2.Literature view of a market orientation pg.3

2.1 concepts of a market orientation pg.3

3.Discussion of sources of a market orientation pg.6

3.1 aspects of a market orientation pg.6

3.2 learning and innovation pg.7

3.3 effects on business performance pg.10

4.Outcomes of a market orientation pg.12

4.1 consequences of a market orientation pg.12

In recent years, consumers have differentiated their needs and wanted them to be fulfilled by the market. Since companies would die to have as many customers as possible, they had to focus their attention more and more on the needs of the customers. They could not come up anymore with their own designed products, but had to listen to all the wants and needs of its target market. One could ask whether all the effort being put into a market orientation is worth the trouble. To satisfy the needs of their customers, a company has to be more effective in its market orientation than any other. Th

These are potential payoffs from a market orientation that keeps a firm a step ahead of his rivals. Kohli and Jaworski (1993) have investigated as well the employee satisfaction payoff of having a market orientation. They state that a market orientation affords a number of psychological and social benefits to employees. Specifically, a market orientation is argued to lead to a sense of pride in belonging to an organization in which all departments and individuals work toward a common goal of satisfying customers. Thus, the greater the market orientation, the greater the esprit de corps and organizational commitment of employees.

It is not without reason that organizations adapt a market orientation. The advantages of a market orientation must overrule the disadvantages before deciding to implement it. When an organization has the right foundation for implementing one, there exists several benefits from a market orientation. Of course, there are some pitfalls that must not be forgotten. In this chapter will first be discussed in what environment to operate, then what the payoff of a market orientation is, followed by pitfalls to look out for.

Besides the different concepts of market orientation, a philosophy of market orientation arose. Narver and Slater (1998) say that the debate about the nature and benefits of being market oriented still continues due to the fact that scholars are talking about two separate management philosophies. The first, being “customers-led” is a short term philosophy in which organizations try to understand and develop products for the expressed wants of the customers in their market. The second, being “market-oriented” represents a long term commitment to understanding the expressed and latent needs of their customers and to develop innovative solutions that produce superior customer value. Besides looking to customers, a market-oriented business also looks at the capabilities and plans of its competitors. Though, some critics on this philosophy appeared. At first there are some problems with the customer-led philosophy. It is a reactive philosophy and short term in focus. It leads to adaptive rather than generative learning. Hamel and Prahalad (1994) call this aspect the “tyranny of the served market” in which managers see the world only through their current customer eyes. As Christensen and Bower (1996) point out, existing customers can substantially constrain a firm’s ability to innovate because the innovations may threaten the customer’s way of doing business (Slater and Narver, 1998). Another criticism on the philosophies is made by Conner (1999), who points out that Narver and Slater seem to be implying that there has to be made a choice between a customer-led and a market-oriented orientation. He views this as an unrealistic interpretation, since it does not appear to allow for the governing constraint of the company’s resource endowment. In reality companies live in the present and the future, with the need to satisfy current customers and to anticipate the future of markets. Strategically a company must be both customer and market-led. It must live and act in de short term and in the long term. Conner therefore points out that a company is most successful when it selects wisely the balance between now and the future rather than choose one or the other.

Some topics in this essay:
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