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Essay: Comparative analysis – marketing orientation / other business orientations

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  • Comparative analysis - marketing orientation / other business orientations
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INTRODUCTION

“There is only one valid definition of business purpose: to create a customer…. It is the customer who determines what the business is…. Because it is its purpose to create a customer, any business enterprise has two-and only these two-basic functions: marketing and innovation”
(Drucker, 1954, p.1)

In past two decades, there has been several researches focused on the concept of marketing orientation (MO), which aims to understand the effect of management culture or behaviour on organisational success (Narver and Slater 1990; Kohli and Jaworski 1990; Slater and Narver 1994a; Greenley, 1995). Even today, despite of growth of technology and entrepreneurship, marketing has been the most influential factor for the businesses around the world (Etgar et al., 1990; Gunaratne, 2015). The aim of this paper is to review and critically evaluate why marketing orientation is an inevitable factor for business performance. In order to do so, this paper will also analyse the importance of marketing orientation in an organisation structure and will evaluate how it is related or compared with other business orientations.
This paper is structured as the following, after introduction, the paper will discuss what is marketing orientation and how it’s a driving force for a business compared with other business orientations such as product, brand and learning orientations. Based on the above comparative study, the paper will then evaluate why marketing orientation is key for business performance by evaluating case studies from scholarly researches, followed by conclusion.

MARKETING ORIENTATION

Kohli and Jaworski (1990) defines marketing orientation as an organization’s wide generation of marketing intelligence, dissemination of marketing intelligence and marketing information across the departments, and organization wide responsiveness to market intelligence. In a corresponding study, Narver and Slater (1990) defined market orientation as the organizational culture that most effectively and efficiently creates the necessary behaviours for the creation of superior value for buyers and, thus, continuous superior performance for the business. According to them the concept of marketing is concerned with customer orientation, competitor orientation, inter-functional coordination, organisational culture and long-term focus. Over the years, researchers have developed common measurements scales such as MKTOR (Narver and Slater, 1990) and MARKOR (Kohli and Jaworski,1993) in order to study the business environment, customer needs and expectations.

Levitt (1960) point outs that customer is the reason for the existence of any organisation, where marketing orientation is at the focus of modern marketing (Grinstein, 2008). Liao et al. (2011) observes that market-oriented organisations are sustainable in competitive environment and capable of performing better. A company gets more profits when they offer their product in market based on consumers expectation and needs (Drummond, 2005, p.6). Conclusively, marketing orientation is the only strategy applied to all organisation irrespective of their size or industry, thus due to wide range of application of marketing orientation, many consider it as a superior strategy to other business orientations (Liao et al. 2011, p.306).
The figure: 1 below shows the components of marketing orientations.

Source: Hooley et al. (2008, p.9)

COMPARING BUSINESS ORIENTATIONS

This section will compare the relationship and components of marketing orientation with other business orientations such as product, brand and learning orientations.

Market Vs Product orientation:

Product orientation is closely linked to the innovation of a business by which a firm will create new ideas or products (Grinstein, 2008). Product oriented business firms are focused on the quality of product (Fritz, 1996; Gatignon and Xuereb, 1997; Han et al., 1998) and highly invest on introducing new products decreasing the organisational inertia. Lukas and Ferrell (2000) argues that market-oriented companies are less innovative because their focus is to satisfy customer needs. Houston (1986) reached to a different conclusion claiming market-oriented companies to be more innovative they are customer-focused and able to anticipate their future needs.
However, there are several overlapping factors between product and marketing orientation. One such factor is “innovation” (Liao et al., 2011). Marketing orientation focus on the continuous innovation of the products while understanding the customer needs in order to serve in a better way from that of their competitors (Han et al., 1998). Evidence indicates that Marketing orientation and product innovation together has a positive impact on the product performance (Raju et al., 2008). Consistent with the above argument, Liao et al. (2011) confirms the conclusion that Marketing orientation is the only strategy applicable to all organisations and is superior than alternative strategies of business orientations.
Market Vs Brand orientation:
Brand orientation is a dynamic and identity-driven approach that focuses on value creation (Gromark and Melin, 2013; Luakkanen et al.,2016). It represents and inside-out approach for an organisation in order to execute their mission, vision and value guided brand development, setting boundaries for themselves to which the customer needs don’t affect branding decisions (Urde et al., 2013; Baumgarth et al., 2013). Gromark and Melin (2013) states that brand orientation seems to be more dynamic and holistic approach than market orientation since they join in both external and internal perspectives on value creation for an organisation. Thus, brand orientation challenges marketing orientation by becoming an unconditional response to customer needs and satisfy them (Urde, 1999). On the other hand, Luakkanen et al. (2016) asserts that brand and marketing orientation together are source of competitive advantage.
Despite the above, brand orientation is different from marketing orientation in terms of ways and extent by which firms responds to their customers (Urde,1999). Researchers have pinpointed several limitations of brand orientation, for example; Hirvonen (2013) argues that young brands fail to establish them in the market due to lack of business strategy and deep understanding of the market. Whereas Keller (2000) points out how consistency is important for a brand to be successful since the customers finds the old brands as trustworthy (Keller, 2000). Similarly, Sinkula (1994) reveals that the old companies are skilled in filtering the relevant market information and turning it into innovative activities.

Market Vs Learning orientation:

Learning is a development that potentially influences the organisation’s behaviour (Slater and Narver, 1995; Hult et al., 1999). Several researches show that those organisations that continuously learn and share knowledge leads to numerous benefits such as strategical renewal or act as a buffer between business and their environments etc. (Breman and Dalgic, 1998). Learning enables the way for firms to enter into new markets and enhance their performance and satisfy the needs of customers (Narver and Slatter, 1990). Researches suggests that there is a positive relationship between marketing orientation and learning orientation. For instance, if the employees have enhanced learning, they are more likely to gather and examine the quality of information and better understand the needs of customers and behaviour of competitors (Grinstein, 2008). Raju et al. (2011) concludes that the learning to be an evolutionary approach of gathering useful marketing information. Firms with low learning capability will be inflexible and their efforts are likely to be limited (Baker and Sinkula, 1999a; Slater and Narver, 1995).

While distinguishing the two orientations, learning oriented firms are committed to the practices that defines the innovation, but market-oriented firms acquire and use market information as an input to innovation process (Kohli and Jaworski, 1990). However, both the strategic orientations are key for successful organisational performance. Thus, the adoption of a learning orientation with the marketing orientation is associated with better organizational performance knowledge creation, competencies, and better response to their environment (Baker and Sinkula, 1999a; Liu et al., 2002; Slater and Narver, 1995).

IMPACT OF MARKETING ORIENTATION ON BUSINESS PERFORMANCE
According to Liao et al. (2011, p.303), a survey conducted on marketing orientation suggests that out of all published articles on marketing orientation about 38 (7.4%) have examined the relationship between marketing orientation and the business performance. Out of which, 36 of them found a relationship whereas 2 of them found a negative relationship between them. The above was overwhelming to the earlier researchers who argued that it is hard to establish a conclusive relationship (e.g. Diamantopoulos & Hart,1993; Greenley,1195; Han et al. 1998). Importantly, 22 out of 38 published articles establish a direct positive link between the marketing orientation and performance of an organisation (e.g. Narver and Slater, 1990; Ruekert, 1992). The below figure:2 reflects on the conceptual framework developed based on the related keywords showing how marketing orientation impacts business performance.

Figure :2

Source: Liao et al. (2011, p. 307)

The growth of global advertising spending and digital marketing suggest the importance of market knowledge and customer focus plays an integral part of business success. It is estimated that the global advertising spending will grow a 3.9% in 2019 to reach 563 billion dollars (see appendix 1). Below are some of the selected case studies based on scholarly researches evaluating the relationship between marketing orientation and business performance.
A study conducted on garment industry in the UK and the US suggests a tight relationship between marketing orientation and business performance (Ngai and Ellis,1998). According to them, this wasn’t different in the case of Hong Kong either (a case of non-western economy). Data collected from 73 textile industries, which then analysed as an evidence-based study by using MKTOR scale introduced by Narver and Slater’s (1990). Similarly, Charles et al. (2012) establishes a positive relationship between market orientation and business performance in an emerging market scenario. They conducted a questionnaire-based survey of 220 managers of manufacturing companies in Kenya. Apart from the above result, they also found that there are significant effects of business environment on business performance.
In service industry, a recent study conducted by Zianuddin et al. (2017) on a hotel industry in Malaysia establishes the importance of marketing on the performance of hotel. A research was done on 108 employees from variety of department of Permai hotel (three star) using reliability analysis, descriptive frequency analysis, Pearson’s correlation analysis, and regression analysis. They found some positive variables influencing performance such as communication, empathy etc but the most influential components of relationship marketing orientation that affect organizational performance were reciprocity. The results above were consistent with studies of Agarwal et al. (2003) in which they concluded marketing orientation is positively associated with both judgmental measurement of performance – service quality, employee or customer satisfaction as well as the objective measures of performance – market share or gross profit. Their study was based on 201 international hotels, where is specifically concludes that the impact of marketing orientation is to spur innovation.

CONCLUSION

This paper theoretically established a comparative analysis on how marketing orientation relates and compared to other business orientations such as product, brand and learning orientations. There are several overlapping positive relationships between these business orientations. However, while distinguishing between them, market orientation is the one that focuses most on their customer and links to innovation process, therefor such companies which are market-oriented are very difficult to be imitated by their competitors (Liao et al., 2011, p.307). Complementing the above observations, there are clear evidences suggesting a positive link between marketing orientation and business performance. Whether in service or manufacturing businesses, the marketing orientation is key for business performance. In short, we can conclude that while breaking down the business orientations, the marketing orientation integrates and dominates on several aspects of business functions, especially on innovation, suggesting marketing is management.

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