ISSN: 2349-4468
International Journal of Advances in Management, Economics and Entrepreneurship
Available online at: www.ijamee.info
RESEARCH ARTICLE
How Market Orientation Helps to Gain Competitive Advantages in
New Product Offering
(Comparative Analysis between Market Oriented & Non-Market Oriented Firms)
Sher Zaman Khan1, Sana Arshad2, Kalsoom Rafique3, Abdul Waheed4*,
Muhammad Laeeq2
1Gomal
University, DI Khan-Pakistan.
2Comsat
Institute of Information and Technology, Lahore.
3University
of Punjab (Gujarawala Campus).
4Donglinks
School of Economics and Management, University of Science and technology Beijing-China.
Abstract
The core objective of this research is to identify the affect of market oriented firms on its ability to gain
competitiveness during new product offering. This study also shows that how an organization can be a
market oriented. Study based on past & moderan perspectives and complied after extensive litrature
review. Market orientation (MO) is found as vital antecedent in product offering through innovation and
differentiation approch which leads an organization to gain competitive advanatges over time. In this
research, it is found that there is positive relationship between market orientation (MO) and firm’s
ability to offer product in more affectivly by understanding needs & wants of customers. This study helps
organizations in order to understand the importance of being market oriented in order to achieve
competitive edge and to survive competitive environment.
Keywords: Market Orientation, Competitive advantages, New product offering.
Keypoints
 Being market oriented is very important for an organization to gain competitive advantages.
 Market oriented firms are most affective than non-market oriented firms.
 There is psoitive relationship between market orientation (MO) and firm’s ability to offer product more
affectivly than competitors.
Introduction
In this competitive environement an
organization need to keep itself as
competitive by making effective competitive
starategies [1]. According to researchers
competitiveness can be achieved by creating
superior value for the customers [2,3].
Further, to achieve competitiveness, an
organization needs to move for cost
leadership strategy, differentiation strategy
or focus strategy [4]. For this purpose,
distribution of market intelligence which is
composed of information about the
customer’s current and future needs and
exogenous factors that influence those needs
[6]. The concept of Market orientation (MO)
Abdul Waheed et. al.| March 2016 | Vol.3| Issue 3|01-07
organizations need to be market-oriented
having the ability to understand the
changing conditions of market to respond
quickly in order to value creation for the
customerss
[5].
Market
orientated
organizations focus to meet the hidden needs
& wants of customers and try to build long
term relationship with them by value
creation. Market orientation (MO) is also
defined
as
the
generation
&
concept is studied and defined by various
schools of thought in different spam of
periods including; [6-11]. Competitive
advantages can be gained being market
oriented as well according to research
1
Available online at: www.ijamee.info
competitive advantages can be gained being
learning organization [12,13]. Furthermore,
according to [5] who defined MO (Market
Orientation) as a firm’s ability to keep itself
in changing environement and create
superior customer value by consistently
offering
competitive
products.
More
precisely, their definition reflects the
importance of conduction and exploitation of
market intelligence across all organizational
levels where different departments can
actively respond to changing market
conditions. It is widely believed that market
orientation (MO) can lead to superior
business performance by various scholars
such as; [5,14].
Research
Questions
Objectives
&
Research
The purpose of this paper is to discuss the
impact of market oriented firms with
strategies of new product offering in market
with respect to its. The core focus is to
discuss
the
significance
of
market
orientation (MO) for a firm that wants to
achieve a competitive advantage. By doing
so, this research intends to answer the
following questions;
RQ1- How market oriented firms can gain
competitive edge?
RQ2- Is there any relationship between
market orientation (MO) and new product
offering?
Literature Review
Concept of Market Orientation
According to different researchers, concept of
market orientation (MO) has great
importance for organizations which is
necessary for the firm to be market
orientated to survive in competitive
environment where different schools of
thought of market orientation (MO) have
shown the importance of marketing
orientation such as; [8] and [6]. Market
orientation (MO) is very important concept
and known as complete implementation of
the marketing concept [15]. Further, market
orientation (MO) is a business technique
which emphasizes to measure and meet the
hidden and stated needs of various
consumers. Market orientation (MO) concept
also explained as the generation of market
intelligence that is composed of information
Abdul Waheed et. al.| March 2016 | Vol.3| Issue 3|01-07
related to customer’s current & future needs
and exogenous factors which affect on those
needs & wants [6].
Market
Orientation
Differentiation
as
Product
According to reseacher, firms adopt product
innovation and differentiation strategies to
meet the current and future needs of target
market or customers [16]. The literature on
Marketing and Management practices
suggests
product
innovation
and
differentiation strategies for those firms that
wish to keep themselves competitive in the
marketplace [17]. Market orientation (MO)
must also accompany entrepreneurial
orientation which helps organizations in
differentiating their products from those of
their
competitors
through innovation
strategies [17]. Therefore, it is vital for
market-oriented firms to focus on both;
product differentiation as well as innovation
if they wish to effectively encounter the
competitive threats from the industry. On
one side, market orientation (MO) helps a
firm in effectively satisfying its customers’
needs based on market information and
quick
responsiveness
to
changing
environmental conditions [5] and at the
same time, it takes support from
entrepreneurial orientation and customer
orientation in order to help the firm in
finding the ways how it can effectively
differentiate its product or service offerings
against its competitors [17]. Thus, market
orientation (MO) may not solely suffice for
organizations to be competitive in terms of
product differentiation with only focuses on
satisfaction the present and future customer
needs [5] while missing the fact that firms
also need to innovate and differentiate their
product and service offerings in order to
outclass the competitive threats [18].
Market Orientation
Product
as
Innovative
According to Slater and Narver [14]; Slater
and Olson [2] market orientation (MO) is
directly linked with product innovation,
competitiveness, and performance where
this school of thought supported by Jaworski
and Kohli [5] by believing that market
orientation (MO) allows firms to effectively
satisfy the customer needs by keeping an eye
on the changing market conditions and
2
Available online at: www.ijamee.info
disseminating this information across
employees in entire levels of organization.
According to Slater and Narver [14] market
orientation (MO) is directly linked to the
product innovation & its performance. They
have supported their arguments by stating
that a market-oriented firm is more likely to
understand the present and future customer
needs which ultimately help it in innovating
and differentiating its products according to
what customers expect from it. Therefore, if
any organization truly understands the
needs of its target customers then it will
ablein abetter way to design, develop, and
present its products to these customers
exactly accordingly Pelham [19]. According
to Pelham [19] market orientation (MO)
helps in collecting information and
developing capabilities in organizations
which are vital to understand needs of
customers. Moreover, with capabilities &
information, the firm is able to provide quick
respond to the changing market conditions
and may develop more innovative and
unique product than competitors [1].
Market
Orientation
Repositioning
as
Product
According to Carpenter [20] market-oriented
behavior of firms along with its core
marketing strategies including; branding,
advertising, promotion, distribution may
help firms to enhance competitiveness. As
far as the impact of market orientation (MO)
on a firm’s repositioning strategy is
concerned, a firm may use market
knowledge and internal capabilities to
effectively design and improve its offerings.
But, it need to think again towards
marketing approach while presenting its
products under the umbrella of repositioning
strategy [20]. Therefore, the firm has to
make greater efforts in order to achieve
differentiation through its marketing
orientation approach [21].
Marketing Orientation as Preliminary
Risks
The biggest risk which firms face while
adoption of product differentiation strategy
or simply go for new product development
[22,23]. It has proved empirically, new and
differentiated products fail when they do not
satisfy the target customers’ present needs
[24]. This risk can effectively decresed while
Abdul Waheed et. al.| March 2016 | Vol.3| Issue 3|01-07
focusing at a time as being market-oriented,
customer-oriented
as
well
as
entrepreneurial-oriented [17]. According to
Cooper [25] specifically explains that risk of
failure can be becreased in product
differentiation.
According
to
abother
researcher who believes that a marketoriented organizations are more vigilant,
cautious, practical and proactive in its
approach to target [25, 26] . Market orinted
firms adopts such kind of strategies which
are purely backed up by comprehensive
market analysis and extensive industry
which is also based on competitor knowledge
[27,28].
This research also carried out all the steps
related to product differentiation and new
product development processes on prior
knowledge based and understanding [29].
So, if the market conditions are favorable,
they
continue
implementing
the
differentiation or innovation strategy [25].
In contrast, they postpone and wait for the
situation to get better approch in near future
[17]. This proactive approach has shown that
organizations are more market-oriented
than competitors that prefer and stick
towards its current product strategies [30].
Market Orientation as Buyer Behavior
According to various reseacrhers to
understand the buying behavior of different
consumer is very necessary for any an
organization to target them in more eficient
and effective way and in order to meet the
present and future needs of their
organizations need to keep themselves
abreast in changing environment over time
10] The behavior of the consumers, choice of
product as well as preferences are affected
by a large number of factors such as; design
of product, name of brand, packaging of
product, product price, product quality,
origin of product, manufacturer of product
etc [31,32]. Further, in order to find and
evaluate some product in buying decision
parameters, customers need to expend
certain amount of money; commonly known
as cost of buyer search [33].
While designing their product differentiation
strategies, firms also meed to have
concentration on buyer search costs.
3
Available online at: www.ijamee.info
According to Kuksov [33] who explain that
low search costs of buyers leands to price
increases the price competition in industry
and in order to encounter this issue,
organizations need to adopt differentiation
strategy for its product design. Moreover, a
highly distinctive product design results in
lower buyer search costs [33]. It may affect
the firm’s performance in both positive and
negative way. Positively, the product easily
develops its unique identity in the minds of
the customers which ultimately leads to
strong brand image and high sales
performance of the firm. Conversely, highly
differentiated products lock in the customer
choice [34] limited attributes to make their
purchase decision [32]. It is beneficial for the
customers to decrease search costs of produc
[33].
Research Methodologies
Specifically, diverse research papers are
being searched from different database such
as Emerald, JSTORE, Elsevier, Google
scholar for detail literature review. Further,
data collection of this paper is based on
secondary data being accessed from some
reliable sources of internet including
Wikipedia & online libraries along with
international
journals.
Secondly,
information is also collected through
relevant books as well. APA 5th style is being
used to court references of different studies.
In this paper a comparative analysis
conducted to understand the market
oriented firms vs. non-market oriented firms
through
depth
literature
review.
Discussion
Figure 1: Discussion Model
Above mentioned model in Figure 1, shows
two types of organization studied in this
paper where one is market oriented firms
and second is non-market oriented firms.
The ultimate objective of any organization is
to compete its competitors to gain
competitive edge. Literature of this study
shows that organizations that are market
oriented have competitive advatnges as
compare to those organizations which are
not market oriented. Because market
Abdul Waheed et. al.| March 2016 | Vol.3| Issue 3|01-07
oriented organization are contineously try to
build long term relationship with customers
by creation of value for them in new product
offering and bringing innocation in current
product. Because, it is found that market
oriented organizations understand the past,
present and future needs, wants and desire
of target customer to satisfy them in more
efficeint and effective way.
Moreover, above discussion represents about
two firms to understandd its role to gain
4
Available online at: www.ijamee.info
competitive advatnges; Market oriented and
non-market oriented where the nature of
market oriented firms are explained in
literature. But, this study specifically relates
market oriented firm on the behalf on
certain objevtive presented in Figure 1, such
as; Innovative, Focus on Differentiation,
Repositioning, Risk takers, Long term
vision, Customer oriented which shows the
organizations which will be innovative, risk
take, visionary, customer oriented and have
differentiation strategy will lie as market
oriented firm that leads toward achieving
competitive advantages. On other side, the
organizations that have not such kind of
strategies can’t be market oriented and can’t
survive in competitive environment for long
term period. So, after depth literature
review and discussion model, this research
concluded that in new product offering an
organization need to be market oriented to
gain competitive edge. And to be market
oriented an organization need to be
innovative, risk taker, should work on
vision, repositioning strategy as well as
should be customer oriented. Because, it
allows an organization to understand the
customer needs & wants either it current or
future need. If the organizations not
emphasize and didn’t keep itself as up to
date then it will considered as non-market
oriented which can never be able to gain
competitive edge from its competitors.
Conclusion
It is concluded that market orientation (MO)
has positive relationship with a firm’s ability
or efficienct to its product offerings in
achieving competitive advantages and
superior performance as compared to
competitors. Market orientation (MO) helps
organizations to analyze its external
environment that help to understand
preferences of consumers, strategies of
competitors as well as changes in overall
market scanerio. On the behalf of this study
organizations may able to effectively
differentiate, design, position and improve
its product and services for the customers by
creating value for them. By doing so, an
organization will able to create long term
relationship with the customer that is
Abdul Waheed et. al.| March 2016 | Vol.3| Issue 3|01-07
ultimate purpose of any organization. This
study further suggested various approaches
that an organizations may adopt to get
positive advantage than competitors as
being market orientated. Further, this
research concluded after extensive literature
that an organization may get better being
customer-oriented
as
well
as
entrepreneurial-oriented along with being
market oriented. Market orientation (MO) is
found very wider concept by different schools
of though having positive affect on
organization efficiency by focuses and
understanding the market patterns and
disseminating information across various
department of the organization. On other
side, entrepreneurial orientation allows the
firm to take risks and improve its products
to compete in competitive environement.
Significance of the Study
This reseach paper may fruitfull for all
organizational
strategic
makers
&
entrepreneurs to understand & analyze the
decision in product/service offering in the
market. This paper also made sure the
importance of being market oriented in order
to product offering, organizational efficiency
as well as in achieving competitive
advatnges.
Limitations of the Research
This research paper discussed few schools of
thoughts of market orientation (MO) and
also
discussed
specific
aspects
and
characteristics of organizations as being
market oriented. But, it may further be
discussed by adding other schools of thought
relevant to markt orientaion. This research
paper also discuss the relationship between
market orientation (MO) and the firm’s
ability to effectively offerings product by
differentiating it. But, there are certain
limitations that may be considered in future
research. Like, it can be analyzed
empirically after certain statistical test
where this research discussion is totally
based on past & modern Literarure.
Empirical research will allows to understand
current situation of the market based on
certain assuptions which may tested after
certain types of statistical tools.
5
Available online at: www.ijamee.info
References
1. Kirca AH, Jayachandran S et al. (2005)
"Market orientation: A meta-analytic
review and assessment of its antecedents
and impact on performance." Journal of
Marketing.
2. Slater SF, Olson EM (2001) "Marketing's
contribution to the implementation of
business strategy: An empirical analysis."
Strategic
management
Journal,
22(11):1055.
3. Connor T (2007) "Market orientation and
performance."
Strategic
Management
Journal.
4. Allen RS, Helms MM (2006) "Linking
strategic practices and organizational
performance
to
Porter's
generic
strategies." Business Process Management
Journal.
5. Jaworski BJ, Kohli AK (1993) "Market
orientation:
antecedents
and
consequences." The Journal of marketing:
53-70.
6. Kohli AK, Jaworski BJ (1990) "Market
orientation: The construct, research
propositions,
and
managerial
implications." The Journal of Marketing:
1-18.
7. Shapiro BP (1988) What the hell is market
oriented?, Harvard Business Review,
8. Narver, JC, Slater SF (1990) "The effect
of a market orientation on business
profitability." The Journal of Marketing,
20-35.
9. Ruekert RW (1992) "Developing a market
orientation: an organizational strategy
perspective." International Journal of
Research in Marketing, 9(3):225-245.
10. Deshpand R, Farley JU et al. (1993)
"Corporate culture, customer orientation,
and innovativeness in Japanese firms: a
quadrad analysis." The Journal of
Marketing:23-37.
11. Slater SF, Narver JC (1994) "Does
competitive environment moderate the
market
orientation-performance
relationship?" The Journal of Marketing,
46-55.
12. Farrukh M, Waheed A "Learning
organization and competitive advantage-
Abdul Waheed et. al.| March 2016 | Vol.3| Issue 3|01-07
An integrated approach." Journal of Asian
Business Strategy 5(4):73.
13. Waheed A, Shahid M et al. "Proposed
Conceptual
Model
of
Learning
Organization
and
Competitive
Advantages." International Journal of
Research, 2(12): 673-682.
14. Slater SF, Narver JC (1999) "Research
notes and communications: Marketoriented is more than being customerled." Strategic management Journal,
20(12):1165.
15. Arshad S, Shahid M et al. "Which School
of thought better measure the concept of
Market
Orientation."
International
Journal of Research 2(12):1178-1180.
16. Barney J (1991) "Firm resources and
sustained
competitive
advantage."
Journal of management, 17(1):99-120.
17. Atuahene-Gima K, Ko A (2001) An
empirical investigation of the effect of
market orientation and entrepreneurship
orientation
alignment
on
product
innovation." Organization science 12(1):
54-74.
18. Bayus BL, WP Putsis Jr (1999) "Product
proliferation: An empirical analysis of
product line determinants and market
outcomes." Marketing Science, 18(2):137153.
19. Pelham AM (2000) "Market orientation
and other potential influences on
performance in small and medium-sized
manufacturing firms." Journal of Small
Business Management 38(1):48.
20. Carpenter GS (1989) "Perceptual position
and competitive brand strategy in a twodimensional,
two-brand
market."
Management Science 35(9):1029-1044.
21. Harris LC, Ogbonna E (2001) "Strategic
human resource management, market
orientation,
and
organizational
performance."
Journal
of
business
research 51(2):157.
22. Tadepalli R, Avila RA (1999) "Market
orientation and the marketing strategy
6
Available online at: www.ijamee.info
process." Journal of Marketing Theory
and Practice, 7(2):69-82.
23. Thomas L, Weigelt K (2000) "Product
location choice and firm capabilities:
Evidence from the U.S. automobile
industry."
Strategic
Management
Journal, 21(9):897.
24. Ulrich K, Sartorius D et al. (1993)
"Including the value of time in design-for
manufacturing
decision
making."
Management Science, 39(4):429-447.
25. Cooper RG (1979) "The dimensions of
industrial new product success and
failure." The Journal of Marketing: 93103.
26. Hurley
RF,
Hult
GTM
(1998)
"Innovation, market orientation, and
organizational learning: an integration
and empirical examination."
27. Verona G (1999) "A resource-based view
of product development." Academy of
Management Review, 24(1):132-142.
28. Yamin S, Gunasekaran A, et al. (1999)
"Relationship between generic strategies,
competitive
advantage
and
organizational performance: An empirical
analysis." Technovation, 19(8):507-518.
Abdul Waheed et. al.| March 2016 | Vol.3| Issue 3|01-07
29. Im S, Workman Jr JP (2004) "Market
orientation, creativity, and new product
performance in high-technology firms."
Journal of marketing, 68(2):114-132.
30. Vorhies
DW,Morgan
NA
(2005)
"Benchmarking marketing capabilities
for sustainable competitive advantage."
Journal of marketing, 69(1):80-94.
31. Ullah GS, Prince PR "Factors Influencing
the Bangladeshi Consumers' Purchase
Decision
Regarding
Fast
Moving
Consumer Goods: An Exploratory Study."
IUP Journal of Brand Management,
9(1):7.
32. Anderson SP, Renault R (1999) "Pricing,
product diversity, and search costs: A
Bertrand-Chamberlin-Diamond model."
The RAND Journal of Economics: 719735.
33. Kuksov D (2004) "Buyer search costs and
endogenous product design." Marketing
Science, 23(4): 490-499.
34. Arping SG (2006) "Corporate Leverage
and Product Differentiation Strategy. The
Journal of Business, 79(6):3175-3206.
7