Week 1: Narver & Slater (1990) The effect of a market orientation on business profitability

Question 1

What is the core of this definition and how is it related to marketing and the marketing concept?

Answer 1

The marketing concept is satisfaction of needs and understanding the market and the MO is an addition to it and get a grip on what is going on. The marketing concept is not the strategy, but the underlying thinking on how to become successful in the marketplace

Question 2

Why is it important to measure this concept?

Answer 2

Market Orientation leads to better market performance because it is crucial for creating sustainable superior customer value (=SCA). Furthermore, there is a relationship between market oriented and the profitability of a company, looking like a U-shape. High market orientation = high external focus = high profitability and low market orientation (efficient companies, choosing for an internal view) have also high profitability. Because of this relationship it is essential to get more insights in market orientation and the way of measuring.

Question 3

Can you explain why some companies benefit more from (investments in) Market Orientation than others?

Answer 3

or Commodity business (mass product; raw material) the relationship between market orientation and profitability will be U-shaped: this because they perceive that increasing their market orientation could be substantially costly and thus unattractive for the short run. For non-commodity business (f.e rare, unique items) has a linear line and the more market orientation is done, the more ROA.