The Differences Between Customer-led and Market-oriented Companies

The Differences Between Customer-led and Market-oriented Companies

🔥 The concepts "customer focus" and "market orientated" are often discussed and presented in different companies’ mission statements. It is important to know that there are significant differences between these two customer orientations. Slater and Narver (1998) have made a point on that matter, while also trying to point out the conditions under which both strategies may be successful as well as possible problems they may lead to. Below I share a summary of their findings.

THE CUSTOMER-LED BUSINESS

• Focuses on understanding the expressed needs of the customers and finding ways to satisfy those needs
• May develop close relationship with major clients
• Is reactive and short-term in focus
• Leads to adaptive learning, which hides the danger of limiting the manager’s view to the one of their current customers’ eyes
• Hampers innovation with its focus only on current rather than the potential needs of the customers
• Needs a valid measure of customer satisfaction, which is often difficult to find
• May discourage the risk-taking in product and process development
• Is appropriate for relatively stable environment.

THE MARKET-ORIENTED BUSINESS

• Focuses on both expressed and latent customer needs
• Tries to understand and predict their competitors’ capabilities and plans by acquiring and evaluating market information systematically
• Facilitates knowledge sharing throughout the whole organization
• Is proactive and long-term oriented
• Leads to generative learning, observing in context
• Works closely with lead users, or “customers, or potential customers, who have needs that are advanced compared to other market members and who expect to benefit significantly from a solution to those needs”
• Has strong leadership
• Searches for unserved or potential markets
• Is not a marketing orientation
• is appropriate for turbulent environment.

KEY DIFFERENCES BETWEEN MARKET-ORIENTED CUSTOMER-LED (Slater and Narver, 1998)

	Customer-led	Market-oriented
Strategic orientation	Expressed wants	Latent needs
Adjustment style	Responsive	Proactive
Temporal focus	Short-term	Long-term
Objective	Customer satisfaction	Customer value
Learning type	Adaptive	Generative
Learning processes	Customer surveys	Customer observation
	Key account relationships	Lead-user relationships
	Focus groups	Continuous experimentation
	Concept testing	Selective partnering

Based on those ideas Slater and Narver (1998) argue that a market orientation is much more probable as a source of competitive advantage than a customer-led orientation.

Source:
Slater, S. F. and Narver, J. C. (1998) “Customer-Led and Market-Oriented: Let's Not Confuse the Two”, Strategic Management Journal, Vol. 19, No. 10 (Oct., 1998), pp. 1001-1006.