Retail market

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Retail market

  1. 1. International Journal of Retail & Distribution ManagementEmerald Article: Retail market orientation: a preliminary frameworkUlf ElgArticle information:To cite this document: Ulf Elg, (2003),"Retail market orientation: a preliminary framework", International Journal of Retail &Distribution Management, Vol. 31 Iss: 2 pp. 107 - 117Permanent link to this document:http://dx.doi.org/10.1108/09590550310462001Downloaded on: 16-10-2012References: This document contains references to 47 other documentsCitations: This document has been cited by 10 other documentsTo copy this document: permissions@emeraldinsight.comThis document has been downloaded 1841 times since 2005. *Users who downloaded this Article also downloaded: *Hans Eibe Sørensen, (2009),"Why competitors matter for market orientation", European Journal of Marketing, Vol. 43 Iss: 5 pp. 735- 761http://dx.doi.org/10.1108/03090560910947025Anthony Foley, John Fahy, (2009),"Seeing market orientation through a capabilities lens", European Journal of Marketing, Vol. 43Iss: 1 pp. 13 - 20http://dx.doi.org/10.1108/03090560910923201Sandy Bond, (2011),"Barriers and drivers to green buildings in Australia and New Zealand", Journal of Property Investment &Finance, Vol. 29 Iss: 4 pp. 494 - 509http://dx.doi.org/10.1108/14635781111150367Access to this document was granted through an Emerald subscription provided by E M LYONFor Authors:If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service.Information about how to choose which publication to write for and submission guidelines are available for all. Please visitwww.emeraldinsight.com/authors for more information.About Emerald www.emeraldinsight.comWith over forty years experience, Emerald Group Publishing is a leading independent publisher of global research with impact inbusiness, society, public policy and education. In total, Emerald publishes over 275 journals and more than 130 book series, aswell as an extensive range of online products and services. Emerald is both COUNTER 3 and TRANSFER compliant. The organization isa partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archivepreservation. *Related content and download information correct at time of download.
  2. 2. IntroductionRetail market Previous studies have stressed that marketorientation: a orientation has various implicationspreliminary framework depending on the type of business, market and company (Cadogan et al., 1999; Greenley, 1995; Harris and Piercy, 1999;Ulf Elg Mavondo, 1999). This makes it especially remarkable that studies on market orientation focus so much on manufacturers and that the predominant frameworks of Kohli and Jaworski (1990) and Narver and Slater (1990) appear suitable mostly for large manufacturing companies with no regular or personal customer contacts. Retailing involves a number of characteristics and The author challenges that makes it a business that is indeed different from most manufacturingUlf Elg is Associate Professor in the Department of industries (Dawson, 2000a; Gilbert, 1999).Business Administration, School of Economics and For one thing, the total offer to the customersManagement, Lund University, Lund, Sweden. is different and more complex, involving a mix of services, facilities and products, and Keywords the challenge to give the consumer a uniqueMarket orientation, Retailing, Alliances and distinct combination of this (Burt and Carrelero-Encinas, 2000). Retailers also get Abstract more central positions in many industries due to an increasing degree of concentration andExisting market orientation frameworks are based mostly internationalization, the successful launchingon studies of manufacturers. Therefore, there is a need ofa modified approach that acknowledges the special of retailer brands, and the fact that overallconditions for retailers. A framework is presented that they control more and more of the value-includes both internal and relational aspects. Inter-firm adding functions within the distribution chainmarket orientation is presented as especially relevant for (Burt, 2000; Dawson, 2000b; Harvey, 2000;retailers. Antecedents to market orientation on a Wileman and Jary, 1997). In all, thisrelationship level are also considered. Kohli and emphasizes the need of a betterJaworskis three basic components are used, but the understanding of market orientation in a retailpaper then discusses indicators that are especially useful context.in order to capture market orientation in a retail context. Retailers are also networking organizations.The suggested framework is further developed using a The fact that products come from a largecase study of a major British food retailer. number of suppliers and that a retailers total offering to a large extent depends on its ability to coordinate a vertical chain of activities and Electronic access actors, makes it even more different fromThe Emerald Research Register for this journal is manufacturing (Dawson, 2000a). This alsoavailable at implies that a market-oriented retailer cannothttp://www.emeraldinsight.com/researchregister focus only on internal aspects, but also has toThe current issue and full text archive of this journal is consider how inter-firm activities and externalavailable at relationships influence market orientation.http://www.emeraldinsight.com/0959-0552.htm Therefore, this paper emphasizes inter-firm An earlier version of this paper was presented at the 11th International Conference on Research in the Distributive Trades, Tilburg, The Netherlands, 27-29 June 2001. The author wishes to thank The Swedish Council for Research in HumanitiesInternational Journal of Retail & Distribution ManagementVolume 31 . Number 2 . 2003 . pp. 107-117 and Social Sciences, Jan Wallanders and Tom# MCB UP Limited . ISSN 0959-0552 Hedelius Foundation and Torsten and RagnarDOI 10.1108/09590550310462001 Soderbergs Foundation for financial support. È 107
  3. 3. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management Ulf Elg Volume 31 . Number 2 . 2003 . 107-117market orientation, referring to activities background, and the suggested framework.performed together by more that one firm in Intra- and inter-firm market orientation in aorder to make the retail system more market retail system is then discussed based on theoriented (see also Elg, 2002). Little attention explorative case study. The last part presentshas yet been paid to market orientation with some general conclusions and especiallyregard to inter-firm systems such as marketing discusses indicators of market orientation inchannels (Frazier, 1999). Being one of the retailing that can be useful in future research.few to recognize the significance of marketorientation in a distribution channel, Siguawet al. (1998, 1999) discuss how the degree of The theoretical frameworkmarket orientation of one channel memberwill influence the market orientation of Most market orientation studies derive fromanother. They also discuss how market the Kohli and Jaworski (1990) or the Narverorientation is related to other relevant and Slater (1990) framework, or adistribution channel characteristics. By combination of them (Cadogan andregarding channel market orientation as the Diamantopoulos, 1995; Deshpande and Âsum of the market orientation of each of the Farley, 1998). A prevailing research theme ininteracting companies they do, however, the 1990s has been market orientationsignore any inter-firm activities that companies impact on performance in different contextscarry out together. (Appiah-Adu, 1998; Greenley, 1995; Hart The discussion above stresses two aspects and Diamantopoulos, 1993; Jaworski andthat need to be further investigated in order to Kohli, 1993; Ruekert, 1992; Narver andunderstand market orientation in retailing. Slater, 1990; Pitt et al., 1996). In general, aFirst, there is a need to investigate the specific positive link has been found. Lately, the directactivities in retailing that contribute to market link has been questioned and different factorsorientation, because these can be expected to have been suggested as mediators, such asbe different from manufacturing. Second, innovation (Han et al., 1998; Hurley andthere is a need to consider the relationships Hult, 1998), stakeholder influence (Greenleythat the retailer is involved in. This includes and Foxall, 1998) and learning (Baker andthe inter-firm activities that retailers, suppliers Sinkula, 1999). All these studies have,and other actors carry out together to improve however, focused only on market orientationthe retail systems market orientation. It also of single firms and none has especiallyrefers to relational characteristics that may recognized the difference betweeninfluence the degree of market orientation. manufacturing and retailing companies.The purpose of this paper is thus to investigate The two main approaches to marketin what respects market orientation in retailing orientation are similar in that both highlightdemands a modified approach. It encompasses an organizations capability to follow theboth the inter- and intra-organizational levels, marketing concept, and stress the impact ofand discusses the characteristics of market market information within the organization,orientation at these two levels as well as but there are also fundamental differences.relational antecedents to market orientation in To a large extent, the Kohli and Jaworskia retail system. When discussing channel approach focuses on behaviour and actualrelationships below the paper refers primarily activities that influence an organizationsto retailer-manufacturer relationships. market orientation, whereas Narver andNevertheless, the notion of inter-firm market Slaters framework treats market orientationorientation should be applicable to other as a form of organizational culture (Beckerchannel relationships as well. and Homburg, 1999; Harris and Piercy, The suggested approach is based on 1999). This paper is based on the Kohli andprevious market orientation and network Jaworski approach. First, on an inter-firmresearch. It also draws upon an empirical level it appears more feasible to capturestudy of a major British food retailer. This behaviour than cultural aspects. Furthermore,study illustrates the suggested theoretical previous studies have supported theapproach and helps to identify activities that applicability of the MARKOR-scale of Kohliare specific for retailing and that can serve as et al. (1993) in different contexts (Hart andindicators of retail market orientation. The Diamantopoulos, 1993; Selnes et al., 1996)next section presents the theoretical and also in retail and marketing channel 108
  4. 4. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management Ulf Elg Volume 31 . Number 2 . 2003 . 107-117settings (Harris, 2000; Harris and Piercy, degree of market orientation. In fact, it is1999; Siguaw et al., 1998; Soehadi et al., likely that all three components suggested by2001). However, these studies have not Kohli and Jaworski can be found at the inter-re-investigated the nature of market firm level as well, and especially withinorientation in retailing with regard to the channel relationships. Once again, however,specific characteristics of this business. their indicators will be context-specific. On the single firm level, market orientation Intelligence generation may take placeis therefore regarded to involve: through joint activities involving several . . . the organization-wide generation of market different members of a distribution network. intelligence pertaining to current and future When studying this it is important to capture customer needs, dissemination of the all the arenas where company representatives intelligence across departments, and cooperate in order to gather customer data. organization-wide responsiveness to it (Kohli and Jaworski, 1990, p. 6). One example is when a trade association gathers general information about, forThese components have been used in a large instance, consumer trends, shoppingnumber of studies made at the organizational behaviour or demographic conditions.level (e.g. Deshpande and Farley, 1998; Â Another one is jointly owned venturesHarris and Piercy, 1999; Kohli et al., 1993; responsible for intelligence generation andRuekert, 1992). This paper explicitly takes a environmental supervision in order to developretailing perspective. On the individual firm new products. These vehicles for intelligencelevel, it is assumed that the three components generation can easily be neglected whenproposed by the Kohli and Jaworski focusing only on the behaviour and attitudesframework are also valid for retail firms. This of individual companies.assumption is supported by the research of Furthermore, it is likely that intelligenceSiguaw et al. (1998, 1999). In accordance dissemination in a retail system will influencewith Cadogan et al. (1999) and Cadogan and its overall market orientation. If the membersDiamantopolous (1995) it is thus assumed exchange data about consumers, each of themthat the basic three components of the will gain better knowledge of consumer wantsconstruct do not change when it is applied and needs. Again, a trade association can bewithin a new setting, but that the possible an arena where such interorganizationalindicators and items that should be exchange of information about marketconsidered will be different. Consequently, conditions, customer preferences, etc., takesslightly modifying the measures included in place. Inter-firm intelligence disseminationthe original MARKOR-scale as carried out by may be more or less formalized. For example,Harris (2000) is not sufficient. Instead, we members of a distribution chain may jointlyneed to acknowledge more the specific nature decide to develop routines for informationof retailing, involving daily contacts with exchange that involve the whole network ofthousands of customers, the need to manage actors and make the market data that a firmcontacts with a large network of suppliers, the has access to available to all the otherneed to cover service aspects, etc. This is companies in the network. Inter-firmdone in more detail in the empirical section. intelligence dissemination can also be Activities that retailers and manufacturers demonstrated by joint investments inwithin a chain of distribution carry out computer based systems that will generatetogether can also increase the retailers market and distribute data that is a basis for quickorientation. Previous research has shown that and effective market responses in line with,a suppliers market orientation will influence for instance, the ideas of ECR. There are alsothat of the distributor, and that the market several less formalised occasions and settingsorientation of the distribution channel will where representatives of different members ofconsist of the sum of the individual members a distribution network may meet andactivities in this respect (Siguaw et al., 1998, exchange information (Stern et al., 1996). An1999). The market orientation of the channel example from Sweden is that adyad has also been found to be positively manufacturers sales-force may act asrelated to performance. As already stressed, distributors of information during their dailyhowever, this study also encompasses meetings with individual retailers.activities that suppliers and retailers carry out Responsiveness can also be more or lesstogether and that can influence the systems coordinated and collectively performed. A 109
  5. 5. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management Ulf Elg Volume 31 . Number 2 . 2003 . 107-117retailer can meet with other firms within the or improving the customer response, and bedistribution chain in order to plan the more open for discussions on their roles tomarketing activities of the channel, decide satisfy different customer demands. Thehow different activities of the value chain are market orientation of a distributor and supplierto be performed and coordinated, or to involved in a relationship has been found to bediscuss how to manage quality problems or positively related to their trust in each otherconsumer dissatisfaction caused by the (Siguaw et al., 1998). As a next step, it candistribution system. Many modern retailers, thus be expected that a higher degree of trustsuch as the Swedish company IKEA, also put will make the parties more willing to involvea lot of emphasis on controlling the activities themselves in joint activities that increase theof the manufacturers who supply them with level of inter-firm market orientation.their own branded product. Data on The division of labour between theconsumer satisfaction and consumer companies is also likely to influence marketdemands can be a decision criterion when orientation. The fact that it enables firms toplacing orders and evaluating the specialize in performing different activities ismanufacturers efforts. It can also be a basis considered a major benefit of inter-firmfor demanding a certain type of product cooperation (e.g. Ford et al., 1998; Jarillo,development from manufacturers. 1988; Webster, 1992). If a distribution A final question is how the properties of a network involves actors that specialize in thechannel relationship will influence inter-firm functions closely related to their coremarket orientation. A number of significant competences it would also support theproperties of inter-firm relationships are retailers capability to respond to the marketsuggested in the literature. The ones discussed demands. However, the division of labour andbelow have, however, been stressed especially roles within marketing channels can be moreby most previous research on networks and or less agreed on by the members, and retailerschannel relationships. Trust is suggested as a and manufacturers often have different viewsmain control mechanism for governing on who is to be responsible for what.network relationships. It is often regarded as a According to Ford et al. (1998) it is more likelyrather intangible sentiment or belief about that routines that facilitate an effectiveanother partys reliability and capability to live customer adaptation can be developed if theup to certain expectations (Moorman et al., division of labour has been institutionalized1992; Morgan and Hunt, 1994). Trust seen in within the system, because then the actors allthis light will depend on previous experiences have clear roles and get the opportunities toand cooperative efforts and on the more focus on the task they are best at.general reputation a firm has built up through Cooperation is an essential and evident partits earlier behaviour. A complementary view isto regard trust as a consequence of the long- of most interorganizational activities (Morganterm advantages that the parties gain by the and Hunt, 1994; Siguaw et al., 1999). Tworelationship being built by making visible the firms that cooperate a lot are also likely to findlong-term disadvantages that the parties would a need to adapt more to each other, exchangesuffer by behaving opportunistically (Buckley more information, learn more about eachand Casson, 1988; Elg, 2000a; Jarillo, 1988). others markets and customers, etc.In all, trust can thus be defined as a firms (Contractor and Lorange, 1988; Ford et al.,reliance on its exchange partners integrity and 1998). When the exchange involves, forpropensity to favour the long-term advantages instance, more complex products orthat the relationship provides over short-term technological issues, it can also be expected togains achieved by opportunistic behaviour. involve more employees from the twoWhen regarded in this way, trust will also organizations, and thus the number ofencompass the aspects covered by the contacts and opportunities to exchangecommitment construct as it is presented in market information will increase as well.earlier studies (Anderson and Weitz, 1992; Cooperation is, however, also about normsMorgan and Hunt, 1994). In a relationship and expectations (Anderson and Naurus,with a high degree of trust, the parties are likely 1990; Langerak, 2001). The existence ofto be less hesitant to share information. They norms and structures that reward cooperativewill also be more willing to invest in joint behaviour in general can also be expected toprojects aiming at processing market data and/ support inter-firm market orientation. 110
  6. 6. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management Ulf Elg Volume 31 . Number 2 . 2003 . 107-117 Like trust, conflicts are likely to have an impact on the retailers market orientation. influence on whether two parties in a Finally, it is reasonable to assume that the relationship are able and willing to exchange more market oriented activities the parties information and to work together in serving carry out individually, the more likely it is that the market as effectively as possible. Conflicts there will be market-oriented activities going occur if a member strives to improve its own on at an inter-firm level as well. position at the expense of other members in a distribution network, and at the expense of the efficiency and the performance of the network An empirical study of a British food as a whole. On an intra-firm level, previous retailers market orientation studies have found that interdepartmental conflict has a negative impact on market Below, results from a case study of a British orientation (Jaworski and Kohli, 1993; Selnes food retailer are presented. The aim is to et al., 1996). One explanation of this result is illustrate the theoretical discussion and to that people or departments in conflict with identify specific aspects to consider when each other are less willing to work together in making the market orientation approach general and to share information. This logic suitable for retailers. The study was appears reasonable to apply at an conducted during the autumn of 1999. It interorganizational level as well, at least when involved a series of interviews with managers referring to dysfunctional or pathological on a product group level, lasting on average conflicts (Anderson and Naurus, 1990; Stern one-and-a-half hours, complemented by et al., 1996). secondary data on various aspects of the Figure 1 summarizes the discussion. A retailers operations. The interviewed persons retailers market orientation can thus be were responsible for the general management expected to be a result of both the retailers of a product group, buying, consumer internal market orientation activities and the marketing, product development, inter-firm market orientation activities that a merchandising, development of IT-systems retailer carries out jointly with manufacturers and internal support and coordination or other partner firms. Here it is suggested between traders, buyers and marketers. The that the basic components introduced by retailer is among the top five in the UK, but as Kohli and Jaworski can be used, but that anonymity was promised, further information indicators have to develop in order to capture cannot be provided. It should be stressed that the specific characteristics of retailing. the results presented are based on the Furthermore, different relationship perceptions of the retailer and that interviews characteristics influence inter-firm market with involved suppliers may have modified orientation. They can to various degrees the picture. Still, the main purpose is to investigate market orientation from a retail stimulate inter-firm activities that contribute perspective, and therefore the views and to the level of market orientation. behaviour of the retailer can be considered as Additionally, previous research has shown the most important. First, the retailers that the market orientation of the suppliers in internal activities are discussed, then inter- the distribution system will have a positive firm market oriented activities that the retailerFigure 1 A framework for analysing a retailers market orientation (MO) carried out with manufacturers and, finally, relational antecedents stressed by the study. The retailers internal market orientation In general, the case stresses that intelligence generation becomes more complex in retailing. The MARKOR-scale presented by Kohli et al. (1993) suggests that one indication of intelligence generation is whether people in a business unit meet with customers at least once a year. Retailers meet thousands of customers every day! The question, then, is more about how and to 111
  7. 7. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management Ulf Elg Volume 31 . Number 2 . 2003 . 107-117what extent the retailer utilizes daily sometimes technologically difficult task. Theinteractions with customers as intelligence use of IT played an important part in linkingthat supports market orientation. This was different functions and levels together in thealso emphasized by the study. Apart from distribution of consumer data. The challengedaily face-to-face contact, retailers have to handle tens of thousands of products alsoaccess to a lot of computer-based consumer makes it particularly essential to have andata. One important aspect that has to be effective system for processing data andcaptured when studying market orientation in distributing the relevant pieces of informationretailing is how this kind of data is processed to the right people. Unlike what has beenand used. The case study suggested that even suggested generally, a high degree ofthough there is a lot of potential information, intelligence dissemination does not necessarilyit is still a very big challenge to use it lead to market orientation in retailing; it is alsosystematically. Furthermore, the studied a matter of information screening.retailer used a number of different research The complexity that a retailer has to livemethods and data sources in order to with is also reflected when discussingunderstand the customers in greater detail responsiveness. Again, it has very much to doand to cover the different aspects of a with the coordination of different activitiesretailers total offer. The research agenda and roles. Often, this was facilitated byincluded: forming teams that included people who. Focus groups with certain types of represented different functions and having shoppers to understand a specific different types of consumer inputs responsible category or consumer segment. for product development. An important area. Quantitative research, e.g. the physical where the retailer aims at a high level of count of shoppers in store. responsiveness is store planning and location.. Interviews with shoppers about their Here, it is considered especially important to shopping behaviour etc. consider local consumer segments and the. Accompanied visits where a researcher demographics of the geographical area where goes shopping with a customer and home a store is located. The need to recognize to observe behaviour and ask questions. customer differences in different geographical. Perception data every four weeks to ask areas, and that different parts of a market what customers think of the retailer in have different types of populations is not terms of quality, price, availability, range, considered by more general market pricing and promotion of brand. orientation frameworks.. Panels with customers across the UK that Another important part of responsiveness is reflect how the retailer is performing buying. The retailer tries to consider both relative to competitors. how attractive a specific product is likely to be. Quality testing using people from the to the consumers more generally, and the role retailer and consumers to test products that the product has for different types of from a category and compare them with consumers. The buying function thus has a competitors. much closer relationship to market responsiveness in retailing than in mostFor this retailer the coordination of different manufacturing companies. Also, the retailerorganizational levels appeared to play a major cannot look only at the attractiveness ofpart in the intelligence dissemination. Apart individual items and products but also has tofrom aspects provided by previous research on consider the range of products as a whole.market orientation, a critical issue is to manage Furthermore, the study stressed the directcommunication between individual store interaction with customers and how to dealemployees who interact with customers, store with complaints. Here, it was preferred tomanagers and central decision units. It is thus deal with complaints and dissatisfiedless relevant to limit market orientation to a consumers there and then in the store. Thisbusiness unit level when discussing retailers. also means that training employees in how toAnother critical point stressed by the study was handle these direct contacts becomes anthat the extensive computer-based information important matter. As already stressed,gathered in individual stores has to be retailing involves a number of dimensions anddistributed and used throughout the levels that influence consumer satisfaction inorganization as a whole. This is a costly and different ways. This also calls for using many 112
  8. 8. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management Ulf Elg Volume 31 . Number 2 . 2003 . 107-117different types of information about aggregated trends in the market placecustomers when making strategic decisions, supplied by the manufacturer can usually beas illustrated by the retailers research agenda valuable even though the more detailedpresented above. information is biased. Personal networks and contacts were regarded as particularlyJoint market orientation activities with important for the distribution of intelligencemanufacturers between the retailer and the manufacturers.On the inter-firm level, intelligence Good personal contacts make informationgeneration may take place in cooperation flow more freely between companies. Anotherbetween different members of a distribution indicator of inter-firm intelligencenetwork ± such as an ECR initiative involving dissemination is if the actors in a distributiona retailer and a set of suppliers. One example chain jointly decide to design systems thatfrom the case study is that the retailer carries enable them to share information moreout joint analyses of the market and of future systematically and openly. One example isconsumer needs together with selected joint investments in computer-basedmanufacturers who are considered to be information systems. In this case study, jointcategory partners. These manufacturers are systems had been developed for spaceinvolved in making more macro-oriented planning and for sending out daily sales dataanalyses as well as micro-oriented analyses and orders for certain product categories.concerning particular product items and Sometimes, the retailer appeared reluctantconsumer segments. Consumer research to share information with suppliers, but thecarried out in projects that included difference was significant between suppliers ofmanufacturers were managed by the retailer, retailer brands and manufacturers onlyhowever, in order for the latter to be in supplying their branded products. Retailercontrol of the gathered information. brands seemed to stimulate informationFurthermore, it should be stressed that these sharing as well as joint intelligence generation.projects usually included only suppliers of the For instance, the suppliers of the retailersretailers own brands. It appears to be very own brands are invited to discuss feedbackrare for the retailer to make consumer studies from customers, sales developments, etc. Attogether with companies who supply only the same time, a disadvantage withmanufacturer brands. The case also gave little manufacturers supplying only the retailerssupport for the existence of joint intelligence own brands is that they might put little effortgeneration at an industry level, involving into gathering their own intelligence about theseveral manufacturers and retailers and consumers and therefore have little to offeradministered by, for instance, trade the retailer in this respect.associations. Members of a distribution system can also Inter-firm intelligence dissemination plan together the marketing activities of theconcerns how different companies in the channel, decide how different activities of thedistribution chain exchange information value chain are to be performed andabout consumers. The case study especially coordinated, or discuss how to manageemphasized supplier presentations and the quality problems or consumer dissatisfactiondata provided by suppliers concerning experienced by the retailer. These are allindividual products. Suppliers of examples of inter-firm responsiveness. Onemanufacturer brands offered the retailer a lot example is when the retailers productof input on consumer trends. For natural development was carried out as projectsreasons, the retailers buying teams are the involving both representatives of differenttargets of plenty of information about market functions in the company and of aopportunities and specific consumer segments manufacturer. The case revealed that it hadthat the manufacturers products might sometimes turned out to be a great successappeal to. From the retailers perspective, a when the retailer and a manufacturer workedcritical issue is how the potentially biased together through the whole process frommanufacturer information is evaluated. gathering and analysing consumerPrevious experiences and whether the retailer information to launching a new product. Inhas had a long-term relationship with the other cases, a supplier of retailer brands wasmanufacturer is an important part. given a brief based on the retailers analysis ofFurthermore, the information about more consumer data. The manufacturer was then 113
  9. 9. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management Ulf Elg Volume 31 . Number 2 . 2003 . 107-117expected to match that brief with a provided with the necessary input. This meansproposition for a new product. that the enormous amount of consumer input Campaign planning and implementation was that a retailer has access to gets distributedanother area of cooperation, basing the more effectively throughout the whole networkactivities on consumer data in order to ensure a of companies. The case thus gives severalgreater correspondence with the needs and examples that support the argument that thewants of customers. Here, the retailer also gave development of retailer labels stimulates aexamples of how manufacturer representatives higher degree of inter-firm market orientation ±were sometimes trained to work with the i.e. more joint activities to generate andretailer in merchandising. This also explains disseminate consumer intelligence and morewhy the retailer found it important that the joint projects in order to respond to themanufacturer let the same employee handle the consumers needs.contacts for a longer period of time. Again, joint The degree of cooperation in more generalactivities on the whole involved manufacturers terms also appears to have a significant impactthat were category partners. It should also be on inter-firm market orientation, though this isstressed once more that cooperating with the not highlighted so much by the case study.retailer as a team in order to respond to the Nevertheless, by stressing that it is importantwants and needs of consumers appears to be for the retailer to be well-acquainted with themore common for suppliers of retailer brands. manufacturers and their representatives, and that previous episodes and activities areRelational antecedents to market important for the stimulation of new jointorientation activities, the study supports the relevance ofIn all, the investigation stresses the importance cooperation. The study also finds that there areof trust within a relationship. To a large extent, few clear examples of conflicts between thethis determines the value of intelligence retailer and its suppliers. The retailerprovided by a manufacturer as well as the representatives made it rather clear that if theredegree of joint intelligence generation within a are any long-term conflicts with a supplier, therelationship. In this case study, trust appears to manufacturer in question will be replaced bybe mostly based on the retailers own previous someone else. Therefore, relationshipsexperiences of dealing with that particular involving substantial conflicts were unusual.manufacturer, and to a lesser extent on the Still, some relationships with major suppliers ofmanufacturers general reputation. The branded products appeared to be a bit infected,importance of long-term relationships at a even though the interviewed retailerpersonal level further stresses the impact of representatives did not make this a big issue. Inprevious experiences in dealing with the these cases cooperation and joint marketsupplier and its employees. One respondent orientation activities were very scarce. Thisstressed that it is important that ``we have a supports the relevance of inter-firm conflicts indegree of history with previous suppliers and explaining the degree of inter-firm marketthat they understand our needs. One orientation.consequence of this view is that the retailer isvery restrictive in changing suppliers and that ittries to limit the total number of suppliers. Conclusions and implications The discussion of trust is closely related to thedivision of labour. The case study reveals that in Much more empirical research is needed on theparticular the responsibility for and the control topic discussed here. It is also relevant toof the brands is a very important issue. The investigate how market orientation influencesretailer trusts suppliers of their own brands performance in retailing. This is a more or lessmore because they have a greater incentive to unexplored issue that is a particularly bigpreserve the relationship, to be honest and to challenge in relation to the special difficulties ofpay attention to the retailers interests. measuring performance in retailing (Dawson,Furthermore, relationships based on retailer 2000a). However, this paper points especially atbrands call for a greater degree of openness some more general conclusions. The theoreticalbecause the retailer has to take a greater framework includes the inter-firm dimensionresponsibility for product development and and suggests that inter-firm market orientationcustomer analysis. In order to get attractive own is an important part. This is supported by thebrand products the manufacturer also has to be empirical investigation. The case gives several 114
  10. 10. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management Ulf Elg Volume 31 . Number 2 . 2003 . 107-117 examples of inter-firm market orientation and makes it necessary to capture intelligence supports the argument that market orientation generation by assessing the quality of these in retailing will not be fully covered unless the contacts and how the input is processed. The inter-firm and relational dimensions are given case also demonstrates that it is not only a due consideration. The paper also stresses the matter of the quantity of customer data. It is relevance of including relational factors as also important to consider whether a retailer antecedents when explaining the degree and uses several different research methods and character of market orientation in a channel as a types of data, in order to understand different whole or of an individual retailer. Here, trust consumer groups and different parts of the was especially stressed, along with the division geographical market. Furthermore, the of labour and the influence that the own brands handling of direct consumer contacts becomes issue has on how the retailer handles market an important part of the retailers orientation and on the interplay between responsiveness. Retailers are responsible for an retailers and manufacturers. The case study assortment of several thousands of products implies that inter-firm market orientation can that can be combined and presented in different be facilitated if the retailer controls the brands. ways, and the retailing offer includes a number The study also helps to identify indicators to work with when studying market orientation in of additional parameters. This makes the issue retailing. These indicators can be used as a basis of coordination ± both internally and externally for developing a measuring tool for market ± especially critical. A number of additional orientation in retailing. Here, several of the aspects are highlighted by the case. A main more general indicators suggested in previous conclusion, however, is that even though the market orientation studies can of course provide general components of market orientation an additional source. The specific indicators suggested by Kohli and Jaworski (1990) can still suggested for market orientation in retailing are be applied, their implication and content need summarized in Table I. Retailers are in direct to be considerably modified. This paper is a and daily contact with their customers. This step in that direction.Table I Indicators of market orientation in retailingSteps in the marketorientation processRetail market orientation indicators Intelligence generation Dissemination ResponsivenessIntra-firm Are different research methods Do managers visit stores to Are data on needs and wants of specific used to target different aspects discuss market trends? consumer groups used in buying? and components of the retail Are customer complaints Are market data used when developing offering? communicated within the different parts of retail offering (product Does the retailer collect specific company? range, store location and formats, own data on different consumer Does the retailer invest in and brands, etc.)? groups? use IT to distribute market data? Are staff trained in how to interact with Are face-to-face interactions with Are there formalized data customers, handle complaints, etc.? consumers used as intelligence? exchange routines between Are sales data used and departments and functions? processed?Inter-firm Does the retailer have joint Are macro- and micro level Has the retailer cooperated with customer research projects with market data exchanged with suppliers in product development, suppliers? suppliers? campaign planning, merchandising, etc. Does the retailer and its Are supplier presentations used to satisfy customer needs better? suppliers collaborate in ordering as customer data sources? Do suppliers consider customer market data from external Have the retailer and the complaints about their products made in research companies? suppliers invested in systems stores? Are trade associations a source that facilitate market data Does the retailer order product of market intelligence for the exchange? development from the supplier based on retailer? Are there informal personal market data? discussions on market trends, Do suppliers help the retailer to respond etc.? quickly to market trends? 115
  11. 11. Retail market orientation: a preliminary framework International Journal of Retail & Distribution Management Ulf Elg Volume 31 . Number 2 . 2003 . 107-117References Elg, U. (2002), ``Inter-firm market orientation: its significance and antecedents in distributionAnderson, E. and Weitz, B. (1992), ``The use of pledges to networks, Journal of Marketing Management, build and sustain commitment in distribution Vol. 18 No. 7/8, pp. 633-55. channels, Journal of Marketing Research, Vol. 29 Ford, D. et al. (1998), Managing Business Relationships, February, pp. 18-34. John Wiley & Sons, Chichester.Anderson, J.C. and Narurus, J.A. (1990), ``A model of Frazier, G. (1999), ``Organizing and managing channels of distributor firm and manufacturer firm working distribution, Journal of the Academy of Marketing partnerships, Journal of Marketing, Vol. 54 Science, Vol. 27, Spring, pp. 226-40. January, pp. 42-58. Gilbert, D. (1999), Retail Marketing Management,Appiah-Adu, K. 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