Wednesday, 25 March 2015

Market Orientation & Outside-In

Outside-In market orientation looks at the market and consumers and tailors the business to their needs.  As such, change is driven by competitors (competitor orientation), consumers (customer orientation) and technology.  With some organisational learning thrown in, the business can get a competitive advantage.

While learning about marketing orientation strategies, I've noticed that the theory is pretty straightforward, its just marketers use specific words to describe it.  If the market changes (market needs), you have to change.  If you don't, you'll fall behind (strategic wear-out).  How do you find out if the market is changing (strategic analysis)? You look at the market (market intelligence), you analyse whats happening (information dissemination) and you interpret your results (shared interpretation) to work out the best way to go forward (organisational learning).

So, if you need to change, how do you change? Well, according to Slater and Narver (1995), there are 4 major options, all with their own pros and cons.  You could change your behaviour to increase your performance (organisational learning) or you could come up with something completely different (entrepreneurship).  You could also take more flexible changes a baby step at a time (decentralised strategic planning), or you could bring some experts in to work on a variety of tasks and share the learning for a more 'organic' information flow (organic structure).

The problems with the Outside-In market orientation is that it's a very costly and lengthy thing to assess how another company is gaining success and how you can appropriate their methods (or do it differently).  It also relies on there being a market to study, and if you choose to do something other than diversify then you could end up playing catch-up. [See also: Morrisons local convenience shops, now having problems as they were years behind Tesco's entrepreneurial move, which is now also faultering, (Ruddick, 2015)]

Slater, S.F. Narver, J.C. (1995) 'Market Orientation and the Learning Organization.' Journal of Marketing, 59(3) 63-74.

Ruddick, G. (2015) 'Morrisons to close 23 stores as it posts £792m loss.' Telegraph. [Online] 12/03/15. Accessed 25/03/15.