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Measuring market orientation: A multi‐factor,

multi‐item approach
a b
Shengliang Deng & Jack Dart
a
College of Commerce, University of Saskatchewan, Saskatoon, Sask., Canada, S7N 0W0
b
College of Commerce, University of Saskatchewan, Canada
Published online: 06 May 2010.

To cite this article: Shengliang Deng & Jack Dart (1994): Measuring market orientation: A multi‐factor, multi‐item approach,
Journal of Marketing Management, 10:8, 725-742

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 Journal of Marketing Management, 1994, 10, 725-742

Shengliang Deng Measuring Market

and Jack Dart Orientation: A Multi-
College of Commerce, factor, Multi-item
University of Approach
Saskatchewan, Canada
The marketing literature reflects remarkable inconsistency in
defining two of its most frequently used terms, "the marketing
concept" and "market orientation". Through a critical review of
the marketing literature and an empirical analysis of data collected
from 248 Canadian firms, the authors established a four-
component measure of "market orientation". The resulting multi-
factor, multi-item instrument provides a foundation for future
studies.
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Introduction

For more than a generation, the "marketing concept" has occupied the interests of
both educators and executives. Articles in marketing journals and trade publi-
cations alike have advocated its adoption as have countless speakers at business
seminars and academic paper presentations. This is not to say that the marketing
concept has been without controversy. Some proponents have sought to extend its
application (e.g. Borch 1957; Kotler and Levy 1969) while others have argued for
limits on its employment (e.g. Arndt 1978). It has been declared endangered, if not
dead (Sachs and Benson 1978) but later revived (Wind and Robertson .1983; Shapiro
1988; Webster 1988) and currently exhibits considerable vitality.
Some authors have argued that the adoption of a customer-oriented business
philosophy is all but essential for survival in a competitive environment (Levitt
1960; Kotler 1977; Crawford 1983; Kotler and Andreasen 1987). Such pronounce-
ments have prodded researchers to consider the methodological issues associated
with the measurement of this construct (McKitterick, 1957; Churchill 1979;
Houston 1986; Lusch and Laczniak 1987; Narver and Slater 1990; Kohli and
Jaworski 1990). Unfortunately, as Meziou (1991) and others have pointed out, the
measures used in previous research have frequently been insufficient to capture
the comprehensive nature of a truly market-oriented operating philosophy.
While the literature does provide insight into the adoption of the marketing
concept in certain firms and/or in certain industries, a critical issue is whether the
measures employed are sufficiently similar to allow for meaningful comparisons.
By testing more comprehensive and well validated indicators, the current study
attempts to develop a reliable and valid instrument for measuring market orien-
tation across a broad range of business firms. The development process began with
a review of the theoretical background to the market orientation and is presented in
the next section. This is followed by a description of the procedure used to develop

Correspondence should be addressed to: Professor Shengliang Deng, College of Commerce, University
of Saskatchewan, Saskatoon, Sask., Canada S7N 0W0.

0267-257X/94/080725+18 $08.00/0 © 1994 The Dryden Press

 726 Shengliang Deng and Jack Dart

an initial measure of market orientation. The processes employed to test the re-
liability and validity of the scale are subsequently described, followed by a dis-
cussion of its practical and research implications. The paper concludes with a
summary plus suggestions for future research.

Theoretical Background

Issues of Definition

Ironically, for such a universally-discussed notion, the marketing concept has not
yet achieved clarity of definition (Kohli and Jaworski 1990). There appears to be no
agreement as to who originally coined the phrase (Webster 1988) and, in fact, this
precept has appeared with only minor gradations of meaning under various names
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including: the marketing philosophy; total marketing; integrated marketing

(Barksdale and Darden 1971); and marketing orientation (Payne 1988). More
recently, the term "customer driven" has enjoyed wide use and, indeed, much of
the TQM literature bears a striking resemblance to earlier articles relating to the
marketing concept.
Few clues as to the meaning of the marketing concept can be derived by refer-
ence to its applications. There is no consensus as to which company first utilized
the marketing concept as a deliberate operating philosophy, although the apparent
contenders for this distinction include Ford (Levitt 1960), General Electric
(Barksdale and Darden 1971) and Pillsbury (Keith 1960). The empirical literature is
equally unclear. Numerous researchers have investigated the relationship between
the adoption of this business philosophy and various aspects of corporate perform-
ance but with mixed results (Hise 1965; Barksdale and Darden 1971; McNamara
1972; Lawton and Parasuraman 1980; Edgett and Thwaites 1990; Hooley et al. 1990;
Narver and Slater 1990; Naidu and Narayana 1991).
Kohli and Jaworski (1990) suggest that part of the confusion evident in the
literature is traceable to a failure to distinguish between the marketing concept and
those many activities necessary to successfully implement this business philos-
ophy. The authors use the term "market orientation" to mean the implementation
of the marketing concept. Based on this distinction, the following definitions were
formulated and served as the starting point for this study.
Marketing Concept—a business philosophy that holds that long term profitability
is best achieved by focusing the coordinated activities of the organization toward
satisfying the needs of a particular market segment(s).
Market Orientation—the generation of appropriate market intelligence pertaining
to current and future customer needs, and the relative abilities of competitive
entities to satisfy these needs; the integration and dissemination of such intelli-
gence across departments; and the coordinated design and execution of the
organization's strategic response to market opportunities.
The distinction apparent in the two definitions is critical for scale development.
Previous studies that have attempted to measure the adoption of the marketing
concept have often relied on very simple measures (e.g. "to what extent has your
organization adopted the marketing concept?"). Given the wealth of admonitions
as to the value and importance of the marketing concept, the answers to such direct
 Measuring Market Orientation 727

questions are almost certainly subject to a strong yea-saying bias, especially in

those research situations that relied on single item measures. In contrast, directing
attention to the multifaceted dimensions of market orientation has the potential to
yield a multi-item measure less likely to be plagued with concerns relating to values
and beliefs.

Scope of the Market Orientation

The discussion that follows presents a brief justification of the factors utilized in
this study to measure market orientation. These factors were derived from the
literature and from interviews with business executives. To facilitate responses that
were relatively free of value judgements, attention was focused on those day-to-
day activities and behaviours that characterize the operation of the normal business
organization. The items presented in Appendix 1 reflect an attempt to provide a
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focus for application in a business context and, for the educator, a useful starting
point for further research.
Inherent in any discussion of the marketing concept (or market orientation) is
that all activities of the firm should be judged against the litmus test of client needs.
This tenant gave rise to the first factor, "Customer Orientation", or the extent to
which the marketer engages in behaviours aimed at increasing long-term customer
satisfaction. As indicated in Table 1, this dimension has received a good deal of
attention in the literature. In fact, some work has been undertaken to provide a
more detailed interpretation of customer orientation among particular corporate
functions, especially the sales force (Saxe and Weitz 1982; Michaels and Day 1985;
Hart et al. 1989).
The second dimension investigated, "Competitor Orientation", involves an under-
standing of the capability of competitors, both current and potential, to serve the
same markets. Kohli and Jaworski (1990) note that in certain situations, such as
when a business has a monopoly or when the industry as a whole is in an under-
capacity situation, a firm's financial success may well be unrelated to market
orientation. Such anomalies will always plague survey research in this area, es-
pecially when undertaken at one point in time; nevertheless, the arguments
favouring inclusion of competitor orientation are compelling. Management can
seldom depend on patent or other types of monopolies or on ever-buoyant market
conditions for profitability; but can rely on the fact that competitors will do all in
their power to reduce such profits to the greatest possible extent.
The inclusion of the third dimension, "Interfunctional Coordination", is a simple
recognition that all parts of the organization must accept responsibility for servic-
ing the market. Whether a firm is organized around functions or markets, there
will be a need to share information and coordinate efforts in this direction. In some
respect, this particular component of market orientation appears to have been the
most difficult for North American business to learn and accept but examples of
activity in this direction are increasingly numerous (e.g. Business Week 1993).
The final dimension selected for examination is "Profit Orientation". Items relat-
ing to this dimension were included despite arguments in the literature that profits
result from the adoption of the marketing concept and should not be treated as a
behavioural component of market orientation (Levitt 1969; Narver and Slater 1990).
We distinguish between profits as an end point, accounting construct and profit
 728 Shengliang Deng and Jack Dart

Customer Service
Customer Orientation
Quality Products
Customer Value

Analysis of
Competition Competitor Orientation

Building
Competitive
Advantage Market Orientation

Market Information
Sharing Interfunctional Co-ordination
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Interdepartmental
Integration

Responsive
Accounting System Profit Orientation

Sales —
Potential
Figure 1. Market orientation.

orientation, the latter an inherent practice in the day-to-day operation of most, if

not all, successful business operations. The compensation of sale representatives
based on product margin rather than simple sales revenues is an example of such
an orientation as is the decision to engage in an account audit. Indeed, so funda-
mental a concept as market segmentation is, in essence, a strong indicator of a
profit orientation in that it necessarily involves the identification of specific market
targets and competitive offerings. Further, as indicated in Table 1, profit orien-
tation has received a good deal of previous attention. Figure 1 depicts the concep-
tual scheme developed for the study.

Developing a Measure of Market Orientation

The Procedure

Psychologists were among the first social scientists to develop and refine rigorous
methods for constructing instruments to measure behavioural variables (e.g.
Ghiselli 1964; Likert 1967; Nunnally 1978). In this study, the procedures used to
develop the desired measure of market orientation follow the now generally-
accepted principles of instrument design set out by these pioneers.
These steps, illustrated in Figure 2, were used as the basic structure for the
research and are reported sequentially in this article. This procedure is based on
Churchill's (1979) general design, but specifically adapted for the current study.
Steps 1 and 2 of the process, the literature review followed by the identification of
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Table 1. Measurement dimensions of market orientation emphasized by selected authors

Keith Hise McNamam Kotler Lusch Webster Uarver Hooley Edgett Naiduand Meziou
(1960) (1965) (1972) (1977) and Laczniak (1988) and Slater etal. andThwaites Narayana (1991)
Critical factors (1987) (1990) (1990) (1990) (1991)
Customer X X X X X X X X X
orientation
Competitor X X X X X
orientation
Interfunctional X X X X X X X X X X
co-ordination
Profit emphasis X X X X X X X X
* See Appendix 1 for detailed measurement items under each critical factors. Initially 44 items were discovered through literature review and personal
interviews. After pretest and refinement, 33 items remained in the final questionnaire.
 730 Shengliang Deng and Jack Dart

Step
Literature Review . 1

—s Identify Critical Factors of

Market Orientation Construct
Content
Validity
Select Detailed Measures to
Represent Each Factor

•-> Personal Interviews to Identify

Further Measurement Items

Construct Questionnaire with the

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Identified Measurement Items

Pretest the Measurement Items

Refine and Finalize the

Questionnaire

Data Collection

Reliability
1
No
Are All Factors Internally Reliable?
(Drop Items that Lower a)
No 5

Yes

Convergent Are All Factors Converged on a No a

10
Validity Common Construct?
Yes

Discriminant Is the Market Orientation Construct No ,

Validity Different from Other Construct? 11
Yes

Criterion-related Can the Market Orientation Construct No 5

12
Validity Predict the Market Performance
Yes

Market Orientation Instrument 13

Figure 2. The procedure of developing the market orientation construct.

the critical factors associated with market orientation, relate to issues of definition
and are presented in the discussion above. The process used to generate the initial
measurement items for each critical factor, the pretesting and revisions of these
items and the administration of the preliminary instrument occupy Steps 3 through
7. The stages of the process presented in Steps 8 and 9 deal with issues of internal
 Measuring Market Orien ta tion 731

consistency and the detailed item analysis used to construct measurement for each
of the critical factors. Steps 10 through 12 are concerned with issues of validity for
each of the measures and for the instrument as a whole.
Using the previously-mentioned four market orientation prescriptions found in
the literature, we set out to generate representative items that, collectively, would
define the scope and meaning of each factor. Many of the items were based on
previously published articles (see Table 1) and each was critically reviewed by a
panel of professors and graduate students of marketing. After eliminating and/or
reclassifying certain items, the remaining statements were subjected to a formal
pretest involving senior managers of firms in the local business community.
During the pretest, these practitioners were probed for comments on the appropri-
ateness of each item and asked for a critique regarding ease of comprehension and
possible improvements in wording. Following these pretest interviews, 33
measurement items remained and are presented in Appendix 1.
A 5-point interval rating scale was used to enable managers to indicate the
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degree or extent to which their company had adopted the practice described in
each of the 33 items. A typical questionnaire item is shown below:
To what extent or degree do the following statements describe your firm?
Not at all A little bit Somewhat Quite well Very well
We regularly analyse 1 2 3 4 5
our competitors'
marketing programs
For each critical factor, the actual level of practice across the sample can be
represented by the scale scores, that is, the average of the item ratings for that
factor. Provided these scale scores can be shown to possess sufficient reliability and
validity, a vector of the averages for the four factors can be used to profile the
company's actual level of market orientation.

Field Testing the Instrument

When a measuring instrument is developed, the subjects used should be those for
whom the instrument is intended (Selltiz et al. 1976; Nunnally 1978). Since the
primary objective of this research was to develop an instrument to measure a firm's
operating practices as they relate to the four critical factors that constitute market
orientation, the survey was directed to general managers or marketing managers.
These respondents are likely to be the "thought" leaders with respect to market
orientation in their organizations, and most frequently serve as the architects of the
company's business philosophy and marketing strategies; therefore, they are the
subjects used in this study.
The sample was designed to include a broad range of Canadian companies that
varied by size, industry type and geographic location. There was a risk associated
with employing such a heterogeneous sample, namely that the inherent differ-
ences between respondent companies would generate so much noise in the analy-
sis as to mask the effects of variations in test scores. On the other hand, since the
objective of the study was to develop a scale which could be used across a broad
range of situations, the need for such a far ranging sample was apparent.
Five hundred questionnaires, addressed by name to general managers or
 732 Shengliang Deng and Jack Dart

marketing managers, were included in the original mailing. This initial mailing
produced 181 returns, of which 168 were usable. A second mailing generated
another 88 returns, of which eight were discarded because of significant missing
values. In total, 248 usable returns were entered into the analysis, representing an
effective return rate of 49-6 percent. Analysis of the patterns of replies between the
two waves revealed no significant differences, lessening our concern regarding
possible non-response bias (Oppenheim, 1966). Figure 3 presents an overview of
the sample employed.

Personal
Age (years) Number % Years with Firm Number %
<35 45 18 S5 89 36
36 to 45 82 33 6 to 10 47 19
46 to 55 82 33 11 to 15 35 14
£56 39 16 16 to 20 36 14
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£21 41 17
Education Level Title in Firm
Grade School 8 3 President/Owner 73 30
High School 24 10 Vice President 58 23
Some Post-secondary 64 26 General Manager 57 23
Bachelor's Degree 97 39 Marketing Manager 60 24
Graduate Degree/MBA 55 22
Gender
Male 226 91
Female 22 9
Firm
Years in Operation Product/Service Industry
S 10 years 26 11 Manufacturing of 61 24
11 to 20 51 20 Consumer Goods
21 to 30 35 14 Manufacturing of 93 37
31 to 40 53 21 Industrial Goods
41 to 50 24 10 Food Manufacturing 4 2
£51 59 24 Wholesaling 19 7
Retailing 4 2
Number of Employees Construction 10 4
<50 29 12 Transportation 5 2
51 to 100 64 26 Mining 2 1
101 to 200 54 22 Agriculture and
201 to 500 40 16 Forestry 22 9
£501 61 24 Publishing 6 2
Medical Supplies 4 2
Aerospace 2 1
Annual Sale Last Year Professional Services 7 3
< $ 1 million 15 6 Others 10 4
1 - 5 million 26 11
5 -10 million 41 17
10 - 25 million 53 21
> 25 million 113 45

Figure 3. Demographic characteristics of respondents/firms (n = 248).

Measurement Reliability

In this section, we report the results of reliability testing and detailed item analyses
which were used to refine the factor measures associated with market orientation.
The general approach was to evaluate each measurement item; if shown to detract
 Measuring Market Orientation 733

from reliability of the scale, the offending statement was discarded and the remain-
ing items revaluated. The purified scales were subsequently subjected to various
tests of validity as described below.

Scale Purification and Reliability Assessment

In general, the reliability of empirical measurements may be obtained by one of

three methods: (1) the retest method, (2) the alternative form method, and (3) the
internal consistency method (Nunnally 1978; Peter 1979). In practice, the internal
consistency method predominates, in part because the first two have major limi-
tations (particularly for field studies). The test-retest approach is plagued with
problems involving respondent memory, not to mention the practical difficulty of
scheduling two independent administrations of the instrument on the same group
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of people. Generating alternate forms of the measuring instrument is equally

impractical, especially at early stage development. In contrast, the internal consist-
ency methods work quite well in field studies because they require only one
instrument and one administration of the test. Two methods have been used to test
for internal consistency: (1) the split-half test and (2) Cronbach's (1970) alpha test.
The split-half method, however, has one fundamental problem in assessing
internal consistency: Depending on how the scale items are split in half, different
results will be obtained. This raises the important question of which is the "real"
reliability coefficient (Peter 1979). Thus, the Cronbach's alpha test has become
almost universally adopted both because of the practical problems mentioned
above and because the alpha coefficient provides a direct estimate of the mean of all
possible split half tests.
The internal consistency of a set of measurement items refers to the degree to
which items in the set are homogeneous. Cronbach's alpha estimate of reliability is
easily calculated for the scores on any subset of items. It is therefore possible to
purify a scale by examining alternate subsets on the basis of their reliability coef-
ficients. The scale constructed from that subset of items with the highest alpha
value is likely to be the best with regards to internal consistency.
In order to test for instrument stability, we randomly split the data into two
samples before assessing reliability (Narver and Slater 1990). Using the SPSS re-
liability program (Norusis and SPSS Inc. 1990), an internal consistency analysis was
performed separately for the items of each critical factor of market orientation (Step
9 of Figure 2). The calculations revealed that maximization of the alpha coefficient
would require the elimination of zero, two, three, and four proposed items
depending on the particular factor. Table 2 reports, in two split samples, the
original sets of measurement items associated with the four factors, the items
dropped from the original sets to achieve maximization of alpha, and the reliability
coefficients associated with the resulting scale. For example, of the original eight
items for the critical factor "Interfunctional Coordination" (items 19 through 26 of
Appendix 1), two items (20, 25) were discarded in order to achieve a maximum
alpha value of 0-7722. As indicated in this table, the maximized reliability coef-
ficients were fairly uniform, ranging from 0-7388 to 0-7890 and exceeding the 0-70
threshold recommended by Cronbach (1970) and Nunnally (1978) for exploratory
studies. The sole exception is observed with the second sample on the competitor
 734 Shengliang Deng and Jack Dart

orientation scale, which had an alpha of 0-6980. Based on these values, the
measures were judged to be sufficiently reliable (see Table 2).

Detailed Item Analysis

Nunnally (1978) developed a widely-adopted method to evaluate the assignment of

items to scales. This approach considers the correlation of each item with each
scale. Specifically, the item-score to scale-score correlations are used to determine if
an item belongs to the scale as assigned, belongs to some other scale, or if it should
be eliminated. An item is eliminated if it does not correlate highly with any of the
scales. The items eliminated on this basis are presented in Table 2.

Table 2. Reliability analysis

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Original items No. of Items deleted Sample 1 (n = 129) Sample 2 (n = 119)

(numbers) items (by number) Cronbach Cronbach
Item alpha alpha
Customer 1-12 12 1,4,5,10
Orientation 0-7890 0-7299
2
3
6
7
8
9
11
12
Competitor 13-18 6 none
Orientation 0-7388 0-6980
13
14
15
16
17
18
Interfunctional 19-26 8 20,25
Coordination 0-7726 0-7212
19
21
22
23
24
26
Profit 27-33 7 27,28
Emphasis 0-7466 0-7544
29
30
31
32
33

As evident in Table 3, all items have high correlations with the scales to which
they were originally assigned, relative to all other scales. Accordingly, it was
concluded that all items had been appropriately assigned to scales. Since the
detailed item analysis results were satisfactory on the first iteration, the items
reported in Table 1 were combined to form the scales which were subjected to
various tests of validity.
 Measuring Market Orientation 735

Table 3. Item to scale correlation matrix for the critical factorsi of market orientation
Scale (n == 248)
Factor Item number 1 2 3 4
Customer Orientation 2 0-7181 0-4015 0-4806 0-2329
3 0-6392 0-2992 0-3568 0-1800
6 0-6823 0-5301 0-4564 0-4358
7 0-6012 0-3714 0-4597 0-2557
8 0-6737 0-3302 0-3761 0-2275
9 0-5025 0-1907 0-3245 0-2372
11 0-6462 0-2210 0-4219 0-2030
12 0-6267 0-2208 0-2400 0-2111
Competitor Orientation 13 0-2106 0-7271 0-3359 0-1757
14 01469 0-7194 0-4012 0-2879
15 0-4062 0-6660 0-3331 0-3050
16 0-3859 0-6495 0-3125 0-1301
17 0-4377 0-6979 0-4284 0-3349
18 0-2914 0-5304 0-3411 0-3049
Interfunctional Coordination 19 0-2899 0-4552 0-6799 01275
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21 0-3635 0 4203 0-6485 0-2149

22 0-2286 01693 0-6008 0-2231
23 0-4534 0-3339 0-6370 0-3927
24 0-4379 0-3931 0-7616 0-2091
26 0-3042 0-3015 0-6435 01736
Profit Emphasis 29 0-2891 0-2992 0-3834 0-8124
30 0-2583 0-2664 0-2512 0-8198
31 0-2088 0-1822 01818 0-7890
32 0-1633 01182 0-2151 0-6832
33 0-4237 0-2750 0-4715 0-6166
Market* Orientation 0-7986 0-7490 0-8352 0-7949
* Market Orientation is a single factor representative of Customer Orientation, Competitor
Orientation, Interfunctional Co-ordination and Profit Emphasis.

Validity Assessment

Content Validity

The validity of a measure refers to the extent to which it measures what is intended
to be measured. Three different types of validity are generally considered: (1)
content validity, (2) criterion-related validity, and (3) construct validity. A measure
can be said to possess content validity if there is general agreement among the
subjects and researchers that constituent items cover all aspects of the variable
being measured; thus, content validity depends on how well the researchers create
items that cover the content domain of the variable being measured (Nunnally
1978).
The measures developed for the four critical factors of market orientation were
derived from an exhaustive review of the literature and detailed evaluations by
both academicians and practising managers. Further, the pretest subjects indicated
that the content of each factor was well represented by the measurement items
employed. Although the judgement of content validity is subjective, the pro-
cedures used are consistent with ensuring high content validity.

Criterion Validity

Criterion-related validity, sometimes called predictive validity or external validity,

is concerned with the extent to which the score on the instrument is related to an
 736 Shengliang Deng and Jack Dart

independent measure of the relative criterion. For example, a test designed to

predict future success in college would be said to have high criterion-related val-
idity if its scores were highly correlated with actual performance as measured, say,
by grade point average.
Criterion-related validity of the four measures of market orientation would be
demonstrated if the scores on the measures are highly and positively-correlated
with actual performance. In other words, these measures, taken together, should
be able to serve as a predictor of actual marketing success.
Criterion-related validity was evaluated by examining the multiple correlation
coefficient between the scores on the four measures of market orientation and a
measure of company marketing performance. This latter measure was derived
from a series of items, each rated on a 5-point scale, relating to 11 performance
areas over the previous 3-year time period (Table 4). An analysis of the 11 perform-
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Table 4. Performance measurement (n — 248)

Cronbach Item-to-total
Item alpha correlation
Performance Measurement 0-8816
overall financial performance 0-6939
corporate liquidity 0-5077
sales volume 0-7660
market share 0-7315
penetration of the U.S. market 0-5409
sales in other export markets 0-4654
new product development 0-6670
developing new markets 0-6835
quality improvements 0-6361
productivity 0-6280
relative to your expectations 0-6737

ance items revealed a single factor solution with an explained variance of 0-75 and a
Cronbach's alpha of 0-88, values sufficient to accept the performance scale as being
reliable. The multiple correlation coefficient of the marketing performance measure
and the four measures of market orientation was 0-79, indicating that the four
measures, when taken together, have a high degree of criterion-related validity.

Construct Validity

A measure can be said to have construct validity if it measures the theoretical

construct or trait that it was designed to measure. The construct validity of market
orientation was evaluated by examining both (1) convergent validity and (2) dis-
criminant validity.
A strong correlation among the four components of market orientation indicates
that they are converging on a common underlying construct, thereby providing
evidence of convergent validity. All of the correlations exceed 0-75 and are all
significant at P < -001. Convergent validity is suggested also by the high Cronbach
alpha (0-8010) attained when scores on the four scales are combined into a single
scale and by the one factor solution in an exploratory factor analysis (eigenvalue =
2-4697, 61-7% of the variance explained).
To test for discriminant validity, the questionnaire incorporated brief descrip-
 Measuring Market Orientation 737

tions of four business philosophies presented by Peterson (1989), namely (1) pro-
duction orientation, (2) sales orientation, (3) marketing orientation, and (4) societal
orientation (see Appendix 1). Respondents were asked to indicate the extent to
which each of the four philosophies help guide their business operations. Since the
described philosophies represent global scenarios and were presented in para-
graph form, this test is substantially different from rating individual items, our
main measurement technique. Substantial differences between the forms of
measurement are prerequisite to testing for discriminate validity.
A correlation analysis was conducted between the scores relating to the business
philosophies and market orientation factors. A high correlation between the
market orientation measures and marketing oriented philosophy could be used to
demonstrate convergent validity. Discriminant validity could be demonstrated pro-
vided the correlation between the market orientation measures and the marketing
orientation philosophy was substantially higher than the correlations with the
other business philosophies. Table 5 presents the result of correlation analysis and
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indicates the desired pattern of correlations.

Table 5. Correlation analysis between market orientation measurements and business
philosophies
Production Sales Marketing Societal
Measurement orientation orientation orientation orientation
Customer orientation 0-1434c 0-1432c 0-5140* 0-3273"
Competitor orientation -00099d 0-1278c 0-4380" 0-1624c
d
Interfunctional orientation 0-0063 0-0635" 0-4111" 0-1618c
Profit emphasis 0-2330" 0-2255b 0-3684" 0-2244b
Market orientation* 0-1003d 0-2035b 0-4875" 0-2931"
* Market Orientation is a single factor representative ol Customer Orientation, Competitor
Orientation, Interfunctional Coordination and Profit Emphasis.
'P < 0001; bP < 0-01; CP < 005; dP = not significant.

Practical and Research Implications of the Developed Scale

Despite the research limitations encountered, the market orientation construct

developed through this study has potential for both managerial and academic
application.
Firstly, the final scale presents a practical way to operationally measure the
extent that a company has achieved a market orientation. In so doing, it further
clarifies the distinction between market orientation and marketing concept.
Secondly, the market orientation construct developed in this study paves the
way to test the research propositions suggested by other researchers (e.g. Kohli
and Jaworski 1990). Without a reliable and valid instrument, the further studies
proposed by these authors would be very difficult, if not impossible to achieve.
Thirdly, organizations can adapt the scale to serve as a guide in assessing their
current practices in the domain of market orientation. They can identify those areas
where their approaches differ substantially from the standards developed in this
study. These deviations may represent weaknesses or oversights on the part of the
firm.
Finally, this study can serve as a stepping stone in the development of better and
more complete measures of market orientation.
 738 Shengliang Deng andJack Dart

Conclusions, Limitations and Future Studies

Many researchers have dealt with the measurement of market orientation; how-
ever, no previously-published research has presented a comprehensive set of
measures that span the literature. This paper offers a four-component market
orientation construct based on a synthesis of the work of various authors plus the
addition of items unique to this study. The resulting instrument is relatively con-
cise and was developed with the assistance of marketing managers from a broad
array of business operations.
This study departs from previous studies in several ways. First and foremost, it
encompasses a more comprehensive variable set than the ones employed by other
researchers. Another improvement can be traced to the use of a very diversified
sample (see Figure 3), while previous studies tended to concentrate on a single
industry, thus limiting their application. Furthermore, this study is the only one
that has so far achieved an operationally-validated four component construct. At a
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minimum, it would appear to have sufficient and adequate psychometric proper-

ties to serve as a starting point for the more directed research needs of academics
and business practitioners.
Several limitations were encountered which should be avoided in the future.
First, we elected to utilize some reverse scored items in our instrument despite
mild complaints from several respondents in the pretest regarding "negative"
descriptors of their business operation. Although some of the offending items were
reworded, it is perhaps not a coincidence that most were subsequently lost at the
purification stage. Future researchers may wish to avoid such reverse score items
in spite of their reported advantages in detecting the "yea-saying" respondent
(Churchill 1979, p. 68).
A second limitation concerns our difficulty in achieving an objective measure of
corporate performance. The measure attempted, return on invested assets, was
poorly answered, perhaps because of competitive sensitivity or because the infor-
mation was collected at the depth of a recession and many respondents were
reluctant to admit to negative returns. It is not known to what extent the subjective
measures provided by the respondents would correspond with more factual data.
Future research in this area should probably involve a sufficient number of pub-
licly-traded companies to test for such a relationship.
Finally, this study used a multi-industry approach. It is possible, perhaps even
likely, that market orientation differs across industries (e.g. industrial goods versus
consumer goods industries). Future research directed to sector differences would
be of great value and could serve as the basis for the development of more refined
and sophisticated measures of market orientation.

Acknowledgements

The authors would like to thank Dr Frederick E. Webster, Dr Bertram Schoner and
two anonymous reviewers for their constructive comments on an earlier draft.

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Appendix 1. The Initial 33 Items Used for Measuring the Critical

Factors of Market Orientation
This appendix contains the items contained in the original research instrument.
The items noted by an asterisk (*) were eventually dropped to improve the re-
liability of the instrument.
 Measuring Market Orien ta tion 741

Factor 1: Customer Orientation

1.* For our customers, price is the most important selling feature.
2. We encourage customer comments—even complaints—because they help us
to do a better job.
3. After sales service is an important part of our business strategy.
4.* We concentrate on production and let our distributors worry about sales.
5.* In our company "sales" and "marketing" are pretty much the same thing.
6. We have a strong commitment to our customers.
7. We look for ways to create customer value in our products.
8. We measure customer satisfaction on a regular basis.
9. Our company would be much better off if our salesforce just worked a bit
harder.
10.* In our company, marketing's most important job is to promote our products
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and services to our customers.

11. In our company, marketing's most important job is to identify and help meet
the needs of our customers.
12. We define product quality in terms of customer satisfaction.

Factor 2: Competitor Orientation

13. We regularly analyse our competitors' marketing programs.

14. We frequently collect market data to help direct our new product plans.
15. Our salespeople are instructed to monitor and report on competitive activity.
16. We respond rapidly to competitors' actions.
17. Our top managers often discuss competitors' programs.
18. We target opportunities based on competitive advantage.

Factor 3: Interfunctional Coordination

19. In our company, the marketing people have a strong input into the develop-
ment of new products.
20.* People other than our sales reps (such as top management, research, produc-
tion) regularly call on customers.
21. Market information is shared with all departments.
22. All departments are involved in preparing company plans.
23. We do a good job of integrating the activities of each department.
24. The marketing people in our organization interact frequently with other
departments such as manufacturing, finance, physical distribution, etc.
25.* In our company, marketing is confined to the sales/marketing department.
26. In our company, marketing is seen as a guiding philosophy for the entire
organization.

Factor 4: Profit Emphasis

27 * Our company does very little formal marketing planning.

28.* Even though our company uses distributors, we have a good knowledge of
the requirements of our ultimate customers.
 742 Shengliang Deng and Jack Dart

29. Our accounting system could fairly quickly determine the profitability of each
of our product lines.
30. Our accounting system could fairly quickly determine the profitability of each
of our sales territories.
31. Our accounting system could fairly quickly determine the profitability of each
of our customers.
32. Our accounting system could fairly quickly determine the profitability of each
of our distribution methods.
33. We have a good idea of the sales potential for each of our markets.

Business Philosophy

Using a 5-point scale to indicate the extent to which each of the following philos-
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ophies helps guide your business operation. 1 denotes "does not describe my
company" and 5 indicates "describes my company very well".
1. The key to business success is producing quality goods and services at a reason-
able cost. Good products and services sell themselves. If possible, products and
services should be standardized to keep costs down.
2. The key to business success lies in persuading potential customers to buy your
goods and services, through advertising, personal selling, or other means.
Potential customers must be informed and convinced of the benefits of the
products.
3. The key to business success is to integrate all company activities and personnel
toward satisfying customers, while providing satisfactory profits to the firm.
The firm should find out what benefits customers want and then provide these
benefits through goods and services.
4. The key to business success lies in satisfying the important "publics" of the
company. These publics include customers, employees, stockholders, govern-
mental agencies, suppliers, and the public at large. All of their interests should
be considered when making decisions.