Understanding Market Orientation and How It Works

What Is Market Orientation?

Market orientation is an approach to business that prioritizes identifying the needs and desires of consumers and creating products and services that satisfy them. Companies that have a market orientation consider the opinions and needs of their target market as a critical component of their research and development (R&D) for new products.

It may sound obvious, but advocates of market orientation argue that the conventional approach to product development is the opposite. That is, marketing strategies focus on establishing key selling points to promote existing products rather than designing products that have the qualities consumers say they want.

How Market Orientation Works

Market orientation is a customer-centered approach to product design. It involves market research aimed at determining what consumers view as their immediate needs, primary concerns, or personal preferences within a particular product category. Researchers use activity, interest, and opinion (AIO) surveys along with demographic to gain insight into the target customer desires.

Companies may also employ additional data analysis to reveal trends and consumer desires that are not specifically expressed. A knowledge of these trends ideally can help product developers meet or even anticipate consumer needs. They may even inspire improvements that the consumer was not aware of as being an option.

This allows a company to focus its product development efforts on the characteristics that are most in-demand. With an increasingly global economy and the proliferation of choices for consumers, companies that adapt to a market orientation may benefit from a competitive advantage over other companies.

Advantages of Market Orientation

Market orientation often includes improvements in customer service and product support geared to solving concerns raised by consumers. This helps ensure customer satisfaction remains high with the company as a whole and promotes brand loyalty and positive word-of-mouth advertising.

To be successful, companies need to ensure that all departments adopt and promote the market orientation approach so that it becomes an integral part of the corporate culture. When effective, market orientation can help a company increase customer retention and propel growth in new demographics.

At times, market orientation may reveal customer desires that are simply not cost-effective or practical to implement. The business then must determine how to meet customer expectations in the best way possible.

At the very least, impractical ideas may inform long-term development strategies. Options that are not cost effective today may become quite possible down the line due to changes in technology, science, regulation or other market conditions.

Market Orientation vs. Other Strategies

Development focused on market orientation puts consumers' desires first, creating the product around their expressed needs and wants. This contrasts with product orientation, a business philosophy that emphasizes getting the consumer to become aware of and like the features and benefits of a particular product.

Product differentiation often goes hand-in-hand with a product orientation approach. With this approach, the company employs an advertising strategy that aims at clearly identifying the attributes that distinguish a brand from its competitors.

Sales orientation focuses on persuading the consumer into immediate action through means such as online ads, social media, television commercials, in-store demonstrations, or direct response marketing.

Any or all of these approaches may be required for a successful marketing strategy, but most businesses focus on one or a few as their primary focus.

Real World Examples of Market Orientation

Amazon

Amazon is an example of a market-oriented company. As it has grown and developed, it has consistently added processes and features that clearly address concerns and desires expressed by consumers.

For example, many consumers, especially city dwellers, worry about getting packages delivered when they're not at home. The company responded with Amazon Locker, a network of self-service pickup boxes.

Delivery charges, no matter how reasonable, are a chief irritant to consumers, and a reason to buy locally instead of ordering online. Amazon Prime charges an annual fee for the free delivery of most of its products.

Coca-Cola

Coca-Cola is another company that is famous for its market orientation. Considerable research goes into identifying new flavors that consumers will actually like, such as wild strawberry and lime. But those new flavors won't help Coca-Cola address the increasing health consciousness of consumers. That's why the company acquired brands including Dasani, Honest Tea, Smartwater, Simply Orange, Minute Maid, and Vitaminwater.