Marketing orientations

Businesses can develop new products based on either a marketing orientated approach
or a product orientated approach.

A marketing orientated approach means a business reacts to what customers want. The
decisions taken are based around information about customers’ needs and wants, rather
than what the business thinks is right for the customer. Most successful businesses take a
market-orientated approach.

A product orientated approach means the business develops products based on what it
is good at making or doing, rather than what a customer wants. This approach is usually
criticised because it often leads to unsuccessful products - particularly in well-established
markets.

Most markets are moving towards a more market-orientated approach because

customers have become more knowledgeable and require more variety and better quality.
To compete, businesses need to be more sensitive to their customers needs otherwise they
will lose sales to their rivals.

On the other hand some products are argued to create a need or want in the customer,
especially products with a very high technological content. Mobile phones have moved
from being a business accessory to being a big consumer brand item, with many
additional gadgets, such as pictures, video and Internet access. Innovations create the
need rather than the customer being able to second-guess how new technology is going to
develop.

Marketing Strategy: Customer Orientation Vs Competitor Orientation

Should Your Marketing Strategy Be

Customer Oriented or Competitor Oriented

Although many marketing literature propounds the dictum “Customer is the King”, it is
seldom practiced in its fullest sense. Marketers would love to put customers at the center
of their business strategy but the intense competitive environment forces them to think
beyond the customer and move towards the competitors.

There is a dilemma in the marketers mind with the choice of whether the firm’s principal
orientation should be towards customer or competitors. Conventional wisdom say that
firms should be oriented more towards customers than competitor. Peter Drucker
famously said “The purpose of business is to create customers “. When a firm is customer
oriented, the entire business is centered on customer needs and satisfaction.

According to academic literature, there are three components of market orientation (1)
Customer Orientation (2) Competitor Orientation (3) Inter-functional coordination.
Customer Orientation is where the firm spends its resources on gathering information
about customer needs and behavior. Competitor orientation is where the firm directs its
resources to gathering information about competitor behavior and activities. The firm’s
strategies will then be based on the information gathered through any of these
orientations. (Source: Narver, John C. and Stanley F. Slater. 1990. "The Effect of a
Market Orientation on Business Profitability." Journal of Marketing 54 (October):20-35.)

Customer orientation helps firms with a clear in-depth understanding of consumer which
results in a focused marketing effort. Research has confirmed that customer orientation
helps firms to increase performance and enhance customer satisfaction.

Too much customer orientation also can be dangerous. There is a chance of marketers
becoming blinded by their current focus thus oblivious of the changes brought about by
the competitors. There are critics who argue that customers may stifle innovation in
companies because customers may not be able to explicitly state their expectations or
anticipate future needs. Customers are often resistant to change and this forces the highly
customer focused firms to maintain the status quo thus refraining from game changing
innovations.

The firms who are skewed towards competitor orientation are blamed for launching me-
too products in an effort to fight competition. Too much focus on competitor often forces
firms to invest in understanding customers or anticipate their needs better. Too many
resources will be spent on competitive activities which may restrict investment on
breakthrough innovations. Competitor oriented firms are more open to the changing trend
in the market. Since their actions are more directed by the actions of the competitor, there
is less chance of lethargy in marketing activities.

Firms must understand that there is a trade-off between these two orientations. Firms will
have to lose something if they chose either of the two orientations. The ideal option is to
balance both the orientation. It is easy to advocate that firms should have both customer
and competitor orientation but with a limited resources in-terms of men and money, firms
will find tough to have best of both worlds.

Companies must realize that the choice of customer / competitor orientation is dependent
on the environment in which firms operate. There are external and internal factors that
will decide the orientation of the company. For example, there are organizations like
Zappos.com which is totally customer oriented. The customer orientation run deep within
the organization’s DNA and the entire firm is structured around the customer.

Competitor orientation is more preferable in markets which are growing very fast. In fast
growing markets, firms should invest in gathering more data about competitors which
will enable them to develop innovations at lower costs.

Customer orientation is preferable in more uncertain markets. When the markets are
changing very fast, firms can focus on customers which will enable them to change their
marketing strategies quickly in accordance with changing customer needs. Also firms that
deal with complex markets need to focus on investing in customers rather than
competitors.

The choice of customer vs. competitor orientation is ultimately depended on the top
management’s world view. The choice is important because there are only limited
resources available with the managers to spend on either of these orientations.

Firms can strike a balance between these orientations if they can focus on the following
guidelines.

• Invest in a robust market intelligence mechanism in the

marketing department. The mechanism can be internal or
outsourced, but the emphasis will be on information gathering
and dissemination. When a mechanism exists, depending on the
market environment, organization can decide on the type of
information that should be gathered.
• Encourage free flow of information within the organization.
Market orientation tends to be ineffective if the organization is
bureaucratic. Hence firms should ensure that important market
information is passed to various levels quickly.