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THE POSITIVE IMPACT OF MARKET ORIENTATION ON ORGANIZATIONAL PERFORMANCE

THE POSITIVE IMPACT OF MARKET ORIENTATION ON ORGANIZATIONAL PERFORMANCE

Market Orientation

Market Intelligence / by Inna Hüessmanns

20. August, 2021

A market-oriented corporate culture and a proper generation, dissemination, and utilization of market intelligence are significant factors in achieving superior sales and business performance.

A growing body of empirical and academic research has analyzed the value of a market orientation for a wide variety of organizational issues, including new product success, customer satisfaction, sales performance, profitability, growth, and innovation. Market orientation has been found to have a positive impact on organizational performance.

Research on market orientation addressed how organizations adapt to their environments and develop competitive advantage and customer centricity. Market-oriented organizations are well positioned to anticipate the changing needs of customers and to respond to them through innovative products, solutions, and processes. Market orientation gives organizations an advantage in the speed and effectiveness of their response to opportunities and threats.

Market orientation supports the value of thorough market intelligence and the necessity of coordinated actions directed at gaining a sustainable competitive advantage.

Market orientation places the highest priority on creation and maintenance of superior customer value while considering the interests of other key stakeholders. It provides norms for behavior regarding the organizational development and responsiveness to market information.

Many organizations often fail to use the market knowledge available to them. Additionally, organizations increasingly have access to the same market information. Research indicates that market oriented organizations are expected to develop superior profitability.

Market Orientation is the ability of organizations to generate, disseminate, and utilize superior intelligence about their markets, customers, and competitors, and the coordinated application of cross-functional resources to the creation of superior customer value.

Key features of market oriented organizations is their expanded focus on market rather than customer intelligence, their emphasis on cross-functional coordination with respect to market intelligence, and their focus on activities related to market intelligence utilization.

Key Components of Market-Oriented Organizations

Three components of a market-oriented organization can be distinguished: customer orientation, competitor orientation, and inter-functional coordination.

 

  1. Customer Orientation and Analysis

Customer orientation and customer centricity place the highest priority on continuously analysing customers’ needs and finding ways to provide superior customer value. Customer oriented organizations innovate throughout their entire business system, as opposed to solely in products or services.

  1. Competitor Orientation and Analysis

Competitor orientation and analysis entail generating intelligence on the following and other questions and facilitate innovations: (1) What is the basis for your organization`s competitive advantage? (2) Who are your competitors? (3) Do they represent an attractive alternative from the perspective of your target customers? (4) What does your organization need to survive competition?

  1. Cross-functional Coordination and Collaboration

Cross-functional coordination is one of the core components of market orientation. Academic research and empirical evidence indicate that coordinated dissemination of market intelligence among various functions was instrumental in the organization’s responsiveness to customer needs.

Market Intelligence as a Distinctive Capability

Market-oriented organizations have superior market intelligence capabilities, such as market sensing, customer analysis, and competitive intelligence. These capabilities deliver superior market insights that guide spanning capabilities. In contrast, the capabilities of internally oriented organizations are poorly guided by market considerations.

Effective market intelligence generation and dissemination, responsiveness to market intelligence, sales processes, and new product development processes are examples of capabilities that support a valuable market position and permit organizations to deliver superior value to customers in a cost-effective way.

Managing these processes so they cannot be readily matched by competitors is very different from managing vertical functions in a traditional hierarchical organization. Many internal boundaries must be crossed and relevant market intelligence should be readily available to all departments.

Market Intelligence helps achieving a better Sales Performance

Academic research proposes that greater collaboration between sales and marketing has benefits to the organization and improves business performance. Empirical evidence indicates that the reduction of interdepartmental conflict and effective market intelligence systems are important antecedents to effective collaboration between sales and marketing. Both sales and marketing have the goal of selling products and services. The two need to be integrated in order to build customer relationships and to boost revenue.

Market intelligence is a process upon which both sales and marketing should focus to achieve joint success, and it proposed to support collaboration. With the growth of competition in many markets, there is an urgent need to develop the collaboration of sales and marketing to improve business performance. Research indicates that gathering, analysis, and dissemination of market intelligence provides a method of improving organizational learning between sales and marketing.

Benefits of Market Intelligence for Sales and Marketing

Improving market intelligence is beneficial to both marketing and sales, and they should therefore be motivated to develop this area together. However, many organizations fail to develop systems to analyze customer and competitor intelligence. If marketing and sales do not cooperate, the company’s strategy will be inconsistent and execution will be flawed.

In many organizations, market information may be available, but organizational structures and processes fail to facilitate prompt and meaningful market information exchange. Market intelligence is important to all organizations, as it allows them to focus their activities on customers more efficiently.

The Impact of Market Intelligence on Innovation and Performance

A market-oriented culture facilitates organizational innovativeness, and this relationship appears even stronger in turbulent environmental settings. In turbulent environmental settings, organizations with superior market intelligence exhibit superior responsiveness, typically through organizational innovativeness, in dealing with the turbulences in the environment.

Being oriented toward markets provides a source of ideas for change and improvement.

Organizations with a greater capacity to innovate are able to develop a competitive advantage and achieve higher levels of business performance. A market- and learning oriented culture promotes innovation as part of an organization’s culture.

Inputs of market intelligence are essential to successful product and process innovation. They can be expected to have a positive impact on company competitiveness. At the same time, small firms are often unsuccessful as exporters because they depend entirely on incidental and personal market intelligence and fail to invest in systematic or representative methods for understanding new and different markets.

The Importance of Market Intelligence for Export-Oriented Organizations

Export intelligence generation includes all activities which constitute the creation of export market intelligence (e.g., export market research) and which are focused towards export customers, competitors, and the environmental changes in international markets. Export intelligence can be generated by international market research providers as well as organizational departments (e.g., marketing).

There is a strong evidence to show that export market intelligence can lead to superior performance in export markets. For organizations concerned with growing their business in international markets, distance to market is a challenge to be overcome.

For export-oriented organizations, distance to market implies risk, cost and ambiguity. The costs associated with overcoming distance are well known. The international expansion of organizations is constrained by the imposition of learning and coordination costs associated with overcoming geographic, cultural and psychic distance. Market-oriented organizations attempting to understand needs of international customers, measure customer satisfaction, target competitor’s weaknesses, and provide service in international markets will be handicapped to the extent that their customers and competitors speak different languages and conduct their business according to different rules of the game.

While exposure to international customers bring benefits in the form of access to new marketing ideas, the pursuit of multiple international markets inevitably raises the demands placed on managers for doing the things that lead to a market orientation. Organizations operating within large domestic markets will find it easier to generate market intelligence and cultivate market orientation than companies selling to customers scattered across international markets.

Market Intelligence helps to cope with Market Diversity.

In markets characterized by rapid change and low growth, market intelligence generation und utilization will have a greater impact on organization’s performance. Diversity of markets hampers attempts to cultivate a focused market orientation. The market intelligence performance link represents one of the most significant advances in recent marketing research. Three such sources of influence – distance to markets, dependence on international markets, and the diversity of markets served were found to have a significant and negative impact on the level of market orientation among organizations.

Outside Expertise for Market Intelligence Generation

Decision-making is becoming an increasingly complex process. And market intelligence generation becomes more important, since there are ever more unknowns coming into the decision-making process. This puts a great strain on market intelligence generating resources, a need to which organizations must be responsive.

Countless studies have shown that greater competitiveness is associated with the use of outside expertise and information in the form of management services, and information about markets, competitors, and customer needs.

How to Measure the Degree of Market Orientation?

The market orientation measure assesses the degree to which organizations engage in market intelligence generation activities, disseminate this intelligence vertically and horizontally, develop and implement marketing programs on the basis of the intelligence generated. One of the key attributes of this measure includes focus on customers and the forces that drive needs and preferences.

Managerial Recommendations:

To manage a company well is to manage its future; and to manage the future is to manage information. In proportion as the accuracy of forecasting and market intelligence is improved, in the same proportion will the survival and growth probabilities of the organization be enhanced. Good forecasting and market intelligence require vast amounts of the highest-quality data. The systematic generation and evaluation of such data will greatly improve the quality of forecasting and market data available to organizations.

In summary, a market-oriented corporate culture and a proper generation, dissemination, and utilization of market intelligence are significant factors in achieving superior sales and business performance. The most distinctive features of market-oriented organizations are their mastery of the market intelligence generating capabilities.

Regular and systematic market intelligence generation will help your organization to understand your customers’ needs, analyze your company’s performance against competition, understand your long-term growth opportunities in your domestic and international markets, and develop a high-performing organization.

We help you to understand your customers’ needs in your domestic and international markets, analyze your company’s performance against competition, understand your long-term growth opportunities, train your salesforce in market intelligence, and develop a market-oriented organization.

For market intelligence, market orientation and customer centricity program consulting and implementation enquiries please contact:

Inna Hüessmanns, MBA

E-Mail: ih@i-g-solutions.de

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The Value of Market Intelligence for Business Success

The Value of Market Intelligence for Business Success

market intelligence

Market Intelligence / by Inna Hüessmanns

11. November, 2020

Moving to a market intelligence driven organization will give companies a better chance of outperforming competition.

Despite large investments in acquiring customer and market intelligence, many companies underutilize what they know. In some cases, information is held within some departments, often because of a lack of trust and the silo mentality.

Despite companies’ investments in digitalization and CRM technology, many of them still face declining customer satisfaction and sales revenues. Many organizations are now going through downsizing, restructuring, and cost cutting. Customers’ expectations and buying processes have changed dramatically in the last few years and they change faster than many companies can successfully respond to those changes. As a result, organizations need to cope with more information, rising customers’ expectations with regard to salesforce knowledge, and the faster speed of response.

Companies must continually maintain and update their market intelligence, that is customer intelligence, competitor analysis and industry insights.

However, too few industrial B2B organizations have market intelligence departments. Too often market research information does not find its way down to the sales departments or is not maintained. Surprisingly many companies do not have the full knowledge about their competitors, their customers, and even about their industries.

For organizations, to cope with the rapidly changing business environments and to be successful in the markets, they must know more and utilize real-time market data.

The more detailed knowledge of customers and markets the companies will have, the better they will be able to perform. Market intelligence involves not only an understanding of the customer but also identifying new and long-term business growth opportunities.

Many organizations believe that business growth is a matter of continued product research and improvement. The value of market intelligence for companies’ success is often not understood. The view that a business is a customer-satisfying organization, not a goods-producing organization, is vital for all businesses to understand.

A business success begins with a customer and his or her needs. Despite all the discussions about customer value, few industrial companies have actually done customer value research, which requires time, analytical and strategic thinking skills.

Today, companies face their toughest competition and a rapidly changing business environment ever.

Moving from a product focused organization to a market intelligence driven organization, however, will give companies a better chance of outperforming competition.

Sales declines for a number of reasons. One of those reasons is that companies’ sales and growth strategies are not based on a thorough analysis of their customers, competitors and their industries.

 
 
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The Importance of Relationship Management for B2B & B2C Sales Organizations

The Importance of Relationship Management for B2B & B2C Sales Organizations

relationship management

SALES EXCELLENCE / by Inna Hüessmanns

10. November, 2020

Strategic relationship management can help companies to obtain and sustain a significant competitive advantage – some features of its relationships that other firms cannot easily replicate.

One of the major reasons why many sales organizations do not perform well, lose their customers to competition or underperform in new business development is poor customer relationship management.

Many firms know that they are serving unprofitable customers or losing their customers to competition, but very few analyse their customer relationships on a case-by-case basis or make sufficient investments in their customer relationships on whose future they depend.

Many companies focus on developing and maintaining strong relationships with tactical customer employees, such as purchasing managers. While it is important to develop such relationships, the strategic customer relationship management approach should consider firmwide relationships – parallel linkages between functional and management areas of the company and its customers.

Successful customer relationships are crucial to the firm’s performance.

Without relationships neither companies nor their customers can continue to trade. The question which companies should answer is how to manage their customer relationships to retain competitive advantage and maintain business growth in times of COVID-19, digitalization, globalization and an uncertain business environment.

Any company has a variety of business relationships. A company’s relationship with its bank is different to that which it has with its customers. Relationships with large strategic customers will differ from those with small ones.

A good sales experience starts by getting the basics right.

Companies should examine how they are performing by asking the basic questions:

  • What are our critical business relationships?
  • Who are our strategic accounts?
  • What things are our sales people doing that could damage our critical customer relationships?
  • Do we have companywide relationships with our critical customers? Do we have a deep understanding of customers’ buying centers?

The development of successful customer relationships is vital for each company. To manage this process effectively, it is important to implement a strategic customer relationship management approach. This approach should start by identifying the strategically important relationships. The wider and deeper the company’s effectively managed customer relationships, the higher the customers’ emotional costs of switching to the firm’s competitors.

In other words, companies should begin to manage their customers as a portfolio of relationship assets.

Many companies understand that change is needed, but they do not understand how to bring about change. Sales effectiveness means performing sales activities better than competitors can perform them.

Strategic relationship management approach and a relationship management portfolio can help companies to obtain and sustain a significant competitive advantage – some features of its relationships that other firms cannot easily replicate.

Some companies have obtained a competitive advantage by developing distinctive relationships in the areas of the world that others have found difficult to penetrate. Companies must shift their focus from transactional to strategic relationship management approach to maximize customer lifetime value. The key distinction between a traditional and a strategic relationship management company is that one is organized to push products whereas the other is designed to serve customers. The traditional sales organization must be reconfigured as a strategic customer relationship management organization that puts building customer relationships ahead of pushing products and their technical features.

Organizations that have successfully implemented change management initiatives have something in common. They continuously and thoroughly assess their situations. Customers are continuously changing the way they buy and the ways in which they want to conduct business. Globalization has also lead to more complex customer relationships.

It is, therefore, necessary for companies to reexamine their sales organizations to find out what is happening there today and to be better equipped for the future.

The customer relationship management assessment tools and metrics developed by us assess the quality of company’s customer relationship management according to different criteria.

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Is Your Sales Organization Becoming Obsolete?

Is Your Sales Organization Becoming Obsolete?

change

CHANGE / SALES EXCELLENCE / by Inna Hüessmanns

11. November, 2020

Changes in the marketplace can render sales organizations obsolete and make their resources and capabilities less valuable for customers.

Today, businesses operate in a global competitive environment where customers demand more value for less money, and where value propositions are short lived. The recent pace of technological innovations and disruptions increase market pressures on companies. In this environment, organizations’ ability to respond to market changes fast and effectively is crucial.

Since environmental change is continuous, companies must regularly examine their markets and their sales organizations and develop new skills and competencies. Changes in the marketplace can render sales organizations obsolete and make their valuable resources and capabilities less valuable for customers.

This obsolescence requires change. Companies’ task is to understand the root causes of obsolescence and to manage change successfully.

In addition to the market driven necessity to change, in each phase of the organizational growth companies need different sales capabilities, strategies and structures.

Like products, companies have different life cycles. What works in the start-up stages of the business may not work in the mature stages of big companies. As companies and their sales organizations grow and evolve, they must develop new capabilities and structures. In the start-up phase, many companies focus on new business development. As a result of this focus, other competencies are often ignored and the seeds for future problems can be planted.

As companies grow, their sales increase. During these success stages, companies can be blind sighted by their success. Signs of obsolescence can be neglected and no attention can be given to long-term growth strategies or internationalization strategies. In many cases, short-term planning and thinking dominate and new future problems can be born. The international expansion stages will require new sales structures and the set-up of international sales organizations. This also requires change. To cope with all these challenges, companies and their sales organizations must become agile and adaptive to change in every stage of their life cycle.

However, experience indicates that many change initiatives fail.

Companies’ ability to continuously evaluate their business from the customers’ perspective, realign resources and build new capabilities is crucial for any sales management change program. But sales change management  involves more than a customer and a market orientation. Any change initiative begins with the company’s culture. Companies must involve their frontline sales employees in their change management programs und communicate to their salespeople why change is necessary.

Change programs can have a negative impact on salespeople job satisfaction and job performance. When organizations involve their salespeople in their change initiatives at the beginning, they encourage salespeople to contribute and adjust their work approaches during the change initiatives. Sales employees should understand why change is necessary and be trained accordingly to cope with change.

During the change programs, salespeople operate in stress environments. They must understand how change will increase the effectiveness of the sales organization and lead to job security. On the other hand, if the salespeople learn that markets and customer requirements are changing but their organizations remain bureaucratic and don’t implement any change or adjust their processes and strategies accordingly, then the salespeople can become dissatisfied and less committed to their organizations.

Additionally, to be successful with change initiatives, sales organizations must not only redesign their structures, incentives, and sales strategies. Companies need to develop a learning sales organization.

A market orientation is the fundament of the agile and learning sales organization. Sales change management programs must systematically realign sales resources, competencies, and capabilities to serve customers effectively. Customer satisfaction is one of the key outcomes of a learning sales organization.

Sales organizations who are able to utilize the market information and continuously learn and adapt to change faster than their competitors will develop significant competitive advantages.

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