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Market orientation

How can market orientation support strategic choice or positioning?

AccessibleStrategicIndividual2 min read

Contents

Market orientation is an approach to business that starts from the perspective of the customer and works back from there.

Market orientation means organising the business around understanding markets and creating superior value, rather than beginning with an existing product and searching for arguments to sell it. It combines an outward-looking culture with the capabilities to collect intelligence, share it and respond coherently.

When to use it

To assess whether the firm can understand, anticipate and shape market needs.

To examine the culture and behaviours that influence customer and competitor decisions.

To identify weaknesses in intelligence, coordination or responsiveness.

Origins

The underlying marketing idea—seeing the business through the customer’s eyes—predates the formal model. Academic interest intensified in 1990 through two complementary accounts. Ajay Kohli and Bernard Jaworski described market orientation as organisation-wide generation and dissemination of market intelligence followed by responsiveness. John Narver and Stanley Slater described a culture built around customer orientation, competitor orientation and inter-functional coordination that creates superior buyer value.

Both accounts appeared in 1990. They differ in emphasis rather than practical purpose: one highlights organisational activities, while the other highlights the culture that sustains them. Later work developed measures and tested relationships with business performance, including the concise diagnostic associated with Deshpandé and Farley in 1998.

What it is

Market orientation is an organisation-wide discipline. It starts with customer problems and the wider market system, then aligns choices about products, operations, channels and service around the value the firm can create.

The capability view comprises:

generating market intelligence through research, observation, experiments and customer-facing work;

distributing relevant intelligence across functions rather than trapping it in marketing;

responding through coordinated decisions and action.

The cultural view comprises:

customer orientation;

competitor orientation;

inter-functional coordination.

Together they prevent two common failures: product centricity, in which the firm protects what it already makes, and departmental marketing, in which the rest of the organisation treats market understanding as someone else’s job.

How to use it

Use the concept first as a diagnosis. Ask a representative group across functions to rate the following statements on a scale from 1 to 10, then discuss the evidence behind the scores:

Our business objectives are driven primarily by customer satisfaction.

We continually examine our commitment to serving customer needs.

Successful and unsuccessful customer experiences are shared across functions.

Our competitive strategy reflects a grounded understanding of customer needs.

Customer satisfaction is measured systematically and frequently.

Customer service has routine, decision-relevant measures.

We are more customer-focused than relevant competitors.

People understand that the business exists to create value for customers.

We poll end users at least once a year about the quality of our products and services.

Customer-satisfaction evidence reaches the levels and functions that can act on it.

Look for patterns rather than a single average. Weak intelligence generation calls for better research and front-line listening. Weak dissemination calls for shared systems, cross-functional reviews and clearer decision ownership. Weak responsiveness calls for shorter learning loops, resource reallocation and accountability for action.

Then convert the diagnosis into a small set of changes with owners and measures. Include non-customers, lost customers, partners, competitors and emerging substitutes so that “customer focus” does not become dependence on the loudest current accounts. Combine what people say with observed behaviour and experiments. Treat personal data lawfully and avoid research practices that exploit vulnerable participants.

Top practical tip

Make market evidence usable outside the marketing team. Give each important insight an owner, a decision it should inform and a date by which the organisation will respond or explain why it will not.

Top pitfall

Listening is not the same as obeying every request. Stated preferences can differ from behaviour, and current customers may not reveal unmet or emerging demand. Keep the lens on the whole market.