Market Orientation of a Firm - Essay Example

Marketing for Managers-Market Orientation Introduction Market orientation is becoming more and more important for companies to garner and maintain client relationships. Market orientations in large sized organizations are very common and now, even for SME companies such surveys and studies are being conducted. This has brought into focus the results of being customer oriented and the benefits a company could derive out of it. A number of methods to rate market orientation have been studied and the same has been used to identify easy rating needs of companies. Methods such as Kohli, Jaworski and Kumar (1993) orientation scale and that of Narver and Slater (1990) are quite well known. Both the methods are commonly employed. In this paper, we will employ the Narver and Slater methods to establish the scale for market orientation. Though both the said scales have their own advantages and disadvantages, the Narver and Slater scale has specific specialties to match the needs of a large organization. In the course of the study, the method will be employed for studying the McDonald's Restaurant chain which is very common and the questionnaire suggested by Narver and Slater was used to check the market orientation of this company. Market Orientation of a firm Market orientation of a firm has been found to have a strong and positive link with the performance of the company by a number of researchers (Matsuno, Mentzer and Ozsomer, 2002). There are also other research outcomes which are not in favor of such positive link (Han, Kim and Srivastava, 1998). A similar study of the same nature on small sized companies and retailers indicate that the retailers are more customer oriented compared to the small companies. Overall, though there are disputable claims on the market orientation on the performance of the company and the extent to which they are related, the counter claims do no augur well with the results that have been obtained in the field over a period of time. With a large economic growth and integration over the last decade, the effectiveness of the market orientation has been more pronounced on the performance of the company. Therefore, a number of methods have been evolved in order to measure the market orientation and to correlate performance vis--vis market orientation. Measuring Market Orientation Market orientation is measured using a number of methods. The works of Deshpande (1993) and that of Wrenn (1997) have helped in evolving a framework for the purpose. Market orientation, according to Narver and Slater (1990), comprises of three dimensions, viz., customer orientation, competitor orientation and inter-functional coordination. While the suggestion of Kohli and Jarowski on Market orientation looked at a complete process of the company and the impact of market orientation on the entire process. If the impact on every one of the processes is gauged then the same can be the metric for market orientation. The method suggested by Narver and Slater has been adopted in this paper. This divides the entire framework of measurement into three dimensions. A questionnaire has been suggested by the researchers that comprises of fourteen different questions primarily grouped under the three heads already cited. The method employs a seven factor scale that will help in judging the size of the orientation by summing the response for every one of the identified factors. This works as a perception of the person on the specific factor and the company's orientation as viewed by the customer or the employ or the vendor. This provides for a 360 degree rating of the company in the prescribed matter. Sample Organization and its market orientation The organization taken into consideration is the McDonalds, the restaurant chain in the US and the World. McDonalds has changed its approach to the market and its market orientation is pretty high; particularly, because of its service oriented nature. This has made the company respond to the needs of the clients much more swiftly than some of the other companies that are not in constant touch with the customers. The company launched a number of programs to involve customers as well as to inform its customers of its sincerity in maintaining customer orientation. It is also true that the company found the changes that it did in market orientation had positive impacts on its growth. It was not just an attitudinal change that it brought in with its employees; it also ensured that the entire process was oriented towards the customers. The company calls it the Balanced Active Lifestyles. While addressing the question of a balanced diet in its menu, the company has also patronized a physically active life. It encourages sports and walking among ordinary citizens, its customers. The company tries to be a customer oriented company by not only providing quality food, but also by providing quality lifestyle. The company has taken to these measures after an appropriate market study and analysis. This has helped the company in furthering its social goals and obligations as well. However, the perception of the customers was analyzed using the questionnaire provided in the annexure to measure the market orientation of the company. This would help in understanding whether the company has taken the right path or not. Market Orientation Measured In order to measure the market orientation of this company, six people were interviewed with the Narver and Slater questionnaire. The standard questionnaire for the purpose is used and the answers for the same were obtained. The questionnaire was circulated among six customers and their response was filled into the form. The data thus obtained is summed up for every individual person and then is taken as the market orientation in line with the Narver and Slater Scale. See Appendix I for data. Figure 1: Market Orientation plotted on to a graph with the trend line. From the graph in figure 1, it could be seen that some of the respondents consider the company under question as over 65 points market oriented. While certain others do consider it at 40 point level. An average level of market orientation has been plotted as the trend line. The trend line was worked as the polynomial trend rather than linear to be more accurate and closer to the actual values. From the graph, it is clear that the best fit curve for the points selected is close to 50 marks in the curve shown. The mean of the values was found to be at 51.67 indicating a customer perception that the company is more market oriented. Many of the customers felt that the after sales service provided by the company is not good; while at the same time, they felt that the company measures the feedback from the customers systematically. The results indicate that the customers felt it is not capitalizing on its strengths while at the same time they felt that the entire orientation of the company and its processes are all customer-oriented. However all these indicators that come out of the sample survey, show that the company is having a customer orientation 'to-a-considerable-extent' and more. Areas of improvement The company has to build its capability to improve competitiveness and competitive advantage. The company has to also have processes for sharing competitive information among sales executives. This will improve the performance of the company on an overall basis. Understanding of customer needs has to be studied further. This would ensure that the competitive advantage of the company is more customer oriented. Conclusion The study shows that the market orientation can be empirically determined using the Likert Scale model employed in the Narver and Slater Scale. This scale would help us convert the qualitative information on the orientation of the company into a quantitative value helping in analysis. The metrics employed using this questionnaire would provide information that would help the researcher to draw meaningful conclusions on the issue. In this case, it could be seen that the company under consideration, McDonalds is customer oriented to a considerable extent and could improve on specific points. References 1. Deshpande, R. (1993). Corporate Culture, Customer Orientation, and Innovativeness in Japanese Firms: A Quadrant Analysis. Journal of Marketing, Vol: 57, pp 23-37 2. Han, J. K., N. Kim, and R. K. Srivastava (1998). Marketing Orientation and Organizational Performance: Is Innovation a Missing Link Journal of Marketing, Vol: 62, pp 30-45 3. Kohli, A. K., B. J. Jaworski, and A. Kumar (1993). MARKOR: A Measure of Market Orientation. Journal of Marketing Research, Vol: 30, pp 467-477 4. Matsuno, K., J. T. Mentzer, and A. Ozsomer (2002). The Effects of Entrepreneurial Proclivity and MO on Business Performance. Journal of Marketing, Vol: 66, pp 18-32. 5. Narver, J. D., and S. F. Slater (1990). The Effect of a Market Orientation on Business Profitability. Journal of Marketing, Vol:5, pp 20-35. 6. Wrenn, B. (1997). The Market Orientation Construct: Measurement and Scaling Issues. Journal of Marketing Theory & Practice, Vol: 5(3), pp 31-54. Appendix I Collected Data Data collected Question Person 1 Person 2 Person 3 Person 4 Person 5 Person 6 1 4 3 4 4 7 5 2 3 6 1 7 1 6 3 3 2 1 4 1 2 4 1 6 7 6 2 5 5 6 6 2 5 3 5 6 7 2 2 3 1 5 7 3 6 3 4 1 4 8 5 4 6 3 6 5 9 2 3 4 3 2 5 10 1 7 1 3 4 4 11 6 1 3 4 5 3 12 3 5 5 4 1 7 13 1 7 2 1 5 7 14 4 2 3 1 1 2 Total 49 60 44 52 40 65 Read More