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Market or product orientation?

The approach adopted by a firm will be determined by the nature of:

  • The product
  • The market
  • The firm

If the product is highly specialised or a niche product, there is unlikely to be much competition and barriers to entry to the market may be high. Under these circumstances, there may be little incentive for the firm to carry out expensive market research if it can sell all of its output at the price it determines. This was certainly true of technological developments such as games consoles and smartphones like the iPhone, where initial output was low relative to demand and premium pricing was possible. As markets grow in size, increased competition forces firms to be more market orientated.

Traditional, long established firms in manufacturing sectors may have corporate cultures which encourage product orientation - a 'we know best' approach. The emphasis is on keeping costs low and maintaining production efficiencies. However, whether this attitude can last into the long term is debatable unless the management is particular adept at consistently producing desirable products.

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