Market Orientation

The Customer is Always Right?

The somewhat clichéd expression “the customer is always right” is often attributed to the early 1900’s entrepreneur Harry Selfridge of the London department store with the same name, but as Kjerulf (2006) asserts, this maxim is not always correct when trying to maintain a competitive edge in business.

While it is true that consumer buying behaviour does drive business, equally important is assessing the strength, weakness and anticipated action of competitors. It is imperative for a business to observe and maintain a balance between these orientations to sustain a competitive advantage. Narver and Slater (1990) describe market orientation as the pursuit of business to ensure continuing “superior value” for their customers. A business concentrating on consumer orientation would therefore align their products and services to focus solely on the demands of customers while a business concentrating on competitor orientation would focus solely on the alignment of products and services relative to their competitors.

While there are competitive advantages to focusing marketing strategies on a single orientation, focusing too heavily on one at the expense of another can result in the near collapse of a business. Kotler and Armstrong (2014, pp.550-551) cite the example of Kodak as a business which failed to adequately monitor the market trends and orientation of its competitors, instead focusing their attention on consumer wishes. While Kodak were innovators in chemical film and were certainly providing consumers with cutting edge analogue technology, they failed to assess the orientation of their competition that were making strides in the field of digital technology, resulting in the demise of the Kodak brand.

The lesson learnt from Kodak is that it is not sufficient to focus purely on the actions of competitors or the desires of consumers and that a mixture of the two orientations is the best way to succeed. Indeed, Han, Kim and Srivastava (1998) recognise the relationship between business performance and satisfying both market orientations, suggesting the most successful businesses have positive relationships with their customers and a strong acumen in assessing their rivals.

However, observing competitors and satisfying consumers while maintaining the sought after competitive advantage is challenging, particularly in a global market and a market orientation which works in one country may not work in another so it is often necessary to focus attention on one orientation over another. Zhou, Brown, Dev and Agarwal (2007) examined the market orientation of a number of hotel chains around the world and found that a customer orientation was most successful in more economically developed countries such as the USA and Great Britain and that a competitor orientation was more applicable in emerging or less economically developed markets such as China or Indonesia. Businesses operating in a global market must be prepared to quickly re-assess their marketing strategies and market orientations to react to changes in global economies or shifts in local market conditions (Ganesan, 1994).

References

Ganesan, S. (1994) ‘Determinants of Long-Term Orientation in Buyer-Seller Relationships’, Journal of Marketing, 58(2), pp. 1-19, Jstor. [Online]. Available from: http://www.jstor.org.ezproxy.liv.ac.uk/stable/1252265 (Accessed: 1 February 2014).

Han, J., Kim, N. & Srivastava, R. (1998) ‘Market Orientation and Organizational Performance: Is Innovation a Missing Link?’, Journal of Marketing, 62(4), pp. 30-45. Available from: http://www.jstor.org.ezproxy.liv.ac.uk/stable/1252285 (Accessed: 1 February 2014).

Kjerulf, A. (2006) Top 5 reasons why “The Customer Is Always Right” is wrong. [Online]. Available from: http://positivesharing.com/2006/07/why-the-customer-is-always-right-results-in-bad-customer-service/ (Accessed: 1 February 2014).

Kotler, P. & Armstrong, G. (2014) Principles of Marketing, 15th Edition. London: Pearson Education Ltd.

Narver, J. & Slater, S. (1990) ‘The Effect of a Market Orientation on Business Profitability’, Journal of Marketing, 54(4), pp. 20-35, Jstor. [Online]. Available from: http://www.jstor.org.ezproxy.liv.ac.uk/stable/1251757 (Accessed: 1 February 2014).

Zhou, K., Brown, J., Dev, C. & Agarwal, S. (2007) ‘The effects of customer and competitor orientations on performance in global markets: a contingency analysis’, Journal of International Business Studies, 38, pp. 303–319. [Online]. Available from: http://www.fbe.hku.hk/staff/kevinzhou/13%20MO_JIBS.pdf (Accessed: 1 February 2014).

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