Although Narver and Slater’s work didn’t show us anything new, it did cement the view that Market Orientation does effect profitability, but it showed the level of profitability depends on the type of business. Commodity businesses those that supply simple generic products have a U-shaped market orientation and profit relationship. This should alert commodity business managers if their firm is in the middle of adopting marketing orientation they should adopt an all or nothing approach with regards to market orientation. In other words if they don’t want to invest properly don’t invest at all, but if you want high profits and a market orientation approach you must invest heavily putting extra efforts into service and delivery payment options. However one of the many drawbacks of this study is that it offers firms no advice or plan of action of how to invest and reach an optimum level of market orientation. Another important point the study recognises is the effect of market growth on profitability. It shows how short term market growth presents a profitable opportunity for non-commodity practices whereas commodity practices may endure reduced profitability. This finding could prove useful for managers associated with non commodity products as if they can identify when market growth is taking place they can maybe increase production or orders to make sure they meet demand and meet capacity utilisation to gain maximum profit. Those associated with commodity business have a variety of measures to try and ease the burden in times of expected market growth and falling profits. One could be to take an overdraft extension with the bank to cope with the loss of profits or the company could even try cutting prices to try and maintain some profit.
Despite some of the paper’s obvious strengths it does however have several drawbacks and leads several questions unanswered on the subject. To the researcher’s credit unlike other articles I have studied it included a limitations and further study section at the back. The biggest problem for me personally is the way in which the paper is written with a majority of the research based purely on mathematics like co-efficients and regression analysis, this makes reading the paper quite complex and time consuming. Another huge drawback is how the research only focused on one corporation a forest corporation, this makes me question whether their findings apply to other industries. Surely it would have been better to them to focus on a series of different companies in the food or clothes sector or even a range of industries .The study could be extended by investigating what market level factors and business level factors most affect a firm’s Market orientation. I would also like to see a comparative study of a series of firms of similar size and market position some that adopt a Market orientated approach and some that don’t and contrast their difference in profits.
Brodie’s study emphasises how important relationship marketing is becoming in a majority of firms but it doesn’t say how this is the most important type of marketing or the only that firms can adopt. On the basis of this it is safe to say there has not been a paradigm shift in Marketing as transaction marketing is still vital with a majority of firms still using it. The study though should show managers just how important good relationship with customers are and firms should try and meet and understand the needs of customers to form a long term relationship. From my own personal work at USC a leading clothes retail store within Newcastle a huge emphasis is put on pleasing the customer and meeting their needs. The importance of a good relationship is essential as it is much cheaper for firms in terms of advertising and promotion to keep loyal repeat purchase customers, than to keep having to attract one –off purchase customers. Although companies do use more than one type of marketing practice Brodie recognises that certain types of marketing practices are more common in some sectors than others. For example companies who scored high on the interaction-marketing index seemed to be mainly industrial good companies with fairly low turnover. The study also identifies how industrial firms in general are more interested in developing long lasting customer relationships compared with FMCG companies. FMCG companies only want a few sales from each customer in a short period of time before they launch a new product so they aren’t interested in developing a long term relationship with the customer. Another interesting point is how the study shows how different types of marketing combine better with some forms of marketing than others. For example firms who carry out a transactional approach are more likely to produce database marketing than interaction marketing. The most important aspect of this is to make firms aware that more than one form of marketing can be carried out and integrated successfully, this means that managers should manage their portfolio of marketing types in an efficient and appropriate way in relation to the firm’s strategy.
The reliability of the study can be questioned as it solely looks at companies in New Zealand, which has a completely different economy as well as different business cultures and values comparable to the UK. The other reason I must question the study is that it only uses established firms that have been in business for ten years or more. This makes me question the validity of the results as we don’t know anything about the firms that have been around for just four or five years or even those just starting up. The companies the study looked at are probably already established but what about the new firms trying to break into the market they are likely to use different marketing methods yet the study doesn’t account for these. The study is also prone to a certain level of bias as only the middle managers have been interviewed and not the top managers or lower level of staff, so we have no proof that what they are saying is actually going on in the firm.
Obdgona’s paper is very useful, as it is the first qualitative study in this particular area. The paper shows us how market orientation is not just about systems and procedures but also value, beliefs and attitudes of employees .The biggest strength of the paper is that it brings to managers attention the organisational culture within the company and their shared values and beliefs on the new marketing concept. The seven responses should show managers how staff feel and are likely to react to adopting a market orientated approach. Some of the responses like ‘comprehensive repudiation’ and ‘dynamic disagreement’ identified by the study should encourage the company to involve and inform the staff of the change in company practice; this should lower the animosity and cut down on the negative responses. Now the company realises the effects of the change they can smooth the transition over and try boosting staff morale perhaps by more job rotation or job enrichment. The paper should ensure that the company uses effective communication and even training to help the employees adjust to marker orientation. They know that if the staff are unhappy and demotivated it is going to affect their own performance as well as the companies, so they must keep their staff motivated. The paper also identifies a common problem that managers face with a potential trade off between meeting short term customer needs and achieving employee satisfaction. This could be remedied with regular communication with employees or even a pay rise.
When using the paper you must bear in mind only two companies have been investigated and both were established leading companies so the research is slightly limited in terms of reliability. For example small emerging firm’s staff may have completely different responses to a marketing orientation approach .Another drawback to the paper is how it doesn’t mention how employee’s attitudes change over time, that is even if they do? One other potential problem for me is that although the seven responses give a good general view to me they are in my view quite simplistic and that many employees fall between two categories. Even more of a problem which questions the reliability of the whole study is how many of the staff questioned would give their honest feeling about the firm, many would hide there true feelings in case the information they divulged ever got to their boss. The study should definitely be extended across more firms and industries to see if the seven responses are true within all companies.
After looking at all the articles it is quite apparent that a market-orientated approach is at the forefront of most business’s strategy. From examining all the articles Obdgona’s was the most useful as well as the most interesting to read as it shows firms how employees tend to react in changing to a Market Orientation approach, this allows firms to reduce the problems of transition with increased levels of communication. Brodie’s work was quite useful as it showed businesses how important relationships with customers are and also proved how firms can integrate various types of marketing. All of this was shown despite Brodie not proving there had been a paradigm shift within marketing from the transactional to the relationship approach. Narver and Slater’s paper had little use as it did not show us anything new yet just confirmed how market orientation affects profitability, for me this is self explanatory as if Market orientation wasn’t profitable why would so many firms use it. All the papers showed how important market orientation was to a business, however it must be remembered there are several other components of a firms strategy just as important such as its human resource management or its operation techniques and these cannot be ignored no matter how good the market orientation is within the company.
Bibliography
Brodie,.R,Coviello,N,.Brookes,W,.and V.Little (1997). Towards a paradigm shift in marketing ? An examination of current marketing practices.Journal of Marketing Management 13: 383-406
Harris,L. and E.Ogbonna(2000). The response of front-line employees to market orientated culture change. European Journal of Marketing 34 (3/4) : 318-340
Narver,J. and S.Slater (1990). The effect of a market orientation on business profiatability. Journal of Marketing 54(October): 20-35
Word Count = 2, 190 with reference to the articles Word Count without = 2,095
Simon Cutsforth
Student Number N11204387