Market Orientation (plus Market Driven vs. Market Driving)

Hola Todos!

In classmate Jenny Zhang’s question below, Jenny asked about the difference between a “marketing orientated” company and “market oriented” company.  I have a feeling what Jenny is asking so I’m going to blurt first and then see what Jenny and everyone else thinks.

To begin, let’s review “market oriented.”  Market oriented firms have three main characteristics: (1) an incredibly strong external orientation towards customers, (2) an incredibly strong external orientation towards competition, and (3) incredibly strong internal communication within the firm.

Most firms do #1 and #2 well.  These two orientations are relatively easy.  Its #3 is which most firms do not do well (or at all).  Most firms have functional silos (e.g., divisions, SBUs, offices, etc. are relatively independent and do not talk/plan/coordinate together).  Non-market orientated firms have mostly an internal orientation for items 1 & 2 and items 3 is non-existent.  Companies that have mostly internal power struggles and are dominated by politics are mostly not market-orientated.

Now “marketing orientated” is not something I condone and I have a feeling Jenny was referring to something else to which I will get to in a moment.  I always liked to stress in class, that it’s called “market orientation” and not “marketing orientation” because its not JUST the marketing department doing steps 1, 2, & 3, it’s the ENTIRE firm.

So WHAT if the marketing department can listen to customers, monitor competition and disseminate that information across the firm.  If no other division takes advantage of the competitive intelligence, then the entire firm suffers.  If the marketing department doesn’t listen to operations or finance, how can one plan strategically?  By contrast, its “market orientation” because the entire firm and not just the marketing department is doing steps 1, 2, & 3.  It’s not the marketing department’s job to tell the firm to be orientated towards the marketplace, it’s the members of the C-suite (e.g., CEO, COO, CMO, CFO, CIO, C-etc.,) to tell the divisions of the firm to be market orientated.

Now what I think Jenny was getting at was two similar and somewhat related terms – –  “market-driven” and “market-driving.”  (Notice, the word is still “market” and not “marketing”)

A firm that is market-driven seeks to understand current customer needs and wants and finds ways to fulfill them. This term is very similar to market orientation.  Where as market orientation is a philosophy, market-driven is a verb.  Southwest Airline is a good example of a firm that understands passengers want to spend little time in the gate area, get on and off a plane as quickly as possible, and obtain luggage without delays. By contrast, a market-driving firm seeks to fulfill needs that the consumer does not realize exist or is possible.  A market-driving firm is often more market orientated then most but not fully as it violates/ignores item #1 above.  Apple a good example of this and Apple changed the way consumers look at computers when it introduced the iPad. It created a new market.

Please let me know what you think.

Best

Dr. Dan-o

 

 

Jenny Zhang says:

Hi Professor,

I was thinking that you are going to talk about the iphone4s, lol.

Actually, I didn’t find it disappointed because there is no iphone5. Personally I feel that Apple is trying to bring in more user-friendly and helpful tools/apps to the apple family rather than bringing forward a new look of iPhone. Siri is a big surprise to me. To some extent, I feel that people are looking for some appearance/ shape changes of iPhone, if that happens, many people will possibly say that this product is revolutionary.

In addition, I remember you used to mention about the differences between a marketing-oriented and market-oriented company. This time, I feel that Apple is a marketing oriented company rather than a market-oriented one. Every new app roll-out and operation system’s upgrade is driven by the extensive research of consumers’ behaviors, expectations and needs. Based on the marketing research, there is new strategy to create brand new products that competitors don’t have. Apple is different from its competitors because it has always been creating the new markets for the consumers, e.g. iPod, iPhone and iPad, while its competitors have been trying to satisfy consumers and competing in an established market. If I was right, you said that it is important to be a market-oriented company, rather than a marketing-oriented one.

I am not sure if I understand it in the right way, so, what’s your thoughts?

Thanks.

Jenny Zhang

10 thoughts on “Market Orientation (plus Market Driven vs. Market Driving)

  1. Thanks Professor,

    I really appreciate your detailed explanation of the differences between these words. Finally, I am more clear that the phrases I refer to in my question should be “market-driven” and “market- driving”. Previously, I was thinking that as to marketing-driven company, they would focus on every aspects of marketing function, e.g. market research, advertising and promotions etc. After you elaborate on the phrase of “market-driving”, I believe Apple is the example of such company.

    Thank you very much.

    Regards,

    Jenny Zhang

    • You are so very welcome Jenny. Sorry I didn’t get back to you sooner. Please let me know what else I can be helpful with and we’ll get it up on share on the blog.

      best
      Dr. Dan-o

      • Professor, thanks very much.
        Recently, I am able to get in touch with Agile Management Methodology, which Apple and many other companies are adopting. I wonder if you have any topics about agile management and if it can somehow be applied in marketing.

        I am currently thinking that it is more towards product development rather than other functions of the company.

        Jenny

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