Influencing Factors Of The Product Performance Commerce Essay

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A business is said to be a market oriented if it gives highest priority to its profit enhancing valued customers and stakeholders. Market orientation model of Narver and Slater (1990) describes it as a construct consisting of three behavioral components i.e. customer orientation, competitor orientation, and inter-functional coordination. The heart of the company is its customers, so the company must recognize their wants and needs in order to provide continuously superior and flourishing products. The creation of customer's upper value demands not only done by addressing its own customers, but it also requires a focus on competitor. Competitor orientations mainly focus on the competitor's strengths, weaknesses, opportunities and threats. Inter-functional coordination is founded on the information of customers and competitors of the firm and efforts of coordination of the firm.

The successful development and market introduction of new products/services is of critical importance for an organization's survival (Judson K. et al, 2006). Product lifecycles are becoming shorter as consumers demand innovation and variety. Introducing new product in today's advanced and technology driven era, is having big risk. New products are the life blood for all companies, and developing new product inherent with significant risks like features , facets and formulation may appeal consumer or not. So market tracking is a useful tool to maximize the success of new product (ACNielsen Pakistan). Thus superior performance of the new development of product is based on the Market orientation. In spite of some dissonant conclusions, studies have shown that environmental conditions and firm factors, like market orientation is related positively to the new product performance (Baker and Sinkula 1999). The new prices of the defeat of the product can be also shallows as one of the three products (Antil, 1988). These studies have concentrated on variables which are identified as influences on success and failure of new product. The common topic found everywhere in studies is, companies who are struck in the client's needs and wants, to develop bring product to the market , tend to go better than those that they might not do (Henard & Szymansk, 2001).

Pakistan is a growing country and the Gross National Product (GNP) has registered an average valuation of growth of 7 percent for the fourth consecutive year and it is increasing continuously as foreign investment is injected in the economy of Pakistan. Not only people from other countries are introducing new products in the market but also people from the country as well. Mostly new products and better launch of them is overcoming the previous products and hence effecting positively on the performance of the organization. Introducing the new products in the market is increasing the performance of the firms, also effects on the GDP of the country as well. The objective of this study is to investigate the role of market orientation on performance of FMCG, Food and Beverage producer's. This study emphasis only in the above mentioned sectors, because these sectors in few years introduced many products e.g. a wide range of juices, soft drinks, biscuits, snacks , chocolates , candies , soaps etc. The results from the study can be used by the marketing managers and entrepreneurs. These results may be guide line for the product and brand mangers to shape their strategy about line or product extension.

2. Literature Review

Langerak's et al (2004) research shows that market orientation is positively related with product advantage and the proficiency in market testing launch budgeting launch strategy and launch tactics. Also product advantage and the proficiency in launch tactics are positively related with the new product performance which; itself is positively related to the organizational performance. Market orientation has no direct relationship with the new product performance and organizational performance but market orientation affects the new product advantage and launch proficiency, which affect the new product performance and finally new product performance positively affect the organizational performance. It is quite difficult to measure the factors that exactly affect the performance (Cooper et al, 1994).

Garrett et al (2004) describes that sources of advantage and positional advantage positively affect the new service development (NSD) and organizational performance in service industry. They further suggest that new service development (NSD) in important as it leads to cost effectiveness and NSD success. These findings show that neither cost effectiveness nor differential position in separation is sufficient for superior and higher financial performance. Hart (2002) research describes that, NPD process is very important factor for performance as new product has an advantage on its rivals. He argues that competitive or premium price may be a factor for enhancing valued characteristics of a product. New product development (NPD) is more successful when it covers other countries as well (Oakley, 1996).

Fred Langerak (2003) describes in study, that customer orientation and competitor orientation give confidence to set up the necessary resources to achieve the competitive advantage and inter-functional coordination encourage for getting low cost advantage. So market oriented organization try to increase customers' perceived benefits. In other words market-oriented organizations make opportunities to develop additional values for customer unexplored. Results show that there is a positive relationship of customer orientation, competitor orientation on differentiation advantage and inter-functional coordination and positively affects the low cost advantage. This is important for the managers because market orientation increases the organizational performance.

Lonial & Raju (2001) conducted a survey in service industry which shows that market orientation and environmental factors such as environmental uncertainty have strong effect on the performance in the service industry including. In general result shows that environment uncertainty is an important moderator of the relationship among the market orientation and organizational performance in the service industry but it doesn't affect directly on the performance of the business. Guo (2002) is also of the similar view that market orientation directly affects the business performance. Pelham (1997) agrees with this effect. He a describes that market orientation helps many organizations to improve their performance but it helps small firms significantly while in other industries, the performance varies.

3.1 Market orientation

After the development of market orientation model by Narver and Slater (1990) it got too much attention. According to them market orientation is the organizational culture which, in reality creates some customs for higher and superior customer values, as a result create continuity in the organizational performance. Further they say that market orientation is the combination of three elements: customer orientation, competitor orientation and inter-functional coordination. Morgan et al., (1998) emphasizes these elements as the basic need for organizational response according to relevant market, whereas Kohli and Jaworski(1990) describes market orientation as the direct implementation of marketing concepts. In addition Pattikawa et al., (2006) describes that there are a number of variables that affect the new product performance one of which is market orientation. Many scholars like Narver and Slater (1998), Guo Chiquen (2002), Kohli and Jaworski(1990) have argued on the basis of their research that market orientation positively affects the organizational performance. On the basis of above definition we may conclude that in order to achieve higher and superior customer values for the continuity in the organizational performance, a business must be a market oriented.

3.2 New product performance

A large no of studies state that market oriented culture show the way to superior new product performance (Hunt & Morgan 1995; Han et al., 1998; Baker & Sinkula 1999). According to Cooper et al., (1995) new product performance is an influential concept, and they find out many factors associated with advanced and superior new product performance, in short a single variable is not adequate to determine the new product performance. They further assert that although many companies are using only one variable to detect the performance of the firm but more than one variable is much enhanced to measure the new product performance.

Gatignon & Xuereb (1997) states that market orientation lead to higher performance of the new product. They further say that association between market orientation and organizational performance; somehow extent to which market oriented culture affects the new product characteristics such as the proficiency in new product launch activities, and new product performance. Song & Parry (1996) relate actions of new product performance with the proficiencies in market research and launch. Biggadike (1979), Green et al., (1995), and Hultink et al., (1998) proposed that proficiency in launch activities is one of the major variable that effect the new product performance. From the above facts described by different scholars we may conclude that new product performance is affected by the market orientation and launch activities.

3.3 Organizational performance

Gatignon and Xuereb (1997) state that market orientation culture leads to superior organizational performance and new product performance is one of the key factor resulting higher organizational performance. Slater and Narver's (1994) say that NPD is the key factor that results superior organizational performance. Further they described in their research that new product development is one of the key function that leads to higher organizational performance of the firm. Whereas Langerak et al (2004) described that higher new product performance positively affects the organizational performance. Barrett H. et al., (2005) are of the view that market orientation is its highest position of affecting the organizational performance. So organizations must have strong focus on customers, understand the competition and should work as one unit to deliver products and services to its customers for higher organizational performance. Verwaa E. et al., (2006) states that market orientation, proficiency in new product development and inter-functional coordination effects organizational performance extensively. They are also of the view that environmental factors are not affecting organizational performance at high level and their impact on organizational performance in very low.

3.4 New Product advantage

Cooper et al., (1994) describes about product advantage, the products which are difficult to copy and compete, offers unique benefits to the customers, and the ingredients of product advantage highly depends on the market orientation. Moreover Judson K et al., (2006) find out that those organizations which can find the wants and needs of the customers and then can bring new product according to all the features desired by the customers for them, brings a great change in the organizational performance. According to them successful companies spend a major time for gathering information for the purpose of introducing new product to capture a major part of the customers, as new product also brings innovation in the market as well as within the organization.

3.5 Competitive environment

Kotler et al., (1996) stated that companies required strong competition in order to assertively struggle, to obtain inadequate resource such as customers. Everyone in market proposes an extensive range of offers to its customers, and customers will choose the best one which meets their needs. So if a company fails to propose the best services and practices to its valuable customers then it is quite possible that they will shift to other company's products which are best according to them. And loosing the customers is an enormous risk for any organization. In other words keeping customers in a competitive environment is an immense achievement for the organizations. According to Frazier & Lassar, (1996), competitive environment creates an environment for the companies to cut off the prices of products and services in order to keep the customers with firm. Competitive environment also brings many features like just in time production, time base competition, TQM etc.

4. Research Methodology:

4.1 Purpose of the Research Study:

The aim of the study is to find out the factors that influence the new product performance and organizational performance. Therefore main objective of the study is to find out Correlation amongst variables and organizational performance as well as new product performance.

4.2 Research Design:

In this research effort convenience sampling has been used. The main objective of using this method is to make research procedure faster by obtaining a large number of proficient questionnaires quickly and efficiently. Pakistan's economy was the major factor motivating us to make research on this field. Pakistan's GDP was approximately 7 for the first half decade of the 21st century, in which manufacturing e.g. food and beverage industry flourished very quickly. For the collection of primary data we used mail, email, telephonic and a face to face interview method was adopted. Only primary data is used due to non-availability of secondary data about our research topic in Pakistan. For this research, data was collected through structured questionnaire. Questionnaire comprises seven sections, each question is followed by 5 likert scale anchored by five points, strongly disagree to strongly agree continuum (point 5 for strongly agree, 4 for agree, 3 for neutral, 2 for disagree and 1 for strongly disagree). In order to avoid confusion of respondents, a brief and detailed explanation of terminologies used in the questionnaire, was provided to them.

4.3 Response Rate:

To make this research concrete, it was ensured to choose respondents from those organizations which were performing well in the particular industry. They were ensured that their response will not be shared with any person, in particular with their competitors. As a result they were promised to provide accurate response according to their best knowledge. Out of 175 questionnaires, 130 responded, the response rate was 74%.The software's SPSS Excel 2003 was used. Statistical techniques of Regression and correlation were used to analyze the data.

4.4 Research Model:

The research model is developed on the basis of previous research studies and variables included are organizational performance, new product performance, market orientation, customer orientation, competitor orientation, inter-functional orientation, proficiency in market testing, proficiency in launch budgeting, proficiency in launch strategy, proficiency in launch tactics, market-level measures, financial measures, customer acceptance measures, product-level measures, timing measures, competitive environment

Framework

Competitive Environment

New Product Performance

Market measures

Financial Measures

Customer measures

Product measures

Timing measures

Market Orientation

Competitor Orientation

Customer Orientation

Inter-functional Coordination

Product Advantage

New Product Development

Market Testing

Launch Budgeting

Launch Strategy

Product Price

Organizational Performance

Following equation is tested:

Equation 1: y1 = a +b1 (x1) +b2 ( x2) + b3 (x3) +b4 ( x4) +b5 ( x5) +b6 ( x6) +b7 (x7) +b8 ( x8) + b9 (x9) +b10 ( x10) +b11 ( x11) +b12 ( x12) +b13 ( x13) +b14 ( x14) +e

OP = a + b1(CO) + b2(CmO) + b3(IC) + b4(NPA) +b5(PMT) +b6(PLB) + b7(PLS) + b8(PLT) + b9(MM) + b10(FM) +b11(CAM) + b12(PLM) + b13(TM) +b14(CE)+e

Where as

X1 =CO = Customer Orientation

X2 =CmO = Competitive Orientation

X3 =IC = Inter-Functional Coordination

X4 =NPA = New Product Advantage

X5 =PMT = Proficiency in Market Testing

X6 =PLB = Proficiency in Launch Budgeting

X7 =PLS = Proficiency in Launch Strategy

X8 =PLT = Proficiency in Launch Tactics

X9 =MM = Market-Level Measures

X10 =FM = Financial Measures

X11 =CAM = Customer Acceptance Measures

X12 =PLM = Product-Level Measures

X13 =TM = Timing Measures

X14 =CE = Competitive Environment

Equation 2:

y2 = a +b1 (x1) +b2 (x2) + b3 (x3) +b4 (x4) +b5 (x5) +b6 (x6) +b7 (x7) +b8 (x8) + b9 (x9) +e

NPP = a + b1(CO) + b2(CmO) + b3(IC) + b4(NPA) +b5(PMT) +b6(PLB) + b7(PLS) + b8(PLT) +b9(CE) +e

X1 =CO = Customer Orientation

X2 =CmO = Competitive Orientation

X3 =IC = Inter-Functional Coordination

X4 =NPA = New Product Advantage

X5 =PMT = Proficiency in Market Testing

X6 =PLB = Proficiency in Launch Budgeting

X7 =PLS = Proficiency in Launch Strategy

X8 =PLT = Proficiency in Launch Tactics

X9 =CE = Competitive Environment

4.5 Hypothesis

H1: There is a positive relationship between market orientation and new product advantage.

H1a: Superior customer orientation positively affects the new product.

H1b: Superior competitive orientation positively affects the new product advantage.

H1c: Superior Inter-functional orientation positively affects the new product advantage.

H2: Superior new product performance positively affects the organizational performance.

H3: Superior market orientation of the firm positively affects the organizational performance.

H4: Superior market orientation of the firm positively affects the new product performance.

H5: Superior new product advantage positively affects the new product performance.

H6: Superior launch proficiency of the new product positively affects the new product performance.

H7: Competitive environment positively affects the organizational performance.

H8: Competitive environment positively affects the new product performance.

H9: Superior market orientation of the firm positively affects the new product development process.

5. Research Findings

For finding the potency of the relationship between different variables used in this research, "Pearson Product Moment Correlation Co-efficient" is used. This tool deals with both variables symmetrically, i.e. there is no incongruity between dependent and independent variables. Two variables will be correlated if both the variables are increasing or decreasing at the same time and with same direction. In case of incremental of detrimental of both variables in the same direction then correlation is said to be positive or direct. And when one variable tends to increase and the other variable tends to decrease, the correlation is said to be negative or inverse.

 

OP

MM

FM

CAM

PM

TM

CO

CmO

IC

NPA

PMT

PLB

PLS

PLT

CE

OP

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MM

0.70

1

 

 

 

 

 

 

 

 

 

 

 

 

 

FM

0.70

0.64

1

 

 

 

 

 

 

 

 

 

 

 

 

CAM

0.72

0.61

0.73

1

 

 

 

 

 

 

 

 

 

 

 

PM

0.65

0.66

0.56

0.61

1

 

 

 

 

 

 

 

 

 

 

TM

0.70

0.59

0.69

0.66

0.58

1

 

 

 

 

 

 

 

 

 

CO

0.79

0.66

0.70

0.71

0.61

0.67

1

 

 

 

 

 

 

 

 

Cm O

0.78

0.64

0.64

0.69

0.55

0.65

0.78

1

 

 

 

 

 

 

 

IC

0.77

0.65

0.71

0.72

0.61

0.6

0.73

0.74

1

 

 

 

 

 

 

NPA

0.76

0.67

0.69

0.74

0.64

0.64

0.73

0.75

0.81

1

 

 

 

 

 

PMT

0.79

0.63

0.68

0.69

0.52

0.64

0.78

0.71

0.73

0.76

1

 

 

 

 

PLB

0.68

0.60

0.56

0.67

0.59

0.51

0.64

0.62

0.69

0.67

0.61

1

 

 

 

PLS

0.71

0.51

0.62

0.68

0.53

0.63

0.65

0.62

0.67

0.60

0.63

0.60

1

 

 

PLT

0.74

0.6

0.59

0.68

0.51

0.55

0.69

0.69

0.69

0.66

0.67

0.64

0.62

1

 

CE

0.75

0.64

0.70

0.66

0.51

0.6

0.64

0.67

0.68

0.70

0.71

0.58

0.64

0.64

1

Table1. Correlation of Variables

Findings show that there is very high correlation between dependent variable like organizational performance and independent variable such as customer orientation. Correlation between these two variables is (0.79), while mean is (3.97) and standard deviation is (0.65). This means that customer orientation is affecting organizational performance with very high rate. Further, one sub dependent variable is also positively affecting another dependent variable. Correlation between proficiency in market testing, which is a sub variable of new product performance and organizational performance is also (0.79), mean of these variables is (3.83) while standard deviation is (0.79). Further findings show that competitor orientation is also affecting organizational performance with very high percentage. Correlation between competitor orientation and organizational performance is (0.78), mean is (3.79), while standard deviation is (0.66). Correlation between inter-functional coordination which is one factor of market orientation, and organizational performance is (0.77), along with mean (3.91) and standard deviation (0.58). So all three factor of market orientation are affecting organizational performance with very high rate. Correlation among the new product advantage and organizational performance is (0.76) with mean (3.90) and standard deviation (0.69). Competitive environment is also one factor which is increasing organizational performance, as correlation between competitive environment and organizational performance is (0.75) with mean of (3.86) and standard deviation (0.74).

The result of mean shows that both customer orientation and product level measures are having highest mean with (3.97), indicating that not only customer orientation affecting organizational performance but also product level measures.

 

Mean

Standard Deviation

Median

OP

3.90

0.67

4.17

MM

3.84

0.74

4.00

FM

3.88

0.76

4.25

CAM

3.90

0.81

4.25

PM

3.97

0.83

4.00

TM

3.88

0.79

4.00

CO

3.97

0.65

4.14

CmO

3.79

0.66

4.00

IC

3.91

0.58

4.00

NPA

3.90

0.69

4.00

PMT

3.83

0.79

4.00

PLB

3.88

0.70

4.00

PLS

3.90

0.63

4.00

PLT

3.84

0.69

4.00

CE

3.86

0.74

4.00

Table 2, Mean, median and standard deviation

The result of mean shows that both customer orientation and product level measures are having highest mean with (3.97), indicating that not only customer orientation affecting organizational performance but also product level measures.

Adjusted R square 0.78

Coefficients

P-value

Intercept

-0.12

0.56

Customer Orientation

0.15

0.07

Competitor Orientation

0.18

0.02

Inter-functional Coordination

0.09

0.35

New Product Advantage

0.04

0.66

Proficiency in Market Testing

0.13

0.06

Proficiency in Launch Budgeting

0.07

0.25

Proficiency in Launch Strategy

0.13

0.05

Proficiency in Launch Tactics

0.11

0.09

Competitive Environment

0.15

0.01

Table3. Regression (organizational performance)

For calculating the involvement of independent variable towards dependent variable, we implemented Multiple Regression. Table 3 represents the regression conclusions. Table result shows that by increasing 1 unit of competitor orientation, will increase organizational performance by (0.18) units. This result is significant at 2%. By increasing 1 unit of customer orientation will increase organizational performance by (0.15) units. This result is significant at 7%. This is also a factor which increases organizational performance like competitor orientation. By increasing 1 unit of proficiency in market testing, organizational performance will increase by (0.13). This result is significant at 6%. Another variable, proficiency in launch strategy is also affecting organizational performance. By increasing 1 unit of proficiency in launch strategy will increase organizational performance by 5%. Also proficiency in market testing hits significantly organizational performance by (0.13). This result is significant at 6%. This means that by increasing 1 unit of proficiency in launch testing, organizational performance will increase 6%. Proficiency in launch tactics also effects considerably. The results shows that by increasing 1 unit of proficiency in launch tactics will increase organizational performance by (0.11). This result is significant at 9%.

Adjusted R square 0.78

Coefficients

P-value

Intercept

-0.14

0.50

Customer Orientation

0.25

0.00

Competitor Orientation

0.05

0.50

Inter-functional Coordination

0.10

0.30

New Product Advantage

0.23

0.00

Proficiency in Market Testing

0.00

0.99

Proficiency in Launch Budgeting

0.09

0.13

Proficiency in Launch Strategy

0.15

0.03

Proficiency in Launch Tactics

0.02

0.72

Competitive Environment

0.14

0.02

Table4. Regression (new product performance)

For calculating the involvement of independent variable towards dependent variable, we implemented Multiple Regression. Table 4 corresponds to the regression conclusions. Table results show that by increasing 1 unit of Proficiency in Launch Strategy, will increase organizational performance by (0.15) units. This result is significant at 3%. By increasing 1 unit of Competitive Environment will increase organizational performance by (0.14) units. This result is significant at 2%. This is also a factor which increases organizational performance like Proficiency in Launch Strategy. By increasing 1 unit of Inter-functional Coordination, organizational performance will increase by (0.10). This result is significant at 30%. This variable is highly affecting organizational performance, it means that if all the departments work together to introduce new product, the new product will be successful. Another variable, Proficiency in Launch Budgeting is also affecting organizational performance. By increasing 1 unit of proficiency in launch strategy, it will increase organizational performance by (0.09). This result is essential at 6%.

6. Limitations and Further Research

This research has several limitations, like only food and beverage industries were chosen for research study. Further study may include other industries in research survey as well, because both these industries are always demanded by the customers. Also this research covers only new product development process; further research must cover other parts of developing the product. This article covers only launch proficiency of a product; further researchers should focus on other processes as well. Organizational performance and new product performance was tested through all the three components of the market orientation, further research may also be carried on any of its component to check its impact on the organizational performance.

7. Conclusion

This research study was carried out with the view to analyze the factors that may influence the organizational performance and new product performance in a market. For this purpose, factors like market orientation with its element like customer orientation, competitor orientation and inter-functional coordination, with other variables like competitive environment, introduction of new product were checked. The results of research study show that there is a major correlation between organizational performance and customer orientation as well as proficiency in market testing which are (0.79), while competitor orientation (0.78) and inter-functional coordination with (0.77) are affecting organizational performance drastically. The research findings show that there is immense collision between marketing orientation, new product advantage, competitive environment as well as launch efficiency. So companies should consider customers' needs and wants while competing with competitors as well as making strong coordination with other departments and managing all the activities during launching the new product.

8. Recommendation

On the basis of this research study we may say that in Pakistani well performing organizations, proficient test marketing, and competitor orientation and inter conditional are key to well performance. So it is recommended to entrepreneurs marketers product or brand managers, that to making a good understanding market requires test marketing, to become know what customer want or what not. Be accurate about your competitors. Finally the inter coordination is also as much important as do competitor and customer. This is may be due to not the presence of well established organizational culture. Further studies can be done on the alone topic of inter coordination and firm performance. This study may be a guide for organization's who are facing the problem of declining performance. Furthermore this study benchmark for those who seeks to enhance their firms performance.

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