The effect of market orientation on bussiness profitability(report)
MKT420 (PRINCIPLES AND PRACTICE OF MARKETING)
THE EFFECT OF MARKET ORIENTATION ON
IZZAH AZIMAH BINTI NOH
CHE MOHAMAD AZRUL BIN CHE LAH (2012102157)
MUHAMMAD ARBAIN BIN MAT YUTI (2012930753)
ZULKHANAIN BIN MAT ZAIN
MUHAMAD AZLAN BIN ABDULLAH
AS247- BACHELOR OF SCIENCE (HONS.) FURNITURE TECHNOLOGY
DR. WAN KALTHOM BINTI YAHYA
UNIVERSITI TEKNOLOGI MARA, (UiTM) KAMPUS KHAZANAH ALAM
TABLE OF CONTENT
TABLE OF CONTENT
What Is Market Orientation?
Key Element Of Market Orientation
1) Target Market
2) Customer Relationship
3) The Marketing Team
Market Orientation Component
Market Orientation Concept
- Concentrate On Customer Needs And Wants
- Combines All Organization Activities
- Achieve Long-Term Goals
What Is Business?
What Is Business Profitability?
THE EFFECT S OF A MARKET ORIENTATION ON BUSINESS
Tools For Gaining Business Profitability
More Suitable For Big Organization Or Company
Assist To Predict The Customer Change
High In Cost
The study about market and what is exactly it is; the place for people purchase and
sales product and services. Market orientation to internally oriented approaches stressing
productive efficiently, selling and promoting.This study the effect of these different emphases
on profit performance. The effect indicates to the customer needs has a positive association
with profitability(Kohli, 1996).
Market orientation is the theory or principles behaviour seize that a sales does not be
rely on an aggressive sales force but more precisely on a customer decision(Philip Kotler,
15th Edition). We simply study about differences between market orientation and marketing
orientation. In pair of to identify the market orientation component; customer orientation,
competitor orientation and interfunctional coordinate.
Next we discuss the expected relationship between market orientation and business
profitability. Besides, with continuing discuss the relationship between the business
profitability and market orientation. Either it is related or not, or might be other substances
that surely give an effect of business profitability towards the manufacturer(Stanley, Oct
What is market? Market is the place for people purchase and sales product and
services. Concept of market; conclude goods, services and person in charge that means seller
and buyer or manufacturer and customer.
Marketing is managing profitable customer relationship, which is created value for
customers in order to capture value from customers in return. For example, (Philip Kotler,
15th Edition). Besides, marketing also can be defined as the management process responsible
for identifying, anticipating and satisfying customer requirements profitably. On the other
hand, in marketing, manufacturer satisfy the customer’s need and wants and added the
marketing activities for a successful business in the long term.
Market orientation is a business approach or technique that focuses on identifying and
meeting the stated or hidden needs or wants of customers. The function of market orientation
is to study customer want, develop and produce those goods/ services. Other than that, market
orientation is the group of broad layer of market intelligence relate directly to current and
future needs of customers, dissemination of intelligence within an organization and
responsiveness to it (Kohli Ajay K, 1990).
Other definition of market orientation is 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 (Narver John C, 1990). Market
orientation is important to the manufacturer to learn, know and understand the space or the
competitive advantage and also stated the competitor’s weakness and strength. Explore the
concept, define evaluation criteria and highlight the implication of surrounding that effect the
manufacturer and also customer is the purpose of market orientation.
Then, we go through to the conceptual model of market orientation and performance
is must create sustainable value for the customers. It is related to the definition of marketing
and collaborates with competitive advantage which the manufacturer took an advantage by
using their speciality of the products or services by built strong relationships in order to
sustain their customer. For example, Starbucks’ give low price menu for their registered
members for purchases the food and beverage. Furthermore, it is focusing on the customer
wants and need. Again it is repeated the beginning of the stage that stated about market
orientation. They can distinguish its products from the competitors’ offering(Carl McDaniel,
What Is Market Orientation?
A theory or principle behaviour seize that a sales does not be rely on an aggressive
sales force but more precisely on a customer’s decision.
Differences between Market Orientation and Marketing Orientation
For market orientation is generally referred to the basic orientation that governs the
relationship of a firm with its market and with its customers. Market orientation is more than
just a management function as production, finance and human resources, and it represents
rather a management philosophy that should guide the overall organization. Next, marketing
orientation is more treated like marketing concept and relate to the 4P which is focusing on
customer orientation(Jean-Jacques Lambin, 2000).
Market Orientation Component:
1) Customer orientation
2) Competitor orientation
3) Interfunctional coordination
Key element of market orientation
There are also form base on the key element of market orientation(Hugo Daniel, 2010):
The customer relationship
The marketing team
1. Target market
Is a starting point of trying and discover what customers actually want. It is refer as
primary stage in market orientation elements. It is look for current probability of
current needs and the future of the needs.
2. The customer relationship
Is the extension of marketing to a customer with the expectation of a long term
relationship? In this extension they segment their target markets to the small ‘portion’
of customer or individual customer.
3. The marketing team
An organization need to work with other departments and concentrate to the
organization effort on selected market.
4. Business profit
The organization tries to make profit with what their work on.
Market Orientation Concept
Market orientation concept is the thought that the social and economic justification for an
organization’s existence is the satisfaction of customer wants and needs while meeting
organizational objectives(Carl McDaniel, 2006). In marketing there are have three simple
concepts must be following:
Concentrate on customer wants and needs
Combine all the organization activities
Achieve long term goals
Concentrate On Customer Needs and Wants Concept
Basic fundamental of market orientation is the important of market activity that most
interest and give more attention. That means, market orientation give effect on business
profitability based on their purpose; they focusing on what customer want and need so that
the organization can distinguish its product from competitors’ offering. For example, if we
talk about Maybelline we already know it is all about cosmetic product products. In fact
Maybelline meet and interview at least 15,000 customers every year to keep track customer
perception and knowledge of the brand. They actually test the market of a new product before
the products actual widely come out for market. So, they might know the future of the
product although the product is not already sold. During them doing this interview or meeting
session they identified the needs and wants and also determine the failure of the product and
try took the competitive advantage for the products.
Implementing of this concept may assist the rate of profit in the manufacturer
business. It is challenge the competitor; on weakness and strength. Also the flow of products
comes out from the stores depending on customer’s decision to purchase the products.
Furthermore, the product will be change along the season base on customer’s ability to buy
and needs. Other than that, the seller’s or manufacturer follows the customer’s desire for the
product. By this, buyer or customer may highly conclude that they’re have been appreciate by
the effort of the seller.
In fact, the value of a seller’s offering to a buyer is the difference between what the
buyer perceives as the offerings expected total acquisition and use coasts(Zeithaml, 1988).
The market orientation concept generously can be said as the organization culture that most
effectively creates behaviours for the creation superior value for buyer. A seller creates value
for a buyer by increasing benefits to the buyer in relation to the buyer’s costs and decreasing
the buyer’s costs in relation to the buyer’s benefits. For the simple explanation that means
seller or manufacturer understand enough the buyer’s economic.
Combines All Organization Activities
In organizational activities of the seller, they combine of the activities only for their
customer. They tend to make it possible based on customers need and want. If the customer
need to buy the product by the seller based on their economic rate, the seller must followed
the customers demand. Besides, the seller must satisfy the customer for their own benefit.
Example for the demand of perfumes, Body Shop brand come out with apple blossom
flavour with high price for customer to purchase and the ingredient content is might not be
allowed for the certain customer; that means the ingredient have high in percentage of alcohol
content which is not suitable for Muslim customers or might be can cause skin irritation. So,
the other company such as One Drop Perfume taka the weakness of Body Shop (competitor)
as advantage and come out with ‘Apple Blossom’ inspired by Body Shop. It is not as
plagiarize the Body Shop flavour perfume but it’s come out with the same flavour which is
inspired by Body Shop with different ingredient based on seller’s consider about the
In addition, the One Drop Perfumes think wisely not to invest more on promote their
product. It is because the apple blossom is already well known for the Body Shop brand. That
means, they take the competitor weakness as their strength to be also well known in the
Achieve Long-term Goals
Refer to the focusing or concentration on customer needs and want and combines all
organization activities may conclude to achieve long-term goals. Achieving long-term goals
for the organization by satisfying customer wants and need legally and responsibly(Carl
McDaniel, 2006). Perhaps, the organizational planning based on all key elements in market
orientation helps the increases of business profit and can be in the market for the long term.
What Is Business?
Business is the organization that involved in the trade of goods, services or both to
consumer with exchanged for one another or for money. Indeed, market is the places of
business have done.
What Is Business Profitability?
In market orientation concept has achieving organizational for long-term goals.
Business profitability is the primary goal of all business ventures. Without Profitability
Company, organization or business will not survive for the long-term of the business stand in
market place.Income and expenses is the rate profitability. The activities in the business can
be generating by the income (money). Income also can be defined as simply a cash
transaction between the businesses. Other explanation is, people or customer buy the product
from the seller and the get the product. For the same time, the seller gets the money as an
income of the selling product.
End user demands or customer demands is the major determinants to create the
potential for economic gains and again it is the same definition of profitability. Other than
that, the customer demands may be utilize profitability, but are also a source of uncertainty.
Utilizing or exploiting the opportunities will often require transaction specific investment
based on the production facilities and marketing channel that committed to the certain group
From exploiting profitability it might go through to the expenses gain for profitability.
Expenses are the cost of resources used up or consumed by the activities of the business of
the business. For example, wheat seed is an expense of a farm business because it is used up
in the production process. Followed by that, business profitability is measured with an
‘income statement’(McGraw-Hill, 1996):
Sale of crop products
Sale of livestock products
THE EEFECTS OF A MARKET ORIENTATION ON BUSINESS PROFITABILITY
Tools for Gaining Business Profitability
Market orientation and business profitability have been explained previously and it
can be assumed that this isrelated to each other. Based on market orientation organization
behaviours; customer orientation, competitor orientation and interfunctional coordination also
may developed the business performance(Stanley, Oct 1990).
business profitability is
orientation and business
market orientation with
by Narver& Slater’s (1990) stated that market orientation and
retested in a broad sample. The result show that the market
profitability it is positively related between them. Application of
continuously or rapidly in business may provide increasing on
We close up to the market orientation concept which is concentrate and ensuring the
customers’ needs and want, fulfil the customer satisfaction. It is stated that there consist
connection between business profitability and market orientation. By using the all elements in
the market orientation, it might be proving that the uses in the organization with highest
degree of market orientation may have the highest profitability. Market orientation and firm
performance stated that achieve greater financial returns from advance quality by stressing
generation income only, along with its highlighting focus on customer satisfaction(Roland T.
The organization used to follow on market orientation; they apply the market
orientation to gain the business profitability for the long-term. In fact, if there any
organization refuse or not use the market orientation as their based in business, it is also can
gain profit but need or took long period for gain their business profitability. For example,
Nokia 3310 a Germany cellular phone model which is OS type is still available sell and used
by the buyers until today but they need keep going sell their product without consider with
the customers satisfaction. Whereas, the other cellular phone company such as Samsung and
HTC struggle to compete each other in producing touch screen and Android software type of
cellular phone for crave in return of customers and highly tend to satisfy the customer based
on their current needs.
More Suitable For Big Organization or Company
Although market orientation make the company increasing gain business profitability,
it is not suitable for small medium entrepreneur (SME) company and dog’s stages in BCG.
The fact is, small company usually produced only one product for the long of market period.
It is because, the small company are divest or low-growth, low share business and
products(Philip Kotler, 15th Edition). They may generate the production with enough cash to
maintain themselves but do not promise to be large sources of cash, also called as break-even.
Break-even is the point at which revenues equal expenses(Goodman, 2011).
So, if they tend to follow the market orientation, they will face many problems
especially on business profitability. They will suffer with liability losses and decreasing on
business profitability. Moreover, based on PLC they can be determining as growth stage of
sales and profits. They are in rapid market acceptance and try to keep sustaining for
increasing their business profitability.
Assist To Predict the Customer Change
When we know what customer needs and wants, we may realize the change based on
past and current sales. For example, people outfit, they wants product (clothes) which is in
trend and up-to-date. So, the company try to produce products based on what they want.
Indeed, many factor that assist the organization to predict the customer change such as
climate, competitor and etc.
Climate or season may give an advantage to the organization in focusing and make it
the product reliable and possible to the customer hand. By using the market orientation they
try to make the product been sold to the customer and because of this it might be come out
with the best business profitability rate.
High in Cost
Application of market orientation could affect the cost of the organization. The
organization need to follow the concept of market orientation concept; concentrate on
customer need and want, combines all organization activities and achieve long-term goals. If
the organization practises this concept it might be interfere in sort of high cost preparation
and also production. They need to keep going upgrade and produce the product(Kohli, 1996).
Connection between market orientation and the business profitability can be conclude
as link or related to each other. Actually, element and concept of market orientation assist the
organization to gain business profitability and motivate the organization or seller to be
progressive production to keep them stable and sustain their profitability in the long period.
Besides, organization are able to works and establish and also maintaining which give an
advantage to the customer. For example, organization able to reward the customer such as
low price products to purchase for the membership holder, give the membership card to the
loyal customer and etc.
By following the market orientation, tendency of an organization to legally,
willingness and responsible to examine the information which related to the competitors.
Moreover, marketing products will run and flow smoothly in production regarding to build
the higher business profitability.
In a nutshell, an organization will know their ability and strength. Seller must
understand enough with the market orientation purpose which is a sales does not depend on
an aggressive sales force, but rather on customer’s decision either they want to purchase the
products or not.
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