Market Orientation Behavior - Assignment Example

Strategic Marketing Executive summary The concept of market orientation has received a great deal of attention over the last decade or so in marketing practice and academic regime. Several perspectives have been provided as academic scholars endeavoured to conceptualize the construct of market orientation and implement it in the real world. A majority of empirical researches have proposed that an appropriate market orientation strategy provides companies with sustainable source of competitive advantage and also improves overall organizational performance. It is with regards to this fact that the researcher ventures to critical evaluate the four major components of market orientation which in turn enables companies to satisfy the needs and demands of their customers thereby maximizing value for the shareholders. Given the fact that companies puts the interest of customers on top of their priority list, their level of satisfaction is enhanced by several strategies implemented by company managers that are aimed towards proper competitor profiling and inter-functional coordination. All of this is achieved via adequate collection of analysis of market intelligence. In this particular project the researcher will conduct a critical assessment of all of the above mentioned factors as well as highlight the effectiveness with which the researcher’s company conducts market orientation. By doing so, the researcher will be able to identify the gaps that exist in the company’s market orientation strategies and make appropriate recommendations to the managing director. Table of Contents Purpose of the report 4 Introduction 4 Discussion 4 Customer orientation 6 Emphasis on customers 6 Competitor orientation 7 Importance of information 7 Inter-functional coordination 7 Organizational culture 8 Organizational effectiveness on components of marketing orientation 8 Recommendation 9 Reference List 10 Bibliography 11 11 Purpose of the report The report is being addressed to the managing director of XYZ Company with the underlying aim of setting forth the effectiveness of the company with respect to the fundamental components of market orientation. Given the fact that having an effective marketing orientation strategy in place is one of the most pivotal activities to be performed by an organization, the researcher endeavours to pin point certain strategies that would enable the organization to enhance its market orientation effectiveness. Introduction In a world that is characterized by rapid changes in customer preferences, even faster progress in the field of technology and increasing intensity of competitive contention, it becomes pivotal for organizations to develop a mechanism in order to generate information related to the market, analyze the same and respond in view of that. The cluster of activities set forth by organizations everlastingly in order to scrutinize, analyze as well as respond to the transformations in the market is termed as market orientation (Rohit Deshpandé, John U Farley & Frederick E. Webster Jr, ‘Corporate culture, customer orientation, and innovativeness in Japanese firms: a quadrad analysis’, 23-37) The matrix of market orientation and its implications in terms of enhancing organizations performance has been researched considerably over the last decades or so. However, it is still not well comprehended how this construct manages to have such impounding effect on organizational performance and the manner in which it operates. It is with regards to this fact that the researcher endeavours to critically evaluate the concept of market orientation by drawing on the perspectives of academic scholars. In that way the researcher will be able to highlight the effectiveness with which XYZ company conducts market orientation and will also be able to pin point any inconsistencies that prevail in the strategies implemented by the organization. Discussion In synchronization with the perspectives of Ajay K. Kohli & Bernard J. Jaworski (‘Market orientation: the construct, research propositions, and managerial implications’, 1-18), John C. Narver & Stanley F. Slater (‘The effect of a market orientation on business profitability’ 20-35) provided a conceptualization of market orientation that established a unique approach towards evaluating this construct. Inherent in the explanation of market orientation provided by John C. Narver & Stanley F. Slater (‘Additional thoughts on the measurement of market orientation: a comment on Deshpande and Farley’, 233-236) is the behavioural component of this concept. The behavioural component of market orientation includes the following three elements: Customer orientation Competitor orientation Inter-functional coordination Organizational culture Long term profit objective for shareholders The conventional standpoints of market orientation perceive the construct as a business philosophy. Nonetheless, modern approaches towards market orientation matrix view the construct as a dimension of a company’s culture, a guiding representation of a company’s tendencies, a capability of attaining differentiation as well as an assortment of business behaviours exhibited by the company (José A. Varela & Marisa del Río, ‘Market orientation behavior: an empirical investigation using MARKOR’, 6-15). As far as the perspectives of Spiros P. Gounaris &, George J. Avlonitis (Market orientation development: a comparison of industrial vs consumer goods companies’, 354-381) are concerned, market orientation is viewed as both behavioural and cultural business philosophy. Two of the most relevant factors that determine a company’s market orientation practices are organizational and environmental (Varela and Rio, 2003). According to the authors market development is one of the salient features of market orientation. The effective and efficient implementation of market orientation strategies is strongly associated with cultural and personal acceptance of a company’s strategy. Therefore an extensive analysis of this construct posits that the behavior exhibited by a company’s management has a significant influence on the market orientation tendencies of any company (Lloyd C. Harris & Emmanuel Ogbonna, ‘Leadership style and market orientation: an empirical study’ 744-764). Market orientation can also be viewed as a framework of marketing management behavior that focuses on satisfaction level of customers, harmonization of functional marketing operations, sensitivity to intelligence and competition and mutually satisfactory quantifiers of performance. This framework is supposed to serve as a guidance tool for marketing managers and its significance lies in its ability to provide customer satisfaction in addition to attaining marketing effectiveness and efficiency. An appropriate market orientation strategy is a key determinant of competitive advantage for organizations. Nevertheless, the degree to which an organization attains competitive advantage depends largely on the effectiveness of its customer orientation, competitor orientation and inter-functional coordination (Barbara A. Lafferty & Tomas M. Hult, ‘A synthesis of contemporary market orientation perspectives’ 92-109). Customer orientation The customer orientation component entails a thorough understanding of the needs and demands of customers in order for a company to create and develop products and services that are of superior value to them. Value is created by increasing benefits to be received by customers upon buying a product or availing a service at low cost. In order to develop such a level of understanding, acquisition of vital information about customer tastes and preferences as well as the nature of political and economic constraints faced by customers is extremely important. This helps managers to make sure that the organization is cognizant of the requirements and needs of its existing and potential buyers (Lloyd C. Harris & Emmanuel Ogbonna, ‘Leadership style and market orientation: an empirical study’ 744-764). Emphasis on customers The nucleus of the market orientation model is occupied by the emphasis that is laid on the needs of customers. Given the fact that market orientation refers to the formulation and subsequent implementation of effective marketing concept, it makes sense that the basic groundwork of satisfying the requirements and needs of a company’s customers is inherent in any conceptualization of market orientation. Despite the perspectives viewed, the requirement for a company to understand its customer base, satisfy their requirements presently as well as in the future, create value for them and put their interest at the topmost position of the priority list is clearly stated in several definitions of market orientation. Competitor orientation Competitor orientation on the other hand requires a company to have a holistic view of the strengths and weaknesses of its current and potential competitors. One of the key quantifiers of competitive advantage is the degree to which an organization understands the long term strategies and capabilities of its competitors. Customer orientation and competitor orientation runs parallel to each other when it comes to collecting information from the market. Following information collection, it is pivotal for a company to analyse the technological ability of its competitors in order to assess their capability to satisfy the common base of customers (Lloyd C. Harris & Emmanuel Ogbonna, ‘Leadership style and market orientation: an empirical study’ 744-764). Importance of information Collection of information is critical both for customer and competitor orientation. Such mechanism is facilitated in a market driven economy where acquisition of information serves as an important quantifier enabling companies to determine the influencing factors that affects a buyer. The facts mentioned above are also echoed by the perspectives of Ajay K. Kohli & Bernard J. Jaworski (‘Market orientation: the construct, research propositions, and managerial implications’, 1-18) who explains the need to gather information in order to acquire market intelligence. The extent to which information is utilized by an organization both for its customers and competitors, determines the degree of market orientation. Acquisition of market intelligence is a crucial factor that enables companies to observe the actions taken by its competitors which in turn allows them to gauge the effects of those actions on the customers (Rohit Deshpandé, John U Farley & Frederick E. Webster Jr, ‘Corporate culture, customer orientation, and innovativeness in Japanese firms: a quadrad analysis’, 23-37). Inter-functional coordination This is one of the most important components of market orientation as it facilitates the dissemination of information within an organization. The significance of cooperative orientation is clearly evident in all three attributes that defines a market driven company. It is believed that information should permeate throughout the company and that tactical as well as strategic decision needs to be made and executed inter-functionally. The appropriate dissemination of market intelligence within each and every functional units of a company is important in order to make sure that synchronized action takes place in different business units. Achieving inter-functional coordination is extremely important when it comes to delivering value to customers. Organizational culture Rohit Deshpandé, John U Farley & Frederick E. Webster Jr (‘Corporate culture, customer orientation, and innovativeness in Japanese firms: a quadrad analysis’, 23-37) elaborates on the form of organizational culture that must prevail within an organization’s internal framework in order to create and deliver superior value to customers simultaneously delivering superior performance on behalf of the company. The significance of having a market oriented business culture is pivotal for organizations and the relevance of having this cultural perspective as groundwork for market orientation is extensively supported. This idea of having a culture facilitated market orientation apparently extends beyond the processes and structures followed in a market driven organization and emphasizes only on values that prevail within the company. It has been seen that companies that have relatively responsive culture outperform the ones which have bureaucratic cultures or are more internally oriented. The signifying of having a flexible organization culture became more prevalent as the idea of market orientation emulated into the concept of learning organization (Barbara A. Lafferty & Tomas M. Hult, ‘A synthesis of contemporary market orientation perspectives’ 92-109). An organization that has a market oriented culture can attain maximum effectiveness only if it is supported by a spirit of flexible and responsive entrepreneurship and a proper operational climate (Lloyd C. Harris & Emmanuel Ogbonna, ‘Leadership style and market orientation: an empirical study’ 744-764). Organizational effectiveness on components of marketing orientation The organization, in which the researcher is employed in, stands upon firm set of values and principles stipulated by the organization’s managers. The fundamental motto of the organization is to serve the customers in most efficient and effective way thereby creating value for them. When it comes to customer orientation, the company places significant importance in understanding the needs and demands of its customers. That is why the company has its relationship managers in place who interact on a frequent basis in order to learn about their tastes and preferences. The company also has a review team that gathers feedback from customers regarding the products and services provided by the company. This enables them to learn about the areas that need improvement. Collection of market intelligence is one of the fundamental responsibilities of the company. That is why the company has its in house market research analysts as well as external analysts (on a contractual basis) who conduct market research on behalf of the company thereby collecting critical information regarding the company’s position in the industry with respect to its customers as well as degree of favourability of customers towards choosing to avail the company’s products and services. This enables the company to assess its products and services thereby allowing them to bring upon further development within the same and gain competitive advantage. The organization has in place a robust line of communication that facilities smooth flow of information between every functional unit. This enables managers to enhance the level of coordination between individual members. Every work process is properly synchronized and there is an appropriate degree of interdependency between work breakdown levels. Having such a robust organization framework enables the managers to attain operational efficiency. The culture that prevails within the organization emulates it as a learning environment that enables employees to learn from each other’s skills and expertise. Such a flexible organizational culture provides employees with the opportunity to attain all-round development. Recommendation Even after having such a robust organizational framework that facilitates appropriate market orientation, the company is not being able to achieve competitive advantage. That is why the managers are recommended hire customer obsessed empathetic employees who would go beyond their thresholds to satisfy the customer base. A responsive customer involvement framework needs to be established that considers the feedback provided by customers and accounts for the same while making decisions. Compatible expertise needs to be built that enables the company to design innovative products and services which in turn would provide the company with significant competitive advantage. In addition to that, a robust business model needs to be built that can serve as a source sustainable value both for the customers and the shareholders. Reference List Deshpandé, Rohit, Farley, John U. & Webster Jr, Frederick E., Corporate culture, customer orientation, and innovativeness in Japanese firms: a quadrad analysis’, The journal of Marketing, 1993, 23-37. Gounaris, Spiros P. & Avlonitis, George J., ‘Market orientation development: a comparison of industrial vs consumer goods companies’, Journal of Business & Industrial Marketing, 16:5, 2001, 354-381. Harris, Lloyd C. & Ogbonna, Emmanuel., ‘Leadership style and market orientation: an empirical study’, European Journal of Marketing, 35:5/6, 2001, 744-764. Kohli, Ajay K. & Jaworski, Bernard J., ‘Market orientation: the construct, research propositions, and managerial implications’, The Journal of Marketing, 1990, 1-18. Lafferty, Barbara A. & Hult, Tomas M., ‘A synthesis of contemporary market orientation perspectives’, European Journal of Marketing 35:1/2, 2001, 92-109. Narver, John C. & Slater, Stanley F., ‘Additional thoughts on the measurement of market orientation: a comment on Deshpande and Farley’, Journal of market-focused management, 2:3, 1998, 233-236. Narver, John C. & Slater, Stanley F., ‘The effect of a market orientation on business profitability’, The Journal of Marketing, 1990, 20-35. Varela, José A. & del Río, Marisa., ‘Market orientation behavior: an empirical investigation using MARKOR’, Marketing Intelligence & Planning, 21:1, 2003, 6-15. Bibliography Grinstein, Amir., ‘The relationships between market orientation and alternative strategic orientations: a meta-analysis’, European Journal of Marketing 42:1/2, 2008, 115-134. Harris, Lloyd C., ‘Cultural obstacles to market orientation’, Journal of Marketing Practice: Applied Marketing Science, 2:4, 1996, 36-52. Hult, Tomas M., ‘Market-focused sustainability: market orientation plus!’, Journal of the Academy of Marketing Science 39:1, 2011, 1-6. Maydeu-Olivares, Albert & Lado, Nora., ‘Market orientation and business economic performance: A mediated model’, International Journal of Service Industry Management, 14:3, 2003, 284-309. Morgan, Robert E. & Strong, Carolyn A., ‘Market orientation and dimensions of strategic orientation’, European Journal of Marketing, 32:11/12, 1998, 1051-1073. Osuagwu, Linus., ‘Market orientation in Nigerian companies’, Marketing Intelligence & Planning, 24:6, 2006, 608-631. Sørensen, Hans Eibe., ‘Why competitors matter for market orientation’, European Journal of Marketing, 43:5/6, 2009, 735-761. Read More