There are three major modern approaches to marketing and they include Product Orientation, Market Orientation and Asset-Led Marketing. Let’s take a look at Market Orientation in this article.
Market Orientation, or Sales Orientation, developed between early 20th century and mid 20th century as the demand for goods weakened which required firms to sell goods to customers (through advertising and personal selling) rather than the customers coming to the business. From mid 20th century to late 20th century, more and more companies embraced Marketing Orientation which puts the customer in the main focus.
Market Orientation is outward-looking as the business focuses on the customer and puts its customers first. Companies using Market Orientation intend to make products that the customers want to buy rather than just making and selling products that the company produces.
In Market Orientation, businesses focus on selling products that they make rather than making products that they can sell.
What products are sold using Market Orientation?
Market-Oriented businesses (or market-led businesses) design, produce, set prices, distribute and sell products with the consumer in mind. They find out what customers need and want through market research. Information collected by researching the market allow the business to base all product decisions on customer demand.
Market-Oriented businesses identify, design, develop and supply products that are expected by customers to satisfy their needs and wants. These firms believe that if their products focus on specific needs and wants devoting production and marketing resources to satisfying them, then the firm will become successful.
Market research is central to the Market Orientation approach because the customer will get exactly what he wants or needs. Market Orientation requires the firm to do market research, followed by market analysis, to indicate present and future consumer demand by constantly consulting with customers.
What influence the choice between Product Orientation and Market Orientation?
The following factors will help to determine what type of marketing orientation a firm will choose. Whether a business adopts a product orientated or market orientated approach depends on several factors, including:
- The firm and its management.
- Corporate culture.
- The market nature and market size.
- The product(s).
- The competition or lack of thereof.
- Laws, regulations and policies.
Examples of companies using Market Orientation approach
Example 1: Furniture retailer IKEA provides stylish home and office furniture and decorations that customers like. In addition, IKEA offers its customers value-for-money meals in its restaurant, grocery store, adult-supervised play areas for young children allowing their parents to shop freely, changing rooms, bathrooms and free car parking.
Example 2: In addition to selling several different types of coffee, multi-national coffee chain Starbucks also sells other products that customers prefer to eat while enjoying a cup of coffee such as cakes and cookies, sandwiches, etc.
Advantages of Market Orientation
The benefits of Market Orientation include:
- Reduce product failures. Thanks to conducting effective market research, the chances of failure for newly developed products are reduced. It is because the customers’ wishes are already embedded into new products making the business more confident that the product launch will be successful. With market research being undertaken first, the risk of product failures is lowered significantly.
- Better fulfills customers’ needs and wants. In fast-paced consumer markets, customer needs and wants must be met with appropriate products. Only in this way, market-oriented businesses are able to survive longer and make higher profits. Many firms using the marketing orientation firmly believe that customers are the most important stakeholder because ‘customers are always right’.
- Constant feedback from consumers. Market-oriented businesses are able to respond quickly to changes in the market thanks to access to relevant information and data about its customers. Increasing consumer awareness of the company’s products, prices and distribution network can result in significant increases in popularity of goods and services.
- Greater flexibility. Market-orientated businesses are more able to anticipate changing market trends and prepare for such changes. Market research allows market-oriented businesses to continuously adapt products to fit preferences of the customers ahead of competitors. In ever-changing consumer markets, gathering information about customers such as their education, level of income or the household size can be priceless. The current market information helps to quickly respond to changing market conditions.
- Lower risk. Firms adapting Market Orientation are prone to less risks. They are more confident that customers will buy their products. With conducting proper market research, and the analysis of the data and information, the risks of product introduction are minimized. The cost of marketing a new product is less likely to be a gamble because it will suit the market better than products produced through the Product Orientation approach.
Disadvantages of Market Orientation
The drawbacks of Market Orientation include:
- Market Research is expensive. Conducting market research which is necessary to find out what customers need and want can be very pricey. The business cannot afford to ignore the needs and wants of customers because it will lead to becoming uncompetitive. And, this would have devastating results for the firm in the long term. Therefore, although market research can be very expensive, the cost of not doing things for the customer could be even higher for the business.
- The market changes too fast. Given the dynamic nature of external business environment and all the uncertainty about the future, there is completely no guarantee that the products which are preferred by the customers today will also be preferred tomorrow. As fashions and tastes can change very quickly, the company may not be able to catch up on time with all market changes.
To summarize, remember that nowadays there are three main approaches to doing marketing. These approaches include Product Orientation, Market Orientation and Asset-Led Marketing.
