provides a decision criterion for market
orientation. How then does a company price its products in order to share the value created
equitably with the customer? On the cost side, certain products that a firm may offer will have a
very low relative cost/potentially high margin and are probably exploiting company core
competencies to the maximum. Other products may be ‘service lines’, perhaps bought in to
complete the product range offering, and will be relatively high cost/low, if any, margin. Should
the company cross-subsidize products, should it maximize margins on the low-cost products by
benchmarking prices against competition, or should it price at the halfway point between the
value to the customer and the cost price—perhaps a ‘fair’ share of reward? One thing is evident
among these interesting questions: it may not be possible simultaneously to maximize customer
satisfaction and profits, but we can, and we should, attempt to exceed customer expectations. If,
as seems likely, customer expectations are based largely on competitive offerings, then we are
reinforcing the importance of competitor and customer intelligence as the basis for price setting
and hence (when compared to value created) determining the level of customer satisfaction. For
this reason, competitor intelligence must feature in our definition of market-oriented behaviour,
either in the context of ‘additional forces in a market’ (Lusch and Laczniak, 1987; Jaworski and
Kohli 1993), or as a focus in its own right (Day and Wensley 1988; Narver and Slater 1990a).

Also, if we accept the reasonable point that every customer has a unique set of needs, then we
must also assume that maximizing customer satisfaction must imply a unique, tailored solution
for every customer. Clearly, some organizations, large and small, are specifically designed to
perform such bespoke work, from tailors in Bangkok or Hong Kong to many management
consultants, and, with the increasing power of information technology (IT) some manufacturing
companies are moving towards mass customization. However, for many companies who currently
target a diverse market with a range of ‘standard’ products, competitively superior (but not
maximal) levels of customer satisfaction, consistent with profit objectives, must be the realistic
goal.

The way that these companies can achieve a better fit between a standard product offering and
variable customer needs is by empowering frontline staff to vary the service component of the
offer, and to provide unbundled pricing options. This way, the full-service/premium-price buyer
can, for example, have product, delivery, installation, training, credit, etc., whilst the budget
buyer can opt for the core product and collect it himself. Customers in the middle ground can
‘customize’ their own product package to suit their price range and resources. This is entirely
consistent with the marketing concept and is a contributor to the third element of market
orientation, as we have defined it: organization-wide responsiveness/coordinated creation of
customer value.

According to the shareholder value maximization view (Rappaport 1986; McTaggart et al. 1994),
no company can create wealth for its shareholders without having very satisfied and loyal
customers, yet it is quite possible to do the opposite and to achieve high levels of customer
satisfaction and be unable to translate this seeming advantage into adequate returns to
shareholders. McTaggart et al. (1994) conclude that the limits to customer satisfaction should be
determined as follows:

As long as management invests in higher levels of customer satisfaction that will enable
shareholders to earn an adequate return on their investment, there is no conflict between
maximizing shareholder value and maximizing customer satisfaction. If, however, there is
insufficient financial benefit to shareholders from attempts to increase customer satisfaction, the
conflict should be resolved to avoid diminishing both the financial health and long-term
competitiveness of the business.

‘The personal-contact network will be used by the entrepreneur owner manager to seek out sales
opportunities and to glean actual sales on the back of wider information exchanges.’ (Chapter 25,
p. 578)

‘A large number of contact employees interacting with the customers create value for them in
various service processes …’ (Chapter 21, p. 505)

4.1 Company response and innovation

There seems to be a dilemma between satisfying customers' needs and desires and the new
levels of technology and innovations. Technological innovations take place gradually and many
new technologies are so different from previous offerings on the market that customers may not
recognize their need for them before they are marketed. How can the customer know what the
customer does not know? As Hamel and Prahalad put it in 1994:

Customers are notoriously lacking in foresight. Ten or 15 years


ago, how many of us were asking for cellular telephones, fax
machines and copiers at home, 24-hour discount brokerage
accounts, multivalve automobile engines, compact disk players,
cars with on-board navigation systems, MTV or the Home Shopping
Network? … if the goal is getting to the future first,
rather than merely preserving share in existing businesses, a
company must be much more than customer-led.
As we have discussed, being market oriented is more than being customer led. American
business magazine Fortune in an article of 1 May 1995 followed this theme and concluded, ‘… if a
company truly understands its customers' needs, it can in good conscience disregard what they
claim to want’.

The term ‘customer intimacy’ is sometimes used to describe this closeness to the customer, and
market orientation must depend upon an expanded definition of customer needs to include latent
needs. Customer needs are evident but not yet obvious, and successful managers will need
superior skill in understanding customers in order to identify and satisfy these unidentified, yet
significant, needs (Day 1990). Information processing (the major process exhibited in market
orientation) is again shown to be the key to satisfying customers, whilst respecting competitive
pressures and value-creation constraints. In many situations, of course, the value-maximizing
response may well be no response—that is, ‘market oriented’ does not carry the same reactive
obligations as ‘market led’.

4.2 Two distinct organizational types of market orientation

The marketing literature appears to disagree regarding what is the impetus to the adoption of a
market orientation in companies. There seem to be two distinct organization types regarding
their market orientation; one group can be labelled as Type A, the other as Type B.

A-type firms exhibit a purer form of market orientation, and embody a genuine philosophy that
generating satisfied customers and satisfactory profits are not mutually incompatible goals and
that, in fact, they are the only long-term goals that make business sense. They are ‘learning
organization’, as Slater and Narver (1995) put it. A-type firms are likely to be small and growing,
to have strong leadership and culture, to be innovative, lean, and flexible. As Peters and
Waterman (1982) describe, these firms may be identified by the kinds of myths and heroes that
the company celebrates. A-type firms focus on customer satisfaction, customer loyalty, focus on
relationships, and the lifetime value of the customer.

B-type firms view market orientation as a ‘magic bullet’solution to external pressures, particularly
increased competition, a more expensive modus operandi to be used only when necessary and in
order to stay one step ahead of the competition. This group of firms regards market orientation
as a corporate stage of evolution, brought about by external pressures, particularly competition.
The B-type firm is driven by cost considerations and by competitor analysis. It is likely to be
large, bureaucratic, and reactive.

B-type firms are obsessed with benchmarking their offerings against competitors, whilst A-type
firms attempt to satisfy their customers to the point where a loyalty exists and the company
effectively eliminates competitors by domesticating (Arndt 1979) the relevant market, so that the
price-driven microeconomic paradigm no longer applies. This (A-type/B-type) distinction may
account for the two schools of thought regarding the definitions of market orientation: one (Day
and Wensley 1988; Narver and Slater 1990a) includes ‘focus on competitors’ explicitly; the other
(Kohli and Jaworski 1990; Jaworski and Kohli 1993) does not include separate reference to the
competitor in the list of attributes or exhibited processes in the market-oriented firm, but rather
includes competitor intelligence in a broader category of market intelligence including
competitors, customers, and other stakeholders. These two organization types of market
orientation are compared in Box 2.3.

Marketing strategy can be viewed as a continuum, but it is not wise for a business continuously
to attempt to adjust the magnitude of its market orientation in relation to various moderators
(Dalgic and van der Weijden 1994). This is the challenge for most mature companies. For existing
A-type firms, the challenge is to avoid becoming a B-type as the company grows. The challenge
for B-type companies is how to become more like the A-type, and, as the literature on corporate
culture shows (Kotter and Heskett 1992), it is much more difficult to change an existing culture
than it is to establish an appropriate culture in a new company.

If the link between market orientation and performance can be shown to be robust across all
industries and environments, then the B-type firm has no reason to accept a limited amount of
matket orientation at a minimum cost. The message for all companies will be to adopt a full
market orientation to achieve superior and sustained business performance.

4.3 Management and market orientation


In the management of the company top managers play a critical role in encouraging the
employees to act in harmony with the norms and values of market orientation (Kohli and Jaworski
1990). The emphasis of top management on market orientation will encourage personnel to be
sensitive for market developments, to share this information with colleagues, and to respond on
this information accordingly (see Insert).

We can rephrase this relationship with the following conclusions. The greater the top-
management emphasis on market orientation, the greater the

• market-intelligence generation,
• intelligence dissemination, and
• responsiveness of the organization.

Responsiveness to the market developments often encompasses the courage to invest in new
products and services without knowing beforehand if these investments will yield the expected
results. Jaworski and Kohli (1993: 55) found several factors as important antecedents of the
implementation of a market orientation. These factors are:

• top management emphasis on market orientation;


• calculated risk-taking and willingness to accept occasional failures of new products and
services by top management;
• the development of interdepartmental dynamics and connectedness, and the elimination of
interdepartmental conflicts;
• the installation of a market-based rewards system; and
• less centralization, formalization, and departmentalization within the company.

A willingness of top management to take risks is, therefore, crucial for a market-oriented
company. We may then reach the following conclusion: the greater the risk aversion of top
management, the lower the market-intelligence generation, the intelligence dissemination, and
the responsiveness of the organization.

Another point of importance is the quality of the interdepartmental cooperation. A certain


amount of interdepartmental conflict will affect the sharing and the responsiveness of relevant
market information. Thus the following conclusion may be reached: the greater the
interdepartmental conflict, the lower the intelligence dissemination, and the responsiveness of
the organization.

Closely related to the former point is the measure of formal and informal contact between
departments. The greater the extent to which employees through different departments are
connected, the more information will be shared and will be responded on. As a consequence, the
greater the interdepartmental connectedness, the greater the market-intelligence dissemination,
and the, responsiveness of the organization.

Market orientation is directed at innovation and risk-taking. Formal and centralized


decisionmaking is essentially conservative in character. Therefore, it seems likely that
formalization and centralization are inversely related to information generation, dissemination,
and design of responsive programmes of action. A market orientation stimulates innovative
behaviour. Innovative behaviour consists of an initiation stage and an implementation stage.
Formalization and centralization may hinder the initiation stage where creativity and flexibility
are much needed. In the actual implementation stage, however, where the organization and
management of the (production of) the innovation are decisive, it is likely that formalization and
centralization actually facilitate the implementation. So, the greater the formaiization, the lower
the intelligence generation, dissemination and response design, and the greater the response
implementation.
It also seems likely that, if managers are evaluated and rewarded by market-related factors, this
will have a positive influence on a market orientation. This means that, the greater the reliance
on market-based factors for evaluating and rewarding managers, the greater ( 1) the market-
intelligence generation, ( 2) the intelligence dissemination, and ( 3) the responsiveness of the
organization.

Researchers Kohli, Jaworksi, and Kumar (1993) have developed an instrument to measure market
orientation of the organizations. This instrument is called Markor. It is in fact, a diagnosing
questionnaire and consists of one general market-orientation factor, one factor for intelligence
generation, one factor for dissemination and responsiveness, one marketing-informant factor,
and one non-marketing-informant factor. Markor has been accepted as a valuable instrument to
measure market orientation and, is therefore, used as a point of departure for the research to be
undertaken in this field by several researchers.

A developing stream of empirical research has found a strong relationship between market
orientation and several measures of business performance, including profitability, customer
retention, sales growth, and new-product success. Day (1994) stresses the role of capabilities in
creating a market-oriented organization. He observes, ‘Capabilities are complex bundles of skills
and collective learning, exercised through organizational processes that ensure superior co-
ordination of the functional activities. I propose that organizations can become more market
oriented by identifying and building the special capabilities that set market-driven organizations
apart’ (1994: 38). According to Day (1994) market-driven organizations are superior in their
market-sensing and customer-linking capabilities.

Slater and Narver (1995: 65) state: ‘presumably, learning facilitates behaviour change that leads
to improved performance.’ It therefore seems most likely that a committed learning organization
will perform better than one that is not so committed. Organizations that are able to adapt to,
and perhaps even create, their environments, that learn from the behaviour of their customers,
and that know how to improve their skills and knowledge continuously must somehow be more
successful than their counterparts. Indeed, especially in knowledge-based industries. This may be
the only basis on which to build a sustainable competitive advantage.

Some authors have written on the role of the environment for the market orientation-business
performance link. In the Jaworski and Kohli (1993) study the following three moderators are found
to influence market orientation-business performance (they are three of the four environmental
characteristics mentioned above): market turbulence, technological turbulence, and competitive
intensity. The performance of the economy appeared to be too complex to measure, so this
variable was not included. Kohli and Jaworski consider market turbulence as the rate of change in
the composition of customers and their preferences. If an organization operates in a turbulent
market, it has to modify its products and services more often than when it operates in a stable
market. It therefore seems likely that firms operating in turbulent markets have a greater need to
be market oriented and committed to learning than those operating in relatively stable markets.
They have to monitor and respond quickly to evolving customer preferences. This leads us to the
next conclusion, which is that, the greater the market turbulence, the stronger the relationship
between market orientation and business performance.

If competition is low, it does not seem to be difficult for an organization to be profitable. The need
to be a market-oriented or learning organization is low, as customers will buy the company's
products and services anyhow. If a business meets high competition, customers can walk away to
the competition at any moment. Therefore, under these circumstances it seems worthwhile to be
highly market oriented and to make a commitment to learning so as to be able constantly to
satisfy the customers' needs and wants. This leads to the conclusion that the greater the
competitive intensity, the stronger the relationship between market orientation and business
performance.

Technological turbulence or the rate of technological change may influence the market
orientation and learning-performance link negatively. Organizations that work with nascent
technologies that are undergoing rapid change may be able to obtain a competitive advantage
through technological innovation, thereby diminishing—but not eliminating—the importance of a
market orientation. By contrast, organizations that work with stable (mature) technologies are
relatively poorly positioned to leverage technology for gaining a competitive advantage and must
rely on market orientation to a greater extent (Jaworski and Kohli 1993). The same will be the
case for the need to be a learning organization. It is likely that the need to learn from the
customers is conversely related to the degree of a technologically driven strategy: this can be
stated as: the greater the technological turbulence, the weaker the relationship between market
orientation and business performance.

Talk to your customers if you wish to be profitable

The Chairman of Marks & Spencer spends sixteen hours out of his 7–80 hours working week in
shops talking with customers and staff. By doing so he keeps in touch with the customers and
motivates staff to do the same. He says about using his time in this way, ‘It is more profitable
than cosying up to the City.’

Source: Marketing Business (1998).

4.4 The relationship between market orientation and the learning


organization

Learning organizations have the collective capacity to learn as entire organizations. They learn
from their environment, they learn from their clients, they learn from their competitors, and one
part of the organization can learn from the mistakes of another part. So essentially a market
orientation and the learning organization seem to have much in common. For instance, market-
orientation theorists stress intelligence generation and intelligence dissemination, while the
learning-organization scholars mention openminded enquiry and synergistic information
distribution. Slater and Narver (1995) support this notion. Their argument is that a market
orientation (complemented by an entrepreneurial drive) is beneficial for the performance of the
company. However, this will be the case only if it is accompanied ‘by an appropriate climate to
produce a learning organization’. This climate must entail generative learning. According to
Slater and Narver (1995), learning organizations consist of five critical components:

• market orientation;
• entrepreneurship;
• facilitative leadership;
• organic and open structures;
• a decentralized approach to planning.

Only when all of these five characteristics are present will superior performance be produced.

There is a leak between a market orientation and the learning organization from the viewpoint of
the relationship between market information processing and organizational learning. In
successful organizations market information is first acquired, secondly distributed, thirdly
interpreted, and fourthly stored for future use in the organizational memory. This describes a
sound way of market information processing that is typical for both a learning and a market-
oriented organization.

As Day (1994: 43) puts it, ‘learning is more than simply “taking in information”. The learning
process must include the ability of managers to ask the right questions at the right time, absorb
the answers into their mental model of how the market behaves, share the understanding with
others in the management team, and act decisively.’ In his paper on market-driven firms—which
could also be called market-oriented firms—Day (1994) investigates the learning processes in
this kind of company. He states that learning processes in market-driven firms are distinguished
by:

• open-minded enquiry, based on the belief that all decisions are made from the market back;
• widespread information distribution that assures relevant facts are available when needed;
• mutually informed mental models that guide interpretation and ensure everyone pays
attention to the essence and potential of the information;
• an accessible memory of what has been learned so the knowledge can continue to be used.

So, for Day (1994), market-driven or market-oriented organizations are characterized by learning
processes.

5 Implanting market orientation in organizations


WHILE the theoretical arguments in favour of following a marketing orientation are clear in
practice, it seems extremely difficult to implant such an approach in an organization. What is
required is a strong and decisive lead from top management.

5.1 A strategic vision and long-term commitment

Market orientation is a continuous, strategic commitment. The decision to implant a market


orientation into an existing or a start-up business requires the support of the entire organization.
For this reason, it must be decided and implemented by the top management team led by the
Chief Executive Officer (CEO) of the company on a long-term basis (see Insert). Ansoff (1987: 61)
stresses the importance of this long-term view, commenting:

Exclusive concern with proximate profitability would be almost certain to leave the firm run down
at the end of the period. Total emphasis would be on current products and markets; on
advertising, promotion, sales force, productivity of the manufacturing organization. But to remain
profitable into the long-term, the firm must continue to renew itself; new resources must be
brought in and new products and markets must be developed. Many key phases of this self-
renewal activity have long lead times. Therefore, during the proximate period resource
commitments must be made to such long-term needs as research and development,
management training and new plant and equipment.

Levitt in 1983 saw marketing as a lifetime commitment, like a marriage: ‘The era of the one-night
stand is gone. Marriage is both necessary and convenient. Products are too complicated, repeat
negotiations too much of a hassle and too costly. Under these conditions, success in marketing is
transformed into the inescapability of a relationship. Interface becomes interdependence.’ This
interdependence should be reflected in a lifetime commitment to good quality, adaptation to the
customers' changing needs, and the establishment of ongoing relationships with the customers.
Not only existing customers, but those who have already left the company, must be taken into
account, and every effort should be made to regain their support. An outline for applying
different customer-relationship strategies for different customer groups is given in Box 2.4.

These strategies may require conscientious efforts, carefully detailed analysis, well-planned,
realistically timetabled, and sensitively applied and controlled methods. It may be concluded that
a solid reputation in the minds of the customers is essential to be successful as a marketer (see
Insert).

Marketing matters too much to be left to everybody

Kodak's Chief Marketing Officer, Carl Gustin, explains why marketing still matters.

‘We've seen all the articles predicting the death of the marketing organization. Some say
marketing should be embedded throughout the organization, eliminating any need for the
marketing department. Others note that the classical organizational structures have collapsed,
leaving marketing teams without any useful function. Many say that since the Internet is
changing everything, it won't be long before people make their major purchases on-line. This, of
course, will eliminate sales people, drive retailers out of business, kill newspapers and
magazines, and so on.

At Kodak we think marketing matters more than ever; that's why we formed the office of CMO
(viz. Chief Marketing Officer) over two years ago. To achieve corporate growth (in volumes,
margins, and share), you must enjoy and intimate relationship with your customers and end-
users.’

Source: MSI Review (1997).

Making dedication to customers an obsession

Hewlett Packard successfully combines a dedication to customers with an obsession with


measurements. The performance of every employee is evaluated against a scorecard and every
scorecard includes some customer-led measures.

5.2 Managing the change for market orientation

To implant a market-orientation strategy may require several changes within an organization. On


this matter, Lichtenthal and Wilson (1992) conclude ‘to change, a firm must analyze the current
system and then prepare a detailed plan to create the norm structure that will support the
degree of market orientation it needs to implement its market strategy’. It is clear that analysing
the current system and behaviour and preparing a detailed plan for the norm structure that will
support the degree of market orientation require changes in the planning and execution of firms'
strategic marketing activities. These changes should be planned and implemented. Management
should develop methods to influence the behaviour of the people by rewarding the good ones.
Topmanagement commitment and exemplary behaviour support the emergence of new norms
because they reinforce the transmission of norms between individuals: stories, rituals, and
symbols. With managerial skills and exemplary behaviour, managers must inspire employees and
channel their energy, abilities, and qualifications, and they must also exhibit a strong support for
the plan for executing the policy (Robbins 1992).

Next to exemplary management behaviour, a well-aimed reward system, and the power
structure, the level of delegation and the communication system play an important role in
institutionalizing a culture (Ansoff 1990). The job descriptions and policy statements must reflect
a market view (Lichtenthal and Wilson 1992). The support of the entire organization in general
and employees in particular is vital for a market orientation; as the same authors conclude, ‘we
might require a majority of the members of the organization to possess a market orientation for it
to become normative’. Here internal marketing may offer a better chance of success.

5.3 A guideline for implanting market orientation

As a guideline for implanting a market orientation, the following points may be followed:

• Put the CEO and the top management team in charge of the process.
• Ensure that the reason for change towards market orientation is clearly communicated to
every individual in the firm by every means of communication.
• Create an internal environment for

consultation and feedback.


• Take time to finish the total change process including the feedback stage.
• Involve employees and give them freedom to work out the change for their own functional
areas.
• Provide training in new values, work methods, and customer understanding and service
quality improvement.
• Acknowledge and reward the successful employees.
• 5.4 Action plan for implementation

The following is a guideline towards achieving the changes in the organizational culture required
to implant a market orientation:

• establishing a market intelligence system and its related departments equipped with
human, physical, and financial resources, directed to the market environment to collect
information;
• developing and implementing a method of information dissemination that will be
responsible for the distribution and interpretation of the market intelligence;
• creating an informal, flexible, active communication system between and among
departments in a supportive manner, reducing the bureaucracy within the company, supporting
bottom-up information flows as well as top-down ones;
• establishing market-based reward and payment systems, as well as internal communication
systems;
• abolishing formal structures and establishing market-based departments and project teams;
• planning for an internal marketing system to present the market-orientation strategy to the
company personnel;
• planning company-based training programmes aimed at creating customer sensitivity,
service quality improvement programmes, and customer understanding strategies;
• establishing a customer-retention philosophy within the company;
• preparing for a relationship marketing strategy, depending upon the size of the company;
• adopting of one-to-one marketing with big customers, and building niches around
customers;
• applying total quality management and periodical service quality surveys among
management and customers;
• setting up customer help lines;
• undertaking customer satisfaction surveys about both goods and services and action upon
the results.

6 The future
IN order to develop more accurate, well-developed, and fine-tuned management methods and
marketing decision-making tools, we need more research in the market-orientation field. This
field will help many companies to operate successfully and eliminate failures. We need
comparative research between service companies, inter-industry and intra-industry surveys in
similar and dissimilar business fields. In addition to studies only in the marketing area, we need
cross-fertilization among other fields of study: organization theory, sociology, psychology, social
psychology, finance, history, economics, IT, and strategic management. Many marketing issues
require multidisciplinary approaches. There are also several issues that need to be investigated.
For example:

• Are market-oriented companies in national markets also market oriented in foreign


markets?
• What is the impact of national culture on market orientation?
• How long does it take a company to increase its market orientation?
• What is the relationship between market orientation and entrepreneurship?

Further reading
Dalgic, T. (1994b), ‘International Marketing and Market Orientation—An Early Attempt at
integration’, Advances in International Marketing, 6: 69–82.

----- (1998), ‘“Niche” Marketing Principles—Guerrillas vs. Gorillas’, Journal of Segmentation in


Marketing, 2/1:5–16.

Day, G. S. (1994), ‘The Capabilities of Market-Driven Organizations’, Journal of Marketing,


58/4:37–52.

Kohli, A., Jaworski, J., and Kumar, A. (1993),‘MARKOR: A Measure of Market Orientation’, Journal
of Marketing Research (Nov.), 467–78.

Lichtenthal.J. D., and Wilson, D.T. (1992), ‘Becoming Market Oriented’, Journal of Business
Research, 24: 191–207.

Slater, F. S., and Narver, C.J. (1995), ‘Market Orientation and Learning Organization’, Journal of
Marketing, 59/3: 63–75.

Ruckert, R. W. (1992), ‘Developing a Market Orientation: An Organizational Strategy Perspective’,


International Journal of Research in Marketing, 9:225–45.

Discussion questions

1. Try to identify those shops that adopt market orientation in your neighbourhood shopping
mall or shopping centre.
2. Why is market orientation not a once-off activity, but a long-term commitment?
3. Critically examine the contention that ‘Marketing is the least developed activity in an
underdeveloped country’.
4. ‘Marketing is the management of life-time relationships with the customers.’ Do you agree?
Why is managing a relationship with customers so important?
5. Try to find at least five niche marketers in your country.
6. ‘Today's market-oriented companies may turn out to be production oriented if they do not
follow the changes in the market place.’ Do you agree? Explain why.

Oxford is a registered trade mark of Oxford University Press in the UK and in certain other
countries

Published in the United States by Oxford University Press Inc., New York

© Oxford University Press 2000

Box 2.3 Two types of organization for market orientation


A type B type

Genuine market customer- Customer orientation


Orientation philosophy accepted when market
forces require it
Belief that profits come Emphasis on cost cutting
from satisfied customers and profit
maximization
Learning organization Learning only when
Competitors make it
necessary
Customers/competitors/ Competitor-based
stakeholders/ market information
technology-based generation
market information
generation
Lean, mean, flexible Large, bureaucratic
Strong leadership and Change in organization
organization culture for culture
Customer care
Innovative Imitative
Long-term focus Short-term focus
Box 2.4 Customer types and customer relationship strategies
Customer type Customer relationship strategy
Past Regain
Existing Retain
Potential Gain
Source: Dalgic (1998).

~~~~~~~~

By Tevfik Dalgic

Edited by Keith Blois

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