Resaerch

PART

I
A

MARKET ORIENTATION
Marketing isn’t somebody’s responsibility; marketing is everybody’s responsibility. —JACK WELCH, CEO 1981–2001
General Electric Co.

market-based business has a strong market orientation that cuts across the functions and employees of an organization. While those in marketing have the primary responsibility to lead marketing excellence, in a market-basedbusiness, all members of the organization have a strong market orientation. This means all members of the organization are sensitive to customers’ needs, aware of competitors’ moves, and work well across organizational boundaries toward a timely marketbased customer solution. The payoff—market-based businesses with a strong market orientation are more profitable. The purpose of part I is to makeexplicit the connectivity between market orientation, customer satisfaction, market-based management, and profitability. In chapter 1, we examine the fundamental components of market orientation and how each is related to customer satisfaction and retention. From this perspective, we will demonstrate the profit impact of a lifetime customer as well as the high cost of customer dissatisfaction. While astrong market orientation enhances a business’s chances for longrun survival, short-run profits can also be increased with marketing efforts to increase customer satisfaction and retention. A strong market orientation does not occur by mere proclamation. To attain a strong market orientation, a business needs to adopt a market-based management philosophy. This means implementing a process fortracking market performance and restructuring an organization around markets rather than products or factories and creating an employee culture that is responsive to customers and changing market conditions. Market-based management also requires businesses to measure profits at the market level and to track external, market-based performance metrics. These topics, and their relation to marketingstrategies and profitable growth, are discussed in chapter 2.
Market-Based Management: Strategies for Growing Customer Value and Profitability, Third Edition, by Roger J. Best. Copyright © 2004, 2000, 1997 by Pearson Education, Inc. Published by Prentice Hall, Inc.

CHAPTER

1

MARKET ORIENTATION AND PERFORMANCE

In today’s globally competitive world, customers expect more, have morechoices, and are less brand-loyal. Businesses such as IBM, Sears, and General Motors at one time seemed invincible in terms of their market domination. However, in each case, these companies have had to restructure (reengineer) their organizations to address changing customer needs and emerging competitive forces. In the long run, every business is at risk for survival. Although companies such as DellComputer, Microsoft, and Wal-Mart were business heroes of the nineties, there is no guarantee that these same companies will continue to dominate over the next decade. The only thing that is constant. . . is change. • Customers will continue to change in needs, demographics, lifestyle, and consumption behavior. • Competitors will change as new technologies emerge and barriers to foreign competitionshift. • The environment in which businesses operate will continue to change as economic, political, social, and technological forces shift. The companies that survive and grow will be the ones that understand change and are out in front leading, often creating, change. Others, slow to comprehend change, will follow with reactive strategies, while still others will disappear, not knowing thatchange has even occurred.

LONG-RUN AND SHORT-RUN BENEFITS
A sports reporter once asked Wayne Gretzky what made him a great hockey player. Gretzky’s response was, “I skate to where the puck is going, not to where it is.” In other words, Wayne Gretzky has a tremendous instinct for change. He is able to position himself as change is occurring in such a way that he can either score a goal or assist...