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Associate Professor of Marketing Rate: 54321 Font size: | Category: Business | Posted By: Spiros Gounaris | Rating:

Market Orientation Development: A Comparison of Industrial vs. Consumer Goods Companies by Spiros P. Gounaris George J. Avlonitis Athens University of Economics & Business, Department of Management Science and Marketing 76 Patission Street, ATHENS 104 34 Greece Tel. 8203445 e-mail: gounaris@aueb.gr Athens University of Economics & Business, Department of Management Science and Marketing 76 Patission Street, ATHENS 104 34 Greece Tel. 8231931 e-mail: avlonitis@aueb.gr Submitted August 2000 Revised November 2000, January 2001 Accepted February 2001 Author Information Spiros P. Gounaris, Ph.D., is a Lecturer of Marketing at the Athens University of Business and Economics. He has published both in European and American journals. His current research interests focus on marketing management, marketing of services, customer satisfaction and loyalty as well as on electronic marketing. George J. Avlonitis, Ph.D., is a Professor of Marketing at the Athens University of Business and Economics. His work has appeared in many journals including Journal of Marketing, Journal of the Academy of Marketing Science, Industrial Marketing Management, Journal of Product Innovation Management, International Journal of Research in Marketing, European Journal of Marketing. His current research interests pivot around sales management, marketing management, electronic marketing, organizational marketing and product policy. Abstract While significant empirical work exists around the conceptualization of the notion of Market Orientation (MO), as well as its relation to company performance, little empirical work has attempted to depict the actual steps a company has to take in order to increase its adaptability to market situation and, thus become market oriented. Furthermore, no empirical work has attempted insofar to investigate the degree of MO between companies producing consumer goods vs. companies producing industrial goods. By examining a number of research propositions, this paper attempts to investigate the marketing practices of consumer goods producers vis-à -vis the practices of companies that participate in industrial markets and to discriminate industrial from consumer goods companies based on their marketing practices and MO adoption profile. Key Words � Market Orientation Development � Industrial Companies � Consumer Companies � Empirical Study Market Orientation Development: A Comparison of Industrial vs. Consumer Goods Companies INTRODUCTION The marketing literature reflects a remarkable variety of definitions about market orientation (MO) (Tuominen, Möller and Anttila, 1999). However, Day (1994) suggests three common denominators: (1) a set of beliefs that put the customer�s interest first (Hooley, Lynch and Shepherd, 1990; Deshpandé et al., 1993), (2) the ability of the organisation to generate, disseminate, and make use of superior information about customers and competitors (Kohli and Jaworski, 1990), and (3) the coordinated application of interfunctional resources to the creation of superior customer value (Narver and Slater, 1989). These three main pillars of MO could be further grouped into two main perspectives of conceiving MO: 1) a philosophy�attitude perspective and 2) a behavioral perspective. It has been argued that a true MO adoption requires a synthesis of both and that disassociating them leads to an erroneous viewpoint (Avlonitis and Gounaris, 1997). Still, despite the significant research efforts and findings on MO, the majority of companies fail to develop MO, although they operate in environments (e.g. markets characterized by competitive intensity or frequent technology changes) which would have otherwise favored its development. This may be due to the fact that most of the empirical studies addressing the issue have done so by concentrating on the relationship between MO adoption and company performance (Hooley et. al., 1989; Narver and Slater, 1989; Kohli and Jaworski, 1992; Diamantopoulos and Hart, 1993; Greenley, 1995; Bhuian, 1998). In addition, to the best of our knowledge, no empirical study has examined whether the industry context (i.e. consumer vs. industrial goods) affects the degree of MO development. This is despite the fact that the marketing literature is affluent with compelling normative and empirically derived arguments which suggest that important differences exist in marketing practices between industrial and consumer goods producers (Webster, 1978; Hooley and Shepherd, 1985; Hutt and Speh, 1992). Within this context, this paper attempts to provide a preliminary insight on this issue. More specifically, an effort is taken to examine how the extent to which MO adoption and implementation varies depending on the market (consumer vs. industrial) in which the company competes. We also investigate the possibility of discriminating industrial from consumer goods companies on the basis of their marketing practices and MO adoption profile. The rest of the paper is organized as follows. First, we define the notion of MO through an extensive discussion of the alternative measures that have been developed and used to conceptualize it. This is followed by the main research propositions and more specific propositions developed from the literature. Then, a brief section of the methodology upon which the findings of this research are based, follows. We then proceed with the analysis of the data and the presentation of the findings and finally, we discuss the implications for both scholars and practitioners, the limitations of our study, and the implications for future research. DEFINITION OF MARKET ORIENTATION Most of the studies on MO have measured the notion by using measurements originally developed by Narver and Slater (1989), Kohli and Jaworski (1990) or some variation of these scales. For example, Narver and Slater (1989) suggest a close conceptual relation between the notion of �MO� and that of �marketing orientation� by pointing to unsuccessful attempts to devise scales in order to use the latter as a proxy measure for the former. They have developed and validated an instrument for measuring MO which compiles three major dimensions (customer orientation, competitor orientation and interfunctional coordination) and consists of fifteen items, each describing different business practices. In other words, the measure developed by Narver and Slater (1989) for gauging MO is behavioral in nature and thus delineates a behavioral stance towards MO. Kohli and Jaworski (1990) also perceive a close conceptual relation between marketing and MO and like Narver and Slater (1989), they also adopt a behavioral perspective. In their opinion, �...a market-oriented organization is one in which the three pillars of the marketing concept (customer focus, coordinated marketing and profitability) are operationally manifest� (Kohli and Jaworski, 1990, p.36). Based on this behavioral conceptualization of MO, they developed a different measure comprised of intelligence-related business practices capturing the notions of Intelligence Collection, Intelligence Dissemination and Response to Intelligence. In examining the measures developed by Narver and Slater (1989) and by Kohli and Jaworski (1990), one can conclude the following: 1) the measures are behavioural in nature; 2) both measures focus on a broad description of company practices (e.g. �...the company understands customer needs�, �...the company offers customer value� (Narver and Slater, 1989, p. 9); �...when something important happens to a major customer or market the whole business unit knows about it in a short period�, �...the product lines we sell depend more on internal politics than real market needs� (Kohli and Jaworski, 1992, p.30)); 3) by doing so, both measures can be employed to measure the extent to which a company has developed MO as a behavioural notion (and both have been validated for face, discriminant and concurrent validity). Nonetheless, neither can be utilized in order to assess the alternative orientations (e.g. production or sales orientation) that a firm may pursue (Kotler, 1997). Thus, specific and not broadly articulated practices as well as attitudes and beliefs that prevail in alternative orientations remain masked. Hence the effort to develop a MO is hindered. Later work in MO (e.g. Deshpandé et al., 1993; Day, 1994a; b; Sinkula, 1994) points to the cultural nature of the concept. MO is perceived as a system of corporate beliefs and values pivoting around: 1) the creation of superior customer value at a profit while not neglecting the interests of other key stakeholders; 2) the shaping of the company�s internal environment and climate so that the company can be responsive to market information. Kohli and Jaworski (1992) admit this cultural dimension when finding that the company�s top management beliefs have a catalytic role as to whether the company pursues a MO or not. Wren et al. (2000) share this view and point to the importance of endorsing a MO at senior levels before it can be embraced by the company as a whole. Similarly, Slater and Narver (1995), when discussing the relationship between MO and the learning capabilities of the company, concede the cultural dimension of the MO when claiming that it represents the �principal cultural foundation� of the learning organization. A first approach to assess MO development from a cultural perspective was undertaken by Hooley et al. (1990) at about the same time Kohli and Jaworski (1990) developed their behavioral measures. This team of researchers developed a measure based on 15 statements, each reflecting a different perception of the role of the Marketing Function in the company. The statements they used have been proven capable to describe not only the extent to which a company pursues MO but also, to unveil the alternative orientations followed by those companies that are not market oriented. Normative as well as empirical work highlights the importance of the Marketing Function in developing and sustaining a market oriented approach in business (Kotler, 1994; Kotler 1997; Forman, 1997; Achrol and Kotler, 1999; Homburg et al., 1999; Moorman and Rust, 1999; Srivastava et al., 1999). To this end, it appears sound enough to use the company�s perception of the functional role of Marketing as a proxy measure of the extent to which the company has incorporated the principles and beliefs of MO. Based on the previous discussion it would appear reasonable to conclude that the evaluation of a company�s degree of MO adoption should attempt to comprise an assessment of both dimensions, i.e. the cultural and the behavioural aspects. In the Methodology section we elaborate further as to how we attempt to do this. With regard to the adoption of MO by companies competing in different markets (i.e. consumer vs. industrial), one has to note that traditionally, marketing has played a more important role in consumer goods industries than in industrial markets (Homburg et al., 1999). On the other hand, the nature of the industrial markets often calls for close co-operation between the producer of industrial goods and its customer, and for a variety of issues pertaining to several aspects of the marketing mix, e.g. product features, pricing policy etc. Hence, one could argue that despite the traditional increased emphasis that consumer goods producers place on marketing, industrial goods producers will also develop MO, both as a culture and as specific practices. Thus, the main research proposition (Pmain) of this paper is that industrial goods producers, when compared to consumer goods ones, will also pursue a Market Oriented approach. In the next pages we built on existing literature and we offer specific research propositions pertaining to the different behavioural aspects of MO. LITERATURE REVIEW AND RESEARCH PROPOSITIONS Strategic Marketing Planning and Market Intelligence Management is about problem solving, decision making and organizing finite resources to achieve pre-specified objectives. Hence, planning of the managerial process is concerned with the controlling of those factors that affect the results of the company�s decisions (Jackson, 1975). Thus, strategic planning can be perceived as the process by which companies attempt to control such factors in the long run in order to attain their strategic objectives (Hill and Jones, 1991; Urban and Star, 1991). A market oriented company seeks to put together its entire organization in a unified and consistent system so that the market�s environment is grasped and the company as a whole is mobilized in order to produce satisfied customers (Kotler, 1997; Day, 1998), in the hope of achieving customer loyalty and improved market position in the long run (Day, 1998). A significant debate exists over the effect of formal strategic planning on a company�s ability to attain its objectives, with significant arguments both in favor and against the positive influence of the former over the latter. However, once planning equilibrium has been developed (i.e. when the majority of the companies within an industry have developed one form or another of a strategic planning process), the company that does not plan and relies exclusively on intuition, prejudices etc., puts itself at a competitive disadvantage (Hill and Jones, 1991). Besides, empirical evidence has shown a positive association between integrated strategic marketing plans and corporate success (Fritz, 1996). Market oriented companies require Strategic Marketing Planning (SMP) in order to develop strong customer relations, customer value and thus, customer loyalty (Dalgic, 2000) while remaining focused on serving its targeted markets (Webster, 1994). This is particularly true for companies operating in industrial markets. Industrial buyers are more inclined to remain loyal ot their providers for as long as they are satisfied with them (Hutt and Speh, 1995), while consumers may exhibit variety-seeking behaviour, regardless of brand or product satisfaction. It is thus logical to expect that industrial suppliers will show greater responsiveness to this long term orientation of their existing and potential customers by adopting a long-term perspective in handling and dealing with them. Hence, companies operating in industrial markets, as opposed to companies competing in consumer markets, ought to place more emphasis on strategic marketing planning. On these grounds we investigate the following proposition. P1: Companies competing in Industrial markets, as opposed to those competing in Consumer markets, will place more emphasis on strategic marketing planning as a reflection of their long-term orientation. The requirement for SMP is directly related to the need for a solid understanding of the market environment in which the company competes. Consequently, the company�s ability to generate such knowledge is a major prerequisite of any market oriented practice (Piercy, 1992). Development of such knowledge calls for the utilization of various sources of information, e.g. internal accounting, marketing intelligence, formal market research because customers often fail to articulate specific needs for specific products and innovations (Piercy, 1992). Thus, MO requires that companies employ various sources of information for unveiling existing and latent needs (Dalgic, 2000). Having made this information available, a company-wide mobilization to satisfy customers� needs and wants should follow. Thus, availability of the information on customers' needs and wants at a company-wide level becomes a major issue for MO development (Narver and Slater, 1989; Kohli and Jaworski, 1990; Slater and Narver, 1994). Given the fact that when compared to consumer markets, industrial markets are comprised of fewer buyers who are readily identified, one can expect that market research will be a less expensive and an easier task for the industrial marketers. Also, industrial customers are much more willing to communicate their needs than consumers are (von Hippel, 1986; von Hippel, 1988). Besides, the complexity of the industrial buying behavior and buying process has led suppliers and buyers to form selling and buying teams respectively, which usually comprise a mixture of managerial specializations (Hakansson and Gadde, 1997). This fact leads one to expect that the producers of industrial goods will disseminate information about customers at a company-wide level to a greater extent than the producers of consumers products will. On these grounds we propose: P2: Industrial goods producers, when compared to consumer goods producers, will place more emphasis on generating market intelligence and disseminating it at company-wide level. Design of Marketing Strategies Understanding the customers� needs and wants induces companies to realize that no two buyers are ever exactly the same. This heterogeneity in needs and wants drives companies to look for distinctive groups of customers with rather homogeneous needs and expectations which, when aggregated, represent potential target markets (Dibb et. al., 1994). In fact, the goal to satisfy customers drives market oriented companies to go as far as one-to-one marketing for their relatively larger customers (Dalgic, 2000). Thus, segmentation strategies allow companies to unveil specific customer groups and fine-tune their marketing strategies accordingly with positive consequences on their market position, customer satisfaction and profitability (Peters and Waterman, 1982; Chaganti and Chaganti, 1983; Brooksbank, 1990; Brooksbank, 1991). The benefits for the industrial goods producer from market segmentation have also been long established and various advanced segmentation techniques for the industrial market have been suggested. For instance, Verhallen et al. (1998), following the typologies suggested by Mintzberg (1973) and Miles and Snow (1978), have suggested a promising framework for segmenting industrial buyers based on their strategic profile. Besides, empirical studies (Woodside and Wilson, 1986; Wilson, 1986) have shown the contribution of using segmentation techniques on the performance of industrial goods producers. Thus, one can reasonably expect that, industrial marketers, when compared to consumer ones, will make at least an equal use of such techniques. The implementation of market segmentation is reflected upon the company�s marketing mix. Baker et. al. (1986) assert that, once the market is segmented, the company has to adjust its marketing strategy and particularly the elements pertaining to the company�s product, pricing and communication. The distribution channel, on the other hand, remains the least controllable element of the marketing strategy since, for many markets, channels are more or less given. As such, managers can only focus on how they handle relationships with various channel members (Avlonitis, 1985). As far as the company�s products are concerned, continuous innovation and new product development have both been associated with MO (Witcher, 1985; Houston, 1986; Hooley et al., 1990). Many of the factors underlying the success of new products are associated with the �goodness-of-fit� dimension of success, i.e. the company�s ability to understand the needs of the market and cater for them (Cooper and Kleinschmidt, 1987). To this direction are also the findings of recent empirical studies which have shown that MO has a positive impact on the performance of a new product (Atuahene-Gima, 1995; Atuahene-Gima, 1996; Wren et al., 2000). When it comes to the composition of the product portfolio of industrial goods companies, one could expect that when compared to consumer goods producers, they will place more emphasis on market/customer related factors (Hakansson, 1997). Von Hippel (1976, 1978) notes that under certain circumstances, customers may even initiate an innovation themselves (Customer Active Paradigm), suggesting a leading role for the customers in the innovation processes and priorities of their suppliers (von Hippel, 1980). von Hippel (1986) argues that new product success can be increased using this method, and larger empirical studies support his case study findings (Urban and von Hippel, 1988; von Hippel, 1988). Similar evidence has been produced by more recent empirical studies (Wrenn et al., 2000). However, innovation alone cannot provide the basis for a competitive advantage. Time required before competitors can introduce a me-too product has been reduced considerably (Butz and Goodstein, 1996). Hence, companies need to focus on delivering superior value, the latter been defined as the ratio of benefits to price (Webster, 1994). Given the nature of the industrial markets, suppliers of industrial goods products often find themselves designing a unique pricing strategy in order to meet the needs of a single customer or a key-account (Cheverton, 1999), a situation in which companies competing in consumer markets rarely, if ever, find themselves. For this purpose, creative and demand oriented pricing techniques are particularly appropriate for industrial goods manufacturers (Chisnall, 1995). Finally, the company�s communication efforts and budgeting practices are also expected to vary depending on the degree of MO adoption. As pointed earlier, MO calls for superior customer value and customer satisfaction at a profit. Because communication money usually represents a significant part of the company�s overall expenses, truly market oriented companies ought to relate their budgeting decisions with their overall marketing strategy (Hooley et al., 1990). In fact, several empirical studies (Blasko and Patti, 1984; Keown, Synodinos and Jacobs, 1989; Lynch and Hooley, 1989) have shown an improvement of the quality of the budgeting methods used over the years, with traditional budgeting methods (e.g. the percentage of sales approach) being replaced by more market oriented ones (e.g. depending on the company�s objectives for a particular product in a specific market environment), resulting in more effective budgeting decisions (Blankenship and Breen, 1993). Interestingly enough, marketing scholars have paid almost equal attention to the budgeting problems faced and techniques utilized by the producers of both consumer and industrial goods. Bonis and Peterson (1997) as well as Hutt and Speh (1995), assert that because communication is an integrated tool with specific goals, the �objective and task� method should be preferred. It allows the industrial goods producer to make more effective use of its communication money by adopting zero budgeting and considering the market environment and the company objectives prior to deciding how much money to invest in communication. The findings of Lynch and Hooley (1989) provide empirical support for the inclination of industrial buyers to make more use of such techniques. Based on the above discussion we propose that: P3: The marketing strategy designed by industrial goods producers will be equally adapted to the market conditions as will be the strategy designed by consumer goods producers. Marketing Implementation Unfortunately, many companies attempt to develop MO simply by changing departmental and/or managerial titles and the levels of hierarchy. Such efforts usually prove to be unsuccessful since MO requires more than a superficial �organizational restructuring� (Houston, 1986). One way to help a company develop a MO is by allowing the Marketing Function to be actively involved during the development of the company�s strategic plans and lead the relevant process (Piercy, 1992). In fact, when the practices of industrial goods producers are considered vis-à -vis those of consumer goods firms, empirical evidence indicates that the influence of the marketing function in the SBU�s strategic objectives and priorities is of equal gravity (Homburg et al., 1999). However, putting the strategic plan in action requires that several marketing tasks are carried out. Hooley et. al. (1989) have suggested that companies embracing the principles of MO are inclined to allow the Marketing Function to maintain a larger number of marketing tasks/activities under its direct authority and control. More recent empirical findings substantiate the role of the Marketing Function within a market driven company and show that it makes a significant contribution to the company�s financial performance, customer relationship performance and new product performance, adding thus to the overall value of the company (Homburg et al., 1999; Moorman and Rust, 1999). Based on these findings, Moorman and Rust (1999) suggest that the functional role of the Marketing Function is to manage the following nodes: (a) customer targeting and company financial performance, (b) customer targeting and product development, (c) customer targeting and service delivery and (d) product development and company financial performance. These nodes cover a large variety of operational as well as of strategic tasks including product development, pricing, promotion, intelligence generation and so on. The number of activities under the control of the Marketing Function of industrial goods producers vis-à -vis the consumer goods producers is an issue which, to the best of our knowledge, has not been addresses in the literature. Homburg et al. (1999), as mentioned earlier, have investigated the influence of the Marketing Function in industrial versus consumer goods producers and have not identified any overall significant differences. To this end, one could expect that the industry context (consumer vs. industrial) has no effect on the number of marketing tasks that are assigned to the Marketing Function. Furthermore, by allowing the Marketing Function to lead the development of the company�s strategy and by increasing the number of the marketing tasks for which the Marketing/Sales Department maintains responsibility, MO companies achieve better interdepartmental co-ordination in satisfying their target market. Menon, Jaworski and Kohli (1997) have shown the significant role of interdepartmental co-ordination and communication in delivering products that meet the needs and wants of the buyer, echoing Kotler�s call (1997) for welding the entire company towards the objective of meeting customers� needs and wants. Besides, the need for co-ordination and coherence of actions becomes even more important in the new economy as knowledge becomes the basic economic resource (Drucker, 1993) and companies are led to develop networks (Achrol and Kotler, 1999). As to the potential differences regarding the degree of interdepartmental co-ordination, to the best of our knowledge, no evidence exists to support the view that interdepartmental co-ordination is affected by the type of market in which the company operates. Thus, based on the above discussion we propose: P4: The implementation of marketing will not vary depending on the industry context, i.e. consumer vs. industrial markets, in which the company competes. Marketing Control Since MO represents the synthesis of a cultural and a behavioural approach for business, MO can be conceived as the managerial process through which a company attempts to continuously adapt to its market. As such, controlling both the efficiency and the effectiveness with which this adaptation is achieved is an important aspect of MO. McDonald and Leppard (1993) as well as Kotler (1997) present various techniques for controlling the marketing effort. They both suggest that a Management Information System (MIS) capable of analyzing marketing information and providing the company with the necessary feedback for control purposes is required. Thus, structuring the MIS so that it can also generate customer-related and competition-related intelligence (Turner, 1991) is part of MO development. Marketing has traditionally played an important role in consumer goods industries (Homburg et al., 1999). This has led consumer goods producers to structure their MIS so that it can deliver customer- and competition-specific intelligence. Nonetheless, industrial goods producers are frequently forced to work closely with their customers for many different reasons and this need for close co-operation has provided the basis for the broadening of the scope of marketing and the development of notions such as �relationship marketing� (Gummesson 1999). To this end, it is only logical to expect that industrial goods producers will also design their MIS to deliver customer- and competition-specific information. Control is also about corrective actions in order to, when necessary, eliminate deviations from objectives and maintain convergence to the company�s primary goals. It is within this framework that Kohli and Jaworski (1990) have postulated responsiveness to intelligence as a central notion of their conception of MO. One may expect that the responsiveness to the intelligence generated by the MIS will not vary between industrial and consumer goods producers. Two reasons can be put forward in defense of this argument. First, industrial customers tend to commit themselves to long-term relationships with their suppliers (Ganesan, 1994; Hutt and Speh, 1995). However, this attitude does not ensure, per se, the longevity of the relationship with the supplier. Industrial goods producers strive to gain the trust of their customers and thus increase the commitment of their customers in the relationship and consequently develop and sustain a long-term relationship with them (Anderson and Weitz, 1992; Ganesan, 1994; Geyskens and Steenkamp, 1994). A second reason lays in the fact that in industrial markets, a limited number of customers often account for most of the supplier�s sales volume and profits. Thus, industrial suppliers are inclined to adjust to the needs of such customers and be responsive to shifts of these needs. Based on these arguments, we investigate the following proposition: P5: Industrial goods producers, when compared to the producers of consumer goods, will place at least an equal emphasis on controlling their Marketing efforts. RESEARCH METHODOLOGY Sample and Data Collection Method The propositions put forward in this paper were assessed against data from 444 Greek companies as part of a much wider examination of business attitudes and practices in Greece. A cross- sectional sample was chosen with the intention to increase the ability to generalize. At the same time, because certain marketing skills should be present among the companies in the sample, we ensured that larger companies would be adequately represented in the sample since it was felt that the larger the company, the higher the probability to possess such skills. Consequently, the sample was defined to comprise all manufacturing companies with more than 40 employees (n=1,743), a random sample of 600 manufacturing companies with fewer than 40 employees (n=3,362) and all service companies with more than 20 employees (n=1,157), as described in the mailing lists of ICAP, a leading marketing research firm that publishes an annual list of all operating Greek companies. This procedure produced a sample of 3,500 companies, reduced to an eligible sample of 3,200 because of changes in addresses and/or the close-down of some of the companies originally included in the sample. Data collection was facilitated by means of a mail questionnaire sent to the Marketing Manager or to the Sales Manager if a Marketing Department did not exist. Prior to mailing it, the questionnaire was pre-tested in order to increase the content validity of the research instrument. For that purpose, 12 personal interviews were conducted with Marketing Managers who had agreed to provide assistance and comments on the development (scales and items) of the questionnaire. The initial mailing and a follow-up effort generated 452 responses. However, nine of those responses were excluded from the analysis due to excessive missing data, thus reducing the number of respondents to 444 (response rate approximately 14%). Of the 444 respondents, 234 (53%) were producers of consumer goods, 158 (35%) were producers of industrial goods and 52 (12%) were companies from the service sector. Service providers are excluded from this analysis since the differences between the marketing of services and the marketing of goods could lead to misleading conclusions. Table I summarizes the breakdown of the respondents. take in Table I A higher response rate was probably impossible because of the length of the questionnaire (12 pages) and the confidential nature of the information requested in some questions. Besides, when cross-sectional samples are used, response rates ranging from 12% to 20% are generally considered acceptable (Cavusgil, 1984; Tull and Hawkins, 1987; Churchill, 1991; Kohli and Jaworski, 1992) while a percentage around 14% is in line with present European response rates to postal surveys addressed to senior managers when no pre-notification is used (Caruana et al., 1999). As to possible bias in the data due to non-response, an approach for dealing with it is to attempt to estimate the degree of possible bias in the data caused by the lack of the responses of those who failed to return the questionnaire (Armstrong and Overton, 1979). To do this, one alternative is to track those responding to the initial mailing and those responding to later efforts and compare the means or other appropriate statistics, depending on the nature of the variables, of early and later respondents (Churchill, 1991). In our case, differences between the first wave (early) and the second wave (late) respondents were insignificant indicating that the variables measured in this study are not valued differently between respondents and non-respondents. Variable Measurement Having conceptualized MO as the synthesis of specific behavior with a specific system of beliefs and attitudes, investigation of the main research proposition as well as the supporting research propositions required the measurement of different aspects of both dimensions. In the following paragraphs we explain how we measured the various constructs included in the research propositions. Measurement of MO As Culture In order to measure the degree to which the companies in the sample had embraced the principles of MO, respondents were presented with the fifteen statements used by Hooley et. al. (1990). Then, respondents were asked to indicate the degree of agreement or disagreement with each statement using a five-point Likert scale. The responses were factor analyzed and factor scores were calculated. Having identified a set of generic attitudes towards MO, we then tried to classify the respondents on the basis of these attitudes. For this purpose, a cluster analysis was performed, using the factor scores derived from the Principal Components Factor Analysis as independent variables. To test the clarity of the cluster solution we ran an analysis of variance along with Duncan�s multiple range test for each of the original variables (from which the factors were derived) across each cluster. This analysis revealed that the solution fit the data in a meaningful way, producing five distinctive clusters of companies: Market Oriented, Product Oriented, Production Oriented, Sales Oriented and Agnostics. Table II summarizes the results of this analysis. take in Table II In order to investigate the convergent validity of the measurement, we examined the extent to which the various cultural profiles identified by the analysis differed in terms of intelligence collection, intelligence dissemination and response to intelligence, i.e. the behavioural dimensions that Kohli and Jaworski (1990) have validated for measuring the behavioural adoption of MO. Table III presents the results of this analysis, showing that Market Oriented companies outperform all others in all three dimensions suggested by Kohli and Jaworski (1990). take in Table III Criterion validity was also examined by investigating the financial performance of the different clusters that resulted from the Hooley et al. (1990) measurement of MO, since MO is known to have a positive impact on company performance. More specifically, we asked managers to rate firm performance relative to their firm�s major competitor, in terms of market share and ROI, two performance measures that are widely adopted when the relationship between MO and company performance is examined. Because of the size of the sample, typical unwillingness to share performance data and the difficulty of creating valid measures of performance across industries, we collected subjective perceptions of performance since previous studies have found a strong correlation between subjective assessment and their objective counterparts (e.g. Dess and Robinson, 1984). Table IV presents the results of this analysis which show that the companies characterized as Market Oriented are the ones with the highest financial performance, thus supporting the criterion validity of the measurement. take in Table IV Measurement of Behavioural Dimensions of MO Strategic Marketing Planning (SMP) and Market Intelligence. In order to investigate the emphasis placed on SMP activities, respondents were asked to indicate, using a 4-point scale (ranging from 1 = �Little or None� to 4 = �Heavily Involved in SMP�), the extent to which their company gets involved in designing such plans (mean = 2,41; std. deviation = 1,16). To assess the extent to which the participants collect market intelligence, we employed the measurement developed by Kohli and Jaworski (1992) and asked the respondents to describe using a 5-point scale ranging from 1 �It Does Not Represent Our Company At All� to 5 �It Fully Represents Us�, the extent to which they were committed to producing this kind of information (mean = 3,56; std. deviation = 0,89; see Appendix). The extent to which the companies participating in the study generated intelligence from formal market research studies was assessed by asking the respondents to use a 3-point scale (ranging from 1= �Not at All�, to 3 = �Systematically�) thus indicating how frequently they design and implement such studies (mean = 1,84; std. deviation = 0,79). As far as the degree of dissemination of market information throughout the company is concerned, we employed the measurement developed by Kohli and Jaworski (1992) and asked the respondents to describe, using a 5-point scale ranging from 1 �It Does Not Represent Our Company At All� to 5 �It Fully Represents Us�, the extent to which the intelligence they generate is diffused at a company-wide level (mean = 3,52; std. deviation = 0,93; see Appendix). Design of Marketing Strategies. In order to examine whether the respondents design and implement segmentation strategies, we asked them to use a 3-point scale (1 = �Not at All�, 2 = �Partly�, 3 = �To a Large Extent�) and indicate the extent to which their marketing mix is predominately designed to cater for the needs of specific customer segments (mean = 1,96; std. deviation = 0,82). With regard to Product Portfolio Decisions, we focused on the criteria against which new products are selected for development and commercialization. A review of the literature revealed ten specific criteria for new product evaluation prior to launch. These were included in the first version of the questionnaire. The Marketing Managers who had agreed to help fine-tune the questionnaire suggested that five additional criteria should be included in the questionnaire. Thus, participants were presented with a list of fifteen criteria and were asked to indicate, using a 4 point scale ranging from 1 (�Little/No Importance�) to 4 (�Very Important�), the importance of each criterion in evaluating a new product and deciding on whether to proceed with the product or not. Their answers were factor analyzed and this analysis produced four distinct blocks of evaluation criteria: Market Considerations, Competitiveness Considerations, Financial Considerations and Economic Performance Consideration. Factor scores were calculated and used in subsequent analysis. With regard to pricing decisions, we focused on the methods the companies use to decide on pricing issues and asked the participants to indicate whether their pricing strategy is predominately designed (a) �On a Cost Plus Basis� (59%), (b) �On What the Competitors Charge Basis� (17,6%), and (c) �On What the Market Can Bear Basis � (22,5%). Finally, with regard to communication budgeting, we asked the participants to indicate whether their communication budget is predominately (a) �Based on previous experience� (22,6%), (b) �Reflecting their Economic Ability� (26,3%), (c) �Set as a Percentage of Sales� (22,6), (d) �Designed to maintain Parity to Competitors� Spending� (2,5%) and (e) �Dependent on the Products� Objectives� (26%). Marketing Implementation. The evaluation of the Marketing Department�s contribution to the company�s strategic planning was gauged by asking the participants to indicate, using a 4-point scale (1 = �Little or none�, to 4 = �Leading�), the role that the Department of Marketing plays in their strategic planning process (mean = 2,78; std. deviation = 0,79). The number of marketing tasks/activities for which the Marketing Department actually holds responsibility was measured by using the list employed by Hooley et al. (1990). This list is comprised of sixteen marketing tasks and respondents were asked to indicate which functional department (Production, R&D, Marketing, Sales, Finance, Personnel, Purchasing, Administration, Data Processing & Software Development) holds the main responsibility for carrying out these tasks. Then, for each company, we calculated the sum of activities (ranging from 0 to 16) for which the Marketing Department holds the responsibility (mean = 3,51, std. deviation = 3,83). As far as the degree of interdepartmental co-ordination between the Marketing Department and the company�s other departments is concerned, we asked the respondents to indicate, using a 5-point scale raging from 1 (�Low�) to 5 (�High�), the extent to which the Department of Marketing co-operates with the other functional departments of the company. Then, for each company we calculated the average degree of co-ordination by taking the sum of the degree of co-ordination between Marketing and each individual department and dividing it by the number of functional departments the company maintained (mean = 3,65, std. deviation = 0,70). Marketing Control. With regard to the dimensions covered by the MIS, based on literature review, we developed a list of sixteen topics that a Management Information System should cover. The list was enlarged to include eight additional topics suggested by the Marketing Managers who provided assistance in developing the questionnaire. Thus a list of 24 topics that a Management Information System ought to cover was presented to respondents who were asked to indicate, using a 4-point scale, how well informed they were about each of these topics (1 = �Minimum Informed� to 4 = �Very Well Informed�). Their answers were factor analyzed and this analysis produced 5 distinct areas of information: Customer Related information, Competition Related information, Market Environment Related information, Sales Force and Promotion Related information and Product Related information. Again, factor scores were calculated and used in subsequent analysis. Companies� responsiveness to the information generated by the MIS was measured using the measurement developed by Kohli and Jaworski (1992) and asking the respondents to use a 5-point scale, ranging from 1 �It Does Not Represent Our Company At All� to 5 �It Fully Represents Us�, to describe the extent to which their company responds to intelligence (mean = 3,28; std. deviation = 0,87; see Appendix). RESULTS Chi-square analysis and t-tests were used where appropriate, in order to examine the propositions put forward in this paper. Next, multivariate analysis (discriminant analysis) was employed in an attempt to discriminate consumer from industrial goods companies based on the degree of MO adoption, both as culture and as behavior. Adoption of MO and Type of Served Market In order to investigate the main research proposition of this paper (Pmain), we performed a chi-square test that is depicted in Table V. Pmain suggested that the market in which a company operates (consumer or industrial) will not relate to the degree to which a company adopts the system of beliefs characterizing MO. However, as it can be seen from Table V, the data does not seem to support this proposition. Consumer goods producers are primarily the ones who have embraced the cultural dimensions of MO while industrial goods companies are mainly pursuing a Sales Orientation. Hence Pmain is rejected. In the next paragraphs we investigate each of the individual propositions pertaining to the various behavioural dimensions of MO. take in Table V Strategic Marketing Planning and Market Intelligence The analysis pertaining to strategic marketing planning (P1) and market intelligence (P2) is presented in Table VI. Our findings suggest that consumer goods firms place more emphasis on strategic marketing planning. This leads us to reject P1. Furthermore, companies competing in consumer markets appear to make more systematic use of market research, while both types of firm are equally committed in producing market intelligence and disseminating it at company-wide level. This leads us to partially accept (P2). take in Table VI Design of Marketing Strategies The analysis pertaining to the design of the company�s marketing strategies and its adaptation to market conditions (P3) is presented in Table VII. It can be seen that contrary to our proposition, producers of consumer goods are more keen in using segmentation strategies than the industrial goods producers are. With regard to the criteria employed to evaluate new products prior to commercialization, the findings suggest that consumer goods manufacturers place more emphasis on market/customer considerations prior to developing and commercializing new products. This finding fails to support our proposition. Finally, with regard to the setting of the price and the communication budgeting, our data suggest that, while no statistically significant differences exist between the pricing techniques employed by the producers of consumer and industrial products, when it comes to communications budgeting, the industrial goods firms are more inclined to rely on traditional techniques (e.g. previous experience, economic ability). On the other hand, consumer goods producers are inclined to use more market adaptive techniques (e.g. objective and task). On the basis of these findings, we reject P3 since only one of the investigated aspects of the marketing strategy was in accordance with our proposition. take in Table VII Marketing Implementation Table VIII shows the results of the analysis concerning the implementation of marketing (P4). Contrary to our proposition, the Marketing Function in consumer companies is involved in corporate strategic planning to a significantly greater extent than it does in the industrial goods companies. Similarly, the number of marketing tasks for which the Marketing Function holds responsibility is significantly higher among consumer goods companies than among industrial firms. Finally, the degree of co-ordination between the various functions of the company and the Marketing Function is independent of the market in which the company competes. Based on these findings we can only partially accept P4. take in Table VIII Marketing Control Table IX summarizes the analysis pertaining to control of the marketing effort (P5). Of the five MIS dimensions examined, only one differs between industrial and consumer goods producers, that of market-related information. As far as the response to this intelligence, the analysis did not produce any statistical significance between industrial and consumer companies. Based on these findings, we can only partially accept P5. The dimension is particularly important for MO development since the latter is a broader notion than customer orientation (Webster, 1994; Day, 1998). Thus, the analysis reveals a significant difference between industrial and consumer goods producers. take in Table IX Discriminating Between Consumer and Industrial Firms on the Basis of MO Adoption The last phase of the analysis involved multivariate analysis (discriminant analysis) to examine whether or not it is possible to discriminate between Industrial and Consumer goods companies based on their degree of MO adoption. To accomplish this, a new variable were developed based on the type of market (i.e. consumer or industrial) each company operated (MARK_TYPE): Companies producing industrial goods were coded 0 while companies producing consumer goods were coded 1. In addition, we also recoded the two non-metric variables that we used to investigate the pricing and promotion budgeting methods of the companies in the sample. Thus, for instance, in order to analyze the alternative pricing methods employed, three new variables were generated, one for each alternative, i.e. �cost plus�, �follow competition� and �what the market can bear�. These new variables were coded 1 if the company used that specific pricing method and 0 if otherwise. A similar approach was followed for the five alternative budgeting methods investigated. The same rationale for recoding was applied to examine how the company�s orientation profiles (Market Oriented, Product Oriented, Production Oriented, Sales Oriented and Agnostics), discriminated consumer and industrial companies. Thus, in total, 29 variables pertaining to various marketing practices and MO adoption profiles were included in the discriminant analysis as independent variables with MARK_TYPE as dependent. Table X depicts the standardized coefficients of the discriminant function that the analysis produced. take in Table X Of the 29 variables included in the analysis, nine are found to discriminate consumer from industrial companies. The discriminating power of each variable is reflected in the value of the standardized coefficient with larger absolute values indicating a stronger discriminating power. The discriminant function and the related statistics are presented in Table XI. The canonical correlation coefficient (0,63) indicates that the proportion of the total variance attributable to differences among the two groups has a good level of correlation. Similarly, there is a good degree of the total variance in the discriminant scores that is not explained by the differences among means (Wilks� lambda = 0,6218). This is further supported by the transformed Chi-square value, which is significant at 0,00. take in Table XI The ability of the discriminant function to accurately classify the respondents was determined by the classification matrix presented in Table XII. Overall, 91,5% of the cases were correctly classified: approximately 92,24% of the consumer goods companies and 90,63% of the industrial goods manufacturers were correctly classified. A final validation of the discriminant model was also carried out using the a U-method validation technique (Dillon, 1979). This method provided an estimation of error rate in the classification (Crask and Perreault, 1977), thus meeting the validation requirements which were to evaluate the classification ability of the discriminant function. Implementation of this technique involves withholding one observation, recomputing the discriminant function and then classifying the withheld observation. This process is repeated until all observations have been exposed. The end result is a new classification matrix that represents the withheld cases. Table XII also depicts the cross-validated classification results. Although the classification success is somewhat reduced (90,5%) it is still within a reasonable range of the stepwise classification rates. take in Table XII With regard to the results of this analysis, the findings suggest that different aspects of the various issues examined in the study can discriminate between consumer and industrial goods producers. More specifically, the analysis has shown that overall, consumer goods companies are: more inclined to have embraced the principles and beliefs of MO; give more emphasis to generating customer derived intelligence through formal market research; are more inclined to design their strategies based on specific parameters that relate to the markets they target, by tailoring their products to fit specific market conditions, pricing them not exclusively depending on their production cost and providing them communication support that does not merely reflect past experience and objectives; implement marketing by empowering the Marketing department to lead the company�s long-term planning ; and maintain control over an increased number of tasks. On the other hand, industrial goods manufacturers, appear to hold a different posture. Their attitudes and beliefs signal a Sales Orientation in business. For example, they: are not inclined to generate customer derived intelligence through regular market research; neglect the individual needs of their customers treating them as an aggregate for which they produce a range of products which they fail to adjust according to market�s conditions; price products on the basis of their production costs and support them in terms of communication based on their experience; down-play the role of the Marketing department in the company�s efforts by reducing both its participation in long-term planning and the number of activities for which it holds responsibility. Overall, the findings of the analysis provide further support for Pmain, while clarifying specific dimensions of MO both as a culture and as behavior that industrial goods manufacturers need to address in order to develop MO. DISCUSSION AND IMPLICATIONS The data and the findings presented in this paper fall within a broader research stream concerning MO. Research until now has mainly focused on producing behavioural measures of MO (e.g. Narver and Slater, 1989; Kohli and Jaworski, 1992; Wrenn, 1997), examining the impact of MO development on company performance (e.g. Narver and Slater, 1989; Hooley et al., 1990; Diamantopoulos and Hart, 1993; Greenlay, 1995; Avlonitis and Gounaris, 1997) as well as investigating the moderating effects of endogenous and exogenous variables upon the relationship between company performance and MO development (e.g. Diamantopoulos and Hart, 1993; Avlonitis and Gounaris, 1999). Within this context, this paper attempts to broaden the research stream on MO by empirically examining the extent of MO adoption by industrial goods companies versus consumer goods companies. Overall, the findings of the study reveal that industrial goods companies, when compared to consumer goods ones, are less market oriented, in terms of both culture and behavior. The data suggest that the producers of industrial goods are more inclined to embrace a Sales Orientation. On the contrary, consumer goods companies seem to have made a significant progress in adopting the principles and the values of MO. Not surprisingly, the same is also true when specific behavioral dimensions of MO were examined. Why is this so? Many managers in industrial firms are promoted out of the engineering and the R&D departments while their business-to-business marketing formal training remains limited (Hlavacek, 1980). It is not unusual, therefore, that technical values tend to dominate their decision making and their general approach to business. Hence, to them, marketing is mainly a notion related to salesmanship. Thus, their attitudes and beliefs about how business is done comes closer to a Sales Orientation. The fact that industrial customers are inclined in many occasions to develop long-term relationships with their suppliers (Ganesan, 1994), may be another reason which explains why industrial goods producers are Sales Oriented. By experience, the Senior Management of industrial companies knows that industrial customers have the tendency to commit themselves to long term relationships, basically in order to control transaction costs. To this end, industrial goods producers focus more on the technology of their product and on its technical superiority as a means for developing a competitive advantage. Hence, when it comes to customer relationships, they seek to establish dependencies in order to lock-in their customers (Anderson and Narus, 1990; Anderson and Weitz, 1992) while neglecting to create and offer value for their customers through the identification and satisfaction of their specific demands. However, when accounts are lost to competition, sales efforts are intensified as a means to sustain market position, leading industrial firms to become Sales Oriented. They cultivate personal relationships and contacts to facilitate the selling of their products with marketing remaining a supportive function of the sales effort, despite the fact that empirical findings have shown that MO adoption has a greater impact on the performance of industrial companies than on that of consumer ones (Avlonitis and Gounaris, 1997) Having said this, the major implication for industrial goods manufacturers is that they should intensify efforts to develop a MO. Narver et al. (1998) suggest that the efforts to develop a MO should focus on two learning strategies: a �programmatic approach� seeking to establish the core attributes and beliefs of MO at company wide level and a �market-back approach� which seeks to create knowledge on how the company can better create and deliver customer value. While the former is mainly educational in nature and involves seminars, formal training and so on, the latter requires the company to take specific actions towards re-engineering its processes, procedures and structures based on continuous learning from its actual customer-value-creation performance. To this end, the findings of this study help industrial goods producers to implement both MO development strategies. With regard to the implementation of the programmatic approach, our findings can be incorporated in pertinent efforts that will aim to prepare the company about the necessary changes that must be done and to develop an a-priori understanding of the nature and the purpose of MO as well as of the basics of the processes and procedures that the company has to adopt in order to be able to offer superior value to its customers. With regard to the latter, the implementation of the �market-back� approach calls for major restructuring of company practices. To this end, the findings of this study can help industrial goods manufacturers by providing them with a set of prioritized actions that can actually guide this aspect of their MO development strategy. Such actions include changes relating to the design, implementation and use of intelligence, generated from formal market research, for strategic marketing planning purposes. Changes are also required with regard to the design of their marketing strategies and, more specifically, attempts to better understand their buyers� buying behavior and unveil specific market segments and target them. Furthermore, new products are required to be developed with a closer eye on market conditions and this may call for considerable shifts in both the processes through which new products are developed and the degree of involvement of the various company functions in the New Product Development Process. The same is also true for pricing and the communication strategies which, according to the findings of this study, industrial goods producers should also review and re-consider the procedures through which they develop them. Finally, when it comes to the implementation of their strategies, structural changes are again required, particularly so with regard to the number of tasks for which the Marketing Department retains the major responsibility and its participation and contribution in the firm�s LTP. By introducing such changes, industrial goods producers can, progressively, increase their MO and, thus, the value they deliver to their customers. Furthermore, by monitoring the results of their re-orientation efforts and managing the knowledge they develop from their experience they can further fine-tune their practices and enhance their company�s adoption to the market environment they operate. Limitations and Future Research Unavoidably, the research and the conclusions presented in this paper are not free of limitations. One limitation concerns the context of the study (Greece) which put constraints on the generalizability of the results to other national contexts. However, the use of a country other than United States or Central Europe increases our understanding of how MO is practised and helps to demonstrate the universality and global importance of the concept. Another limitation rests on the response rate of the study. Although, as pointed earlier, a response rate around 14% is generally considered acceptable for studies addressing senior managers of European companies and involving a cross sectional sample, future research is needed before generalization is possible. The cross-sectional nature of the research design is also a limitation. Although cross-sectional samples enable generalization of the findings, they prevent close investigation of several key aspects of the relationships that are examined. For instance, it may be possible that for specific sectors of economic activity certain practices may be more important in increasing the level of the company�s MO. Another limitation refers to the lack of data pertaining to the market conditions in each type of market (consumer vs. industrial). As we have pointed earlier, such data could allow for an deeper understanding of the practices of industrial goods producers versus those of the consumer goods ones. Also, it could have made possible the examination of a possible association between specif

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