What is Market Orientation?
Market Orientation is a marketing concept wherein the company focuses on identifying the customer needs and preferences and accordingly, designs and sells products and services based on those needs and preferences with the primary objective to earn profits.
This strategy suggests that businesses shall observe what are the requirements and needs of the customer and based on those demands, they shall design and sell their products and services.
The Following are characteristics of market orientation.
#1 – Customer-Oriented
The strategy is based on the demands and requirements of the customer and advises that enterprises shall in order to be profitable turn their focus on customer preferences. The enterprises which follow this strategy deploy their resources for the fulfillment of customer needs.
#2 – Realizes Competition
This strategy also realizes the fact that it is important to identify competition and threats to the business, apart from identifying customer needs. A business that is not able to identify potential threats, may incur damage in the future.
#3 – Product Development
The enterprises which follow this strategy are involved in product innovation and development so as to enable themselves to meet the changing needs of customers.
#4 – Functional Coordination
In an enterprise, which follows the strategy, the different functional departments of the enterprises, tend to work in coordination with each other for great quality of goods and services.
How Does it Work?
Market orientation is a business marketing strategy that focuses on its customer base for the designing and selling of products and services. The strategy involves analysis and research of the requirements, concerns, and suggestions of the customers with respect to the particular product or service in which the enterprise deal. This way, the enterprise will be aware itself of the trends in customer preferences. It will enable the company to modify or design its product or services in line with customer preferences.
Example of Market Orientation
Let us take an example of an automobile manufacturing unit that produces cars. It might be producing different models and categories of cars. However, if it follows market orientation, it will conduct research as to what are the models that are demanded by the customers and what are the features that they look for in the cars!
Stages of Market Orientation
There are various stages involved in market orientation creation.
#1 – Initiation
This is the first stage, wherein the enterprises identify the potential threats that may affect them. Along with threats, they also research as to what steps can be taken in order to handle those threats.
#2 – Reconstitution
In the next phase, the employees of the enterprise are presented with the plans that are identified in the initiation stage, which are required to be followed. Enterprise needs to ensure that all the employees are ready for the change and those who are not ready, will be required to leave the enterprise.
#3 – Institutionalization
The plan is put to action in this stage. It is a very important stage and a lot of training sessions are held for employees so that the enterprise can now cater to customer needs. Thus, the execution of the plan is done under this stage.
#4 – Maintenance
This is the final stage, wherein it is ensured that the plan continues to remain effective and is being followed by everyone properly so that the enterprise continues to meet customer demands and requirements as suggested in the initial plan.
Market Orientation vs Product Orientation
Market orientation is a strategy that focuses on customer preferences and requirements. It suggests that the company should focus its design and sale of products based on the requirements and demands of the customers in order to be profitable.
On the other hand, product orientation strategy focuses on improving the quality of the product it makes on a regular basis. It does not associate itself with the requirements of the customers, rather focuses on how it can improve its product.
Companies that follow market orientation enjoy various benefits.
- Increase in the overall revenue.
- Market share increases.
- Customers remain associated with the company.
- It helps in product innovation, as updated products attract the customers.
- It brings a good reputation for the company as the customer feels happy with the company’s products and services.
- As customer needs keep on changing, it calls for continuous changes by the company in its products and services.
- A large portion of the company’s budget is spent on research work.
- In the dynamic market conditions, it is difficult to predict what the future could be with respect to customer preferences and thus it requires lots of planning.
Market orientation is based on customer needs and preferences. This strategy combined with other business strategies may become very useful for the companies.
This has been a guide to What is Market Orientation and its definition. Here we discuss an example of market orientation and its types, characteristics, differences. You can learn more from the following articles –