Market Orientation, Customer Value, and Superior Performance
Market Orientation, Customer Value, and Superior Performance
Stanley F. Slater and John C Narver
Thinking in terms of the market (not marketing) is essential in the highiy competitive arenas of today,
o achieve superior performance, a business must develop and sustain competitive advantage. But where competitive advantage was once based on structural characteristics such as market power, economies of scale, or a broad product line, the emphasis today has shifted to capabilities that enable a business to consistently deliver superior value to its customers. This, after all, is the meaning of competitive advantage. Our recent research shows that a market-oriented culture provides a solid foundation for these value-creating capabilities. A business is market-oriented when its culture is systematically and entirely committed to the continuous creation of superior customer value. Specifically, this entails collecting and coordinating information on customers, competitors, and other significant market influencers (such as regulators and suppliers) to use in building that value (see Figure 1). The three major components of market orientation+ustomer orientation, competitor focus, and cross-functional coordination-are long-term in vision and profit-driven. Based on extensive interviews with managers and executives, Kohli and Jaworski (1990) conclude that market orientation provides “a unifying focus for the efforts and projects of individuals, thereby leading to superior performance.” A developing stream of empirical research has found a strong relation-
T
ship between market orientation and several measures of business performance, including profitability. customer retention, sales growth, and new product success.
Customer Orientation
The heart of a market orientation is its customer focus. To create superior value for buyers continuously requires that a seller understand a buyer’s entire value chain, not only as it is today but also as it evolves over
Stanley F. Slater and John C Narver
Thinking in terms of the market (not marketing) is essential in the highiy competitive arenas of today,
o achieve superior performance, a business must develop and sustain competitive advantage. But where competitive advantage was once based on structural characteristics such as market power, economies of scale, or a broad product line, the emphasis today has shifted to capabilities that enable a business to consistently deliver superior value to its customers. This, after all, is the meaning of competitive advantage. Our recent research shows that a market-oriented culture provides a solid foundation for these value-creating capabilities. A business is market-oriented when its culture is systematically and entirely committed to the continuous creation of superior customer value. Specifically, this entails collecting and coordinating information on customers, competitors, and other significant market influencers (such as regulators and suppliers) to use in building that value (see Figure 1). The three major components of market orientation+ustomer orientation, competitor focus, and cross-functional coordination-are long-term in vision and profit-driven. Based on extensive interviews with managers and executives, Kohli and Jaworski (1990) conclude that market orientation provides “a unifying focus for the efforts and projects of individuals, thereby leading to superior performance.” A developing stream of empirical research has found a strong relation-
T
ship between market orientation and several measures of business performance, including profitability. customer retention, sales growth, and new product success.
Customer Orientation
The heart of a market orientation is its customer focus. To create superior value for buyers continuously requires that a seller understand a buyer’s entire value chain, not only as it is today but also as it evolves over
References: H.J. Leavitt, Colpomte Puthfinders Penguin Books, 1987). R. McKenna, “Marketing (Homewood,