Kotler and Armstrong (2010) highlighted through the “Chipsy”
story in Egypt that product creation and effective marketing program starts
from a deep understanding of customer wants and concerns. It also mentions that
companies must be innovative to differentiate themselves from their
competitors. The race for competitive advantage is actually a race for customer
and market insights and at the same time marketing intelligence has grown as
more companies are now busy snooping on competitor activities through several
activities such as internet buzzes, quizzing company employees, bench marking
competitors’ product etc. A company
might therefore decide to either focus on competitors or its customers as
situations might dictate, or else might attempt to balance both approaches.
A company with the customer orientation is that which places
emphasis on customer interest, wants and preferences. Richard Hiens (2000)
mentions that firms like this emphasize customer focused intelligence
activities at the expense of competitor information and as such are referred to
as “customer preoccupied”. Customer orientation simply means in-depth
understanding of the customer and continuously providing value for them
(Lafferty and Hult, 2001) and this remain key to the success of any customer
oriented business. In this approach to doing business, not only would customer
needs and interest be appreciated, his entire value chain, his perceived
sacrifices and continuous communication with actual and potential customers is
the highlight.
Competitor orientation on the other hand uses target rivals
as a frame of reference (Robert Hiens, 2000), they seek to identify their
strengths and weakness as it relates to their rivals . Porter (1980) mentions
that close monitoring of competitors is quite a difficult task but at the same
time remains relevant in a hostile business environment.
Most researches (Kohli and Jaworski, 1990; Lusch and Laznak,
1987; Slaver and Nater, 1994) have come to deviate from conventional ideas of
the customer focused marketing proponents (a satisfied customer is the main
objective of business); to embracing a broader perspective on the orientation
construct to include “exogenous factors” that influence customer needs such as
competitors and even government regulations (Robert Hiens, 2000). Citeman
network gives a descriptive analogy of situations in companies with the 2
orientations
Competitor oriented Telecommunication Company
Situation
- Company X in Germany is going
all out to crush us in the GSM market
- Company Y in Spain is increasing
its network coverage to reach rural colonies on the boundaries on the
country
- Company Z in Italy has cut down
call rates and we have lost 3 share points
- Company P in Portugal has introduced
the dot.me application on its network and we are loosing clients.
Reactions
- We withdraw from Germany because
we cannot afford to take on the market leader in such a war
- We increase our advertisement
and promotion expenditure in Spain
- We meet competitors call rates
slash in Italy
- We increase R&D expenses in
Portugal to develop a similar feature like that of our competitor but with
slightly better service.
Such an approach has its advantages and the same time
disadvantages. It portrays the company has a fighter organization and keeps
employee alert on competitor weaknesses and introduced change. On the other
hand, too many resources might be spent on competitive investment rather than
investing on breakthrough innovations. Such organizations do not move towards
their own set goals but rather tailor goals to competitor actions.
Customer oriented Telecommunication Company
Situation
- The total market grows at a rate
of 5% annually
- The reception quality sensitive
segment grows by 10% annually
- The promotion prone segment is
growing fast but such customers do not stay long on the network
- A growing number of customers
are interested in network compatible social networking hubs on their
receivers.
Reactions
- Change of focus to improving
service quality, increase network coverage, install more cell sites and
shift advertising theme to service quality
- Reduce promotions and deals
because we do not want to acquire customer loyalty this way.
- Invest in 4G network and develop
add-ons that could aid the social hub applications on the network
As seen above, the customer oriented organization is
rightfully positioned to identifying opportunities and as such increase
performance and increase customer satisfaction but they could at the same time
due to their emphasis on customers lose sight of changes introduced by
competitors. Customers are known to be resistant to change and in most cases
this forces such organization to maintain status quo thus refraining from game
changing innovations.
Companies must understand that there is a tradeoff between
the two orientations and the ideal option is to balance both perspectives. A
balance of both is important because complete reliance on either can often lead
to an incomplete business strategy, leaving an organization handicapped by a
reactive poster (Day and Wensley, 1988); in other words “ a partial and biased
picture of reality”. It is necessary to balance both perspective so that a firm
can find sufficient flexibility to shift resources between customer and
competitor emphasis as market conditions change (Robert Hiens , 2000; Slater
and Nater, 1994)
References
Kotler and Armstrong (2010). The principles of marketing.
Pearson education. Newyork 13th ed
Lafferty, Barbara A.; Hult, G. Tomas M. (2001): “A sythesis
of contemporary market orientation perspectives”, European Journal of
Marketing, 35 (1/2), 92-109.
Richard Hiens (2000). Market Orientation: Toward an
Integrated Framework. Academy of Marketing Science Review Volume 2000 No. 1 Available:
http://www.amsreview.org/articles/heiens01-2000.pdf Copyright © 2000 – Academy
of Marketing Science
Porter, Michael E. 1980. Competitive Strategy. New York: The
Free Press
Kholi, Ajay and Bernard J. Jaworski. 1990.
"Market-Orientation: The Construct, Research Propositions, and Managerial
Implications." Journal of Marketing 54 (April): 1-18.
Lusch, Robert F. and Gene R. Lazniak. 1987. "The
Evolving Marketing Concept, Competitive Intensity, and Organizational
Performance." Journal of the Academy of Marketing Science 15 (Fall): 1-11.
Slater, Stanley F. and John C. Narver. 1994a. "Does
Competitive Environment Moderate the Market OrientationPerformance
Relationship?" Journal of Marketing 58 (January): 46- 55.
Citeman network (1996). Balancing customer and competitor
orientations. Available online from: http://www.citeman.com/1074-balancing-customer-and-competitor-orientation/
Day, George S. 1994. "The Capabilities of Market-Driven
Organizations." Journal of Marketing 58 : 37-52.
Robin Wensley. 1988. "Assessing Advantage: A Framework
for Diagnosing Competitive Superiority." Journal of Marketing 52. 1-20.
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