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Market Orientation

Chapter · December 2010

DOI: 10.1002/9781444316568.wiem01031

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wiem01031
market orientation
Stanley F. Slater, Jakki J. Mohr and
Sanjit Sengupta
MARKET ORIENTATION
In this article on market orientation we highlight
the role of market-based information – about
customers, competitors, and other important
stakeholders and trends – in strategic deci-
sion making. Simply put, information about
the market becomes the beacon to guide the
company through the messy, oftentimes polit-
ical, process of strategy making. With a shared
understanding of the value and use of market
intelligence, a company can create a powerful
knowledge-based competency that allows it to
gain advantage in the marketplace.
WHAT DOES IT MEAN TO BE MARKET
ORIENTED?
Businesses that value close customer rela-
tionships and rely on market information to
guide strategic decision making are commonly
described as market oriented. Market-
oriented businesses generate intelligence about
customers’ current and future needs, and about
competitors’ capabilities and strategies; share
that intelligence throughout the organization;
PR
and take coordinated action to create superior
customer value (e.g., Kohli and Jaworski, 1990;
Narver and Slater, 1990).
The effect of market orientation on company
E
performance. A significant body of research
has demonstrated a positive relationship bet-
G
ween the degree of a firm’s market orientation
and its performance (see Kirca, Jayachandran,
and Bearden, 2005 for an extensive review and
PA
synthesis). As shown in Figure 1, by utilizing
market intelligence to continuously improve
both product quality and service quality, and
develop innovative products that meet evolving
customer needs, a market orientation delivers
ST
superior sales growth and profitability.
Some research has found that the positive
relationship between market orientation and
firm performance holds true regardless of
R
the environmental conditions in which a
FI
firm competes (such as high or low levels of
market turbulence, technological turbulence,
competitive intensity, and market growth
rates) (Slater and Narver, 1994); however,
other studies report that the market orienta-
tion/firm performance relationship is stronger
in highly dynamic markets (Homburg and
Pflesser, 2000). Firms must excel not only
at generating new innovations that deliver
value to customers but also at commercializing
these innovations (see LAUNCHING NEW wiem05007
PRODUCTS). A strong market orientation
without commensurate development of a strong
innovation/technological capability (see CORE wiem05034
COMPETENCIES) can have a negative effect on
new product and market performance (Baker
and Sinkula, 2005).
Activities of the market-oriented business.
Intelligence generation. First, market-
oriented firms generate a wide array of intelli-
FS
gence about influential market forces. Market
intelligence includes useful information about
trends and participants in the market including
• O
current and future customer needs (see
CUSTOMER ANALYSIS ); wiem01012
• competitors’ capabilities and strategies (see
O
COMPETITOR ANALYSIS); and wiem01011
• other important influencers, such as
suppliers, as well as important market trends
such as socioeconomic and technological
change.
Customer intelligence may be generated
through traditional market research techniques
such as focus groups, customer surveys,
customer advisory boards, and feedback from
the salesforce (see FOCUS GROUP & DEPTH wiem02010
INTERVIEWS). However, the intelligence
generated through these processes provides
insight only into needs that customers can easily
articulate. Responding to customers’ expressed
needs is usually inadequate to create superior,
sustainable customer value since customers
for many products may find it very difficult
to clearly articulate their needs; they may be
unaware of the capabilities that new technologies
offer or lack insight into how technology can
address their needs. And, even if customers
wiem01031
2 market orientation
Intelligence generation
Intelligence dissemination
Intelligence integration
Coordinated action
Figure 1 Market Orientation, Positional Advantage, and Performance.
are able to articulate their needs, what they
articulate to one seller can and will be articulated
to competitive sellers as well.
Firms that primarily act on current intelli-
gence are said to practice a responsive market
orientation. Although current intelligence
provides important information, some argue
that listening to current customers too carefully
can inhibit innovation, constraining it to ideas
that customers can envision and articulate –
which may lead to safe, but bland, offerings.
Firms with a responsive market orientation may
have a tendency to focus very specifically on
solving existing customers’ needs with a current
technology. Firms that focus too narrowly on
their established customers may be constrained
in the strategies and technologies they choose
to pursue. Such a myopic focus obscures the
possibility that customer needs may change over
time and may be solved in radically different
ways, allowing new, disruptive innovations to
creep up like a stealth attack.
PR
For example, a firm’s largest and most prof-
itable customers may be the last to embrace a
radical innovation and the company may believe
that the people who embrace a new technology
first, say a simple or inexpensive new tech-
E
nology, may be an unattractive market segment
– and as a result, the company pays it little
G
attention. Take the 5.25-inch disk drive, a tech-
nology introduced in the early 1980s that was
embraced by the emerging desktop personal
PA
computer marketplace – yet was inconsistent
with mainframe and minicomputer customer
demands (Christensen and Bower, 1995). Estab-
lished disk drive firms did not fail because
they were unable to develop innovative tech-
ST
nologies. Rather, because established customers
were uninterested in new technologies that didn
not address their immediate needs, industry
leaders did not allocate resources to developing
R
the new technologies. This decision allowed
FI
Superior
product quality Superior
sales growth
Superior
service quality
Superior
Innovative profitability
new products
new entrants to gain leadership in the new
market.
Businesses that gather anticipatory intel-
ligence have a proactive market orientation.
Anticipatory customer intelligence is concerned
with customers’ latent and future needs
that enable the firm to proactively pursue
market opportunities that are not evident to
competitors. Latent needs are real needs that
are not yet in the customers’ awareness. If
these needs are not satisfied by a provider,
there is no customer demand or response.
Customers are not necessarily dissatisfied,
FS
because the need is unknown to them. However,
if a company understands such a need and
fulfills it, the customer is ‘‘wowed,’’ and rapidly
delighted. Offering products and services that
O
address these latent needs in a compelling
fashion delights and excites customers and
inspires loyalty. A structured customer visit
O
program, ethnographic/observational research,
and working with lead users, customers whose
needs are more advanced relative to the rest of
the market, may provide insight into customers’
latent and future needs (see OBSERVATION wiem02012
METHODS; ETHNOGRAPHIC RESEARCH; wiem02036
wiem02050
PERSONAL OBSERVATION ; LEAD USERS ). wiem05018
While a responsive market orientation may
generate incremental innovations, a proactive
market orientation is more likely to lead to
radical innovation (see RADICAL INNOVATION; wiem05003
Atuahene-Gima, Slater, and Olson, 2005).
Therefore, firms must be ambidextrous,
combining both responsive and proactive
market orientations.
An extreme type of proactive market orienta-
tion is known as market driving in which a firm
actively seeks to (i) redefine the structure of the
market (see MARKET/INDUSTRY STRUCTURE) wiem01035
and/or (ii) introduce an innovative value propo-
sition (see VALUE PROPOSITION; VALUE
wiem01059
PROPOSITION ) that enables the firm to reduce, wiem05057
wiem01031
or even avoid, competition (Jaworski, Kohli,
and Sahay, 2000). Market-driving activities
may be focused on many different stakeholders
including customers and competitors, as well
as vendors, potential partners and allies, and
regulators. A market-driving strategy can be
quite risky since managers are attempting to
change the structure of a market and/or the
behavior of players in the market by introducing
a discontinuous leap in the customer value
system supported by a unique business system.
For example, Apple anticipated the emergence
of the PDA (personal digital assistant) market
when it introduced the Newton in 1993. The
Newton Message Pad featured a variety of
personal-organization applications, such as an
address book, a calendar, notes, along with
communications capabilities such as faxing
and email. It featured a pen-based interface
which used a word-based, trainable handwriting
recognition engine. Unfortunately, this engine
was notoriously difficult to use which, along
with competition from the PalmPilot, led to its
cancellation in 1998.
Competitive intelligence can be gleaned
through a wide variety of online and off-line
resources. The Society of Competitive Intelli-
gence Professionals (http://www.scip.org) and
the Competitive Intelligence Resource Index
(www.bidigital.com/ci/) are two useful starting
PR
places. Competitive intelligence can include
information on competitors’ customer lists,
product and pricing information, new-product
plans and R&D efforts, job postings that provide
insights into new business arenas, information
E
about partnerships, alliances, distributors, and
managers, to name a few.
G
While both customer- and competitor-
oriented intelligence generating activities are
important, a customer orientation, particularly
PA
a proactive orientation, is more strongly
associated with a firm’s ability to develop new
wiem01044 knowledge and skills (see MARKET-BASED
ASSETS), which, in turn, is more likely to
produce breakthrough product and process
ST
wiem05012 innovations (see INNOVATION TYPOLOGIES).
Conversely, competitor-oriented businesses are
more likely to invest resources into improving
existing products, and hence are more likely to
R
produce incremental innovations.
FI
market orientation 3
Regardless of the specific tools used to
gather market-based information, it is imper-
ative that the firm allocates resources to the
information-gathering process. However, this
is much easier said than done. Many firms do
not give adequate resources to initiatives that
seemingly are not directly tied to underlying
product development, commercialization, and
relationship building. Indeed, one $2 billion
US-based high-tech company with which
we are familiar was unwilling to invest any
meaningful funds to purchase secondary market
data, analyst reports, or to undertake its own
primary market research. Yet this company
wanted to make a ‘‘cultural transformation’’ to
being market driven. Clearly, a company that
says it wants to become more customer focused
must put its money where its mouth is.
Intelligence dissemination. As important
as intelligence generation is, the information
generated will be of limited value until it is
FS
shared across the organization and potentially
combined with other information. A firm’s
knowledge-based competitive advantage – one
that increasingly resides in its know-how – is
O
only as strong as its ability to share and use
knowledge within and across the organization’s
O
boundaries (see CROSS FUNCTIONAL TEAMS). wiem05041
Indeed, some say that effective knowledge
management requires a boundaryless organi-
zation, which takes good ideas from disparate
functions and from outside organizations and
uses them in many areas. Indeed, as stated by
Lew Platt, former CEO of Hewlett-Packard, ‘‘If
only we knew what we know’’ (cited in Brown
and Duguid, 2000). These words reflect a tough
truth about most organizations: the knowledge
and the know-how of their workforce is too
often underused – isolated in departments and
functional units.
Market-oriented firms actively encourage
sharing of information across people, depart-
ments, and divisions. Information may be shared
formally in meetings, conferences, newsletters,
and databases, or informally through ‘‘hall
talk’’ and informal mentoring. People in the
organization must be able to ask questions and
augment or modify the information to provide
new insights to the sender.
wiem01031
4 market orientation
However, freely sharing and using informa-
tion is easier said than done. An organization
is a coalition of individuals or groups, each of
which has its own goals that may conflict with
organizational goals. One way that individuals or
departments promote their own self-interests is
by creating and protecting their ‘‘proprietary’’
knowledge base. They believe that hoarding
or withholding information protects their turf
and generates power and status. However, this
dysfunctional belief does not allow the organi-
zation to fully leverage its knowledge. Effective
dissemination increases the value of information,
allowing each piece of information to be seen in
its broader context by all organizational players
who might be affected by it, use it, or possess
complementary information about it.
Thus, the challenge is to create an organiza-
tional environment in which group success does
not come at the expense of individual success.
One way to ensure this is to cultivate a team
orientation as the foundation for effective infor-
mation sharing, a topic that we address later in
this article.
Intelligence integration. Third, market-
oriented companies must integrate intelligence
to create knowledge assets, and they must
achieve a shared belief system: a shared inter-
pretation of the information and its implications
for the business. Shared interpretation goes
PR
far beyond simply sharing the information.
Consider this variation on an old joke:
Marketing: The glass is half full.
R&D: The glass is half empty.
E
Operations: The glass is twice as large
as it needs to be.
G
Each of these perspectives carries substan-
tially different views of what a particular piece
PA
of information means, and, by extension, impli-
cations for what the firm should do. Integrating
intelligence in order to achieve a shared under-
standing is vital.
Indeed, firms in dynamic and complex
ST
markets must strive for consensus internally
in order to successfully develop and execute
strategy. However, prior to achieving consensus,
companies in volatile industries may benefit
R
from a relatively high level of disagreement
FI
among managers in interpreting the information
they have gathered. Such disagreement allows
a closer inspection of the validity of different
assumptions and alternatives, as well as an
assessment of the relative importance of the
company’s objectives and competitive methods.
In his 1999 book, Only the Paranoid Survive,
Intel’s chairman Andy Grove described his
view of spirited debate to his middle managers:
‘‘Your criterion for involvement should be that
you are heard and understood. . .. All sides
cannot prevail in the debate, but all opinions
have value in shaping the right answers.’’ A
company must reach a shared interpretation of
the information it has gathered, but it should not
do so prematurely. It should actively facilitate
debate, discussion, disagreement, and dialogue
in order to fully tap the value of its knowledge.
Coordinated action for implementing
decisions. Finally, the market-oriented firm
implements decisions through coordinated
FS
action. Commitment to execution is necessary
for successful implementation of a market
orientation. An organization can generate and
disseminate intelligence; however, unless it acts
O
on that intelligence, nothing will be accom-
plished. Mark Hurd, CEO of Hewlett-Packard,
O
quoting Einstein, observed (Murray, 2007),
‘‘Vision without execution is hallucination.’’
Acting on market intelligence involves making
decisions including the selection of target
markets; the development of products/services
that address customers’ current and anticipated
needs; and production, distribution, and
promotion of the products to engender both
customer satisfaction and customer loyalty
(Kohli and Jaworski, 1990).
Moreover, the idea of coordinated action
means that all functions in a market-oriented
company – not just marketing – participate
in responding to market needs. To drive new
products from concept to launch more rapidly
and with fewer mistakes, ‘‘all functional inter-
faces (contacts) must jointly share in discussions
and information exchange’’ (Gupta, Raj, and
Wilemon, 1986). Coordinated action requires
a greater emphasis on multifunctional activi-
ties – activities that are the joint responsibility
of multiple functions in the business. When
wiem01031
decisions are made interfunctionally and inter-
divisionally, a more accurate representation of
the information and a closer connection to the
market issues will occur. Moreover, interfunc-
tional decision making implies that the people
who will be involved in implementing the deci-
sions are the ones actually involved in making the
decisions – the idea being that involvement in
making the decision makes one more committed
to implementing that decision. Indeed, two
firms may have the same information, but what
allows one firm to leverage that knowledge more
successfully than another is not the knowledge
itself, but rather, how that knowledge is coordi-
nated and integrated among different functions
and departments.
However, interfunctional rivalry can impede
internal knowledge transfer. Functions must
compete for scarce organizational resources and
are thus often reluctant to share information.
This sets up a situation sometimes referred to as
coopetition, or the simultaneous need for coop-
eration and competition by various departments
within a company. It is true that functional areas
compete with one another for resources, but they
also cooperate to work toward the firm’s common
interests. A study of these complicated intraor-
ganizational dynamics found that fostering coop-
eration but squelching internal competition can
actually limit a firm’s performance potential
PR
(Luo, Slotegraaf, and Pan, 2006). Constructive
conflict can promote learning and knowledge
sharing, and improve performance. Importantly,
market learning is the mechanism by which
the simultaneous effects of interdepartmental
E
cooperation and competition are transferred to
higher performance. Hence, problems in a firm’s
G
market orientation may be due not only to
low cross-functional cooperation but also to
an inability to assimilate and deploy market
PA
knowledge.
In sum, a firm’s level of market orientation is
determined by its ability to generate and dissem-
inate market intelligence, to come to shared
understanding of what that information means,
ST
and to make and execute decisions based on
the information with cross-functional represen-
tation, including multiple departments that are
affected by the decisions. How does a company
R
know how market oriented it is? The following
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market orientation 5
section provides guidelines to assess the degree
of market orientation of a firm.
Assessing a firm’s degree of market
orientation. Table 1 contains a set of state-
ments that describe market-oriented business
practices. A manager should rate his/her
business on each item using the following scale:
Strongly Disagree Disagree
Disagree Moderately Slightly
(−3) (−2) (−1)
Agree Agree Strongly
Slightly Moderately Agree
(1) (2) (3)
Then sum the scores for the four items in
each of the categories. Negative scores indicate
much room for improvement, low positive scores
indicate the need for selective or incremental
improvement, while high scores indicate a strong
FS
capability. High scores are relatively rare.
Becoming market oriented: facilitating
conditions. The logic for and evidence of
O
the value of a market orientation are clear and
compelling. Why, then, are more firms not
O
able to become market oriented? Achieving a
market orientation requires a cultural change
in the organization. It requires shared values
and beliefs about the need to gather, share,
and compile market-based information; it
requires a common desire to actively discuss
the meaning of that information, and to ensure
that the company’s decisions are soundly
grounded in the relevant information. It also
requires a resource commitment to the processes
involved in a market orientation: data collection
expenditures and staffing, time to share and
discuss the meaning of the information, and so
forth.
The fact is, many firms do not achieve a market
orientation because they do not have the proper
facilitating conditions in place. These conditions
include, at a minimum (i) prioritization of a firm’s
information gathering focus to match its strategy,
(ii) top management advocacy, (iii) a flexible,
decentralized structure, (iv), a team orientation,
and (v) a market-based reward system.
wiem01031

6 market orientation
Table 1 Market-oriented business practices.
Responsive Customer Intelligence Generation:
• We continuously work to better understand our customers’ needs.
• We pay close attention to after-sales service.
• We measure customer satisfaction systematically and frequently.
• We want customers to think of us as allies.
Responsive Competitor Intelligence Generation:
• Employees throughout the organization share information concerning competitors’ activities.
• Top management regularly discusses competitor’s strengths and weaknesses.
• We track the performance of key competitors.
• We evaluate the strengths and weaknesses of key competitors.
Proactive Customer Intelligence Generation:
• We continuously try to discover additional needs of our customers of which they are unaware.
• We incorporate solutions to unarticulated customer needs in our new products and services.
• We brainstorm about how customers’ needs will evolve.
• We work with lead users, customers who face needs that eventually will be in the market – but
face them months or years before the majority of the market.
Proactive Competitor Intelligence Generation:
• We try to anticipate the future moves of our competitors.
• We monitor firms competing in related product/markets.
• We monitor firms using related technologies.

FS
• We monitor firms already targeting our prime market segment but with unrelated products.
Intelligence Dissemination:
• We have interdepartmental meetings to discuss market trends and developments.
• Marketing personnel spend time discussing customers’ needs with other functional departments.
• We share information about major market developments.
O
• Data on customer satisfaction are shared at all levels in the organization.
• When one function acquires important information about customers or competitors, it shares
O
that information with other functions.
Intelligence Integration:
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• We have cross-functional meetings for the purpose of intelligence integration.

• We reach organizational consensus regarding the holistic meaning of related pieces of
information before taking action.
• We utilize cross-functional teams or task forces for important initiatives to ensure that all points
of view are considered before decisions are made.
E

• Collaboration is valued in this business.

Coordinated Action:
G

• We are quick to take advantage of market opportunities.

• The activities of different functions in this business are well coordinated.
• We make sure that all critical functions understand our objectives and strategy before we take
PA

action.
• There is a high level of cooperation and coordination among functional units in setting the goals
and priorities for the organization to ensure effective response to market conditions.
ST

Prioritizing information gathering managers must focus their scanning efforts

needs. Resource constraints coupled with on the market forces that are most salient to
highly complex markets make it impossible to their strategies (see MARKETING STRATEGY). wiem01043
comprehensively scan complex environments. Without the ability to simplify, structure,
R

To make sense of complex environments, and focus their intelligence generation efforts,
FI
wiem01031
managers would suffer from ‘‘paralysis by
analysis.’’ One approach to prioritizing their
market-scanning efforts is to identify the critical
issues faced by each of four different strategy
types. Depending upon whether a company’s
strategy is a Prospector (product leader),
Analyzer (fast follower), Low-Cost Defender
(operationally excellent) or a Differentiated
Defender (customer intimate), it will collect
and use market-based information differently
(Olson, Slater, and Hult, 2005).
Prospectors continuously seek to locate and
exploit new product and market opportunities.
Owing to the importance of product-market
innovation, the most successful Prospectors
emphasize proactive customer intelligence
generation and generation of intelligence about
the development of innovations. Such intelli-
gence can lead either to product performance
improvements for current customers or to new
products that penetrate new markets.
Defenders attempt to seal off a portion of the
total market to create a stable set of products
and customers. Differentiated Defenders accom-
plish this by providing superior service and/or
product quality. Low-Cost Defenders focus on
producing goods or services as efficiently as
possible so that they can provide their products
or services at the best prices. Because the value
proposition for the Low-Cost Defender entails
producing their products/services as efficiently
PR
as possible and offering them at a relatively low
price, the most successful Low-Cost Defenders
focus their intelligence generation efforts on
process rather than on product innovation and on
competitors – competitor intelligence provides
E
a benchmark against which prices, costs, and
performance can be compared. Differentiated
G
Defenders focus on retaining customers through
attention to superior service, product quality,
or image. Consequently, the most successful
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Differentiated Defenders emphasize the gener-
ation of customer intelligence and the establish-
ment of strong customer relationships.
Analyzers occupy an intermediate position
by cautiously following Prospectors into new
ST
product-market domains while simultane-
ously protecting a stable set of products and
customers. In order to identify opportunities for
potential product improvements or for entering
R
new market segments, Analyzers must closely
FI
market orientation 7
monitor customer reactions to Prospectors’
offerings as well as competitors’ activities,
successes, and failures. In other words, while
developing customer intelligence is essential for
Analyzers, monitoring competitors’ actions may
be as important to their success.
Top management commitment. If a
firm’s top managers are not unequivocally and
visibly committed to its customers and the
collection of market-based information, then
the firm will not bring its resources to bear
on developing solutions to meet its customers’
needs (Jaworski and Kohli, 1993). As Michael
Dell, CEO of Dell Computers, once said (Mears,
2003):
‘‘We have a relentless focus on our customers.
There are no superfluous activities here. Once
we learn directly from our customers what they
need, we work closely with partners and vendors
to build and ship relevant technologies at a low
cost. Our employees feel a sense of ownership
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when they work directly with customers.’’
Decentralized organizational structure.
O
Market-oriented behavior thrives in an orga-
nization that is decentralized with fluid job
O
responsibilities and extensive lateral commu-
nication processes (Jaworski and Kohli, 1993).
Members of these organizations recognize their
interdependence and are willing to cooperate
and share market intelligence to sustain the
effectiveness of the organization. Effective infor-
mation sharing in a market-oriented organiza-
tion demands that bureaucratic constraints on
behavior and information flow be dismantled.
Market uncertainty requires high frequency and
informality in communication patterns among
organizational units for effective intelligence
dissemination.
Team orientation. Team orientation is
essential for effective intelligence sharing. In a
team-oriented organization, value is placed on
working cooperatively toward common goals for
which all employees feel mutually accountable.
The organization relies on teamwork to get
work done. Teamwork has several contributing
processes including (i) conflict management,
(ii) motivation and confidence building with
wiem01031
8 market orientation
regard to the team accomplishing its goals and
objectives, and (iii) ‘‘affect management’’ which
represents those activities that foster emotional
balance, togetherness, and effective coping
with stressful demands and frustration. Team
effectiveness is enhanced when teams monitor
progress toward goals, track resources necessary
to achieve the team’s goals, team members
provide direct or indirect feedback to other team
members, and coordinate the activities of team
members.
Market-based compensation system. By
rewarding employees for generating and sharing
market intelligence and for achieving high levels
of customer satisfaction and customer loyalty, a
market-based reward system is the single orga-
nizational factor that has the greatest impact on
a market orientation (Jaworski and Kohli, 1993).
Market-oriented firms place less emphasis on
short-term sales and profit goals than their more
financially or internally focused competitors.
At its heart, creating a market-oriented orga-
nizational culture within a firm requires a major
transformation, characterized by four stages:
initiation, reconstitution, institutionalization,
and maintenance (Gebhardt, Carpenter, and
Sherry, 2006). Essentially, members of the
company recognize a threat. To address the
threat, a group of empowered managers creates a
coalition to mobilize the larger organization; they
PR
create a process that reconnects the company’s
personnel with its customers. Through this
process, personnel build common experiences
and perspectives and build a consensus for
more formal organizational changes to solidify
E
the cultural shift. These formal changes then
sustain the new orientation.
G
SUMMARY
PA
At the most basic level, market-oriented firms
excel at generating, sharing, and using infor-
mation about the market (customers, competi-
tors, collaborators, technology, trends, etc.) to
make coordinated decisions that lead to the
ST
creation of innovative new products, and supe-
rior product and service quality, which lead
to superior performance. However, some firms
are more proactive than others both in the
R
type of intelligence they generate and in the
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action they take. The more proactive busi-
nesses seek intelligence not only about current
customer needs and competitor threats but also
about latent and future customer needs and
competitive threats. Proactive businesses are
more likely to develop market-driving strate-
gies in which a firm actively seeks to redefine
the structure of the market, and/or introduce
an innovative value proposition that enables
the firm to reduce, or even avoid, competi-
tion. A market-driving strategy, while riskier
than a responsive strategy, is more likely to
lead to a breakthrough position. To successfully
transition to being a market-oriented organiza-
tion, there must be strong leadership from top
management, decision making that takes place as
close to the customer as possible, and a reward
system that recognizes the importance of infor-
mation sharing and coordinated action.
Bibliography
FS
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O
Baker, W. and Sinkula, J. (2005) Market orientation
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O
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Please note that the abstract and keywords will not be included in the printed book, but
are required for the online presentation of this book which will be published on Wiley’s
own online publishing platform.
If the abstract and keywords are not present below, please take this opportunity to add
them now.
The abstract should be a short paragraph upto 200 words in length and keywords between
5 to 10 words.
Author names(s) and affiliation(s) will appear, as listed below, in a List of Contributors in
the front of the print edition and will also appear in the online version of the book. Please
check that the names(s) and affiliation(s) given below are correct and that you (and any
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online version.

Abstract: One of the most enduring pieces of advice for executives over the past 30 years has been,
‘‘Focus on your customers!’’ Customer focus is the centerpiece of the market-oriented business.
The meaning of market orientation, the performance implications of being market oriented, and the
processes for achieving a market orientation have been the subject of much debate and research for the
past 20 years. In this article, we provide clarity on these issues. In essence, market-oriented businesses

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generate intelligence about customers, competitors, and other key influencers; share that intelligence
broadly throughout the company; integrate and achieve a shared interpretation of the meaning of
the market intelligence; and take coordinated action based on that shared interpretation. A large
body of research has shown that market-oriented businesses achieve superior new-product success,
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sales growth, and profitability. Becoming market oriented is not an easy task though. In extreme
cases, it requires a total organizational transformation that requires top management commitment,
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organizational restructuring, new compensation systems, and a commitment to team rather than
to self. The material in this article is largely drawn from our book, Marketing of High Technology
Products and Innovations (3rd edition) by Jakki Mohr, Sanjit Sengupta, and Stanley Slater, published
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by Prentice-Hall (2010).

Keywords: market orientation; customer orientation; performance; organizational design; informa-

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tion processing; knowledge management

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Author(s) and Affiliation(s):

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Stanley F. Slater
Colorado State University, Fort Collins, CO, USA
Jakki J. Mohr
University of Montana, Missoula, MT, USA
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Sanjit Sengupta
San Francisco State University, San Francisco, CA, USA
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