Reports

Becoming More Market Oriented: An Exploratory Study of the Programmatic and Market-Back Approaches

John C. Narver, 1991, 91-128

Background
Market orientation is a business culture committed to creating superior value for buyers through three combined behaviors—customer orientation, competitor orientation, and interfunctional coordination. Recent research has shown what intuition suggests—that businesses that are more market oriented enjoy higher profitability as well as superior sales growth, customer retention, and new product success.

With the evidence that a market orientation really matters, the critical question is how a business becomes more market oriented. Efforts to create a market-orientation culture have typically consisted of a programmatic approach, in which a business change its structures, systems, staffing, etc., to induce a commitment to superior buyer value.

An alternative approach to becoming more market oriented is what we call the market-back approach, in which a business first develops strategies for creating buyer value and then continuously learns from these value-creation efforts. It implants this learning by continually adapting, as appropriate, its strategies, structures, systems, staffing, etc., which in turn optimizes the behaviors of customer orientation, competitor orientation, and interfunctional coordination. Through this ongoing learning and adaptation process, a business attempts to reinforce its successes and avoids repeating failures.

Summary and Implications
We examined the effectiveness of two alternative strategies for a business to become more market oriented. Our sample consisted of 36 strategic business units in a Fortune 500 industrial firm. A strategic business unit (SBU) is an organizational unit with a defined business strategy and a manager with sales and profit responsibility. The respondents in the study were the members of the top management team of each SBU. Questionnaires were sent to 361 managers, and 268 questionnaires were returned, for a 74 percent response rate. Controlling for 11 influence variables that could affect a business's magnitude of market orientation, we analyzed the relationship between the two strategies and a business's magnitude of market orientation. We found that a market-back approach characterized by continuous learning from the business's value-creation efforts was the superior approach.

Our findings suggest that the market-back approach has a substantial effect on the magnitude of market orientation in a business, whereas, the conventional approach, or the programmatic approach, has no effect.

Our analysis implies that the corporate CEO and top management play a very important general role in enabling businesses to become more market oriented. In our view the CEO and top management must persistently convey the general meaning and importance of a market-oriented business culture, and thereby a market-oriented corporate culture.

In addition to conveying the vision of a market-orientation culture, the CEO and top management must provide tangible assistance to businesses in eliminating any internal barriers to their becoming more market oriented. A critical issue for future research is to identify the most substantial internal barriers to increasing a market orientation.

John C. Narver is Professor of Marketing and the Director of the Center for Retail and Business Market Strategy at the University of Washington. Stanley F. Slater is Associate Professor of Strategic Management and Marketing at the University of Colorado at Colorado Springs.

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