In their breakfast briefing on 2nd May 2024, the Little Grey Cells “Hive Mind” discussed, among a rich smorgasbord of other topics, the concept of Market Orientation in business, and dug into its constituent elements.
The presence of Professor Mark Ritson could be felt in the room that day, as one of the most vocal exponents of the concept. Several LGC delegates have experienced his opening Mini MBA module on the topic, as have erudite senior marketers such as Rachel Fairley (HP, Infor, Oracle) and Julie Reid (Hallam, Condé Nast).
As a former student myself of Prof. Ritson, at London Business School, but one who encountered Market Orientation under a different faculty member’s tutelage, I felt it timely to dive into the origin and evolution of this powerful hypothesis. After sharing this below, I propose personal observations on its state of play in 2024, and conclude with a contemporary example of a Market Orientated company.
THE ORIGIN STORY
The root of the Market Orientation (“MO”) concept is a 1960 article by Harvard Business School luminary Theodore Levitt. Although the article doesn’t actually use the phrase MO, it does posit, as a negative, the opposite characterization of a company – Product Orientation (“PO”).
Thereafter, various academic writers espoused and debated Levitt’s theory, especially during the 1980s, a period in which the organisational role and mission of Marketing itself within contemporary businesses was evolving significantly.
However, it was in a 1990 Journal of Marketing article by John Narver & Stanley Slater that the first meaningful attempt was made to quantify the financial value (in for-profit firms) of MO, and within which the now generally-accepted definition of what Levitt originally called Customer Orientation is rooted.
THE DEFINITION
Unlike some of their contemporaries, Narver & Slater’s definition of MO – a “business culture [emphasis added] that most effectively and efficiently creates superior value for customers” – assigned the challenge of creating market-oriented businesses to the most senior management levels.
Building and embedding cross-functional, company-wise culture is a remit beyond any one business unit or department, such as Marketing. As the saying goes, “Culture eats Strategy for breakfast”, presupposing equally senior ownership for MO as a business’ commercial strategies.
In summary, MO can be defined as the organization-wide generation, dissemination, and responsiveness to market intelligence, and is built on three pillars of Customer Focus, Co-ordinated Marketing and Profitability. Of these 3 pillars, the first – Customer Focus – is the core underpinning of MO.
Marketing teams may lead on generating and crystallising that focus and associated inputs, but pillars 2 and 3 require the entire business to embrace and support them in product and service development.
The older paradigm was that a business should look inwardly, to continuously improve the quality of products it is good at developing and distributing. Then, it should optimise its resources and operations to do so over time.
MO, on the other hand, involves what Mark Ritson terms the 1800 flip: look externally, at what customers are actually seeking, requesting, or aspiring to – and optimise resources and operations to deliver that over time.
Visually-speaking, MO is perhaps best explained as a simple triangle:
(Source: ResearchGate)
THE STATE OF PLAY IN 2024
Winding forward to today, a plethora of academic and professional articles and reviews of MO and PO exist. The concept has evolved from its origins in the context of American profit-making corporations, to businesses of wider types, in other regions and sectors. As such, we might expect that the process of characterising any one company as MO or PO is now somehow standardised and consistent. However, the reality is somewhat different.
These days, often-cited MO champions include Nike, McDonalds and Google, as opposed to PO representatives – both old (e.g. GM or Gillette) and newer (e.g. Tesla or Bose).
However certain large product vendors such as Apple and Coca-Cola are repeatedly painted as being one or the other, depending on a reviewer’s take on the extent to which their new product pipelines are informed more by internal product development expertise, or by careful Customer focus and research. So, why the disagreements?
I believe that in an era of increasingly knowledge-empowered, hyper-connected consumers, defining entities as primarily inward-focused product innovation engines (i.e. PO) masks the reality of contemporary Marketing. Not being Customer orientated is simply less and less of a practical option. When the MO theory was formulated insight and feedback were much more difficult to come by and required much greater proactive effort to collate – where as now thanks to Web, App, and Social insight AND multiple feedback sources, operating in realtime 24/7 – these cannot be ignored.
Customer input into a company’s product and service range, brand values and CRM is now ubiquitous and omnipresent, across sectors and geographies.
As such, the first of Narver & Slater’s 3 pillars of MO is simply becoming normalised. Developing continuously-refined iterations of products to sell and market in the absence of tangible customer insight is less a meaningful cultural choice and more a decision by a company to bury its head in the sand.
So, if MO is in reality becoming the default business culture – at least in the developed world – the real constraints to achieving it successfully are no longer conceptual business philosophy ones. Rather, they hinge on two operational practicalities.
The first involves the absolute and proportional budget and resources assignable to market and customer insight. By this I mean not just buying in relevant paid research data from the likes of GfK, Kantar, Nielsen, NPD et al – which favours larger, better-funded organisations – but also the human and system resources to collate and analyse VoC and other market insights, and thereafter to derive actionable product and service development plans.
The resources point straddles the second operational practicality, linked to Narver & Slater’s second MP pillar, of co-ordinated marketing – i.e. embedding customer obsession into every department and function in an organisation, to ensure the entire operation is geared to deliver against customer expectations.
Mark Ritson’s truism is that staff within a company are inherently biased, and therefore cannot by definition be, representative of their customers’ views on its products or brand. And yet many businesses still believe in long-entrenched opinions that either “Customer insight and input is Marketing’s remit” or even that “we know our products and services better than customers do”.
MARKET ORIENTATION IS NOT THE ONLY FRAMEWORK – THERE IS ANOTHER WAY
Having posited that the simple MO vs PO framework is, in my opinion, becoming decreasingly useful over time, it is also worth recalling a different and widely-used business culture framework that equally proposes putting an outside-in, customer-led view of how best to compete successfully over time. This is the 1982 “3 Cs” model of Japanese organizational theorist, management consultant, and former McKinsey Japan head, Kenichi Ohmae.
Simply put, Ohmae’s 3Cs of Customer, Corporation and Competition proposes that each of the Cs requires the creation and implementation by business leaders of specific strategies which are all distinctive, but also entirely interdependent – with the Customer strategies being at all times the core component. This is also typically represented as a simple triangle:
(Source: Mindtools)
Having worked for many years in a Japanese multinational, I have seen these 3Cs being constantly referenced on a business-wide basis upstream, not just by Marketing, but also Product Planning, Product Engineering and Sales teams.
Downstream, this resulted in the embedded practice for regions such as the US, Europe and APAC, of always starting marketing planning with the customer view – whether for annual budget cycles, or for time-bound campaigns. As such, it was mandatory for regions to procure within their own budgets, locally-relevant customer insight and market data, as a basis of business planning with HQ.
Whether or not this culture which I encountered in Sony always resulted in developing products or services (B2C or B2B) that truly met customer needs, based on company-achievable processes, and in ways that were truly competitive….isn’t my assertion! However I do believe this 3Cs framework espoused by Sony HQ was the embodiment of Levitt, and Narver & Slater’s MO principles, in all but name.
MARKET ORIENTATION IN 2024: A LIVING EXAMPLE
By way of conclusion, an excellent case study in MO is a young, small but growing UK clothing company: Spoke. As a D2C manufacturer and seller in a ferociously competitive industry, their business evolution and growth is entirely rooted in an obsession with deeply understanding what their customers fail to get from competitors, and orienting the entire organisation to overcome that.
From their founder’s constant customer focus following their 2014 launch to their continuing insistence on reading and replying to every single Trustpilot review of their products and services, as of today they embody truly contemporary MO.
Richard Palk has 15 years of senior international Marketing experience, and 10 years of eCommerce leadership, in multiple Consumer sectors. He uses this professional background, and an MBA from London Business School, to bring Digital-First insights and analysis to a range of contemporary Marketing topics.
