Earlier, the majority of businesses relied on the product orientation approach. Basically, they believed that as long as they produce high-quality products, they would earn profits.

However, creating a product and dictating demand doesn’t work anymore. Currently, the customer is the king, and businesses that get closer to customers always win!

Globalization, hypercompetitive global markets, the convergence of industries, a connected knowledge economy, and empowered customers – are just a few aspects of the world we’re currently living in.

So, in order to thrive in the market and beat the competition, you need to meet the needs of your customers and respond to their demands. That’s where the market orientation approach comes in!

According to a study by John C. Narver & Stanley F. Slater, “businesses that are more market-oriented enjoy higher profitability as well as superior sales growth, customer retention, and new product success”.

Want to learn more about market orientation? You’re at the right place! In this blog, we will walk you through what market orientation is, how it works, why you should practice it, and more. Let’s go!


What Exactly is Market Orientation? (Definition)

Market orientation is an approach where companies invest in the development of products that customers want to buy, instead of convincing them to purchase products that the company wants to sell.

Simply put, in a market-oriented strategy, a company tries to learn as much as possible about the customers’ needs, i.e, what they want, how they want it, where, why, and how much they want.

Then, all the resources of the company are directed towards meeting these customers’ needs and wants through products, services, and customer service.

Now that you know the basics of what market orientation is, let’s head over to the next section where we will explore how market orientation works in detail.


How Does Market Orientation Work?

See, a company that uses the market orientation approach first does extensive research about the taste and demand of a particular market. Then, the company builds a product strategy that caters to those demands.

After implementing the strategy, the company starts advertising the products as something that the consumers were already looking for – rather than persuading them that the product is something they should want!

For instance, if a bike company uses the market orientation approach, it will first analyze what consumers are looking for in a bike, and then build bikes with those features!

To give you a better understanding of what market orientation is, we’re going to take a deep dive into the difference between market orientation and product orientation.


Market Orientation VS Product Orientation: What’s The Difference?

The product orientation approach focuses on promoting and upgrading the product, satisfying existing customers with uniform quality, and attracting customers who want what the company already offers.

On the other hand, the market orientation approach is entirely focused on the customers’ preferences and requirements. All the products and strategies are built around the needs of the customer!

In simple words, the product orientation strategy completely focuses on the quality of a product, and the market orientation strategy focuses on the customer needs and satisfaction.

The concept of market orientation is built on three pillars, and in the next section, that’s exactly what we are going to talk about. Ready? Let’s go!

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The Three Pillars of Market Orientation

1. Customer Focus

There were times when businesses used to focus on profitability and market share. After the advent of globalization, branded goods, and increasing competition, companies started emphasizing on products.

Then, the explosion of the internet resulted in customer empowerment, and customers now have loads of information about product features, peer recommendations, prices, and more.

All these factors have forced companies to shift their focus from profitability and products to customers. To survive in the market, businesses now need to serve customers rather than simply ‘selling’ products.


2. Coordinated Marketing

If you want to practice market orientation successfully, you need to break the narrow confines of the 4P approach. Marketing should be a company-wide discipline, that is practiced by everyone involved!

What we’re trying to say is that marketing should become a cross-disciplinary and coordinated activity. The entire company should be responsible for the customers – and not just the marketing department.


3. Profitability

Under the traditional marketing framework, companies adopted a short-term perspective on profitability, as the focus was on products rather than on customers.

Nonetheless, focusing on short-term profitability comes at a high cost. So, you need to create a healthy balance between short-term and long-term profitability, which is exactly what happens in market orientation.

Within the market-orientation paradigm, profitability encapsulates both financial measures (EVA, market share, ROI), and non-financial measures (attitudes, behavioral patterns, awareness).

The market orientation approach has several advantages, and a few disadvantages as well. Want to know what they are? Keep reading!


The Advantages of Market Orientation

1. Discover Opportunities Before Competitors

As a part of the market orientation approach, the company is constantly on the lookout for trends that it could leverage – either by improving its existing products or building something new that meets the customers’ needs.

Being the first company that pursues an opportunity gives you a competitive advantage. Furthermore, it also helps you build a market share before your competitors, and creates a loyal customer base.

Over time, your company becomes an ‘innovator’ that always develops products that the customers need! The key is to understand what your customers need in real-time and predict what they’ll want in the future.


2. Higher Customer Satisfaction

By tailoring your products and services according to what the customers are looking for, you will make your customers happier and more satisfied! This in turn brings long-term loyalty to your business.

Every company aims for high customer satisfaction, and with good reason. It increases the likelihood of the customer coming back again and again. And, as we know, customer retention is super important.

Also, in market orientation, companies take the time to get feedback from the customers, which helps the company improve and do better. This makes the customers feel like they aren’t just a name on the list.


3. Avoid Costly Strategic Mistakes

A company that truly follows market orientation knows when the market isn’t ready for a new product. This saves the company from wasting marketing resources and making costly strategic mistakes.

In a nutshell, if you put time and resources into collecting information about what your customers actually want, you are more likely to sell your products.

And, if you blindly create a product without considering demand, the product is more likely to fail. This is why you should keep the end-user in mind throughout, aka practice the market orientation approach.


4. Meet The Needs of Customers More Effectively

In the market orientation approach, you need to constantly listen to the marketplace, understand what the customers’ needs are, and how those needs are changing!

This way, the company always stays up-to-date with the target markets, and strives to bring products that are a perfect match for the market. This allows the company to gain great market share, with less marketing efforts.

Moreover, in this approach, the company’s marketing message is focused on making the target market aware of how well the company can meet their needs – instead of convincing them that they need the product.

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The Disadvantages of Market Orientation

1. Customer Demand is Ever-Evolving

The needs and wants of your customers often originate from fads and trends that don’t usually stay for long. So, if you base your products on the needs of your customers, you will have to make continuous changes.


2. Cost of Research is High

Conducting market research through informal conversations and social media polls isn’t expensive. However, other ways of research, such as professionally gathered data or focus groups, can burn a hole in your pocket.


3. Must be Flexible

A business that follows market orientation should be more flexible and be able to adapt to the changing customer tastes. Otherwise, it will lose sales and won’t be able to earn any profit in the long run.


4. A Little More Complicated

Creating products that the customers want isn’t enough! You need to make sure that it’s profitable as well, so you’ve to consider everything from business operations, production, and competitive maps.


5. Unrealistic Customer Expectations

It’s easy for customers to say what they want, because they don’t have to think about the logistics part. For example, in a food item, customers might be looking for more organic ingredients, lower prices, or fewer calories. You would have to make some tough choices and you probably won’t be able to satisfy everyone.


Wrapping Up

Which approach do you think would work the best – trying to persuade customers to buy a product they don’t want, or building a product that they actually need? It’s obviously the latter!

Instead of predicting product trends and making guesses about future customer demands, you should follow the market-orientated strategy and respond to what customers tell you they want.

The market-oriented strategy is all about putting customers first and giving them what they want! This helps you turn your prospects into actual customers, and your customers into repeat customers.

Further reads:

Operational Efficiency: Definition, Importance & Ways to Improve it!

User Research: Definition, Importance & Methods!

8 Different Types of Branding Strategies (With Examples)

Product Mix: Definition, Dimensions, Importance & Examples!

Go-To-Market Strategy Guide for Businesses

Upselling: What is it and How to do it Effectively?

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