WHAT THE HELLIS MARKET ORIENTATION?

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CONTENTS

1. Market Orientation as a Concept2. A Comparative Understanding:

Market Vs Product Orientation

3. Developing a Market Orientated Strategy

4. Evaluating Performance of a Market Orientated Organisation

5. The Apple Case Studies6. The Death of Market Orientation?

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MARKET ORIENTATIONAS A CONCEPT

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1.

The Birth of the Concept:Market Orientation (MO) as a

concept can be traced back to the 1950’s, when marketing was viewed as a concept. Instead of finding the rights customer, marketing orientation is about finding and directing the right product to the customer. (Kotler, 2006)

Since then there has been great deliberation of what market orientation stands for.

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MO Definitions- A set of believes that put the

customers interests first (Hooley, 1990)

- The ability of the organization to generate disseminates and makes use of superior information about customer and competitors. (Kohli and Jaworski, 1990)

- The coordinated application of interfunctional resources to the creation of superior customer value. (Narver and Slater, 1989) 5

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A COMPARATIVE UNDERSTANDING: MARKET VS PRODUCT ORIENTATION

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What’s the difference?Traditional industrial manufacturing is an

example of product orientation. They are ‘fordist’ in their outlook, focus on attaining economies of scale by mass production and are primarily cost affective.

Unlike the homogenous one size fits all approach adopted by product orientation, market orientation understands that no two buyers are the same. They are ‘holistic’ in outlook and take a more heterogeneous, personalised 1 to 1 approach to delivering product excellence.(Gounaris and Avonitis, 2001)

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Some MO Pointers A market orientated organisation:

Understand customers needs and wants Segment the market into target groups Focus on developing long terms customer

relationships Deliver through innovation and product

differentiation Attain competitive edge by searching for

latent markets Diagrams (1.0) and (2.0), further

demonstrates the difference between the two competing philosophies.

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Market Orientation

Customer Needs

Potential Market

Opportunities

Marketing Products and

Services

Customers

Production Orientation

Production Capabilities

Manufacture Product

Aggressive Sales Effort

Customers

Comparing Orientations

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Based on Jobber(2007)

Diagram (1.0)

Diagram (2.0)

Based on Times Newspaper Ltd(2007)

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IMPLEMENTING A MARKET ORIENTATED STRATEGY

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A Strategic OrientationA firm that develops an acute

long term understanding of present and potential customer needs and delivering these needs through superior value can be viewed as market orientated (Kohli and Jorwarski, 1990).

Gary and Hoolay suggest that there are two fundamental tenants to adopting a MO strategy.

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The Two TenantsThe first is the importance of

‘internal market orientation’. That is to create a corporate culture and customer understanding to all the stakeholders within the organisation.

The second is the importance of the organisation to learn from their success as well as failures and to build up product and market knowledge. 12

Integrating Systems/Information

In addition to encompassing the two tenants the organisation must also develop an integrated communications strategy to respond to customers changing needs. This may involve analysing the customers environment and collating data by using MIS systems (Management Information systems).

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EVALUATING PERFORMANCE OF AMO ORGANISATION

4.

To What Degree of Market Orientation?

The degree to which a company is market orientated will depend on which sector they operate in.

Traditionally market orientation has used empirical evidence or statistical analysis to measure overall business performance.

To subsume, the key areas of measuring performance is:

1. Intelligence Generation 2. Intelligence Dissemination 3. Responsiveness.

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Consequences of Orientation

However it is important to note that the relationship between market orientation and performance is dependant on external economic variables, such as competition and market turbulence.

To subsume, it can be formulated that the greater the market orientation of an organization, the higher its business performance, as shown in Diagram (3.0,B) below.

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Diagram (3.0)

Based on Jobber (2007)

A. B.

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5.

THE APPLE CASE STUDY

Embracing Market Orientation

Apple incorporated is an ideal case study of a flexible and dynamic firm, which had fully embraced the MO strategy.

By being innovative through product excellence and variety it has been able to turn its fortune around.

Despite its troubled past (declining market share of PC market 1985/15% - 2005/4%), it has managed to carve a new position for itself in the portable digital music market in 2001 by introducing the ipod.

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Apples Changing FortunesSince its phenomenal rise in 2001, it has now captured approximately 73% share of the U.S. digital portable music market and has been able to:Rebrand and position itselfAttract new target groupsExpand product range i.e. Nano, iphoneBuild an integrated music network i.e. itunesDevelop strategic alliance, i.e. with Samsung

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6.

THE DEATH OF MARKET ORIENTATION?

Does MO have a future?Given the generic nature of

market orientation, the main problem is the lack of consensus to what it really stands for!

Is it a corporate culture or guiding philosophy? (Gray and Hoolay, 2002)

About market scanning, information sharing and response activities? (Kohli and Jaworski, 1990)

Or is it an pseudo ideology that doesn't even exist! (Henderson, 1998)

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