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Unlock This CourseWhen businesses create products or services, they need to decide what to focus on. Should they concentrate on making the best possible product, or should they focus on what customers actually want? This fundamental choice shapes everything a company does - from research and development to marketing and sales.
Think about it like this: imagine you're opening a restaurant. You could either focus on creating the most technically perfect dishes using the finest ingredients (product orientation), or you could research what local people want to eat and create a menu based on their preferences (market orientation). Both approaches can work, but they lead to very different business strategies.
Key Definitions:
Market-oriented businesses start with the customer. They conduct surveys, focus groups and market research to understand what people want. Then they design products to meet those specific needs. Companies like McDonald's constantly research customer preferences and adapt their menus accordingly - that's why you'll find different items in different countries!
Product-oriented businesses start with what they can make well. They focus on technical excellence, quality and innovation. Apple is famous for this approach - they often create products that customers didn't even know they wanted, like the original iPhone, which revolutionised mobile phones.
Market orientation puts the customer at the heart of everything. These businesses believe that success comes from understanding and satisfying customer needs better than competitors do. They spend significant time and money researching their target market.
Market-oriented companies follow a clear process. First, they research their customers extensively. This might involve surveys, interviews, focus groups, or analysing buying patterns. Next, they use this information to design products that meet identified needs. Finally, they continue monitoring customer satisfaction and adapt their offerings accordingly.
Companies conduct market research to understand customer needs, preferences and buying behaviour. This includes surveys, focus groups and data analysis.
Products are designed and developed based on research findings. Features and specifications match what customers have said they want.
After launch, companies continue gathering customer feedback to improve products and develop new ones that better meet market needs.
Tesco demonstrates strong market orientation through its Clubcard loyalty scheme. By tracking customer purchases, Tesco learns what different customer segments want. This data helps them decide which products to stock, where to open new stores and how to personalise marketing. When customers wanted more healthy options, Tesco responded with their "Finest" and "Free From" ranges. When convenience became important, they opened Tesco Express stores in busy locations.
Product orientation focuses on creating the best possible product, often driven by the company's technical expertise and capabilities. These businesses believe that if they make superior products, customers will want to buy them.
Product-oriented companies start with their strengths and capabilities. They invest heavily in research and development, focusing on technical innovation and quality improvements. They often lead their markets by creating products that set new standards or solve problems in innovative ways.
Heavy investment in research and development to create cutting-edge products that push technological boundaries and set industry standards.
Emphasis on superior quality, craftsmanship and technical performance. Products are designed to be the best in their category.
Companies often become market leaders by creating products that define new categories or significantly improve existing ones.
Dyson exemplifies product orientation through its focus on engineering excellence. James Dyson spent years perfecting his revolutionary vacuum cleaner design, creating over 5,000 prototypes before launching. Rather than asking customers what they wanted in a vacuum cleaner, Dyson identified a technical problem (loss of suction) and engineered a solution. This product-oriented approach led to the bagless vacuum cleaner that transformed the industry. Dyson continues this approach with hand dryers, hair dryers and air purifiers - always focusing on superior engineering rather than market research.
Both orientations have distinct advantages and disadvantages. Understanding these helps explain why different businesses choose different approaches and when each might be most effective.
Many successful businesses use elements of both orientations, adapting their approach based on circumstances, industry conditions and competitive pressures.
The technology sector shows both approaches clearly. Google uses market orientation for many services, constantly testing user preferences and adapting features based on usage data. However, they also use product orientation for breakthrough innovations like self-driving cars, where they're creating entirely new markets.
Netflix demonstrates how companies can blend both orientations. They use extensive market research and data analysis to understand viewing preferences (market orientation), but they also invest heavily in original content creation, sometimes backing unusual projects that traditional market research might not support (product orientation). Their algorithm-driven recommendations represent market orientation, while their bold original series like "Stranger Things" show product orientation in action.
The choice between market and product orientation depends on several factors including industry type, competitive environment, company resources and market maturity.
Best for mature markets with established customer needs, competitive industries where differentiation is difficult and businesses with limited R&D resources.
Ideal for emerging technologies, industries with rapid innovation, companies with strong technical capabilities and markets where customers can't articulate future needs.
Many successful companies combine both orientations, using market research to guide improvements while investing in breakthrough innovations for future growth.
Different industries favour different orientations. Fast-moving consumer goods companies often use market orientation because customer preferences change frequently and competition is intense. Technology companies might use product orientation when developing cutting-edge innovations. Service industries typically lean towards market orientation because customer experience is paramount.
When analysing a business's orientation in exams, look for evidence in their actions: Do they conduct extensive market research? Do they adapt products based on customer feedback? (Market orientation) Or do they focus on technical innovation and quality improvements? Do they create products that customers didn't know they wanted? (Product orientation) Remember, most successful businesses use elements of both approaches at different times.