valuable, and difficult to imitate, and thus should lead to
superior performance (Barney 1991).
An important conclusion was reached in the recent literature by Vorhies and Morgan (2005) which has supported
the theory that marketing capabilities associated with
superior business performance can be identified and the
marketing capability gap between top-performing benchmarks and other firms explains significant variance in business performance (Vorhies and Morgan 2005). This sheds
some light on another important source of SCA, namely,
Marketing Orientation, discussed below.
5.1 Definition of Market Orientation
Focus on the definition and measurement of market orientation has only started in the 1990s, despite the existence of
the notion of marketing well ahead of that. There have been
some indications from previous research that three activities
pertaining to market orientation lead to superior performance, they are namely: the thorough collection of market
information, especially with relation to both present and
evolving customer needs; the adequate distribution of the
acquired information across the firm,, and finally the actions
taken across the company in response to this information
(Hooley and Broderick 1998). These conclusions not only
emphasize the importance of market orientation for firm
performance but interestingly, the importance of knowledge
management in ensuring that market orientation is pervasive enough in the organisation to impact performance.
Knowledge management will be addressed in detail in the
subsequent section.
Tuominen et al. (2005) have defined market driven
intangibles as any attribute, intellectual or relational, that
can be deployed advantageously in the market place.
Weerawardena (2003) offered a complementary view
defining marketing capability as integrative processes
designed to apply the collective knowledge, skills, and
resources of the firm to the market-related needs of the
business, enabling the business to add value to its goods and
services to meet demands.
According to Day (1994), market orientation represents
superior skills in understanding and satisfying customers. Its
principle features are:
– A set of beliefs that puts the customer’s interest first as
stated by Deshpanade (as cited in Day 1994).
– The ability of the organisation to generate, disseminate
and use superior information about customers and competitors as stated by Kohl (as cited in Day 1994).
– The coordinated application of inter-functional resources
to the creation of superior customer value as stated by
Narver and Slater, Shapiro (as cited in Day 1994).
Another definition presented by Kohli and Jaworski
(1990) is that market orientation is the generation and dissemination of organisation-wide information and the
appropriate responses related to customer needs and preferences, and the competition (Kumar et al. 2011).
5.2 Market Orientation Effect on Performance
According to Kumar et al. (2011), a firm’s strong market
orientation gives it a superior chance to perform better due to
the focus and information that its managers have on its
consumer and customer base as well as its competitive
environment. This important information can then enable the
company to achieve sustainable competitive advantage, if it
is used in a structured and adequate manner (Kumar et al.
2011).
Market orientation has been positively associated with
superior performance by many authors (Day 1994).
Tuominen et al. (2005) argue that superior performance is
initiated by the degree of market orientation and market
driven capabilities. Performance advantage is defined as the
achievement of overall profit levels, profit margins and ROI,
emphasising especially financial outcomes (Tuominen et al.
2005).
5.3 Competitive Positioning and Innovation
as Marketing Resources
The following section examines some of the reasons why
market orientation leads to sustainable competitive advantage. The literature is lacking in this area as the only two
variables that the researcher has found to be discussed in the
literature explaining why market orientation leads to superior performance, are: competitive positioning, and innovation, with an implicit assumption that the latter two subjects
are integral to the market orientation arena.
The first aspect of market orientation as a driver of performance to be addressed is competitive positioning,
defined as the decisions that the firm makes with regards to
the markets it will do business in as well as the manner it
will compete there (Hooley and Greenley 2005). Judgements
on positioning seek to find a match between market
requirements and company ability to match them (Hooley
and Broderick 1998).
Hooley and Greenley (2005) draw a very interesting
parallel between the possession of unique distinct resources
as sources of competitive advantage in the framework of the
Resource-Based View and the creation of competitive
positions. They contend that parallels can be drawn between
the creation of a sustainable competitive position and a
sustainable competitive advantage, namely that both can be
306
N. El Daly
superior performance (Barney 1991).
An important conclusion was reached in the recent literature by Vorhies and Morgan (2005) which has supported
the theory that marketing capabilities associated with
superior business performance can be identified and the
marketing capability gap between top-performing benchmarks and other firms explains significant variance in business performance (Vorhies and Morgan 2005). This sheds
some light on another important source of SCA, namely,
Marketing Orientation, discussed below.
5.1 Definition of Market Orientation
Focus on the definition and measurement of market orientation has only started in the 1990s, despite the existence of
the notion of marketing well ahead of that. There have been
some indications from previous research that three activities
pertaining to market orientation lead to superior performance, they are namely: the thorough collection of market
information, especially with relation to both present and
evolving customer needs; the adequate distribution of the
acquired information across the firm,, and finally the actions
taken across the company in response to this information
(Hooley and Broderick 1998). These conclusions not only
emphasize the importance of market orientation for firm
performance but interestingly, the importance of knowledge
management in ensuring that market orientation is pervasive enough in the organisation to impact performance.
Knowledge management will be addressed in detail in the
subsequent section.
Tuominen et al. (2005) have defined market driven
intangibles as any attribute, intellectual or relational, that
can be deployed advantageously in the market place.
Weerawardena (2003) offered a complementary view
defining marketing capability as integrative processes
designed to apply the collective knowledge, skills, and
resources of the firm to the market-related needs of the
business, enabling the business to add value to its goods and
services to meet demands.
According to Day (1994), market orientation represents
superior skills in understanding and satisfying customers. Its
principle features are:
– A set of beliefs that puts the customer’s interest first as
stated by Deshpanade (as cited in Day 1994).
– The ability of the organisation to generate, disseminate
and use superior information about customers and competitors as stated by Kohl (as cited in Day 1994).
– The coordinated application of inter-functional resources
to the creation of superior customer value as stated by
Narver and Slater, Shapiro (as cited in Day 1994).
Another definition presented by Kohli and Jaworski
(1990) is that market orientation is the generation and dissemination of organisation-wide information and the
appropriate responses related to customer needs and preferences, and the competition (Kumar et al. 2011).
5.2 Market Orientation Effect on Performance
According to Kumar et al. (2011), a firm’s strong market
orientation gives it a superior chance to perform better due to
the focus and information that its managers have on its
consumer and customer base as well as its competitive
environment. This important information can then enable the
company to achieve sustainable competitive advantage, if it
is used in a structured and adequate manner (Kumar et al.
2011).
Market orientation has been positively associated with
superior performance by many authors (Day 1994).
Tuominen et al. (2005) argue that superior performance is
initiated by the degree of market orientation and market
driven capabilities. Performance advantage is defined as the
achievement of overall profit levels, profit margins and ROI,
emphasising especially financial outcomes (Tuominen et al.
2005).
5.3 Competitive Positioning and Innovation
as Marketing Resources
The following section examines some of the reasons why
market orientation leads to sustainable competitive advantage. The literature is lacking in this area as the only two
variables that the researcher has found to be discussed in the
literature explaining why market orientation leads to superior performance, are: competitive positioning, and innovation, with an implicit assumption that the latter two subjects
are integral to the market orientation arena.
The first aspect of market orientation as a driver of performance to be addressed is competitive positioning,
defined as the decisions that the firm makes with regards to
the markets it will do business in as well as the manner it
will compete there (Hooley and Greenley 2005). Judgements
on positioning seek to find a match between market
requirements and company ability to match them (Hooley
and Broderick 1998).
Hooley and Greenley (2005) draw a very interesting
parallel between the possession of unique distinct resources
as sources of competitive advantage in the framework of the
Resource-Based View and the creation of competitive
positions. They contend that parallels can be drawn between
the creation of a sustainable competitive position and a
sustainable competitive advantage, namely that both can be
306
N. El Daly