1. Slater & Narver defined in 1990 the concept of market orientation.
Almost ten years later, in 1998, they are coming back on this initial
idea. Explain what they initially meant by market orientation and how
that changed in their new article in 1998.
Slater & Narver (1990): CUSTOMER VALUE long-term profit focus
Companies with a market orientation continuously seek ways in which they can
satisfy their customers in a manner superior to competitors, by increasing a
buyer's benefits and/or decreasing the buyer's total acquisition and use costs,
thereby creating a sustainable competitive advantage (SCA). This requires a
continuous process of considering and examining alternative sources of SCA as
to find out how to best meet the current and future needs of its target
customers. In order to convey how a company creates superior value for
customers, it needs to efficiently communicate, this is what we refer to as
marketing strategy, in order to maintain long-term mutually beneficial customer
relationships and maximize its long-term performance. A market orientation
consists of three parts:
Customer orientation: what customers want now and in the future
Competitor orientation: what competitors can and (are going to) do
Interfunctional coordination: combining this information and the resources
of a company to align efforts and synergize.
The standard to choose how to create a superior value for customers is "Long-
term focus" and "Profitability”.
Market orientation as behaviour: the ability to generate, disseminate and use
superior information about customers and competitors.
We should not just look at what we are capable of, just look at where consumer
demand lies.
Market orientation is the implementation of the marketing concept.
Purpose article: a lot has been said about the MO concept, if this thing is so
successful, how can we measure it? And is this a reliable measure of
development? Does the construct have validity? They also looked on the effects
of profitability and the difference on two markets.
Difference commodity (general products, compete on price no option for
differentiation) vs. non-commodity markets (more specific products, compete
on quality). It costs a lot of money to have a market-orientation, and this is not
profitable if you compete solely on price (low ROA), so for commodity markets. It
takes more investment to find something (really good) that will return in
investment (simple filter coffee, later senseo found products with more value and
could ask higher prices).
, The effect of MO on sales and profit has decreased over time. Each additional
investment will have a lower impact on sales and profit.
Did MO become obsolete?
1. there is still an effect on sales and profit
2. it has become a criteria, if you don’t invest at all, you’re not likely to profit
anyways, if you do, you’re not necessarily the winner. So, you need to find new
ways to invest and know you environment (context-dependent)
Slater & Narver (1998)
They distinguish two types of market-orientation, the one earlier (customer-led,
only listening and responding) is not enough anymore, :
Customer-led: concerned with satisfying customers' expressed needs
(e.g. following trends and hypes) and it is therefore typically short-term in
focus and reactive and adaptive.
o Measurement tools: customer satisfaction surveys
Market-oriented: concerned with satisfying both expressed needs and
latent needs (e.g. undiscovered needs) and it is therefore typically long-
term in focus and pro-active. It involves reacting and anticipating and
involves a commitment to develop innovative solutions that produce
superior customer value. They learn in a generative way, which is critical
to innovation. They analyse the capabilities and plans of their competitors
through the processes of acquiring and evaluating market information in a
systematic and anticipatory manner. They continuously create superior
customer value by sharing the knowledge broadly throughout the
organization and by acting in a coordinated and focused manner.
o Measurement tools: monitoring of customer’s use of products in
normal routines; work with lead users, who are important or
potential customers who would have advanced needs and would
benefit from a solution to those needs.
You only find out if there is a latent need, once you do it and bring it to the
market.
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