Market orientation

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Market orientation
Market orientation perspectives include the
decision-making perspective (Shapiro, 1988),
market intelligence perspective (Kohli and
Jaworski, 1990),
[1]
 culturally based behavioural
perspective (Narver and Slater, 1990), strategic
perspective (Ruekert, 1992)
[2]
 and customer
orientation perspective (Deshpande et al.,
1993).
[3]
The two most prominent conceptualizations of
market orientation are those given by Ajay Kohli
and Bernie Jaworski (1990) and Narver and
Slater (1990). While Kohli and Jaworski (1990)
consider market orientation as the

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implementation of the marketing concept,
Narver and Slater (1990) consider it to be an
organizational culture.
Kohli and Jaworski (1990) defined market
orientation as "the organization-wide generation
of market intelligence, dissemination of the
intelligence across departments and
organization-wide responsiveness to it".
[4]
According to them, the marketing concept is a
business philosophy, whereas the term market
orientation refers to the actual implementation
of the marketing concept. They added that "a
market orientation appears to provide a unifying
focus for the efforts and projects of individuals
and departments within the organization."
On the other hand, Narver and Slater (1990)
defined market orientation as " the organization

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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".
[5]
As such, they consider market orientation to be
an organisational culture consisting of three
behavioral components, namely, i) customer
orientation, ii) competitor orientation and iii)
interfunctional coordination; and two decision
criteria, namely, iv) long-term focus, and v)
profitability. However, during the scale validation
process, the items for long-term focus and
profitability did not meet the reliability criteria
and were removed.
[6]
Empirical study found that
among all three behavioral components,
interfunctional coordination, especially those
between R&D and marketing has the most
significant influence on new product success.
[7]

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Niraj Dawar
[8]
argues that competitive
advantage is shifting from a firm’s “upstream
activities” such as sourcing, production,
logistics and product innovation to “downstream
activities”. In doing so, Dawar expands on the
notion of market orientation: Instead of bringing
better products to market or increasing
operational and asset efficiencies, downstream
activities focus instead on what else the firm
can do for the customer: The core focus of the
business has tilted from product and
production, to customers and the market. Thus,
competitive advantage exists externally to the
firm, enabling the company to build lasting
differentiation by creating new forms of
customer value. Consequently, it is the firm’s
The shifting source of
competitive advantage

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perceived position in the eyes of the customer
that matters, in the context of shifting purchase
criteria, and not product innovation.
Customer perceptions can be shaped through
an increased focus on building trust, changing
the customer’s purchasing criteria and defining
the competitive set. By also tailoring the offering
to specific consumption circumstances and
reducing customer costs and risk, value is
created for customers through downstream
innovation. Finally, the firm can build
accumulative competitive advantage from
network effects and also by accumulating and
leveraging customer datasets.
In order to measure market orientation, the two
most widely used scales are MARKOR 
[9]
and
Measurement scales

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MKTOR 
[5]
The MKTOR scale is a 15-item, 7-point Likert-
type scale, with all points specified. In this
measure, market orientation is conceptualised
as a one-dimensional construct, with three
components, namely: customer orientation,
competitor orientation, and interfunctional
coordination. The simple average of the scores
of the three components is the market
orientation score.
On the other hand, the MARKOR scale is a 20-
item, 5-point Likert scale, with only the ends of
the scale specified. Here market orientation is
again composed of three components, namely:
intelligence generation, intelligence
dissemination, and responsiveness.