What is Market Orientation, and Does it Help My Small Business Performance?

| Posted: 22-04-2008 | Comments: 0 | Views: 90 | Rating: (232)

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Since market orientation is not such common notion, let us first define what market orientation stands for. According to Dalgic (1998) market orientation express a marketing perception which put the customer’s needs in the center of all firm’s activities. Berkowitz, Kerin and Rudelius (1989) states that already in the year 1952 General Electric (GE) embedded there marketing personal at the beginning of the assembly line and not in its end, while combining marketing into all firm activities. Practically, General Electric (GE) was the first firm that formally accepts marketing perception as a management philosophy, while at the same time defining itself as a market oriented firm (Dalgic, 1998). Narver and Slater (1990) and Kohli and Jaworski (1990) wrote seminal papers regarding market orientation. By learning about organization and management characteristics of market-oriented firms, they have tried to define market orientation structure as well as preliminary conditions to it, from the firm perspective. According to Narver and Slater (1990) market orientation composed of three behavioral characteristics: Customer Orientation: understanding the potential customer needs in order to create an added value for him on a continuance basis. Competitor Orientation: knowing the strength and weaknesses as well as capabilities and strategies of key competitors. Inter Functional Coordination: coordinating use of the firm resources for creating high added value to target customers.

Logically, the second step should focus in the effort to show some evidence for an existing effect of market orientation on small business performance. In this regard, numerous studies inspect many possible direction of the market orientation performance connection. Among those who focused on small businesses as for characterizing their research sample we can find the following studies: Shun-Ching and Cheng-Hsui Chen (1998) sample seventy-six small businesses that are members at the national union for small medium enterprise in Taiwan. They found significant positive relation between market orientation and performance. Pelham (2000) sample 235 small businesses from eight different industries in the United States. He found significant positive relation between market orientation and sales efficiency, growth to market share ratio and profitability. Homburg, Hoyer and Fassnacht (2002) conducted their study at two disparate geographic zones – United States and Germany. Research population included 441 retail stores. Here also a significant positive relation between market orientation and performance was found.

If you are a small or medium size business owner, then you are probably wondering, now when I know that a higher level of market orientation cause for a higher level of performance at my firm, how will I know if I’m implementing market orientation in my own business? And how can I figure out if what I’m regarding as market orientation can indeed consider as one? Based on earlier questionnaires, such as Pelham (2000), let me suggest for a seven-item questionnaire that each business owner or CEO can take in order to evaluate the level of market orientation in hisher business.

Market Orientation Scale:

For each of the following seven sentences there are five options anchored by descriptive phrases, you need to circle only one option in order to complete the sentence in a way that describe what is going on in your business.

1. Our firm gives a (moderate 1 2 3 4 5 extreme) amount of attention to after sales service.

2. Our firm is (somewhat slow 1 2 3 4 5 very fast) in detecting fundamental changes in customer preferences, competitive strategies, and other major changes in our industry.

3. Our firm responds (somewhat slowly 1 2 3 4 5 very fast) to negative customer satisfaction information.

4. Our firm measures customer satisfaction (occasionally 1 2 3 4 5 systematically).

5. Our salespeople (occasionally 1 2 3 4 5 frequently) share competitor information with all of the other departments of the company.

6. We (occasionally 1 2 3 4 5 systematically) take advantage of targeted opportunities to take advantage of competitors’ weaknesses.

7. In our firm we understands how the entire business can contribute to creating customer value (disagree 1 2 3 4 5 agree).

After you have completed all questions you need to aggregate the scores of all the sentences. The higher the score you achieve the higher the market orientation level implemented by your firm is.

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Article Tags: Performance, Customer Satisfaction, Small Business, Market Orientation

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Dr. Rami Schayek combining the academic world as a researcher and a lecturer at the ben gurion university with a fieldwork as the CEO of several small businesses coincident with coaching many other small and medium businesses. You can see more from his work at www.small-medium-business.blogspot.com
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What is Market Orientation, and Does it Help My Small Business Performance?

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