Market orientation and performance: the moderating effects of product and customer differentiation

Poses the question is the influence of market orientation stronger in specialty markets with high levels of differences in product features and customer needs/applications, compared to commodity markets? Reports that regression results indicate that the only significant interaction is between customer differentiation and market orientation as an influence on new product success, relative product quality and customer retention. However, examination of partial correlations in the quadrants formed by customer and product differentiation indicates that market orientation seems to be a more important determinant of all aspects of performance in markets characterized by low levels of customer differentiation but high levels of product differentiation. Examination of these quadrants suggests that market orientation may be a more important determinant of performance in the high product differentiation/low customer differentiation quadrant, because of high levels of change in technology and customer needs. States that, in addition in this quadrant, there is an indication that since large firms have the advantage in R&D emphasis, small firms need more market orientation to compete. Although market orientation had no influence on performance in the commodity segment, there is an indication that smaller firms may need a higher level of market orientation to compete with large firms emphasizing low‐cost advantages.

[1]  Franklin S. Houston.  The Marketing Concept: What it is and What it is Not , 1986 .

[2]  R. Hogarth,et al.  Confidence in judgment: Persistence of the illusion of validity. , 1978 .

[3]  John C. Narver,et al.  The Effect of a Market Orientation on Business Profitability , 1990 .

[4]  D. L. Sexton,et al.  A Longitudinal Study of Small Business Strategic Planning , 1985 .

[5]  D. Hambrick.  Some tests of the effectiveness and functional attributes of Miles and Snow's strategic types. , 1983, Academy of Management journal. Academy of Management.

[6]  Anil K. Gupta,et al.  Business Unit Strategy, Managerial Characteristics, and Business Unit Effectiveness at Strategy Implementation , 1984 .

[7]  G. Day,et al.  Marketing Theory with a Strategic Orientation , 1983 .

[8]  M. Hitt,et al.  Corporate distinctive competence, strategy, industry and performance , 1985 .

[9]  B. Wernerfelt,et al.  DETERMINANTS OF FIRM PERFORMANCE: THE RELATIVE IMPORTANCE OF ECONOMIC AND ORGANIZATIONAL FACTORS , 1989 .

[10]  David Lei,et al.  Toward an Empirical Prioritization of Contingency Variables for Business Strategy , 1985 .

[11]  Gregory G. Dess,et al.  Corporate-Level Strategy, Business-Level Strategy, and Firm Performance , 1981 .

[12]  F. Webster.  Top Management's Concerns about Marketing: Issues for the 1980's , 1981 .

[13]  S. Kiesler,et al.  Managerial Response to Changing Environments: Perspectives on Problem Sensing from Social Cognition. , 1982 .

[14]  Alice M. Tybout,et al.  The Concept of External Validity , 1982 .

[15]  Bernard J. Jaworski,et al.  Market orientation: Antecedents and consequences , 1993 .

[16]  J. Farley,et al.  Corporate Culture, Customer Orientation, and Innovativeness in Japanese Firms: A Quadrad Analysis , 1993 .

[17]  S. Zedeck.  Problems with the use of "moderator" variables. , 1971 .

[18]  James C. Anderson,et al.  STRUCTURAL EQUATION MODELING IN PRACTICE: A REVIEW AND RECOMMENDED TWO-STEP APPROACH , 1988 .

[19]  J. Lynch.  The Role of External Validity in Theoretical Research , 1983 .

[20]  John E. Prescott,et al.  THE EFFECTS OF TECHNOLOGICAL SOPHISTICATION ON STRATEGIC PROFILES, STRUCTURE AND FIRM PERFORMANCE , 1990 .

[21]  G. Chow.  Tests of equality between sets of coefficients in two linear regressions (econometrics voi 28 , 1960 .

[22]  M. Porter.  How Competitive Forces Shape Strategy , 1989 .

[23]  Pradip N. Khandwalla,et al.  THE TECHNO‐ECONOMIC ECOLOGY OF CORPORATE STRATEGY , 1976 .

[24]  Gene R. Laczniak,et al.  The Evolving Marketing Concept, Competitive Intensity and Organizational Performance: , 1987 .

[25]  Douglas R. Kahl,et al.  A Comparison of Moderated Regression Techniques Considering Strength of Effect , 1982 .

[26]  Bernard J. Jaworski,et al.  Market orientation: The construct, research propositions, and managerial implications. , 1990 .

[27]  Carl R. Anderson,et al.  CONTINGENCIES AFFECTING STRATEGY FORMULATION AND EFFECTIVENESS: AN EMPIRICAL STUDY , 1977 .

[28]  Augustine A. Lado,et al.  A Competency-Based Model of Sustainable Competitive Advantage: Toward a Conceptual Integration , 1992 .

[29]  P. Lawrence,et al.  Organization and environment , 1967 .

[30]  R E Miles,et al.  Organizational strategy, structure, and process. , 1978, Academy of management review. Academy of Management.

[31]  K. Weick.  The social psychology of organizing , 1969 .

[32]  S. Shortell,et al.  Changing generic strategies: Likelihood, direction, and performance implications , 1989 .

[33]  Daniel Kahneman,et al.  Availability: A heuristic for judging frequency and probability , 1973 .

[34]  D. Hambrick.  An Empirical Typology of Mature Industrial-Product Environments , 1983 .

[35]  P. Varadarajan,et al.  Strategic Adaptability and Firm Performance: A Market-Contingent Perspective , 1989 .

[36]  George S. Day,et al.  Assessing Advantage: A Framework for Diagnosing Competitive Superiority , 1988 .

[37]  Robert G. Cooper,et al.  Beyond the marketing concept , 1979 .

[38]  Subhash Sharma,et al.  Identification and Analysis of Moderator Variables , 1981 .

[39]  J. Prescott.  Environments as Moderators of the Relationship Between Strategy and Performance , 1986 .

[40]  R. Reed,et al.  Causal Ambiguity, Barriers to Imitation, and Sustainable Competitive Advantage , 1990 .

[41]  W. Dill.  Environment as an Influence on Managerial Autonomy , 1958 .

[42]  Jacob Cohen,et al.  Applied multiple regression/correlation analysis for the behavioral sciences , 1979 .

[43]  Receptivity to Strategic Planning Tools in Small Manufacturing Firms , 1988 .

[44]  John C. Narver,et al.  Does Competitive Environment Moderate the Market Orientation-Performance Relationship? , 1994 .

[45]  Gregory G. Dess,et al.  Measuring organizational performance in the absence of objective measures: The case of the privately-held firm and conglomerate business unit , 1984 .