DEVELOPMENT OF MARKET ORIENTATION IN A SERVICES
CONTEXT – AN ALTERNATIVE MODEL PROPOSAL
RAZVOJ TRŽNE NARAVNANOSTI NA PODROČJU TRŽENJA
STORITEV – PREDLOG ALTERNATIVNEGA MODELA
Tomaž Kolar
Faculty of Economics
University of Ljubljana
Kardeljeva ploščad 17
1101 Ljubljana
tomaz.kolar@ef.uni-lj.si
Keywords: Market orientation, Marketing concept, Services marketing, Strategic
management
Ključne besede: Tržna naravnanost, Koncept trženja, Trženje storitev, Strateški
management
Abstract
In this paper two important challenges regarding the market orientation concept are addressed
through literature review. Firstly, an attempt to define key directions of development and
implementation initiatives regarding this concept is made. It looks as if conceptual
development has been directed mainly toward redefining and combining different construct
dimensions as defined by early authors. For the implementation issue a more substantial step
toward new knowledge is made through analyzing different barriers, factors and approaches
that impact the success of these efforts. Secondly, implications for assessing the market
orientation construct in a services context are presented. As service context normally requires
an adjusted marketing approach, key areas of services marketing requiring adjustments are
pointed out and implications for market orientation conceptualization and measurement are
discussed. On this basis, an alternative conceptual model separating strategic focus from the
key organizational leverages of market orientation is proposed which better suits the
addressed challenges.
Povzetek
Pričujoč članek na osnovi pregleda relevantne literature obravnava dva izziva, s katerima se
sooča razvoj koncepta tržne naravnanosti. Prvega predstavlja poskus opredelitve ključnih
smernic teoretskega razvoja tega koncepta. Pregled novejših prispevkov s tega področja kaže,
da je ta razvoj usmerjen predvsem v kombiniranje že obstoječih dimenzij, kot so jih opredelili
zgodnji avtorji. Glede implementacije je viden večji napredek pri razvoju novih spoznanj, ki
so rezultat proučevanj različnih ovir, dejavnikov in pristopov, ki vplivajo na uspešnost
tovrstnih prizadevanj. Drug izziv predstavlja pomen in vrednotenje tega konstrukta v
storitvenem kontekstu. Zaradi specifične narave storitev so predstavljena ključna področja
trženja storitev, ki narekujejo prilagoditve njihovega trženja, ta področja pa so obenem tudi
osnova za prilagoditev koncepta tržne naravnanosti in njegovega merjenja. Na osnovi
ugotovljenih implikacij, predlagamo alternativni model merjenja tržne naravnanosti, ki je
glede na obravnavana izziva ustreznejši od predhodnih.
Introduction
Since the beginning of the 90’s the concept of market orientation has attracted immense
attention from marketing academics. This is not surprising because it is closely related to
fundamentals of marketing theory (marketing concept), with implementation of marketing as
an organizational-wide philosophy and with the notion that it positively impacts business
performance. Kohli and Jaworski (1990) and Narver and Slater (1990) are often cited as
founders of conceptualization and measurement instruments for assessing market orientation
construct. In recent years however, improvements or alternative approaches have been
suggested by different authors (Deng and Dart, 1994, Lado et al., 1998). Yet, relatively few
efforts were made to define common points or integrate suggested improvements. On the
other hand, some important suggestions of original authors were largely neglected. Narver
and Slater (1990) and Kohli, Jaworski and Kumar (1993) specifically proposed application of
the questionnaire in different contexts; among them, in service contexts. Despite intense
application of market orientation measurement across different sectors and markets (Jaworski
and Kohli, 1993, Deng and Dart, 1994, Cano et al., 2004, Greenley, 1995, Hooley et al.,
2000), no known attempts were made to test and adopt market orientation measurement for
the services context. As the services sector generally requires a different market(ing)
approach, we believe that this challenge should be addressed.
Development of market orientation Concept
Kohli and Jaworski (1990) defines market orientation as the organization-wide generation of
market intelligence pertaining to current and future needs of customers, dissemination of
intelligence within an organization and responsiveness to it. These authors therefore define
(and measure) this concept through three basic components activities / processes) dealing
with marketing information: their generation, dissemination and responsiveness. A slightly
different definition was proposed by Narver and Slater (1990). They define market orientation
as the organizational culture that most effectively and efficiently creates the necessary
behaviours for the creation of superior value for buyers and thus superior performance for
business. These authors define three basic (content / focusing) components of the construct as:
customer orientation, competitor orientation and inter-functional coordination. To the three
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basic components they also added two decision criteria: long-term focus and profitability.
Both decision criteria were not included in the questionnaire because of their low levels of
reliability.
Deshpande, Farley and Webster (1993) challenged both conceptions. They see market
orientation as being synonymous with customer orientation, being distinguishable from
competitor orientation. Putting customer interests first is the central part of their definition of
customer (market) orientation and they argue that competitor orientation can be almost
antithetical to customer orientation when the focus is more on the strengths of the competitor
than on the unmet needs of the customer. This view is consistent with other authors from the
marketing and strategic management field. They emphasize a need for a strategic focus which
should be on the customer (Ruekert, 1992, Christoper et al., 1991, Karloef, 1993, Day, 1994,
Doyle, Wong, 1996).
Critical discussion stimulated different improvement efforts in measuring market orientation.
Deng and Dart (1994) developed a four-factor instrument, consisting of the three factors of
Narver and Slater (1990), to which they add (actually, put back) profit orientation as a fourth
substantive dimension. Gray et al. (1998) proposed a five-factor instrument which combines
the Kohli and Jaworski (1990) and Narver and Slater (1990) dimensions. The dimensions of
their instrument are inter-functional co-ordination, profit emphasis, competitor orientation,
customer orientation and responsiveness. Lado et al. (1998) added distributor orientation and
environmental orientation to the concept, and proposed a nine-component model which
encompass two stages of the market orientation process: analysis and strategic actions (each
consisting of four components), plus an additional component, intra-functional coordination.
Altogether the nine components proposed by Gray et al. (1998) are:
1. Analysis of the final client
2. Analysis of the distributor
3. Analysis of the competition
4. Analysis of the environment
5. Inter-functional co-ordination
6. Strategic actions directed toward the final client
7. Strategic actions directed toward the distributor
8. Strategic actions directed toward the competition
9. Strategic actions directed toward the environment
More recently, Lafferty and Hult (2001) made an overview of marketing orientation
perspectives and they found five different approaches to the conception of market orientation:
1. Organizational decision making perspective
2. Market intelligence perspective
3. Culturally based behavioural perspective
4. The strategic focus perspective
5. The customer orientation perspective
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Each perspective proved to be an interesting venue for study and further development of the
market orientation concept. Contrary to the information and decision making perspectives, a
culturally based perspective puts more emphasis on informal, deeply rooted elements of
organizational culture: values, norms, artefacts and behaviours (Deshpande et al., 1993,
Homburg and Pflessner, 2000). Lafferty and Hult (2001) also proposed a synthesis of those
perspectives which resulted in four meta-dimensions: customer orientation, importance of
information, inter-functional coordination, and taking action.
While the dimensions discussed in the previous sections are interesting, they add little new to
the Kohli and Jaworski (1990) and Narver and Slater (1990) dimensions - actually they are
merely a combination of them. We think that an “implementational” view is more fruitful at
this point. Despite the notion that Kohli and Jaworski (1990) understood market orientation as
the implementation of marketing concept, Deshpande et al, (1993) points out that the field of
marketing implementation issues received little (empirical) attention. Harris (2002), on the
basis of extensive literature review discusses different management approaches to the
development of market orientation. One important stream of literature in this field addressed
barriers (factors) to market orientation. Harris (2002) identified two types of barriers:
managerial and organizational. Because efficient approaches to deal with those barriers
should be an integral part of market orientation development, we discuss them briefly.
The first set of barriers is connected with senior management characteristics and strategic
issues. Jaworski and Kohli (1993) determined that managers’ attitudes toward risk aversion
and conflicts are such obstacles. Harris and Piercy (1999) additionally found that formalized,
political and uncommunicative management also restrict development of market orientation.
Another senior management related factor of market orientation is strategy development and
efficient implementation. Strategic planning starts with a company’s mission in which the
customer should be a vital part. The common notion that only a sensible company’s mission
satisfies customer needs and that marketing should be a philosophy of the entire business
should therefore be reflected in practice. Day (1994) suggests that a top-down direction
meaning a visible commitment by senior management to put the customer first, exercised
through a strategy development process, is necessary for enhancing market orientation. Dunn
et al. (1994) also confirms that organizational goals and values impact marketing
effectiveness and suggests that a supportive environment is needed for marketing-oriented
strategies. When successful implementation of market orientation is in question another very
practical issue is the amount of power available to accomplish this aim. This is one of the
important questions of marketing concept implementation and the importance of sufficient
political power is often emphasized (Harris, 2000, Piercy, 1990).
Organizational characteristics represent the second layer of barriers to and factors in the
development of market orientation. Kohli and Jaworski (1993) found that structural
connectedness and centralization both act as obstacles for market orientation. Harris (2000)
found that integration devices (internal communication systems, organizational integration
and coordination systems) are important for market orientation. Homburg et al. (2000) also
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stress the importance of organizational structure for customer orientation. According to them,
one of the major trends in organizing marketing in firms is the development of customerfocused structures meaning that segments are the basis of organizational structures. Workman
et al. (1998) discussed another organizational element impacting marketing performance:
location of the marketing department, cross-functional dispersion of marketing activities and
power of the marketing subunit.
Essentially, all structural elements in an organization that are important in enabling,
facilitating or blocking market orientation should be considered here. Information technology
and communication systems are such important elements but so too are different systems and
business tools. Doyle and Wong (1998) emphasise the importance of using tools and
approaches such as re-engineering in a changing environment. TQM also represents such a
tool and Day (1994) points out that the tools and methods of TQM may be helpful in
continuous improvement and change management aimed at customer satisfaction.
Narver et al. (1998) suggests that market orientation could be developed through
organizational learning. He suggests two approaches for improvement of market orientation –
each of them represents a different form of learning. The first approach is focused on
establishing market orientation principles that are later communicated and trained for
development of necessary skills and knowledge. A second approach focuses on direct
interaction with the market and stresses personal involvement and experimentation as a
learning method. Deshpande (2001) also emphasizes the importance of creation, diffusion and
utilization of marketing information, but under a different term - knowledge management.
Both approaches are particularly important for conceptual development of the market
orientation construct because of their emphasis on a systematic, holistic approach which is not
limited only to generation and dissemination of information, but also encompass
interpretation of their meaning and the use of derived knowledge.
Another important element of market orientation development is activation and coordination
of internal - especially human - resources of an organization. While Narver and Slater (1990)
proposes inter-functional coordination as a dimension of the construct, explicit internal
emphasis and it’s balancing with external focus are not evident. Lings (1999) argues that a
myopic external focus has replaced a myopic internal (product) focus and suggests that
internal orientation should be balanced with external orientation. A similar suggestion is
proposed by Day (1994) - that external and internal emphasis should be bridged with adequate
processes and capabilities.
Services marketing and market orientation
For development and implementation of a market orientation concept a services marketing
context is important for three reasons. The first is the importance of the role of services in
today’s global economy and marketing. Services are a fast growing sector that well exceeds
50% of GDP in developed economies (Zeithammel, Bittner, 1996). In addition to this,
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services are an important imperative in manufacturing businesses as they are an important tool
for enhancement and differentiation of the product offer.
The second reason lies in the specific characteristics of services and their distinctive
marketing approaches and tools. In services, the scope and content of the marketing approach
is more complex and sophisticated. Gorenroos (2000) proposes a service marketing triangle
which differs from the traditional (Product-firm-market) in its complexity and emphasis. The
service
marketing
triangle
consists
of
1-firm,
2-customer
and
3personnel/technology/knowledge elements. It emphasizes sources of customer value rather
than pre-produced attributes of the product. Another distinctive feature of service marketing is
the extended marketing mix that adds three important elements (people, processes and
physical elements) to the classic 4-P conception of marketing and therefore enhances it.
Therefore it could be argued that services marketing represents a more realistic,
comprehensive and contemporary approach to marketing concept implementation leading us
to a third reason.
The third reason originates from the fundamental changes in today’s business environments
and market trends. According to Vargo and Lusch (2004) new dominant perspectives in
marketing will focus on intangible resources, co-creation of value (together with customers)
and relationships. Some of their fundamental propositions of new dominant logic in marketing
are centred toward services. They specifically suggest that application of specialized skills
and knowledge is a fundamental element of the marketing exchange and that goods are only
mechanisms for (such) service provision. This reinforces the assumption of Groenroos (2000)
that every business is a service business as any company interacts with customers through a
services interface. Understanding of services merely as just a specific type of product is
therefore misleading. Service marketing therefore seems a more appropriate approach for
today and tomorrow’s marketing context than traditional (goods) orientation. This is also the
most important argument as to why the market orientation concept in general needs
adjustment from the service marketing perspective.
Based on this premises, some key characteristics and implications of contemporary services
marketing that are interesting for market orientation concept development are discussed
below. Laing et al. (2002) suggests that two elements may be regarded as critical foundations
of services marketing and its development. These are management of the service delivery
process and the nature of the interaction between consumers and suppliers. In this interaction
the concept of the service encounter is the focal point of marketing activity, representing a
dyadic interaction between the customer and the provider firm. Customer experiences in these
encounters are critical, because they represent the point at which a customer evaluates
services quality and gets an impression of the organisation (Zeithamel, Bitner, 1996). Service
encounters are therefore the point at which customers actually experience marketing
orientation. One of such experiences for instance is the degree to which service is customised
to individual customer preferences. The nature of services requires customer involvement in
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the production and delivery process, is difficult to mass produce and difficult to standardize
yet is especially suitable for customization strategies (Zeithaml, et al., 1985).
Another issue connected with service encounter evaluation is performance – expectation gaps.
Guo (2002) suggests that market orientation in service context impact business performance
through these service gaps. This implies a very important notion for market orientation, as it
could actually be operationalised and measured as the gap (match) between customer
expectations and provided marketing outputs. These gaps could be minimized by managing
customer information, setting and delivering adequate service standards, matching given
promises, but also through management of customer expectations themselves (Zeithamel,
Bitner, 1996). An important issue here too is exceeding customers expectations. Arnoud and
Price (1993) demonstrated that extraordinarily positive experiences are often hedonic, social
and self-actualizing.
On the other hand, environmental factors, including ambient conditions, equipment and signs
are also very important for service evaluation, and they also deserve a systematic management
approach, as proposed in the Serviscape framework (Zeithaml, Bitner 1996). Turley and
Chebat (2002) also argue that design of atmospheric elements is of strategic importance and
that they are tightly linked with customer orientation.
The importance of service encounters also lies in the fact that they represents a basis for long
term relationships with customers (Laing et al. 2002, Gorenroos, 2000). Gummesson (1999)
points out that value is produced during the time in which customers engage in (often
complex) interactions with personnel, other customers, information technology and other
systems. Consequently, Goreroos (1996) emphasizes the central role of an efficient services
interface for relationship marketing. Services marketing and relationship marketing
approaches are therefore tightly intertwined, with distinctive emphasis on the following
elements1 that are also important for marketing orientation:
 loyalty effects and customer lifetime value concept,
 post-purchase activities and rewards,
 complexity and risks during the buying and consumption process,
 reliability, availability, user-friendly processes and time elements,
 emotional, social and structural bonds with customers and
 relational concepts such as trust and commitment.
Inseparability and heterogeneity of services poses problems for maintenance of consistent
high quality, hence services marketing puts a lot of emphasis on services quality management
(Zeithamel, Bitner, 1996). From a quality management approach some interesting
implications for market orientation development could be derived. This approach strongly
emphasizes customer defined quality that is related to hard and soft dimensions of quality.
The Servqual model for instance proposes assurance and empathy as such dimensions
1
Elements are selected from works of : Groenroos, 1996, Groenroos, 2000, Gummesson 1999, Morgan, Hunt,
1994, Morgan et al., 2000, Zeithaml, Bitner, 1996.
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(Parasuraman Zeithamel, Berrs, 1988), while Groenroos (2000) propose functional quality
(how the service result is delivered), company image, employee attitudes, and service
recovery as such soft service quality dimensions. Such soft elements are largely absent from
the market orientation conceptualization and should therefore be more emphasized.
As service operations are often very complex, a process approach is often suggested for
managing this complexity. A process view represents a useful approach to quality
improvement though defining, mapping (flowcharting) and improving service core processes
or sub-processes (Bateson, 1995). A more explicit emphasis on value adding processes for
customers, instead of emphasis on (coordinating) departments could therefore also be
advisable for market orientation development.
An additional important issue that is tightly connected with quality, but also with general
services marketing management is the importance of social elements and employees, often
addressed under the internal marketing concept. Literally all authors from the service
marketing field emphasize the critical role of employees for desirable marketing results.
Employees are seen as a key productivity and quality force (Zeithamel, Bitner, 1996),
valuable to the organisation, internal customers and “emotional labour” (Lovelock and
Wright, 1999) or a part of the product (Bateson, 1995). According to Gorenroos (2000)
successful internal marketing is prerequisite for successful external marketing. He also states
that internal marketing starts with the idea that employees are the first market for the
organization and that internal marketing can be viewed as an approach for developing interest
in customers and marketing among organization personnel. As such, internal marketing is
concerned with ensuring understanding and motivation for customer consciousness, thorough
management of employee attitudes, internal communications, developing service culture,
training, empowering and enabling employees (Gorenroos, 2000). This point hence reassures
the previously set proposition of the importance of explicit internal (employee) focus and its
balance with external (market) focus (Lings, 1999). This implies that market orientation
conceptualization should overcome the traditional notion of merely coordinating different
departments as one of the key dimensions.
Coordination of different organizational entities as departments is without doubt very
important, but as a market orientation construct dimension, it probably needs more distinctive
focus as well as clearly defined elements, systems and tools to be operationally viable.
Gorenroos (1996) for instance, suggests that three key issues in relationship marketing are:
direct contacts with customers, customer databases and creating a customer-oriented service
system. Customer databases and information technologies are having an increasingly
important role in services marketing. They provides a means for mass customization and a
tactical tool for management of customer relationships but also a solution to non-homogenous
service and inconstant quality level (Zeithaml et al., 1985). According to Laing et al. (2002)
technological mediation in service marketing will be one of the key issues in the future and
the market orientation concept should incorporate this notion in its coordination dimension.
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From a services marketing perspective, two important sources of development propositions
could be extracted for a market orientation concept. The first source is an
encounter/interaction emphasis which focuses on direct contacts with customers. This
dimension is largely neglected in the market orientation concept and should be systematically
incorporated through different elements of customer interface design (social, emotional,
environmental, technological), or a holistic and long term view of relations with customers.
The second source represents the in/tangibility dimension of service marketing. On one side,
intangible (soft) quality elements should be more explicitly included in a market orientation
construct (i.e. employee attitudes), while on the other side, hard approaches and systems that
will ensure a high and constant level of services quality (flowcharting processes, setting
service level standards, automation) and quality of information (customer databases, CRM
systems) are also crucial for implementation of the marketing concept.
An alternative model proposal
The “Implementational” approach to the market orientation concept and services marketing
approach suggests numerous implications for development of this construct in a services
context. Firstly, conceptual foundations will be settled and secondly, a six-component model
for assessing market orientation will be proposed.
Conceptual propositions are tightly linked with domain, definition and operationalization of
market orientation. There are many different definitions and interpretations of this concept
complicating its meaning and measurement. Basically we follow the Kohli and Jaworski
(1990) notion that market orientation represents implementation of the marketing concept (or
marketing philosophy). This notion implies that market orientation is a very broad construct.
The first question then is how to completely, yet precisely encompass such a construct. If we
follow an all-encompassing imperative, very general and abstract conceptualization results –
especially if the construct is operationalized through few (universal/general) dimensions. On
the other hand very specific dimensions and measures result either in excessively long
instruments which can hardly be applied across different contexts, or in too narrow a
conception of marketing orientation.
According to this, traditional definitions are in general too narrow to effectively grasp the
basic meaning and domain of market orientation – this being implementation of the marketing
concept. Kohli and Jaworski (1990) put organization-wide intelligence management and
responsiveness to it at the heart of the construct. Narver and Slater (1990) define the essence
of the concept as a culture that creates specific behaviours. But organization-wide
implementation requires more than intelligence management or a form of specific culture. It
requires both but also requires distinctive management practices, organizational infrastructure,
systems, human resources and technology support as organizational entities (leverages)
enabling implementation.
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A strategic focus of market orientation should also be more clearly defined. Market
orientation is specifically often understood as the all-encompassing strategic orientation that
raises the probability of market performance. According to different authors (Narver and
Slater, 1990, Deng and Dart, 1994, Lado et al., 1998) it should encompass customer,
competitor, intra-functional, profit, distributor and environmental orientation. However,
Nobel et al. (2002) argue that market orientation is not the only viable strategic orientation
and therefore that different alternatives are possible and potentially successful. Precise
definition of market orientation therefore requires a clear distinction from other strategic
orientations. It should provide answers to the questions “Towards what precisely does being
market oriented mean?” and “Which orientations are directed toward the market and which
are not?”. In light of this we argue that traditional definitions imply too broad (allorientations) a focus and that a more precise strategic focus is more adequate as has been well
established (Deshpande et al., 1993, Ruekert, 1992, Day, 1994, 38, Doyle, Wong, 1996; 517).
For operationalization of the construct, clear notions of what and where exactlywe should
measure are also needed. According to traditional definitions, different managerial activities,
cultural/behavioural characteristics or organizational abilities should be measured. As these
are quite different organizational entities, decisions regarding which one to assess must be
done and it is not an easy decision. Additionally, terms such as “organization-wide
responsiveness” and organizational culture are very general constructs and their content
should be more precisely defined in the form of specific/discrete manifestations of market
orientation. Defining one general concept (market orientation) as another one (organizational
culture for instance) specifically is not sensible.
In light of the above considerations we argue that development of the market orientation
concept requires firstly that a broader set of organizational entities is encompassed in the
construct domain, secondly, that a clear direction (strategic focus) of market orientation is
defined and thirdly, that selected organizational entities are more precisely operationalized in
order to provide measurement of specific/discrete manifestations of market orientation. As we
are looking for organizational entities that are crucial for implementation, instead of the term
entities, we propose the term leverages of market orientation. The prevailing conceptions of
Kohli and Jaworski (1990) and Narver and Slater (1990) are therefore too vaguely
(imprecisely) defined, inconsistently operationalized and measured through statements that
are too general. As a basis for a conceptual model that will overcome these weaknesses we
propose the following definition of market orientation: Market orientation is the extent to
which customer focus is implemented in key organizational leverages. We understand
customer focus as a focus on customer needs; providing and continuously improving
perceived value, quality and satisfaction within a long-term time horizon with a view to
achieving superior market performance.
The proposed model consists of six dimensions representing key organizational leverages through which customer focus is implemented. Market (customer) orientation is therefore not
a separate dimension, but is reflected in all organizational leverages. The first proposed
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dimension of the model is strategic deployment. Discrete strategic leverage is important if
organization-wide orientation is in question because it concerns top management factors
(barriers), the strategy building process and necessary resources. These are vital strategic
factors for implementation of market orientation (Day, 1994, Harris, 2000, Piercy, 1998).
Otherwise the marketing function lacks the influence to drive strategic orientation toward the
market and as a consequence business strategy is not aligned with corporate strategy and
backed with sufficient resources. Consequently, we propose strategic deployment as a first
leverage. Through this leverage, market orientation should be manifested as a visible senior
management commitment, as the presence of it in the company’s mission, as alignment with
business strategy and as provision of adequate resources.
The second dimension of the model is internal integration leverage. The need for focus on
internal environment is often emphasized, most frequently under the term intra-functional
coordination (Gray et al., 1998, Deng and Dart, 1994, Narver and Slater, 1990) Under this
dimension Narver and Slater (1990) understood coordinated utilization of company (capital
and human) resources and full departmental alignment. In accordance with services and
internal marketing implications we suggest that the focus of this dimension is on employees
(rather than departments), intangible resources (rather than tangible) and on balancing internal
orientation with external (rather than an exclusive internal or external focus). Internal
integration leverage is implemented through activities leading to efficient and satisfied
employees such as teaching, training, internal communications, empowering, motivating,
rewarding, but also through internal quality management and efficient inter-departmental
cooperation (Zeithaml, Bitner, 1996, Lovelock, Wright, 1999, Groenroos, 2000).
The third proposed dimension of the model is market knowledge management. There appears
to be a consensus that assurance of market information is a core of market orientation (Kohli
and Jaworski, 1990, Narver and Slater, 1990, Dart and Deng, 1994, Gray et al., 1998).
However, as it seems that too much emphasis is just on information handling (analysis,
generating, disseminating), we suggest a broader focus and hence propose market knowledge
management as a second leverage of market orientation. Its emphasis should be on holistic
management of knowledge which will include additional activities like interpretation and use
of marketing knowledge (Deshpande, ed., 2001). This dimension should also be more focused
on learning as a form of information generating (Narver et al., 1998). It covers all important
information for marketing decisions, including information about soft and internal marketing
elements, but also feedback about balanced metrics of market performance.
As the fourth dimension of the model, an organizational infrastructure is proposed. Different
organizational elements and systems such as organizational structure (Homburg et al., 2000,
Workman et al., 1998), organizational connectedness and centralization (Kohli and Jaworski,
1993), information technology and communication systems (Harris, 2000, Gorenroos, 1996)
are often emphasized as important factors of market orientation. Despite this, organizational
structures and systems are absent in any conceptualization of market orientation. As their
specific design and characteristics are important for implementing any strategic orientation
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and they represent a relatively independent organizational entity, we propose organizational
infrastructure as a fourth key leverage of market orientation.
The fifth distinctive dimension of the model is customer interface design. In implementation
of market orientation the importance of direct contacts with customers should not be
underestimated. In service encounters customers get impressions of the whole organization
(Zeithamel, Biner, 1996), thus they are a visible component or marketing orientation. The
importance of the interaction with the customers also lies in the fact that a customer’s value is
largely produced during their interaction with employees, other customers and organizational
systems (Gumesson, 1999). Therefore, frontline communication and interaction points with
customers should be managed as a coherent whole (Groenroos, 2000). Yet this issue is still
largely neglected in the context of market orientation. Kohli and Jaworski (1990) for instance
implicitly address the interaction with customers only for intelligence generation purpose.
Apart from this notion, the traditional approach to market orientation implies a complete
vacuum between a company’s internal environment and market outputs (product attributes).
As market orientation is concerned with sources of customer value, customer interface design
should therefore be one of its key leverages. Customer interface is a relatively independent
organizational entity and it requires distinctive management emphasis. Market orientation for
this leverage could be operationalized as the extent of customization, fulfilment of
expectations, management of emotional, social, technological and environmental elements of
interaction, but also through long term, relationship impacting activities.
Finally, organizational culture is proposed as the sixth dimension of the model.
Organizational culture is an important factor of implementation of market orientation since it
encompasses tangible elements such as behaviours and artefacts, and intangible elements,
such as values, beliefs and norms. Cultural elements are present at the strategic, but also at the
tactical (encounter) level of any organization. Deshpande et al. (1993), defines customer
orientation (according to him this is synonymous with market orientation) as a set of beliefs
which puts customer interests first. He also argues that a superficial focus on customer needs
information is inadequate without considering the more deeply rooted values and beliefs that
are likely to support customer focus and permeate the organization. Narver and Slater’s
(1990) notion of culture as a set of behaviours is therefore too narrow. Many authors
addressed organizational culture as a separate construct, or as an alternative approach to
market orientation conception (Homburg and Pflesser, 2000, Deshpande et al., 1993, Webster,
1993). But, as organizational culture predominantly addresses contextual and informal
organizational elements (Alfferty and Hult, 2001) it is a sensible counterpart to more formal
leverages (strategic planning, organizational structure) of market orientation. Consequently
we believe that it should be a constituent part (dimension) of the market orientation concept,
leveraging its focus on customers. To be efficient at this aim, organizational culture should
retain all its important components: values, beliefs, norms, behaviours (“our way of doing
things”) and artefacts.
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Figure 1: Alternative model of market orientation for services context
Customer focus
Strategic deployment
Internal integration
Knowledge management
Market Orientation
Organizational infrastructure
Customer interface
Organizational culture
Discussion
In the present paper an attempt to further development of market orientation concept was
made from two perspectives. The first was an overview of contemporary approaches and
factors of implementation of this concept and second was a discussion about the implications
of developments in the service marketing field for conceptualizing this construct. On this
basis an improved conceptual model was proposed. In these efforts a critical approach was
used to traditional conceptualization of market orientation as in Siguaw and Diamantopoulos
(1995). Instead of staying inside existing definitions and dimensions, these were put under
scrutiny, questioned, re-assessed and combined with new elements and dimensions. The
purpose of the proposed definition and model was to clarify the confusion around different
meanings of the term market orientation and to add consistency to its operationalization. With
this purpose a clear distinction between a focus (direction) of orientation and leverages
(organizational entities) which enable and reflect this orientation, was made. At this point
some interesting issues regarding the conceptual background and practical (managerial and
methodological) implications of the model emerged. As the need for setting a precise strategic
focus was established, co-existence of different orientations became apparent. This raises
questions about their relative superiority regarding their impact on business performance
(Nobel et al., 2002), but also about relations between different strategic orientations (Morgan
and Strong, 1998).
13
Another notion is that conceptualization of market orientation is often too vague when its
implementation and assessment in practice is in question. What exactly requires management
of market orientation in business practice? Who should actually drive and manage the
strategic orientation of the company? Could the market drive the company? Who should be
responsible for moving, directing and coordinating a company’s efforts toward the market?
Apparently, the notion of organization-wide behaviours as the essence of the construct is too
general and imprecise to deal with such questions. Answers to these questions are, of course,
not simple. They are tightly connected with general marketing dilemmas such as
appropriateness of being market driven versus driving the market (Sheth and Sisodia, 1999)
and with the role of marketing in the company, especially when market orientation became an
organization-wide issue (Moorman, Rust, 1999). In respect of organizational leverages, their
selection is an important issue. In order to efficiently support implementation of market
orientation, all important leverages should be considered. At the same time those leverages
should be precise and specific enough. This raises the question as to how to categorize, select
and prioritize such leverages empirically – a question that is completely unexplored in
relevant literature. Other questions address the methodological perspective on the construct.
How homogenous is a market orientation construct? Are all dimensions of market orientation
equally important? How to define the (optimal) breadth of each dimension? Should the
dimensions of the construct (such as organization culture) be one-dimensional? Further
conceptual development therefore requires discussion on construct domain, factorial structure
and criteria for inclusion in its dimensions.
Another important issue in defining a construct domain is the definition of its antecedents and
consequences. This issue is somewhat more comprehensively covered in the literature than
previously, yet there are still some ambiguities and inconsistencies. Kohli and Jaworski
(1990) proposed intelligence generation and dissemination as such leverages to which they
add a responsiveness dimension. Narver and Slater (1990) proposed inter-functional
coordination as the only leverage (the other two dimensions being two different orientations not leverages). We argue that intelligence management and inter-functional coordination are
just two of the key leverages. To be consistent, all key leverages (factors) should be included
in the construct, not just some of them. In another article Kohli and Jaworski (1993) discuss
top management factors, interdepartmental dynamics and organizational systems as
antecedents of the construct. Again inconsistency appears, as inter-functional coordination is
defined as a component of a construct (Narver and Slater, 1990) and at the same time a similar
concept of inter-departmental dynamics is defined as an antecedent of it (Kohli and Jaworski,
1993). An even larger inconsistency is evident if we confront the Kohli and Jaworski (1990)
dimensions of the construct (intelligence generation and dissemination) and Slater and Narver
(1993) notion that market orientation is a component of a learning organization. In this case a
tautological conclusion results where intelligence generation and dissemination are
components of the market orientation construct, while market orientation is a component of a
learning organization.
14
On the other hand, market orientation consequences are also often in dispute. Deng and Dart
(1994) for instance treat profit orientation as an element of the construct, while business
performance is generally treated as its consequence (Jaworski and Kohli, 1993, Deshpane et
al., 1993, Homburg, Pflesser, 2000, Guo, 2002). Narver and Slater (1990) point out this
inconsistency and suggest a compromise position – that profitability is a business objective
and hence separated from the three behavioural components of the construct. Similarly Deng
and Dart (1994) separate profits as an end point (accounting construct) from profit as
orientation (inherent practice in business operations).
Since antecedent/consequences dilemmas also result from confusing market orientation(s)
with organizational entities, this confirms the need for separating focus and organizational
leverages of market orientation. With an aim to provide a more complete conceptualization
and more consistent operationalization of the construct we argue that a broader set of market
orientation dimensions is needed and that its antecedents and consequences should be reassessed. Consequently some factors that are considered as antecedents (i.e. interdepartmental
issues and organizational systems) should be treated as constituent parts of the construct,
while profitability and other marketing outputs should be treated as consequences of the
construct.
Implications for management
Managerial relevance of market orientation assessment is often emphasized (Gray et al.,
1998). Therefore, the present paper is predominantly concerned with development and
“implementational” factors of a market orientation concept. In order to respond to business
needs, a model is proposed that is more complete in covering organizational key leverages of
implementation than traditional approaches. A clear distinction between the focus (goal) of
market orientation and leverages (means) of its implementation is also potentially useful for
managers, since traditional approaches often confuse both. This could pose problems when
actual manifestations of marketing orientation, rather than general philosophy are considered,
as suggested by Lado et al. (1998). Following this suggestion, our proposed model offers a set
of specific dimensions which corresponds with different organizational leverages. These
leverages could be categorized into three broad organizational layers: senior management
layer, formal management layer (knowledge management, organizational infrastructure,
internal integration, customers interface) and informal/intangible layer (organizational
culture). From a management standpoint this provides a comprehensive, yet specific enough
approach to assessment and management of organizational market orientation. This enables
management more precise detection of areas in which firms distinguish themselves or need
improvements, hence the model could be useful as a framework for action program design
and management. As improvement of market orientation is a very complex issue, discussion
about obstacles impeding such improvements, about approaches to implementation efforts
and about antecedents and consequences of market orientation could also be very useful for
management decisions.
15
Finally, the proposed conceptualization and model of market orientation is managerially
interesting because it incorporates a services marketing perspective. The importance of this
perspective is twofold. Firstly, it is helpful in re-defining strategic focus and key
organizational leverages. According to service marketing implications, market orientation
should put more emphasis on intangible and human elements, but also on service quality and
long-term relationships with customers. As encounter interaction is one of the key areas of
successful services marketing, we added it as a separate dimension in the model, meaning that
managers should consider it in market orientation improvements. Additionally, the notion of
gaps between customer expectations and company performance is considered as a
consequence of market orientation (Guo, 2002). These gaps are therefore a possible indicator
of how successful an organization is in market orientation improvement efforts. Secondly, a
services marketing approach provides a comprehensive and profound view on the future of
marketing (Vargo, Lusch, 2004) and could therefore provide an adequate approach for future
developments of a market orientation construct. From a managerial standpoint this approach
represents a more proactive approach to management of market orientation.
16
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