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Table of ContentsMARKET ORIENTATION 1
NARVER & SLATER 1
MARKETING IN THE THIRD MILLENNIUM 6
RAVI S. ACHROL & PHILIP KOTLER (2012) 6
Market Orientation
Narver & Slater
A business that increases its market orientation will improve its market performance. There is no valid
measure for MO. People don’t have guidance on what exactly is MO and what its effect on business
performance can be.
Based on a sample of 140 business units (commodity products and non-commodity businesses), they find a
substantial positive effect of a market orientation on the profitability of both types of businesses.
Sustainable Competitive Advantage (SCA): Business must create sustainable superior value for its customers.
For a buyer to purchase offering X, the buyer must perceive that the expected value to him of that offering
exceeds the expected value to him of any alternative solution.
The desire to create superior value for customers and attain SCA drives a business to create and maintain the
culture that will produce the necessary behaviors - Market Orientation is the organization culture that most
effectively and efficiently creates the necessary behaviors for the creation of superior value for buyers and,
thus, continuous superior performance for the business - Market orientation consists of: Three behavioral
components: customer orientation, competitor orientation, and interfunctional coordination.
Ø Customer orientation & competitor orientation: All activities involved in acquiring information about
the buyers and competitors in the target market and disseminating it throughout the business.
Ø Interfunctional coordination: Based on customer and competitor information and comprises the
business’s coordinated efforts, typically involving more than the marketing department, to create
superior value for the buyers. The only way to create synergy. Focus on the customer values.
, • 3 components comprehend the activities of market information acquisition and dissemination and the
coordinated creation of customer value.
• Two decision criteria: long-term focus and profitability.
• Alternative MO definition from Kohli & Jaworski (1990): The organization wide information generation
and dissemination and appropriate response related to current and future customer needs and
preferences.
Ø Customer Orientation: The sufficient understanding of one’s target buyers to be able to create
superior value for them continuously:
• Requires that a seller understand a buyer’s entire value chain as it is today and also as it will evolve
over time subject to internal and market dynamics
• A seller creates value for a buyer in 2 ways: - Increasing benefits to the buyer in relation to the
buyer’s costs - Decreasing the buyer’s costs in relation to the buyer’s benefits
Ø Competitor Orientation: A seller understands the short-term strengths and weaknesses and long-term
capabilities and strategies of both the key current and the key potential competitors
Ø Interfunctional Coordination: The coordinated utilization of company resources in creating superior
value for target customers.
Can we prove that companies which are more Market Oriented are better performing on profitability?
• For commodity business, a market orientation degree leads to positive results only at the two extremes
of investments: no investments at all or the full investment in MO. This happens because of the core
essence of the commodity products. They are offered across the market with no differentiation. The only
strategy that can be perceived it’s a pricing game. For this reason, a market orientation needs to be at a
high level to influence profits, with very huge innovation and investments. No market orientation at all
permits to practice a normal pricing game which effects profits.
• For non-commodity business, the relationship between market orientation degree and profits appear to
be uniform.
, Why does the effect of MO on sales and profits appear to decrease from 1997 till 2005? Why does this
decreasing effect seem to be stronger on profits?
As the time passes, companies are increasing their degree of MO more and more; in this way the competition
becomes less and less stronger as differentiation for the customers. So, profits are influenced negatively.
The Ultimate Marketing Machine
Marc de Swaan Arons, Frank van den Driest, and Keith Weed (2014)
What ingredients do companies need to be successful?
The research shows that the best performers are characterized by:
Big data, deep insights:
In the past decade, what marketers do to engage customers has changed almost beyond recognition. Tools
and strategies that were cutting-edge just a few years ago are fast becoming obsolete, and new approaches
are appearing every day.
How to restructure marketing organizations? Marketing leaders must ask
What values and goals guide our brand strategy, what capabilities drive marketing excellence, and what
structures and ways of working will support them?
Structure must follow strategy
The broad traits of high-performing organizations, as well as specific drivers of organizational effectiveness:
Ø Big data, deep insights.
Rather than using data to know what a consumer is doing and when, high performers are distinguished by
their ability to integrate data on what consumers are doing with knowledge of why they’re doing it. This yields
new insights into consumers’ needs and how best to meet them.
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