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The article review highlights how market which decided the way people lived and interact in a social environment has changed over the years and how the concept of sustainable competitive advantage has pushed companies to change their organization culture.
The Author has tried to explain the effect of market orientation on the profitability of a business by taking into account various factors like behavioral component, decision criteria and management policies. Many articles have been written on sustainable competitive advantage and market orientation, this article mainly focuses on how these effects the company's business profitability.
The Research design used in the article for obtaining necessary information by the author was "exploratory" in which he formulated hypothesis of the content of marketing orientation and compare the three behavioral components and two decision criteria's. To gain insight He tried find out the various aspects of market orientation and then tried to analyze it cause effect relationship with business profitability. This type of research is good as one can isolate key variables and relationships for further examination.
This type of approach helps to gain insight by Interviewing target subjects to determine trends, shifts in consumer behavior patterns. This methodology is flexible in nature and is helpful for areas in which a little information is available although it sometime relies on already available literature. During the whole essay, the author has tried to stick on to the effect of Market orientation and has not shown divergence upon this . One negative aspect of qualitative research is its too subjective.( bryman, bell) is not easy to reproduce it and its more focused to a specific area.
An alternative of the Qualitative method is Quantitative method, which starts with Formulation of theory , Hypothesis, Research design, devising measuring of concepts, selecting research site, selection of respondents, data collection, data processing, data analysis, findings, concluding. (bryman & Bell pg69). Quantitative methods can easily be generalized, has strong causality (bryman & Bell). Concepts pertaining to organizational performance are better analyzed by Quantitative methods as the variables changes with time.
The author divided the research in 3 parts which I feel is a very systematic approach to solve a problem, the first part dealt with effect of SCA (Aaker 1989, p 91; Porter 1985,p.xv) with market orientation, then he set forth a hypothetical components and performed various tests on them to evaluate the "contract validity". Next he discussed the relationship between 8 control variables and 2 business profitability for this he made an "independent-effect model". Lastly he discussed the limitations of the study and how it could be used for research purpose.
The author was in accordance with the concept that "market orientation is organization culture"(i.e., culture and climate , Deshpande and Webster 1989). The authors approach to examine independently the behaviors characteristics and management policies was very thorough, He effectively test the various components separately for SCA and Market orientation to come out with some common trends (e.g Aaker. 1988; Anderson 1982;day 1984; Kotler 1977,1984;Levitt 1960, 1980;ohame 1982;peter and waterman 1982;Porter 1980,1985)
Though I somewhat feel that the study was not a new contribution as many researchers have been done previously on this topics, so the author just takes the key points from them , which can be seen that for his test for customer orientation and competitor orientation were in accordance with the findings of Kohli and jaworski(1990).
What is noticeable is that the Author took into account the "economic" and " political " constraints throughout the channels from the seller's end , This was something new , but I would still suggest that the Author should have considered " national culture" and " organizational culture. Competitor Orientation means that a seller understands the short-term strengths and weaknesses and long term capabilities and which is fairly true in today's scenario. Today
Every business firm knows what the strength and weaknesses are there in other firms and what opportunities and threats exist in the environment and they so they formulate their strategies accordingly. SWOT and PEST analysis clearly outlines all the points.
The Author is of opinion about the Inter-functional orientation that any function in a seller firm can potentially contribute towards creation value for buyers (porter 1985) .
The Author Hypothesize about Market orientation being uni-dimensional and treats behavior component and decision criteria's as same and hence tried to measure reliably with a multi item scaleâ€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦â€¦
His assumption of all the 5 dimensions as one and that all of them are on a average equal , I somehow think that taking every components contribution as same is not as every Business firm is different from other, a service industry is completely different from that primarily into production. Hence all the components differ significantly for different firms.
He represented the various Behavior components and showed it as Figure 1 , how the market orientation is effected by them.
Long term profit focus
But as mentioned earlier, the business firms are different from each other , hence the triangle should not be necessarily be an equilateral one. One of the arms can be longer or shorter depending upon the type of business it is. For example, the catering firm focuses more on customer orientation as its their main objective consequently a cellular network provider is more competitor based ,hence in this case the competitor orientation would be more. Also to be noticed that the long term profit circle should not be inside the triangle, rather it should be the bigger circle as all the various component act together in order to attain the long term profit. By increasing the overall size of the triangle which touches the circle's circumference the circles becomes bigger and hence increase profit of the business.
Target market should not be the outer bigger circle as one does not outline the extent to which a firm would restrict itself. In today's world of globalization a business seeks whole world as its target market so it should be the empty space outside the bigger circle to be precise. For businesses having similar profits, the circle remains same but the shape of triangle changes accordingly for example -
Less competitor orientation
More customer oriented business
Long term profit focus
Inter-functional co ordination
Competitor orientation l
To test the face validity the author recorded the responses on a 7 -point likert scale . The questionnaire consisted of six current and former strategic business units (SBU). But for sampling 140 SBU were taken into account and all were from the same division, but it should have been better to choose different SBU as every units works differently and hence would yield diverse responses.
For sampling selection of top management implies that the responses gathered were relevant although the questionnaire given to them shouldn't have been entitled "Business Practices Survey" as by this their responses could have been biased. The coding scheme used was good and maintained privacy of data.
During the reliability analysis the author used two samples and imposed one on another but it didn't yield any results. As what I suppose that the not always we can use long term orientation and profit objective measures with the decision criteria. Construct validity provided positive results for three components of the market orientation and was inconsistent for other combinations. On the basis of earlier studies the Author developed measurement scale to measure the magnitude of usage and noted the respondent's views on a 7 point scale. The author very scientifically took into account the various relationships between the market orientation and profitability and moved forward with the hypothesis of "greater the business, greater the profitability" when other variable are kept common.
The author tried to distinguish the business in two commodity business, distribution and specialty business which is in accordance to my model of market orientation. He found an argument for commodity businesses and tested in on various platforms for market orientations. His conclusion of U-shaped relationship of market orientation was a great finding.
The author pointed out the controlled variables before the effects of market orientation is tested on business's profitability. The explained "buyer power" (porter 1980; scherer 1980), "supplier power"(porter 1980;scherer 1980) and "seller concentration"(Bain 1959;scherer 1980). The Independent effects model (Boal and Bryson 1987) easily showed the various type of relation on business performance.
However the author considered only positive relationship between seller concentration and business profitability rather than looking the negative aspects as well. This could have led to further more combinations of control variables. The author used various dependent and independent variables to derive the empirical formula and noted the results on the scale of 7 or 8. Involvement of single regression dummy variables helped to lessen the redundancies between business/non business commodities. The findings were coherent with those of Barrett's(1986) regarding buyers concentration.
After carrying out a rigorous nonlinear relationship the author came to the conclusion that lowest market orientation leads to lowest customer retention which is true as customers need to be motivated to buy a product or commodity, they should feel a sense of belongingness with the firm.
All the finding helped the author to come to the hypothesis that for both types of business market orientation is necessary and this can be achieved by either cutting down the cost and its seen that commodity business are better able to provide customer satisfaction and superior customer value. Out of the following the author draws out the research question which is whether the existing businesses, be able to sustain in the changing business environment? Or they are going to increase their productivity? And the answer to it he gives by example from miles and snow(1978) that market orientation is relevant in every market environment.
The author points out the advantages and drawbacks of the restricting the study to only one type of business he says, that it allowed easy collection of data from the respondents in the SBU's and with a high response rate. I agree to some extent yes it would have been easy only if there was only one business was to be considered, but when researching upon a topic of such importance, a little bit of pain could have been taken and different businesses should have been taken into account. He suggested 3 three research design and addressed six comprehensive issue for further studies which is really commendable.
Market has been through a continuous phase of evolution since the industrial revolution . today's market and business environment is far ahead from the 5P's concept. Market orientation is the need and demand of the hour. It more of some businesses and less for others ,but it has become an integral part of business processes. The author was clear in his concepts and conducted the studies in a very systematic way and has also paved way for further researches by underlining the limitations and implications of the research. He gave a separate finding for use of the scholars and for managers and concluded that market orientation must be the foundation for business's competitive advantage.