Abstract
The initial analysis to establish the relationship between the performance of the firm and market orientation was conducted from a survey of about 159 hospitals.The survey revealed that the performance of the organization was different between firms depending on the strategy that the firms were pursuing. The survey conducted revealed that the hospitals’ whose strategy was concentrated on the differentiation aspect performed better in terms of organizational structure and cohesiveness of operations than firms that used the cost leadership strategy. Firms that used the cost leadership strategy were mostly affected by the inter-functional coordination component of the market orientations while firms that applied the differentiation strategy were found to be mostly affected by customer and competitor orientation.
Introduction
Market orientation is a key economic tool that affects the performance and organizational structure of firms. The empirical evidence that has been provided by analytical researches indicates that a successful market orientation gives a firm competitive advantage in terms of market structure and control. The market orientation aspect consist of three components; customer orientation which is the key determiner in the achievement of a successful market orientation, competitor orientation which forms a part of external economic forces that affect the process and inter functional coordination which entirely depends on the effectiveness and efficiency of the firm to control its internal organizational operations and controls.
A firm’s organizational process is not dependent on one strategy but a combination of strategic organizational factors. This means that the three components of market orientation cannot be used singularly but have to be applied together to form an effective flow of organizational internal processes. Research evidence clearly indicates that to be able to determine whether an approach taken by an organization is effective in adopting market orientation, we have to evaluate the internal organizational strategic orientation. This forms a theoretical hypothesis that the organizational strategy predetermines market orientation and performance.
An effective organizational process requires coordination and proper control of the firm’s internal controls. Among the key factors that should be put into consideration when lying out implementation strategy include internal and external forces affecting the market. Current research has found out that a strong internal coordination process leads to an effective performance record of the organization. This is as a result of coordinating the production and market plans that help the firm control its expenditure and market control. This impacts the overall goals and objectives of the firm and the implementation program of the same.
Literature Review
Role of marketing
The fundamental role of marketing process according to Keller is developing an economically benefiting relationship between the consumers and the organization a process that benefits both the consumers and the organization (Keller 2007). Regardless of the nature of marketing goals, the process is presumably the most vital process in an organization. Since marketing is the operational process mostly involved in the interaction with consumers, business organization have to be creative in terms of developing diverse marketing options and detailed advertisement strategies. The key roles of the process include;
- The development of products and services that meet consumer needs and ensure quality life in to the general society
- The creation of a customer friendly environment that is cost effective to the consumers.
- The development of diverse distribution channels that avails goods and services to geographically diverse consumer base.
- Engaging in social friendly activities that have a positive impact on the general society and the business community
Customer value
Customer value is the amount of satisfaction that a consumer gets from consumption of goods and services. The term used to refer to what a customer gets from goods and services is known as realization while sacrifice is the term used to refer to the cost consumers have to incur in the consumption process. Customer value is heavily concentrated on the business part in ensuring consumer satisfaction rather than what consumers give to the business. Customer value if conducted effectively and efficiently impacts positively on marketing orientation and performance hence business organization should conduct value propositions to analyze and evaluate the firm’s position in ensuring consumer satisfaction.
Market analysis
The major role of market analysis is to analyze the available opportunities and the general attractiveness of a specific market group. This should be assessed with regards to the strengths and weaknesses of the firm. The process is aimed at establishing current economic opportunities that initiate the growth of the organization in terms of size and market control. These impacts the overall market orientation strategies by influencing the type of strategy that a firm decides to incorporate in its operations.
Market analysis should be conducted in such a way that it impacts positively on the cost of production and consumers satisfaction. The consumer forms a very important segment of the firm since consumers are the leading factor in production and market level. An increase in demand increases the organization’s revenue while a decrease in demand impacts negatively on the same. This means that consumers set and give direction to the firm on what to produce and what amount to produce.
Marketing Research
The markets research process gives the management team crucial information with regards to consumer taste and preferences as well as economic changes. The key role of marketing research is to provide and give direction for an organization to implement its strategies based on key data analysis in the economic field. The process involves a series of key processes that eventually give well analyzed empirical data and figures that guide the internal operations decisions.
Strategic Marketing processes
Some of the strategic marketing processes occur as a result of global changes in economic forces. Many of strategic marketing decisions are made without a proper analysis of the current factors affecting the marketing segment. According to Klein, market orientation and performance should adjust to these changes in the economic segment in order to incorporate a competitive organizational strategy (Klein 2007). The best approach in studying and analyzing the market pattern is by conducting a comprehensive review of the current markets and the available resources. This analysis helps the internal management team come up with long term strategies that are less affected by daily changes in market forces. This helps a firm come up with effective overall marketing goals.
Market segmentation
The marketing concept consists of individuals within an organization that share similar attributes and characteristics with regards to demand basing their demand on factors such as price and quality of products or services. Organizations should develop unique market segments such that the developed marketing segment is distinct from the rest of the segments. There should also be homogeneity in terms of product and services hence the marketing segment developed should target a specific group of individuals. A competitive market segmentation strategy should be cost efficient to the firm and offer favorable and acceptable pricing of goods and services to the affected target market.
Targeting and Positioning
Targeting process is dependent on several factors that affect the process. This entails first analyzing the existing marketing segments used by other manufacturers. Firms should go further and establish the effectiveness of the market segment currently being used by others. Some firms are often favored by market forces as a result of having good reputation. The positioning process on the other hand involves the implementation process. Proper organizational strategy initiates operationally excellent firms that enjoy competitive advantage by experiencing exceptional advantage. Firms are therefore able to serve the customer’s needs at minimal cost.
Product Management
Product management is the functional aspect within the company internal structures that is mandated to forecast and plan for the lifecycle of products and services. The fundamental role of product management is that the process initiates action revolving around such as strategic and tactical planning. The first part of product management is the product planning process where the firm identifies new products and gathers the necessary market requirement to introduce the product into the market. The next process is the product marketing segment which involves product positioning and the promotional process of products and services.
The strategic role of product management is to delegate tactical plans that guide the production and marketing process of products. From the time a product or service is produced, it goes a series of phases before getting to the final consumers. These phase s may cause change in quality or the market value of the product. Effective and efficient product management is aimed at controlling market and economic forces that affect the product during the transition from the producer to the final computer.
Integrated Marketing Communications
Integrated marketing communications refers to the cohesiveness and coordination of marketing tools within the internal structure of the company. This means that the firm is able to run its daily operations at minimal cost. The key factors in this segment include the management process of customer relationship. The process is also the key to effective communication between the internal and external business environment. The foundation of the integrated marketing communication is building the social corporate image of the firm and managing the brand. The last process is coordinating the various promotional and marketing tools a process that involves extensive entrepreneurial ventures and public relations.
Pricing Management
The pricing process determines the input that a firm derives from the exchange process for the good and services produced. The pricing management process is the process that evaluates the various factors that affect manufacturing cost such as; competition, market condition and the quality of goods and service. The process of application and attachment of prices to various goods and services is dependent on various market forces affecting the production process. An increased cost of production leads to increased prices for various goods and services. The management of prices requires constant maintenance to prevent pricing errors.
Prices of goods and services should be in line with consumer satisfaction and acceptance. There are certain marketing activities that limit the effectiveness of the pricing process such as hoarding of goods by producers in order to push prices up and black market dealings that led to unstable prices in the market due to improper competition. The management of the pricing process ensures a system that regulates prices of commodities and services that are both acceptable to the producers and the consumers.
Channels Management
Channel management is a phase of marketing involved in creating and formulating programs that create a channel for product and service delivery. There are various factors that need to be considered in order to apply an effective channel management in marketing. The first process is defining the specific goals that a firm aims at achieving. This is followed by coming up with strategic policies that define each policy. The third phase is to identify the products offered by the firm and identify the most suitable product for each segment. The last phase is designing specific programs that streamline the channel management process.
Organizational Effectiveness in UAE
Management knowledge has had a positive impact on the business practices in the UAE. Research has established that there is a relationship between management knowledge in the region and organizational performance. The key factors that enhance organizational effectiveness and performance are; organizational structure, infrastructural organization, technical structure and management support system. The article evaluates the differentiation process as a means of cutting cost by firms. This is what has helped many firms establish themselves economically in the UAE. The cost leadership strategy is cost effective on the side of the firm but fails to increase efficiency in terms of organizational effectiveness. The differentiation strategy however has a stronger marketing orientation and performance with regards to organizational strategy.
Is the article up to date?
The article on market orientation and performance with regards to organizational strategy, the developed strategies may directly or indirectly be outdated. This is because; the economic sector is one sector that experiences changes over little time frames. These changes however small have great impacts on individual segments in the marketing sector. This article gives preference to the differentiation as compared to the cost leadership strategy. However, due to changes in consumer taste and preferences, a firm that uses the differentiation strategy has to concentrate on the consumer segment and have thorough understanding on complex consumer preference. This is in line that modern day consumers have diverse tastes and preferences that affect their consumption behavior.
Strength and weaknesses
The article is very informative in terms of detailed data analysis and statistical procedures. The analytical variance figures that show the relationship between the overall market orientation and organizational performance can be used to predict the market trend and future concerns in the same. The differentiation strategy also emphasized is an effective model in organizational performance provided it is applied with consideration to market forces like cost. One of the main shortcomings of the article is that a lot of referencing is done. A lot of in text citations impacts negatively on the article in that it signifies lack of originality. This is overreliance on external sources in conducting the research rather than relying on individual analysis.
The empirical analysis on the data is also complicated and not easily comprehensive to an average reader. The article should be set in a level that every reader can be able to understand its contents and argument. The inclusion of complex empirical analysis limits an average reader or academic reader to understand and apply the theoretical aspect of the article.
Application in Strategic Marketing
The article contributes to a wider knowledge in strategic marketing. This is because market orientation and performance forms part of the key tools to effective strategic marketing. As found out by Singh, research has established that the differentiation strategy tends to exploit new market opportunities by staging various strategic orientations (Singh 2004). The two strategies reviewed have different impacts on market orientation and performance. The differentiation method is found to spur competition in the marketing sector depending on whether the differentiation occurs on the market or the innovation segment. The cost leadership on the other hand is concentrated on the consumer’s part hence this strategy cares more about prices than a firm’s image.
Limitations
This article supports the argument by some scholars that market orientation has a positive effect on performance. The effect is not dependent on other factors such as the economic position of a firm. The basic assumption is that market orientation forms a fundamental part where an organization asses constraints and opportunities created by the economic environment. However, the market orientation process is not all about the external environment of an organization but also the internal structures of an organization that help the organization respond to these external factors. Both the differentiation and the cost leadership strategies were found to have had a positive impact on market orientation. However, the differentiation strategy produced a more positive impact in market orientation a situation brought about by the fact that differentiators operate in an open system while cost leaders operate under competitive strategy system
Benefits to academic and practitioners
Previously, the process of market orientation was of little impact to an organization in the hospital industry. This is because the regulations to entry into the industry and the reimbursement cost exempted the organizations in the industry from market pressures. The article provides an important pointer for better understanding in the nature and dynamics of the healthcare industry for both medical practitioners and academics. Medical practitioners and academics become knowledgeable in terms of organizational management in order to enhance the performance of the organization in a highly dynamic industry.
Methods
The study examined the relationship that market orientation and performance have with organizational strategy. The study used the American Hospital Association Guide to the Health Care Field and selected 600 health institutions for the study. The method of survey and response was through questioners and the research provided 159 questioners out of the overall 171 surveys conducted. The method of sampling and categorically grouping the health institutions was in terms of their; profit orientation, size, location and age.
Analysis
The data analysis procedure involved two statistical methods that gave the overall market orientation. Variance and analysis were the methods used to differentiate the market orientation levels between the organizations that the survey was conducted. The table below shows the co-relation between the different groups that the survey was conducted.
The analysis on the different results that give the difference between the two strategies that is the cost leadership strategy and the differentiation strategy was compared using multi regression analysis. The factors that were analyzed in the market orientation and performance were; hospital size, profit orientation, location and age. These factors were identified as to having the most impact on market orientation and performance. The regressions equation used close examined the effect as a result of market orientation on cost. Other financial and economic factors held constant, market orientation was found to having significant impact on the performance of the firm.
Conclusions
The basic assumption regarding market orientation is that though the process has an impact on organizational performance, the overall impact depends entirely on the organization’s ability to implement the formulated strategies that affect the organization whether internally or externally. The relationship between strategic orientation and market orientation is aimed at helping the organization be able to disseminate market information that help the organization effectively and efficiently provide quality goods and services in line with consumer tastes and preferences. From the market orientation point of view, an organization acquires competitive advantage if strategic orientation is applied effectively in the strategic management process of an organization.
The previous assumption was that the hospital industry did not have to go through the market orientation process. This was based on the reasons that the market factors affecting the industry were limited due to government regulation and control. However, this is changing; market orientation according to research has been found to impact on organizational performance. To enhance the performance of the firm, choosing the right strategy to pursue in terms of competitor or market orientation is the best method that an organization can apply.
Work Cited
Keller, K.L. Marketing Management, New York: Grada Publishing, (2007).
Klein, G. Strategic Marketing, New York: GRIN Verlag, (2007).
Singh, S. Market Orientation, Culture and Business Performance, New York: Ashgate Publishing, (2004).