Sunday, July 26, 2009

Marketing Orientation Research Paper

Market orientation is an organisation's disposition to provide superior value to its customers continuously (Slater and Narver, citied in Han, Kim and Srivastava 1998). Kohli and Jaworski as cited by Avlonitis and Gounaris (1999) suggested that the market orientation framework consists of three components, intelligence gathering, intelligence dissemination and responsiveness. They also proposed that this framework is influenced by a number of antecedent variables, such as top management involvement and interdepartmental conflict, is moderated by environmental variables including market turbulence, and is manifested in a number of outcomes, for example, esprit-de-corps and company performance (Ngai and Ellis 1998). Noble, Sinha and Kumar (2002) states that there is support that by striving to achieve market orientation will have a positive effect on organisational performance.

Intelligence gathering is the first step in the market orientation framework. The major type of information acquired is on customers’ needs and preferences. Although intelligence gathering pertains to these customer needs and preferences, the process also includes an analysis of how these may be affected by factors such as government regulations, technology, competitors and other environmental factors (Deshpande 1999). This is so organisations can understand how their products cater for and satisfy customer needs and wants better (Avlonitis and Gounaris 1999).

Effectively responding to a market need requires the participation of the organisation as a whole from research and development, manufacturing, purchasing right through to the sales and marketing departments. For the organisations to adapt to these needs the intelligence gathered from the previous process needs to be communicated, disseminated and sold to relevant departments and individuals (Deshpande 1999). By disseminating the information it will familiarise and mobilise the organisation towards the objectives and goals required to provide customer value and satisfaction (Avlonitis and Gounaris 1999).

Responsiveness takes the form of selecting target markets, designing and offering products and services for catering to their current and anticipated needs, and producing, distributing, and promoting the products in a manner that elicits favourable end-customer response (Deshpande 1999). It is also adjusting products towards market needs and wants, rather than according to the organisations beliefs and perceptions (Avlonitis and Gounaris 1999).

However, there are antecedent variables that can enhance or impede the implementation of the framework towards market orientation. Avlonitis and Gournaris refer to the Top Management Team (TMT) as an important influencing factor. The reason why the TMT are important is that they are the ones that must ensure that the structure is in place so that the organisation can effectively implement the new strategies to gain market effectiveness. The factors that make them influential is how likely are they to encourage employees to successfully implement these strategies, share market intelligence and be responsive to market needs (Deshpande 1999). It could be said that the greater the encouragement and acceptance of the TMT, the greater the market intelligence generation the intelligence dissemination and the overall responsiveness to market change. Another important factor to consider is that responding to market needs often calls for change within the organisation is some form or another. Change of any kind has elements of risk, how big a risk is determined by the nature and size of the change. For that reason the greater the risk aversion of the TMT, the lower the market intelligence generation, intelligence dissemination and the responsiveness of the organisation.

Deshpande (1999) refers to departmental dynamics. This refers to the formal and informal interactions and relationships among the organisations departments. An important aspect of departmental dynamics is conflicts, this usually arising from departments having incompatible objectives. The greater the interdepartmental conflict, the lower the market intelligence dissemination and the responsiveness of the organisation. Deshpande (1999) also alludes to interdepartmental connectedness. This refers to the degree of direct formal and informal contact among employees across departments. The greater interdepartmental connectedness is, the greater the market intelligence dissemination and the responsiveness of the organisation. On a more structural level Matsuno, Mentzer and Ozsomer (2002) talk about the organisations centralisation and formalisation. Centralisation refers to the amount of responsibility and authority delegated throughout an organisation and the extent of participation by organisational members in decision-making. Formalisation is defined as the emphasis placed within the organisation on following specific rules and procedures. The greater the formalisation of an organisation, the less it will tend to generate, disseminate, and plan a response to market information but the more effective its response implementation. The greater the centralisation of an organisation, the less it will tend to generate, disseminate, and plan a response to market information but the more effective its response implementation Deshpande (1999).

Han, Kim and Srivastava (1998) refer to environmental factors that can effect customer satisfaction. Environmental factors refer to competitive intensity, market turbulence and technological turbulence. These environmental factors help organisations to produce products and services that provide value for customers. Competitive advantage comes from the ability to shape buyer perceptions, preferences, and decision making, in which technology and innovation are critical factors. Technical innovation and knowledge management also contributes to customer satisfaction.

The greater the market orientation, the greater the esprit de corps and organizational commitment of employees. Many executives noted that a market orientation provides a number of psychological and social benefits to employees. In addition, a market orientation leads to a sense of pride in belonging to an organization in which all departments and individuals work toward the common goal of serving customers. These matters result in employees sharing a feeling of worthwhile contribution and stronger feelings of job satisfaction and commitment to the organization

A market orientation is likely to lead to improved performance because it is the organizational culture and climate that most effectively encourages the behaviors necessary for the creation of superior value for buyers and, therefore, continuous superior profit for the business.

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