Product and Market Orientation - 1.1.2

Market Research - the gathering and analysis of research from customers - their attitudes, behaviour and wants - in relation to a product or service. This may help support the implementation of a marketing strategy

Marketing - the way a company interacts with current and potential customers. You can think of it as the communication arm of a business - gathering information from and sending out messages to customers. 

Product orientation - where a business focuses primarlily on creating and developing a high-quality good or service - but perhaps ignoring customer preferences and priorities.

Market Orientation - where a business chooses to design a product or service to meet the requirements of customer preferences/desires. Market research is critical to the success of a market-orientated business as itallows the business to find out customer's tastes and priorities.

Market Research

Businesses often complete market research before entering a new market and at various times while operating in a market. For example, market research can check whether customer loyalty is being maintained or is starting to slip - and how best to tackle any slippage, for instance allowing customers to identify improvements in the service in a survey.

The right kind of market research can provide important insights that aid marketing strategy and decision making. For example:
1) Dimensions of the market (size, structure, growth, trends etc)
2) Competitor strategies
3) Needs, wants and expectations of customers (& how are these changing)
4) Market segments- existing and potential opportunities for new segments.

Product and Market Orientation

Businesses tend to develop new products based on either a marketing orientated approach or a product orientated approach.

 Market Orientation

A market orientated approach means a business reacts to what customers want. The decisions taken are based around information about customers' needs and wants, rather than what the business thinks is right for the customer.

Most successful businesses take a market-orientated approach.

Market-oriented companies are vibrant, communicative businesses that actively seek ways to understand what their customers want and create products specifically designed for those customers. Ensuring there is a demand for their products and services is one of the most vital elements of a marketing-oriented company. The amount of effort that goes into marketing can be the difference between a successful and a failed company.

Apple is a great example of a marketing company as are Coke, Nike, McDonalds and most other globally recognized brands. These companies have achieved world fame by constantly monitoring their markets and then adjusting their marketing mix (product, price, promotion and place) in response to the market. These companies are aware that consumers are not just buying the core product (i.e. hamburgers, shoes, mp3 players) but also find value in the other aspects related to those core products such as convenience, design, trust, status, etc... They know how to use all these aspects (both rational and emotional) to influence a purchase decision.

Markets are much more dynamic - Impact of technological change which is shortening PLC cycles

Customers are becoming much more demanding - E.g. Expecting much higher level of customer service and able to share experiences via social media.

Barriers to market entry getting lower - E.g Many new entrants to consumer markets utilising online and mobile technology.

Advantages of Market Orientation 

1. Close fit with customer expectations
2. Greater responsiveness to changes in customer needs 

Disadvantages of Market Orientation

1. Regular changes in the appearance of function of a product (to meet changing tastes) may leave customers confused about what the brand really stands for
2. Businesses may struggle to keep up with product-orientated businesses that invest heavily in new product features and advanced technologies. 
3. With customers who care mostly about cutting edge products, a marketing orientation may not work as well 

Product Orientation

A product orientated approach means the business develops products based on what it is good at making or doing, rather than what a customer wants. This approach is usually criticised because it often leads to unsuccessful products - particularly in well-established markets.

A company that follows a production orientation chooses to ignore their customer's needs and focus only on efficiently building a quality product. This type of company believes that if they can make the best product,  their customers will come to them.

Gillette Company focuses on producing the best possible disposable razors at an economic rate.
Thereby, they distinguish their products with high quality razor blade, ease of use and right pricing strategy. Yet another classic example is the Ford Motor Company, where Henry Ford had made only model of car in black colour irrespective of the perspectives of the consumer.

Advantages of Production Orientation 

1. Allows the business to focus on product quality and innovation and spend most of its efforts and money on doing this. 

Disadvantages of Production Orientation 

1. By putting customer priorities at the back of the list, the product might be admired but not sell very well. In high-tech markets with narrow life cycles, companies that bury themselves in product development may miss the window of opportunity to align with customer demand

Production Orientation vs. Market Orientation

Companies that adhere to a market orientation operate very differently than companies with a production orientation. Companies with a market orientation focus primarily on meeting the wants and needs of their customer base. They constantly monitor their customer's desires and are quick to change the product or service they offer to whatever best suits their customers. Instead of a 'better mousetrap' philosophy, a market-oriented company's philosophy is 'the customer is always right.'

Production orientation and marketing orientation describe different stages in the evolution of modern business marketing. Until the early 1900s, many products were scarce and companies could therefore sell as many as they could make. This made advertising and marketing research relatively unnecessary; the way to make money was to manufacture a lot of goods as inexpensively as possible.

Most companies began to adopt a marketing orientation during the 1960s. Many companies were manufacturing the same types of product, and customers were able to choose between them; therefore, companies needed to distinguish themselves from their competitors by branding, advertising and introducing new and better products