Market orientation (once again): Challenges and a suggested solution

Abstract

Previous research shows almost unequivocally that market orientation (MO) has positive performance consequences for companies. However, research conceptualizes MO as (potentially) too abstract and broad. Consequently, detecting negative performance implications from it is difficult. In this article, I propose to deconstruct MO. First, rather than operating MO as an integrated construct, I suggest treating MO as a class of orientations that share certain properties but differ on important others. I detail the competitive logic of and main risks related to alternative MOs and, drawing from literature on marketing, economics, and strategy, suggest contingencies for alternative MOs to perform well. Second, I propose measuring each individual MO (e.g., customer-centric) as a product of the two forms of orientations (strategy/plan and information) embedded within it. This suggested measurement approach enables further scrutiny of the association between MO and company performance. I conclude with a discussion of the potential implications for research and marketing management which could result from treating MO as a construct class.

Introduction

Market orientation (MO) is a well-established construct in the marketing field. Intellectual roots of this stream of research date back to the 1960s (Levitt, 1960). The contributions by Kohli and Jaworski (1990) and Narver and Slater (1990) had a particularly high impact, as indicated by the approximately 14,000–15,000 citations in Google Scholar for each. Hits from a Google Scholar search on the more general term “market orientation” are approximately 261,000. As Hunt (2012, p. 13) observes, “[MO] as a latent construct, a normative strategy, and an (implied) positive theory has achieved broad acceptance in the marketing community.” Regardless of its high status in the marketing community, I argue there are fundamental problems related to the design of the construct—problems that limit its usefulness as a scientific construct and the amount of knowledge that research can generate by using it. Therefore, I suggest it is time to rethink MO.

First, the fundamental problem of the current conceptualization of MO (referred to as MO “as is”)—based on, most notably, Narver and Slater (1990) and Kohli and Jaworski (1990)—is that it is “[perhaps] too abstract and broad” (Jaworski & Kohli, 2017, p. 11). MO “as is” is an integrated, multilevel, and multidimensional construct. First, MO “as is” incorporates (and thus does not discriminate between) different types of orientation-as-strategy. Therefore, MO “as is” provides limited and vague guidance on strategy for companies in different competitive situations. I subsequently elaborate on customer-centric/customer-oriented, innovation-oriented/interfunctional coordination, and copycat/competitor-oriented strategies as three alternative MO strategies that originate from the original MO conceptualization (MO “as is”). Second, MO “as is” incorporates both orientation-as-strategy/plan and orientation-as-information. Because of this duality inherent in the conceptualization of MO as an integrated, multilevel, and multidimensional construct, orientation-as-strategy and orientation-as-information follow each other as hand in glove.

Motivated by these two problems related to MO “as is”, the aim of this article is to offer a reconceptualization of MO that provides (i) higher precision in regard to the specific strategy of (a given) MO, and (ii) decouples orientation-as-strategy/plan and orientation-as-information. MO can (should) imply different strategies/plans for companies in different competitive situations (e.g., Lukas & Ferrell, 2000), and having a strategy should not implicate by construct design access to relevant information to back up the firms’ strategy.

I suggest treating MO as a construct class rather than as an integrated, multilevel, and multidimensional construct. The common core that defines MO is that an MO company bases its competitiveness on information about customer needs and a strategy (plan) to meet (satisfy) those needs. Other than this, MO materializes in different forms (MOs) with regard to both information (sources) and plans (strategies). Theory development, construct/variable measurement, and hypotheses testing should be performed at the level of the individual MO (i.e., customer-centric, competitor-oriented, or innovation-oriented). The construct-class approach ensures (compared to MO “as is”) increased precision and testability of theory. Finally, I suggest splitting (as per variable measurement) any MO into orientation-as-strategy/plan and orientation-as-information. This deconstruction allows further scrutiny of the viability of any given MO, because success may depend not only on the match between a company’s MO and the competitive environment but also on the match between orientation-as-strategy/plan and orientation-as-information.

I have organized the article as follows. First, I highlight the complexity of the existing MO construct. Second, I briefly take stock of the body of empirical research on MO. The analysis shows that MO has a consistently positive effect on firm performance; no suggested (substantive) factors seem to modify the association in a systematic manner. This pattern is problematic, however, because it is reasonable to expect MO to perform with varying degrees of success in different companies and situations.

As the third step, I make a comparative assessment of alternative ways forward for the MO construct and theory, and detail the construct class solution as the preferred reconceptualization of MO.

Fourth, in the last part of the article, I discuss implications for research and marketing practice of the deconstruction of MO into a construct class.

MO: The construct

Scholars only partly agree on the meaning of the MO construct. Hult and Ketchen (2017, p. 21) identify five perspectives of MO in marketing literature: (1) decision-making perspective (Shapiro, 1988), (2) market intelligence perspective (Kohli & Jaworski, 1990), (3) culturally based behavioral perspective (Narver & Slater, 1990), (4) strategic perspective (Ruekert, 1992), and (5) customer orientation perspective (Deshpandé et al., 1993). In the following, I aim to identify the core of the MO construct, shared across definitions and perspectives. The analysis begins with a discussion of the MO domain.

What is a market? All definitions of “market” in the MO literature include customers (current and potential/future) as the most important element (Sandvik, 1998). Furthermore, most definitions of MO include competitors; an exception is Deshpandé et al. (1993), who define MO as customer orientation. In addition to customers and competitors, some definitions (e.g., Kohli & Jaworski, 1990, p. 3) include in the MO construct “consideration of exogenous market factors (e.g., competition, regulations) that affect customer needs and preferences,” such as technology and “other environmental forces.” Also taken into consideration, especially in the MO and marketing literature, is that the common factor in all the definitions of “market”—namely, the customer—is itself a heterogeneous entity, as different customers (e.g., segments) have different needs.

What is a (market) “orientation”? According to Varadarajan (2017), the word “orientation” has a dual meaning. First, it refers to the process of retrieving information about something; according to the World Book Encyclopedia Dictionary (1966, p. 1365), orientation means “a finding out of the actual facts and conditions.” Second, it also refers to a pre-disposition to engage in specific behaviors directed to the objects of interest; according to Merriam-Webster’s Collegiate Dictionary (2003, p. 875), orientation is “a general point of view toward a topic or an object.” The MO construct intertwines the two. Although there are arguments in favor of this conceptualization (e.g., that an organization will collect information about something it cares dearly about), the unification of the two is problematic, as it masks a potential mismatch between the “general point of view” of a topic/object and the information basis for this specific view and/or actions based on it.

Mintzberg (1978) makes a distinction between strategy as plan and strategy as pattern of behavior. Herein, I focus not on the latter but on the former. Strategy as plan means that strategy is explicit, developed consciously and purposefully, and made in advance of the specific decisions to which it applies. The strategy perspective on MO (e.g., Ruekert, 1992) shares Mintzberg’s definition of strategy as plan, that is, an MO company serves customer needs by formulating a strategy based on customer/market information. Less clear in the MO perspective, however, is what the plan (strategy) to serve customer needs actually is. This also follows from the multidimensional nature of the construct as a hierarchical construct with customer orientation, competitor orientation, and interfunctional coordination (i.e., an internal focus) (Lukas & Ferrell, 2000). These different orientations may represent very different “plans” for how to serve customer needs (e.g., customer-centric product development vs. “copycat” strategies vs. product innovation based on needs that customers were hardly aware of).

The two dominant conceptualizations of MO in the literature are the market intelligence perspective (Kohli & Jaworski, 1990) and the culturally based behavioral perspective (Narver & Slater, 1990). On a theoretical level, they offer different conceptualizations of what an MO is. However, to operationalize their version of the MO concept, Narver and Slater do so in a fashion similar to Kohli and Jaworski (1990).

In summary, the MO concept as presented in the literature is hierarchical and multidimensional, which provides richness to it but also incorporates too much diversity to function well as a scientific construct. Drawing on the preceding discussion, I sum up three main properties of MO. First, across any conceptualization, the core idea is to deliver value to customers. However, knowing how to deliver value to customers (which is essentially a relative concept) is difficult without taking competitors into account. A broader conceptualization of “market” also makes sense (in line with Kohli & Jaworski 1990). For example, a firm may discover a customer value that could be commercially beneficial to serve, but public regulations hinder this opportunity. Or technology changes may give a company/business unit new market opportunities (e.g., ability to serve previously unserved customer needs) but also remove others (make an existing product or service obsolete).

Second, across any conceptualization, the company needs relevant information about what customers (potentially) value to be able to define and deliver that value. Getting access to this information may or may not imply asking customers directly. An illustration is the giving of a Christmas gift. Sometimes the best action is to ask someone who understands the needs of the intended receiver better than the giver does; at other times, the giver him- or herself has the best information. In a similar way, information could come from asking other customers (e.g., early adopters) than those the company assumes will be the main customers in the future (late adopters). Finally, information could come from observing other givers. For Christmas gift ideas, a giver could read lists of the “most popular gifts this year.” Whatever the base is, a company may have good or poor information for delivering value. In summary, delivering value to customers based on relevant information about their needs lies at the core of the MO construct.

Third, the firm might apply different strategies (plans) for delivering value to customers. Therefore, the strategies are different but, at the same time, share (1) the “orientation” that the strategy is sound only if it enables the company to deliver value to customers and (2) the “orientation” that to deliver value to customers, the strategy must be based on relevant customer/market information.

MO: Nomological network

This review covers the relationship between MO and firm performance, as well as the moderators of this relationship. (A more detailed version of this review is available from the author on request, and includes mediators of the MO–firm performance relationship.) The MO literature is particularly extensive and mature regarding the performance implications of MO. Therefore, I build my analysis of the MO–performance relationship on a set of articles carrying out review analyses or meta-analyses of this research issue. My review includes several key findings.

First, the main effect of MO on firm performance is positive across the research field, as reported by all the meta-studies/reviews included in Table 1. Liao et al. (2011) find this positive association in 36 of 38 articles they included for this specific part of their review, and they comment that “given the level of attention that MO receives in the literature, a finding indicating no relationship with performance might seem nearly heresy” (p. 303). The positive MO–performance relationship may also be the case when MO is deconstructed into its components, as in Grinstein’s (2008) meta-study. However, Grinstein’s finding is in contrast with that of Lukas and Ferrell (2000). In their study on the effect of MO on product innovation, they show that customer orientation, competitor orientation, and interfunctional coordination have opposite effects on product innovation outcomes. Interfunctional coordination has a positive effect and competitor orientation has a negative effect on product-line extensions. Competitor orientation has a positive effect and customer orientation and interfunctional coordination have a negative effect on the introduction of me-too products. Finally, they find that customer orientation has a positive effect and competitor orientation has a negative effect on the introduction of new-to-the-world products. Similarly, Atuahene-Gima et al. (2005) find that reactive and proactive MO (i.e., MO focusing on current vs. future customer needs, respectively) have different (U-shaped vs. inverted U-shaped) relationships to new-product program performance. In addition, they find that the interaction of the two has a negative effect on new-product program performance: by trying to serve both masters equally well, effectiveness is lost. These two rare reports of a negative MO–performance relationship show the value of deconstructing the MO construct. However, relevant detailing of performance dimensions should accompany deconstruction of MO to reap the benefits from this research strategy.

Table 1 MO and performance/other consequences (Note, all meta-studies included in the table report positive performance consequences related to MO)

Second, MO research suggests several potential moderators of the MO–firm performance relationship. These include national culture (e.g., low- vs. high-power-distance cultures), the level of economic development in the country in which the company operates (e.g., mature vs. emerging markets), differences in the task environment of the MO company (e.g., competitive intensity, technology turbulence), and the type of business (manufacturing vs. service). Recall that the starting point for the introduction of moderator variables is the unequivocal positive association between MO and firm performance, as reported in all the meta- and review studies included in Table 1. Despite extensive research efforts, however, the aggregated evidence does not reveal such substantive moderators (see Table 2 for details). As an illustration, consider the suggestion that national culture moderates the MO–performance relationship (the first group of suggested moderators in Table 2). In their meta-study, Kirca et al. (2005) find that the MO–performance relationship is stronger in low- (vs. high-) power-distance cultures and in cultures characterized by low (vs. high) uncertainty avoidance. By contrast, Grinstein (2008) finds that the MO–performance relationship is stronger in high- (vs. low-) power-distance cultures. Moreover, Grinstein finds no moderating effect of uncertainty avoidance on the MO–performance relationship, nor an effect of masculinity or long-term orientation. He also finds that the MO–performance relationship is stronger in individualistic (vs. collectivist) cultures; however, Cano et al. (2004) find no moderating effect of this cultural dimension. In summary, little evidence supports claims of a moderating effect of national culture on the MO–performance relationship. As can be seen from Table 2, this lack of support for suggested moderation effects (enhanced or weakened MO–performance association) is the case for all the suggested substantive moderators. Relatedly, there is an absence of aggregated data that suggest nonmonotonic effects related to any moderator variables (i.e., that a high or low value of any given moderator will turn the effect of MO on performance from positive to negative).

Table 2 MO and performance: moderators

Third, the only moderator that systematically alters the positive MO–firm performance relationship pertains to construct measurement. The MO–firm performance relationship is stronger when a study applies a subjective rather than an objective measure for firm performance. This finding signals a common method variance problem, which is a frequent problem of research based on psychometric data.

In conclusion, despite extensive research efforts, evidence of any substantive moderators of the positive MO–firm performance relationship is difficult to find. I propose and discuss in this paper that the lack of empirical results suggesting any negative performance effects related to MO may be due to the way MO (MO “as is”) is conceptualized as an integrated, multilevel, and multidimensional construct).

A comparative assessment of alternative ways forward for the MO construct and theory

Scholars have examined MO for more than 30 years. MO as a multidimensional and multilevel construct, as defined, has uniform and overwhelmingly positive performance consequences. No suggested substantive moderators change (amplify, dampen, or reverse) this MO–performance pattern, despite the considerable research efforts spent to uncover them. As Jaworski and Kohli (2017, p. 11) reflect, “It could be argued that the Kohli/Jaworski approach is too abstract and broad. The framework does not work the same way operationally for all types of businesses.” The question then becomes, where can the field go from here to progress? I identify four main options: (1) abandon the MO construct altogether; (2) do nothing and keep MO “as is”; (3) deconstruct MO, specifically by treating MO as customer orientation (MO = CO); or (4) deconstruct MO, specifically by treating MO as a class of orientations. I begin with the option to abandon MO altogether, followed by a comparative analysis of the other three options.

In light of the problematic issues related to the current conceptualization of MO, should the field then abandon the MO construct altogether? Doing so, however, is akin to “throwing the baby out with the bathwater.” The problematic aspects of the current conceptualization (i.e., MO as a multidimensional, multilevel construct) (e.g., Kohli & Jaworski, 1990; Narver & Slater, 1990) do not alter the significance for companies of the phenomena of MO with which research deals. The two fundamentals of MO—competing by creating customer value and gaining relevant information to create such customer value—represent strategic challenges regardless of the problems in conceptualizing them. Weaknesses in the current conceptualization do, however, indicate a need for major improvements.

I provide a brief comparison of the other three options for future MO research as identified using the criteria of Cramer (2013): comprehensiveness, precision, testability, parsimony, and applied value. Comprehensiveness is the range of phenomena that a theory explains or predicts. Precision entails decreasing orders of the magnitude of measurement that is incorporated into a theory (Agassi, 1968). For example, simply saying that “MO increases profitability” is less precise than proposing an interval (e.g., between a 5 and 10% increase in profit) or even a point estimate (10%) for a one standard deviation increase in MO. Testability is a function of precision as described, as well as the rigor of instruments used to test it. A parsimonious theory offers a trimmed (simple, slim) conceptualization of the world—that is, the phenomenon of scrutiny. Finally, applied value is the extent to which the theory offers effective solutions to life’s problems (Cramer, 2013).

MO “as is” is a parsimonious theory with moderate comprehensiveness. That is, as noted previously, it offers a simple conceptualization of how a company can navigate and compete in a market. As evident in the literature review, the base theory gains support in highly differentiated contexts. In this sense, comprehensiveness of the theory is relatively high. By contrast, MO “as is” seems less capable of detailing the performance consequences of MO. It is also less helpful when research aims to scrutinize mismatches of the various elements in this highly aggregated construct (e.g., mismatch of strategy and information flow into and within the company), with related potential negative performance effects. It will, as Jaworski and Kohli (2017) acknowledge, be difficult (or even impossible) to demonstrate situations in which MO actually performs poorly, exactly because the construct is too abstract and broad.

Assessing the precision and testability of MO “as is” as low or moderate is fair. Precision is altogether low (from a lack of detailing, as the construct is highly aggregated), with corresponding problems related to testability. As is evident in the review of the empirical studies of MO, it is difficult to establish boundary conditions for main predictions involving MO “as is,” such as the proposition that MO improves firm performance. Finally, applied value, or the extent to which the theory offers effective solutions to problems (Cramer, 2013), is moderate. Thus, although MO (“as is”) theory tells an important story about the need to embed company strategy in knowledge about customer needs and market development, it is limited in details and trade-offs.

Treating MO as customer orientation (MO = CO) offers, as does MO “as is,” a parsimonious theory on viable firm strategy but also a more contingent story, as it concerns the relationship between CO and firm performance (I discuss the detailing of customer-centric strategy subsequently). Similar to MO “as is,” MO = CO scores moderately on comprehensiveness, but it differs from MO “as is” in that it has a more limited range of applications but for which it offers a more detailed theory. Given this latter quality, it scores better than MO “as is” on precision and applied value.

Finally, MO as a construct class of orientations presents a less simple, more complex conceptualization of MO than the alternatives do. In short, the construct-class solution offers a somewhat less parsimonious conceptualization. The payoff from the class solution is high comprehensiveness, as it is applicable to a large number of market strategy trade-offs and related information needs. This quality is the area in which MO as a class of orientations scores better than MO = CO, which has a more limited scope. As with MO = CO, with MO as a class of orientations, in which theory (hypothesis) development, variable measurement, and empirical testing happen at the class member level (alternative orientations/strategies), precision, testability, and applied value should be high. Overall, then, MO as a class of orientations is the favored reconceptualization of the construct. Note that this conceptualization deals with MO as plural phenomena, a group of orientations (MOs) that share certain properties (see the following definition) but differ on important others. Customer-centric/customer orientation, innovation orientation, and competitor orientation are central manifestations of MO (I return to this subsequently). I offer the following definition of MO based on this conceptualization (see also the preceding discussion of the MO construct) and provide details next:

MO is the degree to which the firm (1) obtains and uses information about customer needs and market conditions and (2) develops, on the basis of this information, a strategy to meet customer needs. MO firms may differ in type of market strategy they operate and information they obtain and use.

MO as a class of orientations/strategies

Following Jaworski and Kohli (2017), I suggest treating MO as a class of orientations (or strategies). (I also suggest—for each individual MO—discriminating, as per measurement model, between orientation-as-strategy and orientation-as-information. I return to this issue subsequently.) The choice to conceptualize MO as a class of strategies reflects the specific interest herein in the MO–performance relationship. A “strategy” for a firm is a plan for how to compete in the market (Mintzberg, 1978) in a way that gives the company a competitive edge and, thus, better performance. Therefore, MO as strategy is a natural anchor for the conceptualization of MO in this article. The conceptualization acknowledges that objects that belong to the class (alternative MO strategies) have common features. At the same time, the primary level at which theory development, construct definition, and variable operationalization takes place is at the class member level (the individual MO strategy level, e.g., customer-centric strategy), not the class level. Regardless, research projects surely may and should contrast different MOs under different scenarios.

Table 3 summarizes this conceptualization. The table illustrates customer-centric/customer-oriented, innovation-oriented/interfunctional coordination, and copycat/competitor-oriented strategies as three alternative MO strategies. I use these MO strategies to illustrate the class solution for three reasons. First, they originate from the original MO conceptualization of Kohli and Jaworski (1990) and Narver and Slater (1990), as subdimensions of an integrated MO construct. This correspondence between object of deconstruction (MO “as is”) and reconstruction (MO as construct class) ensures correspondence between problem and solution. Second, Lukas and Ferrell (2000) also use these three MO strategies in their study, which is one of the few studies to apply a deconstructed conceptualization of MO. Third, although the selection of the three MOs ensures correspondence between object of deconstruction (MO “as is”) and reconstruction (MO as construct class), it does not ensure perfect correspondence between the construct-class solution and the theoretical universe of MOs. In other words, I do not rule out the possibility that relevant MOs other than the three presented exist or could be argued for (see also the discussion on “combinatory orientations”). However, the main categories of market strategies are represented. At a basic level, the strategy literature (Porter, 1980) discriminates between strategies based on cost advantage/price leadership and differentiation strategies. A price leadership strategy creates added net value for customers by offering the same basic product/solution as competitors, but for a lower price/total customer cost. To be profitable, the price leader needs to be able to operate at comparably lower costs than its competitors. Differentiation strategies are a plurality as a company can differentiate in several ways and on several dimensions, such as product quality, service, and product design. Alternative forms of differentiation add value to the customer in some form, in return for a price premium, added sales, customer loyalty, or other market returns for the firm. For a differentiation strategy to be profitable, the resulting added revenue (market returns) must exceed the added costs related to the strategy. These two basic (“generic”) strategies (or strategy categories) are represented in the chosen conceptualization. The competitor orientation/copycat strategy is a cost advantage/price leadership strategy. Customer-centric/customer orientation and innovation strategy/interfunctional orientation are differentiation strategies. Note that the chosen conceptualization must make some additional simplifications. For example, a “copycat” strategy is not the only competitor-oriented strategy that a firm may apply; a competitor-oriented strategy could be a price-focused or a “beat-the-competitor” type of strategy as well. Thus, the current research selects the copycat strategy as one representative competitor-oriented strategy. In the same vein, in many markets a customer-centric and an innovation-oriented strategy are different entities; however, in markets with highly competent customers, most notably business-to-business (B2B) but also sometimes business-to-consumer (B2C) markets, the two strategies may be identical and thus collapse into one entity. I return to this issue subsequently.

Table 3 MO as a class of orientations

On the one hand, the class solution acknowledges that alternative forms of MO have common features; on the other hand, this conceptualization also identifies important differences between these forms in terms of competitive logic (i.e., why the strategy would potentially bring profitability and growth to the company) and the major risks related to them. As part of this effort, I identify (in line with Jaworski & Kohli, 2017) potential moderators to the MO strategy–firm performance relationship: when might a given MO strategy (e.g., customer-centric) perform well or poorly?

The common features shared across the three strategies are, first, the premise that competitive strength depends on the ability to deliver value to customers. Second, all the MO strategies share the idea that for a firm to be able to deliver value to customers, it must have information that enables it to understand customer needs.

The Venn diagram in Fig. 1 further illustrates the conceptualization. To begin with, the original MO, as formulated by Kohli and Jaworski (1990) and Narver and Slater (1990), contains all three orientations/strategies in Fig. 1 within a common construct. The construct-class solution reads from the figure as follows: different MOs share a common core, in which the company (1) obtains and uses information about customer needs and market conditions and (2) develops, on the basis of this information, a strategy to meet customer needs. What value the strategy aims to deliver to the customer, and what customer/market information the company controls (or not), varies between the three defined MOs. The figure does not visualize the degree to which orientation-as-strategy and orientation-as-information correspond (or not) with each other (i.e., in the figure, this match is a fixed correlation).

Fig. 1

MO as a class of constructs

Note, first, that which dimensions most effectively discriminate (e.g., two alternative MO strategies) will differ from one paired comparison to another. Second, as is common for most conceptualizations in marketing, strategy, and social science more broadly, dimensions used to identify contrasting features of MO strategies are seldom or never perfectly uncorrelated. As the dimensions are correlated, the X–Y angle will be less than 90 degrees. Therefore, and because they share a common core, MO strategies will never be mutually exclusive. They are, however, distinctly different, as dimensions Y and X indicate. For example, the y-axis could be the contrast between radical and incremental product innovations or between internal and external information as primary in new product development (NPD). The x-axis, which contrasts primarily customer-centric and competitor-oriented strategies, differs (from low to high) in primary external sources of information (customers vs. competitors/industry experts) and the process of information transfer (interaction vs. observation).

Finally, “combinatory” strategies (to be explained in more detail subsequently), in which one MO strategy complements another (e.g., customer-centric strategy supported by competitor surveillance for screening of customer initiatives), would be represented in the figure by (for the given example) the customer-centric area plus parts of the competitor-centric area. Next, I offer a closer description of the three MO strategies.

Customer-centric/customer-oriented strategy

This strategy is fundamentally relational (e.g., Jap, 1999; Shah et al., 2006; Sheth et al., 2000)—a win-win strategy with the aim to achieve “pie expansion” for the benefit of customers and firms alike. The relationship with customers gives firms access to information about customer preferences and needs, from sources such as customer cards, firms’ social media platforms, and one-to-one customer–firm correspondence (e.g., emails, phone contacts). Firms tailor their communications, products/services, and pricing (e.g., discount offers) according to their knowledge about customer preferences. These adapted and improved offers affect customer value, satisfaction, and loyalty. In return, firms can harvest their fair share of the added value in the exchange through increased sales volume, added sales margin, and the like.

A customer-centric strategy has risks and pitfalls as well (Anderson & Jap, 2005; Nguyen et al., 2015). First, as with any relational strategy—both B2C and B2B—it does not come for free. Adaptation to customer needs requires resources in the form of time, cost of adapting product or process, and potential loss of scale economies. If, however, the firm’s effort does not cause the intended quasi-integration of the customer (e.g., increased customer loyalty, willingness to pay higher prices), the firm faces a potential loss. This is the essential idea behind transaction-cost economics (e.g., Williamson, 1985, 1991). Technology (most notable in B2C markets) affects automatization of many of the processes involved and lowers direct costs, but it requires system investments (e.g., databases, employee competencies). Second, customer information gathering and adaptation of communications and product/service offers based on this information can, in themselves, provoke negative customer responses due to the lack of customer privacy, concerns about fair and equal treatment, and so on. Third, by being too adaptive to expressed current customer needs, long-term innovation initiatives may not be able to compete internally for the needed resources (Christensen & Bower, 1996).

Innovation-oriented/interfunctional strategy

The competitive logic of an innovation-oriented strategy (with a focus on a high level of interfunctional coordination and company-internal communication) is to create added value for customers. The strategy offers additional value by presenting new products/services in addition to existing solutions. Because the solution is innovative, it is unlikely that customers are the primary or best source of information required to develop it. As Ernesto Gismondi, chair of Artimide, an Italian manufacture of lighting developed by designers and architects, explained: “Market? What market? We do not look at market needs. We make proposals to people” (Verganti, 2008, p. 442). Instead, input necessary to understand customer needs and solutions that may cover these needs comes from cross-functional teams within the company as well as external contributors (e.g., suppliers, designers, research labs). The strategy, if successful, will enable the company to offer new-to-the-market products or services. However, given that only one company can be first to market with a given product, an innovation-oriented strategy will alternatively enable the company to be a fast second follower. New products/services offer unique or improved value propositions to customers, leading to lower competition (for a period) and potentially positive consequences, such as additional sales, price premiums, and higher firm growth (Bayus et al., 2003).

Prior research suggests that high innovation and NPD positively contribute to firm performance (e.g., Szymanski et al., 2007). However, research also indicates that this positive impact declines over time (Shenkar, 2012). The challenge is that followers need shorter time to present me-too products than was previously the case. For example, Bayus et al. (2003) find that new product introductions in the computer industry had positive effects on profit rate and size, but only the first year after the event. In their specific setting, the gain from innovative products was primarily due to lower marketing and general administrative expenditures; the newness made the products “sell themselves,” an effect often associated with Spanish fashion company Zara with its “Fast fashion” strategy (Ghemawat & Iniesta, 2003).

An innovation-oriented strategy creates three types of risk. First, it can incur higher NPD costs than the relative benefits of the innovation. This seems to be the case for the Airbus A380 super-jumbo. Airbus has canceled (according to its announcement in February 2019) production of the jet after 2021, after investments of £25 billion in developing the jet. Second, first-to-market products may face costs of developing the market or even the risk of the market not developing. Exactly because a product is radically new its value depends on supporting infrastructure that may be in short supply (e.g., large runways for Airbus A380, charging network for electric vehicles). Third, firms face competition from me-too brands. The severity of the competition from market followers depends on the relative balance of first-mover advantages and disadvantages. As mentioned, first-mover disadvantages are potentially linked to higher NPD costs, market development costs, and, consequently, higher risk. Potential first-mover advantages include a temporary monopoly for products. This lead time has potential benefits in both the short and long run (Kerin et al., 1992; von Hippel, 1984). As long as the innovator is the only seller in the market, it can gain a time-constrained monopoly profit from a skimming price strategy. In the long run, competitors will present competing products; however, even with the arrival of competitors, the innovator may still enjoy a competitive advantage stemming from lower production costs (e.g., being ahead at the experience curve, scale economies from investments that preempt competitors from investing at the same scale) and also customer valuation (e.g., switching costs, becoming the prototypical brand).

Copycat or competitor-oriented strategy

The customer-centric/customer-orientation and innovation orientation presented are (moderate vs. more radical) differentiation strategies (Porter, 1980). If successful, the company adds some form of value to the customer (e.g., adapted solution, product innovation, better design, product quality and design) for market returns such as customer loyalty, price premium, and so on. By contrast, a copycat or competitor-oriented strategy is fundamentally a cost-leadership (low-price) strategy. The value proposition to the customer is lower cost/price for the same basic product/service attributes. A copycat or competitor-oriented strategy achieves this by offering products/solutions that have been successful for other companies. The two major forms of this strategy are the pioneer importer and the latecomer entry (Shenkar, 2012). Note that Shenkar (2012) includes the “fast second follower” as a copycat strategy, but I chose to categorize it as an innovation-oriented strategy. It can belong to both. Essentially, where a fast second follower belongs in this scheme depends on the process bringing about the outcome (slow innovation or fast imitation), not the outcome itself. The copycat strategy frequently incurs low cost because the imitator saves significant initial costs of product and market development. With a copycat strategy, input required to understand customer needs and solutions that may cover these needs come from adapting product/service solutions already available either in the copycats’ own market or in markets overseas. Regarding the reward/risk profile of the copycat, the arguments are largely the same as for the innovator, except with the opposite sign. Lower NPD and market development costs are, as mentioned, the main advantages of this strategic orientation. The risks are twofold. First, by being less innovative, the copycat (in particular the latecomer entry) risks presenting a weak value proposition and entering a crowded me-too product market. Second, because the innovative first-mover also (ideally) gains experience curve and scale economies, as well as marketing advantages (brand equity, customer switching costs), the copycat may find itself able to compete neither on cost nor on (perceived) value.

Potential moderators

Under which conditions is it reasonable to expect the alternative MO strategies to perform well or poorly? Table 4 summarizes relevant contingencies/moderators for the MO strategy–firm performance association. The aim here is not to provide a complete list of potential contingencies but rather to suggest a selection of relevant contingencies. I classify potential moderators for the effect of a given strategy on firm performance into two groups (Kerin et al., 1992): variables at the product/transaction level and variables at the higher level (firm, dyad, or industry level). Note that factors that favor moving first or early on an innovation-oriented/interfunctional coordination strategy will mirror factors that make moving later on a copycat/competitor-oriented strategy less viable, and vice versa; as such, I unify into one the discussion of the two.

Table 4 Contingencies affecting the relative competitive strength of alternative MOs

As noted, the customer-centric strategy is a relational win-win strategy. Transaction-cost theory (e.g., Williamson, 1985) offers a framework for analyzing this strategy. Key variables in the theory are specific investments, transaction value/frequency, and uncertainty. For a customer-centric strategy to work well, the gains from the strategy (added value for customers from products/services adapted to their needs) must be higher than the costs for adapting and making investments tailored to the needs of customers. The relevance of tailored investments and adaptations depends on the significance (economic value and frequency) of the trade. With low transaction value, investing in and adapting to the exchange may not pay off. Finally, relationalism makes sense when the trade happens in uncertain environments. Communication with customers increases firms’ ability to cope with external changes (Noordewier et al., 1990). Value creation is a necessary, but not sufficient, condition for a relational, customer-centric strategy to be beneficial for firms. However, firms must also be able to get their fair share of the value created to defend added operating and investment costs. In a customer-centric strategy, the payback comes in two ways. First, the close relationship with customers provides information that makes it easier for firms to adapt to customers efficiently. Second, firms gain added value in the exchange from increased customer value, satisfaction, and loyalty, which increase sales volume and provide higher sales margins. In other words, while vertical integration (ownership) and vertical quasi-integration (formal and informal contracts) are common to protect specific investments in B2B markets, in B2C markets “vertical integration” is a matter first and foremost (but not exclusively) of informal quasi-integration (commitment, loyalty, and trust).

Note that customer centricity as an overall strategy has several elements. The causal relationship is first to listen; second to adapt; third to create customer satisfaction, commitment, and loyalty; and fourth to improve performance through these positive relational outcomes. The causal order is not a given, however, as there will be clear feedback loops; for example, a firm should not try to adapt if it does not receive customer commitment and loyalty in return. Finally, firms must pay attention to a possible match or mismatch between elements of the overall strategy. An example is overly investing in or adapting to (B2B or B2C) customers if these customers have a (too) high tendency to switch brands/products and the investment does not create customer switching costs. Another example is adaptation based on poor information about customer preferences, in which adaptation and investment costs are higher than the extra value created for customers.

Palmatier et al.’s (2006) meta-study demonstrates the relevance of several of these dimensions. They find that relationship benefits, relationship investment, interaction frequency, and communication precede relational outcomes (trust and commitment), which in turn affect customer loyalty, cooperation, and firm objective performance. For moderators, they find that the positive association between relational outcomes and performance was stronger when relationships were more critical to customers (service offerings vs. products, channel/B2B markets vs. B2C) and when relationships involved an individual person rather than (just) a firm. All these moderating effects are in accordance with a transaction-cost logic—performance improves when the firm matches more complex and important transactions with a higher level of (relational) governance. The study of Homburg et al. (2011) also supports the rationale. They find an optimum level of salesperson customer orientation and that this level is higher if products/transactions are important, if a supplier’s products are individualized rather than standardized, and if the supplier’s price positioning is above rather than below market average.

Environmental uncertainty implies a need to adapt to changes in the environment. As Noordewier et al. (1990) demonstrate in a B2B setting, such environmental uncertainty may further increase the value of a customer-centric, relational strategy. Finally, if the power–dependence structure is in disfavor of the firm and in favor of the customer, the firm should be cautious in making further investments. Given such a scenario, it may be necessary for the firm, to secure its investment, to introduce or increase vertical coordination through formal contractual claims (Buvik & Reve, 2001).

The literature on first-mover versus late-mover advantages suggests moderators for the relative competitive advantage related to an innovation-oriented strategy versus a copycat or competitor-oriented strategy. The innovation-oriented strategy gains its competitive advantage from developing a unique value proposition for customers, which ideally is the basis for both short- and long-term gains. The innovator’s short-term gains reflect its monopoly situation before competitors enter the market with competing products; its long-term gains reflect marketing (e.g., unique brand position, customer switching costs) and production cost advantages (e.g., economies of scale, experience curve). Note that these gains for innovation-oriented first movers are a function of the sequencing of events—being first to market. By contrast, the copycat or competitor-oriented strategy gains its competitive advantage from offering a product/service comparable to the innovator, but with significantly lower NPD and market development costs and also lower investment risks, as more technical and competitive parameters are set in later stages of the product life cycle.

Moderators to the strategy orientation–performance link are factors that tilt the advantage/disadvantage balance between first movers (innovation orientation) and followers (competitor-oriented copycats). If being first to the market erects entry barriers for later entrants, moving first is likely to be a source of competitive advantage. If not, moving first incurs higher NPD and market development costs and higher risk. Prior research suggests several factors that change the balance of relative gains from being first to being second or later (e.g., Hoch & Banerji 1993; Kerin et al., 1992; Lieberman & Montgomery, 1988, 1998). Following Kerin et al. (1992), I discriminate between moderators at the product/transaction level (potentially affecting subsequent consumer behavior in relation to first movers’ products or services and thus the potential market advantages from moving first) and moderators at the industry level (factors that potentially influence the association between moving first and subsequent costs advantages). Note, however, that a few suggested moderators cut across this distinction; for example, a transaction attribute (i.e., product/transaction level) may co-vary with an industry-level attribute (B2C vs. B2B).

Several variables at the product/transaction level have the potential to affect the level of switching costs for customers. Customer-specific investments in, for example, equipment or expertise, are sources of switching costs. The same is the case for costs of searching for information about competing products. If the product is an experience good (Nelson, 1980; Wilde, 1980), benefits can be determined by customers only after purchasing and using the good. By contrast, customers can assess search goods before acquisition and use. Switching costs are then higher for experience goods; they are also higher the higher the costs of making a purchase mistake (i.e., the higher the perceived risk) (Kraljic, 1983; Porter, 1983; Kerin et al., 1992) suggest that purchase frequency affects the level of switching costs. With high purchase frequency, the perceived risk of product trial is likely to be low, and switching costs will be low. Conversely, low purchase frequency minimizes consumption experience asymmetry. Thus, switching costs should be highest for medium levels of purchase frequency.

Rate and continuity of technological change, changes in marketing channels, and rate and continuity of changes in consumer preferences are also likely to have a negative effect on the competitive advantage from moving first into the market. Changes such as these may neutralize the first-mover advantages from consumer switching costs and being first on the experience curve (Kerin et al., 1992).

Finally, moving first into a market may grant a significant competitive advantage if there is a communication good effect (i.e., if the value of a service is a function of the number of users). An archetypical example of this is Facebook, for which the value of the platform for a given user depends on family, friends, and the wider social network being present on the same platform.

Moderators at the industry level potentially influence the association between moving first and subsequent cost advantages. Recall that potential first-mover cost advantages come from scale, being first on the experience curve, or pre-emption of input resources. Kerin et al. (1992) suggest that the higher the demand uncertainty, the less likely it is that the first mover will be willing to commit substantial resources with correspondingly subsequent scale advantages. Thus, there is likely to be an inverse relationship between demand uncertainty and first movers’ scale-dependent cost advantage. The same effect on first movers’ ability to make pre-emptive investments and issue long-term contracts with suppliers, distribution channel partners, and the like relates to demand uncertainty (Gal-Or, 1985, 1987). Product characteristics can affect first movers’ pre-emptive advantages. When a product is technically complex or requires complementary items or spare parts, channel members might be reluctant to carry second or third brands (Boyd & Walker, 1990; Kerin et al., 1992; Lieberman & Montgomery, 1990).

Minimum efficient scale (MES) is the smallest volume for which unit costs are at a minimum. The lower the ratio of MES to the size of the market, the smaller are the first mover’s scale-dependent cost advantages (Kerin et al., 1992). This effect is (and has been for some time) present in the brewery industry, in which new technology has reduced MES and thus increased competition from new suppliers (i.e., late entrants).

In industries with high advertising intensity, first movers will have stronger advantages than later entrants (Hoch & Banerji, 1993; Kerin et al., 1992). With high advertising intensity, it is even more costly for later entrants to build a market position. Note, however, that the argument is strictly on a ceteris paribus basis. High advertising intensity often reflects low product differentiation; product differentiation is in itself a source of first-mover advantages.

Combinatory orientations

With varying relevance from one industry to another, companies may need to serve conflicting strategic needs. A company may need to be able to both explore new possibilities (radical innovation) and exploit the current product portfolio through process improvements and incremental product improvements. The ability to cope with such tension is called “organizational ambidexterity” (Andriopoulos & Lewis, 2009; Duncan, 1976).

The need for organizational ambidexterity is high in industries with a high level of competition and in which innovation is the winning formula, such as fashion and art. Tensions, however, may come in other and less radical forms. Companies solve the exploration/exploitation dilemma by different means, such as structural separation. I describe in the following paragraphs a set of combinatory orientations. These are examples of contextual ambidexterity, in which companies solve dilemmas through coordination and integration of task processes. With regard to the distinction between orientation-as-strategy/plan and orientation-as-information gathered or sought, how can a given MO (as strategy) be supported by another MO (as information gathered)?

Again, the competitive logic of a customer-centric strategy is to create added value for customers by identifying and adapting to their needs. Internal communication (associated with interfunctional coordination) enhances a customer-centric strategy by internal coordination and implementation of the initiatives stemming from the customer side. Competitor information may help screen customer proposals. Although the needs and innovativeness of different customer bases will vary, there will also be similarities. For example, a company may say no to a customer proposal because it has observed negative consequences when tried by competitors. Second, the customer-centric company can use competitor information to fine-tune segmentation and targeting. Finally, taking account of how other companies have organized similar efforts makes the implementation of the customer-centric strategy easier.

Recall, the competitive logic of an innovation-oriented strategy (with a focus on a high level of interfunctional coordination and company-internal communication) is to create added value to the customer by offering a new product/service relative to existing solutions. In contrast with a customer-centric strategy, the firm generates NPD ideas internally. In later phases of the NPD process, however, feedback and suggestions from customers become more relevant. In addition, the innovation-oriented company will collect customer information from early adopters in contrast with a customer-centric strategy where segments that adopt later are more relevant.

The effect of competitor information as a supplement to an innovation-oriented strategy has similarities to its effect as a supplement to a customer-centric strategy. Competitor information may facilitate more effective proposal screening, segmentation, and targeting of the intended product/service offer and ideas for effective strategy implementation. The more radical the innovation idea is, the more difficult it may be to learn relevant lessons from competing firms.

As noted, the competitive logic of a copycat/competitor-oriented strategy is to create added value for customer by offering similar products/solutions of other companies. The copycat firm must adapt or “translate” the copy to the market in which it operates, particularly its marketing program (4Ps). The more distinct the market (pioneer importer) or market segment (latecomer entry) to the original market/segment, the greater is the potential value of adaptation. The actual level of adaptation will be a question of benefit/cost balance for the company. The more the firm adapts to the market/segment into which it moves the copied product/service, the more value it will have from customer information from the same market/segment. Interfunctional coordination in support of a copycat/competitor-oriented strategy may include processes such as reverse engineering, marketing plan formulation and implementation, and the like.

Orientation-as-strategy/plan versus orientation-as-information

With the dual meaning of “orientation” as strategy/plan and information, an MO company is likely to be successful if (as previously discussed) its MO is well aligned with its internal and/or network resources and competitive environment. However, in accordance with the traditional, integrated construct, MO not only includes very different strategies but also assumes (by lack of discriminating the two) a match between strategy/plan and information.

I suggest unpacking this assumed match between strategy/plan and information by means of a modifed measurement approach. Table 5 provides a preliminary draft of such a measurement model, as well as sources for the items. The copycat/competitor orientation is an exception (i.e.,no source is given), as it (for strategy/orientation) mirrors the innovation orientation items, adjusted for the contrast in the value it aims to deliver to customers. As regards the kind of information sought, the copycat/competitor orientation uses the items (1-3) for customer orientation as a starting point, but then adjusts these item for the difference between customers and competitors as the primary source of information.

Table 5 MO as class of constructs: Measurement approach

Operationalization of MO into orientation-as-strategy and orientation-as-information offers a more detailed analysis of the association between MO and company performance. Table 6 summarizes (some examples) of mismatched scenarios among individual MO (strategy), competitive environment, and individual MO (information). (I make only a brief presentation of Table 6 here as I return to it in the closing section [discussion and conclusion] of the article). In Table 6, the left column summarizes (some) scenarios (for each individual MO) of the mismatch between orientation-as-strategy and the competitive environment. The right column summarizes (some) scenarios (for each individual MO) of the mismatch between orientation-as-strategy and orientation-as-information. The two main mismatched scenarios in this category are that the company (1) collects or controls too little information or (2) collects or controls the wrong kind of information. Either scenario implies that the firm combines, for example, a high customer-centric strategy with a low level of effort to collect customer information. For the latter situation, a low level of customer data collection would be combined with (and to some extent caused by) a high level of effort to collect other information (e.g., too much focus on competitors’ moves or internal communication).

Table 6 Alternative MOs and (some) potential misalignments among orientation-as-strategy/plan, competitive environment, and orientation-as-information

Some closing comments on markets and orientations

Steve Jobs (Apple) famously asked John Sculley (president of PepsiCo) whether he wanted to sell sugar water for the rest of his life or come with Jobs and change the world (Gallo, 2016). The contrast between brown sugar water and Apple’s innovative products of the time (and later) implies very different notions of what a “market” is—a market (already) exists in the former case but is only envisioned and, over time, created in the latter. The two are surely very different situations and thus may require very different approaches. If a company engages in incremental innovations, existing/prospective customers are a valuable source of information. By contrast, for radical innovations, input necessary to understand customer needs and solutions that may cover these needs comes from both cross-functional teams in the company and external contributors (e.g., suppliers, designers, research labs). Radical innovations are also risky—actually, rather than risk (which can be quantified and controlled), they are full of uncertainty (unknown possible outcomes and their probabilities). Therefore, the marketing strategy decision process is quite different. Read et al. (2009) describe these two contrasting strategy decision processes (related to established products/services in established markets vs. radical innovations in markets still to be established) as the predictive versus the effectual approach. In addition to predicting what will happen in an established market versus envisioning and creating new markets, effectual approach goals are difficult to define because the situation is highly uncertain. Rather, with an effectual approach, focus should be on what resources are available (e.g., people, networks) for innovative projects, how much the organization can afford to lose (e.g., “burn-rate”) versus its expected returns, and use of partnerships to create value rather than competition to maximize the share of value created. Thus, with radical innovations, MO is often about envisioned rather than existing customers. Future customers may have needs they are not aware of today, and companies need to define these needs and possible solutions.

Related to this theme of the existence (established) versus creation of (new) markets is the role of customers and customer relationships. Whereas innovation orientation with radical innovations takes place within intra- and interorganizational relationships (or networks), a customer-centric strategy, in pursuit of incremental product development, involves customers in the process. However, in markets with highly competent customers, the two strategies may (more or less) collapse into one strategy/orientation, with customers taking part also in radical innovations. This is most likely to happen in B2B markets (Cui & Wu, 2016) with a limited number of large and professional customers (e.g., shipping, car manufacturing), but it could also occur in B2C markets with “geeky” customer (e.g., open software). Some scholars argue that cocreation between suppliers and customers characterizes market exchanges in general (e.g., Vargo & Lusch, 2011).

In summary, research needs to be sensitive to the context-specific meaning of both “market” and “orientation” (as strategy and/or as information). Markets may be envisioned, prospective, or existing. The choice set of relevant orientations/strategies may change from one context to another, as illustrated previously. Finally, the strategy approach—how goals, means, and outcomes are defined and the processes connecting them—can also vary.

Discussion and conclusion

In this article, I argue that there is a need to deconstruct the MO concept. As observed by Jaworski and Kohli themselves (2017), the MO construct (MO “as is”) is (maybe) “too abstract and broad.” Ironically, this broad conceptualization (i.e., MO “as is” as an integrated, multilevel, and multidimensional construct) enables testing of a rather narrow theory. With the risk of being provocative to some readers, 30-plus years of research and empirical testing can be summarized in the following proposition:

MO (“as is”) summary proposition: A(ny) market strategy performs better when backed by more (vs. less) extensive market information.

As the review of the MO literature shows, the MO summary proposition has received a wealth of empirical support. No suggested substantive moderators change (amplify, dampen, or reverse) this MO–performance pattern, despite the considerable research efforts spent to uncover them. However, the MO summary proposition is not a very surprising logical deduction. Indeed, the logic is rather obvious. Hence, the extensive support of the proposition evident in empirical studies appears less impressive.

One way to deconstruct MO is by defining MO more narrowly as customer orientation. However, this solution excludes from further scrutiny important questions about the multifaceted nature and role of customer/market information in the strategy process of companies. A better solution, and my primary suggestion in this article, is to reconstruct MO as a class of orientations that share certain properties but diverge on important others. It is worth noting that because the three individual MOs identified and described in this article all come from the original MO conceptualization of Kohli and Jaworski (1990) and Narver and Slater (1990), MO as customer orientation is a member of the MO construct class. Thus, in that sense, the construct-class solution includes MO as a customer-orientation solution.

The main takeaways from the suggested reconceptualization of MO into a construct class are threefold. First, the reconceptualization of MO implies building and testing theory by using less aggregated constructs (individual MOs, such as customer orientation). This approach will enhance the precision and testability of theory. Achieving this greater precision has been my primary objective in this article.

Another of my aims in this article was to demonstrate that deconstructing the MO concept has the potential to open up myriad research questions and research opportunities. Using the more specifically defined and narrowly constructed variables that derive from the construct-class solution exposes the dilemmas involved in strategic decision-making. In this article, I identified the potential advantages and the costs and/or risks connected with alternative orientations (strategies). This more specific conceptualization of MO has the potential of identifying the conditions for a given MO to associate with increased firm performance and vice versa conditions when the same MO may cause negative performance consequences. Deconstruction of MO does not exclude the possibility of comparing broader (combinatory) orientations with the more narrowly defined alternatives. An example of such comes from Jaworski and Kohli (2017), who raise the question of when a customer-oriented company may be better suited to compete in a market other than an MO one (and vice versa).

MO as originally formulated (MO “as is”) presumes that the market-oriented company is “oriented” in a dual sense of the word. The “oriented” firm has both an orientation-as-strategy (a plan, the competitive logic it builds on) and an “orientation” (information) relevant for effectively detailing and implementing the strategy. However, the two may not go in tandem. Therefore, a company may underperform for two reasons. The company may underperform because of a strategic mismatch (see Table 6), i.e., where the competitive environment does not favor the strategy. The strategy can also underperform or fail because of limited access to information relevant for the specification and implementation of the strategy. Limited access to information may be related to the quantity or quality (relevance and reliability, respectively) of information. This mismatched situation could come about from a lack of resources, competence, or the like. It could also come about from a lack of internal coordination. Organizational subunits gather information for symbolic reasons or use it strategically in relation to company-internal resource allocation decisions (Feldman & March, 1981). In this article, I suggest illuminating the potential mismatch between MO as strategy and MO as information by means of a measurement approach that discriminates the two, redefining a given orientation (e.g., customer orientation) from a unidimensional (as is commonly done today) to a two-dimensional construct with a multiplicative relationship between the two subdimensions. Relatedly, an interactive rather than an additive relationship can exist between different orientations (information flows)—for example, between customer orientation and interfunctional coordination (see the discussion on combinatory orientations).

In summary, the reconceptualization of MO implies building and testing theory by using less aggregated constructs (i.e., the individual MOs rather than MO “as is”), and offers enhanced precision and testability of theory. As a related benefit, the reconceptualization (MO as construct class) offers, compared to MO “as is”, new research questions and research opportunities, and should potentially illuminate important dilemmas involved in strategic decision-making. Let me give some illustrative examples of fresh research opportunities that derive from MO as a construct-class solution, with related implications for marketing practice.

I start with the larger picture. The discussion assumes data (observations from a sample of firms) on all the three individual MOs as regards both strategy and information). Table 6 (Alternative MOs and (some) potential misalignments….) gives structure for the discussion. An individual MO can fail, i.e., it relates to weak or even negative performance, for at least the following three reasons, or combinations thereof: (i) mismatch between the MO (strategy) and the competitive situation of the firm, (ii) there is not a sufficient level of market information to back the MO (strategy), (iii) there is not the right kind of market information to back the MO (strategy). Keep in mind that MO “as is” discriminates neither between strategies nor between sources and forms of market information. In effect, MO “as is” limits itself to highlighting the second point above (i.e., the MO (“as is”) summary proposition).

The customer-oriented/customer-centric strategy is arguably the individual MO (stemming from MO as construct class) that is closest to (the traditional) MO “as is” (or perceived to be so). If we compare, within a given industry, the respective levels of MO “as is” between a sample of companies, we expect to find that MO and firm performance correlate positively (refer to the MO (“as is”) summary proposition). Because MO “as is” with its all-inclusive construction discriminates neither different company strategies nor different information types/sources, and orientation-as-information follows orientation-as-strategy hand-in-glove (refer to the previous discussion), a positive MO–firm performance association is as far as the story goes. In contrast, a customer-centric strategy could fail if, first, it does not fit with the competitive situation. As described in Table 4, this lack of fit could be the case if the company were overresponsive to requests from customers in a price-sensitive market, with the result being that adaptation costs would be larger than benefits for the firm (customer loyalty, sales volume, price premiums). Put differently, a customer-centric strategy could fail if competition and customer expectations were such that, in transaction-cost theory terms, adaptations to customers caused too-high costs, and/or would not give the intended “quasi”-integration of the customer base. A second scenario would be one in which the competitive environment favored radical innovations, but the firm missed the transitional state of the industry and focused its efforts on responding to adaptation requests from the existing customer base of late majority and laggards (Christensen & Bower, 1996).

Second, even if a customer-centric strategy is sound per se, it can fail due to ill-designed or incomplete systems and routines for collecting customer information, or due to too much focus on internal communication or competitors’ moves. The construct-class solution enables observation of both these forms of strategy–information mismatch. In contrast, with MO “as is,” it is essentially impossible to make such an observation, because the construct integrates different forms/sources of information and information follows strategy by construct design.

As with a customer-centric MO, an innovation strategy can fail if it does not fit with the competitive situation in the industry and/or the company lacks the information (level, type) and related resources (e.g., competence, network) needed to be innovative. As regards a mismatch between an innovation strategy and the competitive environment, it can come about because there are no customer segments (large enough) that are willing to pay for the extra costs related to innovative solutions. (Vice versa, of course, innovation costs may be too high relative to pay-off for the firm in form of price premiums, customer loyalty, etc.) Rather, the focus in the market is on price and/or product/service adaptations of a limited kind. As regards information, it essentially concerns what is required to be (truly) innovative. One crucial cause of underperformance/negative performance could be that the firm lacks innovation capabilities internally (e.g., in design, engineering), and/or that the firm is not sufficiently connected to external innovation capabilities (e.g., via industrial clusters or relational investments). As regards the role of customers in innovation projects, the problem could be that existing customers do not represent valid sources of information needed to succeed in radical innovation. When engaging customers, these are the wrong customers or customers engaged too early in the NPD process.

Finally, a competitor (copycat) orientation may fail if there are no (sufficiently large) price-sensitive customer segments, i.e., customers that demand adapted products with modest value added dominate the market. By the same logic, the competitor-oriented/copycat may struggle to be competitive if the environment requires radical innovations. As regards information needed to implement a competitor-oriented/copycat strategy, the problem could be that the firm lacks competence in or systems for surveillance of competitors’ moves and of NPD initiatives within its own or related industries. Relatedly, the firm could lack competence in or systems for analyzing matches between the original (the product/service that the company copy) and its own customer base.

The analysis summarized in Table 6 of potential mismatches (misalignments) between orientation-as-strategy and the competitive environment of the firm, and the level and kind of market information and the associated systems, resources, capabilities, and networks (internal and external) possessed by the firm, can hopefully work as a rough guideline for companies in their strategy processes. Surely, the process must start with an analysis of the performance and (perceived/analyzed) viability of the firms’ strategy. Negative deviations from the performance level the company aims for could raise questions like the following. For any company, do we have a clearly defined value proposition and target segment (which value to deliver to what consumer), and does the strategy seem to make sense also in the long run? For the innovative company, are we (the previous question in reverse) too committed to the market as defined? Do we have the internal resources and talent and external network to be truly innovative? For the customer-centric company, do we have sufficient information and routines to analyze the income potential (increased volume, price, and customer loyalty effects) from (incremental) product development initiatives? Do we in totality spend too many resources on incremental NPD when we should invest more in progressive NPD initiatives? Alternatively, do we spend too many resources on “art for art’s sake” initiatives? For the competitor-oriented copycat, do we define and target a (sufficiently) large and price-sensitive market (segments)? Are established brands so powerful that their power reduces or erases our competitiveness? Are our monitoring and capability to analyze the industry (e.g., nationally or internationally) adequate for us to effectively identify and introduce competitive me-too products?

To reap the full gains from a deconstruction of MO, research must also deconstruct firm performance. As mentioned, both Lukas and Ferrell (2000) and Atuahene-Gima et al. (2005) are rare examples in the MO literature exploring how deconstruction enables identification of an MO’s positive but also negative performance consequences. Specifically, how this exploration is best done depends on the research question of each individual study. To be able to deconstruct performance, it is necessary to carry out a more detailed analysis of the performance dimensions relevant for the specific research question and to design the study and measurement approach accordingly.

Second, the suggested deconstructive MO approach, which defines MO as plural phenomena, may also open up other issues for scrutiny. For example, it seems reasonable to expect (at least some) companies to change their orientation as an industry matures. While radical innovation is likely to be most important early in a product life cycle, minor customer-driven product adaptations may be dominant in later stages. This process raises two questions. Can a given MO be an obstacle to change, preventing a company from adapting to its task environment and thus creating negative performance consequences? Relatedly, how do such changes in orientation come about in a company, and at what costs (e.g., investments in competence, system investments)? What kinds of resources (e.g., competence) do such a change process require?

Third, Kohli and Jaworski (1990) define MO as the operationalization of the marketing concept. MO defined as a construct class positions well to function as an updated operationalization of the marketing concept. This article details three alternative MOs that all derive from MO “as is,” their respective alternative logics of what value to bring to their customers, and how to do it. With the integration of the three into one integrated, multilevel, and multidimensional construct, however, it becomes difficult or impossible to differentiate them. The suggested construct-class solution, by contrast, adds the capacity to handle marketing as a more plural phenomenon. Yes, sometimes the “customer is king”/“queen” and a core function of marketing is to monitor and adapt to customer needs (i.e., customer orientation). In this scenario, the firm serves (pre-)existing needs by adapting to them within the existing product/service solution.

By contrast, for radical innovations, input necessary to understand customer needs and solutions that may respond to them comes from both cross-functional teams in the company and external contributors (e.g., suppliers, designers, research labs). For example, when the Beatles stopped touring in 1966 and spent their three last years (primarily) working in the studio, they spent less time with their customers (fans) but even more time as the cross-functional team any rock band is (including technicians and guest artists). The innovations (e.g., the concept album, (re)sampling of sound, “arty” album cover design) that came out of this era were innumerable, changed the music industry, and were loved by a global music audience (i.e., the customers). In short, the Beatles and other great innovators of the time shaped or reshaped the music market (content, format, and sources of income for the artists, including the introduction of artist-owned labels such as Apple Corps. This process is “market-shaping” implemented by interfunctional cooperation and coordination (i.e., within the production system) and could happen within intra- as well as interorganizational boundaries. The process was driven by an avant-garde (a small group moving first). Apple Inc. when controlled by Steve Jobs is another iconic example of a company of this kind.

So, in their popularized forms, customer-centric means saying yes to customers, and innovation-orientation means customers saying yes to the proposal of the company and its collaborators (and not vice versa, because the company has a better understanding of what the customer needs). Finally, a cost-advantage/price-leadership orientation implemented by a copycat strategy gives the customer only the core value asked for. In doing so, observing competitors (within or outside one’s own industry) is crucial to reduce costs.